Growth5 Blog

Monday, May 10, 2010

Zero to a Million Users

Drew Houston of Dropbox and Adam Smith of Xobni put together this excellent presentation on launching an online business and ramping up users. You can check out the presentation here, it is also embedded below.

Beneath the embedded presentation I have listed the major points Houston & Smith have offered. If you're an entrepreneur working on launching your first online business, you should memorize slides 24 - 63 (#11 - #15 in the major points list below).

1. Xobni & Dropbox are VC-backed startups in SF. Both reached 2 million users in 2 years.

2. Make something people want. Biggest risk: making something nobody wants.

3. Weak product-market fit cannot be fixed by good marketing. Good product will be wind at your back.

4. Xobni analytics solved a problem no one had (adjustments needed).

5. Learn early, learn often. The cost of changing your plan increases as you get further along in development. Test early, test often, make sure you're building something people want, the way they want it. You can learn on a $0 budget by simply talking to people.

6. Learn without launching: AdWords tests & Hacks: fake landing pages, screenshots, etc.

7. Create a simple landing page: capture interest / email address.

8. Go where your early adopters hang out.

9. Dropbox put together a private beta launch video; 12,000 diggs later the beta waiting list jumped from 5,000 to 75,000 in one day (March 2008).

10. Avoid ghost towns: bootstrapping to critical mass. Go with niche first, world later.

11. Building buzz:
  • tie yourself to a bigger trend;
  • meet journalists in person ALL THE TIME;
  • journalists are really busy, come up with the angle for them;
  • put a media resources page on your web site;
  • generate word of mouth with scarcity;
  • help users tell their friends; and
  • utilize inbound marketing so you can GET FOUND.
12. Getting people to use your product:
  • d0 a few things really well instead of a lot of things poorly;
  • every 10% easier you can make your product, you will get a 50% larger audience;
  • don't make your audience think – if they have no decisions to make it is less likely they will have problems with using your product;
  • don't make your audience have to read, either: design landing pages and signup flows accordingly:
    a) concise beats comprehensive
    b) call out the next steps
    c) simple converts better
  • hook the user first, educate over time (tours, tip emails, etc.);
  • you do not see the same product your users do (plan accordingly); and
  • make feedback painless – then iterate.
13. Getting your product to sell itself:
  • the best products turn users into evangelists;
  • encouraging word-of-mouth (Dropbox referral program increased signups by 60%); and
  • tricks of the trade: Facebook & Twitter feed, emails, contact list importers, etc. (Dropbox had a goal of averaging 100,000 invites per day)
14. Metrics: know thy funnel
  • Output I: know where to invest marketing $$$. Xobni finding: AdWords users don't convert to paid users BUT they refer others who do!
  • Output II: allocate engineering resources between usability, engagement, & virality.
15. Scaling without virality: "dollar in, dollar out" marketing
  • remember that some markets don't elicit virality or buzz
  • focus on what acquisition costs will be needed $X vs. the estimated lifetime revenue of that user $Y. Utilize strategies that maximize the gross margin between $X & $Y.

Thanks Sean for emailing this presentation!

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At May 10, 2010 at 5:44 PM , Blogger Scott said...

Great insight from these two successful entrepreneurs.

Could you please elaborate on topic #6? I'm familiar with AdWords, but not sure what "Hacks: fake landing pages, screenshots..." means.

Thanks Rob.

At May 10, 2010 at 6:11 PM , Blogger Robert Beal said...

Sometimes startups like these will "design" landing pages or put screen shots out there that don't actually represent working web pages. They do this so they can get feedback on the kind of functionality these pages represent even though they haven't built them yet. This way they can see if they're going in the direction their audience wants. Why waste two months coding a solution people aren't interested in? This is the "fake it 'til you make it" portion of the presentation.

This is similar to the strategy that some of these "as seen on tv" product manufacturers have been implementing for 40 years. These are often the ads that tell you it will be 6 to 8 weeks for delivery of their product. The reason they need 6 to 8 weeks for delivery is that they run ads for 5 different products that they haven't manufactured yet (to avoid inventory issues). Whichever product gets the most orders goes into production and is delivered in 6 to 8 weeks. The buyers of the other 4 products have their money returned.


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