Author Archives: Casey Winters

The Present and Future of Growth

June 7th, 2016

Quite a few people ask me about the future of growth. The idea of having a team dedicated the growth in usage of a product is still a fairly new construct to organizations. More junior folks or people less involved with growth always ask about the split between marketing and growth. More senior folks always ask about the split between growth and core product. Growth butts heads with both sides.

Why do more senior folks tend to turn to the difference between core product and growth than marketing? For this I’ll take a step beck. Now, I’m a marketer by trade. I have an undergraduate degree in marketing and an MBA with a concentration in marketing. So I consider everything marketing: product, growth, research, and I’ve written about that. I used to see what was happening in tech as marketing’s death by a thousand cuts. I now more so see it as marketing’s definition has gotten so broad and each individual component so complicated that it can by no means be managed by one group in a company.

So if marketing is being split into different, more focused functions, growth teams aren’t really butting heads with the remaining functions that are still called marketing over responsibilities like branding. They are butting heads with the core product team over the allocation of resources and real estate for the product.

So how do growth team and core product teams split those work streams today, and what does the future look like? The best definition I can give to that split for most companies today is that growth teams focus on getting the maximum amount of users to experience the current value of the product or removing the friction that prevents people from experiencing current value, and core product teams focus on increasing the value of the product. So, when products are just forming, there is no growth team, because the product is just beginning to try to create value for users. During the growth phase, introducing more people to the current value of the product becomes more important and plays in parallel with improving the value of that core product. For late stage companies, core product teams need to introduce totally new value into the product so that growth isn’t saturated.

My hope is that in the future, this tradeoff between connecting people to current value, improving current value, and creating totally new value is all managed deftly by one product team. That team can either have product people naturally managing the tradeoffs between these three pillars, or three separate teams that ebb and flow in size depending on the strategic priorities of the organization. All three of these initiatives – connecting people to current value, improving current value, and creating new value – are important to creating a successful company, but at different stages of a company, one or two tend to be more important than another.

We should evolve into product organizations that can detect which of these three functions adds the most value at a particular point in time naturally, fund them appropriately, and socialize the reasons for that into the organization so these different functions don’t butt heads in the future. I believe that is the product team of the future. I now believe this is more likely than marketers evolving to manage branding, research, performance marketing, and product effectively under one organization.

Currently listening to Good Luck And Do Your Best by Gold Panda.

If It Ain’t Fixed, Don’t Break It

April 11th, 2016

Frequently, products achieve popularity out of nowhere. People don’t realize why or how a product got so popular, but it did. Now, much of the time, this is from years of hard work no one ever saw. As our co-founder at GrubHub put it, “we were an overnight success seven years in the making.” But sometimes, it really just does happen without people, inside or outside the company, knowing why. Especially with social products, sometimes things just take off. When you’re in one of these situations, you can do a couple of things to your product: not change it until you understand why it’s successful now, or try to harness what you understand into something better that fits your vision. This second approach can be a killer for startups, and I’ve seen it happen multiple times.

Let’s take two examples in the same space: Reddit and Digg. Both launched within six months of each other with missions to curate the best stories across the internet. Both became popular in sensational, but somewhat different ways, but Digg was clearly in breakout mode.

What happened after the end of that graph is a pretty interesting AB test. Digg kept changing things up, launching redesigns and changing policies. Some of these might have been experiments that showed positive metric increases even. Reddit kept the same design and the same features, allowing new “features” to come from the community via subreddits, like AMA. By the launch of Digg’s major redesign in August of 2010 (intended to take on elements from Twitter), Reddit exploded ahead of Digg.

This is what the long term result of these two strategies look like. Digg is a footnote of the internet, and Reddit is now a major force.

Now, neither of these companies are ideal scenarios. The best option in the situations these companies found themselves in is to deeply understand the value their product provides and to which customers, and to completely devote your team to increasing and expanding that value over time. But, if you can’t figure out exactly why something is working, it is better to do nothing then to start messing with your product in a way that may adversely affect the user experience. This has become one of my unintuitive laws of startups: if ain’t fixed, don’t break it. If you don’t know why something is working (meaning it’s fixed and not a variable), do nothing else but explore why the ecosystem works, and don’t change it until you do. If you can’t figure it out, it’s better to change nothing like Reddit and Craigslist than to take a shot in the dark like Digg.

Currently listening to Sisters by Odd Nosdam.

The Mobile Equation

April 7th, 2016

One under-represented area of growth optimization is the mobile web to app handoff and tradeoff. This area of growth is about the key decision of what to do when someone arrives at your website on a mobile device. Do you attempt to get them to sign up or transact on our mobile website? Do you prompt for a mobile app download? Do you make mobile web available at all? Different companies have made different decisions of what to do here. What I want to talk about is how to make that decision with data instead of just on a “strategic” whim.

To do this, you need to know your company’s mobile equation. The mobile equation is: when I optimize for an app install instead of mobile web usage when someone lands on my mobile website, do I receive more or less engaged users? The way to answer this question is to experiment. Optimize some people towards mobile web usage, and some people toward mobile app download. Cohort these users, and see which group has more engagement over the long term.

Keep in mind that engagement can also be optimized though, and where the baseline ends up is the result of multiple factors:

  • the quality of mobile app onboarding
  • the quality of mobile website onboarding
  • the quality of the mobile website itself
  • the quality of the mobile app itself
  • the quality of the mobile app prompt
  • where you prompt for app download
  • the country of the user
  • the landing page of the mobile website

At Pinterest, when we did this baseline, even though prompting for app download decreased signups significantly, we still received more users by optimizing for mobile app download because the activation rate was so much higher. That meant more people got more long term value from Pinterest by a little more friction upfront. So, we got to work in optimizing all of the steps of the mobile app funnel. We tested over 15 different app interstitial concepts. We redesigned the mobile app signup flow multiple times. We made the mobile app faster. We also started preserving the context from what you were looking at on mobile web to what we first showed you on the mobile app. We saw significant increases in engaged use from all of these experiments.

Learn your mobile equation. It will help drive your strategy as well as some key growth opportunities.

Currently listening to Rojus by Leon Vynehall.

Hiring Startup Executives

February 16th, 2016

I was meeting with a startup founder last week, and he started chatting about some advice he got after his latest round of investment about bringing in a senior management team. He then said he spent the last year doing that. I stopped him right there and asked “Are you batting .500?”. Only about half of those executives were still at the company, and the company promoted from within generally to fill those roles after the executives left. The reason I was able to ask about that batting average is that I have see this happen at many startups before. The new investor asks them to beef up their management team, so the founders recruit talent from bigger companies, and the company experiences, as this founder put it, “organ rejection” way too often.

This advice from investors to scaling companies is very common, but I wish those investors would provide more advice on who actually is a good fit for startup executive roles. Startups are very special animals, and they have different stages. Many founders look for executives at companies they want to emulate someday, but don’t test for if that executive can scale down to their smaller environment. There are many executives that are great for public companies, but terrible for startups, and many executives that are great at one stage of a startup, but terrible for others. What founders need to screen for, I might argue about all else, is adaptability and pragmatism.

Why is adaptability important? Because it will be something that is tested every day starting the first day. The startup will have less process, less infrastructure, and a different way of accomplishing things than the executive is used to. Executives that are poor fits for startup will try to copy and paste the approach from their (usually much bigger) former company without adapting it to stage, talent, or business model. It’s easy for founders to be fooled by this early on because they think “this is why I hired this person – to bring in best practices”. That is wrong. Great startup executives spend all their time starting out learning about how an organization works so they can create new processes and ways of accomplishing things that will enhance what the startup is already doing. When we brought on a VP of Marketing at GrubHub, she spent all her time soaking up what was going on and not making any personnel changes. It turns out she didn’t need to make many to be successful. We were growing faster, had a new brand and better coverage of our marketing initiatives by adding only two people and one consultant in the first year.

Why is pragmatism important? As many startups forgot over the last couple of years, startups are on a timer. The timer is the amount of runway you have, and what the startups needs to do is find a sustainable model before that timer gets to zero. Poor startup executives have their way of doing things, and that is usually correlated with needing to create a very big team. They will want to do this as soon as possible, with accelerates burn, shortening the runway before doing anything that will speed up the ability to find a sustainable model. I remember meeting with a new startup exec, and had her run me through her plan for building a team. She was in maybe her second week, and at the end of our conversation I counted at least 15 hires she needed to make. I thought, “this isn’t going work.” She lasted about six months. A good startup executive learns before hiring, and tries things before committing to them fully. Once they know something works, they try to build scale and infrastructure around it. A good startup executive thinks in terms of costs: opportunity costs, capital costs, and payroll. Good executives will trade on opportunity costs and capital costs before payroll because salaries are generally the most expensive and the hardest to change without serious morale implications (layoffs, salary reductions, et al.).

Startup founders shouldn’t feel like batting .500 is good in executive hiring. Let’s all strive to improve that average by searching for the right people from the start by testing for adaptability and pragmatism. You’ll hire a better team, cause less churn on your team, and be more productive.

Product-Market Fit Requires Arbitrage

January 25th, 2016

One of the most discussed topics for startup is product-market fit. Popularized by Marc Andreessen, product-market fit is defined as:

Product/market fit means being in a good market with a product that can satisfy that market.

Various growth people have attempted to quantify if you have reached product-market fit. Sean Ellis uses a survey model. Brian Balfour uses a cohort model. I prefer Brian’s approach here, but it’s missing an element that’s crucial to growing a business that I want to talk about.

First, let’s talk about what’s key about Brian’s model, a flattened retention curve. This is crucial as it shows a segment of people finding long term value in a product. So, let’s look at what the retention curve shows us. It shows us the usage rates of the aggregation of users during a period of time, say, one month. If you need help building a retention curve, read this. A retention curve that is a candidate for product-market fit looks like this:

Cohort Curve

The y axis is the percent of users doing the core action of a product. The x axis in this case is months, but it can be any time unit that makes sense for the business. What makes this usage pattern a candidate for product-market fit is that the curve flattens, and does fairly quickly i.e. less than one year. What else do you need to know if you are at product-market fit? Well, how much revenue that curve represents per user, and can I acquire more people at a price less than that revenue.

If you are a revenue generating business, a cohort analysis can determine a lifetime value. If the core action is revenue generating, you can do one cohort for number of people who did at least one action, and another cohort for actions per user during the period, and another cohort for average transaction size for those who did the core action. All of this together signifies a lifetime value (active users x times active x revenue per transaction).

Now, an important decision for every startup is how do you define lifetime. I prefer to simplify this question instead to what is your intended payback period. What that means is how long you are willing to wait for an amount spent on a new user to get paid back to the business via that user’s transactions. Obviously, every founder would like that to be on first purchase if possible, but that rarely is possible. The best way to answer this question is to look with your data how far out you can reasonably predict what users who come in today will do with some accuracy. For startups, this typically is not very far into the future, maybe three months. I typically advise startups to start at three months and increase it to six months over time. Later stage startups typically move to one year. I rarely would advise a company to have a payback period longer than one year as you need to start factoring in the time value of money, and predicting that far into the future is very hard for all but the most stable businesses.

So, if you have your retention curve and your payback period, to truly know if you are at product-market fit, you have to ask: can I acquire more customers at a price where I hit my payback period? If you can, you are at product-market fit, which means it’s time to focus on growth and scaling. If you can’t, you are not, and need to focus on improving your product. You either need to make more money per transaction or increase the amount of times users transact.

Some of you might be asking: what if you don’t have a business model yet? The answer is simple then. Have a retention curve that flattens, and be able to grow customers organically at that same curve. If you can’t do that and need to spend money on advertising to grow, you are not at product-market fit.

Other might also ask: what if you are a marketplace where acquisition can take place on both sides? If you acquire users on both sides at the wrong payback period, you’ll spend more than you’ll ever make. Well, most marketplaces use one side that they pay for to attract another side organically. Another strategy is to treat the supply side as a sunk cost because there are a finite amount of them. The last strategy here is to set very conservative payback periods on both supply and demand sides so that in addition they nowhere near add up to something more than the aggregate lifetime value for the company.

Currently listening to From Joy by Kyle Hall.

My Top Ten Posts of 2015

January 4th, 2016

Since I blogged much more regularly in 2015, my roommate suggested I should do a rundown of my most popular posts. This got me interested to see if there are any trends in the types of posts people want to read from me. Without further ado, here is the list:

1. How To Get A Job At A Technology Company After An MBA
2. A Primer on Startup SEO
3. More On Building Effective Relationships At Work
4. The Three Stages Of Online Marketplaces
5. Scaling Up, The Three Stages of a Startup and Common Scaling Mistakes
6. The Perils and Benefits of AB Testing
7. Loyalty Marketing Part I: Strategies and Segments
8. How To Build a Marketing Team at a Consumer Technology Company
9. First to Product-Market Scale
10. The Startup Marketing Funnel

I sort of expected one type of post to dominate, but the top ten list matches the breadth of the blog pretty well, with tactical (seo, loyalty marketing, ab testing), career advice (mbas getting into tech, relationship building), and company building (marketing teams, product-market scale, scaling up). So, this tells me not to change the breadth of the blog much.

I’d like to thank you all for reading. Onwards to 2016.

Currently listening to Periscope by D’arcangelo. If you’d like to hear my top music of 2015, you can listen here.

Don’t Let Salary Negotiations Leak

November 30th, 2015

If you’re managing people at your company, one thing you will have to do is negotiate compensation packages with people you are bringing onto your team. These negotiations are never anyone’s favorite activity, but they’re necessary and it’s important for someone coming into your team that they feel like they are getting compensated fairly. As a manager, this is frustrating because you generally need someone to start yesterday, and these negotiations push that start date out, if the person accepts, which they haven’t. There is a tendency of hiring managers to vent their frustration of this process with other members of the team. This is a mistake, and I’ll explain why.

If you’re not a hiring manager inside the company, someone negotiating their compensation to join feels like they’re already misaligned with you. You’re inspired by the company’s mission, you’re trying to build something great, and when you hear someone delaying joining you in that because of money, it creates a stigma that they just care about him/herself. What then happens when that person joins is they already have a stigma around them that they won’t be a team player. I have seen this happen multiple times before. What is already interesting is that this is exacerbated when the person negotiating is a woman. Women already naturally negotiate less for fear of backlash, and their co-workers prove them right when they do negotiate.

So, what do you do as a hiring manager? Do not divulge any details about the negotiation process to other people on the team. If someone asks if the person is joining, just say that you are still working on it. If that same person asks what is taking so long, say that hiring is a process, and it’s better for both sides not to rush.

What’s Your Mobile Loop?

November 17th, 2015

One thing that is true about internet visitation habits and even more true about mobile visitation habits is the loop. The loop is the sequence of places you visit when you sit down at your computer or pick up your phone. What’s so interesting about the loop is how short it is for most people. With billions of web and millions of apps, most people’s loop only consist of a select few destinations. So, if you’re building an internet business, to be successful, you need to become part of quite a few users’ loops, or find a way to inject your content into the destinations that are in their loops. For example my mobile loop generally looks like this:

Gmail app (only if new content pushed there)
Feedly app
Twitter app
ESPN website
Amazon Kindle app (currently reading Sapiens)

My web loop looks like this:
Gmail
Feedly
Twitter
Quibb
Pinterest
ESPN
some niche sites for music

If you’re capable of becoming a part of people’s loop, you have what I call destination appeal. You are where people want to go to when they are bored. There is another way to have destination appeal, and that is to be very successful at branding, or to have a frequency not at the level of “I’m bored”, but still pretty high e.g. searching. I set the barrier there at monthly. For the former, Airbnb might not be in any of my loops, but it is the first place I go when I need a place to stay. For the latter, I don’t check Google unless I’m searching for something, but I search for things very frequently. See here for more musings on mobile apps and frequency.

If you are not in many people’s mobile loops, even if you can build destination appeal, you probably need to focus a lot of attention on injecting your content into apps that are commonly in people’s loops (Facebook, Instagram, Twitter, Pinterest). For some of these apps, this can be done organically, but much of it comes in the form of arbitrage i.e. paying less to be in front of users on that site than you will make from getting in front of them.

So, examine your loops. Is your company in your loop? If not, are you injecting your company’s content into your loop effectively?

Giving and Receiving Email Feedback at a Startup

November 10th, 2015

If your startup is anything like Pinterest, you receive a lot of email. Sometimes, that email is feedback on the things you’ve worked on. Since email only communicates 7% of what face to face communication does (with 55% of language being body language and 38% being tone of voice), email feedback can sometimes be misread. Email feedback can be given especially directly in a way that can be hurtful to the team it’s given to, making them defensive instead of receptive, because they fill in a tone and body language that isn’t there. I liken some kinds of email feedback I’ve received to someone walking in your house uninvited and starting the conversation like this:

“Man, what’s up with your door? You need to get that fixed. Oh man, those curtains are awful. Why on earth did you pick those? Is that your wife? You could have done better.”

Startups are making tradeoffs all the time. Everything is harsh prioritization with very limited resources. Employees at startups know this because they live and breathe it. But quite often, when startup employees give feedback to other startup employees, they forget that those people have to make the same kind of hard tradeoffs they do, and that might lead to some of the issues they’re emailing feedback on in the first place.

If you’ve gotten in the habit of giving this type of email feedback, a better way to give email feedback is to ask questions:

“Hey, I came across this experience today. Is it on your roadmap to take a look at this? If now, how did you come to that decision? Is there a experiment/document that explains this because I’m happy trouble understanding why this experience is this way? Here were some things I didn’t understand about it.”

If you’re on the receiving end of harsh email feedback, there are generally two things to think about. Firstly, if the email is to you personally, what I tell myself is to divorce the content from the tone, because the tone is in my imagination. A thought out response to the details of the email and why things are the way they are may seem to be annoying, but it’s worth it. What would be even better is if you point the person to a place they can learn about these things in the future.

If the email is sent to other members of your team, long term, you want to train your team on divorcing the tone as well. If you haven’t, you might need to use the email response to defend the team. Otherwise, they think you are not sticking up for them. What I do in this case is send an email defending the decisions as well as explaining them. Then, I will follow up with the email sender in person and tell them “Sorry for the harsh email. You really put my team on the defensive with the perceived tone of the post, and I felt I had to defend them. Next time, can you word your email a bit differently so we can focus on the issues instead of the team feeling like we have to defend ourselves?”

Currently listening to Sold Out by DJ Paypal.