Optimizing Your Health

Around the time of my graduation from my MBA and the close of my tenure at GrubHub, I finally decided to confront a problem: I had gained a lot of weight. The time commitment of work + school had done no favors to my waistline, and I wasn’t sure what to do about it. I had tried to eat better and exercise more, but could never stick with it. Moderation never worked for me. The only times I had been successful were when I had bets with friends that I could abstain or do something specific for a month, like run or not eat pizza.

Being a growth marketer, I asked myself what kind of approach I could take to address this. Well, in my work, I do experiments that drive small gains that compound over time. Why couldn’t I do that with my health? I decided to give it a try. Knowing that abstention works better than moderation for me, I devised a plan. Every month, I would create a new healthy habit or get rid of a nasty habit, and stick to it for 30 days. If I could stick to it for 30 days, I could stick with it forever. If I successfully adopted a new healthy habit or abstained from an existing bad habit every month, over time, I could seriously optimize my health.

I started in December 2013 with a not very difficult change: I stopped salting things. For January 2014, I really stepped it up a notch by abstaining from caffeine or sugary drinks. I have now been doing this for almost 20 months, and am down 20 pounds. I have been able to stick with almost all of these habits. Here has been my schedule:

December 2013: Stop salting food
January 2014: Eliminate caffeine and sugary drinks
February 2014: Start running once a week
March 2014: Start work out routine after running
April 2014: Start using standing desk
May 2014: Five mile run once a week
June 2014: Give up cereal for breakfast and instead eat banana
July 2014: Eat food over a plate of spinach instead of a plate of rice
August 2014: Swap one type of cookie snack for a healthier one
September 2014: Five mile runs twice a week
October 2014: Do seven minute workout after five mile runs
November 2014: Do thirty minute workout after five mile runs
December 2014: Use standing desk at home
January 2015: Boulder twice a week
February 2015: Eat carrots once a day
March 2015: Play tennis once a week
April 2015: Added exercises to workouts
May 2015: Only snacks allowed at home are fruit
June 2015: Swap banana for breakfast with carrots
July 2015: Swap cookies with cereal

What can you do if you apply the logic of small experiments that compound over time to other areas of your life?

Currently listening to Yuck by Alpine.

First to Product-Market Scale

I like to think of this blog as balancing between business school theory and startup execution. While there are many places they don’t add up, usually the combination of the two provides an insightful truth that is hard to see without the theory plus the experience of trying to implement it. One area where I struggled for a while between my experience and the theory was the first mover disadvantage as it relates to barriers to entry.

The first mover disadvantage states that, while being the first firm in a market to do something has its advantages in terms of brand recognition and speed to market, the firm bares an even greater cost of R&D, education, etc. that second movers do not. These second movers can fast follow without all of these additional costs the first mover had to deal with and quickly compete. See HBR for details. In my Chicago Booth studies, both Eric Lefkofsky (CEO of Groupon who taught Building Internet Startups) and up and coming economist Matthew Gentzkow (who taught Competitive Strategy) argued about how potent the first mover disadvantage would be for Groupon, and that now that everyone knew how profitable the Groupon model was, it would be copied as there was no competitive advantage.

In a case study about Groupon in Gentzkow’s class, I did a one man filibuster against this argument. I looked at the data. During the time of the class, Facebook and OpenTable were winding down their Groupon clones, Yelp called theirs “not a priority” six months after shifting almost their entire team to work on it. Living Social started having financial issues. Groupon was winning despite the first mover disadvantage. The question was not would Groupon win, it what the prize was going to be for being first. Why was that the case when economics would argue against it?

I saw this same phenomenon in my own work at GrubHub. Online ordering was not a hard technology to clone, and once we had educated restaurants on the value of online ordering and shown them the additional business we could bring them, a competitor would have a much easier time with their pitch. Yet, we were still winning in every market except New York and college towns, where competitors had entered well before us. After acquiring those competitors, we talked candidly about competing with each other. The folks at Seamless (the New York competitor) talked repeatedly about feeling boxed out due to GrubHub’s first mover advantage in the rest of the country, even though we weren’t first in many of those areas.

Having taken two classes emphasizing first mover disadvantage before hearing this, I knew something wasn’t right, but couldn’t quite nail the hidden truth. Last year, I read Andy Rachleff’s post on first to product market fit. Andy argued it’s not about first mover advantage, it’s about first to product-market fit. It felt warmer, but not quite right either. GrubHub was not first to product-market fit in many of the markets it entered and later dominated.

If we tweak Andy’s definition slightly from fit to scale, the model fits better. One thing about GrubHub is that everything we thought about we thought about at scale and with velocity. We would systematically try to grow every market we entered with the same focus and the same process. If we achieved this, we would overtake successful players that were already in the market. It also didn’t matter who entered the market and tried the same after that. We had already won. Product-market fit implies a product that works with a small product, and the next step in the company’s evolution should be scale. So, the target for startups or large firms entering new markets in order to be successful should not just be product-market fit, but product-market scale. If you achieve that, you dominate markets and cannot seem to be usurped no matter how few barriers to entry you have.

Value Trade Offs in Online Food Delivery

If you’ve been following the online food delivery space, now is a pretty exciting time. Multiple services are starting up, competing on different value propositions, and many corporations are theoretically launching businesses here as well. There is one clear giant, and it is unclear if any of the upstarts will challenge them. But what is so interesting is how large companies entering the space and new startups alike are confronting the different value trade offs in online food delivery. I’ll first describe the different types of services, their different components, and then their trade offs.

Types of Services

Marketplaces
Services: GrubHub, Seamless, Eat24
Marketplaces aggregates delivery restaurants and allow diners to search for restaurants that deliver to them. The restaurants do their own delivery.

Delivery Services
Services: Postmates, DoorDash, Caviar, Uber Eats
Delivery services offer delivery from restaurants that don’t do their own delivery and deliver the food themselves.

Delivery Only Restaurants
Services: Sprig, Spoonrocket, Maple
Delivery only restaurants have no storefront. They just make food that is available for delivery and deliver the food themselves.

Delivery Only Restaurants that Require Prep
Services: Munchery, Gobble
These restaurant services require some prep work ranging from microwave to stove or oven, but usually it’s only a few minutes of prep required.

Delivery of Ingredients/Recipe Only
Services: Blue Apron, Plated
These services deliver the ingredients and the recipe required to make a meal, but the diner has to cook it themselves.

Delivery of Groceries
Services: Instacart, Fresh Direct
These services deliver whatever items you want from a grocery store.

I won’t go into corporate focused services in this post.

Value Propositions

Variety
People rarely agree on what food they like, let alone on which food they want to eat at a specific time. While GrubHub is currently unmatched in its variety nationally with over 35,000 restaurants, different companies are tackling variety on both sides of the spectrum. Postmates will theoretically offer the most variety as it will pick up food from any establishment. Online food companies like Sprig, Munchery, and Spoonrocket limit options considerably each day. Doordash, Uber Eats and Caviar have the most confusing approach here, as their ability to use their own delivery network does not restrict them to restaurants who already offer delivery, but they curate the list to provide supposedly only great options. GrubHub works with every restaurant that does delivery already, and has expanded the market by convincing many restaurants to start delivery because they see how well other restaurants do by offering that option with GrubHub.

Prep
Convenience has two components: how much work you have to do to eat (prep), and how quickly the food arrives (time). Marketplaces, delivery only restaurants and delivery services deliver ready-to-eat food. Then, there are some that require a little prep, some that require full cooking, and some that require figuring out what to cook and cooking it.

Time
The other convenience layer is time. Delivery only restaurants target 10 minute delivery times by pre-pepping meals and loading them into the cars of their drivers, whereas GrubHub and Eat24 are closer to 45 minutes to an hour depending on the restaurant’s location and type of food. Delivery services tend to take over an hour as they require extra coordination with restaurants. I believe Uber Eats is attempting a hybrid of the delivery service model and the delivery only restaurant model, but I can’t confirm. None of the other services deliver food ready to eat, but they range on how much work is required. The some prep restaurants are more like 10 minutes to heat, and ingredient/recipe services require typically cook time of over 30 minutes to an hour.

Price
Price varies for all of these services. Delivery only restaurants target less than $15 everything included. While that is possible in some cities with marketplaces, it is not in others. Ingredient/recipe delivery services have plans that are under $10 per person. Delivery services tend to charge a fee for delivery or mark up restaurant prices, so they are typically more at $20 and above per person. This incentivizes group order to spread the delivery cost around to multiple people. This is why most delivery services end up focusing on corporate catering instead of consumers over time. Prep delivery only restaurants have different plans to entice regular ordering.

Quality
In marketplaces, the quality options are set by the market, and the diner chooses how good they want their food to be. Delivery services have the same option with perhaps a higher end than marketplaces as the very best restaurants tend not to deliver. The delivery only restaurants tend to be cheap and low quality so far. Whether you had a hand in making it yourself can also be considered a quality parameter, as some people to tend to prefer things they cook themselves.

Planning
With food delivery, one typically does not need to plan in advance to use it, but with new grocery delivery and ingredient/recipe prep services, diners need to plan ahead of time to use the service.

Trade Offs

As you start playing with these value propositions, you recognize some additional constraints. I don’t need to lecture you in price vs. quality. That’s pretty obvious. But what may not be obvious is the trade off between time and quality. Even if you are delivering food from an amazing restaurant, if it takes a long time to get to a diner, it’s typically not very amazing by the time it gets there due to the food being cold. The other interesting trade off is quality vs. variety. At GrubHub, our stance was akin to the saying “quantity is a quality all its own.” In that, if you organized all of the supply, even if you had many amazing restaurants and many not so good ones, the good ones quickly emerged to the top due to ratings and reviews and overall quality of the service improved. So, all GrubHub worried about was variety and convenience, with convenience mostly limited to the ordering and customer service experience. Price and quality were set by the market, but presumably, variety solved quality, with a cap on the high end.

What these new services are doing is taking constants in the marketplace equation and making them variables: prep, time, price, and quality. It is way too early to tell if changing the equation is valuable to the broader market as GrubHub does way more orders in a day than the rest of these services combined. But it will be interesting to watch.

How to Build a Marketing Team at a Consumer Technology Company

I receive many questions about how to build marketing at technology organizations. New entrepreneurs hear terms like growth, user acquisition, and positioning, and don’t know where to start. This should be a handy guide on how marketing looks for a healthy technology organization and why. To start, I’ll re-iterate the definition and explanation of the definition of marketing from my The Incredible Unbundling of Marketing post to understand how we cover everything that is traditionally considered a marketing activity.

Marketing is the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large.
Source.

Since that’s a mouthful, marketers tend to shorthand with a series of P’s (four to seven depending on who you ask). For products, those are product (the creating part of the definition), price (the exchanging part of the definition), promotion (the communicating part of the definition), place (the delivering part of the definition), positioning (the value part of the definition), people (the people who do the activity), and packaging (another part of the communicating piece of the definition). For services, those are product, price, promotion, place, people, process, and physical evidence.

At technology companies, the product piece is typically carved out as a separate team, and various approaches exist for carving up the rest of the P’s. The most typical is to have a CMO in charge of marketing, and two VP’s that split two types of marketing that tend to require different skills (change that to VP’s and directors if you like).

Brand Marketing
Brand marketing typically includes the strategic and soft skills of marketing. These include the positioning, the target market, packaging, and physical evidence. Positioning primarily transitions to what the brand represents for its target, which is why the group is traditionally called Brand Marketing. They also tend to include the promotional elements that are less quantifiable: PR, content, social, community management, events, campaign building, etc. To be successful in positioning and identifying target markets, market research tends to be in this group.

Growth Marketing
Also known as performance, internet, digital, or online marketing due to its heavy reliance on those areas (sometimes also acquisition and retention marketing), growth marketing typically includes price, process and the parts of promotion that are quantifiable. These include SEO, email marketing, loyalty programs, landing pages, paid acquisition in almost all forms (not just online), referral programs, direct mail, and analytics about marketing and product performance.

How does Growth Marketing work with Brand Marketing?
These two organizations need to work hand in hand, Brand marketing determines who the product is for, and Growth Marketing is primarily responsible for getting people to start and to continue using the product. Growth Marketing determines the best ways to find the target market and reach them, and they work with Brand Marketing to receive appropriate creative that reflects the positioning. Growth Marketing should see branding as increasing the conversion rate on all of their activities. Brand Marketing should see Growth Marketing as the distribution engine for their message.

What about the product?
As we saw in the marketing definition above, product is one of the key P’s that does not seem to be owned by marketing. Also, what is typical in many technology companies is that some of the best opportunities to get people to start using the product come from the product itself (SEO, virality, and landing pages are the main ones), and marketers typically lack the authority as well as the technical skills to make these changes. Product and engineering organizations own these areas. So, what has become common is creating cross-functional teams where growth marketers, engineers, and product managers work together to help growth the product. Depending on which distribution methods work best for the product, the product manager and growth marketer can be indistinguishable or the same role.

Early on in a technology company, there is so much opportunity with product driven growth, that just product managers and engineers work on growth marketing. Growth Marketing tends to emerge as product managers become too busy with core product features, when expertise becomes more of a necessity, and when channels that are less product driven (paid acquisition, email,etc.) become more important. Paid acquisition is usually only tried once a lifetime value can be established, so that growth marketers can be sure to spend significantly less than that to acquire a customer.

How should the Growth cross-functional team work with Growth Marketing?
Growth Marketing needs to become a key stakeholder in the cross-functional growth team in key areas. I have spoken of cross-functional teams before, and the key elements. As we grow, we need to expand a three to four person group to include a growth marketing lead. Not every sub team needs a lead to start. You should never hire to fill org charts, only to add additional value. It should only be where they add value, and the cross-functional team adds value to them. In many of these areas, the product manager is also the growth marketing expert in the area, so the position would be redundant. The first area where Growth Marketing should fit typically would be on paid acquisition or email marketing, depending on the company. This person would get support from the team on the infrastructure to make paid acquisition or email successful (tracking, landing pages, etc.), and this person would bring in knowledge on success from these channels that can be applied to organic channels.

How does Brand Marketing work with a Core Product team?
Brand Marketing should be an early voice in the core product development process helping to mold who the new products is for and how it is positioned. Once development is kicked off, typically the Product Marketer becomes a project manager designed to maximize launch impact of the feature and ongoing adoption, coordinating between the rest of the Brand Marketing team (PR, social, content, events, campaigns,etc.) and the Core Product team. It’s important a Product Marketer has short and long term metrics for adoption.

What does the org chart look like typically?

Why Everyone Link Builds, or Why You Sometimes Do Things When You Don’t Know If They Work

I was talking to an analyst about how SEO works, and we inevitably got to the authority side of SEO. I started talking to him about how many companies spend a lot of effort trying to get external links to their site to build authority. It’s not something we have to worry about at Pinterest as our authority is super high naturally, but most companies do not have that luxury. The analyst, being a good analyst, asked how you track effectiveness of link building as a program. My answer surprised him: most of the time, you don’t.

Sure, sometimes you can see a correlation between link building and average weighted rank improvement, and maybe you didn’t make any improvements on the relevance side during that time. But, while you can experiment with SEO in relevance changes, it is pretty much impossible to experiment with link building as it works at both a domain and page level, its impact is felt over such a long period of time, and there are almost always so many other factors one can’t control, namely from competitors for those same search results.

So, he then asked, how do we know it works? The answer is: we usually don’t. So, the next question of course is, if it’s a pain to do and we don’t know it works, why do we do it? This question can be generalized to almost any competitive question via game theory. To really hammer the point home though, I actually used the climate change example.

In climate change, their are four scenarios and two dimensions. The first dimension is whether or not it is actually happening (or whether it’s man made), and the second dimension is whether we do something about it.

Next, you examine the outcome of each scenario to determine the outcome if that’s the box you pick.

As you can see here, in every box you are fine, except for the upper left. Sure, you might have wasted quite a bit of money and slowed the growth of some businesses, but none of that compares to possible catastrophe. Even if you think it’s a waste of time, the risk is so great if you’re wrong, and the answer reveals itself over such a long period of time, the obvious answer becomes to assume it is true and invest in fixing it.

Now, let’s apply this to a much less risky scenario of link building.

While we aren’t saving the world when we work on SEO, from a business perspective, the risk is just as great. In one belief, you lose, and in all other scenarios you don’t. If your competitors are smart, they all do this exact analysis and come to the same conclusion: to invest in link building. This cannot be a prisoner’s dilemma either, as one company always outranks another, and links occur organically that presumably change the rankings.

How to Get a Job at a Technology Company After an MBA

Having been working in technology and startups for a decade and completing an MBA in the process, a frequent question I receive is how can an MBA graduate transfer into the technology industry post-graduation, and many times specifically, into a startup. This question has broken my rule of four: once a question has been asked of me four times, I write a blog post answering it for the masses. This post outlines my advice to those people.

Let’s Say the Hard Thing First: Most Startups Don’t Want You
The thing you have to understand about startups is that they are about belief. A (usually first time) founder with (usually) not much of an understanding of an industry decides s/he can take it on and make it better. If someones has that type of belief in him/herself, that person also believes they can learn all of the skills necessary to execute on their vision, but they don’t have any of those skills when they start. If things happen to go well, the founder/s quickly realize they do have some skills they can’t or don’t have the time to learn that are necessary to scale the business. So, what they look for in people they bring onto their teams is someone with a skill set that can fill a weakness of theirs or their teams. This usually means previous experience in startups as the challenges are so unique.

Most MBAs do not have any startup experience, and founders won’t be impressed if you won your business plan competition during school. They probably never wrote one anyway. If you don’t have a skill they need right now, they feel like they are wasting their time talking to you. In fact, the more likely a startup founder is to talk to you, the less likely it is going to be a successful startup.

Most startups also pay below market values, and MBAs tend to have salary requirements to help them pay down their debt. I remember interviewing MBAs for a position that would report to me. Almost all of them asked for more money in salary than I was making. Essentially, what happens is they don’t want your salary, and they don’t yet need your strategic skills. They need executional skills you probably don’t have.

The Baby Step: Start at an Established Tech Company
Most MBA are deep in debt, and they want to go head on in a new direction. Some times, that may work. But my advice for people wanting to get into startups is to take a baby step. Instead of targeting companies with 15-50 people, target established tech companies. The main reason for this is to build up the set of skills startups needs. Where can you learn those skills? From people that previously worked in startups. Many of those people are still working for what was a startup and is now a successful tech company. The bonus of this situation is that since these companies are bigger, they are more likely to value MBA skills and more likely to have training programs to help you learn the skills startups need. So, if you work at a, say, LinkedIn, for two years, you probably learn a thing or two that scales down to a startup. The other great thing about established tech companies is they are likely to offer internships for MBAs, which are critically important during the summer time off.

What to Do at an Established Tech Company
The next question becomes what to work on at an established tech company. This is a trade off between how much of your skills translate to what they need, and what you want to learn. Let’s say you were in finance before your MBA, and you want to get into marketing. Perhaps an FP&A position that focuses on marketing spend would be an ideal option as it gives you exposure into all the marketing data and probably a lot of the marketers you want to learn from. Perhaps there is a marketing position available that they can train you in at the start. That is ideal. If not, you may be able to transfer later as you learn the lingo.

The Bottom Line
Changing industries is a long term play. You can’t expect to just hop into a new industry with no expertise and get your ideal role at your ideal company. If that role is a role at a startup, play the long game by building skills at a larger company first and working with the right people to make sure that can translate a few years down the line.

The Three Stages of Online Marketplaces

Prior to Pinterest, I worked on two sided network businesses my entire career, for apartment rentals (Apartments.com), real estate (Homefinder.com), and food delivery (GrubHub). As a result, I’ve admittedly become somewhat of a marketplace geek. And today is a very exciting time for online marketplaces. Marketplaces are evolving online. It’s hard to keep up with the innovation, but I’ll describe the three phases I am seeing, and why certain ones may prevail in different industries.

Phase 1: Connect buyers and sellers
This is the basic requirement of a marketplace. Early marketplace businesses like Ebay allowed you find people looking for your service if you were a seller, or find people selling what you were interested in if you were a buyer. To make this work, companies need to get past the chicken and egg scenario and build trust through their network. Things like ratings and reviews and guarantees make buyers trust they would get what they paid for, and sellers knew they would get paid if they delivered the service. Marketplaces in this scenario also had to find a way to get paid, using taking a lead generation or transaction fee for increasing the seller’s volume of sales. This phase is still in use with successful marketplaces like Airbnb, GrubHub, OpenTable, and others, but almost all are desperately trying to migrate into phase two or three right now, as you’ll see in the following paragraphs.

Phase 2: Own the delivery network
More recent marketplaces, not content to just facilitate a transaction, are actually working to implement the transaction by owning the element of bringing the service to the buyer. Marketplaces know that if they don’t control more of the experience, a great experience can be ruined by things outside of their control, supply side fault or not. Startups like Instacart don’t just allow you buy groceries online, but their workers deliver the groceries to you. Postmates and Doordash do the same for delivery food, picking up food from restaurants that don’t deliver and deliver it using their own workers. While this model is not new (restaurant delivery services have been around since before the internet), companies are now trying to build delivery networks at scale.

This is risky, as delivery networks all rely on the same pool of drivers. So, on the delivery side, marketplaces in different industries compete for delivery drivers. In a zero sum game there, it’s most likely the marketplace with the most demand wins (at this point, that’s undoubtedly Uber).

GrubHub, for example, bought two delivery services in Q4. OpenTable is moving into payments at restaurants. Airbnb is working on concierge services to improve the stay of guests. The companies starting in phase 1 see this as owning more of service blueprint, injecting their brand into the blueprint wherever possible.

Phase 3: Own supply
An even newer trend than owning the delivery network for an online marketplace is to vertically integrate the supply side of the business. Now, you may ask, what makes this a marketplace? In reality, it’s not, but from every other element, the business is designed or is mimicking an existing marketplace. Sprig and Spoonrocket do this with food delivery. They are delivery only restaurants that make their own food and have their own delivery drivers. MakeSpace and Boxbee, instead of just building a marketplace to help you find storage space, built their own storage spaces and will pick up your items and deliver them to storage and deliver them back for retrieval if needed. Margins are very different for their businesses.

The question for me becomes how far up the pyramid can you build a successful business. In many cases, owning supply will be victorious, but in many others, owning the delivery network is the best option. In other, a traditional marketplace is the best option. It will be interesting to watch almost every vertical determine the best model for customer satisfaction, scale, and profitability over the next decade.

The Perils and Benefits of AB Testing

Bob, our head of product design at Pinterest, asked me to write up a post on the perils and benefits of AB testing after reading my post on building cross-functional teams. This is me obliging.

One thing it is never difficult to do is to convince an engineer to do an experiment. In general, this is a good thing. Famous engineer W. Edwards Deming said, “In God we trust, all others bring data.” AB experiments generate data, and data settles arguments. AB experiments have helped us move from product decisions made by HIPPO (highest paid person’s opinion) to those made by effectiveness. We build better products as a result that delight more people.

An AB experiment culture can also have a dark side though. Once people figure out that AB experiments can settle disputes where multiple viewpoints are valid, that fact can lead people to not make any decisions at all and test everything. I liken this type of approach to being in a dark room and feeling around for a door. If you blindly experiment, you might find the way out. But turning the light on would make it way easier. Rabid AB testing can be an excuse for not searching for those light bulbs. It can be thought of as easier to experiment than to actually talk to your users or develop a strategy or vision for a product. Here are some perils and benefits of AB testing to think about as you experiment in your organization.

Benefits
1) Quantifying Impact
This one is pretty obvious. AB experiments tell you exactly what the lift or decrease a treatment causes versus a control. So, you can always answer the question of what an investment in Project X did for the company.

2) Limiting Effort on Bad Ideas
Another great benefit of AB testing is that you can receive feedback on an idea before committing a ton of effort into it. Not sure if an investment in a new project is worth it from a design and engineering perspective? Whip up a quick prototype and put it in front of people. If they don’t like it, then you didn’t waste a lot of time on it.

3) Limiting Negative Impact of Projects
Most additions to a product hurt performance. AB testing allows you to test on only a segment of an audience and receive feedback without it affecting all users. Obviously, the larger the company, the smaller the percentage you can trigger an experiment on to get a solid read.

4) Learning What Makes Something Work
In AB experiments, you isolate one variable at a time, so you know exactly what causes a change in metrics. You don’t have to debate about whether it was a headline or background color or the logo size anymore.

Perils
1) Not Building a Strategy or Vision
Many places convince themselves that testing is a strategy in and of itself. While AB testing can inform a strategy or vision, it is not one in and of itself. What happens in these cases is that companies do tons of random experiments in totally different directions, and their failure rate is very high because they have no unifying vision on what they are trying to do.

2) Wasting Time
AB testing can slow companies down when they convince themselves that every single thing needs to be tested thoroughly. Everyone knows of the anecdote from Google where they tested 41 shades of blue.

3) Optimizing for the Wrong Metric
AB experiments are designed to measure the impact of a change on a metric. If you don’t pick the right metric or do not evaluate all of the important ones, you can be making tradeoffs in your product you do not realize. For example, revenue over user engagement.

4) Hitting A Local Maxima
AB experiments do a very good job at helping optimize a design. They do not do as well as helping to identify bold new designs that may one day beat current designs. This leads many companies to stay stuck in a design rut where their current experience is so well optimized, they can’t change anything. You need to be able to challenge assumptions and invest in a new designs that may need quite a bit of time to beat control. This is why most travels sites look like they were last re-designed in 2003.

So, I’d prefer to optimize Deming’s quote to “When the goal is quantified and the ROI is worth it, run an AB experiment. All others bring vision.” It doesn’t have quite the same ring to it.

Currently listening to Forsyth Gardens by Prefuse 73.

The Startup Marketing Funnel

Quite a few startups have asked me how to approach their marketing plan. They hear that it’s important to do specific things, but that list eventually grows long, and they don’t have a plan of attack or a prioritization. While my post on three phases of startup marketing helps, it doesn’t go into enough detail on the framework behind that prioritization, and what to do with a new idea not represented there. Well, the good news is there is a framework you can apply to evaluate a list of ideas and prioritize them, and it’s not too different from the traditional marketing world. It just may be a bit inverted.

You may have seen a marketing funnel like this before (everyone calls the stages different things, but it’s generally something like this):

Startup marketing is a bit different. Instead of products being driven top down as in the above diagram, startups have to work bottom up due to budgets and what will be effective. Also, startups need to focus more on the inverted funnel post-use not seen in the above. So, your startup marketing funnel looks like this:

Now, instead of working top down here, startups need to work inside out. You work on the on site experience to make sure the few users who come convert and have a great experience. Then, you get them to come back and have another great experience. Once they are hooked, you ask them to invite friends. At this time, you also target those who came and didn’t convert. Then, you target those with a need for your product that haven’t tried. Then, you can define your core audience well from those using the product and do core audience targeting to find more like them. After saturating all of those methods, you finally work on general awareness.

Now, how does that translate to tactics. Well, let’s have a look:

Making sure people convert is all about conversion rate optimization. Email and push can help trials turn into repeat purchases, but the big winner there is an engaging product experience or a community. To get those who checked the product out but didn’t convert, you use use retargeting. To find others in need of the product, you focus on search (paid or organic). To find more people like your current audience, you can use Facebook lookalike targeting or interest targeting (thousands of other options here as well, of course). to pursue general awareness, that’s typically when you work on larger spend initiatives like TV, radio, outdoor, and sometimes PR.

Follow this funnel, focusing on each step until it saturates, and you can be sure you’re always working on the most effective and impactful projects to grow your business. Conversion, product, and community never tend to saturate, so you’ll almost always have dedicated people working on that even as you move further up the funnel.

Currently listening to Sonnet by Benoît Pioulard.