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At the beginning of the venture, the core is to find a match between the product and the market.

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Editor’s note: Every company that ultimately achieves an IPO is growing from scratch. For the founder of a startup, what strategy should be used to achieve growth from the first day of the company’s founding? At different stages of subsequent development, is it necessary to adjust and adopt different growth strategies according to the actual situation of the enterprise? This article from the First Round Review, titled From Zero to IPO: How Growth Needs to Evolve at Every Startup Stage, interviewed Brian Rosen, an entrepreneur and investor who has experienced an IPO from scratch to the final realization of an IPO. Brian Rothenberg, and share with you the eyes of Rosenberg, how startups should adjust and adopt corresponding growth strategies at various stages, I hope to inspire you. This is the middle part of this series. The middle part mainly shares with you how the startups should achieve their goal of further growth through the growth strategy in the initial stage of establishment.

• Recommended reading: From 0 to IPO: Entrepreneurship How to adjust the growth strategy at each stage? (first)

Image source: Unsplash @youxventures

Phase 1: Discover products that match the market and make products popular with users

What you are doing now: In the process of constantly iterating and matching the product to the market, try to get the first batch of key users.

Goal: In addition to the original target audience, the product is gradually gaining popularity among more and more people.

Potential trapTrap: Too much focus on growth before achieving a match between the product and the market and getting enough information.

If you become a founder soon, you may adopt a “decisive” strategy for growth. However, Rosenberger made the opposite suggestion. He believes that in the early days of the venture, the core focus should be on finding products that match the market. For the growth strategy, it should be continuously adjusted based on user insight and continuous iteration, based on continuous user value and user data.

In terms of how the startups in Phase One should adjust and foster growth, Rosenberg shared a story about a startup that completed Series A financing. He used to be a consultant to this company. “When I worked with them, their growth mentality at the time was based entirely on the perspective of the B-round or even the C-round enterprise.” Rosenberg said, “As far as their size is concerned, they are every month. The number of new users is also hundreds, but their growth mentality is more suitable for enterprises whose growth scale is increased by 100,000 users per month. This is actually a common misunderstanding. They simply think that only If you need to ‘plagiarize’ the growth strategies of other big companies, you can achieve the growth of your own startups.”

The company also tried data analysis to find out at what stage the potential users gave up their products, and what is behind them. “This method is very good, at least a sensible choice, but still a little off track.” Rosenberg said, “They want to do AB testing, but this kind of testing is usually done by startups in the later stages. But the problem they have is that, unlike other, more mature companies, they don’t have a lot of data at all. If you just do AB testing based on a small amount of data, the results will definitely be compromised, or even the results you don’t want to see. In addition, because there is too little data available, it is difficult to say whether there is a significant increase in product conversion. More importantly, it is difficult to confirm whether new users can truly understand and recognize the value of products.

So, in the early stage of the startup, in the absence of data resources and a small user base, how should we achieve growth? In response, Rosenberg proposed four suggestions:

• First, get more insights through the conversation. Rosenberg also mentioned the start-up company that just completed the A round of financing mentioned earlier. “Rather than wasting resources on insufficient data, the founders are better off focusing on communication with users, further inspiring thinking about products through dialogue, discovering why users choose your products, and why they give up on your products. Rosenberg said, “If you talk to five users, three of them are complaining about users.”If you have an unfriendly detail in the guide, then you should pay attention to it and take it seriously, and then try to solve it. In the early stages of development, you may not be able to obtain data with reference value. So instead of pretending to have this data, it’s better to focus on what you can do, that is, talk to your own users, and the sooner the better, and the more frequently, the better.

• Second, attract and retain more new users through the “Emotional Moments”. “The moment of enlightenment is the place to reflect the value of the product, and it is also the place that reflects the user’s thinking. ‘Ah! This product really knows me!’ In the process of launching products and services, users can experience this magical experience. Then, we are committed to letting them take the initiative to promote your products to others. Once this step is reached, word of mouth naturally becomes an effective catalyst for growth.”

• Third, ask the user for more information to get more favor. Sometimes, asking for potential users to provide more information can make you feel stronger moments of enlightenment. “At TaskRabbit, our staff can better evaluate and provide services if users provide more specific feedback during the product experience. From a customer perspective, if you only say ‘I have to do two tables ‘If you can’t take too much tongue, but if you can be more specific, say, ‘We need to make two custom-made tables, and the specifications…’, then we can better serve our customers. In addition, we have found that, compared to new customers who are indifferent to product feedback, the better way is to get fewer new customers, but new customers are satisfied with the products and services.”

• Fourth, build a data foundation. “At this stage, the founder should have the best data screening and tracking work,” Rosenberg said. “You may not use this data extensively, but you need them to build your data foundation in the first place. Therefore, in the process of accumulating data, it is worth noting. This work is also a very important step for the later development of a data-driven growth team.”

Brian Rothenberg

In the early days of a startup’s life cycle, learning is more important than success. In many trials, failure is more important than success.

So don’t act rashly.

Finally, be sure to carefully grasp the timing. Of course, it is not wrong to start thinking and planning your own growth strategy as early as possible.

“First, don’t blindly expand the scale before you realize the economic benefits of the unit, or if you don’t have a clear direction. If you add every user, you still have to lose money, if you If you continue to scale up before you solve these problems, the problems you face will only get bigger and bigger,” Rosenberg said.

This is a real case before Shyp, a San Francisco-based startup logistics company. Rosenberg was a consultant to the company in 2016 and 2017. “Shyp is losing money in most of the distribution business. They blindly expanded their scale before they realized the economic benefits of the unit and determined the direction of development. After the successful fundraising of 60 million US dollars, they finally closed down.” Rosen Berg said.

“Second, don’t pay too much attention to growth until you find a match with the market.” Rosenberg said, “This is the mistake I made at TaskRabbit. We discovered a loophole problem, and if a new user didn’t get the experience they wanted when they first experienced the product, it was basically impossible for him to choose this product. And we spent a lot of time and money, and Blindly pursuing growth. In fact, we should have stopped investing in the acquisition of customers in a timely manner, and then we will solve this core problem first, so that we can find products and market matching more quickly. TaskRabbit finally launched another platform. Until finally acquired by IKEA.”

Beginning startups will only “stay behind” in Phase One before they are favored by the market. Of course, at this stage, in addition to the recommendations mentioned above to find a match between the product and the market, Rosenberg also mentioned two core “weather vanes” to help you better find that the product matches the market.

• High retention and high activity rate. Compared to the industry average monthly retention rate, your product or service is favored by more users, and the frequency of use is relatively reasonable or even higher. Or, the retention rate of a product or service is sufficient to meet the level of continued business growth.

• Organic growth. Continuously through word of mouth, and on the premise of no loss, to achieve gradual growth. This oneThe signal is critical, indicating that your product or service is a good solution to the user’s needs, and they are happy to share it with their friends to create a positive viral effect.

• Extended reading: From 0 to IPO: How do you adjust your growth strategy at all stages of your business? (Next)

Translator: Ishii Junichi