Episode 199 | Traction: A Startup Guide to Getting Customers (with Guest Gabriel Weinberg)

Show Notes

The 19 traction channels:

  1. Viral Marketing
  2. Public Relations (PR)
  3. Unconventional PR
  4. Search Engine Marketing (SEM)
  5. Social and Display Ads
  6. Offline Ads
  7. Search Engine Optimization (SEO)
  8. Content Marketing
  9. Email Marketing
  10. Engineering as Marketing
  11. Target Market Blogs
  12. Business Development (BD)
  13. Sales
  14. Affiliate Programs
  15. Existing Platforms
  16. Trade Shows
  17.  Offline Events
  18. Speaking Engagements
  19. Community Building

Transcript

[00:00] Rob: In this episode of Startups for the Rest of Us, Mike and I discuss Traction: A Startup Guide to Getting Customers with special guest Gabriel Weinberg. This is Startups for the Rest of Us episode 199.

[00:11] Music

[00:19]Welcome to Startups for the Rest of Us, the podcast that helps developers, designers and entrepreneurs be awesome at launching startups, whether you’ve built your first product or you’re just thinking about it. I’m Rob.

[00:27] Mike: And I’m Mike.

[00:28] Rob: And we’re here to share our experiences to help you avoid the same mistakes we’ve made. What’s the word this week, Mike?

[00:33] Mike: I have essentially scheduled a personal retreat for Labor Day weekend. Something that’s been on my list of things to do. I’m going to head up to my cottage in the Adirondacks. My plan is to just kind of sit down and think about the business that I’m working on.

[00:45] Rob: That sounds really cool. Do you have any type of outline for the retreat? Remember when Sherry did a MicroConf talk last year, she threw out some questions that you could ask during that time.

[00:54] Mike: Yeah, I haven’t really put together anything.

[00:56] Rob: I think it’s a good move. I think everyone should take one at least once a year where they can get 48 hours away from their family or significant other and their work and their house. Just get out of town in somewhere fairly isolated and you can just sit and think without electronic devices and then ask yourself some questions about your business. We’ve talked about this before, and then Sherry’s MicroConf talk will be out on video here pretty soon. For me I try to do it twice a year, and it is some of the most focused and rejuvenating time of my year because it just makes me look ahead and say, alright this is my plan for the next six to twelve months, and it really helps guide that process.

[01:35] Mike: So what’s up with you?

[01:36] Rob: I really kicked up Drip’s marketing effort about twenty days ago. That was when Drip 2.0 launched all the automation rules and such. We have a twenty one day trial, so basically the next week to ten days are going to be really interesting because all those trials end. I of course have an innate sense of what’s going to happen but it’s always cautious optimism. I’m excited about the potential growth over the next ten days but if people don’t convert, I’m not going to be very happy. We’ll know by probably the next podcast recording. At least I’ll have a sense of how many people are sticking around and whether our trial to paid conversion rate is staying in line.

[02:14] I do have a sense, and it should be the best month of growth ever. In fact, if it’s not the best month of growth ever, I will be disappointed. I guess that sounds kind of optimistic, but the interesting thing I’ve really been noodling on this concept of medium touch sales. We talk a lot about low touch sales or no touch sales. No touch is when people just come and they buy the ebook and they never email you. Low touch is when you might do an email here or there but you have a support person handling it. And then high touch is more of what I consider enterprise sales, where you’re probably going to be doing phone calls, maybe Skype demos, webinars, that kind of stuff. I’m working with this concept of medium touch sales that I kind of just stumbled into. And it’s become worth it with certain price points in Drip. So for me, it’s translating into one on one emails with me, the founder. So it’s not a support person, but it’s actual interactions of how do I get this done, can Drip do this, but not just one-off questions. I’m actually recording some short custom screencasts for people when they ask me how to do something. And I’m recording a lot of them. I’m recording probably a half dozen a day right now. The conversion rate to people who are uprooting themselves and changing email providers with tens of thousands of subscribers is shockingly high and I don’t know how long this will last. I don’t know if it’s just because it’s the early days or because people know me or what it is, although several of the people don’t know me which bodes well.

[03:31] This obviously can’t scale infinitely or anything like that, but doing things that don’t scale at this point is kind of where I’m at with Drip. So, I’m just trying to find out how to prequalify people early because for a $50 a month plan, it’s not worth doing this. But when someone is at 150, 200 bucks a month and up it’s obviously worth me spending some time on it. I’ve been doing it for about three weeks pretty intently, and I’m spending quite a bit of time on it, but it’s directly related to revenue so at this point it’s working for me.

[04:01] Mike: I think that it depends obviously on the price point but also on the lifetime value of whoever that customer happens to be because depending on the price point, they may stick around for a longer time or shorter time. When you’re talking to people one on one, there’s a much higher sense of interest from the other party, just because they are working one on one with the same person. So, if you send an email in to a support line or something like that and you hear back from Joe and then next you hear back from Dave, you don’t get any sort of a relationship built up with the person. There’s no investment. I find that if you have that single point of contact on the other side consistently it helps, but I’m curious to know whether or not you’re getting that solely because you’re the founder or if it’s more the one on one relationship.

[04:44] Rob: I agree. I have the same thought in the back of my mind. If I hired a really good sales rep who handled this and they were very knowledgable about the product and doing similar things that I am, I’m curious to see if it would translate.

[04:55] Mike: Very cool.

[04:56] Music

[05:00] Rob: Today we welcome Gabriel Weinberg. He’s here to talk about his book that releases today. It’s called Traction: A Startup Guide to Getting Customers. So today Mike and I have the pleasure of having Gabriel Weinberg on the podcast. Gabriel is the founder of DuckDuckGo, which is a search engine that got more than a billion searches last year and it’s growing. He’s essentially trying to take on Google and Bing and the rest of the search engine companies around. He was previously the co-founder and CEO of Opobox which sold for ten million dollars in 2006, and now he’s doing a bit of angel investing trying to grow DuckDuckGo which he launched in 2008. So Gabriel, welcome to the show.

[05:39] Gabriel Weinberg: Thanks, pleasure to be here.

[05:41] Rob: The reason we wanted to have you on is you’ve written a book. It’s called Traction: A Startup Guide to Getting Customers. You co-wrote it with Justin Mares. And Traction actually launches today, the day this podcast goes live. So if folks are interested in checking this out, it’s all about how to find customers and get traction in your startup, it’s at tractionbook.com. For more info there’s a sample chapter and you can obviously search for it on Amazon. I guess I’ll give a little background. For the book you interviewed more than forty founders, people like Darmesh Shah, Andrew Chen, Noah Kagan, Rand Fishkin, Patrick McKenzie, Jason Cohen, myself, and you and Justin pulled out traction approaches that people have used to get traction in their businesses. And you basically distilled it down to nineteen different traction channels.

[06:29] Gabriel: That all sounds correct. It’s a long time in the making. I started working on this project five years ago, when I started angel investing and tried to get traction for DuckDuckGo and realized there just wasn’t a great process for doing so, and just started doing interviews and five years later I ended up with this book.

[06:46] Rob: Nice. One of the statements in the book is that traction trumps everything. So how are you defining traction?

[06:52] Gabriel: What we mean is really sustainable customer growth. Generally you could even boil it down to just traction is growth. And if you don’t have growth in a startup, you essentially don’t have a startup, that’s why it trumps everything. Because if you’re growing, then everything becomes easy in a startup including some of the hardest things like getting more customers, getting fundraising and getting acquired, things like that.

[07:16] Rob: Right. And so traction could be seen as a combination of having low churn, having a lot of people coming in through the funnel, using the product and then sticking around and using it over time, and then having more people coming in through the funnel over time.

[07:29] Gabriel: That’s right. You can look at whatever core metric it is for your business that is a meaningful metric, like revenue or active customers or time on your site. Whatever that thing is, it should be growing up into the right. That’s essentially what traction is.

[07:44] Rob: Very good. Opobox was a sort of social network and DuckDuckGo is a search engine, these are more B2C plays, but you interviewed a lot of B2B founders as well. So I’m curious who is this book intended for.

[07:57] Gabriel: It really spans everything. I’ve angel invested in B2B stuff, as you mentioned a lot of my person experience in my company is B2C. Justin’s is the opposite. He’s done a bunch of B2B startups. We basically looked out and saw, okay companies now have some decent methodologies for product development luckily in startup, but they don’t have methodologies for how to get traction. And that was the big hole we were trying to address. And from doing the interviews and extracting our bullseye method, we found it’s just generally applicable and that B2B companies and B2C companies often get traction from the same mechanism. It’s just applied to their particular kind of company.

[08:35] Rob: You mention in the book, and obvious in the interview now, how Lean focuses so much on the product and that’s actually been one of my key concerns with it is that there’s a missing piece there. I don’t feel like Lean has emphasized marketing enough. There’s growth engines mentioned in maybe one chapter of Eric’s book. Engineers already have a predisposition to focus on the product.

[08:55]Gabriel: Here’s the basic story that we see, and that I saw with angel investing is, say you follow Lean to the T and you do good customer development. You launch a product that these customers actually want, which is great, but then you still have no idea how to get a more steady stream of those customers coming in the door. So what we see happens is people launch, they don’t have that immediate traction and they run out of money and die. And the saddest part about that is that the product was actually good. Those initial customers wanted it so the product development piece actually did work. It’s just as you said, it needs something to go hand in hand to actually address more of the marketing piece so when you do launch you know exactly what to do and how to get more customers.

[09:36] Mike: So one of the things you talk about in your book is called the bullseye framework. Can you talk a little about what the bullseye framework is and relate it to the listeners?

[09:45] Gabriel: Basically what we did was interview all these different people and saw the same traction channels, as we call them, coming up again and again. Those are things that everyone is familiar with like search engine marketing, SEO, PR, but then there’s a bunch of ones that people don’t usually use like business development, sales, speaking at trade shows or other conferences. Different startups, widely across the map, were getting traction through each of these different verticals but usually only one dominated at any one time. So keep that in mind. There’s nineteen channels; usually a startup gets traction through one of them. On the other side, you have startups and their founders’ bias towards their previous experience. You mentioned my startups. I came into DuckDuckGo from NamesDatabase or Opobox where there’s a lot of SEO and so I first set out to get traction for DuckDuckGo using SEO, but that was not a good choice. The only reason I did it was because I knew SEO and I was biased toward it. So what the framework really does, it tries to get you to take all these nineteen channels seriously and really consider them when you wouldn’t maybe have otherwise. And so the first step really is a brainstorming step and the whole process after that, a few more steps, the reason it’s called bullseye is it’s meant to hone in on to one channel that’s really going to make you take off for your startup.

[11:09] Rob: What I like about the book is, I’ve had this idea that I either wanted someone to write this book or I was going to write this book. This was going to be my second book, was to try to figure out a bunch of marketing channels and list them out and list some of the ways that people had approached them, list the results, just to have this reference. Because when I sit down either to advise someone or even to start a new idea, I’m always going back to this old marketing plan and trying to say, well which of these ideas is going to work now. And to have something that’s this comprehensive and that tries to boil it down into these channels I think is going to be really helpful moving forward as a reference for all of us.

[11:46] Gabriel: And that’s exactly why I wrote it. I just felt there was a need and I personally wanted to use it. And I’ve used the process at DuckDuckGo over the past five years. One of the other take-aways is that any good marketing channel eventually saturates for you. You’re using adwords, they get more expensive, you usually get priced out of it eventually. Or the volume gets too high. Your company is bigger and it just doesn’t move the needle for you anymore. The problem with that is you have to go back to the drawing board every eighteen months if you’re getting a lot of traction. And that’s what’s happened for DuckDuckGo so I’ve repeatedly gone back and looked at these nineteen channels, done the brainstorming, run tests, and we’ve switched channels with which we’ve gotten traction at DuckDuckGo about five times.

[12:27] Rob: Wow. So another concept in the book, you talk about the fifty percent rule. Mind telling us what that is?

[12:34] Gabriel: Sure. This relates to our discussion earlier about Lean, doing the marketing portion that’s missing from Lean. And if you wait until the end and try to start getting traction after you launch, then you’re in the situation that I was talking about earlier where you don’t have a lot of runway to figure this out. Whereas if you start a lot earlier, two things happen. One, you might be able to figure out when you launch what actually to do to get traction so you might figure out what channel you should use, how much that might cost, what niche you should focus on, what the marketing message actually will be that will resonate with potential customers. So you can figure all those things out, and then two, you are building this list over time from actually trying to get traction so when you actually launch you can immediately use this stuff and take off. We use an example in the book from Marketo marketing platform company that IPOed last year, and they started blogging right away and that was their initial traction channel. Way more blogging that you would normally do if you were just doing customer development. As a result they ended up collecting fourteen thousand emails for an email list and essentially took off right from the moment they launched.

[13:45]The other thing you get from this, and the fifty percent rule just means spend fifty percent of your time getting traction, really meaning it’s just as important as product development so you should be spending half your time doing it. But the other kind of non-intuitive benefit of it is that oftentimes people launch, they go try to get traction, and then they end up having to redo product development cycles because the market feedback tells them that it’s not quite right. They made it for these few customers, but to get a wider audience they have to change a bunch of things. If you actually do traction, spend fifty percent of your time doing it before you launch you often spend both less time on the product but also get to market faster with a good product. You’re actually just making a better product because you’re getting market feedback sooner.

[14:31] Mike: So when you talk about some of the different traction channels, one of the things you say is that a lot of the startups are all using the same ones. What are some of the ones that are less commonly used that you would consider essentially low-hanging fruit that people can go after. And because people don’t go after them as much they might work a little bit better for them because they’re not essentially saturated with people trying to leverage them.

[14:51] Gabriel: So there’s two aspects to this. One is, oftentimes people think oh I’m a B2B company so I’ve got to use these B2B traction channels. Or, I’m a B2C so I have to work on social traction channels. I think that’s actually nonsense. You want to go where your competition isn’t, because that’s where you’re going to have to compete less for customers. So there’s one question of, look at your competitors and see what they’re doing and maybe try to use some of these traction channels that aren’t being utilized for that particular type of company. The second piece is that there are channels which are just generally underutilized. So a good example of that is this one that we actually had to name because there wasn’t even a good name for it, which we termed engineering as marketing. And what this one is building essentially free tools that are complementary to your product, putting them out on the internet, they get independent traction because there’s such a need for it. But it’s a feature it’s not really a company, but the amount of usage from them enables you to get customers funneling off of that.

[15:50]HubSpot has done a great job of this with their marketing grader website. You go there and type in your domain name and they tell you how well you’re doing and they can upsell you on HubSpot. SEOmoz is another good example with their followerwonk tool. But it’s actually pretty generally applicable. Another set of ones that are generally underutilized are the offline ones. So, offline ads like in podcasts, or radio or even billboards which DuckDuckGo actually used one time, and speaking at different conferences and things like that, or hosting your own events. Those are all ones that are underutilized.

[16:26] Rob: I’m a big fan of repeatable and predictable channels. I’m always looking for stuff that is repeatable and predictable. And that’s why I have stuck to things like content marketing, SEO, search engine marketing, paid acquisition, that kind of stuff. Because I know what the numbers should be, and it feels like it’s less lightening in a bottle then maybe something like unconventional PR where you do a big stunt. I’m wondering which of the nineteen that you feel are the most predictable and repeatable.

[16:57] Gabriel: I would actually argue they all can be repeatable and predictable. We have examples in the book. I would say that some are definitely more than others. But take unconventional PR. Yes, there are the big stunts and it’s hard to do those again and again. But in unconventional PR, there are other things that people have done repeatedly like doing a series of viral videos. An example is the Will It Blend? channel; a blender company just starts blending things and they made hundreds of videos. Another version of that is doing unconventional things for your customers that end up becoming your company lore and getting good press as a result of that. Zappos customer service is one of those. And Alexis Ohanian from reddit, Hipmunk has done really well just running giveaways and contests around holidays and sending stickers and other stuff around to their customers. Just going above and beyond ends up getting a big word of mouth share going. I’d push back and say that there are ways to make these repeatable. It’s a little harder in some cases than others. I’ve seen it work in all the cases.

[18:05] Rob: Sure. Which of these nineteen have you used at DuckDuckGo? It seems like that would be kind of a hard business to market because it’s so unconventional.

[18:15] Gabriel: It is definitely hard. DuckDuckGo faces a couple of challenges. One is the general distribution mechanisms that people use for search engines, which is it’s in your browser already or in your operating system, are generally locked out to startups because there are bid up and very lucrative contracts from Bing and Google. So that kind of forces us to go around and do other things. Additionally, the traditional paid ones are similarly bid up and expensive to acquire users. So we’ve had to do some of the less paid ones if you will. We started out in SEO and then moved to social and display ads a lot of Reddit, 4chan even, that was kind of early In our growth. Then we did content marketing. We put out a series of microsites and blog posts, that brought in a bunch of traffic. And like I was mentioning earlier, each of these things worked up to a point, at which point they didn’t move the needle for us anymore. Our volume kept growing. We were growing about three to five hundred percent a year and so we had to keep switching.

[19:14]So then we moved to print PR, and then we moved to TV PR, and then that recently topped out for us and now we’re at business development. We’ve kind of come full circle back to that distribution and we just got a deal with Apple to be in Safari in iOS 8 and OS X. That comes out next month actually and so we’re hoping that is the next one that moves the needle for us. And then we’ll be coming back to the drawing board again.

[19:37] Rob: Wow, congratulations on that deal. That sounds like it’s a big jump for you guys.

[19:41] Gabriel: Thank you. To put another point on that, some of these for different companies won’t work for different phases of your company. We were never going to be able to get that deal early on until we were a little bit bigger and were obviously differentiated in the marketplace to allow them to want to include us. So some things won’t work in phase one of your startup, they might work in phase two or phase three.

[20:05] Mike: I think that’s kind of an exclamation point on this whole book that kind of needs to be there. But then you also had a blog article that you wrote a couple years ago called Moving the Needle and you kind of talked about this where there are certain channels that work really really well for you when you are a certain size, and then once you exceed some threshold that channel will no longer move the needle for you so you essentially have to find something new. And you’re always trying to look for what is the next thing that’s going to take your business to the next level. These nineteen different areas that you call out is a great starting point, but obviously which one is going to work for your business is going to be very dependent on what your business is, what your customer base looks like, and what you’re good at quite frankly. That’s something that I think really needs to be called out. You need to figure out which one of these is going to work for the stage that your business is in right now, because just because it doesn’t work now doesn’t mean that it won’t work down the road or that it could have worked for you six months ago but will no longer work for you in the future.

[21:00] Gabriel: Absolutely right. That’s why we like this process. Everything starts in the brainstorming session, trying to think about what you could use this channel for ideally in any way. You write down all these things, you pick the most promising one, you run some tests, you find one that’s working and you focus on it for a while. And then like you said, it stops working right? But the beauty of it is, if you did this successfully, you have all your old data, you have all your old ideas, you have all your old tests and you’re keeping those around. So the second time around you can say, oh hey, remember that idea we had eighteen months ago? That might actually apply now. That might actually work given the uniqueness of our current situation. We’ve done that a lot. We’ve gone back to old tests and lo and behold, sometimes they work.

[21:41] Rob: So in the book you listed nineteen traction channels. It’s probably not worth looking at SEO, SEM, paid acquisition on this podcast because we talk about it so much, but there were a few that were off my radar for sure. You brought up engineering as marketing which I think is a great idea and I’ve been watching Darmesh do that at HubSpot for a while. So I think people, when they get the book, should pay special attention to that one. The other one that caught my attention was existing platforms, and the summary of that is that focusing on existing platforms means focusing your growth on a mega platform like Facebook, Twitter, or an app store so you get some of the hundreds of millions of users to use your product. You talk about Alex Pachikov, the co-founder of Evernote and how he explains their focus on Apple’s app store generated millions of customers. Could you talk a little more about that? About existing platforms, who’s going after that, and how to properly do it?

[22:31] Gabriel: This idea has kind of broke out in the last five years and it basically says wow, a lot of users are just congregating on these places like Facebook and Twitter and the app stores, like you mentioned, and also browser extension add on stores like Chrome and Firefox. And there are people there everyday, millions and millions of people downloading apps and trying things. Those platforms are exposing those users to new products. Through certain strategies you can jump on that platform and get traction just by virtue of focusing on the platform. And so there’s essentially two approaches to this. One is for every platform, even new platforms, there’s usually a company that emerges or multiple companies that emerge solving things on that platform that the parent platform company didn’t really do themselves. Bitly is a good example on Twitter, Zynga is a good example on Facebook. Pretty much every one, you can see companies forming out of that ecosystem. So that’s one very platform-specific approach. Another approach, the one that Evernote took, is to say let’s focus on optimizing our apps for these platforms and getting noticed. And the best approach to that is getting the attention of the platform and getting featured because the platforms themselves, they made these platforms and they want people to make apps and use them. So they want to promote the best apps to showcase and get people to come to the platform. Evernote really has been the leader in this strategy. They’ve gone to almost every new platform you can imagine, there’s an Evernote app, not just the app stores but browser extension stores, almost every kind of phone version. But they do a couple things to really optimize it. One, they show up first. They’re one of the first apps to launch anywhere, and that really gets the platform’s attention because they want to showcase new stuff for their platform. And it’s not just, oh the app store already exists so that will never happen again. It’s new versions of the app store or the iPhone in this case too. I have an example in the book when the smart cover came out on the iPad, they were one of the first apps to use it. They made an app specifically for it, and then they were promoted on the TV commercial because of that. So really that strategy is about getting featured, getting listed in these top lists, and if you can do that it drives consistent downloads over and over again.

[24:53] Rob: I like this approach. It reminds me of Dan Martel, spoke at MicroConf a couple years ago and he used the phrase OPN which is other people’s networks. And he talked about this approach and how he’s seen a lot of startups grow quickly doing this. I’ve tried to dispel the myth that SEO and search engine marketing is Google and Bing, it’s not just the top two. Because you have search engines like Youtube that are massive, and the iOS app store, the Android app store, the WordPress plug in store essentially is an ecosystem with millions if not tens of millions of searches going on all the time, Amazon. I listed this whole list of things that if you can get in the way of any of those searches, they’re actually less competitive than Google because everybody is trying to target them.

[25:38] Gabriel: That’s actually a really good point and we make this in the book. You mentioned just now, there are niche platforms. If you’re in a startup in a niche, there’s often smaller platforms that have users that you can ride on, if you’re in a design space like Dribbble and Behance, those kinds of things. If you’re really going to make a list for all these different niches, there’s probably hundreds of different sites that you could really get traction from. It’s just a matter of finding out where these users are hanging out and then trying to figure out ways to get promoted on the platform.

[26:06] Mike: And that’s one of the things that we advocate, is that you use a VA or somebody like that to help identify those things because those could be extremely lengthy searches that you have to do, and if you can provide somebody with parameters to go out and do those searches then you can get back an excel spreadsheet or a list of some kind that someone has run a lot of these searches that almost take a human to eyeball stuff and say, is this reasonable to look at or not or is this worth somebody’s time, and then essentially filter that down to a point where the founder or the marketing team or whatever can go and take a look at those things and really determine whether or not they want to go after them or not.

[26:44] Gabriel: Yeah, I use virtual assistants all the time. Another good strategy is to, either through the customer development process if you’re pre-launch or through surveys if you’ve already launched of your existing users, just to ask them directly what sites they visit, where they’re hanging out online, if they’re subscribing to newsletters or podcasts, and just try to see if there’s any kind of patterns there, if people are congregating.

[27:07] Rob: Very good. Well, Gabriel thanks a lot for your time today. If folks want to find out more about the book they can go to tractionbook.com and download a sample chapter. They can obviously go to Amazon and search for it there. And if people want to keep up with you and communicate with you online, whereabouts do you hang out?

[27:24] Gabriel: Twitter, @yegg

[27:27]Rob: Very good. Thanks again for your time, it was a pleasure having you today.

[27:30]Mike: Thanks Gabriel.

[27:30] Gabriel: Thank you both.

[27:33] Mike: If you have a question for us, you can call it in to our voicemail number at 1-888-801-9690 or you can email it to us at questions@startupsfortherestofus.com. Our theme music is an excerpt of We’re Outta Control by MoOt used under Creative Commons. You can subscribe to us in iTunes by searching for Startups or RSS at startupsfortherestofus.com where you’ll also find a full transcript of each episode. Thanks for listening and we’ll see you next time.

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