Growth for Startups
Gustaf Alstromer
Partner Y Combinator
What I will cover today
1. Product Market fit & Retention
2. Growth channels & tactics
3. Making decisions with A/B testing
Partner Product Lead,
Growth
Airbnb Growth team 2015
Most startups have nothing
“If you build it, they will come”
“If you build it, they will come”
“If you build it, they won’t come”
“- This idea will not scale”
- Every MBA in YC
Airbnb 2009
“Go to New York”
(Talk to your users and watch
them use your product)
Lesson: Startups take off because
founders make them take off.
(What the YC batch is about)
One way to grow when you are small:
Doing things that don’t scale
Product Market Fit
Product Market Fit
How to use data to understand
If you’ve made something
people want
Product Market Fit
1. Identify the metric that represent the
value my users get from my product
2. Measure the repeat usage of that metrics
Measuring product market fit
Company Metric that represent value Ideal frequency
Airbnb Bookings / Stays Annual
Instagram Active users Daily
Gusto Running employee payroll By-weekly/Monthly
Lyft Riders Weekly/Monhtly
Now, measure your retention
Metric
(in %)
Time
100%
25%
50%
75%
0%
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Measuring retention. This is a bad product
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100%
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This is a great product with product market fit.
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30% after 2 months. 21% after 20 months.
Doordash
80% after 1 month. 30% after 60 months
Github
Retention is the best way to
determine product market fit
Other (worse) ways to measure PMF
1. Net promoter score - not great
2. Surveys - often biased
3. “How would you feel if you can no
longer use this product”
These are not good metrics for PMF
1. Registered users
2. Visitors
3. “Conversion rate”
4. “Customers that aren’t paying”
Growth channels & tactics
Two ways ways to grow at scale
1. Product Growth / Conversion rate
optimization
2. Growth Channels
Product Growth:
Conversion rate optimization
• You product is a funnel / growth loop
• Every step in the funnel have drop-off
Conversion rate optimization areas
• Internationalization
• Authentication
• Onboarding
• Purchase conversion
Growth channels to explore
Company Channel
Is this a rare behaviour that people use Google
Google SEO & SEM
to find a solution?
Do existing users already share your product via
Virality & Referrals
word-of-mouth?
Does having more users improve the
Virality
experience?
Do I already know who each of my future users
Sales
are?
Do my users have high LTV? Paid Acquisition (Facebook, Google etc)
Most companies grow huge using
only 1 or 2 of these channels
Referrals & Virality
Referrals Word-of-mouth is Airbnb’s largest growth driver
Referrals is engineered word-of-mouth
Referrals Product
Referrals Funnel
Weekly active users who saw entry point
Referral “Hooks”
View referrals page
Users sending invites + Sharing
Invitations Reach (Invitees Per Inviter) + Sharing
Email Direct Direct Email Import
Conversion Rate to New User
Sign Up
Conversion Rate to New Guest / Host
Bookings First time nights
Referrals Invite
email
Referrals Invite Social proof
email
Clear value
Urgency
Exclusivity
Social proof
Paid Growth
Paid Growth
• Don’t do paid growth if you don’t have revenue
• CAC = Customer Acquisition Cost
• CAC / Payback time (Most important metric in online marketing)
• Attribution
• Channels: Facebook, Instagram, Google, Youtube
Search Engine Optimization
What you see
What Google see
SEO - Two main levers
On-page optimization
• Every optimization starts with keyword research.
• Which page am I trying to rank for what keyword?
• SEO Experimentation
Off-page optimization
• Who is linking to you?
Making Decisions using A/B
testing
“I want to launch a new
design of our homepage"
Most of you don’t need this
right now (don’t do it!)
Experiment Review
Raise your hand if you have
“good product instincts?”
iOS Sharing Sheet
Metric: Shares
Control Experiment
Place your bets
iOS Sharing Sheet
Metric: Shares
+ 40%
Control Experiment
Signup wall or not?
Metric: Signups & Bookings
Not dismissible
Control Experiment 1 Experiment 2
Place your bets
Signup wall or not?
Metric: Signups & Bookings
Not dismissible
+ 40.6% (signups)
+ 2.6% (bookings)
Control Experiment 1 Experiment 2
Product decisions are hard
Most of you won’t be doing
A/B testing for a long time
Growth for Startups - Summary
1. Start by doing things that don’t scale
2. Measure your retention / PMF
3. Build a culture of experimentation
Thank you
gustaf@ycombinator.com
http://twitter.com/gustaf
