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The Startup Checklist

100 tasks to build unstoppable momentum for your startup from Jason Calacanis and the team at LAUNCH. Click the titles to watch Jason explain each bullet point in detail.
Note: This is built on Coda a great all-in one doc. We don’t even scratch the surface of its capability here... if you want to level-up your team go to and they’ll hook you up with a $1000 credit
1) Are you solving a problem that has personal relevance?
Will you still care about your product, your company, and your customers after getting beaten down for a year straight?
Is the north star mission important enough to you that you will put potentially put everything else in your life second for it?
Examples of north star missions:
Robinhood's mission is democratizing finance
Calm's mission is normalizing self-care and meditation
Eight Sleep's mission is improving quality and tracking of sleep
Is the problem worth solving to YOU?
Not everyone is going to start a company that reduces carbon emissions across the globe like Tesla
It's okay if you're building a B2B sales tool, as long as it matters deeply to you!
But if you're just in it to get rich or get famous, it's probably not going to work out!
2) Can you build a great product?
Do you have these skills:
Developer (knowing how to build something)
Product manager (knowing what to build, and how to get there)
UX/UI designer (knowing what experience the user wants, and how to make it great)
If not, you can learn these types of skills for free on the internet → there are no excuses
Or you can try out no-code/low-code solutions, and see if you can get to a "Minimum Viable Product" or MVP without using hard code
We run a ton of low-code stuff at LAUNCH!
We use Notion, Zapier, Typeform, Bubble, Squarespace, etc.
3) Can you recruit elite talent to join your team?
Can you recruit one or multiple co-founders that balance out your skillset?
Example: if you are non-technical but great at sales and vision you probably want to find a technical co-founder that's can handle product
If you can't build a product, can you convince people to work for you that can?
Is your opportunity large enough that you can convince world-class engineers, designers, salespeople, etc. to come work for you?
Some things that attract high-end talent:
Equity: That's how you can compete with big tech salaries
Large opportunities: Uber, Airbnb, Stripe, Shopify
Meaningful work: Tesla (EVs), Blokable (Housing), etc.
4) Do you understand your ideal customer?
The first step in delighting your ideal customer is knowing who they are
Being able to identify the makeup of your most engaged cohort of customers could be the difference between finding product-market fit and running out of money
How is your customer solving the problem today?
What do you offer that is superior?
Why will they make the switch?
Things to look for: demographics, average time spent on site/in app, how you acquired them, are they likely to recommend your product to a friend?
Do you have domain expertise in your industry?
This is a controversial issues among investors:
Some investors look for domain expertise in a first-time founder
However, other investors () actually believe domain expertise is overrated and could be negatively correlated with outlier success
Keith thinks that the greatest innovations typically come from outsiders, since industry insiders are usually entrenched in a limited way of doing things
Jason calls this "fresh eyes on a problem"
Also: your ideal customer might wind up NOT being who you thought they'd be - if that's the case, are you flexible enough to pivot and still succeed?
5) How much personal runway do you have?
People underestimate how long it takes to either A) raise money or B) get profitable
Ask yourself: What is your personal burn rate? Can you optimize it to extend personal runway long enough?
How you can hack this:
Build a side project on nights and weekends before leaving your day job
If you aren't technical, try no-code solutions to see if you can create a minimum viable product
If you can get to any amount of revenue while still in "side hustle phase" - that's amazing!
Then you can start doing calculations like "When I hit X dollars in profit, that will be ~70% of my salary and I can quit my job and make up the difference"
6) How much are you willing to sacrifice? How resilient are you?
Before you quit your job to start a company, do a self-assessment on your personal resiliency
Here are ten tips for building emotional resiliency ():
1) Practice mindfulness (mindfulness helps with building self-awareness, which is key to emotional resilience, according to the CNBC article)
2) Breathe slowly and deeply
3) Build a robust emotional vocabulary (distinguish between different emotions in yourself and others so you are less likely to react without thinking)
4) Reflect on situations (take responsibility and articulate what you learned and how that will make you wiser in the future)
5) Reframe your mindset (view setbacks as challenges instead of threats)
6) Search for meaning (reframe suffering to create greater meaning for yourself and your team)
7) Forgive (break psychological ties that tie you to your past)
8) Engage your support network (the CNBC article notes that "research shows extroverted individuals tend to be more resilient because they’re more likely to reach out to others when they need help" so introverts should be extra mindful of this)
9) Express gratitude (gratitude can redirect negative emotions)
10) Take control of your outcomes (YOU control your destiny)
7) Do you have a bias towards action?
Complacent people do not make great founders
If you enjoy a casual working environment, don't like working long hours, prefer not to work nights and weekends... than being a founder is NOT for you
As a founder, you will be forced to put out fires from Sunday morning to Saturday night, and everything in between
8) Do you need a boss?
Some people need oversight, direction and someone else telling them what to do
Those people can still be good employees, and can knock off tasks and help your business once you start hitting scale
However many successful founders were NOT great employees, and in fact many were tough to manage
If you're somebody who takes comfort in having someone above you who could take responsibility and give you a direction, you might not be fit to be a founder
9) Do you make excuses?
There are a lot of people who think they have what it takes
But they tend to be hesitant in getting started - often coming up with excuses:
They are willing to start companies if you give them money
They will start companies if they find a developer to work for free
They are willing to start companies, but only if they can make the same money they made at Google
These are NOT signals of a great founder
Great founders start building now, no excuses!
10) Can you build the startup flywheel?
Product, Customers, Team
Can you:
Build a great product?
Is it well designed, or is the product clunky and ugly? Do you have a product at all?
Delight your customers?
Do you even know who their customers are?
Do you know the pain point they're solving?
Build a great team?
Can you recruit and hire a team?
If the founder can't do these simple things then this is probably not a founder that is going to win
Episode 2 -
11) Pick a business model that easily aligns with your product or service and customers
Your business model will depend on the type of product or service you're offering
Today we're going to go through the most popular business models for tech startups, which models investors love and which ones they avoid
Examples:
Imagine if Uber charged a monthly subscription for unlimited rides instead of a marketplace solution... would they have still succeeded?
Companies that sell business software should NOT sell it as a one-off, you should always sell it as a subscription so you can have recurring revenue and reduce your churn
12) Keep it simple: FOCUS on a single business model
One mistake founders make (besides picking the wrong model) is trying to do too much
When founders get unfocused, that's very dangerous for a startup
Businesses with multiple streams of revenue can get clunky with less chance of outlier success than focused business models from the start
Example of single business models (at the start):
Uber → marketplace, takes a percentage of every ride
Calm → subscription for meditation
Slack → subscription for messaging app
Spotify → subscription for music
Pro-tip: Here is one way in which you can use to different business models to prop up your startup in the early days:
You can use service-based revenues to build out your SaaS business
We see this all the time with early-stage startups, and it's a great way to get quick capital to grow your recurring revenue business
HOWEVER... make sure you differentiate "service-based" from "subscription-based" when you're talking to investors!
Competent investors will always ask about the "quality of revenue"
13) Do you understand why investors love SaaS (Software-as-a-Service)?
Because it allows startups to increase revenue on a recurring basis, while keep fixed costs relatively consistent
What is SaaS? It's when a business charges a monthly or yearly price per seat for business software
This business model creates "recurring revenue" for a startup, which investors love because you start every new payment cycle with almost 100% of your revenue from the last cycle
If you sell on a "bottom-up" basis (meaning you sell into an organization from the lower level employees, not top-down from the VP level) your product can spread through a company like wildfire
Example: Slack, Notion
With bottom-up SaaS, you also can have a "cross-pollination" effect, where employees that get addicted to your product move to other companies and then infect THOSE companies with your product
14) Do you understand why investors love the Fintech model (SaaS + Transactions)?
This model combines the best parts of SaaS and transaction-based revenues
What is the Fintech model? It's when companies charge a SaaS fee AND take a percentage of each transaction (if your product enables transactions)
This is a popular business model with Fintech companies like Stripe, Shopify, and Plaid
Why? Because 100% of revenue coming from transactions is not as ideal as having as a recurring SaaS component
These companies typically charge a relatively affordable monthly or yearly SaaS fee and takes a small percentage of each transaction
For example: In Q2 2021 Shopify had $334M in subscription revenue and $785M in transaction-based revenue (they call it "merchant solutions revenue")
Shopify had about a 30/70 split between SaaS and transaction-based revenue
Shopify's standard plan costs $79/month, and they charge 2.9% per transaction for merchants using Shopify's payments processor
15) Do you understand why consumer subscriptions are coveted by investors?
Subscriptions make a vertical with historically high churn rates much more investable by creating pricing lock-in and recurring revenue
Consumer subscription are when companies charge a monthly or yearly fee for a consumer software
Examples: Spotify, Calm, Fitbod
Interesting insight: Calm used to sell their app for a "one-off" price of $10 back in the early days
When they started to charge $5/month (or $60/year) instead of just $10 for life, they actually saw a jump in downloads and paying customers
Why? Because people love subscriptions, even though it makes no logical sense!
The brain thinks "Hey, I can cancel this whenever I want." even though you'll likely paying 10x-100x the original purchase price over time!
16) Do you understand why marketplaces are coveted by investors?
Marketplaces are hard to get started, but even harder to stop when they hit scale
Marketplace businesses take a percentage of each transaction
Marketplaces are two-sided, and the two sides traditionally consist of "buyers" and "sellers"
These buyers and sellers can appear in many forms, depending on the vertical:
Amazon has third-party sellers and buyers (obviously)
Uber has drivers and riders
Airbnb has hosts and guests
Rover has dog sitters and dog owners
Hipcamp has private land owners and campers
Marketplaces rely on the total amount of all transactions on the platform - typically called GMV (or Gross Merchandise Volume)
The GMV in a marketplace determines the revenue that company will make, since companies typically take between 5-20% of the total transaction cost
This differs by vertical as well:
Uber and Airbnb refer to this metric as "Gross Bookings"
In Q2 2021, Uber had $21.9B worth, and revenue was $3.9B (about 18% of Gross Bookings)
In Q2 2021, Airbnb had $13.4B worth, and revenue was $1.3B (about 10% of Gross Bookings)
Marketplaces eventually become "self-sustaining" once they hit scale!
Craigslist, Amazon, eBay, etc.
17) At the most basic level, why do investors love these four business models?
The four models: SaaS, SaaS + Transactions, Consumer subscriptions, Marketplaces
Because they allow startups to capitalize on the scale-ability and high margins of selling software
The power of software: Instagram sold to Facebook for $1B with only 12 employees
What advantage does this provide the founder?
Founders can keep fixed costs relatively similar while growing revenue rapidly due to simple and scaleable business models
Which means they can pour the profits back into building their business
Business models of Jason's outlier success:
Calm (Consumer subscription), Uber (Marketplace), Superhuman (SaaS), Thumbtack (Marketplace), Grin (SaaS), LeadIQ (SaaS), Fitbod (Consumer subscription)
18) Which business models do most venture capitalists stay away from?
Typically these are not "venture scale" businesses, meaning they can't get to $100M in revenue in under 10 years
Direct to Consumer or anything CPG (Consumer Packaged Goods)
Lower margins and scales slower than software
For DTC, you need at least one of these differentiators:
1) Elite product/brand (Ex: Eight Sleep, Warby Parker, Dollar Shave Club, Away Luggage)
2) Elite acquisition strategy (Mastery of TikTok/Instagram/Facebook advertising, or organic)
Hardware
Famous saying: "Hardware is hard"
Historically low margin, and scales much slower than software
Race to the bottom
Pro tip: If your hardware item has a software component, you can sell HaaS, or Hardware-as-a-Service, which is much more appetizing to investors
Ex: Density, Cafe X
Advertising
Making money through ads on your platform
This business model only works if you hit massive scale, which is why investors are typically skeptical
Example: Google, Facebook, Amazon, Yelp, Twitter, Snapchat
Advertising budgets are also dependent on the economy, as major advertisers cut their ad budgets FIRST after there is a down turn
Service-based
Not venture scale, usually bad businesses for everyone except the founder
19) How soon do you need to identify a business model after starting your company?
Most great companies know how they will make money from the start
However, your business model can change as new opportunities appear. Some of the greatest modern tech companies have changed their business model.
Example: Netflix
Netflix had TWO business model changes
First, they went from mailing physical DVDs for a monthly fee to selling streaming software (their margins and user base increased dramatically)
Second, Netflix used to "rent and distribute" 100% of their digital content when their streaming platform first launched
They would sign deals with companies that owned the rights to content and pay to list that content on Netflix
In January 2013, Netflix CEO Reed Hastings released a memo to employees and investors announcing a commitment to producing original content
From the memo: "We don’t and can’t compete on breadth with Comcast, Sky, Amazon, Apple, Microsoft, Sony, or Google. For us to be hugely successful we have to be a focused passion brand. Starbucks, not 7-Eleven. Southwest, not United. HBO, not Dish."
Netflix's first piece of original content, House of Cards, launched one month later in February 2013
In Q1 2013 (the same quarter that Hastings released his memo) Netflix had $1B in revenue and only $3M in net income
Eight years and three months later, in Q2 2021 (their most recent quarter) Netflix had $7.3B in revenue and $1.3B in net income
So in the 8 years since Hastings letter, Netflix has ~7x'ed their revenue and grown their profit ~433x, largely due to their focus on producing original content!
20) Pricing: How much should you charge?
Charge too little and people don't think your product is good enough to buy
Charge too little and you don't cover expenses
Charge too much and people won't give it a shot
Charge too much and potential customers might get "sticker shock" - which is why some SaaS companies don't list their prices publicly
Compare to competition
What are similar startups charging?
How do you compare? Are you the affordable solution, or are you the premium offering?
Know your metrics
At what number of customers and what price can you be profitable at your current burn rate?
If you need 500 customers at $20/month to be breakeven, that seems very doable!
If you need 3000 customers are $100/month, that might be a little harder, and you might want to lower your burn rate
21) Do you know who you're building for?
How can a founder distinguish their "ideal" users vs their "first" users
First users: could be your friend from college, a neighbor, your grandma, etc.
Ideal users: who your product ultimately solves the problem for, and who is willing to use it the most OR pay you the most money
Here is an easy trick to identify early potential ideal customers:
Segment your users into cohorts based on an engagement metric like time on site, rides taken (Uber), workouts registered (Peloton), etc.
Focus on the top 10% of engaged users
Ask yourself:
What do these users look like?
What are their occupations?
Where are they located?
Why are they engaging with my product?
How much time are they spending on the platform?
Use this info to create a blueprint for a potential customer
Ex: Small business that needs help with web design, but doesn't need to hire a full time software engineer
This example would be a blueprint for an ideal customer of a marketplace of freelancers
Remember: Winning founders understand their customers deeply
Superhuman has an innovative approach to focusing only on potential customers that fit their ICP:
CEO Rahul Vohra only on-boards email "power users" due to his product's relatively high price point (~$360/year for an email client)
Rahul knows if he onboards a customer who is not the right fit, that customer will likely have a bad experience, churn quickly, and the entire cycle of acquiring that customer will be a waste of time
Superhuman actually REJECTS potential customers if they are not a good fit
Instead, Rahul chooses to only spend time onboarding and acquiring customers they know will love and utilize their product
22) Can you explain your startup in one simple sentence?
Call this "Jason's OSS Rule" - One Simple Sentence
Any great company can explain what they do in one simple sentence
At its core - what does your company do?
No buzz words; just a clean, clear, and crisp sentence that anyone could understand
Investors see convoluted, buzz word-y company descriptions often
Here are some examples with popular companies:
Slack example:
Bad job: "We're a future of work startup leveraging software and integrations to improve workplace communications for the long-term."
Good job: "We sell chat software to startups."
Coinbase example:
Bad job: "We're leveraging the blockchain and decentralized technologies to allow any investor to get exposure into the world of cryptocurrency."
Good job: "We help people invest in crypto."
Uber example:
Bad job: "We use AI and machine learning to connect riders and drivers, disrupting the worlds of transportation and mobility as we know it."
Good job: "We help you get rides faster and cheaper."
Something to keep in mind: Does all your branding align with your simple sentence?
Is the messaging consistent across your website, Twitter, TikTok, etc.?
Can every employee explain what you do in one simple sentence?
Does your sales team speak clearly?
Remember: Winning founders can explain their product simply
Einstein famously said: "Everything should be made as simple as possible, but not simpler"
Winning founders can do this in their explanation as well as with product development
If you can't say what your company does simply, your customers won't understand your value
23) Do you know where to find more customers?
Once you have your first 5 customers, you should immediately look for 10, then 50...
Too often founders find their first group of customers and quit looking
They often get lost building new features or assume the customers will keep coming
Winning founders are obsessed with acquiring new customers
If you found a way to acquire customers that works - keep doing it!
If you find oil, keep digging!
So, how do founders go about finding users?
What are a few customer acquisition strategies in the early days?
Hangout where your users are
If you're selling developer tools to software engineers on a bottom-up basis...
Post on hacker news and subreddits to try and get early users and feedback
Attend live events (like meetups) and talk to the users themselves
Build in public
Create a sense of community around your product
Being open and transparent on Twitter is becoming more popular
It is a great way to find users with word of mouth
You can also build publicly on Indie Hackers and engage that community
Leveraging your network
Are you solving a problem that your network suffers from?
Do you have ideal customers you can easily reach out to?
Alex Tew, co-founder Calm used a strategy to attract users by building an interesting viral site called - and it's still live today!
The virality of the non-product drives traffic back to the product
He did this with Calm by creating a simple website that asked if you could sit still for 2 minutes
If you moved the mouse or touched keyboard it would say "Fail"
People shared their scores, and he collected ~100k emails of engaged users (in a few days) before ever launching Calm
There is also the waitlist strategy
Obviously, you need serious demand in order to create a waitlist in the first place
Companies like Superhuman have perfected the waitlist
You should create a waitlist if:
You want to gauge the level of interest
You want to limit the amount of customers you're on boarding
You want to build up hype and demand for your product
Once you have a few hundred users on the waitlist, you can utilize growth hacks like:
Enticing users to move up the waitlist by referring other people to sign up, which creates a virtuous cycle
24) Do you have founder-product fit?
Ask yourself "Are you using your own product?"
Are your employees using your product?
Do you truly understand the problem you are solving for the end user?
There are several benefits to "eating your own dog food"
1. You can quickly help your team find bugs before impacting customers
2. It strengthens your relationship with the customer
Everyone at your company understands the customer experience
You'll build credibility by knowing all the work flows and pain points
3. It keeps your company on the same page
Engineering gets to hear feedback from users (even if they are internal)
Marketing knows how the product works to better strengthen campaigns
Sales better understands the problems the product solves when talking to customers
Executives stay involved in the day to day functionality of the product
Fitbod is a great example of this:
Fitbod's co-founders Allen and Jesse originally built their product for themselves
Or, in other words, they were their own ideal customers
In this case: hardcore fitness enthusiasts with disposable income that wanted a data-driven approach to exercise
Do you know your one key feature and how that feature is being used?
What is the main way that you use your own product?
Fitbod's key feature was their workout recommendation engine
This was a machine learning model that would put together your next workout
It was based on your preferences, past workout fatigue, available equipment, and more
When you know who your ideal customer is, what your key feature is, and you use the product yourself regularly
You can build marketing campaigns and sales strategies around these markers
25) Do you know how people are using your product?
We've established that you and your employees are using your product...
But are your customers using it in the same way?
This goes back to the first point today - do you know who you are building for?
Remember, winning founders understand their customers deeply
Are the features you think are most important the same ones that your customers think are most important?
STEEZY uses their customer support tickets to inform their product roadmap
Are customers having to work around clunky UI/UX that is making their lives harder in your app?
If you are dog-fooding your own app you'll identify issues sooner and prioritize a fix
Being able to proactively tell a customer something like:
"In our latest release, you can now save your most common view - you don't have to click this sequence of buttons anymore - it should save you 5 minutes every time you log in"
This builds trust that you understand their problem and your own product
And solving a problem your customer may or may not have known they had goes a long way
Look at the data whenever possible to understand your customers
Understand who logs in and when
What pages are they on longest?
What actions are they taking?
Where do they get stuck or lost and log out?
Study patterns across users
Grouping your users into cohorts to track trends is helpful
You can segment users based on when they signed up, the industry they are in, or any way that might be valuable to slice your user base for insights
Quantitative data like this is extremely valuable
But so is qualitative data... which leads us to:
26) Do you know how to conduct customer interviews?
Are you talking to your customers regularly?
Are you solving their problem?
Winning founders solve big problems for their customers
Use every interaction with your customers as a way to gather this data
You do not need to provide a formal "interview" to gain valuable insights
A simple email to check in and see if they have any needs, thoughts, or questions can provide a lot of great information
When you release a new feature let your customers know about it and be excited FOR THEM...
"I think you'll love this new feature, it is going to make your life easier by doing XYZ - would love to know what you think! What did we miss, what works for you?"
You'll quickly get feedback without people even feeling the need to commit to an interview
Building relationships and checking in with customers before you "need" anything also builds good faith and confidence
Offering additional value and
Providing great customer experience by being available is a way to stand out from competitors
And when you want to conduct interviews, people are more willing to participate if you have a relationship
So, how to find the right customers to interview?
Use the segmented customer engagement data we talked about before
Take the different cohorts and select a random sample of customers
This should range from your most engaged cohort to your least engaged
Reach out via email or phone
If necessary, offer them a gift card, or something relatively meaningful for their time
You want to hear from a wide variety of users
But make sure to weigh your "super users" input more heavily
What kind of questions should you ask?
Sample questions:
What do you think about the product?
What would you change about it?
What does our product allow you to do that you couldn't before?
How would you feel if you couldn't use our product anymore?
What should we stop doing?
Would you recommend our product to a friend or colleague?
Have you? Why or why not?
Listen to their answers and ask follow up questions that keep them talking
"Can you say more about that..."
"Can you explain what you mean by that..."
"Would you elaborate on why..."
Do not interrupt your customer's feedback!
You can also conduct listening labs
Where you have the customer test out the app and think out loud while they explore
You can ask them questions like
"What are you looking for..."
"Did that do what you expected it to do when you clicked on it... why?"
"What do you need to do next..."
You can also take interviews in another direction and create a Net Promoter Score survey...
27) Do you understand Net Promoter Score?
Net Promoter Score (NPS) is a way to measure customer experience
Winning founders are obsessed with metrics
Measuring, tracking, and making decisions based on data is important
Instead of the open ended discussion questions you can ask users to answer on a scale
This makes it easier to compare answers and group results
Customers rate their experience with your company on a scale from 1-10
Something like, on a scale of 1-10 how likely are you to recommend our product...
Here is how it's explained at
Promoters (score 9-10)
They are loyal enthusiasts who will keep buying and refer others, fueling growth
Passives (score 7-8)
They are satisfied but unenthusiastic customers who are vulnerable to competitive offerings
Detractors (score 0-6)
They are unhappy customers who can damage your brand and impede growth through negative word-of-mouth
You find your NPS score by taking your percentage of promoters minus your percentage of detractors
This means your NPS score can range from -100 to 100
You can use NPS results to anticipate churn or drive customer outreaching
NPS for major brands (via ):
Apple: 47
Facebook: -21
Starbucks: 77
Delighting customers is the ultimate goal
You need to be able discover answers to questions like:
What problem are you solving for them?
Do they feel you are solving it adequately?
What sets your product apart?
Which features do they love?
Which do they want removed?
Do you make their job or life easier, faster, or better?
Why do they use your product?
What do they wish was better?
Do the customers recommend your product to others?
Why or why not?
A savvy way to increase NPS through a growth hack is with referral programs
Robinhood had one of the best referral programs ever
You might know it as the "Free stock" program
Every time you'd refer a user to sign up, both you and the new user would get a free stock on the platform!
This created a huge surge of sign ups in the early days
No other brokerage had ever done anything like that before
Delighting customers is a vital part of the Startup Flywheel
Collecting customer feedback is a great way to gauge how you are doing
28) Should you start with a free or paid product?
This is a very common question
And it depends on your business model
Are you going to be a free app that generates all your revenue via ads?
Think, Google, Facebook, etc
Are you SaaS, consumer, or a marketing place that needs people to pay you to survive?
It also depends on how much runway you have from the start
It is best to turn on revenue as soon as possible
Is growing customer base or growing revenue more important?
Ideally you're growing both!
Free users, without skin in the game often provide high frequency, low value feedback
Free users speak with their words and their engagement
Customers who are paying, have skin in the game and are invested in your product
Customers speak with their words, wallets, and engagement
What signals should you look for that tell you it's the right time to turn on revenue?
You've figured out the pain point your company solves
And are seeing early signs of product-market fit
You've run successful free or paid pilots with happy users
During customer interviews they indicate that they would pay to continue using your product
You have a waitlist that includes a price users will pay for your product
How do you shift from a free to a paid product?
There are ways to roll this out
You could offer a freemium version of your product
Allow the free users to have access to part of your product
If they want full access they'll can start paying
You can offer early users a discount to continue using your product
You could grandfather legacy users in at an original price point
You can just flip the switch, turn on paid and know that you might have a high churn month but you've identified your ideal customers as those who stuck around
Anytime you have free users you should work on ways to convert them to a paid plan
Let them know what they are missing, and how it would be better if they paid a monthly fee
29) Do you understand the technology adoption curve
There are 5 stages to think about in technology adoption
Innovators, early adopters, early majority, late majority, laggards
tech_adoption.png
Anytime you are creating new technology you need to win over all five of the individuals
The technology adoption curve was introduced by E.M. Rogers in 1962
And made popular in the book Crossing the Chasm by Geoffrey Moore
Innovators
They take risks with new technology
Typically support a transformation within the company around new tools
Early Adopters
Look to understand the technology fully before the support it vocally
They like to be at the forefront but care about their reputation
This is typically your group of beta testers
Early Majority
This group makes decisions based on data
They support technology but want to see the proof first
Late Majority
Require even more proof than the early majority
Don't like risk and not that interested in change
Laggards
Skeptical of new technology
Give up when a new tool doesn't work and revert to their old way of doing it
Identify the innovators and early adaptors and market accordingly to those users!
30) When should you fire a customer?
Do you know when to cut bait with disengaged users?
Can your ideal customer shift as your product evolves?
These users are giving you bad data also - if they're disengaged, you should NOT be building your product for them
Should change your product to increase engagement?
Are you prepared to tell paying customers, we're not for you?
How do you manage the current relationships as you shift?
How do you communicate that you are firing a customer?
Is it better to fire them?
Or let them continue using your product - knowing they might become upset and churn anyway?
Remember, the people paying the least money are usually the most needy and have the most complaints
Remember the Superhuman example we covered earlier:
Superhuman actually "fires" potential customers during the on-boarding process!
Meaning, if a user doesn't fit the specific qualities of an ideal user, they won't even bring them on as a customer in the first place
Superhuman is able to preemptively "fire" their customer because they understand their ideal customer profile SO deeply
Episode 4 -
31) Do you know what problem(s) your product solves?
The answer to this question can guide your product roadmap
Another way to phrase this is "Why does your product exist?"
Examples:
Superhuman exists to make email faster
Uber exists to connects riders with drivers for faster and cheaper rides
Shopify exists to make entrepreneurship easy on the Internet
How important is that problem to your customers?
How are they currently solving it?
Ex: Gmail? Yellow cabs? Excel?
How is your solution better than the current solution?
When building a technology company, the answer should always be some combination of faster, cheaper and better
Uber helps people get rides faster and cheaper (which is better!)
Superhuman makes email faster and better (but not cheaper)
Remember: Winning founders know this is a race for credibility - do you deliver what you say you will?
32) Can you build an MVP?
MVP stands for minimum viable product
An MVP is the most basic version of a product that you can launch
Don't be precious about your MVP
Remember what friend of the podcast Reid Hoffman says: "If you're not embarrassed by the first version of your product, you've launched too late"
Some things to keep in mind before building your MVP:
Are you a builder?
Can you code?
If not, are you familiar with Bubble, Webflow or other tools?
Do you have UI/UX experience?
If not, do you KNOW what good user experience is?
Do you have a growth/sales background?
If not, do you know how to build a growth model
Do you know how to create a go-to market plan?
How minimum is minimum?
You need be able to solve a customer's problem
How viable is viable?
Will customers actually pay you for it?
Is a landing page enough?
It depends on how complex the problem you're solving is
I've seen people create an MVP with a landing page and typeform
But you will want more functionality in most cases to see real traction
How far can no-code take you? If you can get to an MVP using no-code, that means you can get traction
And if you can get traction, that means you can get meetings with investors
33) Is your product simple to use?
Can a user quickly understand how to navigate and use your product?
Does your product highlight your main feature?
You want your product to be incredibly simple from the home screen
Don't make it difficult for users to navigate your product, that could result in more churn!
Calm
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Zero Fasting
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You should make it incredibly easy and delightful to be a user of your product
Again, the harder your product is to use the less likely a customer is to use it
34) Does your product have world-class design?
Achieving "world-class design" may sound like a high bar, but it's more doable now than ever before
No-code / low-code platforms like Bubble, Webflow, and Squarespace all have great templates that you can use as a starting point
There are also sites like where product designers share their work
You can draw inspiration from any of these places
There are some web 1.0 companies that have had mediocre design grandfathered in
Example: Craigslist, Amazon
These platforms have hit such massive scale that they can't really change anything on the UI side
If Amazon overhauled their e-commerce interface, they would get millions of complaints in minutes
But, first impressions still play an important role
Also, users are savvier than ever and will pick up on janky design instantly
If the product is clunky, slow, and hard to navigate you'll have trouble getting users to engage
Think of how simple and easy it is to use your favorite products
Robinhood used a great interface and no-fee trading to upend the entire stock brokerage industry
Designer co-founders have a great track record in building massive consumer-facing companies
Examples:
Airbnb (Joe Gebbia) - $100B market cap
Canva (Cameron Adams) - $40B valuation in most recent round
Instagram (Mike Krieger) - Sold to FB for $1B in 2012
Pinterest (Evan Sharp) - $30B market cap currently
YouTube (Chad Hurley) - Sold to Google for $1.6B in 2006
And world-class design doesn't just apply to consumer-facing companies
Remember, Stewart Butterfield (a designer) built Slack and started the "Consumerization of SaaS" movement
35) Does your product have "One Killer Feature"
In other words: the key feature that your product is known for
Examples:
Snapchat's ephemeral messaging and stories
Facebook's news feed
Instagram's filters
Spotify's entire catalogue of music for one low monthly fee
Robinhood's no-fee trading
A major mistake that first-time founders make is focusing on new features over ones that are already working
Remember, new doesn't always equal better
Prioritize perfecting your killer feature before you start expanding your product
Founders get into a mindset that if they add a new feature then traction will improve
No! Identify your key feature - get users, listen to them, delight them
Double down on what is working!
36) Does your product have a "hook"?
Great book on this topic -
Nir describes the product hook cycle in four stages:
Trigger
Something that gets a user to take the first action
What makes you open an app in the first place?
On his website, Nir Eyal uses the example of a user getting "hooked" into browsing on Pinterest
In this scenario, the trigger would be a link back to Pinterest on another social media site like Facebook or Instagram
Action
User takes an action that will eventually get them a reward
For example, click the link, open the app, register for the product, etc
It is key to have as little friction as possible here
In the Pinterest example, the link to the Pinterest app for a product they are interested in
Variable reward
Key word here is "variable" - so user does not lose interest
Users are forming a habit and if they always know the reward, then they will get bored
In the Pinterest example, the user is "rewarded" by similar images and products to the item that brought them over, and now they can discover new products
Investment
Requires the user to contribute back into the product
Part of what makes IKEA so successful is that the user feels pride in what they built
Finishing the Pinterest example, the user "pins" items that interest them, which gives Pinterest better data on what to show
Fitbod example from LAUNCH's portfolio:
Co-Founder and Head of Growth Jesse Venticinque described his products "hook" on
Here is Fitbod's product hook cycle:
Fitbod's Trigger: User has a psychological need to know how to exercise effectively, and Fitbod automatically generates a new workout for users
Fitbod's Action: User launches Fitbod to start their workout
Fitbod's Reward: Fitbod sets incremental and achievable goals that leave users feeling achieved after a workout
Fitbod's Investment: Users spend time entering data on Fitbod for better personalization
More data improves Fitbod's workout recommendation engine
Which then increases switching costs and reduces potential churn
After your workout ends, Fitbod immediately generates your next workout, which restarts the cycle (that's the "hook"!)
37) Do you have a viral loop?
You can also think of this as: is one user incentivized to create more users?
Remember, on episode three we talked about Robinhood's free stock referral program
If you invited a user to sign up you get a free stock and they get a free stock
The trigger and action are clear
The reward is variable - you don't know what stock you'll get... could be Apple, could be a penny stock
Here is why this was the best viral loop of all time
Via Robinhood's S-1:
Over 50% of users are first-time investors
So over half of Robinhood's 17.7M MAUs (at the time of their IPO earlier this year) were first-time investors
Ask yourself: What would be the hardest part about getting a first-time retail investor engaged in your brokerage?
Likely answer: Linking a bank account, depositing funds, and actually making their first investment
So to fix this, Robinhood said "Here's a free stock" now YOU have skin in the game and are instantly engaged!
And the results of the free stock referral were staggering:
Via their S-1, over 80% of users were acquired organically or referred
Can you leverage your product to create a viral loop as great as Robinhood's?
Dropbox did it with free storage: Dropbox Basic users got 500MB of extra storage for every user they referred, up to 16GB!
The app "Words with Friends" is another example:
A user can easily challenge a friend to play Scrabble
If that user doesn't have the app, WWF generates a download link to send them
Now that they are in they can invite their friends to the platform
38) Do you have a strategy to retain users?
User retention is a big topic, let's start with a simple example:
LinkedIn has an amazing user retention strategy
After you have gone a few days without opening the app, they will send you an email reminder to log back in
This is NOT a non-personalized, generic, "we miss you" email
They actually say "80 people are viewing your profile" to pique your interest
Then, when you go to the site, they let you know who was viewing your profile
Twitter does something similar
If you don't log in for a few days, you'll get a push notification:
Don't miss tweets from *your most engaged with accounts*
So if Twitter knows Jason engages with Knicks and VC content the most, they'll say "Bill Gurley and Knicks Film School are tweeting - don't miss it!"
These are all in-app ways to retain users, BUT customer success teams are becoming more popular as well
We'll touch on this more on a future episode called "Building Your Team"
Many people like a human touch
39) Do you know which product-focused metrics to track?
Remember - these metrics are "product-specific" so we're not going to include burn rate, runway, etc this time. We'll cover those on a future episode!
So here are the four product-focused metrics that matter:
1) Active User Growth
If your product is providing value, you're going to start growing users quickly
Are you tracking your daily, weekly, and monthly active users?
DAU - Daily Active User
WAU - Weekly Active User
MAU - Monthly Active User
Can you define an active user?
Remember, sometimes founders can get cute with how they qualify an active user
Nextdoor disclosed in their SPAC investor presentation that they count anyone who opens an email as a daily/weekly/monthly active user
This is not good hygiene - an active user is someone who opens your app and uses it
Founders should model their reporting after Twitter - who only reports on "Monetizable Active Users" - if a user can't be monetized (by being shown ads), they will NOT count them
Measuring and growing active users is crucial for startup success
2) Revenue (or MRR/ARR if you're selling software on a subscription basis)
If you're growing users and you have revenue turned on, you should also be growing revenue!
MRR = Monthly Recurring Revenue
ARR = Annual Recurring Revenue (MRR x 12)
Note - Founders can get a little cute with ARR sometimes, espe