Punchline: The need to grow companies quickly means founders sometimes prioritise acquiring anyone who likes their product instead of people who love it. They fall for the ‘like mirage’ which is often terminal.
Love is all you need
Love is all you need is the title of a recent episode of the Masters Of Scale podcast (highly recommended).
Sam Altman from Y Combinator, the world’s most successful incubator for technology startups, is renowned for backing companies with small groups of fanatic customers or users very early in their business lifecycle.
They talked about the difference and effects that come from people liking a product or service versus those who love it.
I was literally stopped in my tracks during an early morning run while listening to this episode.
I realised hadn’t been obeying a cardinal rule in entrepreneurship: Love always trumps like.
The ‘like’ mirage
Let’s be clear on what ‘like’ means. It’s a signal of interest and it may even provide a clue of future intent to commit or buy.
But it’s transactional and often a fleeting reaction to stimulus.
Think about the last time you clicked on a headline or pressed the heart below a picture on Instagram.
Marketers will argue that although fleeting, these interactions build awareness.
They’re right. You need to be interested before you buy.
And while converting interest into revenue is the main game, founders must first grow to show momentum.
This means getting people to like and then use their product. And usually, any user will do.
Herein lies the beginning of the ‘like’ mirage.
First-time founders often believe that once they have the interest they can work on generating revenue.
Without giving too much thought to the conversion experience and how difficult it is or how long it takes to get right or at what point they should start actively converting interest into revenue, founders can get hooked on spinning likes (or an equivalent) as the main measure of momentum.
And by ‘spinning likes’ I mean trying to use any vanity metric to show growth.
While most companies eventually work out how to convert interest into revenue, many leave it far too long due to an obsession with the like mirage.
The companies who don’t run out of cash spend much of their time trying to increase the conversation of people who they think are interested in paying.
But why aren’t we growing faster?
Increasing the number of people who like your product and increasing the conversion rate of people who pay is a journey.
At the end of the day, and if you’re experiment and data-driven, this approach will help unveil ways to increase conversions and revenue.
It takes time and it will deliver some growth but I bet there are many founders who are baffled by why growth isn’t happening faster.
I’ll bet they’re also wondering why their company hasn’t yet benefited from the features they built into their products that were designed to create network effects among their users.
Leaving aside big shifts in demand that can come from wholesale industry changes, I think this lack of expected growth comes from thinking two things.
First, that optimising the sales funnel is the entire game i.e. finding more people who like the product and converting them into customers.
It’s not, it’s 60% at best.
And second, that those people who ‘like’ your product will somehow magically turn into fanatical lovers.
Look for love
The stress that comes with the realisation that growing the number of people who ‘like’ your product isn’t translating into revenue is intense.
And this frustration can lead founders to ignore or place little value on the fanatical lovers.
And why care about this subset of users?
Because they are the ones most likely to share your story and lead two other people to your product!
Here’s how I look at this opportunity and it starts with understanding what makes someone a fanatical lover of what you do.
Step 1: Get to know your top 10% most active users
Fight to understand the facts. And this is important. Don’t hypothesise why they act or who they are. That will come later.
Instead understand when they signed up, how often they use your product, what happens when they do, when they last used it and for how long. Look for time of day/week/month trends.
This isn’t an exhaustive list but it’s a good start.
Step 2: Add demographics and social cues
If you don’t capture basic demographics like age and sex, but you have a clue about their name through their email address, look for ways to find them online and then add these details to their profiles.
It’s a bonus if you can find social cues for your product. In other words, look for mentions of your product (by name or hashtag) on social media.
I also include any verbatim feedback from the 10% most active people, it adds colour to the numbers.
Remember this is for 100 people if you have 1000 using your product.
Step 3: Do these lovers match your target user and customer?
I wish I had a dollar for every time a founder discovered that their target user or customer was vastly different to those who actually use their product.
Undertake this step and let me know how you go.
Prediction: You’ll be surprised and it will inspire a pivot or new product idea.
Step 4: Contact them and ask one simple question.
What is the one thing we could do to make [Product Name] awesome?
The insight from these four steps are the ingredients to create an experience for people who are naturally inclined to introduce two new people to your product.
What’s not to love? :)
Two last things…
Fanatical lovers that fall exclusively into one group can be a red herring for founders.
Reid Hoffman the host of the Master’s of Scale podcast provides an interesting example about how at one point in LinkedIn’s journey there was a growing group of people who believed it was OK to connect with everyone on the platform.
These people, known as LinkedIn Open Networkers, believed that everyone would want to connect with them.
LinkedIn moved passed this by looking into multiple groups of people who loved the platform.
Follow LinkedIn’s lead if you find your fanatical lovers are all saying the same thing. Love don’t come that easy!
The second thing to note here is that if you don’t provide your fanatical lovers with easy ways to share their experience, get rewarded for bringing people to your product or in any way make it difficult to share their love, you can kiss them goodbye.
Don’t fall for the ‘like mirage’.
Get up close and personal (pun intended) with fanatical lovers of your product.
And make it simple for them to share the love.
What did I miss?