Rolling Up Hills or Climbing Up Steps
Sometimes startups think of progress as rolling up a hill. You start off with almost nothing: a first iteration with no users and questionable value. But you believe that you’re able to roll up that hill to grow.
Sometimes, depending on what you are building, rolling up a hill cannot work. The hill, metaphorically speaking, is too steep and instead requires discrete steps to climb. Just as in the physical world, after each step you have a little place to rest and build. The steps may lead you to an indirect path, but you’re getting closer to the goal and maybe with less exhaustion than if you had plodded ahead.
To show you what I mean, let's look at examples from the professional social media site, LinkedIn, and the vacation rental site, Airbnb. In 2003, LinkedIn's founders sent the first iteration to 350 of their friends, then followed up with anyone who didn't create a profile and by the time a month had passed, the site had grown to 4,500 users. With additional feature development and investment, things kept going from there until users reached the hundreds of millions. As they grew to scale, they were able to develop business models around premium accounts, advertising, and recruiting.
Airbnb had a harder start but grew past its small 2008 early user base by improving rental conversions with free professionally photographed apartments and also grew users by spamming renters on Craigslist. But these two companies are different in what is needed for them to provide value. For example, even if there is only one member of LinkedIn, it's partially valuable, because visitors can still view user profiles and learn about their careers. In that way, early LinkedIn functioned as a professionally focused version of About.me. And in the early days, you couldn't really do all that much with people in your LinkedIn network.
However, Airbnb had a steeper hill to climb. Its service always needed both sides of the network to work. Simply listing your apartment with professional photos is more of a hassle than a benefit, if no renters ever book nights. While both LinkedIn and Airbnb achieved massive scale in the beginning, from the way they moved forward, I'd say that LinkedIn was able to "climb up steps," but Airbnb decided to (or had to) "roll up a hill." If Airbnb had not had funding, it might not have lasted long enough— or it would have been forced to do things differently. I want to share how you can use the step-climbing concept to survive long enough to make your way forward.
Instead of Airbnb's progression of improved conversions (professional photography) and signups (Craigslist spam), what steps could it have used instead? Here is a hypothetical example of a step. In the early days when there were few people renting the apartments, Airbnb could have tried to use "single-player mode"—a tactic that startup expert Joel Gascoigne and startup entrepreneur Kevin Dewalt have described.
Make something that has value even when there is just one person using it. For LinkedIn, this could have been the online career history. For Airbnb, this could have been a competition to have the coolest apartment listed. Even if no one is renting yet, there's value in pride, a contest, or perhaps interior decorating awards. Activities such as these could have gotten enough people on the network so that later on renting becomes an option.
I want to go a step further and propose a No-Player Mode.
Can your startup be valuable to people even if no one uses it yet? And how can that help you climb up steps? I think I can guess what you're thinking: "What do you mean, 'valuable before anyone uses it?'" Here's what I mean, continuing with the LinkedIn and Airbnb examples.
If LinkedIn's founders were not well connected and didn't have hundreds of friends to spread the service, they could have pulled data from existing career sites to compile a report on current employment. What jobs are growing? What are average salaries? What cities have the most opportunities for designers? No one is using "LinkedIn," and yet they are able to provide value. Similarly for an "Airbnb" with no users, the founders could have looked at data from AsiaXpat, Craigslist, and other apartment listings to come up with advice on what rental prices will do. You may have a sophisticated view of what your startup will do. You may have a grand vision. That's great. But if your startup is unproven and no one knows you exist, you need to consider your tactics.
For startups that require critical mass, how could you step your way to usefulness and an audience? Ride on top of existing groups to either collect input from them or fit right into their behavior, all without requiring them to actively join your startup or current experiment. Instead of trying to get enough people signed up to gain insight from their actions, can you go today to where people are already doing what you want, in some other less elegant way, perhaps on some other network? They are not aware of it, but they may already be educated customers.
For example, here's the Single-Player Mode play using a question and answer (Q&A) network (a difficult service to pull off well). In the beginning when no one has heard of the new Q&A service, go on existing large public networks, such as Twitter, and search for questions being asked. You will find thousands of people asking their followers questions about all sorts of things. This is where your Q&A service starts to selectively answer the questions with good quality responses. You're providing value for people who are not yet your (official) users. You can even provide VIP service to people once they join your service.
For the No-Player Mode twist on this, instead of actively answering existing questions, make the collection of data a first step to climb. What are the most asked types of questions about coffee? About dim sum? About investing? I bet that for any niche you think you’ll build for, there are already a ton of people already doing things together. This is a way to start to provide that value to them. That data can form the first part of your product.
I hope that these tools help you out as you build your startups. Let me know how it goes.
Paul Orlando cofounded and ran Hong Kong's first startup accelerator, AcceleratorHK. He advises startups around the world on lean startup, customer development, and analytics. Paul now lives in California and has a book coming out called Startup Sacrilege, which is written for startups outside of tech hubs.