January 3, 2013 in Champions of Understanding
In today’s edition of his oft-controversial newsletter, entrepreneur Jason Calacanis talks about the 8 reasons companies are not getting Series A funding. He has some good points about branding and budget, but i’d argue this point is the most important to note:
“c) You lack product traction
The demo day ‘pump and dump’ big metric push, where startups would buy traffic to build a hockey stick-ish chart, is coming to a close. What you want in the startup space, and on any good fire, is a solid and small base of kindling. Get a core group of users who love your product.” [Tweet this]
This is exactly what our CEO said at UserConf 2012: the old “growth” tricks are gone, so you better start focusing on delighting customers. [Tweet this]
It’s not just that you can’t buy traffic anymore. You also can’t break into a crowded space by being the only one with good SEO (everybody does SEO now). You can’t expect people to buy your app just because it exists (the app store is too crowded now). You can’t even count on a huge rush of traffic from Hacker News (there’s tons of content there now, and they’re extremely adept at blocking vote gaming).
So forget the tricks and hacks. You need real users…ones who are passionate and will tell the world. You get these users by actually listening and responding to their requests (without building everything they ask for). You get these users by talking to as many visitors to your site as you can. You get these users by making a better experience.
Invest in making
happy passionate customers and you have a much stronger case for funding. It’s that simple. As Jason says:
“You say ‘Hey Fred Wilson, thanks for taking the meeting. As you can see we have an awesome advisor team, an option to buy a great domain name that you could make happen and a killer new design. Most importantly we did a Google+ Hangout with our top 10 users, and here is a copy of the video. Wait till you hear how excited they are about the product!’
You see what we’re doing? After only doing a, b and c, you’ve moved from ‘Series A roadkill’ to the ‘for consideration’ folder of a VC’s Gmail.”