Traction

Traction:  How Any Startup Can Achieve Explosive Customer Growth

Author:  Gabriel Weinberg & Justin Mares

Pages:  203

Date Published:  2015

Preface:  Traction Trumps Everything

Traction is a sign that something is working.  Traction is powerful and frankly, traction trumps everything else.

Two common mistakes founders make:

  1. Failing to have a concrete traction goal to move the needle.
  2. Thinking that just because one traction goal worked at a previous company, its the best traction channel for this company.

The framework that this book shares is called the BULLSEYE, a simple three step process for getting traction.  It works for all startups, big or small, consumer or enterprise focused.

Chapter 1:  Traction Channels

Traction is basically quantitative evidence of customer demand. ~ Naval Ravikant

p.1

A startup is designed to grow fast.  Being newly founded does not in itself make a company a startup.  Nor is it necessary for a startup to work on technology, or take venture funding, or have some sort of “exit”.  The only essential thing is GROWTH. Everything else we associate with startups follows from growth.”

p. 2

Two big themes were uncovered through the research with over 40 founders:

  1. Founders only consider traction channels that they have success with in the past.
  2. Second, its very hard to predict which channel will work!  You have to test a lot to find one that works.

Chapter 2:  Traction Thinking

The 50 Percent Rule

Traction and Product are of EQUAL importance.  Ideally you should spend 50 percent of your time on each.  Testing traction at the same time as your product helps you 1) build the RIGHT product, 2) experiment and test traction differences before you launch.

The number one reason we pass on entrepreneurs we’d otherwise like to back is they’re focusing on product to the exclusion of everything else.  Many entrepreneurs who build great products simply don’t have a good distribution strategy.  Even worse, is when they insist that they don’t need one, or call their no distribution strategy a “viral marketing strategy.” ~ Marc Andreessen

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Moving the Needle

You need to set traction goals.  Enough to actually help you achieve your GROWTH and REVENUE goals.

In the early stages of your business when you’re still working on Product/Market Fit, your traction goals will not likely be scalable.  In other words, you will do WHATEVER you have to do to get in front of customers.   But, through the next evolutionary steps, you will have to migrate to scalable growth channels.

How Much Traction is Enough For Investors

How much do you need?  The definition keeps changing.  But, when it comes to investors and investments, remember, TRACTION trumps everything else.

The better your perspective investors understand what you’re doing, the less traction they will need to see before they invest because they are more likely to extrapolate your little traction and believe it could grow into something big.

p. 15

To Pivot or Not to Pivot

The author suggests that founders give up on things too easily and quickly.  And, he also suggests that entrepreneurs should consider every startup a 10 year project.  And, to make sure that they are entirely passionate about it before they dive in.

Before you pivot:

  1. Is there evidence of real product engagement if only even a few dedicated customers.
  2. Perhaps you’re too early to the market?  If so, how much too early?  Will the customers become ready soon?

Targets

  1. Put half your efforts into traction.
  2. Set your growth goals!
  3. Learn what growth numbers investors respect (optional if seeking investment).
  4. Find your bright spots.  Customers who are truly engaged.

Chapter 3:  Bullseye

The bullseye model is used to figure out which of all the growth strategies will work for your business.

“If you can get even a SINGLE channel to work, you have a great business.  If you try for several but don’t nail one, you’re finished.  So, it’s worth thinking really hard about finding the single best distribution channel.” ~ Peter Thiel

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The Outer Ring:  What’s Possible

In this step, you list every channel that is possible!  Don’t worry at this point what is going to work or not, just list all the viable channel solutions.

The Middle Ring:  Whats PROBABLE

Run tests!  Test all the possible ones to see which ones appear to work the best.

  1. How much will it cost to acquire customers in this channel?
  2. How many customers are available through this channel?
  3. Are the customers you’re getting through this channel the RIGHT customers?

The Inner Right:  What’s Working

Focus on the very few channels that are working.  One of the most common ways to mess this step up is to get RID of the channels that are NOT working.

Note:  Often you will find that channels interconnect.  For instance, SEO depends on PR to work.  But, SEO is the dominant strategy.

Why Use Bullseye?

It forces you to take all the channels seriously and methodically hone in on what works.   You don’t know what will work until you test.

Comparison to Lean

Bullseye works hand in hand with LEAN.

The Lean framework deals a LOT with the Problem, Solution and MVP “Build, Measure, Learn Loop”.  But, the LEAN framework doesn’t focus on GROWTH.

Traction, on the other hand, focuses on GROWTH and how to test those hypotheses.

Chapter 4:  Traction Testing

Continuous testing is the only strategy that will help you find the best growth channels.

Middle Ring Tests

Three questions you should ask when testing:

  1. How MUCH does it cost to acquire each customer through this channel?
  2. How MANY customers are available through this channel strategy?
  3. Are the CUSTOMERS you are getting through this channel the ones you want?

Inner Ring Tests

These tests do two things, 1) Optimize chosen strategies & Uncover better strategies.  This will be a never ending process because eventually all channels will lose their efficacy.

Online Tools

Organizing and executing tests should be done with some structure.  Tools can be as simple as Google Sheets or as complex as a growth analytics tool.  You need a way to measure and determine the success of each to be effective.

Targets

  1. Look for customers where others are NOT
  2. Constantly optimize!  Channels will loose their efficacy.
  3. Keep it numerical!  Quantify as much as you can.

Chapter 5:  Critical Path

Always have an explicit traction goal that you’re working towards.  As they say, “Traction Trumps Everything.”

“The importance of choosing the right traction channel cannot be overstated.  Are you going for growth or profitability, or something in between?  If you need to raise money in X months, what traction do you need to show to do so?  These are the types of questions that help you determine the right traction goal.”

p. 36

Defining your Critical Path

This is one of the areas that founders usually make mistakes.  Spending too much time focusing on things that are off the critical path to features, goals, hires, etc.

Overcoming Traction Biases

Use the bullseye model to avoid making bias mistakes and missing a growth channel that might be great for your business and ones you otherwise might pass on.

Chapter 6:  Targeting Blogs

Big idea:  Not all growth channels are infinitely scalable.  Some have limits and thats okay, but you should understand the limits of each.  Targeting blogs are a good example of a first traction channel but one that doesn’t scale.  This channel simply targets blogs that prospective customers (your customer segment) read and publishing articles of interest there.

Chapter 7:  Publicity

This is Public Relations which represents all a companies public messaging.

“Most sites make their money from advertisements, so they want to drive as many page views as possible.  If you have a fascinating story with broad appeal, media outlets now want to hear from you because you will drive visits and make them more money.”

p. 49

The best way to get traction early on?  Start small and work your way up the PR food chain.

Chapter 8:  Unconventional PR

There are two categories of unconventional public relation types of activities.  1) Publicity stunts, outlandish activities designed to get press attention and viral sharing and 2) Customer Appreciation, smaller scalable actions.

Chapter 9:  Search Engine Marketing (SEM)

This is placing advertisements on search engines like Google where marketers spend over $100M per day.  You buy ads for key word searches.  This is a must read chapter for everyone using Google Adwords.

Some Key Terms To Remember:

  • CTR – Click Through Rate or the % of ad impressions that result in clicks to your site.
  • CPC – Cost per Click or the amount it costs to buy a click on the advertisement.
  • CPA – Cost per Acquisition is the measure of how much it costs to acquire a customer, not just a click.

SEM Strategy

“The basic SEM process is to find high-potential keywords, group them into ad groups, and then test different ad copy and landing pages within each ad group.”

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Chapter 10:  Social & Display Ads