Over the past few days I’ve been thinking through what makes a successful product.
And I wanted to distill it down to the single most important factor (in my opinion).
Yes, I know that there’ll be a number of things playing off one another, such as: market, timing, luck, team, user acquisition, quality, platform, and so on. But, if we were to really focus on the one element that makes up the lions share. The one element that founders consistently forecast incorrectly. The one element that can mean the difference between success and failure.
I’d say user acquisition.
Where do all those VC dollars typically go?
User acquisition and hiring.
There’s a reason Google and Facebook are two of the largest companies in the world. They earn 90%+ of their revenues from advertising.
Acquisition spend brings people to your product. This in turn generates feedback loops. And those feedback loops, if acted upon correctly, dictate how your product grows, changes and evolves.
By focusing on the right aspects of user acquisition, and thinking about it strategically, you get your jump start – you get the data. You get the visibility. This in turn will bring you something to show to investors.
“I put in x, and I got out y. This is why we need your investment to help refine and prove z”.
You continue to refine, and improve. Showing incremental improvements. This allows you to raise more cash, and get ever closer to that holy grail of actual positive unit economics: CAC <= LTV.
A short post for today, and there’s so many things that I wanted to elaborate upon – for example, acquisition arbitrage. There’s a reason that Instagram and Youtube influencers blew up over the past couple of years – because they had genuine audiences who would go and buy products they recommended. Yet, the influencers didn’t know how to price themselves. So instead of Startup Founder bidding $4 per click on Google or Facebook, he or she could reach out to the influencers and get $0.20 click-throughs.
Do you agree? Let me know on Twitter: @ScottTaylor0