Andrei was previously the CMO at Viddy, and he was the VP of Marketing at MOG. He was also in charge of customer acquisition at Hulu where he helped them grow to 3 million customers.
→ His previous background as a CMO at Viddy
→ His background as a VP of Marketing at MOG
→ He’s in charge of customer acquisition at Hulu
→ His growth challenges
→ How hard is it to do a user-generated play for a startup
→ The growth lessons that he learned in MOG
→ What was the initial strategy for customer acquisition during the launch of Hulu Plus
→ How startups generally understand how powerful partnerships can be
→ What was the primary customer acquisition channel
→ And a whole lot more
Bronson: Welcome to another episode of Growth Hacker TV. I’m Bronson Taylor and today I have Andre Marinescu with us. Andre, thank you so much for coming on the program.
Andrei: Thanks for having me, Bronson.
Bronson: Absolutely. You’ve done some pretty exciting stuff and I think our audiences in for a treat listening to this interview in case they don’t know of you. Previously, you were the CMO at Vidi, you were the VP of marketing at Mog, and you were in charge of customer acquisition at a little company called Hulu. So you see, you’ve done quite a bit here in the last few years. Let’s just jump right in. You know, each company I just listed is very media oriented with their music or video, but they’re also different. You know, Mog and Hulu really leveraged license media where video was more centered around user generated media. And I want to talk about those differences for a minute, because some people watching this are going to be involved in media. That’s user generated and other is going to be involved in media. That’s a license. So I think you can kind of shed some light on that. What do you need? Growth challenges. Do you face with a license as opposed to user generated, let’s say?
Andrei: Yeah, it’s a good question. So they’re both very different animals. And besides growth challenges, there are some fundamental business differences that that I should touch upon. And I think anybody who’s working in the space probably realizes this already. But with licensed media, obviously the content is not yours, so you’re going to another entity and striking licensing agreements, which means that that can usually take some time. Occasionally it’ll involve some hard nosed business development negotiations. So that’s part of the challenge. Other part of the challenge is obviously you’re paying for that licensing. So traditionally licensed media businesses tend to be relatively low margin. That’s, you know, that affects the future of your business. It affects the multiples that anybody who’s thinking about acquiring a company would deal with that. It also affects you on the marketing side because with limited margins, that constrains what you can do in terms of discounts, marketing programs, so you can pay for customer acquisition costs, etc. Also with licensed content, since you’re not the owner of that content, you have to defer to the rightful owners in terms of what you can actually do from a marketing perspective. And we saw this a lot at Hulu where, you know, with the current TV shows, which is the cornerstone of and is the cornerstone of Hulu’s offering, you ideally want to use the Starz the same way that the studios and the networks that are promoting their shows do, but that can be challenging. So you have to rely on on other approaches to structuring creative. So when you’re talking about display advertising, for instance, or anything visual that represents the content, it can be really tricky. You have to go and get approval from the studios. You can’t come up with your own creative, so it creates create some constraints. But on the other hand, with licensed media, you know, you’re getting a certain quality of the content which is helpful and you know that you’re generally getting new content. So when I was a buyer with music, new music that every Tuesday, right? So by almost by virtue of the structure of the system, you know that you have something that you can reach out to your existing users, to new users to entice them to come in and sample your product, which is the content on the video side with Hulu. Since our focus was on Current TV shows, every week there’d be a new episode, there’d be a new season. So lots of lots of opportunities to engage users via email marketing, via banner campaigns, yes, even CRM and whatnot, because you’re constantly having a stream of of fresh content. So those are some of the some of the key challenges. There’s also something to consider in terms of the user experience, right? So whenever you’re marketing, you have to think about your product. And if you don’t have a great product that’s out, it’s that much harder to get people to come to use your product and even more so to get them to pay for it. So generally for our most software web service businesses, etc., when they talk about product, they’re literally talking about the software. They’re talking about the user experience. In a business like Hulu or Mog, for instance, the product really means both the content and the the the chrome, if you will, around that content. So that gives you kind of twice the challenges but also twice the opportunities to market.
Bronson: Yeah, absolutely. Yeah. I think what you said about the financials kind of rings true to me because a lot of people hear about the Spotify stories, the Pandora stories, you know, that they’re just trying to eke out a margins despite having all this market share. So I totally hear what you’re saying about, you know, when you’re dealing with licensed media, you’re really restrained with, you know, what you can do and what you can’t do. And, you know, all the other stuff you said is awesome as well. And let me ask you a little bit about user generated content. I know you didn’t spend very long at Vidi, but you know the industry’s pretty well anyway, just because of all your experience. You know, some people assume that user generated content is going to be easy to acquire, that people are just dying for a new platform to invest in, you know, to spend hours, you know, generating new content for them. How hard is it really to do a user generated play for a startup?
Andrei: I think it’s it’s probably it may be independent of the actual content aspect, right? So it’s as hard as any other product that you’re trying to put together. If you have a great product that addresses a tangible pain point that a lot of consumers have, you will see that reflected in use and adoption of the product. If your product misses the mark, you will also see that reflected in usage, right? So getting getting users to create content using your tool or your service, certainly challenging. But if you can come up with a right, the right experience, if you can tap into the like, if you you know, a lot of it is luck. A lot of it is preparation, hard work. Mm hmm. But, you know, look, just look at Instagram or Instagram seemingly came out of nowhere. Certainly those guys were very hard at putting together a really compelling product and user experience, and they were in the right place at the right time. As smartphones and smartphone cameras were getting better and better and users were kind of looking to transition away from from the traditional digital digital camera experience. And they seized upon that moment and saw just a tremendous amount of growth, which is still going today, obviously, before them flicker back in, you know, in the mid 2000s, I saw similar experiences. So it’s certainly doable. But again, you need to create a you need to create a really great product.
Bronson: Yeah. So this might answer the next question as well. When you say it comes back to product and you don’t really want to focus on whether it’s user generated or license, it’s just does it feel a need to people actually care about it, you know, the zeitgeist kind of stuff. If you were starting a company tomorrow knowing what you know now, kind of working with a lot of licensing and a little bit of user generated, which space would you rather compete in? Do you have a preference?
Andrei: Can I see above?
Bronson: Yeah, you can. Why is that?
Andrei: Well, I’m being facetious more than anything else. Personally, if I had to pick between the two, I would tend more towards user generated media. And for for what it’s worth, I’m still very bullish on the mobile video space. Right. So whether it’s video or Vine or some other as yet unannounced player in the space, I think that there will be sometime in the next year or so, there probably will be some sort of a shift where consumers will get more comfortable with the notion of shooting video that they share publicly. And users will get more comfortable with creating fun and interesting, compelling and creative content. And there’ll be a riot and a source of application. But just with this medium so challenging because again, you are not in control of your own destiny. And ultimately, you know, every entrepreneur has to think about an exit strategy, whether it’s going public or being acquired by somebody. And in the case of the person, realistically, there aren’t that many companies that really make it to IPO. In the case of the ladder, your business is structured around licensed media. It makes it really hard to sell the company because anybody who interested in acquiring you will most likely have to go back and renegotiate those content licenses. So that makes it makes you much less of an appealing acquisition target. And even if you are acquired at the price that you will, that you will get is probably much lower than you would otherwise.
Bronson: So you also helped, like you said earlier, launch and grow Hulu Plus. And tell me if I’m wrong into a 3 million subscriber business with 500 million in annual revenue, is that right?
Andrei: So when I left after the end of 2012, we were just past 3 million paying subscribers. Those are the publicly released figures and our annual revenue run rate was in the $500 Million range. Now, keep in mind, that’s both subscription and advertising since it was a dual revenue or it is a dual revenue stream service. Yes.
Bronson: What growth lessons that you learned in, let’s say, Mog, did you apply to Hulu Plus? Were there any since or both kind of in license media or was Hulu Plus just a completely new animal for you?
Andrei: There are similarities and differences. So I think the main lessons coming away from Mog, they really didn’t have that much to do with licensed media. It was more just around the fundamentals, which basically include anything around analytics. They involve conversion rate optimization as some people refer to it, basically figuring out your acquisition funnel, making sure that you’re thinking through your landing pages, right, that you’re doing a B testing. Think about the copy and the messaging. That’s I mean, the one biggest similarity in between Hulu is trying to figure out how to get out of your own space, being so familiar with the product and the service and figuring out how to describe it in a really easily understandable fashion to the average consumer, so to speak, who maybe at the time wasn’t familiar or comfortable with the notion of streaming music as opposed to buying music. And in the case of Hulu, also with the notion of an on demand streaming service as opposed to ad hoc downloads like iTunes or even the notion of watching TV shows on outside of the traditional television cable box. And so there are a lot of a lot of those kind of messaging challenges were shared, but also just the fundamental, foundational work that you have to do to, you know, to get things started on on the right foot.
Bronson: Yeah, absolutely. What was your initial strategy for customer acquisition during the launch of Hulu Plus kind of day one, you know, right out of the gate, what was your strategy to to really get user adoption?
Andrei: Yeah, it’s a good question. So. With Hulu, we had a very significant advantage and a benefit, which was that Hulu had started years before I joined as a free to consumer service. Right. So we essentially were moving from a free to consumer to a freemium type of model. And because of Hulu having such a great product, they had huge traction in those early years. So we had the benefit of an install base of 20 to 25 million monthly uniques who are coming to Hulu.com to consume free content. And so that was the first area of focus for us is how do we drive awareness of Hulu Plus to this audience, how do we upsell them into Hulu Plus, make them aware of the incremental benefits which really revolved around getting access to the content on other connected devices besides your computer. So tablets, living room devices, smart TVs, gaming consoles. And the second benefit was also that you would get more content, so you’d get full seasons of certain shows, you’d get some shows that weren’t available at all in a free service, etc.. So that was really the main thrust is with this big of an audience, which essentially you could acquire for free since they’re already on your site. How we how can we do the best job of kind of messaging them about Hulu Plus and doing a nice, nuanced, contextual job of upselling them?
Andrei: Also in the early days, frankly, we didn’t have a lot of comps to go by in terms of understanding what the lifetime value of our customers were, being confident, how long subscribers would stick around. So we, you know, we looked at Netflix, obviously, and some other comms, but nothing was perfect. And so we wanted to be aggressive but also strike a somewhat conservative tone and not go out and spend a lot of money on customer acquisition before we really knew what we could afford. So consequently the focus was on the upsell of the existing users. Kind of a second area of focus and just to take a step back on Hulu Plus started it basically rolled out as a private data for somewhere on the order of six months or so. So it was during that time that we really focused strongly on doing all of the landing page work, conversion funnel optimization work. So we had these users in the beta who we were kind of using as a, as a test case to understand what worked and what didn’t. And then when the service launched publicly, we were obviously continuing to do that, that sort of conversion rate optimization work on the site and looking at funnels or landing pages and messaging. But we also started focusing a lot on partner marketing, so we had a lot of OEM partners. So these are all the folks who are making the electronics that had the Google Plus application on their on their software platforms. And so these were folks, everybody from Roku who makes a streaming media player to the Sonys of the world, the Vizio’s of the world, people who were making gaming consoles, televisions and Blu ray, players that were connected, etc.. And a lot of these folks, because at that time, this was in late 2010, connectivity was a big selling point for a lot of these electronics manufacturers. And so Netflix had been on their platforms for a while. But given our unique value proposition around current season content, they were very keen to get Hulu Plus on those platforms. So as a result, not only did we develop apps for those respective platforms, but these partners came in and we’re very eager to work with us to do co-marketing promotion. So for example, if you were to go out and buy a Roku streaming player, you would get a free month of Hulu Plus. If you were to go and buy a Sony PS3 gaming console, you’d get several months Hulu Plus to go along with that. And so that was kind of the second wave that we really focused on for for customer acquisition in the early days, which is leverage these partnerships, leverage the fact that some of these partners are willing to include us in their marketing initiatives. So we’re talking about TV spots, we’re talking about print collateral, we’re talking about online and eventually even shifting into retail where they wanted to include us alongside them in the stores. And that was a huge benefit for us because essentially it allowed us it allowed us to draw down the marketing budgets to some extent of these much larger players. And once we got through these early days, let’s say once we were about six months into the public launch, we started getting enough data on how how subscribers were performing in the service. So what were the conversion rate was how long people were sticking around, what the churn rate was to feel comfortable with the assumptions that we were making about how much we could spend on customer acquisition on an individual basis. And so once we got to that point where we had that degree of confidence, then we started going up and investing in the paid channels. So we started out slowly by doing testing with CRM, with display marketing, and then as we started seeing positive results there, we started spending more and more and gradually increasing the efficiencies of those channels over time, then gradually moved into affiliate marketing and some of the other. Hate acquisition channels.
Bronson: Yeah. Yeah. There’s so much that I want to talk about. You listed out some of the great things there. Let’s start with kind of, you know, you said you wanted to reach the initial audience, right? What was that early messaging like? Was it an email that you sent to them to get them that landing page? Was it ads inside of Hulu to get them to the landing pages? Was it all of the above? What did you learn about really the initial kind of getting in touch with them because you were in a, you know, unique spot where you had 20 plus million people, like you said, kind of waiting for you to tell them what’s next. So what did that initial, you know, reach out look like?
Andrei: Yeah, it was it was interesting. So for a number of various reasons, the and the appetite for email marketing was very low at Hulu and in the early days. Yeah. And so that was a battle that we fought for for a while before we convinced everybody to that, that it was worth going down the path of doing email marketing for customer acquisition as well as retention and re acquisition, obviously. So in the early days, a lot of our messaging was really focused around what we what we could do on the website. So, you know, we had the landing page for Hulu Plus, we had messaging across the rest of Hulu.com that was somewhat contextual. So for example, every show, every episode of content that we have in the service has its own dedicated page on the site and so on. Those pages, if there was content that was available in Hulu Plus as well, we would have a message, basically an upsell message to that effect on that page. So for users who were not plus subscribers, for users who were not signed into the service, they would see a little a little message, a little upsell, basically telling them that, hey, this show is only available on Hulu Plus. Or you could watch more of this show on Hulu Plus, or you could watch this show on your iPad or living room living room device on your gaming console or whatever. So we did a number of tests and iterations on that, on that messaging. There were also other graphical elements across the site, which we played with to to try and drive awareness of the fact that some content was only in Hulu Plus. Mm hmm. And so it was all a big learning experience. And looking back at those very early iterations of what our landing pages look like in our messaging. It’s very cringeworthy, but I think that’s kind of a standard experience for most folks at the beginning. You know, you have your certain assumptions that that you go out there with that you want to test. And what you usually find is that you’re not that close to the mark and you have to kind of go back. And so we did our best iterate as quickly as possible on some of that messaging and we started going out and talking to consumers, doing market research against both subscribers and folks who had subscribed yet, or folks who maybe weren’t even aware of Hulu to try and get an understanding of how they thought about television television content to understand how receptive they were to Hulu Plus as a general service, and then try and hone in on how exactly we should message it. Because, you know, the fact is that we make a lot of assumptions about people’s general comfort level with technology and their understanding of it. But the fact is that outside of a relatively small subset of people who work in this space, the general public really is not, you know, isn’t as comfortable or maybe even as savvy about some of the terms even. Right. So this notion of streaming versus downloading, which to people who work in tech like of course that’s a no brainer difference that you can explain easily, easily. But to an average user, what we found is that wasn’t so readily understandable, right? So this notion of downloading of cam buying something that I have to wait for it to download on my computer, then I can watch it versus is I just click a button and I can instantaneously start to watch it. So I think that’s changed a lot in the last few years as Netflix has gotten bigger and focused more on the streaming service, as Hulu Plus has ramped up. Obviously Amazon, a number of other players have come into into the space. But in those early days, you know, we struggled with that. Even the notion of the cloud, right? Like as we were thinking about messaging, we’re thinking, hey, should we try and position Hulu Plus as like your television in the cloud or, you know, TV shows in the cloud? And we stayed away from that partly because we were afraid that this concept of the cloud was something that was still very novel and not familiar to to most folks. So but to go back to your original question, a lot of the early focus in our messaging was in terms of what we could do on site. Later on, we started doing email marketing and using that as well as an acquisition tool.
Bronson: Yeah. And then you also mentioned partnerships and you know, you talked about how you’re essentially leveraging their marketing budget for your brand because you’re you’re doing something with them and they’re putting your logo here and you’re over there and they’re giving away a free month, you know, in their platform. Do you think startups under utilized partnerships? In my mind, they’re magical. Do you think startups generally understand how powerful partnerships can be?
Andrei: So I think that’s a fair point. I. I don’t know if if the average startup has a full appreciation of that, but I think it’s also challenging for many startups to explore partnerships. I mean, we are very lucky in many ways because at Hulu we are at this perfect intersection where, you know, Hulu had developed a really great brand almost despite itself, right? Because there were had really been no tangible investment on the marketing side because the economics just didn’t just didn’t bear it. So there was an early ad ad campaign in the Super Bowl, and that was partly through to through the investment of one of the networks. It was basically an ad credit that we had received, but there had been no other investment on the marketing side. So Hulu had grown purely by word of mouth, but had done so very quickly and kind of garnered a place in kind of the mindspace of a lot of consumers and also for the consumer electronics industry, obviously, as they’re trying to maintain the value of their products and trying to stay away from them being just dumb electronics that were commoditized. This notion of connectivity was huge at the time, right? This was in 2010. And they knew that consumers were looking for alternative ways to consume video besides the traditional way of subscribing to a cable provider. So so they were very receptive. The OEMs, rather, were very receptive to this notion of working with us. Now, I don’t know if that necessarily translates to a lot of other startups. I can tell you when I was at Mog, even though we had what we considered a really great service, our brand recognition was arguably very low and so we were pursuing similar types of strategies in terms of going to OEMs and trying to do deals to get Mog installed on on their various platforms. And let me tell you that the traction that we were getting there was significantly lower than at Hulu. So it really comes down to who you are and how well you’re known in that particular space. So yes, I think partnerships can be very powerful, but they’re not always easy to get if you’re if you’re a young startup.
Bronson: Yeah, that’s a great point. So you’ve mentioned kind of your existing user base, 20 plus million. You’ve mentioned the partnerships. You also mentioned affiliates. You kind of showed us some of the things you guys started with and kind of how it evolved overall in your time there. What was kind of the goose to lay the golden egg? What was the the primary customer acquisition channel, if there was one?
Andrei: So I would say that we were really focused on a whole slew of customer acquisition channels, and mostly this was because our goals for the service, right? So even though our initial success really quite frankly, was, was much higher than even the most optimistic internal folks had anticipated it, our expectations quickly kind of rose to those levels as well. So we set some pretty aggressive growth targets for ourselves. And in those first couple of years and even today, the growth targets are pretty aggressive at the company. So as a result, we had to really focus on a bunch of acquisition channels that we couldn’t afford, focusing on just one. Now that said, you know, our the user base, the existing Hulu.com user base was and even to this day is a very good acquisition channel for Hulu Plus. Why? Because they’re the most qualified people. They’re the ones who’ve already used the product, if you will, in a in a simpler semblance. They buy into the value proposition of the company. And you’re basically just trying to get them to take that next leap to get their credit card out in order to gain access to the service through other connected devices, which, again, it’s also a the timing again, is critical because fewer and fewer people these days are sitting in front of a computer, want to sit in front of a computer to consume. Right. They want to either consume it on their TV or in most cases they want to consume it on their tablet or potentially even on their smartphone when they’re they could be in a variety of locations. Yeah. So for that reason, that channel was always a great one and is still a very solid one today. Similarly, the partner acquisition channel also very good. Why? Because those users are self-selected, right? So if you are, for example, a Roku customer, right, you have a Roku streaming box in your living room. It’s because you love watching video content, right? So Hulu Plus is practically a no brainer offering to you. And if you’re already subscribing to Netflix and ESPN and whatnot, Hulu Plus just makes a ton of sense. And so again, we saw lots of loss of volume through those channels. Gaming consoles, you know, a lot of people don’t really use gaming consoles just to play games anymore. It’s about consuming a lot of a lot of other content as well. Yeah. And so consequently those turned out to be very good acquisition channels for us both because there are large user bases of of gaming console owners out there, but also because it’s the right audience. Those folks are looking for other things to do with watching content, getting entertainment, whatnot. And so those made a lot of sense. And you know, some of the other channels, including the paid acquisition channels, also performed very well in terms of driving a lot of volume, obviously more expensive than some of the more qualified channels. But overall, our our strategy, our customer acquisition strategy was pretty diverse in terms of the number and types of of acquisition channels that we were going after.
Bronson: Yeah. Well, let me ask you about the paid acquisition channels, because I’m having a hard time trying to imagine what you would what keywords you would buy against, because people don’t go in there saying, you know, searching and Google. I want a cloud based TV service. You know what I mean? I want streaming TV. Or maybe they are. I don’t know. Are you are you targeting a certain kind of person and the kinds of things they would search for and hope that it spills over onto your ad and they click. What was that like?
Andrei: Yeah, so that’s a good question. And so while people may not search on cloud based TV service, they will search on last night’s episode of Glee that they missed.
Andrei: Or they will search on watching TV on my Xbox, for instance. And so those were the types of search terms that that performed well for us. And also, frankly, people a lot of people do searches on just the Hulu brand term itself, which I think happens happens a lot. So we are leveraging those types of searches to to drag people into our acquisition funnel for for Hulu Plus. There are a bunch of other types of acquisition strategies that we’re focusing on in terms of CRM, but those are the ones that tended to perform really well for us, and I think they do similarly for other companies. This though again is kind of comes back to your earlier question about licensed content. I think one of the advantages is, again, it’s it’s ubiquitous and people know the content, right? So you don’t have to make somebody aware of the fact that there is something like Family Guy on your service. People know what Family Guy is, but there are also a ton of other companies and other players who are trying to leverage Family Guy content, whether it’s literally watching it or presenting you metadata about Family Guy or in the music world, metadata about an artist or an album or whatnot. And so CRM, for instance, can get very competitive and get very expensive. And so, again, with paid acquisition, it’s a double edged sword. You can drive a lot of volume that way. Maybe you don’t get through other more. Well, if I channels but if you get expect it can be expensive. And if it’s not expensive, it can get expensive as more people come into the into the space and compete for the same search terms.
Bronson: Yeah. Now, before this interview started, I kind of assumed that Hulu had a huge, you know, marketing budget after talking to you. My guess is the margins were a little bit slimmer and you had a marketing budget, but it wasn’t, you know, astronomical or anything. But I think it’s fair to say that your budget was probably a little bigger than most startups, so we’ll say that at least. Do you feel like having a budget to where you can have an extra credit and do a Super Bowl ad or you can spend some money on paid acquisition, you have those kind of things at your disposal. Do you think it makes growth, you know, ten bucks easier or does it really just come down to fundamentals and it’s not as big a deal as people assume? Well, it’s kind of your take on that. How much does having money actually matter with growth?
Andrei: So money definitely matters and that it definitely helps, but it can also be a crutch of sorts. And certainly you’re not going to get as as as much of an efficient uptake just by spending money. So just if you if you increase your spend by ten X, you know, the returns are definitely diminishing. So on the one hand, it’s nice to have a marketing budget like that because again, with paid acquisition, you have access to potentially an unlimited amount of prospective customers. The fact is that the you know, the larger the audience that you’re going after through a particular pay channel, the chances are that they’re less qualified. So it’ll cost you more to bring them in and they’re less likely to stick around for a long time. And that said, again, with paid acquisition, it’s a zero sum game because there are only so many searches being done, there are only so many banners that people look at and click at. So as as it gets, more competitive prices just naturally will trend up over time. So I think the challenge with paid acquisition is that it can sometimes make you lazy even when you’re unaware of it. In that you just say, well, we’re just going to spend more writing that. That tends to be kind of the first off the cuff reaction is if we need more subscribers, we’ll just up our spend in this channel or that channel. And sometimes that’s just the way it is. But other times focusing on paid acquisition takes away from your willingness or ability to focus on other things you can do, say around the actual product itself, uh, product marketing or thinking about features or elements of the product that can make it inherently more viral things. For example, like a referral program where you can harness your most enthusiastic, passionate users to basically evangelize on your behalf and to bring in, bring in subscribers for you. And so that’s that’s the trick is that there’s only so much time and so much attention that you have. And so sometimes acquisition, it takes you away from making some of the harder decisions and doing some of the more harder thinking around what we could do to generally improve the product.
Bronson: Yeah, that’s great advice. I hope people heard what you just said. Now you’re also a an advisor to 500 startups and people can also consult with you through clarity, clarity dot FM. So you interact with quite a few startups, you know, on a regular basis. What are the most common questions the startups ask you? I’m just kind of wondering because, you know, here’s the guy that helped grow Hulu Plus. What are they coming to you? What do they ask you generally when they have a chance to ask you something?
Andrei: Well, I think most people want to have, let’s say, less qualified conversations like initial kickoff meetings or whatnot with folks. A lot of them tend to have the first time interpreters. Or if they’re just starting out with with their new venture, they have they tend to have kind of fundamental questions around growth. Right. So usually they’re they haven’t necessarily created a structured framework around their thinking. So they’re just trying to figure out where do they start, right? Like how do they take the first step? And so it’s the fundamental stuff that they tend to be trying to figure out whether it has to do with analytics, whether it has to do with how to how to even think about email marketing, for instance, how to deal with paid acquisition. This is what a lot of folks tend to ask about. And again, I, I don’t mean to be down on paid acquisition, but I think a lot of people kind of jump into thinking about paid acquisition right away when the fact is that for early startups, paid acquisition may not even be viable. Right? Because they may not have the funding or the ability to scale the funding to the point where they can drive a meaningful volume of new paying customers to a channel. And also the fact is that that you’ll see is if you’re going out there and doing peer acquisition with a partner like a Google, for instance, there are certain efficiencies that you can realize with a partner like that at significant scale. Right. So once you’re spending, let’s say, six figures a month on CRM or display or whatnot, then that gives you access to some of the tools that Google will have or will just it may just be a matter of data, right? Like getting enough data points to really understand where the pockets of optimization lie. And so those kinds of budgets are just not realistic for a lot of early stage startups. So, you know, folks tend to come to me with those types of questions and I tend to encourage them to think more basically about the product and how you can get just initial growth around your most passionate users through just product marketing, viral features, etc.. And yes, definitely think about paid acquisition to have that be part of your strategy, but realize that that may not be the first, second or third thing that that you that you that you do.
Bronson: Yeah. Now, I think you probably just answered my next question that I’ll ask it anyway just in case there’s something else you want to add. What do you wish more startups understood? Because I’m sure they come to you, they ask you questions and you’re just like, Oh, why do I have to repeat this every week? Why don’t they get this? One thing about growth that it is find myself being a broken record about. Maybe that’s the paid stuff you just talked about. Maybe it’s the focus on the product you just talk about. Is that the case?
Andrei: So I would reframe your question a little bit differently. I think one of the one of the core challenges that almost every company has and this doesn’t even apply solely to startups, even large companies, is underestimating the critical impact of decisions that they make around analytics. So that includes everything from how how they structure to the database on the back end, how they how they capture different behaviors and how those kind of mapped to each other in the database to what sort of analytics service they use, whether they build something in-house or whether they use a third party provider of analytics. Most companies tend to use Google Analytics because it’s free and it’s a good way to start. But the challenge is that it can be sometimes hard for Google Analytics to give you the types of actionable metrics that you really need. And so I would say that that’s another major pitfall that’s also in the analytics arena for most startups, is really knowing what metrics are meaningful and actionable because it’s very easy to implement Google Analytics. And then you see this very beautiful dashboard and you see all sorts of lines moving up and down. You see numbers that are in blue and red and you’re seeing like, Wow, I’m really understanding what’s going on when in fact it’s very easy to get daily, say, those numbers and lose sight of what’s really meaningful and impacting your business.
Bronson: You know, that’s great. And if you’re not tracking the right data early on, you may not have access to that data later. When you really need it, analyze it when you really need to see what that funnel is doing. You don’t have access to it to really understand it. Where do you find yourself pushing companies? Are you pushing them into KISSmetrics and a mixed panel? Do you you know, you know, say you should probably build something in-house. Do you have a go to kind of platform beyond Google Analytics or does it just really depend on the business? And it’s, you know, anything that’s more powerful will work for you?
Andrei: I think it depends on the business. It depends on the team, you know, particularly the technical folks and how savvy they are, what their inclination is. Ultimately, I think most companies that get to be successful and get to scale, unfortunately, will have to build out at least a portion of their analytics needs internally, because there’s only so much you can do through third party tools. And even some of the most forward thinking companies that are developing analytics tools will not be able to custom tailor something specifically to you. So they. There really is no great substitute for having a well-structured database and a really smart database engineer and just opening your own queries to understand what’s going on. But that said, I think Google Analytics is a good starting point. KISSmetrics is a great tool. Mixpanel is a great tool. There’s another one that I’ve come across recently called User Cycle, which also looks very interesting in terms of trying to help you combat this issue, of being overwhelmed with vanity metrics and helping you kind of zero in on defining your most critical performance indicators and and creating a dashboard and visualization system around that. So I think there are a number of tools out there. I think everybody just needs to do their research in depth around that and kind of figure out what works best for them.
Bronson: Yeah, no, that’s great. Now, maybe because you see so many startups, what are some startups that have caught your attention that maybe aren’t well known? Maybe they’re not household names. They’re still early stages, but they’re doing it right. They’re growing the right way in your eyes, and they’re just making really good decisions about user acquisition. Do you have any companies that come to mind when you think about that? It’s a sad state of affairs if you don’t.
Andrei: Well, you know, I think it’s I think it’s there’s a lot of coverage in the tech press. Right. So I’m not going to pretend that I have any insider knowledge that you’re probably not already reading about between TechCrunch and Pando Daily and The Verge and all these other great publications that are out there. Yeah. You know, there are some services that I’m, you know, that I know that I’m working with who are doing a good job of. But I think, you know, there are a lot of them overall, right? So I think especially in the last few years as it’s gotten cheaper and cheaper to get your own venture off the ground, that’s brought in a lot of a lot of folks and kind of convinced them to give it a give it a go on their own. And certainly there are a bunch of people who are trying and flailing. But I think that there are also a lot of smart, smart folks who are kind of figuring out what impresses me is the fact that no matter how jaded you may be on a particular space and feeling like, okay, this has been done to death, inevitably, sooner or later somebody will come along and just create, you know, create a new product in that space, you know, it just takes off, right? And you can look at Dropbox as a great example at a point where there are already a bunch of, you know, cloud based backup services and they just came in and stole the show. Instagram Another great example of a service of, hey, everybody thought that the photo thing had already been done to death and they kind of reinvigorated it. So I think that there are always opportunities for for startups to kind of emerge out of that, out of the pack and take the lead.
Bronson: Yeah, no, that’s great. That’s what I love about startups. There’s always a chance that it’s going to work.
Bronson: Now you also invest in a couple of startups each year. What do you look at when a star comes to you and they’re pitching you or whatever? I know what you’re, you know, thinking about. You’re looking at, you know, all different aspects of their business. What do you focus on to decide? Does this have real growth potential? What are some of the red flags? What are some of the things that really get you excited? Like, okay, I might invest in that. That has the thing I’m looking for. What goes through your mind? Because your filter is probably pretty strong on what to look for.
Andrei: Well, I’m certainly not going to pretend that I’m any sort of amazing investor. If I was, I probably I’d probably be sitting on that side of the desk. But what I tend to look for is I generally focus on consumer on consumer businesses. And that’s mostly because that’s a good way for me to to, you know, to apply my own gut check rate, figure out if this is a product that I’m excited about as a as a consumer, as a user, do I find that engaging? Does it work for me? Does it not? So that’s you know, that’s certainly one filter to consider, you know, the standard filters around the team, right? Do I like the folks on the team? Do they seem smart or sharp? Have they done it before? I think, you know, second or third time entrepreneurs, that’s always a good signal that that they know what’s going on, they’ve been through it. And then it’s also just the marketplace. Right. So are you in the right place in the right time? Right. Are you doing something that is, you know, that that stands a good potential to take off? Because a lot of a lot of people are focused on it. Now, that can go both ways, right? If you look at e-commerce, there was a huge boon in e-commerce starting a few years ago. And now it seems to probably be mostly out of favor with a lot of institutional investors. Mm hmm. So you can’t pay too close attention to the trends, but you need to be aware of the macro trends. Right? Like, so these days, it’s simple stuff like mobile and things of that nature, right? Whereas a few years ago, I think not everybody would have agreed that, hey, mobile is is the area to focus. I think these days it’s pretty, pretty cut and dry that that there are a lot of interesting opportunities around mobile so generally things like that. Yeah.
Bronson: Well Andre, this has been a great interview. I have one last question for you because I actually called you to get advice before starting growth. Apple TV. Yes. A lot of your advice came back to the experience, the end user experience, what the consumer actually feels and what they’re actually going through using the service. How important is experience to user growth? Tell our audience a little bit about how important experience is overall.
Andrei: I think it’s I think it’s hugely important. So if you have a product that doesn’t resonate with your users, they’re just not going to come back and use it, right? So then you’re moving towards that dynamic or your marketing efforts turn to more of trying to put lipstick on a pig than anything else. Right. Which it’s a big headwind that you have to struggle with. The better your product, the easier your work as a marketer is going to be, because people just get it naturally and they want to use your product. You don’t have to necessarily beat them over the head to to come in and use it. And personally, I’m a big I’m a big fan and proponent of the lean startup methodology. So the whole notion that Steve Blank developed years ago around customer development, going out there, understanding who your customer is, what their pain points are, how you’re going to address those pain points and building your product in a very, let’s say, humble way. Right. So it’s not about what you want, but it’s rather what your users want. And building an MVP and minimally viable products and not investing a lot of time and effort, but get something together that’s usable, put it out there and test it right and just put it in the hands of people. See what they say. Do they like it? Do they not like it? What else would they like to see in the product? What else have you not thought about before that you’re seeing people try and do with what the product. So I think those types of kind of very type cycles of putting something out, testing, measuring, going back and tweaking. I think those are very important to getting the product right and those can have a huge impact down the road. And it’s it’s really, you know, you’re kind of laying your your foundation and kind of setting your destiny. I think a well built product that is well thought out, that is built around the customer is basically an investment that’s going to be back in dividends in terms of customer acquisition and retention down the road, a product that is poorly built, that’s not well thought out, that is built on, you know, on suboptimal technology and suboptimal technology stack. Those are all decisions that are going to create hurdles for you. They’re going to slow you down as you try and scale and continue to grow.
Bronson: And that’s great advice to end on. Andre, again, thank you so much for coming on the program. I know our viewers are going to love this episode.
Andrei: Thanks so much for having.
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