Go Summarize

Gustaf Alstromer - How to Get Users and Grow

Y Combinator2018-09-12
YC#Y Combinator#Startup School#Gustaf Alstromer#Airbnb
339K views|5 years ago
💫 Short Summary

Gustaf Alstromer, a former member of the growth team at Airbnb, discusses the importance of growth for startups and the strategies to achieve it. He emphasizes the need to focus on product market fit before pursuing growth and highlights the role of measurement and optimization in the growth process. Gustaf also emphasizes the changing nature of how teams work together, highlighting that the traditional separation between product and marketing teams is evolving.Gustaf Alströmer, former Head of Growth at Airbnb, outlines key principles for startup growth, emphasizing the importance of attention, engagement, and monetization. He discusses strategies for accelerating growth, including referrals, virality, and paid acquisition, and highlights the value of experimentation and SEO in making data-driven decisions. Gustaf's comprehensive guide provides insights into the complex world of startup growth and the unspoken truth that paid channels and a well-organized growth strategy are essential for success.In this segment, Andrew Ng discusses the key elements of growth, including the importance of sustainability, scalability, and experimentation. He emphasizes the distinction between growth and solving problems, the need to transition from non-scalable to scalable strategies, and the importance of user retention and usage in driving growth. Ng also highlights the critical role of experimentation in making informed business decisions.

✨ Highlights
📊 Transcript
The FAQ section includes updates on the graduation requirement, with 8 out of 9 updates being acceptable due to the course being shortened to nine weeks.
The graduation requirement for the course is 8 out of 9 weekly updates.
The course duration has been changed to nine weeks.
Groups will have two extra weeks to submit the required ten updates for consideration for the grant.
Gustav talks about the importance of growth for startups and the significance of making a product really big.
Growth is crucial for startups looking to make their products big.
The focus should be on finding ways to grow the product.
The speaker emphasizes the importance of focusing on growth only after finding product market fit to avoid negative consequences.
Working on growth before finding product market fit can lead to negative outcomes.
Measuring product market fit involves finding a metric that represents the value customers get from the product and measuring the repeat usage of that metric.
Examples of companies with and without product market fit are provided.
The speaker discusses the growth of Facebook and the importance of being intentional about growth to break through forecasts and ceilings.
Facebook's forecasted growth was 400 million users, but it actually reached 2.2 billion users.
Being intentional about growth can lead to fast and significant company growth.
Growth teams should focus on pushing the company's growth.
The success of a product can be measured by how many users continue to use it over time.
Startup School example shows 60% of users come back in week one, but only 30% in week four, suggesting the product may not be very good.
A good product will have a retention curve that flattens out over time, indicating that users continue to use the product.
Retention can be measured by talking to users and asking how they would feel if they could no longer use the product.
The growth team focuses on optimizing specific parts of the user funnel, such as sign-up and onboarding, to drive more growth.
Areas of focus for conversion rate optimization include translation, authentication, onboarding, and purchase conversion.
Growth channels are how people discover a product, and companies should focus on scalable growth channels once they have more than 50 users.
Gustaf Alströmer, former Head of Growth at Airbnb, discusses the key principles of growth for startups, including attention, engagement, and monetization.
Gustaf Alströmer analyzes the growth strategy of startups, emphasizing the importance of focusing on attention, engagement, and monetization.
He discusses the concept of attention and its significance in the early stages of a startup, highlighting the need to understand where the attention of the target audience is and how to capture it.
Alströmer stresses the role of engagement in converting attention into active users, describing it as the second phase of the growth strategy.
Monetization is identified as the third critical element, ensuring that the business has a viable strategy for generating revenue from the engaged users.
The speaker suggests that startups should focus on these three pillars of growth in the specified order to build a successful and sustainable business.
Understanding where your customers come from and how they discover your product is critical for early startups to focus their growth efforts.
Gustaf emphasizes the importance of knowing how customers are discovering the product, whether it's through word-of-mouth, referrals, or other channels.
He suggests that for startups in the early stages, focusing on the channel that is already working for them is crucial.
Gustaf mentions that understanding the morality of referrals and the value of virality techniques is essential for maximizing growth opportunities.
Knowing the list of potential customers and the value of the product for the users (high LTV) is important before investing in paid acquisition.
Gustaf briefly discusses the concept of acquisition cost and lifetime value of customers for paid ads, highlighting the need to have a clear understanding of these metrics before investing in paid acquisition.
Referral programs can be a powerful tool for growth, but their success depends on the ease of use and the clear value proposition for the users.
Referrals are like an engineered word-of-mouth and can be a way to make it easier for users to talk about the product.
Financial incentives, such as $20 in travel credit for the referrer and $40 for the new user, can enhance the referral program.
Referrals are a funnel within the product and should be measured and optimized at every step, from the number of users seeing the referral program to the conversion rate and new user acquisition.
The success of the referral program at Airbnb was attributed to the clear value proposition and ease of use, as well as the optimization of the program over the years.
Search engine optimization (SEO) is still relevant and important for driving organic traffic, but it requires an understanding of what Google can and cannot see on a website.
Google is a significant source of traffic, so SEO remains important for driving organic traffic.
There is a difference between what is visible on a website and what Google can see, especially in terms of images and JavaScript.
Basic SEO optimization includes using clear language and text that Google can crawl and index.
There are two types of SEO optimizations: on-page changes and obtaining backlinks from other authoritative websites.
Gustaf Alströmer discusses the importance of sales, pricing, and acquisition for startup growth, emphasizing the need to focus on referrals, virality, and high LTV for successful expansion.
Making a list of potential customers and engaging in sales is important, especially for B2B startups selling to specific industries like doctors' offices.
Charging enough for the product and having a high Lifetime Value (LTV) for users is crucial before investing in paid acquisition strategies.
Referrals and virality play a significant role in accelerating growth by utilizing word-of-mouth and incentivizing users to bring in more users.
Sales, pricing, and acquisition are essential factors to consider for startup growth, and the right strategy depends on the specific nature of the business and its target market.
Gustaf Alströmer highlights the importance of using experimentation and A/B testing to make data-driven decisions in startup growth, and emphasizes the significance of focusing on SEO and growth teams.
A/B testing in SEO is crucial for understanding the impact of on-page changes on organic traffic and search engine rankings.
Experimentation and A/B testing calculators can help determine the suitable size of the audience and the level of change required to see a significant difference.
For high barrier entry markets like health insurance, growth strategies can still be applied by focusing on reaching more people through sales automation and technology.
Gustaf Alströmer recommends early adoption of A/B testing for startups to guide decision making and discusses the use of experimentation and growth teams in overcoming market challenges.
Growth and solving problems are separate but essential for accelerating the acquisition of more health insurance buyers.
Growth is a means to increase the number of health insurance buyers.
The speaker suggests that whether this is a positive or negative thing is not clear.
In the early stages, companies often engage in non-scalable tactics, but they need to transition to more scalable strategies as they grow.
Manual and non-scalable tactics, such as recruiting every single user, are not sustainable in the long run.
Companies need to find other channels or higher ROI methods as they grow.
Transitioning from manual processes to more scalable strategies, such as engineering and SEO, is crucial for long-term success.
Subsidies and incentives for rides can be scalable if they are implemented through digital channels and have a good ROI.
Referral programs and subsidies are examples of scalable tactics if they have a positive ROI.
Digital channels like email, WhatsApp, and messenger make the implementation of subsidies scalable.
The key is to have a good ROI calculation and ensure the money spent on subsidies is incremental and results in acquiring users who wouldn't have started using the product otherwise.
The key to growth is understanding the retention rate of paying and free users, their usage of the product, and the conversion rate from free to paid.
Focus on the retention rate and usage of paying and free users.
Consider the conversion rate from free to paid.
Freemium model and free trials are options to encourage users to upgrade to paid.
Ultimately, growth depends on the usage of the product by the users who provide the most value.
Experimentation is crucial for a marketplace, and the frequency of experiments should be based on the cost and the ability to minimize that cost.
Running experiments is necessary to make informed decisions and avoid making bad or lucky decisions.
The frequency of experiments should be based on minimizing costs and focusing on small, easy tests to continually improve.
For a marketplace, where experimentation is more complex, investing in infrastructure to use data for decision-making is essential.
User research and analysis of other optimized funnels can provide ideas for experiments.
💫 FAQs about This YouTube Video

1. What are the key factors in growing a product?

The key factors in growing a product include understanding the user's journey, optimizing the referral process, and focusing on product value and virality. Additionally, knowing the target market and the potential for paid acquisition are essential elements of a successful growth strategy.

2. How can companies accelerate user growth through referrals and virality?

Companies can accelerate user growth by optimizing the referral process and leveraging virality techniques. This can be achieved through word-of-mouth marketing and incentivizing users to refer their networks. Understanding the user journey and the value of the product is also crucial in driving growth through referrals and virality.

3. What are the key considerations for implementing a successful referral program?

The key considerations for implementing a successful referral program include making it easy for users to refer others, providing clear incentives, and measuring the effectiveness of the program. By focusing on the user experience and the value they can gain from referring others, companies can ensure the success of their referral initiatives.

4. How important is user engagement in driving product growth?

User engagement is critical in driving product growth as it correlates with increased usage, referrals, and overall satisfaction. Focusing on engagement strategies that enhance the user experience and encourage active participation can lead to sustained growth and a loyal customer base.

5. In what ways can companies determine the potential value of their product and its growth opportunities?

Companies can determine the potential value of their product and its growth opportunities by assessing the market size, identifying potential users, and understanding the user's lifetime value (LTV). Additionally, evaluating the feasibility of paid acquisition and the product's value proposition are essential in making informed decisions about growth strategies.

6. What is the key difference between growth and solving problems in the context of acquiring more health insurance buyers?

Growth and solving problems are two different things when it comes to acquiring more health insurance buyers. Growth is a way to accelerate the process of acquiring more buyers, but it doesn't necessarily indicate whether it's a good or bad thing. It's important to note that sustainability and scalability are crucial factors to consider in the growth process.

7. How can companies navigate the transition from doing things that don't scale to more scalable strategies as they grow?

Companies can navigate the transition by determining the effectiveness of manual processes and finding other more scalable channels. For example, in the case of recruiting Uber drivers, manually approaching them may work initially but is not sustainable in the long run. Companies need to evaluate the return on investment (ROI) and consider shifting to more scalable methods such as running ads on Facebook.

8. Are subsidies or incentives for rides a scalable strategy for growth?

Subsidies or incentives for rides can be a scalable strategy if implemented through digital channels like email, WhatsApp, or messenger. It is important to have a well-calculated ROI and ensure that the money spent on subsidies is incremental and results in acquiring users who wouldn't have started using the product otherwise.

9. What are the factors that contribute to growth in terms of user retention and usage?

The key factors contributing to growth are the retention rate of paying users, the change in usage for free users after they become paying users, and the conversion rate of free users to paid. Ultimately, the focus should be on the usage of the product by the users who bring the most value.

10. How important is experimentation for a marketplace, and what should be the ideal frequency of experiments?

Experimentation is crucial for a marketplace to make informed decisions and improve strategies. The ideal frequency of experiments should be based on minimizing costs and focusing on small, easy tests to continually enhance the marketplace's performance.