Startup Class Lecture 7 Notes – Kevin Hale

These are the notes I took while watching Lecture 7 of the Startup Class taught by Sam Altman. Kevin Hale gave a guest lecture (slides) on making products users love.

Also, my notes from the previous lectures are here.

Growth

  • The Difference between Conversion Rate and Churn gives you growth
  • Most people tend to look at this in a calculated, mathematical way
  • On a more human scale, the goal is to create meaningful relationships with users
  • Wufoo Thought about how these work in the real world and came up with two metaphors
  • New users : Dating
  • Existing users : Marriage

The best way to get to $1 billion is to focus on the values that help you get that first dollar.

New Users

  • When its the first interaction, threshold for pass/fail is higher (i.e. whether they come back again)
  • Like dating, The first impression is vital
  • Any “first” (first email, first transaction, first visit) is an opportunity to seduce the user
  • The Japanese have two words when answering the question “is this the a quality item?” – Hinshitsu and Miryokuteki Hinshitsu
  • Hinshitsu is taken for granted quality
  • Miryokuteki Hinshitsu is enchanting quality
  • Need to strive for the latter
  • Companies spend a lot of time/money on marketing materials to get users, but skimp out on documentation/manuals. Don’t do this. Think of it as another chance to wow your users.

Existing Users

Fights

  • John Gottman can watch a video of a couple fighting for 15 minutes, and predict with a 85% accuracy rate whether the couple will still be together in four years.
  • He discovered that every couple fights, and they all fight about the same things: money, kids, sex, time, and others (jealousy and in-laws)
  • You can map each one of these to something related to customer support when building out your product
    • Money: costs too much/credit card not working with product
    • Kids: users clients
    • Sex: performance
    • Time: how fast it is
    • Others: jealousy – competition and in-laws: parternships
  • Customer support is what takes place in between every step in the conversion funnel.
  • Thinking through the above, realized that there was a broken feedback loop between engineering and support.
  • At Wufoo, changed software development to include values not normally talked about like responsibility, accountability, humility, and modesty
  • It was called support driven development, and it involved those that made the software having to also do customer support. It fixed the feedback loop.
  • The direct exposure engineers get to customers helps improve the UX of the app, consequently making the app easier and better to use.

Break Ups

  • John Gottman says that we break up with one another for one of four main reasons: criticism, contempt, defensiveness, stonewalling
  • You see defensiveness in companies all the time, especially as they get older
  • But stonewalling is even worse. And many startups are guilty of it.
  • Never ignore users. It leads to churn
  • Startups tend to focus on improving conversion rates rather than reducing churn although the effect they have on growth rates is the same, and the latter is easier.

Effort

  • John Gottman noticed that there was a subset of people who stayed together for a decade or so and then suddenly divorced. These were relationships that had no passion in them and they stopped putting energy into the relationship.
  • Startups need to ensure their customers know they are still putting in effort (in support, into the product)
  • A blog and a newsletter are standard ways of showing customers you care
  • Wufoo wrote thank you cards to users

3 Ways to Achieve Market Dominance

  1. Best price (focus on logistics and scale. E.g. Amazon, Walmart)
  2. Best product (focus on R&D: E.g. Apple)
  3. Best overall solution (focus on being intimate with customers. E.g. luxury brands)

The third one is the only one that everyone can do at any stage of their company. It requires almost no money to get started with it. It usually just requires a little bit of humility and some manners