Create new communication channels

Want to create an incredibly successful startup and make the world a better place in the process? Create a communication channel for businesses to reach their potential customers, and they’ll pay you handsomely for it.

Your approach to creating the communication channel doesn’t matter as long as you acquire a large enough user base with some spending power. There’s only one caveat: the users have to stick.

Let me explain what I mean with examples.

Facebook

Facebook did this by creating a social network where it gave people the power to share and make the world more open and connected. Then it built an ad platform so that businesses could reach out to all these potential customers. The hard part was and still is acquiring and keeping people on the platform because the day they leave, so will the businesses, and so will the revenue.

Based on their Q4 2015 and Q1 2016 results, Facebook is doing a damn good job of keeping consumers on the network. Where it’s stumbling is getting new users from the “Rest of the World” category (the developing world). And they need new users to continue their growth rate. The desperation with which they need these users was evident in how they went bat-shit crazy trying to defend Free Basics (Internet.org) in India. Read more about that on link 1, link 2, link 3 and link 4.

Instagram

Instagram is interesting. They acquired users but didn’t give businesses access to these users for a long time. Smart brands quickly found a way to still get to consumers through some women with large followers. Instagram is making no revenue out of that and recently launched the Instagram for Business service.

Youtube

Youtube is slightly different from the pack because others are responsible for creating the content that brings in users, but they share some of the revenue with original content creators who attract and keep potential customers on the platform.

B2B industry news websites

Take for example iEntry, which owns WebProNews. They churn out “technology news” and somehow convince people to visit their website and signup for their email newsletter. Then these two channels are provided to businesses to advertise to their potential customers. Almost every B2B niche has its own news website where others can advertise.

Chrome push notifications

Google was concerned that unlike native apps, websites had no way of engaging mobile users. It responded by allowing websites to send push notifications through the Chrome browser installed on user’s Android phones. Firefox soon followed suit.

While Google was responding to a different threat, some smart people immediately figured that a new channel for businesses to talk to customers had just opened up. And now you have a whole bunch of SaaS products (25 as on date of publishing) that basically bring marketing automation capabilities to website push notifications.

This channel is similar to white-hat email marketing, where businesses have to build their own personal email database.

Google Search

The largest “business to potential customer” advertising channels because of one reason: relevance. Think of every search query as a person looking for an answer to a problem. Google lets businesses bid for access and priority in the advertising channel with appropriate measures in the system to promote relevance.

Chat bots

Facebook’s big announcement at its annual F8 Developer conference, was to make Messenger, its 900-million-user messaging app into a full-fledged platform that allows businesses to communicate with users via chatbots.” – 3 trends driving the chatbot revolution, VentureBeat

How to search for flights with Skyscanner’s new Facebook Messenger bot – Skyscanner

Wrapping up

The hard part is getting and keeping users. Businesses will happily come after you’ve acquired users.

Or you could simply provide the means to the communication and let businesses build their own audiences… like website push notifications or email marketing software.

Think of all the interesting ways in which people have acquired users and then made them available to businesses: Chat bots, Amazon, Linkedin, Zomato, Yelp, Woot, mobile games, content and news websites.

The difficult part, as always, is a product that attracts and retains users.

SaaS Marketing Mistakes – Targeting

A few months ago, we got together a cartoonist and a developer to create a crazy-ass parallax scrolling page. This particular piece of beauty is probably the easiest guide to A/B testing on the web. It is really good and we were mighty excited to share it all over the interwebs. As part of that, we first shared it on HackerNews.

What is A B Testing    Hacker News

Pretty sweet huh? The post was smartly shared on HN in the morning when most of the US was asleep and it stayed on HN’s front-page for almost the entire day. We got a lot of comments and our traffic saw an immediate (but obviously temporary) spike.

HackerNews effect on traffic

Even better, our active trials (the CTA at the end of the page was to sign up for a free trial of Visual Website Optimizer) shot up like there’s no tomorrow!

Active Trials shot up!

So all this felt really nice. We spread this in some other places and got interesting responses. I happily reported to the CEO that we’re reaping significant benefits and the campaign is working well.

The truth unfolds

This is what our active free trials looked like after the campaign (time frame: start of campaign to three months later).

Our active trials go down to pre-campaign levels

At the end of the day, this was a push that bumped up our ‘free trial’ signups, but couldn’t sustain that number. Kind-of obvious. One can’t expect HN to always be following you. But what was surprising was that not one of those free trials converted to a paid account. That’s right, not one single convert from all the HN traffic.

Absolutely no transactions from those who landed on the page!
Absolutely no transactions from those who landed on the page!

The mistake

We ran after vanity metrics like page views and “sign up for free trial” (yeah, in this case that’s a vanity metric). The bigger mistake was that the we got carried away with our work and ran to show it off to those who would appreciate the technical aspects of it. In the process, we neglected the Small Business Owners for whom it was originally meant, and who would actually be influenced by the page. The readers of HN understand A/B testing very well and don’t need a simple story/analogy like Bob. But small business owners worldwide would have really connected with it.

Unfortunately, very few of them actually got to see it.

What we learnt from this

Here’s what we (and you!) can learn from this:

  1. HN is great to introduce new technical concepts (we created a cool parallax page to explain A/B testing and introduce Visual Website Optimizer)
  2. HN might be good if your product solves the problems of technical people
  3. Before creating any marketing campaign/message, think very carefully about the target audience and how you want to reach them
  4. At the end of the day it is all about being relevant

Here’s another nugget of insight that we gleaned from the conversation that happened on HN.

Comment about how useful this would be for Small and Medium Businesses to understand A/b testing

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Why our first startup failed

Our first venture was a completely new experience for me. The three other founders had a fair bit of experience in setting up and running a business (13 years, 6 years and 3 years, in descending order) while I was the only fresher around. I guess my childish enthusiasm and general naiveté led them to christen me “Sid the Kid” but thankfully, they were nice enough to stop calling me that after some time.

The business model

The best engineering colleges are the ones with the best placements (stands true for MBA colleges too). Lots of times, a college is initially able to attract a recruiter (Infosys, TCS, Wipro, HCL, Accenture, IBM, etc) but since the students don’t perform in the recruitment process, the company might not take as many people as it was ready to.

That’s where we came in. Our Placement Development Programme (PDP) would integrate in the colleges’ curriculum and faculty members would go to different colleges to deliver the session. The programme consisted of Aptitude (Mathematics and Logical Reasoning), language (English) and soft skills training (group discussion and personal interview). So, if we were working with ABCXYZ Institute of Technology, their class timetable had 2 slots (usually 4 hours) in the week where our company name was written and during that time, a faculty member would come and deliver the session.

The beauty of this model was that none of the faculty members were our full-time employees, they were consultants who went and delivered as and when required. Therefore, we really didn’t need a big office (in fact, it was a one room setup in one of the partner’s office) and most of our work was done through mobile phones and laptops.

The numbers matched up pretty well too. One faculty member on average was paid Rs. 500 per hour. For a 50 hour course, our charges would be about Rs. 2000 per student. If we worked with one large engineering college, they’d have 180 students sitting for placements from three branches of B.E. So revenues would be 180 x 2000 = 360000 minus 50 x 500 x 3 = 75000 (faculty fees) and let’s assume Rs. 75000 as cost of providing transport through taxi for some faculty members and other miscellaneous expenses, we’re left with 360000 – 150000 = Rs. 210000.

As you’ll realize, that’s not a bad amount for basically sending faculty members to colleges. And if you were to think scalability, two faculty members (English & Aptitude) taking a 2 hour session each per day in the same college (total 4 hours) can cover 5 colleges in one week. Even then, they’re working only 2 hours a day each. If they were to go to one of the areas where colleges are clustered in Jaipur (eg. Sitapura or Kukas) and give 3 sessions each, they could cover 3 colleges per day making it a total of 15 colleges per week. Let’s suppose this continues for 12 weeks so after 3 months, our company nets a cool 210000 x 15 = Rs. 31,50,000. Now consider that there isn’t a lack of teachers in Jaipur since it is one of India’s larger educational centres. In the end, you have enough number of teachers to be sent to enough number of colleges and quite a bit of money to be made.

Fair enough, so what went wrong?

Two things:

  1. We were lazy and did not move our butts as much as we should have
  2. We didn’t understand the colleges’ incentives until it was too late – The engineering colleges don’t really care that their students should be smart enough to handle the companies’ recruitment processes. They just care that they get placed. Anywhere, anyhow. Therefore, a college focuses primarily on the number of companies coming to campus and not preparation of the students. So more often than not, the concerned Training & Placement Officer (TPO) said to us “If you’re doing training for placements, why don’t you just go ahead and get these students placed”. They were ok with getting them placed anywhere in any kind of company as long as they were “placed from college”. That is really shady business to get in to.
  3. We got distracted – You get a bunch of smart people together under one roof and go out to the market looking for work, you’ll realize there’s no dearth of it. In such a situation, navigating the trade-off about how quickly can it be done, how easily can it be done, how much does it pay and do I want to continue doing this forever?, is crucial. We sucked at that. We worked with these guys (they just got arrested) developing a marketing management course for them and got one very crucial bit of learning out of the entire project: don’t ever work with MLM companies. However, in spite of the awesome life learning and all that cute bit, we had burnt up the meager amount of startup capital we had while executing their project and basically received fuckall for it.

Therefore, to sum up: Not working hard enough, not understanding your customer, losing focus and consequently running out of cash. As you’ll realize, dear reader, these 4 are deal-breakers big enough to kill any business organisation.