Any
idea that focuses on anything other than the users, and the product
working flawlessly. It’s not about how many users you sign up, how much
money you raise, how sexy your technology is, or how impressive your
Board of Directors is.
Ever sign up for something and then not use it?
I
worked at Pay By Touch (PBT), a SF start-up that aimed to revolutionize
the way the world pays. PBT developed a biometric system that allowed
customers to pay and get loyalty rewards with their fingerprint. Pretty
cool, right?
PBT raised over $300M dollars, with investors including Gordon Getty, NFL players, Ron Burkle, and Hedge Funds like Farallon Capital.
Once
enrolled, customers could buy items with just a touch of their fingers.
With PBT installed in over 2,000 retail locations, in mega-chains like
Albertson’s, and Whole Foods, we held a fancy office party to celebrate
my team’s 3 millionth enrollment.
But amidst
the celebrating, I grappled with an even greater challenge: Ensuring
that customers used our product enough to make our business profitable.
Despite impressive and rising enrollments, net revenue remained flat
because there was insufficient usage to cover enrollment costs.
Users
need to use the product. Full stop. The most important metric for a
start-up is the Churn rate: How many people stopped using it and/or
disabled the product after enabling it?
Founders
of start-ups think they have a great idea. Otherwise why would they
build it? Employees and investors who join, also get it. But what about
the users, and the market?
Getting people to
use and adopt new start-up products is more difficult than raising
money, hiring talent, or building an awesome beta.
Engineers
and product managers at most start ups believe their product is
intuitive and easy to use. For them, it is. But for the majority of
customers, it is not. Initial sign up numbers don’t mean much. Getting
people to try a new product is not nearly as hard as getting people to
regularly adopt it. Many people can’t figure out how to use the product
on initial use, and forget they even signed up.
Most
start-ups fail not because they haven't signed up enough customers.
They fail because they cannot (1) reduce churn and (2) increase
stickiness.
Facebook, Amazon, Apple
& YouTube succeeded because they won over customers, who understood
how to use the product, and the value in coming back to their product.
It’s not really about the idea, it’s about the execution and focus on the product, and users.