Shahriar Amin’s Post

Customer acquisition costs kill a startup like a serial killer stalks its victims. Because acquiring Customers ≠ Buying Growth (Yes, that's true believe it or not!) You are not growing when you rely on only paid media to grow your business because you are not growing customers, you are buying customers. And when money stops, you die. Many startups fall into the trap of equating customer acquisition with paid media spending, believing that pouring money into ads will fuel exponential growth. However, data suggests otherwise. According to a study by McKinsey, startups that rely solely on paid media for customer acquisition face sustainability challenges, with high customer acquisition costs (CAC) and limited lifetime value (LTV) ratios. Recommendation 1: Focus on a Sustainable Business Model: Instead of relying solely on paid media, startups should prioritize building a sustainable business model where each component of the value proposition contributes to customer acquisition. This involves identifying and leveraging organic acquisition channels, such as word-of-mouth referrals, content marketing, and partnerships, to drive growth without solely relying on paid acquisition. Also business model failure comes when CAC (the cost to acquire customers) exceeds LTV (the ability to monetize those customers. A well-balanced business model requires that CAC is significantly less than LTV Recommendation 2: Build a Brand, Not Just a Customer Base: Investing in brand building is essential for long-term growth and sustainability. By cultivating a strong brand identity, startups can create lasting connections with customers, fostering loyalty and advocacy that extends beyond paid advertising. Brands like Spotify which is finally going towards profitability as well as jumped in its customer acquisition with 602 million active subscribers last quarter have demonstrated the power of brand building in driving organic growth and sustaining customer acquisition efforts over time. They are well on their way to meeting their ambitious goal of reaching 1 billion subscribers by 2030. #shahriarsuncommonsense #startup #customeracquisition #startupbrand #sustainablegrowth

Be quick to adapt for industry defining trends But. Be careful of not banking your future on that trend. Here's a cautionary tale. Los Angeles based sleepwear startup Lunya, founded in 2012, had a $50 million revenue by 2021, fueled by covid-19 induced lockdowns when people were staying indoor in their pajama all day long. Yes, we remember that time. We also remember, thankfully, that time didn't last. But Lunya didn't think so. Lunya forecasted that growth will last longer, post Covid and overburdened themselves with a hugh number of inventory, that they couldnt sell. On top, they expanded with many brick and mortar stores to support that scale up, all of which proved to be costly marketing ventures. As a result, within 2 years of reaching their highest ever revenue, the company applied for Chapter 11 bankruptcy. #shahriarsuncommonsense

What Constitutes a Good Growth Rate? According to Y Combinator, a good weekly growth rate ranges between 5-7%. This figure isn't just optimistic; it's realistically attainable, backed by data from hundreds of startups that have passed through Y Combinator's mentoring process. Startups achieving these growth rates are typically on the right track, efficiently validating their market fit and business model. A 10% week-over-week growth is considered exceptional. Startups that achieve this rate are often on a rapid trajectory, experiencing viral adoption or heavy demand for their offering. This level of growth can help a company stand out to investors, often leading to increased funding opportunities and higher valuations. For instance, Dropbox, a Y Combinator alum, sustained significant growth rates in its early stages by doubling its user base every three months, effectively manifesting the exponential growth potential sought by venture capitalists. Conversely, a growth rate of around 1% per week signals stalled progress. At this rate, a startup may struggle to demonstrate enough traction to secure further investment or might indicate fundamental issues such as lack of product-market fit or operational inefficiencies. For startups, this is usually a critical moment to pivot or reassess their strategic approach. Taking a closer look at successful Y Combinator graduates can provide additional context. Airbnb, another graduate, experienced exponential growth after pivoting from their initial concept of air mattresses for conference attendees to a broader peer-to-peer apartment rental concept. This pivotal shift was fueled by identifying and leveraging high demand periods at popular conference locations, thus boosting their growth rate significantly. Utilizing tools like cohort analysis, startups can segment their growth based on various operational strategies and marketing efforts, aiding in identifying what works best for scaling their business. Moreover, maintaining a growth rate within the 5-7% range ensures they remain appealing to investors, who often seek consistency just as much as rapid growth. #shahriarsuncommonsense

Having a dialogue is a lost art

You need a "Pilot" to stop sinking your startup ship Here's why. 1. Real-World Feedback Is the Breakfast of Champions: Before you can feast on the fruits of product-market fit, you must first till the soil with customer feedback. Piloting offers a controlled testing ground where startups can gather this invaluable data straight from the horse's mouth. Studies have shown that startups engaging in pilot programs improve their product satisfaction rates by up to 60%, as they can make adjustments in real time based on direct consumer feedback (Source: Startup Trends Magazine). 2. Proof of Concept Is Your Golden Ticket: In a world where investors are more elusive than ever, having a proof of concept can be the difference between "Who are you again?" and "Take my money!" A successful pilot not only demonstrates the viability of your product but also showcases potential for scalability and profitability—a language investors speak fluently. According to the Tech Venture Capitalist’s Handbook, startups that have completed a successful pilot program see a 73% increase in funding opportunities compared to those that skip straight to market. 3. Risk Reduction: The Entrepreneur's Best Friend: Let's face it, launching a startup is like playing a high-stakes game of poker, but with a successful pilot under your belt, it's like playing with a peek at the other players' cards. By identifying and addressing potential issues early, you drastically reduce the financial and reputational risks associated with a full-scale launch. The Global Startup Ecosystem Report highlights a 45% decrease in early-stage startup failures among those that conduct pilot tests, attributed mainly to early problem identification and refinement of business strategies. Parameters for a Successful Pilot: 1) Specific, Measurable Objectives: Know what success looks like for you. Whether it's a user engagement rate, number of active users, or conversion rate, having clear KPIs will help you measure the effectiveness of your pilot accurately. 2) Representative Sample Group: Ensure your pilot group mirrors your target market as closely as possible to gather relevant and actionable insights. 3) Feedback Mechanism: Establish a clear, straightforward process for collecting and analyzing feedback, making it as easy as possible for users to contribute their thoughts and experiences. Before becoming a household name, Dropbox conducted a clever pilot by releasing a simple demo video targeted at tech enthusiasts. The overwhelming positive response and sign-up rate provided clear proof of concept and helped to fine-tune their offering before a wider launch. In its infancy, Airbnb's co-founders piloted the concept by renting out their apartment during a local conference. This small-scale test helped them understand the market's needs and refine their platform before scaling up to become the behemoth it is today. #shahriarsuncommonsense

Startups with solo founders are twice as likely to succeed than startups with co-founders. Now that's a totally counterintuitive statement, especially in this era where investors look for complimentary leaders as co-founders and teamwork being the flavor of the era. Let's dive into the why's. 1. Unparalleled Speed in Decision-Making: Solo founders embody the agility and nimbleness of a cat in a world that demands rapid responses. Without the need for debates, consensus, or the dreaded compromise, decisions are made at the speed of light—or at least at the speed of sound, which is still pretty impressive. This swift decision-making process allows solo founders to pivot quickly, adapt to market changes more efficiently, and seize opportunities that would have otherwise slipped through the cracks of a committee meeting. According to a study by the Harvard Business Review, solo founders are able to make pivotal business decisions 2.3 times faster than startups with multiple founders, giving them a significant edge in the fast-paced startup ecosystem. 2. Crystal Clear Vision: When there's only one captain steering the ship, the direction is clear, and the vision is unobstructed by potentially conflicting opinions. Solo founders have the unique advantage of pursuing their vision with unwavering focus, ensuring that the company's trajectory aligns perfectly with their original mission. This clarity often results in a more cohesive brand identity and product offering, resonating deeply with the target market. Research by Startup Genome Report highlights that startups with solo founders are 30% more likely to maintain a consistent vision and strategy over their first three years, directly correlating with higher rates of customer satisfaction and loyalty. 3. Mastery of Multitasking: While the adage 'jack of all trades, master of none' often carries a negative connotation, in the world of solo founders, it's a badge of honor. These entrepreneurial warriors possess a wide array of skills, from coding to marketing to making the perfect cup of coffee—essential fuel for those long nights. This ability to wear multiple hats not only keeps overhead costs low but also fosters a profound understanding of every facet of the business. A Forbes article highlights that solo founders often spend 33% less on initial operational costs than their counterparts with co-founders, attributing this to a lean operational model and the solo founder's ability to multitask effectively. Consider Sara Blakely, the powerhouse behind Spanx. Starting with a simple idea and a lot of grit, Blakely navigated the treacherous waters of the fashion and retail industry to turn Spanx into a billion-dollar empire, all without diluting her vision through external partnerships. Then there's Jeff Bezos, who transformed a garage-bound book-selling startup into the behemoth we know today as Amazon. #shahriarsuncommonsense

What are the 3 most common mistakes a Product Manager can make in a startup? The product manager is the captain navigating the often-choppy waters between product vision and customer needs. They're not just glorified feature factories, though that's a common misconception. PMs are strategic storytellers, wielding user research and data to craft products that solve real problems and propel growth. But even the most seasoned PM can fall victim to critical errors. Here, I explore three of the biggest mistakes that can derail your startup, and how to steer clear. 1. Falling in Love with Your Idea (Instead of User Needs) It's easy to get enamored with your brainchild. But according to a Product Alliance survey, a whopping 74% of new products fail. Why? Often, it's because they don't resonate with the target audience. Take Quibi, the short-form video platform. Despite raising a billion dollars and boasting Hollywood names, it fizzled out. The problem? Quibi didn't cater to established viewing habits; 10-minute "snackable" content wasn't what users craved. The Fix: Obsessively focus on user research. Conduct user interviews, A/B test different features, and leverage customer feedback tools. Remember, Steve Jobs famously said, "It's very difficult to design products by focus groups. A lot of times, people don't know what they want until you show it to them." But here's the key: listen to what they do want, not just what they say they want. 2. Chasing Features Over Value Feature creep – it's the monster under the product roadmap bed. Every department wants their shiny new feature included, and PMs can get pressured to cram everything in. But this is a recipe for a bloated, confusing user experience. A study by Forrester found that a whopping 74% of customers feel overwhelmed by the number of features on a typical software product. The Fix: Prioritize ruthlessly. Focus on the core functionalities that deliver the most value to your users. Remember, Facebook started with just a simple way to connect college students. Only later did features like newsfeed and messaging come into play. 3. Communication Silos: When PMs Become Islands Great products are built through collaboration. But PMs who operate in isolation, failing to communicate effectively with engineering, design, and marketing, are setting themselves up for disaster. Here's a real-life example: Remember the launch of Google Plus? The social media platform flopped in part due to siloed communication. Engineers built a product based on assumptions, not user needs, leading to a confusing and ultimately unsuccessful launch. The Fix: Foster an environment of open communication. Hold regular cross-functional meetings, share roadmaps with all stakeholders, and encourage open dialogue. Remember, a PM's job is to be the glue that holds the product team together. #shahriarsuncommonsense