Lesson: Growth from User 0 with Morgan Brown

Step #7 Insights: Insights vs analytics

I think there is a big difference between analytics and numbers and insights which are actual things that you can use to grow your business. Insights are the competitive advantages. Things you know about your market, your world, your users, that no one else knows that you can really use to double down and find growth. I'll give you a couple of examples.

Hotel Tonight, which is a fantastic hotel booking app, they figured out that their conversion rate on their paid acquisition, was double over 4G wireless connections than it was with people connecting over Wi-Fi. That's kind of counterintuitive. Like wait, okay, its way easier to use stuff on my phone and on Wi-Fi than when I'm on 4G. By digging into the data that's exactly the problem. When people are on Wi-Fi, they had no problem shopping multiple competitors’ websites. If you're on Wi-Fi, you will deal with the mobile web version of Expedia and Priceline and Orbitz. You will shop for rooms.

But if you're on a limited bandwidth connection, you don't want to fight with a mobile web experience for other competitors. They learn that when people were bandwidth constrained, if the deal was good enough, if it kind of fit their whatever it was, they were kind of expecting, then they would book. They saw double the conversion rate over these wireless connections. They shifted all their money away from Wi-Fi enabled data connections to wireless connections and doubled their conversion rates on their acquisitions. That's an insight. You can't learn without really being able to dig deep into the data.

Airbnb did something similar. What Airbnb figured out is that listings with high quality photos received two to three times the bookings of other listings. They did something that didn't scale. They went on and they bought a SLR, a DSLR and went around New York and shot really high quality photos to kind of prove out that insight that they found about the higher booking rate was really true. They found that out. Once they learned that, then they started building out a network of photographers around the world in order to scale that. RJMetrics calls this your golden motion or Josh Elman calls it your magic number. Being able to really hone in on that insight and derive growth from it is super critical for any start up.

Insights are not always completely quantifiable. To be honest a lot of the apocryphal stories that you hear about these magic numbers, like Facebook, 10 friends in 7 days and Twitter, 30 followers, is more of a guideline. There's a lot of question about causation versus correlation and that type of thing. It's something that you know you can kind of drive towards. They're not always perfect and not every business is going to be to crystallize that one small thing. You should look for indicators in your product use that suggest that when people hit these milestones they're going to be better customers, better users over time.

You might find that it's a type of person. You might find what their net promoter score is. You can try to quantify the unquantifiable, but sometimes insights are things that you can't actually put a number on.

Very early on in a company’s life, you'll use a lot of qualitative feedback. That's, frankly, because that's all you have. To run true AB tests, multi-variate tests, any level of statistical confidence is going to take you way too long. You just don't have the traffic or the volume to run many tests. That doesn't mean you can't optimize. Optimizing is really driven off these other types of insights. Whether they're qualitative feedback from surveys or whether they're insights from your support team and your help desk or your sales team or customer development interviews. Really, that's kind of very early stage, insights is very qualitative driven.

As you get bigger, as you scale up to much bigger user bases, you can run experiments at a much higher velocity. You can invest a lot more in experimentation. You can uncover statistical truths about your business that you can really hone in on. If you only have a thousand people coming to your website a month, you can't find a magic number. Right? There's way to much variance. But if you have millions and millions of people, you can get pretty close to that number. I think as you get bigger you'll be able to run more quantitative experiments and really drill in on that. Very early on, you have to mix your quantitative experiments with qualitative feedback and that type of thing, to let you optimize and continue to learn even in a low traffic environment.

There's a couple types of growth. Obviously you have sustainable and unsustainable growth. Unsustainable growth happens when you don't have product market fit but you've been able to tap a channel that's been really performing. Any kind of Facebook app that gets really big and then flames out for example is a perfect example of unsustainable growth. Sustainable growth on the other hand, comes from people who really love your product and who are retaining it for a very long period of time. Obviously as a start-up company trying to create a lot of lasting value and get very big, sustainable growth is core to all of that.

Sustainable growth comes from connecting the right person to the must-have experience of your product. When you do that, you create a user who is active and engaged and retained and that type of thing. When you are hustling for early stage growth, you want to be careful that you're not optimizing for unsustainable growth and you're actually finding people that are going to be long term users, who are going to refer their friends to your product, who are going to be advocates for your product out there. That's really the foundation of long-term successful companies.