Startup Istanbul 2016 / Sam Mallikarjunan - Head of Growth HubSpot
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Presentation of Sam Mallikarjunan at Startup Istanbul 2016. 6-10 October, Istanbul, Turkey
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Startup Istanbul 2016 / Sam Mallikarjunan - Head of Growth HubSpot
- 2. Agile Strategy for Startups Sam Mallikarjunan
- 3. Principal Marketing Strategist @HubSpot Advanced Marketing Instructor @HarvardContEd Sam @Mallikarjunan
- 4. history We live in the one of the most of commerce. interesting periods in the
- 5. “May you live in interesting times.” We are in a mass extinction of businesses.
- 6. 6 new within the last decade 1000 are >70%of businesses on the US Fortune
- 7. 7 The average life expectancy of a Fortune 500 company has declined from around 75 years half a century ago to less than 15 years today and projected to be 5 years if disruption continues.
- 8. Mass extinction brings opportunities for new species to flourish.
- 9. Rogers Market segments Innovators Early Adopters Early Majority Late Majority Laggards Trial users Vast Majority Big Bang Market segments
- 10. 1. Getting Product Market Fit— Can you build something useful that can pull in some money in some way? 2. Getting the Math to Work — Can you acquire customers for X and get at least 3X in return? 3. Getting the Math to Scale— Can you pour lots more money into the top of your machine and keep that at least 3x ratio? 4. Getting Saturated— You are running out of potential customers in your market or being disrupted. HubSpot’s Playbook for Going From Startup to Scale-up
- 11. Getting Product Market Fit START-UP:
- 12. Jobs-to-be- done Step 0: Define the User Assumption “As an x I want to y so that I can z.”
- 13. No one wants a 9 ¾ inch drill bit. They want a 9 ¾ inch hole.
- 16. Fake it before you make it.
- 18. 02 Landing page to generate sign ups
- 19. Button in an existing user interface 03
- 20. Wizard of Oz “Pay no attention to the man behind the curtain." The question you have to answer isn’t “can you build this?” It’s “do people want this?”04
- 22. Iterate
- 23. It’s tempting (but wrong) to look at this chart for P/M fit.
- 24. Product B Does NOT Have P/M Fit Product A Product A Has Product/Market Fit % Active Time Product B 0% 25% 50% 75% 100% How to know when you’ve found product/market fit
- 25. How to know when you’ve found product/market fit
- 26. Just as important as knowing why customers started using your product is knowing why they stopped.
- 27. Congratulations! You have something people will start – and stay – using.
- 28. Getting the Math to Work START-UP:
- 29. Start with the customer, and work your way back. “My CLTV is $1,200 and I want a COCA:CLTV of 1:3” CoCA: $400 CoLA: $40 CoVA: $2 5% Visit-to-lead 10% Lead-to-customer
- 30. Starbucks has an AOV of ~$6* Using the AOV:COTA model, to get a 3:1 ratio a Starbucks marketer would spend ~$2 to acquire that $6 transaction. $14,099Average LTV How Much Would You Spend? * *Source: KissMetrics
- 31. A Business Model A More Profitable Business Model COCA CLTV $1 in, $2 out. $2 in, $12 out. A Faster Growing Business Model $2 in, $4 out. Scalable model. COCA CLTV Cost Of Customer Acquisition Customer Life Time Value CLTV CLTV CLTV CLTV CLTV CLTV CLTV CLTV CLTV CLTV CLTV CLTV CLTV CLTV CLTV CLTV CLTV COCA COCA COCA COCA
- 32. Getting the Math to Scale SCALE-UP:
- 33. 01 02 03 0405 06 07 Am I truly delighting my customers such that they are helping lower my cost to acquire new ones with word of mouth and increasing their own monetary value to me? Am I a startup or a scale-up? Persona perfection? Are we focused? Do I have enough resources on my core delightion? Is my pricing model aligned with the success of my customers? Are my sales reps’ incentives aligned with the customers’ incentives?
- 34. Complexity
- 37. What made Jeff Bezos the best CEO in the world wasn’t that he runs a profitable business. 12% 59% 47% 78% It was that he delivered the best shareholder returns.
- 38. Profit isn't the only goal of business. You want to scale-up. 70% 80% 90% 100%
- 39. Time Investment Period Payback Period Profit Period Growth Leverage Self funding point Break even point Discountedcash Max Cash Consumed
- 40. “Nice rocket ship, how far can it go?” “Oh, it doesn’t go anywhere. Looks cool, though. Right?”
- 42. What’s good for business todayMay send you plummeting to your demise tomorrow. So how do you ensure that you’re still around in the future?
- 43. Moats and Extendable Cores
- 44. Your extendable core is the job you do for customers that a competitor couldn’t replicate without adopting the same cost-structure. You can survive disruption.
- 45. You want to do more than survive disruption. You want to create it.
- 46. “We don’t want to wake up one morning to find ourselves left at the dock while the ship has sailed.” So we compete with ourselves. LeadIn is a good idea. Someone was going to build it. We made sure that someone was us.” Christopher O’Donnell, VP of Product at HubSpot
- 47. 02 01 03 Acknowledge Allocate Assess Adapt 04 Building a Moat
- 49. Reed Hastings knew DVDs, be it by mail or in stores, was not the only future to plan for — the internet was. By innovating a way to use the web and integrate with other products, Netflix’s streaming video effectively staved off disruption. Once-giant Blockbuster found themselves scrambling to react, and are now in the pantheon of distant memory. Netflix Figure 2. DVDs
- 50. Sonos’ future market share is evaporating because of artificial intelligence and voice recognition technology. The company that did innovate for this type of disruption? Amazon. Sonos Figure 3. Wireless Speakers
- 51. “When you’ve done something well enough, you deserve a trophy. But businesses that fail to continually compete against themselves, turn those very same trophies into anchors.” – Christopher O’Donnell, HubSpot VP of Product
- 52. Thank You!
Editor's Notes
- “My name is Sam Mallikarjunan. I write for HubSpot’s executive strategy publication, ReadThink.com, and teach advanced marketing at Harvard DCE. You can find me on Twitter @Mallikarjunan or on my website mallikarjunan.com. I decided many years ago that I wasn’t going to change my last name, so instead I beat everyone in the face with it until they remember it. Previously, I worked in HubSpot “Labs”, where our job was to explore new ideas and new technologies to either protect HubSpot from external disruption or create new opportunities to disrupt other companies. Basically, if someone is going to figure out a way to eat our lunch, we want to figure it out before some MIT nerd does.”
- Mass extinction slide
- “No one is safe from this. We tend to think of descriptors like “Fortune 1,000 company” as fundamental to who the company is. They’re a Fortune 1,000 company, led by a Fortune 1,000 CEO. But 70% of Fortune 1,000 companies are new to the index within the last ten years. That means that 700 companies that had that fundamental label applied to them don’t deserve it anymore.”
- Why is this step 0? Because I couldn’t make it fit into the acronym FIRST and I really like that.
- If you’re selling drill bits (use Vernon Dursley picture), what you have to focus on is the fact that very few people are buying from you because they’re a collector of drill bits. They don’t want a quarter inch drill bit, they want a quarter inch hole.
- If you can’t explain your idea to an animator and get it down into a 30-90 second video, you need to think about it some more.
- It’s the better part of a century old so if I’m spoiling the ending for you I don’t feel even a little bad. If I was an investor I’d absolutely have funded the Wiz. He got a bunch of people to turn over their entire city to him without writing a single line of code. With what I’ve seen over the last 5 or 10 years I’ve stopped thinking that anything is technologically impossible.
- Almost 10X the average advance for a book author in the U.S.
- By now, you know that you have a product/market fit and that you have average customer retentions and can project lifetime values. Start from there, and figure out how hard you can press the gas pedal on growth.
- ***Make bigger***
- Am I a startup or a scale-up? If I hit the gas on customer acquisition will my customer economics fall apart? Are we crisp on our persona definition? Are we chasing too many personas too early? Do we have all of our resources aligned around delighting that persona? (Focus, focus, focus!) Which part of my offering is truly sticky and delighting my persona? Do I have enough resources on it? Is my pricing model aligned with the success of my customers? Are my sales reps’ incentives aligned with the customers’ incentives as well as ours or is it just ours? Am I truly delighting my customers such that they are helping lower my cost to acquire new ones with word of mouth and increasing their own monetary value to me?
- Managing the ratio of these variables is what gives businesses leverage to grow. Marketing controls all of the initial variables.
- “But I’m not going to use HubSpot as an example today, That would be way too easy. Instead, I’m going to tell you the stories of three companies you’ve all heard of, and tell you the stories you may not know of how they went from almost dead back to the top of their game.”
- “Now, I have unwavering confidence that my company, HubSpot, for example, can slog it out with anyone. You want to go toe-to-toe with our sales and marketing team? You’re welcome to try. You want to try and deliver better customer value than our customer success and engineering teams? Good luck with that (chuckle).” “And this week, you’re going to get to see in action how we at HubSpot deal with stuff like this. You’re going to hear about a really cool piece of technology called LeadIn. Why did we do that? It’s entirely possible that some people who might have paid us for the most basic version of HubSpot will instead use this even more basic -- and much more free -- tool instead. But, as our VP of Product, Chris O’Donnell says, “We don’t want to wake up one morning to find ourselves left at the dock while the ship has sailed.” So we compete with ourselves. LeadIn is a good idea. Someone was going to build it. We made sure that someone was us.”