In chapter seven of his book, The Four-Hour Body, Tim Ferriss talks about why so many people fail to stick to their diets. It's only logical to eat healthy and exercise. However, most people fail at it, although they know that's what's right! Logic fails, he argues. He doesn't go to a lot of details, but it's a behavioral challenge the humans have. What's logical to do remains as nice-to-have until it's too late. It's similar in investing. Most people know investing is the right thing to do but, they delay it. When it comes to fat-loss, Tim argues that you may have a tipping point - Harajuku moment - that turns something nice-to-have to a must-have. Or, you can follow a four-step process to making failure impossible. If the process can make a fat-loss program failure-proof, I should be able to use it to make investing a must-have activity too. I don't think there is a way to create Harajuku moment for every single user that signs up for our Stock Card tool, although we may fine-tune our messaging to try to create that. However, we can guide the users through Tim's failure-proof process and make them stick to an investment regiment that improves their lives.
There are four steps to failure-proofing a diet program in the four-hour body book:
Making a diet conscious is another way of saying that you must be aware of where your are (basline) and what you are doing to get there (progress). I can see this in the most successful diet programs I know - RP diet and Zone diet. Moat successful people at such diets take a phone of their before and after body and post it to Facebook, Insta or on their blogs. It establishes a baseline, and it makes the person aware of his flaws. How can this be applied to our context? How can we apply this step to making our users more aware of their investment habits?
I can imagine a few ways of doing this. We won't know until we try a few things. Therefore, before going to steps 2 to 4, I'm going to run a few initiatives or add a few new features to make investing a conscious behavior for our users. Some of the examples that come to my mind are:
The second one is a feature we've already defined and the dev. team is going to work on it soon. The first one is interesting. I had an idea very early-on to get the users to sign a new contract with themselves to obey by the rules of intelligent investing, and declare their goals (for example, I want 1000 to buy X). We've never implemented it. Maybe, it is something to try at a small scale and see how it goes. The third one is related to the ultimate product we would want to build at Stock Card. It's a longer-term thing though. I've developed the specification document for version zero of such behavioral nudging, and I will be adding more to it as we see users' response to it.
Going back to my panic-moment last week, it looks like the one thing I need to do every day is to make Stock Card users conscious about their current status. I'm willing to give it a try!
When I walk Kratos, a.k.a Stock Card's Chief Goof Officer, I listen to podcasts and audiobooks. Most of them are investing related book. And, every now and then, I pick up an interesting self-help or business book. I've been wanting to listen to Tim Ferris' 4-hour workweek forever, and I finally did it last week. The book is not over, but so are most of the books I listen or read. Usually a chapter or a small section resonates with me and I just stop there. Tim Ferris has a chapter about elimination. He suggests, every day in the morning identify the one thing you would like to achieve that day. And, only do that. Eliminate the rest. This exercise has given me so much grief, to the extend that I questioned if I'm just wasting life building Stock Card.
Scene: I'm all caffeinated, ready to take on the challenge. Laptop on, additional coffee at hand, zero-inbox, and ready to go.
me: What's the one thing that matters to me today?
Me: Well... I need to review the analytics reports, and respond to the social media comments and likes, and check in with the developers, and post new social media posts, ...
me: Is that the one thing that matters the most?
Me: ummm... well, I do all these things to acquire more users and increase their retention and they ultimately convert to a paying user.
me: And, how's that going for you so far?
Me: well... we are still in early days. So, I mean... what else I can do?
Conclusion: I have no clue what's the one thing to do everyday that matters ...
Daly City, CA, 3/28/2019
Lonley and clueless!
The concept of "Promise Land" fascinates me. I learned it from Andy Raskin. There are so many ways you can describe what Promise Land is. Andy does it the best, of course. In simple words, Promise Land is the change you want to create in your customers' lives. It's so simple, but not easy. I have been thinking about it for months, and I'm sure my thinking will evolve in the future.
What change are we trying to create in Stock Card's customers' lives? We want to save people time, because time is the most valuable asset they have. Why? Why now?
It sounds corny, but it isn't. Everything we do takes a toll on our time. Social media nibbles at our time, emails consume our time, Netflix gobbles it up. And, we are left with no time that we can use to make investment decisions and manage our wealth. Therefore, we either make mistakes by relying on our intuitive judgment, news, or friends and family recommendations, or we give up better than average return by choosing the passive investing route.
Now comes Stock Card. It is a place(?) where people can make mistake-free investment decisions without spending hours learning and researching. Stock Card makes mistake-free investment decision-making so easy and intuitive that it literally takes you no time. Why do you have to make mistakes or accept the average return of the market, when you can invest easily and generate results without spending any time on the process? In the end, we let you gain back time. You can go back to your social media, emails, Netflix, or whatever else you'd want to do with it, knowing that you made the right investment decisions.
If we tell Stock Card's story in this way, it's a lot easier to let the customers understand the change we can create in their lives. As Andy puts it, it's not about how we are better than the competitors, it's about whoever that tells the story better!
And, that's our story (at least, for now ;):
"We save you time, because time is the most valuable asset you have in life."
In the days to come, my team and I are going to experiment with this new Promise Land of ours. I will tell you how it goes. By the way, if you want to learn from Andy Raskin, and I think you should, watch this latest presentation he did. Have fun!
It didn't feel that special, it was just a fun day. We turned on the paid version and voila!
On October of 2016, when I started the journey from zero to one paying user, I had imagined that the day we get our first paying user, I will be ecstatic. Instead, on April 19th 2018, when the first user signed up, I was just grateful.
Now, the journey changes. It's now about the journey to 1000 paying users. The 1,000 target is important. It makes us ramen-profitable. A lot to say and write about this new journey. So, stay tuned!
Here we go!
Raising startup capital is all about ...
- A great product?
- An awesome team who have built 10 companies and exited 2?
- It has to be about a great network, and who you know?
- Wrong again!
- Oh, I know... It's about having a lot of users. I'm right this time?
- What is it then? Just tell me!
"Raising capital for your start-up is all about establishing credibility as fast as possible!
That's what stuck with me the most after participating in Founder.University, run by the one and only Jason Calacanis and his Launch team. Usually, I try to avoid conferences and workshops that claim to teach you how to be a better founder, and build a great company. Like everything else in life, building a great company is a logical process. There are a few things you need to know, and after that it's all about the execution. However, a few weeks ago, after I read Jason's Angel book, which is a practical guide to become an angel investor (to be honest, it could be used to become any kind of an investor), I decided to apply for Founder.University. If an investor can so clearly and practically describe the path to become an investor, he must have a unique point of view as to how to build a company and raise capital to grow it.
Here is a recap of what I've learned:
Persistence: In the class, Jason talks about the power of persistence. He asks all founders to send him monthly updates. The very first sign of a winner founder is his/her persistence. If a founder continues to send at least three months of consistent updates about the company's progress, chances are that startup is destined for "unicorn-ness". Most founders get distracted. Many are "tourists" in the startup land. And, several are just clueless about how their company is making a progress. A founder that can briefly and consistently articulate her company's progress is rare to be found. Jason talks about the monthly updates in his Angel book too. Continuance in taking action in spite of difficulties and the strength not to give up are the characteristics he expects.
I even had a chance to experience the power of persistence. When I first applied for the Founder.University program, I didn't get in. There were too many applicants, and I was not selected. The Friday before the program starts I thought to myself "I want to be there." One email follow-up and a few last minute cancellations by other applicants gave me the chance to participate.
Credibility: During the two-day workshop (I was there in-person on the first day and streamed through FB live on the second day) a few of the founders get a chance to pitch to Jason and his VC guests. I found the pitching section the most intriguing. I've learned so much by watching how Jason and his VC guests reacted to different components of the founders' pitch. Jason listens to each pitch like a scavenger. He is looking for credibility. Every piece of information, every slide, the founder's body language, and the way he/she responds to the questions are all moments of truth where Jason and other investors look for the evidences of "credibility".
I didn't get a chance to pitch (lesson learned for the next time. Early bird gets the worm. Show up earlier to put your name on the list of the pitchers.) But, I went back to my pitch deck after the session. And, I realized there is limited in my deck that builds credibility. I'm a storyteller, and my deck is a fantastic story. But, aside from the last slide on my 10-page deck, there is no signs of credibility crumbs. I have some work to do. I can't wait to pitch once again, combining the art of storytelling (which I own) with the power of credibility (which I learned) into a power pitch. Thank you Founder.University!
Special thanks to Jacqui Deegan who made everything possible, and surprisingly knew all of the 50 participants by name! What a superstar she is!
Here below is a collection of ten ideas, quotes and notes from Founder.University, winter 2018 batch, to help you pitch like a unicorn (not a snowflake in a blizzard)!
Our progress has been outstanding! We go up the corporate ladder, we build companies, and become CEOs and leaders. We demand pay-equality and take a seat in the boardrooms. We raise our hands. We shout #MeToo. We own it. We lean-in. We form support communities to shatter the glass ceiling, and eliminate the biases! And, we will continue to do all that for many years to come.
But, men are still the investors, not only the venture capitalist kind, but they are also the angel investors, the 401k investors, the retirement planners, and the stock market investors. Whose fault is that?
Men are trying to create equal opportunities. Take this for example:
In January of 2018, AngelList created Spearhead. A new angel-investing model, giving startup founders $200K to scout and invest in promising startups.
I thought to myself, girls will eat this up! What's not to like here? Be a founder, and fund your network! Find those promising startups that won't get a chance to shine, and now you can make a difference. I thought there would be women applications by millions. But, no... as of the time of writing this post, only 10% of applicants are female... I'm furious!
Let me be honest with you, among us girls, unlike many other frontiers for women, becoming an investor starts in-house. Becoming an investor is a decision we can make. It is a skill we can acquire, and it is time to do so. You want more female founders to get funded, step up become an investor! We want to men not abuse their power, become the power.
In my interview with DOER I said and I want to repeat it here: We want to be on an equal footing with men? It starts with our mindset. It's about us believing that getting crumbs is not enough, asking for the cake, the icing, and the cherries on top (borrowing words from Billie Jean King). And, then it's about not feeling sorry for yourself. Not allowing to feel you are a victim of these gender biases. For example, dream and work hard to be the best investor in the world. Why there is no female equivalent to Warren Buffet? Why are the wealthiest people on earth all men? How come, the wealthiest women on earth are the widows of wealthy men and heirs to the wealth of Dads? Don't believe me? Check those lists. I have been reading them for years...
I have a feeling that most of you girls will hate me for this. Just this past weekend the organizers of Women's International Day rejected my talk proposal to discuss #InvestLikeAWoman! I got sad but not surprised! How could we have an international woman day conference, celebrate women in tech, and not talk about the money! I hope they just rejected me, not my talk!
Love me or hate me! I have to say this again, as I have said time and time ( for example, here, here, and here), it is time for girls to 'Own the money'! Step up, and apply for AngelList's Spearhead program now:
Seriously, what can a non-technical founder achieve in one year? How about:
When you make a transition from being a corporate employee to become a founder, the biggest challenge the sudden endless possibilities. You are so used to having your own "swim lane" and the borders of your responsibilities are pretty defined. But, when you become a founder, you are responsible for everything, and I mean everything. Good entrepreneurs are those who find a way to cut through the noise in their heads, figure out what to focus on and stay resilient throughout the course of days, weeks, and months. Bad ones are those who start with excitement and then the excitement fizzles out as they jump between trying this thing, and going to that meetup and talking to that other guy.
Imagine when you start your entrepreneurship journey with a lot of focus. You don't get pulled into several directions. You plan, build, deliver, test and refine the product without any distraction. And you are able to maintain your momentum over weeks, months and years. Founder Institute does exactly that. It gives you a process to stick by and hold you accountable to it. Not only during the course of the first few months, but even after your graduation. When you feel you are losing your energy or direction, there is always someone to back you up and nudge you toward the right direction. I started StockCard.io as a solo founder about a year ago. We are now a team of four (three and half to be exact). We have a working product with hundreds of users who are actively using it. One year ago, I had no idea we could accomplish all that. Joining the Founder Institute and working with its Silicon Valley chapter- specifically Mike and Ryan who are the program's local directors here in Silicon Valley, have set us on the right path.
Thank you Founder Institute!
Also known as the company's strategic story and purpose...
Everything in life is a sales campaign. If you are a startup founder and you are not coming from a sales background, you most likely hate that. But, that doesn't make it less of a truth. Everything in life is a sales campaign and when you pitch your startup you are actually selling your idea, yourself, your team and your product. The worst thing you can do as a founder is to pitch as if you are pitching. By that I mean, you present your company based on what people tell you what they'd like to hear. Start with a problem, and give a solution, show the market size and brag about your team. Finally, make an ask. These are the questions the audience have, but they answer to them is not what grabs their attention, unless you have a thousands and thousands of users or you have Elon Musk on your team. When you pitch to answer people's questions, without having million users or Elon, it feels like you are cold calling them in the middle of dinner trying to sell them a time share.
Imagine you pitch and after your pitch everyone wants to have a second meeting with you. That's what you want. You don't want to follow a script that most people just zone out. Specially, if you are in your early days. You probably don't have an amazing traction figure or an all-star team. So, you can't just pitch the bare bone. You need to sell it like the greatest salesmen(women). And, that's where Andy Raskin comes in. You've got to read Andy's 'The Greatest Sales Deck I've Ever Seen' post. Read it 100 times and internalize it. When you pitch as if you are are selling a story that's when people put their iPhones down and listen. At StockCard.io we used to pitch and people's reaction was "why are you doing this?". We picked up Andy's methodology, telling the story of what we do, why it matters and is the only thing they need to pay attention to, there is always a follow-up conversation waiting for us at the end of the pitch.
So, thank you Andy Raskin for your brilliance.
For every early founder, it is going to be really difficult to explain to others or even to yourself what's the idea you are working on. Everybody wants to have it in their hands and see how it works. And, to get from an idea to a product - especially for a non-technical founder is literally a nightmare. The sooner you have something for people to see and react to it the faster you start the cycle of feedback and iteration. Otherwise, the idea keeps getting refreshed and revamped without ever getting the light of the day. You miss the chance to get to build a product that actually works.
Imagine when you start, even if you have no technical background, but you have a product that you can show to others. You can build it yourself and actually have a starting point to gather feedback. And, it costs you less than hundred bucks to get there. That's where Weebly comes into place. Weebly makes it possible for a non-technical founder to have a home for her ideas and a starting point to get feedback. It promotes itself as an easy platform to build a website. But, these days, unless you are creating a new technology, everything else is basically a website. The early generation of StockCard.io was built on Weebly. We used it as a landing page to test the idea and build our sign-up list. We also connected it to Google Docs and Sheets and some FB messenger and essentially we delivered our product as some sort of a high-end manual concierge. It helped us get all the feedback needed to build the new generation of Stock Cards which are not live, connected to a well-structured database and data APIs.
We never forget what David Rusenko and his team at Weebly did for us.
Update: After writing this blogpost, we actually went back to Weebly to build a subdomain for our website using Weebly. You never know how and when a good tool such as Weebly would come to the rescue.
Creating a brand identity (logo, social media banners and all that) are very time-consuming and frustrating. Every non-designer knows how much time it takes to google things out and figure out what logo, which font, in what ratios you build your logo and visuals. Do you use an icon or image.. How do you keep it consistent and professional and not spend hours and hundreds or thousands of dollars on it? Time is of an essence when you start. There are several things you need to take care of and spending hours building your logo, resizing it for all your social media and creating a banner for your emails, etc. is not the best use of your time. Successful entrepreneurs don't spend much time on these stuff. At the same time having a beautiful and consistent look is a requirement if you would want to stand out.
Imagine you have a tool that helps you build your brand identity in 1 hour. It gives you just the right amount of flexibility so that you can play with the colour and theme but all the other things such as the aspects and ratios, the color palette, and keeping things consistent across all channels are figured out by that tool. That's what Tailor Brand does. You don't have to be a designer, and you don't need a lot of time. All you need is less than 100 bucks to develop a professional, beautiful and consistent brand identity for your company. We used Tailor brands to create our logo. We use the brand identity package they sent us to guide our colour theme and designs on Stock Card.io. We also use their design studio tool to build all of our social media content, banner and updates.
For us, Tailor brands is like an in-house design team and we are grateful to Yali Sar and his team and product at Taylor Brands.
Also known as user acquisition or traction... (I know, I know, I'm pushing my word choice to fit it in the 'Five Ps' of a non-technical cofounder! But, admit it! It's more memorable this way!
There is one question that as a founder you need to have an answer and almost all founders have no good answer for it. That question is 'What's your traction strategy?' How would you get 1 Million users for your product in a cost effective way. And, oh boy, its damn difficult. The worst thing you could do as a founder is to think that you will find one magical way to acquire users in millions and that will be your holy grail. I've listened to 100s of podcasts about very successful startups on and almost none of them knew how they will acquire their million users from the get go. Successful founders will know that finding the best traction channel is an iterative process.
Imagine you have a very easy to follow roadmap that can guide you through that iterative process to figure out your traction channel. And, it stretches your thinking beyond the usual acquisition channels (social media posts) to think of new ways you would have ever considered. That roadmap is called Bullseye Framework by Justin Mares and Gabriel Weinberg who co-authored Traction: A Startup Guide to Getting Customers. It's a easy to follow and it gives you ideas you can implement today. Most importantly, it works. At StockCard.io we have been using their framework since we started our open beta. We are acquiring users at a consistent rate of 4% per week, without single dollar spent on paid acquisition.
So, thank you to Justin and Gabriel for the Bullseye Framework that teaches you how to acquire users for your startup.
Last night, I pitched our company at ElevatorPitch event by PeopleConnect. It went well, nothing surprising - ranging score of 2 or 4 (no 3s are allowed), not a damn 5, neither a damn 1. Before I get to the main question of today's blog post, I have to get something off of my chest. We are stucked in the mediocre land - a 5 would tell me that we definitely have something, and a 1 would say that we are on the wrong track. But we consistently get either 2 or 4. Mediocre land is demoralizing, however it has a pattern to it. I get a score of 2 from older panelists, and a score of 4 from the younger ones. We are in a situation where people agree there is a problem, but do not want to accept or believe that our product will solve it. I have concluded that we need to show traction. Had my pitch had an extra line saying "and we launched a simplified version of our product in January and our sign-up rate has been increasing by 10% every week", then the scores would have been much more different. I think the time has come that as the CEO I need to make a decision to get us out of mediocrity and into the fantastic land. More to come on this topic in a later post (stay tuned!). Now let's go back to today's question!
In today's post I will talk about one particular question from a panelist who has me thinking since last night. He asked with puzzled eyes "what would Warren Buffet think?". This particular question is what I have been asking myself ever since we started, and it has guided my thinking. I did not get a chance to answer the panelist during the event, however I'd like to pay the question the attention it deserves, and answer it here.
Assim, if you are reading this, thank you for your question! This one post is for you!
What would Warren Buffett think about our product?
Warren Buffet will be so proud! Uncle Warren has a certain style of investing. Based on what I've learned, he believes in and act based on three logics : 1) Invest in great businesses that can create value, 2) Buy them at a great price, and 3) Control your emotions and do not panic-react to the short-term market fluctuations. His decision-making is slow, his taking-action is swift. He reads, learns, and gets to know the companies. He waits for a good price patiently, and when it happens he strikes swiftly. In most cases he believes you need not to do anything as an investor. You need to sit on the sidelines, observe and wait for the right price. Buy only and if only a great business - you've learned so much about that you feel competent of your knowledge - is available at a fair price. In case of uncle Warren, he goes through the process on his own, through his readings, and potentially discussing it with his close circle of competent team. This is a slow process that takes patience and it is the hardest thing for a young and new investor to replicate. Read, and do nothing! Learn, and stay put! Observe, and don't act! It it the hardest thing to do for a new generation of investors that are used to act fast, be busy, try, fail, try again. It is getting harder to become a Warren Buffet. Now, if there was a company that could help young investor do the work that Warren Buffett does, wouldn't that be something Warren Buffett be proud? If there was a company that would tell you whether the companies you are looking at are great businesses or not, wouldn't that be interesting? If there was a company that would read the news, annual reports, and articles, and summarize them into a format you could read quickly and understand effortlessly during your morning train commute, wouldn't that worth paying for? If there was a company that monitored the prices for the moment it is in the vicinity of a fair price value so that you get notified at the right time, wouldn't Warren Buffett be proud? I'd believe so! I'd bet if Warren Buffett was born in 80s or 90s, or he was not rich enough to be compliant with the status quo of his decision making process, he would have built such company himself. But he is old, and rich enough not to care! But we are not, neither old, nor rich enough!
What is it that we are building?
We are building a company that uses the efficiency of technology, and accessibility and abundance of data in order to make it possible for anyone to become a Warren Buffett - or broadly said - to become a better investor. If you still remember, I'm writing this blog post in response to Assim - a panelist in an elevator pitch event I participated last night. One of the other panelists brought up an interesting topic that deserves some attention too. He said and I'm paraphrasing "I used to go to the library to get the data I needed, and I worked hard to find a way to make the data relevant to me and use it to make investment decisions. But my kids do not want to take the time to learn, and make the data work for them." The question is, why can't we use technology and data abundance we are fortunate to have these days into a tool that makes everyone a little bit more like Warren Buffett. The new generation who is used to reliable and free data, prescriptive reviews and online content, and is distracted by rapid noise, news, and drama of online lives, do not have Warren Buffett's patience and discipline. We can help them to be a little bit more like him. We are building a company that uses the efficiency of technology, and abundance of data to enable everyday people and especially younger ones make stock market investment decisions quicker and more effortless.
What's so unique about what we do compared to everything else that exists already?
I realize this question is a bit distanced from the the original question of the post, but it naturally comes to mind when someone (and by that someone, I mean myself) is crazy enough to claim Warren Buffett would be proud of what we do. It is natural to ask what is so special here and how come no one else has been doing it? I wholeheartedly agree with anyone who says all trade platforms and many other tools have a slew of research and analytics tools. I also wholeheartedly agree they are part of the problem. Having access to abundant data does not mean you can make good decisions. Let's experiment! Close your eyes and imagine a 30-year old sitting at the Blue Bottle coffee shop, trying to make an investment decision:
He logs in to a brokerage platform, thinking to himself, where do I start? From a screener tool? From an industry data table? Or would I search for the company I've heard about in the news or during the lunch conversation with my friends! Where to start? And then he gets a Twitters notification. He leaves the screen to check the messages, scrolls down the page, and reads a couple of more things, and then he remembers he was investing. Back to the brokerage platform and he is thinking to himself again, Ok, somehow I landed on one company. Ok, let's make a decision using the data and tools available on this page! I need to make a decision in 5 min or less! Cause that's how I usually find everything else I need online. I've heard it is a good thing to be fundamentalist in investing. Look for fundamentals. What's that P/E ratio? It's green. If it is green why not everybody else buying it? Oh, let's check the social sentiment, or go see what the financial analysts say. Even if it is the best company in the world, isn't it too expensive to buy? But Amazon is too expensive and everybody keep buying it. Will I not be in a better place if I just buy an S&P500 index fund? I've heard no one can pick stocks. What do I do now? Oooo, wait what is this new tool they've added... Why do I need this? Damn it, it's been 45 minutes. Why can't I just make a decision in 5 min!
This is a typical experience of a user in a world with an abundant data. Maybe the previous generation of investors had to deal with lack of data and the companies solved it by keep adding new tools and new data. But the new generation of investors need to deal with extracting insights from the ocean of data, and no one has solved that yet. This phenomenon is not limited to the investors. Internet has made data accessible to everyone, and the process of solving the problem of not enough data, has created the new problem of having too much data. Check Finimize.com, They just raised about $560K in series A funding. They read the news for you, and tell you what's the most important news of the day, and why you should care. Aren't there many other companies that just give you the news? Every website of every news channel does that. Their secret is they tell younger people what's worth their attention and why.
Our product does the same! We tell young investors which data is worth their time and why! We also do that openly, logically, and efficiently. It saves them from getting overwhelmed by the large volume of data, and brings them the insights that matter. Our simple, visual, and interactive one-pagers translate abundant data into insights. We do not give the users yet another set of data, we give them the ability to make sense of the data quickly and effortlessly. Ultimately we'll help our users to become more logical and less emotional investors.
This is a product Warren Buffett will be proud of!
First update (12/27/2017)
Not fundable, because you need a ton of money to acquire users, and no one will fund that!
That's the first sentence that comes out of a typical VC or an angel investor mouth when you pitch them a consumer facing product (B2C). And, it annoys me to my core! Why is that the first thing they think about? Because of all the minor problem-solvers. All the apps and startups that just solve minor first world problems, just improve the lives of people incrementally, just deliver a little something people may or may not crave. Of course, when you are in the business of incremental improvement, cost of user acquisition is high. You have to convince people to give you their time and then some money to fix a very minor and perfectly avoidable pain in their little comfortable first world lives. Why would they do that, unless you find them at the best moment, at the most convenient location, and when they are in the mood for some levity or comfort. That is going to be expensive. But not every startup that is B2C falls into that category. Some of us are solving real pains. Some of us are trying to help people make less costly mistakes. Some of us will save people from their emotionally charged financial disaster, and bring order and logic to their investments. We do not belong in the crowd of "high cost of acquisition" apps. We do not belong in that club! I will prove it!
My side mission to prove VCs and Angels wrong! Here and now, I declare a side mission. A side mission to prove to those VCs and Angels that we are not in the same category as every other B2C product. We are not even in the same universe. Don't treat us that way. We are solving a real problem here! In its simplest form, cost of acquiring customers (CAC) = (Sales + Marketings Costs) / Number of New Customers. So you really have two levers to play with. Reduce your cost of sales and marketing per 1 new customers. Or increase number of new customers per 1 dollar spent on a new customer. So I will split the research into two parts: 1) How to reduce cost of sales and marketing. Or 2) How to increase number of new customers per dollar. I will update this post several times in the weeks and months to come. All I know at this point is that we are not the same. My hunch tells me that if you solve a real problem (as opposed to improving people's lives marginally) there must be a better way, a low cost way to acquire users. I do not know how, but I will find out. I'm just fed up of these presumptions, and I will prove them wrong. Stay tuned!
Second update - Become a Trust Broker (2/11/2017)
My second update on the topic of customer/user acquisition cost is a peek into a startup who has been able to acquire users in millions - NerdWallet. It came to my attention by Ryan, one of the Founder Institute's program directors. NerdWallet has truly mastered the path of content market in the personal finance category. My guess is that their cost of marketing with a focus on SEO is not too low, but they have been able to able to convince visitors to click through and land on their website, and ultimately convert. I want to understand they did it, and what was their secret sauce or unique insights. Let's begin!
NerdWallet - A personal finance website that "demystifies" big financial problems, and get paid a lead generation fee from financial institutions. On their Wikipedia page (ohoom, pun intended!) it says "founded in 2009, the company by 2016 had a valuation of $550 million and projected revenue of about $100 million". They attract about 3 million visitors per months to their website. For a website that its primary value is in its free content, this is one impressive profile. It is even more impressive when you think, there are 1000s of other companies, bloggers, websites, Podcasts, TV shows, radio shows, prints, books, and personal advisors that compete with them. So, what is their secret sauce? What is the unique insight they know and use to be who they are.
Their unique insight (Not so unique for us though! This is one of the pillars of our customers insights at Invest Groove) is the fact that when it comes to financial advice, customers do not trust the insiders. NerdWallet banks on the the idea that "most consumers want to know that they can trust somebody who is not beholden to one of financial institution - Dan Yoo, NerdWallet COO". NerdWallet produces that independent content, and through SEO engines put it in front of the customers. The second unique insight is finding those who are willing to pay for those customers handsomely. The old saying "follow the money" is exactly what they did. NerdWallet creates valuable, free content for the customers and then sell them to the same people who the customers were escaping from at the first place. Basically, NerdWallet plays the role of "trust broker". Trust is broken between financial institutions and customers, and they bridge the two sides together by keeping their independence.
What does this mean for us? Can we be the Trust Broker in the stock investing process for the regular people? The first thing that came to my mind is how a startup called TipRanks is doing just that. They test the financial analysts recommendations for accuracy, and sell the accuracy ranking to the customers. In other words, they assumed the reason the trust is broken between financial analysts and stock investors is in lack of reliability of the recommendations, and they are fixing the trust. They are charging a subscription fee for validating and being a proxy for the trust. The question I need to answer is, how can I position Invest Groove as a Trust Broker, and who are the parties that are interacting with each other? One thing for sure that we want to maintain the independence of being the platform that is built by regular investors for regular investors. Thinking about it, it is really about being the trust broker between regular people. We are the trust broker between peers.
Third update - Podcasting and new, yet proven media channel (2/24/2017)
My third update on this topic is based on my believe that there is still a possibility to acquire users with low cost through channels that the target customers are hanging out. The idea came to me one night when as usual I was googling, going back and forth between my laptop screen, conversation with my hobby, and whatever was on Netflix - chosen by hobby as the entertainment of the night. And I came across a Quora question and answers by Sangeet Paul Choudary. He is a well recognized author of a book called Platform Scale. In his book and on Quora he talks about and I'm quoting "Be the first to get onto a new user acquisition platform: There is a window when a new channel launches when users are still gullible enough to be harvested. Yelp did it with SEO, Zynga did it with Facebook. The same tactics don't work when both the users and the channel get more sophisticated later on." At that moment it striked me that is exactly what we should do. In our case, I don't believe our target customers need to identify themselves as stock market investors, but rather explorers. I then started thinking and exploring what are the new channels that we should be on. Everybody have been on Facebook, Twitter, Google SEO, Radio, and TV. What are and where are our channels? The channels where our target customers are hanging, exploring, and waiting to be discovered. These are two examples of companies who have found or are in the exploration phase of figuring out a new channel.
Podcasts - My fascination with podcasting is coming from my never ending quest to become a better storyteller. Podcasting is a fantastic channel to tell stories that surprises, delights, and emotionally engages the audience in a way that no other media does. Intuutitively, you would think because podcasting is limited to sounds and tunes, other media, TV for instance, have a much higher chance to engage their audience. But for me personally Podcast has an exact opposite effect. While TV is distracting, podcast is engaging. When I watch TV my mind wonders. It happens as well when I'm listening to a podcast except that it is a different mind wondering experience. With Podcast my mind wonders around the story the podcast is telling. I can also listen to Podcast almost everywhere with minimal interruption to other activities. When I'm driving, showering, brushing, cooking, sleeping, eating, you name it. And I think that's the unique power of podcasting. The only question remains is whether podcasting is as new as I think it is and the audience are as explorer as I want them to be?
What does this mean for us? All we need to do is give podcasting a chance. Produce a content that fits the channel, and measure how this new and emerging channel will be our path to acquire users with low cost. I did a bit of research and found that about 91M people in the U.S. have listened to a podcast, close to 60M have listened to one podcast in the last month (let's call them active listeners). If the 90M population of podcast listeners is a good representative of the U.S. adults population, then 25% of them should have money in the stock market and half of them should be self-directed investors. That gives me 11M podcast listeners who also invest in the stock market on their own. Can I have all of them listen to our podcasts, and then acquire them to use our platform at Invest Groove almost at no advertising cost? My plan is to give podcasting a chance. As it stand today, I've reached out to freelance podcast producers, I begged Ginlet media to let me pitch a podcast idea, and I pitched a good friend of mine to be my cohorts. None of these has yet come to fruitation. But, I'm determined to record and publish at least 4 podcasts. I owe it to my little inner storyteller to run wild.
One last note note before I wrap up this update. Are there other even newer channels with more explorers out there that I'm ignoring? As I wrote these sentences, I can't help but wonder whether something like Amazon Alexa or Google Home are the channels that are even better than podcasts and I just need to look into them deeper? I guess, this update might have a second part to it that I did not expect. Stay tuned for my next update.
Fourth update - The power of simplicity and storytelling (2/XX/2017)
Finimize - abc
Yep! I'm a non-funded, non-technical, single founder! I spun a couple of weeks thinking about the founder-shaming dialogues I have had with people of all backgrounds. Living in the Bay Area, and being a non-funded, single, and non-technical founder is either seen as a high probability of failure or as an indication of lack seriousness on behalf of the founder. Just read the application of any well-known or for that matter, any not so well-known incubators and venture capitalists, and in the first 2 to 3 questions you'll come across favoritism toward teams and technical backgrounds. As if the investing community have nailed the anatomy of a successful startup and their selection criteria is a colon of the so-called startup stereotype of a technical team worthy of getting funded. Some go to the extent of declaring their lack of interest in the project itself and focusing on the team only. Majority of even idea-stage venture capitalists and investors reject projects on the basis of being a single and non-technical founder. It is a self-fulfilling prophecy of some sort! By the virtue of not being technical and being single you lose the monetary backing and mentorship of the very same people who can help you find a team and close the skill gaps - including but not exclusive to technical skills. So what should you do if you fall in the the non-fundable quadrant of the startup world?
"Find a technical cofounder as soon as possible, or forget about getting funded and consequently succeeding", said or implied most of the people and mentors I have been talking to in the past couple of weeks. At first, it gave me chills! Am I doomed to fail? If my project doesn't have the anatomy of a successful startup, will it fail? Is finding a technical cofounder and team is my utmost priority? If a technical cofounder is the key to become fundable and consequently successful, then what is the value of a business founder like me? These were questions keep dancing in front of my eyes for every second in the past couple of weeks. The answer might have been "giving it up", or "going back to work and making progress with the startup idea as a side project", or it could have even been "finding a cofounder". I was open to all those possible answers, but I was not willing to accept the advice I was given per the anatomy of a successful startup without giving myself a chance to think through it. Here is the summary of three dialogues I have had with me, myself and I to answer those questions:
Problem # 1: Can the project succeed without a technical cofounder?
Getting to that "no" answer was not easy. It took me several days, thinking and chatting with advisors and potential customers to refine the original idea and mold it into something that customers and users would still use and get value from while it can be delivered using an off-the-shelf software out there. Not every startup project needs a technical cofounder assuming that 1) it is not building a new technology but rather using it to deliver its products, and 2) the business founder is open to refine the delivery model to lend itself to an off-the-shelf solution without sacrificing the core value. These two criteria might disqualify your project as a startup but would that matter? You could be just a company enabled by technology.
Problem # 2: Can the project succeed without a team?
There is no doubt that having a team is valuable from two perspective: 1) sounding board and discussion partner, 2) faster or better execution. Former is only applicable when you have at least couple of key activities and they are on hold because you have too many things to do. Unless you are not overwhelmed by the volume of key activities, you do not need a team just yet. The former value of a team as a sounding board and discussion partner can be replaced by your advisory panel. Your advisors do not need to be experienced older mentors. They could be anyone with the skillset different from you who can bring a new perspective. Set up an advisory panel and engage with them regularly in the form of monthly/weekly updates and regular check-ins. Talk with them through the questions you want to answer and discuss the problem you want to solve as if they were your team.
Not every project needs to be funded. Specially if you are a rather experienced business founder with a supportive life partner and some savings that can be allocated to the project. Focusing on getting funded too early or when you do not need it is rather a distraction. Only explore raising funds if you have 2-3 key activities that you cannot afford to do and they are critical to the success for your project.
Problem # 3: Can the project succeed without funding?
At last, I decided to keep going as a single founder, non-technical, non-funded project. They may not call me a startup, but I rather succeed than being a startup. I may never get funded, but I rather find those paying customers than getting funded. Getting funded is not a goal, it is just a means to an end. They may not put my name in the list of hot startups to watch in 20XX, but I rather build a company that creates value for its customers than getting street credit in the Bay Area meetups and xyzCons. I'm not ashamed of being a single founder, non-technical and non-funded. But rather I'm curious to see how far these titles would take me!
Call me startup or not, at the end of the day, I do not need to have the anatomy of a successful startup to be one!
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