Lecture 6 - How to Start a Startup
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Thank you for coming.
>> Move us all, thank you.
Cool, so you guys this is
awesome,
I've been watching the
lectures in this course,
isn't it absolutely amazing
the content?
And now you're stuck with me
today.
>> We'll, so how that goes.
Unlike Paul, when he was
talking in the Q and A,
and you guys asked him what
he would do if he was at
college today and
he said physics, I actually
indulged myself.
I went in, I went and did
physics,
did physics at Cambridge and
I think physics is
an amazing class to give you
transferable skills that
are really useful in other
areas.
But I guess that's not,
that's not why you're
listening to me today.
Like, physics isn't the
class, like, so I paid for
college doing online
marketing.
Direct sales marketing.
I started with SEO in the
1990s.
I created a paper airplane
site.
I had a monopoly.
In the small niche market of
paper airplanes globally
which you know,
when you want to start a
startup also see how big
the market could be in the
long term it wasn't great.
But what that taught me was
how to do SEO.
And back in those days it
was Altavista, and
the way to do SEO was to
have white text on
a white background five
pages below the fold.
And you would rank top of
Alta Vista if you just paper
airplanes 20 or 30 times in
that text.
And that was how you won at
SEO in the 1990s.
Like it was a really easy,
easy skill to learn.
When I went to college,
being a physicist,
I thought paper airplanes
would make me cool, and
I was actually the most
nerdy person in
the physics class, so I
created a cocktail site.
Which was how I learned to
program.
And that grew to be the
largest cocktail site in
the UK.
And that really got me into
SEO properly when
Google launched.
So with Google, you had to
worry about page rank, and
you had to worry about
getting links
back to your site.
Which basically, at that
stage,
meant one link from the
Yahoo directory.
Got you to the top listing
in Google if you had white
text, on a white background,
below the fold, as well.
When Google launched AdWords
that's when I
really started to learn how
to do all my marketing.
And that was buying paid
clicks from Google, and
reselling them to eBay for
a small margin of like 20%
using our affiliate program.
And that was what really
kicked me into overdrive
into doing what everyone
nowadays talks about is
growth, or growth hacking,
or growth marketing.
And in my mind it's just
internet marketing.
Using whatever channel you
can to get whatever output
you want.
And that's how I paid for
college and how I
ended up going from being a
physicist to a marketer and
transitioning to the dark
side of the force.
So what do you think matters
most for growth.
You've had loads of lectures
and
people have said it over and
over, so
what do you guys think
matters most for growth?
Someone give me an answer.
>> Great product.
>> Great product.
I agree, great product.
What does great product lead
to?
>> Customers.
>> Customers.
And what do you need those
customers to do?
>> Spread the word.
Someone said stay on your
site.
Someone said that.
That's it.
Retention.
Retention is the single most
important thing for growth.
Now we have an awesome
growth team at Facebook, and
I'm super proud to work on
it.
But the truth of
the matter is we have a
fantastic product.
But getting to work on
growth at Facebook is
a massive privilege, because
we're promoting something
that everyone in the world
really wants to use.
Which is absolutely
incredible.
If we can get people on, and
get them ramped up, they
stick on Facebook.
So many times I go advise
multiple startups,
my favorite was working with
Airbnb, but
I've worked with Coursera,
I've worked with
other ones that haven't done
as well as those guys.
But the one thing that is
true over, and over, and
over again is if you look at
this curve.
The sentiment, the active,
versus number of days from
acquisition.
If you end up with a
retention curve that
ascentotes to a line
parallel to the x axis.
You have a viable business,
and
you have product market fit
for some subset of market.
But most of the companies
that you see fly up,
we talk about growth hacking
and virality and
all of this other stuff.
I'm gonna try so hard not to
swear, but it'll happen.
Their attention curve slopes
down towards the X-axis, and
in the end intercepts the
X-axis.
Now when I show this chart
to
most people they say that's
all well and good.
You had a million people a
day in terms of
growth when you started the
growth team at Facebook, or
you were at 50 million
users.
You had a lot of people
joining the site so
you had a ton of data to do
this.
We used this same
methodology for
our B to B growth.
Getting people to sign up as
self-service advertisers,
we used this analysis to
understand how much
growth we were gonna have in
that market as well.
And in that place,
when I joined Facebook, the
product was three days old.
And within 90 days of the
product launching,
we were able to use this
technique to be able to
figure out what the one year
value of an advertiser was,
and we predicted it for the
first year to 97% of
what the number turned out
to be.
So I think it's very
important to look at
your attention curve, and
this is how we did it.
If you see here.
This red line is number of
users,
who have been on your
product for
a certain number of days.
So, a bunch of people, that
should say zero,
a bunch of people will have
been on your product,
all of your users will have
been on it at least one day.
But, if your product's been
around a year, or whatever,
you will have zero users
who've been on it 366 days.
Make sense?
The curves sensible?
Cool.
So what you then do is look
for all of your users,
who have been on your
product one day.
What percentage of them are
monthly active.
100% for the first 30 days
obviously,
because monthly active they
all signed up on one day.
But then you look at 31.
Every single user, on their
31st day after registration,
what percentage of them were
monthly active, 32nd day,
33rd day, 34th day?
And that allows you,
with only something like
10,000 customers or
whatever, to get a real idea
of what this curve is
gonna look like for your
product.
And you're gonna be able to
tell does it asymptote.
And it'll get noisy out
towards the right-hand side.
Like I'm not using real
data.
It'll get noisy out towards
the right hand side, but
you'll be able to get a
handle on,
does this curve flatten out
or does it not.
If it doesn't flatten out,
don't go and
do growth tactics, don't go
and
do virality, don't hire a
growth hacker.
Focus on getting product
market fit.
Because in the end,
as Sam said in the beginning
of this course,
idea, product, team,
execution.
If you don't have a great
product,
there's no point executing
well on growing it.
Because it won't grow.
Number one problem I've seen
inside Facebook for
new products, number one
problem I've seen for
startups I ever devised has
been, they don't actually
have product market fit when
they think they do.
So the next obvious question
that people ask over and
over and over again is okay,
so
what does good retention
look like?
Sure I can have five percent
retention but
I'm guessing that Facebook
had better than that, so
that's not gonna be a
successful business.
And I get really pissed off
when
people ask me that question.
Because I think you can
figure it out.
And I love this story, and
this is like my one
gratuitous story that I love
that I'm throwing in here,
so the rest of it may not be
as gratuitous.
But this is a picture that
was published in
Life magazine in 1950 of
one of the Trinity nuclear
bomb tests.
And there's a guy,
Geoffrey Taylor, who's heard
of Geoffrey Taylor.
Awesome.
Yes.
Someone's heard of him.
Geoffrey Taylor was a
British physicist,
who ended up actually
winning the Nobel Prize.
And he was able to figure
out from looking at
this picture, what the power
of the atomic bomb was,
the U.S. atomic bomb.
And Russian's were
publishing similar pictures,
just using dimensional
reasoning.
And dimensional reasoning is
I think,
one of the best skills that
I learned during my
time studying physics back
in the U.K..
And what dimensional
reasoning is, is you look at
the dimensions that are
involved in a problem.
So, you wanna figure out
energy?
Newtons, meters, newtons are
kilograms, meters are second
to the minus 2, so you've
got kilograms,
meters squared, seconds to
the minus 2,
and then you try and figure
out how you can get each of
those numbers from what data
you have.
So, the mass.
Is the volume of this
sphere.
So, that's a meter cubed you
throw in there.
So you've got meters the 5
over seconds the minus 2,
and he was able to use that
to just figure out
what the power of this
atomic bomb was,
what the ratios of the power
between the Russian and
US atomic bomb, and
essentially reveal one of
the top secrets that existed
in the world at that time.
That's a hard problem.
Figuring out what
Facebook's retention rate is
not a hard problem.
How many people are there on
the internet?
Give or take someone throw
something out.
>> 2.4 billion, 2.3 billion.
Something like that right?
Okay, Facebook's banned in
China.
So.
What now?
>> About a billion.
>> About 2 billion?
2 billion.
So
2 billion people on the
internet.
Facebook in their last
earnings call
said something around 1.3
billion in
terms of the number of
active users.
You can divide those numbers
by each other.
And yeah, that won't give
you the right answer.
Course it's not gonna give
you the right answer.
But it's gonna give you
close enough to a ballpark
figure.
Of what the retention rate
looks like for Facebook.
If we signed everyone on the
internet up, and
then you will know it is
higher than that.
Similarly if you look at
Whats App, they've announced
six hundred million active
users.
How many people have smart
phones?
You can figure out that
number.
That number is out knocking
around.
It can give an idea of how
many users there are.
Amazon has had a pop at
signing up almost everyone
in the United States.
You know how many people are
online in the US, and
you've got a good idea of
how many
customers Amazon are from
the numbers they throw out.
Different verticals need
different terminal retention
rates for them to have
successful businesses.
If you're in e-commerce and
you're retaining on
a monthly active basis like
20, 30% of your users,
you're probably gonna do
pretty well.
If you're in social media,
and
your first batch of people
signing up to
your product are not like
80% retained,
you're not gonna have a
massive social media site.
And so, it really depends on
the vertical you're in,
what the retention rates
are.
What you need to do is have
the tools to
think about who out there is
comparable.
And how you can look at it
and say,
am I anywhere close to what
real success looks like in
this vertical?
So retention is
the single most important
thing for growth.
And retention comes from
having a great idea, and
a great product to back up
that idea and
great product market fit.
The way we look at whether a
product has great retention
or not is whether or not the
users who install it.
Actually stay on it long
term,
when you normalize on a
cohort basis, and
I think that's a really good
methodology for
looking at your product and
saying, okay, the first 100,
the first 1,000, the first
10,000 people I get on this,
will they be retained in the
long run?
So now how do you attack
operating for growth?
Let's say you have awesome
product market fit.
You have built an e-commerce
site and you have 60% of
people coming back every
single month and
making a purchase from you.
Which would be absolutely
fantastic.
How do you take that and say
now it's time to scale?
Now it's time to
execute was the last thing
in your thought.
Right?
And that's where I think
growth teams come in.
Like my contrarian
viewpoint, or
whatever is if you're a
start-up you
shouldn't have a growth
team.
>> Damn it.
So close.
Halfway through and I
failed.
You shouldn't have a growth
team.
Start-ups should not have
growth teams.
The whole company should be
the growth team.
The CEO.
Should be the head of
growth.
You need someone to set a
North Star for
you, gratuitous shot of the,
you know, NASA page.
You need someone to set a
North Star for
you about where the company
wants to go.
And that person needs to be
the person leading
the company, in my opinion,
from what I've seen.
And Mark is a fantastic
example of that.
Back when Facebook started
lots of people were
putting out their registered
user numbers.
Right?
You'd see registered user
numbers for MySpace.
You'd see registered user
numbers for Compact.
You'd see registered user
numbers.
Mark put out monthly active
users as the number both
internally he held everyone
to.
And said we need everyone on
Facebook, but
that means everyone active
on Facebook.
Not everyone signed up to
Facebook.
So monthly active people was
the number internally.
And it was also the number
he published externally.
It was the number he made
the whole world hold
Facebook to as the number
that we cared about.
If you look at what Yam has
done with What's Up I
think it's another great
example.
He always published send
numbers.
If you're a messaging
application,
sends is probably the single
most important number.
If people use you once a
day.
Maybe that's great, but they
send one message.
They, you're not really
their primary messaging
mechanism, so Yan published
the sentence number.
Right?
Inside AvianB they talk
about nice book, and
they also published that in
all of the,
like, infographics that you
see inside Tech Crunch.
They always benchmark
themselves against how many
nights booked they
have compared to the largest
hotel chains in the world.
They have, each of these
companies,
a different north star.
The north start doesn't have
to be
monthly active users for
every different vertical.
For eBay, when I was there,
it was gross merchandised
volume.
How much stuff did people
actually buy through eBay.
Everyone externally tends to
judge eBay based on revenue.
Actually, Benedict Evans has
done this amazing breakdown
of Amazon's business.
Which is really interesting.
To look at their marketplace
business versus their
direct business.
EBay is all marketplace
business, right.
So eBay's being judged by
its revenue when it
actually has ten times, or
whatever more
gross merchandised volume
going through the site.
And that was the number that
eBay looked at when I
was inside there, and
optimized for.
So every different company
when it
thinks about growth needs a
different north star.
But when you are operating
for
growth, it is critical that
you have that north star and
you define it as a leader.
The reason this matters is.
The second you have more
than one person working on
anything, you cannot control
what everyone else is doing.
Right?
I promise you,
having now might have hit
100 people I'm managing,
I have no control.
It's all influence.
Yes, I can say to one
person, do this one thing.
But then the other 99
are gonna do whatever the
hell they want.
And the thing is, it's not
clear to everybody what
the most important thing is
a for a company.
It would be very easy inside
eBay for
people to say, you know
what?
We should focus on revenue.
Or you know what?
We should focus on
the number of people buying
from us.
Or you know what?
We should focus on
how many people list items
on eBay.
And Pierre and Meg and John.
Those guys, those various
leaders, always said no,
it's the amount of gross
merchandise volume that
goes through our site.
It's the percentage of
e-commerce that goes through
our site.
That is what really matters
for this company.
Which means when people are
having a conversation and
you're not in the room, when
they're sitting in front of
their computer screen and
thinking about how they
build this particular
product or
this particular feature.
In their head,
it's gonna be clear to them
that it's not about revenue.
It's about gross merchandise
volume.
Or it's not about getting
more registrations.
Registrations don't matter
unless they become long term
active users.
A great example of this is
when I was at Ebay in 2004.
We changed the way we paid
our affiliates for
new users.
And affiliate programs are a
bit out of fashion these
days, but
the idea of an affiliate
program is essentially you
pay anyone on the internet.
A referral for sending
traffic to your site.
But it's mostly about
getting access to like,
big marketers who do it on
their own,
like separately and
some really good stories
from this.
We were paying for confirmed
registered users.
So all of our affiliates
were aligned,
they're out getting
confirmed registered users,
to the base site.
We changed our payment model
to pay for
activated confirmed
registered users.
So you had to confirm your
account and
then bid on an item, or buy
an item or
list an item, to become
someone that we paid for.
Overnight when we made that
change,
we lost something like 20%
of confirmed registered
users that were being driven
by the affiliates.
But the ACIUs only dropped
by about 5%.
The ratio of CIU to ACIU
went up, and
then the growth of ACIUs,
massively accelerated.
The cause of this was if you
wanna drive CRUs if
someone searches for
a trampoline, you land them
on the registration page cuz
they think they have to
register and
confirm, before they get
that trampoline.
If you wanna drive ACRUs you
land them on the search
results page within eBay for
trampolines so they can see
the thing they want to buy,
get excited about it and
register when they want to
buy it.
And if you drive just CRUs
people don't
have an amazing,
magic moment on eBay when
they visit the site.
And that's the next most
important thing to
think about, is how do you
drive towards the magic
moment that gets people
hooked on your service?
So in the lecture notes for
this course I've stuck in a
bunch of links to people I
think are brilliant at all
of this stuff.
That retention curve I
showed earlier,
there's a link to this guy
Danny Ferrante
whose incredible talking
about retention curves.
The magic moment, there are
two videos linked.
One is Chimoff talking about
growth,
who was the guy who set up
the growth team at Facebook.
And one is my friend Naomi
and
I talking at F8 four years
ago about how we
were thinking about growth
back then.
And in both of those mem,
both of those videos we talk
about the magic moment.
So, what do you guys think
the magic moment is for
when you're signing up to
Facebook?
You hit that big green
button,
what is the moment when
users are like ha?
Mark even talked about it at
the start up
school a few years back.
>> See your friends.
>> See your friends.
Simple as that.
And usually it is very
simple.
I talked to so many
companies, and they try and
get incredibly complicated
about what they're doing.
But it is as simple as just
when you see that
first picture of one of your
friends on Facebook.
You go, oh my God, this is
what the site is about.
And Zucks talked at Y
Combinator about
getting people to ten
friends in 14 days.
That is why we focus on that
metric.
The number one most
important thing in
a social media site is
connecting to your friends.
Because without that,
you have a completely empty
news feed, and
clearly you're not gonna
come back.
You'll never get any
notifications,
you'll never have any
friends telling you
about things they're missing
on the site.
So for Facebook the magic
moment is that moment when
you see your friend's face,
and
everything we do on growth.
And if you look at the
LinkedIn registration flow,
or you look at the Twitter
registration flow,
or you look at what WhatsApp
does when you sign up,
the number one thing all
these services look to
do is to show you the people
you want to follow,
connect to, send messages
to, as quickly as possible.
Because in this vertical,
that's what matters.
When you think about Airbnb
or you think about eBay,
it's finding on eBay that
unique item,
that PEZ dispenser or broken
laser pointer that you
really, really cared about,
and wanted to get hold of.
Like when you see that
collectible thing that you
were missing, that is the
real magic moment on eBay.
When you look on Airbnb and
you find that first, you
find that,
that first listing that's
like a cool house that you
can stay in and
when you go through the
door, that's a magic moment.
And similarly on the other
side,
when you're listing your
house,
the first time you get paid,
is an amazing moment.
When you're listing an item
on eBay,
the first time you get paid
is a magic moment.
You should ask Brian what he
thinks,
cuz they've done these
amazing storyboards which I
think has been shared, of
like the journey through
a user's moment on life on,
on Airbnb and how excited.
Isn't, he's talking in three
lectures time?
The guy's awesome at talking
about the magic moment and
getting his users to feel
love and
joy and all this stuff.
So think about what the
magic moment is for
your product, and
get people connected to it
as fast as possible.
Because then you
can move up where that blue
line has asymptoted.
Then you can go from 50%
retention to 60% retention
to 70% retention easily, if
you can connect people with
the thing that makes them
stick on your site.
The second thing to think
about is everyone in
the Valley gets wrong, that
we optimize when we
think about growth for
ourselves.
So my favorite example is
notifications.
Again, talk to lots of
companies, advise lots of
companies, every single
company when they
talk about notifications,
goes, oh I'm getting too
many notifications, I think
that's what we
need to optimize for in
notifications.
Okay, are your power users
leaving your site
because they're getting too
many notifications?
No, then why would you
optimize that,
they're probably grownups
and they can use filters.
What you need to focus on is
the marginal user.
The one person who doesn't
get a notification in
a given day, or month, or
year.
Our experience of our
products, and
by the way like building an
awesome product is
all about thinking about the
power user, right?
Building an incredible
product
is definitely optimizing for
the people who use your
product the most.
But driving growth,
people who are already using
your product all the time,
are not the ones you have to
worry about.
So, in this Danny Ferrante
video there's also this link
from the lecture page,
there's also talk about our
growth accounting framework
that we use to think about
for growth.
And we looked at new users,
resurrected users,
people who weren't on
Facebook for 30 days and
came back, and churned
users.
And the resurrected and
churn numbers for
pretty much every product
I've ever seen,
dominate the new user
account.
Once you reach a sensible
point of growth,
a couple of years, and
whatever.
And all those users who were
churning and
resurrecting, had low friend
counts.
And didn't find their
friends, and
so weren't connected to
the great stuff that was
going on, on Facebook.
And so the number one thing
we needed to focus on
was getting them to those
ten friends, getting them to
the whatever number of
friends they needed.
So think about the user on
the margin,
don't think about where
yourself when
you're thinking about
growth.
So, operating for
growth, what you really need
to think about is,
what is the north star of
your company.
What is the one metric
where,
if everyone in the company
is thinking about it and
driving their product was
that metric and
their actions towards moving
that metric up, you know in
the long run your company
will be successful.
And by the way,
they're probably all
correlated to each other so
it's fine to pick almost any
metric.
Whichever one is like the
deepest, like, that you feel
the best about, that aligns
with like your mission and
your values, probably go for
that one.
But realistically, daily
active users
fairly correlated to monthly
active users.
We could've gone with either
one.
Amount of content shared,
also very correlated to
how many users there are
because, guess what,
you add a user, they share
content.
So, lots of things end up
being correlated.
Pick the one that fits with
you and
that you know you're gonna
be able to stick with for
a long time, but have a
north star.
Have a north star and know
the magic moment that when
a user experiences that,
they will deliver on that
metric for you on the north
star, and then think about
the marginal user, don't
think about yourself.
Those are, I think, the
really important points when
you're operating for growth.
Everything has to come from
the top.
So the last area here is
tactics.
And my hope was that I could
hit a few of these and then
I've got a list of tactics I
wanna go through that
I'm better talking with a
whiteboard and whatever on,
but you can ask me questions
as I'm going through on
those about how they work
and what goes better.
But the important tactics
that you need to think about
this is great guy by the
way,
Tom Fishburne, he lives, he
lives in the Bay Area and
he does these really cynical
cartoons that I love.
So let's say you found your,
your niche market that
you're gonna have
a monopoly on inside the
mousetrap market.
It's a silenced mousetrap
that's sitting under beds so
that if the mice come to
your bed overnight,
like they can be killed
without waking you up, so
that's your niche market.
And your, your mousetrap is
better than anybody else for
that market.
What typically happens in
Silicon Valley is,
everyone think mar, thinks
marketers are useless.
Like I thought marketers
were useless when I
was a physics student, so
I'm
sure as engineering students
you must thing we're awful,
awful people who aren't
useful to have around.
Like, build it and they will
come.
That is something that is
very much the mantra in
the Valley and I don't
believe it's true.
I believe you actually have
to work.
There's a good article,
again, in the lecture page,
from interviewing Ben
Silvermann where he
talks about how the growth
of
Pinterest was driven by
marketing.
It's a really good article
to read into.
I'm biased, of course.
So, the first tactic I
want to talk about is
internationalization.
Facebook internationalized
too late.
Sheryl said it broadly in
public and
I definitely agree with
that.
One of the biggest barriers
to our long term growth and
one of the biggest things we
have to deal with was
all the countries where
there were clones.
Famously Studeveldt said had
Fakebook.css in their,
in their HTML.
And there were a ton of
sites like that out there,
whether it was Studeveldt
site as a clear clone,
Vkontakte, Mixi, Cyworld,
Orkut, there were all these
different social networks
around the world that
grew up while Facebook was
focused on the US.
And so internationalizing
was an important barrier we
needed to knock down, and
knocking down barriers is
often a very important to
think about for growth.
Facebook started off as
college only.
So every college that it
was launched in was knocking
down a barrier.
When Facebook expanded
beyond colleges to
high schools I wasn't at the
company, but that was a
company shaking moment where
people questioned whether or
not Facebook could actually
survive,
the culture of the site
could survive.
Then expanding from high
schools to everyone,
that was like, just before I
joined and
that was a shocking moment
and
that spurred the growth on
to 50 million and
then we hit a brick wall.
And when we hit that brick
wall that was
the point when a lot of
existential questions were
being asked inside Facebook
about whether any social
network could ever get to
more than 100 million users.
Which sounds stupid now, but
at the time no one had ever
achieved it.
Everyone had kind of tapped
out between 50 and
100 million users and
we were worried that it
wasn't possible.
And that was the point at
which the growth team got
set up.
Chimoff brought a whole
bunch of us together.
It was he said very publicly
that he wanted to fire me on
multiple occasions, and he
probably should have done.
But, without Chimoff I
think none of us would have
stayed at the company.
We were a really weird bunch
of people, but
it worked out.
And, the two things we did,
I think, that really,
really drove growth
initially, was number one,
we focused on that ten
friends in 14 days and
getting users to the magic
moment.
And that was something Zuck
drove,
cuz we were all stuck in
analysis paralysis,
saying is it causation, is
it correlation.
Zuck was like, you really
think if no one
gets a friend that they'll
be active on Facebook?
Are you crazy?
The second thing was
internationalization.
It was knocking down another
barrier.
And when we launched it, I
think there were
two things that we did
really well.
Number one was, even though
we were late, and
we were stressed about being
late,
we took the time to build it
in a scalable way.
We moved slow to move fast.
And you can actually read,
hear the full story from
Naomi in one of
the videos linked from the
lecture page.
But what we did was we
wrapped all the strings in
the site in FPT which our
translation script, and
then, or translation
extraction script, and then,
we created the community
translation platform.
So that we didn't just have
professional translators
translating a site we
could have all of our users
translating a site.
And we got French translated
in 12 hours, but
we managed to get to this
day we are now at
104 languages translated by
Facebook for Facebook.
80 plus 70 of those are
translated by the community.
And we took the time to
build something that would
enable us to scale.
The other thing is we
prioritized the right
languages.
So back then the right
languages,
the big four languages were
French, Italian, German and
Spanish, figs and Chinese,
but
we were blocked in China.
>> So we focused on French,
Italian, German,
and Spanish.
Now look at that list,
that's today's distribution
of languages.
Italian isn't on the list
anymore.
French and German are about
to fall off.
In the last year we
quadrupled the number of
people on Facebook in Hindi,
quadrupled.
And so building for
where the world is today, is
an easy mistake to make and
it's what a lot of the other
social networks did.
We built a scalable
translation infrastructure
that actually enabled us to
attack all of the languages,
so we can be ready for
where the future is going
to, is gonna be.
And you'll probably be able
to see some stuff
from our Internet.org Summit
in India about where we
want to go with language
translations later today,
cuz I think they're talking
about that stuff there.
So these are the tactics I
wanna go through now, and
I'll stick with the white
board for that stuff.
But I'd really encourage you
guys as I go through these,
if you've got any questions
about them let me know.
I think this should be like,
a more free form time
anyway.
But I think some these
tactics are quite
interesting.
So Virality.
Yes, I think there are two
ways to look at virality.
There's a great book whoops,
the book on the right here,
by Adam Penenberg, Viral
Loop,
goes through a bunch of case
studies of companies that
have grown through viral
marketing.
And I strongly encourage
you, if
you're interested in viral
marketing, to get that book.
I think Ogilvy on
Advertising's great as well
because chapter seven he's
like if you can't think of
anything else stick a car to
a billboard with
super glue and people will
buy your super glue.
And he's got some really,
he's got some really good
creative tips in there.
>> Like the, the guy's been
dead 20 years and I think he
still, I, I buy everyone on
my team gets both of these
books when they start on my
team.
So virality.
So Sean Park has this model
that he taught or he
told us about when he, when,
when I joined Facebook.
Which is to think about
virality for
a product in terms of three
things.
First is payload.
So how many people can you
hit with any
given viral blast?
Second, he had cooler words
for
these, I'm not quite as
cool.
Second is conversion rate,
and third is frequency.
Payload frequency and
conversion rate, whatever,
that order.
So, how many people can you
hit at once is payload.
How many times can you hit
them per blast is frequency.
And what are they gonna
convert at?
And that gives you
a fundamental idea of how
viral a product is.
So Hotmail is like, the
canonical example of
brilliant viral marketing,
right?
Back when Hotmail launched,
there were a bunch of mail
companies that had
been funded and they were
throwing huge amounts of
money at traditional
advertising.
How many people know the
Hotmail story, of virality?
Awesome, great, new
audience, sorry.
Those two or three people
will be bored.
But Hotmail back in, back at
that time.
People couldn't get free
email clients,
they had to be tied to their
ISP.
And Hotmail and a few other
companies launched and
their clients were available
wherever you went.
You could log in via library
internet or whatever,
school internet, and be able
to get access to that.
Which was a really big value
proposition for
everyone, who wanted to
access it.
Most of the companies, went
out there and
did big TV campaigns and
billboard campaigns and
newspaper campaigns and
things like that forced a
lot of advertising of Yahoo,
all of those things.
But the Hotmail team didn't
have as much funding, and so
they had to scrabble around
to figure out how to do it.
So, what they did was add
that little link at
the bottom of every email
that said,
sent from Hotmail, get your
free email here.
Now, the interesting thing
is that meant
the payload was low.
Right, you email one person
at a time,
not necessarily gonna have a
huge payload.
Maybe you send around some
of those viral spam emails.
But then I'm not sure I'll
click on your link.
The frequency is high,
though because you're
emailing the same people
over and over and over.
Which means you're gonna hit
them once,
twice, three times a day
with that same link and
really move up the
impressions.
And the conversion rate was
also very high because
people didn't like being
tied to their ISP email.
And so Hotmail ended up
being
extremely viral because it
had high frequency and
high conversion rates.
Another example is PayPal.
PayPal, PayPal is
interesting because PayPal
has two sites to it.
PayPal has the buyer and the
seller site.
The other thing that's
interesting about PayPal is
its mechanism for viral
growth was eBay.
And so you can use all kinds
of things for
virality that may not look
necessarily obviously viral.
So PayPal, if you sent
money,
if you said to a seller, I
am going to send you money.
Like, I can't think of a
higher conversion rate.
Frequency was low, payload
was low, but
PayPal did this thing, where
they gave away money when
you got your friends to sign
up for PayPal, and
so that's how they went
viral on the consumer side.
They didn't have to do that
for sellers,
because if I said I'm gonna
send you money via this,
you will take that.
And even on the consumer
side they
went viral because someone
said sign up for
this thing and you'll get 10
bucks.
Why wouldn't you?
So, they were able to go
viral, but
in both cases it was because
their conversion rate was
incredibly high on the buyer
and the seller side.
No.
Because their payload and
frequency was high.
Makes sense?
So this is a really good way
to look at virality if
you wanna say, is this
product viral?
Facebook was not viral via
email sharing or
anything like that.
Facebook was purely viral by
a word of mouth.
Because the interesting
thing about PayPal and
Hotmail Is to use them the
first person had to
send an email to someone who
wasn't on the service.
With Facebook there's no
native way to contact people
who aren't on the service.
Everyone thinks of Facebook
as viral marketing success,
and that's actually, not how
it grew.
It was word of mouth
virality, because it was an
awesome product you wanted
to tell your friends about.
How's everyone doing?
Is this interesting?
Great, question, yes.
>> So when you're talking
about this low pay
load in both of the
examples.
In the later rounds as this
sort of campaign or
whatever you want to call it
gets going.
Aren't you going to have a
much higher pay load as
more and more people are
sending Hotmail] to more and
more folks, and that way
your pay load grows and
grows and grows?
So, the question is in the
first round it
makes sense that it has a
low pay load, but
in later rounds, aren't you
gonna have higher pay
loads as people send more
and more and more emails.
I guess in my head, well,
first and
foremost, I think you
actually,
only send emails to a small
number of people.
So, compared to like the
massive viral engines that
exist today,
where you import someone's
entire contact book.
And send them all.
Send them all an email, or
where you post to everyone's
friends on Facebook.
The actual payloads are
still very small.
Even if it's everyone that
you email on a frequent
basis you hit.
I'm also thinking really per
email sent out.
How many people are on it?
But it's a fair point, like
yeah, as more people get on,
get on Hotmail they'll send
more emails,
as more people use email.
The product actually, grows
more and more successfully.
So, that's a fair point.
Go for it.
>> Doesn't, like, point of
conversion also matter?
So, like, when just click
and sign up.
But if you skip the goal ad
it's
>> Completely agree,
that's why, oh I'm sorry.
Doesn't point to conversion
matters as well, so
on Hotmail, you click to
sign up, but on a billboard
you have to remember that
the URL goes to the website,
type it in, find the
registration button,
click register and sign up.
Yes.
Yes, anything you can do to
move friction out of
the flow.
And going from an offline ad
to an online ad removes huge
amounts of frictions from
the flow.
Obviously.
Totally agree with that.
One more at the back.
>> Aren't frequency and
conversion related?
>> Aren't frequency and
conversion rate related?
Absolutely.
If you hit someone with the
same promotion,
I repeated that.
Aren't frequency and
conversion rate related?
If you hit someone with the
same email over and over and
over again.
All the same banner ads,
this is one of the things
that's fundamental about
online marketing.
The same rules apply to
every channel.
If you hit someone with the
same Facebook ad over, and
over, and over, the more
times you
hit them with the same ad
the less they'll click.
That's why we have creative
exhaustion you have to
rotate creatives on
Facebook.
Same with banner ads, same
with news feed stories.
The fiftieth time you see
the IQ story in
your news feed, you are not
gonna click on it.
If you haven't clicked on
the 49 before,
you're not gonna click on
the 50th.
The same is absolutely true
with these emails.
So, if you send the same
email over and
over and over to people for
an invite.
Or if you send the same
little link at
the bottom over and over and
over to people for Hotmail.
Or I mean the PayPal one's
different because people
just signed up.
But yes, you will get lower
conversion rate.
And the more you hit someone
with
the same message the less
they convert.
Is fundamental across every
online marketing channel,
every online marketing
channel, cool.
Second way, to look at
virality,
which I think is awesome, is
by this guy Ed.
And Ed runs the growth team
at Uber now,
he was at the growth team at
Facebook.
And he was a Stanford MBA
student, and
did a class similar to this,
where they talked about
virility.
And they all went and built
viral products.
And there was a bunch of
press about that actually.
And these brilliance of
these stuff.
The interesting thing about
Uber.
If you look at there growth
team
they're incredibly focused
on drivers.
Because it's a two
sided market place they need
drivers.
That's a huge, huge chunk of
their focus as a team.
Even they've got like
probably the best viral guy
in the world at the company.
So, with virality,
you get someone to contact
import, let's say.
Then the question is,
how many of those people do
you get to send imports?
Then the question is, to how
many people?
Then, how many click?
And you can put extra steps
in this.
You could put how many open,
how many click, whatever.
How many click, how many
sign up.
And then how many of those
import.
So essentially, you want
people who sign up to
your site, to import their
contacts.
You want to then get them to
send an invite to all of
those contacts.
You want to get.
It to all of those contacts,
not just one of them.
Then you want to get a
percentage of those to
click, and a percentage of
those to sign up.
If you multiply out the
percents at every point in
this, this is essentially,
where well this isn't a
percent, this is a number.
If you multiply those out,
that's essentially, the
point where you
get to the question of what
is the k factor.
So, if you have, when
someone imports if on
average they send invites to
100 people.
Sorry doing that wrong,
let's say 100
people get an invite per
person who imports.
And then of those 10% click.
That gets you to 10.
And then, of those, let's
say, 50% sign up.
That gets you to 5.
And then, of those,
only 10 to 20% actually,
subsequently import.
You're gonna be at a point
where you're at 0.5 to 1 as
your K factor.
And you're gonna not be
viral.
So, a lot of things like
Vidi are very good at
pumping, or were very good
at pumping out stories.
They got the cave factor
over one, and it's perfectly
doable to get the cave
factor over one, but
if you have something that
doesn't have high retention
on the back end then it
doesn't really matter.
So, you should look at your
invite flow and
say, what is my equivalent
import?
How many people, per import,
are invites sent to?
How many of those receive
clicks?
How many of those convert to
my site?
How many of those then
import?
To get an idea of your k
factor.
But the really,
important thing is still to
think about retention, and
not to think about virality.
And only do this after you
have a large
number of people retained on
your product per person
who signs up.
So, couple more things we
were gonna touch on.
SEO, email, SMS and push
notifications.
So, in SEO,
there are three things you
need to think about.
First one is keyword
research.
People do this badly all the
time.
So I launched this cocktail
site that I
talked to you about.
I spent a year optimizing it
to rank for
the word cocktail making.
Turns out in the UK no one
searches for
cocktail making.
About 500 people a month.
I dominated that search
term.
It was awesome.
>> I got 400 visitors a
month.
It was amazing.
Everyone searches for
cocktail recipes In the UK.
And in the US, which is the
biggest market,
everyone searches for drink
recipes.
So I optimize for the wrong
word.
So you've gotta do
your research first about
what you're gonna go after.
So, research consists of
what do people search for
that's related to your
sites, how many people
search for it, how many
other people are ranking for
it, and how valuable is it
for you.
Supply, demands and value.
Simple economics I guess.
So you do your keyword
research.
You figure out which
keywords you
want to rank for.
There are great tools out
there to
enable you to do that.
Honestly the best is quite
often the Google AdWords,
keyword planner tool.
Really.
Once you've done, that
the next most important
thing is links.
So, page rank is how all of
SEO is essentially,
is driven and Google is
based on authority.
Now there's a lot of other
things in Google's
algorithm now like do people
search for your website?
There's a lot stuff about
the distribution of what
the anchor text is.
That's send to your site.
So, if you abuse it and
spam it they can pop up with
spam.
White on a white background
five pages below the fold
doesn't work anymore.
But, the single most
important thing is to
get valuable links from
high authority websites
future ranking Google.
Most important thing.
Then you need to distribute
that log inside your site,
by internally linking
effectively.
And when I joined Facebook.
We'd launched SEO in
September 2007,
which was before I joined.
I joined November 2007.
And we'd launched it, and we
were getting no traffic from
the pages we'd launched,
public user profiles.
So, when I went in and
looked at it.
The only way you could get
to any public user
profile was to click on the
footer of the page, for
the about link.
Then click on one of the
blog articles,
then click on one of the
authors, and then spider out
through their friends to get
to all their friends.
Turns out that,
Google was like they buried
these papers,
they're not very valuable,
and
we're not going to rank
them.
We made one change.
We added a directory so that
Google could quickly get to
every page on the site.
And we 100 xd SEO traffic.
Very, very simple change
drove a lot of
upside about distributing
the link love internally.
And then the last thing is
there's a bunch of
table stakes stuff, HML
sitemaps,
making sure you have the
right headers, it's all
covered really well online
for what you wanna do.
I'm gonna stop now and make
sure, cuz we have
a few questions, but, what
other questions are there?
Go for it.
>> We're going to email
actually,.
>> Let's go into email.
Okay great.
Email is dead for people
under 25 in my opinion.
Right?
Young people don't
use email.
They use WhatsApp, they use
SMS,
they use Snapchat, they use
Facebook.
They don't use email.
If you're targeting an older
audience, email is,
pretty successful.
Email still works for
distribution, but
realistically, email is not
that great for
teenagers, especially, and
even people at university.
You know, how much you use
instant messaging apps and
how little you use email.
And you guys are probably,
on the high end of the scale
for email,
because you're in Silicon
Valley.
That being said, on email
the things to think about.
Email, SMS, and
push notifications all
behave the same way.
They all have questions of
deliverability.
So to finish first, first
you have to finish.
Your email has to get to
someones inbox.
So if you send a lot of spam
and
you end up with dirty IP's,
or you send spam from
shared servers where other
people are.
Or if you send email
notifications, from shared
servers where other people
are sending spam from,
you are gonna end up being
put in the spam folder
consistently, and your email
will fail completely.
You may end up, being
blocked and
have your email bounce.
There's a lot of
stuff around email where you
have to look.
When you receive feedback
from the servers you
are sending email too.
500 series errors versus 400
series errors,
you have to be respectful of
how those are handled.
If someone gives you a hard
bounce, retry once or
twice and, then stop trying.
Because if you are someone
who abuses people's inboxes,
the email companies spam
folder you and
it's very hard to get out.
If you get caught, on a
Spamhaus link, or
anything like that, it's
very hard to get out.
It's really important with
email,
that you are a high-class
citizen,
that you do good work with
email because you want to
have deliverability for the
long run.
That counts for push
notifications and SMS2.
With SMS, you can go and buy
SMS traffic, via gray routes
with people with their
having phones strung up.
Attached to a like computer
and pumping out SMS's.
That works for a time but it
always get shut down.
And I've seen so
many companies make these
mistakes.
Where they think they're
gonna grow
by using these kind of
tactics.
If you can't get your email,
your SMS or
your push delivered.
You will never get any
success from these.
Push, you spam your power
users, I know
that's slightly different to
what I said earlier.
But you actually, spam your
power users and
give them notifications that
they don't care about and
make it really hard for them
to opt out.
So, there's no settings
where they can opt out,
and they start blocking you.
You can never push them
once,
they've opted out of your
push notifications.
And it's very hard actually,
to prompt them to
turn them on once they've
turned them off.
So, number one thing to
think about about email,
SMS, and
push notification is you
have to get them delivered.
Beyond that,
it's a question of open
rate, click through rate.
So, what is the compelling
subject line you
can put there.
So, that people are gonna
open your email.
And how can you get them to
click when they visit?
Everyone focuses towards
doing,
marketing email that are
just spam.
In my opinion Newsletters
are stupid.
Don't do newsletters,
because you'll
send the same message to
everyone on your site.
Someone, who signed up
to your site yesterday
versus someone,
who's been using your
product for three years.
Do they need the same
message?
No.
The most effective email you
can do is notifications.
So, what are you sending?
What should you be notifying
people of?
And this is a great place
where we're in
the wrong mindset.
As a Facebook user I don't
want Facebook to email me
about every like I receive,
because I receive a lot of
likes cuz I've got a bunch
of Facebook friends.
But as a new Facebook user,
that first like you receive
is a magic moment.
Turning on that notification
across all of
of our channels, increased
the click through rate
on our email, SMS and
push-notifications.
But we only turned it on,
for low-engaged users who
weren't coming back to the
site so
it wouldn't be spamming
them.
So, it was a great
experience.
To think about that.
What notifications should we
be sending
is the first thing you need
to think about on email,
SMS, and push.
And then the second thing
you need to
be thinking about is.
How can you create great
triggered marketing
campaigns?
So, when someone creates
their first,
cross border trade
transaction was one of
the best email campaigns, I
was ever part of at eBay in
terms of click-through
rates.
It was awesome.
Because it was really
timely,
really in context the right
thing to do for the user.
So I'd say, make sure you
have deliverability.
Most important thing.
Focus on notifications and
trigger based email,
SMS, and push notifications
beyond that.
So, I think we're out of
time.
There's one thing I wanted
to finish with which is.
And if you guys have any
questions, I guess, like,
you can reach me and
if I get spammed, I just
won't reply.
We have great spam filters,
no, my only favorite quotes
is from General Patton,
and it's so cliche it's
crazy but it's awesome.
A good plan, violently
executed today is
better than a perfect plan
tomorrow and
one of the things the most
instilled in us.
And Harvey still instills in
us and Mark instills across
the whole of Facebook is
this move fast and
don't be afraid to break
stuff ethos.
If you can run more
experiments than
the next guy, if you can be
hungry for growth.
If you fight and die for
every extra user.
And you stay up late at
night to get those extra
users to run those
experiments to
get the data and do it over
and over and over again.
You will grow faster.
Marcus said he thinks we won
'cause we wanted it more,
and I really believe that.
We just worked really hard.
It's not like we're crazy
smart, or
we've all done these crazy
things before.
We just worked really,
really hard,
and we executed fast.
And I strongly encourage you
to do that.
Growth is optional.
Thank you.