Entrepreneur Office Hours - Issue #83
How to compete against companies as big as Google
I hope everyone had a wonderful and relaxing holiday “break” however you chose to celebrate (or not celebrate). Of course, now it’s January, and it’s time to get back to work… both you and working on your startups, and me answering all your burning questions about entrepreneurship.
I’m kicking the new year off with a very special episode of Web Masters I’ve been saving for a while. It’s an interview I did with Jake Lodwick, founder of Vimeo. Yes… that Vimeo, the company that literally invented online video sharing, possibly even inspiring YouTube in the process. In it, he talks about what it was like battling Google once they’d taken over Vimeo’s biggest competitor. Lots to learn from Jake’s story. Be sure to take a listen.
Also in this issue, I’m sharing an article I published a bit under the radar last week about the challenges of getting venture capitalists to say “no” when fundraising. You might have missed it because… well… who reads articles about entrepreneurship on New Year’s Eve? In case you did miss it, I’m including it here. When you’re done with that, be sure to check out this week’s Q&A where I answer a question about non-revenue traction.
Back to my normal publishing schedule this week, so I’ll be in your inbox again on Friday. Thanks, as always, for reading, sharing, liking, etc. Looking forward to a great 2022!
Your startup won’t be able to take down a company like Google, but, with the right strategy, you can still build something incredible.
Do you love watching videos online? Do you love posting videos online? If you do, you owe a huge thanks to the guest on this episode of Web Masters. It's Jacob Lodwick, founder of Vimeo, the world's first video sharing platform.
Listen now on:
…or search “Web Masters” wherever you listen to your favorite podcasts.
For fundraising entrepreneurs, getting investors to say “yes” is hard, but there’s something more difficult (and almost as important).
Office Hours Q&A
Thank you for your great articles. I look forward to reading all of them each week.
I noticed you write a lot about the importance of having traction. The traction you describe is usually related to revenue. I’m wondering about user traction. What is a good amount of user traction to have, especially if you’re trying to build the type of startup that is more focused on getting large numbers of users than revenues in the early days.
You’re right that I do write a lot about the importance of traction. And, yes, when I’m writing about traction, I tend to write about it in the context of revenue. That’s mostly a byproduct of my biases/familiarity with B2B SaaS startups. At heart, I’m a software guy, those are the types of startups I know best, and, for better and for worse, I end up contextualizing startups in a B2B, SaaS software context. It’s definitely one of my limitations as a “startup guru.”
I mention this because when I’m writing about the importance of traction and equating traction with revenue, I’m doing this is because B2B, SaaS companies should be able to develop early revenue traction. However, if you’re not building the same kind of startup, don’t worry. The important part isn’t revenue. The important part is understanding that every type of startup has some type of relevant early traction metric. As the founder, you need to know what that key traction metric is for your type of startup and then zero in on it.
In your case, it sounds like you’re building what I like to describe as an “eyeballs” business. It’s the type of company that monetizes through advertising, which requires having lots and lots of people looking at your product (e.g. Instagram or Buzzfeed). Yes, in those cases, early revenue traction is going to be difficult because you won’t have a large enough audience to attract big advertising dollars. Instead, you’re focused on adoption.
For these types of businesses, it’s less about any one specific number in terms of overall users and more about overall growth rates. If I’m thinking of investing in an “eyeballs” business, I want to see two things: (1) a consistent growth curve; and (2) a clear explanation for how you’re getting those users in a way that will continue scaling over time. That means rather than telling me how many users you have, I want to see that you had 10k users three months ago, 20k users two months ago, 40k users last month, 80k users this month, and so on. In other words, show me consistent growth. On top of that, explain to me exactly why you’ll have 160k users next month, and 320k users the month after. I want to be sure that growth is going to continue because, in the case of an “eyeballs” business, that’s what traction means… it means consistent and scalable user growth.
Of course, traction means something different in a health tech business, or a CPG business, or whatever else. Again, the important thing is figuring out what traction means for you and your type of startup, and then zeroing in on how to get it.
Got startup questions of your own? Reply to this email with whatever you want to know, and I’ll do my best to answer!