Spoiler Alert: This post contains spoilers for HBO’s Silicon Valley, S3, E9, “Daily Active Users”.
The 7 moments I, a startup growth strategist, threw popcorn at Silicon Valley on Sunday night… the TV show that is.
Sunday is probably my favourite night of the week.
I put down work. I do stuff that otherwise gets neglected. And I settle in for HBO new episode time.
It’s the night I get out my Buddha Bowl, organic, non-GMO coconut oil popcorn (seriously, if you haven’t tried it, why the heck not?).
And it’s the only night I actually watch anything… and certainly without multiple devices an arm’s length away (well if I’m being honest, in my hands).
And spring season is by far HBO’s best.
Game of Thrones. Followed by Silicon Valley. And Veep.
But boy did it get ruined this past Sunday. By Richard Hendricks, By Pied Piper, By Silicon Valley.
I like Silicon Valley. From the absolutely ridiculous to touchy too-close-to-home moments.
Although it obviously takes many creative liberties with reality, it is a TV show after all, this episode wasn’t as far from reality as it should be…
And because of that, I’m still picking up the popcorn that my trusty Roomba couldn’t reach — on the TV, on the bed, under the pillows — you name it.
As a growth strategist who consults in tech (I know you hate me already because I used the c-word… consulting, but I’m actually pretty awesome), I get to help startups, yes like Pied Piper, figure out how to build a product people love and keep loving and tell the market about it… profitably.
But sometimes I see businesses with awesome potential squander it with avoidable missteps.
Case in point, Pied Piper.
It pains me. So much so that my bedroom looked a whole lot more like the Cineplex concession stand floor than a peaceful abode for sleep last Sunday night.
I digress. I really shouldn’t be throwing popcorn.
But since I did, here’s why.
Popcorn Throwing Moment #1: Richard’s conversation with Monica at Laurie’s house about the number of daily active (“DAU”) Pied Piper users.
Why this made me throw popcorn:
The CEO of Pied Piper, Richard, admits to spending “bazillions” on getting customers only to lose most of them because he (and at least he looks sheepish) didn’t optimize the most important metric for their business first.
Lesson to be learned / my rant:
Pouring “bazillions” into getting customers (in Pied Piper’s case, app installs) before making sure your activation and retention rates are at least decent is a tremendously bad idea.
Otherwise, you’re literally throwing away cash.
Worse off, it’s not that Richard doesn’t know this.
Two seconds after telling Monica their retention rates leave a lot to be desired, he acknowledges that the one metric that matters is retention.
This is a classic case of the Error! Hyperlink reference not valid..
While you do need customers in order to improve retention and activation rates, they should have first gotten just enough customers using Pied Piper, let’s say 1,000, so they had the data to optimize activation and retention, before spending tons on customer acquisition.
Popcorn Throwing Moment #2: Richard and Monica watching the user testing group on Pied Piper.
Why this made me throw popcorn:
Richard: Richard says he only ran a tiny beta made up of exclusively engineers. Based on the performance of this beta, they spent millions launching to “regular people.”
Monica: Monica goes “oh shit”. Realizes the massive problem with this. Only then…
Lesson to be learned / my rant:
Richard’s a smart guy. Yet he builds a mass-consumer product on a small beta of only software engineers.
So the onboarding, user interface (“UI”), and messaging is likely nonsensical to anyone who doesn’t have a CS degree from Stanford.
Oh wait, I don’t think they paid any attention to optimizing messaging and onboarding. At all.
Note, any startups reading this, please don’t do this. Actually, let’s just avoid doing anything Pied Piper does in this episode. Please. Except one thing. See my note at the end.
Popcorn Throwing Moment #3: Richard spends hours trying to explain what Pied Piper is and how it works to the user testing group.
Why this made me throw popcorn:
It takes Richard several hours to explain what Pied Piper is to the focus group.
Lesson to be learned / my rant:
Messaging is hugely important. If someone can’t understand exactly how a product adds value to their life, whether it’s B2B or B2C, they’re not going to stick around. Being able to distill down that value into a couple of sentences (i.e. your value proposition) your market gets is critical.
Because the market is never going to listen to Richard explain for several hours.
Never mind that it’s unscalable.
And yes, in case you’re wondering, a single string of words can in fact drive acquisition, activation, and retention.
Popcorn Throwing Moment #4: Richard shares the lackluster DAU numbers with the growing Pied Piper team.
Why this made me throw popcorn:
The team looks to be about 15 people now.
Yet it appears there is not a single marketing person in the room.
Lesson to be learned / my rant:
There’s little realization that this is largely a marketing problem.
Bringing on some marketing expertise, if it’s not part of the founding team, is a definite do here.
Pied Piper, or any product, is not Noah’s Ark.
The biggest risk as a startup, yes even for Pied Piper with actual game-changing tech, is being able to profitably acquire and keep customers.
Popcorn Throwing Moment #5: Customer support dude quits. Richard acts like this is a massive, knife in the gut blow to Pied Piper.
Why this made me throw popcorn:
Richard says customer support is going to play a big role if they’re to get to 250,000 DAUs.
And still not one mention of the massive role marketing plays in getting to 250,000 DAUs.
Lesson to be learned / my rant:
Now if Pied Piper had a marketing / growth person, and they quit, then maybe be upset about that person leaving, assuming they were any good at their job, which if this is the situation, they’re likely not.
I’m guessing Pied Piper didn’t get the memo that every company is a marketing company now.
Marketing is no longer just marketing. It’s the strategy for business growth that encompasses “traditional marketing”, sales, product, and data.
Please don’t get me wrong — customer success / support plays an important role in retention. And in the next couple of years, we’ll definitely see CX rise to the top of more dashboards as the one metric that matters a la Slack.
But watching it not dawn on anyone in the room that they might need some marketing help is bothersome.
Why? Because this scenario is not completely unfamiliar.
You get marketing people to solve marketing problems.
The same way you get a dev to solve your dev problems.
And a lawyer to solve your legal problems.
Popcorn Throwing Moment #6: Watching all the failed marketing tactics.
Why this made me throw popcorn:
It’s like watching a car wreck… in slow motion.
Because any growth strategist worth their salt could have told Pied Piper that a few booths at CES and SXSW would not solve their problem.
That Richard doing a few informational sessions would not get them to 250,000 DAUs.
And that they couldn’t swag their way out of a product that cannot activate or retain enough users.
Lesson to be learned / my rant:
The problem is much larger than a few splashy marketing tactics.
Acquisition is not always the most impactful lever for growth. Especially early on, boosting activation and retention can net you a much bigger gain.
This means optimizing your messaging, onboarding, UI, and who you target first.
Instead of spending whatever cash they had left on a custom onboarding animation ad video thing — excluding the fact it was utterly horrific — Pied Piper should have invested in analytics, customer development, and more user testing.
Honestly, by this point, I had a headache. And almost no popcorn left.
Popcorn Throwing Moment #7: Jared buys 7,000 fake DAUs from a click farm.
Why this made me throw popcorn:
Need I say anything?
This is the opposite of boosting retention. The opposite of growth. The opposite of everything product people strive for.
Lesson to be learned / my rant:
If I was advising Pied Piper, this is what I’d recommend to try to boost retention and build the foundation for long-term sustainable growth.
- Analyze quantitative data with an analytics tool.
I’d be using an analytics tool like Amplitude (it has features to make some of the pattern spotting easier), but Kissmetrics, Mixpanel, and Woopra are also good.
[Note: While grabbing the link for Amplitude, I saw they just did a post on this episode of Silicon Valley too. Read it. Some great nuggets there.]
I’d segment out my best users — that is my most active users out of the 19,000 DAUs — and then I’d reverse engineer that backwards, asking what is it about this group of users that makes them more active (i.e. get more value from the product) than the others?
I’d ask questions like this…
- Do I see similar patterns in their Day1, Day2, Day3 usage?
- What patterns can be observed on their path to becoming an active user?
- Did they come through with a different onboarding flow?
- Did they signup from the same source?
- Was I A/B testing certain messaging that most of these folks came in on?
- Where does the retention curve level off across cohorts?
- Can we tighten up our target segment?
- Do one-on-one customer development interviews.
Next, I’d set up some one-on-one customer development interviews with some of the most active users. The more the better.
However, 20-30 is a decent sample size to get us started. I’d need more context to the patterns I’m observing above using Amplitude.
And I’d ask things like…
- What job did they hire Pied Piper to do?
- How did they do this before Pied Piper?
- Could they walk me through how they use Pied Piper?
- Has Pied Piper replaced anything else?
- Invest in more user-testing.
Then, I’d set up some more user testing to identify UI issues.
- Implement in-app surveys.
Lastly, I’d then compliment the quantitative data analysis, one-on-one customer development, and user testing with behaviorally-trigged in-app surveys. I love Qualaroo.
Again, I’d be targeting my most active users segment.
And be asking questions like…
- What’s the main benefit you receive from using Pied Piper?
- What was your intent when you originally downloaded Pied Piper?
- How would you describe Pied Piper to a friend?
So what would I do with all this information?
I’d use this data to design tests to optimize Pied Piper’s onboarding/UX, messaging, and targeting.
I’d use a cohort analysis to see what changes resulted in more DAUs.
I’d turn on the changes that worked, turn off the changes that didn’t.
And repeat. And repeat. And repeat.
It’s hard. It’s a process. But it’s necessary for long-term sustainable growth. Yes, I’m speaking calmly to you, Pied Piper.
7 Real Startup Life Takeaways From This Episode
(Other than that popcorn throwing is juvenile, and something I must never do again).
#1. Don’t do anything like Pied Piper in this episode except what I mention at the end of this post. Of course, this excludes the previous episode where they got 500,000 app installs in 10 days, which is awesome.
#2. If you build it — I don’t care what you build — they will not come. Getting and keeping customers is your biggest risk today… by far.
#3. Don’t pour money into customer acquisition or lead-generation until you’ve optimized your activation rate and your retention curve has levelled off. Leaky buckets are like the grim reaper of startups.
#4. Don’t think being able to get and keep customers, profitably and at scale, is easy. It’s not. It’s really really really hard.
#5. Your data is your single biggest competitive advantage. Don’t muck it up with fake data (aka a click farm) to make you feel better.
#6. The right messaging — from your value proposition to copy — is tremendously important. It impacts pretty much every metric you’ll ever care about.
#7. If customers don’t fundamentally understand your product or how it provides value for them, throwing money at getting more customers will not solve the problem. In fact, it will make the problem a lot worse.
As much as this episode infuriated me, it makes me love the show more.
Because it showcases some of the problems in growing a startup.
It’s not easy. In fact, it’s freakin’ hard.
And if it wasn’t, we’d all have unicorns.
The One Thing Pied Piper Did This Episode That Was Great
I promised to share the one thing I saw Pied Piper do this episode that made me happy.
What was it?
The dashboard at Bachman’s (aka the Pied Piper office) with the one metric that matters — in Pied Piper’s case DAUs — to orient the whole team around achieving.
Focus is the key to executing to massive success with finite resources.
Oh yeah, and if you want to work with a growth strategist because I’m speaking nonsense or this stuff just doesn’t float your boat then maybe reach out 🙂
