This Week in Startups - Media employees battling “back to work” orders + Startup Checklist E4: Building a Great Product | E1314

Episode Date: October 28, 2021

First, Jason reacts Conde Nast's union refusing to return to the office on November 1 and takes stock of the big tech WFH policy landscape (1:34). We continue the show with episode four of the Startup Checklist, where Jason covers "Building a Great Product" in points 31-40 (13:54).

Okay, today is episode four of the startup checklist, which you can see at this week in Startups.com slash checklist. Today we're going to go over points 31 to 40, which is on building a great product. We're going to go over all the important aspects, simplicity, design, the killer feature of viral loops and more. But first, we're going to talk about getting back to work. We have an old school magazine business in Condé and NAS trying to force your employees to come back to work in November, while Big Tech is increasingly being more flexible.

about working remotely. What's that all about? Let's find out and talk about it after the break. This week in startups is brought to you by LinkedIn Marketing. To redeem a $100 LinkedIn ad credit and launch your first campaign, go to LinkedIn.com slash checklist. That's LinkedIn.com slash checklist. Odo is a fully customizable and fully integrated suite of business apps that lets you build and scale your stack as you. build and scale your business. Your first app is free forever and right now Odu is offering $1,000 off your first implementation pack at Odu.com slash twist. That's ODOO.com slash twist. And Vanta, compliance and security shouldn't be a deal breaker for startups to win new business.

Vanta makes it easy for companies to get a SOC2 report fast. Twist listeners can get $1,000 off for a limited time at vanta.com slash twist. All right, everybody, our first story today. Condé Ness wants employees to come back to work, but a bunch of the unions are fighting it. So here's a little background. If you don't know, Condonest produces something called print magazines.

Now, you may never have experienced these, but they're available at this thing called newsstands or in the postal service, which is a mail service that you've also probably never experienced if you're listening to this publication. I kid. They do Vogue, Wired, Vanity. Fair, the New Yorker GQ, Bonapeteet, they bought Pitchfork. And so they are a New York institution.

Their pairing company is called Advanced Publications. It's a private company. They own a whole bunch of Reddit, which they bought for a song, and now it's going to throw billions of dollars to their bottom line when they go public at some point. But they're a private company. That means most people will not know their revenue profits, et cetera, and they have a very long-term view of their own by a family. And so in a leaked metric, article to the information in March of 2021. Connie Ness had revenue of approximately $1.5 billion, according to an unnamed source. Information is pretty credible, so I would not necessarily take that with a grain of salt.

I might take it with five grains of salt. Their CEO had said they were unprofitable in 2020, but according to this information article, executives hope to break even next year. Really tough to be in the magazine business and to make that conversion over to digital. Well, yesterday I was on Twitter, and I saw that the New Yorkers Union had posted on Twitter the following thread. And I'll just read it to you. Last week, our RTO Working Group met with Condi and asked to express serious concerns about their mandate to return to the office on November 15th. The plan is unsafe.

And Condi is in violation of New Yorker Union and P4K, I guess that's pitchfork union contracts, and the status quo of the Wired Union, Wired Magazine. Condy Nass is evading essential questions about safety protocols and their vague RTO strategy, return to office, I guess, is insufficient in light of high rates of transmission and a union that demands a robust plan. We therefore ask Condi to rescind their RTO date they refuse. Friday's meeting management implied that because we aren't in the office, we aren't actually working a baseless bad faith insult, particularly given CEO Roger Lynch's recent characterization of 2021 as a banner year.

We are proud of our contracts. CondiNAS continue to pretend that they can unilaterally change our working conditions, but they are wrong. We have already filed UOP charge for wire union, owing to the company's unlawful violation of status quo working conditions. We know our rights. We're not afraid to assert them collectively. Okay.

So to put this in context, the question is, are we ever going to return to offices? And does an employer get to say we're returning to offices? Now, in New York City, the current 70s, day average cases is under a thousand. Average for deaths is nine, seven day average. So essentially people dying of COVID or getting COVID might be, you know, some of them dying with COVID. You know, they were going to die anyway. They got COVID. And of course, some of them might be unvaccinated. I'm going to guess that the debts are almost all unvaccinated. So it's one of these situations where a company does get to dictate. You have to come back to the office.

It's clearly a low risk. If you look at it statistically, it's very low risk. Probably similar as this pandemic turns into an endemic. We're probably at the point where going to work is no different than going to Madison Square Garden to watch a Knicks game, going to restaurants. How different, and I'm just asking this as a question, how different is it going to a restaurant, which certainly these employees are doing, or going shopping, which certainly these employees are doing,

or going to an office. Probably no different. Now, I'm not saying that going to an office is the be-all and all. But if the employer wants you to come to the office and that's their decision, well, to the office, you will go or you have the option of not working there. So the union can, you know, make whatever statements they want, but it is the employer's choice because I don't think that this is high risk. Am I sounding crazy to you? I have seen many people going to the Lakers games, the Knicks games. They don't have masks on.

I see people in restaurants with no masks on. Seems like, as of today, in New York City, it's reasonable to go to an office to work. And if you were scared about that, I mean, I don't know how closely packed together they are, but I know Condon S has a ton of money. And certainly, they have tons of office space. So they could spread people out. They could have all kinds of cleaning crews, not that contacting with a desk is how you get it. And certainly they could mandate to come back to the office.

office, you have to have two shots or a booster or even wear a mask could be optional or not, depending on, I guess, if you have an office. So I think, and I'm wondering, this is the only standoff I know about because here in the Silicon Valley, Google, Apple, Facebook, Amazon, they all pushed their return to work back to January. So let's just say that's, you know, Condi and S is demanding this two weeks earlier. And of course, this is all due to the Delta variant. And Apple was like, hey, let's have you come back three days a week. tech is being incredibly, incredibly flexible. So why?

Why is Condé Nast not being flexible? Why are they picking this as the hill to die on? A couple of theories. One theory is maybe they want to lay people off. Maybe they believe that great magazines and great content can only be made in an office. So let's say that they have those two beliefs. I'm guessing that those two beliefs are true. Maybe they want to trim the workforce?

And maybe they believe that to make great content, to make great videos, to do photo shoots, magazine spreads, it's a collaborative process. And listen, I was a magazine editor for over 10 years. I can tell you it is a collaborative process. It would go better with people in the office. Now, if you're a writer and you're just writing a story, yeah, freelancers always did that from home.

They didn't come to an office. Going into an office and typing on a computer is no different than typing on a computer in your home or apartment. So it does seem for artists that it would be pretty cool to be in an office together. So, you know, the other difference here is Condonest, losing money. in a negative spiral maybe or in a dying industry or a challenged industry in big tech. We had our most profitable year ever. So this to me seems like a really interesting, notable case for us to watch because I actually

think what's going on here is and I hate to be a cynic and maybe I'll be proven wrong. I think Condon Ness probably wants to cut jobs and maybe reduce their workforce. So this would be an interesting way to do that is to just force people to go, office. And I probably do think that an old school company believes that being in an office and discussing things is better than being home. And they probably also think some people are goofing off at home. I don't see that in tech because, you know, we have such high expectations of employees. I'm actually seeing employees working harder and I think burnout some more acute problem. I don't know how good Kanday Nast is as an old school company at managing remote employees. And they're

privately held. And let's face it, they probably have old people who are old school running each of these brands. And they probably think, if you're not in the office, you're not working. So it could be a cultural thing. But certainly this is one to watch. Because remember with Apple, you know, they expected employees to return three days a week and they got massive pushback. They still don't have a hard date. They're waiting to see what happens with Delta. And they had a couple of petitions that returned, you know, a thousand signatures. You know, they're petition crazy at Apple now. Amazon has left returning to the office up to individual teams. So each team is going to make a decision. I think that's what we're going to see for most companies is that this is a negotiation.

And so let's have the negotiation occur on a team-by-team basis and see how many people leave. So if my team, you know, in Amazon Prime or Amazon Web Services doesn't come to the office and people resign, okay, we got an early warning system. So that's this grand dance that is occurring. And now each team will decide what's best for them because at the beginning of COVID, Amazon was gung-ho. We're all coming back to. the office. Now, we look at Google. They have scheduled it for January 10th. The initial date was September. That was moved due to Delta. And employees will have at least a 30 days head up, heads up in advance so they can return to office. In other words, if you're in Hawaii,

if you're in Tahoe skiing, if you're in Austin, you know, living with your friend or cousin, yeah, we'll give you 30 days so you can relocate back to the Bay Area, which I think we all know is happening. Google may also cut salaries of people who move to a less expensive area. So that is the other hand-wringing that's going on. People gave people cost of living adjustments in their salary for the last decade here in Silicon Valley because it was so damn expensive. So people would get literally an extra, I'm not talking about 10K. They might get an extra 30K for living here. Certainly I've seen that in the companies I've invested in hiring somebody here who's a senior executive, the first thing you're going to say to you is, I got to go to private school because

the public schools are terrible in San Francisco. Buying a home is $2 million instead of a million. So I need an extra $5K a month, an extra $60K for that. And you know, they're 50K for private school. And now you're like, okay, you've got to put $100K on top of this package. And maybe they ask for an extra $300K. So a CFO that would normally cost $250,000, now cost $500, just for the cost of living expense. I'm talking about senior executives here in very well-funded startups that are in like the Series B,

series D range. Okay, Facebook expects employees back again in January 22. And they also rolled out WFH Forever plan in May. Zuckerberg said in 10 years he could see 50% of the company working fully remote. No word on how many days per week. They'll go back to the office. So, you know, people are going to get to choose where they work. That's the basic concept here.

But Condé and S putting their foot down, very interesting and well worth watching. What do you think is going to happen? You think they're going to fold? We think they're doubling down. If they do double down, I think it's because they want to shed staff. And this is a great way for them to do it. You don't come back, we don't need to pay you. We can redo the staff.

Or maybe you don't come back, hey, we'll make you a freelancer. You get rid of all your benefits. We'll just pay you per story or something like that. So that's the grand negotiation going on. Condon Nass might be thinking about it in an old school way. Here in Silicon Valley, there's like no COVID cases out here. There's very few COVID debts. People are incredibly compliant.

The place is spread out. People do not have a subway like they do in New York. So this is going to get really interesting. And I think we're going to see in the next three months, if return to work happens. And we're going to see in the next 30 days what happens that content is. Let's watch this one. Okay, next up, let's run through our startup checklist.

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hard-earned in the last 50 years of startup science and alchemy and anecdotal experiences. And we've worked really hard building this list. The audience has done a great job sending us feedback. Producers at This Weekend Startups.com, if you want to send feedback to the producers. And you can see these checklists anytime you want at This Weekend Startups.com slash checklist. If you want to take the startup founder checklist and you want to remix it, change it, edit it, you can cut and paste it, just link back to the original and say, hey, I'm riffing on. what Jason and his team did here with their checklist.

And you can change it. You can update it. You can do whatever you want with it. As long as it's not commercial and you link back and give credit. So, you know, like a Creative Commons license type thing on this. We in our first episode did the qualities of a winning founder, basically what's inside of you. Then in episode two, we really drilled down into business models because your business model is your outcome. And your business model defines your investors.

business model defines your team. Your business model defines your product and your marketing. You got to know your business model. Episode two, critically important. And one of those things founders don't think about early enough. Episode three, understanding delighting customers, man, that's what it's all about. At the end of the day, after you pick your business model, and you know you have the qualities of a winning founder, you're going to have to delight some customers. But in order to delight those customers, you need a product. And that's what we're talking about today. I call it the startup flywheel. So welcome to episode. episode four of the startup checklist. You can view the checklist again at this week

and startups.com slash checklists, right? We try to do everything really simple. That's my URL obsession. This weekin startups.com slash slack slash discord slash meetups slash book clubs slash checklist. All of those go to the places you would think. So today, again, this week and startups.com slash checklist if you want to follow along. And we have a YouTube channel where we put some supplemental graphics up on the screen or you can listen to. this in audio, up to you. And maybe you're biking. If you're on your e-bike, please don't watch YouTube.

You get the idea. So let's get into it. I don't want to belabor the point here. I want to get right to the core of this issue. So the first item on our checklist, which is going to be number 31, right? The previous ones are on the website, is do you know what problem or problems? Your product solves. Most great products solve an acute problem.

Now, some people will say, you know, their vitamins, not painkillers. So what problem does Netflix solve when it's entertaining you? What problem does Instagram solve? It's kind of hard to frame those products, entertaining products, as solving a problem, unless you say boredom, which is actually a problem for some people. But we're here talking about the majority of startups. I would say 80 or 90% really fall into the painkiller. they're removing some friction, they're solving a problem, and they're making people's lives better by saving them time, saving them money, or just getting rid of friction and suffering

in your life. You can phrase this as, why does your product exist? I like, what problem does your product solve? Or do you know what problem? Problems your product solves a little bit better. Because why does your product exist? People tend to answer that question in my experience when I asked it that way, they'll tend to give some answer with a bunch of buzzwords. So let's just do some really, really simple answers here. Shopify makes entrepreneurship easy on the internet. It makes it easy to start a store. Shopify makes it easy to start a store. Shopify makes it cheap and easy to start a store. Shopify makes it fast and cheap to start a store on the internet. Really, really simple problem being solved.

there. Creating a store on the internet, what previously was expensive, and previously was time-consuming. Uber, it gets you a ride quickly and cheaply. The end, and if you notice, in both of those, speed and price come up, this is one of the truisms of delighting customers. If you save them time or you save them money, they're going to love you. If you do both, you're going to be a hero. Superhuman, it just makes you get through your email inbox faster. It helps you get to inbox zero. inbox zero is hard for busy people. So now you have to ask yourself, well, how big are those problems for your customers? Well, if you're in email for more than two or three hours a day, if you can make it faster for me,

that's going to add up. Let's say I was in my email box for three hours a day. That's actually close to true for a lot of venture capital, sadly. So you're in your email box for three hours a day. That's about 200 minutes. you make it 10% but 10% faster

you're saving me 20 minutes a day you're saving me 100 minutes a week you're saving me 5,000 minutes a year that's a lot of time you're talking about close to 100 hours of somebody's time it is enormous so

getting a ride quicker you ever try to get a yellow cab when you're in Brooklyn or try to get a yellow cab to go to Brooklyn this is hard stuff at least when I was in New York in the 90s so I would say these are problems that are incredibly, incredibly acute.

In other words, they're intense and they're real and they're hard. So if you want to compete with Uber or Superhuman today, you're going to have to say, well, hmm, you're not going to say, can I be faster than Gmail? Now you've got to say, can I be faster than superhuman? You're not going to say, can I be faster than more and cheaper and better than a yellow cab. Now you're going to be better than a Lyft and Uber and a yellow cab. This is what entrepreneurship, capitalism, and the race to win customers is all about.

And it's why America and democracy combined with capitalism is such a great system. It's the worst system in the world in some people's minds, but it's the best system we've ever come up with. Certainly better than communism and socialism. Here endeth the rant. If you listen to Twist often, you've heard me talk about Odu Suite of business apps a lot. Well, they are going to give you your first app free forever. At $1,000 off, your first implementation pack at odoo.com slash twist. That's odio.com slash twist.

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Again, your first app is free forever and O-Doo is offering a $1,000 credit on your first implementation pack. Just go to O-D-com slash twist for that $1,000 off again, O-D-O-O-O-O-com. slash twist. Point number 32 on our checklist. Can you build an MVP? What is an MVP? It stands for minimum viable product. Minimum viable product is a startup term that is very well known.

And it means the quickest and easiest product you can build that will solve the person's problem. Now remember, Reid Hoffman, who's a friend of the podcast here, he said if you're not embarrassed by the first version of your product, you've launched to your late. In other words, perfection is the enemy of progress, as I've always said. You really want to be able to build an MVP. And the reason you want to be able to build MVP is so you can quickly start getting feedback from your customers. Of course, some people like to build products that are perfect. They spend a lot of time in the lab. You can think about Apple as the canonical

example here. They really, really, really, really suffer over their products. And they make great products. Yeah, they're at scale. But if you're a startup, you need to move faster, and you may not have the ability to spend five years on the iPhone in a laboratory or 10 years on a car. If you're Tesla, you had to get a car out there or else the company wouldn't exist. So looking at big companies and how they do things is not the framing here. This is for startups. And so if you learn how to use bubble, web flow, Zapier, if this than that, these tools for no code let you build MVP's very easily. Invin. for mockups that are functional.

In other words, you can click on the mockups. So typically you have sketches, mockups, and then minimal viable products in no-code, and then hard-coded products. For consumers, they generally can't tell the difference between those last two. And the first two are really easy to do without developers.

And then that third way of doing it, no-code, is this new thing, just in the last five to ten years, that has emerged. And I think it's going to have a profound impact because if you can, do Excel and scripts in Excel and learn how to do, you know, formulas and, you know, link tables, that's probably how complicated no code is. In other words, you don't have to be a developer

and go to coding school for six months and then have a two-year internship or two years to get good at it. You can do it in six weeks and you can get up and running in the first week. You could also ask yourself, do you have UI, UX experience? Do you even know what that is? Really understanding UI and UX is going to be great for you because being able to build a flow for your app is critical if you want to build a great app and building the MVP lets you get clarity of thought so the developers

are not building stuff that gets thrown away and that really upsets developers when you don't have things speced out an MVP basically specs things out and lets you test it so again can you build an MVP okay let's go to checklist item number 33. Is your product simple to use? And the way you can tell this is, if you give it to a user

with absolutely no prompting, which is what happens in a listening lab, they typically frame a listening lab. You can look that up online. We could talk for, you could do a podcast on listening labs. But basically, how quickly can a user use your product? And in a listening lab, you would say, hey, imagine your friend sent you this app. And they would open up Uber and try to figure out how it worked and it would say, you know, put in your location, get a ride. And could the person figure it out is the question here? If they opened up Robin Hood, if they opened up DoorDash, could they figure it out without having somebody coach them or having to go through a tutorial? That really is what you want to do. If you have to do a tutorial for your app, you've probably

failed already. With SaaS being an exception, you know, software for business and SaaS software might be a little more complicated than just a consumer app. So, checklist item number three, Is your product simple to use? You really want simple products. Calm and zero fasting come to mind. You open it up. There's one button. It tells you what to do.

Listen to the DailyCom. Start your next fast. And you're fast. Listen to keep your streak alive. Listen to the next DailyCon. Now, of course, there are other features in there. You can go deeper. But you really want that core functionality be simple.

You open up TikTok. It plays a video for you. That is the most trending video, depending on how long you spend. on it and if you drill down on that video and look at the comments, they're going to show you more videos like that. They've made it super easy. Twitter, what are you up to? An open box, you post it, you're done. So make it easy. And if it's easy and simple, then users will engage with it. And then the chances of them being delighted and coming back, go way up. If you have to put tool tips

in, if you have to explain it, you didn't make it simple enough. It's as simple as that. Okay, number 34, does your product have world-class design? Now, you don't have to have that in the beginning. Uber Taxi had some pretty ugly design in the beginning, and the team was super embarrassed about it. LinkedIn looked terrible. Some websites like Craigslist, Amazon, and eBay, just looked like somebody vomited it on the page,

a bunch of different UI elements, and they haven't changed, but those sites are so easy to use, and people are so used to them that they are exceptions to the rule. and there are the exceptions that make the rule. In today's market, having world-class design, it sounds like a really high bar, but it's actually more doable than ever because a lot of these platforms out there

come with a lot of templates. So if you use Squarespace, you're going to have world-class design. You would really have to work hard to make an ugly Squarespace website. Like, you would have to spend 10 hours to make your website look ugly on Squarespace because all the templates are beautiful and gorgeous and they won't put a template up

unless it's a 9.5 out of 10 or a 10 out of 10. Now, if you're starting from nothing, well, you know, yes, it's possible that it will come up janky and ugly. But what I would say is, you know, any human being who's intelligent enough and driven enough to start a company should be able to learn design and understand good design within a couple of weeks by just using the best design products in the world and searching for design awards and using those.

and just being considered when you look at them. When you look at an app like Com or Robin Hood, you'll start to understand that it has beautiful design, and then you work backwards, who designed these? And so back in the day when I was doing the Mahalo logo, I had seen the Firefox and Thunderbird logo for those open source projects, and I was like, who designed the Firefox logo?

And this guy, Jonathan Hicks, came up. He had charged at the time, I think, $2,000 for a logo. He had a backlog. I said if I really wanted to get the Mahalo logo done by him, I said, if I paid you $4,000, would you be able to find time for me? I'd hate to take time out of your weekend, but I really need you to do this logo. And eventually he said yes, and I thank him for that. And it was a gorgeous logo, and everybody couldn't shut up about how beautiful the Mahalo logo was.

And that really made a difference. And, you know, at that time, logos were cheap and he was starting his career. Today, logos might cost $10 or $20,000. But you can get a logo, and that was a 10 out of 10 logo. I would say you can get a 7 out of 10 logo designed by yourself or by a $35 an hour designer. An 8 out of 10 or a 9 out of 10, you can get there by spending 500 bucks, you know, $1,000 basically do a design, do a logo, refine it, refine it, and you'll get there. And that really is what design is about.

There are people who are world class designers who you might be able to get to work on your startup, but you can start with a 7 or 8. And as long as you know the journey of how to get to a 9 or 10, you'll be fine. So I wouldn't not launch because you don't have a 10 out of 10. But once you get resources, invest in design. And a lot of designers, in fact, the world's best designers don't work for one company. They like to work for many. You know, designers are really, I think, undervalued in Silicon Valley and tech.

If you look at some of the great companies, Cameron at Canva, a designer, Joe from Airbnb, a designer, Mike from Instagram, designer, Evan from Pinterest, designer, and chat. had Hurley from YouTube. A designer. These are all world-class designers. They understand how to make beautiful things. And if you think about all those websites, you're going to think they're pretty crisp, beautiful website. And even Stuart Butterfield, who was a designer, built Slack, and he started that consumerization of SaaS movement. And so I really think you can have world-class design in all startups, whether you're a SaaS business, if you're an infrastructure business, if you're a developer tools. Great design.

Just makes your heart filled with joy. It starts people off in a beautiful way. You ever go into a hotel and the lobby's gorgeous and you just feel a certain way where you go to a restaurant and your dessert comes out and it's gorgeous and it just makes it taste that much better? You go out to dinner and everybody dressed up because it's a formal event and everybody's in a beautiful dress

or suit or anything in between. It just sets a tone that sparks into motion. So don't discount design. Put that as important as your MVP. You don't want perfection to stop you from progress, but you do want to have really beautiful design while being able to move quick. Sock two compliance is critically important.

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If you're counting, that's 10-Hundies. Go get it right now. Vanta.com slash twist. Checklist item number 35. Does your product have the one killer feature is what you have to ask? In other words, the key feature that your product is known for, that one consumer can explain to another consumer. Facebook, let you keep up with friends.

How does it do it? The news feed. Instagram has cool filters that let you make your pictures look better. Spotify. let you listen to the world's any song in the world. Some people might argue that their curated playlist

is the killer feature, but I would argue just being able to listen to any song anytime for one low fee. Robin Hood, most people would say you can trade for free. You get the idea. For Snapchat, and it can change.

For Snapchat, the killer feature was ephemeral messaging. Your message has disappeared. And then it became stories, was the killer feature, maybe filters, and augmented reality will be the future one. So it can change over time,

but you really should have that one killer feature. Slack gets people to send less emails and moves the conversation to real time. There's all different examples here. But one mistake that first-time founders make is they don't know what their killer feature is, the one feature that makes their product better than any other product out there.

And it doesn't always have to be new. Sometimes just taking a feature that other people have done before and making it better or faster or cheaper is enough. You used to be able to use various services on Vindingo and your Palm Pilot to order a taxi. It just didn't work well. You used to be able to upload videos to sites like Eclipse and, you know, real networks and Brightcove. It just didn't work as good as YouTube.

YouTube was free. It was fast. It was simple. YouTube won the day. So sometimes it's the 15th person to do that really simple killer feature that wins the day. and so prioritize that killer feature and think about how you can make it better,

faster, cheaper, better, faster, cheaper, better, faster, and cheaper. And you really just want to keep going on that flywheel with the key feature. And you think about this podcast, we really want to get you the news, we want to get your tools that you can use, and we want to get your interviews with great people.

News, tools, interviews. That's what this week in startups is about. I just made that up. And because it's rhyming, it's very memorable and now our team knows. News, tools, interviews. That's what we do here. And that's what you love listening to this podcast, right?

You love when I talk about the news, it keeps you informed, doing tools right now to help you do your job better, be better executive, be a better founder, be a better startup team member, be a better investor. And sure, the interviews, wow, you hear from somebody who's been successful or doing something interesting in the world? What can be better than that? So, again, really work on understanding what your killer feature or killer. features are, but it really should be one, and do that better than anybody else in the market

and stay focused. And just double down on what's working. If that feature is working, you want to see if you can make it work better. When Uber, Lyft, and before that, Zim rides, I guess is what Lyft used to be called, and there was sidecar. You know, it used to take 30 minutes to get a ride, then it went down to 10 to 20 minutes, and then it went sub 10 minutes. When it went sub 10 minutes, that's when these things blew up. When you could get an Uber in, remember when you expected an Uber to come in under five minutes. I mean, it's been tough with the pandemic and getting drivers back to work. When you can get an Uber in an Uber Uno, one or two minutes in a major city, that was like crazy. People started to, you know, they're like, oh, I have to be somewhere and

it's a 10 minute ride. Great. I can leave in 15 minutes and get an Uber. Remember those days? That blew people's minds. Those days will come back, obviously. But, man, it was awesome. Now, checklist item number 36. Does your product have a hook? Does your product have a hook? do you have a trigger that gets people hooked to your product? And so, you know, according to Neer, he described near Eyal, he wrote the book, hooked to describe what people were doing in Silicon Valley. And he created a pretty good methodology and a framework, a mental model for this. He puts it in four stages, trigger action, a variable reward in investment.

So it's pretty obvious. A trigger happens. You know, a trigger might be a link. back to Pinterest or another social media site like a Facebook or an Instagram. So you see something on Instagram or Facebook. It triggers you to take an action that will eventually get you a reward. So maybe you click and play the video. Maybe you open the app because you got a notification.

And there should be very little friction on that action. And maybe, you know, if it was Pinterest, you find a product you're interested in or a board that makes you want to save it to your board or share it or buy the product. And the variable reward, that's Skinner, obviously. A variable reward is some reward that changes in intensity. And you could also have it based on time, but let's just go with the variableness here. You could be rewarded in Pinterest just by seeing other adjacent images, related images. The same thing happens on Amazon.

You go look at a product, or you do a search for a product, and then all of a sudden you get this action. Am I going to buy it? I'm going to look at these other related items, these adjacent things? am I going to look at the reviews? Do I vote up a review? You get the idea. And then investment. This requires the user to contribute back into the product.

So maybe you bought something on Amazon or you went to a restaurant on Yelp and it says, hey, would you review it? Would you give it a five-star? Would you tell people about it? You ever go to Yelp? And it says, hey, do you know if they have internet here? Is this place good for families? They'll ask you the questions they don't have the answers to yet for a new place.

And it basically fills in everything. the great company FitPod from our portfolio, you know, there is a trigger, which is they automatically generate a new workout for you and people have a need to be in shape. And then the action is the user launches FitBod and they start their workout. The reward is FitBot sets a bunch of incremental and achievable goals. And this lets you feel like, oh, I, you know, the reward is I feel like I'm making progress. I can see my body changing. I can see it in the app.

I can see, you know, what goals I've hit and the progress I'm. making. And then people invest by putting more data into FitBod so they get a more personalized workout. And FitBot immediately generates your next workout, which restarts the cycle, because then you go workout, you take the action, you get the reward, you invest more, and again, you got that nice loop going strong. Okay. Item number 37, do you have a viral loop? This is really easy. You know Robin Hood, you know Dropbox, you know, Uber, give a ride, get a ride. You get somebody to sign up for Robin Hood.

They give you a free stock. The other person gets a free stock. This is how Robin Hood grew massively. And it was probably the best viral loop of all time. Over 50% of users, according to the Robin Hood S-1, the document they file and they go public, were first-time investors. So over half of Robin Hood's, you know, almost 20 million users, and it was like maybe 18 at the time of the IPO, were first-time investors. So what's the hard part about getting somebody to be a first time investor? It's to get them to link their bank account to deposit funds or actually close their first investment.

So Robin Hood fixed all of that. They got rid of all that friction. You don't have to link your bank account deposit funds or actually buy a stock to own a stock. We gave you one. You've now got skin in the game. You now have a two or three dollar stock or a fraction of a stock. And if you look, the results of that free stock referral program were stock. staggering for Robin Hood via their S-1, again, the document you file when you go public,

over 80% of users required organically referred. They blended that. I'm going to guess it's at least 50% of those 80% were referred, either over the shoulder where somebody said, wow, you should check this out, or somebody told their friend about it, or they actually were referred. I referred so many people to Robin Hood. They turned off my referral program because I think I got 500 people to sign up. And so I had like $1,000 or $2,000 worth of shares. And I emailed Vlad and I was like, why don't you let me keep doing it? He's like, ah, it kind of breaks it because then people start doing funky stuff. This happened in Uber. I know somebody who set up a Google AdWords account and then said, get $25, get your first

free ride on Uber for free. They ran ads. They were getting new users so cheaply that it gave them hundreds of free rides. When Uber saw they were doing it, they turned off their account. So you get the idea. You can go too far. You know, other apps like Words with Friends is another example, you invite a friend to play a game or chess, you got a viral loop. Hotmail was the canonical example from the early days. Every hotmail, if you wanted to have free email at the bottom, it said sent for my Hotmail account, get your own free email address now, click here. Those kind of things were the viral loops that people had. Upload your address book was another one, find your friends in this app, upload your address book, upload your, can we have access

to your phone numbers so we can find your friends? That was another viral loop because after they had your address book and they connected you to your friends, it would say, would you want to invite these friends were not yet here. Okay. Do you have a strategy to retain your users is checklist item number 38? User retention, big topic. Again, you could do multiple episodes of this podcast on that, but I just want you thinking about, and LinkedIn has amazing user retention strategies going through and

studying theirs is a great idea. If you haven't used the app for a couple of days, they're going to send you an email reminder to log back in. And this is not a we miss you kind of email. They actually say 80% are people who are viewing your profile. to kind of engage you and peak your interest. Like, oh, who are those people? So they're letting you know there's activity you're missing out on.

When you go to the site, they then let you know who's viewing your profile. What an incredible hack. Twitter does something similar, and so does YouTube. If you don't log in for a few days, you'll start getting push notifications with your most engaged accounts, people who are engaging with your content. So, you know, maybe if I engage with Nix and VC content, it's going to say, oh, Bill Gurley was, you know, talking about this, you know, venture capitalist. or Nick's fan TV and Nick's film school are tweeting about this.

Don't miss it. Man, is that powerful? And so you can look at Spotify, for examples, as well. They'll send you push notifications every time an artist you follow releases new music, goes on door, or a podcast you follow, releases a new episode. So those kind of push notifications are really awesome. I've had artists. I didn't know they were having new albums come out. You probably have had this happen, and it works really well.

And we're going to touch on this more in a future episode. called building your team. Let's go on to item number 39 on our checklist. Do you know which product focused metrics to track? Okay. You need to really track your metrics, but which ones are important, right? It depends on your startup,

and it might change over time. If you read the book from Amazon and the Amazon Way, I believe that's the name of it, they really talked about how over time they looked at products in stock, how many pages, a product page got that resulted in a sale. How many times did users go to a product page have that product be sold out?

In other words, the womp-womp experience. You go to the product page. It's like, we don't have this product available. Terrible user experience. They track that so they can avoid that. And then they tracked, you know, hey, these pages are getting looked at a lot, but the product's not selling. Okay, what's going on there?

There's something wrong there. People are looking at the products, but not actually buying them. So, you know, Active View. users is a really great way to do this. When you're starting out, people will track monthly. Then things start going well for you. You might start tracking weekly. When things are going phenomenal, you're probably track daily.

People don't want to start with daily because it's too embarrassing for them, and they don't want to signal it. So they'll even talk about signups. We'll talk about signups. And they'll talk about cumulative signups. This is a super tell when you are an investor in somebody's like, we have this many signups. It's like, okay, how many daily active users are they're like, oh, well, we have this many.

a monthly active users. Now I'm going to play detective, right? So active user growth is super important, but let's make sure you define active users. Is an active user somebody who opened your email? Well, that's what Nextdoor did. Nextor said in their SPAC that when somebody opens an email digest, they're an active user. I think that's kind of a weak way to define an active user. That's like Twitter or LinkedIn, as we discussed in the previous point, trying to re-engage a user in counting that email as the user being engaged. I don't count that. I want them to come to the website and use the website and log in. So be intellectually honest about these.

The more intellectually honest you can be, the quicker you can succeed. Don't try to spare your team, investors from reality. Tell them the reality, define the reality. We're doing great with signing up users. We're doing terrible with getting the comeback to the product. I realized that when inside.com was an app. We'd have 500,000 downloads, but only two or three or four or five thousand people open the app a day. When you're having 50 basis points or 1% of people who download a drop open

and something's wrong, what was wrong, people forgot about the app. And we had notifications. The problem was people were getting enough news from Twitter and Facebook and other places that they didn't need a dedicated news app. Once I realized that, I took the top 10% of inside, 50,000 emails, and I sent them the top 10 stories we were covering by email. And 40 or 50 or 60% of them opened the email. And we went from 2,000 people using it a day to then 30 or 40,000 people reading our content every day. And I was like, okay, email is a better format. Nobody wants a news app. And to this day, there is no news app in the United States that is crushing it. Maybe Apple's is because they bundle it with the app in the store. So define your active

users in an intelligent and considered way. Revenue, super important. But again, if you're making $10,000 a month, but it's one-time fees, don't call that monthly reoccurring revenue because that money is not coming back next month. You really want to be honest about your revenue and don't blend your consulting revenue into your monthly reoccurring revenue. Customer acquisition cost, that's another great one. People can play games with that. They'll take all of their organic customers. They have a thousand organic customers and a thousand paid. They put them together and then they divide it into the amount they spent on marketing and they get half their actual paid cack and it's kind of deceiving. You really want to know these numbers well. And so my bestie David

Sacks has a CAC formula, divide sales and marketing expenses in the prior month by the number of new paid customers in the current month. That works really well for SaaS. And what's important about that is sales and marketing expense includes the sales team, right? And so that is intellectually honest. But you might have organic people coming in too. So what works for KAC in a consumer app, like let's say, Com or FitBod or a video game might be different than how you think about it for SaaS. So Lifetime Value is another one.

You really want to think about that. And then finally on our checklist today is item number 40. Do you know when to Sunset a Feature? When you build features and they don't work, sometimes you have to sunset them. And if they're not being used and they're not loved and delighting customers, they are a drag on your team and they're confusing your customers. So customers aren't using it, but they're seeing it in the interface. That creates a little bit of confusion.

And your team is holding on and maybe they need to just let it go. Uber pool and lift line come to mind. You know, the pandemic made it really hard or made it impossible to keep running those services. But, you know, those were always moon shots. Can we get UberPool to constantly have two or three riders in the car so it's a never-ending ride? well, that would make it cheaper. It was a great experiment, but it's an experiment that I think almost got there, but maybe didn't work. So they sunsetted it during the pandemic. Will it come back? We'll see. But I think it's something to think about for Lift Line and Uber Pool if those will come

back or not. Maybe they'll be killed by the pandemic. Maybe they need to think about a different type of service. Maybe Uber Pool and Lift Line should be more like a bus. And if you had a bus that went on a certain route that you could jump on or not, and you called it instead of having bus stops, you had pickups so that they didn't have to stop unless somebody on an app said stop. Well, then you could say, hey, there's always an Uber minivan, you know, along Market Street, or going up and down Broadway. So imagine there was always a van or a sprinter coming down Broadway in Manhattan. And the way you got it to stop was by using the Uber app.

Maybe that would work great. And maybe it went down to Broadway, went on to the Brooklyn Bridge, and went all the way to my hometown in Bay Ridge along Fourth Avenue or whatever, and it only stopped when people wanted. Maybe that would actually be a great, great idea. So think about when you're going to sunset these things. For a company like Amazon or Apple, Google, you know, maybe they sunset something after five to ten years of trying

because they have the resources. But for you, as a startup founder, maybe you need to sunset things a little bit earlier if they're not working. So I hope this list has been helpful to you. stay tuned for next week when we talk about building a great team and that is the third and final part of the startup flywheel and that'll get us through the items in the 40s, get us to 50 will be at the halfway point for the startup checklist.

This week in startups.com slash checklist. If this has been helpful to you, here's something you could do for me. You can go write a review in iTunes. You could subscribe to our channel, maybe turn on alerts at YouTube.com slash this week in or maybe tell a friend about this checklist and just email them URL.

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Wanted to send it along. Spread the word. That really is actually materially helpful because it gets more viewers to the show and helps our mission of supporting founders here on This Weekend Startups. This Weekend Startups. com slash checklist. We'll see you all next time. Bye-bye.