Greylock

User Acquisition: The Five Sources of Traffic

/ Adam Nash / 12 Comments

This is the first post in a three post series on user acquisition.

The topic of this blog post may seem simplistic to those of you who have been in the trenches, working hard to grow visits and visitors to your site or application.  As basic as it sounds, however, it’s always surprising to me how valuable it is to think critically about exactly how people will discover your product.

In fact, it’s really quite simple.  There are only really five ways that people will visit your site on the web.

The Five Sources of Traffic

With all due apologies to Michael Porter, knowing the five sources of traffic to your site will likely be more important to your survival than the traditional five forces.  They are:

  1. Organic
  2. Email
  3. Search (SEO)
  4. Ads / Partnerships (SEM)
  5. Social (Feeds)

That’s  it.  If someone found your site, you can bet it happened in those five ways.

The fact that there are so few ways for traffic to reach your site at scale is both terrifying and exhilarating.  It’s terrifying because it makes you realize how few bullets there really are in your gun.  It’s exhilarating, however, because it can focus a small team on exactly which battles they need to win the war.

Organic Traffic

Organic traffic is generally the most valuable type of traffic you can acquire.  It is defined as visits that come straight to your site, with full intent.  Literally, people have bookmarked you or type your domain into their browser.  That full intent comes through in almost every produto metric.  They do more, click more, buy more, visit more, etc.  This traffic has the fewest dependencies on other sites or services?

The problem with organic traffic is that no one really knows how to generate more of it.  Put a product manager in charge of “moving organic traffic up” and you’ll see the fear in their eyes.  The truth is, organic traffic is a mix of brand, exposure, repetition, and precious space in the very limited space called “top of mind”.  I love word of mouth, and it’s amazing when it happens, but Don Draper has been convincing people that he knows how to generate it for half a century.

(I will note that native mobile applications have changed this dynamic, but will leave the detail for the third post in this series.)

Email Traffic

Everyone complains about the flood of email, but unfortunately, it seems unlikely to get better anytime soon.  Why?  Because it works.

One of the most scalable ways for traffic to find your site is through email.  Please note, I’m not talking about direct marketing emails.  I’m referring to product emails, email built into the interaction of a site.  A great example is the original “You’ve been outbid!” email that brought (and still brings) millions back to the eBay site every day.

Email scales, and it’s inherently personal in its best form.  It’s asynchronous, it can support rich content, and it can be rapidly A/B tested and optimized across an amazing number of dimensions.  The best product emails get excellent conversion rates, in fact, the social web has led to the discovery that person to person communication gets conversion person over 10x higher than traditional product emails.  The Year In Review email at LinkedIn actually received clickthroughs so high, it was better described as clicks-per-email!

The problem with email traffic generally is that it’s highly transactional, so converting that visit to something more than a one-action stop is significant. However, because you control the user experience of the origination the visit, you have a lot of opportunity to make it great.

Search Traffic

The realization that natural search can drive traffic to a website dates back to the 90s.  However, it really has been in the past decade in the shadow of Google that search engine optimization scaled to its massive current footprint.

Search clearly scales.  The problem really is that everyone figured this out a long time ago.  First, that means that you are competing with trillions of web pages across billions of queries.  You need to have unique, valuable content measured in the millions of pages to reach scale.  SEO has become a product and technical discipline all it’s own. Second, the platform you are optimizing for (Google, Microsoft) is unstable, as they constantly are in an arms race with the thousands of businesses trying to hijack that traffic. (I’m not even going to get into their own conflicts of interest.)

Search is big, and when you hit it, it will put an inflection point in your curve.  But there is rarely anysuch thing as “low hanging fruit” in this domain.

Advertising (SEM)

The fourth source of traffic is paid traffic, most commonly now ads purchased on Google or Facebook.  Companies spend billions every year on these ads, and those dollars drive billions of visits.  When I left eBay, they were spending nearly $250M a year on search advertising, so you can’t say it doesn’t scale.

The problem with advertising is really around two key economic negatives.  The first is cash flow.  In most cases, you’ll be forced to pay for your ads long before you realize the economic gains on your site.  Take something cash flow negative and scale it, and you will have problems.  Second, you have solid economics.  Most sites conjure a “lifetime value of a user” long before they have definitive proof of that value, let alone evidence that users acquired through advertising will behave the same way. It’s a hyper-competitive market, armed with weapons of mass destruction.  A dangerous cocktail, indeed.

While ads are generally the wrong way to source traffic for a modern social service, there are exceptions when the economics are solid and a certain volume of traffic is needed in a short time span to catalyze a network effect.  Zynga exemplified this thinking best when it used Facebook ads to turbocharge adoption and virality of their earlier games like FarmVille.

Social Traffic

The newest source of scalable traffic, social platforms like Facebook, LinkedIn and Twitter can be great way to reach users.  Each platform is different in content expectations, clickthrough and intent, but there is no question that social platforms are massively valuable as potential sources of traffic.

Social feeds have a number of elements in common with email, when done properly.  However, there are two key differences that make social still very difficult for most product teams to effectively use at scale.  The first is permission.  On social platforms, your application is always speaking through a user.  As a result, their intent, their voice, and their identity on the platform is incredibly important.  Unlike email, scaling social feed interactions means hitting a mixture of emotion and timing.  The second issue is one of conversion.  With email, you control an incredible number of variables: content, timing, frequency.  You also have a relatively high metrics around open rates, conversion, etc.  With social feeds, the dynamics around timing and graph density really matter, and in general it always feels harder to control.

The Power of Five

Eventually, at scale, your site will likely need to leverage all of the above traffic sources to hit its potential.  However, in the beginning, it’s often a thoughtful, deep success with just one of these that will represent your first inflection point.

The key to exponential, scalable distribution across these sources of traffic is often linked to virality, which is why that will be the topic of my next post.

Product Leaders: User Acquisition Series

/ Adam Nash / 8 Comments

I can be pedantic about user acquisition.  The truth is that consumer web and mobile applications are under increasing pressure to demonstrate explosive exponential traction.  Building a great product is no longer sufficient, lest you be left with the best product in the world that no one has discovered.

As an engineer and designer by training, I didn’t always put this level of focus on traffic acquisition.  It wasn’t until we tried to build an entirely new site under the eBay brand (eBay Express) that I was forced to focus our team’s efforts on one large fundamental challenge: traffic acquisition.

Those struggles, some successful (and some not) led me to appreciate how profoundly the social web changed the metrics of distribution.  When we founded the growth team at LinkedIn in 2008, we were able to structure our thinking around user acquisition, measure it, and bend the curve significantly for the site. 

A special thanks to both Reid Hoffman and Elliot Shmukler, who both contributed significantly to my thinking on the subject.

History is Written by the Victors

History is written by the victors, and on the consumer web, victory is often defined by market distribution.  Growth does not just happen, it has to be designed into your product and service.

The following posts attempt to capture some of the fundamentals that I’ve personally found useful to structure thinking around social user acquisition, and extend those concepts from the web to mobile applications:

Remember, Product Leaders win games.  Now let’s get started.

Top 10 Product Leadership Lessons

/ Adam Nash / 5 Comments

On Sunday, I was fortunate enough to give a talk at the 9th annual Harvard Business School Entrepreneurship Conference.  I’m trying to be better about posting the slides from these talks as they happen.

Context & Caveats

This talk is based substantially on a lecture I gave at LinkedIn on August 31, 2011.  It’s heavily based on the unique product, strategy and organizational issues that you see currently in fast moving, hyper growth, consumer-focused software companies.

At the same time, many of the higher level business and management issues discussed are fairly universal, so hopefully there is something useful here for anyone who is passionate about building organizations that build great products.

So take a look, and I look forward to the comments.  FWIW The Optimus Prime quotes are from this excellent list of Optimus Prime quotes for the workplace.

Be A Great Product Leader

Great Product Leaders Win Games

/ Adam Nash / 11 Comments

Being a great product leader is hard. Every organization and process is different, and in many cases you are responsible for the outcome without having the authority to enforce decisions. My recent blog post on Being a Great Product Leader was an attempt to capture the specifics of how to lead a great, cross-functional software team.

To scale a great team, however, you need more than just a list of roles and responsibilities. How you onboard new talent is as important for the long term health of your team as how you identify and hire them in the first place.

The Trials of Being a New Coach

When a sports team gets a new coach, there is some authority that comes with the role. You can immediately set standards for behavior & strategy – how the team is going to practice, what plays the team is going to run. That authority, however, tends to be short -lived. Before you know it, the team begins to focus on one thing: are we winning games?

Joining a new team as a product manager has the same dynamic. At most of the companies I’ve been a part of, there is this false sense of security that comes from process and organization. Sure, if you are technically fulfilling the role and responsibilities of a product manager, there is a certain amount of respect and authority initially. However, in the long term, teams want to win games, and in software that means products that people are proud of and products that move the needle.

So is there a pattern of behavior for new product managers that ensures long term success? I’ll argue yes, and for my new hires I boil it down to three phases:
2 weeks, 2 months, and 2 quarters.

Two Weeks

The first two weeks of a product manager are critical, because this is the window where a new leader can establish the most important aspect of the role: what game are we playing, and how do we keep score.

As a result, the first thing I lay out for new product manager is:

  • The company culture and organizational philosophy of the team. Why the company matters. Product/engineering partnership. Results oriented performance.
  • The current strategic frame for how their product fits into the overall strategy of the company.
  • The current metrics and milestones for the product they are taking over.
  • A set of frameworks for the roles & responsibilities of product managers. These include posts on being a great product leader, product prioritization, finding heat in design, etc.

In the first two weeks, a new product manager is expected to:

  • Thoroughly challenge and finalize the strategic frame for the area. Does the existing frame make sense, or is there a better game to be playing?
  • Thoroughly understand the existing product metrics, and identify new or different metrics needed to properly assess the success of the area (max: 3)
  • Reprioritize all existing and future ideas & concepts based on the above, a.k.a. the product roadmap.

In addition, the first two weeks is the time when a new product manager can physically sit down and meet all the other key product and engineering leaders in overlapping areas, to help them both have context for their product and more importantly establish communication channels across the company with other key leaders. Great product managers very often serve as efficient people routers, and knowing who to talk to is often as important as knowing what to do.

Two Months

Like medicine, theoretical knowledge will only get you so far as a product manager. At some point, you learn by doing. A team will tolerate theoretical discussion for a short while, but in the end, a new product manager needs to get their hands dirty.

Two months is too short a time to significantly move the needle, but it is enough time to run through a few release cycles. In the first two months, it’s crucial for a product manager to actually be responsible for something released to users. In addition, the first two months is the typical time frame for a new product manager to flesh out the “best idea” from the team on how to win.

Two months is enough time to:

  • Have identified key outstanding bugs or minor feature fixes that matter.
  • Led the design / specification of solutions to those issues, and see them go live.
  • Write their first product specification for a larger, more significant milestone for their area. This should be their highest priority project to “move the needle” as they’ve defined it for the team.

The first two months are crucial, because not only does it help the new team execute together and coalesce, but also put their stake in the ground on what their next big evolution will be. By leading the effort to place that bet, a product manager sets the team up for the type of success that hopefully will provide long term momentum for that product team.

Two Quarters

Six months is the window to get a cross-functional team into the positive, reinforcing cycle of ongoing success. At this point, the team has released both small and large features, and has meaningfully “moved the needle.”

This doesn’t mean, by the way, that the product manager led the launch of a single, monolithic all-or-nothing feature. In fact, what it most likely means is that the team launched a combination of iterative efforts to test out their theories and push through changes that in the aggregate validated the strategy and prioritization that had been put in place.

Great Product Leaders Win Games

Once teams have victories under their belt, in hyper-growth companies they gain both the desire to win again, and the confidence to execute on that desire. Creating that momentum is one of the hardest, and yet most valuable elements of cross-functional leadership.

This pattern has proven reliably consistent for my own product leadership efforts, as well as in differentiating the long term success of product managers I’ve hired and mentored.

In some ways, it’s really simple: great teams like winning, and great leaders reliably lead teams to great victories.

Now go out and win games.

Pinterest & LinkedIn: Identity of Taste vs. Expertise

/ Adam Nash / 4 Comments

It’s hard to go three feet in Silicon Valley these days without someone commenting on the phenomenal engagement and growth being seen from Pinterest and other curation-based social platforms.  What’s a bit surprising to me, however, is how many people refer to this demand as a growing interest and search for “expertise”.

As I have a passion for finding a more human understanding for what drives engagement in real life and then mapping it to online behavior, I think the use of the term “expertise” here is misleading.  Instead, I believe what we are seeing is an explosion of activity around an incredibly powerful form of identity and reputation: the identity of taste.

Expertise is Empirical

If you go to LinkedIn, you see a site that is rich with the identity of expertise.  LinkedIn has rich structured data around sources of expertise: degrees, schools, companies, titles, patents, published content, skills.  They also have rich sources of unstructured content about job responsibilities, specialties, questions & answers, group participation, status updates and comments.  There are even implicit indications of expertise related to other online identities (like Twitter) and relationships to other people with expertise (connections).

This expertise can be tapped by using LinkedIn’s incredibly powerful search engine, either on site or via API, or by browsing the talent graph displayed in catalog form on LinkedIn Skills.  Github has created a powerful identity for developers based on their actual interests and contributions in code.  Blogs, Tumblr, Quora and Twitter have helped people create identities based on the content they create and share.

The power of identity based on expertise is that it is concretely demonstrated.  Education, experience, content and relationships are all very structured and concrete methods for measuring and assessing expertise.  However, in some ways, expertise is limited by it’s literal nature.  Factual. Demonstrable. Empirical.

Taste is Inspiring

Pinterest, however, has unlocked an incredibly powerful form of reputation and identity that exists in the offline world – an identity of taste.  People don’t care about the expertise of people who are assembling pinboards.  They care about how those combinations make them feel – the concept, the aggregation, the flow of additions.  The Pinboard graph begins for most people with their friends, but people quickly learn to hop based on sources to people they don’t know, finding beautiful, interesting, intriguing or inspiring collections of images.

This isn’t an identity based on expertise, really.  It’s not even clear how closely related it is to a graph of interests. Curation-based social platforms evoke a different phenomenon, and with it, some very powerful emotions and social behaviors.

Taste is different than expertise.  Taste does not imply that you are a good person or a deep well of expertise on the domain.  Taste is not universal, although there are certainly those with a predilection for influencing and/or predicting the changes in taste for many.  But when we as human beings find people whose taste inspires us, it’s a powerful relationship.  We map positive attributes to them, ranging from kindness to intelligence to even authority.  Fame & taste are often intertwined.

You Are What You Curate

Curation-based social platforms are based on the interaction of three key factors:

  1. A rich, visual identity and reputation based on curated content
  2. An asymmetric graph based on not only following people, but specific feeds of curated content
  3. A rich, visual activity stream of curation activity

It’s the first item that I seem to see most under-appreciated.  Vanity, as one of the most common deadly sins in social software, drives an incredible amount of engagement and activity.  As people are inspired by those who create beautiful identities of curated content, they also become keenly aware of how their curated identity looks.  When people signal an appreciation for their taste, it triggers power social impulses, likely built up at an early age.

This, more than anything else, reflects the major step function in engagement of this generation of curation over previous attempts (anyone remember Amazon Lists?)

How Does Taste Factor into Your Experience?

I always like to translate these insights into actionable questions for product designers.  In this case, these are some good starting points:

  • How does taste factor into your experience?
  • Is the identity in your product better served by reputation based on taste or expertise?
  • Are the relationships in your product between users based on taste or expertise?
  • Are you creating an identity visually and emotionally powerful enough to trigger curation activity?
  • Are you flowing curation activity through your experience in a way that stimulates discovery and the creation of an identity of taste?

Don’t underestimate the power of good taste.

Be a Great Product Leader

/ Adam Nash / 28 Comments

People who know me professionally know that I’m passionate about Product Management.  I truly believe that, done properly, a strong product leader acts as a force multiplier that can help a cross-functional team of great technologies and designers do their best work.

Unfortunately, the job description of a product manager tends to either be overly vague (you are responsible for the product) or overly specific (you write product specifications).  Neither, as it turns out, is it effective in helping people become great product managers.

I’ve spent a lot of time trying to figure out a way to communicate the value of a product manager in a way that both transparently tells cross-functional partners what they should expect (or demand) from their product leaders, and also communicates to new product managers what the actual expectations of their job are.  Over the years, I reduced that communication to just three sets of responsibilities: Strategy, Prioritization & Execution.

Responsibility #1: Product Strategy

They teach entire courses on strategy at top tier business schools.  I doubt, however, that you’ll hear Product Strategy discussed in this way in any of them.

Quite simply, it’s the product manager’s job to articulate two simple things:

  • What game are we playing?
  • How do we keep score?

Do these two things right, and all of a sudden a collection of brilliant individual contributors with talents in engineering, operations, quality, design and marketing will start running in the same direction.  Without it, no amount of prioritization or execution management will save you.  Building great software requires a variety of talents, and key innovative ideas can come from anywhere.  Clearly describing the game your playing and the metrics you use to judge success allows the team, independent of the product manager, to sort through different ideas and decide which ones are worth acting on.

Clearly defining what game you are playing includes your vision for the product, the value you provide your customer, and your differentiated advantage over competitors.  More importantly, however, is that it clearly articulates the way that your team is going to win in the market.  Assuming you pick your metrics appropriately, everyone on the team should have a clear idea of what winning means.

You should be able to ask any product manager who has been on the job for two weeks these questions, and get not just a crisp, but a compelling answer to these two questions.

The result: aligned effort, better motivation, innovative ideas, and products that move the needle.

Responsibility #2: Prioritization

Once the team knows what game they are playing and how to keep score, it tends to make prioritization much easier.  This is the second set of responsibilities for a product manager – ensuring that their initial work on their strategy and metrics is carried through to the phasing of projects / features to work on.

At any company with great talent, there will be a surplus of good ideas.  This actually doesn’t get better with scale, because as you add more people to a company they tend to bring even more ideas about what is and isn’t possible.  As a result, brutal prioritization is a fact of life.

The question isn’t what is the best list of ideas you can come up with for the business – the question is what are the next three things the team is going to execute on and nail.

Phasing is a crucial part of any entrepreneurial endeavor – most products and companies fail not for lack of great ideas, but based on mistaking which ones are critical to execute on first, and which can wait until later.

Personally, I don’t believe linear prioritization is effective in the long term.  I’ve written a separate post on product prioritization called The Three Buckets that explains the process that I advocate.

You should be able to ask any product manager who has been on the job for two weeks for a prioritized list of the projects their team is working on, with a clear rationale for prioritization that the entire team understands and supports.

Responsibility #3: Execution

Product managers, in practice, actually do hundreds of different things.

In the end, product managers ship, and that means that product managers cover whatever gaps in the process that need to be covered.  Sometimes they author content.  Sometimes they cover holes in design.  Sometimes they are QA.  Sometimes they do PR.  Anything that needs to be done to make the product successful they do, within the limits of human capability.

However, there are parts of execution that are massively important to the team, and without them, execution becomes extremely inefficient:

  • Product specification – the necessary level of detail to ensure clarity about what the team is building.
  • Edge case decisions – very often, unexpected and complicated edge cases come up.  Typically, the product manager is on the line to quickly triage those decisions for potentially ramifications to other parts of the product.
  • Project management – there are always expectations for time / benefit trade-offs with any feature.  A lot of these calls end up being forced during a production cycle, and the product manager has to be a couple steps ahead of potential issues to ensure that the final product strikes the right balance of time to market and success in the market.
  • Analytics – in the end, the team largely depends on the product manager to have run the numbers, and have the detail on what pieces of the feature are critical to hitting the goals for the feature.  They also expect the product manager to have a deep understanding of the performance of existing features (and competitor features), if any.

Make Things Happen

In the end, great product managers make things happen.  Reliably, and without fail, you can always tell when you’ve added a great product manager to a team versus a mediocre one, because very quickly things start happening.  Bug fixes and feature fixes start shipping.  Crisp analysis of the data appears.  Projects are re-prioritized.  And within short order, the key numbers start moving up and to the right.

Be a great product leader.

This work is licensed under a Creative Commons Attribution 3.0 Unported License.

Joining Greylock

/ Adam Nash / 5 Comments

Today, John Lilly put up a really nice note on the Greylock Partners blog officially welcoming me to the firm.  Needless to say, I’m both honored and excited to be joining such a great team.

We’re fortunate to be witnessing the explosive growth of not one but two incredible new platforms for consumer products and services: social and mobile.  Both are literally changing the fundamental ways that consumers interact with devices, and are rapidly changing the dynamics for building successful new products and services.  After spending the past four years helping to build out social and mobile platforms, I can’t wait to partner with entrepreneurs to help them build out the next generation of products and companies over them.

Over the past few years, I’ve shared a number of insights here on this blog about building great products and companies.  Here are a few that are worth reading if you are curious about how I think:

And of course, the most appropriate for this announcement:

For now, I just want to say thank you to Reid, David, John and the entire Greylock team.  I can’t wait to get started.