Does your startup need to be massive?

Editor’s note: This is a guest post by serial entrepreneur and investor Howard Lindzon of StockTwits and SocialLeverage. He was born and raised in Toronto and has a soft spot for his hometown and Canadian entrepreneurs.  Follow him on Twitter @howardlindzon or StockTwits @howardlindzon.

Photo by Paul (dexx)
Creative Commons License - By 2.0 Some rights reserved Photo by Paul (dex)

In 2008, I was using every speaking chance I was offered to preach that there was never a better time to start a web business. I also put my money where my mouth was and invested in more companies than I could afford and started Stocktwits.

Let’s assume you followed the advice and failed. Most startups do. You were Lindzon’d. Sorry.

Good news…you learned a lot and the funding market, never easy, is more open than ever.

Better yet, the mentoring system and pool of talented angel investors looking to reinvest has never been wider and deeper.

Techmeme, Hacker News, Fred Wilson, Brad Feld, LInked In, Twitter, Facebook and of course Stocktwits ….all better than ever for connecting, getting smarter about starting businesses and finding the right trends to ride. Y combinator may be too crowded, but Tech Stars, Founder Labs and Startup Weekends are open.

It is a little intimidating right now to take the first steps because of the bubble talk, startup revolution, competition and massive reach of the last group of leaders. There is not one Tiger Woods of startups, there are 5 you will ultimately stress yourself out comparing yourself too…Facebook, Twitter, Linked In, Zynga and Groupon.

Don’t get caught up in the ‘I need to be Massive’ talk. It’s a trap. Take the ‘Massive’ lessons of geniuses like Reid Hoffman from this great post and than get to work on getting massive one step at a time.

The game of Risk and world domination is won from the corners of the world unless you can roll non stop 6?s. Don’t bet on that stuff and don’t pitch your investors on stuff they won’t believe.

Editors Note: This post was originally published on HowardLindzon.com on March 23, 2011 @copy;2011 Howard Lindzon. Republished with permission.

Getting Traction

Photo by Bierlos http://www.flickr.com/photos/bierlos/4591931914/

Photo by Bierlos

Traction trumps everything for angel investors. Traction is the proxy by which you can determine how well a startup is doing. It demonstrates that the team is able to execute together. That the product has a market with real customers.

“Traction is real customers. If you charge for your product, it’s real paying customers. If your product is free, it’s a real user base. In other words, traction is a signal that your team can produce real results in a real market.” – Gabriel Weinberg

Traction means a lot of different things. Is traction revenue? Maybe. Is traction number of uniques? Depends. Is traction conversion rate? Sometimes. Traction differs at different points in a company’s lifecycle, but it designed to show that there is a demand for the product/service you are building. And it’s not always revenue. There are different milestones for startups at different stages of development. The goal is to get to product/market fit quickly with a minimum viable product. Then establish metrics to measure and evaluate product performance.Dave McClure‘s Startup Metrics for Pirates is a great summary of the types of metrics startups can build into their applications and marketing analysis to track the effectiveness of their ability to attract, convert and retain customers.

How do you avoid expensive build, market and fail attempts?

Elements of a Startup Growth Curve by Sean Ellis

Elements of a Startup Growth Curve by Sean Ellis

Now you’ve got your metrics. You validated your minimum viable product. How do you get traction without spending a ton of cash?

Go figure out what you can do for zilch. That’s right nothing. Nada. Zip. Zero. Zilch. Assume you’ve got a marketing budget that is zero dollars. Then go figure out how you’re going to spend it to find, convert and retain customers. Pick a big, ostentatious goal. A million uniques. A million dollars in revenue. 25 new paying customers. The actual numbers are going to be specific to your startup. But the goal is to drive those numbers for as little (think $0) as possible using:

  • Extreme customer service
  • Inbound marketing
  • Conference submissions
  • Social media engagement
  • Blogging

There are a lot off different activities that startups can do to help drive customers. Go drive real traction. Get to’er.

Need some inspiration. Check out:

What are your favourite examples of startup marketing on the cheap?