Last week, a web/app service startup team made an appointment with me and looked for my advises to the problems they encountered recently. After hearing the startup ideas and discussing about improvements in several perspectives, one quesiton came up:
To acquire inital users, we’d like to purchase Facebook advertisements or execute marketing campaigns like lottery. We need money to do that. Could you introduce us investors?
Several hidden assumptions can be identified in this type of question. For an inexperienced young start-up team, this type of question is very common.
Anyhow, to be successful in a startup journey, the fundamentals are:
- Does the product or service prove to satisfy the needs of core user segment?
- Do we find out the exponetial scaling formula? For example, the design that may double user registration count per week, or the fact that 1K new user comments would increase 10 seconds of average user rention time, or a secret that we’ll get $30 revenue if we invest $1 in certain type of marketing….
- If 1. and 2. are met, the starter should seriously consider investment for boosting growth. If not, however, there would be no need to acquire users by spending a dime.
This is the growth theory of Startup Pyramid :
Find PMF first. Then Scale.
As usual, after explanation, the founders would ask:
But how did LINE acquire initial users in Asia? You placed lots of TV commercials in Taiwan to grow…..
Since I started working in LINE before it landed to Asia market in 2011, and left the company after it went IPO in New York Stock Exchange in 2016, I oberserved its starting, growing, getting strong and then almost monpolizing in Taiwan. Therefore, the question has been repeatedly asked numorous times.
Asked again at the moment, my answer is quite simple:
LINE in Asia and Taiwan broke through the PMF stage in a very short time. Crtical scaling method had also been used.
Let me descibe below:
Step 1 : Find product market fit (PMF)
Let’s review the history facts first:
- LINE was targeted for Japan market at launch stage, not Taiwan.
- It was not popular AT ALL after it’s birthday in 2011/6.
- The performance was not impressive.
To further enlight readers with more background :
- LINE app was not the first app Naver Japan launched in Japan. Before that, the company had launched a dozen more apps but none was popular. Therefore, it should had been easy to expect another failure. Right?
Now, let’s ask ourselves what should be done after LINE app launched to the Japan market.
Should we pay to acquire users?
After the product landed, the most important thing is to keep observing the behavior from early users and quickly iterate features to understand — why they wouldn’t spend longer time, why they don’t come frequently, why they don’t refer to friends, why west part of Japan doesn’t use it, and what feature would make sky-rocket growth…etc.
Observe, infer, make assumptions / hypothesis, do experiments, confirm or explode the hypothesis, then iterate these steps and keep observing. At this stage, the most important thing is nothing but fast iterations of this process.
Speed is everything.
Back to LINE, I assume that through the iterations, the team might have formulated the hypothesis:
- Comic / Manga is center of Asia culture and has good extensions globally.
- Since Japan and Korea are so strong in the creation and leading in this culture, the team should leverage it.
- The essence is that comics or pictures can show complicated feelings, and text isn’t the best tool to express them.
- Since our focus is ‘communication’ through a mobile app, let’s re-design the ‘communication experience’ learning from comic.
Under this possible assumptions or hypothesis, the team might had proposed the followings:
- The emoji stickers should be larger than before so that the details could be seen.
- When you touch the sticker in the app, the sticker should be sent immediately. (one click only)
- The sticker should be designed the way that itself contains complete message that the user wants to describe . Not part of a sentence nor additional text required as what MSN did.
In Oct., 2011, Moon, Cony and Brown sticker sets launched. That was the A-ha moment that user registration and engagement hyper grew. By the end of 2011, LINE’s user base reached 10M.
Did the team really know that the sticker sets would had been the starting point of hyper-growth?
Per my opinion, the product team might have had strong faith, but the faith was just as strong as they shipped other non-successful features. The battle started only after you shipped the product and users started using it.
This story demonstrated the process how a start-up seeked PMF.
It’s easy for us to evaluate how this specific successful feature was designed and learn from it. Sadly, doing that would miss the fact that many other prior improvements didn’t work out and the real merit is the quick process of itertations focus on continuous PMF questions.
A start-up or an enterprise that looks for transformation should ‘love experiments’. At the same time, the speed of experimenting cycle should be super fast. This really challenges the capability of the team.
Next article, I’ll write about how LINE grew in Taiwan market.
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