@andrewchen

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My top essays/tweetstorms in 2019 on product/market fit, investing, KPIs, YouTubers, and more

Dear readers,

I’ve only been writing sporadically recently on here — mostly because I’m working on a new book project (more to come soon on that!!) which has been taking all my time. In the interim, I’ve stayed pretty active on Twitter, writing tweetstorms that sometimes turn themselves into essays on here.

For a quick summary of the essays that did make it onto here, including a couple guest collaborations, here’s an easy set of links:

OK, and now for the tweetstorms. Here are all the tweetstorms I’ve written in the last year or so, all in one place. Hope you enjoy!

Thanks,
Andrew
Lower Pac, San Francisco, CA

 

1. American kids want to be youtubers, and the Chinese kids want to be astronauts.

More from the article here.

2. Is your startup idea already taken? And why we love X for Y startups

I turned this from a tweetstorm into a much longer discussion, and wanted to share it there! Here’s the link.

 

3. Cameras versus smartphones.

The iPhone comes out in 2007 and changes the camera industry. Amazing to see a 90% decline in just 10 years after growth for decades

Amazing that something can go from peak to trough in exact 10

Makes you ask- What’s the next product where this will happen?

 

4. 2019 state of tech investing:

Pre-seed- Bet on the entrepreneur 👨‍💻
Seed- Bet on the team 👨‍👩‍👦‍👦
Series A- Bet on the traction 🏒
Series B- Bet on the revenue 💸
Series C- Bet on the unit economics 💰

 

5. Did you know: 61% of all food delivery is pizza 🍕.

The average American eats 23 pounds of pizza per year. 93% of americans eat pizza every month. Omg right?

 

6. Dashboard clutter

Dashboard clutter – the addition of more KPIs over time – leads to strategy clutter.

The more you add, the less you (and your team!) understands your business. Then people go back to making decisions on intuition not data.

Via this 😂 comic by @tomfishburne below!

 

7. Fascinating infographic: Top grossing media franchises of all time.

Pokémon, Hello Kitty, Mickey Mouse, Star Wars, etc

Observations:
– most of the money has been made in merchandise and video games
– so many Japanese brands! 5 out of the top 10
– many created in the past decade

 

8. The internet culture supply chain

The internet culture supply chain works like this:
Asia ➡️ US teens ➡️ Adults ➡️ B2B.

Multiple data points on this already: Emojis, video streaming, esports…

Emojis are a classic example. First it was big in Japan, then teens. Now we all use it. Then it was baked into Slack and everything else. (Btw, this is an amazing read of pre-smart phone Japanese mobile: https://en.wikipedia.org/wiki/Japanese_mobile_phone_culture …)

Want to know what B2B communication/collaboration will look like in 5 years? It’s inevitable that livestreaming, virtual goods, asynch video, etc all eventually end up in the enterprise. There’s a 3-5 year lag, but it definitely happens

TikTok is a great example that’s mid-phase. Crossing from Asia into US teens, and we’ll see if it’ll be the way we do status updates at work in a few years :)

 

9. Magic metrics indicating a startup probably has product/market fit

1) cohort retention curves that flatten (stickiness)
2) actives/reg > 25% (validates TAM)
3) power user curve showing a smile — with a big concentration of engaged users (you grow out from this strong core)

3) viral factor >0.5 (enough to amplify other channels)
4) dau/mau > 50% (it’s part of a daily habit)
5) market-by-market (or logo-by-logo, if SaaS) comparison where denser/older networks have higher engagement over time (network effects)

6) D1/D7/D30 that exceeds 60/30/15 (daily frequency)
7) revenue or activity expansion on a *per user* basis over time — indicates deeper engagement / habit formation
8) >60% organic acquisition — CAC doesn’t even matter!

Having even one is impressive — it’d make me sit up!

 

10. What’s your biggest miss so far in tech?

In terms of a totally wrong / bad prediction. This was mine from years back — not getting Facebook and how big it was going to be: https://andrewchen.co/why-i-doubted-facebook-could-build-a-billion-dollar-business-and-what-i-learned-from-being-horribly-wrong/

Also for the first few years, I thought Uber was a weird niche service for super rich people to get limos. I managed to fix that bad prediction 😎

 

11. What is your least popular but deeply held opinion on tech/startups? Lively discussion here

 

12. The Law of Shitty Cohorts.

It’s not unusual for a startup to have “meh” retention. But then usually, team says it will improve retention via better activation, lifecycle marketing, improving product features, etc.

But the law of shitty cohorts says this is unlikely to happen.

The reason is that the early cohorts of users — let’s say the first couple million or so — are usually your best cohorts. They found you via word of mouth, they are the early adopters of tech, and you have no market saturation yet.

However, as you scale, each cohort gets worse

In rideshare, all the urban dwelling power users who don’t have cars, and use apps every day – they’ve all signed up. Now we’re acquiring rural/suburban users who have cars and only use it to get to the airport. Huge difference.

When you buy users with paid ads, it’s even worse

So even while teams improve their product, activation, and lifecycle, there’s an opposite (and sometimes even stronger force!) of worse cohorts joining your product over time.

(Inspired by the Law of Shitty Clickthroughs)

 

13. My order of operations when I sit down with a startup to figure out how to grow their new product.

1) first, is it working?
Usually the answer is no :) I look at retention rates, DAU/MAU, session lengths, how many visits are driven via push notifs, etc etc. Lots of benchmarking

2) if it is working, then how do we scale it?
I look at the acquisition mix — how are new users finding the product? Are they using all the channels that other similar products are already doing?

If there’s something that’s working, can we scale it to be much, much larger?

3) what can we do in the product to amplify all of the above?

Since product is expensive to build, let’s focus on top of funnel and work all the way down. Optimizing acquisition, then activation, then retention/churn, then reactivation (for later stage)

Tbh, #1 is the hardest!

Longer discussion on this here.

 

14. The Head/Heart/Hands framework

Or in emoji form, 👩/❤️/✋- for company cultures and personalities at work. The idea is that every work culture can be described as a pie chart of these three factors. (credit to my friends/coworkers at Uber who first described to me)

Not only does each company have this breakdown, so does each individual on the team. And the more their individual profile matches that of the overall company, the more in sync they are, the easier it is to get things done. Or that’s the theory.

👩 Head = how much of the culture emphasizes analytical ability, strategy, planning, etc. Cultures that are strong at this do a lot of analysis, information gathering, etc to try and make the right choices, but sometimes at the cost of moving quickly or bringing everyone along

❤️ Heart = how much the culture emphasizes team cohesion + happiness. Teams that do this invest a lot on internal values, having a clear mission, making decisions that consider the team’s views, not just business outcomes. Lots of obvious downsides when this goes too far, too

✋Hands = how much the culture emphasizes action, and getting things done. Cultures that do this can move quickly, are iterative, and are agile in the market. But they break things, can have a “fire first, aim later” mentality where a lot of energy is wasted

People said Uber 1.0 was a 30% head, 5% heart, 65% hands kind of place. Ridiculously indexed on action. Often doing the wrong thing for the first few iterations, but with so much activity, things would get figured out later. Needed more love for drivers and team though

Another startup that I’m close with, which will be unnamed, is more like 30% head, 50% heart, 20% hands. Great culture, people were close friends, didn’t get much done. Yet another is 70% head, 20% heart, 10% hands. Incredibly intelligent but doesn’t ship.

I like this framework in that it says, hey, there’s no right tradeoff – it’s just different. Some industries require hardcore orientation in one way, and others in another way. The VC industry doesn’t need 75% hands, for instance

Similarly, if someone’s not working out in one culture- they might in another culture, where things resonate. Perhaps they are too action-oriented in a place that requires a lot more deep thinking because decisions are hard to reverse. Again, there’s no “best” working style

As with Myers-Briggs, this exercise is more for fun, than science. However, you’d be surprised by how interesting of a conversation it generates. Ask someone to break down their company’s head/heart/hands, and press for examples. You’ll learn a ton

When you’re interviewing at a company, this can be a fun thing to ask. Otherwise if you ask “what’s the company culture like?” you’ll often just get generic stuff like, “oh people are are so smart and nice.”

A related question is: “What’s something that happens in this company culture that doesn’t at other places?” Or, “who’s the type of person who’s successful here who might not be at other places?” (or the reverse). Interesting to understand the contrasts

 

15. the LA consumer startup ecosystem

the LA consumer startup ecosystem is coming into its own — Honey, Snap, Riot Games, Tinder, Bird, Dollar Shave Club.

The most $1B+ consumer startups outside of the Bay Area?

A few years back, I might have guessed that NYC would be the emerging leader. But pretty clear it’s LA.

 

16. “The One That Didn’t Work Out.”

Startup founders, you know what I mean: We spend years on a product – starting it from scratch, recruiting friends, getting it off the ground. We think we’ll spend years on this. This is the one. We tell that to ourselves, investors, and friends

We celebrate all the milestones we’re supposed to. The first office. First check in. The product launch. Fun emails from the first users. An important hire. Team dinners. These are wonderful, great memories!

When it’s time to raise money, we tell potential investors that this is it. We’re gonna work on this for years, because we believe. And we do! But that’s not what happens…

There’s a messy second year. Traction’s not as good as what we want. Or maybe new users are showing up, but retention sucks. Some of the key hires leave. Fundraising isn’t as easy as it should be. Monetization is slow. It’s tough

When things get hard, it’s easy to go into hermit mode. Don’t go to tech events, because people will ask how things are going, and you don’t want to pretend it’s great. Because it’s not. Easier to stay at home and watch Netflix

You know the end of this story: A few years in, the once shiny new startup acquired by a larger company. Or it’s shut down. People maybe even make a ton of money. But the team splits up. The product that you stared at, every day, for years, gets shut down. It’s time to move on

But it’s hard to move on. It feels weird to walk past your old office. You don’t talk to your team anymore. You move your old photos, old decks, old prototypes into a folder deep in your Dropbox drive. Better to not think about it!

Yes, this is a story of my own journey for a startup I had years ago that didn’t work out. But I know it’s not just me. It’s many of my friends, and many of you, who are on their new startup, or a new big tech job, but still remember the one that didn’t work

You may have seen the wonderful tweetstorm by @dflieb about Bump from 10 years ago. You can see how much he grew from his journey. Even though Bump didn’t thrive, it’s now part of Google Photos and the ideas impact hundreds of millions of people. He should be proud! https://twitter.com/dflieb/status/1050990035892199424

The recent @andrewmason interview on Groupon is the same. You can tell how much he both cherished his experience and also how rough it was. Worth reading: https://twitter.com/andrewchen/status/1051576009454116867

There’s a wonderful journey that happens in the creation and ending of new products. The majority of startup journeys look like this – even in the success case – and we all learn a ton from building them. It’s an amazing experience, but also, it can be rough.

If you have the same Dropbox folder I do, it’s time to open it up. Scroll through the old photos, open up the old decks. It may be the startup that didn’t work out, but it’s also the one that made you stronger and smarter.

 

17. Uber alumni and the next generation of founders

There’s a TON of new startups coming from Uber alumni – I know of a half dozen in stealth, and Bird is already a breakout. It’s obv that the creativity and hustle required to make Uber work in its early years has trained hundreds of entrepreneurs. Very bullish on this group

As y’all know, Uber had a very decentralized mode of operation with each city being run as its own company. Each GM owned their P&L, hired their own people, and in the early years, would just put Facebook ads and other expenses on their credit cards! Great background

The product teams looked like this too. We had a “Programs and Platforms” model courtesy of Amazon / @jeffholden where each program was full stack, and the PMs ran hard again their mission/KPIs without introducing interdependencies

For everyone who joined in the early years – 2010 to 2014 – they’ve already hit their 4 year mark and many are spinning out. The really early folks are investing. Folks like @williampbarnes @joshmohrer have formed angel groups supporting alumni spinouts (and other startups too!)

From an investor standpoint, myself, @fffabulous @akad have all joined venture firms ready to invest in the next generation

The ATG / Otto folks are making moves as well. My good friend @drewjgray joined as CTO of the autonomous startup @voyage with @olivercameron. Also Kodiak, Kache, and many others.

Let’s talk about my fav topic, 🛴. @limebike has folks like my good friend @uber_ed_baker as an advisor, and is slowly collecting ex-Uber alumni (and Lyft! And other on-demand folks). Bird’s exec team consists of Uber’s prev “Supply growth” team – @travisv, RF, Schnell, others

Not everyone is doing startups, of course. Lots of folks on “sabbataquit” – Uber’s policy of allowing sabbaticals after 3 years of work means that people often do this before leaving. And then they keep traveling, sometimes for a year+. Many folks doing that

Whether they are starting, joining, or on sabbatical, it’s clear that this group knows a lot of important, venture-fundable markets well. There’s now 10,000s of focus who are experts on transportation, marketplaces, mapping, autonomous floating out there. This is the next gen.

Very excited about my ex-uber colleagues! Looking forward to what y’all do 😎

 

Finally…

Of course, if you want more of these as they come in real-time, follow me at @andrewchen! More in 2020.

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