Andrew Chen › Comments

"This can apply to SaaS products (like Dropbox) that are very consumery in nature. I have no doubt that Dropbox might one day have 100 million users. It applies much less to B2B. And yes, if lack of monetization limits you in your growth strategy, you gotta solve that too. My main point is not to lead with it as if were a super important problem, because it's not. As far as getting to 100+ million, it's much more achievable than it's ever been, and not only that, I think it's the goal we'd all strive to hit to build a meaningful business." - Andrew Chen

"Great links, well said." - Andrew Chen

"Yes, but even then, you still lead with a great product experience with a lot of growth, and think about monetization a function of that. If I state it in the opposite, I think you'll find that you agree with me more than you disagree. The opposite would be- before coming up with a great product or growth strategy, you should work hard to define the business model because that's the most important thing. Lead with the business model. Contrast that to the first sentence of my comment and I bet you'll agree with me. IMHO, twitter's model is nothing special. It's just direct ad sales, and they are trying to make the ad creative more aligned with their product. But advertisers are stilling paying on a CPM/CPC/fixed basis, just like any other advertising product. It's innovative but within a small sphere. And yes, maybe FB will be worth $30B or $300B, but once you're debating that, you've already won the product/growth side of things." - Andrew Chen

"Obviously not saying you should wait until then- but if you are able to have a good enough product and growth to hit millions of users, then you have a shot at actually building something good." - Andrew Chen

"The vast majority of businesses are shitty and usually fail. If that's the kind of thing you're trying to start, god help you :) My point is that exceptional new businesses start with a great product and a lot of growth, and monetization is an important component of that, but doesn't lead. Especially in today's market." - Andrew Chen

"Well-said." - Andrew Chen

"The easiest high-value thing you could do for 100k users is probably enterprise. Just get them to pay you $1000s or $10,000s per month and you're all set. Much harder to build a small customer base in consumers and still be happy- how many products are you paying for right now where you pay over $100/month? Your rent, maybe your car, maybe your cable bill. But It's very few and far between, which is why you typically need a low price point (<$20/month) combined with a lot of mass. That said, why limit yourself to 100k users? Pick something big, but do it well, start with a small base, and go from there. Maybe there's a bunch of upside and you'll surprise yourself." - Andrew Chen

"My point is true even for medium-sized B2C cases. The problem is that people convert at 1% from free to pay, or at a <1% clickthrough rate. Those are pretty fundamental laws of gravity on the internet that can't be changed much. So given that, if you work backwards from $5M rev/yr (a small business), then you still need 80,0000 customers paying you $5/month. Or you need 400M pv/month. Basically your product has to rock and you need a lot of growth. So I think you have to figure that out before figuring out how to monetize better. Even if you could improve the above stats by 2x or 5x, you're still talking about pretty serious numbers. If you do the math and look at the industry comps, you can't get away from the fact you need a great product that has a lot of growth in order to get to something interesting." - Andrew Chen

"Sure, there's definitely innovation to be had. But would you focus on innovating on your business model OVER innovating on your product? Sounds like the tail wagging the dog." - Andrew Chen

"As with my caveat at the beginning, I definitely think the business model is important and there will be plenty of innovation there. However, it's better for most entrepreneurs to lead first and foremost with the product experience, and making sure you have something really great and really sticky. Innovating on the business model if it's a core part of the experience (i.e., buying coupons from Groupon) or once you have scale. Otherwise, do you really want to have a blah product but a really innovative business model? Sounds backwards to me." - Andrew Chen

"I would hope that evaluating whether you can build a great, sticky product experience that appeals to a lot of people is something every entrepreneur would lead with- not the financial results." - Andrew Chen

"Good point- I should probably use one of the restated estimates. I read an older analysis that had $6B in it, and that stuck with me." - Andrew Chen

"I think I'm both less well-equipped and less interested in debating the merits of Facebook's stock over the next 3 quarters. There's very capable financial analysts that are out there that will do a better job than me. Mainly I believe that Facebook is a great company with a lot of upside, and is a good growth stock even at $50B or $100B, if you plan to make the investment for the long-term. The reason is that they've powered their whole business on extremely unobtrusive ads in the sidebar, monetizing at $0.25 CPM. That's as baseline as it gets. They could easily 2X or 5X their profits in the short run just by placing those ads more prominently (but they won't). Similarly, while they have ~1 billion active users, I think it will be straightforward for them to be the first internet company to hit 2 billion. They've really perfected the art and science around growth. They also have multiple revenue lines that aren't obvious to Wall Street but are straightforward for Facebook to execute...." - Andrew Chen

"You know they are supposed to do $6.5B in revenue this year, right? And that they did $3.7B in 2011? At a 10-15X revenue multiple (I think their growth justifies that), that's $65-$100B. I think it's easy to discount them as not being a $100B business without knowing the metrics behind what they're doing. Yes, $100B is a lot of money, but yes they are planning to do $6.5B this year and have been growing a double digits every year since their inception. A better and more detailed analysis than what I'm doing: http://abovethecrowd.com/2012/..." - Andrew Chen

"It's hard to talk about VCs in general because there are so few good ones :) But I think of the ones who've stuck around and been successful over decades, that some key ideas/themes around their investing. Plus the guys who invented the industry are still around, so they can still instill many of the original ideas to the new generation. All that said, you're right that there are a few firms that kicked ass early on but missed the generational handoff and are now in the failing category." - Andrew Chen

"Hard to build a "one size fits all" rule when you just care about the outliers :)" - Andrew Chen

"I think you'd be surprised by how common this POV is, but it's not what is commonly trotted out by VCs because it's not as complimentary and deferential to entrepreneurs. Here's another important datapoint: "Conversely, in a terrible market, you can have the best product in the world and an absolutely killer team, and it doesn't matter -- you're going to fail."  From http://pmarca-archive.posterou... In the same blog post, quoting Rachleff (formerly Benchmark):  "Andy puts it this way: - When a great team meets a lousy market, market wins. - When a lousy team meets a great market, market wins. - When a great team meets a great market, something special happens." I've heard/read many other references to the same." - Andrew Chen

"I did just get a reply on my second Quora question from someone at FB in '06 who said that it was 40-50% back in the day. Hopefully more responses soon. But yeah, I think it was writing on walls and that's what drove things, even back in the day." - Andrew Chen

"If you believe "the skills mentioned here are nothing new for seasoned digital marketers" then I think we disagree on a profound level. The point is, these new distribution opportunities are afforded because of platforms that have only existed for only a few years. Being "seasoned" and having experience have nothing to do with it. It requires a new skillset that traditional marketers don't have - it's all about products, analytics, and platform integration.If a new company wants to make progress with customer acquisition, the first thing they should do is to bet the farm on getting customers via their product. The product team needs to be accountable for bringing new users in, not marketing. Forget the marketing team, they won't help you these days." - Andrew Chen

":) In my book, the more technical the better. We can argue about the minimum requirements to be conferred the growth hacker title, but I think we agree that's pointless. The point is, if all you know is that your startup should "plug into that Facebook likes thing and go viral!" then you're screwed. If you know enough to say, "wow, if we used authenticated referrals along with Open Graph and the mobile user agent to drive traffic to our iTunes mobile landing page" then that's pretty awesome. The more technical the better, but you're right that you do not necessarily have to write all the code yourself (but that's true of any large-scale engineering project)." - Andrew Chen

"The red circle tweet is a bit too newsy to write a post on. It's "At $679,000 a day, Google Play makes an eighth of iOS App Store’s $5.41M daily revenue http://t.co/0kejQsnF "" - Andrew Chen

"My guess is that it's always been high- same way that email/IM/chat have high DAU/MAUs even though they don't have feeds per se. It's all about communication. Maybe it's not as high as 50%, but maybe like 30 or 40%. But not 10%, which is where a lot of sites are (ecommerce, reference, etc.)" - Andrew Chen

"You're right that you probably need some kind of critical mass to use this. My best tweets have the ratio of 1 RT per 100 followers." - Andrew Chen

"I find that I get a lot more RTs than favorites, and that sometimes favorites are used more like "I want to read this later" rather than RTs which are about spreading the article." - Andrew Chen

"Thanks, Added Ivan and Paul. How could I forget them?" - Andrew Chen

"Great answer on Quora, Andy. Upvoted." - Andrew Chen

"Our mutual buddy Nabeel nudged me :)" - Andrew Chen

"I'm sure there are plenty, but I don't spend enough time out there to add them to the list." - Andrew Chen

"Actually Noah/Sean are really most expert at ad arb - they are amazing at that, but as I caveated in the post, just focusing on data-driven virality for the list. Great suggestions though." - Andrew Chen

"Glad you liked it! Hope it stirred up some trouble at your bschool :)" - Andrew Chen