To build a product is to understand how products grow. If you have no users, your product will die instead of flourish. So let’s make sure we don’t die. To understand how products grow I’m finding myself coming back to two very simple models: funnels, and loops.
Everything is a funnel
Every products has a funnel. You put something in on the left (interested people), and something else comes out on the right (happy customers).
The thing on the right is usually the thing you care most about - your north star metric. Usually, it’s something related to customers or money. Okay okay, most of the time it will be about money. VEED.IO is no exception to that.
You can grow the thing on the right by a) growing the top of the funnel (what comes in), or b) the conversions of each step. Usually though, if you are ambitious, you want to do both.
Finding what to optimize for
But you only have limited resources. So it’s all about deciding where to deploy your team’s efforts. When assessing what to invest in, I’m trying to simulate what the funnel can look like. If we increase this conversion, what will be the impact? Wow much will that move our MRR target? What about if we optimize other steps?
Testing your assumptions
To get an idea of how realistic my simulations are, I combine them with benchmarks. What are those conversion ratios for other similar products? You’d be surprised by how much information you can get from talking to people in similar verticals, or finding industry reports like this one.
This concept is simple, yet powerful. Try it for your product and find the areas of improvement.
Everything is a loop
Although super valuable, funnels are a gross oversimplification. The actual game of growing your product is more 3D and complex. Things feed into and accelerate each other. That’s why I’m using a second model: loops. Everything is a funnel, but everything is also a loop.
What’s a loop?
A loop, or growth loop, is a self-sustaining cycle that helps your product acquire, engage and retain users.
Let’s look at a few examples:
Watermark loop
Another VEED growth loop is the watermark on a video. If a user exports a video with a watermark and shares it online, people will see it and some will search for VEED, some of those people will become VEED users, and put out new videos with watermarks, acquiring even more usersInvite flows loop
Another obvious example can be found in social apps. A new user joins the app, invites friends, some of who will end up joining and inviting even more people. Rinse, repeat and grow your app exponentially. This growth loop is so exponential and thus so potentially powerful that VC/FB are willing to put a lot of money down on the first signs of success.
Find your loops
Loops sound great and I get that you want lots of them. But be careful to not force the wrong loops into your product. You can’t ask users of B2B accounting software to send it to 5 friends before they can start using it. Instead, you might put a watermark at the bottom of your invoices so that every invoice shared makes more potential users aware of your product.
Combining the two
As you can tell from all the loop examples, there’s always a funnel in play. Not everyone who sees the watermark will start using VEED and pay for it. I’m using both models at the same time. You can combine multiple loops into your growth funnel, or review the funnel of each loop. They are different lenses of looking at the same problem. So understand the loop, optimize the funnel, win!
Until next time - Willem
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Happening in Dutch tech 🇳🇱
ASML likely to stay in the Netherlands
Our biggest tech company is staying in the Netherlands. ASML was unhappy with the governments plans. Shoutout to them for staying. Here’s their amazing AI-generated video to celebrateGreat write-up from Andreas Klinger on Europe
Two clear suggestion to prevent Europe from falling behind: make 1 European Inc (instead of BV, GmbH, S.A), raise the level of English.
Read the full piece hereAPC course out of beta
Joined by 2 co-founders to help APC grow. Part of that is becoming the best tech-educator in the Netherlands. From startup people, for startup people. We’re starting with a product management course. Sign up here: https://www.amsterdamproductclub.com/course