Travel Tech Essentialist #95: Product Design
Don't start a startup where you need to go through someone else to get users. —Paul Graham
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1. What's the most successful way to acquire customers?
Julian Shapiro’s Acquiring Customers explains how product-led acquisition (PLA) is the PLA means your users naturally invite other users while using your product. It's a clearer definition of network effects for tech startups, and it's what this lesson deconstructs.
Julian identifies four ways that startups can integrate PLA into their product:
Compel users to invite other users—either to exchange valuable goods or to facilitate valuable conversations. i.e. when you send someone $1,000 via Paypal, they need to sign up to receive the money.
Turn your product into a billboard: The product’s use is repeatedly visible to non-users. Eventually, those who need a product like this will try the product.
Encourage users to make shareable content. i.e. On Tripadvisor, users collaborate to answer questions that then appear in search engine results.
Trigger word of mouth: Users derive a delightful experience (from pain reduction or entertainment) or tribal affinity that they want to tell others about.
2. Is your product sold (sales-intensive) or bought (marketing-intensive)?
The path-to-market is perilous. According to a three-year study on startup mortality, most startups fail after having raised $1.3 million and around 20 months after their last financing round. When a startup product goes to market, the two key muscles it can flex are marketing and sales, but this is often done in an unfocused way.
Leslie’s Compass is a simple set of heuristics to bring more clarity and focus to a startup’s go-to-market strategy. A key question is at the heart of the framework: is your product marketing intensive or sales intensive? Crest toothpaste is an extreme example of a marketing-intensive product. It’s low cost, bought by millions of consumers, simple to operate, low switching cost, and ready to use right after purchase. To succeed, Crest must deliver a product that is bought rather than sold. A jet engine is on the other extreme. It's in the millions of dollars, sold to 100 airplane manufacturers, and requires extensive engineering and customization post-sale. To win, GE must acknowledge that jet engines must be sold, rather than bought.
The way to build on an effective go-to-market strategy is to know whether marketing or sales is taking the lead, which is where Leslie’s 7 variables come into play.
Price - Is this a large or small economic decision for the buyer?
Market Size - Is it easier for buyers to find you or for you to find them?
Complexity - Can a customer self-serve to use, or is education required?
Fit and finish - After all is designed, done, and shipped, is there still much more for the consumer to do?
Customer - Are you predominately selling directly to people or companies?
Relationship - Do you measure successful customer relationships by transactions or longevity?
Touch - Can your efforts compound, or are they mostly one-off?
If the answers to these questions align toward the left of the chart, marketing should take the lead with the go-to-market strategy. If the vast majority of the answers align on the right side, sales should take the lead. Read +
3. Travel conference tips
Christian Watts, founder & CEO at Magpie Travel, has a future as a standup comedian if he wanted to. With so many travel conferences taking place, Christian has taken to LinkedIn to publish a series of conference tips. But instead of linking to his 6 different LinkedIn links, I published them all together on this post. I hope you enjoy them .
4. The state of the travel industry
And speaking of travel conferences, you can see here the main slides from an interesting travel industry overview presentation at the recent Skift conference.
5. Behavioral design for real customers
If people acted rationally, no one would overeat, overspend, text & drive, or hit the snooze button. Companies that understand that their customers are not fully rational use behavioral design, using what we know about the psychology of decision-making (behavioral science), to design products, revise features and change users’ behaviors. The behavioral design process has three primary phases:
Do a behavioral diagnosis. Identify your desired behavior and outline every step your users have to take to achieve it.
Identify behavioral biases. Determine the barriers that get in the way of decisions and the benefits that motivate them.
Experiment. Choose one barrier to address and design an experiment.
6. Face to face: better for business and happier at work
Important reminder by Fred Wilson on the importance of not locking ourselves into a remote-only framework and getting back to face to face, at least some of the time. "We know that humans are better to each other in person. We know that in-person interaction is more meaningful, we are more present, and we connect in more fundamental ways."
7. Agoda's new tech-driven CEO
Omri Morgenshtern is an entrepreneur and engineer. He sold his startup, Qlika, to Booking Holdings in 2014. And now, he’s also the new CEO of Agoda (part of Booking Holdings). I found this recent interview particularly refreshing. He refers to former CEO John Brown as “I don’t think I’ll ever be as good as John” and to his new position as “I don’t think anybody – well, maybe some, but not me – plans to be a CEO”. Omri's approach is welcome in a world where most CEOs seem to be media prepped by the same corporate handbook. He is humble despite his impressive track record and success, and he is also tremendously ambitious for the future of Agoda and online travel booking.
8. Now is the best time in the last 10 years to start a startup
Bill Gurley is one of Silicon Valley’s most respected venture capitalists. As a GP at Benchmark, he has backed startups like Duffel, Nextdoor, OpenTable, and Uber. In this interview with McKinsey, he explains the promise and perils facing startups at a moment of economic uncertainty. Bill Gurley thinks that this might be the best time in the last decade to build something from scratch and is very motivated about the implications of hybrid work.
Talking about in-person vs remote work, Bill Gurley talks about how the CEO of WordPress, which has been 100% hybrid its whole life, says that you need to be all or nothing because when you’re in the middle ground, you get into these weird cases of cultural confusion. That’s why some founders have a steadfast rule: all in person or no one in person.
9. Travel Investor Network is up and running
In my last newsletter, I announced the launch of Travel Investor Network, an invitation-only platform for investors in the travel, hospitality, and mobility spaces whose mission is to connect investors with great startups. A select and high-caliber group of investors (VCs, Corporates, Angels) have joined TIN and have already received the first monthly batch of startups (16 startups from 7 countries). What’s more important, the first connections between investors and startups have already taken place.
If you are a VC, corporate, angel, consulting firm, or innovator interested in joining the Travel Investor Network, please request an invite by completing this form (it should take less than 2 minutes).
If you are a startup looking to raise a round, get in touch with me (by replying to this newsletter) so that we can discuss how to move forward.
10. Fundraising news
Indonesia-based Traveloka secured new financing worth $300 million from the country’s sovereign wealth fund Indonesia Investment Authority, BlackRock and others. The new funds follow the company’s unsuccessful attempt at an IPO via SPAC last year.
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Travel Tech Essentialist job board (this is a different product from the Talent Collective)
There are currently 190 exciting jobs posted on the Travel Essentialist job board. Just a few of the amazing jobs seen on the board:
TROOP, Sales Development Representative (Remote)
Expedia, Director of Strategic Partnerships (Seattle, New York, Chicago)
Selina, 360 Marketing Manager (Lisbon)
Thank you for your attention,