10. Derisking
Can they build the product?
Will people use it?
Risk
Will people pay for it?
Will people come in mass?
Progress
Derisking often happens in steps.
These steps may vary for different startups.
Brendan Baker, Hiten Shah
12. Traction is your story of
momentum, told through
quantified evidence of
market demand for your
product.
Brendan Baker, Hiten Shah
13. “your story”
Not told directly, but implied in examples of evidence.
Your traction is unique – use examples that are unique.
Don’t hide weaknesses, but do frame them.
Brendan Baker, Hiten Shah
14. “quantified evidence”
Yes Maybe
Profits Cohort progress
Revenues Engagement progress
Active users Product velocity
Engagement
Customers/clients
Registered Users No
Downloads Press
Partnerships Testimonials
Traffic
* This isn’t a set list. Use evidence that makes sense for you.
Brendan Baker, Hiten Shah
15. “Market demand”
Aka ‘people want your shit’
Use evidence that describes momentum,
and hints at market potential.
Brendan Baker, Hiten Shah
18. The story is the implied message you want to send. It’s
not something you’ll say directly.
Think of it this way: say you pitched an Associate at a VC
firm. She liked you, and had a minute to describe your status
and progress to a Partner. What would you want her to say?
That’s your target story. Tell it with traction.
Brendan Baker, Hiten Shah
19. Your traction story:
Is unique to you.
Is concrete and evidence-based.
Shows a path to world domination.
Brendan Baker, Hiten Shah
21. story
“They’re super early, but they build and learn fast. They’re
worth betting on.”
traction
Brendan Baker, Hiten Shah
22. story
“They’re creating a marketplace. That’s hard, but they know it.
They knew they had to build the supply side first, and they
nailed it. Now they’re tackling the demand side. Early
indications are good, and I think they know how to ramp it up.”
traction
Launched in March 2011:
- 25,000 vendors, with avg 25 items (growing 20-30%/month)
- 11K uniques (growing 40%/month), with 3% conversion
- avg purchase of $45 (growing 5%/month)
- $120,000 revenue run rate (increasing 30%/month)
- Just signed partnership with Yahoo! and ramping up ads.
Brendan Baker, Hiten Shah
23. story
The product is pre-product-market fit, but they’re working in a
high potential space, and the founder has a huge vision.
Plus, he’s crazy smart. This is a founder worth backing.
traction
Working to enable one-click populated third party accounts, giving
the user ability to manage privacy setting from one dashboard.
Founder:
- Won an NSA hacking competition by outsmarting the organizers
- Secured 100s of trading applications and developed security
language for a top global investment bank.
- Founded an RFID security consumer product company which has
multi millions in revenues, and is growing 50-100%/year.
Brendan Baker, Hiten Shah
24. story
“They’re accelerating their school by school rollout. The first schools are
showing faster adoption than Facebook at their start, and are already
nearing local market saturation. They’ve started in the next set of
schools, and adoption and engagement is even higher. They’re
releasing faster than anyone I’ve ever seen, and it’s working.”
traction
Launched 2 months ago in first school:
- Downloaded by 80% of addressable population
- Weekly actives: 55%
- Feature requests: course sets, note sharing, daily deals V2
With V2, now ramping to 10 more schools in 3 months:
- 3 launched to date
- Each school population is downloading the app at a 15% faster rate
- Engagement (photos shared, messages, etc) has increased 40%+ over V1
Currently found a way to roll out much more rapidly to new schools, in under a few hours
each.
Brendan Baker, Hiten Shah
25. Resources
KISSmetrics
How to Communicate Traction to Investors
How to Hustle with AngelList in 10 Steps
Anatomy of Seed: An Inside Look at a $1M Seed Round
Brendan Baker, Hiten Shah
26. Thank you.
Thank you for building kick-ass companies.
@brendanbaker & @hnshah
Brendan Baker, Hiten Shah