A channel is simply a way a user discovers the product. An eternal law of the universe - every user discovers any product through some channel (even a grocery shop).
- All users come from channels.
- There are a fixed number of channels that exist in the world.
- Channels are rigid. You must build your product to fit your channels.
- Channels almost always have a power law of distribution.
- Channels change over time, new channels give rise to new products.
Growth = product + channels
The uniqueness/effectiveness comes from how well the different channel fits the product
- DropBox - grw through a viral referral program (refer & get storage space)
- paired it with an incentive
- Airbnb - channel of using Craigslist
- used an existing platform for house listings
- Brex - billboard advertising (bought all the billboards in SF)
- city filled with founders
Like product-market-fit, PMC needs to be optimized and found.
- if your #1 channel is viral word of mouth & you don’t optimize for that - your product is going to fail
- if your #1 channel is SEM & you don’t optimize for that - your product will fail
Most startups spend years building a product and gambling on the fact that a good channel exists. The author flips this on its head - he proposes you never build something without a channel in mind.
Serially-successful founders never gamble on channels.
The writer had a 100k email list before he began the book. He knew his top channels (email, word of mouth & Amazon). Everything else is done to enforce the top channels - i.e get reviews on Amazon
There are only so many chanels in the world. e.g if you’re writing a book, Amazon, word of mouth and e-mail are probably the best channels there.
For multi-billion dollar startups it’s even less - only few channels can help you reach a large scale like that.
When you understand your channels early on, your product changes with it. It evolves from “something a random set of users want” to “something people in the channel want”. From “an app for people struggling with mental health” to “an app for users who live on TikTok that have depression”
Understanding the fixed number of at-scale channels means:
- being comfortable spending money on Google Ads
- understanding exactly who your users are, where they live, how you’re going to reach them
- building your product according to that
You cannot change a channel - you only need to change your product to fit it. One of the most important jobs of a growth team is to deeply understand the channel and the rules they follow.
Yelp is a good example of this (there are others) - they split their product by area (city), type of restaurant/service/etc. just so that they get their SEO optimized. They broke down search volume by category and built their entire product around it. Then, businesses link “find us on Yelp” to drive traffic and backlinks (helps in ranking)
In the early 2000s, platforms handed out free/extremely-cheap distribution. Organic growth is good at the start of any platform. Once they grow and need to monetize, they start to charge for it.
A universal theme across time - channels change. billboards → display ads radio ads → podcast sponsorships door to door sales → telemarketing → cold email → IG/Twitter DMs
If a platform if giving you free distribution today, it will most likely charge you in the future. e.g TikTok
Most channels today are paid.
New channels usually arise from new technology and allow you to take advantage of the arbitrage. They usually give rise to a whole host of new startups who harness it (FB→ Buzzfeed, Craigslist → Airbnb)
Organic growth isn’t good, and paid growth isn’t bad.
What matters is whether it scales. What good is organic growth if it doesn’t scale, and what good is paid growth if it’s at a loss.
In fact, it’s a singal for product market fit. If you can compete within a paid channel, it’s an extremely positive sign. Advertising platforms are basically an auction – the best product usually wins.
Marketers give the advice of pushing your audience to owned channels like email, but that’s a fallacy.
Even e-mail changes - spam filters evolve, different inboxes become standard (e.g promotions tab), CAN-SPAM laws change, consumer behaviour changes.
There is no channel you will ever truly own. You just have to understand the natural behaviors of your main channels and how they’re changing over time.
Keep an eye on new channels and experiment with them.
Changes in channel can either destroy you, or your competition.
Having channels is foundational for people using your product. Obviously, if there is no way for them to come - they will never come.
through of sorrow - the period after the initial hype of a startup has worn down
In this stage, founders make this mistake where they believe the product is not good enough, and double down on it – when in fact, their channels simply aren’t set up.
Startups that achieve exponential growth have two things in common - they built an amazing product & they found at least one strong scalable channel of growth.
Nothing can overcome the natural usage & behavior of your audience.
A developer tooling product is best positioned in Google – the channel of search – as that’s where the engineers first go when they have a problem.
The way to win there is to get at the top seach engine ranking by any means necessary.
Buying Google Ads, landing pages with targeted meta titles/descriptions, backlinks – whatever!
Robinhood didn’t use financial advisors recommending their product, bank partnerships, tons of ads, or ranking on Google. They started in 2013 but only added option trading in 2018. It was a brilliant move because it made trading stocks exciting for the average person, especially once they added margin, which fuelled large “YOLO/ bets of people becoming millionaires with 10,000% payoffs.
This made for their core channel of virality on social media.
Their referral system was brilliant too - you got a free stock for referring somebody, which is better than e.g $5 since it has upside (gambling.)
There is almost always an 80/20 rule when it comes to channels – all of your users wil come from 1-2 channels.
You don’t need to be on every channel, you just have to be successful in the 1-2 channels that are key to your growth.
It’s extremely important to recognize what your core channels are because they are the fundamental drivers of your business.
They impact your unit economics at scale, who you need to hire, how you build your product. They will be the reason your product dies when the channel changes.
Try out a bunch of different things. Use intelligent hypothesis to guess your best channels.
It’s easy to run small experiments.
To find your channel you need to spend.
- Do Google/Reddit/FB/etc. Ads work?
- Does the product have natural virality
- Can you create a referral program?
- am i able to send successful cold emails to potential users?
- are there major search terms on Google I can target with ads or organic SEO efforts?
- does my product have natural virality? It’s honestly a shot in the dark, even for the most amazing products.
- social media both paid and organic
- Google Search both paid and organic
- word of mouth
- product virality
- partnerships
- platforms like Apple, Amazon, Google Play
- direct sales If you can’t compete well on these channels, you’re doomed at scale.
A developer tool that can’t compete on search is probably going to fail. A ride sharing app with no product virality is probably going to fail. A consumer app that can’t rank on the Apple iOS store is going to be murdered by its competitors that can.
Tiny niche startups have a lot of small unique hacks for little bits of growth - but the #1 product in a multi-bil industry can’t.