Our Path to Acquiring KISSinsights

Yesterday TechCrunch covered our acquisition of KISSinsights.  This acquisition may seem a little out of left field, but we’ve actually been moving in this direction for a while. I figured other entrepreneurs would benefit from understanding the path that we’ve been following.

The path started with CatchFree.com.  The idea for CatchFree was to capitalize on the fact that the freemium business model was creating many very strong businesses, but the economics of these apps constrained their ability to pay to accelerate adoption.  Our leap of faith was that by organizing freemium apps around detailed user ratings, we’d be able to create a very popular resource for consumers and small businesses.

Since launching at TechCrunch Disrupt last year the site has attracted over 1.8 million users and collected detailed ratings for over 1000 apps.  But surprisingly, app publishers were more interested in the structured insights we uncovered than the traffic we were sending.

If you read my previous post, I mentioned a service we were developing called MustHaveScore.  It was an attempt to productize our process for collecting detailed ratings for the products listed on CatchFree and package the insights in a way that they’d be even more useful for app publishers.  The response was very strong.  Tomer Dvir, CEO at Soluto, recently told me that insights have enlightened everything from their messaging to their product road map. And others were enthusiastic too.  In fact, we soon realized that our “concierge MVP” approach was going to overwhelm us.  By concierge MVP, I mean that we were manually categorizing write-in answers to how people used an app.  Now that we’ve validated demand for this product we are working on a more automated way to provide it.  We’ll also come up with a price point that makes it a viable offering.  In the meantime, we’ve moved MustHaveScore into a private Beta.

Through the execution of MustHaveScore we found that many people were looking for a more elegant way to collect feedback from their users.  They also wanted the flexibility to ask their own questions.  It became clear that what they really wanted was KISSinsights, so we approached our friends at KISSmetrics about buying it.  Fortunately for us KISSmetrics wanted to put all of their focus on their hot analytics business and we were able to reach an agreement to acquire KISSinsights.

What is KISSinsights?

If you’re not familiar with KISSinsights, it’s absolutely awesome.  It essentially pioneered the microsurveying category, making it possible to ask website users questions as they are making decisions, the crucial point at which they are likely to remember their motivation for making the decisions. This is a really powerful way to learn how to improve conversions and engagement. Of course it can be used for more general surveying, but this flexibility to intelligently target users on a website is what really makes it special.

And as an advisor to KISSmetrics, I’ve been helping with the product since it’s inception so I really understand it.  It evolved out of the Survey.io project that KISSmetrics and I launched in 2009.

Heat Seeking Missile

Our business will continue to evolve for the foreseeable future.  Josh Kopelman referred to this process when he wrote about entrepreneurs that are “heat seeking missiles.”  I highly recommend his blog post on the subject if you haven’t read it.  One of the areas we’ve been exploring is helping companies take action on “actionable insights.”  Our longer term vision has also evolved, but I’ll save that for another blog post.

If you’re a KISSinsights customer or have ever used it, I would love the opportunity to talk with you about it.  Please send me an email to ellisatcatchfreedotcom so we can schedule a quick 15 minute call.

Early Detection is Key

Following the Startup Lessons Learned conference, I had the Founder/CEO of a startup tell me that she finally ran the Survey.io customer development survey. She was thrilled to discover that more than 40% of her users considered her product to be a “must have.” She had avoided running the survey earlier for fear of a disappointing number. But now that she has run it, she can confidently start planning the steps needed to scale her business (see Startup Pyramid post).

Her fear is common among many startup founders. We have so much invested in the vision (especially emotionally), that we dread an inconvenient truth standing in the way of our dream.

The fear reminds me of one of my personal life missions. Over the last five years I’ve strongly encouraged my friends to get physical exams – especially entrepreneurs consumed by their startups. I know how hard it is to make time.  At perhaps the most intense period of scaling LogMeIn I was putting off a routine physical exam. I felt healthy, so why worry? But I gave up half of a day anyway and finally got a complete checkup. It turned out that I had the very early stages of bladder cancer. A simple procedure removed the cancer and I haven’t had any signs since. But if I had waited just a few more months, my doctor explained that the prognosis would have been a lot scarier. If you haven’t had a physical exam recently, please make the time. It could save your life.

And on a much lighter note, if you haven’t run the customer development survey on Survey.io, just do it (it’s free). If too few people consider your product a “must have”, you’ll want to pivot/course correct as early as possible.

Optimization Mistakes that Kill Startups

I once believed optimization was the secret weapon that could make almost any startup successful. It was certainly a critical part of reaching millions of users in each of my first five startup marketing roles. At a couple of startups we saw a tripling of conversion rates from a single experiment. When we tripled conversion rates, we tripled the effectiveness of every future marketing dollar.

I first became a fan of funnel optimization at one of my early startups where we had hit a wall trying to develop scalable customer acquisition channels.  We decided to temporarily stop trying to find new customer acquisition channels and focus instead on improving conversion rates.  A few months later we resumed channel building and were able to scale the same previously tested channels to support 100X the marketing spend with the same target ROI per dollar spent.  Beyond the clear benefit of enabling scalable marketing campaigns, the improved user experience also resulted in a multifold increase in free organic growth.  User growth immediately hockey-sticked and years later still  hasn’t diminished.  All the while, the company maintained cashflow positive results.

These benefits probably have you chomping at the bit to start your own optimization program. But be careful, optimization can easily kill a startup when not done right (or at the right time).

Here are the three most common optimization mistakes startups make:

1) Premature optimization – Optimization is about improving the path that users take to reach a certain destination within your website. For most sites it’s ultimately about getting people to experience and buy your product. While this seems like an important goal from the beginning, it’s not. If the value of your core product is weak, doubling the percentage of users that get there won’t help much. And it will actually hurt you because every unit of effort put into optimization is one less unit that you can put into improving your core product. Products that don’t become a “must have” almost always fail.

My recommendation for startups is not to begin optimizing until at least 40% of your randomly surveyed users say they would be “very disappointed” without your product. That doesn’t mean you shouldn’t try to have a great first user experience, rather it means you shouldn’t start iterating flows until the core product meets this threshold.  The only exception to this is if your value proposition will increase because of a network effect (like eBay). I’ll try to write a post on this scenario soon.

2) Not being deliberate –To execute full funnel optimization you test multiple changes at every step in the acquisition process. Since every change is also an opportunity to screw things up it’s extremely important to measure the actual results of a change. Unfortunately traditional analytics programs aren’t helpful here since they don’t track specific user cohorts moving through the funnel (AKA groups of users). In the early startups I worked with we spent months building systems internally to track conversions at the user level. Fortunately “off the shelf” systems are now cropping up that make user level funnel tracking much easier (I’ve been advising KISSmetrics on such a system for over a year and I’m now using it in a couple projects). With the right system you can track your “measures of success” and roll back any changes that havea negative effect on these metrics.

This presents a new problem. Anyone with a basic understanding of statistics will realize that optimization is a numbers game. If you test enough things you will definitely find something that improves your key measures. That’s the theory, but the reality is that you’ll never get past the first few tests if the early ones don’t yield improvements. People quickly lose faith in the process. Therefore it is essential to vet every test idea before asking the development team implement it. Prioritize test ideas so that the easiest and/or most likely to improve results are implemented first.

3) Killing the love – One thing that is rarely measured in an optimization project is a reduction in the core value perceived by your most passionate users. Your ability to deliver an experience that creates passionate users is your most important asset as a business and must be protected. It can be improved, but it must be done very carefully. The first step in protecting it is to understand it. I never attempt an optimization project without first doing a project that helps me understand the use cases of the most passionate users. After this initial project, which I combine with messaging optimization, I am in a much better position to safely optimize the full conversion funnel.

Effective optimization requires the right tools, qualitative research/understanding and a systematic approach to testing. When executed properly it can easily result in 2X – 10X improvements in conversion rates. No business will come close to its potential without a concerted optimization effort, but be careful to avoid the mistakes listed above.

For more context on where optimization fits into the overall startup marketing priorities, see this post on The Startup Pyramid.