There has been an incredible amount of chatter about the coming downturn. Public tech stocks are down, but people are confused about how this might affect earlier stages.

You don’t want to over react and miss the opportunity in front of you. But founders tend to be hopeless optimists and bias towards driving off a cliff with their foot slammed on the gas.

So it’s time to consider roach mode: do whatever you need to do to survive, like a cockroach.

Study History

I feel old saying this, but some founders don’t remember 2008. There was a financial crisis that caused the funding environment to change very quickly.

Sequoia Capital went into freak-out mode and sent their portfolio a presentation called “RIP Good Times”. You should go and read the whole thing here. The advice is rock solid: cut burn now in order to save the company later.

More recently, Paul Graham wrote an excellent essay: Default Alive or Default Dead?

First Round describes the Watney Rule: “We need to act like we’re Mark Watney in the Martian. We can’t assume we will get a shipment of new potatoes to save us.”

“Roach mode” rhymes, so it might be easier for founders to remember. ?

Investor Relations

If you’ve raised money, talk with your investors. Mine have been proactive about explaining how they think the environment is evolving. Hard times are a test for the quality of investors. The best investors are honest and transparent, making them predictable even in hard times.

I love our investors, and they’ve expressed strong support for us. But I’m going to act like that isn’t true. Roach mode means acting like there isn’t more money coming.

Another version of this is taking a lower valuation than you expected. If you shut down your company because of some valuation pissing match, you’re an idiot.

Revenue Structure

There has been a major problem brewing in SAAS businesses: they can predictably grow revenue, but normal accounting makes it look like they lose money. Spend $1K in ads and sales team comp, in 12 months you get back that $1K, and in another 12 you make another $1K. This sounds like a deal until you realize this depends upon external funding to push growth through the short term trough of losses.

Some SAAS companies see this pattern and push to be paid early. For example, eShares just changed to annual billing. This means you pay upfront for a year so that the company doesn’t go into the hole at all. The problem with this approach is that it doesn’t match up with customer value. Any decision that is good for your business but bad for customers should be suspect. But in roach mode, every option is on the table.

Check out this excellent post about strategic finance for more.

New Revenue Channels

YesGraph recently launched an awesome class around growth, where we help you build an experimental process, understand your analytics, understand virality, hire for growth, and more. It is not free, but compared to the value it’s cheap at $199. Check it out here: http://learn.yesgraph.com/

Why are we doing this? One of the reasons is that it’s a lead gen source for us — a premium content marketing play. But there are other structural issues. If we can run ads to get people to pay for the class, then the paid acquisition strategy isn’t the same as the problem in SAAS with marketing and sales costing too much up from. We can efficiently run ads to buy the class, which then pays off immediately.

Plus the ad campaigns we run are going to be open to people that take the class so we can demonstrate what paid acquisition looks like. That’s delightfully meta.

We’re trading more leads with high quality leads (you’re willing to pay for growth), and biasing towards immediate revenue.

We just launched another similar effort: growth teardowns. We just reviewed Telegram Messenger, and are queueing up more. These aren’t free: we’re essentially scaling consulting work in a way that strongly aligns with the service that we build. We’ve been helping YesGraph’s customers with growth advice already, so this fit our mission of helping companies grow faster.

Similar to the growth class, we can run ads to the teardowns to get more clients. It’s transactional and more efficient than other kinds of lead gen. If you want to better understand your growth, email teardown@yesgraph.com

Cutting Payroll

Besides expensive paid acquisition, another major expense for many companies is payroll. Good engineers are expensive, so one of the simplest ways to live longer is to cut payroll.

This is brutally hard at times, but that’s roach mode. Take this slide from RIP Good Times.

If you cut early, you’ll have the extended runway to live forever. If you don’t, you’ll fall off a cliff.

But use your judgement here. YesGraph has recently hired some excellent engineers. I don’t think we have too many. I think we have enough to take on the opportunity, and we’d be strained to make progress with fewer people. We’re already lean because I started out sensitive to over hiring, even without a downturn coming.

Your Strategy

I might be doing something obviously wrong. Some people think offices are expensive, but our office is less than 3% of our expenses. We still buy food, but that’s less than 1% of our expenses.

One reason I wrote this is to hear what I might be missing. So tell me in the comments or email me: ivan@yesgraph.com

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The problem with “Growth Hacking” is that there are legit growth teams at companies like Facebook and Dropbox, but there is still a huge amount of confusion about how to actually drive growth.

It doesn’t help that much of what you can read about the topic isn’t from people that have done it at scale. Worse yet, a general problem with advice is how to synthesize good ideas from others into what you should do for your own company.

We’re launching a class on growth to help solve this problem. We want to help companies get a grip on their data, understand their users, make better decisions, and grow faster. We want to dispel the bullshit and instill the practical advice that you can use today.

I’ve been obsessed with this idea for years — ever since my first startup didn’t take off and I learned how Facebook ran their growth machine. I ran growth at Dropbox and refined my advice — and since have talked to hundreds of companies about what works and what doesn’t.

At YesGraph, We build a product that can help with growth. But much of what we’ve learned about growth isn’t something that can be productized. These lessons learned are about how you think and organize your team. It’s how you run experiments. It’s how you ask the right questions.

So check out the class right here.

This class covers analytics, virality, referrals, growth process, hiring and more. We’ve embedded the syllabus below — it’s pretty long! The format is video lectures plus written essays. We think this will help you get two perspectives to better understand the material. The first lecture is free to preview!

On top of all this, we’re making a living document. We’re going to take feedback, and upgrade the class. This might mean more examples, more exercises, and more topics covered. If you purchase the class, you’ll access to all this new material for free. Feedback loops are as essential part of making your product excellent — and this class is a living example of how much we believe in that.

We have more coming soon too! We want to have more options, like product reviews and maybe even off-sites! You can email me anytime with feedback or questions about the class: ivan@yesgraph.com

Subscribe to get more updates here.

>>> And here is the class link one more time <<<

Mark Cuban thinks YC founders are entitled. PG thinks Shark Tank is a waste of time.

PG is right, because of the way founders behave.

Context: I’ve been through YC twice and Sacca was an investor in my last startup. I think everyone involved here is bright.

Founders put a lot of weight in Shark Tank, and invest too much in getting there and performing. Sacca and Cuban are acting like the founders got up that morning with no plans and spent 10 minutes pitching millions of consumers. The problem isn’t Shark Tank but the way founders behave around it.

This is a specific version of the general phenomenon: founders seek some magic bullet, some golden ticket to solve growth. I’ve written about that here, “The #1 Mistake in Driving Growth”. It’s a mistake. Founders should focus on making the best product for their customers. They should do marketing too — focused on sustainable progress (probably not PR).

Cuban saying YC founders are entitled is both 1) obviously true and 2) difficult to distinguish from Cuban’s anguish over the price of the rounds for YC companies. The fact is that there is a market for company stock, and YC companies get higher prices. They expect higher prices and more, which is entitled, but they get them, to Cuban’s chagrin.

Is it lost on the people looking on that Cuban has a strong business interest to dismiss the value of YC so that he can get a better deal? It’s so transparent it is barely worth mentioning, but apparently people don’t notice the conflict of interest. Plus people like Cuban predict that deflation of prices in some bubble burst as often as founders complain that VCs are slow and lack vision.

We’re happy to announce that YesGraph’s Android SDK is now available!

Like our iOS SDK, it powers the whole invite flow for mobile apps. We built the most performant design, meaning you can get better performance with less work. Plus it’s open source on Github! (Here is the repo, and here are our docs).

YesGraph’s contact recommendations are built in. Users see suggested contacts that are the most likely to get invited and accept invites. Here is the flow:

But there is another interesting feature that highlights the long term power of YesGraph. It’s got me so excited!

Unlike iOS, Android contacts contains wondeful data like favorites and a people you’ve recently contacted. These are wonderful signals to highlight your top contacts. This data just isn’t available through APIs on iOS.

But YesGraph is more than a simple utility for sending invites. It’s a powerful social graph database with machine learning running over millions of points of data.

If you have both an Android app and an iOS app and use YesGraph,  you can can leverage this incredible data on Android for your iOS users. The data just isn’t available on iOS, but the reason this works is social graphs. No really, they are like a super power!

Your Android users are connected to people that are on iOS. Affinity data across your users is symmetric in many ways. In other words, knowing the close friends Android users have on iOS means you know some close friends of your iOS users.

Normally only big data teams at LinkedIn and Facebook and Twitter do this kind of analysis. This is what makes YesGraph powerful: we leverage all of your data to deliver better results.

Let’s walk through an example. Let’s say Anna uses Android. His contacts look like this:

• Beth
• Carl
• Dennis
• Esther (favorite)
• Hunter (favorite)

YesGraph’s ranking puts Esther and Hunter as suggested invites because they favorites. Anna invites Esther, who signs up on iOS

Esther’s contacts are:

• Angie
• Bob
• Carole
• Hunter (yes, the same Hunter that Anna knows — they have the same phone number).
• Finn

Without any other information, you can apply a few social graph heuristics:

• Hunter knows both Anna and Esther
• Hunter is a close connection with one of Esther’s close connections.

Then we can rank the contacts:

• Suggested:
  • Hunter
• Alphabetical:
  • Angie
  • Bob
  • Carole
  • Finn

This social graph analysis and cross pollination of your data is a really big deal. This heavy lifting is why YesGraph can deliver far better performance for your invite flow or referral program. Plus it adds a network effect to every app.

To get started on Android, create an account on YesGraph to get access to our service. Invite your developers to join in, and check out the Android docs and Github repo.

You can get help by emailing support@yesgraph.com and joining the YesGraph growth community slack here: http://community.yesgraph.com

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We write a lot about referral programs at YesGraph because our product helps make them better.

We’re written about which metrics to track, how to test whether a referral program might work, and described dozens of tactics to improve performance.

In this post, we’ll cover exactly what it takes to create a referral program and add YesGraph. This is for people just getting started. If you have a referral program and want to increase performance, start from step 4.

1. Invite URL to track referral signups

To track performance and grant rewards, you need a way of having one user share a link or code with a friend to get them to sign up.

Uber made popular having a referral code because lots of sharing was in person, but we have supercomputers in our pockets and links are easier to click than typing a code.

The simplest invite link just has the inviter’s username or a referral code, like this:

example.com/invite/kirigin

That url should go to a registration page. Making this a dedicated registration page separate from your normal signup form is a good idea because you can optimize it as a referral landing page.

2. Grant a reward

Many apps create an incentive to send referral invites. This helps motivate the inviter to send referrals and motives the invitee to accept the invite.

You don’t need to grant the reward just on signup. It can be deeper in the funnel. Dropbox required the invitee to signup, install the desktop client, and sync a file. This helps bring in better users and motivates users to go deeper into your product. It can also help avoid some fraud.

Note that regardless of the vendors you’re using, you’re probably going to have this build this part yourself. General purpose vendors might make system that work on some platforms, like Shopify. But granting a reward probably requires custom code.

The reward doesn’t need to be money. Extended trials, time on pro features, and some currency like Dropbox extra space all work in the right context.

3. Prompt users to refer

Think about marketing a referral program like you would any other product feature. It isn’t “if you build it, they will come”. It never is, but people seem to forget that for referrals.

In fact, tracking what percentage of your users even participate in your referral program is a primary metric. You should try to make it be as high as possible because this is the top of the referral funnel.

Start with prompts in your app and emails to your users. Consider creating multiple or recurring prompts so that it isn’t just new users that are told about the program.

Ideally, embed the prompt in the product experience. This is why messaging apps and social networks grow so fast: users are frequently active and the products are about communicating with friends. For example, for ecommerce or marketplaces, prompt upon purchase.

4. Add sharing channels, including contact importing

If you have an iOS app, congratulations, you’re done. Just add the YesGraph iOS SDK, which includes all the right parts for sharing channels and sending invites. Read more here.

We’re about to launch an Android SDK and also a web SDK that will completely solve this problem.

There are a few basic channels:

• copy the invite link, to share wherever
• social networks, like Facebook and Twitter
• email, where you type in the contacts
• contact importers, where you select among contacts

If you track the performance per channel, you’ll find email is the highest converting channel per invite. So the goal is often to drive more email invites. You just don’t have as much control over a shared link or Facebook posts.

So add a contact importer to really start to scale. Typical contact importer channels include Gmail, Yahoo Mail, Outlook, Hotmail, and Aol. It’s a fair amount of work to add these and others, which is why we’re building Superwidget.

5. Add YesGraph suggested invites

The problem with contact importers is that there are typically hundreds if not thousands of contacts. If you allow users to send to all of them, your app will get marked as spam and your emails will stop being delivered. It’s a bad experience for everyone.

YesGraph helps recommend exactly who users should invite. The most successful apps use yesGraph to recommend who among the hundreds or thousands to invite. We filter out spam and duplicate contacts.

Most importantly, YesGraph builds a machine learning model to rank contacts just for your app. This is heavy lifting that normally only data teams at huge companies like LinkedIn and Facebook could hope to accomplish. The signal to noise is so high that you can even pre-select our recommendations to drive far more invites while maintaining an excellent user experience and good deliverability.

Send contacts and getting recommendations means using YesGraph’s API. If you have any trouble, email support@yesgraph.com. In short, raw contacts go in, and ranked contacts come out.  Read more about YesGraph’s API on our documentation page. We have an SDK for Python apps too.

POST /address-book → suggested contacts

To exclude current users from our recommendations, use the API to tell YesGraph whom to exclude.

POST /users

To help improve YesGraph rankings over time, tell YesGraph which invites were sent and accepted. This is the basis for our machine learning models and helps us understand your app.

POST /invites-sent
POST /invites-accepted

6. Track performance and iterate

Like any other product feature, there is a support lifecycle after launch. Referrals might be unique in how much optimization is worth it. Unlike other features, optimization directly leads to higher growth.

So you’re going to run multiple tests to get better performance over time.

YesGraph helps here too, in a few ways. First we automatically get better with our contact recommendations from tracking what invites are sent and accepted. We also constantly refine our invite flows available through our SDKs to put forth the best product design.

We also can help reflect what is working through our metrics dashboard. We reflect invites sent and accepted and have powerful cohort analysis tools.
To get started with YesGraph, create an account and invite your developers to dig in. Email support@yesgraph.com with any questions — not just about integration but about your whole referral program. We’re here to help you grow.

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