My buddy recently asked me to give some advice to an early-stage consumer social company. And the company asked if they should focus on growth or retention first. Both are equally as important for a business designed for venture growth.
If you only focus completely on growth, you’re going to have a leaky bucket. We saw this with many of the AI applications that launched in the last few years. Image generation. Video generation. App building. The quality of the product makes the product go viral. Everyone uses it. Then when the next higher quality product comes, they move. Either that, or the one week free wasn’t enough for people to use it beyond casually.
If you focus completely on retention, you have mom and dad and friends using your product, but depending on how much runway you have, may not be able to sustain the business nor attract investors.
And given the short(ish) runway of the company, I told them to focus 80% of their time and energy on growth first to attract investor dollars, but build with the remaining 20% for retention mechanics in the background.
Without getting too specific on the exact company and the exact steps they are taking, first step, get people on the platform, and the only metric outside of growth you should be optimizing for is the login the day after (24 hours later). In the meantime, build notification and engagement mechanisms following the Ebbinghaus’ Forgetting Curve intervals. 2 hours. 24 hours. 3 days. 7 days. 30 days. And 90 days. Moving short term memory to the long-term memory bank.
The notification system, moreover, should activate at least one, but ideally two of George Loewenstein’s five triggers to curiosity.
- Novelty — Access to information known to others
- Partial exposure — Reminders of something forgotten, but also “insider gossip”
- Complexity — Questions and riddles
- Uncertainty — Unknown resolutions
- Conflict — Violated expectations.
If people have enough reasons to come back to the platform, at some point, it’ll become muscle memory.
Photo by Josh Mills on Unsplash
Stay up to date with the weekly cup of cognitive adventures inside venture capital and startups, as well as cataloging the history of tomorrow through the bookmarks of yesterday!
The views expressed on this blogpost are for informational purposes only. None of the views expressed herein constitute legal, investment, business, or tax advice. Any allusions or references to funds or companies are for illustrative purposes only, and should not be relied upon as investment recommendations. Consult a professional investment advisor prior to making any investment decisions.