Customer acquisition, the cockroaches and the ants

In Evan Konwiser’s recent piece about whether or not travel startups should stay the course or pivot, I found myself thinking that a lack of commitment is often what separates the winners from the losers. But it’s also about having the time to let that vision play out. Well, time or lots of money. NB: This is a viewpoint from Joah Spearman, CEO and co-founder of Localeur. - BazaarvoiceGogobot raised a $4 million round before it launched a product. Sosh and Peek raised $1 million and $1.3 million from super angels and venture capitalists before they launched a product. The issue is that most startups don’t have that type of blind backing before they launch. So VCs send really mixed signals about the role of customer acquisition evidence depending on where you went to college, what city you’re based in and where you previously worked. None of those things really have to do with customer acquisition strategies. Still, understanding the customer acquisition dynamics are critical to success. Contrary to current thinking, this is possible only over time on the consumer side. I’d say it’s almost impossible to tell a consumer travel startup in their first 12 months that they figured out the customer acquisition dynamic that will cover them through their angel money and all the way through their Series A round. The Airbnb guys couldn’t have possibly gone and visited every single apartment, but they did it enough, and thankfully great VCs and angels tell you to do things that don’t scale. Meanwhile, struggling startup founders will spend (and waste) more time listening to bad VCs and inexperienced angel investors commanding you to scale Mount Everest before your seed round. That’s a quick way to die, and the goal is to stay alive. Paul Graham at Y Combinator said the Airbnb founders were like cockroaches because they just wouldn’t die. Will you just not die for your startup’s vision or will you try to morph into an ant with much smaller ambitions? When I led travel market strategy for Bazaarvoice, I thought through customer acquisition from a B2B standpoint. While there, I realized my ambitions in travel tech were far greater. That’s where I met my co-founder Chase, who was on Bazaarvoice’s product team. In a B2B world, 12 months is a justifiable time box to chart that customer acquisition strategy so well that you may actually be able to use that “p” word: profit. To use a football metaphor, you can get in field goal range, in that much time if you’re B2B. On the consumer side, 12 months may be enough to get you two or three of first downs. For Localeur, we think a lot about what a VC round like the aforementioned ones by GoGoBot, Sosh and Peek.com, could do for our business. But we don’t let it plague us. We got named the best new startup in Austin this year and we’re about to launch our iPhone app. First downs lead to touchdowns. Evan’s piece refers to Y Combinator’s 10X rule, where a startup should be offering something 10 times better or 10 times cheaper than current competitors. For us, our recommendations from local insiders are 10 times better than the experience you’ll have navigating TripAdvisor and Yelp reviews. We host a lot of events to launch cities and partner with brands like Bonobos and Tito’s Handmade Vodka, but events don’t scale. So we’ve spent a lot of time leveraging Facebook around our first 10,000 consumers and fans so they can become our super-users and word-of-mouth engine. These are the people that are completely ditching TripAdvisor and Yelp for Localeur. We’ve helped more than 100,000 travelers this year, but the top 10 percent represent the heart of our community. They are to us what Harvard was to Facebook, and we use our tiny ~$1,000/month budget to amplify the word-of-mouth exposure of our Localeurs in each city. So far, it’s worked tremendously. Gogobot took three years and $19 million from VCs before reaching 10,000 Facebook fans; we did it in nine months with $500,000 from angels. Ultimately, delivering an excellent customer experience is the key to starting the Localeur loyalty loop, but being laser focused on our community of Localeurs, and our fan base offline and online is what will fuel our growth. Well, that’s at least true for now, as we learn, get those first downs and stay alive. NB: This is a viewpoint from Joah Spearman, CEO and co-founder of Localeur. NB2: Magnet image via Shutterstock.