Kreatik talks – Daniel Johnson explains why feedback is crucial to business growth.

Maria, CEO and strategist at Kreatik talks to Daniel Johnson, We Scale Startups founding partner, business mentor, and professional speaker about the influence of culture and emotions on business, why customer feedback is key to success, and why users always demand more.

The last time we spoke, you were living in London and then you moved to Taiwan. Is this where you live right now? And what do you do actually now?

– Currently I run We Scale Startups. It’s a marketing agency specializing in early-stage technology, mainly in e-commerce and cryptocurrencies. Now I live in the UK but previously lived in Taipei, Taiwan for about 2 years.

I missed a chance to visit you there.

– Yes, but I will probably come back to Asia in the future. There are so many opportunities in Asia and the Middle East with start-ups and marketing in general, especially projects up to the commercialization stage. Keep your eyes peeled!

I once visited Taipei. I remember when I was going there, some people associated Taiwan with cheap and low quality products, while Taiwan for me Taiwan is about new technologies and art. Very often, when I work on some projects in Europe, I look for a benchmark in Asia, because many of the markets there are ahead of what we do in Poland or Western Europe. Have you seen these differences working for startups?

– It is interesting to travel and explore the startup industry all over the world as each location has its pros and cons. Taiwan was unique for its history and cultural experiences and made me realize that culture has a big impact on the start-up industry. I’ve worked a lot with startups, mentoring and speaking, and found that they have great academic ideas, but don’t know how to effectively commercialize them. So we started with an idea and a product. We learned a lot about adjusting the product to the market, lean start-up, and thinking about iteration. Some of the people I worked with had a very legacy mindset, the opposite of how to develop ideas into business. They found my recommendations valuable, although contrary to their current theories about starting a business and entering the market.

Interesting! I thought all tech start-ups would be more open to change and growth. What you just said about the risk made me realize how much cultural differences are important and affect all aspects of life, including business. Do you see anything you could learn from Asian startups? Could they learn something from European markets?

– First: all start-ups should understand that the customer comes first. Unfortunately, I can still see that this is a problem. Second: it’s worth it to risk launching the product to see what happens! This step is necessary to keep going!

I agree.  Many start-ups freeze in the stage of continuous refinement of their business model and product before entering the market. I think what is holding them back is the fear of imperfection or of receiving feedback that something needs to be improved. Meanwhile, customer feedback is an expression of interest, even concern. 

– I completely agree with you, feedback is caring. 

The product is created to win the market and the growth function (acquiring users) is a key element of it. I often come across a business approach where marketing and product are two completely separate topics. When meeting start-ups, very often only marketing employees or product specialists come to the mentoring session. What is your experience with it?

– I think many start-up founders forget the basics of business and economics. What you need to do is consider what problem is solved by the product, who is the customer, what is the value proposition, and what is the work to be done. Marketing is not a way to fit a product to the market but a business scaling tool. People think it’s enough to create a good product (or be convinced that it’s good) and start a paid campaign to get customers. Unfortunately, it doesn’t work that way. I believe that profitable distribution and scale are arguably the hardest part of any business, and the sooner people understand it, the better. Growth is like a pyramid. You start at the bottom, with the basics: customer personas, message maps, clear value proposition, and analytics. Only when you build a solid foundation do you invest in advertising. Otherwise, you can expose yourself to unnecessary expenses and wrong conclusions. I also believe that every employee is responsible for the development of the company, whether you are a CEO or an intern.

I recently spoke to startup owners who say success is based on how many users pay for their services, not investment rounds or KPIs. Obtaining VC/PE money is not yet a success.  If you want to build a product that will attract users, what would you start with? What should you consider and what should you remember?

– First, make sure you do your customer research. Second, have a clear understanding of the problem you are trying to solve, especially from the perspective of the jobs to be done. Third, it doesn’t have to be perfect or even scalable. Your first goal is to create something that works. Fourth, develop a feedback analysis and implementation process. Learn how to do it consistently and objectively every day, because, in my experience, the most successful companies are customer-driven, listen and turn the concept into action.

In product-led growth, data is as important to me as the customer’s perspective and opinion. If you want to know what the next step should be without having any data, this is always a hypothesis that you need to confirm at some point.

– In my opinion, marketing data and product data are integral, and separating them is like building a house with bricks missing – you have to implement it and weave it in. Regardless of the job position, everyone should know how to use data and transform it into information, and then turn it into action. I still do not understand why some owners do not want to do it, because collecting and analyzing data is relatively cheap, it allows you to save time and make good decisions.

People don’t do customer research because they’re afraid of negative feedback. This is a challenge!

– I made a video with the provocative title “What the hell is growth?” in which I talk about early-stage growth – what would I do if I tried to start a business and it’s very simple things: finding out who the customer is, developing a message map, setting up analytics and data frameworks then the idea and testing. It is a logical structure of a pyramid where we test ideas based on data. This metaphor helps people understand which direction to take. When I work with startups, we get a ton of feedback that is extremely valuable to the product. Thanks to this, we can find out what features will appear and discuss how to integrate the product and marketing.

Yes, it’s always a loop, not one-way communication. When people start thinking that the first version of their product defines them and then it is not somehow successful, they feel like a failure. But this is a mindset. It’s important to have fun finding the right answer and experimenting. Only this way can you survive this difficult and sometimes unpleasant process of building a business. You’ve given some examples of startups with the wrong approach before, but maybe you could give some good examples of startups that did a great job at understanding users, building, and optimizing their strategy from feedback?

– Great question. I guess a few companies got feedback and updated their product accordingly. The first example was a eCommerce plug-in start-up. A funny story! I was just at the Notting Hill Carnival in London. My friends and I walked around town until we got some building, which turned out to be the headquarter of a startup. At first, I noticed a logo that didn’t interest me, but on the wall, there was a huge customer persona, timeline, deadlines, funds, etc. I spoke to the founder and he told me that all those things must be so noticeable that everyone can look at them every day. At the time, it was a small but fast-growing start-up and it’s now a powerful.

When we talk about good examples, very often we talk about big companies like Netflix, Slack, and Dropbox and their strategies. Netflix has always been user-focused and at one point it did grow like crazy. But we saw the number of subscribers decline in the last quarter and after announcing that change there was an impact on the capital markets. It is interesting that at some point you also have to be prepared for the fact that some strategies may stop working one day. If you were the Head of Product at Netflix or the Head of Growth, what would your next steps be at this point?

– Netflix is blasting money at production, and probably shouldn’t. Netflix’s problem is growing fatigue, increased competition, and massive market saturation. In this situation, they have to find something to distinguish them or some specific market. It is important to focus on the smallest possible market that you can dominate and then develop. The time when they could rely on being cool has just passed.

They’re not cool kids anymore. This phase is over.

– Exactly. I’ve never worked on products for a company of this size before, but it always surprises me to see a lot of great advice from our customers in a startup. Some we would never come up with! It is never easy to implement. It takes time, strategic thinking, product changes, and more, but our customers are so helpful and valuable in this regard. There has to be some feedback Netflix gets that would help.

Speaking of feedback – data can be used in a variety of ways, including unethical ones. 5 or 10 years ago, unethical actions were a very rewarding strategy. Frankly speaking, I believe Instagram and Facebook are harmful to me. Of course, I am trying to convince myself that I am using it for gathering information. I am trying to focus on following activists, scientists, and journalists and through their eyes, I can learn about the world, trends, or different views on topics that are interesting to me. But the remaining staff is harmful, although also very tempting.

– Industry leaders like Facebook are implementing these types of products and strategies that are very tempting to other companies, but it really doesn’t pay off. If the product is not successful as a result of laborious processes, it is unlikely to be successful in the long run as a result of unethical activities. There are many ethical versions of unethical techniques, e.g. referring a friend – you can scrape contact and automatically send an invitation or some kind of encouragement. The most important and most difficult thing is to find the right incentive. It requires knowing and understanding the client but can result in a long-term relationship, which is the most valuable.

Agreed. These techniques are now so abused that users have invented defense mechanisms eg they want to receive valuable products or content. This is a challenge for marketers and business owners because it requires constantly creating high-quality and fresh content and products. Importantly, this trend is not intended to maximize growth, rather it focuses more on sustainable growth and maintenance. Now, more and more businesses’ priority is sharing values with investors, employees, and society than higher results. When I talk to start-ups, more and more of them don’t dream of becoming the next Facebook. What are your observations and thoughts on this subject?

– When I meet the founders now, I can see that they are more aware of KPIs – they focus less on balance sheet metrics and more on the economy of the company. I’m very happy about this. However, when working with VC-funded start-ups, I need to realize that they haven’t done their due diligence on product-market fit. By setting up a start-up, you see that people much smarter than you have invested in your company and believe that it will be successful. This makes you feel guilty if the campaign is not producing rapid growth. Unfortunately, the VC culture perpetuates a strategy of quick success, preferably on a large scale. You have to think about development from a very holistic perspective – customer-oriented and problem-solving. I think that on the market we can observe more and more companies that approach business in this way because they are run by aware people.

You worked with start-ups funded by corporations. Do you see a different approach there? Are these just numbers and tables or can you also feel a real passion for business and solving user problems? What’s your experience?

– There is often a lot of bureaucracy, a lot of reporting and auditing, which often slows things down. The advantage is the large budget, which is often a problem for start-ups and networking. I have worked with two or three corporations and it was frustrating because everyone was afraid to make a mistake and be responsible for a potential failure, and as we both know, start-ups are very risky.

The challenge for me is that people in corporations treat their work as a project with a usually quite short timeframe. Sometimes a business needs more time and attention. On the other hand, the network provided by the corporation is certainly something that individual start-ups often do not have access to, and it certainly allows you to solve many problems. Do you think a partnership with corporations at an early stage is something good for the startup?

– It’s definitely good! Depending on the business model, corporations can give you a lot of experience, teach you how to develop relationships with big businesses, and give you a lot of brand awareness based on start-ups they already work with.

We could continue this conversation as there is so much more to the growth topic but we need to stop for now. As a final note could you recommend something to read about product-led growth or growth itself?

‘The Mom Test’ – it teaches people how to ask questions related to the job to be done. I also recommend many startup classics such as “Zero to One” and “The Lean Start-up” because an understanding of how start-ups work is essential for effective product-led growth. Also, effective messaging and positioning are very important to everyone, regardless of whether you are a developer or not. Speaking the same language about a product helps to make sure everyone’s expectations are aligned. April Dunfor has written many wonderful books on the subject.

Imagine you wake up in 10 years. What will change? Will there be some new technology, a new way of working, or a coexistence? What would it be? What are your outlooks for the world 10 years from now?

– It’s difficult. The world will always grow in terms of activation energy. More and more political, social, and economic events await us. Technology will be increasingly integrated and commercialized, which means the market has to think of technology as something that people interact with every day. I always thought I could predict the future, but the world we live in is this … Who knows what’s going to happen.

I always think about two versions of the future. One is dark, where everything will turn to dust, and the other is heavenly, where we do not work, read poetry, paint and learn different languages. I would of course choose the latter version, but I’m afraid we need more than 10 years to experience this.

– A very good book that I would recommend to you is “Factfulness”, in which the professor tries to look at the world objectively and quantify it from a statistical perspective. The overall tone of this book is positive. I am an optimist myself, and I believe that when we look at the world from a broader perspective, we are calmer, more connected, and more human.

I love this book.

– It’s not a book related to product-led growth, but I’m a big fan.

I think it’s interesting to read stuff not only related to a product or growth or marketing, but also social sciences. That book is very smart and it showed me how most of the things we are telling each other are opinions (which are very often not true), not facts. Facts verification is a very important skill also for a business owner. 

It was a great discussion. Thank you for your time.

– Thank you, it was a pleasure.

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Daniel Johnson

Daniel develops growth machines for startups to predictably, scalably, and repeatedly drive revenue and customers through data-driven Growth Marketing.

With extensive experience, particularly in the Apps, SaaS, eCommerce & crypto/Web3 industries, he does growth the right way. Having played the role of founder, employee, and consultant, he has a unique perspective on what businesses need to grow.

He helps businesses improve their north star KPI using a lean, data-driven approach. He cuts through the BS of 'growth hacking' to help the startup community build valuable and sustainable companies based on validated methods that have been validated and results that speak for themselves.

Visit Daniel's website: www.danieljohnson.xyz

27.06.2022

Maria Połońska

Creates marketing, sales, and go-to-market strategies. She advises startups, develops digital products, and conducts workshops in the spirit of design thinking.

She is the founder of Kreatik. As a traveler, she reached Beijing by Trans-Siberian Railway and Istanbul by Fiat 125p, but her heart was stolen by South Korea.

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