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Once you have built your product and it’s in the market, there are only three things that matter: distribution (getting the product into users’ hands), engagement (validating that you’ve built the right product and that users are using it), and monetization (making money from those engaged users). This is your strategy.

At board meetings, I’ve started categorizing each portfolio company’s roadmap items into these three buckets. It’s a beautiful simplification that immediately reveals the priorities of the company at any stage. Is most of the product development focused on growth or new product features that drive engagement? How have those priorities changed over time? Where are most of our people allocated? Are these priorities the right ones given the stage of the company?

Breaking strategy into these three parts makes it easy – you now have a template, a stencil for describing your strategy. Make a table that looks like this:

Q1 Q2 Q3 Q4
Distribution
Engagement
Monetization

Fill it in with the top 2 to 3 initiatives per quarter. You have just built a board-level roadmap that describes your strategy. Explain it to your board, solicit feedback, then hold a town hall and describe it to your team. Then get back to building your company!

Update: I’ve written a follow up post after some great conversations/comments and the amazing distribution this post has received.

Phil Libin gave a great presentation at the Founder Institute articulating a similar product philosophy. Slides are here.

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25 thoughts on “Your startup’s top 3 priorities.

  1. I like the simplicity but have some questions on what you are clumping into those categories:

    Do you classify retention as engagement?

    How do you quantify distribution? Are you talking about exposure (marketing page views) or conversions (trials, subscriptions, etc)?

    • As I’ve seen it, retention is usually a part of Engagement. “Do people come back? And when they do, how heavily do they use the product?” Metrics might be “Time on site,” “LTV – Lifetime Value,” “Visits/month,” etc.

      Distribution/Growth generally alludes to the acquisition of new customers/users/members. Metrics might be “Total new conversions,” “Viral Coefficient,” “Conversion Rate,” etc.

      • I think retention and engagement are sort of different and measure different strategies. Whereas retention is often used to measure how well you are at keeping customers and maximising the lifetime value (an monetization objective), I think engagement looks at interactions with the product (how often, what features, how frequently). They are of course, connected, low engagement with the product is likely to impact retention, but not necessarily (some loyal customers may use it infrequently for a variety of reasons). But I think they serve to assist with two distinct parts of the business: user experience with the product, and pricing model.

        I would personally class (customer) retention as falling in the monetization group. Others may disagree and I’d be keen to hear their thoughts.

  2. When I started at LinkedIn, the team framed everything through a lens of (essentially) the same pillars: Growth, Engagement, Monetization. It was interesting to see the weighting and prioritization of these three over time.

    In the earliest days (before I was there), Growth was head and shoulders first. Then there was a concerted effort, just a couple of years in, to evaluate Monetization opportunities. At a certain scale, Growth and Engagement became dual top-priorities. And then at a next level of scale, Monetization moved up to be a third, equal emphasis.

    I think the ordering on the y-axis of your chart is really important. For a small company / startup, attempting to focus on all three areas at once can be difficult. In other words, totally agree with the framework, but don’t be afraid to leave the bottom boxes empty!

  3. Very simple and useful – can you provide a few examples of what this might look like in practice?

    • I would love to see how this might look in practice, as well. Great stuff, though. Thanks to all for the comments on other uses.

  4. At Zynga, we called it the 3R’s: Reach, Retention, Revenue. Same idea – all initiatives and features on the roadmap had to be considered through the lens of how it would impact one or more of those things.

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  9. In what terms do you think of monetization when all of your users are already paying?

    How does the fact that someone pays on the engaged users’ behalf affect things? Think of this like an Enterprise sale, where some people may want the product, and others don’t, but the final decision rests on a non-user (or committee of them).

  10. If all of your customers are paying, you need to focus on distribution. You also should focus on increasing monthly spend per customer either by selling them more of the same (upsell) or by offering them additional products (cross-sell).

    Expensify is in the situation you describe. The end user is not the decision maker. Use free distribution to get the end user and then drive upsell by using a conversion point: it can be number of users, amount of data or free trial periods.

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