Episode 32 Founder’s Journal: Alex Lieberman (@businessbarista) shares his experience and tips on how to acquire your first group of customers, whether that be 100 or 1,000. First, he talks about the early stages of Morning Brew, going from classroom to classroom to sign people up for the newsletter. This approach is known as the hub and spoke model, which he plans on using for The Plunge. Then, he’ll talk about Lenny Rachitsky’s essay that dives into 7 successful ways to obtain early customers.
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Alex Lieberman: What's up, everyone? I'm Alex Lieberman.
Jesse Pujji: Yo, this is Jesse Pujji.
Alex Lieberman: And this is The Crazy Ones.
What's up, everyone? This is Alex, and I am back with another journal-style episode of The Crazy Ones. The show is growing like crazy right now and we have been absolutely loving getting emails from hundreds of you, literally hundreds, and we've been getting to know so many of you through the inbox. So if you haven't yet done so, please email us at email@example.com. You can literally just say "Hi." Two letters, H-I, and we will respond to you and get the conversation going. Think about it this way. If you're considering not emailing us, would you more regret taking 15 seconds to send that email or not taking 15 seconds to send an email and wondering what a conversation with Jesse and myself could have turned into? So shoot us an email now at firstname.lastname@example.org, or after you listen to the episode.
On this episode, I am going to talk about the most effective strategies to get your first 1,000 customers or users. So let's do this thing. It is often the most daunting task for any entrepreneur, whether it's their first business or their 10th business. The question always starts with, "How do I get my initial users?" And my hope is that this episode will give you some of the tools that you need to do just that. I'm going to talk about how we got our first 1,000 subscribers at Morning Brew; a timeless framework that I use to think about the growth of any business that I build; how I'm thinking about getting my first thousand customers at The Plunge, which is a very early-stage business; and how some of the most successful businesses like DoorDash, Instagram, and LinkedIn got their first 1,000 users.
So let's start with Morning Brew. How did we get our first 1,000 customers or 1,000 subscribers for the Brew? Well, for those of you that don't know the early story of the business, the way that this started was I was helping friends prepare for job interviews. I would ask them, "How do you keep up with the business world?" Every student would say, "I read The Wall Street Journal, but it's dense, it's dry." And they'd go on and on. And so I started writing this newsletter, which originally was called Market Corner, and then it became Morning Brew. So our first, I would say 100 subscribers, were those students that I had been interviewing who had told me that they didn't like The Wall Street Journal, because in my head I knew that these were the most qualified people to subscribe to the early newsletter. They told me they didn't like what was currently out there, and I had already built trust with them through preparing them for job interviews. On top of that, I would say the other, let's call it 50 of the first 100, were just friends. Friends from my fraternity, friends from the business school at Michigan, people who had a vested interest in seeing me succeed.
Second, after getting these initial friends subscribed, my co-founder Austin and I went door to door of every single business class and business club at the University of Michigan, specifically in the business school. Why did we do that? Because we asked ourselves, "Who is the target user for Morning Brew?" And we said, "It is the college student or the young adult who is really interested in the business world, but they don't have a lot of time in their day, and they want to read business in a way that it feels like they're having a smart and sociable conversation." And so Austin and I would literally go to, just to give you an example, an Econ 101 class. We'd go five minutes before the class and we would say to the professor, "Hey, can we pitch Morning Brew for 60 seconds? We're not going to try to force anyone to buy anything. We're literally just going to describe this free newsletter we have. We're gonna pass around a sheet of paper, and when people put their email addresses down we will sign them up for it, and they could always unsubscribe." And so that's what we did. We found it to be a really successful strategy. It's how we probably got our first, I don't know, 1,000 subscribers.
We went to Econ 101, we went to Accounting, we went to Finance, we went to strategy classes, then we went to clubs, also. We went to Tamid, which was like an Israeli investment club that my co-founder and I were a part of. We went to different consulting or trading or real estate clubs. We did the same thing. One very interesting learning from the whole process is we had started doing these pitches in clubs and classes, telling people, "Take out your computer. Go to morningbrew.com. Type in your email address, et cetera." And we saw the conversion rate was super low. So say a class had 80 people, only eight people would actually type into their computer their email address. And what we realized is there were just too many steps. There was too much friction for people to sign up for the product. So that's why, literally, what would end up happening is I would pitch in the front of the class. Austin would have sheets of lined paper and a pen. He would pass those pieces of paper around. All people had to do, there's only one step, which was write down your email address. Austin would collect them at the end of class and then we would manually type in all of those email addresses after each class.
So that was the second thing we did for Morning Brew. I would say that probably got us, I don't know, to 2,000 subscribers. And then Austin and I were like, "Okay, this is working really well, basically getting in front of the business-minded student at Michigan. How do we do that at other schools?" So it was proven to us that college students clearly were interested in what we had to do, but it didn't make economic sense for Austin and I to travel across the country. So that's when we created our ambassador program. And so the way the ambassador program worked was, we started by reaching out to our email list and saying, "If you go to another university and you want to be an ambassador for Morning Brew, where you can earn swag for hitting certain tiers of people you've gotten to sign up, let us know."
And so that's what we did, is we started with predominantly Big 10 schools. So Indiana, Wisconsin, Northwestern, schools like that. And the first time we did our ambassador program, we were super strict about getting really quality students. And so we would literally go through people's resumes. We would have interviews for the ambassador program. So our first ambassador program only had 12 ambassadors, and I want to say it got 1,000 subscribers. The second time around, we realized we were being far too strict about who we were letting into this program because, ironically, the people we thought would do best as ambassadors, the people who were most connected in their student body, who were in five different clubs, who were student body president, they were actually the worst ambassadors because they were spread so thin between so many things.
So the second time we did the ambassador program, we opened up the floodgates. We let anyone apply to be an ambassador, and anyone who applied would become an ambassador. And so I think at its largest, we had 250 ambassadors at 100 different schools. I think at its peak, we were getting somewhere between 15,000 and 20,000 subscribers a semester. And the way we would do it is it would be super low-touch in the beginning. So you would, if you expressed interest, you would fill out an application form. We'd have an automatic email that would respond a day later to people who filled out the application, saying it was a super exclusive process. The acceptance rate was super low. That wasn't the case. Everyone was accepted. But we wanted to build up just the FOMO of this program. And then what would happen is we would send people automated emails with tips for how to share The Brew on their campus. So scripts for pitching in your class, email templates for asking teachers or club presidents for permission, signup sheets that had the Morning Brew logo in the corner, et cetera. And we still wouldn't make any human contact with these ambassadors. We'd only make that contact when someone got to 25 referrals, because that told us someone clearly cared enough to be involved in this program, and now we should put time into them. So that was the ambassador program.
And then the fourth growth lever we pulled was our referral program. So in the same way that we went from Austin and I pitching in clubs and classes and saying, "Hey, how do we scale this to other universities? Oh, let's have the Austins and Alexes of other colleges." We then said, "Hey, this college ambassador thing is going well, but we're starting to see a lot of readers who aren't college students. How do we access large chunks of people that aren't college students?" And so then we said, "What if we just turn every subscriber into an ambassador? So you don't just have to be a college student to be an ambassador." That was the natural evolution of our program, is it went from Austin and Alex doing the work to let's find other Austins and Alexes, to other Austins and Alexes are going great. Let's find other Austins and Alexes who aren't just college students. And that's how it went from us to college ambassadors to referral program. So that is how we got, I would say, our first, I don't know, 10,000 subscribers for Morning Brew. And to answer the question directly of the first 100, it was simply friends, and then Austin and I pitching in classes and clubs.
So one thing I want to share before I talk about The Plunge, which is the new backyard game that I'm building, is I just described all these strategies we did for Morning Brew. And I think you can wrap up these strategies in a really neat framework that any founder could use for any business. It doesn't have to be a media company. It doesn't even have to be a consumer company. And what I call this model is the hub and spoke model. And the way I think about it, it's like a hub and spoke on a bike. So you have a bike wheel. The hub is the middle part of the wheel and the spokes are kind of all those metal sticks that go from the hub to the outside parts of the bike wheel. And here's how I think about it. Spokes are your customers or your users. They're your power users. Hubs are the channels, whether they be digital or physical channels that you can use to get access to many of your spokes at once, to many of your customers or your users at once.
So for example, for Morning Brew, it was classes and clubs. Those were our hubs in the beginning, because we could go into an Econ 101 class or we could go into an Accounting class and we could get access to between 75 to 500 spokes, or college business students. We could spend a minute pitching and we'd get access to a 100x more people than we could get access to if we didn't go into those clubs or classes.
And so what I would suggest for you, whether you're honestly in the early stages of your first business, your fifth business, or you're looking for new ways to grow, is ask yourself, do I know who my spokes are? So do I know who my power customers or power users are? And have I created an exhaustive list of the hubs or the channels that give me access to many of my spokes? And then have I prioritized, of those hubs, which ones I want to try exploiting first? And so I'll talk about in a second how I think about the hub and spoke model in the context of The Plunge, which is my new backyard game. But you should use this model to think about it within your business.
Okay, so we've talked about The Brew. We've talked about the hub and spoke model. Let's talk about The Plunge. For those of you that haven't already heard me talk about this new business ad nauseam, The Plunge is a backyard game business. It's a mix between axe throwing and cornhole. And I want to walk through how I think about growth within this business. And I think it provides you a good vantage point, because when I talk about Morning Brew, I'm talking about the strategies that we used in 2014 and 2015. So we're talking about eight to nine years ago. The Plunge, we are in the thick of early growth for this business right now. We only have, let's call it, like 50 people who have put down a $1 deposit for Kickstarter. And so I'm actively thinking how we can grow this thing.
So the way I generally start by thinking about growth in the early days is I try to make it feel as tangible as possible. Because if you just say "I want to grow," I think the weight of that phrase can feel really daunting. Whereas if you create an intermediate goal, you can start breaking down what are the things you can do that actually chip away at this. So here's how I think about the goal. 1,000 people. That is all I want to get right now for The Plunge. If we price our Kickstarter campaign at $99, so it costs you $99 to buy our game on Kickstarter when we go live in May, basically, if we get 1,000 people to back the $99 price point, that means we've raised just shy of $100,000 on the platform. And I would consider that to be a big win. So all we need to keep repeating to ourselves is, how do we get 1,000 people? What are the things that we can do to chip away at 1,000 people paying $99 for our product?
And so here's the process that I've gone through to try and be methodical about chipping away at that number. The first thing I've done is I've defined my top of funnel. Basically, what are all of the things I could do to market this game? And I always have in the back of my mind, going back to hub and spoke, what are all of the hubs that I could think about deploying in order to get access to a lot of spokes? Spokes being the target customer for playing The Plunge. So my top of funnel, just to list out the things I've considered, it includes paid ads on Facebook. It includes organic social. So The Plunge social accounts that I'm creating content from, predominantly short-form videos. Personal social, so leveraging my Twitter audience, my LinkedIn audience, my Instagram audience to talk about the game. So basically, thinking about how do I port my followers to be followers of The Plunge.
The fourth is activating influencers. The fifth is PR. The sixth is events. The seventh is community. So building a community ahead of building a business. And those members of the community could, in a perfect world, be my early customers. And the final one is viral campaigns. I would say viral campaigns are not a focus right now, but just to give you an example of what that could look like, I was thinking about ordering 1,000 plungers, literally 1,000 plungers that on the handle had a QR code or had just the URL, thegamethatsucks.com. And I would stick these plungers all over New York and it would play into absurdity and novelty, where people would see it and be like, "What the hell is going on?" And they would naturally go to the website. Not gonna do that, because I don't think it's the best allocation of, let's call it $5,000 to $10,000, but that's an example of a viral campaign.
So once I define the top of funnel by basically listing out all of the hubs I could access, then I define my focus. So I narrow the top of funnel and I say, "Okay, to start, what are the two to three strategies that I am going to focus on first?" Not in the company's entirety, but at the onset, to chip away at those 1,000 customers that I want to get? And for me, it's three things. It's paid ads. And I'll explain why, because I'm normally averse to paying for marketing in the early days of a business. It's organic social, and it's events.
So just quickly breaking down each one. Paid ads. So for people who don't already know this, I'm launching The Plunge on Kickstarter. The reason I'm launching on Kickstarter is because Kickstarter has a big gaming community. Also, Kickstarter allows you to basically drive preorders for your physical product. So rather than me having to drop $100,000 or $150,000 on a shipment of, let's call it 800 sets of The Plunge today with my own money, I can run a Kickstarter campaign. And based on how that campaign goes, I will already have the payment from customers that I can then use to fund the order to produce the games, and then deliver them to customers.
And so we're working with the Kickstarter agency. And the way they go about their process is they have you run Facebook ads, and not hundreds of thousands of dollars’ worth of ads, but like hundreds to thousands of dollars of Facebook ads. And the whole idea is they're trying to optimize for you getting as many people to put down a $1 reservation. And what that $1 reservation gets you is it gets people the best possible price that they could pay for the game. It means when we go live with our Kickstarter in May, the people that have put down a dollar reservation will get the optimal price that we'll charge, and you only get that price if you put down the dollar reservation. So for The Plunge, it's going to be $99.
And the reason that this agency does it is they have found that someone who puts down a dollar is 30 to 40 times more likely to ultimately back the Kickstarter campaign than, say, someone who just puts in their email address. And then one other benefit also is, it gives you an early sense of, is there actual interest in this game? And also, who is going to be the optimal initial audience for this game? Because as I think about The Plunge, there are two or three customer bases that I could see being really into this. I could see the adult tailgater audience being into this. I could see the young teenage sleepaway camp audience being into this, or I could see kind of the axe-throwing or backyard game fanatic audience being interested in this. And so I think the Facebook campaign will actually, through data, tell us who is really interested in this game. So that's a strategy with paid ads is just to optimize as many $1 reservations as possible.
The next is organic social. So again, that's having handles that are The Plunge, handles on TikTok, on Instagram, on YouTube, et cetera. And the reason I'm putting so much emphasis on this is first, I believe in building your own audience as a business as early as humanly possible. In an age where marketing costs are going up, you want to have leverage over the audience you've built. The second reason is, I think it makes a lot of sense when you have a highly unique product. And I think at the end of the day, there's an absurdity to The Plunge. You are throwing plungers at a board. This is a game that naturally will catch people's eye. And so I think showing off the product via videos of people playing it is in our best interest. And the third reason I believe in organic social specifically for this game is it has been proven that unique backyard games perform very well in short-form video.
I'm going to link to it in the show notes, but there's a tweet by someone the other day that basically has four or five backyard games, or just games for adults in general. So Crossnet was on there. Popdarts were on there. And they get a crazy amount of engagement on TikTok. And so my whole idea is, how can we build that huge top of funnel of engagement and then convert those people to our website by including a link in our bio, as well as a link on each of the videos that we publish. And so just so you understand, on the organic social side, like how I'm going about things, my process is, first, establish this organized process of putting out one short-form video per day on TikTok, Instagram, Twitter, LinkedIn, and YouTube. And in case you're interested in doing this by yourself, if you want to put out content for your business, I used monday.com. for my content calendar. I used an offshore video editor who I pay $30 a video, and then I use analytics on TikTok, on Twitter, on Instagram, basically, to see which videos perform.
And so then, once I've gotten this process down of one video per day, I'm going to step it up to two videos per day. And the whole reason is, I'm gonna have one video, one type of video or one format each day that is consistent. So maybe it's me playing a friend in a game to 15. And then the second post of the day will be a second video format that I'm testing in that given week. And then at the end of the week, I'm going to look back at analytics and see which format performed best. And I will keep the winning format. I'll get rid of the losing format. And I'll run another test the following week. And so ideas or formats on testing include head-to-head games amongst friends, getting the world axe-throwing champion to play games against strangers for money, doing trick shot videos, et cetera. And so I'm trying to be methodical about finding the format that ends up attracting the largest correct audience.
And so that's how I'm thinking about growth at The Plunge, starting top of funnel with all the possible ways I could grow this business or get to 1,000 customers, whittling it down to the two or three that I'm focusing on. And then within those two or three, having a methodical strategy for optimizing each of those before moving on to any other strategies.
Now, to finish the episode, I want to talk about an essay that I recently read that I think provides a really good complement to the growth strategies that I've already talked about. So this essay is by Lenny Rachitsky. Lenny was a product lead at Airbnb, and now he's a prolific content creator, super popular, and I would say most of his content is about growth and product at startups. And one of his most popular essays ever is called "How the biggest consumer apps got their first 1,000 users." So what I just want to quickly share to finish the episode is, what are the common strategies that the most popular applications and businesses in the world use to get their first 1,000 users? And what are a few specific examples you can take with you? So there are seven main categories that Lenny found successful consumer companies use to get their early customers.
The first was the category of going to your users offline. So think about events, think about classes and clubs. In the case of Nextdoor, which is the social media network for communities, they went to homeowners' associations. And so that's the first. The second is going to your users online. So that could be places like Hacker News, Quora, Twitter subreddits, Slack or Discord communities, et cetera. The third is inviting your friends. So especially if your friends fit the target user group of your business, start with your friends. That's what we did for Morning Brew. The fourth is creating FOMO, so I'll talk about it in a second. But businesses like Robinhood or Clubhouse created a ton of excitement, interest and FOMO around their business by gating it, only starting with a small group of users. Those small group of users only had a certain amount of invites, and there was a wait list for everyone else.
The next one is leveraging influencers. So always think about who are your influencers of your target users, and how could you get them to talk about your product? I'll share an example of that in a minute. And the final two are getting press—so what's a unique, compelling, fresh story you could pitch to the press about your business? And the final is building a community. Said differently, can you build a community now to then leverage later to find your customers?
A few just things that Lenny found as he talked to these different businesses that I want to share before giving you examples. First, he found that most startups found early users from a single strategy. So I just named seven of them, but they were focused on a single strategy. A few found success using a handful of strategies, but no successful business that he talked to found success from more than three strategies. So said differently, as I described earlier, have all of your strategies at top of funnel, whittle them down to the two or three that you think will work, and stay focused on those two to three. Don't try to go wide and an inch deep. Try to go narrow and 10 inches deep with every strategy.
The other thing he said is, most popular strategies involve going directly to your users. So whether it was us going to students on Michigan's campus or for The Plunge, it's going to be me literally hosting weekly games in New York City to play with people. Do things that don't scale in the early days, because at the end of the day, you don't need your early business to scale. You need a very small but passionate group of people to be the nucleus of your business. And the final piece of advice he shared is to do your early growth strategies well. It's important to narrowly define your target users. So as quickly as possible, you need to find out who are the people that really, really give a shit about your product. Not kind of give a shit, like really give a shit.
So here's a few examples I'm going to leave you with. One example of an offline strategy, of going offline to your users, is the very first iteration of DoorDash, you know, the massive food delivery business, was a website called paloaltodelivery.com, and it would have PDF menus of restaurants in Palo Alto. And what Tony Xu, who's the CEO of the business, would do, is they printed a bunch of flyers that basically charged $6 for delivery. And this was at a time when delivery wasn't being done. They put those flyers all over Stanford's campus. And he and the team literally just wanted to see, was there demand for $6 delivery? And so that's how it all started, was a website with PDF menus. They would take these flyers that would go to the website. It would say $6 delivery on the flyers. People, if they were interested in $6 delivery, would then go to the website that had the PDF menus. And that would give Tony and team enough of a sense or confidence that people were willing to pay for a delivery.
Second example is an example of leveraging influencers. So I didn't realize this until I read Lenny's article, but the way that Instagram got its early users was actually piggybacking on the audience that Twitter had already accumulated. So the founders of Instagram went to people with large followings on Twitter, but not just anyone with large followings. They went to people with large followings in very specific visual niches. So people who would have a deep interest in a platform that was all about visuals, and they had those influencers talk about Instagram. They invited them to the platform first. So these were people with large followings in the designer community, people with large followings in the online web design community, people with large followings in the photography community. And those were the influencers that they latched onto.
Two more quick examples for you. An example of using friends: Reid Hoffman, who doesn't need introduction, but is one of the founders of LinkedIn. What he did is he intentionally seeded LinkedIn's product with his successful friends and connections. And the whole reason he did that is he wanted to build an aspirational platform, where when you first went on LinkedIn, you would see super successful people on the platform, and you would feel this aspirational need to also join LinkedIn because you wanted to be like Reid's friends. And so those were the initial users, were friends of Reid Hoffman that were super successful.
And the final example for you of how a super successful business grew its users early on through FOMO—this is the final one, is through FOMO—is the example of Robinhood. Robinhood, the free commission trading app, was able to get one million users pre-launch. And their process was dead simple, but it was highly effective. What you would do is if you found out about Robinhood, you would go to their landing page. The only thing you could do on their landing page was put in your email. And once you put in your email address, it would tell you that you're on their waitlist. But it wouldn't just tell you you're on the waitlist. It would tell you what spot you were on the waitlist and how many people were ahead of you. And then what would happen is you would have the option, through a referral link, to share Robinhood with other people. And every person you shared with who ended up putting in their email address, you would move up the waitlist. So you would see this kind of gamified validation of moving up closer to the front of the line for every person you got.
And this worked super well, not just because of the referral mechanism and not just because they gated access to it, but because Robinhood offered something super compelling and something super new to the investor and trader community. At the time, commission-free trading was not something that existed. It's what the traditional brokerages just picked up once Robinhood picked up steam. And so what Robinhood did is they provided a compelling enough offering, complemented by an early growth strategy that created FOMO, and a gamified system for moving to the front of the line.
And so with that, that is my journal entry on how you should think about getting your first 100 to 1,000 customers and users. I talked about how we did it at Morning Brew. I talked about what the hub and spoke model is, and why it is a transformative way for anyone to think about growth. I shared how I'm thinking about things at The Plunge, which is in the very early days of getting its first 1,000 customers. And I shared the way in which most successful companies grew their users early on through those seven different categories.
Now, I would love to hear from you. What is the most pressing challenge you're experiencing in your career or your business right now? The thing that's preventing you from falling asleep at night, and the thing that you wake up stressing about. Jesse and I want to talk about many of these topics on an upcoming episode of The Crazy Ones. So shoot us an email at email@example.com and we will get back to you as soon as possible. Thanks again for listening, and we'll catch you next episode.