Don't Pay to Acquire Your First Users

I don't necessarily agree with the author. Her suggestions for how to get early users are all good ones, and by all means, do them all if you can! Except producthunt -- that one's a rigged vote with its own secret influencers. Google around, you'd be surprised how deep the rabbit hole goes!

But back to my point: there's nothing wrong with trying some Google or Facebook ads. Don't spend too much up front! Google will try to get you to broadly target a bunch of generic words. You should resist that pressure and use their keyword research tool to home in on specific phrases that your potential customers often search for.

Once you have your phrases, just put in $500 and see what happens. If you pick up a handful of customers who pay you $1000 over the next 6 months, then you're golden! Put in $5,000 next time and see if you can turn it into $10,000. Honestly, this kind of thing works for some businesses and people end up dumping as much as they can into ads. Don't ignore this strategy just because it's not as "sincere" or "personal" or something.

[Edit] Fixed author pronoun.

I'm tired and it's late but I just want to say that the author makes a fair number of unsubstantiated claims and assertions.

1. That "organic" users are somehow more real than users acquired by paid acquisition. 2. That ads are super duper simple and you just turn them on then bam users are there. Plenty of companies in fact spend quite a lot on ads and get almost nothing. 3. That the channels she mentions are in fact "organic" I want to know, truly, what the super secret learnings are that one gets from gaming google rankings rather than simply buying a Google ad or spamming Facebook groups rather than buying a Facebook ad.

By all means, do customer discovery, but pretending that hanging kitschy neighborhood signs instead of running Google ads is somehow more authentic is just arrogance not really backed up by anything other than feelings. Plenty of profitable and sustainable businesses run on ads. Other companies ads aren't right for. Just try stuff and see what works.

I don't want to be too critical because I (naively) agree with the idea, but all of the suggestions in the blog post cost time/money. I'm especially thinking about start ups that have a large technical component and have limited resources. You've got that thing in the back of your head where you are going, "I need to spend time marketing. Or I need to spend time writing code. Or I need to spend time making real sales. Or I need to spend time gathering requirements from potential users. Etc, etc".

It's easy to think about founder-effort as being nominally zero cost, but there is always a cost of lost opportunity. Choosing what to do is important. If you have cash that you can spend that will make one of the things on your TODO list disappear, that's a pretty sweet thing.

It's always going to be a judgement call as to what to spend time vs money on. In my (again naive) way of thinking, you should probably take a hard look at yourself (and any other partners you have) and decide what your "value-add" is. If you could make a unicorn simply by spending money, then everyone would do it. It's the people who make the difference and so you need to be realistic about where you are going to make that difference. Prioritise the areas where you are needed (and are able to make a difference) and spend money on the areas where it matters less.

Kapwing adds a giant watermark to the videos to help acquire users. This won't work for products that aren't video meme makers.

Side note: I've seen articles from Kapwing on here recently. It seems they're following formulas to get on HN. It reminds me of TripleByte, and in the past, Mattermark. Please don't take the bait.

I'm literally heads down in the weeds on this now growing a new startup I'm working on.

Just hit 10k users! https://getpolarized.io/

I would agree with 60% of what the author is trying to say.

First, devils advocate.

If your app is actually making money it's totally reasonable to buy ads to grow.

If you spend $100 on ads and make $500 in revenue that's probably a pretty solid deal (assuming your costs are reasonable).

In that case - go for it.

Additionally, there are a lot of channels that you can work with which might need cash to get you bootstrapped.

For example, if you find a really great blog or mailing list it might make sense to just throw down $500 for an ad to the author to mention your product (and disclose of course).

The reason why is that these niche communities can be VERY VERY valuable.

They don't scale but getting your first 10k years is really helpful.

The other things mentioned in the article take a LOT of time. Befriending influencers? Yeah. That can take a while!

...

but I think the spirit is right. If you're lazy and only depend on ads - you're in a world of pain. Most of what you have to do is understand how the ecosystem around your company works.

That just takes a ton of time and the only way to do that is to have legs on the ground feeling it out.

Which sites have traffic? What are some growth loops you can use?

A LOT of startups have found some REALLY cool and interesting growth 'hacks' that you wouldn't really think of unless you're in the weeds for months at a time.

Startups like Duolingo, Dropbox, etc don't just happen. They take time and effort and continual iteration.

> Paid advertising might test if your solution works for a very specific user, but it doesn’t tell you that the unit economics will work at scale.

Paid channels like Facebook & Google have incredibly diverse audiences with any number of sub-populations you can target, and there's nothing special about organic traffic that inherently makes it unbiased and special.

> In contrast, the customer acquisition cost is zero for organic channels.

It just seems free because you can't measure the effects of other channels on direct and branded search (unless you're not doing any paid) or your accountant got creative and put the social media, PR, influencer, and affiliate spend in "Brand Marketing" so it doesn't count towards your customer acquisition cost under "Paid Marketing". You're spending money one way or another regardless of where you're putting it in the books.

> Instead, embrace the hustle and find ways to sell, distribute, and persuade without cash

Your time is money, and is probably worth more than the ad spend you're trying to get out of. Burning cash on salary while you try to hunt down "free" customers can be misleadingly expensive.

Free traffic is great, and I'd like to get as much of it as possible, but it's very hard to build a business on something you have little direct influence over.

Paying is the easiest way to acquire a user. If you can't retain, that's a product problem. There is no need to rule out paying to acquire a user. What author probably meant is that you don't spend on marketing unless ROI is proven. That's a whole lot different than saying "don't pay to acquire first users."

I disagree with the author’s statement “We did not spend any money to acquire our first user.“ she then listed a ton of efforts with real costs. She spent money. She just didn’t spend money on generic search result ads.

> Most companies never get paid acquisition channels to work...

Is this true? Or is it one of those truisms where there are exceptions but you shouldn't assume you'll be one of them.

My product isn't yet at a point where it has a market fit but I came up with a small excel file that goes in the same direction as my product. I can offer that for free and it starts to pull in organic traffic from google, bing and other places like forums where I suggest my free tool as a solution for someone's problem.

My tip for most SaaS out there: If your "keyword + excel/pdf/template" is an easy target, then think about creating a free sub-product with a decent landing-page for it.

Schmeh. You should do EVERYTHING in the early stages, because you simply do not know what will work and what won't. You have assumptions, but ego can get in the way here. Paid users are not always less valuable (talking LTV here) than organic. There are a bunch of really important things you can learn by doing paid ads early on, specifically around potential audience demographics, messaging, site behavior, conversion funnels, CAC, etc. Don't listen to marketers, just do everything and learn a bunch.

The thing is not all products and apps are marketable organically. But I to agree with the spirit of what their saying.

My recommendation would be to modify your product in such a way that it has an organic marketing angle, I think that can make a real difference.

> because we grew it without marketing expenses, we could bootstrap and live out of our savings while we got our first customers

It’s nice to avoid spending on marketing, but here it seems like they just made the product free — which means they incurred platform costs (AWS or whatever) in lieu of marketing spend. Not really a victory.

> advertising distances you from the problem

Except when it helps you learn about your target markets by seeing what keywords perform better than others. It’s definitelu important to talk to customers, as the author advocates, but you can also learn about your customers by seeing what advertising channels/focuses work better than others.

Holy crap. There is just so much wrong and arrogant in this piece that I don’t know where to start. She talks about all of the users her company got; how many of them are paying customers? Depending on your business, it’s easy to get a bunch of “users,” but it’s very hard to get a bunch of paying users. If my product were free, I would have tens of thousands of users, (my niche is pretty narrow, a TAM of 200k people in the US and about 3 million worldwide.) But those users are worth exactly nothing if you can’t convince them to pay. So I am not impressed with squirting a bunch of free users — if you have 5 million free users, maybe then I would be impressed, but anything less than that, unless it’s a paid product, they’re actually costing you a whole lot more than they are worth. Unless you are ad-supported, but even then, less than 5 million isn’t at all impressive (to me.)

I tried the hanging up fliers bit 6 years ago. I also tried to build thought leadership and similar nonsense. For my little company, we are just now getting high rankings in Google for relevant keywords, but that took literally years of relentless blogging on highly focused quality content directed specifically at our potential customers. As far as product hunt? I can guarantee you not a single customer of mine has ever heard about Product Hunt let alone used it to find solutions to their problems. My business deals with mental health practitioners and they sure as hell aren’t looking for our solution on product hunt. The author mentions startup directories. That’s about as dumb as expecting a Tech Crunch article to get you customers. Our customers don’t read Tech Crunch. Most potential customers of products don’t read it either. We were even featured in a Wired Magazine feature in 2012 and that didn’t get us customers either because our customers don’t read Wired or, if they do, it isn’t much. We literally got more leads from a Readers Digest mention than from Wired. We were in a Forbes article about top health startups and years later, we still get leads from that. But counting on that as a customer acquisition channel? That’d be crazy. As far as getting friendly with bloggers — that could help except all the bloggers that matter are already friendly with the competition as well. And, in the mental health practitioner space, there aren’t a great many bloggers that actually have an audience. You know what does work? Content marketing and paid search. Paid ads on industry organization websites work very well too. Professional conferences work to some extent as well. But paid search (not just on Google, but sites like Capterra) works extremely well, especially if you are clever with the long tail.

If you are making some kind of trendy toy for the technorati or a non-specific audience of “the general public,” then perhaps some of her tactics might work, but for reaching actual people in your niche that are willing to pay, content marketing, paid search and paid ads in industry-relevant places work far better than some high school student council election style promotion. I intend to be harsh because in the 9 years I’ve been running this business, almost everything she says is wrong (at least in my anecdotal case.) Paid ads absolutely work, but like anything else, you have to be smart and disciplined. Paid ads can just as easily be a money pit, but if you know anything at all about your customers and your product is worth something, you should be able to find success with initial customers using paid advertising (and not just online.) If I were to raise another funding round, I’d devote almost all of it to content marketing and paid ads because they absolutely work. It costs us about $200 to acquire a customer with an LTV of $750. There is a direct correlation for us with ad spend and customer acquisition. It’s just mathematics at this point. Figuring out the product-market fit and knowing your customer extremely well — those are the hard parts. Once you figure that out, the rest is just about executing and measuring.

Hard disagree here as an app entrepreneur. My goal is to test product positioning, functionality, and pricing as quickly as possible. I want to get close to an 80% LTV/CAC on a very early version to be confident that I can eventually turn a profit on the product.

I’m not doing VC backed and don’t care about exponential growth. I’m just delivering apps that meet existing demand in the marketplace.

I think you really have to do it all. I'm paying for ads and that bring in users. I'm posting on message boards to get users. I do cold outreach via email, etc.

I must say I have actually launched today on Product Hunt and that's bringing in a big chunk of visitors already. But still have to see if they'll convert to paying users at some point.

Online advertising can be very good for quick hypothesis testing, getting alpha users, and can help you figure out your customer acquisition cost. These can help you move quickly. I don’t see the problem if you have the budget as it doesn’t need to be either or.

Not sure there is a hard and fast rule on this one. It sure worked out for Paypal.

No dating site ever started without buying first "fake" customers.

The link is broken to the "longer article on this topic" link (looks like a markdown issue).

What will happen to the head of growth and google ads?

I remember Kapwing, they got lucky with the media and probably through paying some influencers and journalists like many startups under the table but who knows, congratulations anyway

> During our call, the founder - whose startup is backed by a top-tier VC - said to me “I assume that you acquired your first users through paid marketing.” Really? Is this an assumption nowadays?

WOAH, a top-tier VC AND they did something you don't consider to be a best practice!? HERESY! Flagrantly discrediting the meritocracy you think might be necessary to get in the presence of - let alone the PORTFOLIO of - a top tier VC!

Also, that company is still right. Yes, this is an assumption nowadays. Congratulations on getting some funding after doing it your way.