

Traction Trumps Everything - michaelfairley
http://www.gabrielweinberg.com/blog/2010/07/traction-trumps-everything.html

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mmaunder
Traction is absolutely the most powerful asset for raising money.

You will find once you've closed that your investors keep pushing for traction
at the cost of everything else including revenue and burn rate.

This is because, from their perspective, they want you to create a market for
your stock. Which is now also their stock. They want you to do this the same
way you created a market when they wanted to buy. With traction.

There are several target markets for your stock. Future angel and VC
investors. The public markets through an IPO. An acquisition. Traction is good
at creating interest in all of these [less so for an IPO].

You can be a very effective CEO from your investors perspective if you spend
your career in your startup doing the things that are best at creating a
market for your stock. This approach has the highest likelihood of creating a
successful outcome in the shortest time for your investors.

However, you can not use this approach to build a lasting business or a great
business. When your target market becomes investors and your product becomes
your stock, you are not only neglecting the fundamentals of building a lasting
business - you are working against them.

But the reality of the world we live in is that you occasionally need to raise
money. So you need to somehow resolve this conflict which I leave as an
exercise for the reader.

Recommended reading: Jim Collins - Good to Great.

Recommended viewing: Boiler Room

~~~
joshbert
I up voted your reply, not only for your magnificent input, but because of
your recommendations. Absolutely spot on.

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MicahWedemeyer
_I should also point out that once you have traction, you may not need
investors at all._ \- Sums it up perfectly.

Now that I actually have some traction, and I can roughly calculate how long
it will be before I am ramen profitable, investors just completely fade from
the picture.

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famfam
My takeaway: it's easier to get money than to get traction. A powerful and
sobering thought. I've never been present at the attainment of traction. I've
either worked for big companies who already established traction long ago, or
startups that could never find it. In my projects, no traction. It's starting
to feel like the Moby Dick to my Ahab. TRACTION WHERE ARE YOU?

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edw519
_I should also point out that once you have traction, you may not need
investors at all._

Oh how true.

I was recently pitching an angel who was telling me that he didn't see a
market for my app when my cell phone vibrated. I checked voice mail after the
meeting. It was the president of one of my customers, asking if the angel "got
it". If not, no problem, just get back there because he had a bunch of new
requirements and some more referrals. He never understood why I was pursuing
funding when there was already so much demand for what I was building.

That's one time I wish I had been rude enough to take the call during the
meeting, and handed off the phone saying, "Don't ask me. Ask him."

~~~
JoeAltmaier
... and gotten the investment? That you didn't need?

Or you just would have liked to score off the angel.

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AndrewWarner
Gabriel, I think this would be even more useful if you talked about how that
graph happened. Why was there a dip? How did you overcome it? Where did you
get your traction? Etc.

~~~
axod
Also I think it's relevant to show how much was spent on advertising. If all
of that traffic came from paying $$$ to Reddit, then that needs to be taken
into account, but if the majority of traffic is from real traction then very
cool indeed.

~~~
epi0Bauqu
Hey guys, I didn't mean to relate this post to DDG at all. I was just trying
to find a good image, and I figured why not use the DDG compete one, though I
purposefully left out the title and the y-axis.

That said, I'm happy to answer your questions. Andrew, I didn't see a dip on
my end. That's something weird with compete, which is known to have various
biases (and is only US). Axod, not much advertising $$$. From 1/1/10-6/1/10,
~$500 in online advertising, ~$250 on reddit. Most of DDG traffic is actually
direct.

~~~
axod
Good to hear :) I imagined reddit advertising would cost much more than that.

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phreeza
If this is true, it says a lot about the chances Diaspora has. I think there
is more traction there already, even before launch, than many failed social
networks ever had.

~~~
adamhowell
Traction != Hype

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swiftman
Truer words have never been spoken :)

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messel
Traction, social proof, key customers for b2b, these are a few of my favorite
things.

..........|

........./

.___/

This chart is pretty much playing on repeat in my head:

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slvrspoon
sorry Michael, this is ridiculous, i like Gabriel but please don't upvote this
absolute CRAP here.

~~~
epi0Bauqu
Sorry, why is this crap? People ask me all the time what it takes to attract
angel investors, and this is my most succinct answer.

~~~
sachinag
It sucks to be told as someone who hasn't had an exit yet that you have to not
only build something but also get real users before angel investors will help
you. But it's a message that needs to be beaten into entrepreneurs looking for
external funding. (I know I could have used it first time around.)

~~~
epi0Bauqu
You can still get angel investors to help you without traction, including
myself. Anyone looking for advice can feel free to email ha@hackerangels.com,
and we'll try our best to help.

~~~
jeb
Why do you guys help random people? Out of pure curiosity - is it for profit
or just as a contribution back to society?

~~~
prosa
In part, they gain headlights into deal flow at an extremely early stage.

I can vouch for the Hacker Angels' willingness to help just for the sake of
it, though. I pinged them when their announcement first hit HN, and while I am
sure they were deluged, and my business is "pre-traction", they still took the
time to respond in detail to my questions. This type of advice is difficult to
get, especially from angels themselves. It's a great service to the community,
and personally I don't mind them extracting a little value of out it!

