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When building a freemium SaaS company or an ecommerce company or any product that requires users to move through a funnel towards an objective, it’s important to track this funnel to understand where the funnel can be improved.

But tracking one funnel may not be enough. The aggregated funnel may be masking conversion differences across customers segments. For example, at Expensify conversion rates to paid vary quite a bit across customer size. But the total conversion-to-paid rate hides these nuances.

Great products are like ducks. They are calm above the water but paddling furiously below the water. An entrepreneur told me this quip last week and I think it had great wisdom in it.

In other words great products are graceful. They make something complex look effortless.

Great athletes are the same. So are great dancers. And even great entrepreneurs.

The secret within this aphorism is that success is a grind. It is hard work. It’s easier to let it all hang out for others to see how hard work can be. Often we want others to understand how challenging a problem was to solve or how stressful a deal was to close or how complex a product is.

Vinod Khosla penned a great overview of the three phases of a company this weekend. He identifies the hub and spoke phase, the organized chaos phase, the functional management phase.

Once a founder has experienced each of these phases, it’s easy to identify the them in retrospect. But companies don’t transition from one phase to another in discrete steps. Instead, they morph and evolve fluidly into these phases.

Throughout this metamorphosis, two things must remain constant to keep the startup functional: the vision/mission of the company and the culture of the company. Lacking a consistent vision, the startup can enter a tailspin - with a team unclear on the path to pursue. Without the right culture, teams fall apart.

Peter Thiel and Gary Kasparov wrote in the Financial Times about “Our dangerous illusion of tech progress”. The main point of the article is quoted below:

[We are living in an era of] cautiousness far too satisfied with incremental improvements. Our ability to do basic things such as protect ourselves from earthquakes and hurricanes, to travel and to extend our lifespans is barely increasing [since the 1960s]. The genuine progress in IT from the 1970s up to the 2000s masked the relative stagnation of energy, transportation, space, materials, agriculture and medicine.

Yesterday’s post on distribution partnerships for startups elicited a few comments and questions about other important elements startups should consider when contemplating partnerships. I’ve listed a few other major partnership elements below.

Qualifying the Partnership

Quality of inbound traffic - As part of measuring the cost/benefit of a partnership, it’s critical to understand quality of traffic/customers from a distribution partnership, as @jamesreinhart pointed out. Ideally, a startup should collect data on the performance of a distribution channel before entering into a long-term agreement with a partner. Conversion rates can vary widely by channel and lots of poor traffic isn’t worth the effort.

When a startup is approached by an established company about partnership, it can be a very exciting time.

Sometimes partnerships change the trajectory of a startup. Other times, the weight of partnerships can crush startups. Servicing a much larger partner’s needs with a small team can be a full time job and deprive the startup of any time to advance their independent projects.

When evaluating a partnership, the most important first-pass analysis to conduct is to understand whether in the success scenario, the partnership is worth the effort by comparing the startup’s progress to a conservative estimate of internal growth.

This morning NPR profiled an education researcher comparing and contrasting the way different cultures approach intelligence and learning in schools. Though the debate about education methodologies is fascinating, I found the one of the stories in the report reminded me of the importance of transparent cultures in startups.

In 1979, Jim Stigler, a researcher from UMich went to study education in Japan. Sitting in the back of a fourth grade math class, he watched as the teacher asked the class to draw cubes.

Yesterday, I watched as a friend of mine created an Expensify account for his startup. He was trying the product for the first time.

I took notes without saying much. The experience reminded me of the hours I spent in Google’s usability labs watching people use our AdSense Demographic Targeting beta product. In those sessions, I remember feeling a sense of excitement followed by frustration - even disillusionment. Often, the product confused users. And I had only one person to blame: myself.

In a triumph of statistics, Nate Silver predicted the outcome of every state in the Presidential election correctly. What makes this story so noteworthy isn’t that it proves data enables superior decision-making to human intuition. We know the math works.

Instead, Silver’s success highlights and challenges the prevailing culture, present in politics and in the workplace, that overvalues intuition and undervalues data.

Our analysis tools and our access to big data are forcing cultural change at the broadest scale. The latest field to face this upheaval is journalism. It won’t be the last.

Must content platforms be reinvented every few years?

Left to its own devices, the mob will augment, accessorize, spam, degrade and noisify whatever they have access to, until it loses beauty and function and becomes something else.
Seth Godin

Given the noise and misinformation disseminated on Twitter both during the election and the Sandy disaster, I’ve been wondering how Godin’s thoughts apply to new information networks: blogs and feeds.

Sifting the feed in search of the truth

There is an undeniable early movement toward editorially curated publishing. The Twitter founders have launched the most visible response. Medium, a low volume, high quality content site is a direct (and opposite) reaction to the high volume, noisy Twitter feed.