This is another in my series of throwback articles I’ve previously written. I return to the business advice of a multiple 6 figure investment winner who shares his essential business tips for startups.

[Originally written in 2013]

This week I was given the chance to take to Alex Major, a serial entrepreneur with a very technical background. Having worked previously with the likes of Google, he decided to divert his interest into his own startup business along with two colleagues. What started as an online portfolio platform evolved into a 6 figure investment winning startup by the name of Hobzy. [Editor note – he has since moved onto other ventures]

Hobzy, is social network for hobbyists, allowing then to share their hobbies with the world and not just their friends. It has grown from nothing to having over 10,000 members within the space of a few months. Currently moving to new premises amid winning bigger investment, the future really does look interesting for this ambitious startup.

Alex is the Director of Hobzy and he allowed me some time to pick his brain. Here are three key business tips for startups that I learned from the Major.

 

Business tips for Startups:  1)  Do not try to be just anything to everything, be everything to some people instead.

Hobzy started with a team of three people who all had different ideas about which hobbies should be promoted within the Hobzy network. Of course they could easily incorporate them all, as naturally they would be able to attract just about everyone with a hobby. An appealing option which they decided to chase, until they realised that even though they were looking for people with hobbies, the diversity of these hobbies made each person very different indeed.

By trying to offer something to almost everyone, their member pick-up rate was very low indeed. They sat and discussed many a time but they could not figure out what was wrong. They clearly stated communicated how the site would help different hobbyists and their site was set up to help all these different hobbyists.

Then they realised something very important. Perhaps by trying to be something to everyone, they had in fact tried to be far too much. They had not made themselves distinct or useful enough to allow one group of people to make it their home. It also did not allow them to target their adverts well enough either. They had tried to do too much for too many people and not focused on serving one group particularly well.

They then made the decision to focus on just three hobbies. Allowed them to focus their advertising and brand message to a core user group. They changed the wording on the site, made changes to the images and personalised certain aspects to appeal to the exact audience they were targeting.

Overnight their opt-in rate increased dramatically. People were now able to truly associate with the site and they were finally being seen as something useful, even if just to a small group of people.

Interestingly they did not take away any of the features from the backend of the site. So once people were signed up they could still easily add any other hobbies they like, even if they were not the three main ones that were promoted.

Yep, you guessed it, those same people began to naturally grow the site into multiple hobbies. So by targeting only three hobbies, they became attractive and created a core community. A community which naturally expanded into other hobbies that the site’s owners wanted to explore anyway.

Sometimes you achieve way more by being something important and useful to a core group of users rather than trying to be useful to everyone.

 

Business tips for Startups:  2)  Track everything, twice..

Hobzy are [were] driven by statistics. These boys have it down and have almost everything tracked. However when they first started with a certain tracking system, it wasn’t installed correctly. The statistics were spewing out but they were all wrong. They were using this data to make key decisions which affected the future of the site.

The only reason they realised is because one of the statistics was easy to spot as incorrect. It told them no one had been to their homepage over a certain period when in fact they had sign ups, so they know for sure something was up.

Had that statistic not been so easy to spot then perhaps they would have based much of their future business intelligence upon inaccurate data.

To combat this Alex is a big fan of having multiple tracking systems so that you can compare data and find anomalies. Much of what Hobzy do is based upon statistics. They track almost everything, so it is vitally important that the numbers stack up and are reliable.

The lesson for me here was to never rely on a third-party tool as it can be a recipe for disaster. Make sure you have a backup or something in place so you always know that the data you have in your hands is accurate. It can make a huge difference in your business.

 

Business tips for Startups:  3)  Small changes can make a huge difference, but make sure that difference is actually useful.

Tracking data can give you a great indication as to what is working and what is not working. However you still have to make changes in order to have data to track.

Hobzy are great at making small changes and then tracking the results. A small change they made recently with just the colour of their opt-in button increased their sign-up rate by 35%. Yep that is a 35% increase by just changing the colour of one simple button. Hardly a huge change but had a very great effect.

Alex however, warned me about taking that statistic at face value as they increased membership rate did not mean ‘active uses’, which was their goal. Too many businesses look at conversion rates and then use that rate as a basis of deciding what is important but forget that conversion rates on their own are not actually a useful statistic. The role of your business is not to convert highly but to provide a service. Conversion rates may put more people into your funnel, but untimely you measure success on a different metric and not simply conversion rates.

For Hobzy, they aim for active users. These are people who sign up and use the site multiple times within a 60 day period. They know if they have people for this long, then they are strong users, so everything they do is based on increasing this metric.

On face value it may seem that increasing conversion rates would increase the number of long-term regular users, HOWEVER that is not the case.

They actually found that certain changes increased conversion rates initially, but led to many less regular members over a longer period of days. They had increased membership but it was not an increase in quality membership. So simply looking at conversion rates in this scenario would give you a false sense of happiness. You truly have to remember what you are really measuring.

Conversion rates are only one simple metric in a longer calculation, so you must never get hooked upon just conversion rates. You have to really know what your objective is for your business, be it having regular users after 60 days, or even having a certain number of people who continue to open your email after 90 days of joining your lists.

In all these cases initial conversion rates alone would give you a false sense go what is working. Be sure to know what is really important to measure for your business and learn how conversion rates are just a small part of the whole calculation. Profitability is really important in business, so make sure you are measuring changes that affect your true profitability.

 

 

Talking to Alex was great as he is a very easy going guy. He helped to remind me of some important concept within a startup and something I hope all my readers will learn from too. His business tips for startups are also simple but striking.

I think all three of his points hit home with me, with the point about being something important to a small group of people, being the one that hit hardest. I feel I have been guilty of trying to be too many things to too many people in the past and I now clearly see the issues with this.

What was nice to see was that even though you initially target a small audience, that audience itself will have additional interests and will help your product expand into other areas that you may have wanted to explore yourself. It’s better to build a small loyal following and grow from there, rather then trying to offer something to everyone you possible meet. It helps you focus your marketing efforts and makes it easier for your customers to know they really want you too.

Let me know you thoughts!

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