Like many start-ups, this start-up was also using cash incentives to drive this growth in users. Noticing a lack of loyalty amongst users and the low barriers to switching applications, we asked the Director what mechanism were they using to “lock-in” the sign-ups. Stunned, he babbled on about how they were using the sign-ups to build a data-base which they would then exploit for cross-selling and up-selling in future.
We share this story as it clearly highlights the issue of real versus chauffer knowledge. Many times our clients (and even us) overestimate their abilities and just because they read about a strategy, they think they know how it works. The reality is that they don’t. Truth be told, the concept behind land grabbing is not just about the number of sign-ups, it is about building a profitable and loyal user base.
While we applaud the Director of Strategy and his partners for their entrepreneurial spirit, we think that they have chauffer knowledge when it comes to building a successful tech start-up. The start-up needs to quickly identify their ‘circle of competence’ and work within it. For those that fall beyond the circle, they should be humble enough to say they don’t know and hire professionals with the real knowledge.