Before Avanoo arrived at 500, they were making about $2,000 a month selling self-help videos. But after a spell of stardom on Reddit, their social marketing channels had pretty much dried up. As cofounder Daniel Jacobs put it, “you can only do so many #1 posts before the Reddit people want to throw pitchforks at you.”
They had a plan to move from consumer to B2B and pivot from self-help into ongoing employee education for large corporations, but they were having trouble starting conversations with the execs they needed to reach. That’s when Jacobs and his cofounder got accepted to Batch 12. Less than six months later, Avanoo was an enterprise company worth $15M.
Avanoo’s success wasn’t about changing anything about their product or their plan. It was about taking the success they had already achieved and compounding it through rapid iteration, pushing forward through every failure:
- They tried paying databases for leads: they turned out cold (virtually no opens)
- They cold emailed decision makers at big companies: 3% open rate
- They went to LinkedIn to source leads, wrote better subject headers, and implemented domain keys: 60% open rate!
Within months, Avanoo went from hearing silence to hearing excited responses from HR leaders at Fortune 500 companies, and they did it by experimenting—they turned their growth into a process they could continue long after Demo Day. Avanoo followed a pattern of success that we’ve seen happen time and time again at 500: they came in with a product, a market, and a team that was ready to grow. All we did was pour some fuel on the fire.
We want to help more companies in that same way, and that’s why we’ve recently re-oriented the accelerator around growth. We’re working with companies ready to scale rather than focusing on companies in the pre-product or idea stage. And we’re modifying our accelerator schedule to cultivate more intense, productive relationships between companies and their growth coaches.
How You Spend Your Time At 500
When you only have four months to work with, time is of the essence. We’ve made changes to the way we run our accelerator as we’ve narrowed our focus and identified ways to pack more value into less time.
Our four-month program at 500 is split into two parts:
- Growth and distribution: For two and a half months, you learn the ins and outs of acquisition and retention from the industry’s best growth marketers.
- Fundraising: For the last month and a half, you practice fundraising, meet with VCs during office hours and nail down your pitch for Demo Day.
Every batch kicks off with Marketing Hell Week, an intensive week intended to teach you everything you need to know about building a systematic process for growth.
After Marketing Hell Week, we put that knowledge to work by pairing you with a growth coach tailored for your business. You work with them on a weekly basis to develop, run, and refine experiments aimed at tackling your company’s big problems.
Then, with a month and a half remaining, you shift into fundraising mode. We have mock investor meetings, go over how to tell a compelling story about your company in two minutes, and after Demo Day, we bring 100 investors in for office hours to help you start your raise.
Each section of the program is carefully designed to build on the last. Growth, from top to bottom, is the ultimate goal: and it starts on Day 1.
Marketing Hell Week
Every company we accept into 500 Startups is there because we believe they have the potential to build something amazing. But because a lot of our founders come from engineering or design backgrounds, they often don’t have the sales and marketing experience they need to get their amazing product into the hands of customers.
During 500’s first week, we fly some of the best founders and growth marketers in the world to the accelerator. Through classes and workshops, our batch companies learn about everything from the basics of marketing to more advanced topics (examples from Batch 16):
- Building a Growth Machine with Brian Balfour
- Validation Through “Smoke Tests” with Dominic Coryell
- Sales Hacking with Matt Ellsworth
- A/B Testing with Hiten Shah
In the past, we had speakers come in throughout the program and talk on every topic you could imagine, from design to engineering, hiring, legal, product, operations and more, but we realized that those talks took up way too much time and actually distracted founders from running their businesses.
When you’re trying to take your revenue or user base and 10x it, hiring isn’t going to be your main concern. Patenting your software won’t make or break your business. Marketing and sales are the problem, and Hell Week is the beginning of the solution. Eventually, if we’re successful, hiring will be a problem—but growth has to come first.
That’s why we’ve taken all the speakers and workshops we used to have throughout the program and—mostly—put them into a single week full of growth and distribution.
Marketing Hell Week is the foundation of everything that follows at 500, and it’s accordingly intense. 500 founder Troy Sultan documented his own Marketing Hell Week this winter in an article that was tellingly short on personal commentary: “leaving the office at or past midnight were common themes for most of us… so memorable (and exhausting)… did indeed live up to its name.”
Calls will be taken during lunch. Meetings will be held while walking. But at the end of it, everything that companies need to know about distribution will have been covered. It’s then that the “real work,” that Sultan mentions having no time for, can really begin.
1:1s with Coaches
With Hell Week over, each batch company has a little over two months left before fundraising. When we look back at which companies accomplish the most in that span of time, we find that the best founders do two things:
- They experiment relentlessly, and
- They never get distracted
That’s why we’ve removed distractions by condensing our speakers and workshops into Hell Week. It allows us to optimize for experimentation throughout the rest of the program by giving each founder a customer acquisition coach.
Our coaches come from the marketing and sales departments of companies like Lyft and Hulu, and they’re oriented towards speed: try stuff, measure it, learn. Growth is never one-size-fits-all, but that method and the mindset behind it can be learned.
Your coach will start by helping you take what you learned during Marketing Hell Week and put it into practice. Many companies, for instance, come in without having tools like Google Analytics and Mixpanel set up properly, and the most basic foundation for starting a growth process is being able to take measurements of what’s happening in your app.
From then on, you’ll meet one-on-one with your coach every week to run experiments:
- When the week starts, founders will meet with their coach, decide on their #1 metric that matters, and plan for upcoming experiments. Agreeing on the #1 metric brings focus to the founders and gets you aligned with your coach on what’s important.
- During the week, your company runs the experiment. Knowing that you’ll meet with your coach at the end of the week adds a bit more discipline to tracking and making sure you’re growing your #1 metric.
- At week’s end, you’ll get together with your coach to discuss what happened, what you learned, and how to design an experiment for the upcoming week. It’s a lot easier to craft new experiments when you’re working with a growth coach. You probably know about Google AdWords and Facebook Ads, for instance, but your coach will know about channels that many new entrepreneurs are unfamiliar with, like YouTube or Instagram influencer ads. They’ll be able to suggest the appropriate channels based on intimate knowledge of your business.
You’ll learn how to drive growth by doing it. Growth as a process isn’t about lectures or lists of prescribed actions that are supposed to grow startups—it’s about methodology, a state of mind that lasts long after 500. It’s one of the most valuable things you’ll have when you leave 500.
Grow To Raise
Ultimately, one of the best ways to set yourself up for fundraising success in the last month and a half of the program is to grow your business. When you turn growth into a process that you can control, your investor story becomes irresistible.
Richard Werbe, founder of Studypool, came into 500 with thousands of users and a business that was already generating a profit. He would have been able to grow his company without the accelerator, but working with 500 coach Andrei Marinescu helped him turn Studypool’s growth into a rigorous, sustainable process.
What Werbe and Zhong realized was that running experiments off intuition and gut inclinations had won them a few wins here and there, but it wouldn’t set them up for long-term sustainable growth. Marinescu helped Werbe be ruthless about systematizing the work and pursuing those really hard wins, and very soon Studypool was seeing consistent 25% MoM revenue growth.
At the end of Batch 11, Studypool raised $1.2M.
It wasn’t necessarily the 25% figure that set alarms off in the heads of investors: it was the consistency. Systematic growth as opposed to the “one-off lift” tells investors “this founder and team know what they’re doing.” It shows them that you’re in control.
When you have control over your growth and your revenue, your company’s trajectory is in your hands, and you’re on track to build a company that lasts.