In Startup Smart

Startup founders too often focus on superficial elements of running a business instead of what matters, Reddit founder Alexis Ohanian says.

Dubbing itself the “front page of the internet” Reddit is the 25th most visited website in the world and was valued at $US500 million in 2014.

During an AMA hosted by Product Hunt, the founder and tech investor revealed the most common mistake he says first-time founders make.

“First-time founders often delude themselves with doing things that ‘feel’ like doing a startup but aren’t actually what matters: writing code and getting users,” Ohanian says.

“Because there’s no syllabus to entrepreneurship, a lot of students who thrived in schools have problems adapting to a world where you don’t get clear feedback from the market about how well you’re doing.

“In school if you get a B on your paper you can figure out why, and adapt your behaviour to get an A for the class at the end. In business if you’re not showing growth or repeat use it could be for an infinite number of reasons that aren’t clear – you just have to keep testing your hypotheses.”

The question and answer sessions also included a number of insight takeaways on the growth of Reddit, building a dedicated community and why it pays to be a SaaS startup.

Building reddit

Reddit was launched in 2005 long before promoting a new platform was a breeze on social media.

Ohanian says the extent of the startup’s marketing was email pitches to bloggers, and submitted a whole lot of links themselves to solve the chicken and the egg problem.

“Because we weren’t going to attract anyone to stick around with an empty Reddit frontpage, Steve [Huffman, co-founder] and I submitted links for the first month or so under different usernames,” he says.

“This helped new users understand that Reddit wasn’t some kind of stripped down blog Steve and I ran, but a new kind of community platform.

“Our first surge of traffic that didn’t come from brow-beaten friends was thanks to an essay Paul Graham wrote and gave us a great bump.

“People actually were using the site and a couple of months in Steve and I no longer needed to fake submissions, which was a pretty awesome feeling. It seemed like it just might work after all.”

Building a community

For other founders looking to build a strong community around their startup, Ohanian says they have to follow a core mission.

“I think the biggest tip is knowing what you’re about and being true to it,” he says.

“Steve and I were the first community managers at Reddit because we only had one community hten and we handled the spam. We set the tone for the community with the things we posted and upvoted and were active ‘party hosts’ there.

“In many ways that was a reflection of us – if we’d behaved differently the community would have looked different.”

Why it’s an exciting time to be a SaaS startup

According to the Reddit found, it’s a “good time” to be building a SaaS startup.

“Everyone in the workforce now uses world-class software daily and thus has world-class consumer standards when they go to work on less than great software,” Ohanian says.

“Unlike consumers, lots of your planning can be done with spreadsheets once you’ve found product-market fit, so when you’ve hit that next level, get your people together and plan a strategy for getting the sales machine going.

“Obsess over hitting those numbers and making your sales cycle as short and efficient as possible.”

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