GenuineVC

We’ve been meeting with (and investing in) a number of online and mobile consumer-facing services startups recently. A lot of our due diligence questions when exploring these potential investments surrounds customer usage – after all, you can’t have a successful consumer-facing startup without the consumers.

A key component (and risk-area) in most of these businesses is in generating a critical mass of users utilizing the service. One of the lessons that I’ve learned through my own experience with web-based consumer-facing services is the importance in reducing friction between and before desired actions. Any element of a service that would cause a user to either hesitate or initiate an extra step in the process before a desired action should have a solid reason why it’s incorporated. Of course, this rule manifests itself a product strategy level – is there a download to initiate, registration to complete, or new behavior to learn in order to use a service? But this guide also governs granular tactical decisions – how many inputs fields should be included or how is a page laid out?

While I was managing the marketing of our e-mail newsletters at About.com, it always surprised me how minor changes in UI could significantly affect our conversation rates. Taking it one step further, considerable changes in a user workflow had dramatic changes in adoption and usage. In this experience, I learned the lesson that friction is multiplicative. Barriers towards a desired consumer action aren’t additive; they’re compounding on top of each other. Conversation rates in a several step process multiply across the entire sequence as a whole.

Obviously, this message has tactical execution implications. But it also has strategic ones which we consider as investors. Friction points inherent in the service’s usage should be overcome with a compelling value-proposition. So I always ask, “Is it worth it?” And the failure to reduce obvious tactical friction-points in a service signals a lack of in-house expertise (and culture of understanding) about the subtleties of marketing to the consumer.

The goal, however, isn’t to eliminate all the friction. Just the unnecessary portion. Then we ask if what’s left can be overwhelmed with the value proposition to induce adoption.