3Up

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Startup Secret: the three ups (think of “teeing up” a great go-to-market). For your product to get adopted is just the beginning; you always want to improve it.

• Update it: sometimes just security fixes and keeping data current.
• Upgrade it: when new capabilities are needed, new technologies like AI come along, or you want to make it mobile.
• Upsell: sell more into the same customer.

Foodprint (Lisa). Foodprint provides easily comparable environmental information about groceries to consumers, based on data, not marketing. Three ups for it: (1) Update: constantly update the data, because if the data is out of date, you are dead. (2) Upgrade: an online browser extension that, when you get to your online grocery basket, suggests lower-environmental-footprint alternatives to swap in. Those recommended products are not paying commission today, but that is valuable if people actually swap them, and you could charge for the recommendation upgrade because people want it, which increases value for you. (3) Upsell: extend from groceries to CPG (a different value chain and less frequent purchasing, so the human-nudging behavior is not identical, but the idea that we should know the environmental footprint of anything we buy is universal). Notice: throughout the three ups, the customer stayed the same. That is why we always talk about customer-centric value propositions. If the customer is the same, you can keep updating, upgrading, and upselling them, and you build a fantastic business model.

The virus subscription as pure updates. Remember the Symantec virus subscription: that was just updates. We did not change the product at all, we just sent virus updates all the time so you had the latest signature before the virus even hit. We later upgraded it because people wanted different ways to monitor it (how many viruses did I get, an analysis, tracking whether it was happening in certain regions for the IT department). And then we upsold them 2.6x by upgrading the functionality to data security for everything: not just virus, but data backup and improving your PC’s performance.

Retention versus value per user (Clint’s question). Is it fair to say that update and upgrade are about customer retention, whereas upsell is about increasing the value per user? Exactly right, and there is no reason all of it cannot be true at once.

The moat. This plays with everything else: if you make it really slippery for people to land, then keep updating, upgrading, and upselling them, you build a moat (a defensibility) around you that is tremendously valuable. That is how every social network works: I might build a fantastic new social network tomorrow with a slippery download, but if the bad news is you have to invite all your friends before it is of any value, you are not going to do it. The value is that somebody did a really good job building the network (TikTok, Instagram, your favorite) to the point where they have huge defensibility, even if their features are not that good, because they keep bringing you into their ecosystem.

So, quietly, the four startup secrets (SLIP, package for pull / bundling, co-create a win-win, and the three ups) are all multipliers and levers built around your core, all aimed at increasing your lifetime value and reducing your cost of acquisition. It is a fun game to play, and you can start very simply with the core.