By the end of microconf, you should have three actionables:
and three new relationships:
"Building and Scaling Products" by Des Traynor #
@destraynor of intercom.io
1. Strong vision #
- "without a vision you'll flip flop frequently as you're not set on what the future looks like" - every decision will paralyze you
- What's vision? An opinion about the future (market and technology), and how you want to change it.
- In other words, vision is why you exist other than making money. Monetary growth only resonates with you and your pocket book, and monetary goals don't help you decide direction once you've hit them (ex: Stripe wants to increase the GDP of the internet, Uber wants to make transportation as reliable as running water everywhere for everyone)
Actionable: if you're having trouble making decisions, make a higher level decision about where you want to be and the smaller decisions will make themselves.
2. ? #
- Gall's law: all complex systems that work evolved from simpler systems that worked. If you want to build a complex system that works, build a simpler system first, and then improve it over time. (ex: Word and Salesforce started out as basically single page apps and no options)
- "You're ready to start when you know your problem so well you can distill the solution down to workflow(s) which you build features to enable"
- when you've solved the problem, stop - if that small solution isn't something people want you didn't understand the problem or it doesn't exist - don't try to "feature your way out" (no one using product -> ask users what features they need -> build those features -> still nobody using product)
Actionable: when building a new product, your goal is to build the smallest possible thing that provides the most possible value. If you find yourself adding new features to get people to want it, you're probably not building something very valuable.
3. Manage your beta deliberately #
- useful beta users give you honest feedback and need what you're building (ie: not family members that will tell you whatever you built is great)
- a small list of target users beats a big list of non-customers: if you offer a free apple watch for everyone who signs up, you'll get beta users that want apple watches (which is only useful if you're building a new apple watch strap)
- a vague beta pitch (like "Photography reimagined") gets you a wide range of users (is this for people that want to sell photos? export their photos to instagram? filter their photos on their smartphone?) - your beta users can only be as focused as your product vision
- your users won't tell you they're ready to pay you, so launch when it's ready or you'll be forced to when you run out of time ("the show doesn't go on because it's ready; it goes on because it's 11:30 on a Saturday night" - Bossypants)
- how do you know it's ready? By having a very clear vision of what you're trying to do (otherwise you'll always be one feature away from launching)
Actionable: if you have to bribe beta users to try your thing, it's a sign you're building the wrong thing
Actionable: if your beta users aren't giving you actionable negative feedback, they aren't very useful in improving the product
Actionable: qualitative feedback from a focused group of beta users is more valuable than quantative usage data from a gigantic list of beta users
Actionable: if your launch date keeps getting pushed further away, your vision of what you're trying to build isn't clear enough
4. Beta periods are lossy #
- beta funnels are terrible for converting users, so use it as a deliberate period of iteration to really nail your product
- you'll only get one shot at being "new"
Actionable: when in beta, set your goal to be learning and exploring, not converting
5. Obsess about onboarding #
- never stop signing up for your product: your tour, docs, welcome email, and video will get out of date, so continuously refresh them (intercom has a dedicated team that does this every day)
- signing up is the only workflow that you know every user is going to do, so it's easy to justify investing a lot in it
Actionable: onboarding is your most important feature (if your users can't onboard, they can't do anything else), so never stop improving it
6. Know the real competitors #
- is Hershey's competitor other chocolate companies, or flowers?
- Twitter and facebook are competing with iPhone games, TripAdvisor competes with local travel people, todo and reminder apps compete with post-its on your screen, your app probably competes with email or excel
- direct competitors (other chocolate companies) probably aren't as important as secondary (things that do the same job in a different way, like flowers or "I'm Sorry" cards) and tertiary competitors (different job with a conflicting outcome, like marriage counseling)
Actionable: pay more attention to your secondary and tertiary competitors than your direct competitors and you'll understand and solve the problem better
7. Know why people switch #
- people don't switch products just for fun, they switch because their current workflow sucks, or there's something new and exciting about the new product
- incentivize people to switch by maximizing the upside ("your current solution is shit, ours is awesome"), and minimizing the downside (we can do everything you're currently doing, and the risk of switching is low?) - perfect example is the Mac vs. PC commercials
- jobs to be done method: ?
- you're overvaluing your product by 3x, users overvalue their solution by 3x => your product needs to be 10x better to overcome switching inertia
Actionable: to overcome switching inertia, pitch your product as 10x better (not just 2x) not just by saying why your solution is good, but also why theirs is bad and why switching to yours has minimal downsides
8. Product Roadmap #
- you naturally want to work on new features because they're the most fun, but it's better to work on what's most important to the most number of your users
- avoid making niche features for niche customers - you'll turn into a freelancer making custom products for 80 people
- there are 4 types of product development work:
- improving a feature
- getting more people to existing features
- getting people to use your product more
- building a new feature to support a new workflow
- you probably aren't spending enough time on the first 3: most people should be using most of the things you've built
- you can score each of your features on quality (how well it's executed), importance (how import is it to the user's workflow), satisfaction (how happy users are today), and frequency (how often people use it)
- if you have to implement a new feature, implement them in the order your users want them (ex: story about users that were polled on what feature they wanted next - all of them wanted formatting bold and italic above anything else)
- Anthony Ulwick's framework: score features by how satisfied your customers are and how important it is
Improving product usage #
- try asking "why?" five times starting with a question like "what's stopping people from using X?"
- people use things because of habits, triggers, rewards, and defaults. Give them more contexts and more ways to use something
- the solution for increasing use is often in documentation, not code (ex: "here are three ways people use X")
- most effective to announce new features in context when they could use it (ie: "looks like you're about to export your data for the first time - did you know you can ")
- announcing new features in blog posts or emails works for users there on launch day, but it's shit for new users
Actionable: when deciding what to work on next, work on things that maximize product value for the greatest number of users. This is probably not building a new feature (which you have a bias to do because it's more fun), it's probably making an existing feature easier to use (which could just be by improving documentation)
Actionable: if you have to implement a new feature, implement the most important feature to your users (how do you know? talk to your users)
9. New features usually flop #
- don't sell what the feature is or does, sell the superpower it gives your user (ie: compare it with your tertiary competitors, like "this new MacBook will let you express yourself in ways you've never imagined which will let you explore your full potential as a creative human", not "this new MacBook has 16GB of ram and high DPI screen resolution which is more than the Dell laptops")
- microsoft office surveyed users asking what new features they wanted in Office - 90% of new features were already there
- follow up with non users and learn what worked and didn't work (just don't expect to convert them)
- it's easy to move on to the next feature, but it's the worst thing to do - work on improving adoption
- for each feature, you'll generally follow the cycle of: make a new feature -> get more people to use it -> get people to use it more -> improve (add more capability?)
Actionable: sell the superpower, not the feature
Actionable: follow up with non users and learn what worked and didn't work
Actionable: work on improving feature adoption (amount of people that use it and amount each person uses it) instead of building new features
10. Consistently reset your opinions #
- when successful people tell you their story, they tell you the path they took, not the dead ends they were on (it makes them seem like they knew what they were doing all along)
- because the stories you hear (and tell yourself) are very linear, you don't build verifying if your decision was correct into your plan (ie: if you're doing down the right path)
- when you get new information, you can change your opinion - it's okay. You're constantly learning more about your business. Act approporiately on that change
- if you knew then what you knew now, you would've done things differently (if you would've done the same thing, you haven't learned anything since then)
- if you know about a mistake and aren't correcting it, you're making it over and over
Actionable: give yourself permission to change your mind and realize you made a mistake
Actionable: when planning, build in a method of verifying you're going down the right path (ie: define what success would look like so you can test it later)
- your product will get better over time, so you should create a new way to capture value
- uncapped enterprise plans are broken - you're giving your biggest discount to the customers with the biggest pockets
- companies are spending $80/month on coconut water, so don't ask for $20/month for your useful software
- don't try to capture value your customers aren't experiencing (ex: features they aren't using)
- if your product is unique, consider unique pricing - don't jump to the default 3 tiered pricing because you think you have to
- "what tactic do you use to introduce new features?" -> checklist of making sure it's in the docs, in marketing, emailed out; then decide how important the feature is -> how heavily you should pitch it ("core feature: everyone needs to know about this for the rest of time" vs. "obscure facebook integration: the people that need this will find it")
- "reonboarding?" -> it's hard. If someone signed up, tried your product, and stopped using it, they're probably convinced they don't want it. It's useful to ask them what went wrong, but don't expect to win them back. If you do follow up, make sure you have something new to say
Actionable: charge more (if your users spend $80/month on coconut water, don't charge them $20/month for your software integral to their business)
Actionable: after deploying a new feature, make sure it's 1) documented, 2) in the marketing, and 3) email announced, then decide how important the feature is and how heavily you should pitch it (core features used by everyone should be pitched heavily; obscure facebook integrations will be found by the people that need it)
Actionable: when a user churns, ask them what went wrong, but don't expect to win them back
An Unconventional Business - Claire Lew #
CEO of Know Your Company - @cjlew23 - firstname.lastname@example.org
Know Your Company #
- customers are businesses with 25-75 employees
- pricing: $100/employee once
- value proposition: uncover blindspots in your company before bigger problems fester. Know what everyone is working on, what they're thinking, and who they are
Claire Lew #
- started 3 years ago scratching her own itch (didn't feel like she could vent her opinions on a 6 person team)
- started consulting interviewing disgruntled employees
- partnered with Basecamp, who had already built the "Know Your Company" software
- now a two person company independent from Basecamp
Things we do (differently) #
1. Don't show the product on the website #
- copy heavy, customer testimonials (Original marketing page was a letter "Dear Business Owner With Growing Pains")
- to see the product, customers have to sign up for a 30 seat in-person demo with the CEO.
- The users they get are highly committed, which is good, because the entire company needs to be on board for the product to work
- a "high touch" product makes for good market research and a clear value proposition, so they have high retention and high referrals
- optimize for trust, not efficency: "Tell us the problems you're facing, I'll tell you how our software can help"
Actionable: study your customer and what they want so you know when to do things in a unique way that makes more sense for them
Actionable: when you really understand your customer and what they need, try making your landing pages a copy-heavy letter to them
2. Turn away potential customers #
- clearly defined market (25-75 employees) - it won't work for everyone
- they turn down enterprises willing to pay $50k because the product won't work for them
- 30% conversion rate for a smaller number coming into the funnel (~4/week)
Actionable: don't be greedy if it negatively impacts your long term success
Actionable: choose to market to the smallest possible market and your marketing will be easier and more effective
3. Never say "we're employee survey software" #
- no one is looking for a lawnmower, they just want their lawn mowed
- they sell 'helping you overcome losing a key employee' or 'overcoming growing pains so you can grow faster' or 'feeling connected across the world'
- "your copy really resonated with me"
Actionable: don't sell a lawnmower, sell a mowed lawn
4. Charge only once #
- ex: 30 employees = $3k, once. How could this be profitable? because businesses of that size have employee churn, and she charges $100 for each additional seat, so it's actually heavily recurring (70% of revenue is recurring)
- makes sense for this product: she wants you to get feedback from employees for life - if you could turn it off, you'd stop getting value. if you invest in each employee you have up front, you'll be forced to deal with the hard truths
- advantage of smallness: forced focus and quality - working with only 2 people at only one thing at a time - you'll be sure what you're working on is actually imporant
- stop working on things that don't matter
Actionable: when you're small, optimize for learning, and only work on the most important thing
What's next? #
- More marketing to situations (ex: here's what feedback X did, and here's what they did with it)
Actionable: give your customers inspiration on how to use your product
Moderated Question + Answer - Hiten Shah + Steli Efti #
- it depends, but try everything, including driving to their office and standing behind them while they onboard
- help them succeed, whatever it takes
- Question and revisit your assumptions - the world isn't static
- try concierge onboarding
Actionable: do things that don't scale, especially when you learn from them
- when they will improve a metric you're trying to improve (customer retention, acquisition, etc.)
- ideally, you could just do everything (ie: take every sales training course and try selling everything and your own product). With limited time, you might as well invest time in your own product while learning to sell
- there are lots of fascets to selling: you could just practice selling people on giving you product feedback
- face the moment of truth of rejection - that's where you learn "No you don't want to buy this? Awesome - why? Was it me? Is it the product? Can I buy you coffee and ask for more feedback?"
Actionable: know that you're going to make mistakes, and maximize for learning the most from them (ie: knowing that your sales ability and product suck, set yourself to learn as much as you can about why they suck)
- don't focus on success, focus on activity and failure (ie: I make 3/10 sales, so my goal is to fail 7 times to get the 3 sales)
- psychologically, see that failure brings you closer to your goal
- nobody likes failure - it's uncomfortable - but that's how you learn. There's no way around failing a lot (ie: you can't just read a book)
Actionable: set internal goals (like the stoics)
Actionable: relish failure that brings you closer to your goals
- depends on why you're burned out: it's probably because you aren't making progress fast enough
- You'll default to doing comfortable things (like writing code), but this won't necessarily help you make progress
- if you know what you want, it's easier to clarify goals and you're less likely to get burned out
Actionable: when you feel burned out, clarify your goal and the most effective action to move closer to it (it might not be comfortable, but you'll feel better for making more progress)
- the cuase of burnout might be that you don't have a good framework
- "Am I working on the most important thing right now?" - engineers tend to live too much in the product making land
- either you have a product and can't market it, or you have a bunch of users lined up but your product sucks
Actionable: if you feel burned out, take a step back to see what the next step towards your goal is
- experiment - could be super early, super late, odd hours. You could look at your analytics data for when your app is being used, which will help deduce when they're free
- try to reach them within five minutes of when they did an outbound action (like sign up)
- talk to customers - ask them how they find products and how they use them
- sell the situation
- sign up for your competitors site - interview your competitors about their business! (ex: who is your ideal customer, how big is your team) lol
- don't outsource something you don't understand
Actionable: don't automate something until you can do it manually (ex: don't hire an accountant unless you understand the basics of what they're doing)
- try $500 on each and see what converts the best
- test if you can get traffic and if it converts
- you can always change what you're doing
Actionable: when you're not sure what to choose, set up small experiments designed to maximize learning (ex: hire 3 sales people at the same time when you only need one, try advertising in facebook and google adwords and see which converts better)
- recording videos (screencasts?) is a cheap way to make high quantity/quality content
- hire several people to do the same job to evaluate the best one
- if you're not sold, you can't sell
- whatever you're trying to get other people to do, ask yourself when the last time you did that? Have you ever signed up for a credit card trial?
- live and breath what you're doing, so you can just assume the sale - "of course this is how the world works! Now this is the part where you give me your credit card"
- if you foundationally think about what you're doing as bothering people, that's what you'll do - instead make your cold call the best interruption of someone's day
Actionable: when selling, sell yourself on how your pitch could be the best part of someone's day
- The marketing feedback loop is long (this isn't software development). Make a bunch of bets, wait a few days, then see if they worked (ex: set Monday to market on your calendar, then Wednesday to check the results)
Actionable: when marketing, realize that you won't know if an experiment was successful until several days later
- how did you get your existing customers? -> cold calling and things that don't scale
- spend more time with the customers you have and really get to know them: where do they spend their time? what was the last thing they bought? what are other ways they're buying?
- it'll open channels to open new channels of reaching out to people like that
- learn something from every customer
- "one question from a founder to the CEO of blah blah: if you were running my company - as an expert in the industry - what would you do?"
- The B2B referral sales system: The magical outbound growth engine most startups never use!: Steli's blog post on getting referrals from your customers, especially on high touch; "No outbound lead you could ever generate in any other form will ever have the same quality as referral leads...your best customers know others who run similar businesses, and the intros are happening through a friend" - the key is to ask them right after you've made the sale, and remove all friction (eg: pre-write the recommendation email). Don't forget to get the referred person to thank the person that referred them. Steli also talks about this in The Business of Freelancing, Episode 17: Steli Efti On Getting Referrals
- Steli will tell you not to cave and charge more
- in enterprise, as price goes up, value goes up - they're not looking for a discount
- they'll push you on price because they think they can -
- "if you don't do X, we can't buy" - he didn't do X, and they still bought. buyers are liars and they don't know what they want
- there's a reason they're talking to you, so act like it
- they're probably doing the thing that you want them to do - you could look at what they're doing now and quantify all the costs (waiting, hourly time, lost sales)
- "from all the customers we've talked to just like you, this is how much X is takes them to do Y before using our tool. After, they could do Y for <<X"
- if you don't have the data make it up
- make it up as you go
- the next speaker will answer
Lessons from the SaaS Metrics of 1500 Companies - Patrick Campbell #
Price Intelligently: 20 person consulting firm, focused on pricing
As a recap, today we chatted about:
How our growth culture is skewed towards acquisition
How acquisition doesn't have the biggest impact on your bottom line
How to focus a bit more on monetization
How to quantify your buyer personas
How to implement a pricing process
customers just wanted to pay them to solve the pricing problem for them
google: ProfitWell - free financial metrics for subscription businesses
they've seen inside more subscription businesses than anyone (high touch on Price Intelligently, low on ProfitWell)
saw two groups: Long Term Value (LTV) beasts, and Customer Acquisition Cost (CAC) fiends
LVT beasts (5-10% of the market): low funding, 10x sales teams, buyer personas and unit economics
CAC fiends (90-95%): tons of cash, 1x sales team (but high % of workforce are in sales), what are buyer personas?
Is there a unified theory of SaaS growth? No, but there are trends:
- CAC fiends focus on the wrong benchmarks
- CAC fiends don't take customer development seriously
- CAC fiends focus too much on acquisition
Focus on benchmarks
- people quote benchmarks based on their experience (ex: a VC could quote 5% based on ~500 companies)
- better to look at... some kind of ratio??
- what % of total sales is expansion revenue? "10-15%"?
- better to look at... something else?
- How much should I be growing YoY? "as much as possible"
- actual: as companies grow, they don't grow as fast and become less variable
- make buyer personas: valued features, least valued features, willingness to pay (WTP), CAC, LTV, and Channels
- almost nobody actually does this
- QUESTION: do you have numbers on people that do have documents doing better? -> yes, 64% of successful companies had buyer personas
- nobody sends surveys (25% do 1/month)
- nobody tests (25% do 1-3/month)
- these numbers should be scary: we know what we should be doing but we aren't doing it
- 92% of failed companies lack quantified buyer personas (QUESTION: statistical error? -> no, see above)
- arguments against customer development: "the customer doesn't know what they want" (but even Ford and Apple do cus dev)
- "if you're steve jobs, be steve jobs. for the rest of us, talk to your customers"
Focus on Acquisition
- majority of blog posts are about acquisition (next about retention)
- if you can improve acquisition by 1%, you get 3.32% growth; 1% retention = 6.7% growth; monetization by 1% = ~20%?
- tl;dr: focusing on retention and monetization has 2-4x the impact of acquisition
- continual pricing optimization gets you more growth
- growth doesn't mean more users, it's easier to charge better
How can we fix it? On a high level:
- Buyer Personas and Design
- Data Collection and Segmentation: ask demographic information, feature/packaging information (what do they need?), and pricing information (how much can they pay?)
- Data Consolidation and Analysis
1. quantify your buyer personas #
- understand your buyer from their perspective
- if you don't understand who's buying, how can you sell to them?
Ex: quilter box of the month club
- come up with types of customers (ex: Hipster Henrietta, Middle-Aged Mary)
- guess what you think the customers' values would be for your personas
- for each person you talk to, figure out which persona they are, then try to validate your assumptions
- if you aren't talking to customers, that's your new most important thing
2. implement a pricing process #
- don't do cost-plus pricing; your customers don't care what your costs are, they care about their own costs
- don't do competitor based pricing; your competitors probably didn't do this right either
- consider both of these things, then add the value your customers are getting out of it
- once you know who's buying your software, it's easy to design a pricing page - just chunk them into your three categories!
- QUESTION: how do you ask them how much they're willing to pay?
- don't ask them to rank a bunch of features on a scale of 1-10, ask them to rank them with max diff (forces them to make a decision; makes math easier "out of these 4 things, what's the most important, and what's the least important?")
- given a list of user personas and a list of potential features, you can survey with max diff and see which features make sense at which buyer level
- also gives you data for potential extra features
- usage sometimes coorelates with value, but not always (ex: accounting/invoicing)
How much are you willing to pay?
Vanwesterndort model (use ranges):
- At what (monthly) price point does [PRODUCT] become too expensive that you'd never consider purchasing it?
- At what (monthly) price point does [PRODUCT] start to become expensive, but you'd still consider purchasing it?
- At what (monthly) price point does [PRODUCT] a really good deal?
- At what (monthly) price point does [PRODUCT] too cheap that you question the quality of it?
took 8 hours and $1264 (http://aytm.com/ for $2 each)
- Evaluate your pricing every 3 months; make changes every 6 months: do that whole process again?
- once you have your data, make a decision
3. multi-price mindset #
- use a value metric (ie: 5 price tier based on # of videos on wistia): align to customer's needs, grow it with your customers (make sure you're capturing value from Disney), be easy to understand (users should see value immediately from pricing page?)
- fileinbox: could the value metric be number of files, or number of users?
- Focus on the right benchmarks
- Take customer development seriously
- Focus on monetization more than you are currently
- ask your paying customers or new ones? -> ask both
- are you literally asking pricing range questions?: ask open ended questions, ask for the top and the bottom
- "gamify pricing by offering 5% off for everyone they referred in the system?" -> maybe not, customers are probably already referring at their maximum rate. Maybe just give them a free bump in the value metric (like Dropbox)
QUESTION: is this for online surveys? in person? surveymonkey?
Attendee Talks #
Lessons learned from a Year of Product Demos at Drip #
- 1.0: screencast
- 2.0: manual calls and webinars; ask the users lots of open ended questions
- 3.0: systemized, one-to-one demos scheduled with calendly
- 4.0: custom demos (customize sequence of features based on what you know this particular customer will use), education (industry education, like how the whole process works and how it's effective)
- 5.0: workflows launched
- 6.0: demo-to-trial hack; at the end of the demo they can log in with the same account they got the demo on; free for 21 days
Execution: tools and automation
- service that does workflows? sales flow?
- calendly: schedule appointments, ping no-shows
- Zoom is better than Skype and Join.me
if you do demos, use an automated tool to schedule them
if you're just occasionally doing screencasts, start by doing a 10 minute video demo that gets sent out when they request a demo that says "schedule an in-depth demo"
patio11's favorite takeaway: Ask for credit card for demo account
0 to $25k -> $38k MRR with a productized service since last microconf #
- 6 figure exit
- drove/worked around the country
- audienceops.com: started it literally while at Microconf last year; launched in 30 days with 3paying customers
- making ~$500k/year :-o
Lessons Learned #
- big building blocks (right market, right market for you so you stay energized), not things that can be tweaked
- solve a big problem so you can charge more ("bigger than $49/month SaaS")
- how can you improve the fundamentals in your next business? (ie: dropbox independence)
- AudienceOps is totally independent, from writing -> editing -> graphics -> project manager -> customer
- firing himself from things he's been doing so he can focus on building
- What is one job you're currently doing that you should fire yourself from?
Focus on Building
- you're a builder, so build!
- you don't provide max value by pushing pixels around - focus on growth
- productized service model
- What would it take to give your business more time and oxygen so you can keep building?
How We Generate 1,000+ Signups a Week for Our SaaS Business #
- cofounder of Snapa - low value, so have to have high signups
- was working on Bootstrap Bay - marketplace for bootstrap templates
- skyscraper technique: find link-worthy content, make something better, then promote that effectively
- how do you improve things? make it longer, more up to date, better designed, and more thorogh
- ping your email list, and people who shared the original content
- did this with a list of stock photos and it exploded - got so many up boats, ranks on google
- what's already popular that you can make better?
- made a stock photo search engine and linked to it from the post
- takeaway: capture lead generation
- made a photo editor? integrated it in sites already getting traffic in different places
- takeaway: never stop optimizing
- capture influencers, like on twitter
We Grew from $5k MRR to $25k MRR in 12 Months and How You Can Too #
- hit $30k MRR on Friday
- asked Heten Shaw for advice: "What's working for you? Double down on that."
- when you're ready to hire sales people, hire two. On one of their first days, closed biggest deal in company's history
- got an actual office
- pays commission based on math of... where they want to be in salary based on their base salary? I don't understand.
- sales people don't like risk; pay them their comission right away, just adjust the percentage
- google: Jason Lemkin @jasonlk (source of information of this talk)
- closing skills outweigh demo skills
- hire a growth hacker
- they're still not profitable! keep pouring money into growth (makes sense I guess)
- google: Mark Suston
- Mark Suston: first hire should be an office assistant so you don't have to do stupid poop
Game ChangersThe Four Unfair Advantages for Faster SaaS Growth - Rob Walling
- looking at all the startups that Rob has access to and looking at outliers
- "I'll never start another self funded app without one of these unfair advantages"
- why did drip grow so much faster than anything else I've done? (out of like 9 things: beach towels, wedding toolbox, dotnotinvoice, start small stay small)
- looked at a bunch of companies from the Microconf community with Drip and came up with 4 unfair advantages to growing ~5x faster than most
Four Unfair Advantages #
- "The only real competitive advantage is that which cannot be copied and cannot be bought" - Jason Cohen
- ie: if you can't copy it, and can't buy it, it's unfair
- super good at web design? you can buy that
1. Be Early #
- most common, but temporary
- ex: Baremetrics, balsamiq $500k in first year, Bidsketch, WooThemes, Basecamp
- only feasible in small or emerging markets
- have to move fast
- being early can't be copied or bought
2. Who you know #
- your network of people willing to endorse, promote, advise, or intro
- ex: AppSumo founder was a super networker, Clarity two sided marketplace, wpengine got investors and hires easily, CartHook
- only unfair if others can't access them
3. Who Knows You #
- your audience, an existing customer base
- very very hard to copy or buy an audience that knows, likes, and trust you
- ex: SumoMe (from AppSumo), edgar (had a huge email list on how to build social media, then sold them an app for it; $100kMRR), KISSmetrics (crazyegg audience), LeadFuze, Drip
4. Growth Expertise #
- people with none of the first three can still grow stuff exceptionally, because they have tactics, strategy, and experience growing
- ex: Qualaroo, buffer, crazyegg
Not unfair advantages #
great design/UX: this can be bought and copied
technical or design skills: an advantage, but it's not unfair
money: you can buy money? lol
an uncopyable idea: maybe for Apple and Google, but no examples for self funded SaaS
only 2, 3, and 4 can be brought with you (it's hard to be early, and harder to reproduce)
*you can build your audience, network, and growth expertise
HitTail unfair advantages
- early? 1/10
- who Rob knew: 4/10
- who knows Rob: 5/10
- growth expertise: 5/10
Drip unfair advantages:
- early? 1/10
- who Rob knew: 7/10
- who knows Rob: 7.5/10
- growth expertise: 7.5/10
How they're a requirement for fast early growth #
How to improve yours #
- "how do you increase your score faster?" -> pick one that resonates with you and... start with it? lol
- "emerging trends?" -> internet of things, quad copters
- "why can't you buy growth expertise?" -> people good at it don't want to work for other people, vs. good developers take hired gigs
- "should I double down on what I'm good at, or improve something else?" -> depends
- "were your past failures necessary for Drip's success?" -> no, learned the most from doing something the first time
Lessons Learned Growing Keynotopia - Amir Khella #
- made a simple mobile app prototype on Keynote and it was pretty good
- wrote a post about the process and it got really popular
- threw up a half-baked product (asset kit?) in 3 hours; got first payment 3 hours later
- two months later: 20k visitors, 1.5k customers, 750 linkbacks
- 3 years later: 50k customers, 1.5k linkbacks, 4 products, 2 courses
Year 1: Experiment
- don't wait until you know what you're doing
- ask a lot of questions to your customers (how did you find out about us? is the price right? how are you using it?)
- $4 -> $150
- asked forums a lot of questions: "how do I do SEO? SEM?"; tried to learn what he didn't know when launching
- tell everyone who cares, but don't spam
- experiment with as many things you can measure: general advice may not work for you, so validate it's working; only try things you can measure success of
- always be testing (optomizely); they still run ~4 tests/week
- start a mailing list - they get 10x conversion on the mailing list vs. any other channel
- give them... information? then sell later; psychologically prepare them to buy
- educate, don't sell: Amir wrote a lot of explanatory posts and recorded a lot of video tutorials; piggyback on trends
- experiment with pricing, charge from day one; price based on the value you provide
- average time saved by Keynotopia is 10 hours and they charge "a fair fraction of that [time]": $150
- build relationships: can help you in the beginning (ex: app sumo)
- run deals, but make sure not to discount too much
- learn something about everything: coding, design, marketing, etc. Helps you hire the right people. Learn enough not to be BS'd by and communicate well with the people you hire (ex: create valuable content, not clickbait and spam)
- make lots of (cheap) mistakes
Year 2: Focus?
- 20/80 analysis: traffic is from good content and tutorials? Double down on that (ex: making more in-depth info products)
- improve and expand your product (ex: over-investing in making really good graphics only noticed by top 5% mavens)
- create a companion master class: just bought my product? here's a course to help you use my thing to make you better at your job
- share your stories: don't be scared of letting your competitors know your trade secrets; you'll learn more this way, and will be treated like a human
- communicate like a human (see: On Writing Well); don't be a corporate drone. Talk to your customers like you do to your friends.
- give your stuff away, but ask for a favor first (ex: product is $50, but you can get it for free if you tweet and you can actually pay $50 for it; don't "download", "add to cart" with price $0; part of checkout captures email - genius!)
- launched a hand drawn version of the product and used it as bait using technique above; got 50k new subscribers
- make less mistakes (less expensive than in year 1)
Year 3: Scaling and Growth
- decide what kind of business you want
- create a system: what's the user flow?
- hire carefully and slowly: don't grow too quickly (hire #1: ?, hire #2: manager, then assistants, programmers, copywrighters, programmers - still just 3 full time?)
- learn to let go. ie: fire yourself
- build stronger relationships: customers, bloggers, entrepreneurs, business dev.; experiment with lots of relationships and see which relationships are helping you grow your business
- help and mentor others: share your stuff (see: Derek Sivers book on sharing stuff); you can help people the most who already know who you are and what you built?
- create your mastermind group in different circles; hold you accountable, clarify ideas
- find hidden opportunities: create a suite of products and upsell customers (ex: status panda)
- learn by doing, don't wait until you're ready
- be of service: it's hard to fail if your goal is to help others
- don't burn out: make a lifestyle business if that's your thing
- google: scientific american article about burnout
- scientific american article about burnout: it's not the amount of time you spend working on it, it's the amount of time you spend thinking about it when you're not working. ie: work hard, play hard - find ways to disconnect completely
- scientific american article on burnout? -> http://www.scientificamerican.com/article/you-can-conquer-burnout/
- bundles? -> ?
From Funded to Self-Funded: The Story of WeddingLovely - Tracy Osborn #
@limedaring (not @limedarling)
- lots of good things, but also lots of burnout and depression
- raised money, also bootstrapped
- overall, the business just went okay, and that's okay
- built websites in the 90s for $50 each (never delivered on one of them lol)
Lessons learned regarding cofounders
cofounder mixers are just nontechnical people looking for technical people
found a technical cofounder; got a YC interview, but cofounde dropped out right after the interview, thankfully didn't get in (lol)
don't let lack of a cofounder hold you back
Met for lunch with Jeffrey Zeldman - host of The Big Web Show, and got featured in episode 17: Web Meritocracy
don't be smarmy: look at meetings with important people as making a new friend
featured in Swiss Miss, then got all her stuff stolen in Rome lol
- have an MVP live as early as possible
- always be networking: you never know what connection will create a new opportunity
- founder of Designer Fund was posting events he was at, and Tracy stalked him until he funded her (which was only $5k grant?)
Lessons Learned regarding writing
- "I'm a designer who learned django and launched her first webapp" - became "the hacker news weddings person"
- "hacker news wasn't my goal, there's not a lot of people getting married there" (lol)
- "you're a cockroach! you'll never die! you're in."
- write as much as possible - the good and the bad
Bootstrapping vs. Funded company
- her husband went through YC?
- in funding, if you have revenue your mystery is gone? vs. that's the goal in bootstrapping?
- $50k for 5% is hard to turn down, so she did it
- husband: Andrey Petrov @shazow made SocialGrapple, acquired by google in 2011 "gives Twitter users interactive charts and better data representation of Twitter statistics", also Briefmetrics - oh shit I met him!
- acquisitions: establish expectations early on when in talks for acquiring (she got an offer that was super low?)
- the downslide: no hockeystick up and to the right; started losing money, fired employee, cofounder left
- lesson 6: never give up, never surrender (at least I don't have to pay anyone anymore! Let's go back to a bootstrapped business!)
- lesson 7: minimize your expenses for a longer burn rate
- wrote two books: "hello web app" and "hello web app intermediate concepts"
- liked shifting focus to a second business after feeling burned out
- got investment money again lol "it's hard for me to turn down checks"
- doesn't want to be the AirBnB for weddings? took another $5k from a friend and tried to relaunch it, but because she's been around for 4 years and is a "solo female nontechnical designer first-time founder", didn't check a lot of boxes
- couldn't pay back investors (but 500 startups didn't care)
- lesson 8: don't waffle between funding and bootstrapping - they're different games
- website costs nothing to run, and it's still growing, so it's still going on! woo cockroach
- lesson 9: hire remote workers and VAs (http://www.onlinejobs.ph/)
- lesson 10: automate as much as possible (like automated email course)
- she has a form that her VAs can fill out that trigger emails to customers that... can't be done completely automated? something about being featured
- uses Briefmetrics, built by husband Andrey Petrov
- it's hard to juggle all the different hats (marketing, design, etc.)
- when you want to be acquired, there aren't any acquirers
- $68k on stripe; feels like a con
- now is working for salary? lol
- launch an MVP ASAP
- always be networking: you never know what person you'll meet that will lead to the next big thing
- hustle if you want something, don't shy away from working for it (ex: stalk someone you want exposure to)
- write about your experiences, good and bad: writing leads to more opportunities
- if you have an acquisition inquiry, make sure you're on the same oage to save everyone's time (would've saved 6 months of wasted time - establish a baseline number early)
- never give up, never surrender - be a cockroach!
- fail fast
- no shame in lifestyle businesses
- cut your expenses as much as possible for the longest runway
- don't flip flop between bootstrapping and fundraising - once you change to fundraising, it's really hard to go back to bootstrapping
- use remote workers
- automate as much as possible: save mental cycles to focus on bigger picture things
- not an outstanding success
- would she do it again? yeah #noregrets
- "do you regret the flip flopping, or taking funding?" -> both, would've saved time if she didn't fundraise (8 waisted months of fundraising); bootstrapping is simpler
- don't give away lifetime discounts
- steal Drip's demo process (get something for giving credit card)
- overhaul pricing
- sell the job to be done, not the tool
- you'll hear a million things to do, but keep focus
- choose what you're doing well and double down
Patrick Collison #
- "this is the one conference I really wanted to go to this year"
- patrick asked rob "what would make this a win for you?"
"in the early days of stripe, was it harder to build the tech or overcome the red tape?"
- built an MVP on existing systems; didn't solve the hard problems right away
- from MVP and first user, it took 15 months to get proper banking and financial industry deals
- john and patrick previously worked on a YC company (instant domain search?) that got them a good network
- made offline wikipedia apps that helped them pay for school; got excited about offline apps
- "$20/month on slicehost, which I still miss"
- funded for 9 months on savings
- started building a product for a single client (280 north?), built things as they needed them
- built a lot on trust and taking bets
- raised money from Peter Thiel
"You can't really bootstrap a Stripe because you need credibility"
- yes; in this industry no one takes you seriously unless it looks like you'll be around for a while
- we believe that charging people for things is better than advertising
- "/dev/payments" started getting more interest from people outside the target audience
- admires Peter Thiel for initial $200k investment for scrappy college kids complaining about paypal (lol)
- "fundamental enabler of stripe"
"Was word of mouth channel your primary marketing? What did you do in the early days?"
- I've only bulit one business to scale, so it's hard to generalize
- advice he gives: in the early days, businesses tend to over weight analytics and underweight subjective experience and uncomparible high bandwidth data from watching people use the product
- they'd obsessively observe their early customers, ask them to speak aloud their frustrations while looking for things, and tried to find ways to build this dynamic into the product
- in the early days, every single interaction from their customers triggered an email, so they could see errors in API usage, and things they were trying to do
- rather than sending a support request, they added a box at the bottom with a thought started that would send them an email "I really wish this page had..." "the worst thing about this page is..."
- spent two years in this high bandwidth feedback iterative loop
- because of high barriers to entry in the industry, it was easier to build a product that was 10x better than in eg. project management software
- "obsessively watching customers use product (?) and then fixing the things that were stupid"
"What did growth look like? What traction channels did you use?"
- it's difficult to predict growth (ex: instacart founder signed up with a random gmail address)
- they could graph how many gmails addresses sign up, but it was difficult to quantify
- cgenco: you can't optomize something (convergent thinking) until you've explored all the options (divergent thinking); ex: get lots of high bandwidth feedback before focusing on metrics
- we've gotten more effective at deciminating good advice; the world has gotten better at reacting to that
- by being active on HN, etc. they optimized Stripe communication with the people using it; made things they wanted to read
- "write things like you're writing to your friends"
- arguably, they just focused on building a good product
"What metrics did you look at early vs. today?"
- looked at general cash flow, but that's like looking at a patient's heartbeat - you can't infer a lot except whether or not you're dying; high latency
- qualative measure: asked people building cool things that took in money what payment system they were using, ask why not stripe
- still looks at what cool people are using now, because it's a good indicator of what's useful in the future
- start out looking at qualative measures, quantative measures come later
"Are there things you wish you could do over?"
- there were low points
- no matter what happens to stripe, Patrick would't start another company - it's emotionally taxing
- you get some number of years to be really invested in it (some people have longer); Patrick feels like he has 10 years in the building phase
- there are other business that aren't as fun - Stripe gets to work with entrepreneurs!
- the world surprises you with how many things can go wrong
- "woke up this morning to an email and said shit, that was a piece of bad news I didn't know I could get"
- you can be lively and "polyanna ish"? and skip along merrily when bad things happen, or have them really weigh down on you. You need to be in the middle so you can handle failure, but still care about it and fix it. "ostensibliy function as a normal human most of the time"
- "there have definitely been evenings when John and I have had to console ourselves in different ways"
- "if you're hoping for a blissful existance, neither path is good"
"Do you have any big decision regrets?"
- broadly speaking, do things that don't scale. If there's something that needs doing, fight hard, roll up your sleeves, and do it
- nothing is anyone else's job, nothing is beneath you. You've been hired in a particular role, but the things you do will change
- maybe they weren't disciplined and rigorous enough about making things scale
- "if we need to 10x next year, I'll work 10x harder!" doesn't scale
- sometimes they were behind the curve on scaling
"Stuff that felt like premature optomization would've been a good decision in retrospect because you were growing so quickly?"
- right, but this might not be good general advice
"Is EFT coming?"
- I'd love to hear more stripe feedback
- EFT: ACH, Southby in Europe? BAX in UK
- just launched ACH in US
- behind the curve in marketing function - helpfully telling people about things relevant to their interest that they didn't have before (ie: needs to use Des's advice)
- "Every time I talk to Des I get physically itchy at failing at all the things we should be doing"
Attendee Talks #
@NathanBarry ConvertKit.com #
- "I did what anyone that gets good advice does, and that's wait six month without doing anything"
- do you still want this as much as the day you started? if so, have you given it everything you can to get it to succeed?
- Double Down
- invested $50k (on an app that was floating along at ~$1.3k MRR)
- hired a team
- focused on a niche
- started direct sales
- the problem with selling through content is you get rejected every day without knowing why -> do direct sales so you can see why you're getting rejected
- direct sales: list prospects -> cold email ("Is anything frustrating you with MailChimp? I run ConvertKit, which is an email marketing platform for professional bloggers. We've got a lot of great bloggers using us like Katie and Seth from Wellness Maama, Pat Flynn from Smart Passive Income, and Leo Babauta from ZenHabits. If you have a little time this week I'd love to show you inside ConvertKit. Talk soon, Nathan") -> call
- do it for any size account - it's about learning what works and doens't work for that market segment
- had to overcome a lot of inertia: nobody wanted to switch email providers
- "it's not that hard, trust me, I'll do it for you for free" no matter how big the account; "concierge migrations"
- took away the biggest objection
- kept track of leads on Trello - realized he was bad at it.
- "I've been trying to get you to [follow up with leads] for years" -ryan
- up to $14.3k MRR
- focused on messaging; "the power of infusionsoft but easier to use than MailChimp"
- added channels to direct sales: word of mouth, affiliates
- since July, $15k -> $180k MRR growing $30k/month (wow)
- do things that don't scale, because they enable channels that do scale
Creative Twitter Marketing Automation in 15 minutes/week by Ryan Battles #
- time tracking app for freelancers, content marketing
- "some people might think it's the bane of the internet"
- 1.3 billion twitter accounts, most are probably automated spam, 44% never tweeted, 43% tweeted over a year ago (13% left?), 29%/377M check twitter daily (lots of lurkers)
- 33% of ryanbattles.com traffic comes from twitter (google #1, email #3)
- doing marketing automation for people in the waste industry, "so I can do anything"
- twitter actions: favorite, follow, retweet, mention, add to list, direct message
- against DM automation
- automates with IFTTT (ex: if someone tweets about the waste industry, add them to a waste management list) and Crowdfire (makes it easy to... follow people that you follow? semi-manual)
- toread: Become a Technical Marketer (Ryan Battles #microconf)
- Become a Technical Marketer teaches you to use python for twitter automation
- python anywhere: upload a python script on cron
- keep under 100 touch points (200 is too high) per day; don't be too aggressive
- example script: unfollow 50 non-followers, follow followers of others, follow keyword tweeters, favorite @your_username, favorite article sources
- automate content: buffer (spreads it out over time), edgar (same as buffer with repeat queues), quuu
- twitter cards can add people to an email list in one click from a tweet:
- case study: case study and slides
- buffer (queue) up relevant content, even retweets
- @mention other people
- "engage with" list
- always reply to @mentions
Lessons From Manually Onboarding Out First 50 Customers #
Ben Orenstein @r00k
- cool clapping thing with hands
- did something in a hackathon? (briefs? something with podcasts)on a whim decided on manually onboard to see users signing up
- set up 6 30 minute calls with people "interested in signing up"
- you cannot evaluate your own product - you know it too well - things you think are clear aren't, and your onboarding probably doesn't make sense
- tried iterating after demo #1, realized they didn't improve anything
- made different changes after #2, and #3 went a lot better
- #4, #5, and #6 were each better than the previous
- if you have not watched a stranger sign up for and try to use your product, do it. It's going to be painful and you will cry you don't know the weird bugs people are running into, that your site doesn't work on firefox on linux, or with the user's password manager - you'll cry about the money you left on the table
- don't spend a huge amount of time on this - you only need to talk to ~5 people
- two major things: page title, button text
- "people would ask me if they could change it later with their mouse hovering over the micro copy that says they can change it later" - what's the core problem? anxiety
- don't make people name their podcast - just remove it from onboarding and call it "Ben Orenstein's podcast" - defaults are great: it's easier to edit something that's already there than come up with something new
- people want to read as few words as possible (cgenco: but what about long copy landing pages?)
- "by the way, what are you expecting to pay for this?" - sometimes they said 2x more than they were charging, so they made a feature that let them change the pricing page in 30 seconds, so they experimented like crazy
- if you know it's a pain to change pricing, you'll push it off (like putting gym clothes out)
- make it easy and you'll do it more: change your prices without deploying code
Kai Davis #
- podcast tours
- slides and stuff at the end
- Who your best buyers are
- Increase in podcast listeners in the market
- Power of influencer recommendations
1. Best Buyer #
- "Best Buyers are buyers who buy more, more often, at a higher price" - Jay Abraham, Strategy of Preeminance
- "There are fewer best buyers than there are all buyers that that means it's even cheaper to focus on them than on all buyers" - ?
- optomize for just the best buyers
2. Growth of podcasting #
- Since 2008, 9% -> 17% of americans have listened to a podcast, but we're nowhere near market saturation (not like google adwords)
3. Influencer Endorcement #
- Blogs and influencers rank among the top five 'most trustworthy' sources - Technorati Media
- toread: Pitch Anything
- "The first impression we make on another person is based on that person's calculation of our social value" - Pitch Anything
- Star power: authority/trust you've built up
Putting it together in Podcast Tours
- market just to best buyers, to a growing market of podcasters, to grow your reputation => podcast tours
- Reach Existing Audiences
- Make Direct, Personal Contact
- subscribers from podcasts are some of the best
- to identify good podcasts to be on: search iTunes API, cast.market, stalk your colleagues and see what podcasts they appear on (ex: google
intext: ...to see podcast someone has appeared on)
- make it easy for a podcast host to say yes
- Kai wrote a book about this: podcastoutreach.com
The Developer CEO - Peter Coppinger #
- "Topper" - super cool guy I met last night. Making $12M YRR? I thought it was way more
- fo-founder and CEO at teamwork.com @irlTopper
- Topper is a terrible CEO because he loves programming
Part 1: The Hamster Years (1999)
- Digital Crew web dev agency; thought they could get rich doing client work
- 2006: running out of runway
- tried CFTagStore.com - selling to developers? (devs don't want to buy anything)
- tried Akari Software - enterprise software for a city? "enterprise software sucks - I'm happy to be out of that space"
- 2007: 12 months left
- doubled prices, charged for feature creep, and the consultancy started making money
- started getting disorganized. Moved from whiteboard to trying existing software to finding a few key painpoints (like adding a due date and file to a task) and scratched their own itch (Rails guys were dismissive, which pissed him off)
- "we called eachother Ted for some reason"
- "we can make a much better product here" -> "Ted, I've been thinking the same thing"
- tl;dr: consultancy sucks, but sucks less if you charge more; don't target small market; don't sell software components to devs; consultancy-ware software isn't fun to build or sell; treat your customers with respect and listen to their suggestions
If you Build it They Will Come, Right?
- busy with consultancy for 6 months, so devoted Fridays to working on the product (like 20% time)
- just started hacking (no product design or specs), but they had experience behind them making stuff. Also they were the customer, so they knew basically what they wanted, but still would've been better if designed
Preparing for Launch
- eat your own dog food - they could fix pain points quickly
- "teamworkPM.net" - "holy shit this is so bad" (teamwork.com was 20M, but getteamwork.com is still available lol)
- worst project launch ever: no audience or PR, no email sent
- marketing?! psfh - just hackety hack!
- don't use "easy", "most powerful" - this doesn't mean anything to the customer
Did 3 things right:
- built a great product
- treated customers like honored guests
- took every suggestion onboard
Riding the long slow SaaS ramp of death
- $181 in the first month; 3 customers in the first month
- a year later made $13,017
- never considered self-funding - it's super cheap to make software (ex: $23k server a few yeras ago -> $100/month on AWS)
- developers don't need money
- august 2012
- site running on Digital Ocean crashed, hit refresh button 1k times, nobody answering their phone
- lesson learned: go with AWS
didn't hire deliberately; sat on too much cash
waited until 63 people (last year) to hire an HR person
didn't have marketing until 3 years ago
didn't build a sales team until 6 months ago
50 months after launch, hit $1M YRR
part 2 tl;dr: start building now, start with R&D not coding, stand out (don't be the easiest or cheapest), ...?
Part 3: Growing Up
- hockeystick event was acuiring teamwork.com domain name
- guy who owned it was super rude
- "I nearly wet myself with excitement" when he got $675k buy offer
- domain paid for itself in one year
Be the CEO
- took a work vacation to New York to code the next product for 6 months, ignored the company and it fell apart ("nobody knew the vision")
- Meetings Suck, but get over it. At least 4 times a year, bring everybody somewhere different and identify the problems in the company
- "it's my job to fix the company and set the vision"
- sculpting our culture: happiness officer, "don't be a dick" in knowledge base
- process: ?
- nobody has all the answers, not even the CEO
- trust others and let go
- switch to open book (everyone in the company can see finances) and implement the great game (if the company hits goals, employees can 2x or 3x their salary)
- toread: the great game of business (encourage every employee to think like an owner)
Part 3 takeaways: be the CEO, hold quarterly meetings, set the vision, establish culture, establish processes, you don't have to have all the answers, trust others and let go, try "The Great Game of Business"
- "could you have released something leaner?" -> yeah, we should've, but we did everything wrong
- sales? -> started getting people asking for demos?
- "did integrations help growth?" -> yes, each integration = more growth
- "how do you know that the domain name caused the growth?" -> I didn't really do anything for another two years. It was about credibility (stronger brand; "teamwork.com" is sticker if you say it in a bar)
- "could it be that your mistakes were the right thing to do?" -> we had a strong product, but I did most things wrong
- "?" -> dont want to answer
- "what will you to grow more?" -> building software suite, experimenting
- "could you have grown your consultancy?" -> yes, but it wouldn't have been passive
- "could you have hired a CEO" -> not really; vision and leadership should come from founders
- "was the teamwork.com guy still a dick?" -> no, when we were ready to give him $675k he was pretty nice
- "why the great game of business?" -> greatgameofbusiness.com; for manufacturing companies, but applicable to anything; about being transparent; every department gets one true metric that matters for them; each team plays a mini game (ex: increase conversion rate by 5% in two weeks; if they hit it, they get a reward)
The Three SaaS Growth Levers that Keep you From Plateauing - Lars Lofgren #
- growth expert for I Will Teach You To Be Rich
- 3 steps, must be done in order: Churn, Acquisition, lead gen?
1. Churn #
- target <2% monthly
- 3-5: not there yet, double down on product and onboarding
- 5-10%: you have a major product market fit gap
- bad: remove self cancelation, reach out to inactive accounts (just remind people they aren't getting value; will double churn)
- marginal: push annual plans (helps cash flow, slightly reduces churn), downsell campaigns, support ticket prioritization (yes, esp. for top customers, doesn't impact churn a ton)
- major win: fix onboarding and improve product value/product market fit (hard, but this is the key problem), 30/60/90 goals
- Some situations ("mid market"?) where forced annual works really well; sometimes backfires if there's not "an established norm"
- P/M validation: "How would you feel if you could no longer use [product]? very/somewhat/not disappointed" - Sean Ellis; at least 40% should say "very disappointed"
- as customers grow revenue, you should capture more value from them; depends on the quality of your pricing metric - you should clearly segment on (ex: salesforce per user - clearly worth it and clearly follows company growth; go to webinar attendees makes sense, but not organizers because it has a weak coorelation with revenue)
- match your pricing metric as closely to your product value as you can; segment pricing on a variable that strongly coorelates with your customer's revenue
- Expansion engine + low churn = negative churn; revenue from each cohort expands faster than the revenue lost from that cohort
- recap: focus on P/M until negative churn and growing without sales, find pricing segmentation metric to easily capture value, now acquisition has 100% upside
2. Acquisition #
- reminder: you better already have churn and P/M figured out, so you'll have strong word of mouth already
- lots of lead gen: inbound and content funnel, cold calling and outbound, events, partnership, paid marketing, PR, Affiliates, viral loops
- any strategy can work if you get the execution right. Once you find something that works, double down until diminishing returns
3. Lead Generation? #
- look for 10% month over month lead growth
- why not do this earlier? acquisition can't outrun high churn; if the majority of your acquisition goes to replacing MRR you'll plateau
- marketing can dodge a bad product (hiding the product behind clever marketing), but sales can't
- the alligator funnel is nasty - marketing and sales will blame each other ("you're generating shit leads!" "you can't close!" - it's really the product team)
- Make sure you have P/M fit and low churn
- Get cohort expansion in place with a great pricing metric
- Build your lead gen machine at the right time
- "I'm at 12% churn - what should I do?" -> ask serious questions about the market you're in - you might be looking at a pivot. Talk to your customers.; some industries have large churn (like surveys); look for a product/market fit that solves top three problems
- "are you talking about post 60 day churn?" -> look at it; if it's super different there's low hanging fruit in onboarding
- "fremium vs. free trial?" -> really different; used to hate fremium but works for mixpanel; support is harder in fremuim
- idea: 30 day free trial without a credit card? extend it with a credit card?
- "forced annual?" -> works in b2c; try different pricing for a month; already at 65%? definitely force annual
- "onboarding at KISSmetrics?" -> no quick wins; everything is different
- "companies in setup fees vs. annual plans and how that affects churn?" -> if you can charge setup fees, do it. Enterprise expects it.
- "do your minimum churn rates hold for ARR?" -> no; you need an equation
- "would you combine freemium with free trial?" -> no; one or the other. Your funnel (and company) have to be designed around it
- "examples of when per-seat makes sense?" -> are your users going to be able to share a login? if they can they will (ex: kissmetrics is just analytics; nothing personal; product doesn't change based on who's logging in; same with survey tools); if you charge per user your app has to depend deeply on unique user accounts (like gmail, slack, CRM)
- fileinbox: assign particular uploaders with particular recipients
- "pricing for a course?" -> sell it all at once, not as a subscription
- "multi-variable segmentation?" -> it's hard
- pricing is hard
- lower your churn
- focus on onboarding
- all of our businesses are currently on fire (lol)
Closing Reception #
- Mike's sales app: blue tick?
- Patrick Collison: above $50k/year doesn't matter. Ask him what economics book he's reading
- Recap: https://docs.google.com/document/d/1EefLjujm3TW0oL21XvstCx7OuUfwmcJsASvakyhZ2LI/edit#heading=h.dj82bckv2ge6