Why your product stopped growing (and the 5-step framework to restart it) | Jason Cohen

24:59And so is it your fault for picking the wrong ideal customer profile or target segment? And so, yes, that one case of that one project, that's not your fault, quote unquote. But by saying that, you're just like ignoring the fact that there is maybe something to do about it. Now, all this is maybe. None of this proves you should like change your market, right? But when you say there's nothing we can do about it, you are closing the door on these things that might be the right thing. And very often, as I think probably a lot of people here on this, on this listening to this, know the market segment you pick has a lot to do with your retention rate because everyone acts differently.

25:36Right. And so anyway, so I know it's a, it's a lot on this topic, but I just feel constantly people make this particular mistake of not, not getting, you know, not just like abdicating responsibility or just listening to the first thing they, they hear and saying, that's the reason and that's not right. So that's, that's the big thing about listening. Another thing is you got to ask when people are in trouble, but not yet canceled, you might be able to save them. You certainly can learn more because you can talk to them like they're not shut off yet from you. So this might be, they never uploaded their data.

26:12So they're not being successful. They are calling tech support too much. They're in trouble. They're calling text word enough they're not engaged um they didn't log in for a while like there's all kinds of things where where now of course this is all going to the details are going to depend on the product obviously but there are signals that are correlated with cancellation now if you have a lot of data you can literally correlate signals with cancellation and try to extract that um you know you know precisely but even without data you can guess and guessing and having a theory acting accordingly and as you get more data adjusting your theory this is a this is a wise way to proceed even without data.

26:48So if you can catch them when they seem like they're off the happy path, they're in trouble, that's a better time to do it. And then the last thing I would say about this detection is if you don't know what to do or all else being equal, then focus on onboarding. Almost all companies have a whole lot more cancellation in the first day, 30 days, 90 days depends, right? But the first period, then the whole rest of the customer's life and also small changes in the onboarding can have large effects on cancellation. Whereas later on, that's not necessarily true. It could be, but it's not necessarily true.

27:26So a really dramatic version of this is if you've ever done YouTube videos, which I mean, I know you have, but if a listener has ever done a YouTube video and you see the retention quote unquote of the, of the viewer on a YouTube video, it has this thing where it falls like just so much you can't believe in the first 30 seconds. And then if, if it's a decent video, it'll flatten out as people decide to watch the video. So in that, in that crazy looking curve for the people that have watched it for 15 minutes, maybe there's something you could do to keep a few of them staying to the end, but that's not going to change very much how many people get to the end.

28:00Whereas like for me, I've only done a few, but what I see is about 50 % fall off in the first 30 seconds. Well, if I can get that from 50 % to 55 % stay, that's an additional. And at the end of the line, I only have 20 % still there, which is pretty good for a longer video. But if I get it from 50 % to 55%, I might get it go from 20 % to 25 % staying. In other words, if I shift to 10 % at the front, which maybe I could do, like I can't be dramatic, but maybe a little, then in the output, I might be able to increase it by 20, 30%. So that's a huge change. And so the SaaS equivalent is, as we all know, if they leave early, not only is it bad, but it's super unprofitable because you spent all this money to acquire them and then they never stayed around long enough to pay it back, much less to be profitable.

28:46So if you can do a little bit in the onboarding or shift the onboarding percentage a little bit, it pays off enormously in revenue and profit over time by by making them successful. And so again, if you don't know what to do, onboarding is a good bet. And even if you do know what to do, I'll still bet that onboarding is a good bet for where to go. Oh man, I'm so happy we're spending so much time on this very specific first step of LogoChurn because the way you described it is so visceral. You've spent, it took so much. It's like impossible how far this customer got already. Like they are using your product and understand it mostly and then they still decide to leave so brutal the way you're going to believe them when they say it's because of the cost right like it just doesn't even make sense when you put it that way right so let me uh let me kind of uh summarize the advice you shared here because this is so good so step one is look at logo churn the way to understand and essentially to understand how big of a problem this is and why you need to spend time here is uh look at this basically do the math how many new customers you're getting divided by the cancellation rate.

29:56And that essentially tells you what's like, if that doesn't change, what's the maximum number of customers you will ever have. Exactly. That's going to be a sad number. And then the question is, okay, cool. How do I reduce the cancellation rate? Obviously, as you said, everyone wants new customers, more new customers. Yeah, and I know you're going to do that anyway, but you got this cap. Exactly. Okay, so a few things you've shared here. One is, instead of asking people multiple choice, why did you decide to cancel? you make it freeform, and you make the question, how would you say it? Was it, what made you cancel?

30:25What made you cancel? What made you cancel? Great. And then you could use AI to help summarize these things, I imagine, instead of... Yeah, I think what I find with AI is this, with this sort of thing, with surveys, is this. AI is good at picking out themes. It is bad at picking out details that are actionable. When I say AI, of course, I mean LLMs, which is probably what we mean when we're looking at natural language, right? And if you think about it, it sort of makes sense because the LLM is an averaging machine, right? It's predicting the most likely, that's an averaging kind of a thing. And so when what you're looking for is a kind of average, it's usually pretty good.

31:06So summarization, topics, themes, but when you're asking for like, what is interesting and not average, it's actually pretty bad at it. One way that I found that's sort of useful is yes, I'll ask it about themes, but then I'll say now pick out every specific detail that goes under one of these themes, put it along with like which customer said it and the link to, you know, blah, blah, blah. So you have to play with this to tune it. Right. But like that kind of thing, so that a human being can then still see the detail, which is what triggers in your mind. Wait a minute, but that means we should do that.

31:39Right. Cause the topics won't do that. The topics will be, I already know what the topics will be. It'll be stuff like I couldn't figure out how to do this, this integration, right? Like the topics are actually not going to be that surprising. Probably it's the details that are going to be the triggers for action, actionable stuff or patterns or something like that. So yeah, AI is not useless, but it's not as useful as it sounds. It's probably still a good idea to just read all this stuff. Although AI might be able to clean up, you know, maybe people's grammar is bad. It's a weird language. Okay.

32:13Yes. Like that's annoying. could clean that up but i wouldn't rely on ai to do the thinking for that reason that's such such good advice i actually have a really cool guest post coming out soon that gives a bunch of really specific techniques to avoid ai uh hallucinating or just giving you really bad uh results from this very specific synthesis work because it turns out ai is very uh not great at actually being honest about some of the stuff so that's going to it if it comes out before this and like i think in real life most people don't have that much the volume of these cancellations unless it's like a super consumer app is not that high so you don't even need a for this just like read it and then this is like it's like way to your next piece of advice which is uh essentially the five whys but not the five whys where you kind of force yourself to dig into what's the real reason that forced them to cancel it's probably not pricing it's probably not the project ended there's something deeper yeah and then uh advice number three is try to catch people early try to catch them before they You can churn.

33:13If you don't have a lot of customers, it's a lot easier. If you have a lot, it's obviously harder. There's always been this like holy grail idea of a product that just like watches metrics and tells you this person's going to cancel. I haven't seen that. What I would say is it is not hard. You don't need a lot of customers to go talk to the ones who are in trouble. You do need a lot of data or customers to mathematically know what behaviors are correlated with cancel and therefore to spend your time wisely. then you need a lot more data. But to your point, even if you have the data, it's not entirely clear whether some kind of mechanistic thing is all that important.

33:49One way I look at it is, you know, it's very common advice. You should try to get more good customers and fewer bad customers. Of course you should. And so therefore they say you should see what the good customers have in common, but that's not the end of the sentence because a lot of the things that good customers have in common, they also have in common with the bad customers because it's just what your customers do just what anybody does. So it's what the good customers have in common that are different from what the bad customers have in common. Okay. So with that in mind, this kind of like, it has to be both or else you're, you're sort of not getting, you're just getting correlations that are, that are not helpful.

34:28The cancellations or talking to people who are in trouble is, is another application of that. So what is correlated with people who actually end up canceling, not just what, you know. And so I think that mindset is correct if you add the other side of that to it. Really important nuance. Yeah. Okay. And then the final step just to close this out is onboarding, work on onboarding activation. Something that's one of the most recurring themes on this podcast is just the power across every dimension of improving onboarding, improving activation. Yeah. Sweet. Okay. So this is just step one, which is already full of gold if your growth is slowed.

35:04So step one is focus on your logo churn, the number of customers leaving, people leaving, actually canceling your product. So I kind of look at it like a question. So like the first question is, are people leaving it too much? Because if your monthly cancellation is 2 % for S &P, that's good. So you could try to work on it, but since it's already good, it's still probably a good idea to work. It's probably a good ROI for you to work on it, but it's possible that you've got diminishing returns and that this isn't really the reason where it's not really reasonable for it to go. I mean, how low can it go for SMB?

35:35Like there's some floor and you might be near it. So the first question is like, is logo churn too high and trying to set a threshold that, you know, lower than what people normally want to do. So the next question I have is, is the pricing correct? Which of course, pricing is a perennially interesting topic. I know there's this funny thing of, especially with newer companies that the pricing is always too low. It's not always, but like, that's the common thing. Patrick Campbell, who has 4 ,200 data points about startups, let that sink in a little, has this great quote, which goes like this, your prices are way too low because you just guessed and you haven't changed them.

36:15It's like, yeah, if you really like look, look deep within you realize like, yeah, or we just picked whatever our competitors are doing and, and, and that's it, or we added or subtracted something because reasons. Right. That's probably not good. And people are scared to rate prices for obvious reasons, but if we set aside the emotional reasons, whether they're correct or not, the sort of economic reason people normally give is they have in their mind this microeconomic supply and demand curve thing. And the demand curve says that if you raise the price, demand goes down. That's why demand curve is always going that way, right?

36:48And so they understand. I think everyone understands, right, but maybe you raise prices by 10%, but signups go down only 5%. So overall it's better. But the opposite could happen too if I'm on the other side of the demand curve. And okay. So that's how most people think of it. However, this is not how it works. So that's how it works in microeconomics 101 textbooks. That's not how it works in the real world often. So what often happens is you raise prices and signups don't change. When I say signups, I mean they're like signs per month, you know, the rate at sign or signups go up. This happens all the time.

37:27Even for like solopreneurs on Twitter who have, you know, strange projects or everything happens all the time. They raise prices. They're like, I was scared, but then signups went up. I once talked to a guy, this is really funny. I'm going to not say the name to protect the name. So he had a product that he was selling essentially to enterprise and government, so larger companies. And it was, to me, way too cheap. So he said something like, yeah, I charged$300. I'm like,$300 a month? That's not enough. He goes, no, per year. I'm like, okay, wait. I said, okay, just do me a fit. How many signups do you get a week?

38:04And he's like one or two, because this is enterprise and it was a startup. I said, okay, just for fun, just change it from per month, per year to per month. So in other words, we're 12 X-ing the price, right? So he did, and he still got one or two per week, like nothing changed. I'm like, okay, what are you going to do next? And he goes, oh my gosh, well now I have so much more money and profits. I'm going to like hire an engineer. I'm going to do this marketing. And I'm like, time out. what you're going to do is raise prices again. Like you just told me you, you 12 X to the price and nothing observable changed.

38:42That means you're not near the price yet, right? You're going to, you don't have to 10 exit again, necessarily. Maybe two X, maybe 50%, but like you're not done. I mean, you can do this other things too, but you're not done with the price. Like it didn't even occur to them still. Okay. So why does this happen? Um, the reason is that pricing selects the market. So if you only think of the market as people with very limited budgets, barely can do anything, not getting much value out of it, then it is true that if you raise prices, you'll get fewer of them because they were never getting that much value out of it anyway.

39:17They don't have that much money. So if you raise prices, they're gone. But think about just even a midsize company, forget about enterprise, just think about a company with a thousand employees and 400 million in revenue or whatever. And if they see a product that's$2 a month or even$100 a month, their thought is like, well, that can't be good enough. They're not mature enough. It's not going to do enough. The support's not going to be good enough. They probably don't have good governance policies or other things that we need, et cetera. Whether that's true or not, this is what it looks like because it's low quality, cheap, whatever, aimed at SMB.

39:51So they just won't buy. They're not in the market for the thing. So it's not true that they have this demand curve where, oh, since it's cheap, they all want it. That's what microeconomics curve says. It's so cheap that they should all want it. No, they don't. None of them want it because it looks bad. So as it gets into a price range that makes sense for the kinds of things that they need, then their demand actually goes up. Then it can stay up while it's in a good range. And then of course, at some point you are priced out of them. That particular kind of company is like, I'm not going to spend$10 million a year on it.

40:24Are you kidding? So yes, it does slope down and go away. So it's not a normal curve, but it is like it slopes up and then it's something and slopes down. Who knows exactly what shape it is? Probably none of us know. But it's more like a mesa and not a line that goes up to down, like in the textbook. For that market, it's only the very lowest, you might even say worst in terms of metrics, end of the market that has the microeconomic slope that you're worried So what happens is you raise prices and you enter a different market. And that's why the signups go up or okay. You leave behind perhaps a worse market anyway.

41:01And of course, everyone will tell you, you know, the more they pay, the higher retention is. And, you know, like all the, all the kinds of stuff goes better when you, when you, when you charge more. so this question is pricing correct this is kind of what what's in my mind when i ask that question it's like probably the answer is no because pricing is very hard it's just as much art as it is science um you've had some really good people on here on pricing in fact so good that i've bought some of the books that those people have talked about because i love i love the interviews right so so like um so i believe in all that no problem no problem i believe in it nevertheless they also say it's art and science and it's it's it's very difficult to uh and also So once you auger it in, the world changes.

41:42Like five, 10 years later, the market is different. The world's different. And so it's still unclear. Also, price is not just the number on the webpage. It's easy to think that, right? But how it's structured is just as important. How the product's positioned is just as important. So for example, this example I've written about before online is this example. it actually was something that, um, that I, that happened in my life, but I changed the story to make it like simple and clear without having to get into lots of detail. So the sort of story version is, uh, how this company was able to charge eight times as much for the same product, just by talking about it differently.

42:29So just by positioning it differently, eight times as much. Again, this happened to me, but it's too complicated. It's not, not interest. Those details are not interesting. So say there's this company called Double Down. And the idea is that it halves the cost of your AdWords because it makes it so efficient. So that's what it says on the webpage. Cut your AdWords costs in half, which is a very good pitch, isn't it? Simple, obviously valuable. But when you think, so let's suppose I'm a customer and I spend$40 ,000 a month on AdWords. What am I willing to pay for Double Down? Well, if you do cut my AdWords in half, then all right, I saved, I saved 20 K, but I'm not willing to give 20 K to double down because then I'm not saving any money or to actually save money.

43:12I need to give double down less money. How much less? I don't know. Let's just call it a quarter. So I paid double down 5 K to save 20. So I'm saving, I'm really saving 15 double downs, making 5 K a month. That's pretty good. Everyone's pretty happy at this five grand a month price point. So there's nothing wrong with this. No one's doing anything wrong. Like that's a perfectly valid company. However, think about these two situations that the CMO might be, or the chief product officer might be in, in talking to the CEO at the end of the year. Well, a scenario one goes, we started using this tool double down and it halved our costs.

43:50So we got, we able to spend that money on some other stuff. We were able to save money and the CEO would say, great, that's good. Let's, we're going to renew. And I'm happy to hear it. Again, nothing wrong here. But let's take a different tact altogether. What does the CEO want to hear more? Growth or saves money? Both are good. I know which one is healthier for the company, increases market share, is better competitively, and also makes the company more valuable. It's the growth. So what we'd really like the CMO to tell the CEO is, I increased the growth rate of the company. Not so much I saved money.

44:27That would be way better. So here's how we could do that with Double Down. Yes, Double Down has the cost. But what that means is right now, right now, the company is paying 200 bucks per lead. Let's call them leads, right? Whatever, whatever this is outputting, right? Well, if I have the cost of a lead, I could get twice the leads for the same money. I'm already willing to spend$200 a lead and I'm already spending 40K a month for it. So if double down has the cost, it means I can get more leads. So the way I could pitch double down is double the leads per month with period. Now, if I'm willing to spend 40K for this number of leads, how much am I willing to spend to double the leads?

45:1440K. I just said I'm willing to spend 40K for this number of leads. So doubling it, I'm willing to spend 40K to double it. so if i give double down 40k not five for the same product which is the leads are cheaper but now the pitch is i doubled the leads for 40k instead of instead of having the cost for 5k so double down gets 8x the money because it gets 40k for this product not eight not not 5k for this product amazing story and everyone's happy because the ceo goes what did you do and they said like, oh my God, I doubled leads. What? Yeah. I mean, at the same ROI as we had before, same CAC, I doubled leads.

45:55CEO goes, how can we do more of that? I mean, just everything is so much better. Same product. Now I know it's a little bit of an exaggeration, et cetera, because I'm trying to make a point, right? But the big point is, the largest point is pricing is not just the number on the page. It's positioning. It's how their budgets work. It's how it's structured. Like it's per site or it's per usage or it's per seat or it's per, all of this stuff is part of what pricing is. And often, even if it's the same price or the same product, depending on how that's structured, it's either seems fair and good, or it seems like unfair and too expensive or whatever.

46:34And so in particular with the positioning, the big lesson for product managers is sell more of what the company values like growth. It doesn't have to be growth. It could be something else. The retention for their customers, how competitive they are in the market. There's various things they could value. Growth is an obvious one. Sell them that they're going to get more of what they value as opposed to saving, cutting, ROI, saves time, saves money, more efficient. And again, there's nothing wrong with saving money saves time. It's just that it caps this price and this value that they perceive that you do.

47:15Whereas if you deliver more of the value that they already value, it's, I don't want to say uncapped completely, but like the cap is maybe an order of magnitude higher than saving. So again, it's valuable to save. You're not doing anything wrong. Like that's not how to talk about what it is and therefore help set the price. So yeah, so it's a, it's a long way of saying. So when, again, what I think is your price incorrect, I'm thinking in a, maybe a more general way than just like the number I'm thinking about the structure, the positioning and all that. And my guess is when growth is slowing, um, that there's a lot of improvement that could be, that could be had there.

47:52Oh man, this is such, the story is so powerful. Who does not want to change some copy on their website and double their growth and triple their price. and the biggest takeaway here is when you say is pricing correct isn't like what is the number 20 or 25 or 100 it's it's almost is the market we are going after correct is the way we are selling to them correct is this price communicating the right sort of story and then also is the positioning of what problem we solve for you correct so there's a lot here and luckily i've done a bunch of episodes along this stuff yes which will point people to yes to go much deeper because this is a very this is a deep skill and there's a lot to do here one thing i'll mention specifically so jen abel a recent podcast guest it was her second visit to the podcast she has a lot of really good advice on this of just how to price and how to reposition the way you're selling it specifically she had this really interesting insight that enterprises their sweet spot for contracts is like 75 to 150k that's like how they normally buy sas software and it sounds absurd but that's kind of what you want to you want your product to be in that bucket versus like a thousand a month two thousand a month and everything just gets easier if you're like okay this is one of those okay cool it gets easier um the thing uh i don't want to go off too much of a tangent but the the thing you have to remember is that pricing is not this knob that you can turn separate from the rest of your strategy.

49:20So when you say, like, even when I just said raise prices or whatever, but you can't just raise prices. Like these new customers have different demands. Now maybe you need SOC too. Now your other governance stuff matters. Now integrating to certain systems you didn't know about matters. Maybe now they need professional services. like you can't just raise prices and change market and like that's it and maybe that's wise to do but maybe it's not maybe you realize that sure of course that other market has certain advantages but they also have disadvantages and we don't want those either because we'll no longer be competitive because the way that we're distinguished competitive special interesting valuable is only valuable in the market we're in the next market does not value it like that and so uh-oh actually that would be really bad for us.

50:10Or it could even be cultural. We're a company, like Buffer is a great example. Buffer could go up market and try to sell social media tools to whatever. But they realized we are a company for the little people. I don't want to sell to a big company. We're never going to make a product for them. We don't want to. This is who we are. This is what we want to do. This is what's fulfilling to us. So we're not going to go there. So it can be cultural. It can be certain goals. It can be other aspects of the business model or the strategy, but it's not this kind of like, oh, I'll just change this. It's a decision about the whole strategy.

50:44And that, too, we could talk about for hours. But let's just caution that, oh, I'll just go enterprise, is of course not how it goes. I love Jen. I love Jen. Her pricing and sales stuff is good. She's great on Twitter, too. I love Jen. And that is such an important nuance. Don't build the thing you're miserable building and just like, okay, I listened to a podcast, we're going to raise our prices 10x and life will be grand. There's also downsides. Yes. Yeah. Okay. Amazing advice. Okay. There's so much here. Again, this could be some conversation, pricing, positioning. We'll link folks to a bunch of cool advice that we've covered on this podcast too.

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52:28overtake marketing in magnitude, one way to come back, I mean, one thing is, okay, make the cancellations lower, but they can't be zero. So what else do we have to combat cancellations that would be proportional to our size so that it keeps up, unlike marketing, right? Or basic direct marketing. So one would be, all right, 2 % left, but of the remaining 98%, some of those upgraded or otherwise paid us more, maybe it's usage-based, whatever it is, they're paying us more. and so that that covers the gap and that's and yes if i tripled the company overnight that would triple and so that's the answer so that is an answer and maybe that's obvious but you know it's useful to tie it back to the sort of model mental model we've got going um and of course the metric here is nrr net revenue retention and the way that's computed is you say what is the revenue of customers right now like so existing customers existing whatever just the whole total And then one year from now, what of that remains?

53:30So not new customers coming in, not talking about them because we're asking about the cohort that exists. What remains? So with cancels, it goes down. With downgrades, it goes down. But with upgrades, it goes up. So when I say remains, it could end higher than we started if upgrades exceed cancellations and downgrades. And now we are talking about MRR and not N. Because N doesn't have this. N doesn't have an upgrade. N just only goes down. which again is why I think the N is actually the most important one. Because think about it, like a lot of times people think, so if you've heard of NRR, you might think, well, that's my golden metric, I'm done.

54:06But the issue is if NRR is positive, but N goes down too fast, it doesn't matter because not enough people are left. And so there's not enough people left over to upgrade. And so actually you're wrong. And so NRR does not, does not include that. And therefore it actually undercounts what's going on. in a bad way, like in a way that hurts you. There's yet another way to see why what I'm saying is right. There's this thing in investments where, let's say I started out at$100 and the stock goes down 5%. So now it's at 95. No, it goes down 20%. Now it's at 80. Then it goes up 20%. Is it back to 100?

54:45No, because 20 % more than 80 is 96. So if it goes down 20 % and up 20%, it does not come back to zero. It's worse. When you have a loss, a percentage loss, you have to have a greater percentage gain just to get back to where you were. In this case, a loss of 20 % requires a gain of 25 % to get back to where you were. This is why NRR isn't quite right. Because NRR is saying that a loss of 20 % from cancellations is offset by 20 % from upgrades. As we just saw, no, it's not. That only gets us to 96 % actually. So this is why, again, I believe in NRR. I'm saying you got to log and track it. It's good.

55:27Just in the back of your mind, realize it's not quite that good. And looking at N helps me keep you honest about what's really going on with these customer cohorts. Right? So that's why they're both useful. In fact, this is why they're both useful. So NRR, of course, is important. a nice way to see this is if all this is, if everything I'm saying is true and there's these limits and stuff because of cancellation, then there should be no way to get a big company like a public SaaS company unless NRR is greater than a hundred. Like otherwise cancellation should just win. And that is in fact the case.

56:00There's over a hundred SaaS public companies and something like two of them have NRR less than a hundred percent. Like that's how it goes. And those companies have horrible financials and their values valuations are bad like it's not good it's not a good thing right so and in fact the median for a ipo'd sas company like at ipo the median nr is 119 so that's so yes that's what it takes you can't do this you're limited in less now your your goal may or may not be to get that big but the point being it's mandatory for growth now if the literal customers are just leaving, like, you know, that you gotta, you gotta plug that hole first, like you said, but okay, if they're okay, that's why this is in order.

56:45If that's generally okay, now we turn to NRR to say, okay, but the ones who stay, they're hopefully happy. They need to grow. Okay. So that's the kind of the full story of NRR. I think people don't quite, people who've heard of NRR don't necessarily think about all those things and realize that. So a good question is, okay, what do I do with NRR? But I think the answers are pretty clear. Like you add features, you have different tiers, you change the pricing in some way with usage or seats or something that kind of goes up automatically as they get more value out of it. So I don't think that's terribly interesting to like double click into.

57:22It's sort of obvious. I would say, oh, look, it's tied into pricing because their behavior. But the main thing is you want it to where the customer themselves would agree when they pay more that they are getting more value. Hopefully they even think they're getting far more value than the price going up, right? I'm going to say this as if it's precise, which it's not, but they need to feel like if the price doubles, yeah, but I'm getting five times the value. So that's fine. Like that should be the feeling whether they can measure it or not. A good way to do that is to say, well, then you should be measuring whether they're getting value out of it.

57:55Often we measure like usage metrics and other kinds of metrics within our product because we can. But actually what's really important is to measure how does the customer value this? And we need to measure that so that we make that go up. Because if we make that go up, they'll be willing to pay in whatever structure. And if that isn't going up, they won't be willing to pay. So even if we start making them, they'll leave. And we all know, we've all probably done it ourselves. We've all had products we love, But then as we scale, the price goes up faster than we feel the value is. And then we start looking for other products that we've all experienced that.

58:31So that's what I'm saying to do that. You want some sort of measure of the value the customer is getting. If you're really lucky, that can be a number. That'd be wonderful. Then go do that. And maybe that's your North star, but admittedly, it's not always possible. So then the question is the usual questions and metrics. Are there proxy metrics that we understand are not the full picture, but they're helpful. They're part of it. you know, and I'm a big believer in saying not all important things are numbers. I mean, even things like how differentiated are we in the market? Not a number, but it's very important.

59:02So this might be one of those things that's important, but not a number. So, okay, can we get some proxy metrics, even of behavior and other things? That's something, something better than some metric that's, you know, just operational. And even if it's qualitative, okay, can we do that? Can we talk to customers and ask them qualitative questions to try to say, like, you know, I would just say, like, do your best here because only when you generate more value for the customer, you can then decide how to split that with the customer in terms of things like price. Yeah. Right. But that's, that's my, that's in fact how I think of it.

59:37That very phrase, how do we create more value for the customer and then split that with them? And when you do that, you're keeping the customer forefront in mind. you are taking some, like splitting means you get some, like, like let's not forget it's not a charity. And on the other hand, first we should think how are we generating value for customers and then think, and then we can take a little, we've earned the ability to take a little piece of that. So to me, this is the right way to think about NRR, not just we'll add a feature and make them pay true, but let's actually take it from this different, but let's get there from this different perspective.

1:00:10Amazing. There's a, uh, in the recent Modavan episode where we go into pricing, you actually have some really good tactical advice for measuring the value that you're giving to a company to quantify that, which feeds into this idea of how do I create more value for you? And then how do we split it? Yeah. The other element of this that's top of mind is just the slant and expand strategy. There's a lot of companies that are just like, okay, cool. We'll get in with some price. We'll expand. That'll be amazing. Just essentially expanding is NRR going above a hundred percent. Yes. Something Jen actually shared on her, chat that was really important is that you can't expand that much in at least for a while because if you get in for like 10k uh if you go up to okay now it's 100k someone's gonna be like what is it why this can't go up 10x are we getting 10x value from this you can't just raise prices later you're kind of stuck at that reference point so you have to be really careful there yeah i think that's right um and maybe you don't deserve it like in other words especially when there's investors or other sort of forces saying like, hey, we need to X, Y, and Z, forces that are not the customer saying that, yeah, you can be coerced into making pricing or other kinds of policies that in fact are not good for the customer.

1:01:23So one tool I use is when anyone claims anything, really, is that really true or is that really actually good for the customer? Because we are going to do things that are selfishly good for us. We have to. We can't just do things that are bad for us. But is this, in fact, good for the customer? Because often, even in an internal proposal, we say it as if it is. Oh, this price will be good. It'll raise prices on everyone. But it's better because of this reason that we're sort of justifying, right? It's like, well, will the customer say this is better? If the answer is no, it's like, okay, it's better for us.

1:02:01but sorry we have an equation where it has to be better for us and better for the customer sorry it's an and you know and of course not all companies do that and we and we experience that all of us um as as consumers on the other end of that we don't like it and and that's not a good long-term strategy even though i might work in the short term as many bad long-term strategies are i love just how uh this third step just reveals how powerful the sequence is that we're going through step one is this logo retention essentially do we have product market fit step two is pricing positioning essentially are we going after the right market and charging them the right amount roughly and then here it's just can we can we grow is there something here that can continue to expand because you're going to get eaten alive if you're especially and this is just to be clear this is b2b sas primarily that we're talking about here it's harder to grow in our r if your consumer product that has, I don't know, just like a tier two.

1:02:55What I would say is the rules are true everywhere because they're based in the mechanics of finance in the business. You are right that in the consumer segment or small business segment, for that matter, they tend not to grow. So that doesn't mean the NRA question is invalid. It means, dang, we can't think of anything. That's okay. Then you go on to the next question because you can't think of anything, but you know, but it would be more strategic if we could. Yeah. And are we trying hard enough? As a consumer, I do not want to spend more with AT &T, but they're also not giving me any more value.

1:03:32But there are other products as a consumer, like Amazon, where they do. So you're right, but it would be as a product manager, it would be 10 times more valuable for you to think of something like that, you know, then to move on to other things and et cetera. or there's other ways like other products like we didn't talk about it and it's okay because of course each one of these is you could go on forever right but another way is a second product a second product sold to the same segments that you're in. so that your existing customers can buy it. Well, I don't know why that wouldn't work in consumer.

1:04:06It certainly works in consumer and apparel. I think about AG1, which has all these new, like I'm doing their sleep supplement and there it goes. They're just like, here's a new thing you can buy. Yeah. So is it harder? Yeah, of course. Of course. Like all of these are easier or harder in different segments and ways. Like, of course, of course. I'm not trying to say otherwise. But I would say the mechanics of how the finances work is the same. You're just saying, I don't have this lever to pull. And then I would say, okay, well, then you need different levers. One that we didn't talk about is one way to offset the cancellations is existing customers grow.

1:04:42But another way is if existing customers bring in new customers. So they didn't grow, but they brought their friend. Now, this is absolutely something that happens in consumer, but it's also an answer to this thing where cancellations grow exponentially, you know, because existing customers bring in new does triple if you have more existing customers. Aha. So this is stuff like, um, you know, refer a friend and all this kind of stuff. Again, like some of this is obvious, we don't need to enumerate that, but, uh, so, so those things are good. And so in consumer, you might say, Oh, it's easier to try to get someone to invite a friend with a coupon and blah, blah, blah, blah, than it is to try to get them to grow.

1:05:19But in B2B, that may not be true. Right. I don't get a midsize company to refer like that doesn't make sense. So, so once again, this question of how do we have the existing base help us grow is still correct and consumer, but its manifestation could be very different. Of course, I agree with that. But how could we not say, I mean, of course, things like word of mouth and invite a friend, of course, that's enormous with consumer. And this is one of the reasons why. I just love picturing the people listening to this, especially product folks, founders. I imagine many of them are just sitting here taking all these notes of how to help grow their product because as this is we position this conversation as how to deal with stalled growth but it's actually just as useful how do i grow more oh for sure right right right which is clearly it's more growth it's just maybe a little more evocative it's it's because if growth is good yeah sure you want to grow more but it's not the problem like if growth is really good the problem is generally operationally scaling to meet the growth.

1:06:17And so you're focused on that. It's when growth slows, we're like, whoa, wait, wait, wait, wait, wait, right? We have to focus on growth now must as opposed to, of course, it's always nice. So yeah. Yeah. And I was thinking as we were talking about consumer NRR, if you look at Duolingo, they've done a great job here. There's so many ways you can pay them more for all these little advances, get all these gems, change the color of your app to like something fancy. Yeah. Yeah. Yeah. Okay. So there's more, let's keep going. So we've done three. There's more you can do. So, okay. Logo churn. Pricing.

1:06:51Pricing. NRR. NRR. And then maybe it's stalled. So this is really a stalled question. Maybe your acquisition channels, your marketing channels are saturated. We're done. What we tend to do is flog the people doing AdWords, get more, flog the SEO people, get more searches, right? It's possible that this is it. maybe this is it in some sort of physical law there literally isn't anything else or maybe this is it just this is how good we can be like we're just not that this is it right but there really are limits you know it's there's different words for it inventory is sort of the old word like with magazine ads inventory was the word but there's just this amount like there is only so many searches in your area and you can only appear once in the search results for a given keyword so there is this limit of like what you can get even if you were number one position for everything you know other things that are that are not even practical uh there's still a limit and there's some kind of practical limit that's below there that we we don't really know but you know maybe we're there or maybe we're close and worse channels tend to decline over time so i think people talk about s curves right oh i uh i didn't figure out this market then i figured it out you know we we We unlocked it.

1:08:05Now we're getting, you know, 100 leads per month through Facebook or whatever. But then it kind of taps out. And then we go into this optimization mode. Can we eke out another blah, blah, blah, blah, which is right. Oh, that's right. And you call that an S-curve because it's shaped like that. But that's not what happens. What happens is it starts with an S-curve and then starts sagging. Its butt starts sagging down. So I wrote an article about this called the elephant curve, which is what I named it. Right. Because it's like this trunk and then, but then it's this butt. and what and and there's different reasons why this happens but if you talk to any marketer they'll they'll all tell you oh my god let me tell you this story right they'll have stories about it because yeah this is what happens um there's different reasons that um first of all the audience gets saturated you know because there's all these little marketing isms and i don't know if they're true or not i don't i don't think any of it has any data that actually proves it but whatever uh like you know if worms if words uh start with the same letter that's better I don't think anyone's ever proved that's true, but marketers seem to think so.

1:09:05Okay. Well, one of the things is someone has to see it seven times before they act. Okay. All right. Well, maybe they saw it seven times already, so they don't want it. Or they saw it 20 times. Right. So, so you, you, initially you got, you hit people who hadn't seen it yet. Right. But now you have, and you know, especially with magazine ads, as I used to do before there was no such thing. That's exactly what would happen. You'd have this nice surge and then like, well, we've seen this. we've seen it before so you still get a little trick you still get some because you know it was just that moment they needed to see it again okay but like there's this sort of um but a lot of people have already seen it and they don't want it or the channel is declining and they'll never tell you when i did magazine ads every year they would tell you what their circulation is every year it would go up and then the magazine would go out of business conferences are the same way attendance is great attendance is great oh wait we're out of business because we couldn't get enough people to go.

1:09:58What? What? It was great. And, but, but, you know, more quietly AdWords, Facebook ads, even SEO searches, it's that this does happen all over the place. Affiliates, it can happen. And now with AI, I mean, I don't even know, right. It's disrupting everything. I, you know, we've all heard stories going all different directions. I think the answer is, I don't know. Shrug is the answer. And what will it be like in two years? Another shrug. But the point being, they're not all going to be growing a lot. That's not one of the features that AI will bring. So it has to sag. That's just a very long way of maybe trying to prove this point.

1:10:35But it's yet another reason why you can't just rely on marketing forever. Because you try to stack things, but there's not like infinite number of marketing channels you could advertise in that your customers are actually going to. And they sag. Oh, no. Like, it's even harder to keep up. So it's kind of like the secret, like reinforcing my very first point here with, with this, but here are they all saturated because we could flog marketing all we want. It's not going to work. So maybe growth is slowing because this is all our channels are saturated, possibly even sagging, but even if not, okay, not growing.

1:11:08And so we can't just flog the marketing department. It's going to take something else, right? The obvious thing is get more channels, but again, maybe there aren't any. possible things to do, but this is like this critical thing to notice. I guess I would put it this way. Do you know right now which channels are saturated and which aren't? If the answer is no, I'm like, well, okay, maybe that's because the answer is all. It needs to change how you think. Just adding one little feature and then hoping we can flog outwards is not going to work. Even if the feature is great, not going to work. There's different things that could work, but that's not one of them, and yet that's probably what we're doing.

1:11:49Let's add another feature and marketing can flog it is often the answer. But if you're in this state, that isn't the answer. So this is, this is why, like you could say it's obvious to say this or that, but if, but are you, are you acting like this is true? You know, often we don't. Okay. So, so there are many things to do again. We don't have to numerate all of them or something. It's just simply the right question to ask. But for example, some people are like, we've done direct, maybe we should try things like SEO and social and these other indirects or vice versa. We're really good at SEO, but we've never taken out ads.

1:12:21Often if you've done ads and they're optimized, you know what content might be good to write stuff for SEO and maybe even vice versa, maybe. So it's a good idea and sometimes it works, but here I have no data. I only have my feeling here. And actually you probably have a lot more visibility into this, but my experience is a product that's sold really well direct actually doesn't do well on things like social and SEO and vice versa. If you're getting a lot of traffic through SEO, adding ads often like costs a lot and doesn't really move the needle. You can tell me like, is that because I don't have data to support that that theory.

1:12:54Yeah, my take is like you can always get some percentage of win from all these different channels. Usually one channels where most of your growth will come from. And so over time, everyone just adds every channel. Everyone's doing ads. Everyone's doing SEO in some form. But it's usually like sales or word of mouth or ads that drives everything. Everything else is kind of like a little layer on top. Yeah. So, you know, should you do that? Yeah, probably, especially if you're at some scale and you can just afford to, because it's such a clear thing to do, but probably you'll have to get more creative about what it means to add a channel or something like a new product or a new market where it's, it's, it's actually new.

1:13:31It's expanding in a new way rather than trying to incrementally expand what you're already doing. So an example of getting creative on a channel is what Constant Contact did when they had this very problem of growth is slow. We don't know how. We sell email marketing newsletters to small business before all these modern tools existed. And one of the things they did that restarted growth is they physically went to a bunch of cities and held workshops showing here's how to do email marketing for your small business. So the restaurateur and the dentist and everyone would come to these sessions and they teach them how, of course, teaching them how with constant contact.

1:14:07So they became customers, right? That you would think there's no way this is cost effective. Physically being in these cities and dragging people in for a$20 a month product, like no way. It was very effective and actually solved in that moment, their restarted growth. They were very clever about, first of all, it's a clever idea, but then they were clever about how to do it. They took like power users who were also agencies. So like these could become customers of their, okay. This is all like, you could be clever about like, how is it that we do something, uh, something different, something new.

1:14:37So that's possible. Of course, it's always hard to say, think of something clever. That's, that's a weird finger wagging thing to do, but okay. It's true. But, uh, yeah, it, it could be a different type of channel. For example, um, HubSpot famously, uh, tested selling through agencies instead of direct. It ended up being 50 % of the revenue after four or five years. So it's one of the main reasons why they're able to continue growing. Same thing happens with my company, WP Engine. Tons of our websites are sold through agencies that create WordPress sites. So there could be something that's not direct anymore.

1:15:12That's another channel of human beings or something like that. Could in fact dramatically change your growth rate. There's lots of examples like those. But it could be like it's time for the next product. And I said that earlier because it's always possible. Of course, we all know that's very hard. It's risky. I have sort of a framework that I use to think about that kind of expansion, which I'm happy to provide. I've also written it up, but I'm happy to say it right here. But usually you want to stay in the target market you're already good at and grow from there. But sometimes the whole point of the expansion is to change target market or add something where you're leveraging something else about the company that you have as an asset going somewhere else.

1:15:56So this is what this framework helps decide. But one way or another, you probably want to plant one foot into some strength or asset that you have, move the other foot, which is the risky BART. But the idea is that, yeah, well, we have this big upside. So we're taking that bet. And that becomes a smart bet. So with things, of course, that's true for any of these things, but especially if acquisition channels are full and it's like we literally can't ask the marketing department. Like that's just not one of the choices. It almost forces us to start taking these more drastic bets to say, well, we got to do something.

1:16:28And that's not one of them. I just want to keep saying how awesome this advice is and how many people are going to benefit from like, you know, none of this is like, oh, I've never ever thought of any of this. It's just like the very methodical sequence of questions you should be asking yourself to help you not just undo stalled growth, but also just come up with a bunch of great growth ideas. and this specific section it's like it makes sense somebody's discovered alpha in a growth channel say uh sap did i just launch tiktok just you know there's like oh cool what's the new thing okay let's get there quick and then you drive a bunch of growth it's awesome eventually everyone's going to start doing that and so you should assume everything that is working for you now will slow down uh i've never uh i've missed your post on the the elephant uh s curve what do you call it the elephant curve yeah elephant it's so yeah that's so real just it's not just this s curve that will forever continue to drive when it will actually dip and decline over time because other people discover it and start using it yeah i love that so the idea here is and the classic advice is like not a whether it's an s curve or an elephant curve think about are you starting to approach the the apex of that and start to explore other channels before you slow down or start to dip Yeah, it's easy to hear stuff like, oh, if marketing is is full, do something else.

1:17:48And you go, I know. But then you look at people's behavior and it's like, well, you're not acting like, you know, maybe it needs to be said in enough detail that you actually do something about it. And this is it's important to note. This is a very hard problem. Most companies do not really solve this. They something worked for them. Sure. And then it stops working. And then like, all right, well, we found something. And then it just kind of went away. there's a couple posts we're going to link to in the show notes that will help you come up with ideas that are all around new growth channels that are emerging one is by emily kramer around ecosystems as a new growth channel and there's a lot of really cool advice there around this kind of emerging combination of influencers and content and partners where it's your ecosystem that helps grow basically there's a quote from the head of growth at whiz where it's like why start with zero and you can start with 10 ,000, essentially growing through someone with an audience already.

1:18:43And then there's going to be a post out by the time this comes out around ChatGPT's app store, which is going to let you submit apps. And that's a really interesting, potentially huge new growth channel for companies. So cool stuff happening there. So just to summarize, logo retention, pricing, NRR, marketing, channel saturation, what comes next? The last question is, do you need to grow? It's okay. Growth is stalled. And if we assume every question before has been answered in a satisfactory way, you could ask, hey, is that a problem? What do we mean by grow? What do we need to do exactly? Now, of course you should know these kinds of things with goals all the time, but, and again, like obviously the answer could be once again, oh, new products.

1:19:32These other things were like this company. When we say, do you need to grow? If we define you as this product in this market, in this company, the answer might be no. What we need to do is have a different product or in a different market or a different thing. Or you could change the word revenue. If you say, do you need to grow revenue? You could change the word revenue and say, you know what? What we could do is maximize profit instead of revenue now. we've been maximizing revenue, but maybe we maximize profit instead. And so this is a company like 37 signals or really lots of bootstrap companies who have hit some sort of limit and realize that's okay.

1:20:09Like the founders are getting paid millions of dollars a year in dividends and like, it's okay, but I don't have to get, in fact, if I got bigger, it might be an organization that I don't like or serving a market segment that I don't want to serve or whatever. And so maybe growing forever isn't the goal, actually, or growing revenue isn't. You could ask philosophically, why grow anything? Why isn't it just okay to have stasis? And we all have heard the phrase, if you're not growing, you're dying. This is a classic company thing. Is that true? Or is that the kind of thing that investors use to make founders grow or try to grow even when they shouldn't.

1:20:49It might be, but I would submit that even at a bootstrap company that has other values and culture other than growth at all costs, that that phrase is still fairly relevant because if the company's stagnant for years, is that a great environment for everyone? As the founder, did you start this company in order to do the same thing every day? Is that, is that why you did it? Do you really want to, is that fulfilling for you? What about everyone else? Nobody, nobody wants to further their career. They just want to do the same thing every day and never further their career, not really learn anything, not really innovate.

1:21:27Does it feel good to just not be, not, not be growing? The answer could be yes. You know, if I'm a CPA and I have some clients and life is good, the answer could be yes. Like, You know, I'm not saying, I'm not dictating the answer here, right? I'm just asking because a lot of times, whether it's our careers or as founders, our companies, a lot of times we've just been in the mode of, well, I've got to grow. I've got to get promoted. I've got to do more. I've got my resume. We've got in that mode for so long, like maybe our whole life that I was going to say lose sight of, but maybe we never had sight of, wait, does this make me happy?

1:22:04Is this what I really want? Am I fulfilled doing this? or even if I do have these goals, have I gotten stuck in a rut where my goal is growth and, you know, I don't know, more money, more everything. And I'm stuck in a rut here. Like what, sometimes we forget to take a step back and go, wait a minute, what is this? Is this still right? Or do I need to turn the page and have a new chapter of life right now? You know? And so this question, do you need to grow or if you're not growing, you're dying. Well, for some people know they like doing the same thing forever. And that's great. Actually, That's a, that's a, that's nice.

1:22:36But for many people, especially the kind of people who want to get into product and build stuff and innovate and people who start companies, a lot of people like that are not the kind of people that want to just, you know, kind of do rote things for 20 years. And so the not growing part, what I like to say is maybe the you in, if you are not growing, you're dying is you, the person as opposed to you, the company, it's also you, the company, right? But like, what if we took it to mean you, if you are not growing, then in some sense, maybe for some people you're dying. Maybe if you're listening to this, that's you, you got to, you're a shark and you got to go.

1:23:15And we all know people too, who claim they hate work or maybe they do hate work. Let's not say claim they do hate work, but then they retire and kind of go downhill because they don't have a purpose or this or that. And the other thing in that case, case, it was true. If they're not growing, they're dying, literally. So again, I don't mean to overstate this, and I certainly don't mean to claim that there's some answer that's right for everybody, of course, but surely this is the right kind of question. And surely for many people who are listening to this, the answer is, yeah, I mean, in some sense, some very rough sense, that's probably right for me.

1:23:53And so if I'm in a stagnant situation and really every other option has been exhausted and isn't going to happen. This is simply a stagnant thing. Maybe there's something else that needs to happen. I need to leave. The company needs to change some drastic way. I sell the company. I change jobs. I don't know. Of course, it's going to be super context specific and personal, right? But something dramatic may need to change because nothing incrementally is changing. So this final question, do you need to grow? Or if you're not growing, you're dying. Is that true? And are you therefore dying? What needs to happen?

1:24:28You know, so if you were looking for more metrics and another framework, sorry, that's as existential, but it is, it is existential. So, uh, uh, do you have to only ask this at the end of the chain? No, of course, you should feel fulfilled. And, you know, of course you want to be checking in with yourself at least annually, of course, but, um, I sort of put it at the end of my list in the sense that I'm assuming the original question is about the company, but especially with smaller companies, but also with big public companies. There's plenty of big public companies that aren't growing, aren't there?

1:25:05So this is true of all scales because there are natural sizes for things. So, yeah, it's a little philosophical, but I think it's quite important. Such a beautiful way to wrap up this piece. a lot of people listening to the podcast are bootstrap founders. And for them, this is actually very much an option. They can just be happy with the revenue they're generating. Like with my newsletter right now, I'd be very sad if it stopped growing, but also just it's amazing the life it has created for me. And even if it did stop growing and just stayed flat and doesn't become an elephant curve, that'd be incredible.

1:25:43In practice, psychologically still hard for that to be the case. And that's why this component of the, of the sequence is really important. Like why do you actually need to grow? Is that just your ego? Is that just like, I'm used to growth. It can also help you help you avoid doing unnatural things that you actually regret to grow. So like if growth at all costs is just the thing, like there's probably ways you could quote unquote, grow the newsletter that you would just say, I just wouldn't be proud of that. And the newsletter is doing so well, they don't need to do that. And so again, maybe that's a softer version because growth hasn't actually stopped, but okay.

1:26:20It's a softer version of, um, I certainly don't agree with growth. You might say, I certainly don't agree with growth at all costs. I'm going to grow as much as possible within the things that I'm proud of. Like if we grew fast, but the content was crappy, I'm just not willing to do that. It's like not the point, you know? And so it helps set up these boundaries of like, wait a minute, not if dot, dot, dot. And, uh, you know, early on, we may not have that, um, that flexibility. you could argue that you should have those values early on because that's who you are and that's what you're doing and people will respond.

1:26:48So I could argue you should have that all along, but I could also argue that at the beginning, you're just trying to do something where you don't die. You're starting to blog. You're probably copying other people's style. You probably don't have that much unique things to say. So there's a lot of, that's okay. You're just trying to get going. It's okay. At 20 years later, if you have no style and no voice of your own and nothing new to say, that's probably not good, but to get going. Sure. So sometimes we have this thing where we get going with maybe looser, I don't want to say values. I'm not saying that's unethical, but like looser sort of bar or a pride that we have in our own work.

1:27:21And we tighten it up as we're sort of able, um, as we can afford to, you might even say so good, but that's then that becomes a nice filter here of like, what, what is it in a greater sense I'm trying to do here? I'm willing to do here. Um, so if you're not growing, you're dying fair, but like that has to come with these limits. And the more successful you are, the more you can be serious about those limits. I think an important element of this is also the product you're currently working on. Maybe it's okay for it just to not grow. There's a good opportunity to do something else, have this thing maybe running on the side, maybe sunset it at some point, but it's a good opportunity to be like, okay, wait, what else is out there?

1:27:57We had a recent podcast conversation with Matt McGinnis, CPO at Rippling. And there's some really good advice he shared on just when to quit, when to quit your startup. Just like, you know, if it's like four or five years in, it's just not clicking. Maybe it's time to move on. And even though people do succeed years in, most likely it's not going to be you. I have a book almost out now that's on pre-order about topics like what we've been talking. The next book I want to write is on this topic of how do I make these decisions of uncertainty? Like maybe it is time to quit. Maybe I should move to a different city.

1:28:31Maybe I should marry this person. Maybe I should launch this company. Maybe it's time to, maybe I should use this strategy where you want to use, you want to use probability and expected value. It's unlikely that dot, dot, dot. Right. But the truth is we don't know what the probability is. We don't know what the probability curves look like. We actually can't use expected value. And anyway, even if you could have expected value, I am a human being. This is my life. And I either sell the company or I don't. And so all this stuff about probability and like, that's not, that doesn't apply to me. I need other ways of sorting this out.

1:29:03So I guess I would just say briefly, probability is not going to work for these decisions. So that doesn't say what is right, but it's not that. And so, which is nice because you can put those tools down. I'll do some market research to see if I should sell my company. Nope. That's not where the answers are. More questions than answers on that one. Yeah. Yeah. Speaking of the book, let's give you a chance to share what is what you're working on and when this is coming out and when where folks can find it. Sure. So the book is called Hidden Multipliers and you can preorder it at hiddenmultipliers.com.

1:29:42Or I guess if this is out long enough, I'll order it, I guess, depending on when you're listening to this. And it's it's a lot of stuff kind of like we were talking about today. these questions of, it's called multipliers because the idea is little things that you can do or little decisions you can make that have a huge impact. And like moving the cancellation rate from five to 4%, sounds small, has a huge thing. Onboarding as opposed to later used thing. So those are some examples, but the book is of course full of different kinds of topics, but all of this idea of the stuff that has such a big impact on things like revenue or profit.

1:30:19um and either just as you said earlier either like either maybe you have never thought of it that way so you didn't really you weren't thinking about it right or yeah you've heard that you say i know but your actions don't reflect it and so if we go deep enough with examples and specific things to do then you can actually act on on that supposed knowledge and and realize those multipliers and uh just to remind people you're all hidden multipliers.com yeah and there's an s at the end, hidden multipliers. Right. There's more than one. There's more than one. Jason, I had other things I wanted to talk about, but I feel like this episode is actually going to be stronger if we just focus on the thing that we've been talking about, which is unstalling growth.

1:31:02So if we do that, is there anything else you want to mention or leave listeners with before we get to a couple corners and then the lightning round? I think if you tried to find a common thread throughout all this stuff about growth, it comes back to the customer getting value. And I know we already talked about that, but I think if there could be one thing where it would help solve kind of all of it, it would be that they really are getting value. Your product actually promises the right thing and then it actually delivers on that thing and the customers can onboard so that they can do the thing and the customers know, they realize that they're getting the thing and you're measuring the thing So, you know, it's increasing.

1:31:47That is probably, if I was an LLM, I'd probably say that's the common thread. Or if, you know, there's many ways that manifest, of course, but if that's your North Star is how are we actually creating value in the way the customer values it and their language and their way and their way of understanding it. I wouldn't say all the pieces magically fit into place, but certainly isn't that sort of the root thing that is going to make all this stuff work. then there will be a good way to do pricing. They will stay as long as possible. And these things will probably be right if that. So this idea of creating value for the customer and then figuring out how to split with them is probably the root idea.

1:32:26And of course, I hesitate because platitudes like that are actually not actionable, not very actionable. You're like, all right, well, I'll move on with my day. And that's why Twitter is not so useful. But given that we've gone into so much detail, perhaps that's a nice way of summarizing it. I think that's such an important point. I think what's also interesting is some of your advice is the value may, you may be picking the wrong customer, the wrong market. You may be positioning it wrong. So the value may be there. You're just trying to convince the wrong people about it. Yeah. There's so many ways to get it wrong.

1:32:56Uh, right. Because, because all the, like we said, all these things have to be right. You're, you just said another one, which is, and you have to say it in a way that when this person hits the homepage, they know it. It's true, but do they know that? It's just so many things have to go right. What a, what a tough job we've got over here. just solving people's problems. Come on. Well, at least we're growing. So now we will be after this conversation. Okay. So I'm going to take us to a recurring corner, a recurring segment on the podcast that I call AI Corner. What's one way that you have discovered using AI in your work or in your life that might be helpful for folks to hear?

1:33:36There's a lot of data on the internet and it's often in things like images, which makes it hard to do your own analysis or plug it in or etc come up with your own models or apply it but i found that ai is really good actually especially gemini i'd say you just give it to it and give a chart to it and say like make this into a table that i can paste like literally say that i can paste into google sheets and it will do in a way that literally you can copy it and it will actually paste correctly into google sheets and then you can do stuff so especially with the book and and my articles uh i i love to use real data and whenever i can of course and um so I do that all the time.

1:34:13So I think that kind of interpretation is very useful. And so all of a sudden you can get 10 examples of something and test the theory where before it was kind of just too hard and you didn't. That's an awesome tip because people know you can generate all these infographics especially with Gemini and Nanopanana and all these things. That's really cool to know. You can just feed it. Here's a chart and make it text. Yeah. Okay, I'm going to now take us to contrarian corner. The question here is, what's something that you believe that most other people don't? A-B testing doesn't work very well, and it doesn't work on most things.

1:34:47It won't work on strategy or vision or insights, like nothing actually important to the success of the company. You don't A-B test whether Uber is a good idea. And then even when you do A-B test the details, where I agree like sometimes that can work, What happens is people will try things like, oh, I'll just try this verb and that verb and this ad and that ad. And then like, oh, the seventh or eighth one, I got a positive result. That must be good. And what happens is you keep doing that. You pick the best one and then you go on and you find another one and pick the best one. And then a year later, you look back and you should be like 50 or 100 % better because you've stacked these things.

1:35:26And you look back and like nothing's different. The conversion rates are the same as they've always been. You say, what the hell happened? I thought I picked the winner. And the answer is in a combination of the tools not being statistically accurate, which they're not, and the fact that you will get false positives even if the tool is statistically accurate means that most of them are false positives. Even if the tool is 95 % accurate, when the thing you're looking for is rare, which it is in the case of A-B testing, the false positives happen more often than the actual thing happens. And so most of the results you get are false positives anyway.

1:36:01So as a result, this isn't true of all A-B testing, but for what most people do when they just do the sort of the mundane A-B testing, you can't A-B test the important things and the details are mostly false positives. So it's an enormous waste of time unless you're incredibly sophisticated. I know there's special groups that actually are very sophisticated. Fine. If you're not doing that, it's sort of like the poker table. If you don't know who the patsy is, it's you, right? If you don't have all of this information and knowledge about A-B testing, then you're the patsy. Bam. All right. I will just say that I have found A-B testing useful in my career.

1:36:37I think it's maybe at a certain scale when you're just kind of trying to optimize and continue to grow, you know, where it's like millions of users, like a percentage gain is like millions of dollars. True. Most people are not working at that scale. Most people. Yeah. So just wanted to, for folks that find it valuable. That's true. But I love it. However, even so, on your own podcast, when you were interviewing the guy from Shopify, and he was saying how maybe a third of the things that they found with their systems just magically disappear. And they have a team of 100 people and they're really good at it and their effects disappear all the time.

1:37:14So they double check later whether the immediate effect goes away because even then. Right. I think that was the CTO of Shopify conversation. Oh, yeah. Okay. Yeah. Sweet. I just don't know if it's memory because I listen to a lot of episodes but I don't have a lot of episodes. That was such a good one. I love that. Yeah. Yeah, where they leave like a holdout group essentially and then they just look back. Was the effect something that lasted? And most times it didn't. Yeah, so there you go. And that's with a lot of N. So that's what I mean. If you're doing that level of stuff, good for you. But if you're not, I don't know, man.

1:37:42There we go. Well, Jason, it's always a really good sign when I'm just like, I can't wait to get this conversation out the door and into people's minds because there's so much value here. I'm just already anticipating all people are going to reply and just like I get so many ideas for what to do with my product which is exactly the goal and with that we have reached our very exciting lightning round I've got five questions for you are you ready boy yeah I mean I don't like talking a long time anyway so lightning is great here we go what are two or three books that you find yourself recommending most to other people for writing on writing well by William Zinsser.

1:38:19I know I'm not the only one, but that's kind of the point. On my best day, I write like that. And then for product, I actually like crossing the chasm, which of course everyone's heard of, but what I find is no one's read it. So that you know the little picture and you think you know what the chasm is. What I find is very quickly, I realized, oh, you haven't read the book. You saw a blog post and there's so much good stuff in there, how to define a market and really what to do with this model. It's fantastic. So I highly recommend reading the book. I've had a Jeffrey Moore on the podcast. We dove into a lot of this stuff.

1:38:54One of the things that always stuck with me is when early companies are looking for someone like them to adopt the thing. That's something that really stuck with me. It's not like they're looking for an early adopter to be like, oh, this is awesome. Like they're looking for someone that feels like them to say, this is great. And so the early adopters are just going to spread to other early adopters and there's there's work to do yeah part of that's because he defines a market and among other things as and the people in the market respect the opinions of the other people in the market exactly and that's when you realize oh so jumping to a different market it's not impossible it's just you like like case studies aren't going to work yeah it's a new thing okay and then on writing well such a huge fan of the book that's like the book that most helped me write and if you summarize the book for me it's just cut cut more and more of your stuff there's always to cut i love this phrase where he's he's um he's on a panel with with this guy who is like an amateur writer and his his kind of summary is to that guy is i i uh he the guy told him i never knew writing could be hard and zinzer says i never knew writing could be easy i think both of those kind of summarize the turmoil of being a writer.

1:40:07Yeah. The classic, maybe Hemingway, maybe not quote, writing is easy. I just sit at the typewriter and bleed. And bleed. Yeah. So good. Okay. Moving on. Favorite recent movie or TV show? ER from 1994. 15 seasons. Why do I say that? Besides the fact I think is good. I have a 16 year old daughter and we have, we're now in season, I think 13 watching this whole thing she says it holds up after 25 years and being you know gen alpha whatever i don't even know what it is and so if if this is an era an era when you know shows were an hour long and seasons were forever and uh and she says it's great tv it must be great tv wow i've not had on this podcast yet um also the pit i don't know if you enjoy er you'll enjoy the pit which just won all these awards yeah it's good on netflix um fun fact my cousin was in er not as a recurring character but she was like a young girl patient and now she's a fancy actress in the world oh cool that was her start okay next question favorite product you've recently discovered that you really love um this is probably not unique but whisper flow for dictation it's really good i like the keyboard shortcuts because you know i just use it all the time in all the software and anything anchor makes you know they have like power stations and docks and recharge over the k uh yeah a and k right um and uh just all their stuff is super high quality and works really well everything seems to charge twice as fast when plugged into an anchor thing so i don't know whatever it is it's really good i got a new anchor charger i also love anchor uh that has like a display on the side when you plug in stuff and it's got like multiple ports and it shows you like the percentage it's charging and the wattage per outlet.

1:41:54I love it. They're just like, how do we make this more fancy and fun and charge more? Yeah. I love it. Yeah. And then Whisperflow, quick shout out. They are, you get a year free Whisperflow by becoming an insider. I think even just an annual subscriber of my newsletter as part of the Product Pass. And so check it out, Lenny's ProductPass.com. You can also check it out. I do not know that. I'm not a shill for that. No, I love that. I love when people recommend products in the Product Pass. Because I'm a subscriber for long enough that I didn't get that. You missed out. You missed out. There's 19 products in there right now.

1:42:25By the time this comes out, there'll be even more. Okay. Two more questions. Do you have a favorite life motto that you find yourself coming back to in work or in life? Yes. Be yourself. Everyone else is taken. And it's attributed to Oscar Wilde, but I've tried to look into that as I tried to get all my annotations correct for the book. And there's no evidence that he said it. but there's also no evidence who said it so let's say it's oscar wilde because he said lots of things like that i love that and it's such a deep point like you know it's easy to hear and be like yeah yeah but it's it's something i've learned to be more and more true over time especially as you see people online doing their thing and just like oh i want to be like that and then you realize no you gotta be yourself no and and the people who love you or like what you do also want you to be yourself because that's what they love and if you change that they wouldn't love that so final Final question.

1:43:15You have this fancy award behind you on your desk. I'm curious what's the story there. That's the Ernst & Young Entrepreneur of the Year Award for 2017 for Central Texas, which I co-won with the CEO of WP Engine, Heather Bruner, which is awesome because I often call Heather a late joining co-founder because that's what LinkedIn, that's what Reid Hoffman called Jeff Wiener because Jeff was like four years in, but was so impactful to everything, the success of the company, the culture, that basically is a co-founder. And that's exactly what Heather is like at WP Engine. It's now been 11 years since she became the CEO.

1:43:57So there's lots of data to back us up. And I used to say to people at WP Engine, if I just told you that Heather was a co-founder, you'd say, yeah, no kidding. I'm like, right. That's what, that's why I think of it that way. Cause so do you, cause so did anyone. Cause that's, that's the impact she's had. So we co-won that award, which is nice because you almost never have co-winners. In fact, like I, I can't remember another one. I mean, I know there are others, but there it's rare enough. I can't think of another one. So it's really cool that we co-won that, uh, entrepreneur award. Jason, this was so awesome.

1:44:31I really appreciate you making time. I really appreciate you sharing so much wisdom with us. Uh, two final questions, where can folks find you online, point them to your book, your website, and how can listeners be useful to you? Yeah. I mean, to be useful, order the book, hiddenmultipliers.com, or of course you don't have to, you can, I have all these articles online for free. So you can go to asmartbear.com and I'm on Twitter and other stuff that's all linked off of that website. And the articles, they're free. I don't have ads. I don't sell courses. I don't sell anything. So like that's very, very non-commercial.

1:45:06and so in fact the one thing I've ever done with writing that costs money is the book because you know it's a physical book I've got to charge something so I could ship it and everything so but I think Hidden Multipliers is certainly my best work so I'm very proud of that but you don't have to buy it it's okay. This is our chance to repay you for all the content you've put out over time and so I'm going to order a number of them. Jason thank you so much for being here. Thank you. This is fun. So fun. Bye, everyone. Thank you so much for listening. If you found this valuable, you can subscribe to the show on Apple Podcasts, Spotify, or your favorite podcast app.

1:45:46Also, please consider giving us a rating or leaving a review as that really helps other listeners find the podcast. You can find all past episodes or learn more about the show at Lenny's podcast.com. See you in the next episode.