--- title: "Lenny's Newsletter — 2023 年合集" date: "2023-01-01" source: "Lenny's Newsletter" url: "https://www.lennysnewsletter.com/" ---
# Lenny's Newsletter - 2023 (51 issues) This file contains 51 articles/episodes. --- ## [1/51] Virality is a myth (mostly) Happy new year! Over the holiday break I was reading *[Hit Makers](https://www.amazon.com/Hit-Makers-How-Succeed-Distraction-ebook/dp/B01HNJIJ58/ref=tmm_kin_swatch_0?qid=&sr=)* by [Derek Thompson](https://twitter.com/dkthomp) (thanks, [Gabor Cselle](https://twitter.com/gabor), for the recommendation!), and one of the chapters forever changed the way I think about growth. I’m curious if you feel the same after reading this post. *[Hit Makers](https://www.amazon.com/Hit-Makers-How-Succeed-Distraction-ebook/dp/B01HNJIJ58/ref=tmm_kin_swatch_0?qid=&sr=)* is about how hits become hits. Why do some songs, books, movies, and products win, while others don’t? What ingredients do they have in common, and what drives their success? Derek Thompson wanted to find out, and he ended up dispelling a number of myths along the way. **One of his most surprising findings (at least for me) was that going “viral” is mostly a myth. We think that products often grow through friends telling friends, who tell more friends, and this cascades to so-called viral growth. It turns out this is almost never how products grow. Instead, products explode in popularity when someone (or a few someones) with a large platform shares the product with their audience.** Here’s [Derek Thompson](https://twitter.com/dkthomp) describing this phenomenon: > “People are social creatures—they talk, they share, they pass things along. But unlike with an actual virus, a person chooses to be infected by an idea, and most people who confront any given thing don’t pass it along. Viral diseases tend to spread slowly, steadily, across many generations of infection. But information cascades are the opposite: They tend to spread in short bursts and die quickly. > > The gospel of virality has convinced some marketers that the only way that things become popular these days is by buzz and viral spread. **But these marketers vastly overestimate the reliable power of word of mouth.** **Much of what outsiders call virality is really a function of what one might call ‘dark broadcasters’—people or companies distributing information to many viewers at once, but whose influence isn’t always visible to people outside of the network.**” In [a recent interview on the Acquired podcast](https://www.youtube.com/watch?v=0renk9Zy2Wk&t=3133s), [Ben Thompson](https://stratechery.com/) (author of [Stratechery](https://stratechery.com/)) shared this same finding from his personal experience: > “**The problem with a word-of-mouth business and exponential growth is people run out of people to talk to.** That’s the limiting factor. There’s a little bit of exponential with every new subscriber, because they will tell new people, but networks get exhausted.” **My argument in this post is this:** 1. True virality rarely exists. 2. When it does, it’s very short-lived, and quickly reverts to linear (or worse) growth. 3. When we see a product going “viral,” it’s very rarely driven by a many-to-many spread, but is instead the result of someone with a large audience broadcasting it (i.e. one-to-many). 4. Even though products don’t grow virally for long, it’s still absolutely worthwhile to optimize mechanisms of virality (e.g. word of mouth, invites, referrals, a remarkable product), since that can drive ongoing (free) growth. 5. At the same time, to ignite (and re-ignite) moments of “virality,” you’ll need to invest in getting large one-to-many broadcasts. For example, PR, influencers, TV. Before going further, let’s define virality. Something is viral when the average new user brings more than one additional user. This is often referred to as the viral coefficient, or [k-factor](https://en.wikipedia.org/wiki/K-factor_(marketing)), being higher than 1.0, and it looks something like the green or blue line: ![Image from Virality is a myth (mostly)](https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/3570f124-f412-4d61-bd7d-d8d84bc80334_1278x994.png) When calculating k-factor for yourself, there’s an important nuance around the cycle time between new users and referred users (read more [here](https://david-pardy.medium.com/helpful-how-the-math-of-viral-growth-actually-works-a4fcee693ace) and [here](https://adamnash.blog/2012/04/04/user-acquisition-viral-factor-basics/)), but for the purpose of this discussion, let’s keep it simple and think of viral growth as primarily self-driving (i.e. users bringing in new users), and faster than linear growth. Let’s dive deeper by starting with this excerpt from *[Hit Makers](https://www.amazon.com/Hit-Makers-How-Succeed-Distraction-ebook/dp/B01HNJIJ58/ref=tmm_kin_swatch_0?qid=&sr=)*: *It’s become fashionable to talk about ideas as if they were diseases. Some pop songs are infectious, and some products are contagious. Advertisers and producers have developed a theory of “viral” marketing, which assumes that simple word of mouth can easily take a small idea and turn it into a phenomenon. This has fed a popular conception of buzz that says that companies don’t need sophisticated distribution strategies for their product to go big. If they make something that is inherently infectious, they can sit back and wait for it to explode like a virus:* ![Image from Virality is a myth (mostly)](https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/5f059ce1-a830-4d94-904b-96e5af1de3c9_1066x804.png) *In epidemiology, “viral” has a specific meaning. It refers to a disease that infects more than one person before it dies or the host does. Such a disease has the potential to spread exponentially. One person infects two. Two infect four. Four infect eight. And before long, it’s a pandemic.* *Do ideas ever go viral in that way? For a long time, nobody could be sure. It’s difficult to precisely track word-of-mouth buzz or the spread of a fashion (like skinny jeans) or an idea (like universal suffrage) from person to person. So, by degrees, “That thing went viral” has became a fancy way of saying, “That thing got big really quickly, and we’re not sure how.”* *But there is a place where ideas leave an information trail: on the Internet. When I post an article on Twitter, it is shared and reshared, and each step of this cascade is traceable. Scientists can follow the trail of e-mails or Facebook posts as they move around the world. In the digital world, they can finally answer the question: Do ideas really go viral?* *The answer appears to be a simple no. In 2012, several researchers from Yahoo studied the spread of millions of online messages on Twitter. More than 90 percent of the messages didn’t diffuse at all. A tiny percentage, about 1 percent, was shared more than seven times. But nothing really went fully viral—not even the most popular shared messages. The vast majority of the news that people see on Twitter—around 95 percent—comes directly from its original source or from one degree of separation.* *If ideas and articles on the Internet essentially never go viral, then how do some things still achieve such massive popularity so quickly? Viral spread isn’t the only way that a piece of content can reach a large population, the researchers said. There is another mechanism, called “broadcast diffusion”—many people getting information from one source. They wrote:* > *Broadcasts can be extremely large—the Super Bowl attracts over 100 million viewers, while the front pages of the most popular news websites attract a similar number of daily visitors—and hence the mere observation that something is popular, or even that it became so rapidly, is not sufficient to establish that it spread in a manner that resembles [a virus].* *On the Internet, where it seems like everything is going viral, perhaps very little or even nothing is. They concluded that popularity on the Internet is “driven by the size of the largest broadcast.” Digital blockbusters are not about a million one-to-one moments as much as they are about a few one-to-one-million moments.* *Extended to the full world of hits, this new finding suggests that articles, songs, and products don’t spread like in the first picture we saw. Instead, almost all popular products and ideas have blockbuster moments where they spread from one source to many, many individuals at the same time—not like a virus, but something like this:* ![Image from Virality is a myth (mostly)](https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/a1d13fc4-241a-4940-8173-8db4fb488c22_1085x334.png) *Imagine you go to work on a Monday and a coworker tells you about a new guacamole recipe she read in the* New York Times*. Several hours later, you go to lunch with another coworker, who asks if you’ve heard about the new guacamole recipe he read about in the* New York Times*. After work, you go home to your spouse, whose coworker evangelized a new guacamole recipe she found in the* New York Times*. The common observation is: “The* Times *article about guacamole went absolutely viral.” But the truer observation is that the article didn’t go viral in any meaningful sense of the word. It reached a lot of people who read the recipe section of a large international newspaper, and a few of them talked about it.* *Disease is an infectious metaphor. We need a revised epidemiological analogy to rival the viral myth—one that explains how ideas can spread to many people at once, like a thousand people getting the flu from one source.* *In fact, there is a perfect story for this purpose. It is one of the most celebrated episodes in the history of disease research, taught in several medical schools and investigated in popular nonfiction books, like Steven Johnson’s* The Ghost Map*. It begins in the Soho district of 1850s London.* *Two hundred years ago, the popular theory of disease held that people got sick because of a spectral force called “miasma”—invisible poisons lofted by the winds. Miasma theory persisted because, like vampires and virality, it was a great story with inconspicuous flaws. The spread of disease was once as difficult to track as word-of-mouth buzz, and there was little understanding of germs, bacteria, and viruses.* *In the middle of the nineteenth century, London was both the greatest city in the world and a massive stinking cesspool of disease. In 1854 a cholera outbreak struck the city, killing 127 people in three days and causing 75 percent of residents to flee the working-class Soho neighborhood within a week. The city government still assumed that the disease was carried through smells and inhaled by residents.* *The scientist John Snow disagreed. A doctor with the instincts of a journalist, Snow interviewed hundreds of sick and healthy families from the neighborhood. He plotted their cases on a map, where dark bars signified households with cholera.* ![Image from Virality is a myth (mostly)](https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/d40da845-cccb-433e-af7b-fe5c481dd686_1116x1038.png) *Snow’s investigation uncovered several critical clues:* 1. *The infected houses clustered within a few blocks.* 2. *Outside of that cluster, there were practically no incidents of cholera.* 3. *In the heart of the cluster was a brewery whose workers were remarkably healthy.* *Imagine yourself as a detective with these clues and this map. Given the pattern of the disease, you might rule out the miasma theory. But you’d still wonder if this disease was spreading between houses—like a virus—or spreading from one source to many houses. And why would beer offer immunity to workers in the midst of an urban epidemic?* *Snow added more details to the map—restaurants, parks, water pumps—and he noticed something. On blocks where the Broad Street water pump was the nearest source of water, cholera cases were numerous. On blocks where the residents were more likely to retrieve water from another pump, cholera was rare. The families with cholera had one thing in common: They were drawing water from the same source.* ![Image from Virality is a myth (mostly)](https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/409a03e0-3edf-4fc2-8c5e-1f34eda8c1a1_1063x497.png) *“There were only ten deaths in houses situated decidedly nearer to another street-pump,” Snow wrote in a letter to the editor of the* Medical Times and Gazette*. “In five of these cases the families of the deceased persons informed me that they always sent to the pump in Broad Street, as they preferred the water to that of the pumps which were nearer. In three other cases, the deceased were children who went to school near the pump in Broad Street.” And what about the healthy brewers in the heart of the hot zone? They were lucky lushes. For their labor, the brewers received malt liquor, whose fermentation process required boiling the water and removing the toxic particulates.* *The disease wasn’t spreading through the air. It wasn’t spreading between households. Many infections were coming from a single source: an infectious water pump. The disease was a broadcast.* You may be thinking, sure, maybe virality is a myth for cholera, and mayyyyyybe for articles, videos, and books—but what about software? They go viral all the time, don’t they? Let’s investigate. First, I revisited my research into [how the largest consumer products got started](https://www.lennysnewsletter.com/p/consumer-business-find-first-users). It turns out that of many of the products we’d consider super-viral, most actually got their start (and as you’ll see below, their biggest growth spurts) from one-off broadcasts. Some examples: **Spotify (influencers talking about it)**: > “[[Mark Zuckerberg] wrote about Spotify](https://www.google.com/search?q=mark+zuckerberg+spotify+facebook+post&rlz=1C5CHFA_enUS915US915&tbm=isch&sa=X&ved=2ahUKEwiK_-qwypftAhWPvJ4KHbr1AqkQ_AUoAnoECA8QBA&biw=1440&bih=789), Sean Parker reached out to us, and we [seeded it with influencers](https://web.archive.org/web/20190530203143/https://rsms.me/we-have-let-spotify-out-of-its-cage) (journalists, musicians, tech CEOs/founders, etc.) who all raved about us. So this built up pent-up demand.” **Twitter (one influencer writing about it):** > “The first public mention of the service I can find is on [co-founder] Evan Williams’s blog late on July 13th, but you can see that even on the 12th there was a mini-boom in registrations. Then [Om Malik’s post on the 15th](https://gigaom.com/2006/07/15/valleys-all-twttr/) really pushed it over the top, with more than 250 people signing up the next day. What I find fascinating is that there were less than 600 people on the service at that point, so it was a very prescient plug. […] > > A recurring theme is the power of that initial publicity in driving the early users, and the feeling that it was a way to connect with an interesting group of people. Evan’s high profile and Om’s endorsement must have been a big help in building that sort of buzz.” **Airbnb (press about their cereal boxes)**: > “The event that marked the turning point in the business was the 2008 Democratic National Convention (DNC) in Denver, Colorado. The pair [Brian Chesky and Joe Gebbia] saw an opportunity to capitalize on the quadruple-overattended event that caused a massive shortage in rental housing. Finding hosts to offer up rooms in their houses was actually the easy part. Getting people to rent those rooms proved more difficult. > > The first counterintuitive strategy was to pitch only the bloggers with the smallest audience possible.... As ridiculous as it sounds, the coverage by these bottom-feeder press was the social proof that more-prominent publications needed to piggyback on the story. Eventually, national news networks, including NBC and CBS, were interviewing the founders of the unknown startup that was housing the biggest political convention in history.” **Instagram (press on the day of launch):** > “People actually said to us, there’s no point contacting publications such as the *New York Times* and that we’d be wasting our time. But not only did [the](https://bits.blogs.nytimes.com/2010/10/19/a-photo-sharing-app-with-bigger-aspirations/) *[New York Times](https://bits.blogs.nytimes.com/2010/10/19/a-photo-sharing-app-with-bigger-aspirations/)* speak to us, they also sent someone to meet with us.’ On the day of launch in October 2010, all the press coverage happened at roughly the same time and their servers were hit hard.” **Notion (press; from my interview with [Camille Ricketts on my podcast](https://www.lennyspodcast.com/how-notion-leveraged-community-to-build-a-10b-business-camille-ricketts-notion-first-round-capital/#transcript)):** > “David Pierce, who I think is one of the best working journalists in tech today, he’s at *The Verge* now. He was covering personal tech for the *Wall Street Journal* early on at Notion and published a story that said this is the one work-life productivity app that you’ll ever need. And that was Notion’s big break. Truly, if you look back at the graphs, that made a demonstrable difference.” Even Tinder’s breakout moment was a one-off event, [the Sochi Olympics](https://www.thedailybeast.com/sochi-athletes-get-it-on-at-the-tinder-olympics): Let’s dig further. I [asked founders on Twitter](https://twitter.com/lennysan/status/1583539227785994242) for examples of products growing virally. Though there were certainly times where k-factor was above 1.0 (e.g. [Nikita](https://twitter.com/nikitabier) and his breakout app [Gas](https://www.gasapp.co/), though it’ll be interesting to see how long this lasts) … ![Image from Virality is a myth (mostly)](https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/75dc11b4-d17d-41f0-952e-fefb34c4a1e4_1178x360.png) … the thread also confirmed that real virality is very rare and, more importantly, never lasts very long: ![Image from Virality is a myth (mostly)](https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/c0532b2b-0051-4337-8a93-6b4b5db8d34e_1172x832.png)![Image from Virality is a myth (mostly)](https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/54d9c3ea-4c40-43a9-b929-19a57123ddc5_1184x268.png)![Image from Virality is a myth (mostly)](https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/f08315c8-be17-483e-846b-571102ded711_1186x360.png)![Image from Virality is a myth (mostly)](https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/070797db-f9b0-4bf7-bca3-3c1a61669435_1188x234.png)![Image from Virality is a myth (mostly)](https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/8af0ed1b-c91e-4d6f-864b-4cb9f179c8bc_1192x352.png)![Image from Virality is a myth (mostly)](https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/36fdf847-d50a-4335-afc5-6f1e91a53d04_1186x278.png)![Image from Virality is a myth (mostly)](https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/04399ec0-6b8d-4836-aeec-fc043714fdbf_1186x214.png) Let’s linger on Dropbox for a moment. Dropbox is famous for early viral growth. But here’s Dropbox’s growth over time: ![Image from Virality is a myth (mostly)](https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/07a0cb52-a3ba-47f0-8e11-769e7169ce17_906x531.webp) Looks pretty linear to me. Yes, there were moments of real virality (e.g. the “Space Race,” as ChenLi mentioned above, aka the [Dropbox referral program](https://twitter.com/joshpuckett/status/1583548671164964864?s=20)), but they were short-lived and don’t even register in the broader growth trajectory. Here’s Facebook’s MAU growth over the first 15 years. Rather non-viral: ![Facebook MAU worldwide 2022 | Statista](https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/1d0f6bbe-09bb-43e8-a92f-b82cf491841d_1000x743.png) Snapchat: ![Snapchat daily active users 2022 | Statista](https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/0b652d5f-db3c-46cc-aa3d-64bffe00acda_1000x743.png) Slack: ![With 10+ million daily active users, Slack is where more work happens every day, all over the world | Slack](https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/d7307951-c931-4bc8-a89c-545da5ed9488_950x589.png) Instagram: ![Infographic: Instagram's Rise to 1 Billion | Statista](https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/35193cd8-8343-48f4-b725-3b9cdeb5969f_960x684.jpeg) Looking at these charts, it surprised me how non-viral the growth of most “viral” products looks when you zoom out. No question many of these products had moments of true virality. But it’s better to think of these viral moments as [a series of S-curves](https://medium.com/parsa-vc/jumping-s-curves-building-a-high-performance-startup-80e4410466a5). Short-lived accelerations, sparked by one-off broadcast events. ![The S-Curve Pattern of Innovation: A Full Analysis](https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/58dff274-4c10-45db-8b5b-a11f2a6f322b_1280x720.png) Clubhouse’s growth story is a great example of this: ![2022 Clubhouse User Statistics - Trends & Data (Full List)](https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/dffafec5-69e5-40ee-af8a-f6f79b64dece_950x608.jpeg) In May 2020, Clubhouse had 1,500 users. By the end of that year, they hit 600,000. About a month later, they had 2 million and, a month later, 10 million. Feels viral. However, these growth spurts came from one-off broadcast events. Initially with folks like [Naval](https://twitter.com/naval) and [Marc Andreessen](https://twitter.com/pmarca) hosting sessions, and then [Elon Musk](https://techcrunch.com/2021/01/31/elon-musk-goes-live-on-clubhouse-but-with-the-room-full-fans-stream-audio-on-youtube/) joining in January. Most interestingly, as this chart shows, virality quickly petered out. A classic S-curve. After each event, virality took it only so far. Without new one-to-millions broadcast events, growth appears to have ceased. **What does all of this mean for your product?** If you’re a founder or growth leader building a product that aims to grow through virality: 1. Absolutely continue investing in mechanisms of virality (e.g. facilitating word of mouth, invites, referrals, and building remarkable product). The higher your k-factor, the faster you’ll grow. 2. But, more importantly, make sure to invest in a strategy of ongoing one-to-many broadcasts (e.g. PR, influencers, TV, etc.). You need to keep reigniting your viral spread, however much of it even exists. In the words of the [Racecar Growth Framework](https://www.lennysnewsletter.com/p/the-racecar-growth-frameworkexpanded), virality and turbo boosts go together like peanut butter and jelly. The higher your k-factor, the more juice you’ll get from each broadcast. But you’ll get no juice if you don’t find a way to get your product in front of a huge number of people at once. [Here are 60 examples](https://www.lennysnewsletter.com/p/turbo-boosts) of creative (and successful) turbo boosts, a bunch of [ideas to drive buzz](https://www.lennysnewsletter.com/p/creating-buzz-at-launch), and [more reading on turbo boosts](https://www.lennysnewsletter.com/i/75292796/turbo-boosts). I’ll leave you with a (hilarious) example of a viral app getting a large one-to-many broadcast (2.4m views online alone): [Watch on YouTube](https://www.youtube.com/watch?v=yzeH4BBxDew) I’d love to know what you think! Leave a comment 👇 [Leave a comment](https://www.lennysnewsletter.com/p/virality-is-a-myth-mostly/comments) ### 📚 Further study 1. *[Hit Makers](https://www.amazon.com/Hit-Makers-How-Succeed-Distraction-ebook/dp/B01HNJIJ58/ref=tmm_kin_swatch_0?qid=&sr=)* by Derek Thompson 2. [How the math of viral growth actually works](https://david-pardy.medium.com/helpful-how-the-math-of-viral-growth-actually-works-a4fcee693ace) by David Pardy 3. [User Acquisition: Viral Factor Basics](https://adamnash.blog/2012/04/04/user-acquisition-viral-factor-basics/) by Adam Nash 4. [The Elephant in the room: The myth of exponential hypergrowth](https://longform.asmartbear.com/docs/exponential-growth/) by Jason Cohen 5. [How to increase virality](https://www.lennysnewsletter.com/p/increasing-virality) *Have a fulfilling and productive week 🙏* ## 📣 Join Lenny’s Talent Collective 📣 If you’re hiring, [join Lenny’s Talent Collective](https://www.lennysjobs.com/talent/welcome) to start getting bi-monthly drops of world-class hand-curated product and growth people who are open to new opportunities. ![Image from Virality is a myth (mostly)](https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/fd2a86a0-dc08-4cf2-9095-e88dd7f2e5cf_1476x856.png) If you’re looking for a new gig, join to get personalized opportunities from hand-selected companies. You can join publicly or anonymously, and leave anytime. [Apply Now](https://www.lennysjobs.com/talent/welcome) #### **🔥 Featured job openings** 1. **TryHackMe:** [Senior Growth Product Manager](https://www.lennysjobs.com/jobs/4ff08da3-df3e-4952-95bb-b4a032dba623) (Remote) 2. **TryHackMe:** [Head of Marketing](https://www.lennysjobs.com/jobs/f0b0d2d4-f721-4903-a1ef-9125b28b1755) (Remote) 3. **Pogo:** [Product Manager](https://www.lennysjobs.com/jobs/1d236a59-399d-4a81-8dcd-664d76f06cae) (Remote) ## **🧠 Inspiration for the week ahead** 1. **Watch:** [One Breath Around The World](https://youtu.be/OnvQggy3Ezw) via [Watch on YouTube](https://www.youtube.com/watch?v=OnvQggy3Ezw) 2. **Read:** [What Can We Learn from Barnes & Noble’s Surprising Turnaround?](https://tedgioia.substack.com/p/what-can-we-learn-from-barnes-and) by 3. **Read:** [Americans Have Found Their Happy Place](https://www.bloomberg.com/opinion/articles/2022-12-23/the-happiest-place-on-earth-hawaii-and-the-rest-of-america-too?cmpid%3D=socialflow-twitter-view&sref=htOHjx5Y) by Tyler Cowen **If you’re finding this newsletter valuable, feel free to share it with friends, and consider subscribing if you haven’t already.** Sincerely, Lenny 👋 --- ## [2/51] Five steps to starting your product-led growth motion *👋 Hey, [Lenny](https://twitter.com/lennysan) here! Welcome to this month’s ✨ **free edition**✨ of Lenny’s Newsletter. Each week I humbly tackle reader questions about product, growth, working with humans, and anything else that’s stressing you out about work.* I’ve read hundreds of articles about product-led growth (PLG), and they all kind of blur together. So when founders ask me for advice on building their PLG motion, I still don’t know where to point them. Thus, when [Hila Qu](https://www.linkedin.com/in/hilaqu/) approached me about collaborating on a definitive deep-dive on building a PLG motion, I was thrilled. Hila helped scale [Acorns](https://www.acorns.com/) from 1 million to 5 million users as their VP of growth, then joined [GitLab](https://gitlab.com/), where she launched their PLG motion (on top of an established sales motion), and built their first-ever growth team. These days, between advising startups (e.g. [Replit](https://replit.com/), [SEON](https://seon.io/)) on their PLG strategy, advising on [Reforge’s upcoming new PLG course](https://www.reforge.com/programs/product-led-growth), and nerding out on product-led growth with top founders and growth leaders, Hila has been setting time aside to crystallize her advice on product-led growth. This post is the culmination of her firsthand experience, along with the many wins and failures she’s witnessed working with dozens of startups. Hila went far beyond my (already high) expectations putting this post together—sharing not only a step-by-step guide to building your PLG motion, but also adding a boatload of real-life examples, templates, and tools. So much so that we had to split it into two posts. This is part one (and you can [find part two here](https://www.lennysnewsletter.com/p/five-steps-to-starting-your-product)). I’m really excited to share Hila’s work, and I can’t wait to hear what you think. *You can find on [LinkedIn](https://www.linkedin.com/in/hilaqu/), [Twitter](https://twitter.com/HilaQu), and [Substack](https://hilaqu.substack.com/). Make sure to check out the Reforge courses she teaches, [Advanced Growth Strategy](https://www.reforge.com/programs/advanced-growth-strategy) and [Experimentation & Testing](https://www.reforge.com/programs/experimentation-testing), and sign-up [here](https://www.reforge.com/programs/product-led-growth) to get updates on Reforge’s new PLG program which launches in Fall 2023.* ![Image from Five steps to starting your product-led growth motion](https://substack-post-media.s3.amazonaws.com/public/images/95f79c3e-1437-4db9-ad28-966f112cca80_4000x2000.png) At its core, product-led growth (PLG) is about leveraging your product to acquire, activate, convert, retain, and monetize your user base. In PLG, your product is not only the set of features that solve customer pain points but also your go-to-market (GTM) motion, and your distribution and engagement channel. If done right, PLG is proven to have higher efficiency and broader reach than any other growth motion and can be a great complement to a sales-led motion. If you are thinking about adding a PLG motion for your B2B SaaS product, here are the five steps to get you there: ![Image from Five steps to starting your product-led growth motion](https://substack-post-media.s3.amazonaws.com/public/images/8e8ca2af-f664-479c-aba3-fb3ed6cc1671_4000x2000.png) Below, I’ll help you through each of these steps. Let’s get into it. ## Step 1. Map your funnel Sales-led growth and product-led growth approach the customer journeys and funnels very differently. Each motion has benefits, and most successful B2B companies eventually layer both. You need to understand the differences between the two funnels because eventually you’ll need to build data infrastructure, design org charts, and create workflows to enable the measurement and coordination of both funnels. The traditional B2B sales-led funnel looks like this: ![Image from Five steps to starting your product-led growth motion](https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/988448ab-9e36-433c-a0e4-03a1018ac561_4000x546.png) The product-led funnel looks like this: ![Image from Five steps to starting your product-led growth motion](https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/7c137a1a-c8a8-438e-966b-2c77d42d62aa_4000x1068.png) As you can see, the starting points and ending points look similar, but the middle part—how to turn signups into revenue—is different: **In a sales-led funnel**, the B2B marketing team is responsible for generating signups/leads to fill the top of the funnel, as well as further nurturing and qualifying leads into MQLs (marketing qualified leads). They engage leads with marketing channels such as websites, emails, webinars, and retargeting ads, and for every meaningful touchpoint engagement, the leads get points added, for example: - “Fill in contact sales form” +10 points - “Email open” +5 points - “Visit website pricing page” +10 points Once the leads score passes a certain threshold, they are “qualified” into MQLs and handed over to the sales team for further screening and closing. This “lead nurturing” approach is essential, because a B2B product is complex and the buying cycle is long, with multiple steps and stakeholders; thus, extensive education and nurturing is necessary. However, this approach also largely assumes users can’t access B2B software until the contract is signed and that marketing engagement channels are the only way to nurture leads, which is no longer true during the PLG era. **With the product-led funnel**, the marketing team is still driving top-of-funnel, but since potential customers can access the free product right away, product usage becomes the primary lever for product education/evaluation and leads nurturing. Rather than “show” (e.g. sales demo) or “tell” (e.g. marketing campaign), potential users get to “do” (use the product themselves), which is much more powerful and direct. Therefore, quick activation (i.e. getting to the “aha moment”) and meaningful product usage become the key success factors for generating PQLs (product qualified leads), which can be then passed over to the sales team similarly to MQLs. In some cases, the prospect customers like the product so much, and the price fits their budget, that they may even purchase via a self-service checkout flow without talking to sales at all. ![Image from Five steps to starting your product-led growth motion](https://substack-post-media.s3.amazonaws.com/public/images/f027caf6-d5ef-4df9-88f3-fb578d880e56_2518x2000.png) Once you understand the differences between PLG and SLG, the next question you naturally ask is: Which motion should I start with? Thinking from first principles, the two main factors to picking your primary growth motion are (1) target customer segment and (2) product complexity: - **PLG** is your best bet if your product primarily targets prosumers (e.g. Evernote, Dropbox) or SMBs (e.g. Mailchimp, GoDaddy). More so, PLG is probably the only viable way to grow efficiently given the low average customer value and large user base. - **SLG** is your best bet if your product primarily targets enterprise accounts with a high price point and requires a lot of customization and configuration before anyone can use it successfully. Think Salesforce as an example. The average implementation takes three weeks to a few months, and larger enterprises even hire external consultants to assist. That level of product complexity makes time-to-value extremely long and PLG not a viable option. Although I would advise these SLG-native products to challenge their own status quo, because next-generation B2B startups may build many easy-to-use products in the same category that will unlock PLG. For any company in between—and that is the majority of B2B SaaS companies—for maximum reach with high efficiency, there is a benefit to starting with one growth motion and eventually layering on the other. Companies like Canva and Slack started with PLG and added an SLG motion. Companies like HubSpot and GitLab started with SLG and added a PLG motion. GitLab actually started as an open source product. Developers used it for both personal and work purposes, and so we ended up selling into all segments (i.e. SMB, mid-market, enterprise). PLG would have been a natural fit, but since the early team established a sales motion first, it made sense for us to later layer on PLG to support SMB self-service purchases, which I’ll expand on below. As it turned out, the new PLG motion also generated additional usage-based leads for enterprise sales to go after. **🔑 Takeaway:** If you don’t have a PLG funnel today, draw a potential funnel out on a whiteboard. Imagine how a potential customer would travel through that journey, and how your product and teams might need to change to support it. ## Step 2. Pick a starting point To be successful with PLG, you’ll need to invest in multiple areas at once and work through multiple initiatives. It is never as simple as making one change (e.g. opening a free trial or adding an onboarding tutorial). That being said, you can maximize the ROI of your PLG efforts by choosing the right focus area as your starting point. ![Image from Five steps to starting your product-led growth motion](https://substack-post-media.s3.amazonaws.com/public/images/739ca6c8-df4c-4722-a3d0-76c0ef75d0cf_3624x1228.png) **Ask yourself: What is the biggest constraint—and potential unlock—in your growth model?** **Is it (1) acquisition, (2) activation, (3) conversion, or (4) retention/expansion?** The answer to that question should guide the choice of the initial focus area for your PLG efforts. Below, I will focus on the three areas where I consistently see the most opportunities: acquisition, activation, and conversion. The fourth, retention/expansion, is an equally valid focus area, but not one I’d suggest starting with, due to the complexity and effort required to improve those metrics. Focusing on acquisition, activation, or conversion first will provide the most impact and the fastest learnings, which can inform your PLG retention/expansion roadmap. #### 1. Product-led acquisition If you have a small user base, or your B2B SaaS product has an inherent viral or network-effect component, then you should probably focus on product-led acquisition—using your product to generate more users/leads**.** While you can leverage marketing or sales to acquire new users, the benefit of product-led acquisition is that it is highly scalable and cost-efficient. Once established, you won’t have to keep spending money to buy ads or make outbound calls. Product-led acquisition mechanisms tend to generate benefits over a long period of time. Below are a few examples of SaaS products’ product-led acquisition strategies (in Reforge’s language, “growth loops”): ![Image from Five steps to starting your product-led growth motion](https://substack-post-media.s3.amazonaws.com/public/images/e205e45f-5ea6-4abd-909e-d73d9b436f0c_2194x2000.png) #### 2. Product-led activation While sales and customer success are still critical and necessary for B2B customer onboarding, for a PLG product, you want to have your product do as much work as possible. From my experience as a growth advisor, activation is always an area with tons of opportunity to be exploited. I use a two-step framework to improve activation: **Step 1. Define the aha moment** For B2B PLG products, the concept of the aha moment is much more nuanced than Facebook’s famous “7 friends in 10 days.” Taking GitLab as an example, when a developer signs up for the free product, she might connect with her personal repository, test out multiple features, and decide GitLab is a great DevOps solution for her engineering team. But digging into the data, we saw that the pivotal moment happens when she invites another developer to join the same project, and together they begin to collaborate on issues and workflows. Therefore, rather than focusing on an aha moment based on a single user’s behavior, we set “2+ users and 2+ features within the first 14 days” as the “team aha moment.” Then we tried to drive all new free accounts toward that goal. For B2B, there are actually multiple aha moments for different personas. ![Image from Five steps to starting your product-led growth motion](https://substack-post-media.s3.amazonaws.com/public/images/efc79bec-eec8-45c6-bc51-f2af48b68951_4000x2000.png) 1. **The** **user aha moment:** With your free SaaS product, you need to get an individual user to hit the aha moment via product usage quickly. But this is just the first step (even though many companies stop strategizing here). 2. **The** **team aha moment:** You need to help your initial user build confidence and give them a reason to invite their team members to join. The team needs to use the product collaboratively to experience the team aha moment. 3. **The buyer aha moment:** If the user/team gets enough value—and when the opportunity arises—they will be willing to become the advocate and present your product to the decision maker/buyer, who needs to clearly see the ROI of the product for themselves. 4. **Finally, the paid-customer aha moment:** Once this client pulls the trigger and becomes a paid customer, they need to reach the aha moment *again* on the paid version, essentially answering for themselves: Is this worth it? **Step 2. Use a multi-channel approach** Product-led activation doesn’t mean you rely only on product to get users to the aha moment: **It is product-led, not product-only.** From an ROI and reach perspective, you should spend a lot of time optimizing your product onboarding, because it touches almost 100% of new users and is scalable/cost-efficient. But you also have multiple weapons in your activation toolbox: - Product onboarding - Lifecycle marketing channels: emails, in-apps, SMS - Human assistance: sales calls, demos, chats - Documents (especially for a developer product) - Forums The ideal PLG product-activation experience is led by product, powered by data, and supported by automated and low-touch channels, with high-touch assistance available to your high-value customers. ![Image from Five steps to starting your product-led growth motion](https://substack-post-media.s3.amazonaws.com/public/images/a01fb81a-ec23-4086-95cd-dbd1b4cbd5be_4000x2000.png) #### 3. Product-led conversion If product-led acquisition is about how to grow net new users scalably and efficiently and product-led activation is about how to onboard and retain these newly acquired users, then product-led conversion is all about how to convert free users to revenue. It represents a big opportunity because it can directly impact your ARR. If you recall the PLG funnel, there are primarily two paths for product-led conversion: 1. Self-service conversion 2. Product-qualified leads (PQLs) ![Image from Five steps to starting your product-led growth motion](https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/7c137a1a-c8a8-438e-966b-2c77d42d62aa_4000x1068.png) If you don’t have a self-service checkout flow, you need to build that first. Once you have this, there’s always tons of room to improve your conversion rate through new experiments. A PQL system requires more investment upfront but also provides a much bigger return. Let’s explore both options. **Option 1. Self-service conversion** A self-service purchase happens when free users convert to paid customers or upgrade to a higher tier of product via the in-product self-service checkout flow, without talking with sales. Among my PLG advisory clients, I tend to find low-hanging fruit in three areas related to the self-service checkout flow: 1. **Improve the discoverability of the purchase path:** For example, when we surveyed free users at GitLab, a significant percentage of them didn’t know where to purchase a paid plan. This is more common than you might think among B2B products. 2. **Optimize the pricing page and checkout flow like crazy:** For example, when I audited the checkout flow for one advisory client, I saw that their payment success rate in the U.S. was much lower than in Europe. By testing different credit card checkout modal designs and showing the final pricing in the local currency, they could drive a lot of revenue with small changes. 3. **Give users a reason to buy by setting up proper limits and an upgrade path:** If users have everything they need available in the free version, then there is no motivation for them to upgrade. PLG companies often start with a very generous free plan to gain market share, but they also need to have the limit control and upgrade path in mind. Otherwise they might get stuck with a low free-to-paid conversion rate and high operating cost to service free users. I suggest teams consider starting with these low-hanging fruit before later revisiting pricing and packaging design, which is also a huge growth lever. **Option 2. Product-qualified leads (PQLs)** When free customers demonstrate certain behaviors, hit certain usage thresholds, or fit certain firmographic criteria, they are qualified into PQL status and generally sent to the sales team to follow up. If your company has already accumulated a good amount of free active users, then it might make sense for you to set up a PQL motion, because it’s possible that a segment of your free users aren’t interacting with marketing campaigns (thus not qualifying to MQL) but happily use the free product and are ripe for a sales conversation. To close on this section, among acquisition, activation, and conversion, so much can be done. How do you find the highest-ROI focus area? As one example, the GitLab growth team picked activation and self-service purchase as our first two focus areas, because there is much low-hanging fruit and we knew we could generate immediate impact. We then quickly expanded into PQL, because GitLab had a large free user base and its developer audience didn’t like to read marketing emails. We started from hand-raiser PQLs, where customers submit a sales contact form directly inside the product, and saw a 3x higher conversion rate than with typical MQLs. Then we expanded into usage-based PQLs, where we identified high potential prospects via usage pattern and routed them right into Salesforce. We built the PQL data pipeline ourselves, but I also saw companies leveraging PQL tools (I suggest some below) to fast-track the process. **🔑 Takeaway:** Identify what is currently the biggest constraint in your growth model. Is it acquisition (number of users), activation (new user usage), or conversion (ARR)? Within each of these areas, you can also drill down and prioritize low-hanging fruit. You will boost your organization’s confidence in PLG by choosing the starting point with the highest ROI first. ## **Step 3. Anticipate the most common pitfalls** Before going further, I want to spend some time sharing the most common pitfalls you’re likely to face when adding a PLG motion, to help you avoid them. Here’s an overview of the most common challenges, how to identify them, and how to address them: ![Image from Five steps to starting your product-led growth motion](https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/b19c92a7-0e44-4314-aa1e-6b2e336689d4_1624x1000.png) #### **Pitfall #1: Lack of commitment and investment** I often see companies wanting to do PLG but not committing any meaningful resources to give it a chance to be successful. You need to think deeply about why you want to add a PLG motion. What is the problem you are trying to solve, and what is the goal you are trying to achieve, with PLG? Make sure you are considering PLG not because it’s trendy but for a clear strategic reason. Because the investment—and the change required to stand up a PLG motion—is not trivial. Each of the following is a valid strategic reason: 1. **Efficiency seeker:** Improve sales and marketing efficiency and lower CAC via a PLG motion. Many SLG companies add a PLG motion for this reason. 2. **Growth chaser:** Unlock more growth and reach new segments, especially SMB. This is why HubSpot went downmarket with PLG. 3. **Disruptor:** Use freemium and PLG to disrupt established B2B incumbents that dominate a category. This is how Figma disrupted Adobe. 4. **Defender:** An established sales-led enterprise product may want to test PLG on a new product to develop the muscle and defend its position. This is how Gainsight experimented with PLG on Gainsight PX (its newly acquired analytics tool). 5. **PLG native:** PLG is a natural fit for your product (i.e. bottom-up SaaS), and the team wants to grow to a large scale via a PLG-native approach. Notion and Canva both fall under this category. You may need to spend some time to think deeper, conduct research, and collect evidence. But if you build enough conviction and believe PLG is a strategic fit, you should commit to investing in the roadmap, team, and infrastructure for the next one or two years at least. #### **Pitfall #2: The product is not ready** In order to go PLG, you need to have a product vehicle: a free version or a free trial of your product. Some companies have these vehicles in place already. At GitLab, we had a free version and a free trial, plus an open source product. I didn’t need to build these from scratch—the product already had a large free user base. In that case, the growth team could start developing usage-data insights and creating a PLG funnel right away. But there are also companies that enter the PLG era without an existing free version or free trials. For example, when visitors land on their website, the only CTAs available are “request a trial” or “book a demo.” If that is the case, the first step is to open a free trial experience to everyone or create a free version. Without that, there is no “product” in your product-led growth. ![Image from Five steps to starting your product-led growth motion](https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/dbc96ed5-a747-4824-9008-e34fb73cb8c4_4000x1764.png) When you’re building a free product for the first time, you’ll need to overcome design and technical complexities to build that free experience. But more importantly, you’ll need to overcome the fear of “losing control.” For example, a marketing leader from a leading security B2B company shared with me her experience of advocating for the company to move from closed trials to open trials as first step toward PLG: > *“The closed trial for us means we only open our trials to end users who are in our ideal customer profile (ICP)—we have lots of resellers/service providers and tech partners who request trials, but we have different processes for those folks. The first step here was to convince the company to open up a little more to end users a bit outside our ICP—for example, we typically have not let in anyone under 100 employees.* > > *While we certainly can’t monetize these folks at the rate we do those in our ICP, we can, however, learn a lot about how they are using our product. And there might be a path to monetize.* > > *The enterprise B2B sales cycle and PLG are inherently at odds—one is a very controlled experience and the other is not. In a PLG motion, your* product *is shaping the perception as opposed to the salesperson, so I think it’s simply getting used to giving up that initial control.”* **Here is a tip:** If you face resistance, you can start PLG as an experiment. For example, instead of making a shift to PLG permanently, open a free trial to everyone for some time and see how that impacts your signups, leads, and upgrades. It is much easier to have a meaningful discussion when you can ship the change first and have some real data. #### **Pitfalls #3 and #4: Lack of data infrastructure and foundation; lack of PLG expertise and talent** These two go hand in hand. Ask yourself this question: *Assuming you have a free product, do you have the data to track how many free users sign up, which features they use most, and which usage pattern correlates with a higher free-to-paid conversion rate?* If your answer is no, then you need to first build the PLG data infra foundations. There is no way around it. You have to invest in these areas to enable PLG—e.g. hire the right growth/data leader; commit the resources to collect and analyze the data—and it takes time. The good news is that it’s very common, especially among B2B companies starting with a sales motion. A strong data foundation will not only support your PLG motion but also enable you to take a more data-driven approach in product development and customer success, standing out from your competitors. I will unpack what it takes to build PLG infra in part 4 of this post. Once you have the data foundation in place, you may ask yourself the second question: *Assuming you have the data and metrics, do you know concepts like “team aha moment” and “product qualified leads (PQL),” and do you have frameworks to get users/customers to reach this status?* If you or your team can’t answer these questions, then you basically don’t have PLG expertise and talent in-house. Growth itself is still relatively new, and people with B2B PLG experience are even rarer. Thus, companies often find it very hard to hire PLG talent. **I suggest you take a three-point phased approach:** 1. Hire a seasoned PLG growth advisor, ideally with relevant experience to your industry/segment. 2. Identify internal talent who may not have done PLG before but have the passion/skill set. 3. Hire externally for a growth leader or key growth talent as needed. I recommend starting with (1) and (2), to first validate the fit for PLG. Jump-start the motion and get some early wins. For a recent advisory client of mine, the internal PLG leader I worked with was their former head of investor relationships (who is very analytical and can mobilize resources across the company), and together we drove great success. As you gain more confidence, move to hiring externally. This way, you know you are not moving too quickly too prematurely, and then you can hire the growth leader/team that is the best fit for your specific needs. #### **Pitfall #5: Resistance from current teams** This is often the biggest challenge when an SLG company tries to layer on PLG: - Sales teams may worry that PLG will impact their quota and commissions negatively and that it may bring a bunch of “small potato” customers or sell large customers short. - The marketing team may worry that PQLs will take credit from MQLs and, all of a sudden, their existing workflows with the sales team won’t work anymore. - The growth team, as the new kid, needs to understand how to fit into the overall GTM org’s workflow and forecasting, while also building trust with the rest of the product org. The solution goes back to executive buy-in and commitment, but there also needs to be alignment from functional leaders in sales, marketing, and growth/product to try this out. Initially there will be a lot of ambiguity about how the different pieces fit together and how the new workflow between marketing, sales, and growth should work. But I often see successful teams eventually align on the funnel, metrics, org design, and incentives to make this streamlined and effective. **🔑 Takeaway:** You need a good reason and strong conviction to launch a PLG motion, because the investment is not trivial. If you are layering PLG on top of SLG, expect some resistance from internal teams and workflows. If you are starting net-new with PLG, your main challenge will be a lack of foundation and expertise. And make sure you have a vehicle for PLG, either a free trial or free version. If not, the first step is to build one. ### [Read Parts 4 and 5—Setting up the correct infrastructure, and building your team](https://www.lennysnewsletter.com/p/five-steps-to-starting-your-product). *Thank you, Hila!* *You can find Hila on [LinkedIn](https://www.linkedin.com/in/hilaqu/), [Twitter](https://twitter.com/HilaQu), and [Substack](https://hilaqu.substack.com/). Make sure to check out the Reforge courses she teaches, [Advanced Growth Strategy](https://www.reforge.com/programs/advanced-growth-strategy) and [Experimentation & Testing](https://www.reforge.com/programs/experimentation-testing), and sign-up [here](https://www.reforge.com/programs/product-led-growth) to get updates on Reforge’s new PLG program which launches in Fall 2023.* *See y’all next week!* ## 📣 Join Lenny’s Talent Collective 📣 If you’re hiring, [join Lenny’s Talent Collective](https://www.lennysjobs.com/talent/welcome) to start getting bi-monthly drops of world-class hand-curated product and growth people who are open to new opportunities. ![Image from Five steps to starting your product-led growth motion](https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/fd2a86a0-dc08-4cf2-9095-e88dd7f2e5cf_1476x856.png) If you’re looking for a new gig, join the collective to get personalized opportunities from hand-selected companies. You can join publicly or anonymously, and leave anytime. [Apply to join](https://www.lennysjobs.com/talent) ### ❤️‍🔥 Featured job opportunities 1. **Zendoor:** [Product Designer](https://www.lennysjobs.com/jobs/192a2c6c-e46c-4190-9d81-9a527273c89d)(Remote) 2. **TryHackMe:** [Senior Growth Product Manager](https://www.lennysjobs.com/jobs/4ff08da3-df3e-4952-95bb-b4a032dba623) (Remote) 3. **TryHackMe:** [Head of Marketing](https://www.lennysjobs.com/jobs/f0b0d2d4-f721-4903-a1ef-9125b28b1755) (Remote) **If you’re finding this newsletter valuable, share it with a friend, and consider subscribing if you haven’t already.** Sincerely, Lenny 👋 --- ## [3/51] Five steps to starting your product-led growth motion, part 2 ![Image from Five steps to starting your product-led growth motion, part 2](https://substack-post-media.s3.amazonaws.com/public/images/9a771aa5-d4c1-410b-a496-6cdcf340ff69_4000x2000.png) If you’re just joining us, make sure to read [part one of this series](https://www.lennysnewsletter.com/p/five-steps-to-starting-your-plg-motion), where I cover the first three steps of starting your PLG motion: - **[Step 1: Map your funnel](https://www.lennysnewsletter.com/i/89869825/step-map-your-funnel)** - **[Step 2: Pick a starting point](https://www.lennysnewsletter.com/i/89869825/step-pick-a-starting-point)** - **[Step 3: Anticipate the most common pitfalls](https://www.lennysnewsletter.com/i/89869825/step-anticipate-the-most-common-pitfalls)** ![Image from Five steps to starting your product-led growth motion, part 2](https://substack-post-media.s3.amazonaws.com/public/images/d84b759b-51d4-4190-902d-1e6b8a6938f7_4000x2000.png) Now let’s continue with step 4. *You can find* *on [LinkedIn](https://www.linkedin.com/in/hilaqu/), [Twitter](https://twitter.com/HilaQu), and [Substack](https://hilaqu.substack.com/). Make sure to check out the Reforge courses she teaches, [Advanced Growth Strategy](https://www.reforge.com/programs/advanced-growth-strategy) and [Experimentation & Testing](https://www.reforge.com/programs/experimentation-testing), and sign up [here](https://www.reforge.com/programs/product-led-growth) to get updates on Reforge’s new PLG program, which launches in fall 2023.* ## Step 4. Set up the infrastructure PLG tooling is a fast-evolving space. At a high level, there are two categories to consider: 1. **PLG infrastructure** 2. **PLG tool stack** The infrastructure tools are must-haves for running a PLG motion, while the tool stack includes other optional solutions that make PLG easier. ### 1. PLG infrastructure All PLG companies need three important pieces of infrastructure to enable the motion: **a. Data infrastructure** In a way, product-led growth is data-led growth. You give away your free product in exchange for distribution to a large group of users, plus the insights into how they use your product. Without data, you are flying blind. You may be getting free users, but you have no idea how they are using your product and how to activate and convert them. ![Image from Five steps to starting your product-led growth motion, part 2](https://substack-post-media.s3.amazonaws.com/public/images/8df73d3e-2bd4-43ab-aafe-e6464280b042_3894x952.png) The first component of your data infrastructure is **product analytics tools and data instrumentation**.Tools such as Amplitude and Mixpanel are commonly used here, but, as the saying goes, “garbage in, garbage out.” Companies need to dedicate engineering resources to instrument tracking properly. Many B2B companies are significantly lacking in product analytics—watching product usage closely is less important when you sell via human touch—but without a strong foundation of product analytics, PLG will never work. At GitLab, to address this gap, we set up a telemetry team with a dedicated PM and engineers, responsible for creating data collection frameworks and policies and coordinating all product teams to implement tracking, as well as navigating customer and community communication. The second component is a **customer 360 database**.You want to connect various data sources, such as product usage, marketing campaigns (e.g. Marketo, HubSpot), sales activities (e.g. Salesforce), and third-party firmographic data (e.g. ZoomInfo, Clearbit) into a central database so that you can answer complex questions like “Which features do users A and B from company X use, how many emails did we send them, and is our sales team engaging with them?” Then you can also ingest relevant data back into the tools above to empower smart actions—for example, sending feature usage data to Salesforce so that your sales rep can talk about the features the prospect used in a sales call, or to HubSpot to trigger targeted emails based on feature usage. To achieve this, you need a centralized database and a two-way data pipeline to and from your marketing/sales/product analytics tools. Companies usually achieve this through a combination of homegrown systems and third-party tools (e.g. data warehouse, CDP, ETL, reverse ETL). Follow these links for three examples of PLG data infra built by teams at [Netlify](https://www.netlify.com/blog/2021/04/08/how-the-netlify-data-team-uses-census-for-operational-analytics/), [Mixpanel](https://mixpanel.com/blog/data-analytics-product-led-growth/), and [Unity](https://openviewpartners.com/blog/building-a-plg-data-product-analytics-stack-at-unity/). ![Netlify Data Team's data pipeline](https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/e295b179-c021-47f3-89d9-227ffbd01915_960x720.png) An emerging category of product-led sales/PQL tools—such as [Pocus](https://www.pocus.com/), [Endgame](https://www.endgame.io/), [Toplyne](https://www.toplyne.io/), and [Pace](https://www.paceapp.com/)—can also help connect multiple data sources, identify PQLs, and send them to CRM platforms like Salesforce. **b. Experimentation platform** Once you havedata infra in place, the next important piece of PLG infrastructure is a product experimentation platform. Many companies go through a journey like this: ![Image from Five steps to starting your product-led growth motion, part 2](https://substack-post-media.s3.amazonaws.com/public/images/2a6c43cf-1b03-4acf-9598-261c71cdfe0f_4000x860.png) The most common mistake I see is that companies skip buying and jump right into building. In other words, they bypass the option of using a third-party experimentation tool, often because the engineering and product teams feel like they can build anything. But building an experimentation platform requires not only engineering resources but also data science and statistical expertise. The time and labor it takes to build and maintain a homegrown platform properly is not a small commitment, so I strongly suggest that smaller teams try not to reinvent the wheel, and rather look into tools such as [Optimizely](https://www.optimizely.com/), [VWO](https://vwo.com/), and [Eppo](https://www.geteppo.com/). **c. Lifecycle marketing tools** Many SaaS products that originated from sales-led motions use Marketo or HubSpot as their email marketing tools. In this context, emails are primarily leveraged as a channel to nurture leads and generate MQLs. For a PLG product, however, you’ll leverage channels like email, in-app messages, push notifications, and SMS to drive product usage and user engagement—so lifecycle marketing tools such as Customer.io and Braze are commonly used to trigger the right message to the right user at the right time. ![Image from Five steps to starting your product-led growth motion, part 2](https://substack-post-media.s3.amazonaws.com/public/images/262fb461-cd60-48f0-9eb8-099af3545e1f_2358x1474.png) ### 2. PLG tool stack Once you have the critical PLG infrastructure in place, you’ll find that there are also many specialized tools you can leverage in specific focus areas. Below are some commonly used PLG tool categories. As a disclaimer: I haven’t used all of them personally, and I stumbled upon many tools through extensive reading and research with other PLG experts. My intention is not to recommend specific tools but rather to highlight some tool categories and examples that can help you solve specific PLG problems. ![Image from Five steps to starting your product-led growth motion, part 2](https://substack-post-media.s3.amazonaws.com/public/images/92ca20f6-5348-47e3-a5f4-65b1dbfc7c10_2642x2000.png) **🔑 Takeaway:** If you want to launch a PLG motion, data infrastructure is an absolute must. You need to be willing to make the investment to build it out. Once you have it in place, implement an experimentation platform and lifecycle marketing tools to test things out and move the needle. From there, adopt pieces from the PLG tool stack as needed to solve your most pressing problems more efficiently. ## Step 5. Build your team If you are serious about your PLG motion, you will need to have a dedicated team working on it. But, importantly, there is no “standard” PLG team setup that works for all companies. And even within a company, the ideal structure will change over time too. ### **1. Beginning phase** When you start, your main goal is to prove that a growth team and a PLG motion is a good fit for the business. There are two common setups: - **A dedicated growth team:** You assemble a small PLG team by hiring a growth PM, or reassigning an existing PM to growth, and adding supporting roles such as analyst, designer, and engineers. You can assign the team a KPI, and this team can get started with many in-product PLG experiments in signup/trial, activation and onboarding, and self-service purchase and pricing pages, as well as building data and experimentation foundations. Many companies, including GitLab, start this way. - **A cross-functional tiger team:** You can also start by pulling together existing team members from product, marketing, sales, and data (with support resources in design and engineering). These types of tiger teams are best if you need to tackle larger PLG initiatives that require cross-functional collaboration, for example, launching a freemium product, opening a free trial to everyone, or setting up PQL from scratch (which requires not only product changes but also workflow changes and cross-functional collaboration). For example, MongoDB’s PLG exploration started this way and eventually evolved into a new SaaS freemium offering CloudAtlas. ### **2. Growing phase** If the initial investment and experiment prove to be successful, it will be time to grow the PLG team into a more formal team in the org chart. A typical PLG organization includes a dedicated product growth team, plus dedicated PLG counterparts in the sales and marketing orgs. Most PLG-native companies, such as Airtable and Synk, use this structure. This setup is most common because the growth team will operate similarly to other product teams. It makes sense for the head of growth to report to a CPO. But the growth team also needs to work closely with sales and marketing, with KPIs aligned with the broader GTM organization. I’d also like to point out that the “Head of Product-Led Sales” is the least developed role in the PLG org. This [job posting](https://www.linkedin.com/jobs/view/head-of-product-led-sales-at-canva-3066885612/) from Canva is probably the most specific version of it. But in reality, it is common that the head of SMB/self-service/online sales, or a sales manager, is assigned to collaborate with growth product and marketing teams. ![Image from Five steps to starting your product-led growth motion, part 2](https://substack-post-media.s3.amazonaws.com/public/images/b54374d5-67a7-41bb-90cc-45989457278d_4000x1318.png) Sometimes you may see a head of growth reporting to a CRO, or head of GTM. In this setup, the head of growth acts more like a general manager (GM) for the self-service product line. They usually own self-service ARR as a KPI, which adds up to the overall ARR the sales org is responsible for. They need to be able to drive both marketing and growth product teams so they can control the entire PLG self-service funnel. The benefit of this model is that it minimizes the potential conflict between the growth team and the sales org, because the growth team is not taking away revenue/quotas/commissions from the sales team, and the CRO is incentivized to drive the highest ARR at the lowest cost. This model is more common among B2B companies with established sales and GTM orgs, such as GitHub and Cloudflare. ![Image from Five steps to starting your product-led growth motion, part 2](https://substack-post-media.s3.amazonaws.com/public/images/ee8a0950-5e41-4079-9a9b-c9add9367672_4000x1490.png) ### **3. Scaling phase** Over time, the growth team will become bigger and more established. Under a head of growth, there might be subteams focused on different parts of the funnel, such as acquisition, activation, conversion, and retention, and on infrastructure needed such as platform and telemetry. Again, there is no standard setup, as the subteams should be centered around the biggest levers and gaps in your growth model. ![Image from Five steps to starting your product-led growth motion, part 2](https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/0823fb1c-5733-44ce-8201-b7d7da177116_4000x2000.png) Within each subteam, there will be a PM, plus an analyst, engineer, and designer—the essential roles of a growth squad. But for B2B growth teams, I have also seen companies add relevant team members from marketing and sales/customer success to specific squads, to make the team more effective. ![Image from Five steps to starting your product-led growth motion, part 2](https://substack-post-media.s3.amazonaws.com/public/images/4e6ef4a9-05f2-47e9-8122-d51e448034fb_4000x1092.png) **🔑 Takeaway:** You need a dedicated team to work on PLG. But instead of building out a full organization, start small with a growth product team or a cross-functional tiger team. Then, once PLG is proven to be a good fit, invest more. Heads of growth most commonly report to product leaders, but sometimes they may roll up into sales/GTM organizations to better align incentives and KPIs. ## **In summary** If you are considering adding a PLG motion for your B2B product, follow these 5 steps to guide you by answering these critical questions: 1. **Map your funnel:** How should you construct your PLG funnel differently from your sales-led funnel? 2. **Pick a starting point:**Among acquisition, activation, and conversion, where should you focus first to drive the highest ROI for your PLG effort? 3. **Anticipate the common pitfalls:** What are the possible reasons PLG might fail at your company, and what can you do now to avoid them? 4. **Set up the infrastructure:**What are the infrastructure and tools you’ll need to enable and accelerate PLG within your organization? 5. **Build your team:** Who specifically should be working on PLG, and where should they sit in the org chart to best align incentives and workflow? And finally, don’t miss [part one of this series](https://www.lennysnewsletter.com/p/five-steps-to-starting-your-plg-motion), if you haven’t yet read that. ### 📚 Further study 1. [Top 12 books on SaaS product-led growth](https://hilaqu.substack.com/p/top-12-books-on-saas-product-led) by Hila Qu 2. [Growth Loops Are the New Funnels](https://www.reforge.com/blog/growth-loops) from Reforge 3. [The Product-Led-Growth (PLG) Playbook for B2B Startups](https://www.stage2.capital/blog/the-product-led-growth-plg-playbook-for-b2b-startups) by [Mark Roberge](https://www.stage2.capital/blog/author/mark-roberge) 4. [2022 PLG benchmarks report](https://openviewpartners.com/2022-product-benchmarks/) by OpenView 5. [Software powering the PLG era](https://www.bvp.com/atlas/roadmap-software-powering-the-plg-era) by Bessemer Venture Partners 6. Hila’s favorite PLG podcast episodes: [HubSpot](https://podcast.openviewpartners.com/public/32/OV-%7C-BUILD-21cbd466/653b1fae), [GitLab](https://podcast.openviewpartners.com/public/32/OV-%7C-BUILD-21cbd466/a38d2e0d), [Canva](https://podcast.openviewpartners.com/public/32/OV-%7C-BUILD-21cbd466/fde0dcdd), [From PLG to SLG](https://growthpodcast.drift.com/public/13/Growth-13028/22fd3e02), [Product-led sales](https://www.lennyspodcast.com/elena-verna-on-how-b2b-growth-is-changing-product-led-growth-product-led-sales-why-you-should-go-freemium-not-trial-what-features-to-make-free-and-much-more/) *Thank you* so *much, Hila. You can find* *on [LinkedIn](https://www.linkedin.com/in/hilaqu/), [Twitter](https://twitter.com/HilaQu), and [Substack](https://hilaqu.substack.com/). Make sure to check out the Reforge courses she teaches, [Advanced Growth Strategy](https://www.reforge.com/programs/advanced-growth-strategy) and [Experimentation & Testing](https://www.reforge.com/programs/experimentation-testing), and sign up [here](https://www.reforge.com/programs/product-led-growth) to get updates on Reforge’s new PLG program, which launches in fall 2023.* *Have a fulfilling and productive week 🙏* ## 📣 Join Lenny’s Talent Collective 📣 If you’re hiring, [join Lenny’s Talent Collective](https://www.lennysjobs.com/talent/welcome) to start getting weekly drops of world-class product and growth people, who are passively open to new opportunities. I hand-review every application, and accept less than 10% of candidates who apply. ![Image from Five steps to starting your product-led growth motion, part 2](https://substack-post-media.s3.amazonaws.com/public/images/e77cdc85-4a67-491a-9ae6-ee0fee2add2b_1498x1234.png) If you’re looking for a new gig, apply to join! You’ll get personalized opportunities from hand-selected companies. You can join anonymously, hide yourself from companies, and leave anytime. [Apply Now](https://www.lennysjobs.com/talent/welcome) #### **🔥 Featured job openings** 1. **Surfer:** [Senior Product Manager](https://www.lennysjobs.com/jobs/f6ebf2d0-c425-4690-95de-01b9c6568092) (Remote) 2. **Zendoor:** [Product Designer](https://www.lennysjobs.com/jobs/192a2c6c-e46c-4190-9d81-9a527273c89d)(Remote) 3. **TryHackMe:** [Senior Growth Product Manager](https://www.lennysjobs.com/jobs/4ff08da3-df3e-4952-95bb-b4a032dba623) (Remote) 4. **TryHackMe:** [Head of Marketing](https://www.lennysjobs.com/jobs/f0b0d2d4-f721-4903-a1ef-9125b28b1755) (Remote) ## **🧠 Inspiration for the week ahead** 1. **Watch:** [Basic needs—extreme happiness](https://youtu.be/vC8gJ0_9o4M) “This is day 86 on my full return South Pole Expedition. I’m quite hungry and about to pick up my last cache, which I left on the way in. As a part of my motivational plan, I have on purpose not made notes on what goodies I have left behind in the cache. And on this last one, I didn’t expect very much.” (via Nels) [Watch on YouTube](https://www.youtube.com/watch?v=vC8gJ0_9o4M) 2. **Listen:** [MrBeast: Future of YouTube, Twitter, TikTok, and Instagram on Lex Fridman Podcast](https://youtu.be/Z3_PwvvfxIU) [Watch on YouTube](https://www.youtube.com/watch?v=Z3_PwvvfxIU) 3. **Read:** [2023 is the Year of \_\_\_\_\_\_\_\_\_](https://tomtunguz.com/2023-the-year-of/) by Tomasz Tunguz **If you’re finding this newsletter valuable, feel free to share it with friends, and consider subscribing if you haven’t already.** Sincerely, Lenny 👋 --- ## [4/51] How Coda builds product I’m often asked how to best set up a product development process, and since I’ve only had first-hand experience with a few approaches, I’ve embarked on an ongoing series to learn how the best product teams build product. Part one was on [Figma](https://www.lennysnewsletter.com/p/how-figma-builds-product) (which quickly became my fourth-most-read post of all time), and today I’m excited to bring you a deep dive into [Coda](https://coda.io/)’s unique approach to product. Having spoken with many PMs from Coda over the years, plus having [Coda’s CEO, Shishir Mehrotra, on my podcast](https://www.lennysnewsletter.com/p/the-rituals-of-great-teams-shishir#details), I’ve always seen Coda as an incredibly thoughtful, deliberate, first-principled product culture. After digging into their approach, this proved to be absolutely true. I’ve never seen a product development process this well-thought-out and executed. A big thank-you to [Lane Shackleton](https://www.linkedin.com/in/laneshackleton/), the CPO at Coda, for sitting down with me and answering all of my (very detailed) questions—and also for sharing a dozen plug-and-play templates 🤯 Enjoy! # How Coda builds product ![Image from How Coda builds product](https://substack-post-media.s3.amazonaws.com/public/images/c5669255-2846-40ac-8703-7a61be9e9205_4001x4021.jpeg) ### **1. How far out do you plan in detail, and how has that evolved over the years?** The planning motion you need to build a nascent product with few customers is quite different from that of a more developed product with lots of established customers. As we progressed along that journey over the past seven years, the way we plan evolved a lot. As a general rule, though, our view is that planning should take up no more than 10% of the execution time period. So if you’re planning for a quarter, your planning period should be slightly less than nine days. In the early days, we started with two-week sprints. We’d get small teams together, and they’d run a daily standup to figure out what to accomplish that day. The two-week sprints felt fast and like the team was on the hook to deliver a lot of product and learning in a short span. Then, every three sprints (or six weeks), we’d pop our heads up and do a check-in. The six-week check-ins provided a good moment to reflect on what we learned, improve our team’s rituals, and quickly plan for the next two weeks. The team was composed of two or three PMs and 10 to 15 engineers during this period. Later, the company grew to roughly 30 engineers and four or five PMs. By this time, we had beta customers that the team was working closely with, and the shape of the product was more known. The two-week sprints started to feel a little frantic, and we felt the need to create space to strategize on the longer arc of what we wanted to accomplish. At that time, we moved to six-week sprints, along with H1 and H2 planning. During H1 (first half of the year) and H2 (second half of the year) planning, we made the space we needed to do more long-term strategy work for the company. At the same time, six-week sprints felt like the right window for running fast against specific commitments where we had confidence or something specific we wanted to learn. ![Coda Planning.png](https://substack-post-media.s3.amazonaws.com/public/images/abe75d02-1842-4472-8c14-dc00937113f4_5133x2766.png) For the past two years or so, with a PM team of 12 to 15, we do what I call “Quarterly Plus” planning. We couple that with our annual Big Bets. We start with Big Bets, and those ladder into Quarterly Plus planning (more on this below). To arrive at Big Bets, we use a strategy process that is inspired by one of my favorite strategy books, called *Good Strategy Bad Strategy*. One of the core ideas behind the book is that good strategy is an answer to a specific challenge. So we start our annual planning by reviewing our best insights from our Customers team and Data and Insights team with the goal of determining the most important challenges to address. As a group, we enumerate and rank the key challenges facing the business. Then smaller groups of leaders develop strategies against those key challenges, and the group reviews them together. We run a few [$100 voting exercises](https://coda.io/@lshackleton/100-dollar-voting-exercise) to get a pulse on where we may have some alignment versus not, then we debate further and ultimately decide. By the end of the process, we have a small set of Big Bets. Our Big Bets serve as the foundation for team-level quarterly planning. We ask teams to plan concrete commitments for what they will get done, then provide a look ahead to what’s coming the next quarter—hence, Quarterly Plus. The observation is that it’s very hard to plan six months out in a scenario where you’re learning week to week. But you often have a sense of where you’re headed, what the probable decision points are, and what risks lie ahead. So while it’s not a committed plan, it gives the team and the broader company a look at the longer arc and helps them contextualize your current quarter’s OKRs. ![Screen Shot 2023-01-19 at 11.44.30 AM.png](https://substack-post-media.s3.amazonaws.com/public/images/68fe2ab2-192a-4acb-8574-ce62316dc956_1954x1096.png) I love the creativity our teams bring to this exercise. We commonly see fun patterns of [reactions](https://help.coda.io/en/articles/4919307-adding-reactions-to-your-docs-and-tables) where the teams will intersperse things like heart, question, clap, question reactions in the text of their writeup to get the reader engaged and provide lightweight feedback. Oh, and one team is notorious for including catchy songs about their goals. Last year, this team rewrote the lyrics of [“Hooked on a Feeling”](https://www.youtube.com/watch?v=NrI-UBIB8Jk) to turn their OKR presentation into a memorable music video. Sometimes we’ll even replay it during meetings just for fun. :) The artifact that gets produced is a two-pager, in [two-way writeup](https://coda.io/@lshackleton/two-way-writeups-coda-s-secret-to-shipping-fast) style, with two classic Coda rituals: a pulse for gathering sentiment and Dory for asking questions (named after the fish in *[Finding Nemo](https://en.wikipedia.org/wiki/Finding_Nemo)* who asks all the questions). You can see how it looks below, and [here’s a real example from a product discussion](https://coda.io/@lshackleton/two-way-writeups-coda-s-secret-to-shipping-fast/example-inline-toolbar-3). Here’s also [a template](https://coda.io/@codatemplates/dory-and-pulse), or just type */dory and pulse* in any Coda doc. ![Dory.png](https://substack-post-media.s3.amazonaws.com/public/images/2af9e9ec-62ce-4510-bf3a-987a21a68db3_2154x1200.png) Stepping back, the main drivers of increasing the cycle times, and thus forcing us to plan further out, were: 1. **Customers**—As we spent more time with more customers, we developed a better understanding and more certainty that we were solving the right customer problems. In turn, this understanding enabled us to think further ahead. 2. **Product**—As the product matured and PDE challenges became better-known to our teams. 3. **Strategy cadence**—As the company grew, the feeling of when and how to have deeper strategy conversations changed. When we were small and in the same office, we’d have deep strategy conversations over lunch. As we started to have larger groups across offices, teams needed to be grounded in longer-term plans and naturally accepted less ambiguity. 4. **Decentralization**—As teams got bigger, it made less sense to plan in a centralized way. Initially, the Product, Design, and Engineering leads centralized prioritization stack ranking. As it became more bottom-up and decentralized, we needed to plan further out. Overall, I’m a big believer in decentralized leadership and giving teams autonomy to solve problems. 5. **Dependencies**—An increasing number of dependencies across teams, though we always try to minimize the need for these. ### **2. Do you use OKRs (e.g. objectives, key results, 70% goals, etc.) in some form?** Yes, though we’re always tweaking and evolving [our approach](https://coda.io/@lshackleton/quarterly-plus-okrs) to them. Importantly, we make it clear that OKRs are not a strategy. Strategy planning happens independent of OKR planning. I think it’s very easy to fall into the trap where OKRs seem like a reasonable replacement for a strategy doc or presentation that describes the broader challenges you’re addressing with a clear why and how. When it comes to OKRs, we throw out the piece about 70% of hitting your goal being considered success. I believe this is a luxury you have when there is a money-printing machine in your basement (like Google, where I worked for nine years). Instead, we goal around getting to 100% of our commitments. Obviously we don’t always hit 100% of our OKRs in practice, but the expectation is that you’ve set the OKR because you believe you can deliver on it. Of course, we let people defer or carry over an OKR to the next quarter, or explain why we’ve learned something new that caused us to rewrite or remove it. On the metrics side of OKRs, we try to ensure that teams are distinguishing between “input” and “output” metrics. I find these often get confused. For example, someone might say, “It’s so hard to move activation in OKRs.” But that’s because it’s a lagging output metric, influenced by lots of different inputs, which rarely changes in a single quarter. So we want teams to goal themselves around metrics they have control over. If the team has control over the metric, the question becomes more tractable: Do we believe the input metric will move the output metric? At the end of the planning process, teams present an [OKR writeup](https://coda.io/@lshackleton/quarterly-plus-okrs/template-team-okrs-writeup-13) that describes where they are headed and why it matters to our Big Bets, and include a brief look ahead at the next quarter. Then we embed their OKRs as a table within that writeup. I find this makes it much easier to understand the why behind the detailed rows of OKRs you’re seeing. We also put a Dory at the bottom of these writeups so that anyone can ask any question. For years, we’d review these in a central OKR review meeting, but these days we have people ask and answer questions asynchronously. Here’s a sanitized example of what that feels like for one of our teams, the “Ecosystem Team.” ![Image from How Coda builds product](https://substack-post-media.s3.amazonaws.com/public/images/8ab9e4c2-3504-4db7-b0da-85c92590273b_3798x2970.png) ### **3. How do your product/design review meetings work?** We strongly believe in autonomy for each team, and so our approach to product and design review meetings trickles down from that. There are two main review forums where product and design work is reviewed: Catalyst and Design Huddle. The forum we call [Catalyst](https://coda.io/@david/catalyst-meeting) starts from a few hard-earned lessons from years of running review forums. Most review forums have common problems like not having the right people, or not starting with the right context, or being bulldozed by a senior leader. So we designed Catalyst to solve for some of the problems we’ve observed in past companies. It’s an hour block on the calendar, three times per week at 1 p.m. PT. The foundation is having three hours per week where you can get anyone in the company to review and provide feedback on any type of plans, including product. Anyone can sign up for a Catalyst slot, but we’ve evolved some very clear roles: - **Driver:** runs the meeting and facilitates the decision-making process; often the PM - **Makers:** the “doers” who will be executing on the results of the meeting - **Braintrust:** pulled in to guide and provide context for the Makers; often other leaders - **Interested:** people who want to follow along on the topic Below is our Catalyst schedule, with the option to join as “Interested.” If you’re a Driver, Maker, or Braintrust, it gets auto-added to your calendar by the doc. ![Coda catalyst add buttons.png](https://substack-post-media.s3.amazonaws.com/public/images/f7a4dc1f-856d-48d0-b844-f3ab6fea3e7a_4833x1602.png) One little detail I love is the automated reminder that the doc sends the day before reviews. It’s a Slack message that tells you the topic and the links you need to review and reminds you of the expectations of your role in the meeting. The descriptions include some of my favorite reminders for people in review forums, like “Add lift, not drag,” with a clear description of what that means. ![Catalyst slack.png](https://substack-post-media.s3.amazonaws.com/public/images/b07f1aeb-6a4f-4cc5-9986-37bbfa79fd99_3057x3045.png) The other review meeting is called Design Huddle. It’s a once-per-week forum where designers can bring work at any stage for feedback. A Slack notification goes out from the doc the day before, reminding people to sign up. Designers specify the topics, the project phase, the time they need, and the type of feedback they are looking for. We usually get to two to four topics from various designers per meeting, in a round-robin style. We also encourage designers to invite their PM partners so that they get to hear the feedback directly too. In the meeting, the group usually jumps into Figma and follows the designer around the file, adding comments, riffing, and reflecting on the work. In addition, as we’ve grown, individual teams will have their own Design Huddles or Design Jams. For example, our Core Product team is our largest Design and Product team, so they have a Design Huddle specific to their area. Designers choose which audiences are most appropriate given the topic. ![Design huddle.png](https://substack-post-media.s3.amazonaws.com/public/images/bb90cdc7-43d2-43af-99a5-6e3834274402_3180x2736.png) In addition to the meetings listed above, a lot of our product and design work is done asynchronously through docs. It gives teams a way to clearly document their ideas and get fast feedback. One core example is our product brief. We list out a few high-level stages that most projects go through (below). 1. **Problem**—articulating the problem and how it’s experienced by customers. 2. **Press release**—articulating how we’ll describe the value to customers and aligning on this early. 3. **Approach**—describing the high-level approach we may take and gathering early feedback. 4. **Details**—describing detailed decisions, tradeoffs, and open questions. 5. **Journey**—walking through the customer experience and how our decisions feel in practice. 6. **Retrospective**—reflecting on the effort, what we learned, and what we’ll do next. Teams may use parts of the brief or the whole thing depending on the size of the effort involved. The asynchronous reviews or meetings tend to focus on one of these stages at a time. So for example, we may have a Catalyst meeting that is focused on aligning on the overall approach. Most efforts start with a problem brief. Here’s the intro to the Product Brief template that sets context: ![Product brief - about.png](https://substack-post-media.s3.amazonaws.com/public/images/9d57e77d-8986-4772-83a1-4ccc82e64f0a_2894x1766.png) Here’s our problem page of the brief as an example of how each page is structured: ![Image from How Coda builds product](https://substack-post-media.s3.amazonaws.com/public/images/63b8881f-fa68-440e-b7a8-151eb52da051_3573x3521.png) We sometimes also write a [press release](https://coda.io/@lshackleton/gathering-feedback-on-product-directions-using-press-release-opt). I find that teams can quickly explore broad directions simply by writing two or three versions of a press release. It forces us all to do two things. First, we can read the problem statement and the press release and make sure these things align. Second, as a group, we can get clear on the value we think we’re delivering to customers early in the process. ![Product brief - Press release.png](https://substack-post-media.s3.amazonaws.com/public/images/bd13a569-ff4c-4b49-b533-e0d66c83827c_2894x1892.png) And finally, if you want to look across all upcoming launches, we have a centralized [launch calendar](https://coda.io/@codatemplates/launch-calendar-with-slack-summary). One thing we noticed early in Coda’s history is that we should have a central source of truth for anything that is going out to customers. So it includes a mix of new features, improvements, partner launches, and even email campaigns and blog posts. It’s a highly customized version of tools we’ve seen in other companies, like Google’s LaunchCal. The doc has lots of automations that send reminders to individuals so that they keep the details of their launches up to date. It’s one doc that is always open in my browser. :) Below is a look at our real launch calendar with the actual launches blurred out. We make lots of different views of this table, customized to the needs of different teams. My favorite email every week is a summary that gets sent from this doc of past and upcoming launches. ![Coda launch cal.png](https://substack-post-media.s3.amazonaws.com/public/images/04e71137-ab5a-49b7-bb73-56abff99642d_4593x2775.png) ### **4. Who do PMs report to, ultimately? And are product and design part of the same org? Has this changed over the years?** We have a joint Product and Design team. PMs report to PM leads, and PM and Design leads report to me. I report to [Shishir](https://www.lennysnewsletter.com/p/the-rituals-of-great-teams-shishir#details), the CEO. The joint team is based on an observation from Google and YouTube. There, PMs were often the de facto decision makers on most decisions. Designers were often secondary in the team and decision-making process. I was always frustrated by this dynamic and worked to change it. There were many strong designers who were capable decision makers, and personally I’ve always had a deep interest in the interplay between brand, design, and product. (Early in my career I built a wine business to channel this interest.) My reflection was that the orientation of PMs as decision makers wasn’t due to bad intent on anyone’s part. Instead, PMs were just the people with the most context. They spoke with customers, partners, executives, designers, engineers, and more, so they built up a body of context that no one else had. So that’s part of the principle in deciding to build a joint product and design team. The idea is to enable better product decisions by having PMs and designers share the same context and information. We’re building an incredibly interconnected product, so it’s critical that our internal approach is one where everyone on our team understands how the parts fit together. We’re a few years into the experiment, and I think it works pretty well. The roles of designers and PMs are fluid and focused around high-quality work and enabling their teammates, instead of arbitrary definitions of what makes a PM or a designer. Sometimes, designers write specs. Sometimes, PMs draw in Figma. Our aim is to keep teams focused and moving quickly, with a default-open mentality so that their peers can see and provide engaged feedback on each other’s work in real time. In a related aside, and as a Rick Rubin fan, this made me laugh recently :) ### **5. How do you balance resources between new product work vs. maintenance/bugs?** We let our teams decide based on their unique situations and cultures. The only real rule of thumb is how we handle P0 bugs, which get addressed immediately. The most important cultural element is that Eng teams own their part of the codebase and feel a sense of pride about keeping it in good shape. Beyond that, teams have developed various creative ways of handling maintenance and bugs. Some examples include: regular quality weeks where teams focus only on burning down their list of P2 and P3 bugs, reserving a small number of engineers to always be burning down debt and bugs, or a team intentionally placing themselves in “bug jail,” where once they hit a threshold, they can only work on bugs until the number dips below a certain threshold. From my side, I spend time understanding a team’s portfolio of efforts and helping them think through the tradeoffs of how to invest in normal product improvements versus ongoing maintenance or quality work. ### **6. Broadly, do you structure your teams around products, user types, user journey, outcomes, or something else? Has this changed over the years?** Teams are structured around outcomes. For example, we have a team focused on driving revenue that is a mix of PDE and Customer roles. Within broader teams, we have investment areas (IAs) that can be focused on specific customer journeys like onboarding, or specific long-term outcomes like creating a thriving ecosystem via [Packs](https://coda.io/product/packs). We tend to do some iteration on our structure about once per year, but the core elements have remained consistent for several years now. Regardless of broader team structures, we’ve learned that small teams with autonomy tend to work best. By a small team, I mean roughly one PM, one designer, and two to four engineers. Depending on the effort, they may also have help from our Data and Insights team. ### **7. What’s your primary tool for task management, and bug tracking?** Coda for basically everything. One of the observations behind Coda the product plays out in the way we work. The observation is that despite teams buying lots of packaged software, people usually end up back in the most flexible surface: docs and sheets. Unfortunately, that creates silos and out-of-date copies of all types of important information. One of my favorite things about using Coda for everything, and a reason I’d never want to go back to that world, is that a team can have it all in one place. So the PM is no longer sending lots of different links to docs for specs, bug-tracking links, dashboard links, etc. Our teams usually start by creating a [team hub](https://coda.io/@codatemplates/product-team-hub). Then something cool happens—it organically grows with the needs of the team. So they may start with a brief writeup or some meeting notes. And then an engineer goes in and creates a page with a tasks table. And the group starts working off that. Then the designer may embed a Figma prototype into the original spec. And a researcher might write a research plan in a new page. Then an embed of a dashboard may get added as soon as the project has customers. And finally, the team will continue to do things like write meeting notes, create more specs, and do retrospectives in the same doc. ![Image from How Coda builds product](https://substack-post-media.s3.amazonaws.com/public/images/d294f0db-c627-495b-9348-f7f9b6281d0a_1920x1080.jpeg) There are two awesome things about this as a PM. First, there is never confusion about where to go if you’re on the team; it’s always in your team’s hub. Second, if you want to get your team’s eyes on something, you can add a page in that team hub. Then the team is naturally going to encounter it while they do their work. One unexpected outcome of using team hubs for years is that it also creates a nice historical record as new people join the company. So a new person joins and says, “Why did we make that decision?” and in a world of lots of tools, you have to go try to reconstruct history across a bunch of tools. And in our case, you just go find the team hub from that effort, and often it will have good meeting notes or a [decision log](https://coda.io/@lshackleton/decision-log). In a meeting, I may ask a team about a metric or upcoming plans or OKRs, and instead of searching frantically for the link (like they would in a world of lots of tools), the PM will casually shift one page over in the same doc, and we’ll get right to the discussion. It’s interesting to see the contrast between this decentralized style and some other companies. The team can evolve their workspace as the project or team evolves, versus having to fit into the constructs of several different systems. When you live in the world where your notes, goals, and specs are disconnected from your task management system, you may have a problem that you don’t know exists. ### **8. How many PMs do you have at this point?** About 15. ### **9. Is there a philosophy to how your product team builds product that’s unique or core to how you think about product development?** Three things come to mind. First, my view is that it’s the job of our PMs and designers to turn ambiguity into clarity. Shishir, our CEO, who I’ve worked with for a long time, instilled this in me. In building product, ambiguity is everywhere. It’s in the little things like leaving a meeting without clear next steps. It’s in big things like understanding whether a thing we’re building is actually solving a customer problem. Great PMs and designers, and great teams, relentlessly take ambiguous things, prioritize them, and make them clear—first clear to themselves, then clear to their teams, and ultimately clearer to customers. The second is that Coda is a very “first principles” culture. We have a value called “Right vs. Familiar,” where the basic idea is that the world tends toward the familiar. Our job is to understand whether the familiar thing makes sense, or whether to tear something down and build up our view of what’s “right” from first principles. That sounds pretty philosophical, but in practice it’s a very real tradeoff we experience every day. We’ve taken a first-principles approach in everything from how company equity is structured, to the building blocks in our product, to tiny interaction details in the product. Lastly, practice and preparation. As someone who grew up playing team sports, the value of constant practice and preparation seems obvious. One of the things I’m constantly re-enforcing with our product team, and especially our managers, is the value of excellent preparation. It’s always surprising to me when PMs think they can become great without lots of reps. People are familiar with practicing a presentation, but preparation extends to nearly everything we do. Have a hard conversation with an engineering manager coming up? Practice it 20 times with a peer or your manager. Want to become great at influencing your cross-functional peers? Practice your pitch 10 times until it’s convincing. Or you might write and do four or five iterations of edits to your written communications. The point is, if you want to be great at your craft of building product, your preparation should look more like a pro athlete’s than like someone who’s winging it. Overall, I’ve found that people who take pride in their work often lean heavily into this and prepare 10 times better than the rest. ### **10. What are some fun or unique traditions or rituals on your product team?** We’re a company that loves improving our rituals. We talk a lot about [Bing Gordon](https://www.kleinerperkins.com/people/bing-gordon/)’s definition of a company’s golden rituals. The three criteria he has for rituals are: they are named, every employee knows them by their first Friday at the company, and they are templated. For us, as a company, that’s probably Dory and Pulse. We’ve been collecting and publishing lots of other team rituals in the past year and are [writing a book on the topic](https://coda.io/@shishir/join-the-rituals-of-great-teams-braintrust). Some rituals specific to our product teams are things like: - [Fun remote kickoffs](https://coda.io/@helena/remote-team-kickoff-template), since we’re a hybrid-work culture. - [Decision logs](https://coda.io/@lshackleton/decision-log) to capture key questions and decisions as we build. - A set of specific methodologies around research that we put into [a research kit](https://coda.io/@alissa-doose/coda-for-research-medium-study-kit). - We also alternate who drives our team meeting every week, so that everyone gets a chance to lead. And of course, it’s a maker-y bunch, so when we gather in person, we tend to make stuff together. At our last get-together, the team made dozens of their own pizzas at my house. And at work, we have a regular session we call MakerClass where we host internal and external guests who help us improve our craft. ![Image from How Coda builds product](https://substack-post-media.s3.amazonaws.com/public/images/357d18c7-d820-4aca-b8eb-18fbc5a0deeb_1200x723.gif) Thank you, Lane! Have a fulfilling and productive week 🙏 *P.S. Who else should I cover in this series? What companies have the best or most unique product development processes, and what questions would you like me to ask them? Leave a comment with your thoughts 👇* [Leave a comment](https://www.lennysnewsletter.com/p/how-coda-builds-product/comments) ## 📣 Join Lenny’s Talent Collective 📣 If you’re hiring, [join Lenny’s Talent Collective](https://www.lennysjobs.com/talent/welcome) to start getting weekly drops of world-class product and growth people who are passively open to new opportunities. I hand-review every application and accept less than 10% of candidates who apply. ![Image from How Coda builds product](https://substack-post-media.s3.amazonaws.com/public/images/e77cdc85-4a67-491a-9ae6-ee0fee2add2b_1498x1234.png) If you’re looking for a new gig, apply to join! You’ll get personalized opportunities from hand-selected companies. You can join anonymously, hide yourself from companies, and leave anytime. [Apply to join](https://www.lennysjobs.com/talent) ### 🔥 Featured job opportunities 1. **DX:** [Content Lead](https://www.lennysjobs.com/jobs/d88460d1-d9e0-4f13-b939-968d22d5a85e) (Park City, UT; Remote) 2. **Surfer:** [Senior Product Manager](https://www.lennysjobs.com/jobs/f6ebf2d0-c425-4690-95de-01b9c6568092) (Remote) 3. **Zendoor:** [Product Designer](https://www.lennysjobs.com/jobs/192a2c6c-e46c-4190-9d81-9a527273c89d)(Remote) ## **🧠 Inspiration for the week ahead** 1. **Watch:** [Hania Rani live at Invalides](https://youtu.be/J5oZ80Daduc) [Watch on YouTube](https://www.youtube.com/watch?v=J5oZ80Daduc) 2. **Read:** [“Today you ... tomorrow me”](https://www.reddit.com/r/AskReddit/comments/elal2/comment/c18z0z2/?context=3) via [Trung Phan](https://trungphan.substack.com/p/today-youtomorrow-me) 3. **Read**: [12 Assumptions for Extraterrestrial Life](https://kk.org/thetechnium/12-assumptions-for-extraterrestrial-life/) by Kevin Kelly **If you’re finding this newsletter valuable, share it with a friend, and consider subscribing if you haven’t already.** Sincerely, Lenny 👋 --- ## [5/51] I built a Lenny chatbot using GPT-3. Here’s how to build your own. *👋 Hey, [Lenny](https://twitter.com/lennysan) here! Welcome to this month’s ✨ **free edition**✨ of Lenny’s Newsletter. Each week I humbly tackle reader questions about building product, driving growth, and working with humans.* *If you’re not a subscriber, here’s what you missed this month:* 1. *[Five steps to starting your product-led growth motion, part 2](https://www.lennysnewsletter.com/p/five-steps-to-starting-your-product)* 2. *[How Coda builds product](https://www.lennysnewsletter.com/p/how-coda-builds-product)* 3. *[Discussion: What’s one change you’ve made to your product development process in the past year that’s had the most impact on your team’s success?](https://www.lennysnewsletter.com/p/discussion-whats-one-change-that/comments)* *Subscribe to get access to these posts, and every post.* Last month, [Dan Shipper](https://twitter.com/danshipper) (co-founder and CEO of [Every](https://every.to/)) [launched](https://twitter.com/danshipper/status/1602126357953142784) a chatbot trained on the Huberman Lab podcast, and I was blown away. I pinged Dan to see what it would take to build something like this for my newsletter content (as I was super-curious about the process, plus readers have been asking for it over the past couple of months, including just yesterday!), and by the next morning, Dan had a functioning chatbot 🤯 Not only did Dan offer to build and launch the chatbot, he suggested that we use this opportunity to help people learn how to build their own. And that’s exactly what you’ll find below. Dan walks us through the basics of AI and GPT-3, how to set up an environment to play with the API, and how to train it on your own data. No coding background necessary. I found this incredibly interesting, and, as Dan points out below, “the best way to prepare for this fast-approaching future is to dive in and get your hands dirty.” Let’s dig in. *You can find Dan Shipper on [Twitter](https://twitter.com/danshipper), [LinkedIn](https://www.linkedin.com/in/danshipper/), and his [Every newsletter](https://every.to/subscribe?v=3) where he shares his ongoing research into all things AI, tech, and personal development. Also, Dan \*just\* launched a [cohort-based course to help you build your own chatbot](https://www.chatbot-course.com/), so if you’d like to get even deeper, definitely check it out.* # How I built a Lenny chatbot *by Dan Shipper* ![Image from I built a Lenny chatbot using GPT-3. Here’s how to build your own](https://substack-post-media.s3.amazonaws.com/public/images/6bf83feb-d725-4904-a08d-409b093ea786_3024x4032.jpeg) Lenny’s Newsletter is great, but it’s inherently one-sided. It talks *to* you, but you can’t talk back. Wouldn’t it be awesome if you could ask Lenny’s Newsletter a question? Well, now that’s possible. Over the course of last week I built an AI-powered chatbot for Lenny that uses his entire newsletter archive to answer any question you have about product, growth, and startups. It’s built with GPT-3 and it took a couple hours to do, end to end. In this post, I’ll break down exactly how the Lenny Bot works so you can learn to build one yourself. ![Image from I built a Lenny chatbot using GPT-3. Here’s how to build your own](https://substack-post-media.s3.amazonaws.com/public/images/03379035-15b1-4cd6-a5ed-6a768e1f2949_1640x1298.png) You can also use it right now 👇 [Try the Lenny Chatbot](https://www.LennyBot.com) AI technologies like GPT-3 are still in their infancy, but they’re going to be everywhere soon. Staying on top of how they work is going to be crucial to your career in tech, and especially in building product. The best way to prepare for a fast-approaching future is to dive in and get your hands dirty. That’s what I’ve been doing over at [Every](https://every.to)—I’m writing weekly about my experiments with using GPT-3 to [build chatbots](https://every.to/chain-of-thought/i-trained-a-gpt-3-chatbot-on-every-episode-of-my-favorite-podcast), [understand patterns in my thinking](https://every.to/chain-of-thought/gpt-3-is-the-best-journal-you-ve-ever-used), and [organize my notes](https://every.to/chain-of-thought/the-end-of-organizing). I’m trying to understand these technologies as deeply as possible, and I want to share with you what I’ve learned. It might seem intimidating to get started, especially if you don’t have a technical background. But I’m going to start at the very beginning. You’ll be able to understand what I’m talking about and begin using it yourself,*no programming required***.** (And if you have any questions, you can always paste them into ChatGPT—it’ll give you good responses ;) ## Preamble: GPT-3 vs. ChatGPT You’ve probably heard of both GPT-3 and ChatGPT. Maybe you use those terms interchangeably, or maybe you’re not really sure what the difference is. It’s worth taking a minute to understand how they differ. GPT-3 and ChatGPT are both “large language models.” These are machine-learning models that are very good at generating natural-sounding text, code, and more. They’re trained using large data sets of text, and this helps them get very good at lots of natural-language tasks, like answering questions, writing marketing copy, and holding conversations. So what’s the difference between them? And why is it important? GPT-3 is a general-purpose language model—it can hold conversations, write code, complete a blog post, do translation tasks, and more. You can think of it like a flexible know-it-all that can expound on any topic you want. ChatGPT is a version of GPT-3 that’s been turned into a friendly, inoffensive extrovert. Basically, it’s been specifically trained to be good at holding conversations. OpenAI does this by repeatedly holding conversations with the model and then rewarding it for good responses and punishing it for bad ones—a process called [Reinforcement Learning from Human Feedback](https://huggingface.co/blog/rlhf). You’d think since we’re building a chatbot we’d use ChatGPT, right? Unfortunately not. OpenAI hasn’t created a way for us to interact with the ChatGPT model directly—you can only use it through the ChatGPT web app. So it’s not suitable for our purposes. We want to be able to interact with the model directly, not through an intervening app. So instead we’ll use GPT-3 for our explorations. It’ll give us all the power and flexibility we need to build a chatbot. We’ll do it in two ways: using [OpenAI’s Playground](https://platform.openai.com/playground) to start, and with a little bit of code after that. The Playground is a web app that lets you prompt GPT-3 directly and get responses back, making it a great place for us to experiment. Let’s start there and see how things go. ## The basics of GPT-3 The really basic way to explain GPT-3 is that it likes to finish your sentences for you. You provide it with a starting set of words, and it tries to figure out the most likely set of words that follow from your input. You can provide any string of words. It’s very flexible and can talk about anything you want, from product management to astrophysics. The set of words you provide is called a *prompt*, and the answer you get back from GPT-3 is called a *completion*. Below is a simple example in the [GPT-3 Playground](https://platform.openai.com/playground?model=text-davinci-003). The non-green text is what I typed in as a prompt, and the green text is what GPT-3 returned as the completion: ![Image from I built a Lenny chatbot using GPT-3. Here’s how to build your own](https://substack-post-media.s3.amazonaws.com/public/images/56ba3ae9-273e-4efb-a682-7e2f1731324d_1600x710.png) You can see that GPT-3 performs well on a simple completion like this. But it performs well even when the prompts get more complicated. You can, for example, prompt it to define product-market fit: ![Image from I built a Lenny chatbot using GPT-3. Here’s how to build your own](https://substack-post-media.s3.amazonaws.com/public/images/a10d7186-361d-464a-a561-e7df762021a6_1600x885.png) That’s not bad! Since it can already answer product questions, this looks like it will be useful for our Lenny Chatbot out of the box. You might assume that on the back end, GPT-3 has some compendium of concepts that it’s using to understand your sentence and generate the right completion. But in reality, it’s a probability engine. It’s just very good at, given a prompt, finding the words that are most likely to follow it. It can do this because it’s been [trained by analyzing the statistical probabilities of sentences from basically the entire internet](https://en.wikipedia.org/wiki/GPT-3#Training_and_capabilities), so it has a lot of data to learn from. (All those Medium posts about product-market fit are good for something!) If you want to learn more about how this works from a technical perspective, I recommend checking out Andrej Karpathy’s [videos](https://www.youtube.com/@AndrejKarpathy). ## Turning GPT-3 into a chatbot Right now we have the bot answering questions, but how can we get it to actually chat with us? Ideally we want it to get messages from the user and give responses back. And we want to give it a little bit of personality. It would be great if it sounded something like Lenny himself—warm, friendly, and smart. That’s pretty simple to do with GPT-3 as well. We can ask it to behave in this way in our prompt: ![Image from I built a Lenny chatbot using GPT-3. Here’s how to build your own](https://substack-post-media.s3.amazonaws.com/public/images/7192d681-668c-4fc7-befa-e2d4da5497ea_1600x1009.png) As you can see, GPT-3 has read enough chatbot transcripts and product management posts to be able to start a conversation with us based on this kind of prompt. We can continue our conversation with it by writing more of the transcript: ![Image from I built a Lenny chatbot using GPT-3. Here’s how to build your own](https://substack-post-media.s3.amazonaws.com/public/images/cf483800-74be-4633-8f04-7287ee6dbbe2_1600x1376.png) Notice what we’re doing—every time we run the model, we feed it the entire transcript of what came before in the conversation, and that guides its responses: ![Image from I built a Lenny chatbot using GPT-3. Here’s how to build your own](https://substack-post-media.s3.amazonaws.com/public/images/b5f606b3-de7e-4ad0-9e62-721258c9d9d2_1456x1600.png) Success! It’s chatting with us at a high level about product management questions, like how to build a roadmap. But what if we want to get responses to questions that are harder to answer? For example, one of the biggest values of Lenny’s Newsletter is the amount of benchmark data he provides so that you can measure how well you’re doing against the best in the business. If we go back through Lenny’s archive, we find in his post “[What is a good activation rate](https://www.lennysnewsletter.com/p/what-is-a-good-activation-rate)” that the average activation rate across different kinds of products is about 34% and the median is 25%. Let’s ask GPT-3 and see whether it knows this: ![Image from I built a Lenny chatbot using GPT-3. Here’s how to build your own](https://substack-post-media.s3.amazonaws.com/public/images/ab3affee-84ae-4269-9bc8-1e4974ae9c08_1540x1600.png) Not bad! It’s in the right ballpark, but its estimate for a good activation rate is a little lower than Lenny’s data says is the average. Ideally, since it’s a Lenny chatbot, we want it to return the benchmark he provides in his article. Once we start really probing the bot, this kind of problem only gets bigger. For example, if we ask it who Substack’s first publisher was—a topic Lenny covered in “[How to kickstart and scale a consumer business, Step 4](https://www.lennysnewsletter.com/p/consumer-business-find-first-users)”—it will say it was Andrew Sullivan: ![Image from I built a Lenny chatbot using GPT-3. Here’s how to build your own](https://substack-post-media.s3.amazonaws.com/public/images/b5605455-8b6c-4d73-a92f-98f3470eec0a_1568x1600.png) This answer sounds confident, but it is incorrect. (The correct answer is [Bill Bishop](https://sinocism.com/).) This isn’t an isolated incident. For example, if I ask, “Is it best for consumer startup ideas to come from founders who are trying to solve their own problems?” it replies: ![Image from I built a Lenny chatbot using GPT-3. Here’s how to build your own](https://substack-post-media.s3.amazonaws.com/public/images/7d71a34e-430a-4738-9fd1-793b86f1070b_1600x1387.png) This is confident—and also wrong. As Lenny covered in “[How to kickstart and scale a consumer business](https://www.lennysnewsletter.com/p/kickstarting-and-scaling-a-consumer),” less than a third of consumer startup ideas came from founders solving their own problems. So it’s not “absolutely” a best practice. What’s going on here? There are two intertwined problems: 1. **GPT-3 tends to “hallucinate.”** [Hallucination](https://en.wikipedia.org/wiki/Hallucination_(artificial_intelligence)) is a technical term that refers to the model’s propensity to return nonsensical or false completions depending on what’s asked of it. Basically, the model is like a very smart and overeager 6-year-old. It will try its best to give you a good answer even if it doesn’t know what it’s talking about. OpenAI and other foundational-model companies are actively working on this problem, but it’s still pretty common. It’s compounded by the second problem. 2. **GPT-3 might not have the right data.** GPT-3 has a knowledge cutoff—meaning all of the information it uses to produce its responses is frozen in 2021. Also, much of Lenny’s writing is behind a paywall. That means that even though GPT-3 has read the whole internet, it won’t have the material from his newsletter available to construct answers. So how could we construct a chatbot with GPT-3 that solves these problems? Ideally we want to feed GPT-3 the information it needs to answer questions on the fly. That way it will have the right information available and will be less likely to make things up. There’s a pretty easy way to do that. ## Stuffing context into the prompt When I was in high school, I had a physics teacher who allowed open-book tests. He would allow you to bring a single index card to the test with any of the formulas that you thought you needed to answer the questions. The idea was that memorizing the formulas didn’t matter so much. What mattered most was using your reasoning abilities to turn the formulas into the correct answer. People would come to the test with microscopic handwriting covering every inch of their notecard. It turns out that this was helpful! The formulas gave you the context you needed to think through the answers to the questions on the tests, so the tests became less about your memory and more about how well you understood the topic. (I got a B in that class, so my understanding was pretty average.) You can work with GPT-3 in a similar way. If, in your prompt, you include the equivalent of a notecard with context to help it answer the question, it will often get it right. (Its reasoning capabilities are better than mine.) Let’s go back to an example GPT-3 failed on earlier and see if we can correct it with this technique. As I mentioned above, in “How to kickstart a consumer business,” Lenny notes that less than a third of the founders got their idea from trying to solve their own problem: ![Image from I built a Lenny chatbot using GPT-3. Here’s how to build your own](https://substack-post-media.s3.amazonaws.com/public/images/28de9446-2042-4bcc-9424-5e2e43ed9655_1428x914.png)![Image from I built a Lenny chatbot using GPT-3. Here’s how to build your own](https://substack-post-media.s3.amazonaws.com/public/images/4a68d4d0-c3cc-4afb-a291-0b243ff79a0f_1563x661.jpeg) Last time, when we asked GPT-3 if it was best for consumer business founders to try to solve their own problem, it responded, “Absolutely!” Which, given what’s in Lenny’s article, is wrong. Let’s ask GPT-3 this question again—but let’s give it a little help. We’ll feed it the equivalent of a notecard. Written on the notecard will be the section of Lenny’s article that contains the answer. Then we’ll see if it can get it right. To make this fair, we won’t give it just the text containing the answer. We’ll give it a bunch of the surrounding text in the article as well to see how it does. Let’s see if it works: ![Image from I built a Lenny chatbot using GPT-3. Here’s how to build your own](https://substack-post-media.s3.amazonaws.com/public/images/1f193353-11e5-4092-84ad-cbfdf0c22e59_1552x1121.jpeg) Success! Now it tells us that less than a third of founders were trying to solve their own problem. This is great—all we have to do is write all of Lenny’s posts on a little notecard and feed it into the model along with any question we have, and it will answer based on what he’s written. But this introduces another problem: space limitations. The notecard analogy is apt because there’s limited space in the prompt—right now, about 4,000 tokens (each token is the equivalent of ¾ of a word). So we can’t feed in Lenny’s entire archive on every question. We have to be very choosy about what we put in there. Let’s talk about how to solve this. ## Embedding Lenny’s archive At this point we’re going to have to move out of manual interactions with GPT-3’s Playground and start using chunks of code that work directly with the GPT-3 API. The code we’re building is going to do the following tasks: 1. We need to download and store Lenny’s archive in a way that makes it easily searchable for our bot. 2. We need some code that will help find relevant chunks of text from the archive of Lenny’s content that we created in the previous step. 3. When a user asks a question, we want to use the code from the last step to get the chunks of text that are most likely to answer the question, and put them into the prompt that we send to GPT-3. 4. We’ll display the resulting answer to the user. This is simple to do with a library called [GPT Index](https://gpt-index.readthedocs.io/en/latest/), an open-source library created by [Jerry Liu](https://twitter.com/jerryjliu0). It’s completely separate from OpenAI but built to help with tasks like this. Here’s how it works: 1. Create an index of article chunks 2. Find the most relevant chunks 3. Ask our question to GPT-3 using the most relevant chunk *Note:* This is about to get a little bit more complicated and technical. If you’re interested in that, read on to get an explanation of exactly what’s happening here! You can access and run the code from this article in a Google Colab file [here](https://colab.research.google.com/drive/1p2AablavDkSXly6H-XNLoSylMtoz7NDG?usp=sharing). Colab is a cloud-based programming environment that will let you run everything right from your browser. (If you have questions about any of this, reach out to me on [Twitter](https://www.twitter.com/danshipper).) If you’re not interested in the technical details, skip to the end to try out the chatbot for yourself. Still here? Great. Let’s start with index construction. ### **Constructing our index** The first thing we need to do is construct our index. You can think of an index as like a database: it stores a collection of pieces of text in a way that makes them easily searchable. To construct the index, we first collect Lenny’s entire newsletter archive into a folder. Then we ask GPT Index to take all of the files in the folder and break each file into small, sequential pieces. Then we store those pieces in a searchable format. The code looks like this: ![Image from I built a Lenny chatbot using GPT-3. Here’s how to build your own](https://substack-post-media.s3.amazonaws.com/public/images/62015e67-94b6-48a7-b623-693cd3b0ca2b_1600x777.png) When we run this function, we’ll have created a file called index.json that contains chunks of Lenny’s articles converted into a format that makes them easily searchable. These are called [embeddings](https://platform.openai.com/docs/guides/embeddings)—a condensed mathematical representation of each chunk of text. Just like latitude and longitude can help you tell how close two cities are on a map, embeddings do the same kind of thing for text chunks. If you want to know if two pieces of text are similar, you just calculate the embeddings for them and compare. Text chunks with embeddings that are “closer” together are similar. Embeddings are handy for us, because when a user asks a question, they’ll make it easy for us to search Lenny’s archive and find articles that are most likely to answer our question. With that in mind, let’s run the code and see what happens. ![Image from I built a Lenny chatbot using GPT-3. Here’s how to build your own](https://substack-post-media.s3.amazonaws.com/public/images/3e0446ef-b109-42c8-a839-243033d51008_1582x988.png) Success! The Lenny’s archive is fully indexed, and we can query it to find relevant chunks of documents and use those chunks to answer our questions. (Be careful if you do this with big documents, as embeddings cost $0.0004 for every 1,000 tokens.) ### **Asking our question** To query the index we created in the last section, all we have to do is paste a question into GPT Index. It will then: - Find the chunks of our index that are most relevant to the question - Combine those chunks and our question into a prompt that it sends to GPT-3 - Print the output Here’s what the code looks like: ![Image from I built a Lenny chatbot using GPT-3. Here’s how to build your own](https://substack-post-media.s3.amazonaws.com/public/images/06b241d2-10e4-4b20-ae97-f72ec02a3883_1250x256.png) And if I ask it, “What is good retention for a consumer social product?” it says: “25% is good.” If I ask it now, “Is it best for consumer startup ideas to come from founders who are trying to solve their own problem?” it automatically comes back with the right answer: *“Based on the research, it appears that it is a good idea for consumer startup ideas to come from founders who are trying to solve their own problem, as this was the strategy used by around 30% of the most successful consumer companies.* *However, it is not necessarily the best strategy, as other strategies such as paying attention to curiosity, what’s already working, and paradigm shifts were also used by a significant number of successful companies.”* We now have an end-to-end solution to turn questions into answers that are based on Lenny’s archive. And it only took a few lines of code! If you want to see the results in action, you should check out the bot here: [Try the Lenny Chatbot](https://www.LennyBot.com) You can also [access the full source code for this article in this Colab notebook](https://colab.research.google.com/drive/1p2AablavDkSXly6H-XNLoSylMtoz7NDG?#scrollTo=4gHdfdtsSGEW). ## What all of this means It’s important to keep in mind: this is just the beginning. The horizon of possibility is shifting almost every day with these technologies. What’s hard to do today will be easy in a matter of months. We’re just beginning to unravel the implications of this technology, but here are a few of the most relevant possibilities. #### **Content creators get a new format** Every newsletter, book, blog, and podcast that’s used as evergreen reference information by its audience can now be repackaged as a chatbot. This is great for audiences because it means that any time you want to know what Lenny (or any other creator) says about a topic, you’re not going to have to sort through an archive of articles or podcast episodes in order to get their answer to your question. Instead, you’ll just be able to use Lenny’s chatbot to get his answer instantly—and then maybe later read the article in full if you want more details. This is also great for content creators. They now get the ability to monetize the content they’ve already created in new ways, and lessen the amount of repetitive questions they have to answer. This will (hopefully) give them more time and money to create great content. A new class of content creators will learn to create compelling chatbot experiences that combine their personality and worldview for their niche audience in the same way that some creators learned to create compelling YouTube videos, newsletter articles, or TikTok clips. #### **Organizing your notes is over** You’re not going to need a fancy filing system to make sure that you remember what got said in a meeting, or what you learned from the latest book you read. Instead, you’ll be able to ask a chatbot that sits on top of all your notes and returns the right answer to you. This type of chatbot will be able to act like a personal research assistant that can detect patterns in what you’re writing down and synthesize information to help you understand what you think about a topic. #### **Enterprise knowledge management is changing forever** Chatbots aren’t just valuable for content creators and personal knowledge management. They’re also a big deal for companies. Every company currently struggles with making sure all of the knowledge in their organization is written down, up to date, and searchable. In the future, chatbots could serve as a kind of automated librarian for company knowledge. They’d be responsible for answering questions by sourcing information from the right person or document. They could also be used to proactively record tacit knowledge into living documents by periodically interviewing key people about their progress on company initiatives. They’ll eliminate the repetitive questions that get asked inside organizations and make it easier for larger companies to collaborate effectively. ## **Wrapping up** All of this is just the start. Ultimately, the limit for these technologies is our imagination and our desire to improve them. If you use Lenny’s chatbot or follow the code samples, you’ll see that it’s very promising but not yet perfect. There are tremendous returns available to the individuals or groups who learn to make these types of experiences truly incredible for users. I hope this inspires you to embark on that journey. If you’re really into this and want to go deeper, I write a column over at Every where I unpack my AI experiments and explorations. Check it out [here.](https://every.to/subscribe?v=3) ### 📚 Further study 1. [But what is a neural network?](https://www.youtube.com/watch?v=aircAruvnKk&list=PLZHQObOWTQDNU6R1_67000Dx_ZCJB-3pi) 2. [Neural networks and deep learning](https://neuralnetworksanddeeplearning.com/) 3. [Transformers, explained](https://www.youtube.com/watch?v=SZorAJ4I-sA&t=143s) 4. [Let’s build GPT: from scratch, in code, spelled out](https://www.youtube.com/watch?v=kCc8FmEb1nY&t=4511s) 5. [The end of organizing](https://every.to/chain-of-thought/the-end-of-organizing) 6. [GPT-3 is the best journal I’ve ever used](https://every.to/chain-of-thought/gpt-3-is-the-best-journal-you-ve-ever-used) 7. [6 new theories about AI](https://every.to/napkin-math/6-new-theories-about-ai) *Thanks, Dan! You can find Dan Shipper on [Twitter](https://twitter.com/danshipper), [LinkedIn](https://www.linkedin.com/in/danshipper/), and especially make sure to [subscribe to Every](https://every.to/subscribe?v=3), where he shares his ongoing research into all things AI, tech, and personal development.* *Have a fulfilling and productive week 🙏* ## 📣 Join Lenny’s Talent Collective 📣 If you’re hiring, [join Lenny’s Talent Collective](https://www.lennysjobs.com/talent/welcome) to start getting weekly drops of world-class product and growth people who are passively open to new opportunities. I hand-review every application and accept less than 10% of candidates who apply. ![Image from I built a Lenny chatbot using GPT-3. Here’s how to build your own](https://substack-post-media.s3.amazonaws.com/public/images/e77cdc85-4a67-491a-9ae6-ee0fee2add2b_1498x1234.png) If you’re looking for a new gig, apply to join! You’ll get personalized opportunities from hand-selected companies. You can join anonymously, hide yourself from companies, and leave anytime. [Apply to join](https://www.lennysjobs.com/talent) ### ❤️‍🔥 Featured job opportunities 1. **MetaMap:** [VP, Product](https://www.lennysjobs.com/jobs/74ca739b-4b51-4d55-8727-6606327fae58) (SF, Miami, Mexico City) 2. **DX:** [Content Lead](https://www.lennysjobs.com/jobs/d88460d1-d9e0-4f13-b939-968d22d5a85e) (Park City, UT; Remote) 3. **Surfer:** [Senior Product Manager](https://www.lennysjobs.com/jobs/f6ebf2d0-c425-4690-95de-01b9c6568092) (Remote) 4. **Zendoor:** [Product Designer](https://www.lennysjobs.com/jobs/192a2c6c-e46c-4190-9d81-9a527273c89d)(Remote) **If you’re finding this newsletter valuable, share it with a friend, and consider subscribing if you haven’t already.** Sincerely, Lenny 👋 --- ## [6/51] Growth inflections > ## Q: My product is growing, but slowly. I’m wondering if growth will ever take off. What have you found most often precedes an inflection in growth? I love this question. Though I’ve written about [how to kickstart a product’s growth](https://www.lennysnewsletter.com/p/consumer-business-find-first-users), [ways to boost growth](https://www.lennysnewsletter.com/p/turbo-boosts), and [what it feels like once you’ve found product-market fit](https://www.lennysnewsletter.com/p/what-it-feels-like-when-youve-found), I’ve never looked into what precedes sudden inflections in growth. ![Image from Growth inflections](https://substack-post-media.s3.amazonaws.com/public/images/8d81d5f0-bd32-4002-9915-17f08ac0291a_2134x1600.png) To find an answer, I spent the past couple of weeks researching inflection points for two dozen of today’s most successful products, and I found a few surprises: 1. The majority of growth inflections sprang from a product improvement 2. A surprising number of growth inflections came from an unexpected external event, without the product changing at all 3. Many of the most durable inflections came from the company leaning into their primary growth engine (e.g. SEO, virality) Below, I’ll share stories of growth inflections from Figma, DoorDash, Tinder, YouTube, Snap, Airbnb, and many others. Here’s a quick overview: ![Image from Growth inflections](https://substack-post-media.s3.amazonaws.com/public/images/8caac5aa-d8dc-4c06-a730-a4ee4f515fcf_2318x1159.png) It’s important to note that long-term sustainable growth is never as simple as just one thing. Although a single moment can (and often does) ignite growth, to build a durable business you’ll eventually need to get all three pieces right: 1. Ongoing product improvements, to build something people want/need 2. Ongoing events that get the word out 3. A well-oiled growth engine But it often starts with a single moment. Let’s explore these stories. *Thank you, [Badrul Farooqi](https://farooqib.com/) (Figma), [Cem Kansu](https://www.linkedin.com/in/cemkansu/) (Duolingo), [ChenLi Wang](https://www.linkedin.com/in/chenliw/) (Dropbox), [Evan Goldin](https://www.linkedin.com/in/evangoldin/) (Lyft), [Jeff Chang](https://www.linkedin.com/in/jeff-chang-82467459/) (Pinterest), [Jonathan Badeen](https://www.linkedin.com/in/badeen/) (Tinder), [Max Mullen](https://www.linkedin.com/in/maxmullen/) (Instacart), [Merci Grace](https://www.linkedin.com/in/merci/) (Slack), [Micah Moreau](https://www.linkedin.com/in/micahmoreau/) (DoorDash), [Lauryn Isford](https://www.linkedin.com/in/laurynisford/) (Airtable), and [Steve Chen](https://www.linkedin.com/in/stevechen2/) (YouTube) for contributing to this post.* ## 1. Product improvements Though Andrew Chen popularized the [Next Feature Fallacy](https://andrewchen.com/the-next-feature-fallacy-the-fallacy-that-the-next-new-feature-will-suddenly-make-people-use-your-product/)—the mistaken belief that the next new feature will suddenly make people use your product—interestingly, the most common source of growth unlock appears to be adding that one additional feature. This doesn’t mean that *you* are one feature away from 🚀, but it does tell me that a better product experience is often at the heart of unlocking growth. #### Figma (releasing team libraries) > “**The biggest inflection began with the public release of [Team Libraries](https://www.figma.com/blog/team-library-1-0/)** in 2017 (about a year after launch). The sheer amount of leverage that it provided to design teams made Figma such an obvious winner against Sketch/Framer/etc. It changed the entire conversation with large teams.” > > —[Badrul Farooqi](https://farooqib.com/), first PM at Figma #### Snap (launching ephemeral messaging, Stories, and face filters): > “**Initially for Snap, the biggest growth accelerations consistently came from raw, pure, product-innovation-driven growth. Ephemeral messaging in 2011, Stories in 2013, and face filters in 2015—those drove our growth.** > > When IG copied Stories, it may have curtailed Snap’s growth in some international markets, and maybe with older demos where IG already had penetration, but it didn’t stop us. Snapchat was already dominant with younger users, in the West in particular. > > There was also stuff like Bitmoji, Geofilters, Group Chats, etc., but those three above were the hits that everyone wanted to copy. > > Later, growth was driven by much more traditional growth tactics, like performance, localization, notifications, and network expansion.” > > —Anonymous early Snap employee #### **Facebook (adding translations, and then mobile)** ![Image from Growth inflections](https://substack-post-media.s3.amazonaws.com/public/images/48f5d7a4-dce8-4ec6-b9b6-ff1adfa986a9_1564x878.png) > “This is the timeline of Facebook from 2004 to 2015, their growth story. > > Facebook had an excellent data science team, and they came to the conclusion that Facebook would be roughly 400 million users by 2015. Now we know that wasn’t really true, as they actually started growing really fast in 2008-2009. This actually was a result of something that the growth team came up with: translations. You want to make your product available for as many people in the world, and Facebook started hitting the limit on people who spoke English. They assumed that since the content was in the language while Facebook was in English that it would continue to scale, but that wasn’t the case. **So they implemented this new platform that automatically translated Facebook into hundreds of languages, and the growth re-accelerated.** > > **The same thing started to happen again in 2010-2011: mobile**. The data science team was forecasting Facebook to be about 700 million users, or something like that, and because most of those people were using Facebook on computers, they hadn’t intended this massive shift that was happening in 2010-2011, which is people getting smartphones. Facebook had to switch entire teams to mobile—they even have large training classes for engineers who just are learning mobile. […] > > The initial forecast of Facebook’s growth was about 400 million people, but Facebook today is an over-2-billion-user platform. If there’s anything we can learn from this, it’s that if you’re intentional about growth and you’re really trying to sort of break through these forecasts in these ceilings, you can grow really, really fast.” > > —[Gustaf Alstromer](https://youtu.be/T9ikpoF2GH0), YC Partner #### Netflix (tweaking the combination of offerings) > “The original idea of Netflix didn’t work. But hundreds of failed experiments later, and after many a sleepless night of worrying, **we finally tested the unlikely combination of ‘No due dates, no late fees’ and subscription that ultimately was the thing that ended up working. And boy, did it work. Within days of testing it, we knew we had a winner.** > > **Where before we were struggling to get traffic, all of sudden we couldn’t keep up.** Our previously prodigious amounts of inventory were suddenly not enough. Engagement soared, churn went dramatically down. Everything started working! > > If there was a moment when Netflix stopped being a startup and became a real company, it was then.” > > ー[Marc Randolph](https://marcrandolph.com/), co-founder and first CEO #### Tinder (launching their Android app—plus see part 2 below) > “**We saw one of our biggest growth spikes when we launched our Android app.** We knew there was pent-up demand for it, and we also knew we couldn’t really expand to markets outside of the U.S., U.K., and Australia without Android. This also coincided with localizing the app with translations. We didn’t really bother doing much international marketing and promotion until we had all of that in place. At the same time, we were so plagued by server issues and other issues that I was likely distracted and scared that we were going to lose it all.” > > —[Jonathan Badeen](https://www.linkedin.com/in/badeen/), co-founder #### Duolingo (launching on mobile) ![Image from Growth inflections](https://substack-post-media.s3.amazonaws.com/public/images/aaa411e9-57cb-4e6d-8cb7-dfcb6cfb678d_1232x536.png) > “**The first big growth unlock for Duolingo was the launch of the mobile apps, and betting on mobile as our main platform.** Duolingo originally launched as a website. In October 2012 we launched the iPhone app, and it quickly became the number-one downloaded app in the education category. We sent traffic from our website to fuel these downloads. We launched the Android app in May 2013, about seven months after the iPhone app launch. At the end of 2013, Apple chose Duolingo as the iPhone app of the year.” > > —[Cem Kansu](https://www.linkedin.com/in/cemkansu/), VP of Product In marketplace businesses, the user product experience is tied directly to the quality and quantity of supply, and so, unsurprisingly, the biggest improvements, and thus inflections, in marketplace businesses usually come from improving supply: #### **Airbnb (expanding internationally and adding translations)** ![Image from Growth inflections](https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/89416a06-a20a-4cbe-ab99-1533cdef3cf3_1636x576.png) > “No sooner had we learned to build supply than competition came knocking on our door in the form of a European copycat. (And when I say copycat, I mean it. We even found our job reqs on their site—some with Airbnb still listed as employer!) The competitor had just received $90 million in funding and ramped up to 400 employees in two months. Our guests use Airbnb to travel, and if we lost Europe, we really wouldn’t be in the business of travel anymore. Growing on our own timetable was officially out the window. > > We needed to change tactics and go on an all-out blitz to capture as much of the European market as we could. First and foremost, that meant we had to be local. It was September 2011, and our site was woefully U.S.-centric. In just over three months, I purchased top-level domains for nine countries, assembled a global translation team, contracted with Akamai to reduce site load time, and restructured the UI on every front-facing interaction to support long text strings (crucial when you go from ‘average’ to ‘*durchschnittliche*’). We also shifted to a multi-currency payment platform. > > Logistics in hand, it was time to build supply and demand. We’d already seen the value of having people on the ground, so we opened offices in eight European cities. [Co-founder and CEO] Brian [Chesky] cared about the types of people we hired, focusing on ‘missionaries’ and not ‘mercenaries.’ Emphasizing culture, we brought in employees who cared about and who wanted to grow the community. We also bought Accoleo and Crashpadder, two smaller players in Europe, to seed supply in Germany and the U.K. On the demand side, we had to think broader, with potential travelers coming from all over Europe. In January 2012, to officially launch in Europe, we did a PR blitz to drum up as much press as possible with campaigns like ‘Rent the country of Liechtenstein on Airbnb.’ > > ![Image from Growth inflections](https://substack-post-media.s3.amazonaws.com/public/images/e308420f-2201-4426-b653-b8bdd5224085_780x526.jpeg) > > This pace might sound too fast—and it was. The night before the international launch, we were still trying to get the homepage translated! And on the home front, we were undeniably neglecting operational challenges. But it was worth it. When competition comes after you, move ridiculously fast. Marketplaces are normally winner-take-all markets. If we had lost ground to European competitors in 2012, we may have never gotten it back.” > > —[Jonathan Golden](https://medium.com/@jgolden/lessons-learned-scaling-airbnb-100x-b862364fb3a7), first PM #### DoorDash (increasing selection) > “Everything we did was along the vectors of ‘selection, quality, and affordability.’ Which was also what we found to be the order of importance for customers. Meaning, price was actually the *least* important factor in the early years. > > In terms of increasing selection, the biggest early unlock was geographic expansion to the suburbs with big enterprise merchants like Cheesecake Factory, Chick-fil-A, and Chipotle, as well as local heroes (like Torchy’s Tacos and Jon & Vinny’s).” > > —[Micah Moreau](https://www.linkedin.com/in/micahmoreau/), early growth leader #### Lyft (unlocking supply) > “I recall three big inflections in Lyft’s early growth: > > 1. **Surge pricing**. I consider better pricing for ride hailing to be one of Lyft’s great innovations in the market. Before Lyft, there was massive consumer demand going unfulfilled, because taxis (in most cases) had flat pricing 24/7/365. We fixed that, and allowed prices to float up and down as supply/demand ebbed and flowed. [Launching Prime Time in late 2013](https://techcrunch.com/2013/11/15/lyft-prime-time-tips/) really helped us start bringing in way more supply to meet the crazy demand we had. > 2. **Launching our own driver applicant tracking system**. There’s always a buy-vs.-build conversation in startups, and our big one was whether to build our own onboarding system in-house or rely on something else. We’d been relying on Salesforce as the applicant tracking system for drivers, but it was super-leaky and resulting in slow turnarounds, complex workflows, and a slow process. I could be wrong on these numbers, but I think average time to complete the driver application process was 21 days in 2013. So we invested heavily in building our own applicant tracking system. The system did things like automatically run DMV checks, move applicants from one status to another based on triggers, enable access to driver mode automatically once all steps were complete, etc. This helped bring the average application time down to only about seven days! When our biggest need was more drivers, this was a massive unlock. > 3. **Remote launches**. Early in the process, we micromanaged market launches. We hired a team, opened a local office, and a Lyft staff member interviewed all drivers. This was good for the first few markets, but it meant our ability to launch new markets was slow and constrained. We only had a small number people on our launch team. So by late 2013, our team started working on a mix of operational and product improvements that would allow us to launch remotely. Things like (1) nailing the ops process/playbook for a new market and (2) launching ‘mentoring,’ which allows drivers to train other drivers, through the Lyft Driver App itself—the trainee’s first ‘ping’ would be the mentor requesting to train them, and they’d go through a ride-esque experience to meet up with them. The driver would use their mobile app to go through a checklist. This allowed us to [launch 24 markets in a single day](https://techcrunch.com/2014/04/24/lyft-24-new-cities/), in one fell swoop, something that would have been unimaginable months earlier. > > —[Evan Goldin](https://www.linkedin.com/in/evangoldin/), first PM at Lyft ## 2. External event On the other end of the spectrum are growth inflections that require no change to the product. Instead, they come from some external event (which are sometimes engineered by the company). #### Tinder (Sochi Olympics and return to college) ![Tinder Growth Study](https://substack-post-media.s3.amazonaws.com/public/images/857edf2b-a54d-4221-8ee7-9f6e1d6ddeae_983x814.jpeg) > “**There were two moments I really remember as our biggest growth inflections. One was the Sochi Olympics, which coincided with Valentine’s Day.** Jamie Anderson (Olympic Gold Medal winning American snowboarder) did an interview that included Tinder at the Sochi Olympics. She was discussing Tinder being ‘next level’ in the Olympic Village, and the need for her to remove it from her phone due to the distraction. It caught us by surprise, but our PR team (led by Rosette Pambakian) went hard on that and pushed to enlarge and maximize that news cycle. > > **Another inflection was that first return from college holiday break.** We really started growing then. I can only assume people in college went home and told their high school friends about Tinder, who then brought that info back to their own colleges.” > > —[Jonathan Badeen](https://www.linkedin.com/in/badeen/), co-founder #### YouTube (*SNL* and Ronaldinho videos) > “**In the first year, back in 2005, two videos achieved virality with millions of views that differentiated them from the vlogging and personal videos at the time.** One was a video from *Saturday Night Live* and another was a video of Ronaldinho juggling a soccer ball off the goalpost. > > We learned that the Ronaldinho video was actually uploaded by Nike’s marketing department as an experiment. After they saw how the video performed, it culminated with Nike inviting us up to Oregon to talk about content collaboration. I admire them for continuing to always be pushing the envelope when it comes to exploring content distribution. > > The *SNL* clip was uploaded by a YouTube user for the purpose of only sharing. After NBC saw the upload and saw how it did, they contacted us to put the video under an account that they would create. It was also an informative moment for NBC to consider using YouTube as a distribution platform, because it allowed for *SNL*’s content to be viewed anytime, anywhere, any number of times; people were no longer restricted to having to watch *SNL* on only Saturday night.” > > —[Steve Chen](https://www.linkedin.com/in/stevechen2/), co-founder #### **Cameo (**Ronnie Radke joining**)** > “**[Singer] Ronnie Radke was a particular inflection point.** The team went on famousbirthdays.com, and [CEO] Steven Galanis looked up the most famous person on his birthday. It was Ronnie Radke. Steven got Ronnie Radke to respond and buy in. Ronnie said, ‘I’m going to break Cameo.’ This is something they would hear a lot, but Radke actually did it. He came on Cameo for $25 and started getting booked like crazy. It was so fast that after a couple of hours, he was booked a couple of hundred times. The team realized that at the rate he was going, he was going to get booked 2,000 times, and there’s no way a human can fulfill all those Camoes. We thought the startup would fail if we disappoint all these fans with unfulfilled Camoes. > > At what point does Cameo break? Ronnie ended up getting booked 500 times. Three days went by and he hadn’t fulfilled any Cameos. Finally, it’s 7 p.m., they’re watching the feed (a Telegram bot of fulfilled orders). A Cameo video gets fulfilled by Ronnie. It’s the worst Cameo ever. It’s seven seconds, bad lighting, and he mispronounces the customer’s name. And then he keeps doing it, with new videos coming in every 30 seconds. The team still thinks the fans are all going to be really upset. The reviews start coming in an hour or two later, and they’re ... positive. They say things like, ‘Oh my god, I’ve been a fan of you my whole life, this is amazing.’ They realized the magic of Cameo is about the relationship between the fan and the talent and how special it is to hear your name. And Cameo kept on going.” > > ー[Devon Townsend](https://www.linkedin.com/in/devspinn/), co-founder #### Clubhouse (Elon Musk joining for an interview) Step 1: Step 2: ![2022 Clubhouse User Statistics - Trends & Data (Full List)](https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/dffafec5-69e5-40ee-af8a-f6f79b64dece_950x608.jpeg) #### Discord (a mention on Reddit) > “When they released the product in 2015, it failed to make a dent. A few dozen people might mosey into the company’s servers on a given day, but it didn’t seem to be gathering real momentum. That might have been in part due to the fact that alternatives existed—TeamSpeak and Skype were both used by gaming communities—but seemingly had more to do with getting the word out and winning early customer trust. > > **The tipping point arrived via Reddit.** The team was connected with a member of the *Final Fantasy* subreddit and asked them if they’d mention Discord. According to [founder Jason] Citron, they posted something along the lines of ‘Has anyone ever heard of this new voice-over-IP app called Discord?’ > > That one comment was a miniature inflection point. More users flowed in, and Discord had figured out a grassroots distribution model. > > In the years that followed, Discord succeeded in growing rapidly, accumulating hundreds of millions of users and close to $1 billion in funding.” > > —[Packy McCormick](https://www.notboring.co/p/discord-imagine-a-place) #### **Notion (press):** > “David Pierce—who I think is one of the best working journalists in tech today; he’s at *The Verge* now—he was covering personal tech for the *Wall Street Journal* early on at Notion and published a story that said this is the one work-life productivity app that you’ll ever need. A**nd that was Notion’s big break. Truly, if you look back at the graphs, that made a demonstrable difference.**” > > —[Camille Ricketts, on my podcast](https://www.lennyspodcast.com/how-notion-leveraged-community-to-build-a-10b-business-camille-ricketts-notion-first-round-capital/#transcript) Sometimes you get lucky and a whole media narrative forms around you: #### Slack (press) > “The biggest growth inflection for Slack was a PR and news media consensus that Slack was ‘the next big thing,’ partly driven by the press’s own use of Slack, which all had magically compounding effects on our user growth > > There was a ton of very flattering press about Slack and [co-founder and CEO] Stewart [Butterfield] in fall/winter of 2015 that really helped drive growth. Press was incredible for Slack and definitely helped inflect our growth from startups/SMBs to mainstream awareness. Stewart was on the cover of *Forbes* in August 2015 and named *Inc.* Company of the Year in December 2015. > > When April Underwood joined us from Twitter in June 2015, our overall numbers were still low enough that I saw distinct spikes on the days that press came out. > > It wasn’t one article per se but almost this sense that Slack, and specifically Stewart, had been anointed by the tech press.” > > —[Merci Grace](https://www.linkedin.com/in/merci/), first head of growth #### BeReal (press) > “The next chapter in BeReal’s growth came at the heels of the ‘next-generation social media’ narrative. Prominent publications became interested in the rise of anti-Instagram social media startups such as Poparazzi, TTYL, Clubhouse, and BeReal. > > The venture dollars pouring into the space and the ever-changing consumer behavior brought by the pandemic gave an opening to the rise of a Gen-Z-first cohort of social apps. > > - March 2021: Featured on the iOS App Store in France > - April 2021: Featured on Product Hunt (founders ask for the post to be taken down) > - May 2021: First significant publication piece in [the](https://www.ft.com/content/3570bb3b-5c79-4b20-bd11-c292cbe870b6) *[Financial Times](https://www.ft.com/content/3570bb3b-5c79-4b20-bd11-c292cbe870b6)* gives the nod to BeReal in ‘Lessons for Big Tech from the “anti-social” photo app’ > - May 2021: Small-time blog [TwentyTwo Digital](https://www.twentytwodigital.com/post/the-rise-of-bereal) writes a post explaining how BeReal works > - June 2021: BeReal’s subreddit created > - June 2021: Eric Newcomer [scoops BeReal’s $30m A16z-led Series A round](https://www.newcomer.co/p/scoop-a16z-accel-back-french-founders) > - June 2021: *Vogue* writes ‘[Poparazzi, BeReal: Social media’s new generation](https://www.voguebusiness.com/companies/social-media-trends-2021-poparazzi-capcut-bereal-newnew)’ > - June 2021: Investor/creator Rex Woodbury writes ‘[The Startups Reinventing Social Media](https://digitalnative.substack.com/p/the-startups-reinventing-social-media)’ > > —[Ali Abouelatta](https://read.first1000.co/p/bereal), First 1000 ## 3. Doubling down on the primary growth engine A final category, which I love seeing, is when large growth inflections come from a company leaning into their primary [growth engine](https://www.lennysnewsletter.com/i/75292796/the-growth-engine) (e.g. SEO, virality, paid, or sales). I don’t have the data to prove it, but I suspect these end up being the most durable growth inflections. #### Airtable (SEO, templates) > “**One of the biggest inflection points in growth for Airtable was adding templates.** It kicked off the SEO flywheel and ended up accounting for as much as a third of total site traffic at its peak. One of the most interesting elements of this was that templates were seeded with a lot of the content made by creators in the community. This is generally considered the biggest unlock of all time for Airtable’s growth engine.” > > —[Lauryn Isford](https://www.linkedin.com/in/laurynisford/), Head of Growth #### Pinterest (SEO) > “**The biggest unlock to our growth was doubling down on our entire SEO funnel, including SEO work and signup and login conversions work.** I think we were world-class at this, and SEO is Pinterest’s primary acquisition channel and one of two main re-engagement channels (along with notifications). The amount of free traffic coming from Google each day was quite insane. We may have 100x’d or 1,000x’d SEO traffic.” > > —[Jeff Chang](https://www.linkedin.com/in/jeff-chang-82467459/), early growth leader #### Dropbox (virality and partnerships) > “**In terms of percentage impact, the [Dropbox Space Race](https://blog.dropbox.com/topics/our-community/now-announcing-the-great-dropbox-space-race) dramatically elevated signups during the weeks it ran in the summer/fall of 2012**. This was a campaign to get college students to all sign up for Dropbox, with the winning schools earning free Dropbox space for everyone at the school. It’s probably the most zeitgeist growth hack I’ve seen—I still meet people who were in college during those years who fondly remember the race. It was our twist on Facebook’s college-by-college growth playbook and the social tipping point effect of Groupon. > > **In terms of absolute impact (area under the curve), the big growth unlock was the Samsung partnership (and to a lesser extent other PC and mobile partnerships) we did**. Samsung alone drove over 100 million new signups because Dropbox was embedded as part of the OOBE (out-of-box experience—essentially new phone onboarding). This was a mixed blessing, as we didn’t fully capitalize on this growth channel by doubling down on an Android, mobile-first product strategy. It also did not align with the later company shift to B2B.” > > —[ChenLi Wang](https://www.linkedin.com/in/chenliw/), early growth leader #### PayPal (virality) > “For the people in PayPal, it was clear that the only way to grow was organically and at a viral pace; ‘model it just like bacteria growth in a petri dish,’ as Elon Musk later said in an interview. > > The decision was to give $20 to anyone opening a PayPal account, and another $20 for referring another user to open an account. Later they dropped the reward to $10 and eventually to $5 per signup or referral. > > Below you can see how PayPal showcased their proto-referral program on their homepage in 2000: > > ![Image from Growth inflections](https://substack-post-media.s3.amazonaws.com/public/images/3537b836-e64a-4efa-b347-1c2a34b6ba3f_1887x887.png) > > PayPal’s referral incentives landed them a crazy viral growth rate; we’re talking a 7% to 10% daily growth rate. To be more precise, PayPal reached 100 million users.” > > —[Apostle Mengoulis](https://viral-loops.com/blog/paypal-referral-program-case-study/) #### Instacart (channel partnerships) > “Our first growth inflection point was signing our first national retailer and beginning our transition from a consumer company to a retailer enablement company. Signing a large national retailer helped us because it was a tipping point for other retailers who weren’t sure if grocery e-commerce was a trend they should invest in. After this, it became clear that delivery wasn’t just a fad. Growth was then driven when retailers marketed our partnerships, which drove consumers to our platform, and through a huge improvement in the quality of our services, since retailers gave us access to accurate catalogs and pricing and deeply integrated us into their stores.” > > —[Max Mullen](https://www.linkedin.com/in/maxmullen/), co-founder I’m sure I missed some stories, and that some of these stories aren’t reflective of the full reality of what sparked growth for every company, but I’m confident in three takeaways: 1. That one additional feature *can* indeed lead to a massive inflection in growth (though it usually won’t) 2. While you’re working on improving the product, it’s worth attempting to engineer an “event” that gets your product in front of a lot of people, even before you think your product is ready 3. Long-term, the most lasting growth inflections happen when you lean into the primary [growth engine](https://www.lennysnewsletter.com/i/75292796/the-growth-engine) If you’ve got a story of a product going through a growth inflection point, I’d love to hear it 👇 [Leave a comment](https://www.lennysnewsletter.com/p/growth-inflections/comments) ### 📚 Further study 1. [On inflection points](https://www.michaeldempsey.me/blog/2020/07/29/inflection-points/), by Michael Dempsey 2. [Growth engines](https://www.lennysnewsletter.com/i/75292796/the-growth-engine) 3. [Virality is a myth (mostly)](https://www.lennysnewsletter.com/p/virality-is-a-myth-mostly) *Have a fulfilling and productive week 🙏* ## 📣 Join Lenny’s Talent Collective 📣 If you’re hiring, [join Lenny’s Talent Collective](https://www.lennysjobs.com/talent/welcome) to start getting weekly drops of world-class product and growth people, who are passively open to new opportunities. I hand-review every application, and accept less than 10% of candidates who apply. ![Image from Growth inflections](https://substack-post-media.s3.amazonaws.com/public/images/e77cdc85-4a67-491a-9ae6-ee0fee2add2b_1498x1234.png) If you’re looking for a new gig, apply to join! You’ll get personalized opportunities from hand-selected companies. You can join anonymously, hide yourself from companies, and leave anytime. [Apply to join](https://www.lennysjobs.com/talent) ### 🔥 Featured job opportunities 1. **MetaMap:** [VP, Product](https://www.lennysjobs.com/jobs/74ca739b-4b51-4d55-8727-6606327fae58) (SF, Miami, Mexico City) 2. **DX:** [Content Lead](https://www.lennysjobs.com/jobs/d88460d1-d9e0-4f13-b939-968d22d5a85e) (Park City, UT; Remote) 3. **Surfer:** [Senior Product Manager](https://www.lennysjobs.com/jobs/f6ebf2d0-c425-4690-95de-01b9c6568092) (Remote) 4. **Zendoor:** [Product Designer](https://www.lennysjobs.com/jobs/192a2c6c-e46c-4190-9d81-9a527273c89d)(Remote) ## **🧠 Inspiration for the week ahead** 1. **Read:** [Who Owns the Generative AI Platform?](https://a16z.com/2023/01/19/who-owns-the-generative-ai-platform/) by a16z 2. **Watch:** [Paul McCartney composing “Get Back”](https://www.youtube.com/watch?v=4QtCxjyuA08) [Watch on YouTube](https://www.youtube.com/watch?v=4QtCxjyuA08) 3. **Watch:** [Co-Creator of Exploding Kittens | Elan Lee and Tim Ferriss](https://youtu.be/C1H3d4V655I) [Watch on YouTube](https://www.youtube.com/watch?v=C1H3d4V655I) **If you’re finding this newsletter valuable, share it with a friend, and consider subscribing if you haven’t already.** Sincerely, Lenny 👋 --- ## [7/51] How to be prepared for layoffs > ## Q: I fear layoffs are coming at my company. What can I be doing to prepare in case I get laid off? I imagine many people are feeling this way right now. Grateful they still have a job, but scared of what may be coming around the corner. Not being in this situation myself but with the benefit of a large audience of insightful readers, I went to [Twitter](https://twitter.com/lennysan/status/1625951498755772417) and [LinkedIn](https://www.linkedin.com/posts/lennyrachitsky_q-if-youve-recently-been-laid-off-what-activity-7031721077307297792-xvxK) to ask people who’d recently been laid off what they wish they had done to have been better prepared. Here’s the most common advice I heard: 1. Document your accomplishments 2. Build (and freshen up) your network 3. Update your resume 4. Add some cushion to your savings account 5. Explore additional sources of income (e.g. a side hustle) 6. Save your favorite people’s contact info 7. Don’t let work define you Below, I’ll dig into these suggestions and share specific things you can do within each. If there’s anything else you’d recommend from your own experience, other readers would really appreciate your advice 👇 [Leave a comment](https://www.lennysnewsletter.com/p/how-to-be-better-prepared-for-layoffs/comments) *Thank you to [Matt Quinn](https://twitter.com/Mqsley) for encouraging me to write about this topic, and to everyone who contributes their advice 🙏* ### 1. Save your accomplishments Surprisingly, the single most common piece of advice was to save details about your accomplishments. Since you’ll suddenly lose access to many of the details, and all of your future interviewers will ask about what you’ve accomplished, this is a high-ROI task. ![Image from How to be prepared for layoffs](https://substack-post-media.s3.amazonaws.com/public/images/97d83a06-92d3-4b85-b114-fcc05a3d2a5d_954x400.png)![Image from How to be prepared for layoffs](https://substack-post-media.s3.amazonaws.com/public/images/418fe6f8-9d8e-4657-93c8-a404f694563e_1044x476.png)![Image from How to be prepared for layoffs](https://substack-post-media.s3.amazonaws.com/public/images/eec4db3c-0389-4ac8-93ff-68efb3b95de5_1050x278.png) **How to go about doing this:** So easy! Go open up a new doc and start dumping a list of times you’ve made an impact at your current job. Include metrics, screenshots, timelines, stories—anything that’ll help you tell the story of your successes. Do it today, while your memory is fresh and you have access to the details. Don’t overthink it. Here are some templates that may help: [guide 1](https://jvns.ca/blog/brag-documents/#template), [guide 2](https://twitter.com/UpasnaGautam/status/1626596451727065090?s=20), [guide 3](https://laurenholliday.medium.com/how-i-keep-track-of-my-achievements-template-da05f8056edf). ### 2. Build (and freshen up) your network You’ve heard this a million times, but it’s still true: it’s not what you know, it’s who you know. Networking sucks, but it sucks more when you don’t have a job. ![Image from How to be prepared for layoffs](https://substack-post-media.s3.amazonaws.com/public/images/7fe73c40-8987-4f43-816c-efc6a997562a_1048x320.png) **How to go about doing this:** 1. Who are your 5 most talented friends and former colleagues who work at other interesting companies? Casually ping them to see how things are going. 2. Start participating in a community *(hint: the Friends of Lenny’s Newsletter Slack community is a great place to start—if you’re a paid subscriber and haven’t gotten an invite, reply and let me know)* 3. Participate in a hackathon (browse [here](https://devpost.com/hackathons) and [here](https://www.eventbrite.com/d/online/hackathon/)) 4. Go to a local meetup or talk on a subject you’re excited about 5. Reply to that one recruiter who reached out to you a while back, and ask them about the market these days ### 3. Update your resume Resumes still matter, and going through the exercise will help you with these other items. Update your LinkedIn profile while you’re at it. ![Image from How to be prepared for layoffs](https://substack-post-media.s3.amazonaws.com/public/images/34be6655-0a51-4c16-8478-333816428af9_1042x402.png) **How to go about doing this:** 1. Capture your accomplishments (see Step 1 above) 2. Put together a V1 resume. Some templates to get you started: [template 1](https://docs.google.com/document/d/1dk58qH8JtXwocmbZnI3LIi1X1Wh34H2bxYwjWnkYSCk/edit?mode=html#heading=h.gjdgxs), [template 2](https://docs.google.com/document/d/1vH_qwt8fCQldhPsTyE9WtVtu9NFEKdP7h1XoX30OuaM/edit?mode=html), [template 3](https://www.canva.com/learn/10-resume-templates-to-help-you-get-your-next-job/), or [get a cool custom resume design from Etsy](https://www.etsy.com/market/resume_template) 3. Ask your successful friends/colleagues for feedback 4. Share it in an online community that you’re (hopefully) involved in, and ask for feedback 5. Explore resume review services like [this one](https://www.tryexponent.com/resume?src=nav) ### 4. Add some cushion to your savings account Imagine no more paychecks starting next month. What are you spending per month, and how much runway do you have? **How to go about doing this:** 1. Cancel unnecessary subscription services and memberships (I use [Rocket Money](https://www.rocketmoney.com/) for this) 2. Track your spending and/or create a budget using apps like [Copilot](https://copilot.money/), [You Need A Budget](https://www.youneedabudget.com/), and [Simplifi](https://www.quicken.com/simplifi/) 3. Try an automatic savings app, like [Digit](https://digit.co/), [Chime](https://www.chime.com/), or [Qapital](https://www.qapital.com/) 4. Put money into a [high-yield savings account](https://www.bankrate.com/banking/savings/best-high-yield-interests-savings-accounts/) 5. Learn about about [FIRE](https://www.mrmoneymustache.com/2013/02/22/getting-rich-from-zero-to-hero-in-one-blog-post/) (financial independence, retire early) ### 5. Explore additional sources of income Many people said they wished they had built up some kind of side hustle to generate passive income. On one hand, I’m fairly skeptical that you’ll make meaningful income from a side hustle. Making money is hard, especially as a side project, and *passive* income is rarely ever passive. That being said, I 1,000% encourage you to explore this path if you have an idea you’re excited about. Just don’t go into it thinking it’ll lead to a huge income stream. ![Image from How to be prepared for layoffs](https://substack-post-media.s3.amazonaws.com/public/images/dfe9bc68-7ee9-4a1f-bd31-b635f1686dab_1112x242.png)![Image from How to be prepared for layoffs](https://substack-post-media.s3.amazonaws.com/public/images/18fd6289-679f-468e-88f2-1eb5aab146f9_1058x480.png) **How to go about doing this:** 1. Join [Indie Hackers](https://www.indiehackers.com/) 2. Get inspiration: [7 Side Hustles You Can Start in 2023](https://www.youtube.com/watch?v=I-dlPuqFguo) with Ali Abdaal 3. Listen to the [My First Million podcast](https://www.mfmpod.com/); they talk about this a lot ### 6. Save your favorite people’s contact info Love this touching, easy, and impactful piece of advice: ![Image from How to be prepared for layoffs](https://substack-post-media.s3.amazonaws.com/public/images/975667c2-850e-4739-b04e-5f78f8f77045_952x680.png) **How to go about doing this:** Just do it. It’s easy if you start now. ### 7. Don’t let work define you And finally, some of the most important and lasting advice was about creating distance between your work and your identity. This is especially relevant if you’re in your first full-time job, or if you’ve been there a long time. ![Image from How to be prepared for layoffs](https://substack-post-media.s3.amazonaws.com/public/images/da2c76cb-15fa-403d-bc28-04f0dbc47726_1044x348.png)![Image from How to be prepared for layoffs](https://substack-post-media.s3.amazonaws.com/public/images/3a4d7bc6-61e7-4f2a-a335-c72c3505f47a_1044x396.png) Some people even shared that being laid off opened up new opportunities they hadn’t had a chance to explore. **How to go about doing this:** Use this time to think about what you’d want your next job to be, whether in the same industry and role or something adjacent or completely different. An editor friend of mine spent a year exploring career “roads not taken,” including a seasonal job as an urban park ranger and an internship at an art museum. The experience helped her realize she wasn’t as well suited to those occupations as to editing, but she was so thankful she’d tried. This isn’t always possible, of course, practically or financially, but it’s worth taking a moment to blue-sky your options. For more inspiration along these lines, don’t miss [this past post on taking time off](https://www.lennysnewsletter.com/p/sabbatical-time-off). Good luck 🧡 ## 📣 Join Lenny’s Talent Collective 📣 If you’re hiring, [join Lenny’s Talent Collective](https://www.lennysjobs.com/talent/welcome) to start getting weekly drops of world-class product and growth people, who are passively open to new opportunities. I hand-review every application, and accept less than 10% of candidates who apply. ![Image from How to be prepared for layoffs](https://substack-post-media.s3.amazonaws.com/public/images/f27c4bf2-c61e-4a50-ae5b-34e0311374dc_1526x1240.png) If you’re looking for a new gig, apply to join! You’ll get personalized opportunities from hand-selected companies. You can join anonymously, hide yourself from companies, and leave anytime. [Apply to join](https://www.lennysjobs.com/talent) ### 🔥 Featured job opportunities 1. **MetaMap:** [VP, Product](https://www.lennysjobs.com/jobs/74ca739b-4b51-4d55-8727-6606327fae58) (SF, Miami, Mexico City) ## **🧠 Inspiration for the week ahead** 1. **Watch:** [Fireside chat with Dylan Field and Elad Gil](https://www.youtube.com/watch?v=5qaKpFcX7gM) [Watch on YouTube](https://www.youtube.com/watch?v=5qaKpFcX7gM) 2. **Listen:** [From Bing to Sydney](https://open.spotify.com/episode/5xmEvZFZuAN3vy3hGjetUo?si=hMxv8A1jSoCejbAbbAax9A) by Ben Thompson 3. **Read:** [Americans Have Found Their Happy Place](https://www.bloomberg.com/opinion/articles/2022-12-23/the-happiest-place-on-earth-hawaii-and-the-rest-of-america-too?cmpid%3D=socialflow-twitter-view&sref=htOHjx5Y) by Tyler Cowen **If you’re finding this newsletter valuable, share it with a friend, and consider subscribing if you haven’t already.** Sincerely, Lenny 👋 --- ## [8/51] How Duolingo reignited user growth *👋 Hey, [Lenny](https://twitter.com/lennysan) here! Welcome to this month’s ✨ **free edition**✨ of Lenny’s Newsletter. Each week I humbly tackle reader questions about product, growth, working with humans, and anything else that’s stressing you out about work.* *If you’re not a subscriber, here’s what you missed this month:* 1. *[Growth inflections](https://www.lennysnewsletter.com/p/growth-inflections)* 2. *[How to be prepared for layoffs](https://www.lennysnewsletter.com/p/how-to-be-better-prepared-for-layoffs)* 3. *[How Coda builds product](https://www.lennysnewsletter.com/p/how-coda-builds-product)* *Subscribe to get access to these posts, and every post.* I was at a small event a few months back where [Jorge Mazal](https://www.linkedin.com/in/jorgemazal/) (former CPO of Duolingo) shared the story behind Duolingo’s growth reaccelerating. I was captivated. I’ve never seen a growth story like this before—4.5x growth for a mature product, driven by a small handful of product changes, rooted in an innovative growth model, and explained in such actionable detail. I asked Jorge if he’d be willing to share (and expand on) the story with a broader audience, and I’m so happy he agreed. Many products already look to Duolingo for inspiration, and I suspect this story will only increase that trend. Enjoy! *Follow Jorge for more on [LinkedIn](https://www.linkedin.com/in/jorgemazal/) and [Twitter](https://twitter.com/jorgemazal).* ![Image from How Duolingo reignited user growth](https://substack-post-media.s3.amazonaws.com/public/images/01d58ab8-30d0-4dab-bf99-772047443e44_8000x4000.png) I joined Duolingo as the Head of Product in late 2017. Duolingo was already the most downloaded education app in the world, with hundreds of millions of users, fulfilling its mission to “develop the best education in the world and make it universally available.” However, user growth was slowing down. By mid-2018, daily active users (DAU) were growing at a single-digit rate year-over-year, which was troubling, given the explosive growth the company had seen in the past. This was a problem for a startup with investors anxious to see fast monetization growth. In this post I’ll cover some of our early failures and then our first big wins that helped us turn around growth, including launching leaderboards, refocusing on push notifications, and optimizing the “streak” feature. These, together with several other efforts across Product and Marketing, helped us grow DAU by 4.5x over four years. Robust organic user growth supercharged Duolingo toward its 2021 IPO. ![Image from How Duolingo reignited user growth](https://substack-post-media.s3.amazonaws.com/public/images/9cf69f9c-ebae-4578-8383-d3bc752b40a2_1410x556.png) This article is an in-depth look into that journey. It is my hope that sharing this work will help others find their own growth breakthroughs faster. ### **Phase 1: Increasing gamification** Our first attempt at reigniting growth was focused on improving retention, i.e. fixing our “leaky bucket” problem. We prioritized working on retention over new-user acquisition because all of our new-user acquisition was organic, and, at the time, we didn’t have an obvious lever to pull to supercharge that. Also, some of us had a suspicion that we could improve retention through gamification. There were two main reasons why this felt like the right approach to me. First, Duolingo had already implemented several gamification mechanics successfully, such as the progression system on the home screen, streaks, and an achievements system. And second, top digital games at the time had much higher retention rates than our product, which I took as evidence that we hadn’t yet reached the ceiling for gamification’s impact. ![Image from How Duolingo reignited user growth](https://substack-post-media.s3.amazonaws.com/public/images/d8463cc2-78d0-4d66-a3f9-fab80364f8e0_994x778.png) Armed with a short presentation I co-created with our chief designer, we were able to get just enough buy-in from the rest of the executive team to create a new team, the Gamification Team. The team consisted of an engineering manager, an engineer, a designer, an APM, and me. But there was one small issue: we had no idea which incremental gamification mechanics would work for Duolingo. Our team at the time was hooked onagame calledGardenscapes*,* a mobile, match-3 puzzle game similar to Candy Crush*.* This mobile game became our first inspiration. ![Image from How Duolingo reignited user growth](https://substack-post-media.s3.amazonaws.com/public/images/9030159b-ede9-4d3c-9f99-d22f4c7df4f3_1280x720.png) As we looked at the different game mechanics in Gardenscapes, we didn’t really know what we were looking for—we just knew that Gardenscapes seemed stickier than Duolingo, and we saw several parallels. A three-minute Duolingo lesson felt similar to a Gardenscapes match-3 level, and Duolingo and Gardenscapes both used progress bars to provide visual feedback on how close the user was to completing the session. Gardenscapes, however, paired its progress bar with a moves counter, which Duolingo didn’t do. The moves counter allowed users only a finite number of moves to complete a level, which added a sense of scarcity and urgency to the gameplay. We decided to incorporate the counter mechanic into our product. We gave our users a finite number of chances to answer questions correctly before they had to start the lesson over. ![Image from How Duolingo reignited user growth](https://substack-post-media.s3.amazonaws.com/public/images/ee942fef-feab-4796-bda7-b01b16adb8da_1600x951.png) It took our team a couple of months of work to add the counter. With the release of the update, I expectantly waited for an unmitigated success. Depressingly, the result of all that effort was completely neutral. No change to our retention. No increase in DAU. We hardly got any user feedback at all. I was deflated. The greatest effect the initiative had was on our team. After the results came out, we quickly fell into dissension. Some wanted to continue iterating on the idea, while others wanted to pivot. The team almost immediately (and dramatically) disbanded, and the idea was abandoned. It was pretty awful. The one silver lining of this failure was that I learned a lot about the company culture and about how to improve my personal leadership style—though that’s for a different article. ![Image from How Duolingo reignited user growth](https://substack-post-media.s3.amazonaws.com/public/images/be863857-c1ed-4e63-99e1-93358e33cf2a_400x300.png) ### **Phase 2: Referrals** Feeling burned after our gamification effort, we completely pivoted away from improving retention and put together a new product team focused on acquiring new users, called the Acquisition Team. At the time, Uber was doing well with user acquisition and had reputedly grown largely because of its referral program. Inspired by this, we created a referral program similar to Uber’s. The reward was a free month of our premium subscription, Super Duolingo (at the time, it was called Duolingo Plus). Seemed like a pretty good offer to us! ![Image from How Duolingo reignited user growth](https://substack-post-media.s3.amazonaws.com/public/images/c685d30e-1e4b-4ed1-b572-ae980beeaa7f_1600x536.png) We implemented the feature and hoped our second attempt would be more successful. Instead, new users increased by only 3%. It was positive, but not the type of breakthrough we needed. Still, the team doubled down and pushed through, shipping iterations to the referral program and making some other bets, but no avail. While the team continued to iterate, it became clear to me that we had to find a different approach to tackle our growth problem. ### **Time to regroup** The aftermath of these back-to-back failures in only a few months was a period of reflection for me about making better product bets. In hindsight, it became clear why the Gardenscapes moves counter was not a good fit for our product. When you are playing Gardenscapes, each move feels like a strategic decision, because you have to outmaneuver dynamic obstacles to find a path to victory. But strategic decision-making isn’t required to complete a Duolingo lesson—you mostly either know the answer to a question or you don’t. Because there wasn’t any strategy to it, the Duolingo moves counter was simply a boring, tacked-on nuisance. It was the wrong gamification mechanic to adopt into Duolingo. I realized that I had been so focused on the similarities between Gardenscapes and Duolingo that I had failed to account for the importance of the underlying differences. It also did not take long to understand why our referral program did not produce Uber-like success. Referrals work for Uber because riders are paying for rides on a never-ending pay-as-you-go system. A free ride is a constant incentive. For Duolingo, we were trying to incentivize users by offering a free month of Super Duolingo. However, our best and most active users already had Super Duolingo, and we couldn’t give them a free month when they were already in a plan. This meant that our strategy, which needed to rely on our best users, actually excluded them. In both of these situations, we had borrowed successful features from other products, but the wrong way. We had failed to account for how a change in context can impact the success of a feature. I came away from these attempts realizing that I needed a better understanding of how to borrow ideas from other products intelligently. Now when looking to adopt a feature, I ask myself: - Why is this feature working in that product? - Why might this feature succeed or fail in our context, i.e. will it translate well? - What adaptations are necessary to make this feature succeed in our context? In other words, we needed to use better judgment in adapting when adopting. Being more systematic in just this area would have made a big difference in what gamification mechanics we chose to pursue. And we would have probably been dissuaded from focusing on referrals altogether. I was committed to making sure our next attempts would be more methodical. We needed to be better at basing our decisions on data, insights, and foundational principles. ### **Phase 3: Using data and models** Duolingo has always excelled at collecting data, especially in support of A/B testing. But there hadn’t been much effort put into using the data for insights generation. Having seen from the inside how Zynga and MyFitnessPal used data, I felt we could use Duolingo’s data to find a North Star metric and get the breakthrough we needed. My time at Zynga and MyFitnessPal gave us inspiration on how to segment and model our users by engagement level. Zynga separated their users and measured retention based on the following weekly retention metrics: - **Current users retention rate (CURR):** The chance a user comes back this week if they came to the product each of the past two weeks - **New users retention rate (NURR):** The chance a user comes back this week if they were new to the product last week - **Reactivated user retention rates (RURR):** The chance a user comes back this week if they reactivated last week Later, when I worked at MyFitnessPal, I found that they had adopted and expanded Zynga’s retention work. They not only used CURR, NURR, and RURR to measure growth but also to model future scenarios. They also added SURR: - **Resurrected user retention rate (SURR):** The chance a user comes back this week if they resurrected (from a longer absence) last week I hypothesized that we could use these metrics at Duolingo as a starting point to create a more sophisticated model, and use that model to identify a North Star metric. Working with the data scientist and the engineer manager in the Acquisition Team, we came up with the model below. We used the same retention rates as Zynga and MyFitnessPal, but we tweaked from a weekly view to a daily view and we added several more metrics. ![Image from How Duolingo reignited user growth](https://substack-post-media.s3.amazonaws.com/public/images/c2785b10-a1e1-4f7c-b796-30fce95e2c7d_1600x902.png) The blocks, or *buckets*, represent different user segments with different levels of engagement. And every single user who has ever used the product is in one, and only one, bucket on any given day. That means the buckets in the model are MECE (mutually exclusive, collectively exhaustive) in representing the entire base of users who have ever used Duolingo. The *arrows* measure the movement of users between the buckets (these include CURR, NURR, RURR, and SURR, but evolved into daily retention rates rather than weekly). Combining the buckets and the arrows, the model creates an almost closed-circuit system, with new users being the only break. Conveniently, the top four buckets of the model add up to DAU. Those buckets are defined as: - **New users:** first day of engagement ever in the app - **Current users:** engaged today and at least one other time in the prior 6 days - **Reactivated users:** first day of engagement after being away for 7-29 days - **Resurrected users:** first day of engagement after being away for 30 days or longer The remaining three buckets represent users who were not active today and have different degrees of inactivity. - **At-risk WAU:** inactive today, but active in at least one of the prior 6 days - At-risk WAU + DAU = WAU - **At-risk MAU:** inactive in the past seven days, but active in at least one of the prior 23 days - At-risk MAU + WAU = MAU - **Dormant users:** inactive in the past 31 days or longer - MAU + dormant users = Total user base The fact that DAU, WAU, and MAU can easily be calculated from these buckets made it easy to model them over time. This is a key feature of the model. Additionally, by manipulating the rates represented by the arrows, we can model the compounding and cumulative impact of moving these rates over time; in other words, the rates are the levers product teams can pull to grow DAU. With the model created, we started taking daily snapshots of data to create a history of how all of these user buckets and retention rates had evolved on a day-by-day basis over the past several years. With this data, we could create a forward-looking model and then perform a sensitivity analysis to predict which levers would have the biggest impact on DAU growth. We ran a simulation for each rate, where we moved a single rate 2% every quarter for three years, holding all the other rates constant. Below are the results of our first simulation. It shows how those small 2% movements on each lever impacted forecasted MAU and DAU. ![Image from How Duolingo reignited user growth](https://substack-post-media.s3.amazonaws.com/public/images/cc3963cd-00fd-4020-83fa-4567be6b3223_1600x775.png) We immediately saw that CURR had a gigantic impact on DAU—5 times the impact of the second-best metric. In hindsight, the CURR finding made sense, because the Current User bucket has an interesting characteristic: current users who stay active return to the same bucket. ![Image from How Duolingo reignited user growth](https://substack-post-media.s3.amazonaws.com/public/images/45204e46-e5f0-44ed-a801-b5a56c34954b_1600x678.png) This produces a compounding effect, which means that CURR is much harder to move, but when it does, it will have a greater impact. Based on this analysis, we knew that CURR was the metric we had to move in order to get that strategic breakthrough we wanted. We decided to create a new team, the Retention Team, with CURR as its North Star metric. One of the biggest benefits of focusing on CURR was deciding not to work on things that seemed paramount before, especially new-user retention. This was a huge mindset shift for a company that had tremendous success spending years running the bulk of its growth experiments on new users first. Another big lesson was seeing the massive gap between how a metric could impact DAU vs. MAU; for example, CURR’s impact on DAU was 6 times its impact on MAU. iWAURR (inactive WAU reactivation rate) was the second-best lever for moving DAU but a distant fourth for moving MAU, behind increasing new and resurrected users. This meant that, at some point, we would still need to figure out new growth vectors for new-user acquisition if we wanted to see substantial MAU improvements. But for the time being, our focus was only on moving DAU, so we prioritized CURR over all other growth levers. And it turned out to be the right choice. ### **Leaderboards vector** With this clear directive, we looked at our historical model data and at our A/B tests going back a few years to see if we had inadvertently done anything that had moved CURR in the past. Surprisingly, we hadn’t. In fact, CURR had not moved in years. We had to figure out our first steps to move CURR based on first principles. I still thought gamification was a good place to start when trying to improve retention. Our failure with the Gardenscapes-style moves counter hadn’t actually disproved any of the original reasons why we believed gamification still had upside for Duolingo—we had only learned that the moves counter was a clumsy attempt at it. This time, we would be more methodical and intelligent about features we added or borrowed. We made sure to apply the lessons from our prior efforts with gamification. After some consideration, we decided to bet on leaderboards. Here’s why and how. Duolingo already had a leaderboard for users to compete with their friends and family, but it wasn’t particularly effective. Based on my experience at Zynga, I felt that there was a better way. When I started working on Zynga’s FarmVille 2 game, it included a leaderboard similar to Duolingo’s existing leaderboard, where users competed with their friends. I had hypothesized based on my personal experience as a player that the closeness of the competitor’s engagement would be more important than the closeness of personal relationships. I thought this would be especially true in a mature product where many users’ friends weren’t active anymore. From our testing at Zynga, that idea turned out to be true. Based on this, I felt a leaderboard system, similar to what I had helped design at Zynga, would succeed in the context of our product. FarmVille 2’s leaderboard also included a “league” system. Beyond getting to the top of a weekly leaderboard, users had the opportunity to move through a series of league levels (e.g. from the Bronze league to the Silver league to the Gold league). Leagues provided users with a greater sense of progress and reward, an integral element in game design. They also increased engagement over time, since engaged users move up to more competitive leagues week after week. We felt this feature would translate well to Duolingo’s existing product because it tapped directly into the common human motivators of competitiveness and progression. ![Image from How Duolingo reignited user growth](https://substack-post-media.s3.amazonaws.com/public/images/c30bdb3b-bf15-4b2d-8bb4-72827c136cdd_516x514.png) Not all aspects of the FarmVille 2 leaderboards would translate well to Duolingo, though. We had to use our judgment to adapt this gaming mechanic to Duolingo’s context. In FarmVille 2, competing in the leaderboard required completing additional kinds of tasks on top of the core gameplay. That was something that we purposefully left out. In the Duolingo context, more tasks would only add unnecessary complexity to language learning. We deliberately made our leaderboard as casual and frictionless as possible; users were automatically opted in and could progress to the top of the first league by merely engaging consistently in their regular language study. By keeping the game mechanic exciting, but making it simpler than in FarmVille 2, we felt like we had struck the right balance of adopting and adapting. The leaderboards feature had a huge and almost immediate impact on our metrics. Overall learning time increased by 17%, and the number of highly engaged learners (users who spend at least 1 hour a day for 5 days a week) tripled. At this time, we hadn’t yet figured out how to calculate statistical significance for CURR, but we saw that our traditional retention metrics (D1, D7, etc.) improved materially and with statistical significance. Going forward, the leaderboards feature became a vector for improving metrics, and teams continue to optimize the feature to this day. Also importantly, the leaderboard was the Retention Team’s first breakthrough! ### **Push notifications vector** The Retention Team was completely energized to find more mechanics to keep current users engaged and motivated to practice every day. One area they started to look into was push notifications. Based on substantial A/B testing in prior years, Duolingo had established that notifications can be a big vector for growth, but that impact had plateaued for us over the years. With a re-energized team full of new ideas, we felt it was the right time to revisit this vector. As we started diving into this, there was one principle that became paramount. It came from a cautionary tale from Groupon’s CEO. He explained to Luis von Ahn, our CEO, that for a long time, Groupon stuck to one email notification per day. But their team started wondering whether sending more emails would improve metrics. The CEO eventually gave in and allowed his team to test sending one more email to each user each day. This test resulted in a big increase to their target metrics. Encouraged, Groupon kept experimenting, sending more emails, even as many as five a day. Then, in what felt like a change from one day to the next, their email channel lost most of its effectiveness. Over time, the accumulation of Groupon’s aggressive email tests had basically destroyed their channel. One often underappreciated risk with aggressively A/B testing emails and push notifications is that it results in users opting out of the channel; and even if you kill the test, those users remain opted out forever. Do this many times, and you’ve destroyed your channel. This was the outcome to avoid. For our push notifications, we established one foundational rule: protect the channel. With this constraint in mind, we decided to give the team a lot of freedom to optimize on dimensions like timing, templates, images, copy, localization, etc., but they could not increase the quantity of notifications without strong justification and CEO approval. Over time, through countless iterations, A/B testing, and a bandit algorithm, the team was able to generate dozens of small- and medium-size wins that have amounted to substantial gains in DAU year after year. ![Image from How Duolingo reignited user growth](https://substack-post-media.s3.amazonaws.com/public/images/48a366a3-a3cc-4286-bd9c-5e7c24155d09_464x242.png) ### **The streak vector** In the search for even more growth vectors, the APM on the Retention Team started exploring whether there was a strong correlation between retention and usage of particular Duolingo features. He discovered that if a user reached a 10-day streak, their chances of dropping off were reduced substantially. Clearly, a lot of this was simply correlation and selection bias, but we felt the insight was interesting enough to start investing in improving this feature again. The concept of a streak is really quite simple: show users the number of consecutive days they’ve done any activity on the app. But it turns out that there is a surprisingly large number of optimization opportunities around streaks. We got our first big win with the streak-saver notification—a notification that alerts users with streaks if they are about to lose their streak. This late-night notification proved that indeed there was considerable upside to doubling down on streak optimizations. After this, several improvements followed: calendar views, animations, changes to streak freezes, and streak rewards, among others. Each helped improve upon the original streak idea and generated substantial improvements to retention. ![Image from How Duolingo reignited user growth](https://substack-post-media.s3.amazonaws.com/public/images/6e7d9190-a4af-4e67-9f9b-2d1fae8a36be_242x417.png) To date, the streak feature is one of Duolingo’s most powerful engagement mechanics. When people talk about their Duolingo experience, they often bring up their streak. I recently met one user who told me, “I have a 1,435-day streak!” and added, “with no streak freezes!” His bragging rights were well-earned, as he had been studying his chosen language daily for almost four years. Streaks work for a number of reasons. One of those is that a streak increases user motivation over time; the longer the streak is, the greater the impetus to keep the streak going. When it comes to user retention, this is the exact behavior we want in our users. Each day that a learner comes to Duolingo, they care a bit more about coming back the next day than they did the day before, hence increasing retention and DAU. As a meta-lesson, our success with the streak mechanic further showed us that we could squeeze major wins from existing features. We could see the value in both big breakthroughs and in fast optimizations. And an A+ team often has a mix of both. ### **Growth beyond CURR** We didn’t stop at CURR; there was a very healthy paranoia that at some point CURR would hit a ceiling, so sooner or later we would have to figure out growth vectors for new user acquisition. The Retention Team stayed focused on increasing CURR, but as a company, we consistently increased our investment in growth by creating more and more Product and Marketing teams to find new vectors (for both retention and acquisition). Luckily, several of these bets worked, including expanding internationally, building social features (this is what the Acquisition eventually team pivoted to, with great success), accelerating course content creation, working with influencers, increasing our presence in schools, investing (a little bit) in paid UA, and going crazy viral on TikTok. Each of these merits its own case study. ### **Overall results** Through our efforts over four years, we were able to increase CURR by 21%, which represents a reduction in the daily churn of our best users by over 40% and, together with our other successful bets, led to an increase in our DAU of 4.5x. Last year was one of the fastest growth rates in Duolingo’s history. The quality of the user base also improved; the share of our DAU with a streak of 7 days or longer increased almost 3 times to more than half of our DAU. This means that not only does Duolingo have a much higher number of active users now, but also that those users are much more likely to keep coming back, refer their friends, and subscribe to Super Duolingo. This growth was key to Duolingo’s successful IPO. ### **Parting thoughts** I hope that this article gives you the inspiration you need to find new vectors of growth for your product. If you adopt anything from my experience at Duolingo, I hope you adapt it to your own context using your best judgment. Don’t blindly trust what Duolingo or any other company did. Certainly that didn’t work for me. Happy experimenting! ### ***Acknowledgements*** *Gamification Team: You know who you are. Thank you for teaching me so much!* *Acquisition Team: Vanessa Jameson (Engineer Director), Cem Kansu and Liz Nagler (PMs on the team, now VP of Product and Product Area Lead for Growth, respectively), and the rest of the team, who worked super-hard and eventually made a smart and successful pivot to work on social features. Shoutout to Nico Sacheri (Principal PM) and Hideki Shima (Eng Director), who have been crushing it leading the Connections team for the past couple of years.* *Growth Model: Erin Gustafson (Staff Data Scientist) and Vanessa Jameson, who collaborated with me in the creation of the growth model. Learn more about how Erin is working to evolve the way Duolingo thinks about growth in her recent post: * *Retention Team: Sean Colombo (OG Engineer Manager for the team, and now Eng Area Lead for Growth), Daniel Falabella (OG PM for the team, now GM for Duolingo ABC), John Trivelli (Designer on leaderboards), Anton Yu (PM who “re-discovered” streaks and so much more), Jackson Shuttleworth and Osman Mansur (Sr. PM and PM on the team today, still crushing it), Antonia Scheidel (Engineering Manager, also crushing it), and all the wonderful engineers and designers who have worked and continue to work on this team.* *Gina Gotthilf, who was a total growth rock star in Duolingo’s early years.* *Luis von Ahn (CEO) and Tyler Murphy (Chief Designer), with whom I reviewed every single product change for almost five years.* Thank you, Jorge! You can follow Jorge for more on [LinkedIn](https://www.linkedin.com/in/jorgemazal/) and [Twitter](https://twitter.com/jorgemazal). Have a fulfilling and productive week 🙏 ## 📣 Join Lenny’s Talent Collective 📣 If you’re hiring, [join Lenny’s Talent Collective](https://www.lennysjobs.com/talent/welcome) to start getting bi-monthly drops of world-class hand-curated product and growth people who are open to new opportunities. ![Image from How Duolingo reignited user growth](https://substack-post-media.s3.amazonaws.com/public/images/f8eb7d1d-965c-4b8a-813d-b233fc74197b_1526x1240.png) If you’re looking for a new gig, join the collective to get personalized opportunities from hand-selected companies. You can join publicly or anonymously, and leave anytime. [Apply to join](https://www.lennysjobs.com/talent) ### ❤️‍🔥 Featured job opportunities 1. **Athena:** Head of Growth (Remote) 2. **MetaMap:** [VP, Product](https://www.lennysjobs.com/jobs/74ca739b-4b51-4d55-8727-6606327fae58) (SF, Miami, Mexico City) **If you’re finding this newsletter valuable, share it with a friend, and consider subscribing if you haven’t already.** Sincerely, Lenny 👋 --- ## [9/51] Growth ideas > ## Q: Love your frameworks, but I could use some concrete growth ideas. Sometimes you just need ideas. I get that! Here are a bunch to get your juices flowing. My advice is to get your team together and go through this list with the mindset of “How might we…?” ![Image from Growth ideas](https://substack-post-media.s3.amazonaws.com/public/images/0f6a702d-30d9-43d0-8464-102363115533_2048x1024.png) #### **Drive more top-of-funnel (short-term)** 1. Convince an important (niche) influencer to mention you (e.g. [Tinder](https://www.lennysnewsletter.com/i/101715830/tinder-sochi-olympics-and-return-to-college), [Twitter](https://www.lennysnewsletter.com/i/38506758/twitter), [Clubhouse](https://www.lennysnewsletter.com/i/101715830/clubhouse-elon-musk-joining-for-an-interview)) 2. Do something controversial to get people talking about you ([here’s some advice](https://www.getflack.com/p/the-danger-of-playing-it-safe)) 3. Buy lots of billboards in a concentrated area (e.g. [Brex](https://www.wsj.com/video/the-surprising-power-of-old-school-billboards-in-driving-sales/5C27A4E7-6C48-4FBF-B5CE-3D496FC51F2B.html), [Airtable](https://www.tiktok.com/@lennyrachitsky/video/7194279500082105646), [Venmo](https://neilshah.com/downloads/venmo-lucas-case-study.pdf)) 4. Release a shareable one-off product (e.g. [Copy.ai](https://www.copy.ai/tools/cold-email-generator), [Ahrefs](https://ahrefs.com/awt), [Calm](https://www.donothingfor2minutes.com/), [UberPuppies](https://www.youtube.com/watch?v=HEwBCtO4BBs), and [a bunch more advice](https://www.lennysnewsletter.com/i/107886686/i-free-sidecar-products-built-with-marketing-intent)) 5. Launch on Product Hunt and hustle to get to #1 ([guide](https://www.linkedin.com/feed/update/urn:li:activity:7037062826099666944/), [guide](https://airinc.notion.site/airinc/How-to-win-at-Product-Hunt-9b14b5c1eb234deba3d966988e2f7847), [guide](https://paper.dropbox.com/doc/The-Ultimate-Guide-to-Statistics-of-Projects-at-Product-Hunt-nHlShXZxjrAcNMzJ9V41x), [guide](https://www.producthunt.com/launch), [guide](https://launchpedia.co/product-hunt-launch-guide/)) 6. Publish a viral piece of content (e.g. [Clancy’s Auto Body TikTok video](https://www.nbcnews.com/news/florida-auto-shop-viral-tiktok-rcna72817), [Dropbox](https://www.reddit.com/r/startups/comments/9pgudv/how_dropbox_got_their_first_users/), [Superhuman](https://www.acquired.fm/episodes/superhuman#:~:text=Ben%3A%20How%20did,your%20initial%20idea.)) 7. Get a popular newsletter or podcast to cover you (e.g. [Ramp and Packy](https://www.notboring.co/p/ramping-up), [Vanta and](https://www.acquired.fm/episodes/reverse-interview-with-ben-and-david-at-vanta) *[Acquired](https://www.acquired.fm/episodes/reverse-interview-with-ben-and-david-at-vanta)*, [Substack and The Generalist](https://thegeneralist.substack.com/p/substack)) 8. Expand to an additional location ([here’s some advice](https://www.lennysnewsletter.com/i/31258917/geographic-expansion)) 9. Share something [remarkable](https://youtu.be/xBIVlM435Zg?t=418) about your product or company 10. Translate your product into other languages (e.g. [Facebook](https://www.lennysnewsletter.com/i/101715830/facebook-adding-translations-and-then-mobile), [Airbnb](https://www.lennysnewsletter.com/i/101715830/airbnb-expanding-internationally-and-adding-translations)) 11. Organize a high-profile launch event (e.g. [Salesforce](https://www.salesforce.com/blog/what-is-dreamforce/), [Airbnb](https://www.youtube.com/watch?v=yQ0_7vGJQL8), [Spotify](https://newsroom.spotify.com/stream-on-2023/)) 12. Launch on a new platform (e.g. [Android](https://www.lennysnewsletter.com/i/101715830/tinder-launching-their-android-appplus-see-part-below), VR) 13. Orchestrate a PR stunt (e.g. [IHOP](https://twitter.com/Adweek/status/1093531751517904896?s=20), Tinder’s “Dozens of Dopes” date stunt, [Salesforce](https://www.businessinsider.com/marc-benioff-salesforcecom-chief-has-pulled-some-crazy-stunts-2012-3#he-hired-fake-protesters-to-disrupt-a-siebel-conference-and-drew-the-cops-in-1)) 14. Create a viral video (e.g. [Descript](https://www.youtube.com/watch?v=Bl9wqNe5J8U), [Spotify](https://vimeo.com/26427650), [Blendtec](https://youtu.be/I7TK_8RiVj8), [Poo-Pourri](https://youtu.be/ZKLnhuzh9uY), [Dollar Shave Club](https://youtu.be/ZUG9qYTJMsI)) 15. Get your users and investors with the most followers to all post an announcement on social media at once 16. Run an ad on a large podcast, TV show, or radio show (e.g. [Eight Sleep](https://twitter.com/m_franceschetti/status/1630584598336790531?s=20), [Coinbase](https://www.theverge.com/2022/2/13/22932397/coinbases-qr-code-super-bowl-ad-app-crash)) 17. Run a killer contest or giveaway (e.g. [Jet](https://www.bizjournals.com/newyork/blog/techflash/2015/01/jet-com-gets-a-big-following-with-equity-giveaway.html), [Harry’s](https://tim.blog/2014/07/21/harrys-prelaunchr-email/), [Coinbase](https://twitter.com/coinbase/status/1400571428009779202?s=20), [more examples](https://outgrowco.medium.com/amazing-marketing-contests-and-giveaways-examples-ce407f05fa68)) 18. Create a limited-time deal (e.g. [Amazon Prime Day](https://www.amazon.com/primeday), [Starbucks Pumpkin Spice Latte](https://stories.starbucks.com/press/2022/starbucks-pumpkin-spice-latte-returns-on-august-30/), [more examples](https://getsitecontrol.com/blog/limited-time-offer-examples/)) #### **Drive more top-of-funnel (long-term)** 1. [Increase your product’s virality](https://www.lennysnewsletter.com/p/increasing-virality) 2. [Start investing in SEO](https://www.lennyspodcast.com/the-ultimate-guide-to-seo-ethan-smith-graphite/) 3. Hire a salesperson ([some advice here](https://www.lennysnewsletter.com/p/sales-bottom-up)) 4. Run ads on Google, Facebook, TikTok 5. Add a referral program ([here’s some advice](https://www.lennysnewsletter.com/p/this-week-16-building-a-referrals)) 6. Establish a channel partnership ([some advice here](https://review.firstround.com/From-Zero-to-10000-clients-in-Two-Years-Using-Channel-Partners)) 7. Add a freemium offering ([some advice here](https://www.lennysnewsletter.com/p/five-steps-to-starting-your-plg-motion)) 8. Invest heavily in brand marketing (e.g. Red Bull, Apple, Airbnb) 9. Start an online community that brings value to your target audience ([some advice here](https://www.lennysnewsletter.com/p/building-community)) 10. Launch or acquire a content/media company (e.g. [HubSpot and The Hustle](https://techcrunch.com/2021/02/04/hubspot-acquires-media-startup-the-hustle/?guccounter=1&guce_referrer=aHR0cHM6Ly93d3cuZ29vZ2xlLmNvbS8&guce_referrer_sig=AQAAANwfm8WIU0kccNCR-ojj_1Ky0ZHkFVquB5dOcQeEvDCO-KYvHA1io4ZSUZKpMaILJDh9Vl0-OlWtmMiVG5Xid37EOg9aGCtv41ghYNY459xjVKOEvdpfJsNEJvnRYpsXw8HOHu5njeFn89dZ96dYZcwE-Q7hY0V_CsoJyyYUzG8p), [Stripe and Indie Hackers](https://www.indiehackers.com/blog/acquired-by-stripe), [Robinhood and MarketSnacks](https://fortune.com/2019/03/25/robinhood-acquires-marketsnacks/), [Zapier and Makerpad](https://techcrunch.com/2021/03/08/zapier-buys-no-code-focused-makerpad-in-its-first-acquisition/), [AngelList and Product Hunt](https://techcrunch.com/2016/12/01/angelhunt/)) #### **Improve monetization** 1. Encourage annual plans by offering a larger (limited-time) discount 2. Charge power users more 3. Increase your prices broadly ([some advice here](https://www.lennyspodcast.com/how-to-price-your-product-naomi-ionita-menlo-ventures/), and [here](https://www.lennyspodcast.com/videos/the-art-and-science-of-pricing-madhavan-ramanujam-monetizing-innovation-simon-kucher/)) 4. Offer a limited-time discount if customers buy now 5. Bundle a product with a bonus (e.g. a free trip, a cool backpack, [AirPods](https://www.tiktok.com/@lennyrachitsky/video/7193906269806153002)) 6. Double down on expansion revenue vs. acquiring new customers #### **Improve conversion and activation** 1. Make your site faster 2. Remove a step from the flow 3. Add a step to the flow (e.g. [example from Twilio](https://youtu.be/UMAmj1bciww?t=1246)) 4. Add more guidance (e.g. [example from Airtable](https://youtu.be/dLku0AiGPVA?t=823)) 5. Add smart recommendations/defaults to questions 6. Cut 50% of your copy 7. Have just a single CTA—remove any other options 8. Add an additional authentication partner (e.g. Google, Apple) 9. Add an email drip sequence with how-to videos 10. Remove one thing from the flow that may be distracting the user 11. Schedule one-on-one Zoom onboarding with new users 12. Ask customer support and sales about one thing that’s blocking users 13. Add one element of personalization depending on the user persona 14. Increase [psych](https://andrewchen.com/psychd-funnel-conversion/) #### Improve retention 1. Manually onboard new users, to make sure they see your value 2. Let users “pause” or “snooze” instead of cancel 3. Add a level of gamification (e.g. [Duolingo](https://www.lennysnewsletter.com/p/how-duolingo-reignited-user-growth)) 4. Solve one additional problem for your user 5. Solve a more painful problem for your user 6. Increase the percentage of new users getting to your activation milestone ([here’s a bunch of ideas](https://www.lennysnewsletter.com/p/what-is-a-good-activation-rate#%C2%A7what-are-the-most-common-ways-to-increase-activation)) 7. Invest in resurrecting churned users (i.e. growth = new users + resurrected users - churned users) 8. Stop acquiring low-intent/quality users #### Improve team velocity 1. Narrow your team’s focus by taking one thing off their plate (e.g. a goal, a project) 2. Have one or two no-meeting days a week (e.g. “No-meeting Friday”) 3. Put one person’s ass on the line (i.e. a DRI) for each goal/outcome 4. Find one blocker that is slowing your team down and unblock it 5. Ask your engineers what is most slowing their day-to-day work down, and improve it 6. Cancel a standing meeting and handle it async 7. Let go of underperformers ([some inspiration](https://www.tiktok.com/@lennyrachitsky/video/7170103159971532074)) Bookmark this post as I’ll be adding to this list as I come across more ideas. And if you’ve had any other ideas, please share in the comments 🙏 [Leave a comment](https://www.lennysnewsletter.com/p/growth-ideas/comments) ### 📚 Further study 1. [Where great roadmap ideas come from](https://www.lennysnewsletter.com/p/where-great-product-roadmap-ideas) 2. [Common ways to increase activation](https://www.lennysnewsletter.com/p/what-is-a-good-activation-rate) 3. [How to increase your retention](https://www.lennysnewsletter.com/p/how-to-increase-your-products-retention) 4. [How to increase conversion](https://www.lennysnewsletter.com/p/this-week-21-strategy-and-tactics) 5. [Increase your team’s velocity](https://www.lennysnewsletter.com/p/increasing-velocity-issue-61) 6. [Growth inflections](https://www.lennysnewsletter.com/p/growth-inflections) *Have a fulfilling and productive week 🙏* ## 📣 Join Lenny’s Talent Collective 📣 If you’re hiring, [join Lenny’s Talent Collective](https://www.lennysjobs.com/talent/welcome) to start getting weekly drops of world-class product and growth people who are passively open to new opportunities. I hand-review every application, and accept less than 10% of candidates who apply. ![Image from Growth ideas](https://substack-post-media.s3.amazonaws.com/public/images/f8eb7d1d-965c-4b8a-813d-b233fc74197b_1526x1240.png) If you’re looking for a new gig, apply to join! You’ll get personalized opportunities from hand-selected companies. You can join anonymously, hide yourself from companies, and leave anytime. [Apply to join](https://www.lennysjobs.com/talent) ### 🔥 Featured job opportunities 1. **Forem:** [Senior Platform Engineer](https://www.lennysjobs.com/jobs/d01563e6-1312-4af7-8dc5-c5070ac6e8e9) (Remote) 2. **Forem:** [Senior Product Manager](https://www.lennysjobs.com/jobs/13f493f2-0050-48e3-aa4c-8fbcb2b7c389)(Remote) 3. **Fitmate Coach:** [Growth Manager](https://lennys-jobs.pallet.com/jobs/eabfbfa5-ffdc-446d-84bb-9958bcaf1b34) (SF, Remote) 4. **Fitmate Coach:** [Product Lead](https://lennys-jobs.pallet.com/jobs/c6c1e81a-b2ad-4a37-b9cb-b3327ccf7247) (SF, Remote) 5. **Athena:** [Head of Growth](https://lennys-jobs.pallet.com/jobs/ecdd07bc-e3f0-4307-afd5-c55cbbf5ea47) (Remote) **If you’re finding this newsletter valuable, share it with a friend, and consider subscribing if you haven’t already. Check out [group discounts](https://www.lennysnewsletter.com/subscribe?group=true) and [gift options](https://www.lennysnewsletter.com/subscribe?gift=true).** Sincerely, Lenny 👋 --- ## [10/51] How Duolingo builds product On the heels of what is now my second most popular post of all time ([How Duolingo reignited user growth](https://www.lennysnewsletter.com/p/how-duolingo-reignited-user-growth) by [Jorge Mazal](https://www.linkedin.com/in/jorgemazal/) 🔥), I’m excited to share a deep dive into the day-to-day workings of how Duolingo builds product. This post is part three of an ongoing series on how the best product teams build product (don’t miss [Figma](https://www.lennysnewsletter.com/p/how-figma-builds-product) and [Coda](https://www.lennysnewsletter.com/p/how-coda-builds-product)), and I’m especially excited to share this because, as you probably noticed in Jorge’s post, Duolingo has a unique approach to most things 😮 I sat down with [Cem Kansu](https://www.linkedin.com/in/cemkansu/), VP of Product at Duolingo, to learn about the company’s fascinating org structure, planning cadence, design review process, approach to OKRs, team rituals, goals, and much more. And per usual, you’ll find plenty of templates, real-life examples, and inspiration for your own team. A big thank-you to Cem for answering all of my questions. For more, make sure to follow Cem on [LinkedIn](https://www.linkedin.com/in/cemkansu/) and [Twitter](https://twitter.com/cemkansu). Enjoy! # How Duolingo builds product *with Cem Kansu* ![Image from How Duolingo builds product](https://substack-post-media.s3.amazonaws.com/public/images/f664390a-4597-43a8-8b3e-70079149efab_2400x3600.jpeg) ### **1. How is your product org structured? And how has this evolved over time?** Our product teams are cross-functional—people from multiple functions (e.g. design, engineering, learning science, marketing, PM) work on the same team. The team is managed by two or three “co-leads.” Typically, a PM lead and an Engineering lead head up the team, sometimes joined by a Learning and Curriculum lead (experts in learning science, curriculum design, and educational content creation), Biz Ops lead, or Marketing lead, depending on what the team is working on. Team co-leads are ultimately responsible for their team’s success and deciding its roadmap. They also own the decisions in their domain. For example, the PM co-lead owns more of the product discovery and roadmap decisions, whereas the engineering lead owns more of the product delivery and implementation decisions. When I joined Duolingo in 2016, the company had three PMs and only engineers as team leads. As we started building out the PM team, leadership saw value in having PMs as team leads. We piloted the co-lead structure with PMs and engineers and saw two main benefits: - PM and engineering brought complementary skills to team leadership, bringing together business acumen with technical expertise. Together, they were more effective than one lead from either function. - Division of leadership responsibilities made it easier to run a team. Having co-leads enabled them to split responsibilities and reduce the time invested to lead a high-performing team. Today, almost all of our product teams have the co-lead structure. Zooming out, all Product teams are part of “areas.” An area is a group of product teams that share common business goals. Similar to individual teams, areas also have cross-functional co-leads (Engineering, PM, and other roles, like Marketing). Here is the current list of product areas and the teams within them: ![Image from How Duolingo builds product](https://substack-post-media.s3.amazonaws.com/public/images/cd97f5c8-c1e1-4807-bbb9-e06637480eb8_1600x900.png) While all of our teams are metrics-driven, we tend to structure product teams as either (1) metric-based or (2) feature-based. Metric-based teams are structured around clear metrics that impact something the company wants to improve, like revenue or DAUs. For example: - **The In-App Purchases team** owns the metric of in-app purchase (IAP) revenue. They are part of the Monetization area. The Monetization area owns the metric Duolingo app revenue, which is the sum of IAP, ads, and subscription revenue. - **The Retention team** owns the metric [current user retention](https://blog.duolingo.com/growth-model-duolingo/) (CURR) and is part of the Growth area. The Growth area owns the metric of DAUs, which is heavily influenced by CURR. Feature-based teams are defined by the product problem we want to solve, and in most cases there isn’t a good metric that can accurately quantify success. For example: - **The Connections team** owns all social features within Duolingo. We know that in the long term having a more social experience within Duolingo is good for our growth because it makes language learning fun and accelerates word-of-mouth growth. So instead of focusing on driving a metric, the team is focused on “making Duolingo more social” and is part of the Growth area. - **The Path team** aims to improve a learner’s navigation within Duolingo, and their mission is to create a “path” for learners that maximizes learning efficacy and makes Duolingo engaging. They help Duolingo teach better by creating more efficient and fun ways for learners to go through lessons. There’s no clear metric that captures this, so the Path team focuses on their mission to build their roadmap. Obviously it’s harder to measure success with feature-based teams, but we’ve learned to work with that. We use a combination of qualitative and quantitative signals to see if we are tracking toward success, which looks different depending on the feature. For example, to measure how we are “making Duolingo more social,” we would use a few signals to decide if we are making progress: - Usage of features by Duos (Duolingo employees) and buzz around the features we are building. In other words, we look for how much Duos care about our features. - Most of us use Duolingo daily and have long streaks. It’s always a good sign if Duos are actively using and talking about a feature. - User research studies on the features we are building. - Signals from public forums like Reddit and Twitter to see how our users are reacting to our features. - Results from long-term holdout experiments, where we launch the experiment condition to the majority of our users and hold a small percentage in the control condition for a long time (more than three months). Social features have long-term effects, since it takes time for learners to add friends and have meaningful interactions. We measure these effects with holdout experiments. In terms of our reporting structure for product management, here’s a chart that displays what it looks like for PMs on the retention team, which is part of the growth area: ![Image from How Duolingo builds product](https://substack-post-media.s3.amazonaws.com/public/images/85175ce1-1cfb-4725-84f3-9d12409f405d_1600x901.png) In our org structure, all of Product Management, Product Ops, and UX Research are part of Duolingo’s larger Product organization, and they report up to me. I report to our CEO. All of Design reports into our VP of Design (Simmy). All of Engineering reports into either the Chief Technical Officer (Severin) or Chief Engineering Officer (Natalie), and they report to our CEO. ### **2. Do you use OKRs in some form?** We use quarterly OKRs that have been tailored around what we’ve seen work at Duolingo. Today our quarterly OKR development process is a three-step process that takes about three weeks. Here’s an example of what the planning cycle for Q2 would look like: #### **2 weeks before end of Q1: Teams grade their Q1 OKRs and draft Q2 OKRs** - Team leads lead this process. They collaborate with area leads and other relevant leaders, and work with their team members to write their draft OKRs. - In the course of a week, they collect feedback and iterate on their first draft to finalize team OKRs. #### **1 week before end of Q1: Areas grade their Q1 OKRs and draft Q2 OKRs** - Using team OKRs as their main input, area leads draft their Q2 OKRs for their area. - In the course of a week, they collect and incorporate feedback from senior leadership as they iterate from first draft to final draft. #### **First week of Q2: Companywide OKR reviews with senior leadership** - Area leads present the final version of their OKRs to senior leadership. - All OKR reviews are done in the first week of the quarter. - Any feedback and proposed changes are incorporated ASAP after the review meetings, and final OKRs are published to the company by the end of the first week of Q2. We follow this OKR timeline closely but not super-strictly. In reality, the team and area OKRs happen in parallel. For example, areas would start writing their first draft when they review the first version of team OKRs. The only part we are strict about is the companywide OKR reviews with senior leadership always being on the first week of the quarter, as that keeps us on schedule. In writing OKRs, here is a summary of the best practices we follow: ![Image from How Duolingo builds product](https://substack-post-media.s3.amazonaws.com/public/images/91f91439-25d2-4812-9d5a-8c19f20faf0a_1600x900.png) In the end, our OKRs will end up looking something like this for a product area—this would be an example of a revenue-based set of OKRs (numbers are made up): ![Image from How Duolingo builds product](https://substack-post-media.s3.amazonaws.com/public/images/678b59b6-cae3-4685-9b00-c304b3550494_1600x899.png) We’ve had quarterly OKRs for as long as I can remember, but as the number of product teams grew, we evolved the process to match our needs. In the earlier days, when Duolingo had only a few product teams, OKRs were simply product teams writing their OKRs down on a spreadsheet and getting feedback from senior leaders to finalize. The whole process took a few days. As we created many product teams, this became unmanageable because it wasn’t feasible for leadership to review and have valuable input on every team’s OKRs. Then we changed our process to what we have now, where teams finalize their OKRS within areas, and areas present OKRs to senior leadership. We believe in giving latitude to product teams to do what they think is right and empowering PMs to set their own strategy. Having this two-step OKR process with area and team OKRs helped us have clear alignment on team priorities while giving autonomy to teams. We’ve kept the time invested in OKR planning to a reasonable minimum by keeping each step to one week. The reason for this being: time spent planning OKRs is time taken away from making progress on our OKRs, but good OKR planning is critical to making sure we work on the right things. So balancing these two goals has been core to how we’ve evolved OKRs. ### **3. How far out do you plan in detail?** We have two main planning cycles: quarterly OKRs for all teams/areas (described above) and yearly OKRs for the whole company. For the yearly OKR process, around October each year the senior leadership team comes together to set the company OKRs for the next calendar year. The yearly company OKRs define our biggest strategic bets and highest-priority investments for the next year. Here is an example screenshot of what our company OKRs looked like for 2022 for DAU growth (numbers are X’ed out): ![Image from How Duolingo builds product](https://substack-post-media.s3.amazonaws.com/public/images/a9a2dfae-ba81-49a5-8719-c964a4dd5848_1600x900.png) Our Strategy and Biz Ops team leads the coordination for the yearly company OKR process. It takes us one to two months from the first draft to getting to finalized yearly company OKRs. During this process, we assign senior leaders to own the finalizing and reporting of these OKRs; we call them “key result facilitators.” For example, Manu (our Head of Marketing) and I are the designated key result facilitators for our User Growth OKRs. We are responsible for finalizing the Growth OKRs, tracking progress throughout the year, and helping solve roadblocks. The yearly company OKRs provide a guide to quarterly team OKRs. Teams use the yearly company OKRs to determine their end-of-year goals and how they should work toward them every quarter. ### **4. How do your product/design review meetings work?** We have a process that we internally call “product review” (PR) by which we review and approve larger changes to Duolingo products. Product review meetings happen every Tuesday and Thursday for a total of two hours. These two hours are divided into 20-minute slots that product teams sign up to present. The agenda of these meetings is product teams presenting their proposed product changes for the first 5 to 10 minutes and then reviewers asking questions and giving feedback for the rest of the time. Product reviews typically have this core group attending the meetings: - Luis, our CEO - Simmy, our VP of Design, representing Design - A rotational group of Product Area leads and me, representing Product Management - Having rotational PM reviewers is a new process for us. Our goal is to have more PM leaders uplevel their product decision-making and in the future have them lead product reviews at the area level. - Deanna, our Lead Product Ops Manager, who runs the meeting and coordinates the product review process About a year ago, Product Ops stepped in to own the product review process, and that has been transformative. We’ve standardized a lot of best practices: simplified our spec templates, standardized how things are presented, improved how the meeting itself runs, and started analyzing the quality of the decisions made in product review. Product review meetings are open to anyone who wants to observe, meaning anyone can watch these meetings. In fact, we encourage new PMs and product designers to watch at least 10 product reviews when they join Duolingo because we believe it’s a great way to understand how Duolingo makes product decisions. Here’s a photo of a product review meeting: ![Image from How Duolingo builds product](https://substack-post-media.s3.amazonaws.com/public/images/66e4d5b5-24b3-4d36-a372-860ca9cc1793_1600x657.png) Product reviews can happen at different stages of the product life cycle, and we have different types of product review discussions depending on the stage of the project: #### **One-pager: Get early feedback on a specific idea** A one-pager describes a potential feature idea or product change at the concept level. It is a great way to gather feedback from key stakeholders early on. A good one-pager makes sure that the team starts on the right foot and helps them realize all the issues they’ll have to address on the path to a successful feature. Here’s the template we use for one-pagers: ![Image from How Duolingo builds product](https://substack-post-media.s3.amazonaws.com/public/images/f6aceead-979d-453d-9392-b3b30eadd13a_1280x1600.png) #### **1.5-pager: Choose a specific direction for a feature** A 1.5-pager is, practically, a one-pager with wireframes or wireflows. It is an optional part of the process. One-pagers and specs are usually enough to help drive alignment across multiple stakeholders. For some projects, the one-pager is simply a formality. The idea is generally agreed upon, but the spec is controversial because the devil is in the details. For those projects, and for big features in general, 1.5-pagers can be very helpful because they generate the right level of feedback: not a 30,000-foot view, but also not pixel- or word-specific feedback. #### **Spec: Get approval on fully fleshed-out proposed change** A spec is the final product review document. In it, mocks need to be pixel-perfect and copy needs to be word-perfect. The spec should perfectly represent what users will see in the product. Here’s an example spec to show this in action: ![Image from How Duolingo builds product](https://substack-post-media.s3.amazonaws.com/public/images/35c56575-528c-4d34-8cd9-f1980ffb017f_877x1600.png) #### **Prototype: Get feedback on product experience** Prototype PRs are centered on a test build of the experience that allows the reviewers to see the flow for themselves and give the team specific feedback and the go-ahead signal if appropriate. Instead of a product doc, the team would show up with a prototype of the change they would like to show. Most product changes don’t go to product review at every step—it’s up to product teams to decide how much input they’ll need from leadership. The most common reviews are one-pagers and spec reviews. Another review process we have is “quality review.” It’s a complementary process to product review aimed at reviewing the implementation of a feature or product, ensuring that all of our features are excellent. In particular, the quality review looks at performance, visual polish, delightfulness, and adherence to the approved product spec. Feedback from quality review helps everyone align on the right balance between improving existing functionality and working on new projects. Teams are encouraged to go through quality review soon before or after rolling out significant new features. ### **5. How does your team estimate work items, track velocity, and know when something’s off track?** Every team/PM does this differently depending on their needs, but our core planning and development cycle is based on a weekly cadence. The most common method is weekly sprint planning. There’s a culture of daily standups to bring the whole team together. We release a new version of our mobile apps on a weekly basis, so teams generally use app release dates to plan their work. For example, when a product team is working on a feature and they estimate the work to take three weeks, they plan for that feature to go into the app release three weeks from today. As they do their weekly sprint planning, they track progress against their initial timeline and decide what they can do to speed things up or delay the release timeline. We also have a strong dogfooding culture that lets us keep a pulse on how large feature projects are evolving. Every change, before it rolls out to our users, goes live to all Duos for them to dogfood. For large projects, teams push regular updates to our internal builds for dogfooding, which creates awareness of how a project is progressing and gives us an opportunity to experience the UX ourselves. We even have dogfooding nudges for Duos to make sure the app flows that don’t frequently get tested as much get dogfooded, like onboarding for new users or re-onboarding for resurrected users (learners who come back to Duolingo after having been away for more than 30 days). ![Image from How Duolingo builds product](https://substack-post-media.s3.amazonaws.com/public/images/4a54c71e-244a-484b-8f68-cc47ee649318_1600x1349.png) ### **6. What’s in your product team tool stack?** We have a variety of tools in our product team tool stack: - Task management and bugs: Jira for everything - Internal communication: a combination of Slack and email for written communication and Zoom for meetings - Collaboration: Google Docs for official documents like product specs, Figma for product designs, Confluence for storing companywide information - Brainstorming: Figma, Google Docs, or old-school whiteboard! Even though our digital tools have improved so much, I still find in-person brainstorming and the old-school whiteboard very powerful. A new tool that’s starting to become popular with product teams is GPT-4. We started using it for many different things: quickly generating draft content for feature ideas (like a new story type), summarizing long documents, or giving presentations that rhyme (ask GPT to write anything in rhyme, and the output is hilarious 🙂). ### **7. How do you, as a product leader and product team, balance resources between new product work vs. maintenance/bugs? Is there a general rule of thumb or system, or is it ad hoc and team-specific?** Our general philosophy is treating balancing resources between new work vs. incremental work as an investment portfolio. Depending on the stage the product team is in and what they are working on, the diversification of this portfolio will look different. For a mature team that’s working on established features that already have many users, this might look something like a 50/50 portfolio between building a big product feature vs. incremental smaller changes. This is because incremental changes compound over time and can drive a lot of growth for mature products (like improving the onboarding flow). But you also never want to get stuck at a local maximum, so you have to keep trying big bets, like building complete new features or redesigning existing ones, in order to keep reaching for step function improvements. For a team that’s earlier in the R&D cycle and is working on products that don’t have an established product-market fit, their portfolio will look something like 90/10 between building new features vs. incremental improvements. For example, the Duolingo Math app team has a portfolio like this because we just launched the Math app a few months ago and we are still working on establishing product-market fit. Incremental changes won’t get us much return when we haven’t built strong adoption and a large user base. Instead we want to build new features until we have product-market fit. For bugs, if it’s a P0 issue and affects the user experience significantly, we triage and address those immediately. For P1/P2 issues, product teams work through them at the pace they can as part of their portfolio. To help solve P1/P2 issues that pile up, teams also do a quarterly “grease week,” which is a dedicated week where a product team only works on bugs. ### **8. How many PMs do you have?** We have an amazing group of 37 PMs, and [we’re hiring](https://careers.duolingo.com)! Here’s some of us pictured at our annual company trip in Mexico in February: ![Image from How Duolingo builds product](https://substack-post-media.s3.amazonaws.com/public/images/ede94056-bc0b-404a-932d-efc5e2636e20_1600x1200.jpeg) ### **9. What are some fun or unique traditions or rituals on your product team?** The product team likes to have fun, and I would say we have a long list of traditions. Here’s a few: - **The PM all-hands meeting, named Product Party.** Every other meeting name sounded too boring. At the start of every Product Party, we play a music video that someone on the team has picked and we try to guess who picked the song. - **Monthly happy hour called Product Pub.** Old-school in-person happy hour with no work agenda. We do this in the first week of every month. - **Kahoot trivia parties for celebrations.** [Kahoot](https://kahoot.com) is often used in classrooms for creating educational games or quizzes, but we use it for trivia parties. For example, when the Data Science function moved from the Product organization to Engineering, we did a farewell Kahoot where we had to guess fun facts about data scientists. - **Annual product team ski trip offsite.** Two days of skiing and hanging out every year. Here’s the product team on the 2023 ski trip. ![Image from How Duolingo builds product](https://substack-post-media.s3.amazonaws.com/public/images/be1718d4-ce3e-4714-bf31-b71734379029_1600x1200.png) - **Turning Slack into Instagram with #post-PTO-Mondays.** Every Monday, anyone who was on PTO the week before is encouraged to share a photo and update from their PTO. The goal is to remind ourselves to take time off and learn about what cool things the product team has been up to. ![Image from How Duolingo builds product](https://substack-post-media.s3.amazonaws.com/public/images/571694f6-b455-4051-a29f-ef31deed8e1b_979x1600.png) ### **10. What would you say is most unique or core to your product team’s philosophy for building product?** Here are a few things that make the product team at Duolingo unique: - **Our mission is at the heart of how we make product decisions.** We are here to develop the world’s best education and make it universally available. For example, we don’t charge for learning content so that Duolingo can remain accessible to learners worldwide. - **We are experimentation-driven and data-obsessed.** [Every product change is first tested as an A/B experiment](https://blog.duolingo.com/improving-duolingo-one-experiment-at-a-time/). We have more than 200 A/B tests running at any given time, and our product teams are experts in experimentation and data analysis. PMs at Duolingo become experts in what makes a good A/B test, how to analyze massive amounts of data well, and how to blend quantitative data with qualitative data to make good product decisions. - **Great UX design is key to building successful products.** Duolingo has a very specific design language: it’s simple, fun, and intuitive. For example, one of our product principles is “do more with less,” which means we put a minimal amount of elements on a screen to achieve the core functionality of that screen, and nothing more. The product team understands what makes a great user experience on Duolingo and applies it to the features they build. - **We build features that are fun, not just features that get the job done.** Learning a language is hard, and reaching fluency takes thousands of hours of work. We have to build fun and gamified learning experiences in order for our products to be sticky, so learners will have fun spending time with our products and be more likely to reach their learning goals. This is why gamified features like Streak and Leaderboards are core to Duolingo. The product team studies a lot of game mechanics to see how they can be adapted to learning experiences. - **We use Duolingo every day.** In order for us to understand what our learners experience when they use our features, we use our own products daily. It’s pretty cool to have long streaks on Duolingo on the product team. For example: I’m certainly not the longest streak on the team, but I’m currently on a 977-day streak that I’m pretty proud of. ![Image from How Duolingo builds product](https://substack-post-media.s3.amazonaws.com/public/images/c1eb05d0-7f5f-4222-b0c9-6788f9fe576b_738x1600.png) Thanks, Cem! You can follow Cem on [LinkedIn](https://www.linkedin.com/in/cemkansu/) and [Twitter](https://twitter.com/cemkansu). ### 📚 Further study 1. [Duolingo’s growth model](https://blog.duolingo.com/growth-model-duolingo/) 2. [Duolingo’s experimentation methodology](https://blog.duolingo.com/improving-duolingo-one-experiment-at-a-time/) 3. [How Duolingo reignited user growth](https://www.lennysnewsletter.com/p/how-duolingo-reignited-user-growth) *Have a fulfilling and productive week 🙏* ## 📣 Join Lenny’s Talent Collective 📣 If you’re hiring, [join Lenny’s Talent Collective](https://www.lennysjobs.com/talent/welcome) to start getting weekly drops of world-class product and growth people who are passively open to new opportunities. I hand-review every application and accept less than 10% of candidates who apply. ![Image from How Duolingo builds product](https://substack-post-media.s3.amazonaws.com/public/images/659d3de8-6cbb-4b67-9ef3-093e320f65ac_1498x1234.png) If you’re looking for a new gig, apply to join! You’ll get personalized opportunities from hand-selected companies. You can join anonymously, hide yourself from companies, and leave anytime. 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Check out [group discounts](https://www.lennysnewsletter.com/subscribe?group=true) and [gift options](https://www.lennysnewsletter.com/subscribe?gift=true).** Sincerely, Lenny 👋 --- ## [11/51] Product-led marketing *👋 Hey, [Lenny](https://twitter.com/lennysan) here! Welcome to this month’s ✨ **free edition**✨ of Lenny’s Newsletter. Each week I tackle reader questions about building product, driving growth, and accelerating your career.* *If you’re not a subscriber, here’s what you missed this month:* 1. *[A long and growing list of growth ideas](https://www.lennysnewsletter.com/p/growth-ideas)* 2. *[How Duolingo builds product](https://www.lennysnewsletter.com/p/how-duolingo-builds-product)* 3. *[Discussion: What’s your favorite product and why?](https://www.lennysnewsletter.com/p/discussion-whats-your-favorite-product/comments)* *Subscribe to get access to these posts, and every post.* [Kyle Poyar](https://www.linkedin.com/in/kyle-poyar/) is one of those people that I knew I’d eventually collaborate with. As a longtime partner at [OpenView](https://openviewpartners.com/product-led-growth/), he’s been studying, working with, and writing about product-led growth longer than anyone I know. When I pitched him on writing a guest post, he shared a topic that I immediately knew would resonate with this audience. Like all of my favorite guest posts, it’s full of tactical advice, real-life examples, and actionable next steps. I hope you find it as useful as I did. *For much more from Kyle, make sure to subscribe to his newsletter, [Growth Unhinged](https://kylepoyar.substack.com/), and follow him on [LinkedIn](https://www.linkedin.com/in/kyle-poyar/).* ![Image from Product-led marketing](https://substack-post-media.s3.amazonaws.com/public/images/d89355d6-b033-4fa0-bb08-d8816fd1593d_8000x4000.png) I won’t sugarcoat it: making the math work with product-led growth is hard. It requires attracting a vast pool of potential users who are interested in your product, all while spending very little to attract that audience (i.e. near $0 customer acquisition cost, or CAC). As a rule of thumb, you’re looking at spending less than $1 per unique visitor, compared against benchmark costs of [$1 to $5 per](https://www.businessofapps.com/ads/cpc/research/cpc-rates/) for traditional B2B products. Let’s unpack the PLG funnel math, pulling on data from [OpenView’s 2022 Product Benchmarks survey](https://openviewpartners.com/2022-product-benchmarks/). If an average freemium PLG product attracts 1,000 unique visitors to their website each day, that translates to: - **60 free signups** (6% conversion from a unique visitor) - **3 paying customers** (5% conversion from a new signup) - **$10-$100 per month** as an average initial spend for a new self-service customer - **30-60 days** to convert those free signups **⇒ You’ll make $1-$2 for each unique visitor** When you add all that up, you can expect to make $1 to $2 in first-year spend for every unique visitor. And that’s just top-line revenue on new users. This doesn’t account for churn (which can be notoriously high for single-user accounts) or your costs to serve those customers (e.g. salaries, customer support, cloud costs, or sales commissions). **Your CAC needs to stay below $1 per unique visitor** so you can cover these costs and facilitate efficient ongoing growth. Attracting users for PLG products calls for a new playbook, which I refer to as **product-led marketing**. Product-led marketing means making it easy for end users to discover your product when they need it, through two primary strategies: 1. Organic search/SEO 2. Product virality Each PLG product has its own growth engine and its own spin on product-led marketing. But there are striking similarities in how this looks across the top PLG products. Standout PLG products like Airtable, Miro, Snyk, Webflow, and Zapier disproportionately attract users through two channels: **organic search and SEO** (40% of new users), and **product virality** (16% of new users). Start here before spreading your resources across channels like paid advertising, channel partnerships, cloud marketplaces (e.g. listing on the Shopify App Store or AWS Marketplace), and outbound business development. ![Image from Product-led marketing](https://substack-post-media.s3.amazonaws.com/public/images/f5b102b8-9df7-483c-870e-cc30ee07ad7b_1600x682.png) ## **Examples of product-led marketing** Let’s explore these two acquisition sources—organic search and product virality—in product-led marketing. Usually one of these two channels will be your primary source of acquiring new users. Neither requires paying per click, which helps you scale efficiently. ### **1. Organic search and SEO** If your goal is to be easily discoverable by end users in their moment of need, organic search is the obvious starting point. The best PLG products treat search-oriented content as a natural extension of their product experience and as something that offers real value to users. Here’s what that looks like in practice. #### **i. Free sidecar products built with marketing intent** Usually we build a product and then market it. What if you flipped the script and built products that were specifically meant to grow your primary product? These “sidecar” products help you attract a high-intent audience, add value to their experience (no paywall or gates required), and then nudge visitors to create an account (often to save their progress or take action on what they’ve learned). Snyk’s [Open Source Vulnerability Database](https://security.snyk.io/) makes for a great example. ![Image from Product-led marketing](https://substack-post-media.s3.amazonaws.com/public/images/c001d024-ad23-464c-b53f-1ebdc4eb7b72_1600x754.png) It’s a comprehensive database of open source vulnerabilities across apps and operating systems. Underlying this product is a rich set of content that gets exposed to organic search and can be easily discovered in the developer’s workflow. Snyk’s tool gets regularly updated as new vulnerabilities are found, giving users a reason to come back, and incorporates user-generated content by asking visitors to disclose a new vulnerability. My favorite part: Snyk has a clear call to action to try their core product. Instead of checking vulnerabilities manually, why not let Snyk test all of your apps and help you automatically fix vulnerabilities in your code? *Related examples: Similarweb’s [Top Websites Ranking](https://www.similarweb.com/top-websites/), HubSpot’s [Website Grader](https://website.grader.com/), Ahrefs’s [Free Backlink Checker](https://ahrefs.com/backlink-checker), Zenefits’s [Health Insurance Marketplace](https://www.zenefits.com/benefits/health-plan-shopping/), Copy.ai’s [Free Cold Email Generator](https://www.copy.ai/tools/cold-email-generator)* #### **ii. Templates tied to what users are trying to do with your product** If you test out only one product-led marketing campaign, this would be the one to try. Many PLG products can be used in a variety of ways to accomplish different jobs-to-be-done. That’s where templates come into play. Templates help you attract a diverse set of potential users by showing how you help them achieve *their* specific goal in *their* own language. Consider the case of Airtable, which lets teams create low-code and no-code apps. As a marketing leader, I might not realize I need a low-code app builder. But I do know that I need a better content calendar or perhaps a better way to track my marketing campaigns. Airtable has compiled more than 200 [pre-built templates](https://www.airtable.com/templates) around these popular jobs-to-be-done, each of which has its own SEO-optimized landing page for maximum discoverability as well as a no-brainer call to action (it’s simply “use template”). ![Image from Product-led marketing](https://substack-post-media.s3.amazonaws.com/public/images/9f22715c-48fc-4ce0-b4be-c62150a8f670_1600x864.png) What’s better is that templates don’t just attract new users; they help users get activated quickly and make them feel like your product was purposely built for them. Templates can also be a way to kickstart a community strategy where you source templates from your power users (for example, Miro’s [Miroverse](https://miro.com/miroverse/)) or even let users monetize the templates they’ve created, as [Notion does](https://www.notion.so/templates). ![Image from Product-led marketing](https://substack-post-media.s3.amazonaws.com/public/images/f462673d-93ee-4f61-8687-2a1fc0969ec7_1254x1079.png) *Related examples: Notion’s [Template Gallery](https://www.notion.so/templates/), Miro’s [Templates Library](https://miro.com/templates/), SafetyCulture’s [Safety Checklist Templates](https://safetyculture.com/checklists/), SurveyMonkey’s [Survey Templates](https://www.surveymonkey.com/mp/survey-templates/)* #### **iii. Programmatic “how to” landing pages** You can take this concept of templates even further with *programmatic* landing pages tied to all of the various combinations of your product use cases. Not much content is needed—just enough to convey value and the context of how you help a user achieve their goal—but this content gets multiplied to be discoverable no matter the user’s context. Zapier’s library of more than 70,000 “how to connect x + y app” landing pages makes for a classic case in point, as [others have highlighted](https://ryanberg.co/how-zapier-reached-35m-arr-with-this-saas-seo-strategy/) in detail. (Lenny has a great [newsletter](https://www.lennysnewsletter.com/p/crafting-an-seo-strategy-issue-34) and [podcast](https://www.lennysnewsletter.com/p/the-ultimate-guide-to-seo-ethan-smith#details) with tips on how to do this, by the way.) Another example I’m digging is Similarweb, the website traffic software provider. Similarweb attracts nearly [10 million website visitors](https://kylepoyar.substack.com/p/your-guide-to-plg-enterprise) each month, according to the company’s own traffic analysis tool, and programmatic landing pages are an important part of their strategy. ![Image from Product-led marketing](https://substack-post-media.s3.amazonaws.com/public/images/70dc0162-0de9-49a2-a847-8415989fb5cc_1600x727.png) They have free, ungated, and SEO-friendly landing pages built out for nearly every website, which include background on the company, the traffic ranking relative to other websites, and useful insights into what that traffic looks like. That allows Similarweb to get found for hyper-specific searches like “Google traffic ranking” or, in my case, “[openviewpartners.com website traffic](https://www.similarweb.com/website/openviewpartners.com/#overview).” Similarweb’s marketing provides immediate value to the visitor—in the form of a quick answer to their question—and then nudges those visitors to sign up for a free account in order to get even more actionable insights. *Related examples: Zapier’s “[how to connect x + y app](https://zapier.com/apps/hubspot/integrations/typeform)” landing pages, Grammarly’s grammar FAQ landing pages (e.g. [No-one, Noone or No one—Which Is Right?](https://www.grammarly.com/blog/no-one-noone/))* #### **iv. Product education and documentation** Most tech companies have put significant energy into documentation to let users troubleshoot problems and get help on their own. This documentation tends to be hard to find, poorly indexed in search, sitting on a separate web domain, or lacking in quality calls to action back to your product. Put simply, you could be sitting on a content goldmine without even realizing it. My first advice is to put what you already have to work. Cypress, an open source web testing company in OpenView’s portfolio, [makes for a great example here](https://docs.cypress.io/guides/overview/why-cypress/), with well-organized help material that is regularly updated, includes compelling interactive content, and nudges visitors to start using Cypress for themselves. ![Image from Product-led marketing](https://substack-post-media.s3.amazonaws.com/public/images/5d4c0e6f-1588-45bb-bafa-aba08b2b8717_1600x785.png) From there, go on offense with curated hubs around key product pillars, particularly ones with substantial search volume. Hotjar, the website analytics company, does this to great effect with hubs around features like [heatmaps](https://www.hotjar.com/heatmaps/) and session recordings. In fact, the company has the number one result on organic search for “heatmaps,” “heatmap tool,” and “heatmaps guide.” ![Image from Product-led marketing](https://substack-post-media.s3.amazonaws.com/public/images/632b5694-96f3-4811-bcd7-c9e50ab026a1_1600x825.png) They’ve done that by addressing the high-level intent of the visitor (“What is a heatmap?”), challenging the visitor’s question and raising the stakes, and then addressing a broad range of related questions. Hotjar’s product hubs break down detailed and complex topics into bite-size, digestible chunks. *Related examples: Ahrefs’s “[how to do keyword research](https://ahrefs.com/blog/keyword-research/)” guide, Shopify’s [guide to starting an e-commerce business](https://www.shopify.com/blog/ecommerce-business-blueprint)* ### **2. Product virality for PLG products** Viral loops, while rarely the primary acquisition channel, can be extremely powerful as well. After all, it’s far easier (and cheaper) to generate growth from your existing product users than it is to acquire totally new ones. There are two types of virality for PLG products: external and internal. External virality is the classic form of virality through multiplayer use and product exposure, which we’ve come to associate with collaboration products like Zoom, Loom, or Typeform. Many of these products are inherently viral—they’re only valuable when used in multiplayer mode—and it’s extremely hard to manufacture external virality when it’s not natural. Internal virality, on the other hand, applies to nearly every bottom-up PLG product as it gets adopted across an organization. Your first task is to figure out how viral your product is today: how many additional users does one existing user bring? This can be extremely tricky to measure in the real world, especially for B2B products where a user may get exposed to the product but not have an immediate need for it. A proxy measurement is your direct traffic via Google Analytics—the share of people who come directly to your website without doing a Google search or clicking on an ad. From there, you can systematically accelerate virality. #### **i. Add and promote social features in your product** Calendly, the appointment scheduling software (disclosure: an OpenView portfolio company), is well known for its external viral loop where users invite people outside of their company to schedule a meeting. What you might not realize is that Calendly has systematically added features to promote *internal* virality, where the first Calendly user in an account brings in others from inside their company. One clear example is around creating a new event type. Calendly asks users which type of meeting they’re organizing: a one-on-one (the classic Calendly use case), group meeting, collective meeting, or round-robin? If the user is a sales rep looking to bring a CSM or BDR into a customer call, for example, it’s a no-brainer to create a group meeting and then plug your colleagues’ availability directly into your Calendly account. (You should listen to [Lenny’s conversation with CPO Annie Pearl](https://www.lennyspodcast.com/behind-the-scenes-of-calendlys-rapid-growth-annie-pearl-cpo/) to learn more about Calendly’s growth strategy.) ![Image from Product-led marketing](https://substack-post-media.s3.amazonaws.com/public/images/456cafad-4faf-44c6-b8a8-7b029321356c_527x313.png) #### **ii. Remove friction from being social** You’re likely putting up barriers that get in the way of users adopting these social features. Loom, the async video software, may be an inherently viral product, but even Loom had friction that slowed its virality. In the early days, Loom had only two types of users: paid creators (who could record Looms) and free viewers (who could not). This model worked well at the time, but it didn’t easily enable new folks to give Loom a try and become creators themselves. ![Image from Product-led marketing](https://substack-post-media.s3.amazonaws.com/public/images/f0b5b6bf-10b8-45f2-85ed-7cadfe18f683_1000x528.png) To solve for that friction, the company launched its [Creator Lite tier](https://www.loom.com/blog/more-for-teams) in June 2021. Creator Lite users can record up to 25 videos with a five-minute limit before they’re asked to pay, which offers a bridge from viewing to creating to paying. A bonus of the Creator Lite tier: it allowed Loom to introduce a successful user referral program via gamified storage incentives. Pro tip: If possible, avoid blocking the ability to invite new users into the product. I much prefer the [Figma approach](https://kylepoyar.substack.com/p/your-guide-to-product-led-sales), where new editors can be invited for free at any time. Team admins receive an email before payment each month that recaps what the bill will be and highlights any new editors, allowing them to downgrade editors to viewers in order to avoid extra costs. #### **iii. Add social elements around your product** Once you’ve done that, you’ll want to add social elements around your product, exposing your brand to people who would not otherwise create an account. Consider the milestones that your users achieve during their product experience and might want to share with their colleagues. Analytics, insights, and reports are great ways for users to showcase your product in a way that feels natural to their workflow. Ask yourself: Can users easily share these milestones via email, IRL, or—my personal favorite—via a Slack notification? B2B companies can also look at adding a watermark to their product, especially for free or self-service customers (bonus points if that watermark is URL-enabled!). You can reserve removing the watermark for businesses that want to pay for it. You could even extend this thinking to [building community](https://kylepoyar.substack.com/p/your-guide-to-plg-and-community), which is essentially virality that happens outside of your product. Community isn’t just another Slack group or forum that nobody asked for; it needs to be designed for and with your users. ![Image from Product-led marketing](https://substack-post-media.s3.amazonaws.com/public/images/cc4dafcc-9577-416b-b3a3-04825026baf3_1600x1033.png) Webflow, the no-code website builder, is a great case study. While community was a critical pillar in the company’s early growth efforts, it was actually a last-minute addition, [according to co-founder Bryant Chou](https://kylepoyar.substack.com/p/your-guide-to-webflows-4b-plg-engine). The Webflow team spun up a Discourse account only hours before opening up its beta; now that community counts more than 75,000 members. Their insight was that Webflow’s audience would be freelancers who work by themselves and would be hungry for a place to hang out, provide support for each other, and show off how to do cool stuff in Webflow. *Related examples: Figma’s [Community](https://www.figma.com/community), Procore’s [Construction Network](https://www.procore.com/network/), Pendo’s acquisition of the [Mind the Product community](https://www.mindtheproduct.com/mind-the-product-joins-pendo/), Pocus’s [Product-Led Sales Community](https://www.pocus.com/community)* ### **Final words of advice** The good news is that PLG creates an opportunity to attract users in a way that’s different from legacy competitors and allows you to scale more efficiently. - **PLG companies have a wider funnel, since they can target** ***users*** **rather than executive buyers.** There could be hundreds of end users in an account for every one executive, opening the aperture of who you can target. - **PLG companies can reach users earlier in their buying journey.** PLG lowers the entry barrier to trying out your product. Users get started for free, see tangible value, then advocate for wider adoption. Organic search and product virality represent 56% of new users for the average PLG company. Start with one (or both) of these channels and then layer on incremental channels like paid marketing, marketplace listings, channel partners, or outbound business development to amplify your efforts. Every PLG business is unique, and what’s worked for others might not be worth replicating for your product and target audience. Take these concepts as inspiration, then vet the potential ideas before you roll them out. Ask questions like: 1. Will this appeal to the target users of my product? 2. Where is there white space that other folks haven’t addressed in my market? 3. How strong is the connection between these campaigns and what my product actually does? Much of this piece dealt with minimizing friction that blocks a user from signing up for or sharing your product. Keep in mind that some level of friction might actually be a good thing. PLG products need to motivate users not only to sign up but to put the work into being successful with the product. This might translate into your marketing team spending time on punching up your messaging, using website real estate to show off how your product works (bonus points for an interactive product tour), or nurturing visitors who aren’t ready to get started. While this edition focused on product-led marketing, your target KPI shouldn’t be metrics like website traffic or monthly signups. To optimize your marketing, focus on [product activation](https://www.lennysnewsletter.com/p/what-is-a-good-activation-rate). Activated signups—the number of new users who reach their aha moment with your product—is the best north star for PLG marketers, in my experience. When marketers are tightly embedded in your product strategy, you’re headed for a winning PLG strategy, no complicated math required. — Thank you, Kyle! Make sure to follow Kyle at [Growth Unhinged](https://kylepoyar.substack.com/) and [LinkedIn](https://www.linkedin.com/in/kyle-poyar/). Have a fulfilling and productive week 🙏 ## 📣 Join Lenny’s Talent Collective 📣 If you’re hiring, [join Lenny’s Talent Collective](https://www.lennysjobs.com/talent/welcome) to start getting bi-monthly drops of world-class hand-curated product and growth people who are open to new opportunities. ![Image from Product-led marketing](https://substack-post-media.s3.amazonaws.com/public/images/f8eb7d1d-965c-4b8a-813d-b233fc74197b_1526x1240.png) If you’re looking for a new gig, join the collective to get personalized opportunities from hand-selected companies. You can join publicly or anonymously, and leave anytime. [Apply to join](https://www.lennysjobs.com/talent) ### ❤️‍🔥 Featured job opportunities 1. **BioRender:** [Product Manager, Growth](https://www.lennysjobs.com/jobs/2ebe3227-5d14-4dd1-bfce-6a03eb3a1eee) (Canada, Remote US) 2. **BioRender:** [Senior Product Designer](https://www.lennysjobs.com/jobs/96f22fb3-100d-4f39-9782-d4efb80fe3bc) (Canada, Remote US) 3. **BioRender:** [Senior Product Manager](https://www.lennysjobs.com/jobs/6e874b72-2779-40e2-a135-c5beb7cc89dc) (Canada Remoe US) 4. **Forem:** [Senior Platform Engineer](https://www.lennysjobs.com/jobs/d01563e6-1312-4af7-8dc5-c5070ac6e8e9) (Remote) 5. **Forem:** [Senior Product Manager](https://www.lennysjobs.com/jobs/13f493f2-0050-48e3-aa4c-8fbcb2b7c389)(Remote) 6. **Fitmate Coach:** [Growth Manager](https://lennys-jobs.pallet.com/jobs/eabfbfa5-ffdc-446d-84bb-9958bcaf1b34) (SF, Remote) 7. **Fitmate Coach:**[Product Lead](https://lennys-jobs.pallet.com/jobs/c6c1e81a-b2ad-4a37-b9cb-b3327ccf7247) (SF, Remote) **If you’re finding this newsletter valuable, share it with a friend, and consider subscribing if you haven’t already.** Sincerely, Lenny 👋 --- ## [12/51] Taking the week off I’m taking this week off to recharge (and babymoon!!) in Big Sur. If you’re hankering for something to read, [check out this collection of my best stuff](https://www.lennysnewsletter.com/p/the-best-of-lennys-newsletter-d61) and [my most viewed posts](https://www.lennysnewsletter.com/archive?sort=top). See you next week! *P.S. [Read more about my PTO policy here](https://www.lennysnewsletter.com/p/pto-policy).* *P.P.S. I’m going to try to take a month off when baby arrives (early June 🤞), and since I don’t get parental leave (a downside of solopreneur life), I’m putting out a call for guest posts. Many of my most popular posts were guest posts, and I’ve never put out a public call for submissions. I’m excited to see what comes in. No prior writing experience required, but the bar is high. [Submit your pitch here](https://docs.google.com/forms/d/e/1FAIpQLSeh7aTCK19P63fVzTE4sXztqFZQu9xHL2C4osirSqc2cUdBAA/viewform).* ![Image from Taking the week off](https://substack-post-media.s3.amazonaws.com/public/images/e8bd8c6e-e344-4b08-8fc4-678293a21db8_640x480.gif)![Image from Taking the week off](https://substack-post-media.s3.amazonaws.com/public/images/d7331afa-3859-426c-83ab-9839b93bb8f2_3317x2017.png)![Image from Taking the week off](https://substack-post-media.s3.amazonaws.com/public/images/df562a22-a5cb-4ed9-8d42-e52a470677f9_4032x3024.jpeg) --- ## [13/51] How to use ChatGPT in your PM work > ## Are PMs actually using ChatGPT/GPT-4 for getting real work done, and if so, how? Let this idea sink in: Though I don’t believe PMs will be displaced by GPT-4/5/6/n, I do believe that, as with most knowledge work, learning to work alongside AI will quickly become table stakes. Just like [Grammarly](https://www.grammarly.com/) became for writing, [Copilot](https://github.blog/2023-02-14-github-copilot-now-has-a-better-ai-model-and-new-capabilities/#:~:text=Today%2C%20GitHub%20Copilot%20is%20behind%20an%20average%20of%2046%25%20of%20a%20developers%E2%80%99%20code%20across%20all%20programming%20languages%E2%80%94and%20in%20Java%2C%20that%20number%20jumps%20to%2061%25.) for engineers, and [Firefly](https://www.adobe.com/sensei/generative-ai/firefly.html), [Runway](https://runwayml.com/), [Midjourney](https://www.midjourney.com/showcase/recent/), and others are becoming for designers. It’s scary and confusing, but also exciting. When was the last time there was a transformative new tool for product management? Never? Importantly, as Dan Shipper suggested in [his recent guest post on building the Lenny Chatbot](https://www.lennysnewsletter.com/p/i-built-a-lenny-chatbot-using-gpt), **“the best way to prepare for this fast-approaching future is to dive in and get your hands dirty.”** So to help you roll up your sleeves and get started, I [polled Twitter](https://twitter.com/lennysan/status/1640385666134704128?s=20) for concrete examples of how PMs are already using ChatGPT day-to-day. Honestly, I was shocked by how common (and useful) it has already become for people. Below, I’ve collected a dozen of my favorite use cases of how you can integrate ChatGPT into your work today—with actual prompts you can play with. To follow along, [go sign up for ChatGPT](https://chat.openai.com/auth/login) (seriously, go do that now), and try at least one prompt you find below. Even if you don’t find it useful today, it’ll plant a seed. Also, a pro tip: You can ask ChatGPT for advice on how to best *phrase* your prompt. It’s very meta and very cool. For example: Here’s what it suggested when I did this: ![Image from How to use ChatGPT in your PM work](https://substack-post-media.s3.amazonaws.com/public/images/e641adac-5adc-459d-9a81-aeda03113db2_1470x548.png)![Image from How to use ChatGPT in your PM work](https://substack-post-media.s3.amazonaws.com/public/images/6e8c5cd3-baa9-4456-b12e-40fbf902e581_1318x1210.png) The future is coming fast. # 12 ways to use ChatGPT in your PM work #### 1. Collect and summarize user feedback and usage data Synthesize survey results: Find feature ideas and bugs from app store reviews: Extract insights from raw usage metrics: Do sensitivity analysis: #### 2. Come up with product name suggestions #### 3. Strengthen your argument Come up with critical questions your audience may ask: Identify gaps and hidden assumptions in your thinking: Highlight edge cases and counterarguments: #### 4. Inspire roadmap ideas Assist with roadmap ideation: Develop frameworks: Propose strategy: #### 5. Come up with customer interview questions #### 6. Inspire PRDs and user stories Create a v1 PRD or Jira ticket: Identify drag metrics: Write user stories: #### 7. Improve your writing #### 8. Do market research #### 9. Ask technical questions SQL queries: Programming specifics: Explain a broad concept: Write the code for you: #### 10. Create a v1 landing page #### 11. Create a v1 pitch deck #### 12. And, maybe most importantly, help you say no: Here’s a handy summary of the list above, with links: 1. [Collect and summarize user feedback and usage data](https://www.lennysnewsletter.com/i/111708404/collect-and-summarize-user-feedback-and-usage-data) 2. [Come up with product name suggestions](https://www.lennysnewsletter.com/i/111708404/come-up-with-product-name-suggestions) 3. [Strengthen your argument](https://www.lennysnewsletter.com/i/111708404/strengthen-your-argument) 4. [Inspire roadmap ideas](https://www.lennysnewsletter.com/i/111708404/inspire-roadmap-ideas) 5. [Come up with customer interview questions](https://www.lennysnewsletter.com/i/111708404/come-up-with-customer-interview-questions) 6. [Inspire PRDs and user stories](https://www.lennysnewsletter.com/i/111708404/inspire-prds-and-user-stories) 7. [Improve your writing](https://www.lennysnewsletter.com/i/111708404/improve-your-writing) 8. [Do market research](https://www.lennysnewsletter.com/i/111708404/do-market-research) 9. [Ask technical questions](https://www.lennysnewsletter.com/i/111708404/ask-technical-questions) 10. [Create a v1 landing page](https://www.lennysnewsletter.com/i/111708404/create-a-v-landing-page) 11. [Create a v1 pitch deck](https://www.lennysnewsletter.com/i/111708404/create-a-v-pitch-deck) 12. [Say no](https://www.lennysnewsletter.com/i/111708404/and-maybe-most-importantly-help-you-say-no) And again, “the best way to prepare for this fast-approaching future is to dive in and get your hands dirty.” Thank you to everyone who shared their insights and prompts. If you’ve found any other use cases valuable, or have specific prompts you can share, please post a comment 👇 [Leave a comment](https://www.lennysnewsletter.com/p/how-to-use-chatgpt-in-your-pm-work/comments) ### 📚 Further study and helpful tools 1. [A native Mac app](https://github.com/vincelwt/chatgpt-mac) that I’ve found handy 2. [Write My PRD](https://writemyprd.com/) 3. [How to use ChatGPT in product management](https://bootcamp.uxdesign.cc/how-to-use-chatgpt-in-product-management-f96d8ac5ee6f) 4. [45 ChatGPT Use Cases for Product Managers](https://aatir.substack.com/p/45-chatgpt-use-cases-for-product) Also, to expand your brain further: [Watch on YouTube](https://www.youtube.com/watch?v=Yf1o0TQzry8) *Have a fulfilling and productive week 🙏* ## 📣 Join Lenny’s Talent Collective 📣 If you’re hiring, [join Lenny’s Talent Collective](https://www.lennysjobs.com/talent/welcome) to start getting weekly drops of world-class product and growth people who are passively open to new opportunities. I hand-review every application, and accept less than 10% of candidates who apply. ![Image from How to use ChatGPT in your PM work](https://substack-post-media.s3.amazonaws.com/public/images/f8eb7d1d-965c-4b8a-813d-b233fc74197b_1526x1240.png) If you’re looking for a new gig, apply to join! You’ll get personalized opportunities from hand-selected companies. You can join anonymously, hide yourself from companies, and leave anytime. [Apply to join](https://www.lennysjobs.com/talent) ### 🔥 Featured job opportunities 1. **BioRender:** [Product Manager, Growth](https://www.lennysjobs.com/jobs/2ebe3227-5d14-4dd1-bfce-6a03eb3a1eee) (Toronto, remote) 2. **BioRender:** [Senior Product Designer](https://www.lennysjobs.com/jobs/96f22fb3-100d-4f39-9782-d4efb80fe3bc) (Toronto, remote) 3. **BioRender:** [Senior Product Manager](https://www.lennysjobs.com/jobs/6e874b72-2779-40e2-a135-c5beb7cc89dc) (Toronto, remote) **If you’re finding this newsletter valuable, share it with a friend, and consider subscribing if you haven’t already. Check out [group discounts](https://www.lennysnewsletter.com/subscribe?group=true) and [gift options](https://www.lennysnewsletter.com/subscribe?gift=true).** Sincerely, Lenny 👋 --- ## [14/51] What jury duty taught me about product management So, I had jury duty last week. Like everyone ever, I expected to get dismissed at some point in the process—until I was juror #1 on a weeklong criminal case. The experience was equal parts disruptive, rewarding, and fascinating. Being the product nerd that I am (and because we had a lot of time to sit around and think), I started to notice parallels and hidden lessons about leadership and product management. Trials, I realized, are a great lens for studying important soft skills. In both litigation and PM, you’re trying to convince a group of people to do what you believe needs to be done. And facing decades in prison is much higher-stakes than getting button copy wrong 😵‍💫 Here are five lessons I took away from my jury duty experience: ### **1. Be super-selective about who’s in the room** The trial lasted a total of three days, including *one whole day* for jury selection. A third of the trial was picking the jury! Think about all the time attorneys put into laying out their case, interviewing witnesses, cross-examining witnesses, opening and closing statements, etc. The prosecution and the defense spent as much time picking *who* they were pitching as doing the actual pitching. I know this timeline isn’t the case for every trial, but from my research, it’s typical. **What’s the product lesson?** 1. **Projects:** Think carefully about who you want on your next team. Who’s going to help you align, make decisions, and ship—and who’s going to derail everything? 2. **Meetings:** Think carefully about who you want in that upcoming meeting. Who’s going to help you get to the outcome you want—and who’s going to create confusion? 3. **Leadership team:** Think carefully about who needs to be on your leadership team. Who’ll do real work and push the team forward, and who just wants to be involved? 4. **Success criteria:** Think carefully about how success will be judged for your project. How could you set your team up for success before you even start the project? 5. **Career:** Think carefully about who you want to spend your days with. Is the place you work full of people who are better than you, or do you constantly need to pull everyone along? ### **2. Tell them what you’ll tell them → tell them → tell them what you told them** Here’s how a trial unfolds: 1. Jury selection. 2. Opening statements by the prosecution and the defense, each laying out what you’ll hear during the trial. **←(Unexpectedly important)** 3. The prosecution makes its case by bringing up witnesses and asking them questions to lay out the facts as they see them. 4. The defense makes its case by bringing up its own witnesses and asking them questions to lay out additional facts and dispute the prosecution’s facts. 5. Closing arguments from each side. 6. The jury deliberates and shares their verdict. What surprised me most was how impactful the opening arguments were on my mindset throughout the trial. Each side started by telling us *exactly* what their case was going to be—including who we’d hear from, what each person would tell us, and what evidence we’d see. There was no mystery. As a result, as the prosecution (who went first) laid out their case, I always had in the back of my mind, “This sounds damn convincing, but I know the defense will have someone later tell me this wasn’t how it happened at all.” Knowing the key points up front helped me avoid jumping to conclusions too early. **What’s the product lesson?** The effectiveness of this simple presentation flow when trying to make an argument to an executive: 1. Tell them what you’ll tell them. 2. Tell them. 3. Tell them what you told them. This framework is often referred to as the [Aristotelian triptych](https://www.oreilly.com/library/view/interactive-lecturing/9781119277309/Barkley277309_c06_14_EPUB.xhtml) (though [it’s not clear](https://quoteinvestigator.com/2017/08/15/tell-em/) whether it actually came from Aristotle), and it connects nicely with the [Minto pyramid principle](https://www.lennysnewsletter.com/p/minto-pyramid-principle-scr), which teaches us to start a presentation with your conclusion, instead of saving it for the end. Here’s Daymond John (from *Shark Tank*) sharing this lesson in 30 seconds—using the actual technique within the video: [Watch on YouTube](https://www.youtube.com/watch?v=iegsoaG12_U) ### **3.** Don’t go into important meetings not knowing what key stakeholders will say Most people imagine a trial going like this: ![Image from What jury duty taught me about product management](https://substack-post-media.s3.amazonaws.com/public/images/0589baf4-3d41-4299-b48e-80c085ded760_476x200.gif) When they’re really mostly like this: ![Image from What jury duty taught me about product management](https://substack-post-media.s3.amazonaws.com/public/images/ea04b963-e170-4270-ba5a-206873d71b8e_480x304.gif) Trials are very low-drama for one simple reason: [lawyers are taught](https://www.youtube.com/watch?v=B1piLVzrlko) never to ask a question they don’t already know the answer to. To accomplish this, they spend a lot of time behind the scenes, pre-trial, deposing witnesses, doing research, and preparing. Most of the work they do to win their case happens before the trial even begins. **What’s the product lesson?** Don’t go into important decision meetings not knowing how key stakeholders will feel. Meetings should be low-drama and full of non-surprises. To accomplish this, do the pre-work: 1. **The meetings before the meeting:** Schedule 15-minute pre-meetings with key stakeholders ahead of the meeting, to convince them of your case, and if nothing else, to get a sense of where they stand. 2. **Get alignment outside of a high-pressure room:** Aim for one-on-one low-stakes discussions vs. letting one loudmouth sway everyone. 3. **Think like a Jedi:** Be less Tom Cruise, passionately arguing your case, and more Obi-Wan, pulling strings behind the scenes. ![Image from What jury duty taught me about product management](https://substack-post-media.s3.amazonaws.com/public/images/c316af2b-c9af-4957-8a59-da12441a0446_471x200.gif) ### **4. Hunt for misalignment, and quickly push everyone back into alignment** Although attorneys try to avoid surprises, surprises do happen. Particularly in cross-examination, when the other side tries to create doubt in a witness’s testimony. In my trial, the case revolved around a DUI—specifically, whether the defendant drank before he left a party (because the breathalyzer results weren’t conclusive). The defense brought up a witness who was at this party, who claimed he never saw the defendant drink. This witness even told a story of offering the defendant a drink that he declined, because he said he was a designated driver that night and wasn’t drinking. If true, this would create a big problem for the prosecution, whose case rested on the fact that the defendant drank heavily at the party. A serious misalignment for his case! So what did the prosecuting attorney do? He looked for ways to bring the jury back into alignment (with his story). He drilled into where the witness was throughout the party, and whether he always had eyes on the defendant. It turned out the witness was upstairs for some meaningful period of time making out with his girlfriend 🤣 **What’s the product lesson?** [An important habit](https://www.lennysnewsletter.com/i/33702655/great-pms-hunt-for-misalignment-and-quickly-push-everyone-back-into-alignment) of highly effective product managers is to be endlessly hunting for misalignment—and quickly pushing everyone back into alignment. For example, rooting out misalignment between designers and engineers, researchers and PMs, and executives and the team. It’s some of the highest-leverage work you can do. Some ways to build this habit: 1. When reviewing new designs, always bring people back to “What problem are we trying to solve here?” 2. When you get a hint that team members are misaligned (e.g. quoting data not everyone has seen, optimizing for different goals, shifting priorities), just say, “We may be misaligned on this. What’s your understanding of X?” 3. Create, and keep coming back to, a source-of-truth document that crystallizes the goal, the succinct problem being solved, key assumptions, and key decisions. 4. Listen carefully in standups for anything that sounds like misalignment, and ask questions. 5. Revisit priorities, plans, and assumptions with your manager in 1:1’s. ### **5. Influence = evidence + trust** A trial really boils down to which side is better able to influence you. It’s maybe the purest display of influence—with real stakes. In our deliberation process, before we actually headed into deliberation, the judge specifically gave us instructions to base our decision solely on: 1. Evidence (e.g. a mark on a car) 2. Expert testimony (e.g. from a breathalyzer technician) 3. Witnesses’ firsthand accounts, and how much we trusted them She told us to ignore: 1. What the attorneys told us happened 2. Speculation or hearsay from witnesses 3. Our own sympathy, or emotion, for the victim or defendant 4. What we believe the judge thinks, based on how she interacts with both sides Essentially, we were told to focus on just the evidence and how much we trusted people. As one example of this in action, the defense attorney was not…great. The judge kept getting angry with him, he kept making mistakes with simple procedures, and he kind of annoyed everyone. But he won. His witnesses were trustworthy, and the evidence we did have pointed us to an acquittal. Many of us joked about how bad the defense attorney was, but that didn’t impact our conclusion. **What’s the product lesson?** I previously wrote a post on [how to improve your influence](https://www.lennysnewsletter.com/i/73401125/strategy-bring-evidence), and looking through it again in relation to this trial experience, I’m reminded of how much of your ability to influence others really boils down to two things: (1) how convincing your evidence is and (2) how much people trust you, your evidence, and others on your side. If you’re having a hard time influencing someone, instead of assuming they have something against you, double down on evidence and trust. ### Other parallels and lessons that I didn’t have time to explore because jury duty f’d my week 1. Getting a jury summons letter in the mail = Getting an invite to a meeting you didn’t want to be in 2. The amount of resources spent on small crime = This meeting should have been an email 3. The judge setting expectations that she wants the jury deliberation by end of the week = Great example of timeboxing 4. Getting dismissed = An upcoming meeting getting canceled 5. Proving something beyond a reasonable doubt = Statistical significance 6. Hoping they don’t call your name when they’re calling out potential jurors = Hoping they don’t call on you in a big meeting 7. Random jurors deciding your fate = An uninformed exec making the call on your project’s future 8. Decision by consensus = 😵‍💫 Finally, I’ll leave you with this clip from a new reality show called *[Jury Duty](https://www.amazon.com/Jury-Duty-Season-1/dp/B0B8JM2BBS)*: [![Image from What jury duty taught me about product management](https://substack-post-media.s3.amazonaws.com/public/images/08b50214-e677-4309-ae1e-caab4971aeec_672x1232.jpeg)](https://www.tiktok.com/@keshascastle/video/7219733026379418922) [@keshascastle](https://www.tiktok.com/@keshascastle)[this is not even an ad im just urging u to watch bc its a hilarious show😭💀 #juryduty #jurydutyonfreevee #tvshow #theoffice #funny #showrecommendations](https://www.tiktok.com/@keshascastle/video/7219733026379418922) ![Image from What jury duty taught me about product management](https://substackcdn.com//img/alert-circle.svg)Tiktok failed to load. Enable 3rd party cookies or use another browser *Have a fulfilling and productive week 🙏* ## 📣 Join Lenny’s Talent Collective 📣 If you’re hiring, [join Lenny’s Talent Collective](https://www.lennysjobs.com/talent/welcome) to start getting weekly drops of world-class product and growth people who are passively open to new opportunities. I hand-review every application, and accept less than 10% of candidates who apply. ![Image from What jury duty taught me about product management](https://substack-post-media.s3.amazonaws.com/public/images/f8eb7d1d-965c-4b8a-813d-b233fc74197b_1526x1240.png) If you’re looking for a new gig, apply to join! You’ll get personalized opportunities from hand-selected companies. You can join anonymously, hide yourself from companies, and leave anytime. [Apply to join](https://www.lennysjobs.com/talent) ### 🔥 Featured job opportunities 1. **Fitmate Coach:** [Product Leader](https://www.lennysjobs.com/jobs/4d6c9e6a-5f53-478b-be29-a87c6e8eb109) (Menlo Park, CA, or remote) 2. **Wingspan:** [Product Marketing Manager](https://www.lennysjobs.com/jobs/02f1d98a-a58e-427b-a46e-9e8b1fd52295) (NY, remote) 3. **Wingspan:** [Senior Software Engineer](https://www.lennysjobs.com/jobs/e42afaf7-f323-441d-8f4c-cf7a252e9ca3) (Remote) 4. **Wingspan:** [Technical Account Manager](https://www.lennysjobs.com/jobs/b8d36434-9885-4d23-80bf-9ac3847e37de) (Remote) ## **🧠 Inspiration for the week ahead** 1. **Read:** [Five big trends that have changed in the last few years](https://www.noahpinion.blog/p/five-big-trends-that-have-changed?publication_id=35345&post_id=115309518&isFreemail=false) by Noah Smith 2. **Watch:** [Michael Jackson on Fire Diorama](https://www.youtube.com/watch?v=QHi479xN_po) via Tim Ferriss [Watch on YouTube](https://www.youtube.com/watch?v=QHi479xN_po) 3. **Read:** [The Difficulty Ratio](https://sacks.substack.com/p/the-difficulty-ratio?publication_id=91289&post_id=111941126&isFreemail=true) by David Sacks **If you’re finding this newsletter valuable, share it with a friend, and consider subscribing if you haven’t already. Check out [group discounts](https://www.lennysnewsletter.com/subscribe?group=true) and [gift options](https://www.lennysnewsletter.com/subscribe?gift=true).** Sincerely, Lenny 👋 --- ## [15/51] How to do linear regression and correlation analysis *👋 Hey, [Lenny](https://twitter.com/lennysan) here! Welcome to this month’s ✨ **free edition**✨ of Lenny’s Newsletter. Each week I tackle reader questions about building product, driving growth, and accelerating your career.* *If you’re not a subscriber, here’s what you missed this month:* 1. *[How to use ChatGPT in your PM work](https://www.lennysnewsletter.com/p/how-to-use-chatgpt-in-your-pm-work)* 2. *[Discussion: How and where are you finding the best job opportunities?](https://www.lennysnewsletter.com/p/discussion-how-and-where-are-you/comments)* 3. *[What jury duty taught me about product management](https://www.lennysnewsletter.com/p/what-jury-duty-taught-me-about-product)* *Subscribe to get access to these posts, and every post.* > ## Q: You’ve mentioned regression analysis a few times in your posts . What exactly is a regression analysis, and how do I run one? I’ll be honest. Though it’s come up in the newsletter a few times, I’ve also never *truly* understood what a regression analysis is. I know it helps you understand how two metrics are connected, but when exactly to run one, how to run one, and how regression differs from metrics being *correlated*, I’ve never deeply understood. I imagine many of you feel the same way. Considering how often these two methods come up, and (as you’ll see below) how powerful these tools can be, it’s important we all get smarter about this. To help us out, making her [return appearance](https://www.lennysnewsletter.com/p/measuring-cohort-retention), I’ve pulled in [Olga Berezovsky](https://www.linkedin.com/in/olgaberezovsky/), author of the wonderful [Data Analysis Journal](https://dataanalysis.substack.com/) newsletter, to explain what exactly correlation and regression analysis are, when to use one versus the other, how to run an analysis yourself (including recommended tools and templates), and a couple of common pitfalls to avoid. I’ve always wanted a simple, clear, and actionable explanation of correlation and regression analysis, and I’m excited to finally have one. *You can find Olga on [LinkedIn](https://www.linkedin.com/in/olgaberezovsky/) and [Twitter](https://twitter.com/OlgaBerezovsky), and [subscribe to her newsletter](https://dataanalysis.substack.com/) for all kinds of great, actionable advice on data analysis and product analytics. Also, don’t miss Olga’s other guest post, on [measuring cohort retention](https://www.lennysnewsletter.com/p/measuring-cohort-retention).* ![Image from How to do linear regression and correlation analysis](https://substack-post-media.s3.amazonaws.com/public/images/f96f8914-8651-4375-9d0c-f67756b4329a_8000x4000.png) Linear regression and correlation analysis are two of the most common (and crucial) methods for getting insights from data. Both are used as a foundation for predictions and forecasting, but they are hard to understand, often confused with each other, and difficult to do without prior training. In this post, I will cover the fundamentals of both linear regression and correlation analysis, demonstrate the primary use cases for each, and lay out steps and tools for how you can quickly conduct such analysis on your own. ## Correlation analysis Correlation analysis illustrates **the degree of a relationship** between two variables, i.e. how closely they are correlated. The result is always between -1.0 and 1.0, where 1.0 denotes the highest positive correlation, -1.0 stands for the highest negative correlation (explained below), and 0 means no correlation: ![Image from How to do linear regression and correlation analysis](https://substack-post-media.s3.amazonaws.com/public/images/2c4dd36d-ef1e-45af-8499-b94875043d75_1600x431.png) Correlation does not imply causation, but it’s the simplest and fastest way to locate which features or metrics correlate the most with high or low user engagement. In my work, I like to run a correlation analysis first thing when I am coming fresh to the data and looking for connections between metrics. For example, at MyFitnessPal, I used correlation analysis to understand if logging weight is correlated with starting a trial, or if stopping logging exercises is correlated with user churn. Examples of great use cases for doing correlation analysis: 1. Is there any relationship between the two features or two user activities (e.g. booking a hotel and purchasing a concert ticket, creating a document template, and sending a message to a collaborator)? 2. Do they increase and decrease together (e.g. does an increase in comments per post correlate with an increase in post shares? Is the decline in activated trials related to the price change)? 3. Are they dependent or independent (e.g. the day’s weather and your app usage, activations by day of the week, or market recession and your subscription churn)? #### **There is a “positive” and “negative” correlation** Positive correlation—increase in X is correlated with an increase in Y: - An increase in installs relates to an increase in signups - An increase in notifications relates to an increase in daily active users Negative correlation (or inverse correlation)—increase in X is correlated with a decrease in Y: - An increase in price is related to a decrease in the trial-to-paid rate - An increase in webpage time load relates to a decrease in page views Depending on your question, you may find everything you need with just a correlation analysis. It’s simpler and faster to do than linear regression, it’s easier to understand, and this step alone might give you enough insight into your question. For example, if you simply want to measure the strength of the connection between, for example, a user seeing an upsell and activated trials, correlation would be sufficient. If, however, having the upsell view data, you want to predict new trials or gauge how much of the increase in showing upsells will be reflected in new trials, then you need linear regression. Note: If you jump straight to doing a linear regression and the values are not correlated, you’ll often find an inconclusive pattern. That’s why I recommend running a correlation analysis first—to confirm whether there is a correlation between X and Y, and if it’s a positive or negative correlation. Once you know if X and Y are related, then you can expand the analysis and predict Y using linear regression. ## Linear regression Linear regression takes correlation analysis further and shows **how much one variable affects another** and, more importantly, whether you can **use the pattern of one variable to predict and estimate the behavior** **of another**. Importantly, just like correlation analysis, a linear regression doesn’t prove causation, but it does give you more confidence that there’s a strong connection between variables, plus how this connection is expected to change if you increase or decrease variables. Use cases for linear regression: 1. How much do page views have to increase to improve signups by 2x? 2. Is showing more recommended articles to readers increasing return visits? 3. How many exercises do users have to log in the app to see an improvement in user retention? 4. If we send 3x more notifications, how much will this increase DAU? 5. How many months will it take for Lenny to reach 500,000 subscribers? (Answer: About two months, assuming the current trend won’t change and Substack won’t release another killer feature. It’s estimated around July 2023.) Per the last point, linear regression is also often used for predicting averages for user activity, growth, and revenue. For example, at Change.org I used regression to forecast the day and time when we hit 200 million users (and I was within 10 minutes right!). At MyFitnessPal we use linear regression to estimate how many meals users have to log to become “sticky” or how many days users have to use the app to upgrade their subscription plan. ### The difference between linear regression and correlation analysis ![Image from How to do linear regression and correlation analysis](https://substack-post-media.s3.amazonaws.com/public/images/62413fa0-3d80-411c-af93-ebd0f096a26a_1042x644.png) Correlation analysis confirms **the relationship** and **connection** between two variables. Linear regression analysis shows **how much one variable affects another** and how to **predict, estimate, or explain its behavior**. Another way to understand it: - If you can swap X and Y and get the same result, use correlation. If changing them affects your outcome, use regression. - If your analysis aims to answer *if* there is a relationship between X and Y, use correlation. If you aim to answer *how* X affects Y or haveX *predict* Y, use regression. ## How to run a correlation and linear regression analysis To demonstrate both of these analyses, I’ll share some of the work my team did at [MyFitnessPal](https://www.myfitnesspal.com/). We set out to prove that encouraging users to log more foods soon after signup would improve overall user retention. MyFitnessPal is the leading nutrition and food-tracking app, offering the tools to log meals quickly and easily. Using the app, users can track meals, learn about their habits, and reach their weight goals. ![Image from How to do linear regression and correlation analysis](https://substack-post-media.s3.amazonaws.com/public/images/c3827257-40ba-4493-afab-8b1ecaa464e3_1486x932.png) For my analysis, I will be using “food logging events” to measure and analyze user engagement ([see my previous guest post](https://www.lennysnewsletter.com/i/70174617/step-define-active) for advice on how to pick your “active” user metric). For your product, your active user metric could be app opens, session starts, screen views, requesting rides, booking a room, etc. To prove that food logging has an impact on user retention, I will be running both a correlation and linear regression (using dummy data), as an example: 1. Correlation analysis to confirm: 1. There is a relationship between logging foods and retention. 2. The relationship is strong, and the correlation is positive. 2. If there is a relationship, and it’s strong, then take the next step with regression to validate that an increase in the number of users who log a meal has the opportunity to increase active user retention. ### Running analysis using product analytics tools Unlike my early years as an analyst, having to run such analysis in Excel, R, SPSS, or STATA software that required training and had a steep learning curve, today we can take advantage of product analytics tools that are intuitive and help you confirm the relationship between variables in seconds. Below I’ll show you a way to run such an analysis in Amplitude and Mixpanel, along with Excel, Google Sheets, and other tools. These digital analytics tools offer features that are similar to correlation and linear regression modeling. They use your historical data to help you locate signals, patterns, and connections by doing correlation analysis, and on top of that develop predictions of expected user behavior. In other words, using Mixpanel and Amplitude, you can do correlation and go slightly beyond that with predictions. For linear regression, I’ll show you how to supplement your analysis with Excel and Google Sheets. #### **Amplitude—Compass feature** In Amplitude, you can click into the *Analysis* section and pick the [Compass](https://help.amplitude.com/hc/en-us/articles/235147347-The-Compass-chart-discover-your-users-a-ha-moments) chart. Follow these steps to run a correlation analysis: 1. Select the user activity you want to measure—logging a meal, opening the app, sending an invite, viewing a listing, creating a video, etc. 2. Pick the metric you want to see an impact on—retention, trial, churn, activation, etc. 3. Adjust the time range for the user activity—e.g. 7 days after signup, for example: ![Image from How to do linear regression and correlation analysis](https://substack-post-media.s3.amazonaws.com/public/images/78e896f2-95f7-48ee-9b9b-54afade0ed89_1600x262.png) Compass returns the correlation score based on your input data (using a sample of data for reference): ![Image from How to do linear regression and correlation analysis](https://substack-post-media.s3.amazonaws.com/public/images/2baa5a31-974f-4d36-9ca0-143669f4e8d0_794x436.png) We received a 0.564 correlation score, which proves there is a relationship between food logging and user retention in this dataset. Amplitude says it’s “highly predictive,” meaning there is a high likelihood of food logging predicting high retention. That said, it **doesn’t mean that new users registering tomorrow and logging more foods will have better retention**. There is still work to do to prove that. This just indicates that based on our historical data: - A big percentage of users who logged food in their first 7 days after signup returned to the app on the 14th day. - Among users who returned to the app on the 14th day, a big percentage of them had logged food in their first 7 days. There is no proof yet that every new user who will log in twice as often will show improved retention. My next step here was to run the same analysis for other user activities and see if there is as strong a relationship for other MyFitnessPal features: water intake logging, plan activation, intermittent fasting, logging an exercise, etc. As you can see below, many other features don’t show as strong a correlation with retention: ![Image from How to do linear regression and correlation analysis](https://substack-post-media.s3.amazonaws.com/public/images/2b0d4576-4b64-44f1-acc7-6b5e44b58755_1600x983.png) As a bonus, the Compass report in Amplitude also shows the impact of the *frequency* of activity on retention. For example, it helped us determine if logging food once in 7 days (versus, say, five times) is sufficient to detect improvement (it is). #### **Mixpanel—Signal report** In Mixpanel, you can use the [Signal](https://help.mixpanel.com/hc/en-us/articles/115004567503-Signal-Report) feature to confirm the relationship and connection between user activity and any of your metrics. To access this feature, click on Mixpanel Apps in the top navigation bar: ![Image from How to do linear regression and correlation analysis](https://substack-post-media.s3.amazonaws.com/public/images/fa43cedf-6c5c-4c86-9004-1834eb8014f6_586x752.png) Signal analyzes the correlation between an action and an outcome, to help you understand what user behavior drives conversion, retention, or growth. To create a Signal report in Mixpanel, follow these steps: 1. Define the user cohort for analysis (e.g. new users) 2. Choose a time frame (e.g. the last quarter) 3. Pick the goal/metric (e.g. second-week retention) 4. Select the user activity you want to measure (e.g. “log food”) 5. Add additional filters to the selected user activity (such as specific time, device type, or geo) 6. Click “Correlate” ![Image from How to do linear regression and correlation analysis](https://substack-post-media.s3.amazonaws.com/public/images/8e337589-70ec-4914-a080-8c27c63ba1a2_1600x448.png) Signal returns the correlation score based on your inputs: ![Image from How to do linear regression and correlation analysis](https://substack-post-media.s3.amazonaws.com/public/images/1e69ca2a-9ffc-4948-98d7-663ce47dd701_1600x148.png) In our example, we received a 0.78 correlation score, which proves logging food is strongly correlated with second-week retention in this dataset. If you click on “Details,” you can view the heatmap that helps you locate the ideal frequency of food logs to get the highest retention (not actual data; using an example for reference): ![Image from How to do linear regression and correlation analysis](https://substack-post-media.s3.amazonaws.com/public/images/3b519473-fc93-4ef5-a103-028630c7b1e5_1600x989.png) Mixpanel suggests that this action needs to be completed at least 2 times within 3 days of registration to have an impact on user retention (see the green box above). We can run the same analysis for other user activities in our app to confirm if there is a strong relationship for other features, using the “Top features” breakdown: ![Image from How to do linear regression and correlation analysis](https://substack-post-media.s3.amazonaws.com/public/images/a7a8aedf-95b6-482c-85ad-6f299c0a30ae_840x960.png)![Image from How to do linear regression and correlation analysis](https://substack-post-media.s3.amazonaws.com/public/images/c7c739bc-4c61-48f3-9732-c5729c79bb62_1600x527.png) Mixpanel returns a list of top activities in the app along with their correlation score to user retention. It makes it very easy to locate strong product features. Both Amplitude and Mixpanel help us confirm the association between retention and food logs, and determine how strongly predictive these associations are and their pattern of relationship. They don’t, however, give us an estimate of how much we should increase food logs to improve active user retention. And this is what linear regression can help to uncover. To confirm any type of prediction, we have to leverage statistical tools to model the linear regression trend line. This can be done in Excel, Google Sheets, or in a number of free online tools. For Excel, you will need to install an additional package, the [Analysis ToolPak](https://support.microsoft.com/en-us/office/load-the-analysis-toolpak-in-excel-6a63e598-cd6d-42e3-9317-6b40ba1a66b4). Once it’s downloaded, from the Data menu select Data Analysis, then select Regression. For running either a correlation or linear regression in Excel, you need to create two columns with your input data, like so (again, using made-up data): ![Image from How to do linear regression and correlation analysis](https://substack-post-media.s3.amazonaws.com/public/images/c2e8f0f1-fc74-4244-8d72-cf3f60ce40b1_988x970.png) For Google Sheets, you can leverage functions and a scatterplot chart: 1. Correlation =CORREL(X range, Y range): > ![Image from How to do linear regression and correlation analysis](https://substack-post-media.s3.amazonaws.com/public/images/1dfeb900-e932-49d9-847b-90cf739235a2_1176x458.png) 2. Linear regression, instead use *=LINEST(Y range, X range, true, true)*, where *true* stands for if you want to see additional statistics or calculate intercept. Here’s a quick template to help you get started: [Correlation and Linear regression template](https://docs.google.com/spreadsheets/d/1T4LAcBx9HHhDydMW0NPr1jOaEzx5GtZ9CTrcjeTrFZ8/edit#gid=1443729456). Alternatively, you can upload the same input data into online calculators such as [DATAtab](https://datatab.net/statistics-calculator/regression), [Statistics Kingdom](https://www.statskingdom.com/linear-regression-calculator.html), or [Social Science Statistics](https://www.socscistatistics.com/tests/regression/default.aspx) and get correlation and linear regression right in the tools. Note: Addressing outliers for linear regression is important. Depending on their value and position, outliers can affect the regression and change its trend line. In some cases, you should keep them, because they make your regression more precise (the image below on the left). In other cases, outliers deviate from the whole result and must be eliminated (the image on the right): ![Image from How to do linear regression and correlation analysis](https://substack-post-media.s3.amazonaws.com/public/images/ee4bea31-3c86-4d10-bff1-73e0d26c68ec_1600x697.png) *[Learn more about outliers in linear regression](https://www.statisticshowto.com/probability-and-statistics/regression-analysis/find-a-linear-regression-equation/#definition)* To understand which outliers should be removed, you have to see the whole distribution of your data points. As a rule of thumb, the closer outliers are to your average, the less likely they affect the regression. The further outliers fall from the average, the more leverage they have to skew the trend line. Additionally, you also need to consider data variance. If it’s overall high, you should keep extreme outliers. Read more: [Leverage in Linear Regression: How it Affects Graphs](https://www.statisticshowto.com/probability-and-statistics/regression-analysis/find-a-linear-regression-equation/#definition). That’s why running linear regression on your own in Excel can be tricky. It’s safer to leverage online tools and statistical applications that can build the regression for you. If you need help with exploring outliers, different types of regressions, or distributions, I recommend using a product called [Wizard](https://www.wizardmac.com/). It helps you build a scatterplot in seconds, find outliers, find correlation scores, and more: ![Image from How to do linear regression and correlation analysis](https://substack-post-media.s3.amazonaws.com/public/images/d754829c-8750-4337-9674-b91adfd950a8_1126x1050.png) ### **To recap, here are the steps to run correlation and linear regression:** **Hypothesis:** An increase in food logs will improve active user day-30 retention. ![Image from How to do linear regression and correlation analysis](https://substack-post-media.s3.amazonaws.com/public/images/94a29cc5-cd83-491e-9f6c-6b9a332596bd_1278x974.png) ## To conclude 1. Correlation is the simplest and fastest way to locate which features or metrics correlate the most with high or low user engagement. 2. Linear regression takes correlation analysis a few steps further. It shows how much one variable affects another and if you can use the pattern of one variable to predict and estimate the behavior of another. 3. Neither correlation nor linear regression implies causation. They help you locate which features or metrics correlate the most with user engagement and answer whether there’s a strong connection between variables, and if this connection will change if you increase or decrease variables. 4. The fastest way to confirm relationships between metrics and user activity is by leveraging product analytics tools, like Mixpanel, Amplitude, etc. 5. To learn how much one variable affects another, or to predict, estimate, or explain its behavior, you have to supplement analysis with linear regression either via online tools, statistical applications, or Excel. 6. If you do linear regression manually in Excel, make sure you address influential outliers (if you have any), which can make your trend line skewed. ### 📚 Further study 1. A fun, quick [video walk-through](https://www.youtube.com/watch?v=QzY4roUb3HM) on the differences between correlation and regression, from 365 Data Science 2. [A Refresher on Regression Analysis](https://hbr.org/2015/11/a-refresher-on-regression-analysis) 3. [A Visual Introduction To (Almost) Everything You Should Know](https://mlu-explain.github.io/linear-regression/) 4. [The Compass chart: discover your users’ “a-ha” moments](https://help.amplitude.com/hc/en-us/articles/235147347) 5. [Mixpanel Signal Report](https://help.mixpanel.com/hc/en-us/articles/115004567503-Signal-Report#build-a-query-in-signal) 6. [Linear Regression: Simple Steps, Video. Find Equation, Coefficient, Slope](https://www.statisticshowto.com/probability-and-statistics/regression-analysis/find-a-linear-regression-equation/#definition) 7. [What Statistics Are Used In Data Analysis?](https://dataanalysis.substack.com/p/what-statistics-are-used-in-data) 8. [Behold! How You Can Handle Missing Data](https://dataanalysis.substack.com/p/behold-how-you-can-handle-missing) 9. [Causality, correlation and regression](https://datatab.net/tutorial/causality) *Thanks, Olga! You can find Olga on [LinkedIn](https://www.linkedin.com/in/olgaberezovsky/) and [Twitter](https://twitter.com/OlgaBerezovsky), and [subscribe to her newsletter](https://dataanalysis.substack.com/) for all kinds of great, actionable advice on data analysis and product analytics.* *Have a fulfilling and productive week 🙏* ## 📣 Join Lenny’s Talent Collective 📣 If you’re hiring, [join Lenny’s Talent Collective](https://www.lennysjobs.com/talent/welcome) to start getting bi-monthly drops of world-class hand-curated product and growth people who are open to new opportunities. ![Image from How to do linear regression and correlation analysis](https://substack-post-media.s3.amazonaws.com/public/images/f8eb7d1d-965c-4b8a-813d-b233fc74197b_1526x1240.png) If you’re looking for a new gig, join the collective to get personalized opportunities from hand-selected companies. You can join publicly or anonymously, and leave anytime. [Apply to join](https://www.lennysjobs.com/talent) ### ❤️‍🔥 Featured job opportunities 1. **Wingspan:** [Product Marketing Manager](https://www.lennysjobs.com/jobs/02f1d98a-a58e-427b-a46e-9e8b1fd52295) (NY, remote) 2. **Wingspan:** [Senior Software Engineer](https://www.lennysjobs.com/jobs/e42afaf7-f323-441d-8f4c-cf7a252e9ca3) (Remote) 3. **Wingspan:** [Technical Account Manager](https://www.lennysjobs.com/jobs/b8d36434-9885-4d23-80bf-9ac3847e37de) (Remote) **If you’re finding this newsletter valuable, share it with a friend, and consider subscribing if you haven’t already.** Sincerely, Lenny 👋 --- ## [16/51] How Miro builds product Varun Parmar’s [podcast appearance](https://www.youtube.com/watch?v=furNg4njlsg) about Miro’s unique approach to product got so much love that I knew I needed to go deeper. In part four of an ongoing series on how the best product teams build product (don’t miss [Figma](https://www.lennysnewsletter.com/p/how-figma-builds-product), [Coda](https://www.lennysnewsletter.com/p/how-coda-builds-product), and [Duolingo](https://www.lennysnewsletter.com/p/how-duolingo-builds-product)), Varun delves into Miro’s OKR process, planning systems, design reviews, product building philosophy, and, as always, shares tons of plug-and-play templates you can start using today. With over 50 million users, and a valuation of $17.5 billion (making it one of the 10 most valuable U.S. startups), there’s a lot we can learn from Miro’s journey. What stood out to me most about Miro’s approach to product: 1. Their focus on speed—and how they operationalize it 2. Their systems for maintaining a high quality bar, including their “*Mona Lisa* principle” and their design review process 3. Their AMPED team structure 4. Their history with OKRs 5. Their product principles 6. The power of having a three-year “painted picture” vision 7. Their epic team rituals, including MiroFest: ![Image from How Miro builds product](https://substack-post-media.s3.amazonaws.com/public/images/49615afd-80ad-4c20-b35e-09798e49e0d2_1600x1067.png) Thank you, [Varun](https://www.linkedin.com/in/vparmar/), for taking the time to answer so many of my questions! Enjoy. # How Miro builds product ![Image from How Miro builds product](https://substack-post-media.s3.amazonaws.com/public/images/20901a5c-0876-4dfc-b22c-b50f21b97107_1067x1600.png) ### **1. How is the Miro product org structured?** Over time, we’ve experimented with multiple organizational structures. The first structure divided the org between “Core Product” and “Growth,” which allowed each team to stay focused on one priority: delivering product features or driving growth. Then we evolved our structure to focus more on users, experimenting with use-case-focused teams to solve specific user needs and end-to-end experiences, e.g. Miro for workshops. Today the product organization is a cross-functional team composed of **A**nalytics, (Product) **M**arketing, **P**roduct, **E**ngineering, and **D**esign—or **AMPED** for short. AMPED is organized into seven “product streams” aligned to the product component that each stream owns: 1. Core product experience 2. Enterprise 3. Growth 4. Core product foundation 5. Infrastructure 6. Platform 7. Data Each stream focuses on a set of user personas or outcomes. For example, the Enterprise stream focuses on the enterprise admin and security persona, while the Platform stream is focused on developer persona, and the Growth stream is more horizontal, focusing on specific acquisition and activation outcomes. Finally, we have common metrics across all of AMPED that are supported by multiple streams and teams. For example, improving first-time user experience is an outcome that is supported across multiple streams. What we see is that the AMPED structure brings together all required functions into the team from the get-go; they bring diverse perspectives, as well as empathy for each other and the users, resulting in a much more effective product development process. Another great example here is that Product Marketing is part of our product development process from the start. So we’re not only thinking of what to build but how to position it, how to differentiate, and how to reach the users. ### **2. How far out do you plan in detail, and how has that evolved over the years?** At the company level, we have a “three-year painted picture,” which is a high-level picture that Miro’s Leadership Team co-develops and that defines the outcomes we want to achieve—both for our users and for Miro as a company. The painted picture is bold and ambitious, and establishes a general direction for the entire company. ![Image from How Miro builds product](https://substack-post-media.s3.amazonaws.com/public/images/256b756b-e603-4769-b1b1-4556b85be2ef_1600x283.png)![Image from How Miro builds product](https://substack-post-media.s3.amazonaws.com/public/images/c194ba05-eb4f-4c54-8d10-00d723313f46_1600x903.png) The painted picture informs our annual strategy, which sets the direction for the entire AMPED org for the next 12 months. We build the product strategy collaboratively in three steps, between November and January. - **First, the Product Leadership Team identifies priorities for the year** (e.g. outcomes we need to achieve) and an initial list of initiatives we want to pursue. This is the stage where we also select initiatives from the past year that should continue or stop and add new initiatives. The leaders consult their teams and represent their views in discussions. - **Next, the AMPED leaders come together to refine our priorities, discuss conflicts, and make tradeoff decisions.** Typically, this group meets at an in-person offsite and dedicates four or five days to finalizing the product strategy. We also start thinking about staffing needs here to ensure that our most important initiatives are staffed appropriately across all functions. Our last offsite was in Barcelona in mid-December—we had a lot of deep discussions, ensured that leaders understood many areas of the product, not just their streams, and also managed to spend some time at the Joan Miró museum for inspiration! The in-person discussions also made alignment a lot easier. - **Finally, the full 700-plus AMPED org reviews the product strategy.** The product strategy document is shared with everyone; I present the strategy at an all-hands meeting, and we hold Q&A sessions where AMPED leaders (not just product leaders) answer questions. This phase is about building broad awareness and providing teams with clarity on what we want to do. We got (and answered) more than 1,000 questions in the most recent iteration and refined the details based on the team’s input. Each stream takes the annual strategy as input and identifies which outcomes they will support and what initiatives they will drive. Teams also identify the estimated impact of their initiatives—this is helpful when we’re trading off between different opportunities they could pursue. The identified initiatives go into our product roadmap. Our product roadmap operates on a rolling six-month cadence—we have 80% confidence in the current quarter and 50%-plus in the subsequent quarter. We used to plan just two weeks out, but this longer-term cadence allows us to be more strategic, while also being nimble and reacting to market changes. And we’ll revisit and update our product strategy mid-year based on the progress until then and the emerging market context. For example, Miro AI is in beta as of March 9, a point the team reached in just eight weeks. When changes are happening in the market or inside the company, you should be agile and ready to adjust, not trapped by your own planning. Our flexible roadmap framework allowed us to embrace this watershed moment in AI capabilities; we prioritized initiatives and secured a team that rapidly ideated, built, and deployed the features. Other key factors that helped us act fast included: people who had passion around the topic (a motivated team can do a lot!); singular focus, as we deprioritized everything else for the core AI team; and fast, almost daily iterations and standups where we tweaked things, resolved blockers, and highlighted achievements. ### **3. Do you use OKRs in some form?** We do. And, like many other things, it is constantly evolving. We’ve improved a lot, but there’s also more work for us to do here. We used to have OKRs at each level in the organization: Company → AMPED → Product Stream → Team, and followed a quarterly planning process. It was great in theory but had many challenges. There were three big problems with this setup: 1. **Overlapping initiatives:** Having OKRs at every level meant each team had to define their objectives and initiatives. This often resulted in teams rephrasing the same initiative at different altitudes and adding it to many key results. It was hard to do traction (check execution against goals) and was not providing clarity or alignment for teams. *So we’ve removed extra layers and now have Company-, AMPED-, and Product Stream-level OKRs, with each team just deciding which OKRs they will support. It has brought much-needed alignment and clarity to teams.* 2. **Too much time for the “process”:** Quarterly planning needs a lot of time. In addition, the same DRIs had to present updates at multiple traction forums. It led to a lot of time being spent in following the process and was just not working. *So we’ve moved to a semi-annual OKR frequency and fewer OKR tractions each month, reducing duplicate and process-related work by a lot. We also do quarterly check-ins for course correction, if needed. For example, if a KR metric is no longer relevant, or based on rolling forecasts, we need to adjust targets.* 3. **Too many priorities:** We were seeing approximately three to five objectives with three to four KRs per objective. At each level, we created new sets of metrics, dashboards, and monthly traction reports, making it difficult to get a comprehensive overview of our common priorities. It was clear we weren’t driving focus. *So we’ve started limiting the number of objectives and KRs (three to four objectives, two to three KRs) to start focusing from the top. This is still a work in progress, and we’ll continue to sharpen the pencil here.* Today we represent our OKRs as a ladder framework, where companywide OKRs are the most encompassing, followed by AMPED, and then the Stream, to avoid duplication. We also reduced the set of metrics that we track. The Product stream leaders present these to me as Chief Product Officer and to our CTO, Vadim Barshtak, for review and sign-off. We have an AMPED-wide monthly traction meeting where we discuss the most important topics and try to address the challenges that we see. ![Image from How Miro builds product](https://substack-post-media.s3.amazonaws.com/public/images/cb7849eb-4ef9-49c0-bc05-4fe47261bcb1_1388x773.png) ### **4. How large is the product organization, and how many PMs do you have?** AMPED is about 700 people, including over 50 PMs ([and we’re hiring](https://miro.com/careers/open-positions/?searchTerm=&selectedTeam=Product&selectedLocation=¤tPage=1)!). Geographically, the Product organization is based in Europe, and the go-to-market team is global. ![Image from How Miro builds product](https://substack-post-media.s3.amazonaws.com/public/images/3f17106c-9e23-444c-aaea-584f23394b30_1004x995.png) ### **5. What would you say is unique or core to your product team’s philosophy for building products?** The Product team’s motto is “Deliver customer value faster with high quality.” The most important thing is that customers see value in what we build and deliver. It’s what we want the product teams to focus on. We spent a lot of time within the Product Leadership Team to define what we mean by each word, how we use it, and how we measure it. It’s been a good journey, but, in many ways, we are still in the early stages. For example, product quality wasn’t always meeting our bar. We needed a way to help teams build a strong sense of what is good enough. One of the product leaders came up with the “*Mona Lisa* principle”—simply put, everything we ship should be like a *Mona Lisa* painting, something we’d be proud of putting our name on. When you look at a painting, you can easily say that something is a masterpiece and something is definitely not; the same is true with the product. It was simple and super-easy to understand and use. But it still didn’t help the team get better. So we iterated, and the Design team built the monthly design reviews. Every month, they review everything that was shipped and say what is high-quality or not. You know how a picture is worth a thousand words—similarly, real examples of high quality are a lot more powerful, and simple at the same time. I think that’s what makes us unique: focusing on customers, building with empathy, and iterating for better outcomes. (By the way, these are also three of Miro’s core values.) ![Image from How Miro builds product](https://substack-post-media.s3.amazonaws.com/public/images/22bec7f1-a52c-4964-ab49-93995f8dc675_1280x726.png) In the broader product organization, we’ve codified eight product principles, which have become especially essential at Miro’s scale and pace of growth. We use the principles to make choices in what we prioritize, what design options we choose, etc., which ensures that our decisions are calibrated and that the product remains in line with the team’s core DNA. 1. **Best-in-class collaboration** before **solo scenarios** 2. **End-user adoption** before **top-down decision makers** 3. **Holistic product experience** over **local optimizations** 4. **Intuitive patterns** before **reinventing UX** 5. **Measurable outcomes** over **deliverables** 6. **Evidence** over **opinions** 7. **Fast learning to get product-market fit** before **scaling** 8. **Always customer value** along with **tech initiatives** ### **6. How do your product/design review meetings work?** Product reviews are a key ritual for us, and we spend significant time and energy on them. Product reviews can focus on different stages of the product development lifecycle: - P-Strat: long-term strategy and vision - P0: the opportunity and problem that we want to pursue - P1: the proposed solution - P2: what we launched and how it’s performing Each stage has a defined template outlining the type of information the team should bring (e.g. [for P0 product alignment stage](https://miro.com/blog/product-management-at-miro/)). Large initiatives are discussed in a sync meeting with pre-scheduled slots (usually Mondays, Wednesdays, and Fridays) that teams can sign themselves up for. Small- and medium-sized projects are approved over Slack where everyone can engage. We spend about five hours per week on product review meetings for large initiatives. These reviews are cross-functional, and the AMPED product team presents together (not just the product managers). These reviews are open to everyone, but, to ensure it’s highly relevant and to reduce cost, we identify and ensure the participation of critical stakeholders who are needed to make decisions (e.g. DRIs as well as Product leaders, who can veto or provide specific direction). At the time of booking a slot, the Product team identifies who needs to be present and the Product Excellence team that runs the reviews tries to ensure their participation. During the meeting, we use the full power of [interactive presentations](https://miro.com/presentations/interactive-presentations/) to share slides, relevant data from dashboards, and [Talktracks](https://miro.com/blog/improve-collaboration-with-talktrack-videos/) (board recordings), and also capture reactions and questions from *all* the participants right there on the frames. As the questions are captured on the board, everyone can see them, and often questions lead to meaningful conversations even outside the presenting team. After the meeting, the PMs share the details and decisions in a dedicated Slack channel so everyone can see what we’ll work on and why. ![Image from How Miro builds product](https://substack-post-media.s3.amazonaws.com/public/images/7241a323-081a-4878-b562-1fda7c214507_1328x752.png)![Image from How Miro builds product](https://substack-post-media.s3.amazonaws.com/public/images/91fa2d36-b2d9-4f0a-adf7-4ee74f2c8541_1600x843.png) Overall, product reviews are one of the most engaging rituals we have. They’re a great opportunity for knowledge sharing, peer-to-peer learning, and raising the quality bar. ### **7. What tools do you use for task management and bugs?** We rely on Jira for task management and bugs; Slack for async messaging; and a variety of tools for documentation, ranging from Coda to Confluence, Google Docs, and, of course, Miro boards. We use Miro throughout the product development lifecycle — including for [design sprints](https://miro.com/miroverse/design-sprint-jake-knapp/), [product reviews](https://miro.com/miroverse/product-alignment-document-template/), [retros](https://miro.com/miroverse/sailboat-retro/), mapping user flows (see below), and other steps. One step for which we have yet to find the ideal tool is product roadmapping. It can be difficult to meet everyone’s diverse expectations and needs, so we’re still exploring solutions. ![Image from How Miro builds product](https://substack-post-media.s3.amazonaws.com/public/images/2acad9a2-c985-4c32-825b-b82d0d0d0ae3_1600x734.png)![Image from How Miro builds product](https://substack-post-media.s3.amazonaws.com/public/images/a6566327-fba6-4508-b6c3-46bc3b85e09d_1600x820.png) Talktrack is a new feature that’s becoming quite popular. I get Talktracks from the PMs a few days in advance and review them async. I and others add comments or questions right there on the board, and in the meeting we skip a lot of the “presentation” and jump to the important discussions—it’s a game changer. ![Image from How Miro builds product](https://substack-post-media.s3.amazonaws.com/public/images/8f85b8cf-fc9f-4d18-9451-2f9f752a7d55_600x365.gif) Talktracks are used for async updates, and meetings focus on discussions. ![Image from How Miro builds product](https://substack-post-media.s3.amazonaws.com/public/images/5d547e37-fea6-42b4-8241-9faacdb421fd_800x800.gif) ### **8. How does your team estimate work items, track velocity, and know when something’s off track?** Miro’s Product organization is a constellation of autonomous teams, empowered to solve a business problem end-to-end. They leverage that autonomy to develop ways of working that enable them to succeed in their particular problem space. We don’t enforce a common system to do this. Our product development lifecycle consists of a number of phases. At the end of the first phase (the P0 phase we mentioned above), teams use relative estimation techniques—such as planning poker, Pomodoro, affinity estimation, or T-shirt sizing—to align on a rough timeline. Once a team is committed to building the solution (i.e. the P1 stage), we enable them to look at how their work flows through their delivery process—and we’re building a more robust telemetry system for both work tracking and team health tracking. The goal is to support teams in increasing their confidence on the plan and the date range when they expect to deliver. ### **9. How do you, as a product leader and product team, balance resources between new product work vs. maintenance/bugs? Is there a general rule of thumb or system, or is it ad hoc and team-specific?** Our general rule of thumb is to devote 60% of resources to product innovation, 20% to running the business (RTB, maintenance, and bugs), and the final 20% to tech innovation (reducing tech debt). That said, this balance depends on the maturity of the product. So if there are a lot of legacy issues, then tech debt requires more than 20%; or, if we’re shipping a new capability, product innovation is closer to 80%. ### **10. What are some fun or unique traditions or rituals on your product team?** My favorite rituals are those that bring us together to learn from and create with one another. These include: - **“Miro Connect,”** which started as a small experiment within the Product organization for teams to get together and showcase the cool stuff they’ve been working on. The teams loved it as a low-stress way to brainstorm, test their pitch, and get feedback. It became so popular, with over 140 teams presenting, that we’ve since opened it up to the full company across three locations the first Friday of every month. If I am in the office when Miro Connect is happening, I never miss attending because it’s so great to experience the energy. ![Image from How Miro builds product](https://substack-post-media.s3.amazonaws.com/public/images/35520daa-8139-4f4b-a8b6-e715433e38c9_1600x1234.png) - **“Voice of the Customer” all-hands**, hosted by our fabulous UX Research team, features insights from their research as well as that of the Marketing Insights and wider Marketing team that, in turn, drive product and business decisions. - **Semi-annual hackathons** are a blast. Over two or three days, cross-functional teams transform an idea into a functional, user-tested prototype, many of which eventually make it to our public product release. It’s a great way to unlock creativity, meet new people, and have some fun along the way. ![Image from How Miro builds product](https://substack-post-media.s3.amazonaws.com/public/images/693f1328-e32b-4238-b560-c70653beb0ae_1031x648.png) - **In-person offsites** bring together teams from Miro’s global hubs to take a step back and focus on the big picture, alignment, planning, and bonding. At the company level, we hosted our first post-pandemic, in-person MiroFest in September last year (see photo at top of this post); we gathered global employees in three hubs across three continents for a two-day event, full of keynotes from and panels with company leaders, ice-breaker activities and workshops, and socializing. Later in the year, AMPED leadership came together in Barcelona to build out our annual product strategy. In addition to productive breakout sessions and workshops, we visited the Miró museum, celebrated a team member’s birthday, and had a lot of deep conversations. ## Bonus: Select clips from my conversation with Varun [Watch on YouTube](https://www.youtube.com/watch?v=voVzAZ9qpEk)[Watch on YouTube](https://www.youtube.com/watch?v=ucbRSZXEPls)[Watch on YouTube](https://www.youtube.com/watch?v=Nl4pXNKgOIU)[Watch on YouTube](https://www.youtube.com/watch?v=2DrWIUOy3vo) *Thank you, Varun! And don’t forget, [they’re hiring](https://miro.com/careers/open-positions/?searchTerm=&selectedTeam=Product&selectedLocation=¤tPage=1). Have a fulfilling and productive week 🙏* P.S. I’ve got many more product-team deep dives in the works, but if there’s a specific company you’d especially love to learn about, please let me know in the comments 👇 [Leave a comment](https://www.lennysnewsletter.com/p/how-miro-builds-product/comments) ## 📣 Join Lenny’s Talent Collective 📣 If you’re hiring, [join Lenny’s Talent Collective](https://www.lennysjobs.com/talent/welcome) to start getting weekly drops of world-class product and growth people who are passively open to new opportunities. I hand-review every application, and accept less than 10% of candidates who apply. ![Image from How Miro builds product](https://substack-post-media.s3.amazonaws.com/public/images/f8eb7d1d-965c-4b8a-813d-b233fc74197b_1526x1240.png) If you’re looking for a new gig, apply to join! You’ll get personalized opportunities from hand-selected companies. You can join anonymously, hide yourself from companies, and leave anytime. [Apply to join](https://www.lennysjobs.com/talent) ### 🔥 Featured job opportunities 1. **Mindbloom:** [Creative Producer](https://www.lennysjobs.com/jobs/389f9fcf-65bb-4852-836e-f3a732203212) (Canada, remote U.S.) 2. **Mindbloom:** [Acquisition Growth PM](https://www.lennysjobs.com/jobs/c74c7805-4b6c-42fa-a989-070e49a48898) (Canada, remote U.S.) 3. **Wingspan:** [Product Marketing Manager](https://www.lennysjobs.com/jobs/02f1d98a-a58e-427b-a46e-9e8b1fd52295) (NY, remote) 4. **Wingspan:** [Senior Software Engineer](https://www.lennysjobs.com/jobs/e42afaf7-f323-441d-8f4c-cf7a252e9ca3) (Remote) 5. **Wingspan:** [Technical Account Manager](https://www.lennysjobs.com/jobs/b8d36434-9885-4d23-80bf-9ac3847e37de) (Remote) **If you find this newsletter valuable, share it with a friend, and consider subscribing if you haven’t already. Check out [group discounts](https://www.lennysnewsletter.com/subscribe?group=true) and [gift options](https://www.lennysnewsletter.com/subscribe?gift=true).** Sincerely, Lenny 👋 --- ## [17/51] Your startup idea probably isn’t venture-scale > ## Q: I’m told my idea isn’t “venture-scale.” What does that mean? What do [Product Hunt](https://www.producthunt.com/), [Trello](https://trello.com/), [Balsamiq](https://balsamiq.com/), [Basecamp](https://basecamp.com/), [Things](https://culturedcode.com/things/), [DuckDuckGo](https://duckduckgo.com/), [Brain.fm](https://www.brain.fm/), and many of your favorite products have in common? They’re beloved, have millions of users, and likely generate tens of millions of dollars a year, but, like your idea and 99.9% of new startup ideas, they will never be “venture-scale.” And that’s OK. You can build a killer business without going the VC route. And you probably should. A simple rule of thumb for what makes an idea venture-scale is having a path to **$100 million a year** in revenue and hitting **$1 billion+ valuation**, in **10 years**. Essentially, can you get big, fast? This is what VCs need to invest in in order to make their fund economics work. Very few ideas can hit this scale, and it’s important that you recognize this before you take venture capital (more on this below). #### **To gauge the venture-scaliness of an idea, investors look for:** 1. **Large enough market:** Are there enough people (or companies) spending enough money for you to be able to generate $100M in revenue per year—and eventually $1B in revenue a year? This usually means that the total addressable market ([TAM](https://visible.vc/blog/modeling-total-addressable-market/)) needs to be $5B or more. And the bigger the better. 2. **Scalable business model:** Can you scale efficiently, primarily through technology—and not through hiring more people (e.g. accountants) or acquiring assets (e.g. buildings)? Venture investors are looking for high-margin businesses, and nothing is higher-margin than software. 3. **High growth:** Have you shown 2-3x growth year after year, and can you keep it up? Otherwise, it’s hard to believe there is actually a big market for what you’re building. Also, with a low growth rate, the [multiples on your revenue](https://medium.com/@harlemcapital/why-are-vcs-obsessed-with-software-38a4c48cbb08) will be lower, and thus so will your long-term value. 4. **Cash → growth:** Is there a clear understanding of how an infusion of (venture) capital will unlock growth in the short term? Otherwise, why sell a big percentage of your company? 5. **Path to IPO:** You plan to go public one day. > “When I look at a startup, I ask myself, can I see a path to $100M+ in revenue, and then a consistent way to compound from there? Is there a dream scenario of **building a category-defining business in the hundreds of millions, or even $1B+, in revenue?**” > > —[Stephanie Zhan](https://www.linkedin.com/in/stephaniezhan/), Partner at Sequoia A high bar indeed. #### Making something people want is not enough You often hear about the importance of [making something people want](https://www.paulgraham.com/good.html), but that’s just step one. If not *enough* people want what you’ve built, or you *can’t make enough* money from these people, you won’t be able to build a venture-scale business. But, again, that’s OK. You can still build a great business. Here are some ideas that will (probably) never be venture-scale businesses but can still be great revenue-generating businesses (and many already are): 1. On-demand car washing 2. In-home chefs-as-a-service 3. A better podcasting app 4. A better personal to-do app 5. A better photo-sharing app 6. A better bird-watching app 7. A better recipe app 8. A better app to manage Little League schedules 9. An app for couples to communicate long-distance 10. An app to coordinate household chores If you’re excited about one of these ideas, by all means build it! We need more great products in the world. The mistake is thinking your startup idea *is* venture-scale and getting on the VC treadmill. Once you’re on the treadmill, here’s what changes: 1. **High growth expectations:** VCs are looking for companies that grow big enough fast enough. If your business isn’t suited to this kind of rapid growth, it can lead to undue pressure and unrealistic expectations. 2. **Loss of control:** VCs generally buy 10% to 20% of your company and often get a seat on the board. This could lead to a loss of control over your company’s direction and decision-making. Especially if you aren’t growing fast enough. 3. **Misalignment of goals:** You may prioritize product quality, profitability, sustainability, or specific values, whereas VC firms typically prioritize rapid expansion and a high return on investment. 4. **Ongoing dilution:** When you attempt to raise additional funding and you’re not performing well, you’ll end up raising at lower valuations, thus diluting yourself, employees, and early investors. 5. **Exit pressure:** Investors usually expect an exit event (like an acquisition or IPO) within 5 to 10 years, to cash out their investment. This can lead to decisions that prioritize short-term gains over the long-term health and vision of the company. > “Bootstrapping is for lifestyle businesses that want cash flow, and (venture) funding is for companies trying to create a billion dollars in annual revenue. Simple as that.” —[Patrick Campbell](https://www.linkedin.com/in/patrickccampbell/), founder of ProfitWell (bootstrapped to $200M ARR) If you’re already down this road and are realizing your idea isn’t venture-scale, don’t worry. As long as you tried your best (and are working with good investors), they won’t hold it against you. As [Leo Polovets](https://www.linkedin.com/in/lpolovets/), GP at Susa Ventures, shared with me: > “**Most reputable investors will be content with their investment regardless of the outcome—as long as you tried your best to build something big.** So if you raised a seed round and ended up exiting for $15M, or even $0, because the $1B opportunity didn’t materialize, that’s totally fine. Where investors get frustrated is if you raised money on the promise of trying to create a huge business but then pursued an early exit without trying to realize the company’s full potential.” #### How to tell if your idea is venture-scale If you’re now wondering whether you have a venture-scale business, ask yourself three questions: **1. Is my market big enough?** Do the math. What would have to be true for your business to reach $100M in revenue in one year? How many people would need to be using it (and/or paying for it), and how much should you need to make per user? As [Nina Achadjian](https://www.linkedin.com/in/nina-achadjian/), GP at Index Ventures, says, it very simply often comes down to market size: > “**It all comes down to the size of the market and if the business model can scale.** That, and if you’re taking VC money, you are signing an unofficial ‘oath’ to one day take your company public or sell it. The minimum threshold is growing to $100M+ ARR.” Also, a classic piece of advice from [Andy Rachleff](https://www.linkedin.com/in/rachleff/) (co-founder of Benchmark Capital): > “When a great team meets a lousy market, market wins. > When a lousy team meets a great market, market wins. > When a great team meets a great market, something special happens.” Note, this is in large part a guessing game, but knowing what needs to be true to reach this bar is illuminating. [Here’s a simple guide](https://medium.com/sequoia-capital/the-market-curve-44097b626f6d) to help you think this through. **2. How much pain are you solving?** On a scale of 1 to 10, how painful is the status quo? Is it a 9-10, or is it 4-5? It’ll be hard to get people to pay a lot of money, or to switch from a good-enough product, if there isn’t a lot of pain. Here’s how [Hunter Walk](https://www.linkedin.com/in/hunterwalk/), GP at Homebrew, thinks about what makes a venture-scale business: > “Many investors will say that the total addressable market (TAM) size is the primary indication of ‘venture scale,’ but I disagree. You can have large TAMs that actually aren’t very good markets for startups, and smaller markets that can be expanded by the abilities of a talented startup with the right product offering. > > So instead I tell founders to think about the *problem* they’re solving, specifically my [LUV framework](https://hunterwalk.com/2017/04/12/why-i-care-about-problem-size-more-than-market-size/): > > 1. **Large:** Is the problem you’re aiming to solve large enough—customers, users, spend, etc.? > 2. **Urgent:** Is the problem urgent to your users/customers—will they be interested in a new offering, change their way of solving this problem today? > 3. **Valuable:** Are people willing to spend money to solve this problem; is there financial value associated with this problem?” **3. Can your business model scale efficiently and quickly?** Top VCs generally prefer to invest in software-driven businesses. Businesses that grow by adding bodies (e.g. hiring more plumbers), buildings (e.g. opening retail locations), or hardware (e.g. watches) tend to take a lot more time and capital. They also generally make lower margins. Software, on the other hand, can scale infinitely and is very cost-efficient. This is why companies that are high-margin [are valued so much higher](https://medium.com/@harlemcapital/why-are-vcs-obsessed-with-software-38a4c48cbb08) and why “[software is eating the world](https://a16z.com/2011/08/20/why-software-is-eating-the-world/).” ![Image from Your startup idea probably isn’t venture-scale](https://substack-post-media.s3.amazonaws.com/public/images/6b7a16ca-0992-46df-8547-c4cc100e3e7c_2172x1214.jpeg) As [Nina Achadjian](https://www.linkedin.com/in/nina-achadjian/) touched on above: > “**Venture-scale businesses need to have a business model that scales**. This means as the company grows, every incremental dollar that goes into the business unlocks more and more revenue, and eventually profit, over time.” VCs in particular look for companies where an infusion of cash unlocks growth and scalability—not simply companies that need cash to keep going: > “**Venture capital is best suited to companies that require discrete capital infusions to unlock orders of magnitude more enterprise value at key de-risking steps along the journey**. These ‘unlocks’ in value are discontinuous, because the investment thesis is generally out of consensus in the early rounds. > > For example, a technology, team, market, and/or business model may be unproven and, therefore, difficult for traditional capital providers to underwrite in the early stages. VCs, alternatively, are often willing to ‘take a flyer’ on certain large risks if they have a strong POV that one of these factors may be misunderstood and that the company can tap into unbounded upside if, in fact, this POV turns out to be right.” > > —[Alex Taussig](https://www.linkedin.com/in/ataussig/), GP at Lightspeed > “**The VC-backed route is ideal for companies where a lot of initial funding is required to launch and grow quickly**, where your ambition is to do everything you can to build a $1B+ company, and where there’s a viable path to $100M+ in annual revenue within 10 years. If at least one of these is not true for your company, then bootstrapping is probably the better choice.” > > —[Leo Polovets](https://www.linkedin.com/in/lpolovets/) #### Alternatives to the venture route You may now be realizing your business is not a venture-scale idea (hint: it probably isn’t). What should you do? You have a few options: 1. [Bootstrap it](https://www.seedready.org/journal/how-to-bootstrap-a-startup/). 2. Raise money only from friends and family, and supportive angel investors, who don’t expect venture-scale returns. 3. Check out funds that are aligned with this path, like [the Calm Fund](https://calmfund.com/), [TinySeed](https://tinyseed.com/), and [Purpose](https://purpose-economy.org/en/ventures/). 4. Explore revenue-based financing like [Capchase](https://www.capchase.com/), [Clearco](https://clear.co/), and [Lighter](https://www.lightercapital.com/revenue-based-financing). 5. Down the road, if you want to explore an exit, you can list yourself on [Acquire.com](https://acquire.com/). **All this being said, the biggest and most successful companies [do indeed raise venture capital](https://medium.com/point-nine-news/funded-vs-bootstrapped-comparing-the-metrics-of-37-saas-companies-ae579d3a0b60). And rarely regret it.** Also, you can always raise venture capital later, once you’ve proven that your idea works, to the market and to yourself. **Make sure to watch this two-minute clip with [Patrick Campbell](https://www.linkedin.com/in/patrickccampbell/)**, who bootstrapped his company to $200M ARR before selling it, and a big lesson from his experience: [Watch on YouTube](https://www.youtube.com/watch?v=FjLSCrSg5QY) > “I’ll tell you, with ProfitWell, this was a big mistake. Yes, it was a great exit, we sold for over $200 million dollars, etc., but if we had taken money, we could have had a billion-dollar exit or we could have kept going. We should have taken money earlier in our lifecycle. This was actually a big mistake, because we got hooked on the efficiency, and that was great, but we could have moved even quicker than we were, and you know in hindsight.” —[Patrick Campbell](https://www.linkedin.com/in/patrickccampbell/) In the meantime, if you go down the bootstrapping route, here’s [Stephanie Zhan](https://www.linkedin.com/in/stephaniezhan/)’s closing advice for how to approach the early phase of your journey: > “Build an MVP, serve early customers, lean in to building what they want, and see if (1) the value proposition is strong enough and (2) the market is potentially large enough. Find the right investment partners who can help you explore this, and problem-solve together from first principles. Also, be patient enough for the long haul. It can take a decade or two for the best businesses to achieve their potential, and the right partners can help you achieve that in the long term.” And a final bit of inspiration from [Patrick Campbell](https://www.linkedin.com/in/patrickccampbell/): [Watch on YouTube](https://www.youtube.com/watch?v=Im6PTVHPez4) If you’ve had any experience bootstrapping, or raising money and finding out you maybe shouldn’t have, I’d love to hear it. Please share in the comments 👇 [Leave a comment](https://www.lennysnewsletter.com/p/your-startup-idea-probably-isnt-venture/comments) *A huge thank-you to [Alex Taussig](https://www.linkedin.com/in/ataussig/), [Leo Polovets](https://www.linkedin.com/in/lpolovets/), [Nina Achadjian](https://www.linkedin.com/in/nina-achadjian/), [Stephanie Zhan](https://www.linkedin.com/in/stephaniezhan/), and [Hunter Walk](https://www.linkedin.com/in/hunterwalk/) for contributing to this post. Have a fulfilling and productive week!* ## 📣 Join Lenny’s Talent Collective 📣 If you’re hiring, [join Lenny’s Talent Collective](https://www.lennysjobs.com/talent/welcome) to start getting weekly drops of world-class product and growth people who are passively open to new opportunities. I hand-review every application, and accept less than 10% of candidates who apply. ![Image from Your startup idea probably isn’t venture-scale](https://substack-post-media.s3.amazonaws.com/public/images/7bb5a176-c0ea-4970-8937-a09a9f0871c6_1492x1194.png) If you’re looking for a new gig, apply to join! You’ll get personalized opportunities from hand-selected companies. You can join anonymously, hide yourself from companies, and leave anytime. [Apply to join](https://www.lennysjobs.com/talent) ### 🔥 Featured job opportunities 1. **Wingspan:** [Product Design Lead](https://www.lennysjobs.com/jobs/6122b947-a5e1-44c9-a45e-30e305394589) (NYC) 2. **Mindbloom:** [Creative Producer](https://www.lennysjobs.com/jobs/389f9fcf-65bb-4852-836e-f3a732203212) (Canada, remote U.S.) 3. **Mindbloom:** [Acquisition Growth PM](https://www.lennysjobs.com/jobs/c74c7805-4b6c-42fa-a989-070e49a48898) (Canada, remote U.S.) ## **🧠 Inspiration for the week ahead** 1. **Watch:** [Infinite Chocolate Bar Trick](https://www.youtube.com/watch?v=z7tRr49qZfo) (via Tim Ferriss) [Watch on YouTube](https://www.youtube.com/watch?v=z7tRr49qZfo) 2. **Listen:** [This is Love: The Wolves](https://podcasts.apple.com/us/podcast/this-is-love/id1337100398?i=1000470172701) 3. **Read:** [Exploring the 2nd order effects of generative AI in marketing and martech](https://chiefmartec.com/2023/04/exploring-the-2nd-order-effects-of-generative-ai-in-marketing-and-martech/) **If you’re finding this newsletter valuable, share it with a friend, and consider subscribing if you haven’t already. Check out [group discounts](https://www.lennysnewsletter.com/subscribe?group=true) and [gift options](https://www.lennysnewsletter.com/subscribe?gift=true).** Sincerely, Lenny 👋 --- ## [18/51] How Ramp builds product I was talking to a prominent VC the other day about what startups he’s watching, and he told me that he’s seeing one company quickly becoming a gravity for the best talent: Ramp. If you’re not familiar with Ramp, they provide corporate cards and a spend management platform, helping startups save money and control spending. They were last valued at over $8 billion, are backed by Founders Fund, Redpoint, Stripe, and others, and in the past year grew 4x, to over $10 billion in annualized spending. **I believe they are also the fastest-growing SaaS company of all time, hitting a $100 million run rate in two years.** I’m not an investor, but I wish I were. In part five of an ongoing series on how the best product teams build product (don’t miss [Figma](https://www.lennysnewsletter.com/p/how-figma-builds-product), [Coda](https://www.lennysnewsletter.com/p/how-coda-builds-product), [Duolingo](https://www.lennysnewsletter.com/p/how-duolingo-builds-product), and [Miro](https://www.lennysnewsletter.com/p/how-miro-builds-product)—and Notion, Linear, and Snowflake coming soon), I sat down with [Geoff Charles](https://www.linkedin.com/in/geoffrey-charles/), Ramp’s VP of Product, to understand what Ramp has done right (and wrong) over the years in how they approach product. This is definitely my new favorite edition of this series, and you’ll soon see why below. **Here’s what stood out to me most about Ramp’s approach to product:** 1. Velocity, velocity, velocity. 2. Their unique product strategy framework, including this [template](https://docs.google.com/document/d/1vQiTmIghKhCjlFU0HtdTmRNsyKmwv9gs/edit#heading=h.gjdgxs). 3. Anchoring their product strategy to their financial model. 4. Their evolution from two-week sprints to bi-yearly planning with detailed quarterly roadmaps. 5. Focus on efficiency—they had fewer than five PMs and 50 engineers when they hit $100 million in ARR. 6. Teams are organized around business outcomes (e.g. increase attach rate for bill payments). 7. Product, design, and engineering all report to the CTO. 8. Emphasis on thinking from first principles. 9. Their approach to hiring, e.g. hiring ICs vs. managers *For more from Geoff, follow him on [LinkedIn](https://www.linkedin.com/in/geoffrey-charles/) and [Twitter](https://twitter.com/geoffintech).* # How Ramp builds product ![Image from How Ramp builds product](https://substack-post-media.s3.amazonaws.com/public/images/8d2b8f3d-53e1-4f80-9c15-f340d3548403_492x512.png) ### 1. How far out do you plan in detail, and how has that evolved over the years? **At Ramp, our culture is velocity.** It shapes every process and team ritual. It’s how we develop our people. It’s our solution to nearly every problem. And most importantly, velocity is key to our business strategy. It’s how we deliver on our mission to save customers their most valuable resources—their team’s time and money. Our entire planning process is optimized toward product velocity. In essence, we believe that doing is better than planning**.** Any second you spend planning is a second you don’t spend doing. The moment you are aligned in a direction, you don’t need a high level of accuracy. It’s impossible and costly to try to predict what you can do—and part of our competitive advantage has been that we can respond very quickly to the change in environment, strategy, or customer feedback. We learn something new every day that helps us adjust our plan. While the balance between planning and execution has evolved over Ramp’s growth, we’re still very much in execution mode even today: - **Pre-product-market fit, sub-20 people:** When I first joined Ramp, our main focus was to find product-market fit. We had a million ideas, but what truly mattered was how we were able to execute. This required being laser-focused on delivering one thing at a time, fast. We planned in two-week sprints because you could easily forecast two weeks ahead. It was all about doing as much as possible, as quickly as possible. The “backlog” didn’t exist. It was all about, what are we doing today? This week? We weren’t planning beyond that. - **Product-market fit with the core card product, 100+ people:** We started planning in months for one to two quarters at a time. We needed deeper coordination with sales, marketing, and customer operations teams—teams that operate on cadences longer than two weeks (you can’t change sales quotas in two-week cycles). We also shifted our technology teams toward thinking about the reusability and durability of systems—and this requires you to know what capabilities you would want to build in the future. - **Multiple products in a portfolio, 500+ people:** At this current stage, we know we have a sustainable core business that we’re taking upmarket, multiple emerging products, and rapidly growing go-to-market teams to help us tackle expansion in both our customer mix and product/market targets. The upmarket has longer sales cycles, and launching ambitious, coherent GTM campaigns needs much more lead time. Now we plan on a quarterly basis, and reserve the right to toss out the plan the moment it is written. ![Image from How Ramp builds product](https://substack-post-media.s3.amazonaws.com/public/images/7c1c8fcb-bf1a-4f99-88d9-57dffedc7e41_1600x840.png) ### 2. Do you use OKRs in some form? Oftentimes people start and get very bogged down with OKRs when where they should really start is *strategy*. The process of OKRs to me feels forced—you know what you want to do, and you have to reverse engineer an objective and a metric to fit into this framework. You sweat the wording and the specific metric. Teams feel like they are being judged on the metric. There is so much iteration. And at the end of all this, not much has changed from the original plan. To win in the market, you need to be product-strategy-driven, not sales- or marketing-driven. You need to believe that the product strategy will deliver value to the customer, and that in turn drives value to the business. That belief is earned and needs to start early in the company’s lifecycle. Here’s the way we plan: ![Image from How Ramp builds product](https://substack-post-media.s3.amazonaws.com/public/images/3b353f07-4067-46af-808f-07700f7efa2d_1200x630.png) 1. **Start with product strategy, bottom-up.** Define clearly what you want to achieve and why achieving this will lead to outsize outcomes for the customer and the company. The process of developing pod-level product roadmaps is almost entirely bottom-up. Once we align on our product vision and the top two or three goals we have as a company, we empower the folks closest to the problem to develop their own product roadmaps. Then we co-develop the top-level product strategy. The way we write out a product strategy is as follows: 1. **Goal** → What do you want to see in the world? 2. **Hypothesis** → Why do you think this will work? 3. **Right to Win** → Why are we uniquely positioned to do this? 4. **Metric** → How will you measure that it does? 5. **Initiatives** → What do we need to do to reach the goal? 6. **Risks** → Why would we fail & what should we do about it? 7. **Long Term Outcomes** → How will this work compound? [Here’s a template](https://docs.google.com/document/d/1vQiTmIghKhCjlFU0HtdTmRNsyKmwv9gs/edit#heading=h.gjdgxs) of our planning doc. ![Image from How Ramp builds product](https://substack-post-media.s3.amazonaws.com/public/images/b7645597-8418-4a73-b32a-6ef52d7ef575_1308x1472.png) 2. **Anchor the product strategy with the financial model.** A product strategy that is not anchored on the reality of how the company needs to make money will not survive. We need to constantly understand how we will monetize, and the tradeoffs between innovation, monetization, and growth. For example, for one quarter we might be focused on increasing our operating margins, or decreasing our credit losses, or launching a new revenue stream—we align on this with finance. 3. **Publish the product roadmap and align it with the marketing calendar.** We share a high-level roadmap, get feedback from leaders across the company, and ensure that it is in lockstep with large marketing moments we co-develop. This helps us amplify our product releases and get loud in the market. Planning is not just specifying goals but also trade-offs. Everyone wants everything to be done—but that simply can’t happen. By making explicit what trade-offs you are making, we were able to engage in much more nuanced discussions around whether we should do X vs. Y instead of the absolute. For example: ![Image from How Ramp builds product](https://substack-post-media.s3.amazonaws.com/public/images/3665b0ac-5a1a-4708-9624-29686b63c3a8_1200x630.png) 4. **Define company-level OKRs to mobilize cross-functional teams.** Timebox company OKR planning, and stay high-level. We realized that we were planning one month every quarter—that’s 33% of the time. We ended up switching to bi-annually (planning twice a year) and scoped it to be the top priorities for the entire company rather than a laundry list of what every team was doing. The point of the exercise is to make trade-offs—it should be painful. Not everything on the roadmap needs to be in the company-level OKRs. We limit them to a few large cross-functional projects or launches. Here’s a planning template filled out: ![Image from How Ramp builds product](https://substack-post-media.s3.amazonaws.com/public/images/e01af030-c97c-4ba3-8e33-86b862b84eda_1200x630.png) 5. **OKRs should not be used for** ***performance management*****.** Each team is assessed differently. For example, sales are based on quota attainment and “closed won” conversion. Support is based on “solves per hour” and “customer satisfaction.” None of these should be in OKRs. While everything is measured at Ramp through scorecards, we focus OKRs on things we want to *improve* vs. just *maintain*. To reach these goals requires deep collaboration between, say, engineering, product, marketing, and sales. If we don’t hit the goal, that does not necessarily mean everyone tied to the goal underperformed. You need to go to a level much deeper than that to assess performance. ### 3. How do your product/design review meetings work? At Ramp, we build in the open and empower teams as much as possible to make the decisions in order to move quickly. What this means in practice is that every spec, design, decision, progress, and status is published in project-specific Slack channels, and anyone is invited to read and opine. Essentially, teams farm for dissent, not approval. Eliminating gatekeepers ensures that things keep moving forward. When there were fewer than 100 people, I could actually read everything. I would get notified anytime something was published or a key decision was made, and would review it and share any important perspectives. Three things broke as we scaled: 1. As teams got bigger, I could no longer be everywhere and have all the context. I needed teams to “manage up”—to synthesize context and key decisions for input. 2. As PMs on the team got more senior, more trust had to be built. PMs deserved more autonomy to decide what they needed input on. 3. Design teams were hearing one thing from the head of design in design jams and another from the head of product. If we weren’t aligned, it slowed things down. So for key decisions and high-risk projects, we now trust the PMs to bring these up in the weekly product “jam session.” This is meant to accelerate context sharing, decisions, and alignment between product, design, and engineering. Here are some of our design principles: 1. **Focus on what truly matters**, which is any new product or major change to the core user experience. PMs should ask themselves: If we get this wrong, what impact could it have on our product goals? If the answer is “big impact,” get input at the meeting. Otherwise, take the risk and skip the meeting. 2. **Don’t slow down teams.** We needed something lightweight, frequent, and non-blocking. The head of product and design blocked out an hour every week (Wednesdays at 4 p.m.). Folks simply sign up. We are always available. 3. **Ensure alignment between product and design.** By having both product and design leadership in the room, you ensure that they are aligned. This speeds things up instead of hearing feedback from two different people at different times. 4. **Stick with relevant folks.** Include the engineering leaders involved. Exclude anyone outside of tech—their perspective should have been covered as part of the initial spec process as key stakeholders. Process is like a product—it requires constant iteration, and we’re still iterating. ### 4. Are product and design part of the same org? And who do PMs ultimately report to? Has this changed over the years? The biggest lever to high velocity is designing your organization structure so that teams are forced to cooperate. 1. **PM, Design, Engineering, and Data should be equal parts of the same team.** This has largely stayed the same since the beginning. I tend to think that if design reports into Product, the UX suffers. Design needs to have some of their own agenda, their own discovery. This is where you come up with truly brilliant ideas. 2. **Everyone should report to the same tech-minded leader.** There is no better way to force a relationship to happen than by having each head report into the same leader—in our case, we all report into the CTO. If Product reports into the CEO and Engineering into the CTO, then the only way to escalate differences is if the CTO and CEO talk to each other; that’s too high up the chain. You then run the risk of Product being “stakeholders” to Engineering instead of being “co-founders”—and not being product-driven. 3. **Design your org the way you want your product to perform.** Ultimately, you ship your org structure.Think about what the core competencies are that you want to amplify to accomplish your product strategy. If Data is not an equal, you are not elevating data-driven decision-making, data-science-driven products, and objective accountability. This matters as you get larger. ### 5. Broadly, do you structure your teams around products, user types, user journey, outcomes, or something in between? Has this changed over the years? One of the biggest impacts to velocity is how you organize product teams. Here is how we did this at Ramp: 1. **Teams are organized based on customer or business outcomes** **above all else.** The team needs to be accountable for something big. That lights a fire behind a team and makes them want to run through walls. Years ago, we gave a team the mandate to drive 50% of our sales qualified leads by automating outbound emails. And they did. We gave a team three months to build a competitor to Bill.com. And they did. Big goals, tight timelines, and fully autonomous resourcing (remove as many dependencies as possible) were the common ingredients. The key here is for tech teams to deeply understand how the business functions. 2. **Teams publish openly clear contracts with each other.** In order to exist, each team needs to publish, visibly and clearly, their contract and reason for existence to the rest of the org: 1. A goal: what they want to achieve 2. A strategy: how they will win (see template above) 3. A roadmap: what they will build 4. Metrics: how they are measured 5. User flows: the UX 6. Underlying systems: the tech 7. Stakeholders: who they work with ![Image from How Ramp builds product](https://substack-post-media.s3.amazonaws.com/public/images/b9ed3066-b6db-4835-9105-4d29aacd84fb_1200x630.png) 3. **Make staffing flexible, regardless of reporting lines.** To maintain velocity, we have a very flexible model, where folks can jump to different teams based on the business needs and work with engineers who might report to different people. Management is about hiring, staffing, coaching, and development. We leverage Tech Leads in scrum teams who don’t manage but drive strategy and execution. By keeping reporting structures the same and re-organizing pods, we can respond quickly to new opportunities without needing to constantly destroy relationships between managers and their teams. 4. **Embed platform teams as long as possible.** Pure platform teams are often too far removed from the business context to make the right prioritization decisions and move with velocity. So we try to keep platform teams embedded in core product teams for as long as we can. Our payments platform was embedded within our Bill Pay product because most of the new use cases were B2B payments. Our data-science platform was embedded within our risk team since most of our data-science needs were on underwriting. We spin teams out after they’ve had a few wins to force them to work across teams. 5. **Keep teams small** so they move fast. We don’t like having more than 5 to 10 engineers on a given team. For example, we spun up a new team to build our Bill Pay product. That pod became four subpods as we grew, and we spun out one of those subpods fully to own workflows across Ramp. 6. **Map the rest of the org to your tech teams.** What’s important in org design is having single-threaded teams that have the resources they need to execute on big opportunities. We ensured early on that the entire company, not just the tech organization, was mapped to product goals, which were ultimately mapped to business goals. For example, each product “pod” has a dedicated Product Marketer, Product Operator, Product Partnerships Lead, and Product Counsel. They are responsible for quarterbacking the product strategy within their respective organizations. ![Image from How Ramp builds product](https://substack-post-media.s3.amazonaws.com/public/images/696a12c5-4d54-4982-9177-2a94c30465f6_1200x630.png) ### 6. How many PMs are there at this point? We have 14 PMs at Ramp today (and we’re [hiring](https://ramp.com/careers)!). We try to increase leverage as much as possible—defined by impact divided by headcount. We reward teams that were able to get more done with very little. For the first two years at Ramp, we had fewer than five PMs and fewer than 50 engineers as we scaled to $100 million in ARR. I try to restrict PM hiring until it’s patently obvious to everyone that product is the bottleneck to velocity. This does a few things: 1. **It makes everyone at the company do some type of PM job**—which helps build a culture of caring about business goals, customer pain points, and shipping. 2. **It makes every other PM have a larger scope**—which eliminates the time-consuming fight for resources and politics. They simply have too much to do to ask for more. 3. **It makes the team welcome that PM when they actually join**, and gives them clear value to deliver to give them a win. ### 7. What’s in your product-team tool stack? In order to empower teams to move quickly, we focused less on which tool to use and more on what the tool should accomplish: 1. **Let teams decide for themselves what tools to use that maximize productivity.** Some people use a notepad (I do!). Some people use GitHub tasks. Some use Linear. It doesn’t really matter. We don’t track tasks—we track whether you shipped what you said you were going to ship. No burndown, velocity, story points—a lot of this process actually slows you down because it takes time and sucks the oxygen out of the room. Talk about value, not story points. 2. **Enforce a high bar for communication standards.** Everything at Ramp is publicly available. Teams are required to publish openly, with high clarity and high succinctness, their goals, progress, and targets. 3. **Invite anyone to give opinions on UX improvements or product enhancements.** For example, we created a #UX-input Slack channel where anyone can post improvements to our UX. We triage these posts using emoji, and this automatically creates Linear tickets to the right teams. We even have GPT summarize the issue for us. Individual teams are accountable for burning down a fixed percentage of improvements every sprint. 4. **Get the important things done today.** We don’t really maintain a backlog. If there’s a bug, we fix it (we have on-call engineers who are solely tasked with this). If we don’t fix it, it will escalate again if it’s important. Backlog grooming is low-leverage in a high-velocity environment because things change so quickly that the context of the task has changed. If it’s important, get it done. As long as your coordination tools hit #1-4, that’s all we care about. ### 8. You build one of the most beloved and successful products out there. What would you say is unique or central to your approach to product that leads to such a great and successful product? There is so much to say here. I’ll leave it at a few principles: 1. **Speed is a competitive advantage.** I wrote more about this [here](https://geoffcharles.medium.com/how-to-increase-product-velocity-8d0979a67c22). Everything we do is around velocity. This means high-velocity decision-making, keeping things simple, reducing team sizes and dependencies, maintaining extreme focus and work ethic, and letting the process work for us instead of against us. If your speed of shipping is extremely high, the cost of being wrong is much lower. 2. **Empower the folks closest to the problem to own the decision.** We give teams the resources they need to hit the goal, and we hold them accountable to hitting the goal. Simple as that. When folks at the lowest level of the organization can make the call, it creates better decisions, higher velocity, and a culture of high ownership and accountability. It also makes work more fun. You can see this joy show up in the details of our product—for example, check out what happens when you mouse over our card image. 3. **Sell your first customer.** Oftentimes, PMs throw products over to sales to sell without actually having gone through the motions of positioning, pitching, listening, and iterating. I task my PMs to find, pitch, and close the first 5 to 10 customers for their products. This forces them to work with customers from the start and iterate until they get it right. If you can’t find 10 customers, you haven’t built something people want, and we are not going to waste the time of the go-to-market teams. We also believe PMs need to learn to sell, period, whether it’s the company vision, the product, or new candidates. 4. **Think from first principles.** Thinking from first principles forces rigor and a complete understanding of a problem space. But you can’t think deeply about everything—you don’t have enough time. What’s most important is understanding *when* you should take the time to dive deep: 1. A critical user **experience** is dependent on it. Our payments PM understands what each line of an ACH payment file [represents](https://achdevguide.nacha.org/ach-file-overview#:~:text=An%20ACH%20file%20is%20a,must%20follow%20a%20specific%20order.); our head of design visited factory floors to choose the right premium metal card for our customers. 2. A high-cost business **decision** is dependent on it. For example, instead of taking legal counsel’s advice at face value, we read the statutes. How does the state of Texas define money transmission, and what does that mean for how we build the user experience of our compliance features? 3. An important business **process** needs to be defined for scale. Hiring is the best example of this. Our hiring guides are long and exhaustive. We list out the highly specific behaviors and attitudes you need to see demonstrated in order to evaluate a candidate. 5. **Take the bets with asymmetric upside.** If an outcome has a 98% chance of failure and a 2% chance of massive benefits for the business, take the [bet](https://ramp.com/blog/making-big-bets-in-business). That’s ultimately why startups are able to thrive. This applies to so many domains: hiring, selecting investors, building products, and even vendor selection. 6. **Simplify, simplify, simplify!** It is significantly harder to build a complex product that is simple at the surface for our users. We sweat every pixel and cut complexity until all our customers, from small mom-and-pop shops to multinational companies, can intuitively understand how to successfully use Ramp. Why have two clicks when you need one? Better yet, no clicks. The less time you spend on Ramp, the better. 7. **Taking risks demands humor, kindness, and gratitude.** If you’re taking asymmetric bets, you’re making decisions under high uncertainty and high risk. There are sometimes unknown consequences for other teams. Rather than spend time in analysis paralysis, we publish our assumptions and take accountability. In return, PMs can’t take themselves too seriously. We need to stay kind, express gratitude to all the teams we support, and be ready to apologize and own our mistakes. Life’s too short. ### 9. Building on the above, I assume much of your success has been thanks to hiring well and keeping a very high bar. In your product hires, what do you most look for (that maybe others don’t)? The story of Ramp is the story of getting hiring right. First we had to understand, from first principles, the attributes needed for high velocity: 1. **High slope, not intercept.** Because Ramp is growing fast, we need to hire people who are going to succeed six months from now when the scope is much bigger, not just today. This requires incredible learning ability and a growth mindset: our strategy relies on us winning many markets. We greatly discount domain expertise in favor of intrinsic curiosity. To understand abstractions at the lowest level, PMs need to love problem-solving. 2. **High agency.** We hire a lot of former (and future!) founders. The three PMs who’ve left Ramp all started companies. Note that high agency doesn’t come from ruthlessness. It comes from self-awareness: understanding and reshaping the limiting stories we tell ourselves of why something can’t be done. 3. **High humility.** Because taking risks demands humor, kindness, and gratitude. Because we focus on asking the right questions, not having all the answers. Because PMs are our first sales and support hires and have to be willing to roll up their sleeves and pick up the shovel. Because we empower the people closest to the problem to own the decision. Next, we needed to find non-obvious ways of recruiting that talent. Early engineering hiring has driven all the success of our product team. The first year at Ramp, our co-founder and CTO Karim [Atiyeh] was focused on only one thing: hiring the best engineers. That’s it. He didn’t spend much time with me on product strategy. He did this with strategies that big tech couldn’t use because they don’t scale. 1. **Find early talent before anyone else.** We focused on finding the young talent that demonstrated early signs of being a founder—winning programming competitions in high school, building businesses in college, dropping out to work at startups. He even found engineers from playing Fortnite. Then, by keeping the bar extremely high and focusing on our college internship program, we built a powerful brand on campuses. This started our talent flywheel. 2. **Allow only the best to interview.** To avoid implicit bias, you get extremely explicit about what you’re looking for. We standardize our interview process and the attributes we’re looking for—and teach new hiring managers what to look for. We do this with a long interviewing apprenticeship process, and debriefs after each step. The goal is to build the broad base of signals that hiring managers are able to perceive while actively warding off implicit bias. 3. **Don’t hire managers, hire stellar individual contributors.** You can learn to be a good manager over time, but if you are not a good PM, designer, engineer—you won’t be able to set the bar. The best PMs/designers/engineers will manage. This ensures that managers deeply understand the jobs to be done and can better assess whether they need a new headcount and who to hire. All our managers first earn the respect of their team by showcasing mastery of their craft as an IC. And all our managers, including me, own some workstreams as an IC to this day. 4. **Always place new PMs on a team with top performers.** This maximally sets them up for success and allows you to understand their performance as objectively as possible. If you’ve only changed one variable on a team with all-stars, you immediately know there’s a problem to help coach your new hire through. Finally, we ruthlessly capped headcount to keep talent density high. Every headcount that you add inherently slows down the rest of the organization because it increases the cost of communication and alignment within the organization. We see hiring as a last resort. To avoid bloat, we use a 4-step process: 1. **Will focusing on this opportunity accelerate progress toward our OKRs (value)?** 2. **If yes, can we accomplish this with automation or do we really need a person (deflection)?** Our Product teams don’t simply build products for the end customer—they build for internal teams as well. We deploy operational teams to tackle a problem, and apply technology to scale it once we understand the process. An example of this is our outbound sales teams—by understanding what their processes are, we were able to deploy a technology team to scale our outbound email motion to give each SDR “superpowers.” We call it OATs (Outbound Automation Team). With this, outbound has become Ramp’s largest growth channel. 3. **If not, is there someone in the organization who can do this job today (leverage)?** We value, hire, and promote individuals who think from first principles, not those who pattern-match from previous experiences. As such, we believe that high performers can flex into other responsibilities. For example, our Customer Success team is led by a founding engineer on the team who deeply understands our product and is able to create systems that automate a lot of the tasks that typical CSMs take on. Our Head of People started in risk operations and applied structured thinking and process to help us scale our talent operations. We focus on slope, not intercept. 4. **If not, hire the best, and we hold the manager accountable for the impact defined.** ## 10. What’s a fun or unique ritual you have at Ramp, either within the product team or more broadly? In order to maintain a culture of high velocity, you need to define and encourage values around risk-taking, humility, ownership, and teamwork. We reward people who take risks, who are humble, and who go out of their way to help one another move forward. To amplify these values, we have a Slack channel, #gratitude, where anyone can tag someone else at the company and give them “couscous.” Why couscous? Because in the early days we had a team in Morocco help bootstrap some of our platform, and they picked it. It’s easily the most popular Slack channel at Ramp. Every day, tons of people express gratitude for the help of others. And we make a point to express gratitude at the beginning of every sprint. We move with velocity especially to tell others how much we appreciate them. ![Image from How Ramp builds product](https://substack-post-media.s3.amazonaws.com/public/images/71445074-f39c-4a5e-a1a5-5a3d910d3246_1600x482.png)![Image from How Ramp builds product](https://substack-post-media.s3.amazonaws.com/public/images/41004546-0fc7-4744-a88d-a0c27675491b_1600x788.png) *Thanks, Geoff!* *For more, follow Geoff on [LinkedIn](https://www.linkedin.com/in/geoffrey-charles/) and [Twitter](https://twitter.com/geoffintech). And [Ramp is hiring](https://ramp.com/careers)!* *Have a fulfilling and productive week 🙏* ## 📣 Join Lenny’s Talent Collective 📣 If you’re hiring, [join Lenny’s Talent Collective](https://www.lennysjobs.com/talent/welcome) to start getting weekly drops of world-class product and growth people who are passively open to new opportunities. I hand-review every application, and accept less than 10% of candidates who apply. ![Image from How Ramp builds product](https://substack-post-media.s3.amazonaws.com/public/images/8638d278-ac01-4f28-b2c9-39f1dd6e4724_1492x1194.png) If you’re looking for a new gig, apply to join! You’ll get personalized opportunities from hand-selected companies. You can join anonymously, hide yourself from companies, and leave anytime. [Apply to join](https://www.lennysjobs.com/talent) ### 🔥 Featured job opportunities 1. **Wingspan:** [Product Design Lead](https://www.lennysjobs.com/jobs/6122b947-a5e1-44c9-a45e-30e305394589) (NYC) 2. **Mindbloom:** [Creative Producer](https://www.lennysjobs.com/jobs/389f9fcf-65bb-4852-836e-f3a732203212) (Canada, remote U.S.) 3. **Mindbloom:** [Acquisition Growth PM](https://www.lennysjobs.com/jobs/c74c7805-4b6c-42fa-a989-070e49a48898) (Canada, remote U.S.) **If you’re finding this newsletter valuable, share it with a friend, and consider subscribing if you haven’t already. Check out [group discounts](https://www.lennysnewsletter.com/subscribe?group=true) and [gift options](https://www.lennysnewsletter.com/subscribe?gift=true).** Sincerely, Lenny 👋 --- ## [19/51] How Notion builds product Last week I was working in my home office, and I heard my wife in the other room yell, “I love Notion!” I know what she means. With over 20 million people and hundreds of thousands of teams using Notion around the world to organize their work and get things done, she’s not alone. Notion is currently the [fourth fastest-growing app](https://www.okta.com/businesses-at-work/) in the world (it was [#1 last year)](https://www.okta.com/businesses-at-work/2022/) and, unsurprisingly, has also been the most requested team for me to chronicle in my ongoing series on how the best product teams build product. I’m excited to finally deliver, and it’s been worth the wait. A huge thank-you to [Michael Manapat](https://www.linkedin.com/in/mlmanapat/), Notion’s Chief Product and Technology Officer, and the whole Notion team, for answering my many questions. Per usual, you’ll find tons of actionable lessons and frameworks, and more than any other edition, it’s jam-packed with plug-and-play templates. **Here’s what stood out to me most about Notion’s approach to product:** 1. The amount of iteration they’re going through as they scale through hypergrowth 2. How few PMs (and designers) they have ([similar to Ramp](https://www.lennysnewsletter.com/i/122125031/how-many-pms-are-there-at-this-point)!)—and how long they waited to hire their first product manager 3. Their four-point product review process 4. How interconnected all of the products are, and how that impacts their org design 5. Their twice-yearly planning cycles, two-week sprints, and quarter-plus planning cadence ([similar to Coda](https://www.lennysnewsletter.com/p/how-coda-builds-product)!) 6. Their shift from primarily async product feedback to more of an emphasis on real-time conversations 7. The fact that data, design, research, eng, PM, UXR, and security all report up to Michael—and why that’s the case Also, as you’ll see below, Notion is launching **Notion Projects** tomorrow, May 31. Notion Projects combines project management with your docs, knowledge base, and AI in one connected workspace. [Learn more about it here](https://ntn.so/lennysnewsletter). *For more from Michael, follow him on [LinkedIn](https://www.linkedin.com/in/mlmanapat/) and [Twitter](https://twitter.com/mlmanapat). And for more stories of how the best product teams operate, don’t miss my other deep dives into [Figma](https://www.lennysnewsletter.com/p/how-figma-builds-product), [Coda](https://www.lennysnewsletter.com/p/how-coda-builds-product), [Duolingo](https://www.lennysnewsletter.com/p/how-duolingo-builds-product), [Miro](https://www.lennysnewsletter.com/p/how-miro-builds-product), and [Ramp](https://www.lennysnewsletter.com/p/how-ramp-builds-product).* # How Notion builds product ![Image from How Notion builds product](https://substack-post-media.s3.amazonaws.com/public/images/3bed5169-37d1-4b5f-ab6e-0594fbe3fb9a_1500x1200.png) ### 1. How far out do you plan in detail, and how has that evolved over the years? I make the joke that we change how we plan every planning cycle and that we need to plan for planning. Historically, we didn’t really look beyond what we wanted to do in a given half. And that’s actually something we have recognized is a bit of a problem, in that we’re always solving for what we can do in a few months and not thinking as holistically as we could be about the long term. We’re figuring out how we can both maintain the coordination rigor and discipline that regular planning provides while also making sure we have the room to think more broadly about the future. All that said, we roughly plan for each half, with differing resolutions for the two quarters. As an example, at the beginning of this year, we said for Q1, list out all of your projects in detail with a prioritization of the roadmap, and for Q2, just give some high-level bullet points of what you think you’ll be working on. We then did planning for Q2 as the quarter started, taking those bullet points and making them concrete, with some added guidance for things that changed in the company strategy between Q1 and Q2. ![Image from How Notion builds product](https://substack-post-media.s3.amazonaws.com/public/images/60aeef65-06dd-4487-839b-9d6028d24550_3840x2160.png) In terms of how teams operate within each quarter, one thing philosophically is that I don’t like mandating organization-wide process approaches—at least in terms of how teams run themselves. (We do have org-wide processes for product review; see below.) We generally leave it to individual groups or teams to figure out what type of cadence makes sense for them. These days, however, it is the case that all product teams operate on two-week sprint cycles, and those cycles are all aligned across the organization. This last sprint just started yesterday, actually, across the whole company. What individual teams do for sprints varies a lot. Some are quite disciplined and precise—they actually write down all of the commitments they think will get done, and at the end of the sprint they will assess what exactly got done that sprint. For the teams that are, say, doing longer-term work on infrastructure, sprints are more just a unit of time and not an accountability mechanism. So the only thing that’s really shared is this two-week cycle, but there’s a lot of variation in what people do within their team. ![Image from How Notion builds product](https://substack-post-media.s3.amazonaws.com/public/images/6417bab0-a541-476a-bcde-2f896c22c9bb_1920x1080.gif) I’m always wondering—we’re not that large a company, at 550 people—can we just be a bit more dynamic? We know what the strategy is and what our goals overall are, so can we do something a bit more continuous? The whole “we’re going to stop the whole world to figure out what to do for the next half”—it’s really important, especially for coordination with our go-to-market teams and other cross-functional ones, but *within* the product org it’s not clear to me that it suits our needs particularly well. But I also don’t have a better approach yet. ### 2. **How many PMs do you have?** Under 15. Out of 550 people. Our product management team is tiny. As you probably know, we waited a long time to hire product managers. We didn’t have PMs until two years ago, at around 50 or 60 engineers. I’m not sure this was actually ideal. Both Notion and my former employer Stripe are both very engineering-driven to start, and both companies have a very product-minded engineering core, which I think is a great thing. That said, there is a difference between engineers who think about product, and product managers who are out there talking to users and bringing in user feedback constantly, coordinating closely with go-to-market teams, and thinking deeply about product strategy. And I think that was missing at Notion early on. So I’m glad we have PMs now and that we’re growing the product management team. One thing that’s interesting about Notion is that no part of the product can really be isolated. At [Stripe](https://stripe.com/), there were a number of essentially completely independent product lines. In the group that I managed, the products were only linked by the competencies needed to build them (beyond general product work, there was a need for machine learning and AI depth). For example, there was [Radar](https://stripe.com/radar), the fraud product. And there was [Capital](https://stripe.com/capital), a lending product. And they were linked by being ML- and AI-powered products, but they were otherwise independent—very little that Radar did would affect Capital and vice versa. You can’t decompose Notion into individual products. So if you’re working on the Project Management offering at Notion and you change how databases work, or you change how pages work, that has implications for the use of Notion as a docs tool or a wiki tool. So there is a bit more of this central planning and product coordination problem here to make sure that things are considered holistically and that people aren’t stepping over each other in a way that makes the product worse. ### 3. Do you use OKRs in some form? Yes, we use OKRs at the company level as part of planning. The output of each of these twice-yearly planning cycles is a set of company objectives and a set of key results. ![Image from How Notion builds product](https://substack-post-media.s3.amazonaws.com/public/images/4b0f8342-037a-40a8-b81a-04d23d945c79_3840x2160.png) There’s more variation below the company-level OKRs. Some teams or groups do have OKRs; for example, teams working on product-led growth. In other areas, things are sufficiently nascent that a lot of our key results end up being like “ship this thing,” and it has frankly been a journey for us to figure out when so much of what we’re trying to do is zero-to-one work, and how we actually measure success. What does that look like? What is the right framework for it? I would say we’re certainly far from Google, where they have OKRs at the company, the group, the team, and the individual level. ### 4. How do your product/design review meetings work? This is another area where we’ve been iterating a lot. We used to have something that we called “working sessions.” They would be between 30 and 45 minutes and relatively unstructured. When the team wanted to discuss something with product leadership or we had something we wanted to discuss with the team, we’d actually just ask to meet and the prompt would be something high-level. And these ended up being basically brainstorming or ideation sessions. What we found was we needed a bit more structure to make sure things were moving along. We also wanted to make sure that feedback from [Notion co-founders Simon Last and Ivan Zhao] and me was coming at known moments, and not just, for example, two days before launch, seemingly out of nowhere. So what’s happening now is that we have a process where at four points in the product development process, we have a “check-in.” The four points are: 1. The statement of the user problem 2. A discussion of possible directions—what are the three or so high-level possible approaches to solve the user problem, and what does the team recommend? 3. The full solution, with high-fidelity designs and everything scoped out 4. The ship candidate, ready for a final quality check All of these are predominantly asynchronous. At each of these steps, an engineer, designer, PM, or EM will send an email describing where they are, and then we’ll review and give feedback asynchronously. We’ll talk about everything from “What exactly is the user problem?” to “How does this thing interact with this other thing?” to sometimes nitpicky details of the product. We’ve discovered, though, that async check-ins don’t work for some types of discussions. What are all the options you explored, and how do you think about each of them? Why did you choose them? Putting that in a doc and explaining that in writing takes a lot of time. People were spending way too much time documenting this stuff, and then when you take into account the email exchanges and then the responses and all of that, the process would drag out for quite a while. So we’re tweaking our approach right now. For the exploration-of-the-directions step, we’re going to start focusing on in-person discussions with the team. Come in and let’s stare at Figma together, discuss the pros and cons of each variant, ask questions, and align on reasoning. We normally schedule those types of synchronous check-ins for half an hour. Sometimes they’re faster and sometimes they take longer (we had one yesterday, and it went a little bit over, to 40 minutes). We only began doing this four-stage check-in process in February. To start, we asked for essentially all product work to go through that. By “all,” I don’t mean every *single* change, of course. But any project with meaningful product impact goes through this. And it has been helpful for me, as I’ve ramped up relatively recently on working with our product team, to get a sense of everything that’s going on. But as part of our next iteration, we’re also going to introduce tiering so only P0 projects get reviewed by me. ### 5. Are product and design part of the same org? And who do PMs ultimately report to? Has this changed over the years? We have a unified product and technology organization—engineering, product management, design, data, user research, and security all roll up to me. Our data lead, design lead, research lead, engineering and product management group leads, user research lead, plus the person working on our overall technical approach and our CISO—they’re all peers and my directs, and we frequently meet and plan together. I personally really like this, because you get a lot of crosstalk and exposure to what’s going on with all of those people in the same room. If you go back a year, [Janna](https://www.linkedin.com/in/janna-bray-a4046a25/), who leads user research here [and who Lenny worked with at Airbnb for many years!], and [Daniel](https://www.linkedin.com/in/sternbergdaniel/), who leads Data, weren’t frequently in the same forums even though both of their functions involve our learning about our users, their needs, how they behave, etc. But now everyone has visibility into what the organization overall is working on, and [Fatemeh](https://www.linkedin.com/in/fatemeh-alavizadeh/), who manages our Core Product engineering group here [who Lenny also worked with at Airbnb!]), can hear our Enterprise PM lead [Birkan](https://www.linkedin.com/in/birkanicacan/) talking about plans to work with users at a particular scale and figure out what’s needed on her end. I think more gets surfaced proactively when you have a mixed leadership group like this. ### **6. How do you structure your product teams?** Right now there are essentially four layers of teams. There are teams working on user-facing use cases or stories or workflows—for example, the project management team, or the docs and wiki team. And they own making sure that the user problems around that use case are solved well by Notion through a combination of leveraging existing primitives in the product, extending them as needed, and developing custom functionality. And then below that, figuratively speaking, there are teams that own what you might call underlying primitives, things like databases in Notion. Databases actually power both the wiki and also project management, so the team that is thinking about wikis and the team that is thinking about project management are both “clients” of this databases team (which we call “Collections” internally). ![Image from How Notion builds product](https://substack-post-media.s3.amazonaws.com/public/images/e62c8def-2f7b-4db1-a22a-411ab010ba95_1920x1080.gif) And then below that there are Notion-wide systems, like search, notifications, the sidebar, and so forth, with a PM lead—[Ekin](https://www.linkedin.com/in/eoflazer/)—who oversees all of these. And then below that is Infrastructure. That’s sort of how our grouping is right now. (To be clear, these layers are metaphorical and don’t correspond exactly to org structure.) Sometimes things don’t always map cleanly onto any of these single teams. We have a product team that is thinking about the enterprise segment overall, though their day-to-day work is generally focused on what a particular persona (the enterprise buyer or admin) needs. But with that overall segment focus, they need to think about things like—okay, what do companies with 20,000 users need from a wiki product? Well, they need something like verification of pages. And then they’ll go and advocate for that even if another team builds it (which is what happened here). And also, what do they need from a data residency standpoint and data locality or security? That PM lead is also talking to Infrastructure. Large companies also need Notion to work well with other tools, which necessitates work on our API and integrations—part of the middle layers. So Birkan, that PM lead, is really just working all over Notion and doesn’t map cleanly to a single team. ### 7. What’s in your product-team tool stack? We use Notion for almost everything—writing, project management, presentations, etc. And we hope at least for product teams that it really can be (almost) everything for them. The “almost” here is a reference to the fact that some important things you do in product—for example, design (we use [Figma](https://www.figma.com/)), experiment setup and analysis (we use [Statsig](https://statsig.com/)), or data analysis (we use [Hex](https://hex.tech/)) you can’t do in Notion, and these aren’t use cases that would make sense in Notion—at least for a while. You can embed your work from many of these tools in Notion, of course, which helps keep Notion the “hub” for all our work. ![Image from How Notion builds product](https://substack-post-media.s3.amazonaws.com/public/images/55285fb8-43cd-4321-9376-3df8387eb3dd_1920x1080.gif) Unsurprisingly, project management is a big deal for us, both in terms of how we run projects internally and how Notion can enable users to run projects as part of a connected workspace with their other knowledge (their docs, wikis, meetings, etc.). Traditionally you needed to do a fair amount of setup to get the sort of project management framework (with projects, tasks, subtasks, etc.) in Notion that you might in another, project management-specific tool. It was possible given the generality of Notion’s primitives but not always easy. We have a big launch this week that we’re very excited about—it’ll be much easier to use Notion for project management, whether for general use or for issue-tracking for engineering and product teams, and there’ll be direct support for things like sprints. Starting on the 31st, you’ll be able to add [our new project management tools](https://ntn.so/lennynotionprojects) to any teamspace. ![Image from How Notion builds product](https://substack-post-media.s3.amazonaws.com/public/images/70825540-3411-4f4f-94ba-3c2c76497e19_3840x2160.png) Notion AI is also getting extended so that it’ll automatically infer and complete information for you—by keeping project properties updated as other information changes automatically. We think this will be a big advance for how people use Notion for project management. ![Image from How Notion builds product](https://substack-post-media.s3.amazonaws.com/public/images/7b97dff0-6250-4f41-aa75-28918549fe16_1920x1080.gif) ### 8. You built one of the most beloved and successful products out there. What would you say is unique or central to your approach to product that leads to such a great and successful product? One goal for Notion is to meet users where they are. If you are a power user and are really obsessed with your tools and customizing them, you’re going to love the flexibility and generality that Notion offers. And if you just want something that works for your particular use case, like a wiki for knowledge management, Notion should also meet you there. We’ve historically focused—and done better—with users in the former camp, but we’re emphasizing the latter more and more (as with tomorrow’s project management launch!). Lots of products are very opinionated and rigid—that makes it easy to onboard and use the product but also easy to outgrow it. And lots of products are very general, but that means they can be excessively complicated. We are aiming—though we’ll be the first to admit we have a long way to go—to strike a balance of both. We sometimes use this metaphor of “peeling an onion,” where users can go as deep into the core as they want. In our development process, this means we’re often thinking, “How would you build support for this use case, in terms of generic, reusable building blocks?” and “What are things users might want to actually modify in how those blocks are assembled?” (versus “What type of flexibility just adds unneeded entropy to the system?”). This means our route to the final product is often a bit more circuitous than it would be if we were building a “point solution” directly, but capturing that balance of use-case specificity and underlying generality is important to us. Speaking of people building off the flexibility of Notion, one of the most unique parts about Notion is the vibrant community we have. This started with a few power users hosting events in different cities around the world—they would geek out about their own Notion setups and templates. Today, this community has expanded to campus leaders in colleges, champions inside small-medium businesses, educators on YouTube/TikTok, and consultants who are onboarding large enterprises to Notion. At Notion, we create the building blocks—new capabilities that you can leverage to build things. And each time we build new functionality, the community takes that and builds some incredible things with it. ### 9. I assume much of your success has been a result of hiring well, and keeping a very high bar. In your product hires, what do you most look for (that maybe others don’t), and broadly, what does your interview process look like? There are some commonalities to hiring for engineering, product, and design here, and we have interviews with the same spirit across all of these roles. One theme, for example, is that we love working with people who care about craft and attention to detail. When we interview engineering managers for product teams, we have an exercise where we give them a product spec and ask them to comment on it as if it were something their team was working on. And we’re interested in everything from what the person says about the problem statement, to how they comment on whether the work is worth doing relative to other things and the ROI to the business, to which pixels or UX elements look off. Beyond that, we care about your view of your role and how expansive it is. “End-to-end ownership” is important. Let me give you an annoyingly long description of what this means to me. My PM director counterpart at Stripe had been at Microsoft and at Facebook before coming to Stripe. And I always loved his—admittedly reductive—description of product and engineering at those companies. At Microsoft, the PMs would go into the mountains twice a year and come down with stone tablets and hand them to engineering for execution, almost no questions asked. It was very waterfall-y. At Facebook, if you built the wrong thing, Zuck would yell at the PM. If the thing was built badly, Zuck would yell at the EM. But even there, the spheres of EM and PM accountability were somewhat disjointed. I’m sure this is something of a caricature (I’ve interviewed plenty of EMs and PMs from both companies who decidedly don’t operate this way), but the anecdote is useful as a contrast to what we’re going for at Notion. We want EMs and PMs to have joint responsibility for everything. Both should be staring at the team, figuring out what it needs to achieve their outcomes, and be willing to do whatever is necessary, without rigidity around role definition. Ideally, the EM and PM are joined at the hip or mind-melded. And yes, the PM will not necessarily be reviewing the full-on details of a tech spec, and an EM might not be working on the details of a launch video with product marketing. But they together own the product and business outcomes. If a PM needs to have one-on-ones with engineers every week, they’ll do that, and if an EM needs to work directly with Customer Success, they will. ### 10. What are some fun or unique traditions or rituals on your product team? When we were just a few dozen people, Elad Gil published his book *[High Growth Handbook](https://www.google.com/search?q=High+Growth+Handbook&ie=UTF-8),* and there was a chapter on Claire Johnson (also a former colleague of mine from Stripe) and [her handbook](https://growth.eladgil.com/book/the-role-of-the-ceo/insights-working-with-claire/) on how to work with her. Internally, everybody wanted Ivan to publish his own version of that handbook; he is a product visionary but also sometimes intense, and people wanted to understand how to work with him. So anyway, he wrote his handbook—as a Notion doc, of course—but said, “Hey, before I share this doc, let me share my life story.” ![Image from How Notion builds product](https://substack-post-media.s3.amazonaws.com/public/images/9e99b021-6570-4d3d-8cd7-11d4e2e50e42_3840x2160.png) And he ended up talking for 45 minutes about his life and how he got to where he is now—his family, his childhood interests and passions, Notion’s very early days, and more. When he ended, we were like, “You know what? That’s the perfect handbook. We don’t need to see the other doc; just seeing your life story actually gives me enough to know how to work with you.” And that description of the life story has become a ritual. Every Friday someone walks through their story over lunch, and everyone loves it. *Thank you so much, Michael!* *For more from Michael, follow him on [LinkedIn](https://www.linkedin.com/in/mlmanapat/) and [Twitter](https://twitter.com/mlmanapat). And if this post resonates, [Notion is hiring](https://www.notion.so/careers)! Have a fulfilling and productive week 🙏* ## 📣 Join Lenny’s Talent Collective 📣 If you’re hiring, [join Lenny’s Talent Collective](https://www.lennysjobs.com/talent/welcome) to start getting weekly drops of world-class product and growth people who are passively open to new opportunities. I hand-review every application, and accept less than 10% of candidates who apply. ![Image from How Notion builds product](https://substack-post-media.s3.amazonaws.com/public/images/8638d278-ac01-4f28-b2c9-39f1dd6e4724_1492x1194.png) If you’re looking for a new gig, apply to join! You’ll get personalized opportunities from hand-selected companies. 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Check out [group discounts](https://www.lennysnewsletter.com/subscribe?group=true) and [gift options](https://www.lennysnewsletter.com/subscribe?gift=true).** Sincerely, Lenny 👋 --- ## [20/51] What working at Figma taught me about customer obsession *👋 Hey, [Lenny](https://twitter.com/lennysan) here! Welcome to a ✨ **bonus** **free edition**✨ of Lenny’s Newsletter. Each week I tackle reader questions about building product, driving growth, and accelerating your career.* *If you’re not a subscriber, here’s what you missed this month:* 1. *[Your startup idea probably isn’t venture-scale](https://www.lennysnewsletter.com/p/your-startup-idea-probably-isnt-venture)* 2. *[How Notion builds product](https://www.lennysnewsletter.com/p/how-notion-builds-product)* 3. *[How Ramp builds product](https://www.lennysnewsletter.com/p/how-ramp-builds-product)* 4. *[How Miro builds product](https://www.lennysnewsletter.com/p/how-miro-builds-product)* *Subscribe to get access to these posts, and every post.* Figma is the business every business wants to be when they grow up: net dollar retention of over 150%, gross margins of 90%, generating $400m+ in ARR, and, 10 years in, still growing more than 2x year over year. Also, they’re the #1 fastest-growing enterprise software product in the world (according to Okta’s [Businesses at Work 2023 report](https://www.okta.com/businesses-at-work/)). And have you ever met someone who doesn’t *love* Figma? I don’t think so. To help us all learn what Figma has done so right, I’m excited to bring you a special guest post by [Sho Kuwamoto](https://twitter.com/skuwamoto). Sho was the first product leader at Figma, and for the past seven years, as VP of Product leading the editor experience, has helped shape the special product and culture of Figma. Below, he shares his biggest lessons about building a product that’s beloved by people the world over. *For more from Sho, follow him on [LinkedIn](https://www.linkedin.com/in/shokuwamoto/), [Twitter](https://twitter.com/skuwamoto), [Mastodon](https://mastodon.social/@skuwamoto), and [Bluesky](https://bsky.app/profile/skuwamoto.bsky.social). And don’t forget to [sign up for Config](https://config.figma.com/), Figma’s annual design conference, happening live in San Francisco (and streamed online) June 21–22. Hear from speakers like Sho, Figma CPO Yuhki Yamashita ([past newsletter guest](https://www.lennysnewsletter.com/p/how-figma-builds-product)!), and Stripe’s Head of Design, Katie Dill, and CTO David Singleton (also a [past podcast guest](https://www.youtube.com/watch?v=F0_IKKY3HCk)!). Sign up [here](https://config.figma.com/).* ![Image from What working at Figma taught me about customer obsession](https://substack-post-media.s3.amazonaws.com/public/images/0946ae49-ac18-4e9d-b9ad-58a75fc68eb8_8000x4000.png) About a month into my new job at Figma, an engineer shipped a bug that broke the site. We knew we needed to fix it, but we were still in stealth mode, and the eng team was in the middle of some complicated projects. I didn’t want to thrash the team to jump on this bug, but Dylan Field, our CEO, wanted us to drop everything and fix the bug immediately, which I didn’t understand. The conversation went something like this: > **Me:** “Dylan, you know we’re still in stealth mode, right? > > **Dylan:** “And?” > > **Me:** “Literally no one knows that the site is down.” > > **Dylan:** “That’s not true. We have users!” > > **Me:** “Like. . . 10 people?” > > **Dylan:** “Some of them are using us for work!” > > **Me:** “Uh. . . look, if they’re willing to use a stealth-mode product for work, that’s on them.” > > **Dylan:** “Fix it now!” So we did. And even though I’d initially disagreed, I was excited. I *liked* that my boss cared more about customers than I did, which had never happened before. The truth is, I had been a bit nervous about joining Figma. I was worried about being pigeonholed into design tools (particularly given my background building products at Macromedia, Adobe, and Medium), and I wasn’t sure that this small (less than 10 people) team really understood how hard it was to make a tool that designers would love. Fast-forward to 2023, and Figma has grown beyond what I could have imagined. It’s gotten to the point where people often ask me for advice on how to prioritize features or how to run a product process. These questions are hard for me to answer, because I don’t think we do anything special. Our process is messy and we make mistakes. We create designs and then throw them away. We miscommunicate all the time and forget to write things down. The one thing that I think we do better at Figma than other places I’ve been is that we try to put customer needs first—I mean. . . I thought I had done a good job of prioritizing customer needs in previous jobs, but there is a philosophy that I picked up here that feels different from other jobs I’ve had. It shows up in how we do research, how we build community, and how we prioritize features. It all starts from putting the customer perspective over our own, and it’s something that we built into our culture from the very early days. ## **Customer support is everyone’s job** When we launched our first private beta, we were fielding so many support requests that it became a core part of all of our jobs. We would go back and forth with our beta users so much that it was like being in a giant private chat group, talking about this experiment called Figma that we were all building together. And because we were all in it together, it felt natural to drop everything if a bug or usability issue got in the way of a customer doing their work. That attitude soon became part of our early culture: **Customer support is everyone’s job.** Even after we hired a dedicated support team, our designers and developers continued to respond directly to customers in our support channel. They liked being close to customers. Yes, it took time away from coding or designing (sometimes 20% of an engineer’s time or more), and, yes, sometimes our customer support manager cringed a little when we said the wrong thing, but support—especially in the early days—was a key part of how we did business, and we couldn’t imagine doing it any other way. ![Image from What working at Figma taught me about customer obsession](https://substack-post-media.s3.amazonaws.com/public/images/593047e8-4985-4c6e-a3af-d093f498b485_1600x1066.png) Our rhythm was simple: (1) understand the customer’s problem, (2) unblock the customer by giving them immediate support, and (3) if needed, change the product so that other customers don’t run into the same problem. We used this approach for bug fixing, of course, but also to find gaps in our product, which we would address through bigger, bolder features. This attitude wasn’t just about responding to support tickets. We would do things like drive an hour to go visit a customer who was having performance issues on their computer that didn’t show up on ours. Or we would respond and chat with someone over the weekend if they were working on an important project and something went wrong. Their problems were our problems. Logically speaking, the fact that engineers were spending something like 20% of their time helping customers should make product development go slower, but we found the opposite to be the case. **By doing this, we figured out what mattered to customers quickly, and we built a reputation for being fast to respond.** Your users don’t judge your velocity based on how many lines of code you write. They judge you based on how quickly you do the things that matter. This culture of customer care repeated whenever we found ourselves talking to customers. When we didn’t have a dedicated sales team, we all participated in sales calls, and used that as a way to help people. Same with research trips, where we would sprinkle in offers to help people along with our questions, and in fact, same with random encounters with Figma users at airports. Whenever we talked to customers in any way, we used it as an opportunity to understand and help them however we could. I think this, more than anything, explains why our users seem to like Figma so much. ![Image from What working at Figma taught me about customer obsession](https://substack-post-media.s3.amazonaws.com/public/images/c72bfcd2-3e32-476f-bdaa-2cbc878564e5_3000x2051.jpeg) **Takeaways:** - Encourage your teams to engage directly with customers, and build a culture of supporting users. - You learn faster, and it helps build a community around your product. - Don’t worry about the time your team spends in understanding customer problems. Your team will feel like it’s moving faster, not slower. ## **Software as a** ***service*** Different markets have different dynamics, but when it comes to design tools, I’ve found that focusing on end-user happiness over everything else has been a good way to go. Ultimately, our customers get to decide if they like the features we build, and that’s the only thing that truly matters. It sounds simple (or maybe obvious?), but it’s hard to do in practice. As Figma has gotten bigger, it has become tempting to shift the focus to our own perspective instead of the customer’s perspective. Maybe something is easier to do given our architecture, or maybe something might bring us a bit more revenue, or maybe something might be easier to get past a high-stakes product review. I personally find that it’s a constant struggle to keep the customer in mind over my own perspective. One trick that I use is to think of Figma as if we were in the service industry. I imagine that Figma is a hotel or a restaurant, and our customers are our guests. It’s taking the term “Software as a Service” (SaaS)\* and breaking it down, word by word, as if we are *literally* providing a service to people. We just happen to provide that service by writing software. This is a **service-oriented mindset**. *(\*I know that the [original meaning of SaaS](https://en.wikipedia.org/wiki/Software_as_a_service) is that the software comes as a response from the server, and has very little to do with how I’m using the word “service” above, but bear with me on this.)* There are a lot of frameworks out there to help teams build better products, but in those frameworks, the user problem is often just a tool to help figure out how to *make the product better*. They take a product-oriented mindset. With a service-oriented mindset, it’s the opposite: the product is just a tool to help *solve the user problem*, which is the ultimate goal. Both are similar, but thinking about building *in* *terms of service*,for us, means that we’re prioritizing customer experience, and using that as our metric benchmarks for success. ![Image from What working at Figma taught me about customer obsession](https://substack-post-media.s3.amazonaws.com/public/images/01e5b34c-7514-49c5-9f37-0f7e6b72d42d_1600x738.png) Figma is in the design tool business. In a more traditional framework (e.g. jobs to be done), you would identify a job, like “manage a design system” or “deliver a component update to my designers,” and use that as a lens for understanding how to make Figma the product better for users. In other words, the “job” is just a way of understanding the ultimate goal, which is building the product. I think of it backward. **My job, as a Figma employee, is to help people do great design.** The software that we write is just a tool that helps me do my job, but it’s just as important to answer people’s questions directly, or to help connect designers to other designers so they can learn from one another. This mindset shift makes it easier to help me stay out of the trap of focusing on internal business needs over user needs. ![Image from What working at Figma taught me about customer obsession](https://substack-post-media.s3.amazonaws.com/public/images/870c6474-6bda-48f3-9b1a-f7a73fae001a_1600x1005.png) I find that keeping these different levels of user goals in mind makes it easier to evaluate product trade-offs. When you are simply trying to balance feature X vs. feature Y vs. feature Z, I find that traditional frameworks are somewhat artificial. You can write down a strategy, but the devil is in the details. You can try to create a set of metrics and goal yourself against them, but there will always be competing metrics that you need to balance between. For me, it feels easier to just go back to this mindset of serving customers well in order to figure out what to do. For a given user, is feature X or feature Y more valuable? What about for a room full of users? Or a stadium full of users? What decision best serves the most people? **Takeaways:** - To really put customers at the center of your thinking, invert the “jobs to be done” so that the user’s needs are your primary focus. - Think about your user’s higher-level goals. Why do they want to accomplish a task? And why do they want to do that? - Think about all the levels of your user’s goals as you try to balance feature investments. ## **The importance of** ***feel*** I am sure there are certain kinds of software where people decide what to purchase based on rational criteria. Design tooling is not like that. When you talk to designers about their preferred tools, they start talking about how things “feel.” It’s almost like talking to a musician about their favorite instrument. It’s my belief that the feel of software is vital to adoption, especially when you are going for product-led growth. People respond instinctively to how something feels, and you can’t fake it. In fact, I think it might be the most important part of PLG. Because of this, the “feeling” of the tool is something we tried to get right from the beginning. When we officially [launched Figma](https://www.figma.com/blog/design-meet-the-internet/), we limited ourselves to a core set of features that felt polished and well-designed, instead of cramming in features. We didn’t have components, styles, or even multiplayer in that core set of features. It was just a simple design tool that lived in the browser and felt great. Cutting multiplayer out of the initial release was really tough, but our thinking was that **if we had started with something that felt bad—even with all the right features—we would’ve started with a credibility problem**. We would’ve had to then spend the majority of our time convincing people that we *weren’t bad anymore*. Even though we didn’t have every feature from the start, this trust allowed our customers to believe that we would continue to improve and add features based on their feedback. ![Image from What working at Figma taught me about customer obsession](https://substack-post-media.s3.amazonaws.com/public/images/c84d66c3-49ab-4356-a503-1df2823ab4a2_1600x1065.png) Every product will have different aspects that are important to get right for the feel of it. For Figma, we focused on the following: - **Performance**—We measure how fast we are able to display changes as the user edits the document. We try to hold ourselves to a bar of 60 frames per second whenever we can. - **Familiarity**—Design tools have a long history of keyboard shortcuts and muscle memory. For example, certain modifier keys affect how objects get resized, and there is certain behavior that users expect if the keys are pressed or released halfway through. There are even combinations you can do, like holding down the spacebar while moving an object, that feel like advanced video game combo moves. - **Consistency**—Figma can be quite complex. Objects can be duplicated from file to file, nested within each other, and updated in real time while multiple people edit at once. We have an internal set of rules for how everything operates, and these rules help people feel like the tool is predictable, even when they can’t quite put their finger on what those rules are. When trying to decide on the importance of “feel” for a product, consider the following: How frequently is the product used by your user? Products that people use every day, like communication tools (email/messaging) or productivity tools (IDEs, spreadsheets), are ones where feel can be a make-or-break factor in adoption. In these high-frequency categories, there are usually behaviors that people expect from the software they are used to using from before. If possible, try to accommodate these expectations, and then find a few ways to surpass them. Note that this isn’t about doing something silly; this is about doing something that feels truly deep and useful. Show them how good a piece of software can be. If you’re not sure whether to invest in improving the feel or in adding to the functionality of your product, just ask! Zoom all the way out to the highest level, and ask people whether they like using your product. And if not, why? Sometimes the reason is that it’s missing a piece of functionality, but sometimes it’s something ineffable, and they will say something like “It just feels clunky.” Instead of dismissing this kind of feedback, really lean into it to try to understand how to make it feel better. And if you’re not sure how to convince others of your vision, show them customer quotes. Show them videos. Show them how frustrated customers can get, or how delighted they can be when things work smoothly. We all respond to software viscerally, and when you see users actually struggling—or enjoying—a piece of software, you can feel it. **Takeaways:** - The more frequently a piece of software is used, the more important “feel” is. - Do research on what users expect and live up to that, but also do a few things that go above and beyond. - If people need to be convinced of the importance of feel, show them customer reactions. Here’s a final note: Getting the overall feel right can be more art than science, and this is another area where I’ve found that taking a service-oriented perspective can be helpful. I imagine myself running a high-end restaurant. Yes, I want the decor to be good, as well as the service and the food. But at the end of the day, I don’t really care about those independent aspects. What I really care about is that every customer leaves feeling that they had a wonderful night. I can’t quite put my finger on the reason, but this kind of analogy makes it much easier for me to think about the whole thing. I think to myself, “I’m just like a host, inviting my user into my application for a little bit, and I want them to have a wonderful time.” Because why else do we make software? Don’t we all want to work on software that makes people happy? ![Image from What working at Figma taught me about customer obsession](https://substack-post-media.s3.amazonaws.com/public/images/227c6b7b-0cb3-4305-bbee-90262b2be705_4400x2928.jpeg) *Thank you, Sho! For more from Sho, follow him on [LinkedIn](https://www.linkedin.com/in/shokuwamoto/), [Twitter](https://twitter.com/skuwamoto?lang=en), [Mastodon](https://mastodon.social/@skuwamoto), and [Bluesky](https://bsky.app/profile/skuwamoto.bsky.social), and don’t forget to [sign up for Config](https://config.figma.com/), Figma’s annual design conference, happening live in San Francisco (and streamed online) June 21–22.* *Have a fulfilling and productive week 🙏* ## 📣 Join Lenny’s Talent Collective 📣 If you’re hiring, [join Lenny’s Talent Collective](https://www.lennysjobs.com/talent/welcome) to start getting bi-monthly drops of world-class hand-curated product and growth people who are open to new opportunities. ![Image from What working at Figma taught me about customer obsession](https://substack-post-media.s3.amazonaws.com/public/images/a1ef5004-959a-42ec-b2e8-a3a5f7cf44be_1492x1194.png) If you’re looking for a new gig, join the collective to get personalized opportunities from hand-selected companies. You can join publicly or anonymously, and leave anytime. [Apply to join](https://www.lennysjobs.com/talent) ### ❤️‍🔥 Featured job opportunities 1. **Thoughtful:** [Technical Product Manager](https://www.lennysjobs.com/jobs/6062e014-eda9-4781-a3bc-3a1fe309fefc) (SF, Austin) 2. **Thoughtful:** [Head of Product](https://www.lennysjobs.com/jobs/b6c37021-7a1d-4201-8ff4-e35ee0085bc4) (NYC, SF, Austin) 3. **Splash Sports:** [Director of Growth](https://www.lennysjobs.com/jobs/473f331a-d082-445e-8c7f-69089828732a) (SF, Denver, Boston) 4. **Zinc:** [Senior Product Manager](https://www.lennysjobs.com/jobs/a5525e7d-cf8e-46b6-a602-772144ae12df) (London) 5. **Zinc:** [Product Designer](https://www.lennysjobs.com/jobs/f6c53038-8192-4e08-8576-15c4abbbdea1) (London) 6. **Wingspan:** [Product Design Lead](https://www.lennysjobs.com/jobs/6122b947-a5e1-44c9-a45e-30e305394589) (NYC) 7. **Mindbloom:** [Creative Producer](https://www.lennysjobs.com/jobs/389f9fcf-65bb-4852-836e-f3a732203212) (Canada, remote U.S.) 8. **Mindbloom:** [Acquisition Growth PM](https://www.lennysjobs.com/jobs/c74c7805-4b6c-42fa-a989-070e49a48898) (Canada, remote U.S.) **If you’re finding this newsletter valuable, share it with a friend, and consider subscribing if you haven’t already.** Sincerely, Lenny 👋 --- ## [21/51] How a traumatic brain injury made me a better PM—and person *👋 Hey, [Lenny](https://twitter.com/lennysan) here! Welcome this month’s ✨ **free edition**✨ of Lenny’s Newsletter. Each week I tackle reader questions about building product, driving growth, and accelerating your career.* If you’re getting this post, that means my wife’s due date is very near (😮‍💨), or our kid was just born (🥹). To give my new family my undivided attention, I’ll be taking a month or so of parental leave. To make sure you continue to receive exceptional value from the newsletter during this period, a few months back I [put out a call](https://twitter.com/lennysan/status/1635437392349007873?s=20) for guest posts. Out of 500+ pitches, I whittled it down to six extraordinary posts. Today’s post is the first of the series and comes from [Amol Avasare](https://www.linkedin.com/in/amolavasare/), who runs B2B growth at [MasterClass](https://www.masterclass.com/). Amol was previously an investment banker, chief of staff, and a founder, and last year Amol suffered a serious brain injury. His story of recovery has stuck with me ever since I read the first draft. Enjoy ✨ *For more from Amol, make sure to follow him on [LinkedIn](https://www.linkedin.com/in/amolavasare/) and [Twitter](https://twitter.com/theamolavasare?lang=en). He also writes a great newsletter, [Time to Ship](https://www.timetoship.co/), which is a daily digest of the latest features shipped by your favorite product teams.* ![Image from How a traumatic brain injury made me a better PM—and person](https://substack-post-media.s3.amazonaws.com/public/images/afc5e5d5-5f71-4952-8ae7-979f888df863_8000x4000.png) *“The real troubles in your life are apt to be things that never crossed your worried mind—the kind that blindside you at 4 p.m. on some idle Tuesday.”* —Baz Luhrmann, [“Everybody’s Free”](https://www.youtube.com/watch?v=sTJ7AzBIJoI) My life was turned upside down when I suffered a [traumatic brain injury](https://www.mayoclinic.org/diseases-conditions/traumatic-brain-injury/symptoms-causes/syc-20378557) (TBI) during a Muay Thai sparring session in San Francisco. I immediately suspected something was wrong as I felt a strange sensation in my head, but as I had no other symptoms, I didn’t think too much of it and kept going on with my life as normal. Two weeks later, I suddenly felt extremely dizzy and started to get painful headaches. I knew I was in big trouble when I tried to read a book but couldn’t understand what the sentences meant. Individual words were fine, but when I tried to string together a whole sentence, it just wouldn’t click. My symptoms began to spiral, and before I knew it I found myself in the emergency room. What I thought would be a quick stint on the sidelines turned into the most difficult and prolonged ordeal of my life. I was on disability leave for nearly a year, and even today I’m still not fully recovered. It’s been a tough experience, but one that in a strange way I’m immensely grateful for. What I’ve learned from the process, which I’ll be sharing in today’s post, has been a huge unlock both as a PM and in life more broadly. — Most mild TBIs heal within weeks, but for [10% to 20%](https://journals.plos.org/plosmedicine/article?id=10.1371%2Fjournal.pmed.1003652) of people, including yours truly, symptoms don’t get better and persist for a much longer time. Everyone’s symptoms vary, but generally, the body’s capacity for stimuli falls to a much lower level. This makes it a lot harder to engage in daily life activities. For example, while most people would feel nauseous if they worked on their laptop for 16 hours straight, a TBI patient may feel the same way after just a few minutes of screen time. ![Image from How a traumatic brain injury made me a better PM—and person](https://substack-post-media.s3.amazonaws.com/public/images/847899a6-040a-4749-b538-9a4543cb0985_1440x982.png) My main physical symptoms were dizziness, nausea, headaches, noise sensitivity, fatigue, and a range of GI issues. For several months I couldn’t read, listen to audio, or do screen time, as even a few seconds of these activities would set off my symptoms. For over half a year I could barely walk, as any movement would trigger extreme symptoms of dizziness. I was generally unable to take care of myself, and without the support of my amazing partner, I’m really not sure how I would have gotten by. I found myself in a very dark place as I could no longer do the activities that brought me joy. I couldn’t stop worrying about whether I’d get better, and the thought of being disabled and unable to work for the rest of my life was overwhelming. I also became very withdrawn, as social contact would trigger my symptoms. It’s been a brutal journey requiring very “active” rehab, but I’m glad to say that I’m now about 90% recovered and can yet again do most things in life. I’m back at work, and apparently I’m now also writing 5,000-word posts for Lenny’s Newsletter! Here’s what I’ve learned during my recovery. # **Lessons from the journey** Reorienting my life to compensate for my injury has left me with some invaluable knowledge across both my personal and professional life. In this post, I’m going to share a range of frameworks and actionable tips that’ll help you better manage your energy and emotions as a PM, while becoming a happier human being in general. Before I jump into specific tactics, a quick primer on an integral part of our physiology that many of my learnings tie back to—the autonomic nervous system. ### **The autonomic nervous system** Have you ever felt waves of anxiety and stress before an important meeting? And what about that conversation you had with your difficult coworker that felt like pulling teeth? Did you notice your blood boiling or heart pounding as nerves or frustration set in? If so, you can thank the [autonomic nervous system](https://my.clevelandclinic.org/health/body/23273-autonomic-nervous-system) (ANS). The ANS regulates a range of involuntary processes throughout our bodies. Examples include heart rate, blood flow, digestion, and our internal threat response. There are two parts to the ANS: 1. **Sympathetic nervous system:** The “fight or flight” response, which ramps up our body’s response to a perceived threat and keeps us on edge if it thinks we’re unsafe 2. **Parasympathetic nervous system:** The “rest and digest” response, which relaxes our body, conserves energy, and promotes digestion ![Image from How a traumatic brain injury made me a better PM—and person](https://substack-post-media.s3.amazonaws.com/public/images/36159c3d-f486-464e-80af-255d7b199912_1540x1430.png) In a healthy ANS, these systems are in a state of flux and balance each other as situations arise. After my TBI, I developed ANS dysfunction, with my nervous system getting stuck in “sympathetic dominance.” In other words, the fight-or-flight response became my default state. This led to a range of issues, including excessive anxiety, insomnia, digestive issues, higher cortisol, and more. ![Image from How a traumatic brain injury made me a better PM—and person](https://substack-post-media.s3.amazonaws.com/public/images/752b294a-98ad-4e2e-84c0-087e44b9c252_1492x758.png) Why is this relevant to you? Turns out that chronic stress also results in sympathetic dominance, where your fight-or-flight response gets stuck in overdrive. If you’re dealing with higher baseline stress levels than you’d like, this system is playing a key role. So. . . what can you do about this? The answer lies in stimulating the parasympathetic rest-and-digest system. This response reduces baseline levels of stress and is also a useful tool to remain calm in high-stakes situations—such as a contentious product review. A decent chunk of my recovery journey and what I cover below ties back to this core, overarching principle. ## **Managing energy** After nine months of working up my tolerance for screen time and cognitively challenging tasks, I finally restarted my job as a growth PM at MasterClass. *Side note: I’m immensely grateful to the MasterClass team for how much they went above and beyond in supporting me throughout my recovery!* Soon after returning to work, my symptoms began to get worse. Due to my reduced physical tolerance, I kept running into strong headaches and nausea, and I’d generally end the workday feeling shattered. These symptoms would often carry over to the following day, and before I knew it, I was progressively crumbling over the course of the week. I found a few tactics to be effective at maintaining optimal energy across the course of the day, allowing me to work in a much more sustainable manner. ### **Structuring my calendar for energy** The frame of viewing my calendar as a tool for energy management was a game changer. I had to systematically think through how to manage energy troughs and maintain the right levels of energy across the week. One simple exercise here is to map out your working energy levels. For one week, at the end of each day draw a curve of how your energy levels fluctuated over the course of that day. Make note of anything that preceded increases or decreases in energy. ![Image from How a traumatic brain injury made me a better PM—and person](https://substack-post-media.s3.amazonaws.com/public/images/cb29b9b6-e692-4152-bbf3-117e172e8446_1600x733.png) At the end of the week, draw a curve of how your energy levels fluctuated over the course of the week. The next step is to ask yourself the question, “Am I happy with what I see?” If the answer is yes, then you’re doing great! If not, you have an opportunity to restructure your week and adjust activities that are crushing your energy. In my situation, there were a few obvious energy killers: 1. Meeting-heavy Mondays 2. Many back-to-back meetings in a row 3. More than 1 to 1.5 hours of continuous screen time I was progressively losing energy throughout the week. I’d start off strong, but given the meeting-heavy nature of Monday and the start-of-week surprises that can spring up, I’d end up exhausted by the end of the day. This fatigue would carry forward and snowball over the course of the week. I moved non-critical one-on-ones to later in the week and front-loaded some of my planned work for Monday to the weekend. Everyone has different views on weekend work, but for me, the benefits of having a lighter start to the week outweighed the inconvenience of a few hours of work on Sunday. To help with back-to-back meetings, I started switching some Zoom meetings to phone calls and also made sure to limit myself to a maximum of three back-to-back meetings. Also note—if you’re serious about optimizing for energy, Matt Mochary has a killer energy audit exercise that’s completely free: [Watch on YouTube](https://www.youtube.com/watch?v=emAXGqwtPCk) ### **Taking breaks** One of the biggest hacks I’ve discovered is to take structured breaks throughout the workday. I put two 30-minute “DNS–Break” blocks on my calendar each day. I have one around mid-morning and the other around mid-afternoon so as to most evenly chunk up my day. During these breaks, I disconnect from screens and focus on activities that stimulate the rest-and-digest response. For me, this has included meditation (I practice [Vipassana](https://www.lionsroar.com/how-to-practice-vipassana-insight-meditation/)), listening to calming music ([here’s](https://open.spotify.com/playlist/12fZU4mVdFdj6Nt1NaoRcy?si=6db621eaa79449fe) my go-to playlist), and deep breathing ([two-one](https://yogainternational.com/article/view/soothe-your-nervous-system-with-2-to-1-breathing/#:~:text=Inhalation%20emphasizes%20sympathetic%20activity%20(the,rest%2C%20and%20digestion%20branch).) breathing). More on these later. I’ve found that I often go into these breaks feeling somewhat frenetic, with anxious energy, but generally leave being much more at peace and rocking “no big deal” vibes. ![Image from How a traumatic brain injury made me a better PM—and person](https://substack-post-media.s3.amazonaws.com/public/images/9ca88adb-9aaf-4bc1-907a-ddf7004dc6ab_1600x702.png) For the first few months back at work, I was ultra-strict with taking breaks, as I just couldn’t function without them. Over time, I’ve relaxed this as my physical capacity has improved. I still try my best to take at least 15 minutes mid-morning and mid-afternoon to disconnect and chill out, but nowadays I’ll schedule over my blocks if I have to. If you often feel run-down at the end of your workday, I challenge you to add structured breaks to your calendar, even if they’re only 5 or 10 minutes long. If you’re anything like me, if it’s not on your calendar, it’s not going to happen! ### **Ruthlessly prioritizing my time** [Parkinson’s law](https://en.wikipedia.org/wiki/Parkinson%27s_law) refers to the observation that work expands to fill the time that’s available for its completion. The corollary here is that work shrinks if we’re given less time in which to complete a task. ![Image from How a traumatic brain injury made me a better PM—and person](https://substack-post-media.s3.amazonaws.com/public/images/b14a0ac3-c405-478e-82c3-a9e2b19eca02_1040x694.png) In my case, the TBI meant that in my first few months back at work, I simply didn’t have the physical tolerance that I had in the past. I needed to take breaks, I couldn’t work long hours, and I had to prioritize my health and recovery over anything else (yes, that included my OKRs!). One of the most helpful changes I made was to set a limit of how much I would work in a day. I restricted myself to working around two hours less per day than my pre-injury baseline. I took additional breaks during the day and avoided working late into the evening. Shorter hours raised the bar for what I considered worthy enough to invest my time in, which naturally led to better prioritization of my work. I hear this sentiment a lot from friends who’ve had kids, as they’ve similarly been forced into prioritizing more effectively to avoid completely losing their shit! > *“It’s not prioritization unless it hurts.”* > > —Ami Vora, [The Hard Parts of Growth](https://amivora.substack.com/p/its-not-prioritization-until-it-hurts) On a tactical level, I started applying [p0/p1/p2 priorities](https://www.bluelabellabs.com/blog/a-primer-on-prioritization/) to my daily and weekly tasks. I’ve found this helpful in reorienting myself toward higher-leverage tasks, while still making sure that I don’t drop any important balls. I limit myself to two p0 items each day, which I absolutely must get done before clocking off. I try my best to get through the p1 items on any given day but will let them slip if I have to. The p2 items are more of a stretch that I’ll only get to if my schedule permits. Note: If a p2 task keeps getting pushed back day after day, it’s worth digging in to understand the cause. Sometimes it becomes clear to me that a task is very low-ROI and that I’m better off cutting it entirely. Other times I realize that aversion and anxiety are the real reasons why I’m delaying an important task, such as aligning with a difficult cross-functional stakeholder. In these cases, I elevate the task to a p0 to force myself to get it done. I also started giving my talented design and engineering counterparts more ownership of work that I ordinarily covered. The key here was to work with each engineer and designer to understand their personal goals and what types of work excited them the most. For some, this included taking on more XFN comms to improve their leadership presence. For others, this involved having greater responsibility over data and analytics, or doing the work to help define our north-star vision. I’ve found that the changes to my schedule and prioritization tactics, combined with empowering the team around me, has made me a more effective operator. It’s been a strong win-win, as I’ve given my body the space to recover while also improving our team’s performance and satisfaction levels. ## **Managing emotions** During the earlier stages of my recovery, I struggled to adjust to my newfound reality that life was going to be very different. The fear around whether I’d ever get better was crippling. I felt a deep frustration at my disability pressing pause on my career and life progression. In TBI recovery, excessive anxious and depressive feelings kick off a self-reinforcing negative loop that impedes recovery. Higher stress leads to sympathetic dominance of the nervous system as the fight-or-flight response gets stuck in overdrive. Sympathetic dominance causes insomnia, which has a huge impact, given how critical sleep is for TBI recovery. Sympathetic dominance also causes digestive issues such as irritable bowel syndrome and nausea, both of which in turn lead to more anxiety and stress. ![Image from How a traumatic brain injury made me a better PM—and person](https://substack-post-media.s3.amazonaws.com/public/images/ebcaecd1-1248-4442-becc-39d4b3c1486d_1600x1058.png) There are a few tactics that I now consider table stakes in how I manage my psychology, both in a work context and in life more broadly. ### **Vipassana meditation** The meditation bandwagon has hit escape velocity over the past decade. Despite how prevalent meditation has become, I find that there’s still a lot of confusion around what exactly it entails. Contrary to popular belief, meditation doesn’t require that you sit completely still for long periods of time. Nor does the inability to “clear your mind” mean that you’re doing meditation “wrong.” Here’s one definition of meditation that I find particularly helpful: > *“Awareness that arises through paying attention, on purpose, in the present moment, non-judgmentally”* > > —Jon Kabat-Zinn, [Defining Mindfulness](https://www.mindful.org/jon-kabat-zinn-defining-mindfulness/#:~:text=The%20Definition%20of%20Mindfulness%3A,self%2Dunderstanding%20and%20wisdom.%E2%80%9D) Breaking this down into its inputs gives us four items: 1. Attention: To emotions, thoughts, and physical sensations 2. Intention: Being deliberate with guiding attention 3. Presence: Staying with what’s true in the moment 4. Attitude: Being curious and non-judgmental toward reality Learning how to observe difficult thoughts and physical symptoms without judgment was a huge unlock for my recovery. In the earlier stages of my journey, overwhelming physical pain would cause me a lot of emotional strife. I’d desperately want the pain to stop, and when it didn’t I’d feel extremely frustrated about not being able to live my life. While meditation didn’t solve all my problems, it helped me become much less reactive to all the difficulties associated with my condition. Meditation also reduced the amount of emotional pain I experienced, as I learned to struggle less against reality. > *“True freedom is learning how to be at peace when you don’t get what you want.”* > > —Dr. Nikki Mirghafori, [Spirit Rock](https://www.spiritrock.org/nikki-mirghafori) With Vipassana practice, I focus on an object of attention (breath in my abdomen). When my mind gets distracted, I gently investigate my thought patterns before coming back to the breath. While I choose to sit cross-legged on the floor, there’s nothing wrong with sitting in a chair, or meditating while walking or lying down. It’s important to be comfortable when you meditate, so I use a [zabuton](https://www.amazon.com/gp/product/B08CZXNS6D) (floor mat) and [zafu](https://www.amazon.com/gp/product/B09LMRKZ5C) (sitting cushion). If physical discomfort prevents you from meditating, I highly recommend getting on these! I aim to meditate daily for 20 minutes. Having a dedicated meditation space helps here, as does having the same scheduled time slot each day. If I’m just too busy on a certain day, I still meditate at the same time, albeit for a shorter length (even if just a few minutes). It’s important to be kind to ourselves and recognize that we’re humans, and so I do skip a day here or there and don’t see it as a huge problem. However, I’ve found that if I start to skip days too often, I become a lot less present and a lot more reactive. ### **Tactical deep breathing** In a work context, one of the most important tactics I’ve relied on is deep diaphragmatic breathing. There are many different types of deep breathing, and all probably work fine enough. However, two factors should be considered to best calm the nervous system: 1. **Exhaling for longer than you inhale.** Breathing in stimulates the sympathetic response, while breathing out stimulates the parasympathetic rest-and-digest response. Testing this using a heart-rate monitor will show that your heart rate rises when you breathe in and falls as you breathe out. Maintaining a [2-to-1 ratio](https://yogainternational.com/article/view/soothe-your-nervous-system-with-2-to-1-breathing/#:~:text=Inhalation%20emphasizes%20sympathetic%20activity%20(the,rest%2C%20and%20digestion%20branch).) of exhalation to inhalation ensures that deep breathing indexes your body’s systems toward rest. 2. **Diaphragmatic “belly” breathing.** Slow diaphragmatic breathing stimulates the [vagus nerve](https://www.uclahealth.org/medical-services/gastro/wellness/wellness-approaches/relaxation-therapies), which further activates the parasympathetic nervous system. To execute this most effectively, you want to focus your breath in the region where the upper belly meets the lowest ribs. I’ll often do this type of breathing to calm myself down before product reviews or important meetings where I expect things to get a little spicy. It’s also been very helpful after difficult meetings when I leave with anxious energy and major WTF vibes. Even just 20 to 30 seconds of this type of deep breathing can bring me closer to baseline and prevent my emotions from spiraling out. Andrew Huberman’s breathing techniques to reduce stress are also a great reference here: [Watch on YouTube](https://www.youtube.com/watch?v=kSZKIupBUuc) ### **Working with fears exercise** One of the most pervasive and anxiety-inducing fears I faced during the earlier stages of my recovery was the question of whether I’d ever get better. As I was still extremely limited several months after my injury, it was easy to get caught in the “I’m going to be like this forever” narrative. Working with a therapist and learning to accept my lack of control played an important part here, as did a “working with fears” exercise that’s similar to Tim Ferriss’s thoughts on [fear setting](https://tim.blog/2017/05/15/fear-setting/): 1. Write out your fear 2. Estimate the probability of that fear happening 3. Run a thought experiment of the concrete steps you’d take to survive and navigate the situation if the fear does ends up playing out My primary fear was that I’d never be able to return to work. While my doctors were unclear on how long my recovery would take, they did believe that there was a decent chance I’d eventually recover enough to get back to a job. Nonetheless, I played out the scenario of never being able to work again. I had long-term disability coverage and was lucky enough to have a very supportive partner who could help take care of me. I reasoned that in the worst case, I could move to my native country, Australia, and at least have health-care coverage and some degree of welfare support. I knew that while not being able to work would be a very painful future, I would find a way to survive if it did end up happening. If you want to reduce the emotional impact of fear the next time you worry about something not going your way, try working through this exercise and see where you land. ### **Creating a “parasympathetic space” in your house** So much of managing my emotions comes back to stimulating the rest-and-digest response. One hack that I’ve found to be very effective has been to create a dedicated space in my house with “relaxing vibes” that I use to do my deep breathing, meditation, and general chilling out. This tip stems from the [classical conditioning](https://www.verywellmind.com/classical-conditioning-2794859) principle of psychology, courtesy of Pavlov’s well-known [experiment](https://www.verywellmind.com/pavlovs-dogs-2794989). In that experiment, it was discovered that feeding dogs soon after ringing a bell would eventually lead to the dogs salivating at the sound of the bell alone, even with no food present. Why? Because they began to associate the sound of the bell with food. The same principle applies with setting up a parasympathetic space in your house. If you have a specific place you go to where you stimulate your rest-and-digest response, over time that response will begin to fire just by going to that space. I set up part of my room for this specific purpose with the following props: - Futon to lie down on - Cushion and mat (zafu and zabuton) for meditation - Essential-oils diffuser for stimulating smell - Speaker to play calming music - Steel tongue drum if I want to actively play music ![Image from How a traumatic brain injury made me a better PM—and person](https://substack-post-media.s3.amazonaws.com/public/images/622d9e5e-2aa7-41aa-b996-010acde69f8b_1200x1600.png) I use this space to calm my nerves before a meeting, chill out whenever I’m feeling a bit frenetic, and during my scheduled breaks over the course of a day. Sometimes Taco (the cat) is helpful, other times he most certainly is not. . . ## **Managing physical health** To increase the speed of my healing and to maximize the chances of making a full recovery, I made some major lifestyle changes. Given I’m about 90% recovered today, I no longer “have” to stick to these lifestyle changes, but I nonetheless plan to. After suffering so much from health issues, I want to maximize my probability of having a healthy life, and as such I’ve oriented toward a lifestyle that optimizes for my long-term health. ### **Exercise** > *“Exercise is the single most potent tool we have in the health-span-enhancing toolkit—and that includes nutrition, sleep, and meds.”* > > —[Dr. Peter Attia](https://www.menshealth.com/fitness/a43137717/peter-attia-outlive-exercise-longevity/) TBI [best practices](https://www.ncbi.nlm.nih.gov/pmc/articles/PMC6089233/) take the view that after an initial two- to three-day period of rest, daily cardio is the most important recovery activity for patients. In particular, brain injury experts [recommend](https://www.cognitivefxusa.com/blog/brain-injury-exercise) heart-rate-based high-intensity cardio intervals. I worked with a physical therapist on an exercise program designed to slowly increase the maximum heart rate at which I could exercise without causing symptom onset. This involved doing one-minute-on intervals where I’d try to get my heart rate up to a target range followed by one-minute-off intervals where I’d rest and focus on deep breathing to bring my heart rate down. As walking would trigger my symptoms, the stationary bike was my poison of choice. These short bursts of intense cardio increase [brain-derived neurotrophic factor](https://home.hellodriven.com/articles/neuroplasticity-why-you-should-care-about-your-bdnf/), also known as neuroplasticity. Rapidly bringing down your heart rate during the off-intervals helps stimulate the parasympathetic nervous system response. After my injury, I was unable to lift weights, as the movement and exertion required would trigger my symptoms. The benefits of weightlifting are [well documented](https://www.healthline.com/health/fitness/benefits-of-strength-training), so over the course of a few months I worked with my physical therapist to slowly get back into light weightlifting. Being able to once again lift five times per week was a turning point that brought with it significant physical and mental health benefits. ### **Anti-inflammatory diet** Leading TBI [experts](https://completeconcussions.com/team/dr-cameron-marshall/) argue that TBI recovery is held back unless diet is adequately addressed, and most agree that the best bet is the [anti-inflammatory diet](https://www.arthritis.org/health-wellness/healthy-living/nutrition/anti-inflammatory/anti-inflammatory-diet). In a nutshell, the anti-inflammatory diet favors fruits, vegetables, whole grains, lean protein, and healthy fats. On the other hand, processed foods, added sugar, red meats, and alcohol are discouraged. ![Image from How a traumatic brain injury made me a better PM—and person](https://substack-post-media.s3.amazonaws.com/public/images/554fce99-9f6b-4b8a-93b9-2b21965311a5_1440x1496.png) While acute inflammation is essential to our body’s healing process, inflammation that doesn’t go away can be a big problem. [Chronic inflammation](https://www.health.harvard.edu/staying-healthy/understanding-acute-and-chronic-inflammation#:~:text=Research%20has%20shown%20that%20chronic,to%20know%20its%20exact%20impact.), a common byproduct of our modern diet and lifestyle, is associated with heart disease, diabetes, cancer, arthritis, and bowel diseases such as Crohn’s disease and ulcerative colitis. For the first six months after my injury, reducing inflammation in my brain and gut was a key goal of recovery. As a result, I was ultra-strict with adhering to the anti-inflammatory diet. Fast-forwarding to today, the anti-inflammatory diet still makes up the core of what I eat, but I’m not going to say no to the occasional ice cream or burger. You gotta enjoy life and follow a diet that’s sustainable over the long run! ### **Quitting alcohol and caffeine** While the literature on whether one can drink alcohol and caffeine after a TBI is mixed, I was advised by my doctor and TBI specialists to avoid both. In the case of alcohol, many TBI patients experience a spike in symptoms after having as little as one or two drinks. Alcohol also affects sleep, causes inflammation, and increases the chances of re-injury due to impaired coordination. Caffeine is another sleep culprit, although the bigger issue for me was that caffeine exacerbates nervous system issues, as increased adrenaline stimulates the body’s fight-or-flight response. I’ve long been aware that I have an addictive personality. I’d previously experimented with quitting alcohol and caffeine, so I thought “fuck it, why not” and decided to follow the doctors’ advice and completely avoid both substances. It’s now been over a year and a half since I last drank alcohol or caffeinated beverages, and I couldn’t be happier with my decision. Since giving up alcohol, I’ve absolutely loved getting up early on weekends and being hangover-free. I feel better and have more energy throughout the day, and also save a lot of money. Socializing while sober was tough at the start, but I’ve gotten used to it over time. Today, I’m generally very much at ease in social settings despite being fully sober. The increasing popularity of non-alcoholic beer and cocktails with 0.0% ABV makes it even easier. Caffeine has been slightly harder. Getting back to work was a tough jolt to the system, and the fatigue I was running into definitely made me miss drinking caffeine. Having said that, my energy has improved over time, and I can now work at a high-output level without needing any caffeine. I do miss a good matcha latte, though. 😢 ## **Other helpful frames** Beyond managing my energy and emotions, I’ve also realized how important of a role perspective plays. Being intentional with perspective-taking improves life satisfaction, while making it easier to undertake desired life changes. ### **Taking on something positive that you enjoy** The first few months after my accident were the toughest. I couldn’t play sports, work, listen to music, watch Netflix, travel, hang out with friends, and so on. It felt like I’d lost all the joy in my life, as I could no longer do most of the activities that I ordinarily loved. My lesson here is that when life goes south, you need to find at least one activity that brings positivity to your life. Having just one positive thing to look forward to can flip your perspective on life, even if everything else is completely fucked. ![Image from How a traumatic brain injury made me a better PM—and person](https://substack-post-media.s3.amazonaws.com/public/images/35e492f7-f8d7-456e-a799-4380ff253919_1200x846.png) #### **Meditation** Initially when I couldn’t do anything else, meditation was my savior. I’d been meditating on and off for a decade and had always wanted to go much deeper into the practice. In this sense, my injury was a blessing, as I had months on end where I couldn’t do much else. It just so happened that meditation was also beneficial to my recovery. For the longest time, I’d wanted to do a meditation retreat but couldn’t find the time to prioritize it. After my injury, I had nothing but time. A few months into my recovery, I mustered up the courage to go on my first seven-day silent Vipassana retreat at Spirit Rock, a well-known meditation center in Northern California. I had such a blast that I went on another silent retreat at Spirit Rock just two months after my first! Because I was finally able to go deeper on meditation, the feeling of months going by where I did “nothing” no longer felt like wasted time. Instead, it began to feel like a unique opportunity to pursue a lifelong passion. #### **Writing** Another long-term unfulfilled desire had been to start writing online in some capacity. I’d just never found the time or the right moment to get started. As I slowly increased my screen time tolerance, my doctor told me to take on more cognitively challenging tasks to prepare myself for eventually going back to a full-time job. After initial hesitation, I started writing about my injury and recovery on a blog. As my recovery progressed and I started to think about returning to work, I switched over to writing about recent product and experiment launches. This slowly evolved into [Time to Ship](https://www.timetoship.co/), a short-form daily digest where I recap the latest features shipped by product teams. Writing has brought me immense joy and satisfaction, and mind-blowingly, the newsletter is now read by thousands of PMs around the world! If you’re feeling like you’re in a bit of a rut or that you’re not getting enough joy in life, I’d encourage you to think about what you can take on that you feel excited and motivated by. ### **Taking a wider perspective** They say that success rarely looks linear, and instead more closely resembles a squiggly chaotic line that goes all over the place before eventually heading up and to the right (in the ideal world). ![Image from How a traumatic brain injury made me a better PM—and person](https://substack-post-media.s3.amazonaws.com/public/images/5e467463-280f-480c-b26a-af411abad95a_1600x1031.png) My recovery process was a squiggly line in every regard. So many times, just when things were starting to get better, I’d have a major setback and feel like I lost months of progress. To say this was demoralizing would be the understatement of the year. In these moments, it was very difficult to not lose hope, as the “I’m never going to get better” narrative would take hold. During one of these setbacks, my therapist asked me an important question. “How wide is your frame of reference?” When suffering from strong and painful symptoms, I often defaulted to a very narrow view of my recovery. What I would miss was that even if the preceding days or weeks had not been great, if I zoomed out to take a wider frame of reference, it was clear that the overall trend line was positive. Learning to take a wider frame was extremely helpful when the going got tough, and this principle has strong applicability in a broader life context. Let’s say you’ve been hard at work on a project or improving some aspect of yourself. If the goal is lofty enough, you’ll inevitably run into major obstacles. You’ll feel like you’re hitting a wall and question whether you’ll ever reach your goal. Zooming out and taking a wider frame of reference is helpful in a bi-directional way. Looking at progress over months and years instead of days and weeks may help you realize that in fact you are progressing, and that it makes sense to stay the course. ![Image from How a traumatic brain injury made me a better PM—and person](https://substack-post-media.s3.amazonaws.com/public/images/3e278799-0e1c-40ce-be45-5347b012d7f1_725x448.png) However, the converse is also true here. After zooming out and taking a multi-year view, you might realize that you’ve gotten stuck and aren’t progressing as quickly as you’d like. This can act as a wakeup call to start taking stronger actions to make a difficult change. ## **A new lease on life** It’s been a tough ride, to say the least, but I’m immensely grateful for my TBI journey. There was no escaping my situation, and being forced to face my challenges head-on has left me with knowledge that has significantly improved the quality of my personal and professional life. I’m thankfully continuing to get better and better over time. Last month I went scuba diving in the Great Barrier Reef, and in December I’m flying to Nepal to do Everest Base Camp. In true growth PM fashion, I also successfully converted my girlfriend to fiancée! ![Image from How a traumatic brain injury made me a better PM—and person](https://substack-post-media.s3.amazonaws.com/public/images/8d606484-6bf2-4c1d-9c9c-f7d92d1fc528_1200x1600.png) All of us will experience a major decline in health at some point. That’s life, until the day we’re no longer here. However, we can maximize the probability of staying healthy over the long run by maintaining positive habits and lifestyle choices. Working hard is undoubtedly important, but it’s also critical to do whatever you can to reduce the physical and emotional load caused by an ambitious career. I consider myself fortunate to have experienced firsthand what it’s like to be disabled for an extended period of time, and I now have a much deeper appreciation of just how awesome life is when you have great health. Do not take it for granted. *Thank you, Amol, for sharing this story with us. For more from Amol, follow him on [LinkedIn](https://www.linkedin.com/in/amolavasare/) and [Twitter](https://twitter.com/theamolavasare), and check out his newsletter [Time to Ship](https://www.timetoship.co/), a daily digest of the latest features shipped by your favorite product teams.* *Finally, here’s a handy checklist of all of Amol’s lessons:* ![Image from How a traumatic brain injury made me a better PM—and person](https://substack-post-media.s3.amazonaws.com/public/images/5986b10d-565a-4abc-ab79-8fc9cecd07af_1545x2000.png) *Have a fulfilling and productive week 🙏* **If you find this newsletter valuable, share it with a friend, and consider subscribing if you haven’t already. Check out [group discounts](https://www.lennysnewsletter.com/subscribe?group=true) and [gift options](https://www.lennysnewsletter.com/subscribe?gift=true).** Sincerely, Lenny 👋 --- ## [22/51] The unconventional Palantir principles that catalyzed a generation of startups Next in my special paternity-leave guest series, I’m excited to bring you an incredible post by [Adam Judelson](https://www.linkedin.com/in/adam-judelson-25441583/). Adam spent seven years at Palantir, where he led product for their flagship Gotham data platform. Below, Adam shares his most lasting lessons from his time at Palantir. After Palantir, Adam went on to lead product at [Slingshot Aerospace](https://slingshotaerospace.com/), built a startup for [Deloitte](https://www2.deloitte.com/us/en.html), and then served as president at [mePrism](https://meprism.com/), where he grew their data privacy marketplace from zero to 100 million data points protected. Adam is also a two-time founder and advisor to businesses ranging from scrappy drone startups to space and satellite companies to large private-equity-backed firms. These days, he runs [First Principles](https://www.firstprinciples.la/), a product agency focused on helping companies achieve their world-changing visions. You can find Adam on [LinkedIn](https://www.linkedin.com/in/adam-Judelson/) and [Twitter](https://twitter.com/Ajuggles), and definitely check out his [Product Principles newsletter](https://judelson.substack.com/), where he shares lessons from the best emerging tech product leaders. ![Image from The unconventional Palantir principles that catalyzed a generation of startups](https://substack-post-media.s3.amazonaws.com/public/images/675a4f4a-add1-49c1-b6ae-b8910654b082_8000x4000.png) The CTO of Palantir Technologies, Shyam Sankar, in April 2023 testified before the U.S. Senate that “we must spend at least 5% of our [defense] budget on capabilities that will terrify our adversaries.” Shyam and CEO Alex Karp’s unwavering commitment to strengthening our country motivated me to resign from the civil service and permanently defer attending a top law school so I could join what was then Palantir’s small band of engineering mavericks. Our mission was simple: revolutionize the way the world’s largest and most important organizations answer their hardest questions. Fast-forward a decade, and Palantir is a public company whose alumni have gone on to build nine unicorns, from Anduril to Handshake to Amplitude, and over 100 additional venture-backed companies.[1](#footnote-1) At Palantir, we didn’t believe in heavy processes, because we felt that formulas and playbooks tacitly give people permission to stop thinking for themselves. Nonetheless, as I reflect on the experiences we had together and as I now partner with new startups looking to learn from Palantir’s experience, I feel compelled to compile and share my unofficial list of learnings.[2](#footnote-2) While the company has at times been a lightning rod for public speculation, the secrecy and misinformation surrounding its missions often prevent the amazing product lessons it forged from spreading the way they deserve. Not every lesson will work for every startup or innovation team, but I hope these ideas will catalyze others to consider unconventional approaches to doing the impossible and encourage the creation of more world-changing technologies. ## A playbook of first principles: To disrupt an industry. . . ### 1. Forward-deploy your engineering Product thought leaders tend to extol the value of talking to users, but most are barely scratching the surface. At Palantir, one of the largest teams was called Forward Deployed Engineering.[3](#footnote-3) This is the team I joined when I first got hired, and we were responsible for making our early product live up to the vision. Our main goal was creating product solutions for issues blocking customer adoption, or that could unlock new growth. The golden nugget in this philosophy is that you don’t worry about how to ask users the right questions or obsess over “interviewing” them. Instead, you are literally there, in the shit with them, getting involved in what is happening. In the early days at Palantir, this meant flying to war zones carrying a bunch of laptops to where U.S. forces actually engaged the enemy. In a commercial context, it didn’t mean jumping on the phone with the fraud specialists at a major bank. It meant going and spending the next three months in customer operations centers, working the same leads as the customer. Anduril, where many Palantir alumni have gone next, continues a similar practice, and I’ve met numerous excellent PMs who work this way even when it’s not a part of the company culture.[4](#footnote-4) ![Image from The unconventional Palantir principles that catalyzed a generation of startups](https://substack-post-media.s3.amazonaws.com/public/images/ed6d9a84-d3c3-4583-8543-326c2bd3cce2_1519x1133.png) It’s not just getting downrange that matters. You have to *be* the user to unlock this concept. I don’t mean that spiritually as in “think like the user”; I mean literally do their same job with your product as an extended member of their team and see what you learn. You don’t embed for 20 minutes, either. A lot of the real aha moments come after you’ve been in the customer’s shoes for an extended period of time. Work with your product long enough that the customer is impressed that you’ve accomplished something real for their business that they couldn’t. In the early days of one of our most successful engagements that led to an over $100 million deal, the customer had no users of our product for the first 6 to 12 months. We formed a small team that was given direct access, integrated their data into our existing product, built prototype solutions for the unique problems this engagement taught us about, and then performed the analysis and briefed it directly to a top worldwide CEO. ![Image from The unconventional Palantir principles that catalyzed a generation of startups](https://substack-post-media.s3.amazonaws.com/public/images/c1262f59-8573-4e5a-b939-edc49aed600a_1200x1600.png) Some financial market analysts have judged Palantir harshly for this sort of embedded dedication, attempting to cast the company as a services organization or consultancy. They completely miss the point that this process is how to learn which problems matter the most and how to build compelling solutions; it is not a permanent state but rather a tool for the vanguard as it approaches a new use case. Further, when innovating in emerging technology applications, often the customer doesn’t yet have a conceptualization of how they will work in the future, so by being one of them, you can establish the first patterns for doing that work excellently. Instead of spending years iterating based on a loose understanding of the customer, we completely understood what mattered and executed immediately, driving real value an order of magnitude faster with superior results. **Lessons:** 1. Go fully inside the customer’s environment. 2. Don’t just empathize with the user; be the user. 3. Do real customer work long enough to have full empathy and inspire. ![Image from The unconventional Palantir principles that catalyzed a generation of startups](https://substack-post-media.s3.amazonaws.com/public/images/f6745208-c88f-40dd-937c-3333546a5a99_569x328.png) ### 2. Hire the ~~best~~ absolute greatest people who exist Everyone says “talent is everything” and “it’s all about the people,” but many executives who I’ve encountered have never worked with the absolute best on the planet. As a result, it’s not obvious to them when they have hired someone who is decent, pretty good, or even downright average. Just because someone saves your butt doesn’t mean they are “amazing” or a “rock star.” Sure, we say that and are appreciative, but that’s not what we mean. We aren’t talking about “the top 1%.” We are talking about the literal one best person for the job who exists on Planet Earth. I cannot stress this difference enough. FAANG companies are the backup plan for this cohort. Early in our days engaging with military customers at Palantir, we hired directly from special forces, for example ex-Navy SEALs. The SEALs are the créme de la crémein a military context*,* but we didn’t stop there. We hired some of the most decorated and well-known Navy SEAL commanders alive today. I distinctly recall telling customers who I was bringing to the meetings, and people who had never met either of us would instantly know that individual’s reputation and nickname, and what he was known for. Last year, a space and AI startup I was advising set a great example for this lesson. They wanted to build a first-of-its-kind satellite fabrication facility. The person they hired for the job is an engineer who has built more satellites that are in the sky today than any other human. That’s hiring the absolute best. Hiring this way is crucial for two reasons. First, the best are, well, better, at the specific work they’ve been asked to tackle. But the less-understood reason why this is so high-leverage is because the world opens doors for people at the very top of their respective fields. The best AI engineers in the world, for example, attract media attention, top VC attention, and top founder attention. As a result, they are better connected and have disproportionately more access to the other best people in the world. This accelerates their learning and dramatically improves their ability to make the impossible happen. The difference between the #1 and the #50 in the world in terms of skills is practically indistinguishable, but as a result of being #1, that individual likely has access to an order of magnitude more knowledge, opportunity, and talent. This problem cascades down the organization through hiring generations, which is one of the reasons why the best startups are orders of magnitude better than the next tier down. ![Image from The unconventional Palantir principles that catalyzed a generation of startups](https://substack-post-media.s3.amazonaws.com/public/images/a1fe2264-f9bd-403e-ab46-af9fbddaedb3_1600x942.png) > Prof. Lambeau: “You’re right, Will. I can’t do this proof. But you can, and when it comes to that, it’s only about. . . **it’s just a handful of people in the world who can tell the difference between you and me**. But I’m one of them.” > > —*Good Will Hunting*, 1997 But the top people aren’t always obvious or famous, so that cannot be our only means for identifying them. One of my favorite new startups is [Quindar Space](https://www.quindar.space/). The Quindar team is easily one of the best teams in the world for the problem they are solving. They focus on every piece of software technology required for satellite spaceflight that is not directly a part of the satellite—for example, software for determining when to maneuver, tracking onboard issues, and finding ground stations on Earth that satellites can beam data down to. The founders all built this type of software together at multiple prolific satellite companies, including OneWeb (the company with the second-most satellites in orbit after SpaceX), before they became founders at Quindar. Almost no one has more experience or skill in standing up these systems, giving them an enormous advantage. Sometimes these individuals are well known and other times they have been buried in a bureaucracy, and sometimes they don’t even know that they are the world’s best at a particular problem. **Lessons:** 1. For each discipline on the critical path to success, hire the world’s #1. 2. To be sure, ask others in the community if those people are the best. 3. Look in unexpected places for the talent—it’s the experience, not the fame. ### 3. Hire no salespeople—instead have engineers do sales At Palantir we broke most business rules. Not for the sake of it, but because we valued thinking from first principles, or the art of getting to the core of what is true multiple layers beneath the surface of the problem. For example, one of our most controversial early decisions was to put people like me and engineers in front of customers, instead of a formal sales team.[5](#footnote-5) Why exactly is a salesperson necessary to sell a product? Is that the best way to handle the situation? Sometimes it is, but for a complex mission-driven sale, we realized that we could disrupt the old model in a positive way. Instead of forcing our government customers into opportunistic pitches from professional relationship brokers, we could put former operators and engineers in the room instead. As a result, we could speak intelligently about the mission and our product from firsthand experience. We didn’t try to hide the skeletons or answer questions “the right way.” Rather, we spoke to our clients like normal people would. Without formal sales training, we were forced to find ways to create value in sales settings and not waste time. Put in the extreme, if what you are building is incredibly compelling, and if someone truly wants to buy it, then the customer doesn’t require a person with a sales background to ask closing questions to scope the engagement and deliver the product. ![Image from The unconventional Palantir principles that catalyzed a generation of startups](https://substack-post-media.s3.amazonaws.com/public/images/c3aabeea-7e7f-4bfb-add4-70f9150d944f_640x480.png) I was shocked when, fresh out of working in government, I was told to take point on all inbound sales inquiries through the Palantir website while simultaneously taking responsibility for some of our earliest customer engagements. The demanding customer implementation schedule meant that time spent “doing sales” was time I couldn’t spend working on the missions that compelled me to join Palantir in the first place. Potential customers and partners didn’t get true attention from me unless I personally believed that we could help them achieve something meaningful for the mission. Instead of golf, steak dinners, and boxes at sporting events (which aren’t allowed in government contracting anyway), I would ask questions to partners like, “How will you make *your* money on this?” and to prospects, “How fast can you get us integrated into your mission so we can have an impact?” It’s exceedingly difficult to get that sort of authentic motivation and customer connection out of traditional sales teams that are incentivized by commissions and who come from backgrounds in sales rather than the work itself. **Lessons:** 1. Evaluate who the customer needs to hear from to believe, and put those people in the right places at the right times. 2. Delay hiring professional salespeople for as long as possible. ### 4. Experimenting with live products I’m going to make just about every single well-trained product person grumble here. For anyone who learned product formally, you learned to experiment cheaply, meaning not with expensive engineering time and code. We’re supposed to use designs, value tests, landing pages, and all sorts of other lightweight methods to measure the value of a product *before* we build it. Well, at Palantir, we often used working products as the iterative units of value. When we learned about new customer needs, we didn’t spend a lot of time standing back and designing product experiments or running extensive discovery sprints. We designed and built instead. Then we shared with customers. Then we’d subtract and add and build again, and then we’d share again, and so forth. We did full-scale product iteration with real working code. To supercharge velocity, we sent our designers forward too, and generally worked in daily cycles. ![Image from The unconventional Palantir principles that catalyzed a generation of startups](https://substack-post-media.s3.amazonaws.com/public/images/74f512ba-0dc3-4bbe-a748-96a01c4ff8e7_800x600.png) I won’t belabor the disadvantages of this style, as they are pretty obvious (wasting lots of time and money on code no one uses), but the advantages when it works are so powerful as to be nearly unfair. For starters, to customers it is magical to see their feedback incorporated into the product nearly instantaneously. This creates insanely strong advocates. Perhaps more importantly, though, it takes the guesswork out of trying to understand if users will care. If they don’t care, they won’t use the product, and you’ll know that immediately. That’s a clear signal to go back to the drawing board. If they do care, they will use the new features and create tons of value with them in less time than it takes typical product teams to review feedback, much less build something. There is also nothing lost in translating their desire into a product—you can be entirely clear with them about how you are solving their problem, and they can be entirely clear on what they are getting. This creates a huge amount of trust and avoids the mental gymnastics sometimes required to test difficult assumptions, especially with hard-to-reach users. This is not something that only Palantir can do; however, it is something that only teams with *very* *strong* engineers can do. Teams without engineers who can make serious, meaningful improvements to products in less than 24 hours should skip this strategy and focus on delivering validated product solutions as quickly as they can using traditional discovery and validation techniques. Effectively, what we did that was novel was to use skill and experience to make writing code cheaper than typical teams can run most experiments. Particularly in the earlier days, when running frequent experiments in secure facilities would have been extremely difficult because of how few users we could access in these rarified environments, this worked great. **Lessons:** 1. Consider using working products to iterate with users instead of designs and concepts. 2. Acknowledge that most of what you show won’t have value, but what value is there will grow rapidly if you focus. 3. Honestly assess who in your company has the skill to participate in this model, and do not impose it on everyone. 4. Keep using traditional discovery and validation techniques for high-risk endeavors, but consider blending working prototypes more frequently in the mix. ### 5. Build features that magnify value over time We want to solve customer problems, but we also want to solve them in ways whereby the next user or customer is better off because of what the first user did. This can manifest as (1) a growing data asset, for example more valuable records or an increasingly well-trained machine learning model, or (2) network effects from user and customer interactions with one another. At Palantir, we focused on both. One key value proposition in our Gotham platform was its ability to find unknown connections across large data sets, for example between a terrorist financier and a bomb builder. Finding and disrupting a connection like this can save lives. The system already integrated key data sources, but before AI could “read” well, computers were horrible at identifying these sorts of connections in textual reports written about suspects. One of our stickiest features addressed this challenge: we called it “tagging.” If you read a document that said that John Smith was a terrorist suspect using the telephone number “123-456-7890,” you could select that text and effectively write it back to the system as a new structured entity. This information, part of the growing data asset, would then link to the other existing structured records. The next user would find evidence of John Smith, see the source referencing him as a suspect, and then easily surface connections through that telephone number, without having to first read the report. If the system previously had a billion records that made it compelling to users, it now had a billion and one, plus possibly dozens of new, unexplored connections. Further, users could leave their own analytic remarks after pouring hours into an investigation, helping the next user start from the last user’s end point. Now imagine one organization with thousands of users each tagging and commenting thousands of times per year. As each user contributes more to the data asset and interacts within the network of each other’s content, the entire product’s value grows at a rate higher than the linear growth in users because more value exists than in the previous generation. [Peregrine](https://peregrine.io/), another Palantir-alumni-founded company, nails this same concept. They focus on helping public safety organizations collaborate on real-time information. One of their compounding value features is the ability for different public safety organizations to form software-defined sharing arrangements, where authorized records can be shared without requiring someone to pick up the phone first. Agencies can share a living report with organizations that have the right to access the data but who aren’t customers, and through this pathway, the new agency can see an easy pathway to joining the collective. When they do, the sharing becomes even more compelling for the original members, increasing product stickiness for all. To build features like these, you don’t need to solve different problems than your product is already solving—you simply need to put more thought into how to solve them in ways that draw in or add value for others. [Repl.it](https://repl.it/) does a great job here too, in that each new public template coding project can act as a starter project for a new or existing user to build upon, drawing in people who might not have gotten started if they had to begin with a blank screen. ![Image from The unconventional Palantir principles that catalyzed a generation of startups](https://substack-post-media.s3.amazonaws.com/public/images/7c12336e-e58e-4afc-8ed7-0c9f2993ca9c_1024x768.png) **Lessons:** 1. Identify ways to solve problems in the product that increase value over time for the nth user. 2. Supercharge those cycles by streamlining usability, and call attention to them with new users. ### 6. Don’t build a PM organization too early How could anyone possibly build a product company without a product team? As a product coach and fractional CPO, I get a lot of blank stares from CEOs when I sometimes advise them not to replace me with a full-time CPO. Here’s what’s going on: at its core, doing great product work is about surfacing great problems to solve and great solutions for those problems. The more people in a company who are responsible for product, the more this information has to play telephone, going from the customer to the CPO to the product manager to the CEO and back. These communication and customer-sensing pathways are already lossy—lossy in fidelity about the actual customer’s needs, lossy in terms of holding the founder’s vision across team members, and lossy in terms of how easily the best engineering ideas get applied to the problems, and so on. We didn’t use traditional titles when building Palantir, but the company’s first chief product officer was a brilliant engineer who ran product for a decade and never had a product title. However, make no mistake, startups cannot succeed without people working to fulfill the responsibilities of product (finding value, experimenting, building, aligning, making it work for the business, etc.), but centralizing that responsibility under a single person isn’t a necessary condition for success. Many Palantir product initiatives were run by people who would later become formal product leaders, founders, and CPOs in their next gig, but few were formally called that inside Palantir, at least not in the early days. A reductionist summary of our approach could be “Put the best engineers in front of people experiencing the problems, and magic will happen.” No product people needed. Of course, what I now appreciate is that those engineers were in fact acting at least part-time as product people. For example, they were showing up in the right places at the right times because of savvy product discovery work that we didn’t have a good name for. My practical guidance for startups and innovation teams is to be cautious when adding a first product role. Adding a product manager who isn’t tethered to value or, worse, a scrum master, product owner, or project manager masquerading as a product manager, not only isn’t guaranteed to accelerate your journey but might actually stall it.[6](#footnote-6) As the founder with the vision, you’re often better off getting some coaching on product in the early phases than delegating this responsibility, at least until after you’ve achieved product-market fit. If your product is successfully gaining user and monetary traction without a product person, you can probably forgo one until you hit a scale crunch point, but if those pathways are lagging, you either need product coaching or a strong, value-driven product person. I find that this leaner model more commonly adds efficiency in emerging technology companies, where the technical bar for understanding the problem is sufficiently high that those lossy communications problems are magnified, but this guidance can apply to any venture in any industry working on any problem set. **Lessons:** 1. Empower people to do the work of product, but don’t feel compelled to have a product organization in the early days. 2. Be possessive of the CPO role, but don’t pretend you know how to do it just because you are the founder. 3. Put great engineers (and other creative disciplines and experts) as close as possible to the actual problems, and make space for something great to happen. 4. Where product is already working organically, don’t insert more product people to have a neater organization chart. ### 7. Solve the hardest problems first People are obsessed with low-hanging fruit. Solving for these was not the Palantir way. The Palantir way was to find the biggest, hairiest, and most difficult problems facing a major organization or industry and work hard on those. We literally worked on problems like finding the next terrorist and where to drill for oil. Perhaps the part of being a Palantir alumnus that makes me the most proud is that almost every company emerging from our network is focused on extremely difficult, world-changing problems. A good litmus test is as follows: if the problem you are solving doesn’t show up in the news or annual report, then it’s probably not a big enough challenge. “Impossible” challenges are opportunities in disguise. Each “unsolvable” problem you can solve becomes intellectual property that separates you from your competition and helps you establish a market of your own. When Congress publicly demanded[7](#footnote-7) after 9/11 that the U.S. Intelligence Community find ways to share sensitive data across agencies while protecting civil liberties, Palantir built Nexus Peering.[8](#footnote-8) The capability was a first-of-its-kind product that prioritized multi-directional sharing from one organization to another without divulging sensitive sources or neglecting the audit trail. ![Image from The unconventional Palantir principles that catalyzed a generation of startups](https://substack-post-media.s3.amazonaws.com/public/images/e6e9c3b0-a7e0-4364-a681-9b625b5e1f03_1600x1200.png) Palantir CEO Alex Karp has frequently argued that society doesn’t have to make a choice between doing good and doing well. He is an inspiration, and part of what I learned from him is that it is good business to solve missions first. Palantir didn’t employ any sort of SaaS-style upsell mechanisms or psychological tricks to gain customer attention. We didn’t spend months or years obsessing over every piece of our customer funnel. The reason is that we were always laser-focused on mission value and hiring people who cared more about solving for those missions than money. We learned early and often that the most important piece of customer engagement is first the impact it has and then the access it affords product to the real problems, which then drives more impact. Once access is established, the product can create value. Once value for the mission is proven, contracts are easy to close, and you get growth. In every company I have advised or worked for since, it’s painfully obvious when this mission and value chain is reversed. Those companies try to push sales and their way of thinking onto customers, who react like someone who wants to leave a blind date as early as possible. ![Image from The unconventional Palantir principles that catalyzed a generation of startups](https://substack-post-media.s3.amazonaws.com/public/images/125da181-c6b4-481d-beb4-aa59a1ee97b1_1024x768.png) **Lessons:** 1. Embrace the hardest problems in your market. 2. Actively say no to solving the easy ones. Let someone else handle them. 3. Put your customer’s mission and your product vision first. 4. Generate product wins, and then get paid. ## Closing thoughts As with any guidance, it’s important for each reader to decide if and when each of these ideas will work in your situation. I learned a lot that was unconventional at Palantir, and in the years since, I’ve gained much perspective on which of these concepts worked well for us and which did not. Palantir is a hugely valuable (and likely dramatically undervalued) company, but it’s also true that each of these concepts worked as both an innovative plan to be emulated and also at times as challenges to overcome. I want you to be armed with these tools, but also the ability to recognize that each of them must come with balance and be used in the right circumstances. They are phase-driven and environment-driven. When well understood, they can make a company generationally powerful in shaping its environment and driving positive impact in the world. *Thank you, Adam! For more, find Adam on [LinkedIn](https://www.linkedin.com/in/adam-Judelson/) and [Twitter](https://twitter.com/Ajuggles), and check out his [Product Principles newsletter](https://judelson.substack.com/).* *Have a fulfilling and productive week 🙏* **If you find this newsletter valuable, share it with a friend, and consider subscribing if you haven’t already. Check out [group discounts](https://www.lennysnewsletter.com/subscribe?group=true) and [gift options](https://www.lennysnewsletter.com/subscribe?gift=true).** Sincerely, Lenny 👋 [1](#footnote-anchor-1) https://www.protocol.com/newsletters/pipeline/palantir-pack-mafia and https://seekingalpha.com/article/4601938-why-palantir-is-my-top-holding [2](#footnote-anchor-2) These are my views about what made Palantir tick, and my views alone. Palantir did not review any drafts, nor was it involved in the production of this article. [3](#footnote-anchor-3) To learn more about the role of a Forward Deployed Engineer, see https://blog.palantir.com/a-day-in-the-life-of-a-palantir-forward-deployed-software-engineer-45ef2de257b1 [4](#footnote-anchor-4) https://blog.anduril.com/the-problem-solver-lindsay-trice-85c4fdb6437d [5](#footnote-anchor-5) https://www.nationalreview.com/the-agenda/ashlee-vance-palantir-reihan-salam/ [6](#footnote-anchor-6) For a detailed explanation of why these roles are almost always unhelpful, see Marty Cagan’s blog post: https://www.svpg.com/revenge-of-the-pmo/ [7](#footnote-anchor-7) https://thehill.com/news-by-subject/defense-homeland-security/99497-ten-years-after-9-11-report-details-gaps-in-intelligence-networks/ [8](#footnote-anchor-8) Palantir explains Nexus Peering: https://www.youtube.com/watch?v=IX55r1WhUWM --- ## [23/51] How to create an exceptional coverage plan for your parental leave This week’s very on-topic special paternity-leave guest post comes from [Tamara Hinckley](https://www.linkedin.com/in/tvhinckley/). Tamara is a product leader at Pinterest, and in her awesome newsletter, [Half Moon Hustle](https://halfmoonhustle.substack.com/), writes about women’s health, motherhood, and everything else that stresses out ambitious women. You can find Tamara on [LinkedIn](https://www.linkedin.com/in/tvhinckley/), and for more, definitely [check out her newsletter](https://halfmoonhustle.substack.com/). Enjoy! ![Image from How to create an exceptional coverage plan for your parental leave](https://substack-post-media.s3.amazonaws.com/public/images/dd04cc61-e30f-445c-95de-0268f336b8ee_8000x4000.png) Imagine that you’re snuggling with your precious newborn while he or she is napping in your arms. Suddenly your phone rings, waking the baby. It’s your manager, asking you a question about a project at work. Don’t let this be you! If you or your partner is expecting a baby and you plan to take extended leave (more than a few weeks), you’ll need to put together a thorough coverage plan. A solid coverage plan will help you: 1. Focus completely on your family without unexpected disturbances 2. Minimize business disruptions by maintaining continuity for your projects 3. Build and maintain relationship capital with your manager, peers, and the broader team When I was pregnant with my first child, I was grateful that my company offered a generous parental leave. I knew I needed to write a coverage plan, but I didn’t know where to start. When I realized there were no templates available, I did a lot of research and [created my own](https://docs.google.com/document/d/1exzxuP_SvI_HExQGt3uJkpQ6JJ49lx2Xb2TtvMjtoyk/edit#heading=h.5o9iuasufx3d). ![Image from How to create an exceptional coverage plan for your parental leave](https://substack-post-media.s3.amazonaws.com/public/images/990fa2dc-4894-4bb5-b760-afc4616224b5_1440x1352.png) Since taking leave myself, I’ve helped many people prepare for their own parental leave, including direct reports, peers, and other coworkers. Now people use my coverage plan as a reference across the company, referring to it as the “gold standard” in the product organization. Here’s a step-by-step playbook for creating an exceptional coverage plan for your parental leave. ### 1. Start early and socialize often Your coverage plan will require a lot of input, so start working on it at least a few months before you plan to be out. Then start socializing it early and aim to finish at least a month before the due date. Follow this suggested timeline to raise awareness and solicit feedback: - **T-minus 4 months:** Share the news with your manager sometime in the second trimester (suggestion: after the 20-week anatomy scan). Afterward, meet with your skip-level manager and tell them the news directly. - **T-minus 3 months:** Share a first draft of your coverage plan with your manager in the early third trimester so you have some time to iterate on it. You will likely make changes as things come up and evolve. - **T-minus 2 months:** Socialize the plan more broadly. Share the news and a revised draft with your team, peers, and others to see if you missed anything. Meet one-on-one with every person who is listed as a DRI (more on that in the next section) to get their buy-in and commitment. - **T-minus 1 month:** Finalize the plan and send it out to a wide distribution list of key stakeholders. Plan to be fully “done” 3-4 weeks before the due date. You can make final tweaks as you go, but be prepared in case the baby comes early. - **Due date:** Once you go out, set up an auto-response message on email and Slack with a link to your plan. Your communication strategy is critical for getting key stakeholders on board with the plan. Once you’ve finalized your coverage, don’t forget to tell people about the details to maximize impact. ### 2. Determine your parental leave timeline To start, contact HR to understand your company’s leave policy and what you are eligible for. If you’re the first person taking parental leave at your company, here is a great [resource](https://docs.google.com/spreadsheets/d/1ycmPpaeUXwYkkXpR_K8kvQF2wCJ4eFZFfejwy56qGg4/edit#gid=0) to help you advocate for the time you deserve. In the U.S., the [Family and Medical Leave Act](https://www.dol.gov/agencies/whd/fmla) allows employees to take up to 12 weeks of unpaid leave for pregnancy and bonding with a new child. Ranges vary widely based on industry (Netflix offers up to 52 weeks!) but typically average 16 weeks for secondary caregivers and 20 weeks for birthing parents. Once you understand your options, you can determine your timeline. Here are some questions to consider: - **Split or all at once?** For birthing parents, front-loading their leave tends to be more popular due to the physical recovery needed after birth. Some people stack their leave with their partner to maximize coverage (e.g. birthing parent takes first X months, then partner takes next Y months). If you have flexibility, consider whether there are particular times, like annual planning, when you’d benefit from being around to help shape major decisions. Regardless of how you split it up, my advice is to plan to take all the time you are eligible for. - **Start leave before the baby is born?** For birthing parents, some states will allow you to receive benefits for up to four weeks before the delivery date (see, for example, [California](https://edd.ca.gov/en/Disability/FAQ_DI_Pregnancy#:~:text=Without%20medical%20complications%3A%20You%20can,eight%20weeks%20after%20your%20delivery.)). If you are eligible for this leave, take it! If the baby comes early, you’ll be glad you were prepared. If not, you’ll have extra time to wrap things up before you go into “sleep deprivation with a newborn” mode. - **Phased transition or full return?** For most people, the transition back to work after becoming a parent is challenging. Some companies offer a phased transition (work X days per week for the first few weeks). If you have this option, take advantage of it so you can slowly ease back into things. If not, start your first day back on a Thursday so that your first week back is a short one! Ultimately, when deciding on your timeline, I encourage you to optimize for what is best for your family and then be super-clear about the dates you’ll be gone (see “Timeline” [here](https://docs.google.com/document/d/1exzxuP_SvI_HExQGt3uJkpQ6JJ49lx2Xb2TtvMjtoyk/edit#heading=h.vcmw9xy2gh6y)). ### 3. Outline a coverage plan This section is the heart of your coverage document (see “Coverage plan” [here](https://docs.google.com/document/d/1exzxuP_SvI_HExQGt3uJkpQ6JJ49lx2Xb2TtvMjtoyk/edit#heading=h.vcmw9xy2gh6y)). It should cover your primary responsibilities and who will serve as your proxy for each. Here are two ways to approach this: **Option 1: Bottom-up approach (works best for individual contributors)** - **Projects:** Start by creating a prioritized list of every project that you’re working on. Consider projects that might come up while you’re gone (for example, annual or quarterly planning, feature releases, etc.). Add the major outcomes that need to happen while you’re out. Make sure to highlight upcoming milestones, include key documents, and define what success looks like. Then choose one directly responsible individual (DRI) per project who can step up and lead the work in your absence (consider cross-functional partners like engineering managers and designers who are eager to step in). Align with that person on what specifically they’ll be covering for you (and thank them for their help!). - **Upcoming meetings:** Look through your calendar for the upcoming month and document all your recurring meetings (excluding 1:1s). If you lead the meeting, find people already in the meeting who can cover for you. Share how you run the meeting (e.g. what outcomes you are driving, who is in charge of the agenda). If you attend the meeting, decide whether you need to send a delegate in your place (sometimes you’ll realize you don’t get much value from the meeting and you can just skip it). - **Other:** Think about what else you do that will require coverage. Do you oversee a budget that requires managing approvals? Do you send out a recurring newsletter for your department? Incorporate these responsibilities into the plan. **Option 2: Top-down approach (works best for managers)** - **Area DRIs:** Create a list of major focus areas (3-5 maximum) and assign one DRI for each area (choose from your direct reports or peers). Provide context on specific projects, meetings, and other workstreams, but give each DRI full autonomy to handle any new decisions that come up in their area. - **De facto proxy (optional):** Designate one person as your de facto proxy (“Interim Product Lead”) to serve as the primary point of contact for your manager and your team. Ideally choose a senior member of your team who has held a similar role in the past or is eager for a challenge. List their high-level responsibilities (e.g. set goals for the team, serve as interim manager, liaise with the executive team), and clarify that he or she has final decision-making authority while you’re out. As you plan for coverage, consider in detail what needs to get done to deliver on the major outcomes you want to drive. Then identify one person for each project or focus area who is willing and able to cover in your absence. By breaking up your work into smaller chunks, you can distribute your responsibilities across multiple people without overwhelming any one person. Plus, you’ll give multiple people the opportunity to receive credit for the additional work they’ll take on, while maintaining continuity for your projects (a win-win for the business!). ### 4. Support your team If you’re a people manager, your job is to support and unblock your team. That’s hard to do if you’re not there, but it *is* possible if you get creative. Consider the additional set of responsibilities that will require coverage, and incorporate them into the “People management” section [here](https://docs.google.com/document/d/1exzxuP_SvI_HExQGt3uJkpQ6JJ49lx2Xb2TtvMjtoyk/edit#), if applicable. For example: - **If you have direct reports:** Confirm whether your manager is willing to provide guidance for your team while you’re out. Ask her/him to pre-commit to recurring 1:1 meetings (at least biweekly) and reiterate that they should prioritize these meetings. Train your direct reports on the best way to work with your manager (e.g. their preferred communication medium, working style, etc.). If this isn’t possible, or if you have more junior reports who require additional coaching, identify a mentor who can serve as a coach or sounding board on your behalf. - **If you have open roles:** Decide who will be in charge of hiring. Who will help screen candidates on your behalf? Will you have any say in final hiring decisions? Include your recruiting partner in the coverage plan as a key contact, and agree on how each aspect of the hiring process will be managed. - **If you’ll be out during a performance review cycle:** Write reviews for your team before you go out on leave (especially for anyone who you want to put up for promotion). Share them with your manager and HR before you go out, and incorporate any feedback. Decide if you want to be available for calibrations or whether your manager can represent you (preferred). As a manager, you’ll need to take some extra steps to set your team up for success while you’re gone. Find someone (ideally their skip level) who can serve as a mentor for each direct report. If relevant, create a system for how to continue hiring new team members, ideally without your involvement. ### 5. Don’t share your contact information broadly Now that you’ve identified coverage for yourself and your team, you can be strategic about who you share your contact information with. You get to decide who can get in touch with you, how, and for what reasons (see “Contact information” [here](https://docs.google.com/document/d/1exzxuP_SvI_HExQGt3uJkpQ6JJ49lx2Xb2TtvMjtoyk/edit#)). Tempted to be very available? It’s a trap! You don’t know what kind of experience you will have as a parent or what your child/family will need. You might require an extra stay in the hospital for yourself/partner or your baby. You may experience postpartum depression (which impacts both men and women) and not be in the right state of mind to make business decisions. Plan for very limited or no availability, especially for the first few weeks. When you are exhausted with a screaming baby in your hands, you’ll be glad you have one less thing to worry about. Here are two options for how to present your availability: 1. **[Preferred] Not available:** Your manager is the only person who has your personal phone number and email. You align up front with him or her about the types of things you want to be proactively notified about (performance reviews, changes to the organization, changes to your team scope and responsibilities). For everyone else, your policy is “I won’t be checking Slack or email. If you need to reach me while I’m out, reach out to my manager and they’ll contact me if needed.” Most people probably won’t reach out to your manager. 2. **Available upon request:** Share your contact methods in preference order—cell, work email, personal email. Assume that people probably won’t bug you, but they might. Once you set your availability, be sure to stick to it. Otherwise, it will be confusing for your team if you are available when you said you wouldn’t be. Also, DRIs will not be empowered or motivated to cover for you if they think you’re back early. P.S. Don’t feel guilty about being unavailable! You put all this work into a great coverage plan so that people wouldn’t need to get in touch with you. Stick to the plan. ### Bonus: Advocate for yourself If you’ll be out during a performance review cycle, don’t forget to advocate for yourself while you’re gone! This step is especially important if you’re up for promotion. Yes, you *can* get promoted while you’re out on leave (I’ve seen it happen multiple times for both men and women), if you follow these steps: - **Discuss your goals with your manager** for the upcoming review cycle. Are you hoping to get promoted? Are you asking for an increase in compensation or other benefits? Get specific about what you want, and don’t feel guilty about asking for what you deserve. Ask how you can help your manager make the case on your behalf. Meet with your skip level and reiterate the above. - **Write a detailed self-review** (do this in parallel with writing your coverage plan) that includes the outcomes you drove and the impact on the company’s goals. If you’re up for a promotion, you may need to prepare a promotion packet with additional information. Share the document with your manager and your skip level. Ask for their feedback and incorporate it. - **Choose peer reviewers** and ask them if they’re willing to provide feedback while you’re gone. Send them each a personalized document with the projects you worked on together, the impact you drove, and the type of feedback you’re looking for. Schedule-send an email to each of them, cc’ing your manager, reminding them to write your peer review, so everyone knows their responsibilities when the review cycle begins. Similarly, ask if any of your peers want feedback from you. If so, write their performance reviews before you go out and share those with their managers. If you’re out during a performance review cycle, don’t leave your evaluation to chance. Take the time to do this pre-work to maximize the chances of getting the recognition (and compensation!) that you deserve. ### Final words of wisdom Having a baby is a very exciting but also stressful time. The last thing you should worry about while you’re home with your child is what is happening at work. That’s why you need to create a thorough coverage plan before you go out on leave. To summarize: 1. Start preparing early so you can socialize the plan often with relevant stakeholders. 2. First, determine your timeline based on what is best for your family. 3. Next, outline interim coverage for all key projects, meetings, and other responsibilities. 4. If you are a people manager, consider what additional support for your team is required to set them up for success. 5. Finally, don’t share your contact information broadly if you can help it. 6. And don’t forget to advocate for yourself for when you’re away! By following this step-by-step playbook, you can create a stellar coverage plan for your parental leave and be better prepared for your return to work. Congratulations on becoming a parent, and I wish you the best of luck! ![Image from How to create an exceptional coverage plan for your parental leave](https://substack-post-media.s3.amazonaws.com/public/images/f8cec68e-e160-4f9c-8182-985914f8852c_1200x1600.png) *Thanks, Tamara! Have a fulfilling and productive week 🙏* **If you find this newsletter valuable, share it with a friend, and consider subscribing if you haven’t already. Check out [group discounts](https://www.lennysnewsletter.com/subscribe?group=true) and [gift options](https://www.lennysnewsletter.com/subscribe?gift=true).** Sincerely, Lenny 👋 --- ## [24/51] What 5 years at Reddit taught us about building for a highly opinionated user base For this week’s guest series, I’m excited to bring you an incredible post by [Evan Hamilton](https://www.linkedin.com/in/evanhamilton/) and [Tyler Swartz](https://twitter.com/tylerswartz), on a topic that is both timely and near and dear to my heart. While leading the Airbnb host team, I had to learn to deal with a highly vocal Airbnb host community while making constant changes to the product. Although Airbnb hosts aren’t as opinionated as Reddit users, their homes and livelihoods are on the line, so the stakes are high for them. I truly wish I’d had this guide then. Thank you, Evan and Tyler, for sharing your story. *[Evan Hamilton](https://www.linkedin.com/in/evanhamilton/) has been building community and customer experience teams for over 15 years at both consumer and B2B companies like HubSpot, UserVoice, and Reddit, where he was head of community. His happy place is creating win-win situations that lift up community members and drive business goals. Evan curates a newsletter, [Community Manager Breakfast](https://eepurl.com/c7sjOv), which includes three links about community building, delivered hot and fresh to your inbox every Monday.* *[Tyler Swartz](https://swartz.cc/) has a decade of product management experience, leading teams to create software loved by customers. His strength lies in connecting product and community, honed at Reddit, where he led a variety of teams over five years, including the safety team and content creation team. He is now building his own businesses, offering his community-building expertise to companies, and writing a weekly AI newsletter, [The AI Product Report](https://www.productreport.ai/), where he tests AI-powered products and curates the most interesting and innovative products launching each week. Be sure to subscribe to his newsletter.* ![Image from What 5 years at Reddit taught us about building for a highly opinionated user](https://substack-post-media.s3.amazonaws.com/public/images/95450eae-c585-47b3-826a-b557392162be_8000x4000.png) It was 2015, and nearly 200 million people were visiting Reddit.com each month. Nothing seemed to slow Reddit down—not even revenues so low that Reddit had to solicit users to purchase “Reddit Gold.” Then one day, everyone who landed on Reddit.com found hundreds of their favorite pages shut down: ![Image from What 5 years at Reddit taught us about building for a highly opinionated user](https://substack-post-media.s3.amazonaws.com/public/images/5eb75ca6-a528-498d-a236-fd266c0d1446_981x774.png) The moderators had gone on strike. Reddit had no idea what to do. In under a week, the CEO was ousted. Passionate customers are a double-edged sword. Founders and product leaders pray for product-market fit, strong word-of-mouth growth, and a supportive community. But founders often struggle when the community feels—and displays—intense, vocal ownership of the product. We both spent more than five years at Reddit, and through blood, sweat, and tears, we developed a framework that helped turn a sometimes combative relationship with users into a strong, productive partnership most of the time. At its best, when Reddit gets it right, it hits monthly visitor milestones. As we are seeing in the [recent news](https://www.platformer.news/p/reddit-goes-dark), maintaining the right balance with a highly opinionated user base takes continuous work. In this post, we’ll take you through four steps for building product with a highly opinionated user base: 1. Identify and measure your Trust Vault 2. Find the *right* customer voices to listen to 3. Take actual discussion *out* of the public square 4. Listen intently, act responsibly ## **1. Identify and measure your Trust Vault** At Reddit, we often heard alarmed product managers compare our angry users to petulant children. “Stop yelling,” they’d say. “Just act like adults!” In fact, they *were* acting like adults—specifically, parents whose fervent unconditional love can turn to burning rage when their children are threatened. Your team sees a product. The users see their baby. This mismatch between the parental and the professional means you are starting from a place of mistrust. Many of your most passionate customers suspect you’ll never care about the product as much as they do. This led us to the concept we call the Trust Vault—a metaphor for how much trust the customer base has in you. Your Trust Vault can be filled and it can be depleted. At Reddit we had multiple Trust Vaults: a company-level Trust Vault as well as Trust Vaults for individual teams or product managers. Just as you can’t ask parents not to love their kids, **you can’t ask passionate users not to love your product. Don’t try to destroy their passion. Instead, fill the Trust Vault and harness their passion productively.** One way to measure your Trust Vault is using the [Edelman Trust Barometer](https://www.edelman.com/trust/2023/trust-barometer), a survey that measures people’s trust in governments and major corporations. The two key questions in your survey should be: 1. “On a scale of 0 to 6, how much do you trust [your company] staff to do the right thing?” 2. “Why?” (Note: Plan your cadence of surveys carefully. While it’s useful to have a live view of how your trust is trending, oversending the survey can itself deplete trust! Once or twice a quarter is generally fine unless you’re dealing with rapid swings in trust.) The answers you get can help you plan and execute new product launches. If the trust score with a target audience is too low, you might decide to adjust your launch plans—perhaps even delay launching a potentially controversial product. ![Image from What 5 years at Reddit taught us about building for a highly opinionated user](https://substack-post-media.s3.amazonaws.com/public/images/2f355a7d-ae44-4a97-b441-409d923e339d_811x500.png) For example, at Reddit, if a product threatened to increase the day-to-day effort of moderators (e.g. introducing a new content type such as livestreaming) and the trust score for moderators had been trending downward, we might adjust our launch schedule, and even delay the launch until we had gotten a few Mod Experience Oriented Wins (MEOWs) . . . [yes, that’s a real acronym](https://www.reddit.com/r/modnews/comments/tt5rjw/april_mod_experience_product_update/). We knew that a few MEOWs would boost moderator trust and make it much easier to release a more controversial feature. ## **2. Find the** ***right*** **customer voices to listen to** Just because someone is loud doesn’t mean you should act on their complaints. You need to get good at identifying whom you should pay attention to. That starts with examining *who* is being loud. Often the loudest people don’t represent your general user base or your ideal customer profile. When Tyler first got to Reddit, he made the mistake of responding to the loudest voices, versus determining whether their complaints truly represented the majority of users. In one of his first roles, he was a product manager on Reddit’s big redesign—an overhaul of its desktop site, the first redesign of the Reddit UI in 13 years. To collect feedback from redditors on the new design, Tyler and his team used a special private subreddit for beta users. The plan was to use feedback from the beta community to iterate on the new design and then slowly roll out the design to all users once we felt it was in a good place. A couple months into beta testing, the team released some updates to the “hamburger” menu, which is how you opened a sidebar menu. Within days, some redditors complained that the sidebar was hard to navigate. Tyler and team decided to make changes based on the negative feedback and created a new dropdown navigation paradigm to replace the sidebar. ![Image from What 5 years at Reddit taught us about building for a highly opinionated user](https://substack-post-media.s3.amazonaws.com/public/images/1f96dabc-d71d-43c3-986b-02b8ffb36f74_1600x728.png) We felt stoked! We were iterating, moving fast, listening to our users. But our smiles faded as soon as we released the new design. Beta users posted negative comments far exceeding the original complaints about the sidebar. They demanded we bring the sidebar back. Where were all these people a few weeks earlier?! ![Image from What 5 years at Reddit taught us about building for a highly opinionated user](https://substack-post-media.s3.amazonaws.com/public/images/8231c695-46d7-4897-90a1-dc8427251949_748x263.png) This experience taught us a few important lessons. First, customers typically won’t go out of their way to tell you if a feature is useful or helps them do a task. They treat useful features like table stakes: they expect them, so they don’t think those features are worthy of comment. As a result, it can be hard to tell whether negative feedback represents the attitudes of most users. Second, when assessing user feedback, it’s important to consider two key factors: (1) whether the feedback represents a significant portion (10% or more) of your user base and (2) whether the users who are giving feedback can influence the opinions of other users. Examples of influential users at Reddit would include moderators of smaller women-focused communities, as the company aimed to expand its user base beyond the core demographic of young male gamers and programmers. ![Image from What 5 years at Reddit taught us about building for a highly opinionated user](https://substack-post-media.s3.amazonaws.com/public/images/0a782ffb-6f05-4214-9172-3b92b0af19c7_2000x2000.png) Third, if you decide to deprioritize a group’s feedback, make sure you help them understand why. For example, you might have a small but [passionate group of bakers](https://www.reddit.com/r/Breadit/) streaming on your livestream platform; helping them understand that you are primarily serving gamers will feel hard at first but avoid a lot of pain later. Often these groups don’t realize that their ideas don’t represent the whole user base. They may assume that most users feel more or less the same way they do. In brief, feedback comes in many forms and is not always vocalized. It’s crucial to analyze the representation and influence of those giving the feedback, and provide clear reasoning behind the decisions you make to ensure you don’t deplete your user’s trust. ## **3. Take actual discussion out of the public square** Perhaps the biggest thing we learned at Reddit is that the public square is not the place to have a nuanced product discussion. The trick is to form an advisory council—a group of passionate community representatives with whom you can discuss and ideate in a safe, private space. A private advisory council enables you to make the right product decisions and to set yourself up for success when you communicate with the larger audience. When the council is well chosen, its members become your early warning system, your shepherds, and your evangelists. And notably, they shouldn’t be yelling. An incident with a large sports subreddit made us realize we needed to form an advisory council. We were making changes to how “post” and “user flair” functioned (think: little icons on your username and next to your post title). Moderators of multiple sports subreddits posted public complaints about what we were doing. ![Image from What 5 years at Reddit taught us about building for a highly opinionated user](https://substack-post-media.s3.amazonaws.com/public/images/ad3c65d2-2827-4e4d-8170-b5377dc61548_734x325.png) The public back-and-forths didn’t promote any clarity or alignment, largely because the incentive in the public subreddit comment thread was to *win* the conversation. We took the discussion to a phone call. Both sides could then start seeing each other as human beings and focus on relevant details of the flair design without as much grandstanding. Yet the conversation was still derailed by a single moderator who dominated the call and spent most of the time berating the product manager and demanding that we roll back the entire project. Thankfully, another moderator from the call DM’d us later with constructive feedback and paths forward. That’s when it clicked: we needed to create a space that disincentivized winning and incentivized nuanced conversation, compromise, and collaboration. Shortly thereafter, we hosted the first Moderator Advisory Council call. Here are four essential components for creating a successful advisory council: #### **1. Assemble a representative group** This group should represent a broad cross-section of your user base: casual users, more serious users, minority groups, etc. Look for critical thinkers and strong communicators who won’t simply agree with you and who won’t be immovably stubborn. Including influential users within your customer base can be immensely helpful when pitching changes to a larger group. You can find these people on social media, in comments sections, and on idea forums. When you send out customer surveys, include a follow-up question—for example, “Can we contact you again if we have follow-ups?” Recruit thoughtful respondents from these results. You should aim to have a group large enough to have at least 10 people show up to your monthly council calls, but not so many that members are fighting to get a word in. At Reddit, this meant a group of roughly 80 people on a rolling basis. #### **2. Create a space and culture for reasonable discussion** Just because you have assembled a good group of people doesn’t mean they’re automatically going to behave. You need to build a culture in your council that rewards candid feedback and thoughtfulness. Create a code of conduct and enforce it consistently. Remind everyone why they’re there at the beginning of meetings and praise the desired behavior. Be sure to lead by example. [Evan has a more in-depth post on the topic here.](https://www.evanhamilton.com/building-a-strong-community-culture/) Where you host these conversations will probably have more to do with your bandwidth. Live conversations tend to have the most clarity, but depending on the volume of items you’re launching, you may want to consider a forum or chat room in addition. Whatever space you choose, set expectations about your engagement in the space, and hold up your end of the bargain. At Reddit we had a private subreddit for async conversations *and* hosted regular calls with council members. #### **3. Build process and cadence for connecting** The earlier and more often you can consult this group, the better. Not only will this ensure that you have relevant feedback, it’ll also fill the Trust Vault and signal that you are taking them seriously. Ideally you are meeting with your council at least once a month; be sure to accommodate multiple time zones if you have a global audience. Ultimately, the cadence will depend on how involved they want to be and how frequently you are shipping. At times, we were doing more than one call a week! ![r/modnews - The Reddit Mod Council Year End Review | 2022](https://substack-post-media.s3.amazonaws.com/public/images/ef1f3dc4-dd35-434e-9284-84ec12b532dc_1015x733.png) When conducting meetings, make sure to be clear about where you are in the development process so that they know what type of feedback will be most helpful to you and the team. For example: - At conception: Does the idea resonate with them? - At design: Does this raise any alarm bells? - At beta: What gaps do they find once they try it? - At launch prep: Make sure they know that it’s coming and how you’ve acted on their feedback #### **4. Cycle them out** To keep your group fresh, avoid having an advisory council with a fixed membership. A fixed membership can invest too few people with too much power; it can also leave you vulnerable to decision-making blind spots, since the people on the council might not adequately reflect the viewpoints of the larger group they represent. Finally, it can create a culture that disincentivizes candid feedback because members of the council are comfortable with your staff. To overcome these problems, we suggest setting a 12-month tenure for most members and cycling them out at the end (with the option of one extension). Thank them for their service and maintain the relationship. ## **4. Listen, but act** The number one trap we see most companies fall into when they start an advisory program like this is that they fail to act on the feedback they receive. They see it as a checkbox to placate the crowd. Here’s the problem: if you ask someone to give you their precious time and feedback and then *don’t* act on it, you’re actually burning more trust than if you had never asked at all. So the golden rule of feedback is this: **Ask for feedback only if you’ll consider it.** #### **Have a system** Deciding what feedback to act on would be a whole post in and of itself, but at a high level, the best thing you can do is create a framework for filtering what you hear. Some feedback is well-intentioned rubbish. But even if the feedback has some great ideas, you’ll never have the bandwidth to build on all of them, nor will all of them be mission-critical. You have to think about the number of people that something affects. But at a big company like Reddit, you can’t think only about that, because even 10% of the user base is a huge number of people. Instead, you have to think about the depth of an effect in addition to its breadth. The following 2x2 matrix can help you think through some of the options here. Intuitively, things in the upper-right quadrant—ones that have a deep effect on a massive group—are top priorities: you should almost certainly do them. The home feed at Reddit is obviously a crucial space frequented by a massive number of people: upper right. By contrast, things in the lower-left quadrant—ones that have a shallow effect on a small group—are probably a no. We got frequent requests from the most hardcore of power users for folders to better manage their bookmarks—a feature that hardly anybody used in the first place: bottom left. ![Image from What 5 years at Reddit taught us about building for a highly opinionated user](https://substack-post-media.s3.amazonaws.com/public/images/71320aff-7989-4320-be38-774c6b190738_2000x2000.png) Then there are things in the upper-left and lower-right quadrants—ones that have a shallow effect on a large group, and ones that have a deep effect on a small group. The flair example earlier in this post was the quintessential Reddit tool that some subreddits, like r/stopdrinking, completely relied on and most never even used: bottom right. When it comes to these things, you should keep three considerations in mind. First, think of your Trust Vault. While they may not be mission-critical features or fixes, they will affect how the community overall feels about you, how much goodwill you have stored in your Trust Vault, and how much people are willing to contribute to your advisory council. Second, think of any larger organizational goals you have. You want to delight your existing customers, so maintaining your Trust Vault is essential. But you should also consider future potential customers—new audiences you want to attract. Third, your advisory council should play an important role in your decision-making—not a solo role, but an important one. Balance is key. #### **Say no** It may seem scary, but part of building up the Trust Vault is being transparent with your audience, even when you have tough news to share. Explaining that you’re not acting on a piece of feedback—and, crucially, *why* you’re not—may be painful in the moment, but it will build long-term trust. Here’s an example of us saying no. In 2020, Tyler and the team launched [multi-image gallery posts](https://www.reddit.com/r/announcements/comments/hrrh23/now_you_can_make_posts_with_multiple_images/), a much-requested feature that opened up a lot of creativity on Reddit. However, building a new post type was a massive undertaking. We had to change many platforms and APIs to support gallery creation and consumption in feeds, as well as moderator tooling and internal safety systems. The team frequently met with the advisory council throughout the multi-quarter development process to get feedback at each stage. Many moderators expressed concern about whether or not we would support “Old Reddit”—a web platform that many moderators fell in love with during Reddit’s early days. Old Reddit’s usage is low compared with mobile apps and the desktop site, but the people who use it are some of Reddit’s most vocal users. Moderators insisted that having galleries on Old Reddit was imperative. The advisory council calls helped us understand the underlying reasons for their concerns. We broke those concerns into three categories: - **Creation:** Creating galleries was unlikely to be conducted by many Old Reddit users, who preferred text posts. - **Consumption:** Despite there being few Old Reddit users, an inability to view a gallery post on Old Reddit would essentially break their browsing experience. - **Moderation:** Removing problematic gallery posts is important for a sense of safety, and requiring our volunteer moderators to use two platforms to moderate would be a big ask and deeply affect them. Plotted on the 2x2 matrix, they looked like this: ![Image from What 5 years at Reddit taught us about building for a highly opinionated user](https://substack-post-media.s3.amazonaws.com/public/images/67af5dc9-89b2-4a47-aa52-286b08e05169_2000x2000.png) Based on where these asks landed on this grid, we decided to provide only limited support for Old Reddit, offering a basic consumption experience so that the gallery could be viewed by users browsing a feed. Additionally, we gave moderators on Old Reddit basic moderation tools so they could view and moderate gallery posts that were reported. But we didn’t add any further functionality to this legacy platform. We followed up with the advisory council to explain our decision-making, as it was relatively easy for a user on Old Reddit to switch over to New Reddit to post a gallery if they so desired. All in all, the image gallery post feature has been successful and a net benefit to Reddit. Moderators appreciated the basic enhancements we made to Old Reddit to ensure their mod workflows remained usable. #### **Throw a bone** When we redesigned Reddit, we got many complaints about the “white space” from old-school users. They didn’t love the spacious, modern design of the new cards: ![Image from What 5 years at Reddit taught us about building for a highly opinionated user](https://substack-post-media.s3.amazonaws.com/public/images/50205dde-54cb-4b15-8826-eb3ebef4aa53_1298x1314.png) But there was no way we were going to subject new users to this old design: ![Image from What 5 years at Reddit taught us about building for a highly opinionated user](https://substack-post-media.s3.amazonaws.com/public/images/2561bc33-a4b2-405c-8754-73adf1765553_1600x437.png) So instead, we offered an additional content density option, called “classic,” that was similar to the original Reddit design, and we decided to default new users to the more spacious, updated design and existing users to the classic density: ![Image from What 5 years at Reddit taught us about building for a highly opinionated user](https://substack-post-media.s3.amazonaws.com/public/images/63f770a5-1cd4-4e1b-bdd8-3f4608525ec0_1600x545.png) And just to delight a small number of power users without causing any issues for new users, we threw in an ultra-condensed view. Not most people’s cup of tea, but it went a long way toward showing that we weren’t leaving them behind: ![Image from What 5 years at Reddit taught us about building for a highly opinionated user](https://substack-post-media.s3.amazonaws.com/public/images/1873b457-d0de-4d50-a6e9-2debfe31e73e_1600x364.png) You shouldn’t do this constantly—you don’t want to reward the vocal minority for complaining—but it can be highly effective in situations like this where the change will be staring your vocal minority in the face all day long, and the work to throw them a bone is relatively light. The proof is in the pudding: after we added these two additional options, most complaints about the modern card were deflected by other users pointing out the classic and condensed options. ## **Putting it all together, what does this look like in practice?** Here’s how we’d put all of the above ideas into a playbook. You can adjust our approach to fit your own needs depending on the features you have in mind, and how early and often you want to engage your advisory council: #### **1. One-pager and Community Manager review** After the PM’s 1-pager is complete, the PM meets the Community Managers, reviews the 1-pager, and gets their feedback on potential issues or risks that the community might raise. (Shoutout to Lenny for his [1-pager template](https://docs.google.com/document/d/1541V32QgSwyCFWxtiMIThn-6n-2s7fVWztEWVa970uo/edit)—Tyler used it all the time.) #### **2. Product spec writing and design process initiation** Write product spec, incorporating the feedback from the Community Managers, and start the design process. #### **3. Advisory council call** Once early low-fidelity wireframes or sketches are complete, conduct a call with the advisory council. During this call, which is facilitated by the Community Team, walk the council through your understanding of the user problem, the proposed solution, and designs. Then listen to feedback from the group and answer questions—usually lots and lots of questions. #### **4. Design iteration** Iterate on designs based on their feedback. #### **5. Pilot phase** Once engineering on the initial version is complete, introduce the feature as a pilot to a small number of individuals. Ideally, the pilot testers cover a broad range of personas or customer profiles (i.e. have some power users and some casual users) and also include members from your advisory council. Throughout the pilot, reach out to testers and ask them for feedback. Consider hooking up a feedback form directly to the team’s Slack channel so that it alerts everyone on the team when feedback arrives. #### **6. Feature iteration** Iterate on the feature based on feedback. Iterating on feedback is happening throughout the pilot phase. #### **7. Advisory council call** Meet with the advisory council to share pilot results, a summary of the feedback you received, and what you’ve changed. This is a crucial step for showing their importance and making sure they are primed to support the launch. #### **8. Beta phase** If you feel good about the feature, announce it in a more public setting and increase access to it. It’s important to highlight what you learned during the pilot phase and what you changed during that period. Encourage the advisory council to join the discussion in the comments, provide trustworthy context and—ideally—advocate on your behalf. Continue to provide a communication channel for beta users to give the team feedback. #### **9. General availability** If the feature is driving value, make it generally available to all users. — This community-driven go-to-market strategy helped us build features and product lines that added real value to our communities. Although it took longer than a traditional consumer go-to-market strategy, working closely with moderators or community leaders allowed us to ship features that they were excited to use and that they, in turn, would promote in their communities—something that likely saved us a lot of pain, energy, and angry video calls. ## **Summary** We won’t claim any of the above is easy, and even if you pull off all the steps, it can take time to build up trust with a passionate user base (especially if previous leaders may have depleted some of it). But consider this: during the five-ish years we were executing on this playbook, moderator protests on Reddit were rare and small, the majority of product launches were civil, product announcements were full of community council members advocating on Reddit’s behalf, and Reddit continued to hit new milestones for monthly visitors with over 100k active communities. Once you’ve built the infrastructure and muscle memory, this becomes a play you can repeat over and over, and each time it gets a little easier and your audience is a little more willing to listen. The yelling will always be there, and even in Evan’s fifth year at Reddit he had to remind himself frequently that it was the sound of love. But when you harness that loud love to successfully launch something that makes your audience happy . . . well, there’s no other feeling like it. *Thanks, Tyler and Evan! For more, Evan curates a newsletter, [Community Manager Breakfast](https://eepurl.com/c7sjOv), that includes weekly links about community building, and Tyler writes [The AI Product Report](https://www.productreport.ai/), where he tests AI-powered products and curates the most interesting and innovative products launching each week.* *Have a fulfilling and productive week 🙏* **If you find this newsletter valuable, share it with a friend, and consider subscribing if you haven’t already. Check out [group discounts](https://www.lennysnewsletter.com/subscribe?group=true) and [gift options](https://www.lennysnewsletter.com/subscribe?gift=true).** Sincerely, Lenny 👋 --- ## [25/51] How to pass any first-round interview (even in a terrible talent market) *👋 Hey, Lenny here! Welcome to this month’s ✨ **free edition**✨ of Lenny’s Newsletter. Each week I tackle reader questions about building product, driving growth, and accelerating your career.* *If you’re not a subscriber, here’s what you missed this month:* 1. *[The unconventional Palantir principles that catalyzed a generation of startups](https://www.lennysnewsletter.com/p/the-unconventional-palantir-principles)* 2. *[What 5 years at Reddit taught us about building for a highly opinionated user base](https://www.lennysnewsletter.com/p/what-5-years-at-reddit-taught-us)* 3. *[How a traumatic brain injury made me a better PM—and person](https://www.lennysnewsletter.com/p/how-a-traumatic-brain-injury-made)* 4. *[How to create an exceptional coverage plan for your parental leave](https://www.lennysnewsletter.com/p/how-to-create-an-exceptional-coverage)* *Subscribe to get access to these posts, and every post.* This week’s post comes from the amazing [Coach Erika](https://coacherika.co/). Since 2020, Erika has coached 200+ job seekers on how to land their dream jobs. In today’s post, she shares a step-by-step guide for passing your first-round interview—with practical frameworks, tons of practice questions (with answers), and even a daily schedule to help you make the most of your available prep time. If you’re currently interviewing, or plan to, this will change your life. For more, follow Coach Erika on [LinkedIn](https://www.linkedin.com/in/egemzer/), [Twitter](https://twitter.com/ErikaCoaches/), and definitely check out her newsletter, [The Career Whispers](https://thecareerwhispers.substack.com/). ![Image from How to pass any first-round interview (even in a terrible talent market)](https://substack-post-media.s3.amazonaws.com/public/images/f3cbfb8d-5a19-41db-83bb-454801ac8d4c_8000x4000.png) Today I’m going to teach you how to pass any first-round interview in tech, even in a difficult talent market. I’ve coached over 200 people in tech job searches (from APMs to eng managers to chief product officers, and everything in between). 93% percent of them landed jobs at Google, Meta, Uber, Airbnb, Stripe, or a similar top-tier tech company—without burning themselves to the ground endlessly preparing, or winging it and hoping for the best. I’m not a recruiter or HR leader. I’m an engineer and product manager, like many of you. In 2013, I landed my first job in Big Tech (at Google), and my career took off. Over the next 10 years, I moved into management and leadership roles, where I learned about how the sausage is made when it comes to interviews, offers, and talent assessments. Now, I’m a chief product officer, and I moonlight as a career coach to help people unlock outsized career opportunities. My goal in sharing this Minimum Viable Interview Prep (MVIP) process is to arm you with the employer and interviewer perspective so that you can build confidence in your job search. I’m passionate about helping people with job searching because I know how much the right role can set you up for success in your career and financial life. ## Why employers do first-round interviews First rounds are designed to filter out candidates who are unlikely to be a contender for an offer. Interviews are *very* expensive for employers (time, coordination, resources, opportunity cost). The singular goal of a first-round interview (from the employer’s perspective) is to determine if they want to invest in additional interviews with that candidate. ### How first-round interviews fit in the broader interview process ![Image from How to pass any first-round interview (even in a terrible talent market)](https://substack-post-media.s3.amazonaws.com/public/images/e24a39eb-70f0-4521-8536-7fc73f709c48_1408x1056.png) By the time you get to a first-round interview, you likely have already: - Applied or been referred by an employee - Spoken to a recruiter or HR representative (phone screen) If you pass a first-round interview, the next step is often second rounds (another single interview), or even final-round interviews (three to six interviews back-to-back in one day or split over two days). ### The logistics **Most first-round interviews in tech are:** - 30 minutes to 1 hour - on the phone or via video chat - with just one interviewer (not panel-style) - conducted by a hiring manager, peer, or another person familiar with the role **The standard time breakdown is typically:** - 10% intro - 70% questions from the interviewer - 20% questions from the candidate **For a 45-minute interview, this looks like:** - 3-5 minutes intros - 35 minutes questions from the interviewer - 5-7 minutes questions from the candidate **Most first-round interviews stick to behavioral questions**, i.e. questions that ask you about your own experiences, like *“Tell me about a time when you had a conflict with a colleague.”* **Generally, the first-round interview scope isn’t comprehensive.** Employers aren’t going to be able to fully assess your fit for the role/team/company in less than 60 minutes! *Note: It’s a bit of a hot take, but I advise people to run if a company gives you an offer at this stage. (Just imagine how undiscerning they will have been with your future peers as well!)* On-the-spot offers in tech are rare, but all of us who build products know that systems fail at the edge cases—few of you will get an offer in your first or second interview (and this is a good thing), but my advice is to walk away (or at least ask a lot of questions) if you get an offer on the spot. **Common first-round interview question themes:** - Your resume and online content (including expertise posts and thought leadership) - 1-2 core competencies for the role (usually the P0s, not the P2s and P3s) - Culture fit (these can be direct questions, e.g. “*Describe your ideal team culture,”* or indirect assessments based on your behavior, mannerisms, or speech: what you say and how you say it) **Special cases** *Are you a software engineer or data scientist?* Your first-round interview will likely be a technical screen (coding or system design or experimental design). Note that the way you problem-solve and communicate are assessed, not just whether you arrive at a working solution! *Are you a PM?* Your first-round interview will likely focus more on product design, product sense/execution, and data analysis or estimation questions (PM core competencies). ## How to prepare It’s time to talk about tactics for interview preparation. Now is a good time to introduce Minimum Viable Interview Prep (MVIP). Below is a quick summary of the approach, with links to dive deeper before your next interview. ### The How, part 1: Get your (career) story straight **Know your digital footprint** Anything and everything on the open web is fair game for an employer or interviewer to read and bring up in your interviews. This includes LinkedIn posts, Medium or Substack articles, GitHub, tweets, old blog posts, quotes in newspaper articles, etc. A useful to-do list: 1. Know what’s out there (about you or authored by you) 2. Assess whether it fits how you’d like to present yourself 3. Modify as needed to represent yourself as you’d prefer For example: If I were looking for a data science role, I’d want to spend a few hours organizing the Python code in my public machine learning GitHub repo. It was written under timeline duress (!) and needs some refactoring so I can put my best foot forward if someone skims the code. **Know your (strategic and compelling) reasons for wanting this role** When you go for an interview, you should assume the company is assessing at least two to four other people for the role. Like any competition, you want to get out front quickly and take the lead. One way to do this is to be clear and concise about why you want this job. Generally, avoid reasons that revolve around work hygiene or professional conveniences, e.g. compensation, short commute, remote work. This advice may seem obvious, but yes, people bring these up often. Don’t be one of them. Avoid reasons that sound like complaints about your current or past employer, e.g. “better company,” “smarter colleagues,” “kinder boss,” “escaping a toxic culture.” Stick to reasons that: 1. convey what you bring to the role (the compelling ones for the employer) 2. explain how this role will accelerate your career (the strategic reasons) You don’t need 10 reasons. One single, decisive reason will do: *“I’ve spent eight years building large-scale, distributed systems for products used by about 100 million users. An exciting and progressive step for me would be to build similar technologies for the billion-user scale.”* **Know the role (map it)** One of the oldest sales tricks in the book is a tactic called “mirroring.” It’s a psychological concept that involves physically and verbally doing what the other person is doing. People are comfortable with their own mannerisms. When you mirror them, you make them comfortable and subconsciously make them feel you are like them. You can use mirroring in your interview process. How? Use *their* language when describing *your* experiences. **How to do this (interview pre-work)** 1. Paste the job description into a doc, then highlight keywords and concepts. 2. Put the keywords into a table (one row per keyword or concept). Then add a column to the right. [Here’s a template to get you started](https://docs.google.com/spreadsheets/d/16rMkstp5LsN99TEGALCBE4_bM7KqxpOW35swrIRzyD8/copy). 3. In the right column, write down parts of your experience that map to that concept. 4. Read this before your interview. 5. In the interview, when you talk about your experience (right column), use their language (left column) to explain what you did. **Example:** ![Image from How to pass any first-round interview (even in a terrible talent market)](https://substack-post-media.s3.amazonaws.com/public/images/cdc0f0ea-c0a4-41d9-bd5e-b8a066f9cd8d_926x840.png)![Image from How to pass any first-round interview (even in a terrible talent market)](https://substack-post-media.s3.amazonaws.com/public/images/12908a0e-5733-479c-95d7-e5cab50dfa48_1422x1002.png) In the interview, use their language when you describe your experiences: *“When I was **on-call** for a **multi-datacenter system**, I diagnosed and **resolved a major technical issue** and ensured services were restored. Later, I wrote **automation** to programmatically detect this type of issue in the future.”* The more familiar the interviewer is with the job description and the role requirements, the more effective this technique will be (at subconsciously reinforcing your fit for the role). ### The How, part 2: Walk down memory lane The vast majority of interview questions will ask you to dive into your past experiences and describe how you handled a specific situation. When you’ve been working for five or more years, it can be really tough to index your memory and pull out the perfect example on a dime. *(By the way: It’s not you. It’s everyone. We all struggle with this. It’s a neurobiological limitation with the way our brains store memories.)* Writing down the answers to hundreds of behavioral questions is a common way I see candidates try to remember all the things they’ve accomplished. This is exhausting and can actually overload your brain and cause you to freeze up or even “blackout” in an interview. To avoid burnout and get better results, I instead coach candidates to pick three to five recent major projects in their careers, and then remember *every single detail they can recall* about those projects, for example: ![Image from How to pass any first-round interview (even in a terrible talent market)](https://substack-post-media.s3.amazonaws.com/public/images/a89baa80-568b-4c2f-830e-89fb76cf488a_1528x1172.png) Writing all of this down will help you reference the details before future interviews (especially if you have an extended job search, as is common in difficult talent markets like the one we’re experiencing this year). When you are asked about past work experiences, your brain will more easily pull from one of these projects. And you’ll be able to provide high-resolution details on the context, what happened, and the results (quantified!). **What counts as major?** Large and complex, ideally. - Large in scope (important to the business, strategic, involves lots of stakeholders, significant revenue or user impact) - Complex (in terms of the stakeholders, core team, tech, timeline, resources, etc.) **Why large and complex?** Demonstrating your maximum capacity will enable you to validate your ability to handle larger scope and responsibilities, which typically correspond to higher titles and compensation (if that matters to you). **What counts as recent?** Ideally the past two to four years. The two-to-four-year guideline is largely pragmatic. Memories aren’t stable, and they do experience neural “bit rot”—which means even if you resurrect those memories, it’ll be hard to recall the details. A second reason to aim for recent projects: Assuming your career has been growing, recent projects will likely also be larger and more significant (see: *Why large and complex?).* ### The How, part 3: Learn the behavioral frameworks, and never again sweat an interview question Most people know that interviews are chock-full of behavioral questions, and most candidates either know (or quickly research) the STAR method during their interview prep. A refresher on the STAR method if you’re unfamiliar or haven’t interviewed recently: - **S:** Situation—what was happening at the time (context) - **T:** Tasks—what you were responsible for - **A:** Action—what you did to solve the problem and deliver outcomes - **R:** Result—the impact of your actions ![Image from How to pass any first-round interview (even in a terrible talent market)](https://substack-post-media.s3.amazonaws.com/public/images/b3807284-9c75-4e8e-a246-fc8477c43660_1418x572.png) Simple, right? Yet there’s more to it… Behavioral interview questions were invented 50 years ago, in the 1970s. Studies quickly found that these questions were 55% more effective at predicting on-the-job performance than the prevailing interview questions at the time. They took the business world by storm and became the de facto interview technique. Today, they are used extensively in tech interviews (by my estimate, more than 60% of interview questions are behavioral). Amazon actually sends candidates a STAR primer before their interviews! But it’s been half a century, and behavioral question formats *have*evolved. Your approach to answering them needs to evolve too. In tech, I see 3 main formats for behavioral questions: 1. **Pure** — “Tell me about a time when…” 2. **Situational** — “Put yourself in this situation; what would you do?” 3. **Theoretical** — “What’s your general approach to doing X?” All of them ask what you **have done** or what you **would do** (in a situation) or what you **generally do**, to extrapolate and predict on-the-job performance. To interview effectively in tech today, you need to know how to answer each of these questions. Below is a primer you can use to answer each type of behavioral interview question. #### Pure (70% of behavioral questions) **Why they ask:** Understanding how you’ve behaved in the past can be used to extrapolate how you might perform in this role **What they ask:** Share a specific career experience from the past **How to respond:** Start withSTAR, then add two improvements. First, what you learned. Then, how you evolved your approach and incorporated these learnings in a future situation. **(I call this STAR++)** #### Example Tell me about a time you had to work quickly to deliver a result. **S:** Start with context (strategic, business, project) ***Answer: Situation*** > *“I was at a pre-IPO company in an eng leadership role. To prep for the IPO, we needed to update compensation bands and ensure all 250 engineers were being paid fairly.* > > *This was complex, because comp is a charged issue and I only had six weeks to deliver.”* **T:** Explain your role in the situation ***Answer: Tasks*** > *“The project was driven by HR. They were doing the analysis and proposing the new comp bands.* > > *My job was to test the new comp bands against the current comp for every engineer in the company and ensure that the new comp bands were both equitable and attractive for current and future talent.”* **A:** Share the actions you took to ensure success ***Answer: Actions*** > *“As HR pushed new draft engineering comp bands:* > > - *I analyzed them against the career ladder to detect issues* > - *I verified that no employee would have a compensation regression* > - *I identified and corrected errors* > - *I messaged the comp changes to the 250-person eng team”* **R:** Quantify the results (from a short- and longer-term strategic perspective) ***Answer: Results*** > *“I rolled out the engineering comp bands on time.* > > - *Engineers were happy with the changes (no comp regressions, most got pay increases)* > - *Finance could accurately forecast headcount spending with the new comp* > - *Comp was ready for IPO 🎉”* Then add the growth mindset **(the ++ in STAR++)** **+ (learnings):** Expose what you learned ***Answer: + (learnings)*** > *“There was an uncaught error in the Sr. Mgr comp bands that resulted in above-market comp for some employees.* > > *The project goal just set a minimum, no maximum, so I didn’t look for outliers. I learned to ask for success criteria in a range, not just the target!”* **+ (future improvements):** Share how you’ve adapted your approach for future projects (given the learnings) ***Answer: + (future improvements)*** > *“I recently ran a project to reduce our platform web page load times. Initially the executive sponsor set the success criteria as loading in less than 1 second. I inquired about the success criteria as a range and was able to set a clearer target: 0.3 to 1 second.* > > *Setting the success criteria as a range saved us from major misalignment that would have doubled the development efforts and led to exorbitant ongoing server costs.”* **Try this at home!** (with these handy practice questions): - “Tell me about a time when you failed.” - “Walk me through an experience where you had to give difficult feedback.” - “Share an example of an excellent team culture that you were part of.” **💡 Tip:** If you’re in a time pinch, focus your prep time on pure behavioral questions (70% of all behavioral questions). #### Theoretical (20% of behavioral questions) **Why they ask:** Learning how you generally go about doing tasks or activities that are central to the role **What they ask:** Your general approach to a core element of the role and your craft **How to respond:** 1. Outline your general approach (3-5 elements) 2. Describe your approach for each in detail 3. End with an example (use STAR) that exemplifies your use of this framework #### Example *How do you give feedback (as a manager)?* ***Answer, part 1: Outline your general approach (3-5 elements)*** *Three major considerations:* > 1. ***Behavior** — what specific behavior am I trying to change?* > 2. ***Messaging** — how can I give the feedback in the way it will be most effectively heard, understood, and actioned?* > 3. ***Alignmen**t — how can I ensure that me and the team member are in agreement with the need to change, how we’re going to measure success, and how we’ll check in to monitor the change?* ***Answer, part 2: Describe your approach for each in detail (with tactics)*** > *For each of these major considerations, here’s how I would specifically go about doing this:* > > 1. *Behavior* > > 1. *What is the specific behavior that needs to change?* > 2. *What are the impacts of that behavior (on the individual, team, project, product, business, or company strategy)?* > 3. *If this specific behavior changes, what will improve (for the individual, team, project, product, business)?* > 2. *Messaging* > > 1. *Direct* > > 1. *What do I need them to hear?* > 2. *What words must be said?* > 3. *How will I know if they understand the message?* > 2. *Empathetic* > > 1. *How can I respect the vulnerability of the situation?* > 2. *What do I need them to not hear? (avoid creating defensive behavior)* > 3. *What words should I avoid?* > 3. *Alignment* > > 1. *What questions can I ask to ensure they understood?* > 2. *What questions can I ask to ensure we’re aligned on the problem and what needs to change?* > 3. *What questions can I ask to collaborate on a definition of what success looks like so we know if the feedback is being actioned?* > 4. *Create a check-in plan (activities, frequency)"* ***Answer, part 3: End with an example (use STAR) that exemplifies your use of this framework*** Situational Context and Tasks: > *“At Google, I managed a team of technical program managers (TPMs) who owned critical, strategic programs for the organization. One of the TPMs on the team was chatty and often made other team members late to meetings or distracted with their work. Their intent was to build relationships at work, but the reality was that other team members got distracted, anxious, and even stressed by my team member’s chattiness.”* Actions: > *“I came up with a plan, first by clearly identifying the behavior that needed to change. Because the problem was caused by a personality trait, it was important to isolate the specific problem being caused and the specific action that needed to change. In this case, it was having personal chats with colleagues during core work hours.* > > *Next, I needed to plan the messaging, to avoid making the person feel attacked or defensive. I decided to express the problem in terms of how it impacted both their project success and their teammate’s stress levels. Then, I planned some alignment questions to ensure we were in agreement on the problem, the change that needed to happen, and how we were going to hold ourselves accountable to measure success and check in.* > > *Then, I had the conversation with the team member.”* Results: > *“The team member immediately acknowledged the issue, since they knew themselves to be chatty, and thanked me for bringing the impacts (to others) to their attention. We aligned quickly on a plan to check in monthly, and the team member agreed to let me periodically probe the team to ensure that the change was taking place.* > > *Within two months, the issue was resolved. Team members felt less stressed, more focused, and more confident in the team dynamics. My team member continued to connect with colleagues at lunch and after work hours, to build meaningful relationships (which was their personality). Today, that team member is a successful TPM leader at Google and thanked me for helping them see this blindspot.”* **Try this at home!** (with these handy practice questions): - “What’s your general approach to building respectful, delightful products?” - “How do you go about building team culture?” - “How do you give feedback?” #### Situational (10% of behavioral questions) **Why they ask:** To see how you gather and synthesize information to create a reasonable path forward using strong judgment **What they ask:** In a hypothetical (but realistic) work situation, tell me what you’d do **How to respond:** 1. Ask clarifying questions to fully understand the situation (enough that you can create an action plan) 2. State any assumptions you’re making 3. Outline a plan, then expand with specific details on your approach 4. Check in with the interviewer to see if you missed anything or if they want to dive deeper into a given area 5. Summarize #### Example *You found out the project you are leading is being canceled. What do you do?* ***Answer, part 1: Ask clarifying questions*** > *Some clarifying questions* **(and answers from interviewer)***:* > > - what stage of completion is the project (beginning / middle / end)? **(end)** > - *how long has the team been working on this?* **(a while)** > - *how important is this project to the team (strategic priority)?* **(it’s the only work that the team has on its plate)** > - *how many people are working on this?* **(30)** > - any users / clients / customers affected? **(no)** > - *other internal teams affected?* **(yes)** ***Answer, part 2: State your assumptions*** > *I’m going to assume:* > > - *there’s an open dialogue with the leadership team* > - *there are data available to confirm the validity of this decision* > - *the team doesn’t know yet* > - *the team is not going to be fired, laid off, or otherwise disbanded (thus will be available to work on other high priority efforts)* ***Answer, part 3: Outline a plan, then expand (3-5 items)*** > *Three major considerations:* > > 1. *Trust but Validate the Decision (before communicating further)* > > 1. *Meet with exec leaders* > 2. *Ask about assumptions* > 3. *(if I don’t agree with the conclusion, gather data, and present it back with alternative solutions)* > 4. *(if agreed on the conclusion, move forward)* > 2. *Team (communication, landing the change, setting the team up for future success)* > > 1. *make a wind-down plan* > 2. *communication plan — crisp, clear, direct, state assumptions, preemptively address likely FAQs* > 3. *announce to everyone at once, in person* > 4. *make information available in written, transparent, discoverable format* > 5. *address individual concerns, leverage managers (align with them)* > 6. *develop a future plan for the team (replace the strategy void)* > 3. *Internal customers (communication, partnering to problem solve & land the change)* > > 1. *communication plan — crisp, clear, direct, state assumptions, preemptively address likely FAQs* > 2. *announce in person with each internal customer* > 3. *make information available in written, transparent, discoverable format, add FAQs as they come in* > 4. *partner to problem-solve and ensure they land on their feet.* ***Answer, part 4: Check back with the interviewer*** > *“Did I miss any key steps from your perspective, or is there any area you’d like to dive into together?”* ***Answer, part 5: Summarize the question prompt and key items*** > *“You asked me what I would do if I found out that a project that I was leading was canceled. I walked you through my process of validating the decision, then creating a plan, communicating to both the team working on the project and the internal customers of the project, then my goal to land the wind-down effort in a timely and effective manner, and ensure the future direction and productivity of the team.”* **Try this at home!** (with these handy practice questions): - “You just started on a new team. Tell me your approach to ramping up.” - “You just found out the project you are leading is being canceled. What do you do?” - “You get a report that your product is crashing. What do you do?” ***💡*** **Want more examples?** Check out the reference posts at the end for detailed walk-throughs for each of these behavioral question types. ### **The How, part 4: Formulate high-signal questions (to get interviewers thinking)** If you’re a running fan, you know that the Boston Marathon is often won or lost at one single point in the race—Heartbreak Hill—including in this year’s marathon. ![Image from How to pass any first-round interview (even in a terrible talent market)](https://substack-post-media.s3.amazonaws.com/public/images/411e91cc-8d95-41ec-965c-7205be82bb44_1600x1200.png) Interviews are often won or lost by the questions *you* ask the interviewer at the end. Half of the battle is preparing well and showing up to answer *the interviewer’s*questions; the other half is asking *them*questions that get them thinking (and make you stand out). We all want to work with exceptional colleagues who work hard, get things done, and push us to greater heights. Interviewers are exactly the same. You need to get them thinking (in a good way). Formulate questions that are interesting and thoughtful, and you’ll end the interview on a high note and possibly put yourself in the lead. 3 steps to formulating great questions for interviewers: 1. **Define the signals you need (to determine if you want the role).** Bring questions whose answers are actually important to you. Anyone can grab a question from a listicle. Only you can ask questions that will answer your open questions about the role. 2. **Do your research.** On the industry, company, competitive landscape, team/product, and even the interviewers. Look for trends, competitive landscape changes, and news. You can find these on consulting firm dossiers, VC thought-leadership white papers, the company’s website, Yahoo Finance, and competitive landscape engines like G2 and Capterra. 3. **Formulate questions** that highlight that you’ve done your homework and that give you the signal you want. You can do this in an hour or two, and it’s well worth the investment. You can even reuse some of these “first-round” questions in later interviews to get diverse perspectives from the full panel. An example of a high-signal question that one of my coaching clients formulated for an interview at Cruise, a self-driving car company: > *In your three years at Cruise, the privacy world has expanded, with the CCPA and other states discussing more regulations for consumer privacy—how has this impacted the nature of your work, and what do you see as the biggest challenge or area of focus as Cruise continues to expand to new geos?* ![Image from How to pass any first-round interview (even in a terrible talent market)](https://substack-post-media.s3.amazonaws.com/public/images/7f60af5f-e193-4008-a225-c39cd2439e3c_1001x599.png) **🎉 Voilà!** You’re ready for your next interview. Here’s a recap checklist you can use for your next first-round interview prep: ![Image from How to pass any first-round interview (even in a terrible talent market)](https://substack-post-media.s3.amazonaws.com/public/images/f0c83e45-ddbf-45e9-a336-b429af8edfa0_2000x1882.png) **Some timing guidelines:** - Cleaning up your resume, LinkedIn, and online presence: **1-2 hours**\* - Crafting a strategic, compelling career story: **1-1.5 hours** - Mining the job description: **30 minutes** - Walking down memory lane: **1-2 hours** the first time; **30 minutes** to refresh for any additional interviews - Mastering behavioral questions: **4-6 hours**\* - Formulating high-signal questions for interviewers: **1-2 hours** *\* A one-time task for your entire job search, not for every single interview* If you use MVIP, you can prepare for a first-round interview in three or four days (with about four hours per day of prep). If you’re working full-time, you can do it in a week with two to three hours a day. Much of what you learn with this MVIP interview prep system is reusable across interviews, so you will quickly see the effect of your preparation in later interviews. Now you know how to prepare for and pass any first-round interview, even in a tough talent market. I’d love to hear your success stories using MVIP. Feel free to reach out at [hello@coacherika.co](mailto:hello@coacherika.co). That’s a wrap! ## 📚 Further study Everything we discussed today is available in greater detail in my Substack, [The Career Whispers](https://thecareerwhispers.substack.com/). Useful deep-dive posts are linked below: 1. *Craft a Strategic and Compelling Career Story* using The Career Whispers issue #001 [here](https://thecareerwhispers.substack.com/p/001). 2. *Walk Down Memory Lane* with The Career Whispers issue #002 [here](https://thecareerwhispers.substack.com/p/002). 3. *Master Behavioral Interview Questions* in The Career Whispers issue #003 [here](https://thecareerwhispers.substack.com/p/003). 4. *Formulate G-R-R-REAT High-Signal Questions for Interviewers* in The Career Whispers issue #004 [here](https://thecareerwhispers.substack.com/p/004). *Thanks, Erika!* *Have a fulfilling and productive week 🙏* **If you’re finding this newsletter valuable, share it with a friend, and consider subscribing if you haven’t already. Check out [group discounts](https://www.lennysnewsletter.com/subscribe?group=true) and [gift options](https://www.lennysnewsletter.com/subscribe?gift=true).** Sincerely, Lenny 👋 --- ## [26/51] How Snowflake builds product Snowflake is the type of business every founder dreams of building. Nine years in, they’re generating $2B in revenue/year, with a net revenue retention of 150%, a market cap of $50B, growing 70% YoY (and 100% YoY the year before), and an NPS of 72. When they went public 2.5 years ago, they were in the upper percentiles of essentially every important business metric. ![Image from How Snowflake builds product](https://substack-post-media.s3.amazonaws.com/public/images/856a6db5-54cc-4005-9bc2-f0b780a662ca_1654x999.jpeg) This type of success doesn’t just happen, so I’ve been hankering to get an inside peek at how Snowflake builds product. They’re by far the biggest company I’ve chronicled in this series, so I approached this interview a bit differently. Instead of going to the CPO, I interviewed someone closer to the day-to-day work of the product team: [Jeff Hollan](https://www.linkedin.com/in/jeffhollan/), Director of Product for Snowflake’s Developer Platform and Ecosystem. A huge thank-you to Jeff for spending time with me and sharing so much about what it’s really like to build product at Snowflake. **Here’s what stood out to me most about Snowflake’s approach to product:** 1. How they align the entire company around 6 to 10 “big boulders” each year 2. How involved their leadership team is in product reviews 3. Their zero tolerance for organizational politics 4. Their hiring team’s focus on finding “drivers” instead of “passengers” 5. How the data science organization is embedded in the product org 6. Their “Snowvation” hackathon weeks ☃️ and [Snowflake Summit](https://www.snowflake.com/summit/)’s—one just wrapped up last week with over 12,000 attendees 🤯 *For more from Jeff, follow him on [LinkedIn](https://www.linkedin.com/in/jeffhollan/) and [Twitter](https://twitter.com/jeffhollan), and for more on Snowflake, check out . And for more on how the best product teams build product, don’t miss [Figma](https://www.lennysnewsletter.com/p/how-figma-builds-product), [Notion](https://www.lennysnewsletter.com/p/how-notion-builds-product), [Miro](https://www.lennysnewsletter.com/p/how-miro-builds-product), [Ramp](https://www.lennysnewsletter.com/p/how-ramp-builds-product), [Coda](https://www.lennysnewsletter.com/p/how-coda-builds-product), and [Duolingo](https://www.lennysnewsletter.com/p/how-duolingo-builds-product).* # How Snowflake builds product ![Image from How Snowflake builds product](https://substack-post-media.s3.amazonaws.com/public/images/7c0bbcd0-1829-4996-b949-d2a19aa4fd14_1008x780.jpeg) ### **1. How far out do you plan in detail, and how has that evolved over the years?** We spend a good bit of time on planning, and planning frequently, with both quarterly and annual planning cycles. I sometimes joke that if it’s been more than six weeks without some planning exercise, my email must not be working. 😉 Planning for us is all about making sure we’re aligned on our goals and priorities—especially as our teams continue to grow. At the start of every year, Snowflake’s leadership team identifies 6 to 10 “big boulders” for us to focus on as a company. For example, in FY ’24, two of our boulders are “[Snowflake application development](https://www.snowflake.com/en/data-cloud/workloads/applications/)” and “[workload and cost optimizations](https://www.snowflake.com/blog/commitment-to-improving-economics-for-customers/).” From there, each product area (e.g. data engineering, storage, etc.) creates an annual plan that maps to these boulders. The annual plans are generally structured as a six-pager that captures the overall state of the product, goals, measurable success indicators over the coming fiscal year, and a set of customer scenarios that we focus on in relation to the big boulders. Each of the individual product area plans is reviewed by the area product leader, area engineering leader, and area architects. Snowflake’s founders, alongside our product and engineering VPs, also read and review each document and add comments and feedback within. It’s a huge undertaking, but it helps us capture potential scenario gaps and progress our product vision as one unified team. As for timing, we generally start our annual planning around October, with Snowflake’s fiscal year kicking off in February. Why plan so far in advance? Aside from building in buffer time to prepare and review, this also helps us make sure that all areas of the business are aligned on a single message and vision before the fiscal year kicks off in full force. Product directors like me have reviews with sales and marketing counterparts to align on product plans, and from there, we jointly create our sales and marketing plays in time for the new year. In addition to annual plans, we do quarterly planning to get more specific about the customer deliverables and work we need to prioritize over three-month periods. The month before each quarter, we outline what customer scenarios we plan to focus on and map them back to those same big boulders discussed earlier. While we use metrics and data to validate adoption and business impact, our quarterly plans are very focused on customer scenarios to help ensure that product investments are providing clear impact around jobs-to-be-done, and avoid each product focusing only on area-specific features or metrics. If a prioritization decision ever has to be made, we consider customer value, i.e. how we can make our customer experience better. I know this may sound like the “classic PM answer,” but it’s really ingrained in all of us at Snowflake. We have [eight core values](https://www.snowflake.com/company/), and the first value is “Put Customers First.” Snowflake’s chairman and CEO, Frank Slootman, shared in a recent company all-hands that this is the first value for a reason. I will say, one of the harder challenges in product isn’t having ideas of what we *could* do for our customers, it’s being clear on what we *won’t*be focusing on right now. We want to avoid being “an inch deep and a mile wide,” as Frank loves to caution. Instead, we really home in on customer value, and prioritize putting our customers’ needs first to determine what products and features are most important. ![Image from How Snowflake builds product](https://substack-post-media.s3.amazonaws.com/public/images/bfd39a56-3ada-42c7-b2f1-e1ca6b1c1068_1600x1140.png)![Image from How Snowflake builds product](https://substack-post-media.s3.amazonaws.com/public/images/6933920e-d2d7-4422-8558-ef4613ed8140_676x402.png) As one can imagine, a big part of quarterly planning is coordinating work across different teams. If there’s ever a question about competing priorities, we flag them and review them in our quarterly planning roundtable the last week of every planning cycle. Anyone is welcome to add an item to the agenda for this roundtable, the purpose of which is to make sure we’re aligned on the relative priority of investments. It’s led by “BTCG,” the common acronym you’ll hear in the Snowflake halls for **B**enoit Dageville and **T**hierry Cruanes (Snowflake co-founders), **C**hristian Kleinerman (SVP of Product), and **G**reg Czajkowski (SVP of Engineering). This is where any questions around competing priorities can be adequately addressed at the right levels across the company. Teams and BTCG have an open discussion and help resolve priority mismatch, and these meetings are typically very open and conversational. One reason this process works so well is that by the time we get to the roundtable, teams are already roughly aligned on company priorities based on the big boulders and annual plans, and are genuinely looking to find the right areas to focus on in order to bring customer experiences to the fore. ### **2. Do you use OKRs in some form?** Every team is accountable for providing the best experiences for our users, identifying what success looks like, and determining what metrics are needed to get there. There isn’t a prescribed framework, but having metrics for success is a must. Each product area will take part in a QBR (quarterly business review), where they report key indicators and metrics around their area to leaders across product, marketing, sales, and support. One unique element of Snowflake is that we have a data science organization embedded into our product organization, so every product area has a dedicated data scientist integrated with their team to help surface insights from the data—using Snowflake, of course! Data is in our DNA, and we take a data-driven approach to how we build products and track progress along the way. Everyone is encouraged to dig into the data at Snowflake, and we use this as our primary measure for our progress against strategy. While I can’t share the data itself, here’s just a feel for the recent [Snowflake worksheets](https://docs.snowflake.com/en/user-guide/ui-snowsight-worksheets-gs) (worksheets provide a powerful and versatile method for running SQL queries or Python code, as well as performing other Snowflake data loading, definition, and manipulation tasks) that I personally have been using within the past months where I explore and understand the data for my product areas. ![Image from How Snowflake builds product](https://substack-post-media.s3.amazonaws.com/public/images/9f4a021f-4ec2-4dc9-9fb3-b492246ab14d_1140x1340.png) The focus on and attention to data is something we see led from the top down as well. One of the products I help lead right now is called [Snowpark](https://www.snowflake.com/en/data-cloud/snowpark/), which enables developers to build in their language of choice and run code in Snowflake. I quickly got accustomed to Slack messages from Christian Kleinerman asking me questions on changes or trends on the dashboards. I don’t mean monthly changes; I’m talking about things that happened 24 to 48 hours ago—showing just how ingrained everyone is in looking at the data and our dashboards. Data plays a huge role in how we stay connected with our products and how we ensure the best possible outcomes for customers. To measure success, we also look at various metrics like product revenue, net revenue retention rate, impressions, active usage, engagement, customer satisfaction/Net Promoter Score (NPS), and more. Snowflake even [publishes its annual NPS report](https://www.snowflake.com/blog/customer-experience-report-2022/) externally every year. ### **3. How do your product/design review meetings work?** We use product, engineering, and design reviews to ensure consistency across products and that we’re sharing information, getting feedback, and making timely decisions. A few product reviews happen each week, and anyone in the product organization is welcome to attend any topic they are interested in. Any product manager can add a review to the schedule backlog, which will be queued up for the next available slot. Generally each product area has about one product review a month around some aspect of the product, like a new feature proposal, business update, strategy update, etc. A week before a product review, Snowflake product managers share a six-page document for the topic with meeting attendees that outlines the customer problem, proposed solution, risks, and other key data points around a specific product investment. There is no template for the product review document, but they all typically include an executive summary, goals and non-goals, background information, a problem statement, key tenets (underlying product principles), use cases, key requirements, risks, a timeline, and lastly an FAQ section. The goal of a product review isn’t to “sell” the leadership team on a new investment but to detail customer requirements, align on relative business priorities, and provide a clear direction of how to address these challenges. Attendees of these meetings (including product and engineering leadership, architects, directors, and relevant stakeholders) all review and comment on the document prior to the meetings. There are some amazing discussions and conversations that happen in the comments section of review documents. Understandably, most of these comments I can’t share publicly, but here’s just one example of a small interaction I had shortly after sharing a product review document with the two founders of Snowflake. They are engaged and eager to contribute toward the product goals. 🙂 ![Image from How Snowflake builds product](https://substack-post-media.s3.amazonaws.com/public/images/5593824b-48b8-442a-96f4-7b57b3d49d7a_852x522.png) One of the things that impressed me the most when joining Snowflake was how involved the leadership team is in these reviews. Snowflake’s co-founders Benoit Dageville and Thierry Cruanes attend each review, alongside Christian and Greg. They each actively comment and join discussions on each document. Every product manager at Snowflake can relate to the excited feeling you get when you see your co-founders commenting and engaging on a document you’ve worked on. And while they are invested and involved, unless there is a fundamental misalignment, decisions are generally left to the combination of the product, engineering, and architect leaders for their respective areas of expertise. ![Image from How Snowflake builds product](https://substack-post-media.s3.amazonaws.com/public/images/a0095d15-66fe-46f3-b7b5-e5368c40ed0e_650x433.png) ### **4. How are your teams organized? Has this changed over the years?** Teams at Snowflake are organized more around customer workloads (various programs or applications running in the Data Cloud), rather than specific features or feature areas. To date, Snowflake operates in eight different workloads: applications, collaboration, cybersecurity, data engineering, data lake, data science and ML, data warehouse, and Unistore. Whenever people ask me what it’s like working in the product organization at Snowflake, I often mention that no team can operate in a silo. Every team needs to collaborate and work with other teams to help build delightful and intuitive customer experiences. Over the years, Snowflake has experienced rapid growth—we now have teams that span more than 30 offices worldwide—and many folks have only been at Snowflake for one or two years. Having the teams structured around critical customer workloads has scaled with the company, and enables us to continually grow and evolve to meet the global needs of our users. ### **5. What’s your tool stack for your product teams?** We use a lot of tools across our product teams, but Google Docs is the tool I spend the most time in. Having discussions, learnings, and designs captured in documents makes them more shareable and discoverable as we work to stay in sync as a global company. When the [Streamlit team](https://streamlit.io/) ([acquired](https://www.snowflake.com/blog/snowflake-to-acquire-streamlit/) by Snowflake in March 2022) joined Snowflake, they were heavy users of Notion, which they have now effectively spread across many product teams. I’ve found Notion is a nice complementary tool for other notes, and it helps our team capture customer conversations, hypotheses and research, and product updates with a very organized hierarchy. The other tool you’ll see used broadly across teams is Figma, for commenting and helping design UI and user journeys. And of course, for data and data analysis, we do everything with Snowflake. Most team communications happen in Slack, with public channels for each feature and workload where stakeholders across marketing, sales, support, and product can all collaborate. As for brainstorming, a good portion of this still happens on good old-fashioned whiteboards in conference rooms. ### 6. What percentage of ideas come top-down, and what percentage come bottom-up, roughly? From my experience, I’d say 85% of ideas are bottom-up, and 15% top-down. Some examples of specific top-down ideas include those around compliance, security, and customer promises that are company-wide. Most items originate from a product manager recognizing a customer pain point or opportunity, and then taking that item forward to drive customer impact. A big source of the bottom-up ideas are the big boulder themes I mentioned above. But the big boulders are intentionally high level—often it’s just a paragraph or two intended to ensure we’re focusing our efforts on a few themes, and are all aligned for mutual success. For example, collectively focusing efforts on cost optimizations as one of the boulders I referenced. I like to think of these big boulders as our lighthouse. They help provide perspective and general direction, but at the end of the day there’s a lot of judgment and different ways to navigate the actual ship. The ship steering is left to the product manager. ### **7. What are some fun or unique traditions or rituals on your product team?** My personal favorite is “Cheesy Thursdays.” I work out of Snowflake’s Bellevue office near Seattle, and it is a tradition that every Thursday we have “cheesy,” which means that the office offers cheese, wine, and snacks from 4 to 6 p.m. while we all have a chance to catch up and socialize. This tradition also takes place at various Snowflake locations across the globe. It’s simple, but a great way to chat with and get to know other employees on a more personal level. Not to mention, the food is amazing! ![Image from How Snowflake builds product](https://substack-post-media.s3.amazonaws.com/public/images/a1d7627c-27a7-4758-b339-75d35e6d5abe_1116x618.png) Another favorite tradition for Snowflake’s product teams is the “Snowvation” hackathon week—we love our snow puns ❄️. This is a huge weeklong event at Snowflake across all of product and engineering. ![Image from How Snowflake builds product](https://substack-post-media.s3.amazonaws.com/public/images/125b9808-fd02-4a64-ac33-62e88951e9a4_1600x905.png) Teams form to go solve and build something interesting around anything they are passionate about, all using Snowflake. Have a great idea for a new Snowflake feature that could delight our users? Want to try out some new Snowflake features combined with your other favorite tools and technologies? Whatever it is, you can build it with your team. It doesn’t have to be fully fleshed out or complete, but it’s a great chance to test, experiment, and explore. The week culminates in presentations to all participants and our “esteemed judges,” including our co-founders. It’s always amazing to see what innovative solutions teams come up with over the course of a week, and the demos and presentations get everyone excited. A good amount of the features we announce at events like our annual [Snowflake Summit](https://www.snowflake.com/summit/) originated as a Snowvation project idea. ![Image from How Snowflake builds product](https://substack-post-media.s3.amazonaws.com/public/images/b5f28ae2-ce5e-4182-af92-e535fcf9f213_1600x1200.png) ### **8. What would you say is unique or core to your product team’s philosophy for building product?** When building products or thinking about new capabilities, it’s important for everyone in the product organization to remember that Snowflake is one single, unified platform. This is our core philosophy and guide when it comes to development—even as we continue to evolve in terms of Snowflake’s capabilities and use cases, Snowflake’s core platform is the underlying foundation. When we release a new product function, instead of passing the integration problem on to our thousands of customers to solve in thousands of different ways, we take time on the front end to solve it for *all* customers, so they don’t have to. As our product offerings continue to evolve and become more complex, we prioritize end user simplicity and make sure that we maintain an “it just works!” sentiment. We know how much our customers value quality and the performance of every feature as a component of Snowflake’s single product, so we have *no* tolerance when it comes to compromising on any aspect. This also ties back to our customer-first mentality, and ensures that we maintain a simple, unified global experience across clouds. While this is easy to say, it’s important to note that it takes significant time, effort, and energy. But we settle for nothing less. This tenet even permeates the culture of the product organization: there’s no tolerance for organizational politics. There is no “what’s best for my team” or “what’s best for your team.” It’s all about “what’s best for Snowflake and our customers.” Every product manager is treated as and expected to be a leader and owner, regardless of their title or team. We’ve had many individuals be surprised to find themselves in product reviews and leading discussions with our senior leadership when they’re just one or two years into their career. It’s incredible what an organization of talented people can achieve when they have a clear north star of Snowflake’s products and customers at the forefront, and we’re only getting started. That’s a big part of what gets me excited to go to work every day. ### 9. **You build one of the most beloved and successful products out there. What would you say is unique or central to your approach to product that leads to such a great product?** There are two core elements to our approach that on the surface may feel obvious, but are imperative to providing our customers the best possible product with the Snowflake platform: performance and simplicity. Performance is a non-negotiable in everything we build, and we continue to invest and optimize to ensure we remain the most performant Data Cloud on the planet. We have and will hold products back from shipping until they can meet our high expectations around performance. Simplicity and providing more functionality that doesn’t break our “single product and platform” vision is the other critical core approach. Christian recently shared a truth of this principle: “simplicity makes our lives harder” as product managers. However, it is rewarding and a large part of why our customers love Snowflake. We take the extra cycles, pain, and iterations to make sure that every new capability is simple for users, and ultimately helps them on their missions of mobilizing their data. ### **10. Similar to the above, I assume much of your success has been thanks to hiring well and keeping a very high bar. In your product hires, what do you most look for (that maybe others don’t), and broadly, what does your interview process look like?** We strive to keep a high bar and are tenacious about finding “drivers” instead of “passengers,” as Frank puts it. We look for people who get satisfaction from making things happen and feel a strong sense of ownership. I’ve found that many of the best candidates are already driving impact and being successful in their current roles, and we look for opportunities for them to bring those skills and apply them to Snowflake’s mission and vision. For the interview process, there are a couple of things that Snowflake does that are unique. Almost every product interview starts with a presentation from the candidate to the interview team and leaders of that area. The topic can be anything the candidate wants to share—often it’s about a product they have delivered—and provides insight into how they communicate, as well as what they are passionate about and proud of. Throughout the interview process, we evaluate candidates across each of Snowflake’s values. Finally, before moving ahead with an offer, we typically tap into our networks to get a few references on the candidate to better understand from others what their impact and strengths are. I’m incredibly impressed with the caliber of people I get to work with every day, and believe that Snowflake’s thorough process of evaluating candidates based on the company’s values, alongside their adaptability, humbleness, and desire to learn has proven successful in driving Snowflake’s culture as we continue to scale. *Thanks, Jeff! For more, follow Jeff on [LinkedIn](https://www.linkedin.com/in/jeffhollan/) and [Twitter](https://twitter.com/jeffhollan).* *Have a fulfilling and productive week 🙏* **If you find this newsletter valuable, share it with a friend, and consider subscribing if you haven’t already. Check out [group discounts](https://www.lennysnewsletter.com/subscribe?group=true) and [gift options](https://www.lennysnewsletter.com/subscribe?gift=true).** Sincerely, Lenny 👋 --- ## [27/51] How today’s top consumer brands measure marketing’s impact You won’t succeed at growth long-term without deeply understanding and operationalizing attribution and incrementality. You risk endlessly spending money on seemingly good ideas that have exactly zero impact. [Michael Kaminsky](https://www.linkedin.com/in/michael-the-data-guy-kaminsky/) and [Mike Taylor](https://www.linkedin.com/in/mjt145/) are two of the most experienced people I’ve met on the dark arts of attribution and incrementality, and in today’s special guest post, they share the most in-depth and practical explanation I’ve ever seen on the topic. It’s based on primary research into how 40+ top brands measure their marketing efforts, and I’m very excited to share it with you. *[Michael Kaminsky](https://www.linkedin.com/in/michael-the-data-guy-kaminsky/) previously built the data team at the men’s shaving brand [Harry’s](https://www.harrys.com/en/us) and is the co-founder of marketing analytics firm [Recast](https://getrecast.com/). [Mike Taylor](https://www.linkedin.com/in/mjt145/) is the founder of the training platform [Vexpower](https://www.vexpower.com/) and previously built a 50-person growth marketing agency called Ladder.* ![Image from How today’s top consumer brands measure marketing’s impact](https://substack-post-media.s3.amazonaws.com/public/images/b7e87614-1187-44b4-b7da-fd986247fc4a_8000x4000.png) Many people encountering marketing measurement for the first time are surprised that it isn’t a solved problem. “I spend thousands of dollars on ads every day. I should be able to just pull a report to see what I got for it,” they might think. Unfortunately, even brands spending millions of dollars on advertising per month still struggle with measuring the impact of those dollars. The most important problem in marketing is this: If we spend an additional $1,000 on some marketing activity, how many additional sales would we drive? Marketers sometimes refer to this concept as “incrementality.” Incrementality is difficult to measure because we don’t get to observe the world where there’s no marketing activity, what a statistician might call the “counterfactual.” So even if we record some person clicking on an online advertisement and then making a purchase, we don’t know if this is correlation or causation: they might have made a purchase anyway, even without seeing the ad, because their friend told them about it, maybe, or because they already knew the brand. Navigating the labyrinth of marketing measurement is daunting at first glance, given the sheer variety of strategies available and the inherent complexity of the field. Although it’s true you can never achieve 100% clarity in marketing measurement, you’d be surprised at how close you can get by combining the right techniques. We’ve built a database of 42 top consumer brands, such as Uber, Amazon, and Airbnb, providing unique insights into their measurement methods. These case studies present inventive and thoughtful approaches to marketing measurement and will help you shortcut your way to measurement success. [Check it out here](https://airtable.com/shrzPkZvLTZtcsnbI). Building on this research, below, we demystify the complexity of each measurement technique and provide a guide on how they operate and, most importantly, how you can implement each of these methods yourself. We’ll show you exactly what the biggest consumer brands are using and what’s interesting about the way they’re using them. ![Image from How today’s top consumer brands measure marketing’s impact](https://substack-post-media.s3.amazonaws.com/public/images/8209aa5b-b32a-4d26-9f85-293fb462fa54_1499x883.png) ## How do top consumer brands measure marketing? There are three main ways that brands measure marketing effectiveness: 1. **Digital tracking/multi-touch attribution (MTA):** the default for online marketing, where browser cookies (or similar identifiers) allow advertisers to track the marketing source of their customers 2. **Marketing mix modeling (MMM):** a statistical modeling technique that marketers use to determine which channels in their marketing mix deserve credit for sales, in order to reallocate budget to the highest-performing areas 3. **Testing/conversion lift studies (CLS):** regularly run by marketers to validate what performance would look like if you switched a channel off, or scaled spend up or down One growing trend we’ve seen in the database we created was the theme of “triangulation,” or using all three methods in conjunction with each other, to zero in on the truth of what’s working in marketing. Over 40% of the brands in the database are using at least two methods together, and around 20% use all three. Each of these methods has strengths and weaknesses, but by triangulating the truth through combining multiple methods, you can get a more accurate measurement. The goal of triangulation is to determine how many of your sales are “incremental,” meaning they wouldn’t have happened had you not invested in marketing. Using multiple measurement methods is like getting a second opinion after visiting the doctor: it can help you make better decisions. ![Image from How today’s top consumer brands measure marketing’s impact](https://substack-post-media.s3.amazonaws.com/public/images/6417bfa3-1b37-4e5f-bba4-6c244b57529e_1138x632.png) We’ll run through each of the methods, highlight how consumer brands are using them, and then walk you through how to implement them in your own business. Then we’ll cover how to combine them together through triangulation, so you can see how it works in practice for today’s top consumer brands. ### 1. MTA: Multi-touch attribution/digital tracking Digital tracking is measuring marketing performance through UTM codes or tracking pixels. When tracking is discussed, “last touch” or “last click” attribution is always mentioned as the default form of measurement on the internet. Last touch is easy to implement and understand, but it’s flawed because it gives zero credit to “touches” from other channels. Multi-touch attribution is a step more advanced, where you assign credit to different channels that a user interacted with (touched), based on predefined rules or a statistical model. The most consequential player in this space is Google and their measurement platform [Google Analytics](https://analytics.google.com/analytics/web/), which is installed on [60% of the top 100,000 websites](https://trends.builtwith.com/analytics/Google-Analytics). In addition to providing product analytics, GA is also used to measure the impact of marketing campaigns, which you can see in the source/medium report. We’ll talk through the basics of setting up analytics below, but there are thousands of high-quality walkthroughs on using [GA for attribution](https://support.google.com/analytics/answer/9397590?hl=en#zippy=%2Cin-this-article) across the internet and YouTube. ![Image from How today’s top consumer brands measure marketing’s impact](https://substack-post-media.s3.amazonaws.com/public/images/856443df-1b84-4016-a8d8-1732d6df7c14_1138x632.png) How this works technically is that the analytics tool or advertising platform drops a cookie (a unique identifier) in your browser so it can track your behavior across the website, and even across multiple websites or devices. Marketers add [UTM codes](https://app.vexpower.com/sim/lets-keep-our-utm-tracking-consistent/) to the end of the URLs (?utm\_source=facebook&utm\_medium=cpc&utm\_campaign=abc) that they use in their campaigns, which record where users came from, and an “event” is logged whenever they do something valuable, like buy the product or sign up as a user. The major distinction within this space is how you assign credit across channels. Users tend to not come from just one source—they may come back to the website multiple times via different channels before making a purchase or signing up. If you use the Google Analytics default “last touch” (assigning 100% of the credit to the last channel), you’ll favor lower-funnel channels like (surprise, surprise) Google Ads, as opposed to upper-funnel channels like TikTok or Instagram. Outside of Google Analytics, there are a variety of vendors in this space, including [Rockerbox](https://www.rockerbox.com/), [Northbeam](https://www.northbeam.io/), and [Triple Whale](https://www.triplewhale.com/), and many companies have implemented variations of this technology internally (my team helped build our internal version of this when I was at Harry’s). #### How consumer brands use multi-touch attribution This is by far the most ubiquitous method, and because most new startups are online, it’s usually the predominant method they use to measure marketing in the early growth stages. Paradoxically, because it’s so common, there are comparatively fewer case studies available compared with the other methods. You can safely assume that everyone that sells products online is using this method in some form, because everyone has Google Analytics installed. The cases we’ve included in the [database](https://airtable.com/shrzPkZvLTZtcsnbI) are where they’re doing something interesting over and above the standard implementation of Google Analytics, like a custom model or unique approach. ![Image from How today’s top consumer brands measure marketing’s impact](https://substack-post-media.s3.amazonaws.com/public/images/04397207-888b-4dbf-95a9-712e0be11dcb_1357x897.png) We found 17 instances of top brands talking about MTA in case studies, which is 40% of the brands featured, although it can be assumed that 100% of the brands use analytics and tracking pixels. Here are a few select quotes we found interesting, to highlight how top consumer brands are thinking about digital tracking/MTA: > **[DoorDash](https://doordash.engineering/2021/08/10/predicting-marketing-performance-from-early-attribution-indicators/): “Currently, DoorDash uses a several-day last-touch attribution system for all digital marketing channels, which provides a good balance between a holistic view of conversions for most ads, and reasonable wait time for fully refreshed attribution performance.”** It was surprising to me that a company as sophisticated as DoorDash would be using last-touch attribution, as detailed by Zhe Mai on their data science team. When I started in marketing over a decade ago, everyone was moving away from last-click, because it was universally agreed that it had obvious issues in biasing toward “lower funnel” channels like Google Ads. Lower-funnel channels are more likely to be the last channel that a user interacts with before purchasing, but they shouldn’t get 100% of the credit! However, I think the fact that DoorDash is still using it highlights the pervasive nature of the last-click model: it’s simple and easy to interpret, as well as being the easiest to measure, so it’s still very commonly used across the industry, including at very sophisticated companies. > **[Airbnb](https://www.singular.net/blog/experts-from-airbnb-stitch-fix-and-bark-box-on-multi-touch-attribution-incrementality/): “‘Some teams look at MTA as a way to re-slice the pie,’ he said. ‘It kind of makes one channel look better, or one team look better . . . but the pie doesn’t get bigger. The key is to use multi-touch attribution to make the pie bigger.’”** This quote from Airbnb’s then–growth marketing lead Dmitry Stavitsky reminds us to not get sucked into the battle for budgets that attribution often comes down to. Different attribution models will make one channel look better than another, which can cause political infighting in siloed organizations. The goal should be to make marketing perform better, which ultimately leads to more success and financial reward for everyone working at the company. > **[Uber](https://www.uber.com/en-GB/blog/euclid-marketing-engineering/): “When a user sees a social network ad, then searches ‘Uber’ on the web, clicks a search ad, and later signs up with Uber, it’s not fair to give all the credit to the search ad. Multi-touch attribution, another challenge Euclid tackles, involves looking at the impression level data, analyzing the complete user conversion journey, and then attributing the right weight of credit for each conversion to multiple channels.”** As you might expect, there were several cases where fast-growing startups and larger enterprises saw fit to build a custom system, like the one Uber describes above. Companies like Uber pride themselves on their engineering and statistical talent and have the capability to manage such software in-house, adapted to their specific needs. One thing that was surprising was how we couldn’t find any examples of open source software, even among companies that have open-sourced their software for other methods like marketing mix modeling, like Uber has with their “Orbit” model. Perhaps MTA software isn’t as generalizable, or it could be that it’s seen as a “secret sauce” internally. #### How to set up tracking and analytics Digital tracking, despite its issues, is a good starting point for brands that are primarily online. Start with a [tracking plan](https://www.reforge.com/blog/why-most-analytics-efforts-fail), which details what you want to track and when that occurs. This can take the form of an Excel spreadsheet on up to a dynamically updated [event tracking system](https://www.avo.app/) that’s integrated with your software deployment process or [tag manager](https://segment.com/docs/protocols/tracking-plan/create/), depending on your required level of sophistication. Once you’ve agreed on your tracking plan, you should implement a tag manager, which lets you record data once and then push it to where you need it. Google provides a free product called [Google Tag Manager](https://tagmanager.google.com/#/home), but there are also more sophisticated options like [Segment](https://segment.com/) that have a cost associated. The benefit of using a paid product is typically better collaboration and monitoring functionality, as well as ease of implementation. Now set up tracking pixels for each ad platform, and choose your analytics software. Google Analytics 4 is a good default for the web, although not everyone finds the interface to their liking. Mobile tracking is more complicated, because the Apple App Store is a barrier past which tracking parameters don’t cross. You have to use a link attribution service like [AppsFlyer](https://www.appsflyer.com/) or [Branch](https://www.branch.io/), which work with various methods to re-associate each install to the campaign they came from. Whatever stack you use, you’ll find more advanced use cases necessitate setting up a data warehouse that pulls in all your analytics data, as well as your advertising spend data via a provider like [Supermetrics](https://supermetrics.com/) or [Funnel.io](https://funnel.io/). Once everything is in one place you can build your own MTA models, with your own rules, as well as analyze the data in various reports through a data visualization tool like [Looker](https://www.looker.com/) or [Tableau](https://www.tableau.com/). ### 2. MMM: Marketing mix modeling Before we had the internet, how did marketers measure ads? You can’t click on a TV ad or tap on a newspaper to get to a website. [In the 1960s](https://getrecast.com/econometrics-history/) a technique called marketing mix modeling (MMM), a subset of econometrics, was developed to measure the contribution of each channel to sales. More recently this technique has grown in popularity because it only needs aggregate data and therefore doesn’t have any privacy concerns. Meta’s open source [Robyn](https://facebookexperimental.github.io/Robyn/) library has made MMM more accessible, and a number of vendors (including [Recast](https://getrecast.com/)) have worked toward modernizing the technique. ![Image from How today’s top consumer brands measure marketing’s impact](https://substack-post-media.s3.amazonaws.com/public/images/34bd5789-d733-481a-abc5-44ca6ec677df_1138x632.png) The method involves building an advanced statistical model, which correlates spikes and dips in sales with events and actions in marketing. So for example, if every time you increase paid advertising your organic sales rise, MMM can pick that up. This works independently of what your platform or analytics tool is telling you, so it’s used to fill the gaps in tracking and get a truer sense of what channels are really contributing to the bottom line. However, it can struggle with granularity at the campaign or [creative level](https://marketingmemetics.com/essays/message-mix-modeling). Additionally, the results are very sensitive to the sophistication of the model, and it’s easy to get incorrect results if the model isn’t set up correctly. The big divide in methods is whether you use a traditional vendor like [Nielsen](https://www.nielsen.com/solutions/marketing-optimization/marketing-mix-modeling/) or one of the more modern techniques. This is an important departure, because traditionally MMM is slow and expensive, meaning it’s usually run just once or twice a year, even by big brands. With more modern approaches, the models are more automated, and you can set up a data pipeline to update the model and optimize your marketing budget more regularly, like two to four times a month. #### How consumer brands use marketing mix modeling We have the most case studies on this method because we built the [database](https://airtable.com/shrzPkZvLTZtcsnbI) for a blog post on [who’s talking about MMM](https://getrecast.com/mmm-examples/) in case studies. If we tried to collect case studies even five years ago, we would have been left with boring corporate drivel, but what’s normally a dry space has exploded since the advent of iOS 14, when Apple introduced the ability for users to say no to tracking. There has been a lot of innovation in the space, and, refreshingly, people seem eager to share what they’re doing, which has helped progress happen faster than it otherwise would. ![Image from How today’s top consumer brands measure marketing’s impact](https://substack-post-media.s3.amazonaws.com/public/images/8a535d52-50aa-4121-890b-678336e0d013_1355x1561.png) We found 35 instances of top brands talking about MMM in case studies, which is 82% of the brands featured. Here are a few select quotes we found interesting, to highlight how top consumer brands are thinking about MMM: > **[Uber](https://arxiv.org/pdf/2106.03322.pdf): “Recent consumer privacy initiatives (e.g., Apple’s announcement of no-IDFA 1 in iOS 14) further underscores the strategic importance of future-proofing any marketing measurement game plan with MMM.”** Uber pins down precisely the reason for all of the recent momentum in this space. With a big gap in MTA tracking, marketers can no longer rely entirely on that method and have been branching out to techniques like MMM. Uber has been a large proponent of this in releasing their open source library Orbit, which is technically sophisticated but isn’t a full out-of-the-box MMM solution. Uber was just one of the companies in the database using multiple methods: 40% of these brands had at least two case studies recorded using different methods, or mentioned more than one method in the same case study. > **[HelloFresh](https://engineering.hellofresh.com/bayesian-media-mix-modeling-using-pymc3-for-fun-and-profit-2bd4667504e6): “The MMM is especially helpful in quantifying the impact of offline channels like television, billboards, or radio advertising, which are difficult to assess using digital measurement solutions.”** HelloFresh is one of the best-known companies among modern MMM proponents because it uses Bayesian techniques. Bayesian methods are helpful in the application of MMM because they allow for more complex specifications of the model while still capturing the underlying uncertainty. Many marketers tend to turn to MMM when they have a more complex marketing mix, like an advertiser that has multiple offline channels, for example. In fact, many of the clients we’ve worked with came to use it right around the time they decided to branch out into offline channels like TV or billboards, because of course you can’t measure these methods with digital tracking—you can’t click on a TV ad or billboard. > **[Resident (Nectar mattresses)](https://www.facebook.com/business/success/resident): “The optimization efforts have achieved a 20% increase in revenue with the same blended cost per acquisition. Five days to implement the Robyn model (compared to five working months to implement its in-house model).”** The case study from Resident, owner of the Nectar mattress brand, highlights both the benefit of MMM and the positive contribution of all of this investment in modern techniques. Done well, MMM should help you bring down your cost of acquisition or improve your return on investment, through helping you reallocate your budget. It’s easy for analysts to lose sight of that and fail to communicate the ultimate goal to the rest of the business, who get lost in the statistics. Meta’s open source library, Robyn, has democratized MMM for companies that didn’t have a data science team to custom build their models, and it does a fairly good job out of the box. It’s usually the first port of call for smaller clients, and often the people we work with have at least tested it on the path toward more sophisticated techniques. If you’re paying for a vendor to build your MMM, or working on your own custom solution, we recommend testing it head-to-head against Robyn to establish a good baseline for accuracy and performance. #### How to build a marketing mix model When it comes to building your first MMM, you should buckle up for a three- to six-month project if you have a complicated set of marketing activities to model. Data collection and formatting might take you 40% to 60% of this time, particularly if you don’t have your house in order already. Tech startups that already have all their data in a data warehouse will accelerate through this phase, whereas legacy businesses that operate in silos might take a significant amount of time. Beginning this project might also spawn other projects to clean up your data or collect more of it, depending on what you find when you go looking for the data you need. We’ve found you can bring that timeline down to a couple of weeks when working with a vendor who has automated all the data collection, reporting, and forecasting. On the lower end this can be as simple as using Supermetrics or Funnel.io to dump your data into a Google spreadsheet, but on the higher end it could mean working with a vendor that has built a data warehouse and all the necessary connectors to the main marketing channels and analytics platforms, like we have done at Recast. If you plan to build a model in-house, either [Meta’s Robyn](https://getrecast.com/facebook-robyn/) or [Google’s LightweightMMM](https://getrecast.com/google-lightweightmmm/) would be a good solid base, but they obviously have their limitations and will need some customization for your use case. [Uber’s Orbit](https://www.uber.com/en-MX/blog/orbit/) uses time-varying coefficients, which means the performance of marketing can change over time in their models, which we think is essential and, as such, built our models around this principle. Remarkably, most MMMs assume marketing never improves or changes in performance, even around important seasonal trends or economic events. If you plan to go for a completely custom build, plan in anything from an additional three months to two years, which is how long it took us to exit our R&D phase at Recast. MMM is a hard statistical problem to solve, and is unusually unsuitable for solving through modern machine learning techniques. MMM has the joint goal of being accurate but also explainable: a model is useless if it can’t tell you which channel contributed to sales historically, or help you forecast out what to spend in each channel. ### 3. CLS: Conversion lift studies Most people don’t know that marketers were using [randomized controlled trials](https://marketingmemetics.com/essays/scientific-marketing) before the first double-blind study was published in medicine! Claude Hopkins, who wrote the book *Scientific Advertising* in 1923, would regularly split his mailing list into multiple groups that would each get a different message so he could see what message worked best. Conversion lift studies (CLS) are still the gold standard of how advertising is measured, and serve as definitive proof of incrementality (how many of your sales wouldn’t have happened without ads). Nowadays the power of split testing, or A/B testing, is commonly known among marketers and product managers for landing page and [creative testing](https://marketingmemetics.com/performance-branding), but it can also be used for marketing measurement. It works by dividing the audience into randomly assigned groups and then turning off advertising to one of those groups to calculate the difference. There are more advanced statistical calculations that can be run to determine group selection and estimate what would have happened had you not turned off ads. “Geo lift” isn’t [immune from problems](https://getrecast.com/geo-testing/), and it can be complicated and expensive to set up and run these experiments, but it’s a solid technique. ![Image from How today’s top consumer brands measure marketing’s impact](https://substack-post-media.s3.amazonaws.com/public/images/f90ab8a3-8e29-45f6-8f4e-143806490f6b_1137x632.png) There are two forms of testing that are most useful in determining the overall effectiveness of marketing. Many ad platforms, like Meta and Google, allow you to run CLS on the platform, where they define the parameters of the test and are responsible for dividing the audience. Even without a platform, you can run a geo-level experiment where you might turn off ads in five U.S. states and calculate the difference, using statistics to establish causal effects. #### How consumer brands use conversion lift studies There were relatively fewer case studies in this domain, perhaps because there aren’t as many vendors that offer it. Usually, in our experience, lift studies are done in-house using an open source library like [Meta’s GeoLift model](https://app.vexpower.com/sim/can-we-prove-the-roi-of-ads/) or with some custom code written by the data-science team. There are also platform lift tests, which are much more commonly run by large advertisers, but, again, this is a standard feature (only in some cases do you need to go through your platform representative), so not many people write publicly about it. ![Image from How today’s top consumer brands measure marketing’s impact](https://substack-post-media.s3.amazonaws.com/public/images/13ee9d5b-7b1f-457f-93e3-9dbd33b2ca5c_1355x855.png) In the [database](https://airtable.com/shrzPkZvLTZtcsnbI) we found 16 instances of top brands talking about experiments/CLS in case studies, which is 38% of the brands featured. Here are a few select quotes we found interesting, to highlight how top consumer brands are thinking about this method: > **[Netflix](https://netflixtechblog.com/quasi-experimentation-at-netflix-566b57d2e362): “Usually we’d like to run a classic individual-level randomized experiment, but randomizing which individuals see a billboard ad, as an example, is not possible. However, while we cannot randomly assign individuals, we can randomly choose some cities within which to show billboards and other cities to leave without.”** Netflix makes the case for geo-testing, where you divide up your audience into geographical regions like cities, counties, or states, and turn off ads in some of those regions, to determine how many incremental sales the ads drove. This is often the only feasible way to run an experiment for many channels, because randomly assigning some part of the audience to not see ads is impossible or impractical. The benefit of this approach is that it works independently of what the platform offers, which means you don’t have to trust their in-platform lift testing methodology and can confirm the value of their channel for yourself. > **[Uber](https://papers.adkdd.org/2020/papers/adkdd20-barajas-advertising.pdf): “We measure a 6.57% decrease of conversions (statistically significant) when UAC spend is suspended. To our knowledge, our work is one of the earliest studies that successfully measures the incremental value of UAC with controlled experiments.”** This case study from Uber is the bread and butter of experimentation: determining the incremental value of a channel. Knowing that 6.57% of their conversions were attributable to UAC (Google’s Universal App Campaigns) helps them clearly calculate the return on investment for that channel and decide if they want to invest more or cut spend and re-attribute elsewhere. Experiments like this are important to Uber because they were the victim of a [$100 million fraud](https://veracitytrustnetwork.com/blog/digital-marketing/uber-ad-fraud/) in ad spend, ultimately suing their programmatic display vendor. The reports all looked great, but when they ran the incrementality numbers, they noticed that the conversions would have happened anyway, which tipped them off to the fact they were spending millions of dollars advertising to bots instead of real people. > **[McDonald’s](https://www.warc.com/newsandopinion/opinion/mmm-and-experiments-the-new-paradigm-to-measure-marketing-effectiveness/en-gb/5694): “In 2019, we used the Meta Marketing API to build a geo-test solution switching on and off Meta advertising for McDonald’s. We used the aggregated output to validate our MMM model, grounding the contribution to Meta’s advertising into the causal contribution identified in the experiment.”** This is becoming a common thread: using the results of one method to calibrate another. Using the results of a conversion lift study based on geographical regions helped McDonald’s build a more accurate marketing mix model, by establishing a ground truth with which to measure the model against. This can be really useful to keep the modeling process honest, because there are usually hundreds of potential models that fit the data. It’s important to bear in mind that incrementality tests are just a snapshot of a point in time. You learn the incrementality of the channel at that point when you run the test, but it doesn’t necessarily generalize over time. I’ve seen some scenarios where a channel that was found to be 90% incremental previously ended up being less than 20% incremental only four months later, because the ads team unknowingly dropped the setting that excludes existing customers. #### How to run a conversion lift study Most often, the first experience with lift studies is in-platform, for example using Meta’s native solution or the equivalent offered by Google. However, this only tells you about one channel, and not every channel offers this option. Many smaller digital channels outside of Google and Meta don’t offer in-platform incrementality tests, or they do offer it, but only if you’re a big spender and you insist on it. In many channels it's just not possible technically—for example, you can’t de-rank your website from Google search results for some users but not others—to test whether ranking makes a difference to traffic. If you don’t trust the platform to grade their own homework, or want to test a channel that doesn’t offer in-platform testing, the most common method is a geo-region test. If you’re planning to run these experiments in-house, Meta’s team open-sourced [GeoLift](https://app.vexpower.com/sim/can-we-prove-the-roi-of-ads/), a library that does the calculations and estimates a “synthetic control” (a weighted combination of similar regions), so that you can be sure you’re running a statistically valid experiment. Various factors can be adjusted in your experiments, so, for example, you can turn off some channels but not others, or run them in various combinations, to establish how they interact with each other. One of our favorite techniques is to run scale tests, where you increase spend in graduated steps in some regions but not in others, in order to see where a channel hits saturation due to diminishing returns. This can tell you how much headroom you have to expand investment in the channel, and at what point it gets too expensive to invest more in. ## How to get these methods working together We like to say that marketing measurement is like the parable of the [blind men and the elephant](https://en.wikipedia.org/wiki/Blind_men_and_an_elephant): every different marketing measurement method gives you a different view of true performance, but if you put all the pieces together you can triangulate the best answer for your business. That isn’t to say that it’s not worth pursuing the path of marketing measurement if you can’t use all three methods. If you’re just getting started with digital tracking, that’s great! You just need to keep in mind the limitations of the methodology and get ready to add on more sophisticated and complicated techniques when you’re ready. ### Triangulation, i.e. calibrating MTA with MMM with CLS Triangulation is where you use all three methods together, to triangulate the true performance of your marketing mix. It works like this: 1. Use your platform reports or analytics (MTA) to provide directional data for small daily optimizations like turning off a poor-performing ad or adjusting campaign settings. 2. Use your model (MMM) to forecast different budget allocations between channels, determining how much you can spend in a channel before it becomes inefficient. 3. Run lift tests (CLS) every few months, and use the results to calibrate the accuracy of your MMM: if these two methods agree, you can be more confident making predictions. ![Image from How today’s top consumer brands measure marketing’s impact](https://substack-post-media.s3.amazonaws.com/public/images/4903d09f-d04e-4666-8afe-90f3e14b732c_1137x632.png) Triangulation helps us build on the strengths of each method and mitigate their weaknesses by not relying on a single source of truth. - Conversion lift studies will get you the closest to true incrementality, but it can be difficult and expensive to run them too frequently. Run an incrementality test once or twice a year, with more regular testing as your budget gets into the millions. - Marketing mix modeling is easier to get right when you can compare it against conversion lift studies. There are usually hundreds of different models that fit the data equally well, and this allows you to rule out the least plausible model configurations. - Multi-touch attribution is used directionally for smaller optimizations, because your marketing mix model usually won’t be that granular to the campaign or tactic level. Allocate your budget using your model, and use it to adjust your platform level reports. **Here’s how this might look in practice:** - If your budget is $1 million a year, with 80% spent on Google Ads, you could run lift tests for that channel quarterly, with your smaller channels (TikTok) tested annually. - Your last lift test told you Google Ads had an incremental cost per signup of $20, so you keep working on your MMM until it says the same for that time period. - Your model estimates that TikTok is only counting 80% of the conversions it actually generates, so when it reports $27 CPA it’s really achieving a $22 CPA. ![Image from How today’s top consumer brands measure marketing’s impact](https://substack-post-media.s3.amazonaws.com/public/images/247729dd-018f-4a7b-9b6c-a4e9075b1c74_1137x632.png) ## To close Marketing measurement has never been an easy job, and the past few years have made it even harder. Multi-touch attribution is still the default starting point for most brands, but if you’re looking for more accuracy, you should consider marketing mix modeling and conversion lift studies to protect against wasted ad spend. Each method is useful in helping marketers optimize their campaigns and make better decisions, and by combining the strengths of each method, marketers can triangulate the truth and get a more accurate reading of how their campaigns are performing. ### 📚 Further study Marketing measurement is a huge topic, and we’re only just scratching the surface. If you’re keen to learn more, we recommend diving into the various links in the [database](https://airtable.com/shrzPkZvLTZtcsnbI), which we’ll keep updating. If you spot an interesting case study on MTA, MMM, or CLS, [please add it to the database](https://airtable.com/shrFVy4pMcAxjltBe), so we can make this the definitive place to look for marketing measurement insights. We’ve written extensively about these methods, in particular MMM, which is seeing a resurgence of interest post-iOS 14. Here are a few select posts from the Recast website, as well as a few courses for learning MMM: 1. [The Attribution Stack: How to Make Budget Decisions in a Post-iOS 14 World](https://www.reforge.com/blog/marketing-attribution-stack-after-ios14)—a piece we wrote for Reforge on how these methods work, and their strengths and weaknesses 2. [Operationalizing Modern MMM for Your Brand](https://getrecast.com/operationalizing-mmm-for-modern-brands/)—an e-book we collaborated on that walks through the entire end-to-end process for implementing MMM 3. [What’s the impact of TV ads?](https://app.vexpower.com/sim/whats-the-impact-of-tv-ads/)—an introductory-level course where you see the outputs of a simple MMM and learn how decisions are made based on the results 4. [How can Facebook drive negative sales?](https://app.vexpower.com/sim/how-can-facebook-drive-negative-sales/)—an online course we both worked on that teaches how to code your own simple Bayesian MMM, to understand how it works 5. [Validation through testing](https://getrecast.com/validation-through-testing/)—a blog post on using lift tests and experimentation to validate MMM results *Thank you, Michael and Mike!* *Have a fulfilling and productive week 🙏* **If you’re finding this newsletter valuable, share it with a friend, and consider subscribing if you haven’t already. Check out [group discounts](https://www.lennysnewsletter.com/subscribe?group=true) and [gift options](https://www.lennysnewsletter.com/subscribe?gift=true).** Sincerely, Lenny 👋 --- ## [28/51] How Shopify builds product Shopify has always done things a bit differently. They’ve been remote-friendly long before Covid, recently [canceled all of their recurring meetings](https://www.fastcompany.com/90888605/shopify-exec-this-is-what-happened-when-we-canceled-all-meetings) (and now even [show how much each meeting is costing attendees](https://qz.com/if-you-want-fewer-meetings-measure-them-in-cash-1850632407)!), and famously are on a mission to “[arm the rebels](https://qz.com/1954108/shopify-is-arming-the-rebels-against-amazon).” The business has been an unprecedented success story, too. Shopify now powers over 10% of all U.S. e-commerce, hosts a large swath of the world’s biggest e-commerce businesses, including Supreme, Glossier, Mattel, Vuori, Gymshark, and Allbirds, has processed over half a trillion dollars of GMV, and generates nearly $6B (!) of revenue per year. Shopify is also 17 years old, with almost 10,000 employees, but continues to execute like a startup and launch innovative products like [Sidekick](https://twitter.com/tobi/status/1679114154756669441) (an AI business partner), [immersive product description pages](https://twitter.com/kalenjordan/status/1682102256022192128?s=20), and the world’s highest-converting checkout platform, [Shop Pay](https://news.shopify.com/shop-pay-ccs). To learn from Shopify’s experience scaling and optimizing their product org, I sat down with [Glen Coates](https://www.linkedin.com/in/glcoates/), VP of Product, responsible for the core Shopify product—the largest product team within the company. **Here’s what stood out to me most about Shopify’s approach to product:** 1. Their CEO Tobi’s yearly themes, and how they inform every team’s planning 2. Their aversion to OKRs 3. Their homegrown task tracking system, called GSD—Get Shit Done 4. Their shift away from a GM structure, and their move from 10 business units down to two 5. Teams being structured around jobs to be done 6. Their AAA framework for handling stakeholders—Aiming, Assembling, and Achieving 7. Their recursive internal mantra that ends with “The third priority is never to reverse priorities one and two” Glen is also going to be announcing a swath of product updates to the Shopify platform tomorrow morning as part of the [Shopify Editions Summer ’23 launch](https://www.shopify.com/editions). For more from Glen, follow him on [LinkedIn](https://www.linkedin.com/in/glcoates/) and [Twitter](https://twitter.com/glencoates?lang=en). For more stories of how the best product teams operate, don’t miss my interviews with [Figma](https://www.lennysnewsletter.com/p/how-figma-builds-product), [Coda](https://www.lennysnewsletter.com/p/how-coda-builds-product), [Duolingo](https://www.lennysnewsletter.com/p/how-duolingo-builds-product), [Miro](https://www.lennysnewsletter.com/p/how-miro-builds-product), [Ramp](https://www.lennysnewsletter.com/p/how-ramp-builds-product), [Notion](https://www.lennysnewsletter.com/p/how-notion-builds-product), and [Snowflake](https://www.lennysnewsletter.com/p/how-snowflake-builds-product). # How Shopify builds product ![Image from How Shopify builds product](https://substack-post-media.s3.amazonaws.com/public/images/586ee879-d8a7-48e0-b926-e49cd1f2378b_1066x1600.jpeg) ### 1. How far out do you plan in detail, and how has that evolved over the years? Until very recently, Shopify had an annual planning process where we’d present plans to the CEO and Finance in August or September. We’d write these long docs, but unsurprisingly, they’d usually get torn up by about March. So planning became this charade of *we’re going to do this insane planning thing, but we know it’s all just going to go sideways in three months*. We all know how crazy it’s been out there; things are changing so fast all the time. People who think they can see a year out are mostly kidding themselves. Instead now, once a year, [Tobi](https://twitter.com/tobi) [Shopify’s founder and CEO] sets themes for the year. This year there were six that reflect top-level priorities. They’re always written from the point of view of the merchant. We try to imagine a Shopify merchant writing an email to a friend where they say, “Here’s why I love Shopify, and here’s why I’m going to keep using it for my business.” One of the themes that Tobi added this year was “Shopify keeps me on the cutting edge.” Which is an amorphous thing, “the cutting edge”—what does that mean? Is it developer tooling? Is it AI? Is it evolving regulations like [ATT](https://developer.apple.com/documentation/apptrackingtransparency)? Is it how I optimize my checkout for conversion? It could be any of that, which is the idea. We want merchants to focus on their business. We want them to think, “Hey, I’m just a guy trying to sell candles. Do I really want to have to learn everything about checkout conversion optimization? Do I really want to have to read white papers coming out of OpenAI, or can I trust that Shopify’s got me and I can just focus on my candles?” This year, especially with AI, that theme was such a focusing lens for us. We have to be on the bleeding edge so merchants don’t have to be. Once we have Tobi’s themes, one level lower within each top-level team (e.g. Core), we think about the ways we could measure our impact against those themes. We come up with what would end up being called an objective or something that smells a bit like an OKR (though we would never say that here). That turns into a rough six-month roadmap. This aligns with our twice-yearly releases, [Shopify Editions](https://www.shopify.com/ca/editions/all), which are our big releases with hundreds of improvements, features, and products. ![Image](https://substack-post-media.s3.amazonaws.com/public/images/978d495a-c371-4e97-8901-37030c9de1d1_982x852.jpeg) We want to have very high confidence in what’s going to be shipping in the next Edition, and some idea of what will go in the one after that, but we don’t try to think too much further than that. Then every six weeks, teams come together and do their sprint-level detailed planning of what they are doing right now. So that’s kind of the lay of the land in terms of planning. Themes once a year, which gets translated into a six-month plan, and then there are four six-week cycles inside each half. But again, things are changing so much right now. The world economy just went upside down last year, and that changed things. The world of AI appeared earlier this year, and that changed things. So I think we’ve learned the hard way that the world doesn’t seem to be slowing down, and being able to react and not being married to the plan is actually the most important thing. ### **2. You said you never use the word “OKR,” but let me ask you anyway—have you used OKRs in some form, and how has that changed over the years?** I’m not aware of us ever using OKRs formally at Shopify, but people end up using things that smell like them all the time. If I had to say why there is an aversion to them, I think it’s really two things. One, it’s part of the culture—there’s a bit of an affinity for chaos and change that doesn’t embrace structured systems. In a sense, that’s just who Tobi is. Tobi is very truth-seeking in the sense of whatever the truth is, he just wants to go there, and systems and structures that stop him going to the truth are bad in and of themselves. If you look at companies like Google, Facebook—things that are very aggregatory, very funnelly, very at-scale consumer products—they’re often very metrics-oriented. A team owns a number, and the goal is to do whatever they have to do to make that number go up. I think Tobi just does not agree with that philosophy of product development and thinks that you end up with a lot of micro-optimizations of local maxima that may say you drove that number up, but the product just doesn’t feel good anymore. The product doesn’t fit well together, and it feels like one part is pushing me in one direction and the other part in another. You can’t really explain why that is until you find out that there were two teams inside the company who had different metrics they were optimizing for. That’s when you realize why the product is so weird and incohesive. On the other hand, there are some parts of Shopify where we do care a lot about metrics. A good example would be the Checkout team, who cares a lot about checkout conversion rate because there’s a one-to-one relationship between that and the money that our merchants make. We’re extremely focused on metrics when it comes to performance. We care a lot about the speed and quality of the product itself, but we’re not the kind of company that would deem something a failure or not approve something to go ahead just because you can’t put a metric on it. As an example, right now we’re working to significantly change the look and feel of the Shopify Admin [the seller dashboard] for no reason other than it’ll look better and we think it’s the right thing to do. There’s zero metrics attached to it. The only thing that matters is that we come out the other side, look at it, and think: *That’s rad. I’m psyched. Merchants are psyched.* That’s it. ![Image from How Shopify builds product](https://substack-post-media.s3.amazonaws.com/public/images/7e7776f4-5947-44a4-ba22-fcd68db0bf16_1600x900.png) ### **3. How do product/design review meetings work?** Shopify has an internal system called GSD, which is a bit like Jira or a task management app, except it’s not really a task management app. It’s a project stakeholder reviewing tool. It stands for “Get Shit Done.” Every project that any team does goes in GSD, which has five phases of review: 1. Proposal 2. Prototype 3. Build 4. Release 5. Results Here’s what this looks like in an actual screenshot of GSD: ![Image from How Shopify builds product](https://substack-post-media.s3.amazonaws.com/public/images/9547ef9b-2db8-495e-bc95-2a839ba7fb55_1118x184.png) We have a system called OK1 and OK2, and for any particular team there’s a front line of reviewers. On OK1s, it’s usually the directors from product, UX, engineering, and sometimes data who all have to sign off. And then it comes up to the senior leadership team (SLT), which we call OK2, which includes, again, product, UX, engineering, and data, who all have to sign off on it as well. It’s actually been really good practice for the PM team, because most of these reviews come with a short video from the PM explaining what the product or project is. I think it’s great practice for PMs to have to say, very concisely, “What is this thing? Why is it valuable? How does it work?” So they get a lot of practice storytelling in tight videos. Usually we do these reviews async and we trade comments. Sometimes, though, we set a meeting to talk synchronously when we know the topic will be super-controversial or it’s a big deal. We also have an office-hours rotation where if you need to get in for a 30-minute review for quick feedback on not very much notice, there’s a lever to pull. In terms of who makes the calls in product reviews, I generally think of it like this: product makes the call on *should we do this at all*, Engineering and UX essentially has the veto power on *how* we do it, and then at the end of the day, the PM has to put their body on the line for *is this ready to ship*. If they say yes and the thing’s garbage, then the PM has to wear it. That’s generally how that works. ### **4. Are product and design part of the same org? And who do PMs ultimately report to? Has this changed over the years?** Tobi is the head of R&D (and also CEO) at Shopify, and there are two people who report to him, who all the PMs report to. One of them is me and the other is [Kaz](https://www.linkedin.com/in/kasranejatian/?originalSubdomain=ca). About half the PMs report to each of us. In my org, product, UX, marketing, ops, and partnerships all report up into me, and engineering and data have their own functional orgs separately. Under me, the reporting lines go functional. So the head of UX reports to me, and all of UX reports to her. I have a head of product marketing, and all of product marketing reports to her. ![Image from How Shopify builds product](https://substack-post-media.s3.amazonaws.com/public/images/e05b4b6b-dbf3-4343-ba71-f654233198b8_1600x1074.png) In 2018 we had a GM structure, with about 10 GMs at Shopify, each of whom had all the functions for their business unit reporting to them. Then, about two and a half years ago, Tobi reorged the company from 10 divisions to two. The two divisions are: 1. **Core:** What I run product for, which is what’s in the box when you buy Shopify—all the included features, the online store, checkout, and Admin. 2. **Merchant services:** Think of it as the optional add-ons for Shopify, the point of sale, the payment processing, and the shipping labels. This also includes **Shop**—the buyer-facing brand, the wallet, the package tracker, the shopping. There were many reasons for our move away from the GM structure, but one of the biggest reasons was because as the company grew and our product became wider, with lots of capabilities, the advantage we have versus your competitors is the breadth of the feature set—the one-stop-shopness of your product. That value really starts to fall apart if the parts of the product don’t work well together and don’t seem like they were crafted from a single vision. This is the challenge that all big tech companies need to overcome. Can you tell how our org structure works by looking at the product? Can you see where the breaks are in the product or not? The best companies figure out how to make sure you can’t see the org chart through the product. This org structure that we’re in right now, it has downsides to it (e.g. very large teams that require a lot of centralized coordination), but the big upside is that the org chart and the actual product are very close to the same thing (e.g. we are respecting [Conway’s law](https://en.wikipedia.org/wiki/Conway%27s_law)). This helps us deliver on what our merchants want: products that work well together and are all aimed in a single, consistent direction. ### **5. Do you structure your teams around products, user types, user journey, outcomes, or something in between? Has this changed over the years?** We’re structured essentially around jobs to be done. Within Core, we have 11 teams, and they are oriented around the main merchant jobs to be done. There are some that are obviously semi-standalone bits of the product, like the online store and the checkout. Once you get into the back end, we have a team called Merchandising, and the job to be done there is all about how to set up and sell products. There’s a team called Engage, which mainly focuses on marketing and customer engagement. There’s a team called Build, which manages the developer platform. There’s a team that manages the app ecosystem and all the dynamics around that. Part of the reason we focus teams around jobs to be done is to honor a promise Shopify tries to make and keep to its merchants. We never want merchants to bump into the ceiling that says, *I love this product, but it’s not scaling to meet my needs. Now I have to go do the really painful thing of moving my entire business onto some other platform.* We want teams to think about the whole spectrum. Everyone from my mom, if she wants to get started selling pottery tomorrow, all the way up to big brands like Supreme. We don’t want there to be any rough edges on that curve. As a merchant’s business gets bigger, we don’t want there to be a weird moment where Shopify flips into enterprise mode, where suddenly everything’s different. We want that to be a smooth curve all the way up, and we just need every team to care about that, so there is no “Enterprise Team” or “Small Business Team”; each team needs to think about “hello world through to IPO” for their features. ![Image from How Shopify builds product](https://substack-post-media.s3.amazonaws.com/public/images/a79c9d4d-bfa3-4531-95f9-889f58033e93_1600x900.png) In terms of jobs to be done, we don’t use the hardcore, capital JTBD framework or anything like that. There are gray areas around the edges of some of these things. There’s also a very big variance in the maturity between different jobs to be done within the company. Shopify is a world leader in checkout, for example. I think the next company to us in the world, in the landscape of checkouts on the internet, isn’t even close. We’re world leaders by a big margin. But then you take our Engage team, which builds the marketing tools and customer segmentation—that’s really like a challenger, an upstart, versus a Salesforce Marketing Cloud or things that are much more steeped in those categories. ### **6. What’s in your product team’s tool stack?** It’s super-basic. GSD is the big thing. Google Docs. GitHub for actual task tracking at the team level of sprints and tickets and stuff like that. Descript for sending videos around. We try to keep it pretty simple. We don’t use Jira. I think we’ve hemmed and hawed about that for many years. When I got to Shopify, it was a bit of a Wild West tooling thing, where every team got to pick their own tooling. Everyone had to use GSD for registering that we are working on this project, but the day-to-day management of the tickets was all over the place. When I got here, some people were using Jira, some people were using GitHub Issues, some people were using Asana. It was just chaos. I ran a 50-person startup when we were acquired by Shopify called [Handshake](https://www.linkedin.com/company/handshake-corp/about/), and Handshake was way more disciplined about tooling than Shopify was at that point. The first question I asked was, “Where’s the big Jira instance?” and people were like, “Oh, there isn’t one. People just do whatever they want.”And I was like, *What are you actually talking about? How the hell does this place even work? What is wrong with this place?* Eventually we cleaned it up, but it’s been a bit of a journey to streamline our tooling. ### **7. How many PMs are there at Shopify?** We have a few hundred, half of whom report into Core. ### **8. What percentage of ideas come from the top down and what percentage come bottom-up, roughly?** I would say if we drew the line at Director of where top-down starts, about three-quarters of the roadmap comes from the top down. The other quarter is teams saying, “We want to improve this thing about our area. It’s not some huge roadmap, but we just think this could be better.” There is a steady stream of that stuff. So it’s probably two-thirds or three-quarters top-down, mostly big rocks, and about a quarter bottom-up, polishing and small features. I think most companies think of hierarchy and jobs basically as this sort of single line of leadership downward, based on how senior you are. But a few years ago we introduced something called the AAA framework, which is basically three parts: 1. **Aiming:** strategy and direction of what we are building 2. **Assembling:** operational stuff to bring the right people together and keep them on track 3. **Achieving:** the day-to-day work of getting shit done (GSD) like design, code, etc. ![Image from How Shopify builds product](https://substack-post-media.s3.amazonaws.com/public/images/a7bbd378-4e42-4fe3-b827-474992cc56fc_744x824.png) I was honestly very skeptical of it, but I’ve found them to be very useful. I’m glad to have been proven wrong. It’s been useful to identify people who are actually passionate about one more than the other. You don’t want to take on a leadership job and suddenly be responsible for aiming when you’re really passionate about assembly, or the other way around. It’s helped us put people in the right roles and not just have one dimension of leadership that everyone has to conform to. On projects, it’s really good to be able to know who’s the aimer, responsible for the strategy. It may not be the most senior person in the room; it may be the staff designer or the staff engineer. It’s sometimes good to know that the team’s manager actually isn’t the aimer, which is by design. Then there’s usually dedicated product ops and program management people who are responsible for the assembly. And of course the achievers, who actually do the work. ### **9. You build one of the most beloved and successful products out there. What would you say is unique or central to your approach that leads to such a great and successful product?** It’s a little bit of a cliché, but I would say the fact that Shopify is still founder-led is a big deal. I don’t think anyone can or will ever care as much about Shopify the product and its merchants as much as Tobi does. I think everyone really believes and feels that. Tobi’s also really good at pushing out the values of being merchant-obsessed. This is also one of the things that I learned when I got to Shopify that was one of those nice luxuries. Shopify has been and still is such a successful company that Tobi was able to both establish and live by a set of very merchant-focused values for a very long time. That, just by osmosis, seeped into everyone’s brain. There’s such an insane culture here of doing the right thing for merchants, even at the expense of revenue or other users like buyers or developers. You can have that culture if you have a successful business where you can live that and the business still succeeds. That’s a cultural thing that runs through everything. ![Image from How Shopify builds product](https://substack-post-media.s3.amazonaws.com/public/images/e4b04981-3945-4d15-9abc-14892fe23685_1200x1600.jpeg) The other thing we have is a super-high quality bar. We’re constantly asking, “Is this good enough? Are we proud of this?” Honestly, the main motto inside of Shopify is this kind of mantra. It goes: 1. The number-one priority is to make the best product in the world for our merchants. 2. Our second priority is to make some money so we can do more of number one. 3. The third priority is never to reverse priorities one and two. ![Image from How Shopify builds product](https://substack-post-media.s3.amazonaws.com/public/images/48976cc0-ddf8-4e8c-863f-572a515b29f9_720x405.png) There’s a militant hard line about quality that has been really cool for me. I came from a startup, where you’re just constantly forced to cut corners and do shit that you don’t like to make the next round or to close the next deal. One of the things that I started feeling last year was that I just insist that Shopify is a great product at the level of something that Steve Jobs would have been willing to put his name on. I’m not here to do the version that’s kind of, sort of okay, or thinking that whatever makes money is good enough. This could very likely be the most widely distributed software product I ever work on in my career. I often think of it as, is this iconic in the way that Apple products are iconic? Is it iconic in the way that Porsche is iconic? Is it iconic in the way that Rolex is iconic? I think that being at a company that values that and has the capacity to do that has actually been one of the most inspiring things for me. In the past couple of years, because Shopify is a market leader, in some ways I think we’re kind of on top. But then I turn and I look at the products and I see all these little things where I’m like, *That’s fucked-up. That could be better. Why are we doing that?* I believe that this could actually just be one of the truly great products and we can do it. We’ve got the resources. We should actually just go do that. ### **10. I imagine much of your success has been thanks to hiring well and keeping a very high bar. In your product hires, what do you most look for (that maybe others don’t), and, broadly, what does your interview process look like?** I have a really simple interview process. Not to give too much of the game away, but I only ask four questions. The first question is “Tell me about a product that you were responsible for that went well, and tell me the story of that thing.” The second question is “Tell me about a product that you’re responsible for that didn’t go well, and tell me the story of that thing.” And then I do the same two questions for a product manager who worked for you. I’m looking to understand how a person thinks about what good or bad looks like. How did they react when things went wrong? How insightful is their analysis of what they would do differently, especially in the product that went well or the PM who went well; how much reflection is there on what could have been done better? Even in the things that went well, is this person tortured by that thing that they didn’t do well even in that product that was ridiculously successful? Honestly, I’m looking for sheer horsepower and grit. I don’t care that much about people who are super-frameworky, people who are super-processy. I just want people who are tenacious builders who are really smart and have done the work to be reflective about what they would actually do differently. ![Image from How Shopify builds product](https://substack-post-media.s3.amazonaws.com/public/images/8d7dca6d-2d27-48a0-9aac-0a2c78baa537_1600x1200.png) *Thank you, Glen! For more from Glen, check him out on [LinkedIn](https://www.linkedin.com/in/glcoates/) and [Twitter](https://twitter.com/glencoates?lang=en), and don’t miss the [Shopify Editions Summer ’23 launch](https://www.shopify.com/editions), which Glen will be hosting.* *For more stories of how the best product teams operate, don’t miss my interviews with [Figma](https://www.lennysnewsletter.com/p/how-figma-builds-product), [Coda](https://www.lennysnewsletter.com/p/how-coda-builds-product), [Duolingo](https://www.lennysnewsletter.com/p/how-duolingo-builds-product), [Miro](https://www.lennysnewsletter.com/p/how-miro-builds-product), [Ramp](https://www.lennysnewsletter.com/p/how-ramp-builds-product), [Notion](https://www.lennysnewsletter.com/p/how-notion-builds-product), and [Snowflake](https://www.lennysnewsletter.com/p/how-snowflake-builds-product). Have a fulfilling and productive week 🙏* ## 📣 Join Lenny’s Talent Collective 📣 If you’re hiring, [join Lenny’s Talent Collective](https://www.lennysjobs.com/talent/welcome) to start getting weekly drops of world-class product and growth people who are passively open to new opportunities. I hand-review every application, and accept less than 10% of candidates who apply. ![Image from How Shopify builds product](https://substack-post-media.s3.amazonaws.com/public/images/8638d278-ac01-4f28-b2c9-39f1dd6e4724_1492x1194.png) If you’re looking for a new gig, apply to join! You’ll get personalized opportunities from hand-selected companies. You can join anonymously, hide yourself from companies, and leave anytime. [Apply to join](https://www.lennysjobs.com/talent) **If you’re finding this newsletter valuable, share it with a friend, and consider subscribing if you haven’t already. There are [group discounts](https://www.lennysnewsletter.com/subscribe?group=true) and [gift options](https://www.lennysnewsletter.com/subscribe?gift=true).** Sincerely, Lenny 👋 --- ## [29/51] What is good free-to-paid conversion > ## Q: What is considered a good free-to-paid conversion rate? Getting this benchmarking data is difficult because very few companies publish their conversion rates, and metrics can look wildly different depending on the target customer, product experience, and sales motion. At the same time, improving your free-to-paid conversion rate is one of the single best ways to increase revenue without adding headcount or marketing spend. **To get you a definitive answer, I partnered with [Kyle Poyar](https://www.linkedin.com/in/kyle-poyar/) from [OpenView Ventures](https://openviewpartners.com/) and the excellent [Growth Unhinged newsletter](https://kylepoyar.substack.com/), and the wonderful team at [Pendo](https://www.pendo.io/), to run the most in-depth product benchmarking survey ever**. We collected data from 1,000+ products, and from that pulled out a host of fascinating takeaways, including: 1. *Good* and *great* conversion rate by product type 2. The most effective ways to increase your free-to-paid conversion 3. The differences between freemium vs. trial products 4. Pricing and packaging tips 5. Much more [You can check out the full report here](https://openviewpartners.com/2023-product-benchmarks/). The data set focused on B2B SaaS, but we ended up with data for prosumers/micro-SMBs all the way up to large enterprises. We tried to look at conversion from every possible angle, but if we missed something, drop a comment and we’ll update the post with additional learnings. ### 1. What exactly is “free-to-paid conversion”? Your free-to-paid conversion is the percentage of new accounts who end up paying for the product in the first 6 months. `Free-to-paid conversion = [new accounts who begin paying within their first 6 months] / [total new accounts created during the measurement window]` The best practice is to measure free-to-paid conversion on a *cohort* basis, looking at the percentage of new accounts who begin paying within their first X number of months. Without looking at conversion on a cohort basis, it’s impossible to tell whether you’re getting sequentially better or just pulling forward conversion that would naturally happen over time. Our data assumes a six-month conversion window. An account could be made up of a single user or a collection of users. We’ve defined the data at an account level. Of course, the lifetime value of the two audiences might differ significantly. Make sure to monitor conversion rates across different audiences and not only the blended rate. ### 2. What is a *good* and *great* free-to-paid conversion rate? ![Image from What is good free-to-paid conversion](https://substack-post-media.s3.amazonaws.com/public/images/387be486-c0c9-4dc3-8d81-3a74ea36036f_4000x2668.png) On average, 3%-5% is a GOOD conversion rate for a freemium self-serve product, and 6%-8% is GREAT. This group includes products like Canva, Trello, and Typeform. For a freemium product with a sales-assist motion, 5%-7% is a GOOD conversion and 10%-15% is GREAT. Examples of freemium products with a sales-assist motion include Airtable, GitLab, and HubSpot—any products where sales is generally involved in closing new customers. Products that offer a free trial (i.e. you can use all of the features for a set amount of time, like Shopify, Google Workspace, and Intercom) have higher conversion rates on average—GOOD is 8%-12% conversion, and 15%-25% is GREAT. My theory for why free trial products are so much higher is that these products are typically attracting a user that’s more ready to buy, which then makes them more innately ripe for sales involvement. Sign-up rates for free-trial products are materially lower than for freemium products (5% vs. 9%, respectively). There’s time pressure in a free trial—since users can access it for only a short period of time—and so people wait to sign up until they’re serious. As a result, it’s common for free-trial products to have sales involved in most or all cases. Nearly half of free-trial companies (44%) have sales reach out directly to more than half of sign-ups, double the rate of freemium SaaS (24%). ### 3. What is a good free-to-paid conversion for my specific type of product? The numbers above are useful, but they don’t tell the full story. Free-to-paid conversion rates vary substantially from company to company and by product type. It’s not uncommon for one freemium business to see free-to-paid conversion rates below 1%, while another is able to get to closer to 20%. ![Image from What is good free-to-paid conversion](https://substack-post-media.s3.amazonaws.com/public/images/632dbe1d-afd4-4c62-a040-ec9ee7dd8888_8000x5340.png) **Here’s what we saw in the data for freemium products:** 1. A fifth (20%) of products see a free-to-paid conversion rate below 2.5% 2. About a third (33%) see between 2.5% and 5%—and this is the biggest bucket 3. Only about 15% see a conversation rate higher than 20% (not pictured). **For free-trial products:** 1. Only 7% of free-trial products see a free-to-paid conversion rate below 2.5% 2. A quarter (~24%) of products see a conversion rate between 7.5% and 10%—the most common bucket 3. 14% of products see a free-to-paid conversion rate as high as 20% **Looking at the data by customer type is also illuminating. A few takeaways:** 1. If you’re selling to larger customers, plan for lower free-to-paid conversion. Bigger companies tend to have more stakeholders involved in the buying process and more complex requirements. (There’s also the potential for bigger deal sizes, compensating for the lower conversion rates.) 2. It’s a truism that developers are a tough crowd to sell to—and the data supports that intuition. The median conversion rate for developer-focused companies was 5%; this was half that of companies that do not sell to developers. 3. We investigated conversion rates based on a long list of other factors, too. The data did not indicate statistically significant differences based on the revenue of the company, year-over-year growth rate, or whether the product was a horizontal app or vertical-specific app. ![Image from What is good free-to-paid conversion](https://substack-post-media.s3.amazonaws.com/public/images/4b4e3077-3858-47ae-ad92-1a8beb88d16e_8000x5340.png) ### 4. How do I increase my free-to-paid conversion? Regardless of how your product stacks up, you’re probably thinking the same thing: what should I do to increase conversion? We observed four specific behaviors that can move the needle on free-to-paid conversion. #### a. Sales outreach ![Image from What is good free-to-paid conversion](https://substack-post-media.s3.amazonaws.com/public/images/6f5d5086-c682-47f1-84c2-072598f26919_8000x5340.png) A main driver of increasing free-to-paid conversion is simple: having sales reach out to free accounts. SaaS companies with a free-trial motion are far likelier to layer in sales than their freemium peers. Nearly half of free-trial companies (44%) have sales reach out directly to more than half of free-trial sign-ups. This is double the rate of freemium SaaS (24%). Differences in sales outreach help explain a good amount of the difference in conversion rates between freemium and free-trial products. Gone are the days when it was self-service *or* sales. Today, the new frontier is combining product-led growth (PLG) and sales for efficient growth. I consider this part of a broader trend toward [product-led sales](https://kylepoyar.substack.com/p/plg-and-sales-in-2023). Lenny has great advice on this, including [his conversation with Elena Verna](https://www.lennysnewsletter.com/p/the-ultimate-guide-to-product-led#details), this [guide to layering on PLG](https://www.lennysnewsletter.com/p/five-steps-to-starting-your-plg-motion), and [this guide to layering on sales](https://www.lennysnewsletter.com/p/sales-bottom-up). Sales reps can enhance the user’s experience by helping guide them through the buying process rather than forcing them to go it alone. Contract size used to dictate when procurement got involved. Now even free tools may be scrutinized if important data is involved. One product-led sales approach I’m digging is Zapier’s. Steeve Vakeeswaran was tasked with building out v1 of Zapier’s sales-assist program. He paid close attention to proving whether sales actually improved on Zapier’s baseline metrics relative to self-service. He learned that sales touchpoints weren’t just helpful for converting upmarket accounts; they even improved retention rates post-purchase, because Zapier was able to gather much more information on who these customers were and what they needed. ([Read the Zapier story here](https://kylepoyar.substack.com/p/your-guide-to-sales-assist).) Zapier’s sales team paid close attention to different signals that might qualify a customer for a sales-assisted experience. There were ultimately four signals to product-qualify an account: - **Multi-player use:** Are there multiple active users on a specific domain? - **Usage patterns:** Is the account growing its usage over time? - **Use case:** Does the customer’s use case indicate that they’d benefit from assistance? - **Role:** Does the user’s role align with the company’s ideal customer profile? Sales-assist reps then tailor their outreach based on the user’s context in order to add value before pushing for the commercial transaction. #### b. Product onboarding The data revealed another conversion trend that shouldn’t surprise growth pros: higher product activation coincides with higher free-to-paid conversion. Finding success with the free product opens the door for monetization conversations in the future. (Lenny and Yuriy Timen published a great [activation guide](https://www.lennysnewsletter.com/p/what-is-a-good-activation-rate) last year, including [a bunch of advice for improving your activation rate](https://www.lennysnewsletter.com/i/77646597/what-are-the-most-common-ways-to-increase-activation). Also, [a guide for determining your activation metric](https://www.lennysnewsletter.com/p/how-to-determine-your-activation).) The first-day experience is the most critical part of the user journey and represents your best shot at moving the needle on activation. I’ll typically find that 40%-60% of new users never return to the product after the first day. I collected a number of [product onboarding mishaps](https://kylepoyar.substack.com/p/your-guide-to-self-serve-onboarding), especially for those launching a self-service offering: - The product is too confusing without sales or success helping out - There’s too much of a blank slate - It’s unclear “what’s in it for me” as a user - There’s no personalization for specific use cases, jobs-to-be-done, or levels of intent Miro avoids these missteps and has one of my all-time favorite product onboarding experiences. ![Image from What is good free-to-paid conversion](https://substack-post-media.s3.amazonaws.com/public/images/354990c2-0df5-45dc-bd80-fc116ebd7f1d_1386x859.png) Onboarding begins on the homepage, where Miro combines compelling messaging (“take ideas from better to best”) with social proof (“based on 5,149+ reviews”) and product imagery across desktop, mobile, and presentation-ready devices. From there, the company nudges folks to sign up with a work email (“we recommend using your work email—it keeps work and life separate”), which positions Miro as a business-grade product and attracts higher-intent use cases. Once a new user lands in the Miro dashboard, there’s no blank slate. The app comes pre-populated with recommended Miro boards, including templates sourced from the Miroverse community. There is no need for excessive in-product tours or pop-ups, as the whole experience is extremely intuitive without it. #### c. Focus on higher-intent sign-ups What some product-led companies realize is that they actually make it too easy for a user to try their product. They pour resources into website conversion optimization as a way to generate as many new sign-ups as possible. These companies celebrate their acceleration in sign-ups only to realize later that the extra sign-ups never translated into more customers or revenue. There are two paths to proceeding if you run into this problem. 1. Provide more nurturing, context, and community outside of your product in order to turn low-intent visitors into high-intent users. 2. Redesign onboarding to create a path for low-intent users who aren’t yet ready to activate, let alone purchase, your product. Videos and best-practice guides go a long way. I recommend that you replace sign-ups as a core marketing KPI with *activated sign-ups*, which creates a stronger alignment between marketing and product. Then revisit your onboarding flow with the mindset of a low-intent user in order to spot opportunities to add more educational resources at pivotal moments. To drive more activated sign-ups, I’m a fan of [product-led marketing](https://www.lennysnewsletter.com/p/product-led-marketing), making it easy for end users to discover your product when they need it through two primary strategies: organic search/SEO and product virality. ![Image from What is good free-to-paid conversion](https://substack-post-media.s3.amazonaws.com/public/images/18e87de3-246f-483b-a65a-3a10784e56ba_1600x799.png) Snyk, for example, does a fantastic job of attracting high-intent users through free sidecar products like [Snyk Advisor](https://snyk.io/advisor/) and [Snyk Vulnerability Database](https://security.snyk.io/). The Advisor product is an ungated resource to search and compare from more than a million open source packages. The product attracts—and provides tangible value to—security-conscious developers, and provides a compelling call-to-action to sign up for Snyk’s free version. (Former VP of PLG Ben Williams shared an in-depth case study in his [Product-Led Geek newsletter](https://www.plg.news/p/a-look-inside-snyks-biggest-growth).) #### d. Pricing and packaging Free products need to walk a tightrope between letting users try before they buy and having a compelling reason to pay. Founders and operators regularly debate what the best way to achieve this balance is: freemium or free trial? I won’t dwell on the trade-offs between these two approaches. But I will suggest you contemplate a third option, the reverse trial. Popularized by growth leader Elena Verna ([she has a great run-down here](https://amplitude.com/blog/reverse-trial)), reverse trials give new users access to a free trial of the premium product, then downgrade users to the fully free version if the user chooses not to upgrade. ![Image from What is good free-to-paid conversion](https://substack-post-media.s3.amazonaws.com/public/images/65c0d08d-f822-4bcf-b240-7ad5bdc487ce_8000x6552.png) Reverse trials are a relatively new phenomenon—only 5% of respondents had one. The early data shows that there’s a solid conversion benefit. Reverse-trial businesses convert at twice the rate of classic freemium while maintaining a similar sign-up rate. Reverse-trial examples include up-and-coming PLG darlings like [Krisp](https://krisp.ai/pricing/) and [Coefficient](https://coefficient.io/pricing). My personal favorite case study is Airtable, the low-code/no-code app builder. ![Image from What is good free-to-paid conversion](https://substack-post-media.s3.amazonaws.com/public/images/661df342-763e-4f35-9302-40c69eeb2051_1213x775.png) Airtable lets new users try the Pro plan for free for the first 14 days. This plan offers powerful app-building features such as extensions, granular interface permissions, and up to 50,000 records per base. If the user isn’t ready to buy, they have the space and time to stay on the free plan. There are ongoing opportunities to convert these users when they click on a call-to-action in the product, run into a usage paywall, or encounter a feature gate. I profiled [Airtable’s reverse-trial approach](https://kylepoyar.substack.com/p/your-guide-to-reverse-trials) with Lauryn Isford, the former Head of Growth (and [Lenny had her on his podcast talking about this as well](https://www.lennyspodcast.com/mastering-onboarding-lauryn-isford-head-of-growth-at-airtable/)). From Lauryn’s perspective, there’s a lot to like about a reverse trial—and she thinks they’re becoming more common. “The reverse trial provides space upfront to explore the full potential of the product, but also keeps the door open for you to nurture your relationship with users over a longer time horizon,” she told me. Other [pricing and packaging tips](https://kylepoyar.substack.com/p/your-guide-to-plg-pricing-201) to drive conversion: - **Don’t ignore the admin experience of PLG pricing and billing.** Admins struggle with billing, budgeting, and feeling like they’re in control of their spend. - **Design pricing around team or higher-value use cases, not individuals.** Ideally, all of your plans should have the option of being used with multiple users in an organization. - **Quantify the value of your features for different audiences.** You can quantify the perceived value of your existing and roadmap features through ongoing willingness-to-pay surveys. *(Lenny has a [great podcast with Madhavan Ramanujam](https://www.lennysnewsletter.com/p/the-art-and-science-of-pricing-madhavan#details) on this topic.)* ### **Final words of advice** Improving conversion is unlikely to go out of style among product and growth teams. We hope you find this data useful as a way to benchmark your performance and gut-check how much room you have to continue to optimize. Remember that conversion is a team effort. It starts with attracting high-intent users, flows through to delivering real value in the product, and ends with personalized assistance from sales. When all of these motions are cranking, you’ll have a powerful monetization engine around your product. ## 📚 Further study 1. [2023 Product Benchmarks Report](https://openviewpartners.com/2023-product-benchmarks/) 2. [Freemium vs. trial](https://www.lennysnewsletter.com/p/freemium-trials-free) (Lenny’s Newsletter) 3. [How to combine PLG + sales](https://kylepoyar.substack.com/p/plg-and-sales-in-2023) (Growth Unhinged) 4. [9 strategies to convert free trial users into paying customers](https://www.appcues.com/blog/free-to-paid-conversion-strategies) (Appcues) 5. [The hidden freemium advantage](https://www.reforge.com/blog/the-hidden-fremium-advantage) (Elena Verna) *Have a fulfilling and productive week 🙏* ## 📣 Join Lenny’s Talent Collective 📣 If you’re hiring, [join Lenny’s Talent Collective](https://www.lennysjobs.com/talent/welcome) to start getting weekly drops of world-class product and growth people who are passively open to new opportunities. I hand-review every application, and accept less than 10% of candidates who apply. ![Image from What is good free-to-paid conversion](https://substack-post-media.s3.amazonaws.com/public/images/8638d278-ac01-4f28-b2c9-39f1dd6e4724_1492x1194.png) If you’re looking for a new gig, apply to join! You’ll get personalized opportunities from hand-selected companies. You can join anonymously, hide yourself from companies, and leave anytime. [Apply to join](https://www.lennysjobs.com/talent) **If you’re finding this newsletter valuable, share it with a friend, and consider subscribing if you haven’t already. There are [group discounts](https://www.lennysnewsletter.com/subscribe?group=true), [gift options](https://www.lennysnewsletter.com/subscribe?gift=true), and even [referral bonuses](https://www.lennysnewsletter.com/leaderboard) available.** Sincerely, Lenny 👋 --- ## [30/51] How the most successful B2B startups came up with their original idea *👋 Hey, [Lenny](https://twitter.com/lennysan) here! Welcome to this month’s ✨ **free edition**✨ of Lenny’s Newsletter. Each week I tackle reader questions about building product, driving growth, and accelerating your career.* *If you’re not a subscriber, here’s what you missed this month:* 1. [How today’s top consumer brands measure marketing’s impact](https://www.lennysnewsletter.com/p/how-todays-top-consumer-brands-measure) 2. [How Shopify builds product](https://www.lennysnewsletter.com/p/how-shopify-builds-product) 3. [What is good free-to-paid conversion](https://www.lennysnewsletter.com/p/what-is-a-good-free-to-paid-conversion) *Subscribe to get access to these posts, and every post.* My paternity leave has come to an end, and I’m kicking things up a notch. Over the next two months, I’m going to share a multi-party in-depth playbook for kickstarting and scaling a B2B business. This series took hundreds of hours of work and is based on dozens of 1:1 interviews with the founders of two dozen of today’s most successful B2B companies—including Gong, Notion, Figma, Amplitude, Retool, Canva, and many more. In addition to these juggernauts, I’ve also pulled in a handful of my favorite up-and-coming B2B startups, including Linear, Vanta, Stytch, Zip, Census, Persona, and Hex. ![Image from How the most successful B2B startups came up with their original idea](https://substack-post-media.s3.amazonaws.com/public/images/a87ce4e4-4278-49f9-bb9e-7e2c6bd5a167_2298x1704.png) This series builds on my two previous playbooks—for [consumer businesses](https://www.lennysnewsletter.com/p/kickstarting-and-scaling-a-consumer) and [marketplace businesses](https://www.lennysnewsletter.com/p/how-to-kickstart-and-scale-a-marketplace)—and brings me one step closer to my goal of giving every founder a tactical guide for turning their idea into reality. Even if you’re not building a B2B startup right now, you’ll find inspiration, new ideas, and frameworks that will help you with the product you’re building right now. Here is what’s in store: ![Image from How the most successful B2B startups came up with their original idea](https://substack-post-media.s3.amazonaws.com/public/images/cc0835a6-d90f-4394-a579-c1b6bc3586fe_1996x998.png) - **Part 1:** How to come up with a great B2B startup idea *← This post* - **Part 2:** [How to validate your idea](https://www.lennysnewsletter.com/p/how-to-validate-your-b2b-startup) - **Part 3:** [How to identify your ICP](https://www.lennysnewsletter.com/p/how-to-identify-your-ideal-customer) - **Part 4:** [How to find and win your first 10 customers](https://www.lennysnewsletter.com/p/how-to-win-your-first-10-b2b-customers) - **Part 5:** [How to find product-market fit](https://www.lennysnewsletter.com/p/finding-product-market-fit) - **Part 6:** [How, and when, to hire your early team](https://www.lennysnewsletter.com/p/hiring-your-early-team-b2b) - **Part 7:** [How to scale your growth engine](https://www.lennysnewsletter.com/p/scaling-your-b2b-growth-engine) You’ll find never-before-shared stories, surprising lessons, and, as usual—a ton of tactical and actionable advice you can use to grow your own product today. **Here’s a peek at a few of the more surprising takeaways:** 1. The majority of founders had no special skill or background in the problem space they went after. 2. Most B2B startup ideas did not come from the founder feeling the pain at their last gig (though many did). 3. *Every* prosumer product (e.g. Notion, Figma, Airtable, Miro, Slack, Coda) took two to four years of wandering in the dark before they found something that worked. 4. Founders spoke to a median of 30 potential customers to validate their idea before committing. 5. ~40% of startups pivoted at least once before landing on their winning idea—oftentimes more than once. 6. About 20% were solo founders. 7. Cold outbound works—it’s the second most common way to get your early customers. This series should probably be a book, but instead I’m sharing it with you all here. I’m excited to hear what you think and evolve this work further. And remember: following these steps (or any steps!) won’t guarantee success. But it’ll certainly improve your odds. Let’s get started with step one: coming up with a great idea. *A huge thank-you to **[Akshay Kothari](https://www.linkedin.com/in/akothari/)** (COO of Notion), **[Ali Ghodsi](https://www.linkedin.com/in/alighodsi/)** (CEO of Databricks), **[Barry McCardel](https://www.linkedin.com/in/barrymccardel/)** (CEO of Hex), **[Boris Jabes](https://www.linkedin.com/in/borisjabes/)** (CEO of Census), **[Calvin French-Owen](https://www.linkedin.com/in/calvinfo/)** (co-founder of Segment), **[Cameron Adams](https://www.linkedin.com/in/themaninblue/)** (co-founder and CPO of Canva), **[Christina Cacioppo](https://www.linkedin.com/in/ccacioppo/)** (CEO of Vanta), **[David Hsu](https://www.linkedin.com/in/dvdhsu/)** (CEO of Retool), **[Eilon Reshef](https://www.linkedin.com/in/eilonreshef/)** (CPO of Gong), **[Eric Glyman](https://www.linkedin.com/in/eglyman/)** (CEO of Ramp), **[Guy Podjarny](https://www.linkedin.com/in/guypo/)** (CEO of Snyk), **[Jori Lallo](https://www.linkedin.com/in/jorilallo/)** (co-founder of Linear), **[Julianna Lamb](https://www.linkedin.com/in/juliannaelamb/)** and **[Reed McGinley-Stempel](https://www.linkedin.com/in/reed-mcginley-stempel-17362245/)** (co-founders of Stytch), **[Mathilde Collin](https://www.linkedin.com/in/mathilde-collin-bb59492a/en/)** (CEO of Front), **[Rick Song](https://www.linkedin.com/in/rick-song-25198b24/)** (CEO of Persona), **[Rujul Zaparde](https://www.linkedin.com/in/rujulz/)** and **[Lu Cheng](https://www.linkedin.com/in/lu-cheng-973b7830/)** (co-founders of Zip), **[Ryan Glasgow](https://www.linkedin.com/in/ryanglasgow/)** (CEO of Sprig), **[Shahed Khan](https://www.linkedin.com/in/shahedkhan/)** (co-founder of Loom), **[Shishir Mehrotra](https://www.linkedin.com/in/shishirmehrotra/)** (CEO of Coda), **[Sho Kuwamoto](https://www.linkedin.com/in/shokuwamoto/)** (VP of Product of Figma), **[Spenser Skates](https://www.linkedin.com/in/spenserskates/)** (co-founder and CEO of Amplitude), and **[Tomer London](https://www.linkedin.com/in/tomerlondon/)** (co-founder and CPO of Gusto) for contributing to this series. Art by [Natalie Harney](https://www.natalieharney.com).* ![Image from How the most successful B2B startups came up with their original idea](https://substack-post-media.s3.amazonaws.com/public/images/4a6057ac-6fee-4b05-8499-2a9f092a6e29_2010x1005.png) ## What makes a great B2B startup idea If you boil it down, there are essentially three elements to a great B2B startup idea: ![Image from How the most successful B2B startups came up with their original idea](https://substack-post-media.s3.amazonaws.com/public/images/3aa5d4a7-1dae-4364-8876-0cbd426f23b4_2400x1350.png) #### **Ingredient 1: The problem is important to people** There need to be a lot of people willing to spend a lot of money to solve the problem. Most startups fail not because the idea isn’t good but because the market for the solution is just too small. If you want to build a venture-scale business, a rule of thumb is that there needs to be a clear path to $100m in revenue per year, and eventually a path to $1B a year. Here’s a great example of what you want to see, as told by [Ryan Glasgow](https://www.linkedin.com/in/ryanglasgow/), CEO of Sprig: > *“Robinhood agreed to a large contract even though we were early. They’re like, ‘We love it. We’ll install tomorrow.’ They installed it as we were building the first version.”* Hunter Walk has a great framework called [LUV](https://hunterwalk.com/2017/04/12/why-i-care-about-problem-size-more-than-market-size/). Also, [here’s my take on what makes a venture-scale idea](https://www.lennysnewsletter.com/p/your-startup-idea-probably-isnt-venture), and [a guide](https://medium.com/sequoia-capital/the-market-curve-44097b626f6d) to help you think through your market size. #### **Ingredient 2: The market is underserved** Existing solutions need to be doing a subpar job of solving the problem. The founder of CRED, [Kunal Shah](https://www.linkedin.com/in/kunalshah1/), has a great framework for evaluating potential new solutions, called Delta-4: 1. What would a customer rate the *existing* solution on a scale of 1 to 10? 2. What would they rate *your* solution? Your solution needs to be +4 better for anyone to care about your product. This also means that if the existing solution gets a 6 or higher, it’ll be very hard to replace (e.g. Excel). Here’s what you’d love to see, as shared by [Tomer London](https://www.linkedin.com/in/tomerlondon/), co-founder of Gusto: > *“As soon as we asked them the simple question of how they feel about their current payroll provider, they started cursing. More than half of the people we talked to just started cursing, unprompted. Two people voluntarily told me, ‘I use [competitor name], and my password is fuck[competitor name].’”* #### **Ingredient 3: You’re excited about solving this problem** Finally, the problem needs to be something *you* are willing to spend many years of your life solving. This advice from Dylan Field, co-founder of Figma, captures the sentiment perfectly: > *“There are actually a lot of good ideas out there. It’s kind of the weird part, especially if you’re searching for one; it feels like it’s not the case, but there are so many different markets that are underserved. The more important thing, actually, is to find something that you are personally passionate about, because any good company takes a long time to build.* > > *If you are, let’s say, three to four years in on an idea that you hate, you’re just going to burn out and you’re going to quit. It won’t feel good and you’ll be hating life. Don’t just go for an idea because it’s kind of working. Go for an idea that you really care about, because even if it doesn’t work, you’ll still learn from it and you’ll still have one.” —[Dylan Field](https://www.linkedin.com/in/dylanfield/), co-founder and CEO of Figma, [via Elad Gil](https://blog.eladgil.com/p/transcript-and-video-fireside-w-dylan?publication_id=1119759&post_id=103105470&isFreemail=true)* **Takeaway:** Find an idea that solves a problem that is important, underserved, and that you’re excited about. You’ll hear a lot more about how to do this, and what this looks and feels like, below. “*It’s essential to work on something you’re deeply interested in. Interest will drive you to work harder than mere diligence ever could. When in doubt, optimize for interestingness.” —*[Paul Graham](https://paulgraham.com/greatwork.html#f1n) ## Finding a great B2B startup idea Across all of the interviews I did, I found three reliable paths for discovering a great idea: 1. **Past pain:** Identify a large pain you experienced at a previous company—then build a solution. 2. **Ponder and probe:** Pick a space you’re interested in, then whiteboard and tinker while talking to dozens of potential customers—looking intently for pain and pull. 3. **Present pull:** Identify something you’ve built that is showing signs of pull—and pivot fully to that. Here’s an overview of how today’s biggest B2B companies found their ideas: ![Image from How the most successful B2B startups came up with their original idea](https://substack-post-media.s3.amazonaws.com/public/images/356b3df7-4ec3-4961-ba71-33d674a1ca92_2318x1204.png) No matter which path you take, you are looking for two things: *pain* and *pull*. Pain tells you there’s an opportunity to solve a problem, and that it’s important. Pull tells you that you’re actually solving the problem. Let’s explore each of the three paths, illustrated by founder stories. ### Path 1: Past pain—Identify a large pain you experienced at a previous company. Then build a solution. When I first started this research, I was expecting this path to be the way that *all* great startups found their ideas. Surprisingly, it only accounts for about 40% of great ideas. Let’s consider five successful startups that found their big idea following the path of past pain: Gong, Retool, Linear, Persona, and Hex. The CEO of **Gong** experienced the pain of being unable to understand what was going wrong within the sales process at his previous company: > “Amit, now my co-founder, ran a company in the BI space called Sisense. He ran into a problem—when sales didn’t work well—and it was very hard to understand why. **He realized that essentially all of the knowledge about what was working and not working was hidden inside people’s heads: ‘The CRM was showing me stuff, but it wasn’t anything meaningful. Yes, you didn’t close that deal, but why?’** > > He left Sisense and looked around to see if anybody was addressing this problem. I was on sabbatical doing nothing, learning deep learning, so we figured: let’s try to come up with a system that takes the stuff from salespeople’s heads, captures the information, and gives visibility and guidance to the rest of the organization.” > > —[Eilon Reshef](https://www.linkedin.com/in/eilonreshef/?originalSubdomain=il), co-founder and CPO David Hsu, the founder of **Retool**,found himself building the same product over and over at each company he worked at: > “Perhaps a little-known fact is that I had actually started a couple of other companies and products before Retool. And every time the team built any of these products, we had to go build our own tools for it. **Eventually, when you build enough of the same things—in this instance, internal tools for different projects—you kind of realize they actually all have the same building blocks.** We thought, ‘There’s got to be a better way of doing this.’ And we’re lazy engineers and we thought other engineers would be lazy as well. So that’s how the idea [for Retool] first came about.” > > —[David Hsu](https://www.linkedin.com/in/dvdhsu/), founder and CEO The founders of **Linear** felt deeply disappointed every time their companies defaulted to Jira: > “**Linear emerged out of the pain we all felt with issue tracking project management**, when it comes to building software. I was at the time at Coinbase, Karri [Saarinen, co-founder] was at Airbnb, Tuomas [Artman, co-founder] was at Uber. We were all at these growth-stage companies and saw how they both grow and operated as they grew. > > I very vividly remember the time around 2016 at Coinbase, when we were closing in on 100 people and we hired a VP of engineering. There was a desire to start unifying the teams using a single tool. And Jira started coming up in the conversations. > > I was maybe a little bit naive and tried to keep my team using Trello, but I very quickly realized that it is a losing battle. You’ve just got to go with it and there’s no other solution, basically, on the market. And so we ended up going with Jira. But it just stayed with me as this nagging feeling of disappointment. > > Separately, Karri at Airbnb had created a Chrome extension to re-skin their Jira, and Tuomas was building developer tools at Uber, using Fabricator. We all had similar experiences of ‘This doesn’t feel right and we should do something about it.’” > > ***—***[Jori Lallo](https://www.linkedin.com/in/jorilallo/), co-founder **Persona**’s founder noticed how inadequate identity tooling was when having to build this technology at Square: > “**I worked on identity over at Square for a fair bit of time. We actually used to joke as a collective team over on Square, ‘I’m sure in 10 years there will be someone who does this well for us.’** Importantly, while we were building it, we noticed that there was this disconnect between existing identity vendors thinking that there was going to be one technique that’ll solve all of a customers’ identity problems, while in reality, every business had a multi-modal approach: a bunch of different techniques to verify different people in different contexts. So we saw an opportunity to go after this problem in a unique way.” > > —[Rick Song](https://www.linkedin.com/in/rick-song-25198b24/), co-founder and CEO **Hex**’s founder realized that no one was going to build what he needed, so he had to do it himself: > “I actually started this journey as a buyer. I was looking for something like Hex and I couldn’t find it. It took me a few months of going around and talking and asking people like, ‘Oh, what are you using for this? What are you using for that? Have you found anything good for this?’ Everyone said, ‘No, but if you do, let us know.’ It kind of clicked one day. I was like, ‘Well, maybe we should do this.’ > > I didn’t set out to be a founder. There are a lot of people out there who are like, ‘I want to be a founder. I just need an idea and a co-founder.’ I was almost the opposite. The idea was very obvious to me. I had two great co-founders that I had met at Palantir whom I loved working with. It almost took us a while to be like, ‘All right. I guess we have to do this. Don’t we? No one else is doing this, while we have to do it.’” > > —[Barry McCardel](https://www.linkedin.com/in/barrymccardel/), co-founder of Hex **Takeaway questions to reflect on:** 1. What did you or others build at previous jobs that proved to be incredibly valuable to the company, or your teammates? 2. What’s a tool you wish you had (and would have paid a lot of money for) at your previous companies? 3. What internal products have you built again and again at past companies? ### Path 2: Ponder and probe—Pick a space you’re interested in, then whiteboard and tinker, while talking to many potential customers looking for pain and pull. A surprisingly large number of founders came up with their startup idea by doing something that’s often discouraged: sitting around and whiteboarding. As you’ll see below, there’s a wrong way of whiteboarding and a right way (i.e. ideating and building in a silo versus quickly talking to potential users to validate your idea). But most importantly, if you want to find a great idea, again, focus on finding a problem space with three traits: (1) it’s important, (2) it’s underserved, and (3) you’re excited about it. Ideally your idea is also rooted in some experience you’ve had in the space, but it doesn’t have to be. **Figma**’s founders narrowed their focus to two areas they saw potential in and then started tinkering with the one they were most excited about—design: > “After we got the Thiel Fellowship, I called Evan [Wallace, co-founder] and said, ‘Hey, you know, we’ve got actual funding now: $100,000 over two years. Do you want to go do this thing for real?’ > > When you’re starting a company, it’s really useful to ask the question: why now? It’s a really useful framework. It can be societal; maybe there’s some new cultural trend. Perhaps it’s regulatory; some law has been passed or repealed. I like the technological version. For us, we saw drones in 2012 and WebGL as a few technologies that were happening. Because of them, new possibilities were suddenly there. > > On the drone side, we didn’t get very far. Evan in particular was not that interested in doing hardware. He’s like, hardware sucks, run debug cycles are really long, and then we focused on WebGL instead. > > We were also excited about computational photography for a bit, but quickly realized that with photos, that ends up leading to a consumer sort of application. And the entire purpose of WebGL was to be in the browser. Why would you do anything in photo editing if you’re not on the phone? And so we felt like we were kind of building in the wrong place and then eventually sort of shifted our attention to design. I had been a design intern at Flipboard, and that kind of helped me realize what would be possible there.” > > —[Dylan Field](https://www.linkedin.com/in/dylanfield/), co-founder and CEO, [via Elad Gil](https://blog.eladgil.com/p/transcript-and-video-fireside-w-dylan?publication_id=1119759&post_id=103105470&isFreemail=true) **Vanta**’s [Christina Cacioppo](https://www.linkedin.com/in/ccacioppo/) similarly narrowed down her thinking to two spaces that felt ripe for opportunity that she was excited about (security and collaboration), and kept talking to customers to find the biggest source of pain and pull: > “Our first couple of ideas were just total garbage. There was a lot of whiteboarding. I think the failure mode in this part of the process with the whiteboard is that it’s just all so abstract. There were no customers or users. > > Back then, I tended to be a shiny-object person, so left to my own devices, my natural inclination was just to go find all the shiny objects on the surface. So I was, okay, no, don’t do that. Pick one or two spaces and go really deep. You’re not allowed to look at anything else. Not allowed. > > I chose (1) team collaboration tools, because I thought, I don’t know if I truly love this but I know it from my Dropbox days, and (2) security, because it seemed interesting and I wanted to learn it. **They both seemed big and important, and interesting**, and I had all kinds of security and compliance challenges at Dropbox. I also felt like I’d be happy learning about that space, and I also wanted to work with startups. > > Within collaboration, we were asking ourselves, ‘What are the macro trends and new technologies shaping the world?’ It’s late 2016, and so . . . voice! Team collaboration software is also emerging, and so the answer is B2B Alexa. **At the whiteboard stage, it makes so much sense. And in reality, zero sense. We recognized that if you can do it on a whiteboard, someone has probably done it. There’s no $20 bills on the sidewalk.** > > Also, when you’re changing context from B2B Alexa to other ideas like, I’m going to make a better wiki, to solving security, to whatever, you’re spreading yourself too thin and you’re not going deep enough to actually learn anything that someone else hasn’t. > > So within the security bucket, I started asking all the startups I knew about security, and they all looked at me really guiltily and said, ‘We don’t really do anything. We know we should, but we don’t.’ Everyone wanted to do security, but it was hard to prioritize until customers asked for it. So I started doing it for them scrappily and manually, and that led to what Vanta is today. > > When I tell founders this, sometimes they’re like, ‘Well, how did you know security was going to work?’ You don’t. If you know the answer to that, go for it. But it’s only obvious if you look back.” > > —[Christina Cacioppo](https://www.linkedin.com/in/ccacioppo/), founder and CEO **Notion** started with the general idea of a no-code app builder and eventually (four years later!) noticed pull for a specific set of features: > “Early Notion was basically a no-code website builder. [Some of the videos actually exist in YouTube](https://youtu.be/FPYl7nIKRbA?t=305). It didn’t go anywhere for years. It was very unstable, the tech stack we had used in the early iterations of it was fairly buggy, and user feedback was not great. **But as we peeled the onion, talking to users and using it ourselves, we realized that for the people that continued to use it, they liked some elements of the editor and the collaborative features that the product had.** And through that, we realized that we should double down on docs and wiki. > > The turning point was in early 2017 (four years in), when we launched Notion 1.0, focused around just docs and wikis. At the same time, we made a few different templates ourselves so that you can click a button and start using the product. Instead of telling people to build software using our tool, you can now click a button and get this modern docs/wiki product, without any work. It proved to be a great wedge into the market, because notes is the simplest unit of work, and it got people in the door and using the product. And then once people actually started using it, some people went down to the lower stack and they were like, ‘Huh, I can actually change these things. I can modify it, I can build my own template.’ We took a little bit of a roundabout way of getting there, but that’s the story.” > > —[Akshay Kothari](https://www.linkedin.com/in/akothari), co-founder and COO For **Zip**, [Rujul Zaparde](https://www.linkedin.com/in/rujulz/) and [Lu Cheng](https://www.linkedin.com/in/lu-cheng-973b7830/) went through a variety of ideas, looking for a big and underserved market they were excited about. They eventually focused on procurement (and their company is currently valued at over $1B): > “This was actually our sixth or seventh idea. Some earlier ideas included allowing people in India (and then other countries) to be able to buy U.S. equities in a fractional way, and an accounting staffing platform (which generated $200k of revenue!). > > **Eventually, as we were thinking through our next pivot, the advice we got from our Y Combinator partner was to look for a market that was large and had entrenched companies that weren’t great. This led us to the procurement space.** > > And then we thought back to this problem at Airbnb. In hindsight, we both adjacently ran into it a couple of times, but we didn’t realize it until later.” > > —[Rujul Zaparde](https://www.linkedin.com/in/rujulz/) and [Lu Cheng](https://www.linkedin.com/in/lu-cheng-973b7830/), co-founders For **Databricks**,[Ali Ghodsi](https://www.linkedin.com/in/alighodsi/)noticed a new technology emerging that was underutilized and kept talking to users until he realized how to turn it into a real company: > “We were doing research for a bunch of years at U.C. Berkeley and had started seeing what was happening in Silicon Valley tech companies, how they were solving data scalability problems, and how different their approach was from what we were seeing in the rest of the industry. At that time, the rest of the industry was leveraging this technology called Hadoop, and that was the best thing since apple pie for them. **But we were seeing that the Silicon Valley tech companies were using a different technology (what is now Apache Spark) and were in fact doing AI and machine learning on data, and they were getting magical results. We knew this technology could be game-changing for the rest of the industry.** > > Our initial thought was, ‘Can we just take what we’re seeing over there, open source it, and publish the research, and then the whole world will adopt it and we’ve changed the world?’ We didn’t really intend to start a company. But then over the years, it was frustrating to see that we had found this software, and we had open-sourced it, and we thought it was so amazing, but it wasn’t getting the uptake that we thought it deserved. And people kept telling us, ‘This is some academic project. How do we know that we can really rely on it? Is it really enterprise-ready?’ And so on. There was frustration around 2012 where we thought, if we start something, if we ourselves get behind it and we raise some money, maybe we can really actually ourselves make it happen. So that was the journey.” > > —[Ali Ghodsi](https://www.linkedin.com/in/alighodsi/), co-founder and CEO **Takeaway questions to reflect on:** 1. What’s a trend that’s emerging but underserved (e.g. security, collaboration)? 2. What’s a transformative technology that’s emerging that’s underutilized (e.g. data scalability)? 3. How many potential customers have you spoken with about your idea? 4. How important to potential customers is the problem you’re exploring, on a scale of 1 to 10? 5. How underserved is the current market, on a scale of 1 to 10? And where would your solution rank? Look for a delta of at least 4. ### Path 3: **Present pull—**Identify something you’ve built that is showing signs of pull. Pivot fully to that. A final path is simply to keep building what you’re building, but pay special attention to features or functionality that are showing strong pull from existing users. This may lead to shifting your approach slightly, or it may lead to a completely different product. In the case of **Amplitude**, the big idea came from noticing other founders wanting access to their internal analytics tool: > “We started with a different company before Amplitude, called Sonalight, which was a voice recognition application that allowed you to send and receive text messages by talking to your phone. **One of the things that was really clear to us at the time was that you should look at what people are doing in your product in order to figure out how to make it better.** Figure out where people are getting stuck, what keeps them coming back, what they like to use, and what they don’t like to use. > > We tried out tons of products on the market. I remember Flurry, Google Analytics, Adobe, Kissmetrics, and others. And none of them were able to answer the questions I just posed. And so we said, ‘All right, well, we’ve got to build it ourselves.’ A bunch of engineers with a lot of hubris, haha. So we ended up doing that. And as **we shared those insights with other companies that we knew (we were at Y Combinator at the time), they were like, ‘Wow, that’s amazing. I really need to understand that about my business.’”** > > —[Spenser Skates](https://www.linkedin.com/in/spenserskates/), co-founder and CEO **Sprig** followed a very similar story—[Ryan Glasgow](https://www.linkedin.com/in/ryanglasgow/) was building one product, but then noticed a side project seeing much more pull: > “​​I was exploring a startup idea, but I wasn’t quite getting the pull I expected. I went back to what I knew, which is product management, and I started asking users tough questions, like ‘Would you pay for this?’ and ‘Why do you not use this?’ In this discovery process, I wanted to add more rigor, knowing that this was a high-stakes decision (e.g. I’d be spending 10-plus years of my life on it), and I found a technique called [outcome-driven innovation](https://jobs-to-be-done.com/outcome-driven-innovation-odi-is-jobs-to-be-done-theory-in-practice-2944c6ebc40e), which adds rigor to product innovation. I was like, ‘Wow, this is mind-blowing. What if I could build a tool to help other people go through the idea maze and not build something before they de-risk the idea?’ > > **So I built a little SDK that people could plug into their apps**, with a very simple front end, that would just rotate through three questions about functionality, usability, and quality (the core questions in the framework I mentioned). It used Airtable as the back end, actually; it was so simple. > > **I shared this with other founders that I knew who were also trying to get their business off the ground, and gave them this spreadsheet of quality, usability, functionality, using this framework. And they were like, ‘Wow, I’m learning so much. I’d be your first customer if this was a product.’** It immediately clicked. They would say, ‘I’ll pay you for this.’ ​This was the market pull I was looking for, and I quickly pivoted to surveys.” > > —[Ryan Glasgow](https://www.linkedin.com/in/ryanglasgow/), co-founder of Sprig The **Loom** founders went through two completely different products before seeing obvious pull within one unexpected feature of their app: > “Loom was the result of two previously failed attempts in the video space. Our first was a marketplace for companies to hire subject-matter experts (i.e. product managers, designers, engineers, etc.) for feedback on checkout flows, UX, sales funnel, onboarding, and more. While we saw initial revenue here, this failed to get the traction to warrant additional build time (we were already four months in at this point). The second was a SaaS tool that any company can embed on their website and get instant feedback from their users in the form of a user test. Similar to the first iteration, this failed to get any real momentum after three months, although it led us to a remarkable insight from one of our few design partners. > > **Three months into this second idea, we had an aha moment when a client used the product to record a video of himself summarizing all of the user tests his team had collected. That’s when it occurred to us that there could be** ***something*** **here.** > > A month later, we launched on Product Hunt and had thousands of people who’d downloaded the extension by day’s end. That made it clear to us that we should double down on this new direction, and we’ve never looked back.” > > —[Shahed Khan](https://www.linkedin.com/in/shahedkhan/), co-founder With **Segment**,nothing was working for a year and a half, and while throwing ideas against the wall, one idea finally stuck: > “We originally applied to YC with the idea for a university classroom lecture tool (we were college students at the time), and we built that out over the course of the summer. It failed because we aren’t good at identifying real problems, and we decided that one reason is that we didn’t understand our users. > > We spent about 15 months pivoting and building various analytics products to help better understand users. None of them really took off, and we keep chasing the next idea that will get us users. **As a growth hack, my co-founder Ilya built a little library called Analytics.js. The idea was that users can use it as a ‘drop-in replacement’ for Mixpanel or Kissmetrics and send us the exact same data as you would to each of them via one library. Users didn’t care much about our tool, but they seemed to like the idea of Analytics.js.** > > Finally, we have about six months of runway left and we haven’t launched anything. My co-founder Ian [Storm Taylor] thinks that the idea behind Analytics.js could actually be a big deal. We could effectively be the ‘API layer’ over all these annoying and similar, but inconsistent, data tools. > > We’re split on the decision. Peter thinks it’s the worst idea he’s ever heard and that there’s zero chance a company could be made from 100 lines of JavaScript. **We all agreed to build it for a week and launch it on Hacker News. That day, it goes straight to the top of HN, and the rest is history.”** > > —[Calvin French-Owen](https://www.linkedin.com/in/calvinfo/), co-founder of Segment And famously, for **Slack**, the big idea came from noticing one feature being incredibly popular within their ill-fated video game: > “We came to the conclusion that Glitch [the game he was working on] was never going to be the kind of business that would have justified the $17.2 million in venture capital investment [that we raised]. It might have been a neat project for a half-dozen people if we had spent a million dollars to get there, but by the end of 2012, there were 45 people working on it, we had spent many millions of dollars, and it just wasn’t ever going to scale. So we decided to shut it down without knowing what we were going to do next. > > The company still had millions of dollars left in the bank, and one of the possibilities was to return that money to the shareholders and call it a day, maybe start something else up. But because we had that money, we had the flexibility to shut it down in what we felt like was a humane way. We spent a long time working on reference letters for the employees who built the website, essentially to make sure that they all got jobs. > > We also gave users the choice to get a refund for everything they had spent, to let us keep the money, or donate it to charity. We kind of had our hands full for a little while in shutting the game down, and while we did that, we were thinking about what we might want to do next. There were all kinds of ideas. > > It took us a little while to settle on the idea that would become Slack. > > That was really born out of the style of communication that developed while we were working on the game. We used an older technology called IRC, and because IRC is very limited, over the years we added the little features here and there that we wanted. > > For example, in IRC, if you’re not online at the same time as me, I can’t send you a message. I have to wait until you are also connected. So one of the first things we did was build a way of archiving messages so that you could catch up when you came back online, and in those archives we wanted to be able to search them, so we added search, and so on. There was no good iPhone client, so we made an HTML5 front end for our archive viewer. > > This interesting dynamic happened. By the time we shut down the game, again there were 45 people at the company, we had been in operation for three and a half years, and we had a companywide email list. After more than three years, it only had 50 messages on it, so about one every three weeks. That wasn’t a deliberate decision, that wasn’t ideologically driven. But it just happened that everyone paid attention to IRC, and the more people paid attention to it, the more information we routed to it; and the more information we routed to it, the more people paid attention to it. So eventually, everything from database alerts to daily sales figures were being pumped into IRC. Every time someone uploaded a file to the file server, that would be posted into IRC. While we weren’t successful in making the game, we were very efficient in being unsuccessful to make the game.” > > —[Stewart Butterfield, founder, via](https://www.businessinsider.com/slack-ceo-stewart-butterfield-interview-2015-4) *[Business Insider](https://www.businessinsider.com/slack-ceo-stewart-butterfield-interview-2015-4)* **Takeaway questions to reflect on:** 1. Of all the things you’ve built, what one feature is showing the most pull? 2. What problem are you currently facing with your startup that you wish someone would solve? Explore solving it yourself. 3. What’s a side project you’ve been wanting to build that you haven’t? ## To summarize, if you’re trying to come up with a great B2B startup idea: 1. Look for ideas that are (1) **important**, (2) **underserved**, and (3) **you’re excited** to solve. 2. Pick one of these routes and ask yourself these questions: 1. **Past pain** 1. What did you or others build at previous jobs that proved to be incredibly valuable to the company or your teammates? 2. What’s a tool you wish you had (and would have paid a lot of money for) at your previous companies? 3. What internal products have you built again and again at past companies? 2. **Ponder and probe** 1. What’s a trend that’s emerging but underserved (e.g. security, collaboration)? 2. What’s a transformative technology that’s emerging that’s underutilized (e.g. data scalability)? 3. How many potential customers have you spoken with about your idea? 4. How important to potential customers is the problem you’re exploring, on a scale of 1 to 10? 5. How underserved is the current market, on a scale of 1 to 10? And where would your solution rank? Look for a delta of at least 4. 3. **Present pull** 1. Of all the things you’ve built, what one feature is showing the most pull? 2. What problem are you currently facing with your startup that you wish someone would solve? Explore solving it yourself. 3. What’s a side project you’ve been wanting to build that you haven’t? 3. You know you’re on to something when you notice *pull* and *pain*. Now that you have a framework for coming up with an idea, the next step is to figure out if the idea is worth going all-in on. ### Next: [How to validate your idea](https://www.lennysnewsletter.com/p/how-to-validate-your-b2b-startup) *Have a fulfilling and productive week 🙏* ## Appendix: Bonus origin stories not included in above (for brevity) but also incredibly interesting #### Past pain **Snyk**’s [Guy Podjarny](https://www.linkedin.com/in/guypo/) noticed a couple of emerging trends and pain points in two previous jobs and began tinkering with the idea: > “Between 2002 and 2010, I helped build and manage some of the very first Application Security (AppSec) products, which customers used to find and fix AppSec vulnerabilities. Since it was very expensive to fix flaws you found at the end of a year-long release cycle, we tried to get security to ‘shift left’—to find issues during development where it’s cheaper to fix them. > > I left that path to found my first startup, Blaze, building a real-time web page compiler that made websites faster. Blaze was acquired by Akamai, where I became the CTO of the web performance business. DevOps played a key role in that journey, and the perspective helped me appreciate the impact it will have on the industry—and the opportunities it brings. > > These two lenses made me realize two things: > > 1. At the pace of DevOps, getting developers to embrace security has gone from an efficiency and costs play to a necessity. It’s the only way for software to be secure. > 2. If you build the right solution, developers can and will embrace security. DevOps had proven that by getting developers to embrace ops, with tools like New Relic, Heroku, and others paving the way. > > So after leaving Akamai, I set out to build a developer tooling company that tackled security.” > > —[Guy Podjarny](https://www.linkedin.com/in/guypo/?originalSubdomain=uk), founder and CEO All three of **Canva**’s founders noticed a gap in the design space: > “Mel [Melanie Perkins, co-founder and CEO] was teaching design through university, including how to use different types of design software, and through that experience, she realized that it was quite complicated and really hard for people with no design background to start approaching these tools and actually get something useful out of them. > > And I’d created a lot of creative tools over the previous decade, which I found unlocked people’s creativity in a whole bunch of different ways, like with music and drawing, and other creative tools. I’d worked at Google on a product called Google Wave, which was all about communication and collaboration, and again, being able to unlock people’s creativity through new technology and new experiences. > > When I met Mel and Cliff [Obrecht, co-founder and COO] in 2012, the idea of unlocking design and creativity really captured all of our imaginations, and so we decided to band together in July 2012 and start building that first product. We eventually launched Canva in August 2013, about a year later.” > > —[Cameron Adams](https://www.linkedin.com/in/themaninblue/?originalSubdomain=au), co-founder and CPO Same story for **Stytch**: > “We had a monthly coffee chat on our calendar after Julianna [Lamb, co-founder] left Plaid to go to Very Good Security. We were always just catching up and often complaining about work, what we were banging our heads against the wall on. And that week, we were both banging our head against the wall on authentication. It was the number one thing I worked on at Plaid. And so I was particularly frustrated. And then Julianna had just finished a project to rip out Auth0. A project had gone on for six months before she joined, and then it was taking so long that they’d stopped doing it and then later picked it up again. It was like a meme within the company because of how annoying a project it was and how much time it was taking. > > Julianna was talking about how frustrating it was internally there, I was talking about how we just had a really bad experience with Auth0 and AWS Cognito at Plaid. And we were just surprised that everything assumed you’re using a password in terms of how the APIs were designed, but also, you didn’t have much flexibility. > > And so that was the first time we were both complaining about the same thing, which led it to being the first company idea where I think what we said was: we just presumed there would’ve been a Stripe for authentication in terms of how easy it was to work with an API, to do this rip and replace Julianna was doing or add the password-less features that we were trying to add in the Plaid. > > So December 2019 was the coffee. We had left our jobs at Plaid and Very Good Security at end of April, early May, I want to say, to go full-time on this. And we raised our seed round in June of 2020.” > > —[Reed McGinley-Stempel](https://www.linkedin.com/in/reed-mcginley-stempel-17362245/), co-founder The founders of **Snowflake** noticed looming challenges with companies relying on Hadoop: > “In 2012, Thierry Cruanes and I were working at Oracle, and there was not a single day without discussions on how Hadoop [a developer of open-source computer software] was about to make [our work] completely obsolete. I even remember one day interviewing a young engineer who [was] so excited about Hadoop that he didn’t listen to anything we said about Oracle. We realized then that we were missing something. > > This made us think a lot about the future [of what we were doing]. Big data was taking over the world, and data warehouses as we knew them were having a really hard time competing. They were—and often still are—rigid, expensive, and difficult to use. At the same time, we were convinced that Hadoop was not a good solution either. Hadoop systems were really too hard to use for most—very inefficient, slow, and missing key features that I would consider must-haves. > > This is the point we realized we could [build] a new type of data warehouse system . . . that would master the elasticity of the cloud. [What we built ran] 10 times faster than any other system for the same cost [and freed] users from any management tasks.” > > —[Benoit Dageville](https://www.linkedin.com/in/benoit-dageville-3011845/), co-founder, [via Yahoo Finance](https://finance.yahoo.com/news/snowflake-co-founder-reveals-multi-100000340.html?guccounter=1&guce_referrer=aHR0cHM6Ly93d3cuZHJpZnQuY29tLw&guce_referrer_sig=AQAAAMtq-hBrHr75ASPOhdNGZrj6-UB6mW6ugY-r5WpmdMieaC2oQrt_VM2BEVJmVXk6ALd9m1cX_iEfisO2g4HB6OVam23O3tQcghQXocL4nMRWNJ7cOA0yr2k_kqJs-qY2_jc7SzwEMzSVqPWa900cOVTUMQEIlpmntIIchoSqm9TE) **Ramp**’s founders found that credit card companies were solving the wrong problem, through working at Capital One and their previous startup: > “Ramp is a continuation of a lot of things we’ve been working on for a while. I had a company before this called Paribus, which helped people save money on things they were buying online. Within the year, we had about a million customers. Then we got what was a life-changing offer from Capital One to buy the company and went for it. So that was about 2016. > > We then spent the next two and a half years there scaling the company. We learned a lot more about how to turn data into savings at scale, and about all the ways that you can use fragments of data processes to automate processes, save people money, and save people time in various ways. > > We also ended up in the credit card division within Capital One, where we learned about how credit cards work, how rewards work, and all that. I just remember we talked to customers and asked them, ‘Did you want points, cash back, something different for rewards?’ And what jumped out is people didn’t really want any of that. They wanted to be better-off. And we were just struck by this idea of rewards versus not spending that dollar in that first place. > > Pretty quickly we got obsessed with an idea: what if your card was smart enough to help you spend less? It actually might be better for the customer. You might be able to have a better shot at breaking out of the price-based competition. > > And fintech was becoming a thing then, where you could actually start these businesses relatively cheaply. > > There was only so much we could do inside of Capital One, and we helped what was Capital One Shopping become a thing and grow, and now it’s a big part of what they do, but we also concluded we couldn’t quite do what we were hoping to do inside of the company. So we left and then set out to build Ramp. That’s the story.” > > —[Eric Glyman](https://www.linkedin.com/in/eglyman/), co-founder and CEO #### Ponder and probe **Coda**’s [Shishir Mehrotra](https://www.linkedin.com/in/shishirmehrotra/) had been thinking about this idea for years: > “Coda started as a series of brainstorms. And at the time, I was reasonably happy at Google. I wasn’t going anywhere. But I had this long list of ideas of just stuff I’d like to see different in the world. This idea is one that’s been on my list for 20-plus years. And in some way or the other, I’ve actually worked on it three different times. > > I had a good friend, Alex [DeNeui, eventual Coda co-founder], who was busy starting a company and had decided to pivot to a new idea. He asked me for help brainstorming what he should work on, and we ended up talking about the core ideas behind Coda—that the line between docs and apps is artificial, and that it was time for a new blinking cursor. And in that process, I ended up basically falling in love with the idea again myself. Despite all reasonable indicators of why you shouldn’t start a company, I just couldn’t stop thinking about it. And so I jumped in, and it was kind of funny, when I was talking to my wife: we were driving up to Napa for this wedding, and we’re in the car, and I was like, ‘I think I’m going to do this company with Alex.’ And she says, ‘Yeah, I already knew that.’ And I said, ‘How?’ And she’s like, ‘Because you took every free moment and you’re spending all that time with him on this idea.’” > > —[Shishir Mehrotra](https://www.linkedin.com/in/shishirmehrotra/), co-founder and CEO **Gusto**’sthree founders had secondhand experience with the challenges of running a small business and after ideating, focused on payroll as a great place to start: > “My parents have a clothing store. It’s a small business, and I just grew up there in the store every day after school, going and organizing and selling and answering the phone calls and helping in the store. So I have this kind of small-business experience throughout my family. My grandfather has another store down the street. My aunt had another store. All in the same street in Haifa. So I really grew up around these small businesses, and one thing that’s really, really, really clear is that they don’t have the tools that big companies have in order to be successful. If you think about it, they are the ones who actually need the tools more than anyone else. > > So this idea of, what can you do to help this underserved group who need the help and what can you do to level the playing field for small business, is something that was always top of mind for me. Josh [Reeves], Eddie [Kim], and I [co-founders] all share a similar story with small businesses in our families. So when we got together, we wanted to build something. > > **We kicked around a bunch of ideas for a couple of months. We had this massive whiteboard, and we kind of plotted a lot of different problems that we felt ourselves personally in our lives in different moments and different things, but very quickly we got focused on small businesses and then started talking with people.** > > We learned that a third of companies make payroll mistakes every year, and they get fines for it every year. That’s insane. The system is incredibly broken, so that’s where the idea came from.” > > —[Tomer London](https://www.linkedin.com/in/tomerlondon/), co-founder and CPO For **Census**,[Boris Jabes](https://www.linkedin.com/in/borisjabes/) noticed a big pain point at his previous job and couldn’t stop thinking about it: > “Where the idea came from (eventually): I sold my previous startup (Meldium) to a company called LogMeIn, and I ended up working with a bunch of sales and marketing people there. Working with them was a struggle because they didn’t seem to have the same fountain of usage data that we did on the product and engineering side. That planted a seed in my mind. I thought, ‘There really should just be one version of who is your user, what did they do, and what do we know about them?’ My brain kept coming back to it, and my co-founders found it intriguing as well. But who was it for? In what form? That part was super-vague. > > We started to get together in the metaphorical basement, which was my house some days and my co-founder Anton [Vaynshtok]’s house other days. We kept asking, ‘What’s something that is customer data- or CRM-related?’ For a couple of months, we worked on ideas in the domain, even going as far as building the prototype of a CRM for marketplaces. > > We realized it was better for us to say, ‘All right, marketplace CRM, let’s do this.’ We did it for two months. We didn’t want to raise on this right away. Instead let’s see if there ‘is a there there.’ We were looking for the combo of something we liked *and* excited potential users before building in earnest. A sensation that there’s a big problem that I would be willing to spend the next decade of my life pursuing. > > Looking back, sitting in a room and trying to come up with a great startup is really bad. We played that exercise for a month, and it’s just bad because we should have been talking to people who had problems. What I realized was all our ideas sounded great, but they were not connected to a specific user pain. For us, writing code, even though it’s not the most efficient use of time, helped us explore ideas best. Maybe we did it in a less efficient way; it forced us to talk to people and build a mental model of the real world.” > > —[Boris Jabes](https://www.linkedin.com/in/borisjabes/), co-founder of Census ## 📣 Join Lenny’s Talent Collective 📣 If you’re hiring, [join Lenny’s Talent Collective](https://www.lennysjobs.com/talent/welcome) to start getting weekly drops of world-class product and growth people who are passively open to new opportunities. I hand-review every application, and accept less than 10% of candidates who apply. ![Image from How the most successful B2B startups came up with their original idea](https://substack-post-media.s3.amazonaws.com/public/images/8638d278-ac01-4f28-b2c9-39f1dd6e4724_1492x1194.png) If you’re looking for a new gig, apply to join! You’ll get personalized opportunities from hand-selected companies. You can join anonymously, hide yourself from companies, and leave anytime. [Apply to join](https://www.lennysjobs.com/talent) **If you’re finding this newsletter valuable, share it with a friend, and consider subscribing if you haven’t already. There are [group discounts](https://www.lennysnewsletter.com/subscribe?group=true), [gift options](https://www.lennysnewsletter.com/subscribe?gift=true), and [referral bonuses](https://www.lennysnewsletter.com/leaderboard) available.** Sincerely, Lenny 👋 --- ## [31/51] How to validate your B2B startup idea ![Image from How to validate your B2B startup idea](https://substack-post-media.s3.amazonaws.com/public/images/b9c06d49-2beb-4de4-80b0-c9e0e9ad565e_2014x1007.png) Welcome to part two of kickstarting and scaling a B2B business. Here’s where we’re at: - **Part 1:** [How to come up with a great B2B startup idea](https://www.lennysnewsletter.com/p/how-the-most-successful-b2b-startups) - **Part 2:** How to validate your idea *← This post* - **Part 3:** [How to identify your ICP](https://www.lennysnewsletter.com/p/how-to-identify-your-ideal-customer) - **Part 4:** [How to find and win your first 10 customers](https://www.lennysnewsletter.com/p/how-to-win-your-first-10-b2b-customers) - **Part 5:** [How to find product-market fit](https://www.lennysnewsletter.com/p/finding-product-market-fit) - **Part 6:** [How, and when, to hire your early team](https://www.lennysnewsletter.com/p/hiring-your-early-team-b2b) - **Part 7:** [How to scale your growth engine](https://www.lennysnewsletter.com/p/scaling-your-b2b-growth-engine) Let’s get into it. *A huge thank-you to **[Akshay Kothari](https://www.linkedin.com/in/akothari/)** (COO of Notion), **[Ali Ghodsi](https://www.linkedin.com/in/alighodsi/)** (CEO of Databricks), **[Barry McCardel](https://www.linkedin.com/in/barrymccardel/)** (CEO of Hex), **[Boris Jabes](https://www.linkedin.com/in/borisjabes/)** (CEO of Census), **[Calvin French-Owen](https://www.linkedin.com/in/calvinfo/)** (co-founder of Segment), **[Cameron Adams](https://www.linkedin.com/in/themaninblue/)** (co-founder and CPO of Canva), **[Christina Cacioppo](https://www.linkedin.com/in/ccacioppo/)** (CEO of Vanta), **[David Hsu](https://www.linkedin.com/in/dvdhsu/)** (CEO of Retool), **[Eilon Reshef](https://www.linkedin.com/in/eilonreshef/)** (CPO of Gong), **[Eric Glyman](https://www.linkedin.com/in/eglyman/)** (CEO of Ramp), **[Guy Podjarny](https://www.linkedin.com/in/guypo/)** (CEO of Snyk), **[Jori Lallo](https://www.linkedin.com/in/jorilallo/)** (co-founder of Linear), **[Julianna Lamb](https://www.linkedin.com/in/juliannaelamb/)** and **[Reed McGinley-Stempel](https://www.linkedin.com/in/reed-mcginley-stempel-17362245/)** (co-founders of Stytch), **[Mathilde Collin](https://www.linkedin.com/in/mathilde-collin-bb59492a/en/)** (CEO of Front), **[Rick Song](https://www.linkedin.com/in/rick-song-25198b24/)** (CEO of Persona), **[Rujul Zaparde](https://www.linkedin.com/in/rujulz/)** and **[Lu Cheng](https://www.linkedin.com/in/lu-cheng-973b7830/)** (co-founders of Zip), **[Ryan Glasgow](https://www.linkedin.com/in/ryanglasgow/)** (CEO of Sprig), **[Shahed Khan](https://www.linkedin.com/in/shahedkhan/)** (co-founder of Loom), **[Shishir Mehrotra](https://www.linkedin.com/in/shishirmehrotra/)** (CEO of Coda), **[Sho Kuwamoto](https://www.linkedin.com/in/shokuwamoto/)** (VP of Product of Figma), **[Spenser Skates](https://www.linkedin.com/in/spenserskates/)** (co-founder and CEO of Amplitude), and **[Tomer London](https://www.linkedin.com/in/tomerlondon/)** (co-founder and CPO of Gusto) for contributing to this series. Art by [Natalie Harney](https://www.natalieharney.com).* ![Image from How to validate your B2B startup idea](https://substack-post-media.s3.amazonaws.com/public/images/0f7c31c8-e43f-40b5-9ca3-2d1abf7cc108_1980x990.png) Forty percent (nearly half!) of the companies I spoke with went through at least one failed idea before discovering something that worked. Some went through 10. As [Christina Cacioppo](https://www.linkedin.com/in/ccacioppo) eloquently put it, “Our first couple of ideas were just total crap.” Many shared the same sentiment. Here’s how some of today’s biggest B2B startups began: - **Retool** started as Venmo for the U.K. - **Amplitude** started as a voice recognition application that allowed you to send and receive text messages by talking to your phone - **Segment** started as a university classroom lecture tool - **Vanta** started as B2B Alexa - **Notion** started as a no-code website builder - **Loom** started as a marketplace for companies to hire subject-matter experts - **Slack** started as a game called Glitch - **Box** started off as a “box” to put photos and content in on Facebook The question we’ll be tackling in today’s post is this: Once you have your startup idea, how do you know if it’s a big idea or . . . total crap? Below, I’ll share: 1. How the best founders validated their idea 2. What specifically convinced them to go all-in 3. How many people they spoke to before committing to the idea 4. What true pull looks like 5. Which companies pivoted and which had the right idea from the start #### **Some of my biggest takeaways and surprises:** 1. Founders spoke to a median of 30 potential customers before feeling like their idea was solid. 2. Outbound sales is consistently the best signal for validating your idea (versus friends using your product, incubator batch-mates, or investor leads). 3. Only about a third worked with design partners. 4. There are four ways to validate your startup idea—and it’s fairly clear which path you should take depending on your product and your experience in the problem space. 5. There are four signs your idea has legs: 1. **People pay you money:** Several people start to pay for your product, ideally people you don’t have a direct connection to 2. **Continued usage:** People continue to use your prototype product, even if it’s hacky 3. **Strong emotion:** You’re hearing hatred for the incumbents (i.e. pain) or a deep and strong emotional reaction to your idea (i.e. pull) 4. **Cold inbound interest:** You’re seeing cold inbound interest in your product 6. *Every* prosumer collaboration product, including Figma, Notion, Coda, Airtable, Miro, and Slack, spent *three to four years* wandering in the dark until they stumbled on something that clicked. I’ll share these stories below. 7. As I mentioned, about 40% of startups pivoted at least once before landing on their winning idea—oftentimes more than once. This rate is a lot higher than [in B2C](https://www.lennysnewsletter.com/i/48316625/high-level-takeaways), where it’s closer to 20%. ![Image from How to validate your B2B startup idea](https://substack-post-media.s3.amazonaws.com/public/images/38b68a4b-53c6-46cd-98cf-ec1024f0a886_2988x2000.png) ## Four strategies for validating your B2B startup idea Across two dozen interviews, I noticed four distinct paths to effectively validating a startup idea: 1. **The do-it-manually path:** Don’t build anything—solve the problem manually first, for a small number of companies 2. **The listening path:** First talk to tons of potential users, and then start building 3. **The prototype path:** Start building a prototype and then co-create it with a small number of design partners 4. **Just launch and see how it goes** If you look closely, all four paths are just different ways to validate the same things we focused on in [part 1](https://www.lennysnewsletter.com/p/how-the-most-successful-b2b-startups)—*pull* and *pain*—with varying degrees of up-front investment. Here’s what pain and pull look like in practice: 1. **People pay you money:** Several people start to (or offer to) pay for your early product, ideally people you don’t have a direct connection to. 2. **Strong emotion:** You’re hearing hatred for the incumbents (i.e. pain) or a deep and strong emotional reaction to your idea (i.e. pull). 3. **Cold inbound interest:** You’re seeing cold inbound interest in your product. 4. **Continued usage:** If you’ve got a prototype running, people continue to use your product even if it’s bad. ### 1. **The do-it-manually path**: Solve the problem manually for a small number of companies This path is a great choice for founders who are unclear whether the problem they are going after is important, or even solvable. Though it was the least common path, when done right, it can unlock huge lessons with very low up-front investment. In the case of **Vanta**,Christina Cacioppo sensed there was a big opportunity in the compliance/security space but wasn’t confident the pain was that bad. So she manually created compliance reports for a few companies and noticed (surprisingly) that they all found them very valuable: > “**There was about a six-month process before we started coding where we talked to about two dozen companies.** **Initially I simply answered security questionnaires for a company myself. They sent me their old questionnaires and they would send me new ones, and I would manually do the copy and paste.** > > At the time, no one really got SOC 2 certifications, and we didn’t know anything about them. I went and read two dozen SOC 2s and then went to a company and did a readiness assessment for them. We made them a SOC 2 report card in a spreadsheet, interviewed all their people, and wrote out, ‘Here’s all the stuff you have to do for a SOC 2.’ **And the test there, honestly, was: one, would they spend time with us, and two, would they believe us? Would they think the spreadsheet was useful?** > > We did this first with Segment, and they really liked it. We were like, ‘Wait, really? Are you serious?’ Then we went and took our spreadsheet to Front, and we basically gave it to Front. We did a find-and-replace in the doc from ‘Segment’ to ‘Front.’ And that was a test of whether that’s useful to Front. Can we standardize this? And that actually was useful to Front. > > **And then we got an email from an old Dropbox colleague who was like, ‘I hear you guys have become SOC 2 consultants. That’s super-weird. I thought you were going to do other things with your life. But also, can you come do this for my company?’ And that’s when it was like, no, but I’ll start writing code. That was the validation process for us.**” > > —[Christina Cacioppo](https://www.linkedin.com/in/ccacioppo), founder and CEO The founders of **Ramp** did the same thing with savings reports: > **“**We came at it with this theory of: We’re experts in savings, and we’re really interested in this idea of a credit card that would save your business money. We think we can save you money, but we want to prove it to you. > > **So we did these things we called ‘Savings reports,’ where we would ask founders for the last 90 days of their credit card purchases or ACHs and—manually, but they didn’t know it was manual—come back to them with ideas to save their business money.** > > One of the early aha moments there was a company that was legitimately spending money on seven different project management tools. They were growing so fast that they had forgotten to cancel the subscriptions. They had adopted Basecamp and Trello and Asana and Smartsheet, and all these things that they later abandoned. I think it was a hundred grand on software they weren’t using. We came back and were like, ‘There’s $200,000 in savings. You don’t have to use us, just go and enjoy this tip. But by the way, this is what our software does, and we can do this for you ongoing and automatically.’” > > —[Eric Glyman](https://www.linkedin.com/in/eglyman/), co-founder and CEO ### 2. The listening path: First talk to tons of potential users and then start building This path should be your default, unless you have a clear sense of what you need to build. Go this route with the goal of speaking with around 30 potential customers, looking for pain and pull (see above what that means). The founders of **Zip** spoke with 75 potential users before committing to their idea: > “**We did a lot of interviews with CFOs, heads of procurement, heads of finance (I think the exact number is around 75), and over the span of two to three weeks.** It really helped refine that idea. We had like 110 pages of notes or something in those two or three-ish weeks. Turns out the response rate is pretty good on LinkedIn when you just want advice. > > We would be like, ‘All right, we had these three ideas. These two suck, but maybe we should tweak this idea because of what these two or three people said.’ And so we’d keep honing it down, honing it down, honing it down, iterating every day. > > **We also had a very stringent list of, I think, 16 criteria for the idea we were going to work on. And this idea actually met all of them.** > > ![Image from How to validate your B2B startup idea](https://substack-post-media.s3.amazonaws.com/public/images/3fd6f009-7b67-4f0f-8239-9e6f6af379aa_2298x1150.png) > > But we were very honest with ourselves. We worked on a bunch of terrible ideas before, and if there’s anything we had learned, it’s that today will be the easiest day to kill the idea and do something better. It’ll always be harder tomorrow because you’ll have more customers if you’re fortunate (or unfortunate). You’ll be more emotionally attached to it; you’ll have more sunk cost.” > > —[Rujul Zaparde](https://www.linkedin.com/in/rujulz/) and [Lu Cheng](https://www.linkedin.com/in/lu-cheng-973b7830/), co-founders The founders of **Stytch** spoke with about 30 people and noticed there was universal hatred (i.e. pain) for the existing solution. Then they started building, and launched quickly, per the advice of their lead investor: > “We talked to about 30 people over the course of a few months, mostly fintech developers, but also friends that weren’t in the fintech space that know how to build authentication. We asked them what they used for authentication and what they thought of it. For most of them, it was either Auth0, Google Firebase, AWS Cognito, or in-house. **And pretty universally, everyone hated whatever they were using.** It turned into a snowball of momentum, where at a certain point it just seemed inevitable that we were going to do this. > > **We specifically didn’t go the design partner route, and instead focused on getting a self-serve product out as soon as possible, specifically an email magic links product.** > > [Chetan](https://www.linkedin.com/in/chetanputtagunta) (our lead investor at Benchmark) gave us advice that selling authentication to large companies would take a long time, since they’d need a lot of features. The advice we had gotten was if they really want just this one product, that’s great. Let them be a design partner and partner with you. More likely, they’re probably going to keep asking for things that aren’t in your ability to serve them right now. So see what you can do to serve that broader long tail of the internet with your wedge and see if you can get that going. If really we had built for only one of those, we probably would’ve waited another year to launch.” > > —[Julianna Lamb](https://www.linkedin.com/in/juliannaelamb/) and [Reed McGinley-Stempel](https://www.linkedin.com/in/reed-mcginley-stempel-17362245/), co-founders The founders of **Gusto** had an extremely similar experience, both in terms of finding real hatred for the existing solution and also talking to exactly 30 potential customers: > “**I had 30 people I talked to about the original idea. This is before we wrote a single line of code and before we actually committed to the payroll idea. We had a list of 30 people that Josh [Reeves, co-founder] and Eddie [Kim, co-founder] and I knew one way or another—some from Stanford, some from other networks—and I asked them for the names of friends who had small businesses. And for every call we did, we asked them, ‘Who are your friends who have small businesses?’** I literally was calling people out of Yelp. > > Over time, if you look at the first call transcript and compare that to the 30th call transcript, it’s a very different call. In the beginning, you’re very open, exploratory, lots of different ideas and options. In the end, it was really mostly validating what you’re seeing. > > The thing I was looking for in retrospect is emotional reaction. When you talk with a customer and you’re like, ‘Hey, here’s a new type of mint. The reason why it’s different is because it’s organic and it’s local,’ and then the person says, ‘Oh yeah, that’s cool.’ You say, ‘Would you buy it?’ They’re like, ‘Yeah, yeah, I may buy it.’ That’s not the feedback you’re after. That basically means that, no, they’re not going to buy it. They’re just being nice. > > **What you’re looking for is really, really deep emotion.** So, what I heard from people was extreme frustration with their current payroll providers. The moment you just asked them the simple question of ‘What do you feel about your current payroll provider, your payroll system?’ they started cursing, literally. More than half of people just started cursing and being really upset. **When you hear that strong emotion, then you know you have something.**” > > —[Tomer London](https://www.linkedin.com/in/tomerlondon/), co-founder and CPO Guy Podjarny, the co-founder of **Snyk**,spent time talking to dozens of potential users before building anything, not so much to validate the problem (it was obvious) but to make sure that if he built the solution, companies would embrace it: > “The value in getting security built into the development process was already well recognized, so **I didn’t need to validate the idea. What I needed to firm up was whether if I built the solution, developers would actually embrace it.** Therefore, my early conversations were not with security people but rather with developers and entrepreneurs, especially founders of companies in the DevOps space. > > I had several dozen such conversations in the opening days, and focused not on finding potential customers but rather on deeply understanding what it means to build a dev tooling company, and how it differs from a cybersecurity one. > > DevOps founders were quite supportive of the idea, and agreed with both the need and the opportunity. They’ve all seen or run companies that disrupted incumbents by embracing a DevOps approach. The few security people I spoke to were skeptical, agreeing it’d be valuable but not believing it possible. **This firmed up my conviction that this was the right problem to tackle. I thought, ‘It’s hard, but if I pull it off, it’ll be big.’**” > > —[Guy Podjarny](https://www.linkedin.com/in/guypo/), co-founder and CEO The founders of **Ramp** spoke to more than 100 potential users before jumping in and building anything (even before building their manual solution): > “**Before we shipped a single card, we talked to over 100 finance and founder teams.** We’d reach out to old YC batch-mates, or old friends who left companies and went to other companies; also the founders in the New York tech ecosystem.” > > —[Eric Glyman](https://www.linkedin.com/in/eglyman/), co-founder and CEO You may think you’ve talked to enough people, but don’t stop until you’re seeing evidence of real pull (e.g. money, usage, strong emotion, cold inbound). Spenser Skates, the founder of **Amplitude**, stopped at 30 conversations and later realized he should have talked to more: > “We did not talk to nearly enough. We talked to 30 different companies within a month. I should have aimed higher, like 50 companies in a month. But we talked to 30 in a month before building anything at all just to see, ‘Hey, is this something potentially interesting?’ > > **And out of that group, there were probably 10 folks that we identified that could potentially use this, and then five that had so much of a need they might pay money. Out of that group of 30, how many ended up being paid customers? A grand total of zero. We knew there was a need, but we made the mistake after that month of going straight to building, because we were like, ‘Well, instead of having all these speculative conversations, we actually want to have something to show people.’** > > Some of them used it, but were they interested in paying money? Hell, no. I think in retrospect, I should have continued dedicating half of my time to going out and talking to customers. But that’s in retrospect. In the end, though, it worked out.” > > —[Spenser Skates](https://www.linkedin.com/in/spenserskates/), CEO and co-founder ### 3. The prototype path: Create a prototype and co-create with a small number of design partners The next step up is to go straight to building a prototype, and then evolve the product based on ongoing feedback from a select set of early users. This path is most appropriate for founders who have experience in the space and come into it with a somewhat clear sense of what to build. This includes companies like Gong, Retool, Linear, Sprig, Zip, and Hex. [David Hsu](https://www.linkedin.com/in/dvdhsu/) at **Retool** relied on his past experience building internal tools at multiple companies, but still wanted to validate his thinking along the way: > “Since we’ve built this product in the past at other companies, we basically just built the first version of Retool for ourselves. We thought, ‘Are we going to use it?’ and we did. So then we tried finding more people like us. > > At that point, Retool was at YC and we were this tiny company, and so we just tried finding other tiny companies that had product-market fit and needed internal tools. Out of 200 YC companies, we identified maybe five. **So we approached them, and they wanted to use it. And then they actually started using it. And so that was the main thing for us to know it was working—there was usage.**” David also explained why *outbound sales* was the best signal to find true pull: > “We realized when you sell to YC batch-mates, or people that you have some relationship with, it’s very easy to delude yourself into thinking that you have product-market fit, because everyone is always kind of interested. It’s like, ‘Oh yeah, that sounds cool. Let me try it out.’ But no one is actually willing to put money down. So **I realized the best signal of this being** ***real*** **is to do cold outbound sales. It’s just much purer, basically: just pure outbound with your pitch and the value prop, with no other incentives attached**. So at Retool, we started doing sales early on. You cannot fool yourself and be deceived anymore. You can get an accurate grasp of reality. That’s actually how we landed DoorDash, as customer number five.” > > —[David Hsu](https://www.linkedin.com/in/dvdhsu/), founder and CEO The founders of **Zip** highlighted this same lesson as well. > “We made an active decision to focus on cold outbound, versus friends. We wanted to know if this was a shitty idea or a good idea. And **if we sell to friends, they might buy it because they feel bad or whatever. It’ll confuse us. So we have to get the first 10 essentially cold**. They shouldn’t owe us anything. They should buy it because they see value in it, and that’s how we’ll know it’s a good idea.” > > —[Rujul Zaparde](https://www.linkedin.com/in/rujulz/) and [Lu Cheng](https://www.linkedin.com/in/lu-cheng-973b7830/), co-founders Like Retool, the founders of **Linear** came into the space with strong opinions of what the product needed to be—essentially building it for themselves—and then, slowly but surely, started sharing their prototype with similar-minded small startups to validate their thinking. > “**We started by, ‘Let’s just build something we want to use ourselves.’ On the weekends, let’s build something we want to use. Then let’s build something that the small startup of two to five people can use, and not try to jump ahead. Let’s go in stages. Let’s just be very focused on these small startups, putting aside any request that might come from a larger customer so that we know we can serve them.** > > We did talk to a lot of our friends at a time when we were starting working on it, chatting to them about this: ‘Hey, do you have this need?’ It was, interestingly, very binary how well it clicked. Some people got it immediately. They’re like, ‘I hate product X, and I would love there to be something better.’ And other people are like, ‘We’re completely happy using GitHub Issues. There’s nothing wrong about it.’ They just completely ignored our ideas—which is hard to hear. > > **But then once you hear both sides so often, you start to realize there’s no way of convincing the people who don’t feel the pain to overcome that unless they overcome it themselves. So let’s just focus on the people who feel the pain and serve them.**” > > ***—***[Jori Lallo](https://www.linkedin.com/in/jorilallo/), co-founder Same story with the founders of **Gong**,who had a lot of experience in sales but who still worked with a small set of design partners once they had a prototype ready. They knew their idea had legs when all but one design partner was ready to buy their product: > “**We ended up with 12 design partners. We gave them the software in January. In May, we made a decision to tell them the beta was over and that we were going to start charging for it. Out of the 12 companies using the beta, 11 ended up buying.** > > During the beta process, we had a bunch of systems that recorded the users’ screens using Gong. And we were watching these like maniacs, every day. I would probably spend two hours watching people interact with the system, reverse engineering them based on their role or what they were trying to do, and then go on thinking, ‘So this is what this person is doing?’ And if needed, I would give them a call. This approach is an underutilized product management tool, because in some areas it gives you more information than a quantitative survey or a discussion, because this is what the person actually does versus what they tell you and what they think they’re doing.” > > —[Eilon Reshef](https://www.linkedin.com/in/eilonreshef/), co-founder and CPO With **Sprig**,[Ryan Glasgow](https://www.linkedin.com/in/ryanglasgow/) worked with just four companies that were immediately excited—and again, paid the most attention to cold outbound as a signal of true pull: > “It was about getting as many meetings as I could get, sharing the roadmap, and asking, ‘What do you want us to build next?’ Effectively co-creating. > > We ended up working with essentially four companies—Plann (they’re in Australia), Thunkable, and then Square, and then Robinhood. They all had millions of users, and they all cared about their user experience. Because they were a similar scale, I wasn’t getting pulled in different directions; they all wanted a lot of the same stuff. > > **The real test for me was ‘Can I find customers with cold email?’ Because where a lot of founders make a mistake is that they sell to their friends—like YC, you sell all your YC batch-mates and everyone uses your product. But I actually wanted to try cold email and confirm that I could get meetings if people still use the product.** > > I got a meeting with Thunkable. They came over to our office, I did a demo, they installed our SDK. A week later I came back and they wanted help figuring out all these issues, and usability, and how much it costs, and they ended up being the first customer that I had no connection to. That gave me confidence that this idea could work.” > > —[Ryan Glasgow](https://www.linkedin.com/in/ryanglasgow/), founder and CEO With **Hex**,[Barry McCardel](https://www.linkedin.com/in/barrymccardel/) also had a strong sense of what needed to be built, because of his previous experience, and was able to validate it quickly with just two design partners: > “We had two design partners, and I always joked that two is the exact right number of design partners, because it’s the minimum number that’s more than one. You want it to be the minimum number so you stay focused. This is a place people will get tripped up. They’ll try to go and work with a ton of different customers, and they wind up losing focus. You won’t be great for anyone. **Just get the thing to be really damn useful for one customer.** > > It was one customer for us in particular that early on started using it for real. When they started sharing stuff and asking for features proactively from us—that’s when I knew we were on the right track. I wasn’t so worried about like, ‘Oh, I need to go validate this feature request with 10 other people’—in part because **we knew this space pretty well, and I think we had a good sense for what was generic versus esoteric**.” > > —[Barry McCardel](https://www.linkedin.com/in/barrymccardel/), co-founder and CEO ### 4. Just launch and see how it goes A final, and surprisingly common, path to validating an idea is simply to launch it and see how the market responds. This path is most appropriate for two situations: 1. Founders who are getting desperate and need to just try stuff out (e.g. Segment, Loom) 2. Founders who have a crystal clear vision of what needs to be built (e.g. Canva, Databricks) In the case of **Segment**, the founders didn’t actually expect the product to take off: > “We basically did the *opposite* of the design partner approach. We just launched and put the product out there, partly since we didn’t actually expect this idea to work. > > What was interesting is that prior to launch, we had spent about nine months trying to build products for design partners we were talking to. The overlap between the design partners we were talking to and the new users was near zero. > > **This was really surprising to me. In general, I think users are much better at finding products than founders are at finding design partners. There are exceptions to this rule, but if you have very little in the way of network (like we did), then it’s probably worth launching.** > > What convinced us to commit, frankly, was desperation. We were running out of money and ‘would have to find real jobs’ in the next few months if this didn’t work out. We decided to launch and give it our best shot. Our backup plan was to try and launch a group-trip-planning idea (which, for the record, would’ve been a disaster).” > > —[Calvin French-Owen](https://www.linkedin.com/in/calvinfo/), co-founder **Loom** followed a similar story—launch, and then start iterating: > “**We launched on Product Hunt and had thousands of people who downloaded the extension by day’s end. That made it clear to us that we should double down on this new direction, and we’ve never looked back.** > > Once we launched, every new sign-up was prompted with a welcome email coming from one of us founders. We were so eager to talk to anyone who was using Loom. We closed out our first month with around six to eight thousand users, and for our first year live, all customer support conversations were had with any one founder.” > > —[Shahed Khan](https://www.linkedin.com/in/shahedkhan/), co-founder With **Canva**,the founders had a very clear sense of what needed to be built, so they simply built it: > “**We had a very strong vision of where we wanted to go, based off experience and qualitative data from interacting with people, understanding their struggles with design, and being able to envisage this future where design was immediately accessible for anyone in the world.** > > I’d say our product was probably driven by 70% vision and 30% user feedback along the way. We were strongly building towards our vision, but as we had prototypes, we would put them in front of people and get their reaction. Once we had a fairly complete production product, we started user testing to see how people reacted to it, what they could achieve with it, whether we needed to tweak our onboarding process, whether we had the right feature set, etc. And that shaped our product in the later stages, as we were getting ready for launch and as we were thinking about how to communicate the product to people.” > > —[Cameron Adams](https://www.linkedin.com/in/themaninblue/), co-founder and CPO The **Databricks** team initially launched their product as just an open source project, without intending to turn it into a business: > “We were in the special category, different from most companies, which is the open source category. Open source companies have intrinsic advantages and disadvantages. **The advantage of open source companies like ours is that by the time we started, the open source technology already had a significant number of downloads and people using it. It wasn’t a worldwide phenomenon, but it was enough.** It had thousands of people using it. That was already enough to know that this was something that people find useful, but it wasn’t getting the breakthrough that we really thought it deserved. Open source companies often have that, right? You have an open source project. It already has mindshare and people are liking it, but you don’t really have a business around it. We were in that category. Whereas many other companies, they start from scratch and they have nothing.” > > —[Ali Ghodsi](https://www.linkedin.com/in/alighodsi/), co-founder and CEO ### To summarize: Four ways to validate your idea in B2B: 1. **The do-it-manually path:** Solve the problem manually for a small number of companies 2. **The listening path:** First talk to tons of potential users and then start building 3. **The prototype path:** Create a prototype and co-create with a small number of design partners 4. **Just launch and see how it goes** Strong signals your idea has real pull: 1. **People pay you money:** Several people start to pay for your product, ideally people you don’t have a direct connection to 2. **Continued usage:** People continue to use your prototype product, even if it’s hacky 3. **Strong emotion:** You’re hearing hatred for the incumbents (i.e. pain) or a deep and strong emotional reaction to your idea (i.e. pull) 4. **Cold inbound interest:** You’re seeing cold inbound interest in your product ## Bonus: Prosumer companies wandering in the dark One of the most interesting takeaways from this phase is how every prosumer collaboration product spent two to four years looking for an idea that worked. Here are their stories. **Notion** > “**To be brutally honest, for the first four years it didn’t go anywhere. Very few people used it, the feedback was not great. The retention was not great. It was very buggy. The company almost ran out of money. Well, actually it did run out of money, and Ivan [Zhao, co-founder] had to borrow some money from his mom to keep it going.** > > The final shot at it was essentially that Ivan and Simon [Last, co-founder] moved to Japan for a few months and rebuilt everything from the ground up. And they did that because they kept their burn very low. Funny enough, they were able to get an Airbnb in Japan, in Kyoto, which was cheaper than their S.F. office and apartment on Airbnb. So they were net making money by putting their office and apartment on Airbnb and working from the Kyoto Airbnb.” > > —[Akshay Kothari](https://www.linkedin.com/in/akothari/), co-founder and COO **Figma** > “When I joined, they were still in stealth mode and the company had existed for three years at that point, building in the dark. I was like, dude, you can’t be in stealth mode for three years. People were getting stressed and going crazy, and that’s what happens when you don’t ship something for three years. Whether they were fortunate or had great product taste, I don’t know, because three months later, we launched our first private beta, and then a year later our first public beta, and it worked out just great.” > > —[Sho Kuwamoto](https://www.linkedin.com/in/shokuwamoto/), VP of Product **Coda** > “From inception to Coda 1.0, it took us four and a half years. Longer than Figma. You’re going to have to extend all your charts for us. It’s what we expected right from the onset. Coda is displacing a set of legacy productivity surfaces that have been around for about 50 years and reimagining them from the ground up—so the bar is quite high.” > > —[Shishir Mehrotra](https://www.linkedin.com/in/shishirmehrotra/), co-founder and CEO **Airtable** > “In the frenetic world of tech, where the ruling ethos is to move fast and break things, Howie Liu moves at a glacial pace. With Andrew Ofstad and Emmett Nicholas, he launched Airtable in 2013. They wanted to create a spreadsheet with the power of a database. Then they spent three years building a prototype. ‘Instead of trying to rush a new product out the door, we introduce a period of forced delay, so people have a chance to sleep on an idea,’ he says. ‘It’s a concept we call the simmer.’” > > —*[Forbes](https://www.forbes.com/sites/stevenbertoni/2018/11/15/move-slow-and-make-things-airtables-howie-liu-built-a-1b-software-giant-emphasizing-substance-over-speed/?sh=319a46c21f20)* ## Bonus 2: How they knew it was time to go all-in Another big question many founders face is knowing when to commit to that one idea and go all-in. Beyond the signs of pull and pain we looked at above, I asked each founder what moment convinced them to go for it. Here’s what came up. #### Pattern 1: The right people agreeing to join the company > **“I always tell people, when you’re deciding to start a company, the two main litmus tests are (1) Do you have an idea you can’t imagine not working on? and (2) Do you have a person you can’t imagine not working with?** > > Usually I’ll meet people and I’ll ask them that question, and they’ll have one but not the other: ‘Oh, me and my buddy are going to start a company.’ I ask what’s it going to be about, and they’re like, ‘We don’t know, but we really like each other, so we’re going to start this company.’ And I have to say, that works sometimes, but not often. > > Or the other way is: I’ve got this great idea, but have you convinced anybody to do it with you? And they’re like, ‘No, not really.’ I bet it’s not that great an idea then. Usually you kind of need that test. > > In our case, Alex [DeNeui] and I had a quite high bar for committing to an idea, because both of us had reasonably high opportunity costs, plenty of other things to go and do. But actually the thing that probably pushed us over the edge is we made a list of the people we wanted to hire and we said, ‘Here’s the first four people we want. And if all of them say yes, we’re starting the company.’ And it was kind of our next level of commitment. They all said yes.” > > —[Shishir Mehrotra](https://www.linkedin.com/in/shishirmehrotra/), co-founder and CEO of Coda #### Pattern 2: An impactful conversation **Gusto:** > “**We had two commitment moments. The first commitment moment was to commit to each other, and that was before we knew exactly what we would work on.** I don’t hear a lot of people talk about that—the team stuff. The three of us had previous startups, and none of them are as successful as Gusto, but we had enough mileage to know what a good and what a bad co-founder would look like. I think we’re just very lucky to have found one another. It’s kind of like a marriage, a partnership. I think what we did—that was not just luck but the good judgment to know that this is it, so we committed. > > I remember Josh sending an email out of blue, literally saying, ‘I quit my job and we’re going to go full-time. Can you join me?’ I was like, ‘Holy shit! He’s being real.’ That’s moment number one. > > **Moment number two was committing to this idea of paying people electronically. We had variations of this idea. One of the first things we looked at was a payroll API, and then the thing that sold us on this idea was a meeting with one of our potential customers.** > > This person was the accountant of the company called Bump back in the day. We sat down and ate Thai food in Mountain View, and we just said: ‘We’re thinking about building a new payroll product, a new payroll company.’ We didn’t even start telling her what we would do or why what we would do is different, and she just went on for 30 minutes, telling us all the opportunities and how all the systems are broken and how ‘Gosh, I just can’t wait to have something new,’ and we came out of this meeting, and I remember—I think sometimes there are moments that sit in your brain—**we exited the restaurant, said goodbye, walked just around the building to the parking lot, then we looked at each other, like: We’re doing this, right? We’re building a payroll solution for small and medium businesses, right? Yeah, we’re doing this. Yeah, okay, cool, we’re doing this.** That’s it. It was literally on the spot. It was very clear that the energy from customers was there. So that was that second moment.” > > —[Tomer London](https://www.linkedin.com/in/tomerlondon/), co-founder and CPO of Gusto **Census:** > “**There were two conversations that made me go, ‘Holy shit, this problem is a big deal for me. I’m willing to spend a lot of my life on this, and we should raise money to do that.’** > > The first epiphany came from working with our first user, a brilliant operator. They knew how to model their business, but they lacked not just the tool but even the process—the thinking. When they talked about moving data and integrations, it was about connecting stuff. I told them, ‘Your work wasn’t connecting—this is about *deploying*. You should think about your workflow as a piece of code that you version, ship, and monitor. These are tied to a clean set of entities that model your business, which change over time.’ None of these concepts were familiar to them or almost anyone in their discipline. I looked and them and felt, ‘Oh, you are super-underleveraged.’ So that was epiphany number one. > > Epiphany number two came from a friend, an old buddy of mine from Microsoft who led a team at Amazon. I asked him about this stuff: ‘How do you guys do this? You’re the pros, right? How do you deal with these data pipelines for the sales team etc.?’ I figured he was going to describe to me a Rolls-Royce. Instead he said it was a terrible, terrible piece of infrastructure and they lose leads all the time. My response was: ‘What? This is crazy.’ > > **These two conversations weren’t PMF, in that we can build a business, but for me, it was founder-motivation fit. I know these people can be more empowered, and they’re only going to get there if we bring it to them. It’s going to take a long time, but I was like, ‘We have to do it.’**” > > —[Boris Jabes](https://www.linkedin.com/in/borisjabes/), co-founder and CEO of Census #### Pattern 3: Momentum **Stytch:** > “**The way I articulate it to people is that it was just this snowball of momentum, where at a certain point it just seemed inevitable that we were going to do it.** There were a lot of conversations leading up to that of being in my head, like, ‘Do I do this?’ Talking to my friends and family and being like, ‘Do I do this? I don’t know.’ And then, obviously, Reed and I decided together to some degree, but it felt like we actually made the decision late, if that makes sense. It felt like we had a lot of momentum with feedback on the idea and formulating the idea, so by the time I think the two of us consciously talked about it, it felt like it wasn’t a decision that we were making.” > > —[Julianna Lamb](https://www.linkedin.com/in/juliannaelamb/), co-founder and CTO of Stytch **Front:** > “For me, it was just a leap of faith. I did not allow myself to doubt too much. I think I had enough conviction that it was a problem worth solving, through people signing up to the landing page and conversations with potential customers.” > > —[Mathilde Collin](https://www.linkedin.com/in/mathilde-collin-bb59492a/en/), co-founder and CEO of Front #### Pattern 4: Companies giving you time > “I knew it was time to commit when Segment allowed us to be a ‘SOC 2 consultant’ and spend time with their engineering team to put together a gap assessment for them.” > > —[Christina Cacioppo](https://www.linkedin.com/in/ccacioppo/), founder and CEO of Vanta #### Pattern 5: Desperation > “Frankly, it was desperation. We were running out of money and would have to ‘find real jobs’ in the next few months if this didn’t work out. We decided to launch and give it our best shot. Our backup plan was to try and launch a group-trip-planning idea (which, for the record, would’ve been a disaster).” > > —[Calvin French-Owen](https://www.linkedin.com/in/calvinfo/), co-founder of Segment #### Pattern 6: Cosmic coincidence > “It was a weird cosmic coincidence that my co-founder [Glen Takahashi] and I both were going to have to move to support our significant others’ jobs. We were both living in New York, and both of our significant others had gotten really cool jobs in San Francisco that we couldn’t say no to. And so we were moving anyway, and we were going to have to find new jobs anyway. It kind of threw us off the cliff a little bit. And honestly, I wonder sometimes if we had stayed in New York and we were just at our old jobs, if we would’ve done it, because we were reluctant. Not that we didn’t think we’d be good founders, just we only wanted to do something if it really felt right. It was one of those things where the universe was kind of telling us we have to do this. We’re like, ‘Fuck it. I guess we have to.’” > > —[Barry McCardel](https://www.linkedin.com/in/barrymccardel/), co-founder and CEO of Hex #### Pattern 7: They were already certain they were going to start something **Figma:** > “As soon as Dylan [Field] and Evan [Wallace] got the Thiel Fellowship, they were like, ‘Hey, we’ve got this money that gives us a runway to try stuff. So let’s just try stuff.’ **They were committed to building a company from the beginning.**” > > —[Sho Kuwamoto](https://www.linkedin.com/in/shokuwamoto/), VP of Product of Figma **Amplitude:** > “**I actually was committed to doing a startup before Sonalight and before Amplitude.** I graduated from MIT in 2010, and as part of it, I had done Battlecode, which is this month-long coding competition—the largest coding competition at MIT. Over 1,000 people participate, and a lot of the people who compete in that end up going on to found amazing companies. So the founders of Dropbox came from that. Benchling came from that. Obviously now we’re part of that group too. But lots of amazing startups and companies come out of that. > > It made me realize starting a company was a viable path after graduating from college. And so I spent about a year studying companies, figuring out, ‘Am I capable of doing this?’ I read Paul Graham’s essays, talked to founders—I went through Founders at Work, just to understand. > > And one of the things that really stood out to me going through that process of studying companies was that most companies went through a period where about a year, maybe a year and a half, in, the founders rationally probably just should have given up because they weren’t getting any traction. Airbnb’s story is famous for that. All sorts of false starts. For whatever reason, they didn’t give up. And they decided to keep at it. And then they ended up going on to find massive success. And that is true in almost every single founding story you can find out there. > > And so that was a huge thing to us. To me that was like, look, if you’re going to do it, you’ve got to commit for multiple years and not quit on this thing no matter how bad the thing gets. And if you do, it’s likely you’ll find some sort of success. Whether that’s an acquisition or whether that’s a scalable company or whether that’s some other opportunity. You don’t know, but you’ll find something by sticking to it. And so that was the thing for me. I was like, ‘All right, I’m going to go do this, and I will do this for a minimum of two years no matter what happens.’ > > I pitched tons of folks and my classmates at MIT to try to come start the company with me. None of them wanted to do it. > > To Curtis [Liu]’s credit, my co-founder at Amplitude, he was like, ‘I want to do it, but I want to stay at Google for a year first.’ I’m like, ‘If he goes to Google, he’s never coming out of that thing.’ So, we’d worked together on side projects on nights and weekends. Other people would be part of that and come and go, but he was the one who stuck through it. We ended up starting Sonalight. Nine months in, it didn’t work. No question we were going to continue to go after this thing. Yes, both of us full-time; we added Jeffrey [Wang] after that. And the three of us started Amplitude together. And then after a year of work on that thing, it really started to take off.” > > —[Spenser Skates](https://www.linkedin.com/in/spenserskates/), co-founder and CEO of Amplitude **Snyk:** > “**My first decision was to leave Akamai and start another company. I loved the startup experience, and I wanted to prove to myself Blaze wasn’t a fluke and that I can do it again.** Moreover, I wanted to build something bigger than Blaze, which was a successful but quick outcome. I resigned, with the intent of taking a year off before starting another thing, but once the idea for Snyk took hold, I couldn’t wait. It felt like I was uniquely positioned to take this challenge on, and that now was the time to act. I ended up incorporating Snyk eight days after my final day at Akamai.” > > —[Guy Podjarny](https://www.linkedin.com/in/guypo/?originalSubdomain=uk), co-founder and CEO of Snyk ### Next: [How to identify your ideal customer profile (ICP)](https://www.lennysnewsletter.com/p/how-to-identify-your-ideal-customer) *Have a fulfilling and productive week 🙏* ## 📣 Join Lenny’s Talent Collective 📣 If you’re hiring, [join Lenny’s Talent Collective](https://www.lennysjobs.com/talent/welcome) to start getting weekly drops of world-class product and growth people who are passively open to new opportunities. I hand-review every application, and accept less than 10% of candidates who apply. ![Image from How to validate your B2B startup idea](https://substack-post-media.s3.amazonaws.com/public/images/8638d278-ac01-4f28-b2c9-39f1dd6e4724_1492x1194.png) If you’re looking for a new gig, apply to join! You’ll get personalized opportunities from hand-selected companies. You can join anonymously, hide yourself from companies, and leave anytime. [Apply to join](https://www.lennysjobs.com/talent) **If you’re finding this newsletter valuable, share it with a friend, and consider subscribing if you haven’t already. There are [group discounts](https://www.lennysnewsletter.com/subscribe?group=true), [gift options](https://www.lennysnewsletter.com/subscribe?gift=true), and [referral bonuses](https://www.lennysnewsletter.com/leaderboard) available.** Sincerely, Lenny 👋 --- ## [32/51] How to hire your first growth team *Scheduling note: We’ll resume the “Kickstarting and scaling a B2B startup” series next week.* > ## Q: How do I hire and build my first growth team? This is a question that’s been asked and answered many times but, tbh, never super-well. To get you a full, complete, and lasting answer, I brought in the big guns—[Elena Verna](https://www.linkedin.com/in/elenaverna/) (legendary growth advisor/leader) and [Andrea Wang](https://www.linkedin.com/in/andreashuyuwang/) (former growth leader at Amplitude and Lime, now a partner at General Catalyst). Elena and Andrea far exceeded my expectations in answering this question by personally interviewing 12 of the top growth minds in the world (plus tapping into their own experience), to lay out a detailed step-by-step guide for building your first growth team. A huge thank-you to Elena and Andrea for going the extra mile with this post and for being such great collaborators. *Elena is a growth advisor and angel investor—you can find her on [LinkedIn](https://www.linkedin.com/in/elenaverna/) and [Twitter](https://twitter.com/ElenaVerna), and don’t miss her amazing newsletter, [Elena’s Growth Scoop](https://elenaverna.substack.com/). Andrea is a partner at General Catalyst, investing in early-stage B2B startups, who loves helping companies think about product and growth strategy—you can find her on [LinkedIn](https://www.linkedin.com/in/andreashuyuwang/) and [Twitter](https://twitter.com/AndreaShuyuWang).* ![Image from How to hire your first growth team](https://substack-post-media.s3.amazonaws.com/public/images/0c489b8d-d512-47ac-bc63-188b91a423f9_8000x4000.png) Growth, as a function, is only a decade old. Many companies are establishing growth teams for the very first time, and there’s still very little practical advice for thinking through the timing and sequence of building your first growth team. We decided to leverage our experience and the expertise of top growth practitioners, including [Adam Fishman](https://www.linkedin.com/in/adamjfishman/) (Lyft, Patreon), [Adam Grenier](https://www.linkedin.com/in/akgrenier/) (Eventbrite, Uber), [Ben Williams](https://www.linkedin.com/in/semanticben/) (Snyk), [Casey Winters](https://www.linkedin.com/in/caseywinters/) (Pinterest, Grubhub, Eventbrite), [Hila Qu](https://www.linkedin.com/in/hilaqu/) (GitLab), [Laura Schaffer](https://www.linkedin.com/in/lauraschaffer/) (Amplitude, Twilio), [Lauryn Isford](https://www.linkedin.com/in/laurynisford/) (Airtable, Notion), and [Melissa Tan](https://www.linkedin.com/in/melissamtan/) (Webflow, Dropbox), to help you get started. ## What does a growth team do? Growth teams don’t build net new products or features. Instead, they work on creating distribution strategies that help acquire, activate, engage, and monetize customers on the existing product value. > “*Most product and marketing teams are built to create or expand the core value provided to customers. Growth is connecting more people to the existing value.*” —*[Casey Winters](https://www.linkedin.com/in/caseywinters/) (ex-Eventbrite, Pinterest)* Growth teams and pods are typically formed around (1) acquisition, (2) activation, (3) monetization, and/or (4) engagement goals. And 90% of the time, *acquisition* is the first goal new growth teams take on. This is our recommended approach as well, because: 1. There is more user volume in the earlier stages of the customer journey for the growth team to take a scientific, data-driven approach to finding the best ways to increase distribution. 2. Most businesses experience the biggest drop-offs around the acquisition parts of the user journey, giving a way to faster time-to-value for the newly formed growth team. 3. Improved acquisition leads to healthier engagement and monetization; thus, by refining these initial stages, businesses can also enhance downstream metrics. 4. Monetization is a complex issue involving all company stakeholders, so the growth team must build organizational trust before addressing this crucial element. ## How does growth look at different company stages? Growth efforts and team compositions vary depending on the stage of a company’s development. Just like with the first product or marketing hire, it is a difficult decision to determine when growth specialization and hiring are worthwhile. Here are our guidelines: #### **Before PMF: Develop a growth model hypothesis** Many founders get caught up in growth hype and try to hire growth talent as early as possible. Don’t fall victim to this trap—you will only waste precious capital and equity for lackluster results. Growth is about increasing the distribution of the core product. If there is no validation that the product has found PMF, growth has nothing to grow. PMF has to happen first, then growth. But that’s not to say you shouldn’t think about growth pre-PMF. As you explore potential product-market fit, it is crucial to have hypotheses on how you will distribute your product. For example, if you are planning to be product-led, then the product has to be designed with acquisition, monetization, and retention distribution goals in mind from the very beginning. If you are planning to be marketing/sales-led, then the product experience will look very different from inception, as you will have humans responsible for growth levers and distribution. Founders must assess their PMF strategy and develop the best-fitting ways to distribute the product to create predictable, sustainable, and defensible growth. It can be product-led, marketing-led, sales-led, or combinations thereof. But just like you wouldn’t outsource your PMF to a PM, you cannot outsource your initial growth ideas. #### **Finding PMF: Founder-led growth** During early signs of traction and initial scaling stages, it is important to validate that the growth model hypothesis was correct. Founder-led growth is the best path here, where the founder drives growth efforts across product-led, marketing-led, or sales-led motions. - **Product-led growth:** The founder prioritizes not only building core functionality but product experiences to resolve distribution goals, from acquisition to monetization. - **Marketing-led growth:** The founder prototypes third-party channels and content to enable the market with the information to drive acquisition, educate on engagement, and assist monetization. - **Sales-led growth:** The founder does sales themself. The benefit of founder-led growth at this stage is quick decision-making, tight alignment to vision and customer, and, perhaps most importantly, leading by example to set up the growth mindset within the company culture. At this stage, we recommend you don’t hire a team for growth, as it’s still too early in the PMF journey to warrant multiple headcounts, but if you still want to hire dedicated growth talent, look for someone with (1) high iteration/learning velocity; (2) a growth mindset; (3) strong execution skills, and a generalist who can execute across different growth problems; and, ideally, (4) someone internal who already has the business context. #### **Scaling PMF: Hire your first full-time growth roles** As your company efforts transition from a search for and validation of PMF to scaling work, you can begin hiring your growth team. In other words, the right time to think about the first growth hire is when you are ready to blow up the distribution of your current product-market fit and have initial validation of your distribution methods. Your first growth hire’s skill set should be anchored to the biggest growth lever that is currently experiencing friction: acquisition, activation, engagement, or monetization. Is your biggest bottleneck to growth today acquiring new users, activating those users, keeping them retained, or generating revenue? It is important not to hire growth team members just to “accelerate growth,” as it will likely result in a misfire. For example, if product-led growth is your main motion, hiring a marketer to accelerate growth will lead to disappointing results—because most of the growth work will need to be done in the product by the PM and eng teams. Knowing where you are experiencing friction will ensure that you have sufficient data tracking and understanding of your growth model to bring the right talent on board, enabling new hires to have a meaningful impact. Suggestions on whom to hire depending on the problem: ![Image from How to hire your first growth team](https://substack-post-media.s3.amazonaws.com/public/images/7ecb9b3e-1e46-4e21-a283-48f2f06cc4ce_1276x774.png) ## A growth leader should not be your first hire Understanding why your business is not growing is incredibly difficult. Many founders want to shortcut this by hiring a growth leader to outsource solving this problem to them. Unfortunately, even the most experienced growth leaders will take at least 6 to 12 months to understand the local problem fully. The business ecosystem is incredibly complex, and learning about products, industries, markets, customers, and internal employee dynamics is not an easy feat. When growth leaders need immediate results, they are forced to simply copy-paste from their previous experiences, often resulting in initiatives that do not produce desired outcomes. Sustainable growth is about evolution, not revolution. Hiring a “builder” profile (e.g. Acquisition PM, Activation PM, Monetization PM, Acquisition Growth Marketer, Retention Growth Marketer) as your first hire is a better bet. A builder is a growth generalist focused on broad tactical and execution skills within a specific domain. These are the individuals you want on your team when you are standing up growth processes and systems from the ground up. ## How to structure the growth team Since growth is a result that the whole company contributes to, the question is how to structure the growth team to accelerate growth while also ensuring that the responsibility for growth is shared across the entire organization. Let’s take data analytics teams as an example. Although almost every company has data analysts, other team members also analyze data whenever possible. While the analysts may take ownership of the more complex data projects where they can provide unique insights, the entire company must take responsibility for data analytics if they want to make data-driven decisions. The same concept applies to growth teams. Growth teams take accountability over growth work where they can uniquely add value, yet the entire company should continue aligning to growth outcomes. There are two common archetypes of growth team structure: 1. **Centralized growth team** 2. **Decentralized growth team** Let’s explore the pros and cons of each archetype: #### **Archetype 1: Centralized growth team** Centralized growth teams are optimized for velocity. **Examples of companies that started with dedicated growth teams:** Dropbox, HubSpot, GitLab, Miro, SurveyMonkey, Snyk **Reporting structure:** Growth marketing, product, and analytics report to a Head of Growth. Dedicated engineering and design resources are embedded in the team or may even report directly to the Head of Growth. The reporting structure can be either reporting to the CEO or a Marketing/Product/Revenue leader. ![Image from How to hire your first growth team](https://substack-post-media.s3.amazonaws.com/public/images/ea80e9c3-f2db-4d6b-9b26-a20bdc8ac25f_1016x490.png) **Superpower:** Velocity. They operate as a lean, mean, execution-hungry machine. 1. They have aligned priorities 2. Are self-sufficient 3. Have customized processes, rituals, and development lifecycles 4. Can prioritize and re-prioritize on the fly **Drawbacks:** 1. Centralization of responsibility: Dedicated teams often hoard growth responsibility because they can do it faster and better than anyone else. This often results in all growth outcome accountability falling on the dedicated team, alleviating the need for the rest of the company to contribute to growth success. The Product team may become a feature factory, and Marketing begins to fall back on the blind chase after traffic/MQLs. 2. Resourcing: Resource constraints are often felt fairly quickly because the rest of the organization is not aligned to contribute. 3. Career growth: Unclear career progression for people on the growth team—not all growth marketers and growth PMs want to be growth leaders. > *“At GitLab, the initial product growth team had four sub-teams: Acquisition, Activation, Retention, and Expansion. However, engineering resources were stretched too thin, so we consolidated them into two teams: Activation and Conversion. This led to increased velocity and impact without abandoning Expansion and Retention.* > > *We also established a dedicated product analytics team within growth, significantly improving productivity. Lastly, adding a ‘Head of Online Sales’ role in the sales organization helped align growth and sales efforts. For any B2B PLG growth team, it’s crucial to design a sales counterpart early in the process.”* > > *—[Hila Qu](https://www.linkedin.com/in/hilaqu/), growth advisor and former Director of Growth at GitLab* > *“Snyk formed a dedicated growth organization later in its journey, initially focusing on building the necessary foundation for growth work at scale and early growth hypotheses. The org was predominantly centralized, with multiple cross-functional growth pods designed to drive cultural change, establish growth practices, and maintain a platform-wide approach. Hiring team members with a specific mindset was crucial, although some personnel changes occurred in the first 12 months. Challenges included alignment due to rapid company growth and the ‘absolution effect,’ where the existence of a dedicated growth org seemed to relieve others of growth responsibility.”* > > *—[Ben Williams](https://www.linkedin.com/in/semanticben/), growth advisor and former Head of Growth at Snyk [P.S. Read more about Ben’s take on PLG org structure [here](https://plgeek.substack.com/p/a-best-in-class-plg-org)]* > *“At Uber we were product-led and reported directly to Travis [Kalanick], the CEO. That included things like paid media, lifecycle, and SEO, where we opted to run them more like product sprints and experiment-to-build instead of experiment-to-optimize for the first couple years. This allowed us to take big swings aimed at any leverage point in the business (for instance, we had a few sprints focused on recruiting engineers because that was the biggest barrier to our company’s growth).”* > > *—[Adam Grenier](https://www.linkedin.com/in/akgrenier/), VP of Growth at Eventbrite, ex-Uber* #### **Archetype 2: Decentralized growth team** Decentralized growth teams operate as tribes and are optimized for fostering a growth culture. **Examples of companies that started with decentralized growth teams:** Amplitude, Airtable, Pinterest, Twilio, SurveyMonkey **Reporting structure:** Each growth marketer or PM reports to their respective function (growth product into Product and growth marketing into Marketing), coming together as a “growth tribe.” ![Image from How to hire your first growth team](https://substack-post-media.s3.amazonaws.com/public/images/540ca6ef-7b73-488d-9fe9-f7f116d034cf_1018x546.png) **Superpower:** By building a decentralized growth tribe, you can cultivate a culture of growth throughout your organization, as members from various teams come together to share their expertise and insights. This collaborative approach leads to a more holistic understanding of growth opportunities. It also fosters a sense of ownership and accountability for driving growth, ultimately leading to more sustainable and scalable growth over the long term. **Drawbacks:** 1. Priorities: Conflicting priorities of their respective departments will slow down the velocity. 2. Complexity: As the number of participants in a growth tribe increases, it can become more challenging to coordinate and align everyone around a common goal or objective, leading to inefficiencies and slower decision-making. 3. Communication breakdown: With participants coming from different departments or teams, miscommunication and misunderstandings can arise, particularly if there isn’t a clear and open line of communication established. This can lead to delays, missed opportunities, and even conflicts between team members. > *“At Pinterest, we started with growth product and engineering teams reporting into the head of product and the head of engineering, respectively. A couple years after forming, the decision was made to move the growth team into Marketing. It was quickly undone within six months because they realized that having a product-led-growth team report into Marketing was creating alignment issues. It was still early in Pinterest’s journey, and the core product was evolving. We found that with growth reporting into Marketing, a lot of growth product strategy was aligned with what the product was like today, and was not aligning with where it was going be six months from now. It created a communication and alignment gap.”* > > *—[John Egan](https://www.linkedin.com/in/jwegan/), former Head of Growth Engineering at Pinterest* > *“At Twilio, we had a growth product team focused on driving activation and monetization through efficient self-serve experiences. We evolved the team’s composition to suit our objectives, first targeting activation, then engagement and monetization.”* > > *—[Laura Schaffer](https://www.linkedin.com/in/lauraschaffer/), Head of Growth at Amplitude, ex-Twilio* At Amplitude, our growth team structure evolved from decentralized to centralized (Marketing and Product report into VP of Growth), and then back to decentralized (Growth Marketing reports into CMO; Growth Product and Analytics report into VP of Growth) over time. What we found works well for us, going from the centralized to decentralized structure, is spreading a growth mindset across the organization, especially within marketing, product, and design orgs. It also helped with getting more resourcing in areas like growth marketing, when it’s structured as a standalone team. At SurveyMonkey, at first, Elena ran a dedicated growth team across growth product (acquisition, activation, monetization), marketing (acquisition, engagement), and analytics teams. We operated as a lean, mean, high-velocity machine but lacked shared goals and support from the rest of the organization. At one point, we found ourselves to be solely responsible for the forecast, even though we made up less than 25% of the company, which was far from ideal. As I left the company, the growth team was split up into a cross-functional growth tribe. The goal was to instill a growth mindset across an entire organization and create shared accountability across growth outcomes. #### Which growth team configuration is right for you? It often depends on what problem you are trying to solve. The growth team is meant to solve the following: 1. Increase learning velocity 2. Begin experimentation practice 3. Pressure-test existing business assumptions 4. Connect initiatives to outcomes 5. Create a data-driven growth mindset Dedicated growth teams best solve for 1-3. Growth tribes best solve for 4-5. If you go with the centralized growth team structure, there’s often the question of what functions related to growth should report to a growth leader. This often depends on the competency and experience of the growth leader and how that plays into the organizational dynamics. If a growth leader you already have has a strong marketing and product background, then you can have growth marketing and product teams report to this person. If the leader only has a strong data and product background but limited experience in marketing, you could have a decentralized structure where growth analytics and growth product report to a VP of Growth, and growth marketing reports to the CMO. We have seen companies oscillate between centralized and decentralized models as circumstances change.At Amplitude, we went through several iterations of the growth team. Initially, we went with a dedicated growth team that first focused on growth traffic and then took ownership of key growth areas in the core product, including activation, monetization awareness, and self-serve product feature engagement. Growth product and engineering reported into the Head of Growth; this helped us run faster and empowered the team to have more ownership in the core product, versus aligning with other product teams on every change. But we evolved into a decentralized org structure later, with each function reporting into the functional head, to spread growth mindset across the organization. When we started the growth team at SurveyMonkey, Elena ran just growth product and analytics teams. Growth marketing began reporting to her a few years later as we evolved to be a fully centralized team (reporting to the president). However, as Elena left, the team was decentralized, and a growth tribe was created. > *“Different structures are effective at varying times. Teams may transition between reporting to multiple functions, a single person, or back to a distributed approach. Success depends on whether the structure addresses the root cause at the right moment. Centralization is preferable for velocity issues, while distribution may be better for resolving cultural conflicts.”* > > *—[Adam Fishman](https://www.linkedin.com/in/adamjfishman/), advisor and former Head of Growth at Lyft, Patreon* The growth team structure is not static, and **growth teams’ structure typically evolves based on business needs and organizational maturity**. > *“At Webflow, we recently centralized all growth teams (e.g. Product Growth, Growth and Lifecycle Marketing) under one unified growth team, which has been very empowering for the team and has enabled better alignment and accountability. We’ve moved from teams locally optimizing their areas to now being able to consider and execute larger initiatives that would previously require a lot more alignment across teams.”* > > *—[Melissa Tan](https://www.linkedin.com/in/melissamtan/), Head of Self-Serve at Webflow, ex-Dropbox* [Lauryn Isford](https://www.linkedin.com/in/laurynisford/), Head of Growth at Notion, ex Airtable, also called out the need for revisiting the growth team structure as the business evolves: > *“The team structure could change if there were other areas the team wanted to work on. The org should spin up or down growth teams as business needs change. Teams should be staffed accordingly.”* So don’t worry if you don’t get it right the first time. The right org structure changes over time as the business and org maturity in growth evolves; what serves you well today may not be the best structure in six months. You almost always encounter new challenges with the existing structure that may warrant a reorg. If you are not sure, we recommend starting with a decentralized growth team and, when you start to notice issues with velocity or decision-making, consider creating a centralized team. To conclude, our advice on structuring and hiring a growth team: 1. Don’t hire too early, pre-scaling PMF. 2. Hire the right type of talent to address your specific growth bottlenecks and challenges. 3. There are trade-offs between decentralized vs. centralized team structures, and they address different organizational problems. ### **📚 Further study** 1. Elena Verna: [Six rules of hiring for growth](https://www.lennysnewsletter.com/p/hiring-growth) 2. Reforge: [Growth Leadership course](https://www.reforge.com/programs/growth-leadership) 3. Reforge: [How to pick your ideal growth team structure](https://www.reforge.com/previews/growth/growth-team-structure) 4. Adam Fishman: [Hiring your first Growth employee—part 1](https://www.fishmanafnewsletter.com/p/hiring-your-first-growth-employeepart) 5. Andrew Chen: [Hiring a Head of Growth](https://andrewchen-com.cdn.ampproject.org/c/s/andrewchen.com/hiring-head-of-growth/amp/) *Thank you, Elena and Andrea!* *Andrea is a partner at General Catalyst who loves helping companies think about growth strategy; Elena is an angel investor and growth advisor. If you are interested in chatting about your challenges and learning how we can help, feel free to get in touch. Find Andrea on [LinkedIn](https://www.linkedin.com/in/andreashuyuwang/) and [Twitter](https://twitter.com/AndreaShuyuWang), and Elena on [LinkedIn](https://www.linkedin.com/in/elenaverna/) and her [newsletter](https://elenaverna.substack.com/). Views expressed in this post are those of the individual General Catalyst personnel writing the blog herein and are not the views of General Catalyst Group Management, LLC, or its respective affiliates.* *Have a fulfilling and productive week 🙏* ## 📣 Join Lenny’s Talent Collective 📣 If you’re hiring, [join Lenny’s Talent Collective](https://www.lennysjobs.com/talent/welcome) to start getting weekly drops of world-class product and growth people who are passively open to new opportunities. I hand-review every application, and accept less than 10% of candidates who apply. ![Image from How to hire your first growth team](https://substack-post-media.s3.amazonaws.com/public/images/8638d278-ac01-4f28-b2c9-39f1dd6e4724_1492x1194.png) If you’re looking for a new gig, apply to join! You’ll get personalized opportunities from hand-selected companies. You can join anonymously, hide yourself from companies, and leave anytime. [Apply to join](https://www.lennysjobs.com/talent) **If you’re finding this newsletter valuable, share it with a friend, and consider subscribing if you haven’t already. There are [group discounts](https://www.lennysnewsletter.com/subscribe?group=true), [gift options](https://www.lennysnewsletter.com/subscribe?gift=true), and [referral bonuses](https://www.lennysnewsletter.com/leaderboard) available.** Sincerely, Lenny 👋 --- ## [33/51] How to identify your ideal customer profile (ICP) ![Image from How to identify your ideal customer profile (ICP)](https://substack-post-media.s3.amazonaws.com/public/images/c572ff61-0f24-4cf5-b1f1-4e705e9fd94a_2014x1007.png) Welcome to part three of our series on how to kickstart and scale a B2B business: - **Part 1:** [How to come up with a great B2B startup idea](https://www.lennysnewsletter.com/p/how-the-most-successful-b2b-startups) - **Part 2:** [How to validate your idea](https://open.substack.com/pub/lenny/p/how-to-validate-your-b2b-startup) - **Part 3:** How to identify your ICP *← This post* - **Part 4:** [How to find and win your first 10 customers](https://www.lennysnewsletter.com/p/how-to-win-your-first-10-b2b-customers) - **Part 5:** [How to find product-market fit](https://www.lennysnewsletter.com/p/finding-product-market-fit) - **Part 6:** [How, and when, to hire your early team](https://www.lennysnewsletter.com/p/hiring-your-early-team-b2b) - **Part 7:** [How to scale your growth engine](https://www.lennysnewsletter.com/p/scaling-your-b2b-growth-engine) Let’s jump right in. *A huge thank-you to **[Akshay Kothari](https://www.linkedin.com/in/akothari/)** (COO of Notion), **[Ali Ghodsi](https://www.linkedin.com/in/alighodsi/)** (CEO of Databricks), **[Barry McCardel](https://www.linkedin.com/in/barrymccardel/)** (CEO of Hex), **[Boris Jabes](https://www.linkedin.com/in/borisjabes/)** (CEO of Census), **[Calvin French-Owen](https://www.linkedin.com/in/calvinfo/)** (co-founder of Segment), **[Cameron Adams](https://www.linkedin.com/in/themaninblue/)** (co-founder and CPO of Canva), **[Christina Cacioppo](https://www.linkedin.com/in/ccacioppo/)** (CEO of Vanta), **[David Hsu](https://www.linkedin.com/in/dvdhsu/)** (CEO of Retool), **[Eilon Reshef](https://www.linkedin.com/in/eilonreshef/)** (CPO of Gong), **[Eric Glyman](https://www.linkedin.com/in/eglyman/)** (CEO of Ramp), **[Guy Podjarny](https://www.linkedin.com/in/guypo/)** (CEO of Snyk), **[Jori Lallo](https://www.linkedin.com/in/jorilallo/)** (co-founder of Linear), **[Julianna Lamb](https://www.linkedin.com/in/juliannaelamb/)** and **[Reed McGinley-Stempel](https://www.linkedin.com/in/reed-mcginley-stempel-17362245/)** (co-founders of Stytch), **[Keenan Rice](https://www.linkedin.com/in/keenanrice/)** (founding team), **[Mathilde Collin](https://www.linkedin.com/in/mathilde-collin-bb59492a/en/)** (CEO of Front), **[Rick Song](https://www.linkedin.com/in/rick-song-25198b24/)** (CEO of Persona), **[Rujul Zaparde](https://www.linkedin.com/in/rujulz/)** and **[Lu Cheng](https://www.linkedin.com/in/lu-cheng-973b7830/)** (co-founders of Zip), **[Ryan Glasgow](https://www.linkedin.com/in/ryanglasgow/)** (CEO of Sprig), **[Shahed Khan](https://www.linkedin.com/in/shahedkhan/)** (co-founder of Loom), **[Shishir Mehrotra](https://www.linkedin.com/in/shishirmehrotra/)** (CEO of Coda), **[Sho Kuwamoto](https://www.linkedin.com/in/shokuwamoto/)** (VP of Product of Figma), **[Spenser Skates](https://www.linkedin.com/in/spenserskates/)** (co-founder and CEO of Amplitude), and **[Tomer London](https://www.linkedin.com/in/tomerlondon/)** (co-founder and CPO of Gusto) for contributing to this series. Art by [Natalie Harney](https://www.natalieharney.com).* ![Image from How to identify your ideal customer profile (ICP)](https://substack-post-media.s3.amazonaws.com/public/images/b7f6244b-8cdb-4c50-946a-726255a31b5e_2010x1005.png) We’ve so far spent all of our time finding and validating a problem, but surprisingly, many (perhaps most?) of the B2B companies I researched spent just as much time on picking the problem as they did on figuring out *who* to solve the problem for. When they didn’t do this, they often regretted it. “We did not think about ICP. I wish we did earlier on. It’s one of my biggest mistakes.” —[Mathilde Collin](https://www.linkedin.com/in/mathilde-collin-bb59492a/en/), co-founder and CEO of Front If you’ve got a killer idea but you’re talking to the wrong people, you’ll come away thinking your idea stinks, and give up. But the same idea pitched to different people can change everything. Below, I’ll share a guide for nailing your ideal customer profile (ICP), dozens of stories of how founders identified their ICP, and as always, templates and tons of examples. ### **A few of my biggest takeaways and surprises from this step** 1. Most founders initially got their ICP wrong. 2. Everyone landed on at least *three* attributes to describe their ICP. 3. Data from *outbound sales* is the best signal for what’s working, versus leads from investors and friends. 4. There are four common signs that you’re getting closer to your ICP: 1. A significant increase in your conversion rate 2. A significant increase in enthusiasm 3. A much stronger desire to take action now 4. The nod (see below) ### Initial ICPs for some of today’s biggest B2B companies Through my interviews, I’ve gathered the initial ICPs of over a dozen startups. In the chart, and in the stories below, notice how most companies landed on exactly three attributes. Some had more, but no one had fewer. Also notice how specific these attributes get. ![Image from How to identify your ideal customer profile (ICP)](https://substack-post-media.s3.amazonaws.com/public/images/c2b296c3-8bd6-4088-8219-c0086e8ea22b_2276x4584.png) ## How to identify your ICP To identify your own ICP, go through the list below and take your best guess at picking the three most *unique* and *important* characteristics of your potential ideal customer ([here’s a template to get you started](https://docs.google.com/spreadsheets/d/1DAajOv4KKm_cVMFgA694sP7mfFvieAPasWZVK_9TOcg/edit#gid=0)): 1. Company size (e.g. 1,000-5,000 employees) 2. Job title (e.g. engineering manager, social media manager) 3. Pain point you’re solving (e.g. compliance, internal transparency) 4. Company’s unique way of working (e.g. design-driven, operationally heavy) 5. Specific tech used (e.g. data warehouse, GitLab) 6. Type of business (e.g. B2B SaaS, e-commerce) 7. Price point (e.g. sells software that’s $10k ARR) 8. Geo (e.g. urban centers, LatAm) 9. A unique place the user spends time (e.g. Node.js community) #### Try to get *super*-specific and *super*-narrow with your ICP. Almost comically narrow. **Gusto** found the most success with *six* ICP attributes initially: > “We started really, really, really, really, really, really, really narrow. Here’s how narrow: > > 1. Only companies that are five or fewer employees > 2. in California > 3. that offer no benefits > 4. that have only salaried employees and no contractors > 5. that have any other deductions > 6. and that agree to get paid eight days after they run payroll > > That ended up being a specific set of companies. The reason they chose us, and why we went after them, is because of the value that we provided. > > Slowly, we expanded to where we felt ready. Let’s begin to serve hourly employees. Okay, now let’s help businesses provide benefits. Okay, now let’s move to additional states. We knew we were ready to expand when we felt like, one, we were getting customer love and, two, we had sufficient engineering bandwidth to go and build the features and products without letting go of the previous customer audience. > > Today Gusto handles the bulk of what HR teams do, as well as some work of finance teams—payroll, insurance, benefits, onboarding, performance reviews, state registrations, tax credits, and more—for over 300,000 businesses with 1 to 500 employees in the U.S. and in 120 other countries. We’re 11 years in, but I still feel we are just getting started.” > > —[Tomer London](https://www.linkedin.com/in/tomerlondon/), co-founder and CPO The founders of **Gong** landed on three highly nuanced attributes: > “We tried to narrow it down as much as possible. We said we’re only going to sell to software companies that are: > > 1. Selling in the U.S. in English, so we could start with just one language. > 2. Selling via video conferencing (it was Webex at the time), so we had the most amount of data to analyze. > 3. Selling software that is worth somewhere between $1,000 to $100,000, because beyond $100k, we assumed it was going to be a different sales cycle, and less than $1,000, it would be too transactional. > > There are probably 5,000 companies with this profile in the world. And exactly like the book *Crossing the Chasm* suggests, we thought, let’s get this small group working and get them excited. They would be the early adopters. We knew that we would understand their pain, and they’re typically advanced, so they would be early adopters. > > And then of course, over time, we went wider, adding phone calls versus video conferencing, and then different company categories and geographies.” > > —[Eilon Reshef](https://www.linkedin.com/in/eilonreshef/?originalSubdomain=il), co-founder and CPO As did **Snyk**: > “Our initial target audience was a developer building with Node.js who was very security-conscious. > > This depth-first approach was really important to validate the solution on the path to product-market fit. A JavaScript developer won’t care if you support Golang or Rust. Nailing the narrow and deep use case before expanding wider was critical. > > The initial problem Snyk set out to solve was specific too: tracking and securing dependencies in the Node ecosystem. The community there would often discuss the inadequacies of the NPM dependency management capabilities. At the time, Node.js was gaining traction with increasing adoption in the enterprise, dedicated conferences, and the like, but it was still small enough that Snyk could meaningfully influence things. Here’s actually the first public showing of Snyk at Velocity Amsterdam in late 2015.” > > —[Ben Williams](https://www.linkedin.com/in/semanticben/), former VP of Product And **Looker**: > “Looker was a technical product, created right at the very start of data moving to the cloud and large, event style data being treated as business critical for analysis. So in 2013-2015, our core ICP was technical data teams—not end users or business analysts—who were starting to adopt cloud with large data sizes and complex analytical requirements AND the need to support a larger base on less technical end users within all functions of the company. These data teams tended to look at themselves more as engineering vs analysts, which aligned very well to our engineering first product design (code LookML, github built in, and all aspects of the product accessible via APIs). The companies tended to be startups with around 50-400 employees, with either engineering leading data or the data team being very technical.” > > —[Keenan Rice](https://www.linkedin.com/in/keenanrice/), founding team #### **Don’t stress if you can’t figure out your ICP for a while.** Here’s [Ali Ghodsi](https://www.linkedin.com/in/alighodsi/), co-founder and CEO of **Databricks (**which is now worth over $30B) on their complete lack of an ICP early on: > “We didn’t have an ICP at all. In those years at Berkeley, we just wanted to change the world, honestly. We just wanted to have impact. That was the most important thing. We worked with all kinds of different companies. We worked with a hospital that was using this stuff, and they were doing genomic stuff. We worked with folks that were using us to determine earthquake magnitudes using Twitter. These are completely different customers and different user profiles. So, no, we didn’t have an ideal customer profile. We were just trying out whoever wanted to use it.” And [Rick Song](https://www.linkedin.com/in/rick-song-25198b24/), co-founder and CEO of Persona: > “We did the ICP exercise 17 times in the early days. So many times. Because at that time, all of the advice we ever got was like, ‘Know your ICP.’ So we kept trying to know who it was, and I also desperately did not want our ICP to just be startups. So we tried a lot. I think in earnest we never really had one, but we tried for sure.” #### **But the sooner you figure out your ICP, the faster things will fall into place.** > “I didn’t think about ICPs whatsoever. However, looking back, that’s part of the reason PMF took so much time.” —[Boris Jabes](https://www.linkedin.com/in/borisjabes/), co-founder and CEO of Census > “We did not think about ICP. I wish we did earlier on. It’s one of my biggest mistakes.” —[Mathilde Collin](https://www.linkedin.com/in/mathilde-collin-bb59492a/en/), co-founder and CEO of Front #### Eventually, you’ll be forced to figure it out. > “We didn’t focus on ICP at all, but once we did our public launch, we started getting a flood of different people coming in. Filtering through the leads spurred me into putting a much tighter definition around qualification for deals.” —[Barry McCardel](https://www.linkedin.com/in/barrymccardel/), co-founder and CEO of Hex #### Start by paying attention to *who* gets most excited about what you’re building. For **Canva**, here’s[Cameron Adams](https://www.linkedin.com/in/themaninblue/?originalSubdomain=au), co-founder and CPO, sharing their path to identifying an ICP: > “We didn’t have any target persona until about six months into building the product. **Through the conversations that we had with people, we began to see a certain segment really get excited about it. These social media managers, these people who were (a) figuring out what social media actually was, and then (b) having to scale this work across multiple clients and customers.** > > In 2012, Instagram had only really started. Pinterest had just come out. This whole notion of visual social media was still emerging. And Canva was, I think, the perfect tool at the right time for people who were grappling with what visual social media was. **The social media manager/blogger audience was definitely the perfect one for us to start building a community around—especially freelancers, who were building their own social media management business.** We gave them early demos of the product and then helped shape the feature set through their feedback. They were probably the ideal launch customer.” For **Sprig**,[Ryan Glasgow](https://www.linkedin.com/in/ryanglasgow/), founder and CEO, on narrowing in on their unusual initial segment: > “We found pretty early that our ICP was companies with millions of users. Being an early-stage startup selling to larger companies was actually one of our biggest early challenges. You have product-market fit for companies that are more difficult to sell to. > > Our first customer, Thunkable, had millions of users. Square and Robinhood—also two of our early customers—had millions of users. I was getting very strong pull with companies like these. **The larger the user base, the more excited they were about Sprig.** ​​**Robinhood agreed to a large contract even though we were early. They’re like, ‘We love it. We’ll install tomorrow.’** They installed it as we were building the first version, basically. So that told us to go after these larger companies, with millions of users.” #### **Be careful not to pattern-match too quickly.** > “We actually got pushed off track initially. The very first user of Census was a unicorn person, unlike anyone else we met, which I didn’t know at the time. His title was business ops, and I thought—incorrectly—that he was the prototype of what every business ops person should be. He totally bought into a data-driven, system-oriented way to do business operations. > > But when I talked to people who had this same ‘biz ops’ title, which initially became our ICP, it proved to be really hit-or-miss. A lot of people would ask, ‘What’s a Redshift?’ We couldn’t find enough sophisticated people who wanted this until we found the data persona: data scientists, analytics people, and heads of data. Which is our ICP now. > > **We started to recognize this once it started to be noticeable that the data persona was just much more of a fan of Census. They were just getting much more** ***enthused*****.** The ICP shifted to that persona, and that’s when things started to click.” > > —[Boris Jabes](https://www.linkedin.com/in/borisjabes/), co-founder and CEO of Census > “One of the things we were good at was, once we had success with one type of customer, we would generalize the idea and not build something that just worked for them. > > **When we found somebody in a specific space, we wouldn’t go after any more customers of that ilk until we found another customer of a very different type. We’d rewrite everything such that our product worked for both of them. And we kept doing that for our first 10 customers.** > > There are a lot of identity companies that emerge as like, ‘Hey, we just do finance.’ > > My belief was, what if you focus on just a narrow ICP, then you keep specializing towards them and you build your platform entirely around them? And then you’re always like, oh, eventually I’ll spread off and branch off in different niches. But I think actually that process is borderline impossible without a fair degree of foresight.” > > —[Rick Song](https://www.linkedin.com/in/rick-song-25198b24/), co-founder and CEO of Persona #### Pay attention to which *roles* are **most successfully** implementing your product. For **Stytch**, it proved to be IC to mid-level engineers: > “We used to think that our buyer persona could be either the technical buyer, like the engineering manager or the senior IC or even CTO at a smaller company, or the growth product persona, who owns the funnel and really cares about conversion, offloads, etc. > > We kept both of those personas as our ICP for a while because we signed some pretty significant deals with the growth product persona, but then **we realized we had a only 5% to 10% conversion rate with those types of ICPs, versus a 40% to 50% rate with technical buyers.** Once we realized that, we just deprioritized the growth persona because, yes, they mattered as stakeholders and it was helpful to have them on calls, but they weren’t going to have enough of the carry on the technical organization to determine which vendor to go with.” > > —[Julianna Lamb](https://www.linkedin.com/in/juliannaelamb/), co-founder and CTO, and [Reed McGinley-Stempel](https://www.linkedin.com/in/reed-mcginley-stempel-17362245/), co-founder and CEO For **Retool,** it was engineering execs: > “In figuring out who wanted Retool, we had a lot of hypotheses. Probably 50% to 60% of the hypotheses were wrong, 20% to 30% of the hypotheses kind of worked, and then 10% really paid off. With product-market fit, it’s actually not just about the product; it’s about the market as well. > > The CTO or VP of Engineering at a fast-growing, operations-heavy company being a good buyer for us is an example of a hypothesis that we didn’t know was going to be right. In fact, we probably had about as much traction from those teams as the ops team at that same startup. And so it was kind of a toss-up at that point. We’d just reach out to both and see what happened. **We found out that outreach to CTOs was much more successful. Once we noticed that, we just iterated on the pitch and approach from there.**” > > —[David Hsu](https://www.linkedin.com/in/dvdhsu/), co-founder and CEO #### Then, pay attention to the *size* of the company that’s the best fit for your solution. For **Vanta**, they found a sweet spot at 20 to 60 people: > “I didn’t know what our ICP should be, so I just tried everything. > > **What it ended up being was a probably 20- to 60-person company, B2B SaaS, going through compliance for the first time, and that did not have an in-house expert.** > > To find this ICP, I just talked to everybody for a while, probably most of three or four months. In those days, you’re just so glad if anybody ever answers your email. We worked closely with a few larger companies, like AppDynamics, Segment, Front, but they ended up being just design partners and not customers at that stage because we realized they were maturing at a rate faster than we were in 2017.” > > —[Christina Cacioppo](https://www.linkedin.com/in/ccacioppo/), founder and CEO **Linear** found their initial ideal audience were startups with 2 to 5 people: > “Broadly, we always only focused on product companies with two to five people. Small teams building products. For example, consultancies were wanting to use us, but we always prioritized founder-led product companies. > > We also focused on only companies using Google Auth and GitHub, because we had only built for GitHub Authenticator or Google Authentication. With these constraints, it was very easy to target our ideal customer and only invite them off the waitlist. > > Something I thought we did really well, looking back, was the sign-up flow asked a bunch of key questions that helped us figure out who to go after. We asked what’s the size of your company, what’s your role, and which tools are you using. Are you GitHub or GitLab, or something else? Do you use Slack, or Microsoft Teams? From that we were able to cherry-pick the first customers. This allowed us to stay very narrow initially, e.g. only allow Google authentication and only integrate with GitHub to start.” > > —[Jori Lallo](https://www.linkedin.com/in/jorilallo/), co-founder **Persona** took a while to recognize how strongly correlated company size was to their success rate: > **“My biggest lesson is to be very realistic on who would want to buy your thing. Early on, we knew very quickly that we couldn’t sell to anyone large. Size truly is a consideration, especially for certain types of products, like security and user identity in our case. Depending on the type of security, there’s a lot of opportunities out there, but it’s so difficult early on because the very nature of your team might not be able to support them.** > > I actually wouldn’t go and try to retrofit the ICP, like, ‘Hey, this person bought us, so could we find more people with that role who resemble them?’ I think what was much more useful was actually being able to think through, ‘Hey, what are the common characteristics of people who’ve bought us to date (e.g. company size, pain points), and what are the theories we have now about the next set of people we could get?’” > > —[Rick Song](https://www.linkedin.com/in/rick-song-25198b24/), co-founder and CEO And **Ramp** found Series A to late-stage was the right spot, versus early-stage startups: > “We thought about our ICP all the time. We paid a lot of attention to what customers were telling us on calls. > > Early on, when we were focusing on early-stage startups, the asks were like, ‘I want a sign-up bonus. I want lounge access. I’m not paying myself enough.’ These perks were how a lot of the market was competing and what everyone was focusing on. > > Over time, we started seeing this mix shift: once you started getting into the Series A, B, and later-stage startups, the needs were different. They’d say, ‘Points aren’t going to change my business. I am spending too much. I want to be more profitable. I want to close my books on time.’ > > ![Image from How to identify your ideal customer profile (ICP)](https://substack-post-media.s3.amazonaws.com/public/images/65082ddf-cb29-4ea3-a29c-1e77190288ba_1820x932.png) > > The revenue in this group was also an order to two orders of magnitude more. So we made a very explicit decision early on to focus on this group. > > We would welcome customers outside of this ICP, but we wanted to be really clear about who we were building for, which was the series A, B, or mid-market companies. > > What we actually were competing against wasn’t a credit card. It was ‘I hate Expensify or Concur. Or bill payment software. I can’t close my books on time.’ So we could compete in a different way and grow differently.” > > —[Eric Glyman](https://www.linkedin.com/in/eglyman/), co-founder and CEO #### Look for patterns in the unique *ways* companies work. The founders of **Figma** recognizedthat they were most successful with design-forward and internally transparent companies: > “**Our notion of who our initial customer was is basically in-house design teams at companies that place a premium on design, or where the design is an important part of the company**. **We also started with targeting (not on purpose, but a little bit by accident) just startups, because startups tend to have less history of stuff that they have to deal with.** There aren’t thousands of years of files that they have to deal with. They want to move fast; they are willing to adopt new things. And obviously most startups are software startups. With software, there’s a lot of design involved. So for that reason, we tended to get those people. > > **What ends up happening over time is you get a sense of which companies are just kicking the tires and which companies actually are considering switching over**. The reason Uber became a customer is that there was this guy, Michael Gough, whom I had worked with at Adobe in Macromedia and who became their head of design. At the time, Uber was a relatively siloed company. The rider and driver product teams weren’t sharing a lot, because they didn’t want leaks. > > And so Michael was like, we have to change the culture. And **when we showed them Figma, they checked it out, and relatively quickly they went all in because they thought that it was a way to radically change the transparency of design within their company**. And they actually put up monitors throughout their building that showed designs and progress based on what was going on in Figma. > > Twitter was another early company that wanted to use Figma seriously from the beginning, and after a few of these conversations, you build a sense when someone reaches out to you, if they’re serious. If they are trying to deploy this across their whole team or if they’re only marginally interested. Whenever we see the former, we’d rush over and are like, ‘Okay, what’s going on? How can we help out? How are you trying to use it?’ And help them figure it out.” > > —[Sho Kuwamoto](https://www.linkedin.com/in/shokuwamoto/), VP of Product The founders of **Hex** found they were most successful with companies that had a specific data workflow: > “When people think about ICP, a lot of times they think about customer size or customer type, and that is really important. But **I think just as important is, what is the type of workflow and what is the type of pain that you want to solve?** This is the most interesting thing, which our first salesperson and I really zeroed in on: ‘What are the qualification signals we want to hear in terms of the pain they feel today?’ > > There were people we talked to who didn’t feel the pain, and even if they could get some marginal utility out of Hex, they weren’t the people we wanted to prioritize. **It was the people who, when we’d talk about the pain we were solving, would nod their heads and salivate. Those are the people we really wanted to spend time with.** > > **Where we landed was startups with data warehouses and using dbt. If they had those things, we’d probably have a really good conversation. There was a user ICP but also a workflow ICP. We were looking for folks who were primarily interested in analytics and data science. We weren’t looking to serve generic ‘I want to be doing machine learning engineering.’** > > **I distinctly remember that I was looking for a specific type of nod.** I’d be talking to them, doing my pitch: ‘We see a lot of customers who have this problem where they’re sharing primarily by screenshotting charts and pasting it in a Google Doc or exporting a CSV or sending around PDFs.’ I’d say that line and you’d see people nod—the knowing ‘Yep, that’s us too.’ That was always the thing. If I just got that nod, we were on the same wavelength, and the rest of it would go really well.” > > —[Barry McCardel](https://www.linkedin.com/in/barrymccardel/), co-founder and CEO #### **Pay the most attention to signals from** ***outbound sales*** **instead of leads coming through your network.** > “**One of my biggest lessons is to pay the closest attention to signal from outbound sales.** With outbound sales, the data is quite clean. For example, if you’re an investor at Retool, I’d ask you, ‘Hey, can you try to connect us with a few companies that might be building internal tools?’ Or ‘Can I ask you to forward an email on?’ They’d probably say yes. But then if you forwarded to a bunch of different companies, probably some of them would reply, even though they had really no interest in Retool. They were often thinking, ‘I want to meet another founder’ or ‘I’m lonely and I want to make friends.’ It kind of feels good in the moment, but it’s actually fake interest. It’s not helpful. You kind of muddy the experiment, actually, quite a bit, because then one might say, ‘Well, that company didn’t like using Retool.’ But why was that? They weren’t ever really interested. > > It’s just much purer to pay attention to signal from pure outbound, with no other incentives attached.” > > —[David Hsu](https://www.linkedin.com/in/dvdhsu/), co-founder and CEO #### Keep at it—it often takes many months. The founders of **Zip** spent six months listening, and bouncing between various personas, until they figured it out: > “**It was actually pretty unclear for a while because it was between procurement, IT, and sometimes finance. We kind of confused ourselves quite a bit. And then it wasn’t until maybe five months in that we got pretty clear it was procurement. We just had a lot of conversations and kept pitching it over and over again until we nailed down the pitch and nailed down the ICP.** I think we just had a large volume of customer calls. We would ask them about problems and then try to guide them to what we were building and see if it would come up organically. If it didn’t, then we’d guide it there and then ask. We just talked nonstop to hundreds of people over the first six months. > > Eventually, we created a category out of this space (‘intake to procure’) and identified our ICP persona (finance and procurement), which is what we sell today. But it took us those six months to know even what to say. For a long time we were like, ‘Are we just being really dumb? Are we just creating the same software, making it look better, and then thinking it’s innovative?’ Because people don’t buy stuff just because it looks better. We didn’t really know for half a year, probably.” > > —[Rujul Zaparde](https://www.linkedin.com/in/rujulz/) and [Lu Cheng](https://www.linkedin.com/in/lu-cheng-973b7830/), co-founders For **Notion**, it took years: > “**Figuring out an ICP is one of the biggest challenges of building a horizontal tool. Every quarter, you feel like the persona that’s most important changes. And we definitely went through all of those cycles—and we still go through some of it—although we’ve now landed on something that feels like it will stick (the product, engineering, design, data world).** > > But in the early days, it was everything. We went back and forth between personal users versus business users versus students all the time. And every quarter we’d be like, ‘Oh my God, this other persona is the persona that’s struggling most. We need to focus on that.’ And so it was a bit of a trial by fire, just learning on the job what felt the most important thing to do. > > Our focus now, as we think about it in terms of landing inside companies and inside usage, is the product engineering, design, data world. It doesn’t mean that’s the only end users we support, but we found those people to be the early champions inside companies. So we typically land with them and then we grow from there on out.” > > —[Akshay Kothari](https://www.linkedin.com/in/akothari/), co-founder and COO #### Know that your ICP will evolve—stay flexible. > “In the very early days, our ICP was engineers at small startups who thought, ‘This is the right way to collect data.’ It was intuitive to them that this was a better way to do analytics. > > Mid-stage, our ICP was directors or heads of engineering at growth-stage startups who couldn’t hire engineers quickly enough to meet growth. Think Glossier or DoorDash. > > Recently, our ICP has become big enterprises focused on doing ‘digital transformation,’ often via a core innovation group. Think 21st Century Fox trying to move to streaming or Anheuser-Busch trying to figure out more D2C options.” > > —[Calvin French-Owen](https://www.linkedin.com/in/calvinfo/), co-founder of Segment #### And if all else fails, focus on what you can sell this month. > “Mitch [our sales coach] was always saying, ‘**Only focus on people who can buy this month. This month is the thing. If someone says the project is a few months out, don’t talk to them.’** > > When they ask for a price, quote a really high price. Say, ‘Hey, my software is $100,000 a year.’ When they say, ‘Oh, I can only pay you $20k,’ you say, ‘Cool. Can you do it this month? If you can, then let’s go.’ > > It’s all about just getting customers to pay something and as soon as possible, and then prioritizing your time in that way.” > > —[Spenser Skates](https://www.linkedin.com/in/spenserskates/), co-founder and CEO of Amplitude ### Here’s a summary of the above steps 1. Get super-specific and super-narrow with your ICP. Almost comically narrow. 2. Start by paying attention to *who* gets most excited about what you’re building. 3. Pay attention to which *roles* are most successfully implementing your product. 4. Pay attention to the *size* of the company that’s the best fit for your solution. 5. Look for patterns in the *ways* the company works. 6. Be careful not to pattern-match too quickly. 7. Pay the most attention to signals from *outbound sales*, instead of leads coming through your network. 8. Keep at it—it often takes many months. 9. If all else fails, focus on what you can sell this month. ### Signs you’re on the right track To support each point, I’ve included select segments of the quotes above here again. #### 1. Increased conversion rate > “We kept both of those personas as our ICP for a while because we signed some pretty significant deals with the growth product persona, but then we realized we had only a 5% to 10% conversion rate with those types of ICPs versus a 40% to 50% rate with technical buyers. Once we realized that, we just deprioritized the growth persona because, yes, they mattered as stakeholders and it was helpful to have them on calls, but they weren’t going to have enough of the carry on the technical organization to determine which vendor to go with.” —[Julianna Lamb](https://www.linkedin.com/in/juliannaelamb/) and [Reed McGinley-Stempel](https://www.linkedin.com/in/reed-mcginley-stempel-17362245/), co-founders of **Stytch** > “We found out that outreach to CTOs was much more successful. Once we noticed that, we just iterated on the pitch and approach from there.” —[David Hsu](https://www.linkedin.com/in/dvdhsu/), founder and CEO of **Retool** #### 2. Increased enthusiasm > “We started to recognize this once it started to be noticeable that the data persona was just much more of a fan of Census. They were just getting much more *enthused*.” —[Boris Jabes](https://www.linkedin.com/in/borisjabes/), co-founder and CEO of **Census** > “Through the conversations that we had with people, we began to see a certain segment really get excited about it. These social media managers, these people who were (a) figuring out what social media actually was, and then (b) having to scale this work across multiple clients and customers.” —[Cameron Adams](https://www.linkedin.com/in/themaninblue/), co-founder and CPO of **Canva** #### 3. More desire to take action now > “Robinhood agreed to a large contract even though we were early. They’re like, ‘We love it. We’ll install tomorrow.’ They installed it as we were building the first version.” So that told us to go after these larger companies, with millions of users.” —[Ryan Glasgow](https://www.linkedin.com/in/ryanglasgow/), founder and CEO of **Sprig** #### 4. The nod > “**It was the people who, when we’d talk about the pain we were solving, would nod their heads and salivate. Those are the people we really wanted to spend time with. I distinctly remember that I was looking for a specific type of nod.** I’d be talking to them, doing my pitch: ‘We see a lot of customers who have this problem where they’re sharing primarily by screenshotting charts and pasting it in a Google Doc or exporting a CSV or sending around PDFs.’ I’d say that line and you’d see people nod—the knowing ‘Yep, that’s us too.’ That was always the thing. If I just got that nod, we were on the same wavelength, and the rest of it would go really well.” —[Barry McCardel](https://www.linkedin.com/in/barrymccardel/), co-founder and CEO of **Hex** “You have to change the audience to whom you target the product, to try to find who is desperate for what you do.” **—[Andy Rachleff](https://www.linkedin.com/in/rachleff/)** ### To summarize 1. Start by taking your best shot at picking the three most *unique* and *important* characteristics of your potential ideal customer [using this template](https://docs.google.com/spreadsheets/d/1DAajOv4KKm_cVMFgA694sP7mfFvieAPasWZVK_9TOcg/edit#gid=0): 1. Company size (e.g. 1,000-5,000 employees) 2. Job title (e.g. engineering manager, social media manager) 3. Pain point you’re solving (e.g. compliance, internal transparency) 4. Company’s unique way of working (e.g. design-driven, operationally heavy) 5. Specific tech used (e.g. data warehouse, GitHub) 6. Type of business (e.g. B2B SaaS) 7. Price point (e.g. sells software that’s $10k ARR) 8. Geo (e.g. urban centers, LatAm) 9. A unique place the user spends time (e.g. Node.js community) 2. Signs you’re on the right track 1. Increased conversion rate 2. Increased enthusiasm 3. Desire to take action now 4. The nod 3. Try to get *super*-specific and *super*-narrow. 4. Pay the most attention to signals from *outbound sales*, instead of leads coming through your network. 5. Keep at it—it often takes many months. 6. And if all else fails, focus on what you can sell this month. As a bonus, for inspiration, [here’s an ever-evolving doc](https://docs.google.com/spreadsheets/d/1DAajOv4KKm_cVMFgA694sP7mfFvieAPasWZVK_9TOcg/edit#gid=691141091) showing the initial ICPs of every B2B startup I can get my hands on: ![Image from How to identify your ideal customer profile (ICP)](https://substack-post-media.s3.amazonaws.com/public/images/89227feb-20db-4e56-ae46-fa196364a116_2280x914.png) ## 📚 Further study 1. [Ideal Customer Profile (ICP) template](https://docs.google.com/spreadsheets/d/1QZ8sNT7aP3TWHDsrK8k1vN_HDohxQUQaPok1BfVh0Uo/edit#gid=0) by Patrick Campbell 2. [Find your HXC](https://review.firstround.com/what-i-learned-from-developing-branding-for-airbnb-dropbox-and-thumbtack#:~:text=global%20mobility%20services.%E2%80%9D-,Find%20Your%20HXC,-It%E2%80%99s%20no%20exaggeration) by Julie Supan 3. [Ideal Customer Profile (ICP): How to Create a Comprehensive Customer Profile](https://www.mykpono.com/ideal-customer-profile-icp-how-to-create-a-comprehensive-customer-profile/) by Myk Pono 4. [GTM nirvana](https://www.carolineclark.xyz/gtm-nirvana) by Caroline Clark ### Next: [How to win your first 10 customers](https://www.lennysnewsletter.com/p/how-to-win-your-first-10-b2b-customers) *Have a fulfilling and productive week 🙏* ## 📣 Join Lenny’s Talent Collective 📣 If you’re hiring, [join Lenny’s Talent Collective](https://www.lennysjobs.com/talent/welcome) to start getting weekly drops of world-class product and growth people who are passively open to new opportunities. I hand-review every application, and accept less than 10% of candidates who apply. ![Image from How to identify your ideal customer profile (ICP)](https://substack-post-media.s3.amazonaws.com/public/images/8638d278-ac01-4f28-b2c9-39f1dd6e4724_1492x1194.png) If you’re looking for a new gig, apply to join! You’ll get personalized opportunities from hand-selected companies. You can join anonymously, hide yourself from companies, and leave anytime. [Apply to join](https://www.lennysjobs.com/talent) **If you’re finding this newsletter valuable, share it with a friend, and consider subscribing if you haven’t already. Check out [group discounts](https://www.lennysnewsletter.com/subscribe?group=true) and [gift options](https://www.lennysnewsletter.com/subscribe?gift=true).** Sincerely, Lenny 👋 --- ## [34/51] How to find and win your first 10 B2B customers ![Image from How to find and win your first 10 B2B customers](https://substack-post-media.s3.amazonaws.com/public/images/a0474f2c-61c5-4a7d-9655-52bc5f5c3a69_2014x1007.png) Welcome to part four of our series on how to kickstart and scale a B2B business: - **Part 1:** [How to come up with a great B2B startup idea](https://www.lennysnewsletter.com/p/how-the-most-successful-b2b-startups) - **Part 2:** [How to validate your idea](https://www.lennysnewsletter.com/p/how-to-validate-your-b2b-startup) - **Part 3:** [How to identify your ICP](https://www.lennysnewsletter.com/p/how-to-identify-your-ideal-customer) - **Part 4**: How to find and win your first 10 customers *← This post* - **Part 5:** [How to find product-market fit](https://www.lennysnewsletter.com/p/finding-product-market-fit) - **Part 6:** [How, and when, to hire your early team](https://www.lennysnewsletter.com/p/hiring-your-early-team-b2b) - **Part 7:** [How to scale your growth engine](https://www.lennysnewsletter.com/p/scaling-your-b2b-growth-engine) Let’s get into it. *A huge thank-you to **[Akshay Kothari](https://www.linkedin.com/in/akothari/)** (COO of Notion), **[Ali Ghodsi](https://www.linkedin.com/in/alighodsi/)** (CEO of Databricks), **[Barry McCardel](https://www.linkedin.com/in/barrymccardel/)** (CEO of Hex), **[Boris Jabes](https://www.linkedin.com/in/borisjabes/)** (CEO of Census), **[Calvin French-Owen](https://www.linkedin.com/in/calvinfo/)** (co-founder of Segment), **[Cameron Adams](https://www.linkedin.com/in/themaninblue/)** (co-founder and CPO of Canva), **[Christina Cacioppo](https://www.linkedin.com/in/ccacioppo/)** (CEO of Vanta), **[David Hsu](https://www.linkedin.com/in/dvdhsu/)** (CEO of Retool), **[Eilon Reshef](https://www.linkedin.com/in/eilonreshef/)** (CPO of Gong), **[Eric Glyman](https://www.linkedin.com/in/eglyman/)** (CEO of Ramp), **[Guy Podjarny](https://www.linkedin.com/in/guypo/)** (CEO of Snyk), **[Jori Lallo](https://www.linkedin.com/in/jorilallo/)** (co-founder of Linear), **[Julianna Lamb](https://www.linkedin.com/in/juliannaelamb/)** and **[Reed McGinley-Stempel](https://www.linkedin.com/in/reed-mcginley-stempel-17362245/)** (co-founders of Stytch), **[Mathilde Collin](https://www.linkedin.com/in/mathilde-collin-bb59492a/en/)** (CEO of Front), **[Rick Song](https://www.linkedin.com/in/rick-song-25198b24/)** (CEO of Persona), **[Rujul Zaparde](https://www.linkedin.com/in/rujulz/)** and **[Lu Cheng](https://www.linkedin.com/in/lu-cheng-973b7830/)** (co-founders of Zip), **[Ryan Glasgow](https://www.linkedin.com/in/ryanglasgow/)** (CEO of Sprig), **[Shahed Khan](https://www.linkedin.com/in/shahedkhan/)** (co-founder of Loom), **[Shishir Mehrotra](https://www.linkedin.com/in/shishirmehrotra/)** (CEO of Coda), **[Sho Kuwamoto](https://www.linkedin.com/in/shokuwamoto/)** (VP of Product of Figma), **[Spenser Skates](https://www.linkedin.com/in/spenserskates/)** (co-founder and CEO of Amplitude), and **[Tomer London](https://www.linkedin.com/in/tomerlondon/)** (co-founder and CPO of Gusto) for contributing to this series. Art by [Natalie Harney](https://www.natalieharney.com).* ![Image from How to find and win your first 10 B2B customers](https://substack-post-media.s3.amazonaws.com/public/images/ccc079cd-aa13-494e-9a61-cfa291dbea27_2010x1006.png) Let’s jump right into it. ![Image from How to find and win your first 10 B2B customers](https://substack-post-media.s3.amazonaws.com/public/images/c6b2a4b8-105f-42db-8916-930e1fe33fc6_2836x2084.png) ### Here’s my recommended sequence to find your early customers: 1. Start by reaching out to your network, looking for people who match your ICP 2. Go cold outbound, but be strategic about it 3. Tap your investors’ networks 4. Participate in relevant communities—and network 5. Put out compelling content and build a following online 6. Get press 7. Just launch **If you want to keep it really simple:** 1. Start with former colleagues (yours, and those of your early employees) 2. Collect your investors’ contacts who match your profile and then go cold outbound (creatively)—more on this below 3. Find a community where your ICPs might be hanging out, and go participate ### My biggest takeaways from this step: 1. None of these seven strategies scale. That’s why they work. In B2B, it always starts with hand-to-hand combat. 2. Cold outbound works—if done creatively. 3. PR can work, but rarely does. 4. A surprising number of founders found their early customers by putting out compelling content online and first building a following. 5. Y Combinator (YC) especially is very effective at helping you get early users, but not the way you’d think (as you’ll see below). Also, major shoutouts for First Round Capital. 6. When joining communities, focus first on adding value to the community. No one wants to pay attention to you if you’re there just to pitch your product. 7. For your first set of customers, trust is the key. # How to find and win your first 10 customers ### 1. Start by reaching out to your personal network, looking for people who match your ICP Think about your friends—and their friends. Do any fit your ideal customer profile? This group will have the most innate trust (and the lowest amount of skepticism) about your idea. You won’t find a more supportive group to start with (though there’s a downside to this, as you’ll see below). For **Figma**, Dylan Field reached out to design-oriented founders who he knew from previous projects: > “**The early batch of alpha customers were just mostly friends, and friends of friends, of Dylan.** Dylan’s the kind of guy who’s always been a mover and shaker, with connected people in the industry ever since he was a teenager. He’s just a nice, smart guy. The first company that used Figma is a company that at the time was going by the code name Krypton and now is known as Coda—[Shishir’s](https://www.linkedin.com/in/shishirmehrotra/) company. Dylan and Shishir knew each other from before.” > > —[Sho Kuwamoto](https://www.linkedin.com/in/shokuwamoto/), VP of Product **Gong**’sfounders found their early customers through connections of theirs, along with connections of their early employees: > “**All of the first dozen customers were some sort of personal connection, either through [CEO Amit Bendov] or myself or other people we later brought on.** Our third or fourth employee was a part-time contractor out of the Bay Area, and he called the people he knew, like at Greenhouse Software, where he had consulted and had buddies, and asked if they wanted to try it out. It wasn’t even about selling to them, since we already knew them. But it worked.” > > —[Eilon Reshef](https://www.linkedin.com/in/eilonreshef/?originalSubdomain=il), co-founder and CPO **Coda** had the same experience—finding their early customers through former colleagues and early employee connections: > “My former colleague Noam Lovinsky was starting a company, and I said to him, ‘Hey, would you use Krypton [our name at the time]?’ His company started using it, and for a while, it went well. Eventually, however, this led us to rework the entire product. > > Then we recruited our next set of customers. We called those the ‘Alpha 2’ customers. One was a jewelry shop run by one of our employee’s wives. Another was a tech company that my co-founder, Alex [DeNeui], started. Box, which was an early customer, came through our head of recruiting, Kenny. **All were recruited one or two steps out from friends of the company**.” > > —[Shishir Mehrotra](https://www.linkedin.com/in/shishirmehrotra/), co-founder and CEO For **Census**,all of their early customers came through the founders’ networks—mostly one super-connected co-founder: > “**Most of our early growth had to do with being in San Francisco and from our loose network of friends.** **Half of the first 10 came through Sean [Lynch, co-founder].** Everybody knows Sean, and Sean knows everyone. Sean was like, ‘Hey, let’s go talk to all these ex-Dropbox people who are at new companies and see what they think.’ The Dropbox mafia turned out to be the perfect fit for Census because most ended up at new product-led companies and wanted to do it better than Dropbox. Our pitch resonated very easily. > > **The other half was people who I knew. People who were doing B2B that I knew living in the Valley for a while.** Fivetran is one of our earliest customers. They were in the first 10, and the co-founders of Fivetran and I went through Y Combinator 10 years ago. It was an easy conversation to have. You can skip all the niceties of doing customer discovery. And when they look at a janky demo, they’re like, ‘Yeah, dude, I remember. It’s all good.’” > > —[Boris Jabes](https://www.linkedin.com/in/borisjabes/), co-founder Same for **Hex**: > “**A few of our first 10 customers were from our network. It was people I knew in the data space.** It’s one of the many reasons why I am always so confused by founders who start something that’s far outside their wheelhouse, especially in B2B, because you just have a built-in network if it’s something you know well. Glossier is an example of this. We had friends there.” > > —[Barry McCardel](https://www.linkedin.com/in/barrymccardel/), co-founder And **Okta**: > **“We reached out to our networks, folks we knew in IT from Salesforce and past jobs.** We networked aggressively on LinkedIn with our alma mater networks etc. We asked our angel investors and combed their LinkedIn networks. I had a target of 15 to 18 net new IT folks at different companies to talk to every month for the first six months and probably hit 85%-plus of my quota.” > > —[Frederic Kerrest](https://www.linkedin.com/in/fkerrest), COO and co-founder And **Gusto**: > **“Gusto’s first 10 customers came from friends we knew who were just starting their businesses in California.** **Mostly new tech startups from our YC batch, but also non-tech small businesses** (like a children’s swimming camp) that we happened to know through family and friends. We [three founders] basically went around telling everyone we knew that we’re building a modern delightful payroll and HR system and asked if they’d know someone who’d be interested in trying it out.” > > —[Tomer London](https://www.linkedin.com/in/tomerlondon/), co-founder and CPO And **Ramp** (alongside some other strategies we’ll touch on below)**:** > “We got our first 10 customers any way we could, really. The first one was an early employee of our last startup. And they were like, ‘All right, as long as you don’t screw up my business and I can run it, I can make payments, rent it on yourselves for a little bit, but then I’ll try it because I like you.’ And there were a few other people like that, where there was a very close kind of trusting relationship. > > You knew that you had us—we personally were going to go and obsess over saving your company money—and it was small enough scale and they had backups, that it was okay to do it. Later on, a lot of this came from co-building. Candid was one of our early large customers. They were at that time very high-flying direct-to-consumer. [Ro](https://ro.co/) is very much this kind of way, where a relationship developed over time, multiple meetings, talking about the idea and how it would come to life. > > The next 40 came from a combination of friends, entrepreneurs, different people we met in the city, different finance teams, but also some level of cold or semi-cold outreach. Also, VC introductions and co-building. That was the story of the first 10 for sure. One of the first 50 was Truebill, which became Rocket Money. It was a cold email and we had met each other years before.” > > —[Eric Glyman](https://www.linkedin.com/in/eglyman/), co-founder and CEO And **Notion**. Also, it’s fascinating how many of these early stories connect back to Dylan and Figma 🤷‍♂️ > **“The first 10 were probably just friends and family, and founders of fellow San Francisco startups. Some we got connected to through the investors we had.** > > Figma was an early user of Notion, and we were also heavy users of Figma. Dylan and Ivan [Zhao, co-founder and CEO] and I have been long friends, so I know Ivan was sort of a crazy power user of Figma, giving them a ton of early feedback, and I believe that’s probably the case the other way around as well.” > > —[Akshay Kothari](https://www.linkedin.com/in/akothari), co-founder and COO ### 2. Go outbound, but be strategic about it One of the recurring themes (and biggest surprises) across my interviews is the value, and effectiveness, of going cold outbound in the early stages—cold emails, cold DMs, cold calling. But you need to be clever about how you do this. If you aren’t getting a good response, get more creative and more targeted. Dylan Field at **Figma** built a custom tool to find the most influential designers on Twitter and focused all his energy there: > “We recognized for design software, there’s no choice but to go bottom-up. You cannot go top-down with designers. Designers are the ultimate arbiters of what makes a good design tool. You’re not going to tell a musician, hey, don’t use your violin that you love, use this other violin. People get really attached to their tools. We had to appeal to individual designers. And designers find out about tools not by looking at price and looking for the cheapest thing, but by seeing what other designers are using. > > **So Dylan actually [built a custom script to find the most influential designers on Twitter](https://twitter.com/zoink/status/1566566649712431105?s=20) and cold-DM’d them to show them Figma. That’s how it started.”** > > —[Sho Kuwamoto](https://www.linkedin.com/in/shokuwamoto/), VP of Product David Hsu at **Retool** used Crunchbase in an incredibly clever way: > “We were very tactical. Here’s exactly what we did—and it still works today. We bought a Crunchbase account. (In fact, we actually shared a Crunchbase account with five other companies, because we were very frugal at that point.) > > **We filtered Crunchbase by data points like when was the last time the company fundraised and what verticals they’re in. We didn’t want SaaS, because SaaS companies actually don’t build that many internal tools. We wanted delivery startups, we wanted fintech, we wanted stuff that’s very operationally heavy.** > > And then we emailed the CTO and VP of operations at these companies, because the engineering team experiences the pain of not being able to build tools, but the operations teams experience the pain of not having the tools. These were our ICPs. > > We learned a lot from this outbounding exercise. That’s how we got DoorDash as our customer; that’s how we got Rappi (a few-thousand-person company) as well. Then we got Brex as a customer in this same way.” > > —[David Hsu](https://www.linkedin.com/in/dvdhsu/), founder and CEO Rujul Zaparde and Lu Cheng at **Zip** exclusively used LinkedIn—and focused on getting feedback from people versus trying to sell them right away: > “**For us, we got our first 10 customers by reaching out for advice on LinkedIn. Truly, it was advice at first, until we had a clear perspective on who to go after.** > > We made an active decision to focus on cold outbound, versus friends. We wanted to know if this was a shitty idea or a good idea. And if we sell to friends, they might buy it because they feel bad or whatever. It’ll confuse us. So we have to get the first 10 essentially cold. They shouldn’t owe us anything. They should buy it because they see value in it, and that’s how we’ll know it’s a good idea. So they were all cold through LinkedIn. > > Our first customer was a company called Deserve. There were 80 people. And I remember we did a bunch of calls with the CFO, and we were in YC approaching demo day, and we were like, ‘Dude, we really need the revenue.’ And he just felt bad, I think. And he was like, ‘All right, I’ll pay you a thousand dollars.’ And we’re like, ‘How about 10?’ And then we landed on seven, I think.” > > —[Rujul Zaparde](https://www.linkedin.com/in/rujulz/) and [Lu Cheng](https://www.linkedin.com/in/lu-cheng-973b7830/), co-founders One common thread is that you just need to hustle, as described by **Gusto** and **Persona**: > “We had a swimming instructor’s company who heard about us from her brother, who was in a startup that we knew. Also, a flower shop that Eddie [Kim, co-founder and CTO] went to buy at and asked her, ‘Hey, what are you using for payroll?’ Basically, we hustled all the way.” > > —[Tomer London](https://www.linkedin.com/in/tomerlondon/), co-founder and CPO of Gusto > “We would build anything for anybody. The initial milestone we had was ‘As long as it has something to do with identity, we will do anything.’ I used to joke with Charles [Yeh, co-founder], ‘If we get one customer paying us anything, I’d call this a success.’” > > —[Rick Song](https://www.linkedin.com/in/rick-song-25198b24/), co-founder and CEO of Persona ### 3. Tap your investors’ networks Though it’s not a large bucket, some startups found success leveraging their investors to find their first handful of customers, especially among YC. But not by asking for introductions—instead, by doing the hard work of digging into the investors’ own networks (including batch-mates within YC) and cold-emailing them. And not only pitching these founders but also asking them for intros to other founders who may be a fit. **Vanta** used YC’s resources to source older, more established YC startups: > “**We got our first 10 customers through YC. This is why we did YC.** But not people in the actual batch, because companies in the batch were so early-stage and did not think about SOC 2s back in 2018. They do now, though. > > I went through the list of old YC companies, worked with our partner to prioritize them, and wrote outbound emails to the founders. I went through Bookface, the YC internal forum, and emailed anyone who’d ever said the word ‘compliance’ on Bookface in the prior decade. Literally. Somewhere in there, we got our first 10 customers.” > > —[Christina Cacioppo](https://www.linkedin.com/in/ccacioppo/), founder and CEO **Amplitude** similarly used YC, but not to get intros to batch-mate founders. Instead, to get into a network of product people who matched their ICP: > **“Our very first few customers were connections through investors and other folks at YC.** One mistake that YC companies make is trying to sell to other people in their batch. Those are not real companies. They don’t have money. A YC company is a speculative investment, not a business yet. You want to go sell someone who’s a real business and figure out how to solve their problems. > > The very first community we got word of mouth in was the ex-Zynga product managers who had gone on to build their own companies. Matt Ocko, who is an investor in us through Data Collective, introduced us to this guy Bret Terrill, who is the CTO and co-founder of Super Lucky Casino and was ex-Zynga. He got excited, and then from that, other folks in the Zynga community heard about us. He posted in their Facebook group or something.” > > —[Spenser Skates](https://www.linkedin.com/in/spenserskates/), co-founder and CEO **Sprig** tapped both YC and First Round’s unique internal resources to go cold outbound: > **“Our first 10 customers were all from cold emails to YC companies.** One of these emails led to a meeting with Thunkable, which ended up being our first customer that I had no connection to. They came over to our office, I did a demo, and they installed right there. A week later, I came back and helped them figure out all these issues and usability challenges, and they asked how much it cost. That was the first full sale where it was not a friend’s friend, or not my friend, or not someone I already knew or might know me. > > This is also where I love First Round Capital. I’ll sing their praises for the rest of my life. They have an SDR program (they don’t call it that; they call it a customer discovery program), but they basically have someone who is sending cold emails to your target customers for you, aiming to get you five meetings a week. Our partner, Bill Trenchard, told us, ‘We’re going to get you five meetings a week for exactly who you want to talk to, and then we’re going to meet with you every two weeks to talk about the feedback. We’re going to talk through the feedback, see what’s working, and you’ve got to get the company to a million ARR. Then you can hire salespeople.’” > > —[Ryan Glasgow](https://www.linkedin.com/in/ryanglasgow/), CEO And **Carta** found lots of success finding customers through their investors (likely because their product was for founders and investors): > “Our very early customers came from two places: > > 1. **The angel investors in our company:** Andy Palmer from [Tamr](https://www.tamr.com/) was an investor in eShares [now Carta] and brought it into his company early on. > 2. **Sister portfolio founders**: We had this personal connection to them through our investors. > > Other than that, it was just working the network.” > > —[Josh Merrill](https://www.linkedin.com/in/joshio/), ex-CPO ### 4. Participate in communities, and network A surprising number of startups found some of their early customers by old-school networking and community building. This includes participating both in offline and online communities, and sometimes creating your own community. The founder of **Snyk** went to where their ICP users were spending time—meetups, events, and online communities: > “Since we were trying to get developers to take on a responsibility they’ve historically not embraced, it was critical to make the product extremely low-friction and focus on getting them using it. > > Therefore, we initially launched a freemium beta product, promoted it across open-source project maintainers and in dev communities, and didn’t have a paid version for nearly a year. **The first** ***users*** **of the product came from meetups and conference-based events, online content, and proactive reach-outs to our networks, dev thought leaders, and open source maintainers. We pretty quickly got to thousands of users, and a year later, the first (tiny) customers came out of that user base.**” > > —[Guy Podjarny](https://www.linkedin.com/in/guypo/?originalSubdomain=uk), founder and CEO **Plaid** similarly found success tapping online forums and meetups where developers and PMs spent time: > “We mostly grew through word of mouth in the developer and product manager community. **We invested in meeting founders of fintech companies, learning their problems, and seeing how Plaid could help. Lots of time spent on forums, IRC, meetups, and working with startup accelerators**.” > > —[Zach Perret](https://www.linkedin.com/in/zperret/), co-founder and CEO The founders of **Databricks** went further and organized their own events and community: > **“In the early Berkeley days, we would put on these events where we would say, ‘Come and do a hackathon with us and use our open source software.’ And we would sort of handhold them and say, ‘Oh, if you want to try to do machine learning, let’s help you figure this out.’** These were called AMP Camps. AMP was the name of the lab we were in at the time: Algorithms, Machines and People, because the lab was focused on using algorithms and then machines and then people, sort of the mix of those three. We put on these AMP Camps and they were popular, and we thought we were world-famous rock stars because we could get 70 people to come to it. About 70 people in the room just here using our software. I mean, it’s like, can you believe it?” > > —[Ali Ghodsi](https://www.linkedin.com/in/alighodsi/), co-founder and CEO **Persona** found great success at First Round Capital’s networking events: > “Our first customer actually was a friend of a friend’s vape shop; they needed help with age verification. > > **Some of our other early customers came through First Round. We would go to every one of their events, and whoever seemed they had some identity needs, we pitched them. Urban Sitter came through this. I had met them at one of these First Round events, and I think their founder had brought up something about identity verification, and all of us jumped on that deal.**” > > —[Rick Song](https://www.linkedin.com/in/rick-song-25198b24/), co-founder and CEO ### 5. Put out compelling content and build a following online I was surprised by how many founders found their early users from their online presence. Some started sharing content online before they started the company, and some after. The founder of **Front** went big with content: > “We ultimately had 3,000 people signing up for our beta (mostly B2B). My approach was to inundate the market with content—write interesting content, post on Hacker News, post on Twitter, etc.) and see who signs up.” > > —[Mathilde Collin](https://www.linkedin.com/in/mathilde-collin-bb59492a/en/), founder and CEO The founders of **Linear** started building buzz and a following on Twitter early on, building on their existing Twitter following: > “A couple of our first 10 customers were through friends, but really, most of our early growth was building a wait list through Twitter. When we went full-time on the idea, we put out an announcement on Twitter to a landing page with an email signup. We had a good amount of Twitter followers among the three founders, so we were very privileged there.” > > —[Jori Lallo](https://www.linkedin.com/in/jorilallo/), co-founder As **Hex**’s founder says, it’s never too late: > **“We started putting out a lot of content early on, writing about the problem we were solving and building an audience. That helped us build a wait list. Then we started sending out feature update emails as we were releasing features and got back replies, ‘This looks sweet. I’d love to try it.’ And then we’d spin up accounts for people, and they started using it and went from there.** > > Even with a large wait list, it took us a while to get to 10 customers. With a product that’s technical and complex, it takes a while to build a surface area big enough that you just feel good getting people on. > > Also, at some point, we saw this tastemaker effect where there were certain people who started using the product who would tell people, and so other people started using it. If we got some of the right people using it, we would get sort of a viral adoption effect. That was really cool to see happen.” > > —[Barry McCardel](https://www.linkedin.com/in/barrymccardel/), co-founder ### 6. Get press Three startups I looked at had meaningful success with early PR. **Amplitude:** > “Soon after, we did a TechCrunch launch in early 2014, and we got a handful of customers through that. Keepsafe came through that. Normally PR is a terrible channel. You need to grow through communities and customers hearing about you through word of mouth.” > > —[Spenser Skates](https://www.linkedin.com/in/spenserskates/), CEO and co-founder **Canva:** > “We had a fair bit of press based on our very first funding round. Press loved writing about funding, so anytime you can talk about funding, it was easy to get a story.” > > —[Cameron Adams](https://www.linkedin.com/in/themaninblue/), co-founder and CPO **Slack:** > **“**With help from an impressive press blitz (based largely on the team’s prior experience—i.e. use whatever you’ve got going for you), they welcomed people to request an invitation to try Slack. On the first day, 8,000 people did just that; and two weeks later, that number had grown to 15,000. The big lesson here: Don’t underestimate the power of traditional media when you launch.” > > —[Stewart Butterfield](https://www.linkedin.com/in/butterfield/), co-founder and former CEO (via [First Round Review](https://firstround.com/review/From-0-to-1B-Slacks-Founder-Shares-Their-Epic-Launch-Strategy/)) ### 7. Just launch, and wait for users to come to you Sometimes you build it and they do come, like in the case of Segment, Stytch, and Loom. **Segment:** > “We just launched on HN. [You can still read the post](https://news.ycombinator.com/item?id=4912076). In the early days, we got a lot of engineers trying out the product on their side projects. They told us what they’d need to bring it into their companies. We just sort of levered our way up into bigger and bigger markets that way. The short answer is launch, launch, launch.” > > —[Calvin French-Owen](https://www.linkedin.com/in/calvinfo/), co-founder **Stytch:** > “**The first random (i.e. non-friend) internet user who used the product was a pretty exciting one. Our public beta had not even been released yet.** This one guy, Jon Ma, who ran Public Comps, had reached out on our site and had been one of the few I gave beta access to. We didn’t really expect anyone to deploy it into their production environment on a real product. We had a 20-minute conversation, gave them the API keys, and then eight hours later, we saw production traffic from them. Our eng team was like, did we know somebody was going to go into production?! > > After that, we were approaching launch and somebody was about to leak the story on us, so we just ended up publishing on our blog that we had raised the seed. Chetan [Puttagunta], our partner at Benchmark, retweeted it, and we started getting a lot of signups for demos, even if they didn’t have immediate use cases, just out of interest. Something like 40% to 50% converted to demos, and then maybe 20% of those converted to actually onboarding with the product.” > > —[Reed McGinley-Stempel](https://www.linkedin.com/in/reed-mcginley-stempel-17362245/) and [Julianna Lamb](https://www.linkedin.com/in/juliannaelamb/), co-founders **Loom:** > “**We launched on Product Hunt and had thousands of people who downloaded the extension by day’s end.”** > > —[Shahed Khan](https://www.linkedin.com/in/shahedkhan/), co-founder ### Canva did all of the above 🤣👏 > “We had a big wait list that we had built up over time. That wait list had taken two years to build up, and it was all sorts of random connections, people we’d met at conferences, people that we’d done user testing with, friends, family, everyone. That wait list was probably 10,000 people by the time we launched. > > We’d laid the seeds for it, and then off the back of those seeds, we lined up a bunch of press for launch day, and we’d done a bunch of embargoes and gotten interviews with TechCrunch and ZDNet and a few other outlets. We’d given them a pre-demo of what the product was going to be on launch day, and then scheduled them all to launch at launch night. > > Here in Australia, it’s a bit different dealing with American press, because all these launches are basically at midnight in Australia. We stayed up all night watching the press come out and watching our real-time Google Analytics board as well, expecting all the people to roll in. We also sent out an email to our wait list saying the product was now ready, and we’d set up a big dashboard screen with Google Analytics on it so that we could see the thousands and millions of users rolling in on day one. > > Unfortunately, it didn’t quite happen that way. We had one user drip in, and then another user drip in five minutes later, and the flood of users didn’t quite materialize on day one. I remember feeling slightly dejected that night. > > We had put so much effort into the launch. For the week beforehand, we basically had no sleep as we were crunching bugs and polishing the product. And the number of people we got that night was a bit anticlimactic. I think it is really hard to convert press into actual users of your product, often because the articles don’t necessarily link to your product. People often just read about the product in the press and don’t actually make that leap across to your site. So it was quite a slow burn. It was by no means an overnight success. > > I think in that first week we probably got about a couple thousand signups, and then the week after that we got 5,000, and it slowly grew and grew. > > **Over time, there was never one silver bullet. It’s always just bits and pieces and that slowly agglomerates into a full acquisition channel. I remember one time, one of my old sites on my personal website started getting a huge amount of traffic for some weird reason. It was actually this Daft Punk visualization that I’d created, and it turned out that Daft Punk had released or teased an album at Coachella and someone had linked to my site, and it had started getting millions of visitors. So we actually put up a banner at the top of that which pointed to Canva, and I think we got more visitors via that than we actually got through our TechCrunch article. You try out all these weird and wonderful things to get traffic in the early days.** > > We were quite fortunate in that our early user base was a very talkative user base, so the people who were using Canva and the people who we had user-tested with and built community up with were social media managers and bloggers, so people who love to talk about the tools that they’re using and build an audience based around that. So a lot of our early Canva users were in that mold, and they were our best advocates. They were tweeting about Canva, they were writing blog posts about it, and that enabled the first six to 12 months of Canva’s growth.” > > —[Cameron Adams](https://www.linkedin.com/in/themaninblue/?originalSubdomain=au), co-founder and CPO ## Important takeaway: Trust is your secret weapon If you look back at the sequence above, it’s essentially a series of concentric circles with increasing distance from the founder. Or, put another way, decreasing levels of trust. ![Image from How to find and win your first 10 B2B customers](https://substack-post-media.s3.amazonaws.com/public/images/3551c556-f200-4d9c-be26-1d5e8a2b1e38_3000x2264.png) Takeaway: Start with the channels that have the most innate levels of trust, and work your way outward. Here’s [Sho Kuwamoto](https://www.linkedin.com/in/shokuwamoto/)’s take on the importance of trust for **Figma**’s early customers: > “**It’s all a matter of trust. Somebody I trust is going to say, you should use this tool. I’m going to trust it way more than if a marketing team says that you should use this tool.** And so we tried to make sure that we understood those people and so we got them in early, but we also did a good job of trying to listen to them too. They’d give us feedback and they’d say, this is good and this is not good, and we take that seriously. > > As soon as the word got out: oh, there’s this new tool, it’s by this Greylock-funded company, they’re going to change everything about how design works; people are like, oh, I’ll sign up. So we already had a good list of people, and it was a matter of us reaching out to them to say, hey, would you like to be in the beta? And so on. > > They ask other designers, you’re like: hey, I just found this tool, it’s amazing; you should check it out. Or, oh, I hear that Airbnb is seriously using Figma. We should check it out. That’s how it happens. So we deliberately tried to understand, well, who are the people that people listen to the most? We actually dug into Twitter to understand how people are connected to other people on Twitter.” Same story for **Ramp** from [Eric Glyman](https://www.linkedin.com/in/eglyman/) (co-founder and CEO): > “**They were like, ‘All right, as long as you don’t screw up my business and I can run it, I can make payments, rent it on yourselves for a little bit, but then I’ll try it because I like you.’ And there were a few other people like that, where there was a very close kind of trusting relationship.** > > You knew that you had us—we personally were going to go and obsess over saving your company money—and it was small enough scale and they had backups, that it was okay to do it.” And **Census**, from [Boris Jabes](https://www.linkedin.com/in/borisjabes/) (co-founder and CEO): > “Fivetran is one of our earliest users. They were in the first 10, and the co-founders of Fivetran and I went through YC 10 years ago. **It was an easy conversation to have. You can skip all the niceties of doing customer discovery.** And when they look at a janky demo, they’re like, ‘Yeah, dude, I remember. It’s all good.’” And Salesforce, from Marc Benioff, founder and CEO ([source](https://www.salesforce.com/blog/2013/09/marc-benioff-win-customers.html)): > **“It was challenging to convince prospects to try our service, and it was especially challenging to convince the first one**. Most people don’t want to be the first to take a giant risk. Realizing that truism was pivotal. We finessed our strategy to target pioneers who saw an opportunity to participate in something new and exciting. > > That first pioneer came in the form of [Blue Martini Software](https://en.wikipedia.org/wiki/Blue_Martini_Software), one of the small software companies in which I had previously invested. I knew I was asking for a favor when I called the founder, [Monte Zweben](https://twitter.com/mzweben), but I also knew I was offering something that he really needed.” And finally, [Shishir Mehrotra](https://www.linkedin.com/in/shishirmehrotra/), co-founder and CEO of Coda, who shares a strong perspective on targeting friends early on: > “How important is it that your early customers not be connected to the company? A lot of people tell you it’s super-important for them not to be connected. I don’t buy that. I think that certainly for a product like Coda, you can’t force anybody to use it. If they don’t like it, they will stop using it, regardless of how close they are to you. And I think the ability for them to give you honest feedback is actually higher if they know you.” This problem is especially hard for certain spaces, as [Rick Song](https://www.linkedin.com/in/rick-song-25198b24/) found when starting **Persona**: > “Early on, we knew very quickly that we couldn’t sell to anyone large. We were just too small. Size truly is a consideration, especially for certain types of products like security. They’d have to be insane for a mature company to work with a startup like us to build a PII system, especially one that wouldn’t be hosted on their own system. But this limitation was also very helpful, to be constantly thinking through, ‘Why would this person buy us?’” ### Again, here’s the sequence: 1. Start by reaching out to your network, looking for people who match your ICP 2. Go outbound, but be strategic about it 3. Tap your investors’ networks 4. Participate in communities—and network 5. Put out compelling content and build a following online 6. Get press 7. Just launch ### Next: [A guide for finding product-market fit](https://www.lennysnewsletter.com/p/finding-product-market-fit) *Have a fulfilling and productive week 🙏* ## 📣 Join Lenny’s Talent Collective 📣 If you’re hiring, [join Lenny’s Talent Collective](https://www.lennysjobs.com/talent/welcome) to start getting weekly drops of world-class product and growth people who are passively open to new opportunities. I hand-review every application, and accept less than 10% of candidates who apply. ![Image from How to find and win your first 10 B2B customers](https://substack-post-media.s3.amazonaws.com/public/images/8638d278-ac01-4f28-b2c9-39f1dd6e4724_1492x1194.png) If you’re looking for a new gig, apply to join! You’ll get personalized opportunities from hand-selected companies. You can join anonymously, hide yourself from companies, and leave anytime. [Apply to join](https://www.lennysjobs.com/talent) **If you’re finding this newsletter valuable, share it with a friend, and consider subscribing if you haven’t already. There are [group discounts](https://www.lennysnewsletter.com/subscribe?group=true), [gift options](https://www.lennysnewsletter.com/subscribe?gift=true), and [referral bonuses](https://www.lennysnewsletter.com/leaderboard) available.** Sincerely, Lenny 👋 --- ## [35/51] 500,000 This week the newsletter hit 500,000 subscribers, which I’m told makes it among the top five largest newsletters on Substack and one of the largest newsletters broadly. Friggin’ bonkers. A big round number is a good time to reflect, so I’ve collected some lessons from my journey. I still only sort of know what I’m doing, and it’s unclear where this all goes, but if you’re thinking about embarking on a writing journey, or are just curious about this path, I hope you find this useful. To everyone who reads this newsletter, has been a paid subscriber, or has even just shared a post with a colleague—from the bottom of my heart, thank you for allowing me to do the most meaningful work of my life 🧡🥹🙏 ## Lessons learned #### **1. Quality + consistency = all that matters** Things that don’t matter: your design, your title, your strategy, your growth plan, vision . . . most things. Things that matter:quality, consistency. There’s no trick to making something like this grow. Growth comes from publishing something valuable, that people want to share with their friends and colleagues, over and over and over. If your newsletter isn’t growing, it’s most likely either a quality problem or a consistency problem. Here’s some advice for improving both. *“Strive* not to be a *success*, but rather to be of *value*” —Albert Einstein #### 2. Do your “job to be done” better than anyone else in the world You can bucket every great newsletter into the “job” it’s doing for people: - Help me parent better: [ParentData by Emily Oster](https://emilyoster.substack.com/) - Help me cook better: [Broken Palate](https://www.brokenpalate.com/), [a newsletter](https://anewsletter.alisoneroman.com/) - Help me understand what’s happening in tech: [Stratechery](https://stratechery.com/), [Platformer](https://www.platformer.news/) - Help me understand what’s happening in the world: [Noahpinion](https://www.noahpinion.blog/), [The Free Press](https://www.thefp.com/) - Inspire me: [Adam Grant](https://adamgrant.substack.com/), [Austin Kleon](https://austinkleon.substack.com/) - Entertain me: [Seeing Things](https://lizadonnelly.substack.com/), [Alphabet Soup](https://etgarkeret.substack.com/) There are many more categories of jobs, and there’s room for many winners within each category. So you don’t necessarily need to be the best in the world. But you should strive to be. My newsletter’s job-to-be-done is to help you get better at work—specifically, building and growing your product and career. If I can do this job super-well for you, consistently, you’ll keep reading. Start by figuring out what job you’re doing for someone by answering these two questions: 1. Who *exactly* is your audience? Think of a specific person—what would they find extremely interesting or useful? 2. What is the *concrete* job you’re doing for them? Is it entertainment, helping them make money, inspiring them, helping them understand the world, something else? #### 3. Follow your energy Writing consistently is a grind. Best-case scenario, you’ll be thinking, writing, and learning about this topic for years. To continue to do this work at a high caliber, you need to be genuinely curious about your topic area. Otherwise, you will create a job for yourself that you will hate. To find a topic that is right for you: 1. **Follow your energy**. What topics give you energy to think about, write about, and talk about? What saps you of energy? Spend more on the former and less on the latter. This one trick will tell you a lot. 2. **Make sure it’s based on your real-life experience.** You need to know what you’re talking about. People can tell if you don’t. Notice how the best newsletters are by people who have deep experience in that space. What’s at the center of the Venn diagram of your unique skills and background that together create an interesting topic? 3. **Pay attention to what people value.** I deliberately made this the third item because many people start here, which is a trap (see below). But it’s still important for there to be people who care about your ideas. What do people often ask you for advice about? What has been the most helpful thing you’ve shared with friends? Where do you find pull from others? Finally, it’s important to find a niche (aka build a personal monopoly), but be careful about getting too niche. You have to write/think/learn about one narrow topic for a long time, and if it’s too narrow, you’ll get bored as hell. If I followed the classic advice of picking a narrow niche, I’d have focused on just product management. But I don’t care about product management *that* much. I’m interested in the wider space of building products, helping them grow, improving your career, and building startups. So I kept my focus areas broad and went where my interests took me. Although this made it harder to explain what my newsletter was about, the topics were close enough to make sense together, and I was able to stay excited about the work. As a good rule of thumb, start by getting [1,000 people](https://kk.org/thetechnium/1000-true-fans/) to think your newsletter is the best newsletter in the world. Interestingly, [when I hit 1,000 paid subscribers](https://twitter.com/lennysan/status/1288622024328269825?s=20), I was able to make a real living from this newsletter. #### 4. Spend more time on it You may feel like there are a billion newsletters out there—how can you possibly break through? I felt the same way when I started. It turns out that 99% of the content in the world is not very good. There’s always room for, and interest in, better content. You just need to rise above what’s already out there. And that takes work. I spend a median of 10 hours per post. Some posts take hundreds of hours ([like this series](https://www.lennysnewsletter.com/p/how-the-most-successful-b2b-startups)). There’s a strong correlation between the time I spend on a post and how well it does. This is also why it’s hard to do this well when you have a full-time job. Along these lines, any time you have allotted for working on your newsletter that is not writing (and making your writing better) is time wasted. Many newsletter writers spend time optimizing their website, creating a brand, crafting a big strategy around their newsletter—and their growth slows. If you can spend almost zero time working on anything that isn’t creating the content itself, you’ll have an advantage. This is actually why Substack is so great. I can focus exclusively on the writing and they do everything else. Speaking of Substack, [the recommendations feature](https://on.substack.com/p/recommendations) is a total game changer. IMHO it’s one of the most impactful growth features in history ([which I explored in a recent podcast episode](https://www.youtube.com/watch?t=206&v=zKP2HrMc23s)) and, as you can tell in the graph above, totally changed the trajectory of my newsletter. The way it works is newsletter authors can recommend other newsletters they enjoy. Currently, over 9,000 other newsletters recommend my newsletter 😱. It’s not because of anything I did actively. It all comes back to what I said in point #1—if people find your stuff valuable, they’ll want to share it with others. More significantly, thanks to this feature, there’s never been a better time to start a newsletter. If you create great stuff, other authors will recommend it, and you’ll grow faster than at any other time in history. #### 5. Cut 30%-50% of your words Before I started this newsletter, I’d never written anything publicly, taken writing courses, or studied writing. But after doing a bunch of writing, and reading three impactful books (*[On Writing Well](https://www.amazon.com/Writing-Well-Classic-Guide-Nonfiction/dp/0060891548)*, *[Nobody Wants to Read Your Sh\*t](https://a.co/d/gt08rKH)*, and *[Several Short Sentences About Writing](https://a.co/d/9trLEs9)*), the biggest lesson I’ve learned is to cut, cut, and cut some more**.** Cut every word that isn’t ~~absolutely~~ necessary. Make your intro 50% shorter. Get into the meat of your post as quickly as possible. [As Wes Kao puts it](https://twitter.com/wes_kao/status/1257771556152934402), “Start your story right before you get eaten by the bear.” As an example, with almost every guest post that I edit, if I remove the first paragraph of the first draft, the post immediately gets stronger. Try this with your next piece of writing. Cut the intro and get right into it. #### 6. Contribute something new to the conversation Most writing is a rehashing of something that’s already been said, or a superficial pontification that people don’t need. **What are you adding to the conversation?** What *new* ideas, insights, and concepts are you contributing? This is what people want. Most of [my top newsletter posts](https://www.lennysnewsletter.com/archive?sort=top) are the result of my spending tens of hours doing primary research and uncovering new insights that haven’t been shared before. I’m doing a lot of work on behalf of the reader, so it makes sense that people find it valuable. To do this well, consistently, you need to have real-life experience in the space you’re writing about. Many people start writing publicly without having done much in their life or career, and they run out of experiences to tap into. This is why I continue advising work on the side, to not lose complete touch with the real work. If you’re considering going all-in on content creation, my advice is to first spend many years (e.g. 10) actually doing the work. Build up as much real-life experience as you can first. This also gives you more “career optionality,” as [Elena Verna](https://elenaverna.substack.com/p/the-dark-side-of-the-leadership) describes: > *“I finally realized that I set out the wrong end goal for myself. Leadership title should have never been the end goal—only a step toward the ultimate unlock: **career optionality**.* > > *Career optionality may look different for people, but it materialized into becoming a solopreneur for me. As a solopreneur, my brain is my product, and I created a solo business around it with various monetization streams: advising, interim, public speaking, workshops, course creation, etc. VP titles validated my abilities and impact, aiding my journey toward solopreneurship. But only in solopreneurship did I find a happy place for my career: fulfilling, flexible, challenging, and impactful work.* > > *So do set out the goal to get to the leadership titles, which are quite valuable. But not as an end destination. Work towards unlocking career optionality as an end goal, which will enable you to craft your career any way you’d like.”* #### 7. Commit to a consistent cadence, and make sure it’s sustainable Having a deadline to ship is an essential forcing function to write consistently. [Here’s how I created a deadline for myself](https://twitter.com/lennysan/status/1172237713711542273?s=20) when I launched the newsletter. Pick a cadence, share it publicly, and try your hardest to stick to it. A weekly cadence is a great starting point. People often start publishing at too fast a rate and quickly burn out. I can only sustainably write one great post a week. Crazies like [Ben Thompson](https://stratechery.com/), [Noah Smith](https://noahpinion.substack.com/), and [Heather Cox Richardson](https://heathercoxrichardson.substack.com/) can do this almost daily. Others can do it only monthly. All these routes are fine. Depending on your goals, even one incredible post a year is very valuable. The key is to find a cadence you can keep up for years. Remember, quality + consistency = you win, and people don’t want more emails. They want better emails. #### 8. Get started by just getting started Joan Didion said, “I don’t know what I think until I write it down.” I write not to share a crystallized thought I have in my head, but instead to mold a rough idea into something that makes sense. What’s something that you want to get out of your head and crystallize? Start with that. Write it out, and share it online. Just see how it goes. Don’t overthink it. And I’d post it on Substack or a similar platform so that you can start collecting email addresses, in case it does turn into something. [Here’s my first piece](https://marker.medium.com/what-seven-years-at-airbnb-taught-me-about-building-a-company-e1d035d49c56) that I put out publicly. It came out of my simply wanting to remember what I learned from my time at Airbnb. I found that people found it valuable, so I wrote more stuff. And it continued from there. People always ask how I got going with the newsletter, so here is what that looked like: - **First 100 subscribers:** [Medium post about Airbnb](https://marker.medium.com/what-seven-years-at-airbnb-taught-me-about-building-a-company-e1d035d49c56) → helped me grow Twitter audience → tweeted that I’m launching a newsletter → first 100 subscribers - **Next 1,000:** Guest post on [First Round Review](https://review.firstround.com/the-power-of-performance-reviews-use-this-system-to-become-a-better-manager) and [Andrew Chen’s blog](https://andrewchen.com/grow-marketplace-supply/) - **Next 10,000:** Writing useful stuff every week for 9 months → tweeting summaries of it + word of mouth - **Next 100,000:** Writing useful stuff every week for 2 years → tweeting + word of mouth - **Next 200,000:** Continuing to write useful stuff week after week - **Last 200,000:** Continuing to write useful stuff week after week + [Substack’s recommendations feature](https://twitter.com/lennysan/status/1581331300325109765?lang=en) #### 9. It’s not all rainbows and butterflies There are major downsides to this life. No PTO, no benefits, no 401(k) matching, and no one to write for me if I’m sick. To take parental leave, I had to work doubly hard for a couple of months to create a backlog of content. Also, unless I shut this thing down, in theory I have to write an awesome newsletter every week for the rest of my life. I’m used to it now, but this is what every week basically feels like: #### 10. This is the most fulfilling work of my life, and I highly recommend it Never did I imagine this was where my life would take me, but I followed what gave me energy, and this is where I ended up. As a result, I now do the most fulfilling work of my life. My personal mission is to help people get better at their work, and to increase net happiness in the world, and I feel like I’m doing this at scale. I’m so incredibly grateful. Thank you for being a part of this journey, and for continuing to read, subscribe, and share. The best is yet to come. ## 📚 If you want more 1. [A recent](https://www.fastcompany.com/90940453/lenny-rachitsky-newsletter-podcast-job-board-substack) *[Fast Company](https://www.fastcompany.com/90940453/lenny-rachitsky-newsletter-podcast-job-board-substack)* [profile](https://www.fastcompany.com/90940453/lenny-rachitsky-newsletter-podcast-job-board-substack) 2. [A presentation I once gave on creating a writing habit](https://www.canva.com/design/DAESBO5RCnw/msMLA8QJNmPQi0H1GNHl3Q/edit) 3. [A presentation I once gave on launching the paid plan](https://www.canva.com/design/DAD8irTiMoI/igeI5Uv-4TWSbGV4WnbgIQ/edit) 4. [An impressive reverse engineering of my newsletter journey](https://growthinreverse.com/lenny/) (though the numbers aren’t totally accurate) 5. [My most popular posts of all time](https://www.lennysnewsletter.com/archive?sort=top) Sincerely, Lenny 👋 --- ## [36/51] A guide for finding product-market fit in B2B Welcome to part five of our ongoing series on how to kickstart and scale a B2B business: - **Part 1:** [How to come up with a great B2B startup idea](https://www.lennysnewsletter.com/p/how-the-most-successful-b2b-startups) - **Part 2:** [How to validate your idea](https://www.lennysnewsletter.com/p/how-to-validate-your-b2b-startup) - **Part 3:** [How to identify your ICP](https://www.lennysnewsletter.com/p/how-to-identify-your-ideal-customer) - **Part 4**: [How to find and win your first 10 customers](https://www.lennysnewsletter.com/p/how-to-win-your-first-10-b2b-customers) - **Part 5:** A guide for finding product-market fit *← This post* - **Part 6:** [How, and when, to hire your early team](https://www.lennysnewsletter.com/p/hiring-your-early-team-b2b) - **Part 7:** [How to scale your growth engine](https://www.lennysnewsletter.com/p/scaling-your-b2b-growth-engine) *A huge thank-you to **[Akshay Kothari](https://www.linkedin.com/in/akothari/)** (COO of Notion), **[Ali Ghodsi](https://www.linkedin.com/in/alighodsi/)** (CEO of Databricks), **[Andrew Ofstad](https://www.linkedin.com/in/aofstad/)** (co-founder of Airtable), **[Barry McCardel](https://www.linkedin.com/in/barrymccardel/)** (CEO of Hex), **[Boris Jabes](https://www.linkedin.com/in/borisjabes/)** (CEO of Census), **[Calvin French-Owen](https://www.linkedin.com/in/calvinfo/)** (co-founder of Segment), **[Cameron Adams](https://www.linkedin.com/in/themaninblue/)** (co-founder and CPO of Canva), **[Christina Cacioppo](https://www.linkedin.com/in/ccacioppo/)** (CEO of Vanta), **[David Hsu](https://www.linkedin.com/in/dvdhsu/)** (CEO of Retool), **[Eilon Reshef](https://www.linkedin.com/in/eilonreshef/)** (CPO of Gong), **[Eric Glyman](https://www.linkedin.com/in/eglyman/)** (CEO of Ramp), **[Guy Podjarny](https://www.linkedin.com/in/guypo/)** (CEO of Snyk), **[Jori Lallo](https://www.linkedin.com/in/jorilallo/)** (co-founder of Linear), **[Julianna Lamb](https://www.linkedin.com/in/juliannaelamb/)** and **[Reed McGinley-Stempel](https://www.linkedin.com/in/reed-mcginley-stempel-17362245/)** (co-founders of Stytch), **[Keenan Rice](https://www.linkedin.com/in/keenanrice/)** (founding team), **[Mathilde Collin](https://www.linkedin.com/in/mathilde-collin-bb59492a/en/)** (CEO of Front), **[Rick Song](https://www.linkedin.com/in/rick-song-25198b24/)** (CEO of Persona), **[Rujul Zaparde](https://www.linkedin.com/in/rujulz/)** and **[Lu Cheng](https://www.linkedin.com/in/lu-cheng-973b7830/)** (co-founders of Zip), **[Ryan Glasgow](https://www.linkedin.com/in/ryanglasgow/)** (CEO of Sprig), **[Shahed Khan](https://www.linkedin.com/in/shahedkhan/)** (co-founder of Loom), **[Shishir Mehrotra](https://www.linkedin.com/in/shishirmehrotra/)** (CEO of Coda), **[Sho Kuwamoto](https://www.linkedin.com/in/shokuwamoto/)** (VP of Product of Figma), **[Spenser Skates](https://www.linkedin.com/in/spenserskates/)** (co-founder and CEO of Amplitude), **[Tom Preston-Werner](https://www.linkedin.com/in/mojombo/)** (co-founder of GitHub), and **[Tomer London](https://www.linkedin.com/in/tomerlondon/)** (co-founder and CPO of Gusto) for contributing to this series. Art by [Natalie Harney](https://www.natalieharney.com/).* If you’ve come here looking for a step-by-step guaranteed guide to finding product-market fit, you’re going to be disappointed. No such guide exists. Nor will one ever exist. Finding PMF is too squishy. As Rick Rubin said in his recent book *The Creative Act*, “If we’re aiming to create works that are exceptional, most rules don’t apply.” However, there is hope. Though there’s no formula for finding PMF, you can significantly increase your odds, and save yourself a lot of time and heartache, by studying the lessons of those who’ve made it. I interviewed more than 20 of today’s most successful B2B founders, and from their stories, I’ve found: 1. A simple framework for moving closer to PMF 2. Reliable signs that you’re approaching PMF 3. How long it should take you to find PMF 4. Advice for what to do if you aren’t finding PMF Let’s get into it. ### In B2B, it normally takes two years to start feeling product-market fit Here’s an overview of how long it took 24 of today’s top B2B startups to get to (1) a live product, (2) their first customer, and (3) their first feeling of PMF: 1. **The median time from idea to feeling product-market fit was roughly 2 years.** Start to worry if you’ve been working on your idea for over 2 years and not feeling PMF (see below what that feels like), and start to seriously worry if it’s been over 3 years. 2. **From a working product to feeling PMF typically took 9-18 months.** Expect to spend a year or so iterating before you finally have something people want. 3. **Most companies got an alpha product out the door in 1-3 months.** Unless you think you’re the next Figma, get your V1 out quickly. 4. **A few companies—Figma, Airtable, Slack—took 4+ years to find PMF**, but they were the exceptions, and Slack was working on a completely different product (a game) before [pivoting to what became Slack](https://www.lennysnewsletter.com/p/how-the-most-successful-b2b-startups#:~:text=And%20famously%2C%20for%20Slack%2C%20the%20big%20idea%20came%20from%20noticing%20one%20feature%20being%20incredibly%20popular%20within%20their%20ill%2Dfated%20video%20game%3A). 5. **Additional takeaways and surprises from the insights below** 1. If you build it, they *will* come—if you have strong product-market fit. 2. Stop thinking of product-market fit as a *yes* or *no* question—but instead as a process of finding fit with more segments of the market. 3. Surprisingly, no founders I spoke with used retention as their signal of PMF. It might have been implicit, but if you read the quotes, that wasn’t really ever the main story. 4. The journey to PMF starts by finding just one company to truly love your product. ### One of the most interesting takeaways from my interviews is how often founders *never* fully felt PMF [Shishir Mehrotra](https://www.linkedin.com/in/shishirmehrotra/) (co-founder and CEO of Coda) described this feeling so well: > **“My problem with the term is that you always have product-market fit with one group and not with the next. The group that you haven’t achieved product-market fit with is the one you really want to target.** > > It always surprises people to hear that, at YouTube, we never thought we had a product-market fit. We had 100 million DAUs and almost a billion monthly actives, and yet we did not have our desired audience. We had teenagers but not adults. We were envious of the satisfaction those folks were finding on Netflix, Facebook, or wherever. In my experience, you’re always stretching product-market fit. I don’t think there’s a moment where you’re done with product-market fit.” You may not feel like you have PMF even when you reach 100 customers: > “**I remember with the first 100 or so customers, every customer kind of felt like the last customer we would get, to be honest.** We were like, I can’t believe DoorDash is using this product. That’s incredible! We were so proud. Unlike on the B2C side, there was no sort of viral loop that got going that made us think, ‘Okay, we found it.’ Instead, it really was kind of just pushing the boulder at a pretty steep trajectory uphill, over and over.” > > —[David Hsu](https://www.linkedin.com/in/dvdhsu/), founder and CEO of **Retool** Or at $100M/year in revenue: > “**The fear of hitting a wall and collapsing was always there. Even when we were at 100 million in revenue, there was always this fear that we were suddenly going to crash into a wall and everything would stop.** > > There are all these horror stories in Silicon Valley of these companies who got to 150 or 200 million revenue and then didn’t grow. So there was always this fear that it was going to happen to us as well. **Your product-market fit is always with respect to a particular market.** It might be small companies, or medium-size companies, or enterprises. The small companies don’t want your stuff, or the U.S. market doesn’t want your stuff, or the Asian market, and so on. Eventually, at some point you become a multi-product company, so then the whole game repeats itself again and again and again. You have to revamp and change things significantly, which is its own challenge.” > > —[Ali Ghodsi](https://www.linkedin.com/in/alighodsi/), co-founder and CEO of **Databricks** In fact, you might never fully feel PMF: > “**I never felt at any point of time like, ah, now I have product-market fit.** I always felt like there was always something for us to improve on—whether it was growth or product or customer care. I’m always seeing what more we can do to solve problems on behalf of our customers.” > > —[Tomer London](https://www.linkedin.com/in/tomerlondon/), co-founder and CPO of **Gusto** > “I’ve spent most of the history of Hex paranoid that we’re not at PMF, or there’s more to do. I think our vision is big enough and that, at any point, even when I have thousands of people telling us this thing is awesome, I still feel like, ‘Yeah, but there’s this bigger thing we want to do.’ **I don’t feel like we have product-market fit for the ultimate vision we have yet.** And so that’ll take time, obviously.” > > —[Barry McCardel](https://www.linkedin.com/in/barrymccardel/), co-founder and CEO of **Hex** > “**I don’t even know if today we have true product-market fit.** If you’re going down the venture path, what I tell other founders is that anytime you raise, your product-market fit is gone, because whatever you raised, the next raise effectively demolished it. **You now have to hit the next bar of product-market fit.** What we have today at the series A and series B, I consider it strong product-market fit. But that’s because we were able to grow into the valuation and what the stature of the company should have been at those respective stages.” > > —[Rick Song](https://www.linkedin.com/in/rick-song-25198b24/), founder and CEO of **Persona** PMF is never a binary yes-or-no moment. It’s instead a gradual process of finding fit with larger and larger segments, as [Jori Lallo](https://www.linkedin.com/in/jorilallo/), co-founder of **Linear**, describes: > “PMF has been so gradual; I might even say . . . linear. There’s not just one hump that we got over and thought, ‘Okay, now it’s clicking.’ **It’s more like we’re chipping away at these obstacles and getting more and more people interested.** It’s more like, ‘Oh, this is really working for certain segments.’” ## A guide for finding product-market fit Though you may never feel everlasting product-market fit, you need to start somewhere. I asked every founder when they first felt product-market fit, and their answers fell along a spectrum that provides a useful guide to finding ever-increasing PMF: - **Step 1:** Get one company to love your product - **Step 2:** Get one company to pay (a meaningful amount of money) for your product - **Step 3**: Get more than one company to love and pay for your product - **Step 4:** Start noticing a shift from push to pull, and organic growth - **Step 5:** Keep growing consistently Below, I’ll explore each step in-depth, and share stories from founders of the moment they finally felt PMF. ### **Step 1: Get one company to love your product** Start your PMF journey by becoming obsessed with getting one company to love, use, and continue to use your product. Do whatever it takes to make them successful. In the case of **Figma**, co-founder Dylan Field became obsessed with the success of their first real user, Coda (originally called Krypton): > “There was a weekend when we had a bug and the product wasn’t working very well because it hadn’t been released yet; it was an alpha. And Dylan was freaking out. He’s like, ‘There’s a bug.’ And I’m like, ‘Yeah, we’ll fix it, but we’ve got other stuff going on.’ He’s like, ‘We have to call a red alert.’ I’m like, ‘Dude, what are you talking about? We haven’t shipped this thing yet. There’s no such thing as a red alert because it’s not shipped.’ **And he’s like, ‘You don’t understand. There are customers depending on us.** There’s this company called Krypton.’ So I was like, ‘Okay, they haven’t paid us any money, nobody even knows we exist, but I guess we’ll deal with it.’ > > I actually came to appreciate Dylan’s mindset, because a lot of founders don’t give a shit about their customers. They want to understand the customers, but just enough to figure out what features they would be willing to pay for. **But at the end of the day, Dylan was thinking about it in terms of trust. He was like, ‘Look, I convinced this guy to use our product. They’re actually trying to use it for work, and if we fuck it up for them, I don’t want that on my conscience. I want to do whatever I can to make sure that we’re holding up our end of the bargain. Because they believed in me.’** > > They’re still customers; they were our first customer.” > > —[Sho Kuwamoto](https://www.linkedin.com/in/shokuwamoto/), VP of Product **Coda** itself went through this same journey with their first customer, Springful: > “My former colleague Noam Lovinsky [now CPO at Grammarly] was starting a company called Springful. I said to him, ‘Hey, would you use Krypton [our name at the time]?’ They started using it, and for a while, it went well. They were getting a lot of use out of it. We had a chart of what the DAUs looked like, and because they had six employees, the chart basically sat at 6 every day, except for on the weekends. > > **Then one day, it dropped to zero on a weekday, and the following day, it stayed at zero. And so I texted Noam and said, ‘Hey, what happened? Are you at an offsite?’ I was trying to find some other excuse. He said, ‘Oh man, I’ve been putting off calling you, but I have good news and bad news. The bad news is we had a team meeting and I asked the team how things were going, and they said that if we made them keep using Krypton, they were all going to quit.’ And I was like, ‘Well, that’s pretty terrible news.’ He said, ‘The good news is they all completely believe in the vision. They’ve made a list [in Krypton] saying, ‘If you do these things, we’ll come right back.’ The list was like 25 things, all completely reasonable.** > > This led to a big internal debate. The team was basically divided in half. Half the folks had a mindset like, ‘What a gift. We have a customer and they have given us a clear list of requirements.’ The other half said, ‘He’s reacting to the wrong product—it’s not actually the shape of the thing we want. And if we do that, we’re going to dig a hole deeper and deeper into this part of the product.’ > > We decided not to finish his list. Instead, we built the doc that we originally envisioned. I thought it would take three or four months, but it took over a year to get back to his list.” > > —[Shishir Mehrotra](https://www.linkedin.com/in/shishirmehrotra/), co-founder and CEO [David Hsu](https://www.linkedin.com/in/dvdhsu/) at **Retool** built a tool to catch anyone running into issues with their early product so that they could fix the issues immediately: > “At the beginning of any startup, no one knows about your product, nor does anyone use it. We came to a point where we’re like, given that no one’s using the product, every time somebody’s using the product, we should go see what they’re doing. So we built this custom analytics server along with FullStory, and anytime anyone was in the app and using the app, we got notified immediately on Slack. > > Invariably, they’d run into a bunch of issues. And anytime they ran into any issue, we’d immediately reach out. We’d just call them. With sales, oftentimes when you call a customer, they don’t reply or they don’t want to talk to you. But in this case, they were literally using the product and they’re running into issues, and so they were super-likely to pick up. > > With DoorDash, for example, the product went through multiple iterations over three weeks, where they’d uncover an issue and we’d respond, ‘No problem, we’re on it.’ We’d ship the feature, they’d come back the next day, it would work. They wanted an on-prem option, which is at that point a pretty big feature, as you can probably imagine, putting a cloud product on-prem. We’re like, ‘No problem.’ And we shipped it in just 36 hours. So we were iterating very rapidly, even if the core idea was the same.” The founders of **Gong** did exactly the same thing: > “During the beta process, we had a bunch of systems that recorded the users’ screens using Gong. And we were watching these like maniacs, every day. I would probably spend two hours watching people interact with the system, reverse engineering them based on their role or what they were trying to do, and then go on thinking, ‘So this is what this person is doing?’ And if needed, I would give them a call. This approach is an underutilized product management tool, because in some areas it gives you more information than a quantitative survey or a discussion, because this is what the person actually does versus what they tell you and what they think they’re doing.” > > —[Eilon Reshef](https://www.linkedin.com/in/eilonreshef/), co-founder and CPO The founders of **Gusto** literally sat next to their early customers watching them send payroll day after day: > “**For the first 30 customers, I was with them in their offices seeing them do payroll, or I was on the phone with them, watching them and then seeing them send payroll, and their reactions and seeing feedback.** What’s working, what’s not working, what’s intuitive, what’s not intuitive. Every time they added an employee, I was there on the phone with them or in their office.” > > —[Tomer London](https://www.linkedin.com/in/tomerlondon/), co-founder and CPO The founders of **Looker** are famous for going even further and “forward deploying” their engineers to sit in the customer’s offices and work alongside their team to make sure they’re set up for success: > “The best way to show a prospect or customer the real value of Looker was to show them on their own data. Its power came from being designed as both a language and a development platform, but that also came with a lot of overhead to learn how to be powerful with it. It wasn’t rocket science; it just took time. > > Therefore, **we created a team of data analysts to serve as our technical customer-facing teams (sales engineers, customer support, and implementation analysts) to quickly deploy and develop instances of Looker for our customer.** Early on, this enabled us to see and know everything that our customers and prospects wanted to achieve with analytics. Having that insight, we were able to both develop features and ways to use Looker, almost daily, to ensure we would be the best choice for a powerful analytics platform. This also helped us ensure that our customers would find value from Looker on day 1 after purchasing.” > > —[Keenan Rice](https://www.linkedin.com/in/keenanrice/), founding team “You won’t be great for anyone. Just get the thing to be really damn useful for one customer.” —[Barry McCardel](https://www.linkedin.com/in/barrymccardel/), co-founder and CEO of Hex One of the biggest recurring lessons from my conversations is to talk to customers more. I know you hear this a lot, but you are probably *still* not talking to customers enough. Here’s [Spenser Skates](https://www.linkedin.com/in/spenserskates/)’s(co-founder and CEO of Amplitude) hard-won lesson: > “We spent about a year building, when in retrospect, we should have spent half that time talking to customers. And if we had, we would’ve wasted a lot less time on customers who were never going to buy. > > **The biggest thing I will tell founders is, you have to spend half your time talking to your customers. If you’re a B2B company, that means becoming a salesperson. Figure out how to spend the collective time of your founding team: 50% needs to be talking to customers. If you’re a consumer company, that just means talking to them and meeting them. Airbnb was very famous for doing this. And spend the other 50% of your time building.** > > I’m an engineer. My two co-founders, Curtis [Liu] and Jeffrey [Wang], are engineers. And so our instinct is to always build the product because we know how to solve those problems. But we wasted a lot of time solving problems that didn’t really exist or didn’t have money or traction behind them. And so that was a huge lesson for us.” At this stage, you may not even have true “product”-market fit, if your product is early. Instead, you can look for “message”-market fit, as in the case of **Ramp**: > “When we launched, in mid-2020, I think we had ‘message-market fit.’ We were able to differentiate and have people be interested in our unique messaging, but we didn’t have the product there yet. > > I think it’s hard to have true product-market fit when you’re public. When you’re operating just on friends and founders you meet and VC introductions. You need to have people out in the world who you don’t know you but are using you, and the product is what’s doing the selling. > > And in terms of the product itself, where suddenly it was spreading, that came later, probably fall of 2020, when it was finally delivering on the messaging we had. > > In terms of feeling market-message fit, there’s a few ways you can test it. One, based on launch press coverage, e.g. who wants to talk about it. You send an email using cold outbound and look at response rates. SDRs can do that all the time, and we were testing that all the time, even in an elevator pitch. Would people get it or would they be turned off? You can be very technical about it. You measure it or you can just sort of go by feel.” > > —[Eric Glyman](https://www.linkedin.com/in/eglyman/), co-founder and CEO Or “product-user fit,” as in the case of **Snyk**: > “I separate the ‘product-user fit’ from ‘product-buyer fit.’ We got the former pretty quickly, I’d say within a year after we launched our Git integration. The latter— getting people to pay for it and aligning with their commercial needs—took a full extra year to happen.” > > ***—***[Guy Podjarny](https://www.linkedin.com/in/guypo/), co-founder and CEO Remember, [trust is your secret weapon](https://www.lennysnewsletter.com/i/115245373/important-takeaway-trust-is-your-secret-weapon) early on. ### **Step 2: Get one company to pay (a meaningful amount of money) for your product** The next PMF milestone is to get one company to pay a meaningful amount of money for your product. This should be five to six figures per year. I’ll share pricing advice below. For **Vanta**, getting the first five-figure verbal agreement, and then a $500k deal, convinced [Christina Cacioppo](https://www.linkedin.com/in/ccacioppo/) that she had found PMF: > “During the pricing research, when **folks overwhelmingly said they’d pay five figures** for the Wizard of Oz prototype of a real-time security report. They thought it was generated by code, but I definitely wrote them by hand. > > Then, when I was able to **sell the first $500k** of Vanta by myself, when I didn’t really know how to sell. I joke that prior to Vanta, the last thing I sold was Girl Scout cookies. I knew it wasn’t my sales skill that was getting these deals closed; it was a testament to the problem we were solving and the product we were building.” For **Stytch**, it was getting their first six-figure deal: > “For me, it was probably our first six-figure deal when it was like, ‘Oh crap, a company will actually pay us for this.’ I just remember being consistently surprised that they didn’t say no to the prices that we were putting in front of them.” > > —[Julianna Lamb](https://www.linkedin.com/in/juliannaelamb/) and [Reed McGinley-Stempel](https://www.linkedin.com/in/reed-mcginley-stempel-17362245/), co-founders If you have early users telling you that you need to take their money, like with **Figma** and **GitHub**, you’re in a good spot: > “I think I didn’t admit it to ourselves until we had a customer, Microsoft, that told us, ‘Hey, you have to start charging for this thing.’ I thought we might have product-market fit. In reality we’d had it for like a year, and I wish that I had recognized that sooner, because I think I would have acted differently.” > > —[Dylan Field](https://www.linkedin.com/in/dylanfield), co-founder and CEO of **Figma**, via [fireside chat with Elad Gil](https://blog.eladgil.com/p/transcript-and-video-fireside-w-dylan?publication_id=1119759&post_id=103105470&isFreemail=true) > **“**When we launched our private beta, we were offering it for free.To our surprise, **users started writing to us asking, ‘Can we pay for this?’ They liked it so much, they wanted to pay for it. That was the first sign this was going to work.”** > > —[Tom Preston-Werner](https://en.wikipedia.org/wiki/Tom_Preston-Werner), first CEO and co-founder of **GitHub** When thinking about pricing, the best advice is to charge more than you think you should. > “I was talking to this company called Super Lucky Casino. I went through the demo and the whole pitch, and we got to the end of it, and they asked me a question I’d never been asked. They’re like, ‘This is great, how much does it cost?’ And I’m like, holy shit, someone wants to pay money for the software I built. I am blown away. And the first thought that popped into my head was like, okay, what’s SaaS supposed to cost? I’m thinking $50 a month. > > But then I remember [Patrick McKenzie’s advice](https://www.kalzumeus.com/2006/08/14/you-can-probably-stand-to-charge-more/), which is, ‘Charge more.’ So I’m like, all right, what’s the biggest number I can think of? Well, let me double that number. So maybe $100 a month? Then I thought, wait, no, no, no, no, no. Let me try adding another zero to it. I said ‘$1,000 a month.’ And the guy who we were pitching, the CTO of Super Lucky Casino, was like, ‘Holy smokes, wow, that’s so cheap, amazing.’ And I’m like, oh my god, all my dreams have been fulfilled. Someone wants to buy the software that I wrote for $1,000 a month. This is incredible.” > > —[Spenser Skates](https://www.linkedin.com/in/spenserskates/),co-founder and CEO of **Amplitude** And it goes without saying, if these early customers leave, they don’t count. [Retention is key](https://www.lennysnewsletter.com/p/what-is-good-retention-issue-29), especially early on. ### **Step 3: Get more than one company to love and pay for your product** Next, you need to get multiple companies paying for your product. For most founders, hitting 3 to 10 paid customers was the moment they felt like they had real PMF. For **Amplitude**,[Spenser Skates](https://www.linkedin.com/in/spenserskates/) felt PMF once they signed their first half-dozen customers (at increasingly higher prices): > “After our first customer, Super Lucky Casino, signed, came Keepsafe, which we sold for $2,000 a month. Then it was The Hunt for $3,000 a month. And then we sold to HERE Maps, which is a division of Nokia, for $4,000 a month. And then we did a few more deals. Rdio and QuizUp were the two big deals; those were $10,000 a month. We were really cranking. We got from zero to a million in ARR in less than nine months. And so that was really where we started taking off.” **Gong** felt like they had product-market fit when 11 out of 12 of their design partners chose to buy the product: > “We had 12 design partners. We gave them the software in January. In May, we made a decision to tell them the betas were over and that we’d start charging for it. Out of 12, 11 ended up buying. So that’s a pretty big signal. > > By the way, the reason why we decided to charge money is that during beta, the product wasn’t always working very well. It wasn’t robust in any way or form, and people were complaining left and right when it wasn’t working. So we were like, well, if they are complaining that it doesn’t work, that means they care. If my iPhone doesn’t work, I freak out. But if home speakers don’t work, I don’t give a shit, just like whatever. So that gave us the confidence that at least they use it. > > Then we went to charge money for it. With 11 out of the 12 buying, it should have been obvious. But it wasn’t obvious to us. It was like, how come the 12th didn’t buy it? > > We later learned that the 12th one’s CRO left while we were doing the beta, and they bought Gong a year later and are still a customer. > > One of 11: the salespeople at one point decided they didn’t need it, and turned it off. A day later, we got a call from the CEO saying, who the fuck told you to turn it off? That’s the type of feedback you want to hear to feel like you have product-market fit.” > > —[Eilon Reshef](https://www.linkedin.com/in/eilonreshef/?originalSubdomain=il), co-founder and CPO For both **Zip** and **Persona**,they finally felt they found PMF after closing their 10th customer: > “I don’t think we felt PMF until we had our first 10 customers live and very successful. This took just over a year from the time we committed to the idea. I distinctly remember a deal where our champion cried because her manager hadn’t approved budget for Zip. She actually quit her job because of it (and is now a customer). That was a telling moment.” > > —[Rujul Zaparde](https://www.linkedin.com/in/rujulz/) and [Lu Cheng](https://www.linkedin.com/in/lu-cheng-973b7830/), co-founders > “In the earliest early phases, the only really meaningful measure of product-market fit is whether you can close more than 10 customers, and you think you can close more.” > > —[Rick Song](https://www.linkedin.com/in/rick-song-25198b24/), founder and CEO With each new customer, you’ll start to feel more and more confident that you’ve got something special, and you should start to feel a pull. ### **Step 4:** Start noticing a shift from push to pull, and organic growth Another very common answer to the question “When did you first feel PMF?” is when founders noticed a shift from having to convince people to use the product to people pulling it from them—organic growth, word of mouth. In other words, if you have strong PMF: if you build it, they *will* come. Pull can look like cold inbound emails from people you’ve never met, like in the case of **Box**, **Canva**, **Gusto**, **Hex**,and **Sprig**: > “For us, it really felt like Geoffrey Moore’s *Inside the Tornado*. Nearly 100% of customers were coming from inbound sales because there was sufficient demand to keep the phones ringing.” > > ー[Jeffrey Queisser](https://www.linkedin.com/in/queisser/), co-founder of **Box** > “I definitely remember the moment I knew this product wasn’t going to die, and that was when we started getting our first emails from people we had never met before and who lived in areas of the world that we’d never been before. We started getting emails from people who were using it in South America, India—a whole bunch of places around the world. And when we started getting those emails, I remember thinking, wow, this is an actual company with a future. It’s not just a product that we’ve put out hoping that people will use.” > > —[Cameron Adams](https://www.linkedin.com/in/themaninblue/), co-founder and CPO of **Canva** > “In 2013, after the initial wave of the PR kind of went down, and before we had any paid marketing, or sales, or GTM, we didn’t really know what we were doing. We just experimented with a bunch of stuff. Like we wrote a blog post, and **we just saw people signing up. We asked them, ‘How did you hear about us?’ and they were like, ‘Oh, this friend told me about this, and this person I know, and, oh, my sister does this.’ And it kind of kept going. In retrospect, I think positive word of mouth is a sign of product-market fit because you see this type of pull from the market.** > > If you analyze it one level under, it’s like, well, okay, why are your customers talking about your product? Well, because it exceeded their expectations, and you can measure it with NPS. We didn’t appreciate it as much as we should have. > > Many companies go through a bunch of pivots, like a thirsty person searching for water in the desert. Luckily, we didn’t have that. > > The actionable thing for me on the product-market fit stuff is it’s just really focusing on customer love. At the end of the day, what we did—every single bullet point and element and bone in the body of what Gusto is—was how can we make customers not just like us, but love us? How do you answer the phone with customer care? Even when we had just two people—like at the very, very beginning. Every single line of copy in your website, every single line of copy in your app. I personally looked at probably 200 tool tips in the app. Back then, every single one, I optimized like crazy. This is too long, and it doesn’t fit nicely on the screen. Let’s reduce three words. How can you reduce three words? I didn’t have ChatGPT to help me do it. You’ve got to go, and you obsess about it.” > > —[Tomer London](https://www.linkedin.com/in/tomerlondon/), co-founder and CPO of **Gusto** > “**It wasn’t until the first person came effectively inbound telling us that they heard about us from someone else.** I was kind of like, when you’ve heard about us from someone else, when there’s someone who likes it enough that they’re raving about it, your NPS score is high enough that you’ve probably got some form of PMF.” > > —[Barry McCardel](https://www.linkedin.com/in/barrymccardel/), co-founder and CEO of **Hex** > “PMF was always just kind of a journey of moments. You show it to a product manager or you show it to a friend and they’re like, ‘Wow, this is way better than what you’re working on before.’ The response was very immediate and very positive. A friend’s friend I showed it to immediately said, ‘Can I install this right now? I’ll pay you. Here’s my credit card." So that was kind of another moment. > > Then when Thunkable committed to an annual agreement, and that was from a cold email, like this is really solving problems for us. The CTO, the VP of product. Then the other moment was Square. I had some arm’s-length connections from Weebly, but the buyer was no one I knew, which is important. They committed to a substantial contract, and that was kind of the other moment of like, ‘Okay, I mean, Square is kind of seen a lot. This is not just a mistake at this point.’ So probably four moments.’” > > —[Ryan Glasgow](https://www.linkedin.com/in/ryanglasgow/), founder and CEO of **Sprig** Or people starting to ask you for more features, like in the case of **Segment** and **Figma**: > “It was the first time we put something out into the world and people said, ‘This is great. Can you solve mobile? What about internal data? What about warehousing?’ Suddenly we had another 5 to 10 problems to go tackle. It felt like the fog of war had lifted from the dark forest we had been wandering around in and we had clear waypoints to the next goal.” > > —[Calvin French-Owen](https://www.linkedin.com/in/calvinfo/), co-founder of Segment > “There’s a point when the editor was so slow that if you typed text, it took forever to type the text. We didn’t have multiplayer editing yet—there was so much that wasn’t there. And a potential customer wrote us a 12-page document saying, ‘Here are all the things I want you to go build.’ In retrospect, that was a moment of product-market fit. They’re trying to get the product out of us, and it’s about how fast can we go do it? And I think now I’d recognize that, but before I didn’t.” > > —[Dylan Field](https://www.linkedin.com/in/dylanfield/), co-founder and CEO of Figma, via [fireside chat with Elad Gil](https://blog.eladgil.com/p/transcript-and-video-fireside-w-dylan?publication_id=1119759&post_id=103105470&isFreemail=true) Or simply a clear feeling of pull that is hard to miss, like in the case of **Dropbox** and **Census**: > “For me, there was a visceral sense of your thing taking on a life of its own and lurching forward, like **getting pressed into the back of your seat by a fast car or a plane taking off**.” > > —[Drew Houston](https://www.linkedin.com/in/drewhouston), CEO and co-founder of Dropbox > “**The way it manifested was really a transition from a push to a pull.** In that first year or so, not only did I have to go find potential users, I always did a lot of explaining because it was so weird. I’d try to explain why they should put all their data into a data warehouse, as a central hub for everything, and their eyes would glaze over and they’d say, ‘Cool. I guess maybe, I suppose.’ > > With the rise of what’s now called the modern data stack, we started to feel a real tailwind. Now all these people would say, ‘I have a data warehouse. I’ve invested in my data. I want to do more.’ > > We started getting more reactions like, ‘I wish I had found you months ago.’ They’d get the product much faster in the conversation, and they had more ‘wow’ reactions to it. That’s how it started happening. > > In a funny way, it was a friend that noticed things had changed before I had. He asked me the same question you asked two years ago—something like, ‘When do you think you felt PMF, Boris?’ I tried to frame when these customer conversations started to shift, and said, ‘June or July.’ He said that coincided with a change in my general demeanor. Apparently it was visible in my day-to-day social life! I was just late to figure that out myself. > > **You’re pushing what feels like molasses, and you’re constantly wondering, ‘Should I change the shape of the product because of these conversations?’ As those conversations started shifting, my demeanor probably changed.** > > **It wasn’t one moment, though. It was a gradual feeling of realizing, ‘Wow, this is starting to work.’ We likely had PMF earlier but I just didn’t feel it for a long time.”** > > —[Boris Jabes](https://www.linkedin.com/in/borisjabes/), co-founder and CEO Here’s how two former presidents of Y Combinator describe this phase: > “The only way you know if you’ve built what customers want is because **they are using it in an explosive and destructive way**. If you are not getting explosive usage, you are not building what customers want, or there aren’t that many customers, which means you don’t have a big business.” —[Michael Seibel](https://www.youtube.com/watch?v=FBOLk9s9Ci4&feature=youtu.be) > “I think the right initial metric is ‘**Do any users love our product so much they spontaneously tell other people** to use it?’” —[Sam Altman](https://blog.samaltman.com/before-growth) ### **Step 5: Keep growing consistently** The next phase, which never ends, is to continue growing, month after month, year after year. With each passing month and year, your confidence in lasting PMF grows. Ideally. Many founders—including at **Notion**, **Datadog**, **Front**, and **Loom—**only first felt PMF when seeing a certain consistent growth rate: > “In early 2018 (four years after Ivan [Zhao, co-founder] started working on it), it was apparent that without actually any dollars spent on marketing or even having a marketing team, **the product was just growing week over week, both from a user standpoint, and also converting into revenue. Week over week, more people are signing up, more people are sticking with it.** > > Then, when we launched Notion 2.0 later that year, a *Wall Street Journal* article came out by David Pierce that sort of put growth on steroids. We felt not only do we have product-market fit, we have this consolidated tool that people are loving. And a leading publication wrote a home-run article on it. And so Ivan was like, okay, this thing is actually starting to be real.” > > —[Akshay Kothari](https://www.linkedin.com/in/akothari/), co-founder and COO **Datadog:** > “We never have a sudden influx of new users, but from the moment we flipped from closed to open beta, **we started seeing a regular influx of signups**. As we added key features (such as alerting!), we saw them use our product more and more actively. **This constant influx of new users has grown ever since then.**” > ー[Olivier Pomel](https://www.linkedin.com/in/olivierpomel/), co-founder and CEO **Front:** > “I don’t feel like PMF is ever black-and-white. You’re most of the time on a course to getting PMF. But **what gave me confidence we had some level of PMF was our ability to grow our MRR consistently week over week. We had a goal of growing 20% WoW.**” > > —[Mathilde Collin](https://www.linkedin.com/in/mathilde-collin-bb59492a/en/), co-founder and CEO **Loom:** > “The ‘Wow, this is really working’ moment was when we moved from the hype of Product Hunt to the product selling itself: about 3 to 4 months after launch. The organic virality caused by someone creating a video and innately wanting to share it with someone was a killer built-in virality mechanics. **This growth never really slowed, which led us to go all-in on our mission of becoming a ubiquitous tool within the workplace (before monetizing).**” > > —[Shahed Khan](https://www.linkedin.com/in/shahedkhan/), co-founder For other founders, like at **Retool** and **Databricks**, they finally felt PMF at a certain ARR milestone: > “From a PMF perspective, I think probably at even $5 million or $10 million in ARR, I was still not totally sure we had product-market fit. Every deal felt like it could have actually been our last. What I didn’t realize is that people or businesses have surprisingly common problems. And so if you’re able to solve a problem for 10 people, probably you could find another 10 people that have that problem, another 80 people that have that problem, even though the product itself may not be inherently viral.” > > —[David Hsu](https://www.linkedin.com/in/dvdhsu/), founder and CEO > “Product-market fit came in different phases. In Q3 of 2015, we knew that we had a tiger by the tail in terms of the open source project kind of exploding, but we just didn’t know how to monetize it. Then a kind of a depression set in, because the board was sort of pushing us really hard, asking, ‘Where is your revenue? You keep bragging about these downloads, but you have no revenue.’ I think we ended that year with one and a half million revenue, and I think there was a joke in one of the board meetings from one of the board members who said, ‘Yeah, that’s great. You have the same amount of revenue as a local restaurant.’ > > On the one hand, we were excited that the open source project had taken off. On the other hand, it kind of felt like maybe we don’t know how to monetize it and maybe we’re actually just not good at business. So that’s sort of the state of mind in 2015. > > **In Q2 of 2017, I finally felt, okay, this thing has wings even business-wise. And it was one particular moment when my CFO came in. We had $1 million revenue in 2015. In 2016 we ended the year at $10 million revenue. Okay, that’s good. But is that a game-changing company? No. I remember in Q1 of 2017, my CFO came to me and said, ‘Hey, I was just doing some modeling here. I think we’re going to end this year at $30 million revenue.’ They said, ‘Wow, 30 million, that’s like a big real number.’ And I said, ‘Really? 30?’ And they said, ‘Yeah, it’s 30.’** > > So then I started thinking this is a viable business. This thing can go much further. Maybe we can one day get to, say, $100 million revenue or something like that. Q2 of 2017 was when we felt that, okay, there’s something here.” > > —[Ali Ghodsi](https://www.linkedin.com/in/alighodsi/), co-founder and CEO And often, founders recognized they had PMF earlier but didn’t know it at the time: > “I think we were under-appreciative of our product-market fit. Looking back, we had good product-market fit, which made us grow very fast at the time. But I don’t think we are as aware of it as we are now how good our product-market fit was.” > > —[Eilon Reshef](https://www.linkedin.com/in/eilonreshef/), co-founder and CPO of **Gong** > “Looking back, we had [PMF] for like a year, and I wish that I had recognized that sooner, because I think I would have acted differently.” > > —[Dylan Field](https://www.linkedin.com/in/dylanfield), co-founder and CEO of **Figma**, via [fireside chat with Elad Gil](https://blog.eladgil.com/p/transcript-and-video-fireside-w-dylan?publication_id=1119759&post_id=103105470&isFreemail=true) ### What to do if you get stuck on this journey First, don’t worry too much. This happens to basically every startup. But do worry, because most startups don’t make it out of this phase. If you’re feeling stuck on your path to PMF, take 10 minutes and deeply think about these questions: 1. Is the problem you’re solving [truly](https://www.lennysnewsletter.com/i/113130490/what-makes-a-great-bb-startup-idea) **[important](https://www.lennysnewsletter.com/i/113130490/what-makes-a-great-bb-startup-idea)** [and](https://www.lennysnewsletter.com/i/113130490/what-makes-a-great-bb-startup-idea) **[underserved](https://www.lennysnewsletter.com/i/113130490/what-makes-a-great-bb-startup-idea)**? 2. Is your solution **[Delta-4 better](https://www.lennysnewsletter.com/i/113130490/ingredient-the-market-is-underserved)** than the status quo? 3. Have you tried rethinking your **[ICP](https://www.lennysnewsletter.com/p/how-to-identify-your-ideal-customer)**? How truly painful is the pain you’re attempting to solve for them? 4. Have you tried rethinking your **idea**? [Revisit Step 1](https://www.lennysnewsletter.com/p/how-the-most-successful-b2b-startups). 5. Is your idea truly **[venture-scale](https://www.lennysnewsletter.com/p/your-startup-idea-probably-isnt-venture)**? Good luck! ## 📚 Further study 1. [How To Find Product Market Fit](https://youtu.be/0LNQxT9LvM0) by David Rusenko 2. [The Lean Startup Playbook for Achieving Product-Market Fit](https://leanstartup.co/a-playbook-for-achieving-product-market-fit/) by Dan Olsen 3. [The Never-Ending Road To Product Market Fit](https://brianbalfour.com/essays/product-market-fit) by Brian Balfour 4. [How to find product market fit: the counterintuitive secrets](https://www.unusual.vc/post/how-to-find-product-market-fit) by Unusual Ventures 5. [The Only Thing That Matters](https://pmarchive.com/guide_to_startups_part4.html) by Marc Andreessen 6. [How to know if you’ve got product-market fit](https://www.lennysnewsletter.com/p/how-to-know-if-youve-got-productmarket) 7. [What it feels like when you’ve found product-market fit](https://www.lennysnewsletter.com/p/what-it-feels-like-when-youve-found) ### Next: [How, and when, to hire your early team](https://www.lennysnewsletter.com/p/hiring-your-early-team-b2b) *Have a fulfilling and productive week 🙏* ## 📣 Join Lenny’s Talent Collective 📣 If you’re hiring, [join Lenny’s Talent Collective](https://www.lennysjobs.com/talent/welcome) to start getting weekly drops of world-class product and growth people who are passively open to new opportunities. I hand-review every application, and accept less than 10% of candidates who apply. If you’re looking for a new gig, apply to join! You’ll get personalized opportunities from hand-selected companies. You can join anonymously, hide yourself from companies, and leave anytime. [Apply to join](https://www.lennysjobs.com/talent) **If you’re finding this newsletter valuable, share it with a friend, and consider subscribing if you haven’t already. There are [group discounts](https://www.lennysnewsletter.com/subscribe?group=true), [gift options](https://www.lennysnewsletter.com/subscribe?gift=true), and [referral bonuses](https://www.lennysnewsletter.com/leaderboard) available.** Sincerely, Lenny 👋 --- ## [37/51] The Magic Loop I’m thrilled to bring you an important guest post by [Ethan Evans](https://www.linkedin.com/in/ethanevansvp/). During his 15 years at Amazon, Ethan helped invent Prime Video, Amazon Video, the Amazon Appstore, Prime Gaming (formerly Twitch Prime), and Twitch Commerce. He led global teams of over 800, holds more than 70 patents, and helped draft one of Amazon’s 14 core Leadership Principles, “Ownership.” Below, for the first time publicly, Ethan shares one of his most important career frameworks, The Magic Loop. This framework helped him rise quickly in his own career, and has helped countless mentees and direct reports rise in theirs. I’m excited to share it with you here, and I can’t wait to hear how it goes when you implement it. *Ethan is now working as a writer, career coach, and course instructor. He writes a newsletter, [Level Up](https://levelupwithethanevans.substack.com/), which publishes candid career advice twice a week, and offers a range of Leadership Development Courses ([live online](https://maven.com/ethan-evans) and [on-demand](https://ethan-evans.mykajabi.com/)) that go in-depth on topics like “Breaking Through to Executive,” “Managing Up Successfully,” “Leadership Networking,” and more. If you’d like to connect, you can find Ethan on [LinkedIn](https://www.linkedin.com/in/ethanevansvp/).* ![Image from The Magic Loop](https://substack-post-media.s3.amazonaws.com/public/images/67343f74-eb31-42ce-85cd-0621d39cbff3_8000x4000.png) The Magic Loop is a process through which any employee may systematically grow at a company. It is reliable in its results, with a simple core of five basic steps. In this post, we first present the Loop in its most straightforward model. We then follow up with variations, optimizations, and special circumstances that users will find over time. ### Asking to do more In my first job, I went from having just left graduate school to managing a team of 10 in only two years. I did this by seeing unmet needs and asking my manager about filling them. I’ve repeated this pattern throughout my career, all the way up to my last role at Amazon. It worked at every step along the way. In my second job, I was hired as a director, then given more responsibility through an acquisition. In my third job, I was promoted to vice president before I turned 30. At Amazon, my responsibilities grew from an initial team of six to more than 800. Along the way, I helped create household products you would recognize, including Prime Video, Kindle, Alexa, Twitch, and Prime Gaming. At every step, I followed the Magic Loop. Since then, I have worked both with leaders on my team and clients of my coaching practice to use the Magic Loop themselves. It worked for them and can work for you. ## The Magic Loop The heart of the Magic Loop consists of five steps. Some of these steps will require substantial time and effort, but they lead to not just rapid career growth but also a great relationship with your manager. The Loop is used to grow both your personal skills and abilities as well as your career, responsibilities, and compensation. The steps: 1. Do your current job well 2. Ask your manager how you can help them 3. Do what they ask 4. Ask your manager if you could help in a way that also grows your skills toward a particular goal 5. Do as they suggest, and repeat in a loop from step 4 ![Image from The Magic Loop](https://substack-post-media.s3.amazonaws.com/public/images/85848a68-46b2-4680-93f6-ed5a99869299_7494x6000.png) ### Why the magic works The “magic” in this loop relies on simple human nature. We have a natural sense of fair play and partnership, and we want to invest in people we view as having our best interests at heart. The magic in the loop is building a collaborative, mutually beneficial relationship. We will also cover exceptions, such as the rare manager who is exploitative or dishonest, later in this discussion. ## The core loop ### Step 1: Do your current job well Managers always need help. They always have work that needs to be done and are wondering how to get it all done. As a result, they normally welcome offers of help and look positively on those making such an offer. The exception to this is when they feel that the person asking is not doing their current job well. In that case, what they are thinking is, “The way you could help is to do what I have already asked you to do, well and on time.” Therefore, before you can move to step two of the Magic Loop, you need to first be an employee in good standing in terms of performance with your current responsibilities. Note that this is an ongoing challenge. Workplaces and projects change. Further, when you practice the steps in the Loop, over time you will take on new responsibilities and you may struggle with them. Thus it is important to verify with your manager that you are doing your current job well. The simplest way to do this is to ask, in a non-threatening manner. This is not hard to do but can be scary, because there is the possibility that the manager will say no and ask for improvements. A good way to ask is to wait until a relatively quiet time, when there is no crisis going on (or less of one than usual, for a chaotic workplace), and ask your manager if you can talk with them for a few minutes. Sit down (a non-threatening posture) and say something like, “It’s been a while since I last checked in with you. I want to do a good job here and be helpful. I was wondering if you could tell me how you feel I am doing.” Then, no matter what they say in response, say thank you. Do not argue. At most, ask for an example if you receive a complaint. The rest of how to take feedback well is another topic beyond our scope in this article. If the feedback you got when you asked was basically good, you are clear to move on to step two. If not, you must address the feedback and re-verify good job performance before moving on. At my first job, where I did quality-control work for equipment made by our partner company, the engineering manager at that company complained that I was disrupting his team. He was nice about it; he told me he could see that I was trying to help and had good intentions, but that I was pestering his engineers about problems so much that they could not focus. I was working hard and I was calling out valid problems. In my eyes, I was doing my job and succeeding. But the way I was doing my work was causing problems for others. Few people intentionally do poor work. But without asking for feedback, you may have no idea how your work is being received. I learned to prioritize the problems I found and channel them through a process. I could only take on more once I addressed the feedback. ### Step 2: Ask your manager how you can help Once you are seen as doing great work and have your current job under control, ask your boss what more you can do to help them. Managers always need help. For some managers, they may need a bit of prompting if offers to help are unusual in your workplace. Some managers can be suspicious of such offers or may not have anything in mind right at that instant. In such cases, offer to check back in a week or so, giving them time to think about it. Often, once a manager knows you are willing to help, they will come to you with a request the next time a need arises. One great way to shortcut this process is to raise your hand or volunteer when a new task comes up. Often in a meeting, something will come up that needs to be done, and the manager will be trying to figure out who to give it to. Some of your peers will be looking down at their laptops or phones, trying to avoid being chosen. The easiest way to help your manager is to simply volunteer to take on the task. It is clear that it is something that your manager wants to have done, and you can be the hero. Believe me, as a manager, we notice who steps up to help us. ### Step 3: Do what you are asked Once a manager makes a request, even if it was not the work you were hoping for, make an honest attempt to help. It is natural to want to be assigned the new, high-profile work, or tasks that perfectly suit our interests. However, often what managers need help with are the more operational tasks. In software engineering, the classic examples of such work fall into the maintenance category—migrating servers, applying patches, and fixing bugs. Good managers want to balance the work and match it to their employees’ desires. If you really want to get the most impact from step three, it may help if you take on an extra share of some of the work that others may be avoiding or that may not be getting done at all. You’ll be able to turn this into credit to move your career forward in the next step! Do the work as well as you can. You must meet the bar of step one (do a good job) with this work to continue. If the work is truly beyond your skills (not your willingness), then you will need to be politely clear about that and ask for pointers, resources, or aid in doing the work. Be clear that you are willing to do all you can but that you are concerned about failing and leaving the manager worse off. Frame any request like this in terms of helping the manager (protecting them from your nascent ability) rather than about you (say, that you are afraid of the challenge or the hard work). ### Step 4: Ask your manager how you can help, in line with one of your career goals After you are doing a good job and have shown that you can and will put in extra effort to help out by completing steps one through three of the Magic Loop, you will be in a position to ask for work that helps you advance a career goal. This is because it is human nature to be inclined to help those who have helped you. So after you have first helped out the manager, they are more likely to help you in return. Note that if you have a good manager who invests in the careers of their team members, you may be able to skip step three altogether and jump straight here. This depends on your manager—if they have shown interest in growing the careers and abilities of their team members, then you can go straight to asking for the work that helps you grow. I have confirmed again and again with many managers that they are very rarely offered help and that they appreciate it. Simply the act of offering help will make you stand out. To move to this step, you have to have some idea of what you would like to achieve. This can be anything from learning a new skill to developing an ability you already have. It can also include getting more responsibility, a raise, or a promotion. If your goal is simple, you can ask directly in one statement, as in “Is there a way I could help you out while working with [piece of technology or specific skill] so that I can learn and improve?” If your goal is more complex, such as a major promotion, you probably cannot ask in one large request, such as “Is there a way I can help so that I can be promoted?” Rather, you have to frame it and say, “One day I’d like to be promoted. Could I help out in a way that you think would develop me toward that goal?” Lenny has already written a [great article](https://review.firstround.com/the-power-of-performance-reviews-use-this-system-to-become-a-better-manager) about the kinds of performance reviews a good manager should deliver. As you work with your manager, you can use this as a model of the kind of feedback and detailed plans you want to develop with them. ### Step 5: Repeat the loop You may wonder why the “repeat” part needs any explanation. Partly, it depends on where you repeat. Sometimes you only go back to step four and do something else that both helps you grow or advance and that helps your manager. Sometimes you have to revisit step one and make sure that you are doing a great job even with new and more challenging tasks. Finally, you may have to update your goals or make sure that your manager is clear and on board with them. So, for example, if your goal is a raise or promotion, you may need to make sure that you and your manager are aligned on exactly what that will take. I asked for opportunities and promotions many times in my career. I was also constantly asked about growth and promotion by my direct reports. I am proud to say that my top-performing direct reports now hold higher positions than I did when I retired. People who worked for me are now company founders and executives all over the industry. As one specific example, a young man who came to me in 2005 as a Software Engineer II at Amazon went on to be a VP of Engineering at Google and has recently joined a new company as an Executive Vice President. He did it through the Magic Loop—by doing a great job, asking for more, and then doing that new work well. ## Advanced forms of the Magic Loop The Magic Loop is strong, but you can make it even stronger. Once you master the basics and begin building a collaborative relationship with your manager, the methods in this section will let you take it even further. ### 1. Suggest your own ideas In the simple form of the Magic Loop, you ask your manager what they need help to accomplish. However, as you understand your group and your company, you should be able to anticipate what needs to be done. In this model you evolve from asking what needs to be done to suggesting things that you can do that you believe will help. This approach involves confirming your ideas rather than simply offering help. To suggest an idea, use language with your manager like, “I noticed that we are often late on projects because we forget to account for vacation schedules and then someone critical is out. I’ve been thinking that I could implement a step in our planning and update process that captures these. Would that be helpful, or is there something else you would like me to do?” Note that the ending question is very important. It both asks if this would be helpful and it implies the offer to do something else that the manager prefers if they have other priorities. This kind of response makes managers feel comfortable that they have the choice, but avoids the need for them to come up with the ideas. Managers will start seeing you as more than just helpful; they will see you as innovative and proactive as well. ![Image from The Magic Loop](https://substack-post-media.s3.amazonaws.com/public/images/e3d5f4a3-b442-4fad-a03b-70b4ef6cac97_4996x4000.png) ### 2. Just do it Ultimately, as you learn your manager’s and company’s style well, you can slowly start to just do what you see that needs to be done. That is, as trust with your manager grows, you can simply see what is needed, know what the manager will likely want done, do it, and mention it in your next discussion. “I noticed we often miss vacations in our schedules. I went ahead and fixed that by adding a step to solicit and document holiday plans with the team.” At this point, your manager will start to see you as helpful, innovative, and autonomous. This is the best thing for a manager—someone who does their job and who then additionally magically helps out without needing to be asked or told. As my career progressed, I changed almost entirely to this final style. I would see what my business at Amazon that I owned as a vice president needed in order to grow and succeed, and I would just go do it. The strongest star performers blend all three styles. Occasionally it is good to ask your manager what they need, because they may have needs based on information outside of your purview. It is also good to get their input on your biggest suggestions so that they can help make them better and feel part of the result. Finally, it is fastest to simply see what is needed and get it done. A blend of approaches, a collaborative team effort between you and your manager, is the end goal. You know you have succeeded when your relationship with your manager is less of a boss/employee structure and more of a partnership. ![Image from The Magic Loop](https://substack-post-media.s3.amazonaws.com/public/images/c5929f2f-94ca-4871-aafb-f7e748a491e0_9371x3678.png) ## Manager problems and how to handle them The Magic Loop is designed to work with your manager to grow your career. What should you do if you don’t think your manager is very good, or you don’t have a good relationship with them, or they don’t give you good projects, ideas, or feedback? ### **Start with yourself** It is easy to blame others for our problems, but none of us are perfect people or ideal employees. Further, we do not control what our managers do; we only control ourselves. Thus, even if your manager is not ideal, you can work on your own performance. If your manager gives you no feedback or you strongly disagree with it, get additional feedback from your own peers as well as peers at the next level. Do not just seek out people who will say nice things about you. Use this process to find out: is my manager truly wrong, or do other people say versions of the same thing? Whether others say the same things or different things, in every single case I have ever seen, broad feedback has revealed places for improvement. Get to work on those. ### **Build the relationship** The whole idea of the Magic Loop is to form a cooperative relationship with your manager where you both win. The manager gets a motivated employee who works on critical projects, while you get a career advocate. If you are starting with a poor relationship with your manager, or with a manager who does not seem to invest much in you or other team members, then this process may take longer. But it is a rare human who turns their back on those who help them. Most managers can be won over by people who volunteer to help them and then follow through. However, you have to get past your disappointment with past interactions as well as any resentment you may be harboring. To improve any relationship, someone must take the risk to take the first step. This does mean that it is possible that you will put in some extra work helping your manager and they will not change. What we can also guarantee, though, is that if you do nothing different than you have in your past (that is, you refuse to take risks or change, waiting for them to “get better at managing” first), then your career will stay stuck right where it is. If you take the risk and try, then either something improves or you can know that this manager is not going to be a supporter and that your next step is to change roles. ### **Suggest your own ideas** Sometimes managers are not good at helping you plan your career. They give poor feedback, such as “Just keep doing what you are doing!” They have few suggestions where you can grow. They offer no ideas for projects you can take on that would grow your skills and career. In other cases, their ideas of what direction you should take your career do not match your own (for example, they recommend a management track when you want to grow as an expert in your field instead). In all of these cases, you will need to suggest your own ideas of what you want to work on and how you can grow in the way you want for your career. To do this successfully, you need to consider what the manager, team, and company need from you. This is because for your suggestions to be accepted, they do have to accomplish something of value for the manager and the company. If your suggestion is only good for you, it will likely be rejected. Thus, the key task is to work to figure out and explain a win-win recommendation that is good for both of you. ### **As a last resort, leave** If you try all the steps above and your manager remains unhelpful or is exploitative (see below), then you need to find a new manager. The first mistake I see people make is blaming the manager without truly looking at their own performance issues first. The second mistake, however, is simply complaining about the manager but staying in the job. I have seen many employees complain about their jobs and managers for years without doing anything about it. Both approaches are wrong. The successful employee does everything they can to make a situation work but then also quickly exits the role if it cannot be repaired. ## Frequently asked questions about the Magic Loop ### If I keep volunteering for work, won’t I end up being overloaded? The Magic Loop recommends that you do your job well and then ask for more. If all you ever did was take on more work, eventually you would end up overloaded. There are two ways out of this. First, if the things you take on are projects, they should have an end. So you complete one project, then take on the next one. In this way, they do not accumulate. However, sometimes things you take on are ongoing tasks with no clear ending. In some cases, you can automate a task such that it takes much less time. If you can do this, great, go ahead. In other cases you have to add a question to your discussions with your manager, which is what you can hand off to someone else. A discussion with your manager about delegation would sound like this: “I’ve really enjoyed taking on vacation scheduling, project reporting, and ownership of the Acme account. I’d like to do more, but I am at capacity. The daily run to the supply office takes a lot of my time and is something anyone can do. You told me you need help with the ABC project and I think I could do what you need there, but is there someone else who could do the supply office run to free up my time?” This style of discussion cites your contributions, offers help with a need, and suggests a way to make room for it. Your choice in what to request to hand off is strategic—it is the lowest-value or lowest-risk work. In this sense, your career is like a card game, where you are slowly trying to play or discard your less useful cards while getting new, higher cards. Discard a 3 and add a jack to your hand. You do need to be sensitive about this. You do not want to be seen by your manager as shirking work or your coworkers as pushing lousy work onto them. That said, this is all about pace and delivery. You are unlikely to advance without real, true hard work. But if you are obviously working hard, the request to shift low-value work will make sense to a good manager. Let them do the shifting of the work, so that coworkers direct any issues to the manager, not toward you. ### **Does the Magic Loop assume that the employee is in a fast-growing company or team?** Growth is much easier in quickly growing companies. I believe the Magic Loop works in both fast and slow companies and that it will help you grow more quickly in either environment. However, someone recently shared a quote with me, which they attributed to Costco: “Promotions happen here one retirement at a time.” In such an environment, the Magic Loop can do two things for you: 1. Ensure that even if you are not being promoted, you are at least partnered with your manager to work on things that grow and broaden your skills 2. Put you in a position to get that spot when someone retires But if you are unwilling to wait for #2, get some learning from benefit #1 and then go somewhere with higher growth. Despite following the Magic Loop in my own life, I would not have gotten to vice president at 43 and retired at 50 without Amazon’s 100x growth while I was there. ### Can the Magic Loop lead to exploitation? Some people fear that by volunteering to help, their managers will simply load them up with additional work and never reward them. This is of course possible, usually in stagnant companies where there is plenty of work but few opportunities or need for advancement. This is not a flaw in the Magic Loop but in the company and circumstances. In companies with low growth and few opportunities for advancement, managers may have lots of tasks they need to get done but have low need for new leaders. In the worst case they may even feel threatened by hard workers. They can fear that a hard worker will upset other employees who wish to coast, or even that you are secretly seeking their job. There are a few options to fix the problem of a slow, difficult company. You can be patient, waiting for leaders above you to retire or move on, and hope that the advancement strategy will reward ability and skill rather than tenure. Your other choice is to move on to a higher-growth company. The best strategy in such circumstances is to first make sure that you understand the culture and your manager correctly. Check with others on how advancement occurs at your company. Look at the rate of growth. Is the company getting bigger each year? Are they hiring new employees from outside? Are other people getting promoted? If these good things are happening around you, then promotion is possible. Go back to step one of the Magic Loop—confirm with your manager that you are doing your own job well. If you find your company is stagnant and low-growth, or even shrinking, move on. If your manager truly is paranoid or exploitative of your help (all requests, no rewards), then it is time to move on, but only after you have tried the Magic Loop and gotten no collaboration in return. Go find a place that rewards investment and achievement! ### **Does the Magic Loop apply to managers?** *Yes!* I often tell managers, “If you want a better team, show them this Magic Loop idea.” Tell your team that you are open to working with them on their goals via this system if they are willing to invest and take on some necessary work to get there. Not all people want that tradeoff. There is an unfortunate set of people who (I think) learned in school that the “game” is to do as little homework as possible while graduating with a set of Bs. It can be hard to get people who have internalized that the game is to avoid work to switch modes and see the value of putting forth effort. But for anyone who wants to put in effort, the loop works well. ### Does the Magic Loop work for freelancers and entrepreneurs? What if you do not have a traditional manager because you are a freelancer or entrepreneur? Ultimately the Magic Loop is about systematically thinking through your own development goals and growth plans. In this sense, the freelancer and the entrepreneur have to manage themselves. So it still makes sense to ask yourself: What are the most important things I should be working on (often coming from your clients, because every business has customers), and what things have I mastered that I can delegate (outsource) to others? The Magic Loop is a process of deciding where you want to take your career, getting feedback on how you are doing, and then taking on projects and challenges that grow the skills you need to reach your goal. Inside a company, you do this with your manager; on your own, you must do this for yourself. ## In closing The Magic Loop is simple and effective. I used it throughout my career to climb successfully at both startups and Amazon. Along the way, it helped me form great relationships with my managers, many of whom are among my closest friends today. I also explained the same process to my direct reports, and the ones who used it are now high-level executives across the industry, at Amazon and beyond. While the loop itself is magical, there is nothing secret or mystical about it. You can start using it today, right now. Go for it! *Thanks, Ethan! For more from Ethan, make sure to check out his [newsletter](https://levelupwithethanevans.substack.com/), courses ([live online](https://maven.com/ethan-evans) and [on-demand](https://ethan-evans.mykajabi.com/)), and [LinkedIn](https://www.linkedin.com/in/ethanevansvp/).* *Have a fulfilling and productive week 🙏* ## 📣 Join Lenny’s Talent Collective 📣 If you’re hiring, [join Lenny’s Talent Collective](https://www.lennysjobs.com/talent/welcome) to start getting weekly drops of world-class product and growth people who are passively open to new opportunities. I hand-review every application, and accept less than 10% of candidates who apply. ![Image from The Magic Loop](https://substack-post-media.s3.amazonaws.com/public/images/8638d278-ac01-4f28-b2c9-39f1dd6e4724_1492x1194.png) If you’re looking for a new gig, apply to join! You’ll get personalized opportunities from hand-selected companies. You can join anonymously, hide yourself from companies, and leave anytime. [Apply to join](https://www.lennysjobs.com/talent) **If you’re finding this newsletter valuable, share it with a friend, and consider subscribing if you haven’t already. There are [group discounts](https://www.lennysnewsletter.com/subscribe?group=true), [gift options](https://www.lennysnewsletter.com/subscribe?gift=true), and [referral bonuses](https://www.lennysnewsletter.com/leaderboard) available.** Sincerely, Lenny 👋 --- ## [38/51] How Linear builds product [Linear](https://linear.app/) is a story I’ve been wanting to tell for a long time. Not only are they [the #1 most requested startup for me to include in this series](https://x.com/lennysan/status/1705298041555780033?s=20), they’re also building the product that a growing number of teams are using to build their own product. And they are doing so in incredibly unique ways: 1. **No product managers, just a head of product.** PM duties are distributed across engineering and design. 2. **No durable cross-functional teams.** Teams assemble around a project and disperse once the project is done. 3. **No metrics-based goals.** Just a North Star company-level metric goal. 4. **No A/B tests.** Decisions are based on taste and opinions. 5. **Job candidates go through a paid work trial.** Theyjoin the team for 1-5 days and work on a real project with the team. 6. **The team is completely remote.** And always has been. Linear also has more cash in the bank than they’ve ever raised in VC funding, they’ve been profitable for 2+ years (before it was cool), and have spent a grand total of $35K on paid marketing in the history of the company. Only two people have ever left the company, and their CEO, Karri Saarinen, is a designer (who rarely gives interviews). For all of these reasons, I’m thrilled to share an in-depth look at how Linear builds product. If you’d like to learn more, check out [Linear.app](https://linear.app/), find [Karri on X](https://twitter.com/karrisaarinen), and [they’re hiring](https://linear.app/careers)! # How Linear builds product ### **1. How far out do you plan in detail, and how has that evolved over the years?** In the very beginning, when it was just us three founders, we planned by the week. We would think about the most important things to resolve and then go work on that. If you go back to the beginning of our [changelog](https://linear.app/changelog/page/16), you can see what shipped each week. Our goal was usually to figure out what was blocking us the most from getting more users on the product, and fixing things we heard from our beta users. Today, we have about 50 people at Linear. We only have a single product team, which means that we can keep the planning process quite centralized, and there is only one roadmap for the whole product. This makes it very clear to everyone what we are working on. Additionally, everyone feels responsible for the whole product and how it all works together. For the planning process itself, it’s a two-way approach, where we start with the founders and small leadership group to plan the direction we want to go as a company for the following 12 months. In parallel, we ask everyone on the team to share their thoughts and ideas in FigJam sessions (here’s a link to [our template](https://www.figma.com/community/file/1285828596884760720/product-planning-brainstorm-template)) or surveys to get more thoughts on areas we could improve or tackle. Once we have the strategy in mind, we then define a high-level roadmap for the next half of the year based on that. The strategy, for example, might be “focusing on large company needs.” We don’t have complicated ways to rank or vote on projects. Instead, we believe that if the leadership team and the whole company spend time with customers and use the product regularly, the needs and opportunities become more apparent. Then it’s just a matter of sequencing and scoping. We’ve included a high-level product roadmap for Q2 and Q3 of this year below. We had two strategic workstreams: planning and roadmapping, and issue discovery. Our other two workstreams are dedicated to high-priority user asks, so we can respond quickly to needs we hear from customers, and keep-the-lights-on projects (in the “other” workstream below). We’ll include new features and functionality alongside improvements to existing features within these workstreams. We try to plan out in detail for two quarters, then sketch out the next half, and leave a pretty extensive backlog to pull from. The roadmap (more on that below) for a given workstream will get more detailed as we break this work into projects. We sequence the projects based on what we think is the optimal path to tackle them. “Optimal path” means we see a reason to do X before Y, because they would support each other, or we have specific people from the team in mind who should tackle some specific project but cannot do them in parallel. We like to pair projects with individual strengths when possible. For example, when we know the project feature will need a more advanced front end, we staff with our strongest front-end people. Project plans start as documents or lists where we just draft ideas. We then ask the project team to write the spec for the project. Here’s an example spec for our [Triage](https://linear.app/docs/triage) feature: After the spec is written, we’ll add the project to the [Roadmap](https://linear.app/features/plan#roadmaps) in Linear. This is our internal working view of the “Planning & Roadmapping” workstream and how the team manages their workflow as they build. ### **2. How many PMs do you have?** One. We hired Nan Yu a little over a year ago when we were about 25 people. He is Head of Product and currently the only one carrying a “PM” title. The reason I phrase it this way is that we have other roles that also contribute to what is traditionally considered part of the PM role. Our plan is not to hire PMs for every project or team. We hired Nan because we saw the need for someone to shepherd the product overall and the activities around building products. Instead of having a PM for every team or area of the product, we like to see that the broader team collectively thinks about the product and how features are delivered, not just the PMs. ### **3. Do you use OKRs in some form?** We haven’t used OKRs. For goals, we like to keep it simple and sometimes have more strategic goals, like “Be the default tool for startups” or “Get xxx number of companies,” which we then use as the theme for figuring out the roadmap. I find these types of goals useful to align our team to what we are after without being too specific about how we get there. It’s also much more empowering for them. We also don’t have metrics goals for the product or any projects, but we do have a North Star company-level metric goal. For a B2B tool like ours that takes some time for a company to adopt the tool or any new feature, setting specific metrics goals and measuring progress doesn’t seem that useful and more often can lead you astray. To me, product goals should be about how we add value for our existing customers or expand to a new customer base; in other words, how we solve our customers’ problems better. With certain projects, we might pull up specific data or metrics to see if the data gives us any more insights, but it’s not the way we make decisions. We don’t do A/B tests. We validate ideas and assumptions that are driven by taste and opinions, rather than the other way around where tests drive decisions. There is no specific engagement or other number we look at. We beta test, see the feedback, iterate, and eventually we have the conviction that the change or feature is as good as it can be at this point and we should release it to see how it works at scale. ### **4. Do you structure your teams around products, user types, user journeys, outcomes, or something in between? Has this changed over the years?** We only have mobile and infrastructure as specialized teams, as they require specialized skills and focus. The rest of the product team works on the projects that come out of the planning process, which could address any area of the product. We have purposely avoided product-area-specific teams (e.g. the roadmaps product team, the cycles product team, etc.), as I see it can be a way for people to get too trapped in their specific product area and potentially lose the broader context and/or start working on more minor details with diminishing returns. Naturally, some people become more knowledgeable about some parts or types of problems, and the same people might address the same area again, but it’s not a formal position. Our product team is divided by region (U.S. and Europe). We realized early on that it’s challenging to work over many different time zones with a distributed team, so we now have Europe- and U.S.-based people run as their own distinct groups. In addition, we have people in marketing, data, sales, customer success, support, and talent/people who work closely with our product teams. When we do our roadmap planning, we divide the work between the U.S.- and Europe-based teams. Then within those teams, the projects get staffed with a project lead and the rest of the team. The project lead can be an engineer or designer or whoever else is part of the project. Since we don’t have any PMs other than our Head of Product, the project lead is never a PM. The role of the lead is to get the project started and communicate how it’s going. Typically, for almost any feature we build, we have small teams of one designer and two engineers. At our current size, we have about six project teams running in parallel. Once the team finishes their project, they disperse and move to another project. When it comes to planning, we might set up themes around a certain type of customer, area, or type of features that we would like to develop, but we just don’t set the org chart based on that. ### **5. How do your product/design review meetings work?** We aim to give individual project teams ownership of projects, because we believe that when a team has ownership over their work, they can create far better solutions for our users. I, along with my co-founders Jori Lallo and Tuomas Artman and our Head of Product, each lead or sit in each project meeting acting as a sponsor to give feedback and direction as needed. One of us is ultimately responsible for the outcome. For example, we have a project team focused on new-user onboarding experience, and Jori will lead that project and the project team meetings, while also providing feedback on updates shared asynchronously from the project team in Slack. We don’t have formal product or design reviews. It’s more ad hoc and iterative, which enables us to move faster. For example, our designers share an early design in a project-related Slack group and get informal asynchronous feedback from many different people that way. We’ve had a robust feature-flag system from the beginning, so we push new features to internal testing as fast as possible, sometimes in days or weeks from starting the project. At that point, everyone can try out the feature and see if something feels wrong or if they have ideas for how things could be improved. Because of these feature flags, there is no excuse to wait to ship. We run a beta customer testing program called Linear Origins where our customers get earlier access to new features and we can get product feedback early. Sometimes this happens a month or two before we aim to launch a feature, and sometimes it happens days before. For example, we’re working on a more significant new feature release and we’re setting up calls with some of our customers to walk them through the product. If they’re interested in trying it out, we’ll enable the new feature, ask them for their feedback, and do our best to address it. While we do this with some products, we don’t view pushing features to beta as a required step to launching. We still value shipping quickly, which means not everything needs to go through the beta program, but we use it when we find it useful to get more feedback. ### **6. Are product and design part of the same org? And who do PMs ultimately report to? Has this changed over the years?** Yes, product, engineering, and design are all part of the product team. Product and design report to me (CEO). We have engineering managers, but engineering ultimately reports up to my co-founders: Tuomas for infrastructure and Europe engineering, and Jori for U.S. engineering. While engineering and design have their own meetings for their functions, for the most part, we talk about “Product” holistically and not engineering, design, and product separately. The org has stayed the same from the beginning. ### **7. What’s your primary tool for task management, and bug tracking?** Well, Linear, of course. We recently shared a [blog post](https://linear.app/blog/how-we-think-about-customer-experience-at-linear) about how we use Linear to manage incoming bug reports and feature requests directly from customers. As a quick overview, for bug tracking we heavily use our Triage feature, which is like an inbox for your team. Our support team, sales team, and even I often file issues into Triage, and one of our “goalie” engineers routes the request to the appropriate person or fixes it at the time. “Goalie” is a weekly rotation where an engineer helps the support team with issues, fixes bugs, and triages incoming requests. Most of the other tasks are part of projects. The engineers and designers are creating the tasks for themselves and resolving them as they go about the project. Project teams do weekly updates on the project progress using our Project Updates features. These updates also get posted to Slack to our #product-updates channel so anyone can follow them. ### **8. You built one of the most beloved and successful products out there today. What would you say is unique or central to your approach to product that leads to such a successful product?** One of the unique aspects to Linear is that we expect the project team to be the PM. In other companies, I’d often see that the PM is or becomes the de facto decision-maker for the team. When that’s the case, it’s almost like you outsource all the thinking to the PM, and the rest of the team—engineers and designers—just execute based on that thinking. I think it’s a waste of opportunity and talent. I think it can work for some teams, but what I think works better is to build a team where the project team both thinks and executes. I like to compare how Apple combines CPU, GPU, RAM, and other functions on the same M1 chip to make it more efficient. I don’t think it would be possible to maintain the quality we have, or build some of the things we have, without this setup. Anyone who has built things knows that a lot of ideas and opportunities emerge when you actually start building something. A good example of this is when an engineer on our team, Andreas, [built the context menus](https://linear.app/blog/invisible-details). We didn’t ask or spec it for him to figure out how we can make sure the context menu doesn’t close if the user hovers their mouse a few pixels off. He just felt it was needed. These kinds of details are almost impossible to spec or plan for if you’re not there building it or if the people building it don’t have ownership. My take is that this is one of the reasons why so much of the software we have today seems fine on paper but doesn’t actually work well in practice. We as an industry optimized the process too much and created a Henry Ford–style feature factory where each role is very specific and production speed is more important than craft. (The other reason is A/B testing.) It’s worth noting that there are downsides to this approach. It means that engineers and designers do have to play the role of the PM, which includes communicating, talking to users and stakeholders. This means that engineers and designers are not purely coding or designing, which can sometimes feel like it slows things down. Personally, I believe often it’s better to go slow to go fast, meaning we generally get projects done right the first time, with minimal fixes later. The second downside is that it’s harder to hire for these roles, as many people don’t have experience working this way. ### **9. I assume much of your success has been thanks to hiring well. In your product hires, what do you most look for (that maybe others don’t), and broadly, what does your interview process look like?** We always look for product sense, taste, and judgment for all product roles, like engineering and design. For non-product roles, we similarly look for something beyond the specific skills the role requires. For example, in marketing we look for storytelling ability; for operations roles we like to see more understanding and comprehension of user needs. Overall, we aim to build a company where each person looks and cares beyond their immediate role and can take more scope than what is commonly expected in their role. The hiring process is different for each role, but generally, there are the common interviews: recruiter, hiring manager, skills assessment, cross-functional or “beyond” interviews. For many engineers, I interview them for product thinking. Product thinking or taste for us means that the person is interested in and can form opinions on products or specific features. For example, if the person worked at Airbnb in the past, I’d ask them if they disagreed with something they built there and why. Opinion also doesn’t mean that you just personally like something; you need to be able to articulate why and what the rationale is. The last step of the process is a work trial. These are paid working sessions where the candidate joins us for one to five days and works with us on a project related to their function and presents the work at the end. They have access to our docs, codebase, designs, and Slack, get invited to relevant company and team meetings, and have one-on-one chats with other people. For example, an engineer would get a spec for a feature they need to build. Leadership candidates would have a prompt of a challenge or an area they would need to develop. The work trial works for us and the candidate as a way to understand how we might work together, and we can see how they approach problems, handle uncertainty, and communicate. The candidate also gets a much better sense of the company and the team they would be joining than from a traditional interview loop. ### **10. What are some fun/unique rituals or traditions you have on the product team, or at the company broadly?** Every product has bugs and little paper cuts that affect quality. At Linear, we fix these every week, but we also dedicate concentrated time at the end of the year to these efforts through [Polishing Season](https://linear.app/changelog/polishing/2022). We have users tell us what we should fix or improve, or would make their lives easier. As we fix bugs and make product improvements, we notify the user who made the request that we shipped their fix and make live updates to the public page. Here’s [Polishing Season 2022](https://linear.app/changelog/polishing/2022): *Thank you, Karri! For more from Karri, check him out on [LinkedIn](https://www.linkedin.com/in/karrisaarinen) and [X](https://twitter.com/karrisaarinen/), and learn more about Linear at [Linear.app](https://linear.app/). Also, [they’re hiring](https://linear.app/careers)!* *For more stories of how the best product teams operate, don’t miss my interviews with [Figma](https://www.lennysnewsletter.com/p/how-figma-builds-product), [Notion](https://www.lennysnewsletter.com/p/how-notion-builds-product), [Shopify](https://www.lennysnewsletter.com/p/how-shopify-builds-product), [Ramp](https://www.lennysnewsletter.com/p/how-ramp-builds-product), [Coda](https://www.lennysnewsletter.com/p/how-coda-builds-product), [Duolingo](https://www.lennysnewsletter.com/p/how-duolingo-builds-product), [Miro](https://www.lennysnewsletter.com/p/how-miro-builds-product), and [Snowflake](https://www.lennysnewsletter.com/p/how-snowflake-builds-product).* *Have a fulfilling and productive week 🙏* ## 📣 Join Lenny’s Talent Collective 📣 If you’re hiring, [join Lenny’s Talent Collective](https://www.lennysjobs.com/talent/welcome) to start getting weekly drops of world-class product and growth people who are passively open to new opportunities. I hand-review every application, and accept less than 10% of candidates who apply. If you’re looking for a new gig, apply to join! You’ll get personalized opportunities from hand-selected companies. You can join anonymously, hide yourself from companies, and leave anytime. [Apply to join](https://www.lennysjobs.com/talent) **If you’re finding this newsletter valuable, share it with a friend, and consider subscribing if you haven’t already. There are [group discounts](https://www.lennysnewsletter.com/subscribe?group=true), [gift options](https://www.lennysnewsletter.com/subscribe?gift=true), and [referral bonuses](https://www.lennysnewsletter.com/leaderboard) available.** Sincerely, Lenny 👋 --- ## [39/51] Hiring your early team Welcome to part six of our ongoing series on how to kickstart and scale a B2B business. Here’s where we’re at: - **Part 1:** [How to come up with a great B2B startup idea](https://www.lennysnewsletter.com/p/how-the-most-successful-b2b-startups) - **Part 2:** [How to validate your idea](https://www.lennysnewsletter.com/p/how-to-validate-your-b2b-startup) - **Part 3:** [How to identify your ICP](https://www.lennysnewsletter.com/p/how-to-identify-your-ideal-customer) - **Part 4**: [How to find and win your first 10 customers](https://www.lennysnewsletter.com/p/how-to-win-your-first-10-b2b-customers) - **Part 5:** [A guide for finding product-market fit](https://www.lennysnewsletter.com/p/finding-product-market-fit) - **Part 6:** How, and when, to hire your early team *← This post* - **Part 7:** [How to scale your growth engine](https://www.lennysnewsletter.com/p/scaling-your-b2b-growth-engine) *A huge thank-you to **[Akshay Kothari](https://www.linkedin.com/in/akothari/)** (COO of Notion), **[Ali Ghodsi](https://www.linkedin.com/in/alighodsi/)** (CEO of Databricks), **[Andrew Ofstad](https://www.linkedin.com/in/aofstad/)** (co-founder of Airtable), **[Barry McCardel](https://www.linkedin.com/in/barrymccardel/)** (CEO of Hex), **[Boris Jabes](https://www.linkedin.com/in/borisjabes/)** (CEO of Census), **[Calvin French-Owen](https://www.linkedin.com/in/calvinfo/)** (co-founder of Segment), **[Cameron Adams](https://www.linkedin.com/in/themaninblue/)** (co-founder and CPO of Canva), **[Christina Cacioppo](https://www.linkedin.com/in/ccacioppo/)** (CEO of Vanta), **[David Hsu](https://www.linkedin.com/in/dvdhsu/)** (CEO of Retool), **[Eilon Reshef](https://www.linkedin.com/in/eilonreshef/)** (CPO of Gong), **[Eric Glyman](https://www.linkedin.com/in/eglyman/)** (CEO of Ramp), **[Guy Podjarny](https://www.linkedin.com/in/guypo/)** (CEO of Snyk), **[Jori Lallo](https://www.linkedin.com/in/jorilallo/)** (co-founder of Linear), **[Julianna Lamb](https://www.linkedin.com/in/juliannaelamb/)** and **[Reed McGinley-Stempel](https://www.linkedin.com/in/reed-mcginley-stempel-17362245/)** (co-founders of Stytch), **[Keenan Rice](https://www.linkedin.com/in/keenanrice/)** (founding team), **[Mathilde Collin](https://www.linkedin.com/in/mathilde-collin-bb59492a/en/)** (CEO of Front), **[Rick Song](https://www.linkedin.com/in/rick-song-25198b24/)** (CEO of Persona), **[Rujul Zaparde](https://www.linkedin.com/in/rujulz/)** and **[Lu Cheng](https://www.linkedin.com/in/lu-cheng-973b7830/)** (co-founders of Zip), **[Ryan Glasgow](https://www.linkedin.com/in/ryanglasgow/)** (CEO of Sprig), **[Shahed Khan](https://www.linkedin.com/in/shahedkhan/)** (co-founder of Loom), **[Shishir Mehrotra](https://www.linkedin.com/in/shishirmehrotra/)** (CEO of Coda), **[Sho Kuwamoto](https://www.linkedin.com/in/shokuwamoto/)** (VP of Product of Figma), **[Spenser Skates](https://www.linkedin.com/in/spenserskates/)** (co-founder and CEO of Amplitude), **[Tom Preston-Werner](https://www.linkedin.com/in/mojombo/)** (co-founder of GitHub), and **[Tomer London](https://www.linkedin.com/in/tomerlondon/)** (co-founder and CPO of Gusto) for contributing to this series. Art by [Natalie Harney](https://www.natalieharney.com/).* For this step, I’ll focus on the four most common hiring questions I get from early-stage founders: 1. **Who should I hire first?** 2. **Where do I find them?** 3. **How do I convince them to join?** 4. **When should I hire a salesperson (and what should I look for)?** ## 1. Who to hire I asked all the founders I interviewed who their first 10 hires were: Let’s break this down by your first hire, first three hires, and first 10. ### Who to hire as employee #1 **Takeaway:** Developers, developers, developers, developers. Over two-thirds of the companies hired an engineer as employee #1. Not a big surprise. In the rare case when an engineer wasn’t the first hire, it usually came down to the founding team having enough horsepower to build the V1. > “**Having four founders who could stretch across the business helped a** ***lot*** **here.** Each of us could write code, handle customer success, write product specs, and work across the stack.” —[Calvin French-Owen](https://www.linkedin.com/in/calvinfo/), co-founder of Segment Founders were instead able to de-risk, or un-bottleneck, something else. **Vanta** hired a compliance subject-matter expert as their first employee: > “**We could build, but we wanted the check on are we building the right thing**, given our background wasn’t in the space. The worst case would have been promising to get a company ‘secure and compliant’ and then failing to do so!” > > —[Christina Cacioppo](https://www.linkedin.com/in/ccacioppo/), co-founder and CEO of Vanta **Coda** hired a recruiter: > “I’d say that our first hires were all fairly typical, except for hiring a Head of Recruiting at such an early stage of development. It was earlier than anticipated, but a good friend introduced me to [Kenny Mendes](https://www.linkedin.com/in/kennymendes) and said, **‘I know it’s early, but people like Kenny don’t come along often, so you should probably pull him in.**’That turned out to be a fantastic choice, as Kenny has turned out to be an amazing generalist and quickly became chief operating officer for us.” —[Shishir Mehrotra](https://www.linkedin.com/in/shishirmehrotra/), co-founder and CEO **Sprig** hired an AI data scientist, and **Segment** and **Amplitude** hired a customer success/support person as employee #1. Here’s [Calvin French-Owen](https://www.linkedin.com/in/calvinfo/) (co-founder of Segment) on why they did this: > “**There’s something really magical when you write in to a startup and they fix your issue within a few hours. It’s something you’d never, ever expect from a big company, and it was one way for us to differentiate.** > > So initially, the four of us basically round-robined support. We’d log in to Help Scout and answer as many emails as possible. We’d switch off whoever answered the handful of Olark live chats that would pop in throughout the day. By the middle of the year, we were getting slammed with fairly technical support requests from users. They’d run the gamut from the relatively easy ‘What analytics tool should I use?’ to the more technical ‘I’m running Python on App Engine; why aren’t my events making it to Segment?’ > > To give us extra engineering bandwidth, Peter [Reinhardt, the CEO] spent about eight weeks handling all the support volume on his own. But it basically meant he couldn’t do anything else. > > **We wanted to find someone who could handle most of these requests on their own and synthesize any new requests. Jake [Peterson] (who we hired for the role) was a bit of a unicorn in that respect. He had run his own analytics consultancy that was focused on helping customers reduce their costs and had a little bit of technical ability to read code. He wrote good docs and authored a bunch of our early blog content.** > > Given the breadth of integrations we supported, and the fact that we had four technical co-founders, we hired early here.” ### The first three hires **Takeaways:** 1. Engineers continued to be the predominant function across the first three hires. Not shown in the chart, but **100% of companies hired at least one engineer among their first three hires**. 2. Interestingly, customer success/support continues to be a popular role for the first three hires. **Of the non-engineer hires, almost a quarter of them are customer success/support.** For me, this ties directly to the core lesson from part five—[get companies to love your product](https://www.lennysnewsletter.com/i/119122450/step-get-one-company-to-love-your-product). 3. **Subject-matter experts also continue to be a surprisingly common early hire**, particularly for startups building in a complex regulatory-oriented market (e.g. Gusto, Zip, and Vanta). 4. Although only 10% of hires were designers, and this isn’t shown in the pie chart above, **over 40% of companies hired a designer in their first three hires, or had a designer co-founder.** 5. **Very few companies hired a salesperson among the first three.** 6. **Three companies hired a PM within their first three hires**: Coda, Persona, and Snyk. Here’s [Guy Podjarny](https://www.linkedin.com/in/guypo/), founder and CEO of Snyk, on why they hired a PM so early: > “I believed the fact that security products weren’t fit for developers **was a product problem, not a tech problem**, needing breakthroughs more in the UX world than tech algorithms. Furthermore, I had two technical co-founders that I knew would lead the security and tech aspects well, so felt I’m well-covered there. > > **I could have done the product work myself (and in practice, I did a portion of it), but I wanted to free myself up to build the company as a whole, and not be too focused on one aspect of it. I did hire someone with deep UX skills, better than mine, who complemented me, not just offloaded work.** > > In general, I intentionally took the path of building a strong leadership team early on. It was always a very hands-on leadership team, who initially spent most of their time as ICs but were also building teams and practices. This is a personal choice, and many founders prefer to directly manage most of the team until it grows. For me, however, I perceive myself as a better leader and innovator than I am a manager, and I wanted to focus my attention there.” And here’s [Rick Song](https://www.linkedin.com/in/rick-song-25198b24/), founder and CEO of Persona, on hiring a PM as employee #1: > “We hired Vincent [Tsao] because Charles and I believed his professional experience and willingness to give it his all were a perfect fit. We would’ve wanted to work with him whether at Persona or elsewhere, and that speaks highly of our rapport. He had experience from a previous startup and understood the fluid nature of a company’s early stages—he wasn’t tied to a specific role, title, or set of responsibilities and understood that we were all going to do whatever it took to succeed. In fact, his very first project had nothing to do with product- he spent the first evening setting up payroll! > > **We also believe that many founders, in their eagerness to launch and iterate, often swing too far on the pendulum of no documentation or process. While Charles and I were confident in our product and market insights as well as our ability as engineers to create a MVP, we were also self-aware about our shortcomings.** We knew we needed someone with not only sharp product intuition but also someone who could anchor our product operations and knowledge base, synthesizing insights from chaos and ultimately helping us move faster. Vincent was invaluable in building the foundation that enabled us to smoothly go from MVP to product market fit, and eventually, to scaling our team.” ### The first 10 hires **Takeaways:** 1. **Sales becomes the second most common hire**, after engineering. 2. **A quarter of companies hired a product manager** at this point. 3. **Recruiters become a surprisingly common hire.** I did not expect that. This is particularly true across some of the most unique startups, like Linear, Figma, Ramp, and Coda. Here’s [Jori Lallo](https://www.linkedin.com/in/jorilallo/), co-founder of Linear, on why they hired a recruiter so early: > “Initially all of us three founders ran the recruiting process, and while it worked for a little while, it wasn’t something we were necessarily particularly good at or passionate about. **We cared about hiring the best people, not about the first person who came knocking at our door. Also, we didn’t really have the tools or the time to reach outside our own networks, so we needed help to expand outside the inbound applicant pool.** > > At first we experimented with a couple of external boutique recruiting agencies, but it didn’t feel natural. This was mainly due to a consulting recruitment model where incentives are often tied to closed hires, so the recruiters are incentivized to make the hires as fast as possible. This is good for growing the team fast but hard when you want to hire only the best talent. The best and most sought-after people are often hard and slow to hire, and the process looks more like leadership recruiting. > > So building the function in-house and investing into it made sense to us. We probably weren’t great at it at first but have since come a long way. Today we have a four-person recruiting function at a 50-person company.” ## 2. Where to find your early employees Once you have a sense of which roles to hire, how (and where) do you find amazing people? I asked each founder how they found their early employees. Their answers all fell into four channels: #### **Channel 1: Friends and former colleagues** Unsurprisingly, hiring friends and former colleagues was by far the biggest channel. This also in part explains why multi-time founders, and anyone with a large network (e.g. Y Combinator), have an advantage: > “All of our early hires were friends/ex-coworkers.” > “First hires were practically all former colleagues. Several people who worked with me in my previous company reached out when they heard I was into something new, with my co-founder.” > “About half the early hires came from my personal network (friends from school, ex-coworkers, etc.).” > “I thought about the hardest-working people I knew and reached out to them.” But not so fast. There’s also a downside to this path, as shared by **Segment** and **Linear**: > “We tried for a long time to hire former classmates (we were fresh out of college, so had no former colleagues), but we had pretty rotten luck. **Believe it or not, there was little appetite to join four crazy guys in a room who had been failing for two years straight** :)” —[Calvin French-Owen](https://www.linkedin.com/in/calvinfo/), co-founder of Segment > “We didn’t end up hiring people from our past jobs, which might be more common for others. **All of us founders worked for more established startups before Linear, and we looked for people who would do well in an early-stage environment**. Among our first 10 hires were several founders (including two who had gone through YC). We still look for generalists and people with experience and who deeply care about their craft.” —[Jori Lallo](https://www.linkedin.com/in/jorilallo/), co-founder of Linear #### **Channel 2: Cold outreach** I was surprised to learn that the second most common channel for finding early employees is cold outreach—finding people you want to hire and reaching out to them directly. These outreaches happened mostly through LinkedIn and GitHub, and unlike channel #1, this is something anyone can do. > “We filled many roles through **cold hard outbound on LinkedIn**.” > “**We reached out directly to people (mainly engineering) that had significant public experience** with parts of the product we were developing, i.e. visualizations.” > “**We had great luck finding people off GitHub**. These were folks who had contributed to repos we were watching, and we had decent evidence that they were good. They didn’t come from FAANG, they had solid contributions in open-source land, they paid a lot of attention to abstractions and were really productive. Most of them had worked at one or two prior startups, but in general we bet on people looking to make their next big leap.” #### **Channel 3: Job boards** Also, surprisingly, a lot of early hires were found by posting roles on public job boards—again, something every founder can do. By far the most mentioned job board was AngelList. Also mentioned were Triplebyte, Facebook groups, and VCs’ internal job boards. Shoutout: If you’re looking for the best jobs in town, check out [Lenny’s Job Board](https://www.lennysjobs.com/)! 😅 #### **Channel 4: Friends and former colleagues of your** ***employees*** A final channel, which, if you recall, was also useful for [finding your early customers](https://www.lennysnewsletter.com/i/115245373/start-by-reaching-out-to-your-personal-network-looking-for-people-who-match-your-icp), was tapping the networks of your early employees. > “Many of our early hires were people from my network or the n**etwork of the very first employees.**” > “Our second sales hire was a **former colleague of our first salesperson.**” I didn’t get many interesting quotes for this channel, but it was a fruitful one for many founders, and worth spending time on. ## 3. How to convince people to join your startup [I actually researched and covered this in a previous issue](https://www.lennysnewsletter.com/p/early-stage-hiring), so go read that post. Here’s the high-level summary of what you need to get right: 1. **Captivating vision**—Make it easy for candidates to visualize what you are building toward and to feel like their work will be meaningful. 2. **A++ early team**—The best talent attracts the best talent. 3. **Put in the time—**Be prepared to commit 50 to 100 hours for each hire you make. 4. **Grow your network**—It’ll be an easier sell if they know you (or know someone who knows you). 5. **Love bomb—**Go the extra mile when trying to close a candidate: > “We see the actual offer stage as a big place you can stand out. We do a Zoom to surprise the candidate with everyone from their interview panel to share why they’re excited about the candidate potentially joining.” > > —[Julianna Lamb](https://www.linkedin.com/in/juliannaelamb/), co-founder and CTO of Stytch ## 4. When to hire a salesperson, and what to look for #### Always start with founder-led sales Every founder I spoke to started with founder-led sales—doing the sales themselves until they reached a certain milestone. [David Hsu](https://www.linkedin.com/in/dvdhsu/) (founder and CEO of **Retool**) shared why he found this so valuable: > “**The main thing you get from doing sales yourself is that you have a very good sense of how customers think about the product, the pros and cons of your product in the market versus competition. It’s actually very hard to scale sales if you haven’t done that yourself. If you talk to most people, most SaaS people will say the CEO generally is the best salesperson for the product, at least when you’re under $10 million ARR. And you should be. If you’re not, that’s actually kind of a problem.** > > I don’t think you should view sales as like, ‘Oh, let me go hire someone who will magically distribute my product to everyone for me.’ Instead, you have to go figure out how to distribute it. You can hire other people to help you scale the distribution, but you have to figure out what your market is, you have to go figure out how to price, stuff like that. The direct experience is so helpful and is not really reproducible by anything else. Especially for a new category, it requires a lot of first-principles thinking.” I heard exactly the same advice from [Ryan Glasgow](https://www.linkedin.com/in/ryanglasgow/) (founder and CEO of **Sprig)**, among others: > “I remember not loving sales and wondering why I was doing sales for as long as I was. **But I do think the business is much, much better off because of it.** I learned how to sell.” #### Four signs it’s time to turn over the reins to a full-time salesperson **Sign 1:** You can sell consistently. > **“We hired our first salesperson when we were able to grow it consistently. We had a pitch, it was working, and we got to the point where I could do something repeatable and I thought I could teach it to someone else.** > > We also didn’t know, as ex-consumer founders, what we were talking about in sales. And so we were really hopeful at the time we could find someone who could help us do that and figure it out. And we did.” > > —[Eric Glyman](https://www.linkedin.com/in/eglyman/), co-founder and CEO of Ramp > **“We hired our first salesperson when I was consistently selling**. Basically, I hired someone to do my job versus hired someone to figure out sales. We had 200 customers already.” > > —[Mathilde Collin](https://www.linkedin.com/in/mathilde-collin-bb59492a/en/), founder and CEO of Front **Sign 2:** It gets boring, and you’re not learning. > “The impetus for hiring a salesperson wasn’t actually a dollar amount. **What it actually was, was the sales calls were repeatable and boring: you get on, say your script, turn your brain off, get off, send the DocuSign**.I was spending all this time on sales calls, and it was working, but it felt repeatable and boring, and that seemed to mean someone else would be able to take the calls. That was actually the thing.” > > —[Christina Cacioppo](https://www.linkedin.com/in/ccacioppo/), co-founder and CEO of Vanta > “It was at a point where basically I was doing sales while I was building the product, and **it was like, okay, it feels like I’m not learning more now, I’m just trying to awkwardly turn these calls into sales calls from advice**.Because that was the only way we could get the meetings. > > I felt that it would be irresponsible of me to spend all my time just doing more of these calls by myself. It’s time to go get somebody. Then you slowly fire yourself from the most simple building up to the most complex part of the sales cycle.” > > —[Rujul Zaparde](https://www.linkedin.com/in/rujulz/), co-founder and CEO of Zip **Sign 3:** You’re overwhelmed with inbound. > “Our first salesperson didn’t come on until, honestly, **there was more deal flow than I could deal with.** We were getting a lot of inbound. We did our launch ourself, and we were getting enough in that I was realizing I was just really underwater, and I wanted someone to help figure it out.” > > —[Barry McCardel](https://www.linkedin.com/in/barrymccardel/), founder and CEO of Hex **Sign 4:** You hit $300-500k ARR. #### Try to wait until $300-500k ARR before hiring your first full-time salesperson This is where nearly every founder I spoke with brought in a full-time salesperson. [Ryan Glasgow](https://www.linkedin.com/in/ryanglasgow/) (CEO of Sprig) got this advice from his lead investor, [Bill Trenchard](https://firstround.com/person/bill-trenchard/#mystory): > “**Don’t consider marketing or sales until you get to a million in ARR**. We’re going to meet every week, talk through the feedback you’re getting from prospects, and see what’s working and not working. We’ll do this until you get the company to a million ARR.” Ryan didn’t fully follow his advice, but got past **$300k (with a large pipeline)**: > “I was talking to several late-stage founders, hearing at $200k, or $300k, you should hire a salesperson. So what I did was I got to $300k ARR, and I had $700k in late-stage procurement, and so when she joined a month later, it was essentially a million in ARR. It was kind of penciled in, because sales deals, it takes 90 days, and kind of knew, ‘Okay, this is working. Let’s bring someone in.’ ” [Christina Cacioppo](https://www.linkedin.com/in/ccacioppo/) (co-founder and CEO of **Vanta)** hired her first salesperson at **$500k ARR** (her 9th employee): > “I sold the first $500k for about 50 customers, and that’s when the first salesperson came on. I think I probably started to figure out what a salesperson is and how you recruit one at $250k.” [Spenser Skates](https://www.linkedin.com/in/spenserskates/) (co-founder and CEO of **Amplitude)** hired his first salesperson at ~**$300k ARR** (2nd employee): > “Once you get to a few $100k in ARR, that’s a great time to bring on sales reps. That’s when we brought on ours. > > We brought on one and then we brought on a second one at the end of the year when we were closer to a million-dollar mark. Which was too slow; we should have done it much earlier. And then we brought on two more the following year. We should’ve ramped that up faster. I remember we got to about 8 million in ARR with four sales reps, which is the stupidest thing ever. > > We hired one guy, Marcus Ratzlaff, who did $2.3 million in his first year, and then Bryan Parman, who did $2.7 in his first year. We were at the right place at the right time at the right thing. Got very, very lucky on that front.” [Julianna Lamb](https://www.linkedin.com/in/juliannaelamb/) and [Reed McGinley-Stempel](https://www.linkedin.com/in/reed-mcginley-stempel-17362245/) (co-founders of **Stytch**) hired their first salesperson at “**low six figures” ARR** (8th employee): > “If I had to describe my skill set, I think I’m actually pretty good at pitching, and I can sell you on things. I don’t think I’m great at running a sales process. When you see a great salesperson figure out who the champion is, how to fully get their buy-in, how to navigate all the different stakeholders, really, it’s a massive coordination effort and it’s a different skill set than what I would say is one of my best.” [Ali Ghodsi](https://www.linkedin.com/in/alighodsi/) (founder and CEO of **Databricks)** hired their first salespersonat **under $1m ARR:** > “In 2015, the year we did $1 million revenue, we had already hired something like three salespeople, might have actually been four. Three of them were focused on startups and they were doing okay. They were closing all these startups, and the startups were not paying us that much. Typically they were paying us $15,000 to $20,000 a year. You can do the math; it was adding up to a million. We had a bunch of those. We had one salesperson that focused on enterprises.” [Tomer London](https://www.linkedin.com/in/tomerlondon/), co-founder and CPO of **Gusto,** alsohired his first salesperson at **under $1m** (~20th employee): > “Gusto was primarily, and is still today, a self-service motion. So sales is mostly for the channel side of things, for accountants and then a little bit on the inbound side, so we didn’t hire our first salesperson for a while.” **Other data points:** - Zip at $200k ARR (4th employee) - Census at “mid-six figures” ARR (4th employee) - Hex at $250k ARR (8th employee) **Takeaway:** Past $200k ARR, start looking; before $1m, you should probably have someone. #### Some founders went founder-led for longer, mostly because growth was going so well **Retool hired their first salesperson at $2-3m ARR:** > “Initially, it was all me, up until probably $3 million or so, then I gave it to my co-founder, who ran it to $5 million, and then I think we started hiring AEs at that point.” —[David Hsu](https://www.linkedin.com/in/dvdhsu/), founder and CEO **Linear at a couple million in ARR:** > “We brought in Casey [Bertenthal] as head of sales, and he was only salesperson for years. The second person, under him, only joined a few months ago. > > His main job has been product growth. That’s been our path to get companies, through our product. And now that we work with medium to large startups, **he’s there mainly helping them adopt Linear and navigate their internal structures and so on.** We don’t do any outbound sales. It’s all about enabling these teams to get on board and figuring out securing reviews and procurement and contracts if there are some.” —[Jori Lallo](https://www.linkedin.com/in/jorilallo/), co-founder #### Some went an incredibly long time 🤯 **Notion went past $10-15 million in ARR before bringing on a salesperson:** > “**I basically made a rule that said that no salesperson should touch companies less than 100 employees because I felt like product needed to do that work.** > > **We got to $10-15 million in ARR just with startups and SMBs.** And then what ended up happening was some of them started to grow. I remember one of our early customers was a U.K. bank that went to 400 employees. And I used to do biweekly meetings with them because I was like, ‘Oh my God, tell me how is Notion even working for you? We are 20, 30 people and we have all these problems, and you’re using it for 400 people.’ And they actually had a full-time person whose entire job was to make Notion work. And I was like, ‘Why do you have that?’ I remember the founders basically said, ‘Actually, if everybody can use this tool to do their work and everybody used it in a specific way I want them to work, we are at least 50% more productive.’ And so they built internal templates for how they wanted to write their PRDs and internal templates for how they want their sales. I don’t know, they sort of built everything inside Notion. > > **And then that’s when we realized, okay, well these kinds of companies will churn unless there’s a human involved in really sort of making sure their experience is growing with Notion. And so that’s that.** > > The first six, nine months of my journey, when I was in the support pit, was essentially when I met a lot of the sales folks. Ivan [Zhao, co-founder and CEO] and I both did a lot of these interviews together, because we were both trying to understand what will make Notion sales successful. We have this ideal view of product and sales working together as opposed to product versus sales. And so it took some time, but I think our DNA is quite good. Nobody’s walking around asking why we have salespeople, and also salespeople are very empathetic for how we think about product roadmap at Notion.” > > —[Akshay Kothari](https://www.linkedin.com/in/akothari/), co-founder and COO **Canva went past something around $120m ARR 🤯🤯🤯** > “For most of our life, we haven’t been very sales-led. Our sales organization has mostly developed in the last three years as we started to focus more on enterprise and large teams. And you could even apply that question to marketing. We weren’t a very marketing-led company either. **I think in terms of spending real marketing dollars, we only started doing that in about year six or seven. Prior to that, we had a very SEO-driven strategy, and it wasn’t even paid—it wasn’t SEM, wasn’t paying money to search engines. It was mostly very much in the vein of content marketing and jobs-to-be-done. For the first two years, we relied a lot on organic word of mouth.** And then year two, or probably to the end of year two, we actually met a guy called Andre [Andrianes Pinantoan]. > > Andre just brought a whole bunch of knowledge and experience about how to leverage landing pages, SEO, keyword analysis to drive customers to the right place at the right time in Canva. And he set up this whole strategy around a number of jobs to be done, targeting keywords and getting people into the right flow within Canva. An example for this might be typing ‘poster maker’ into Google and surfacing the right landing page that showed a great poster gave people the confidence that Canva was the right tool for it, and then easily let them jump into the product and start building their first poster. And he did this for posters, presentations, flyers, business cards, whole swaths of different things that you could create in Canva. And that probably drove the second phase of growth in Canva, so this was not just about people telling other people, this was about people discovering Canva without any other social pressure. And that would’ve driven our growth from year three to year six and really accelerated the curve of our growth. > > Then, as we started getting more revenue ourselves and as we got a little bit more later-stage investment, then we started thinking about marketing. Firstly, we did keyword marketing, SEM, that type of stuff, and **it’s only in the last two years that we’ve started doing more brand marketing, billboards, all that kind of thing.**” > > —[Cameron Adams](https://www.linkedin.com/in/themaninblue/), co-founder and CPO #### On the other extreme, some companies hired a salesperson before they had any revenue Sometimes this was a customer success person who essentially did sales, as with **Coda**: > “**We hired our first salesperson before we had monetization at all.** So there was no ARR, and his job was basically just to help companies get activated. These days you’d probably call it customer success, although I would argue that for products like Coda, getting a commitment to use the product, the dollar figure matters. But the commitment to use it, actually it’s sales. You have to get them to actually commit. I don’t want to minimize what is really hard work from our sales team, but it’s one of those products where if you use it, you’ll value it. Most of what we do is focused on helping teams get set up using it well, happy with it, and then worry about paying for it.” —[Shishir Mehrotra](https://www.linkedin.com/in/shishirmehrotra/), co-founder and CEO Sometimes this hire was most useful for tapping into the existing latent demand, as with **Segment**: > “We hired our first sales rep, Raphael Parker, about 10 months after launch. We had a lot of latent demand to pay for Segment, and my co-founder Peter [Reinhardt] was trying to navigate sales. We weren’t very good at it, so we hired a Raphael. > > Raphael honestly had no way of evaluating us, and we had very little way of evaluating him. He went on to close our first $1.5m in revenue.” > > —[Calvin French-Owen](https://www.linkedin.com/in/calvinfo/), co-founder #### Pro tip: Consider hiring a coach or consultant early on This idea came up a number of times and seems like a great one to me. Here’s **Gong**’s experience, from [Eilon Reshef](https://www.linkedin.com/in/eilonreshef/) (co-founder and CPO): > “We hired a part-time consultant initially who used to be the VP of sales at various companies. It’s always a gamble for a salesperson. Do you bring a VP? Do you bring an IC? Nothing works, because you bring an IC, they have no idea what to do. We bring a VP. They want to hire a team. There’s no playbook. So that one actually worked well for us because that guy was VP-level but still dialing. > > He got us, out of the 12 first customers, probably half. And then after we saw things working, we started hiring salespeople. I think the first two or three are still with us after so many years.” And also for **Amplitude**: > “You don’t want to learn sales out of a book or reading. You’ve got to go through the motions and get the reps. If you look at how the best salespeople learn, they get someone who’s really good at sales, aka a sales manager, to coach them regularly. So we hired this guy, Mitch Morando, to meet with us once a week and walk me through stuff. He helped sort the wheat from the chaff in the existing customers and pipeline very, very quickly. And after that, we really started taking off. > > A lot of engineers that go to sales, it’s not that hard; it’s actually just as deep and complex as an important problem to the success of a business as the engineering. But it’s also very solvable. The best salespeople are very much like the best engineers; we’re able to take some problem that seems almost impossible to solve and figure out how to absolutely go crush that.” > > —[Spenser Skates](https://www.linkedin.com/in/spenserskates/), co-founder and CEO #### **Final tip: Be careful about assuming you can make PLG work** Here’s **Databricks**’scautionary tale: > “The whole vision of Databricks was we don’t want to have sales in the company. It’s going to all be product-led growth. So it’s a hundred percent product-led-growth motion. And in 2015, we kind of doubled down on it. We actually said, ‘Let’s do what Amazon did. Let’s just make it really slick, and you swipe your credit card and you can start using this stuff.’ We called it the zero-touch effort. We were going to touch the customers zero times from a sales perspective. No human needed to touch the customer. We’re very excited about that and we built it all, we automated it all. And I think around Q2 of 2015, we told sales, ‘Stop engaging with the customers. This is going to be zero-touch. Focus all your attention on automating this stuff and let’s set it up for that kind of motion.’ > > **And actually, revenue flatlined. Revenue was growing, and then in Q2, Q3 of 2015, it started flattening. So around Q4 it was starting to become kind of clear that, okay, this product-led-growth thing—nice story, but in practice, it doesn’t really work.** Which is actually, by the way, my view. I think for all practical purposes, it doesn’t work. Maybe it works for Atlassian. Maybe there’s another company out there that nailed it, but a ‘don’t try it at home’ kind of thing.” > > —[Ali Ghodsi](https://www.linkedin.com/in/alighodsi/), founder and CEO ### Who to hire as your first sales hire Across all of my interviews, one of the most recurring themes is to hire what I’ll describe as “**hungry senior AEs**.” Somewhat experienced early-career salespeople who can help you “break through the snow”: > “**Be very mindful when you’re bringing on early go-to-market/sales hires of the difference between someone you’re bringing on who helps you break through the snow and figure out new things, versus someone who’s there to just do a repeatable process.** > > A lot of people who have been successful salespeople at later-stage companies are really good at those repeatable processes and playbooks, but it’s really, really, really, really, super-duper important that you see the evidence in their resume and in the interviews that they’re able to break new ground.” —Anonymous [Tomer London](https://www.linkedin.com/in/tomerlondon/) (co-founder and CPO at **Gusto**) learned the same lesson early on: > “An article I recommend all the time is Mark Leslie’s [‘The Sales Learning Curve’](https://hbr.org/2006/07/the-sales-learning-curve) in *HBR*. It teaches you that the job of a salesperson is different in a startup in three different phases across the maturity. **In the beginning, you really are looking for a product person that’s all about generating insights.** You [Lenny] are talking with 20 people and then you generate insights from that. That’s what you want your early salesperson, and the marketer, to do. Their job in the beginning is to experiment. To be a super-entrepreneur. Just experiment with a bunch of stuff, see where the opportunity is, and get ahead of the curve of the newest technologies, newest stuff, etc.” [Ali Ghodsi](https://www.linkedin.com/in/alighodsi/) (founder and CEO of Databricks) went through this pain himself: > “**Early on, we had four salespeople, three of them young kids who just had maybe finished being SDRs, who were focusing on small and medium businesses. They were closing $10-20k deals, doing very well. Two of them are still at the company.** > > **We also had an early-enterprise salesperson, a very senior big-enterprise salesperson, who had been at a very successful billion-dollar-revenue company, and he really felt like he was a sort of fish out of water.** This kind of felt like, will he fit in at Databricks? Will this work out? He was not having much success that first year. Eventually, the success started coming in, and eventually we hired more and more and more, and eventually sales became a normal thing at Databricks. Eventually we had a huge sales force, and it is now half of the company. But this part started slow.” At **Vanta**, they hired “**a senior AE who had been a founder in a prior life, and super-entrepreneurial**”: > “He **thought of himself as a marketer as well, loves to recruit, loves doing all the things needed to build a company**. He wanted a leadership role from the start and is still advancing at Vanta. It’s awesome. From a temperament perspective, he was very willing to roll with the punches. He kind of knew, as much as anyone can, what he was doing and what walking into a 10-person company meant. The other piece that was very clear is he’s the sort of seller who literally and figuratively makes friends with the people he sells to and then invites them into his Burning Man camp. It was clear he would do right by customers.” —[Christina Cacioppo](https://www.linkedin.com/in/ccacioppo/), co-founder and CEO of Vanta At **Stytch**, it was an “**AE who had a mix of more mature sales org experience at Plaid but had also been the first AE on the ground as Plaid opened up a Europe office**”: > “We needed someone who could be boots on the ground, working deals. We wanted someone that could be autonomous and could navigate the ambiguity of an early-stage startup. This person played more of a player-coach role opening up the Europe office, and so for us it was a good mix of someone who was senior enough to be autonomous but not so senior that they didn’t want to be in the weeds on deals.” —[Reed McGinley-Stempel](https://www.linkedin.com/in/reed-mcginley-stempel-17362245/), co-founder and CTO of Stytch At **Zip**, they hired an AE who had “**experience working at a large company as an AE but also in other cross-functional roles (programs, enablement, etc.)**”: > “He did an incredible job scaling the early sales motion and teams.” —[Rujul Zaparde](https://www.linkedin.com/in/rujulz/), co-founder and CEO At **Sprig**, their first sales hire was “**one of the top AEs at Box**”: > “**She was the enterprise account executive, selling to large companies. Very experienced.** What’s tricky for founders to consider is that you could take a star AE to be your first AE, but don’t assume they grow into a head of sales. I got to talk to so many founders where their first AE does great, but then they don’t do so great as a head of sales.” —[Ryan Glasgow](https://www.linkedin.com/in/ryanglasgow/), founder and CEO At **Census**, they hired two salespeople relatively close together, both “**senior AEs who could instantly be doing deals and learning and bringing back that information**”: > “I hired two salespeople in quick succession, which is helpful to do a comparison, because it’s like you don’t know what you don’t know at that point when you’re managing these people.” —[Boris Jabes](https://www.linkedin.com/in/borisjabes/), co-founder and CEO At **Gusto**, their first salesperson was a former investment banker—but creative, smart, collaborative, and ready to hustle: > **We were really hiring for creativity, raw intelligence, ability to work together with engineers, product managers.** That was basically it, because their first job is to help evolve the product roadmap. The second job is to help build the go-to-market motion. Both of these things are creative endeavors. They’re not repetitive, sales-y, close-close-close, create-FOMO roles. This is about actually creating something. That was really the focus, and was really helpful for us to understand.” #### Takeaways on hiring your first full-time salesperson: 1. Start with founder-led sales—do the selling yourself until you can sell consistently, it gets too boring, or you’re overwhelmed with demand. 2. Consider bringing on a sales consultant/coach (normally a former VP of Sales) to help you during the early period. 3. Once you hit $300-500k ARR, it’s probably time to bring on a full-time salesperson. 4. Your first hire should probably be a hungry senior AE. If not, they should act like one: dialing, gathering insights to inform the product/GTM, and closing deals themselves. ## Takeaways on hiring your early team To close, here’s a quick recap of my biggest takeaways: 1. Developers, developers, developers, developers. 2. If your founding team has enough horsepower to build the V1, consider hiring to de-risk, un-bottleneck, or lean into a part of the business that can differentiate you (e.g. customer success, subject-matter expert, design). 3. Within your first 10 hires, in addition to engineers and designers, consider a recruiter, a PM, or a GTM person. 4. To find your early employees, spend time in these four channels: 1. Friends and former colleagues 2. Cold outreach (mostly through LinkedIn and GitHub) 3. Job boards 4. Friends and former colleagues of your *employees* 5. To convince candidates to join your risky startup, invest in: 1. A captivating vision 2. An A++ early team 3. Putting in the time 4. Growing your network 5. Love bombing For even more tactical advice, and inspiration, don’t miss my conversation with [Pete Kazanjy](https://www.linkedin.com/in/kazanjy/) (author of my favorite founder sales book, *[Founding Sales](https://www.amazon.com/Founding-Sales-Go-Market-Handbook-ebook/dp/B08PMK17Z1)*[)](https://www.amazon.com/Founding-Sales-Go-Market-Handbook-ebook/dp/B08PMK17Z1): [Watch on YouTube](https://www.youtube.com/watch?v=cZd5234Eem0) I’d love to spend more time in this area, so if you have additional questions about hiring your early team, or insight from your experience, please leave a comment 🙏 [Leave a comment](https://www.lennysnewsletter.com/p/hiring-your-early-team-b2b/comments) ### Next week: Scaling your growth engines 🚀 *Have a fulfilling and productive week 🙏* ## 📣 Join Lenny’s Talent Collective 📣 If you’re hiring, I can help. [Lenny’s Talent Collective](https://www.lennysjobs.com/talent/welcome) works with a select group of companies every month to help them make key growth and product hires. You tell us what you’re looking for, we scan through our entire community to find the best fits and introduce you directly to the candidates you most want to talk to. I hand-review every potential intro to ensure a great experience for all parties. If you’re looking for a new gig, join [here!](https://www.lennysjobs.com/talent/welcome?application=true&pallet=&step=privacy) We’ll send over personalized opportunities from hand-selected companies if we think there’s a fit. Nobody gets your info until you allow them to, and you can leave anytime. [Apply to join](https://www.lennysjobs.com/talent/welcome?application=true&pallet=&step=privacy) **If you’re finding this newsletter valuable, share it with a friend, and consider subscribing if you haven’t already. There are [group discounts](https://www.lennysnewsletter.com/subscribe?group=true), [gift options](https://www.lennysnewsletter.com/subscribe?gift=true), and [referral bonuses](https://www.lennysnewsletter.com/leaderboard) available.** Sincerely, Lenny 👋 --- ## [40/51] Skipping newsletter today Given what is happening in the world, we’ve got more important things to focus on right now. If you’re wondering where I stand, these three messages resonated deeply: [alexedelman](https://instagram.com/alexedelman) [![Image from Skipping newsletter today](https://substack-post-media.s3.amazonaws.com/public/images/__ss-rehost__IG-meta-CyJe9CDPJmC.jpg)](https://instagram.com/p/CyJe9CDPJmC) A post shared by [@alexedelman](https://instagram.com/alexedelman) [amyschumer](https://instagram.com/amyschumer) [![Image from Skipping newsletter today](https://substack-post-media.s3.amazonaws.com/public/images/__ss-rehost__IG-meta-CyJfMkEubQ0.jpg)](https://instagram.com/p/CyJfMkEubQ0) A post shared by [@amyschumer](https://instagram.com/amyschumer) If you’re looking for more ways to help, [here’s one way](https://x.com/benln/status/1711001072842543225?s=20). I’ll be back this Thursday with a brand-new podcast episode, and a new newsletter post next week 🙏💔 --- ## [41/51] How to build a killer sales pitch I suck at selling. I bet you do too. But if you’re building a startup, or leading a product team, you need to build this muscle. We saw in [last week’s post](https://www.lennysnewsletter.com/i/135973645/always-start-with-founder-led-sales) how important founder-led sales is in the early days of a startup, and as we’ll see in next week’s post, it only gets more critical as your product grows. Thus, I’m always on the lookout for actionable advice on how to get better at sales. When I heard that [April Dunford](https://www.aprildunford.com/about) ([frequent](https://www.lennysnewsletter.com/p/positioning) [collaborator](https://www.lennysnewsletter.com/p/april-dunford-on-product-positioning#details), and author of the amazing bestseller *[Obviously Awesome](https://www.amazon.com/Obviously-Awesome-Product-Positioning-Customers/dp/1999023005)*) was working on a new book about sales, I knew it would be outstanding (it is). So I convinced her to write a guest post sharing some of the best advice from the book. Per usual, she overdelivered. I suspect this post will transform how you pitch your product. **Below:** 1. Why buying software is surprisingly harder than selling it 2. Why your real competition isn’t competitors, it’s the buyer’s “no decision” 3. How and why you’re getting your sales pitch wrong 4. A two-part sales pitch structure that’ll transform your sales process 5. A bunch of examples and frameworks you can apply today *For more from April, do not miss her new book,* [Sales Pitch: How to Craft a Story to Stand Out and Win](https://www.amazon.com/Sales-Pitch-Craft-Story-Stand/dp/1999023021/)*—it just came out this week! April also has a [new podcast](https://www.positioning.show/), where she shares bite-size lessons on positioning, marketing, sales, and standing out from the competition, and you can follow her on [LinkedIn](https://www.linkedin.com/in/aprildunford/?originalSubdomain=ca) and [X](https://twitter.com/aprildunford).* ![Image from How to build a killer sales pitch](https://substack-post-media.s3.amazonaws.com/public/images/9399c17e-9f29-41ea-92d9-98aaaaa3699b_8000x4000.png) In Matthew Dixon and Ted McKenna’s new book, *[The JOLT Effect](https://www.amazon.com/JOLT-Effect-Performers-Overcome-Indecision/dp/0593538102/)*, they analyzed over 2 million sales calls looking for patterns that could teach us what works and doesn’t work in successful sales processes. One of their key findings was that 40% to 60% of B2B purchase processes result in “no decision.” And in the majority of the cases, the company didn’t decide to stick with the status quo because they decided it was better than other options. They failed to buy because they couldn’t figure out how to confidently make a decision. In B2B software, it turns out buyers are more worried about messing up than they are about missing out. Let’s understand why, and what we can do about it to significantly improve your sales success. ### **Selling is hard, but buying is harder** Rather than focus on sales from our perspective as vendors, I’d like you to imagine what it’s like for a buyer. I think today, buying is harder—particularly if we are talking about B2B software. I’ve had folks laugh at me when I say that. They say things like, “April, that’s called shopping, and that’s not hard. I wish it was my job to buy stuff all day!” I get it—some things are fun to buy. I like shopping for shoes or T-shirts. But there are many things that are definitely not fun to buy. Have you ever bought insurance? How about a house? These are stressful purchases! Most of the things we love shopping for are low-stakes decisions, where there isn’t much of a problem if we make a poor choice. If I buy the wrong pack of mints at the convenience store, it’s not a big deal; I just won’t buy that one again. Insurance, on the other hand, is different. There are complex options to consider and, often, other people involved who could be impacted by the decision. If I make a poor choice, really bad things could happen. Many of the decisions that B2B technology buyers make are difficult because the stakes are high. A bad decision could lead to bad things for both the company and the buyer personally. Let’s look at a typical purchase process for an enterprise B2B product. ### **A typical B2B purchase process** Janet, the VP of Finance, has been struggling through an audit. She decides the company has outgrown its accounting software and they need to look at new options. Does she go looking for new accounting software to buy? Nope, she’s got an audit to deal with. She calls her controller, Joey, and says, “I need you to find us a new accounting software. Come back to me with a recommendation, and I will sign off on it.” How’s Joey feeling at this moment? He’s pissed! And a bit stressed. He doesn’t know much about accounting software. Sure, he uses the current platform, but he doesn’t know which the best accounting software vendors are or what the state of the art of accounting software is. He’s never purchased accounting software before in his life. Joey turns to the internet for help. He researches accounting software and finds hundreds of products, each with similar-sounding features and each claiming to be “The world’s best accounting software.” Comparison sites like G2 list a dozen “leading” software packages. There are hundreds of features to consider—some he understands, many he doesn’t. He signs up for a handful of trials, but he’s got questions that a trial can’t answer. How will this work during an audit? Will it integrate into our current IT stack and meet our security requirements? What about support for international offices? He books a demo with a shortlist of vendors, looking for answers. In each call, the sales rep asks Joey a bunch of questions about his requirements, his biggest challenges, and what he’s looking for. Joey answers as best he can, but he’s worried he doesn’t really know the answers. Are there other requirements he should be thinking about? The rep does a detailed product walkthrough demo, showing Joey dozens of product features. Joey’s not sure how important any of these are for his business and whether or not every new accounting package has them. At this point, Joey’s stress is peaking. What if he recommends a product to his boss and she hates it? What if the accounting team hates it and blames him for picking it? What if the product doesn’t have the audit capabilities needed and the company fails the audit? Joey could get passed up for a promotion. Heck, he might get fired. What is the easiest decision for Joey to make at this moment? The easiest thing for him to do is to go back to his boss and say, “Hey, now’s not a good time to switch accounting platforms; we have an audit to worry about, after all. What we have now isn’t perfect, but it’s fine. Let’s delay the decision until next year.” Delaying the decision gets Joey off the hook, and next year maybe he won’t be picked to figure out what package to buy. ### **The origins of a better pitch structure** Many of the B2B companies I work with use a pitch structure that is essentially a feature walkthrough. The sales rep logs in to the product and methodically takes the customer through as many features as they can cover in the time they have. There is little talk about which features are unique to the product and which are common to every solution on the market. It is left to the customer to determine why the features matter. There is rarely any talk about other potential approaches to the problem. In short, many sales pitches don’t do a great job of helping a prospect decide why they should choose your product over the alternatives. In the early days of my product marketing career, similar to Joey’s experience, I built pitches that were essentially detailed product walkthroughs. Sometimes we would throw in a company background slide, a case study, and sometimes a customer logo slide. If we were being really fancy, we would start with a “problem” slide before we moved to the product walkthrough (and in general, that problem was so vague, any of our competitors could also say they solved it). My perspective changed when I landed at IBM and had to build a sales pitch deck using their pitch structure. At IBM, our pitch structure was very specifically designed for IBM deals (which were gigantic, highly technical, and took an eternity to close), and some of the components were heavily influenced by *[The Challenger Sale](https://www.amazon.com/Challenger-Sale-Control-Customer-Conversation/dp/1591844355/)*. Not everything in the structure made sense for other companies, but there were two key things I thought could work anywhere. First, the pitch always started with IBM’s unique insight into the market, and, secondly, we never talked about features outside of the context of the value those features delivered for customers. The pitch was never about “pushing” our products on buyers. It was always about helping customers make confident purchase decisions. When I left IBM to join another startup, I stole these ideas and built a “startup-ified” pitch structure I could use to map positioning to a sales pitch. The new pitch dramatically improved revenue (and, ironically, led to us being acquired by IBM). I have now successfully used an evolving version of this pitch structure with over 200 B2B technology companies ranging in size from seed-stage startups to big companies like Google and Epic Games. I think it could help any company thinking about improving the way they communicate in sales meetings. Let’s dive in. ### **A better sales pitch structure** The pitch structure is composed of two main parts: the setup and the follow-through. The setup is where we give customers a way to think about the entire market and get them aligned with our point of view. The follow-through is focused on our differentiated value and how we deliver that. At a very high level, the structure looks like this: ![Image from How to build a killer sales pitch](https://substack-post-media.s3.amazonaws.com/public/images/b2d300bb-5699-4361-8d4d-869e024f4faa_960x540.png) The “market insight” stage gives customers a way to think about the entire market so they can understand the trade-offs associated with different approaches and confidently make better decisions. Differentiated value (the value we can deliver to a customer’s business that nobody else can) is the core of our positioning, so it makes sense that it should form the core of our sales pitch. Let’s look at an example where we contrast a typical feature walkthrough with a more positioning-oriented pitch. ### **Help Scout example** #### **Background** [Help Scout](https://www.helpscout.com/) provides a customer service solution for modern digital businesses. Their point of view is that customer service is a growth driver, not a cost center. Traditional help-desk software treats service as a cost center and focuses on reducing time spent with agents. Help Scout was built for online businesses that do not have physical stores or salespeople, so support is one of the few places where customers interact directly with the company. For these businesses, delivering a great experience can strengthen customer loyalty, driving repeat purchases and revenue growth. Looking at the competitive landscape, many of Help Scout’s customers started by simply using a shared email inbox for support. As their business grows, these customers need a solution with more advanced features, like prioritization and assignments, leading them to look at traditional help-desk vendors. Let’s contrast a typical product walkthrough pitch with a pitch that mirrors Help Scout’s differentiated value. #### **Feature walkthrough pitch for Help Scout** A feature walkthrough would flow like this: - Log in - Show the shared inbox - Show some advanced features—assignments, prioritization, etc. - Show how customers can choose any interaction channel - Show how customers are not assigned “ticket” numbers - Etc., etc., until we run out of features The problem with this is that it appears there is a lot of overlap in the features that a shared inbox has and the features that a traditional help-desk solution has. Why pick Help Scout over the alternatives? It’s not entirely clear. #### **A better sales pitch for Help Scout** Using the improved sales pitch structure, the flow would look more like this: 1. We know from working with e-commerce businesses like yours that customer service can drive brand loyalty and growth. 2. You have choices in the approach you take to customer service. Here’s what we have seen with our customers: 1. **Use a shared inbox:** Service users love it because it’s easy to get started. The downside is, as you grow, you will want more advanced service features, like assignments and prioritization, and you will have to move to something else. 2. **Use a traditional help-desk tool:** This gives you all the features a growing customer service group needs; unfortunately, it’s a lot harder for the team to use. The bigger issue here is that these tools were designed to reduce costs—by driving customers to lower-cost channels and minimizing their time with agents—not to give customers an amazing experience. 3. We think what e-comm businesses really need is an easy-to-use tool that has advanced features so they never outgrow it, but was designed from the ground up to provide an amazing customer experience. Would you agree with that? 4. Let me show you how we do that (this is the follow-through and can be a demo): 1. Show how easy it is to use 2. Show the advanced features, emphasizing that you won’t outgrow it 3. Show the features oriented around giving a great customer experience—a customer chooses the channel, is not assigned a “ticket” number, etc. 4. Show case study examples that demonstrate the improvement in customer loyalty and revenue This version of the pitch is entirely oriented around answering the question “Why pick us versus the other approaches?” Done well, the setup should take only a few minutes, but it is a crucial few minutes that helps to set the context for why our differentiated value matters to them. The setup phase should be a conversation with the prospect. At each step we are asking: Does this resonate with you? What are you folks using today? Have you considered other options? In sales, we call this discovery, and it is a critical point where the sales rep is getting a deeper understanding of the prospect’s situation and understanding of the market. ### **A more detailed look at the setup** Let’s break the setup down into the smaller components and then walk through another example: ![Image from How to build a killer sales pitch](https://substack-post-media.s3.amazonaws.com/public/images/42066253-200e-44bc-b526-ffe43a1c4260_1012x533.png) The setup comprises three components: insight, alternatives, and “the perfect world.” #### **1. The insight** This is the most crucial step and also the hardest. Our insight underpins our point of view on the market. I like to think of it this way—what does a customer need to know in order to understand why our differentiated value is important? For Help Scout, it’s “Customer service is a growth driver, not a cost center.” Insight is the key to a great sales pitch. I’ve seen companies attempt to frame a pitch using “the problem” or “the change in the world” or a trend. But any company in the space could also claim to solve that problem or take advantage of that trend. There is nothing differentiating about those. Insight, on the other hand, gives us a way to start the conversation in a clearly distinct and differentiated way. It’s your point of view on the market—and by definition, it’s different from how your competitors look at the job your prospects are attempting to do. #### **2. Pros and cons of alternative approaches** In this step, we look at alternative approaches to the problem and the advantages and disadvantages of each. In general, we aren’t picking on individual products but rather the approaches to the job. For Help Scout, we are lumping competing solutions into “shared inbox” and “traditional help desk.” We are also explicitly teaching customers the pros and cons of each—“easy to use, but you might outgrow it” and “full-featured but difficult to use and doesn’t give customers a great experience.” This step is the cure for customer indecision. Here we are teaching customers about the entire market, not just our stuff. Put another way, we are actively positioning every alternative approach they could take, including the status quo. This step is also the perfect place for our reps to do discovery while simultaneously building credibility with the prospect. #### **3. The perfect world** This step is the conclusion of the discussion in the previous step. “Knowing what works and doesn’t work with the alternative approaches for a customer like you, what would a perfect solution look like?” Done well, there is a bit of magic that happens in this step. If the prospect agrees with us that a perfect solution should have this list of things, the sale is ours. All we have to do is prove that we can deliver those things. If the prospect does not agree, we should disqualify them, because we literally have nothing to sell them. For Help Scout, this happens when they say, “We think what e-comm businesses really need is an easy-to-use tool that has advanced features so they never outgrow it, but was designed from the ground up to provide an amazing customer experience. Would you agree with that?” If the customer says yes, all we have to do is show how we do it. If the customer says no, we should disqualify them, because we have nothing they want. ### **Postman example** Let’s walk through one more example of how this works. #### **Background** [Postman](https://www.postman.com) has a free version that individual developers can use to develop and test APIs. The full Postman product, however, is a complete platform for managing the entire API lifecycle, including development, testing, documentation, and distribution. Postman has a sales team that sells the full platform to executives who want to deploy it across the broader organization. Postman’s platform competes with a wide range of individual tools, each serving a specific purpose across the API lifecycle. The company’s point of view is that having teams hand off and work with so many different tools is incredibly inefficient and results in APIs that are buggy, poorly documented, and difficult for API users to consume. If we believe APIs are critical to our business, we need to adopt an “API-first” mindset, along with a platform that can help us seamlessly work across the entire API lifecycle to deliver better APIs, faster. Again, let’s contrast two styles of sales pitch for Postman. #### **Feature walkthrough pitch for Postman** A feature walkthrough would flow like this: - Log in - Show the development and testing features - Show the documentation features - Show the collaboration features - Show how to organize APIs - Show how the governance features work - Show how integrations work - Etc., etc., and there are a *lot* of things to show… The obvious pushback you would get from an executive would be, “We produce APIs today and we have tools to do this. Why rip that all out and use Postman?” There are also other, less obvious questions: Does this mean Postman is like an API gateway? What do we replace and what do we keep, if we adopt this? How on earth would we measure the ROI on this investment? #### **A better pitch for Postman** Using the improved sales pitch structure, the flow would look more like this: 1. APIs are a critical way in which applications interact with each other. Low-quality and difficult-to-consume APIs are putting customer experience and revenue at risk. Companies must quickly deliver high-quality APIs that are easy to consume. [*insight*] 2. Today, APIs are built, managed, and distributed using a siloed set of tools, each used by separate teams across the API lifecycle, which allows individual teams to choose a tool that is specific to their task. This siloed approach, however, makes it impossible to govern API quality across the lifecycle. This often leads to APIs that are badly designed, inconsistent, and poorly documented, resulting in their being difficult to use and understand. [*alternative approaches*] 3. If we believe APIs are important to our business, we need to take an API-first approach—one that would: 1. provide an integrated set of tools across the entire lifecycle to improve API quality 2. allow teams to efficiently collaborate to solve problems quickly 3. provide a repository for APIs with documentation, test cases, and anything else consumers need to make it easy for customers to use and consume the APIs 4. Would you agree with this? [*perfect world*] 5. Let me show you how we do that [*differentiated value*]: 1. Show the integrated toolset, including what gets replaced and what Postman integrates with. Show how governance allows for higher-quality APIs 2. Show collaboration and how that allows teams to ship faster 3. Show collections and the experience for API consumers 4. Show case study examples and call out the ROI achieved and impact to the business Again, the improved sales pitch is not designed to highlight every feature—it is designed to answer the question “Why pick us over the alternatives?” ### **A structured approach to building a sales pitch can be a great way to bring sales, marketing, and product together** I’m a big believer in cross-functional teams working on positioning together. We get much better results when we have product, sales, and marketing in the room, each contributing what they understand about the product, customers, and the market. I’ve seen many marketing and product teams do the hard work of creating solid positioning, only to have that story die the moment it makes the transition to sales. Having a good sales pitch structure gives us a starting point for the teams to collaborate and create a story that is more consistent across the buyer’s entire journey. I’ve recently released a book, called *[Sales Pitch](https://www.amazon.com/Sales-Pitch-Craft-Story-Stand/dp/1999023021/)*, that dives into the details of how a team might use this structure. It builds on the positioning process I describe in my first book, *[Obviously Awesome](https://www.aprildunford.com/books)*, which was designed to help teams determine their product’s differentiated value. Taken together, the two books give teams a way to tighten up their positioning and then translate that into a sales pitch that helps you stand out and win business. *Thank you, April!* *Have a fulfilling and productive week 🙏* **If you’re finding this newsletter valuable, share it with a friend, and consider subscribing if you haven’t already. There are [group discounts](https://www.lennysnewsletter.com/subscribe?group=true), [gift options](https://www.lennysnewsletter.com/subscribe?gift=true), and [referral bonuses](https://www.lennysnewsletter.com/leaderboard) available.** Sincerely, Lenny 👋 --- ## [42/51] Scaling your B2B growth engine Welcome to part seven of our (now complete!) seven-part series on kickstarting and scaling a B2B business 🥳 Here’s an overview of the series so far: - **Part 1:** [How to come up with a great B2B startup idea](https://www.lennysnewsletter.com/p/how-the-most-successful-b2b-startups) - **Part 2:** [How to validate your idea](https://www.lennysnewsletter.com/p/how-to-validate-your-b2b-startup) - **Part 3:** [How to identify your ICP](https://www.lennysnewsletter.com/p/how-to-identify-your-ideal-customer) - **Part 4**: [How to find and win your first 10 customers](https://www.lennysnewsletter.com/p/how-to-win-your-first-10-b2b-customers) - **Part 5:** [A guide for finding product-market fit](https://www.lennysnewsletter.com/p/finding-product-market-fit) - **Part 6:** [How, and when, to hire your early team](https://www.lennysnewsletter.com/p/hiring-your-early-team-b2b) - **Part 7:** How to scale your growth engine *← This post* Let’s do this. *A huge thank-you to **[Akshay Kothari](https://www.linkedin.com/in/akothari/)** (COO of Notion), **[Ali Ghodsi](https://www.linkedin.com/in/alighodsi/)** (CEO of Databricks), **[Andrew Ofstad](https://www.linkedin.com/in/aofstad/)** (co-founder of Airtable), **[Barry McCardel](https://www.linkedin.com/in/barrymccardel/)** (CEO of Hex), **[Boris Jabes](https://www.linkedin.com/in/borisjabes/)** (CEO of Census), **[Calvin French-Owen](https://www.linkedin.com/in/calvinfo/)** (co-founder of Segment), **[Cameron Adams](https://www.linkedin.com/in/themaninblue/)** (co-founder and CPO of Canva), **[Christina Cacioppo](https://www.linkedin.com/in/ccacioppo/)** (CEO of Vanta), **[David Hsu](https://www.linkedin.com/in/dvdhsu/)** (CEO of Retool), **[Eilon Reshef](https://www.linkedin.com/in/eilonreshef/)** (CPO of Gong), **[Eric Glyman](https://www.linkedin.com/in/eglyman/)** (CEO of Ramp), **[Guy Podjarny](https://www.linkedin.com/in/guypo/)** (CEO of Snyk), **[Jori Lallo](https://www.linkedin.com/in/jorilallo/)** (co-founder of Linear), **[Julianna Lamb](https://www.linkedin.com/in/juliannaelamb/)** and **[Reed McGinley-Stempel](https://www.linkedin.com/in/reed-mcginley-stempel-17362245/)** (co-founders of Stytch), **[Keenan Rice](https://www.linkedin.com/in/keenanrice/)** (founding team), **[Mathilde Collin](https://www.linkedin.com/in/mathilde-collin-bb59492a/en/)** (CEO of Front), **[Rick Song](https://www.linkedin.com/in/rick-song-25198b24/)** (CEO of Persona), **[Rujul Zaparde](https://www.linkedin.com/in/rujulz/)** and **[Lu Cheng](https://www.linkedin.com/in/lu-cheng-973b7830/)** (co-founders of Zip), **[Ryan Glasgow](https://www.linkedin.com/in/ryanglasgow/)** (CEO of Sprig), **[Shahed Khan](https://www.linkedin.com/in/shahedkhan/)** (co-founder of Loom), **[Shishir Mehrotra](https://www.linkedin.com/in/shishirmehrotra/)** (CEO of Coda), **[Sho Kuwamoto](https://www.linkedin.com/in/shokuwamoto/)** (VP of Product of Figma), **[Spenser Skates](https://www.linkedin.com/in/spenserskates/)** (co-founder and CEO of Amplitude), **[Tom Preston-Werner](https://www.linkedin.com/in/mojombo/)** (co-founder of GitHub), and **[Tomer London](https://www.linkedin.com/in/tomerlondon/)** (co-founder and CPO of Gusto) for contributing to this series. Art by [Natalie Harney](https://www.natalieharney.com/).* Although we’ve reached the end of this journey, we’re on a journey that never ends. Building a venture-scale business means endless challenges, surprises, and an unrelenting need for growth. I like to think of the startup journey as a huge puzzle board, where every challenge, decision, and opportunity is a piece of the puzzle. My job is to (slowly but surely) fill in this board and help you through every challenge, decision, and opportunity you’ll face. For reference, here are some puzzle pieces I’ve already put into place to help you scale your B2B startup prior to this series: - **On growth and GTM** - [GTM motions of 30 B2B SaaS companies](https://www.lennysnewsletter.com/p/gtm-motions) - [Picking a wedge](https://www.lennysnewsletter.com/p/wedge) - [Differentiating](https://www.lennysnewsletter.com/p/how-to-differentiate) - [Positioning](https://www.lennysnewsletter.com/p/positioning) - [The Racecar Framework](https://www.lennysnewsletter.com/p/the-racecar-growth-frameworkexpanded) - [What is good retention](https://www.lennysnewsletter.com/p/what-is-good-retention-issue-29) - [What is a good activation rate](https://www.lennysnewsletter.com/p/what-is-a-good-activation-rate) - [What is a good payback period](https://www.lennysnewsletter.com/p/payback-period) - **On sales** - [How to do founder-led sales](https://www.youtube.com/watch?v=cZd5234Eem0) - [How to build a killer sales pitch](https://www.lennysnewsletter.com/p/how-to-build-a-killer-sales-pitch) - [Layering sales on top of a PLG motion](https://www.lennysnewsletter.com/p/sales-bottom-up) - [Adding a PLG motion on top of a sales-led motion](https://www.lennysnewsletter.com/p/five-steps-to-starting-your-plg-motion) - [How to hit revenue targets in a recession](https://www.youtube.com/watch?v=pYZ0S7a72po&t=1s) - **On pricing strategy** - [The art and science of pricing](https://www.youtube.com/watch?v=A6veeCbKIzw) - [Pricing strategy for your SaaS product](https://www.lennysnewsletter.com/p/saas-pricing-strategy) - **On fundraising** - [A playbook for fundraising](https://www.lennysnewsletter.com/p/a-playbook-for-fundraising) - [Your startup idea probably isn’t venture-scale](https://www.lennysnewsletter.com/p/your-startup-idea-probably-isnt-venture) Today, I’ll answer four additional questions: 1. **What’s a good timeline to get to $1 million ARR?** 2. **What are the most common growth channels for B2B startups?** 3. **When should you start charging for your product?** 4. **What should you charge?** Let’s get into it. ## Typical times to get to $1M ARR On average, it took top B2B startups ~**2 years** from founding to hit $1m ARR, and roughly **1.5 years after closing their first customer.** There are exceptions, like Ramp, Linear, Census, and Zip, that got there more quickly (some within months), and also companies like Loom and Vanta that took 2+ years. My takeaway is that once you’ve signed your first customer, you should **strive to hit $1m ARR within 1.5 years** if you want to be on pace with the top B2B companies. Interestingly, there isn’t a large difference in timelines between companies with large ACVs (e.g. Looker, Gong, Sprig, Vanta) and low ACVs (e.g. Loom, Figma). Also, in some instances, there’s good reason to push out monetization. In the case of Loom, co-founder Shahed Khan shared, “We didn’t monetize Loom for several years intentionally, as **our focus was to become a ubiquitous tool within organizations**. Thus it took us four years to hit $1m ARR.” With the [recent acquisition news](https://techcrunch.com/2023/10/12/atlassian-to-acquire-former-unicorn-loom-for-975m/), seems like a good call. ## How B2B startups grow as they scale Broadly, the biggest growth channel for top B2B companies (at least the 20+ I researched) is **organic** **inbound**. Essentially, word of mouth. This connects with a key lesson from part five of this series—that strong product-market fit often looks like [strong organic growth](https://www.lennysnewsletter.com/i/119122450/step-start-noticing-a-shift-from-push-to-pull-and-organic-growth). That being said, as we saw in [part six](https://www.lennysnewsletter.com/i/135973645/when-to-hire-a-salesperson-and-what-to-look-for), eventually 100% of B2B businesses build a sales team. Below I’ll explore all six B2B growth channels: self-serve organic inbound, sales-assist organic inbound, outbound sales, content/SEO, paid ads, and partnerships. This summary doesn’t get into revenue expansion (e.g. growing revenue from existing customers), since it didn’t come up in my interviews, but this is also a massive growth lever for scaling B2B SaaS companies, and I’ll spend more time here in future posts. Use this list not as “we should do all of these,” but instead as inspiration for one new channel to explore for your own product. You’re likely already growing primarily through one of the first three channels; ask yourself which of the remaining channels might be a new opportunity. #### 1. Organic inbound: Self-serve (aka Product-Led Growth) This channel is simply users hearing about your product from someone else (or being invited) and signing up on their own. No one from your company helps them through the funnel. This isn’t to say salespeople never talk to these leads (check out [this podcast episode](https://www.lennyspodcast.com/the-ultimate-guide-to-product-led-sales-elena-verna/) on product-led sales), but it does mean new customers come primarily from them first trying the product on their own. Companies like Loom, Figma, Segment, Gusto, Hex, and Linear grow primarily in this way. **What this looks like:** - “People in trials are checking out with credit cards, without us talking to them.” - “Signing up for Loom after watching someone else’s Loom (typically coworkers), within Slack or in Salesforce, Linear task, or Notion doc.” - “We’ve always had a strong stream of inbound users who had found out about us via our open source work and propelled us through our early revenue milestones.” #### 2. Organic inbound: Sales-assist Similar to the above channel, new customers come to you, but in this case, your sales team hand-holds leads through the process. Companies like Looker, Ramp, Vanta, Hex, Census, Persona, and some portion of Amplitude and Segment grow through this channel. The key determinant of whether you go self-service or sales-assist is how successfully new users can get activated without handholding. **What this looks like:** - “Our biggest growth channel by far is organic, with visitors to our site clicking the ‘Request a demo’ button.” - “Customer referrals continues to be one of our strongest channels, which funnels into our inbound sales pipeline.” - “All of our growth is inbound, but it’s all sales-touch.” #### 3. Outbound sales This is what you think of when you think of sales-led growth—your sales team reaches out to prospects, pitches them, and closes them. Companies that grow primarily through this channel include Gong and Zip, along with a meaningful portion of growth for Ramp and Segment. I’ll be doing more writing on this topic in the coming months, so stay tuned. #### 4. Content/SEO A surprisingly popular growth channel for top B2B companies is content. Companies like Vanta, Amplitude, Figma, Persona, and, famously, HubSpot have all found success using content (aka SEO) to grow. I’ve covered this topic in depth previously, so [go read this](https://www.lennysnewsletter.com/p/content-driven-growth-strategy) if you’re looking to invest here. #### 5. Paid ads They may be boring, but paid ads work. For B2B, this means running ads on Google, Facebook, and LinkedIn, along with the occasional ad on podcasts, newsletters, and other less-scalable channels. Companies that have found success here include both large (Figma and Amplitude) and smaller (Vanta and Census). For advice on running paid ads, [here’s a good podcast episode](https://www.lennysnewsletter.com/p/mastering-paid-growth-jonathan-becker) to check out. #### 6. **Partnerships** Partnerships: huge if successful, massive time suck if not. This is a meaningful growth channel for companies like Census, Hex, and Zip, but as one founder shared, “We have a big channel partnership with Snowflake, and though this doesn’t drive a big percentage of our leads, it does help to have that relationship.” I’ve written about channel partnerships before, [so go read this](https://www.lennysnewsletter.com/i/31258917/channel-partnerships) if you’d like more examples and advice. #### **A few additional takeaways** 1. Most of your growth will come from one of the top three: inbound self-service, inbound sales-assist, or outbound sales. Spend most of your time optimizing that channel. 2. No matter how you start, you’ll be building a sales team. It’s a question of when, not if. 3. Creating content (e.g. blog posts, LinkedIn posts, viral tweets, a great podcast) seems to be effective for a number of companies, so it’s worth exploring. But think about the system that can allow this to scale, versus one-off efforts. [Think engines, not turbo boosts](https://www.lennysnewsletter.com/i/75292796/the-growth-engine). 4. Be careful about forcing PLG. Here’s [Ali Ghodsi](https://www.linkedin.com/in/alighodsi/) (founder and CEO of Databricks)’s cautionary tale: > “The whole vision of Databricks was we don’t want to have sales in the company. It’s going to all be product-led growth. So it’s a hundred percent product-led-growth motion. And in 2015, we kind of doubled down on it. We actually said, ‘Let’s do what Amazon did. Let’s just make it really slick, and you swipe your credit card and you can start using this stuff.’ We called it the zero-touch effort. We were going to touch the customers zero times from a sales perspective. No human needed to touch the customer. We’re very excited about that and we built it all, we automated it all. And I think around Q2 of 2015, we told sales, ‘Stop engaging with the customers. This is going to be zero-touch. Focus all your attention on automating this stuff and let’s set it up for that kind of motion.’ > > **And actually, revenue flatlined. Revenue was growing, and then in Q2, Q3 of 2015, it started flattening. So around Q4 it was starting to become kind of clear that, okay, this product-led-growth thing—nice story, but in practice, it doesn’t really work.** Which is actually, by the way, my view. I think for all practical purposes, PLG doesn’t work. It’s a ‘don’t try it at home’ kind of thing. Maybe it works for Atlassian. Maybe if you can swipe a credit card and use the product in five minutes, it’ll work. But if you think this is how you can sell to enterprises, without a sales force, good luck.” ## When and how much to charge These are the four key lessons that came up again and again when I talked to founders about their pricing strategy: 1. Charge *sooner* than you think 2. Charge *more* than you think 3. Keep it very *simple*, to start 4. *Revisit* pricing every year or so ### On when to start charging A lesson learned by the founders of **Amplitude**, **Front**, **Zip**, and many others is to charge sooner than you think you should: > **“My number one piece of advice is to ask for money earlier. We wasted a year. We could have been a year further along on the journey.** If I build this, are you willing to pay for it? You’re going to get a lot of no’s, and that’s fine. Just move on. > > I remember arguing with a user. They were using it for free. I was like, ‘All right, now it’s time to pay.’ And they’re like, ‘Oh no, we don’t have any money.’ And I’m like, ‘Well, you have to pay something, so what are you going to pay?’ And they’re like, ‘All right, I’ll pay you like $10/month.’ I’m like, ‘What the f\*ck? No.’ We ended up negotiating to $150/month. But compared to our regular deals (thousands a month), that’s nothing. I shouldn’t have wasted the time. **The market is massive, and there are always more people out there for you to talk to. Just keep at it until you find someone who’s interested in paying. That is the number one thing I would’ve told myself. Spend half my time talking to prospective customers and asking them for money.** It’s uncomfortable for you to do, but that’s okay. That is exactly the point.” —[Spenser Skates](https://www.linkedin.com/in/spenserskates/), co-founder and CEO of Amplitude > “**If you’re not willing to pay, then you should take their input with a grain of salt.** We spoke to enough founders to know that people who want to give you advice don’t want to pay. So we never did not charge.” —[Rujul Zaparde](https://www.linkedin.com/in/rujulz/) and [Lu Cheng](https://www.linkedin.com/in/lu-cheng-973b7830/), co-founders of Zip > “Most companies **charge too late**. We started charging from day one.” —[Mathilde Collin](https://www.linkedin.com/in/mathilde-collin-bb59492a/en/), CEO of Front As [Akshay Kothari](https://www.linkedin.com/in/akothari/), co-founder of **Notion**, explained, one of the biggest side benefits of early revenue is *freedom*: > **“One of my biggest lessons looking back is that I’m just glad we charged for Notion early on. It gave us so much leverage over the years.** > > What ended up happening was that by charging for it, we became profitable, and became cash-flow-positive from the get-go. When I joined in the middle of 2018, we were eight people, profitable, never needing to raise money again. That meant that 100% of our time was focused on just getting new customers. > > It was kind of an interesting time because we didn’t take many meetings with VCs or investors, and I still remember a lot of VCs, a lot of investors thought that Notion was a nice lifestyle business because it’s not taking more venture money. I tried to defend that, telling them that money is not really a constraint for what we’re trying to do right now. But when it will be, we will not be shy to raise it. Eventually I sort of gave up and we were like, ‘You know what? Let’s just get to enough scale and then we can tell our story.’ > > In my time here now, we’ve raised three times, and all three times, we’ve diluted less than 2% to 3% in each round. A big reason for that is because we’ve charged money from the start. We also have not used a single dollar of the money that we’ve raised. There’s more money in the bank than we’ve collectively raised. This has actually made us a fairly disciplined company, which is very rare in the Valley.” ### On how much to charge #### Charge *more* than you think you should > “**A big lesson learned was we undercharged like crazy in the beginning**. It came from just founder lack of confidence. **The rational advice here is, hey, you are a founder. You are biased because you’ve built it from scratch, you are biased to think that it’s not worthwhile, that it’s less valuable than it actually is. Whatever you think the price should be, you should probably increase it.** You built it because it’s valuable, and what you charge should correlate to the value and service you provide. Believe in the value you provide and charge accordingly.” > > —[Tomer London](https://www.linkedin.com/in/tomerlondon/), co-founder and CPO of **Gusto** > “**As a founder, you’re always way underpricing.** We hired our first AE and she was quoting prices I wouldn’t have even have considered. ​Going to a prospect and asking for over seven figures. I would’ve never fathomed this price point. It’s one of the big advantages of bringing a salesperson is that you get way bigger deals. For me, it was just trying to look at what I thought was fair.” > > —[Ryan Glasgow](https://www.linkedin.com/in/ryanglasgow/), founder and CEO of **Sprig** #### Keep doubling prices until it stops working > “We were woefully undercharging initially, because we had no real idea what people would pay for a startup. **Eventually we hired a sales advisor who told us, ‘Double your price. If they say yes, keep doubling,’ so we did that a number of times as we talked to bigger customers.** Pricing was always a contentious issue for us, but we charged roughly on either the reduction in headcount needed for similar infrastructure (engineers are expensive!) or our ability to help grow revenue in some meaningful way.” > > —[Calvin French-Owen](https://www.linkedin.com/in/calvinfo/), co-founder of **Segment** > “**The first customer was $100 a month. The second customer was like $500 a month. Then $2,000 a month.** Then, soon enough, $12,000 a month. You kind of start to triangulate based on the usage, and we started to fill out a pricing matrix based on what we were seeing working and not working.” > > —[Ryan Glasgow](https://www.linkedin.com/in/ryanglasgow/), founder and CEO of **Sprig** #### Keep it simple at first—you can change prices later > “**Whenever people ask me for advice, I always say, don’t worry about pricing initially. You want to get people who love the software above all else at first.** > > For example, we use Segment today. I’ve loved them from day one. I subscribed to it when they were just an alpha product. And to this date, Gong is a Segment customer; they’re instrumented across all of our applications, with tens of thousands of users. We pay them a hefty amount of $39 a month. > > I respect the fact that they never came back to us and said you have to pay more. They told us we’re one of their 50 first customers, and enjoy the ride. If you ever want to get a new feature, you’re going to have to upgrade because we have a limited set of functionality based on what we bought at the time. But we’re happy. > > My advice is go be friends with your first customers. They took the time to work with crappy software that isn’t ready. This is how I think we should be—like people should be—doing business.” > > —[Eilon Reshef](https://www.linkedin.com/in/eilonreshef/), CPO and co-founder of **Gong** > “**My only takeaway is: don’t overthink it. It’s really easy to worry too much about like, ‘Oh, how will I ever change the price on this customer?’ The reality is that if you are anywhere close to right about your company and your idea and your product being worth a damn, the first few deals you do will be 0.1% of your ultimate revenue.** If you’re just spending one second worrying about how you’re going to change the pricing down the road on this customer, don’t. Do something that feels like a fair exchange of value. Make it clear to them that it’s valid for one year and move on. You’ve got bigger sh\*t to worry about.” > > —[Barry McCardel](https://www.linkedin.com/in/barrymccardel/), founder and CEO of **Hex** > “**We didn’t overthink or optimize the pricing initially. There’s industry pricing for this tool. Let’s just put it on that and not overthink about it.** We should probably charge more. But that’s not the challenge that we want to focus on right now. It’s more that we still need to make these larger companies extremely happy about using Linear.” > > —[Jori Lallo](https://www.linkedin.com/in/jorilallo/), co-founder of **Linear** #### But make sure to revisit your pricing strategy regularly > “I remember I put together this presentation of other pricing models with four tiers, and it was very complicated. Even though we had very few products. I showed it to our board and they’re like, ‘no.’ They told us to just literally give one simple pay-as-you-go tier. Charge 10 cents per MAU, and ‘Contact us’ for enterprise pricing. It was super-simple, and I think that actually is the way to go early on. > > **The mistake we made was not that we went with this simple approach early on but that we didn’t revisit it three to six months later.** We’re only revisiting it now, a year and a half later. Early on, it was super-simple, almost stupid simple, and if I had to do it over again, I think I would do the same, but then **make the expectation that we would iterate on pricing every six months**, or at least revisit it to make sure we felt like this is where it should be right now.” > > —[Reed McGinley-Stempel](https://www.linkedin.com/in/reed-mcginley-stempel-17362245/) and [Julianna Lamb](https://www.linkedin.com/in/juliannaelamb/), co-founders of **Stytch** #### Look at benchmarks for inspiration > “**We used a benchmark to get to $50/user/month. CRM was always a benchmark for us. Salesforce was something like $70-$100/user/month, or $1,500 in a year. So at the time we couldn’t charge close (though nowadays, we can). People perceived Salesforce as the king; we’re the add-on, so to speak. So we decided to go for about half of what Salesforce list price was.** We said this should be a reasonable price and people should be able to pay that much. So we felt pretty comfortable with it, and of course, the prices went up over the years.” > > —[Eilon Reshef](https://www.linkedin.com/in/eilonreshef/), CPO and co-founder of **Gong** > **“I looked at competitors and priced similarly.** I optimized for getting something on the market sooner than later that people could react to.” > > —[Mathilde Collin](https://www.linkedin.com/in/mathilde-collin-bb59492a/en/), CEO of **Front** #### Consider pricing surveys and regression analysis > “We weren’t sure what the product was worth, so we just asked users! **We ran what’s called a [Van Westendorp survey](https://en.wikipedia.org/wiki/Van_Westendorp%27s_Price_Sensitivity_Meter), where we basically tried to find the price curves that made sense for all customers, and told users we’d give them a good deal if they filled it out.** I think we netted out to a $9, a $39, and a $79 per month plan.” > > —[Calvin French-Owen](https://www.linkedin.com/in/calvinfo/), co-founder of **Segment** > **“We did a pricing matrix survey with tens of thousands of users**, asking users various questions to get to a number that made sense for Loom. This was a multi-sprint process from research, parsing results, user interviews, to A/B testing landing pages. We *shockingly* landed on $10/month if paid monthly, and $8/month paid annually—a very common figure seen in the SaaS world.” > —[Shahed Khan](https://www.linkedin.com/in/shahedkhan/), co-founder of **Loom** > **“**To figure out the price, we looked at usage per month, and then based on what I was seeing for what the market would bear, I kind of was like, ‘Okay, well, they’re paying this much, and these guys are paying this much, and those guys are paying this much.’ **You get a few data points, and then I plotted them. You then fill in the rest of the gaps, and then over time kind of triangulate on a good price point.**” > > —[Ryan Glasgow](https://www.linkedin.com/in/ryanglasgow/), founder and CEO of **Sprig** #### If you’re going usage-based, focus on your “utility metric” > “Census is different than a generic SaaS product, where you charge per seat and then you call it a day. You can try to be fancy, but by and large, it’s about how many people use the product. **But products like Census are usage-driven, and the big question is ‘What is the utility metric?’ And what will make sense to users? We didn’t know for a long time.** > > The first year, we would make up pricing. We would just be making it up every time we sold the product, but through that we could learn, okay, do they understand what this metric is? Do they agree with where they are at the margins? All that stuff was super-helpful.” > > —[Boris Jabes](https://www.linkedin.com/in/borisjabes/), co-founder and CEO of **Census** ### Early pricing strategies of select companies Stories from **Figma**, **Databricks**, **Snyk,** **Coda**, and **Retool** that illustrate many of the lessons above. **Figma** > “There are a couple of steps in that journey. The first step was easier, and the second step was harder. > > The first step was going from zero to something. We had a lot of comparables. Sketch existed and other kinds of tools like that exist. Roughly speaking, they were all around a hundred bucks, and they come out with a new version every year or something like that. You can just do the math. We decided we’re going to charge $12 if you go month by month, and $8 a month if you buy an annual plan. We actually talked to a lot of pricing consultants to try to help with this decision, but at the end of the day, they were kind of like: you’ve got to just try and figure it out as best you can, and you can always change it later. So we didn’t feel a lot of pressure to get it right in the beginning. But we also haven’t ever changed it. > > Then the harder step was once we came up with the Orgs tier, which was our first tier for larger companies. You make features and you’re like, okay, I actually don’t know if this set of features is worth $45/month, because $45/month is a lot of money. It turns out you can ask people how much they’d be willing to pay. You can say, okay, here are these features; would you be willing to pay? And they’ll tell you. You would think they would lie to you to get you to lower the price, but generally speaking, they’ll tell you, ‘Here’s how we think about our business. If it saved us this much money, we’ll pay this much money. Here’s other software that we purchased; it costs about this much. If it’s in this range, it’s fine.’ So we had some confidence in a direction, but the feature set that we had still felt thin (e.g. single sign-on, security features, etc.). We were nervous when we launched it. Is this really going to work? But it worked great. People really resonated with it.” > > —[Sho Kuwamoto](https://www.linkedin.com/in/shokuwamoto/), VP of Product **Databricks** > “We were academics and we’re data scientists, so pricing was always a hot topic. We had huge fights about how to price the product. Even in 2012, before we even started the company, before we even had the product, there were fierce debates on how should you price and what’s the optimal pricing model. So pricing has been something that we’ve spent a huge amount of time on at Databricks ever since the beginning, and we’re still spending a lot of time on it. But two of us in particular spent a lot of time with customers in 2015 and ’16 just trying to see what sticks. We experimented with different models and we would see which one is easy to explain, which one is not easy to explain. We had one pricing model that was awful that we had to quickly deprecate, which was a suggestion from a customer. > > The customer said, ‘I’ll pay for it if you construct it this way.’ It turned out it was a terrible pricing model. By the way, the pricing model was ‘I’ll pay you this much and you reserve this many machines for me, but since it’s the cloud, I want to be able to use more. So if I use more, but only 10% of the time, I go 10x more than what I had bought; that’s okay. But what if I use more than 10x 10% of the time?’ It turned out it’s very hard to put in legal contracts. And it turns out all the pricing systems out there in the world that you have to leverage to charge people, none of them support this weird pricing model. We have to sort of phase that out. > > But one thing in hindsight that no one had told me, which makes it much easier if you’re thinking about pricing, is if there are big dominant players in the market that price in a certain way, then you should seriously consider that, because they’ve trained the market on that pricing model. If you’re going to deviate away from that, you’d better have really good reasons. And in our case, Amazon existed and they had launched this pay-as-you-go pricing model and that was sort of how people were used to buying software and selling software. So we should have just, honestly, by default gone with that unless there were really good reasons to deviate. We ended up actually eventually going with the pricing model that was like that [usage-based pricing]. > > I remember we did a hackathon in 2014, and me and the leadership felt like this product is not ready to be... we can’t really start charging. No one will really pay for it. So we did a survey in the company and it turned out the engineers working on the products who were building it, they were like, ‘Yeah, this is a pretty cool service. We should charge for it.’ Everyone else who was not building the product was like, ‘Ahh, it’s not ready.’ And I remember we said, ‘Well, if the engineers think that we can do it, we should try it.’ And we started charging people, and it turned out people would pay for it. Keep in mind we had modest expectations those days. So for us, someone paying us $10,000 or $20,000, we thought: that’s a lot of money.” > > —[Ali Ghodsi](https://www.linkedin.com/in/alighodsi/), co-founder and CEO **Snyk** > “Pricing was tricky. The lowest common denominator for our actions was the number of tests. Every time you ask, ‘Am I vulnerable?’ you’re performing a test, whether you ask that question as a one-off test, a recurring test in your build, or a background test you run every week to see if new vulnerabilities affect the app you scanned before. This metric is a great billing unit, as it’s easily measured and fairly easily explained. We still use it today to limit the free-tier allowance due to this simplicity. > > However, while measuring tests is easy, test counts do not align well to the value we provide, and incentivize the wrong behavior. For instance, we want you to test your application on every build, to help you find security mistakes as early as possible. However, if you’re trying to shrink your bill, you may choose to only test weekly, defeating the value we’re trying to provide. Another example is modularity—if you split a monolith app into 10 micro-services, and build each of them separately, you’ll run 10 times more tests but get roughly the same value. > > We wanted to charge based on the ‘amount of application’ we’re protecting, but there’s no good way to measure that. Number of lines of code, which our competitors use, has long been a terrible way to measure app size—why would moving a variable assignment to a new line suddenly cost more? Other competitors used ‘number of apps’ or domains to measure, which was also poor, as some apps were huge and others were tiny, and it’s very hard to quantify. Lastly, a user-based model didn’t work well for us either. If a single developer registers to Snyk and adds Snyk into a CI system doing builds for 100 developers, we can’t charge for a single user… > > After much deliberation, we decided to measure on ‘contributing developers’ as our unit of value—developers who contributed code to the apps we protect in the last 90 days. If we’re protecting the work of more developers, we’re providing more value by making more developers productive and reducing more risk. This measure is not the easiest to measure, but it has the best correlation to value, which we think is more important. Over time, we’ve seen many in the industry embrace this measure, likely for the same reason.” > > —[Guy Podjarny](https://www.linkedin.com/in/guypo/), co-founder and CEO **Coda** > **“**We do a thing at Coda called ‘maker billing,’ which is basically, if you look at all the documents products, they have the same three personas. They have viewers, editors, and makers—people who can see things, people who can change things, and people who can create new things. Everybody charges you for the top two, editors and makers. That’s Office and Google Docs, Notion and Airtable and Quip and Dropbox and Figma and Miro, and so on. They all charge you for: if you can make changes, you pay. And I didn’t like that. I thought that it was squashing the growth cycle. There’s a viral cycle: you share a doc; you create a doc; you share a doc; you create a doc. That’s the cycle of spread. And basically, everyone in our industry had put a big dollar sign on sharing a doc. > > Imagine if you had to put a dollar sign on ‘share an Airbnb listing’ or ‘share a story on Facebook.’ It just seemed crazy to me. And so we decided that we are going to charge for creation, not for sharing. Very controversial, and I didn’t want to do it until we had a strong instinct that we wanted to head this way. I also didn’t want to do it until we had enough of the scaffolding together to get that unit right. And so we waited. > > Eventually we launched it, and we were super-scared. The big fear with ‘maker billing’ is: won’t people abuse it? Won’t people create a doc, share it with hundreds and hundreds of people, and then every other company would monetize all of that? We’d get to monetize just one license. So we actually launched with this kind of halfway model. We launched with this governor. We would only charge for makers, but makers come with this many editor seats. Every maker can have five editors, 10 editors, so on. And it was so complicated. But my main philosophy was: no dollar signs in the share dialogue. The fundamental philosophy on pricing for Coda was: sharing is your moment of expression. It’s actually the thing we look for in terms of product-market fit. > > So we launch it, and then we get all this customer feedback, and it was really easy to interpret. We had a lot of negative customer feedback—in fact, from some of our deepest users. And it was really easy to say, the lazy view was: oh, they just don’t want to be charged for a product they’ve been using for free for so long. > > And it took us a while to come to terms with it. I was like, we launched it on a Thursday, got all this feedback. My head of support calls me on Sunday and she says, ‘Look, I’ve been reading through this feedback, and I’ve got to tell you, I don’t think they’re wrong. I don’t think this is just people who are being cheap. These people are quite happy to pay for this thing they’ve been using for free. They all knew they were going to pay someday, and they even think the pricing is reasonable, but they think we got this mechanic wrong. I think we should reconsider.’ And it was actually kind of a brave moment for her. It’s not easy. So we went and thought about it and we ran a bunch of numbers, and we basically came and we relaunched the whole thing in three weeks and we simplified the model. And now it’s very simple. It’s just: makers pay, nobody else does. And it’s easy to explain, easy to understand. And we took the risk. And so far, it seems to have worked out fine.” > > —[Shishir Mehrotra](https://www.linkedin.com/in/shishirmehrotra/), co-founder and CEO **Retool** > “The alternative to Retool is, basically, you build software by writing code. And writing code is good in some ways, but it’s actually really painful in many other ways. So for that reason, there was basically relatively little competition and there was no sort of benchmark that we could charge at, necessarily. There’s sort of a variety of ways to a good price. Whereas, for example, I think for something like Figma, Sketch might be an obvious comp. Or if you’re Notion, Google Docs might be an obvious comp. For Coda, similarly, Airtable. For Retool, there’s really nothing like it. And so for us, we experimented a lot on pricing. Just kind of started quoting really cheap prices, then we started moving more expensive, just to understand the market. To understand the willingness to pay. This process was very helpful because it allowed us to tell the value story a lot better. Because then we could say, ‘Oh, well, the value of Retool is not just X or Y. Instead, it’s actually Z, because...’ And we’d ask people, sort of, ‘How do you justify the value? How do you think about it?’ And we’d just kind of play back what other customers told us. So it was a first-principles way of understanding the value that you deliver. And those conversations were enormously helpful, because for sales, it allowed us to just tell a story better. Even though we might charge someone far less money or give them a fairly cheap product, nevertheless, people understand how to talk about the value. And then we could be like, ‘Getting 100x ROI here, so you should probably buy this product.’ ” > > —[David Hsu](https://www.linkedin.com/in/dvdhsu/), founder and CEO With that, we’re done! Seven parts promised, seven parts delivered. This series was a boatload of work, and I’m incredibly proud of it. I hope you’ve found it valuable. If you’re on this journey, I encourage you to read through each step a couple of times. There’s a lot of content within each step, and I promise you’ll find something you missed the first time. Here’s the full series, again, for reference: - **Part 1:** [How to come up with a great B2B startup idea](https://www.lennysnewsletter.com/p/how-the-most-successful-b2b-startups) - **Part 2:** [How to validate your idea](https://www.lennysnewsletter.com/p/how-to-validate-your-b2b-startup) - **Part 3:** [How to identify your ICP](https://www.lennysnewsletter.com/p/how-to-identify-your-ideal-customer) - **Part 4**: [How to find and win your first 10 customers](https://www.lennysnewsletter.com/p/how-to-win-your-first-10-b2b-customers) - **Part 5:** [A guide for finding product-market fit](https://www.lennysnewsletter.com/p/finding-product-market-fit) - **Part 6:** [How, and when, to hire your early team](https://www.lennysnewsletter.com/p/hiring-your-early-team-b2b) - **Part 7:** How to scale your growth engine *← This post* Thank you for reading. And again, a *huge* thank-you to everyone who contributed to this series: **[Akshay Kothari](https://www.linkedin.com/in/akothari/)** (COO of Notion), **[Ali Ghodsi](https://www.linkedin.com/in/alighodsi/)** (CEO of Databricks), **[Andrew Ofstad](https://www.linkedin.com/in/aofstad/)** (co-founder of Airtable), **[Barry McCardel](https://www.linkedin.com/in/barrymccardel/)** (CEO of Hex), **[Boris Jabes](https://www.linkedin.com/in/borisjabes/)** (CEO of Census), **[Calvin French-Owen](https://www.linkedin.com/in/calvinfo/)** (co-founder of Segment), **[Cameron Adams](https://www.linkedin.com/in/themaninblue/)** (co-founder and CPO of Canva), **[Christina Cacioppo](https://www.linkedin.com/in/ccacioppo/)** (CEO of Vanta), **[David Hsu](https://www.linkedin.com/in/dvdhsu/)** (CEO of Retool), **[Eilon Reshef](https://www.linkedin.com/in/eilonreshef/)** (CPO of Gong), **[Eric Glyman](https://www.linkedin.com/in/eglyman/)** (CEO of Ramp), **[Guy Podjarny](https://www.linkedin.com/in/guypo/)** (CEO of Snyk), **[Jori Lallo](https://www.linkedin.com/in/jorilallo/)** (co-founder of Linear), **[Julianna Lamb](https://www.linkedin.com/in/juliannaelamb/)** and **[Reed McGinley-Stempel](https://www.linkedin.com/in/reed-mcginley-stempel-17362245/)** (co-founders of Stytch), **[Keenan Rice](https://www.linkedin.com/in/keenanrice/)** (founding team), **[Mathilde Collin](https://www.linkedin.com/in/mathilde-collin-bb59492a/en/)** (CEO of Front), **[Rick Song](https://www.linkedin.com/in/rick-song-25198b24/)** (CEO of Persona), **[Rujul Zaparde](https://www.linkedin.com/in/rujulz/)** and **[Lu Cheng](https://www.linkedin.com/in/lu-cheng-973b7830/)** (co-founders of Zip), **[Ryan Glasgow](https://www.linkedin.com/in/ryanglasgow/)** (CEO of Sprig), **[Shahed Khan](https://www.linkedin.com/in/shahedkhan/)** (co-founder of Loom), **[Shishir Mehrotra](https://www.linkedin.com/in/shishirmehrotra/)** (CEO of Coda), **[Sho Kuwamoto](https://www.linkedin.com/in/shokuwamoto/)** (VP of Product of Figma), **[Spenser Skates](https://www.linkedin.com/in/spenserskates/)** (co-founder and CEO of Amplitude), **[Tom Preston-Werner](https://www.linkedin.com/in/mojombo/)** (co-founder of GitHub), and **[Tomer London](https://www.linkedin.com/in/tomerlondon/)** (co-founder and CPO of Gusto). Art by [Natalie Harney](https://www.natalieharney.com/). *Have a fulfilling and productive week 🙏* ## 📣 Join Lenny’s Talent Collective 📣 If you’re hiring, [join Lenny’s Talent Collective](https://www.lennysjobs.com/talent/welcome) to start getting weekly drops of world-class product and growth people who are passively open to new opportunities. I hand-review every application, and accept less than 10% of candidates who apply. If you’re looking for a new gig, apply to join! You’ll get personalized opportunities from hand-selected companies. You can join anonymously, hide yourself from companies, and leave anytime. [Apply to join](https://www.lennysjobs.com/talent) **If you’re finding this newsletter valuable, share it with a friend, and consider subscribing if you haven’t already. There are [group discounts](https://www.lennysnewsletter.com/subscribe?group=true), [gift options](https://www.lennysnewsletter.com/subscribe?gift=true), and [referral bonuses](https://www.lennysnewsletter.com/leaderboard) available.** Sincerely, Lenny 👋 --- ## [43/51] Lessons learned from a startup that didn’t make it *👋 Hey, Lenny here! Welcome to this month’s ✨ **free edition**✨ of Lenny’s Newsletter. Each week I tackle reader questions about building product, driving growth, and accelerating your career. If you’re not a subscriber, here’s what you’ve missed:* 1. *[A guide for finding product-market fit in B2B](https://www.lennysnewsletter.com/p/finding-product-market-fit)* 2. *[How Linear builds product](https://www.lennysnewsletter.com/p/how-linear-builds-product)* 3. *[How to build a killer sales pitch](https://www.lennysnewsletter.com/p/how-to-build-a-killer-sales-pitch)* 4. *[Hiring your early team](https://www.lennysnewsletter.com/p/hiring-your-early-team-b2b)* 5. *[Scaling your B2B growth engine](https://www.lennysnewsletter.com/p/scaling-your-b2b-growth-engine)* 6. *[The Magic Loop](https://www.lennysnewsletter.com/p/the-magic-loop)* *Subscribe to get access to these posts, and every post.* Failure has a lot to teach us. But we usually miss our chance to learn from it. Recently, in the process of shutting down his startup, [Jake Fuentes](https://www.linkedin.com/in/jakefuentes/) (co-founder and CEO of [Cascade](https://www.cascade.io/)) jotted down his biggest lessons from the journey. I found them incredibly insightful, and applicable to most startups and product teams, so I asked him if I could share them broadly. Below, Jake offers his hard-won lessons about what people forget about competition, how early market signal is often deceiving, what it takes to build horizontal products, the danger of unfocused ICPs, and more. These lessons are especially timely with the conclusion of [my recent B2B series](https://www.lennysnewsletter.com/p/how-the-most-successful-b2b-startups). For more from Jake, follow him on [LinkedIn](https://www.linkedin.com/in/jakefuentes/) and [X](https://twitter.com/jakefuentes). He also advises companies considering acquisitions or other strategic options. Learn more and get in touch [on his website](https://www.soundcheck.net/). “So, what did you learn?” It’s meant to be a simple question, asked by friends and family in the months after the end of a startup journey. But when looking back on a company that didn’t go the distance, so many lessons emerge that it’s daunting to find an equally simple answer. That said, I’m struck by a few key decisions we made that seemed sound at the time but that ended up having a profound impact on the company’s direction. I doubt we’re the only team to face those junctures—perhaps our hindsight can serve as a tiny bit of foresight for others. We started Cascade in 2019 destined for glory. Both founders were repeat entrepreneurs with prior exits, we were backed by top investors including First Round Capital and Redpoint, and we had a spectacular starting team. We sat at the intersection of the no-code wave and the red-hot data space: our product gave non-technical teams a way to import, analyze, and visualize large data sets and present their findings via an interactive data app. In our previous companies, we had been surrounded by ambitious but nontechnical business analysts, and we saw how much time they spent fighting Excel and updating charts in PowerPoint. Over the next four years, Cascade raised a $5.3 million seed round, grew to be a team of 10, and served some marquee customers. However, without a clear path to breakout growth, in 2023 we decided to pursue a soft landing. Here’s what we learned. ### If you allow your ICP to fray, you’ll lose From the beginning, we knew we needed to define a good ideal customer profile (ICP). There are [many](https://medium.com/racecapital/defining-your-ideal-customer-profile-icp-41b7b58107de) [approaches](https://www.unusual.vc/articles/what-is-an-ideal-customer-profile) to [defining a good ICP](https://www.lennysnewsletter.com/p/how-to-identify-your-ideal-customer), but a quality we underestimated is specificity*.* Simply put, an ICP must be *a single* *market segment*:a group of people for whom the value of solving a problem is roughly the same, and who can be reached in roughly the same way. “People who use Excel” is not a market segment, because it says nothing about either the value of their problem or how to reach them. “Marketers who use Excel to build content calendars at Fortune 500 companies” could be a good market segment, depending on how you reach them. We defined our ICP as *nontechnical business analysts using Excel to crunch big data sets*. In retrospect, that was much too broad, particularly because it said nothing about *why* they were using Excel or the value of the problem they were solving with it. So we ended up with a large basket of ICPs: a scooter company used us to manage location data, an HR team used us to manage employee data, and a retailer used us to analyze distribution. We didn’t really have a framework for accepting one and rejecting another, so we tried to support them all. If we had a properly defined ICP, we would have seen it start to fray with each new use case. ICP fray confuses *every* decision for a very simple reason: to know what problem you’re solving, you need to know who you’re solving it for. On the journey to product-market fit, we know products often change quickly. But the chances of finding fit go down dramatically if the market is changing as well. Therefore, every other decision is downstream of a clear definition of who your audience is. Encountering demand outside of your ICP may seem like a good thing, but be *very* careful about supporting those customers and expanding to a new segment. Yes, you may discover a whole new market for your product, but along the way, recognize that you’re allowing your customer focus to fray. Either validate the new market segment and pivot into it, or stick to your guns and move on. ### Horizontal products are only as good as their best vertical use case We justified our broad approach and basket of use cases because we thought about ourselves as a horizontal product (a toolkit built for multiple use cases rather than a single solution). We looked at Airtable, Notion, and Webflow as successful examples of horizontal plays, and we salivated when thinking about the aggregate TAM of all the use cases we could support. We needed to remember that our customers do not care about our TAM. All they care about is their specific set of problems. Building a horizontal tool is especially hard, because each supported use case often competes with a tailor-made, vertical solution. If we had tried to build a whole business around the scooter company that was using Cascade to manage logistics, we would have quickly run up against Samsara and Onfleet. Horizontal products win if a specific audience encounters enough use cases that they want one tool to address them all. Figma won because it captured a much larger portion of an app designer’s workflow than Sketch or Illustrator did. Notion won because it addressed the vast array of documentation tasks faced by product managers in San Francisco. In both cases, a specific buyer encountered a large array of problems, so a horizontal toolkit was the best solution. As we took Cascade to market, we were dismayed to find that the business analyst role had changed, making us less relevant. A lot of big-data wrangling and analysis was being shifted to more technical data teams, for whom Cascade had little value. Business analysts at midsize companies no longer faced the diversity of analytical problems they used to, which meant that more opinionated, targeted products could pick up what was left. The diversity problem still existed upmarket, but that meant we would have to build a large number of enterprise features in addition to what we had. We knew that horizontal tools often must survive a [very long](https://www.lennysnewsletter.com/p/finding-product-market-fit), [uncertain journey](https://www.lennysnewsletter.com/p/how-to-validate-your-b2b-startup#%C2%A7bonus-prosumer-companies-wandering-in-the-dark) toward product-market fit in order to support all the use cases they need to. During that time, we knew our customers would reject the product for ambiguous reasons, our team would second-guess our strategy, and our investors would tell us to pivot. We stuck to our guns for over three years, convinced that we could build our way out of it. But the further we got, the more it felt like we had landed on a melting island. ### A competitive product being old and clunky doesn’t mean it’s vulnerable We thought we had landed on a startup gold mine. Alteryx, an early-2000s-era software company, was about to clear a billion dollars in annual revenue. Their only product was a Windows-only, clunky desktop application for which each user paid over $5,000 a year. They were the only player in their esoteric market and seemed incapable of delivering anything that resembled modern software. Getting the application started took several incantations and a minor miracle, and one look at the interface revealed a stark contrast with the lightweight, browser-native applications we were used to. We set out to build a competitor, confident that we could out-execute them and steal major market share. The problem was that Alteryx users actually liked the product. It was clunky and probably needed to be moved to the cloud, but it delivered on its promise, giving its nontechnical users the ability to build logic the way their engineering teams did. Over the past 15 years, it had also amassed a community that helped each other solve complex data problems. The desktop app was a big part of the offering, but the community had helped solidify its moat. We chalked all that up to the fact that users had no real alternative. Besides, we knew that Alteryx was horrendously expensive, which left buyers frustrated even if end users were not. While most of their customers were not actively seeking an alternative, cost alone led to reasonable success getting companies to evaluate their options. If we could overcome switching costs, we saw a path to real growth. Generally, teams think about switching costs as the amount of time and money needed to install one solution and remove another. But *true* switching costs are much more than that: they include the politics, emotions, career ambitions, esoteric business processes, competing priorities, and sheer laziness that all favor the existing solution. Those forces can be incredibly strong, working to ensure that inferior products can still win (have you ever used Bill.com, Concur, or even Salesforce?). In our case, we underestimated how deeply Alteryx was integrated into company processes. Only a couple of people inside those companies actually knew how Alteryx worked, and hell would freeze over before we convinced them to abandon a career-defining tool. While “normal” users were willing to switch, we didn’t go far enough to facilitate replacing old work and to convince power users that we were the future. We thought the product would speak for itself. While it did to some degree, we needed more. Many old-school companies seem ripe for disruption but are actually much stronger than they appear. Others appear strong but are secretly vulnerable. If only the user is frustrated, you’ll have a hard time winning. If only the buyer is frustrated, you have a path to victory as long as you can overcome switching costs. Only direct input from customers will reveal the true story. ### Don’t confuse people rooting for you with market signal On some level, all founders suffer from “happy ears”—the chronic confirmation bias pervading conversations with customers, partners, team members, and investors. We tend to have irrational levels of confidence anyway, but that gets compounded when we mistake support for market signal. Most commonly, founders believe that investor checks signal that they’re on the right track. That could be true, but at the seed stage, investors often make a broad bet on the team, trusting that they’ll figure something out. If founders read more into an investment than that, they might double down on a bad strategy because of some perceived investor confidence. The phenomenon goes further than investors. Before a product can speak for itself, a company’s earliest deals are often done on the backs of the founders’ personal relationships. While those early deals are often critical to the company’s survival, they’re also not true market signal. Your supporters will be rooting for you and want you to succeed, and at times they’ll be in a position to accelerate your progress. Unbeknown to them, sometimes they can accelerate you in the wrong direction. That’s especially true if you have a product like Cascade, which has multiple use cases and a broad value proposition. Our customers hired us because they liked or trusted us and because the founders were involved in the deal. But once the founders stepped out of the room, things got a *lot* more difficult. The founding team could push the car forward, but we mistook that movement for a machine that could run on its own. Once we stopped pushing, the car stopped. Looking back, I’m struck by the insane number of forces pulling companies away from product-market fit. Founders need to plow through a murky market, propelling their journey with the right team, stepping over competitive land mines, turning based on the right feedback but not the wrong feedback, and suppressing their own biases in order to see their environment clearly. Along the way, we often look to learn from companies that have gone the distance, succeeding in spite of the odds. But success stories (and the revisionist narratives told about them) often don’t do enough to highlight the common misconceptions, obstacles, or mirages that face new companies. I hope our story, with all of its ups and downs, will add a few more signposts along the road. *Have a fulfilling and productive week 🙏* ## 📣 Join Lenny’s Talent Collective 📣 If you’re hiring, I can help. [Lenny’s Talent Collective](https://www.lennysjobs.com/talent/welcome) works with a select group of companies every month to help them make key growth and product hires. You tell us what you’re looking for, we scan through our entire community to find the best fits, and introduce you directly to the candidates you most want to talk to. I hand-review every potential intro to ensure a great experience for all parties. If you’re looking for a new gig, join [here!](https://www.lennysjobs.com/talent/welcome?application=true&pallet=&step=privacy) We’ll send over personalized opportunities from hand-selected companies if we think there’s a fit. Nobody gets your info until you allow them to, and you can leave anytime. [Apply to join](https://www.lennysjobs.com/talent) **If you’re finding this newsletter valuable, share it with a friend, and consider subscribing if you haven’t already. There are [group discounts](https://www.lennysnewsletter.com/subscribe?group=true), [gift options](https://www.lennysnewsletter.com/subscribe?gift=true), and [referral bonuses](https://www.lennysnewsletter.com/leaderboard) available.** Sincerely, Lenny 👋 --- ## [44/51] Introducing DRICE: a modern prioritization framework If you boil down a product manager’s job to just one task, it’s making sure everyone on your team knows what to do next—and that it’s the most impactful work they can be doing. In other words, prioritizing. If you can get better at prioritizing,you can grow your leverage as a product leader, and increase the impact you and your team drive. And while you can’t double the speed that engineers build at or designers design at, by picking better projects even a little bit better, you can double your team’s impact. Below, [Darius Contractor](https://www.darius.com) and [Alexey Komissarouk](https://alexeymk.com) share a brand-new framework that will make you significantly better at prioritizing. They also include plug-and-play templates, real-life case studies, and great memes. I wish I had this years ago. *[Darius Contractor](https://www.darius.com) is the former head of growth at Dropbox, Facebook, Airtable, and Vendr and is currently Chief Growth Officer at [Otter.ai](https://otter.ai/). You can find him on [X](https://twitter.com/dariusmc), [LinkedIn](https://www.linkedin.com/in/dariusmc/), and [Darius.com](https://Darius.com/). [Alexey Komissarouk](https://www.linkedin.com/in/alexeymk/), a former growth engineering lead at MasterClass and Opendoor, is currently writing a book and [advising teams on growth engineering](https://alexeymk.com/growth-eng). You can find him on [X](https://twitter.com/alexeymk), [LinkedIn](https://www.linkedin.com/in/alexeymk/), and [alexeymk.com](https://alexeymk.com/). Alexey will be [speaking about growth engineering at Reforge this Thursday](https://www.linkedin.com/events/7122963652738985985/comments/).* With limited time and resources, what is the highest-value thing a product manager can do for their team? **Prioritization. Ruthless, rigorous prioritization.** The guide below contains everything you need to run a reliable prioritization process. It’s based on a distillation of techniques from the authors’ combined 35-plus years of experience driving growth at Dropbox, Facebook, Airtable, Opendoor, and MasterClass that, in our experience, doubled our impact rate. The frameworks are primarily intended for growth teams, but the practices apply to any team focused on moving a business metric. This prioritization process should be run every planning cycle. **Below, we’ll walk you through:** 1. The industry-standard prioritization process **RICE** (Reach, Impact, Confidence, Effort) 2. Then we’ll refine the top ideas using “DRICE” (**Detailed RICE**) 3. Finally, we’ll talk through how to make the most of these two frameworks Throughout this guide, we’ll assume you’ve already collected tons of potential ideas—through brainstorming, sifting through data, looking at sales/CX calls, your past backlogs, etc. As a rule of thumb, you’ll want to have at least 5x as many ideas as you could reasonably build in the next time period (typically a quarter) before starting to prioritize. ## Part 1: RICE ### Definition In short, [RICE](https://www.intercom.com/blog/rice-simple-prioritization-for-product-managers/)-ing is the process of T-shirt scoring (i.e. S/M/L) your ideas according to their: - **Reach:** How many of your customers would experience the new idea - **Impact:** If the idea pans out, how much it would affect conversion - **Confidence:** How likely it is to work - **Effort:** How much time it would take to validate (from the engineering team) The process is best illustrated by example. ### Example: “Checkout with PayPal” vs. “free-trial promo codes” Say your team is choosing between two potential ideas: 1. **Checkout with PayPal.** Several potential customers have emailed complaining that they will only buy with PayPal. 2. **Free-trial promo code.** Your podcast marketing manager wants to be able to give away promo codes for an “X-day free trial.” We can compare the ideas based on their qualities: **Checkout with PayPal:** - **Reach**: **all.** Potential customers must go through checkout and are exposed to the option. - **Impact**: **small.** Most customers are comfortable with credit cards. - **Confidence: likely**. Competitors offer PayPal; customers have asked for it before. - **Effort: medium.** Will need to integrate PayPal through the [Braintree API](https://developer.paypal.com/braintree/docs/guides/drop-in/overview/javascript/v3/). On the other hand, a **free-trial promo code** is: - **Low-reaching:** Only about 15% of your customers come in through podcasts. - **Medium-level confidence:** Free-trial promos are common but not ubiquitous. - **High impact:** The company has had free trials convert well in past tests. - **High effort:** The free-trial code is messy; the team will need a month to clean it up. In visual terms: Eyeballing would suggest we’re better off with **Checkout with PayPal**.Even though the potential impact isn’t as high, the change is likelier to work, faster to implement, and will affect more potential customers. ### Processes The process above works well with two ideas, but what if we have tens of ideas to score and rank? A spreadsheet keeps things organized. Here’s a [minimalistic template](https://docs.google.com/spreadsheets/d/1trzJaf37kh6C5Cprcnmj20LX0RKxeZ1CVuuwNCZCAYE/edit?usp=sharing) from Alexey, and a [batteries-included Airtable template (called EVELYN)](https://www.airtable.com/universe/expZpCNVlkaoLGNAr/evelyn-experiment-velocity-engine-lifting-your-numbers) from Darius. ### Sizing heuristics It’s not always obvious exactly what “high impact” versus “medium impact” means. At this stage, these estimates are meant to be low-fidelity and directional [SWAGs](https://en.wikipedia.org/wiki/Scientific_wild-ass_guess) anyway. Rather than nailing the categories, compare between items—do all the M’s truly feel smaller than the L’s? That said, here are some heuristics for evaluating an idea at this stage. **Reach** is relatively straightforward to estimate: either your users will experience the change or they won’t. **Effort** estimates come with experience on the engineering side. Always strive to run the laziest test possible[,](https://paper.dropbox.com/doc/The-Laziest-Price-Test-I-Ever-Ran--B~Bpmr4lVuBhttC0Z_cn_60wAg-V7SYN64MVFFXq0ibFClLH) asking “What is the least amount of engineering work required to test this idea?” **Impact** and **Confidence** have more subtlety, however. **Impact** An idea should be higher-impact if: - It addresses a sensitive-to-change portion of the customer journey: above the fold on the landing page, pricing, etc. - The change is particularly significant—a “big swing” **Confidence** An idea should be higher-confidence if: - You’ve already had the same concept work elsewhere: “Emphasizing the money-back guarantee was a winner on the homepage; let’s try it during checkout.” - One or more of your competitors already employ this tactic (they’ve likely tested into it): “Our competitors offer a monthly pricing plan; we should try the same.” - Your customers are explicitly and repeatedly complaining about it: “Why do I have to create a new account? I wish I could log in with Google.” The product manager should have the context to fill in **Impact**, **Confidence**, and **Reach**. The **Effort** column can sometimes be filled by an experienced product manager, but more commonly a tech lead. Once a T-shirt-size prioritization is complete, you can sort the list based on the implied score (with T-shirt sizes translated to numeric values to make the math work): *Score = (Reach % \* Impact % \* Confidence likelihood %) / Weeks of effort* Sort all of the available ideas using their scores. Take about twice as many ideas as you’d have time for during the period you’re planning for (typically a quarter). This is your preliminary shortlist. ### Validating your shortlist Some shortlisted ideas will surprise you. RICE isn’t gospel; double-check and adjust the suspicious scores until you feel comfortable. Next, loop in your team, who will appreciate a chance to weigh in and offer helpful adjustments. Even after the refinements, some ideas you had thought of as clunkers will end up above your favorites. This is the process working as intended. By establishing objective evaluation criteria, you have separated the wheat from the chaff. ## Part 2: DRICE Once your RICEd shortlist is ready, it’s time to invest in a higher-fidelity evaluation of your ideas. This assessment method is known as **DRICE**, a “**Detailed RICE**” estimate. During DRICE, we will go from: - A 30-second estimate to a 30-minute estimate - A relative scoring (S/M/L) to a $X of expected annualized revenue - “Wouldn’t it be cool if” to “We are shovel-ready” “Wait, 30 minutes per idea?” says the growth PM reading this guide. “We don’t have time for this. Our list is solid. Let’s be biased toward actionand get started!” Not so fast. Teams that adopt DRICE notice a difference in the projects they end up prioritizing. Many “promising” projects turn out to be defeated by a half-hour investigation, while “nice to have” features that would have been left on the cutting-room floor end up becoming high-ROI winners. #### **Dropbox case study** A particularly clear example of this comes from Darius’s time at Dropbox, focused on activating new Dropbox Business users. One proposed idea was a migration tool for Basic users, streamlining the process of getting started with a Business account. Initially we didn’t think this would be a huge win, since target users were only a subset of all sign-ups. However, the DRICE investigation showed: - A large percentage of Business team creators were previously Basic users - A good chunk of teams had multiple users - Many teams had private files but not team files - A “choose folders to share with your team” modal could boost sharing significantly The DRICE investigation significantly bumped the idea’s expected ROI. We built it. The Dropbox Business Migration Tool became **the biggest activation win of the quarter**. Without DRICE, we were unlikely to have prioritized it at all. Overall, we found that Dropbox teams that adopted DRICE were able to move their key metric by **twice** as much as teams that stuck to a simpler prioritization process. To see how the DRICE process works, it’s also best illustrated by example. ### Example DRICE: Adding PayPal We’ve already RICEd the PayPal project: - **Reach**: **all.** Potential customers must go through checkout and are exposed to the option. - **Impact**: **small.** Most customers are comfortable with credit cards. - **Confidence: likely**. Competitors offer PayPal; customers have asked for it before. - **Effort: medium.** Will need to integrate PayPal through the Braintree API. Not bad. Here’s what a DRICE would look like: #### **Hypothesis** A potential customer segment prefers to pay with PayPal instead of credit cards and has been emailing to let us know. By adding PayPal as an option in the checkout flow, **we will improve conversion by 2.7%, or an incremental $540k/year**. #### **Impact estimate** #### **Engineering estimate** ***Effort:** 7 days* *We originally thought we’d have to integrate the Braintree API, but these days, you [can integrate PayPal directly from Stripe](https://stripe.com/docs/payments/paypal). This eliminates the bulk of the expected back-end work, leaving us:* - *[1 day] Integrate PayPal button on front end according to designs* - *[1 day] Update receipt emails to support PayPal* - *[1 day] Migrate e-commerce back end to support a new payment type from Stripe* - *[2 days] Integration tests for key flows (purchase, refund, cancellation, chargeback)* - *[2 days] Buffer time* #### **Return on eng investment** - $540k in annual revenue - Eng cost of 7 days (~1.5 weeks), yielding an ROI of - **$360k/eng week** Through a DRICE estimate, we reduced the engineering estimate and increased the success likelihood for our “Checkout with PayPal” idea. With 30 minutes from PM and engineering, we’ve taken the idea from being marginal to a “let’s definitely do it this quarter” type of idea. Note that we didn’t *eliminate* guesswork as part of this process; our guesses simply became *educated*. Here’s a [DRICE template](https://docs.google.com/document/d/1J5j2g6ACKxDFjALPR1DgQIn7tABAycOFQDW8beQIfh0/copy) to use when making your own estimates. ### Components of a DRICE estimate Now that we’ve walked through an example, let’s talk about what a DRICE involves and how to perform one. You’ll want: **Hypothesis** A clear, brief explanation of the idea that anybody without context will be able to understand, and a short justification for why you believe the idea will be effective. **Impact estimate** Typically from the product manager, a clear, bottom-up financial model estimating the impact of the idea. This is the time to do a bit more research, speak with peers, and see if any existing analytics data is available that would allow for a precise estimate. **Engineering estimate** Not every idea being DRICEd requires its own proper engineering spec. However, this is the place for a growth engineer to kick the tires of the assumptions behind the original T-shirt-size estimate. Projects could end up being much simpler (like the PayPal example) or much harder (due to complexity that wasn’t apparent until digging in). An experienced growth engineer will develop an intuition for how to de-risk and spike the more complicated parts of any particular project. **Non-engineering efforts** Many projects will have non-engineering effort required for this roll-out as well. Designs need to be finalized, legal may need to sign off, the support team will need to be notified and trained, FAQs will need to be updated, etc. However, for the purposes of DRICE, it is common for engineering availability to be a bottleneck. So unless one of the other roles will need to bear an usually large lift, we use engineering effort as a proxy for effort required. Where appropriate, it may also make sense to include some initial design-level wireframes. ### When should we start DRICE-ing? If you find a $100 bill on the ground while walking to work, you don’t need to run a prioritization process to pick it up. If you are seeing an over 70% win rate, you are still enjoying the early days and can postpone investing in your prioritization muscle for a little while longer. If you’re doing a good job of growth, however, you’ll pick off the obvious ideas within a quarter or two and the sky-high win rate shouldn’t last. Then it’s time for proper prioritization—not just RICE, but DRICE as well. The work required to properly DRICE any idea will encourage productive activities. Impact modeling, effort estimating, and the like are work you will want to be doing for your projects, DRICE or otherwise. Once you have done the work to get a real dollar estimate for every idea, you can begin to reap the full benefits of prioritization. ## Benefits of proper prioritization If you’ve gotten this far, the primary benefits of prioritization will be clear: you have a high degree of confidence that the bets you are going to execute on are the highest-value bets available to you, setting your team up to hit its goals. There are, however, several additional benefits. ### 1. Higher experiment hit rate and impact Most growth teams have more than 50% of experiments fail. Some teams have as much as 80% of experiments fail or deliver far below the hoped-for impact. This means only 20% are true winners, or one-fifth. If you can lower the failure rate from 80% to 60%, you’ve doubled impactful experiments from 20% to 40%. This happened at Dropbox, where we saw that teams using DRICE had twice the impact rate (hit rate \* impact per hit) of other teams using classic RICE scoring or simply picking ideas. ### 2. Simplify managing up When staffing across departments, one question executives will ask is “What is the ROI on this?” Teams that have the most trustworthy and direct answer—“give us X people and we’ll make you $Y dollars”—are likeliest to get the resources they ask for. This is the reason salespeople often speak about their “sales pipeline revenue.” With DRICE, growth teams can use the same approach. “With X engineers, we will execute on $Y of opportunities next quarter. With X+A engineers, this goes up to $Y+B. Here’s the spreadsheet you can use to check our work anytime.” By following DRICE, making commitments and meeting expectations become easier, simplifying the work required to manage up. ### 3. DRICE builds team culture Growth PMs often wish their engineers contributed more ideas during planning. “Why bother,” think engineers. “The PM is just going to pick their own ideas anyway.” [HIPPO](https://jeffgothelf.com/blog/highest-paid-persons-opinion/), the Highest-Paid Person’s Opinion, is the default mode of planning for many teams. It’s better than random—there’s a reason the PM is in their position—but it’s far from optimal. By running (and prominently communicating) a transparent prioritization framework, engineers feel that the planning game has rules. Most folks on a team tend to have a pet idea they’ve been hoping they’d get done someday. With DRICE, it’s clear what they must do: find evidence for why it is a high-confidence idea, cut engineering scope to reduce effort, etc. They feel they’re gaming the system, but in fact they’ve started to learn to think more like a growth PM. ## Takeaways Going through the motions of growth prioritization can feel like busywork. It’s so easy to fall back on “I’m the PM, I have this job for a reason, I should make the call on what we work on. All this process is really just a waste of everybody’s time.” This is the HIPPO mindset; don’t fall for it. Implement proper prioritization and see how a fair, rigorous playing field results in a higher win rate, a happier team, and a more successful business. *Thank you, Darius and Alexey! For more, find Darius on [X](https://twitter.com/dariusmc) and [Darius.com](https://Darius.com/), and Alexey is a [growth engineering advisor](https://alexeymk.com/growth-eng) in the process of writing [a book about growth engineering](https://alexeymk.com/), and you can find him on [X](https://twitter.com/alexeymk) and [LinkedIn](https://www.linkedin.com/in/alexeymk/).* *Have a fulfilling and productive week 🙏* ## 📣 Join Lenny’s Talent Collective 📣 If you’re hiring, I can help. [Lenny’s Talent Collective](https://www.lennysjobs.com/talent/welcome) works with a select group of companies every month to help them make key growth and product hires. You tell us what you’re looking for, we scan through our entire community to find the best fits and introduce you directly to the candidates you most want to talk to. I hand-review every potential intro to ensure a great experience for all parties. If you’re looking for a new gig, join [here!](https://www.lennysjobs.com/talent/welcome?application=true&pallet=&step=privacy) We’ll send over personalized opportunities from hand-selected companies if we think there’s a fit. Nobody gets your info until you allow them to, and you can leave anytime. [Apply to join](https://www.lennysjobs.com/talent/welcome?application=true&pallet=&step=privacy) **If you’re finding this newsletter valuable, share it with a friend, and consider subscribing if you haven’t already. There are [group discounts](https://www.lennysnewsletter.com/subscribe?group=true), [gift options](https://www.lennysnewsletter.com/subscribe?gift=true), and [referral bonuses](https://www.lennysnewsletter.com/leaderboard) available.** Sincerely, Lenny 👋 --- ## [45/51] When they hired their first PM *P.S. Don’t miss [Lennybot](https://www.lennybot.com/)—my AI chatbot that’s trained on every newsletter post and podcast interview. It’s very good.* > ## Q: When do companies typically hire their first product manager? I reached out to 30 companies to find this out, and here you go: **Takeaways:** 1. **Everyone hires a product manager** **eventually**. 2. **The typical company waited two to three years to hire their first product manager**. They typically had 10 to 15 engineers and 15 to 25 total employees. But the ranges are wide, so don’t use this as a hard-and-fast rule. 3. **Surprisingly, more than half of companies hired their first PM** ***before*** **[finding product-market fit](https://www.lennysnewsletter.com/p/finding-product-market-fit)**, which is counter to the advice you hear. Particularly in B2B. 4. **No founder told me they regretted bringing on a PM**, but some companies, including [Notion](https://notion.com/), shared that they [regretted waiting so long](https://www.lennysnewsletter.com/i/106839388/how-many-pms-do-you-have). Though others, like Stripe, were happy they wanted so long. 5. **Most first PMs were previously individual-contributor product managers, or senior PMs.** Very few were previously former directors, VPs, or heads of product. Surprisingly, almost a fourth were engineers. 6. **Interestingly, many companies with a strong product founder hired a PM very early**. [Coda](https://coda.io/) and Snyk (who both had PM founders) hired their PM essentially as their first employee, and Slack (with [Stewart Butterfield](https://en.wikipedia.org/wiki/Stewart_Butterfield)) just over a year in. 7. **In terms of timing, there’s no one way to do it.** Companies that hired a PM early did great (e.g. [Snyk](https://snyk.io/), [Ramp](https://ramp.com/), [Slack](https://slack.com/)), and companies that waited a long time (e.g. [Stripe](https://stripe.com/), [Figma](https://figma.com/), Notion) did great. 8. Companies that waited a long time to hire their PM had different reasons to wait: 1. Notion spent much of that time (about three years) looking for product-market fit. 2. Stripe was building an engineering-oriented product and hired top-tier product-minded engineers, so they didn’t have a strong need for PMs. 3. [Snap](https://snap.com/en-US) hired designers who took on the PM duties, which, from what I hear, ended up being fairly chaotic. They eventually hired a PM to lead their initial monetization efforts. 9. **Companies that hired a PM early, like [Ramp](https://ramp.com/) and [Snyk](https://snyk.io/), did so because they didn’t have the skills or time to do the product job well**, and they knew their product would make or break the business. More on this below. No matter how long you wait, whether you have a PM or not, someone will be doing the PM duties. If you’re looking to push out your first PM hire, the questions you need to ask yourself are: 1. Do you *want* to be doing this work? 2. Are you *good* at it? 3. What are you *not* spending time on that you could be, if you had a PM? Generally, the sequence is: a founder takes on the PM duties, they then divide up the duties among the early engineers and designers, and then eventually they bring on a full-time product manager. Here’s a simple way to think about the jobs of a product manager: 1. **Shape the product**: Harness insights from customers, stakeholders, and data to prioritize and build a product that will have optimal impact on the business. 2. **Ship the product**: Ship high-quality product on time and free of surprises. 3. **Synchronize the people**: Align all stakeholders around one vision, strategy, goal, roadmap, and timeline to avoid wasted time and effort. Here’s a bunch of advice I collected from founders and early PMs on hiring your first PM: #### A product manager will give you breathing room and create order From [Geoff Charles](https://www.linkedin.com/in/geoffrey-charles/overlay/about-this-profile/), first PM at **Ramp:** > “**A PM’s greatest value is bringing order**. As the single point of contact for the team, they hold context and disseminate to the right folks, keep teams focused on building and shipping, and can make decisions quickly.” From [Ben Porterfield](https://www.linkedin.com/in/benporterfield/), co-founder of **Looker:** > “My co-founder and I were acting largely as PMs up until we hired Josh [Siegel]. But we were drowning in prospect calls and our own responsibilities. **Bringing in a PM allowed us some breathing room**. **More importantly, it let us organize feedback from customers and prospects, generate higher-quality sales/marketing materials, and improve internal communication with various teams** (e.g. feedback to engineering, roadmap plans for CS/sales/marketing, etc.).” #### This extra time for founders can lead to big unlocks > “**What my PM role allowed was for our founders to have the bandwidth to do bigger conceptual thinking**, since I’d taken over the product and project management of Zimride. Within a few months after I started, the founders hatched a plan for an entirely new business based on short-distance ridesharing, while I kept the Zimride product humming, allowing for experimentation. **That experiment became Lyft.**” > > —[Evan Goldin](https://www.linkedin.com/in/evangoldin/overlay/about-this-profile/), first PM at **Lyft** #### Let your first PM own execution so that you can focus on strategy and vision From [Sarah Tavel](https://www.linkedin.com/in/sarahtavel/), first PM at **Pinterest:** > “**You as the founders know what needs to be built, but you need hands to execute. In the beginning, it’s about getting leverage, and to get leverage, you need someone you trust.** > > It doesn’t need to be a senior person who is figuring out what to build, but it does need to be someone who really understands your product and can effectively channel you, communicate well, and know what decisions/details to surface.” From [Badrul Farooqi](https://www.linkedin.com/in/farooqib/), first PM at **Figma:** > “**Initially the main benefit was more diligent support on execution and not letting small (but important) things fall through the cracks.** Better weekly rhythm for the team, better triaging of all incoming issues, identifying harder product decisions quickly. Less focus initially on vision, big roadmap exercises, exec presentations, etc. Basically, things are working pretty well and we need smaller and consistent improvements to keep it that way.” From [Calvin French-Owen](https://www.linkedin.com/in/calvinfo), co-founder of **Segment:** > “**For us, Alex [Millet] took on trying to harness the thorniest part of our business.** We were getting dozens of tickets per day, from customers who all wanted our hundreds of integrations to behave slightly differently. **He took on the prioritization work around which customers to listen to, how to sequence work-in-progress, and some sort of sense of taste for how to solve it.**” #### Do not delegate your *strategy* to your first product manager > “**I’ve seen too many founders make the mistake of bringing in a ‘product person’ to fix the fact that they don’t have PMF and figure out the product strategy almost from scratch. Bring in a PM when you’re confident about the direction you’re heading. It’s the founders’ jobs to set the strategic direction of the company.** > > Adding our first PM brought critical additional bandwidth that unlocked engineers to focus on writing software. Additionally, having more product talent onboard enabled us to bring in the voice of the customer to the room and connect the dots between support, sales, and engineering.” > > —[Tomer London](https://www.linkedin.com/in/tomerlondon), co-founder and CPO of Gusto #### The key to success with your first PM is *trust* From [Calvin French-Owen](https://www.linkedin.com/in/calvinfo), co-founder of **Segment:** > “**The founders should be okay handing off product decisions. The biggest problem I see is when founders don’t really want to cede control.** This works best when the founders are still on the hook for approval and high-level decision-making but can delegate some of the lower-level decisions.” From [Kenneth Berger](https://www.linkedin.com/in/kberger/), the first PM at **Slack:** > “**Ask yourself if you’re ready to trust someone else with your beloved product.** Many founders desperately want help but also aren’t willing to trust an outsider. To set them up for success, choose to trust them *and* give them plenty of feedback to build alignment over time. > > Often founders are operating from a ‘trust is earned’ mental model, so by default they don’t trust their employees and expect them to earn that respect over time. But those employees are operating at a distinct disadvantage. Especially when they get started, they won’t have anywhere near the level of commitment and experience of a founder. Both employee and founder are set up to fail under this model. Churn and frustration is the result; this is why you see so many startup execs exit after a year or less. > > The alternative to ‘trust is earned’ (low trust) is ‘trust is given’ (high trust). In this model, you choose to trust your employee on principle. Once you believe they’re trustworthy, any gaps tend to look less like unsolvable character flaws and more like opportunities for coaching/feedback. This model is more about the founder trusting themselves. Trusting themselves to source the right people, to interview them effectively, to coach them to high performance, and to promote them or let them go depending on the fit. Trusting themselves to deal with the discomfort of delegating out product decisions, versus blaming the employee and putting that burden on them. > > In a high-trust environment, it’s easy to repair mistakes and build increasing independence over time. In a low-trust environment, mistakes feel like threats to safety, and thus employees tend to get fired to help the founder feel safe. Mistakes are inevitable in any role, but especially in a high-profile, critical role like head of product or first PM—so it’s best to plan for those mistakes and have a plan to coach through them.” #### For that reason, many first PMs come from internal transfers Including **Notion**, **Looker**, **Figma**, **Robinhood**, **Segment**, **Amplitude**, and **Linear:** > “**Our first PM actually joined as a growth PM, and I found that to be a good role to start the product org.** If you’re a product founder, finding a good core PM as your first PM is very hard, whereas growth PM can actually be very complementary to the founder’s core product skill set.” > > —[Akshay Kothari](https://www.linkedin.com/in/akothari/), co-founder of **Notion** > “**We transitioned an internal analyst (effectively a software engineer, already working with customers on building their LookML models for a while) about 1.5 years into building the company.** His name was Josh Siegel, and he was **really smart and really focused on the product**. He used to deliver long emails after prospect meetings about all the things the prospect needed to be successful. He also was clearly already capable of translating the requests from what they said they wanted to what the product should actually deliver—not an easy task. He became our first PM, which continued at that time to report up through engineering. The following two PMs were also internal transfers—we wanted people who deeply understood our product and our customers.” > > —[Ben Porterfield](https://www.linkedin.com/in/benporterfield/), co-founder of **Looker** > “**Robinhood’s first PM was an iOS engineer originally**, and then in 2016 (three years in) we decided it was time to add a PM to the mix. **He had great product sense, knew the front end and API, and had been through several product cycles.**” > > —[Jaren Glover](https://www.linkedin.com/in/jarenglover), early engineer at **Robinhood** > **“I didn’t start with a PM title.** The formal titles came later at Figma, once the company needed more discrete roles and seniority throughout the company.” > > —[Badrul Farooqi](https://www.linkedin.com/in/farooqib), first PM at **Figma** > “We had nobody with the title ‘PM’ until something like 30 to 40 people. We were 10 to 12 engineers; it was mostly the founders acting as PMs and then individual engineers and designers at the company designing features for the first two years. **[Alex Millet](https://web.archive.org/web/20150926175552/https://segment.com/blog/welcome-alex-millet/) was probably the person who was closest to a pure PM, originally hired in September 2014 as a sort of forward-deployed engineer who then started prioritizing integration fixes and working with customers sometime in late 2014.** > > We sort of realized all at once that we could benefit from having PMs (around mid-2015?). **Instead of hiring externally, we hired internally** and formed a product team with Alex, Kevin Niparko, and Chris Sperandio.” > > —[Calvin French-Owen](https://www.linkedin.com/in/calvinfo), co-founder of **Segment** > “We got really lucky with Justin [Bauer], who started out as director of product, turned into our CPO, and ran the function for eight years. **He proactively had heard about the product and sought us out to join the team.** It probably would have taken a lot longer if he hadn’t done that, as hiring good PMs is hard!” > > —[Spenser Skates](https://www.linkedin.com/in/spenserskates), founder and CEO of **Amplitude** > “We didn’t outright seek to hire a PM or head of product. **Nan [Yu] actually started as a contractor to help us lay out the foundation and roadmap for Linear Insights**, our analytics product. We didn’t internally have strong knowledge on analytics, and he was the perfect person to help the team; he had been an engineering leader and more recently led product for Mode Analytics. **Working together on the project, it became clear he would be a fit for us and could lead more complex product features as we founders started to lack time to focus on them.** Contract-to-hire was also the perfect way for us to experience a new type of skill set on the team in a less risky way, even though it was not the original intention.” > > —[Jori Lallo](https://www.linkedin.com/in/jorilallo), co-founder of **Linear** #### Look for strong IC superpowers, passion for the problem, and product intuition > “Hiring a great PM can be tricky because the interview process only tells you so much, but one way to make sure they’re a good fit is to hire a PM that **you’re confident brings an IC superpower to the table (design/UX, for example) or is otherwise very technical or a subject-matter expert in your field** (for Ramp, fintech). Make sure cross-functional stakeholders have a say in PM hiring, as PM–technical lead–design lead chemistry is super-important.” > > —[Karim Atiyeh](https://www.linkedin.com/in/karimatiyeh), co-founder and CTO of **Ramp** > “In my own experience, the best PMs fall in love with the problem and the space. PMs in particular benefit from a passion for the customer in a way that other roles don’t require. The engineers and designers have to trust the PM, and that is hard to do if the PM isn’t a font of customer/ecosystem knowledge.” > > —[Calvin French-Owen](https://www.linkedin.com/in/calvinfo), co-founder of **Segment** > “Looking back, I’d say choosing someone like Josh [Siegel], who had good product intuition, and ensuring that there’s clarity around how bringing in the PM changes things or doesn’t (how is roadmap now decided, where are co-founders’ responsibilities and PM responsibilities shared and where are they delineated, etc.).” > > —[Ben Porterfield](https://www.linkedin.com/in/benporterfield/), co-founder of **Looker** #### To build trust quickly, help your first PM get some quick wins > “Engineers in smaller companies are understandably nervous about adding a PM, so **have the first PM identify and lead quick, easy wins to prove their value immediately. Do this even before setting up a longer-term product roadmap.** The product VP (Awaneesh Verma) and I came from much larger companies (Google and Microsoft). We had to switch to a scrappy mindset right away. The low-cost, high-impact experiments we prioritized in our first months showed the company how we could help them unlock the next stage of growth.” > > —[Kai Loh](https://www.autographlabs.com/), first PM at Duolingo #### A few companies hired a PM as their very *first* hire, because they knew the product itself would make or break the business Stories from **Coda**, **Snyk**, and **Persona:** > “**It all depends on the type of startup. Some startups are all technical insight/risk, and you want to get those core engineers in place right away. If, for example, you have a startup that is mostly regulatory risk, you would want to get someone familiar with that set of regulators early.** > > For Coda, most of our insight (and risk) was in the product (is it actually possible to build a new all-in-one blinking cursor? And what are the key choices that enable ‘docs as powerful as apps’). So we asked Matt Hudson (@huddy) to join in very early. He’s a supremely talented product thinker and also has really deep passion and instincts for our space.” > > —[Shishir Mehrotra](https://www.linkedin.com/in/shishirmehrotra), co-founder and CEO of **Coda** > “I believed the fact that security products weren’t fit for developers **was a product problem, not a tech problem**, needing breakthroughs more in the UX world than tech algorithms. Furthermore, I had two technical co-founders that I knew would lead the security and tech aspects well, so felt I’m well-covered there. > > **I could have done the product work myself (and in practice, I did a portion of it), but I wanted to free myself up to build the company as a whole, and not be too focused on one aspect of it. I did hire someone with deep UX skills, better than mine, who complemented me, not just offloaded work.** > > In general, I intentionally took the path of building a strong leadership team early on. It was always a very hands-on leadership team, who initially spent most of their time as ICs but were also building teams and practices. This is a personal choice, and many founders prefer to directly manage most of the team until it grows. For me, however, I perceive myself as a better leader and innovator than I am a manager, and I wanted to focus my attention there.” > > —[Guy Podjarny](https://www.linkedin.com/in/guypo/), founder and CEO of **Snyk** > “We hired Vincent [Tsao] because Charles [Yeh] and I believed his professional experience and willingness to give it his all were a perfect fit. We would’ve wanted to work with him whether at Persona or elsewhere, and that speaks highly of our rapport. He had experience from a previous startup and understood the fluid nature of a company’s early stages—he wasn’t tied to a specific role, title, or set of responsibilities and understood that we were all going to do whatever it took to succeed. In fact, his very first project had nothing to do with product—he spent the first evening setting up payroll! > > **We also believe that many founders, in their eagerness to launch and iterate, often swing too far on the pendulum of no documentation or process. While Charles and I were confident in our product and market insights, as well as our ability as engineers to create a minimum viable product (MVP), we were also self-aware about our shortcomings.** We knew we needed someone with not only sharp product intuition but also someone who could anchor our product operations and knowledge base, synthesizing insights from chaos and ultimately helping us move faster. Vincent was invaluable in building the foundation that enabled us to smoothly go from MVP to product-market fit and, eventually, to scaling our team.” > > —[Rick Song](https://www.linkedin.com/in/rick-song-25198b24/), founder and CEO of **Persona** #### Finally, a common thread in the feedback was that early PMs are mostly useful in B2B, and can be a hindrance in B2C > “If the relationship between the product and the customer is complex and involves different stakeholders (like B2B software), then hiring a PM sooner can be helpful. > > **If it’s more straightforward, like most consumer experiences, hiring a PM will almost certainly disempower engineering leaders and design, so you have to be very careful and clearly think about why you need someone between leadership and those who are actually building.**” —Anonymous As you look back at the chart above, I’m curious if you see any other takeaways or surprises. Any other lessons, insights, or data points? Leave a comment! I’d love to hear from you. [Leave a comment](https://www.lennysnewsletter.com/p/when-they-hired-their-first-pm/comments) ### 📚 Further study 1. [When to hire your first product manager](https://www.lennysnewsletter.com/p/when-to-hire-your-first-product-manager) (my first attempt at this question) 2. [Advice for joining as the first product manager](https://www.lennysnewsletter.com/p/joining-as-the-first-product-manager) 3. [Hiring your early team in B2B](https://www.lennysnewsletter.com/p/hiring-your-early-team-b2b) *Have a fulfilling and productive week 🙏* ## 🙄 Hiring? Or looking for a new job? I’m piloting a white-glove recruiting service for product roles, working with a few select companies at a time. If you’re hiring for senior product roles, apply below. [Apply to join](https://www.lennysjobs.com/talent/) If you’re exploring new opportunities yourself, use the same button above to sign up. We’ll send over personalized opportunities from hand-selected companies if we think there’s a fit. Nobody gets your info until you allow them to, and you can leave anytime. **If you’re finding this newsletter valuable, share it with a friend, and consider subscribing if you haven’t already. There are [group discounts](https://www.lennysnewsletter.com/subscribe?group=true), [gift options](https://www.lennysnewsletter.com/subscribe?gift=true), and [referral bonuses](https://www.lennysnewsletter.com/leaderboard) available.** Sincerely, Lenny --- ## [46/51] A new-parent gift guide *P.S. Don’t miss [Lennybot](https://www.lennybot.com/), my AI chatbot that’s trained on every newsletter post and podcast interview.* ![Image from A new-parent gift guide](https://substack-post-media.s3.amazonaws.com/public/images/99c6168a-bb15-42d1-abac-23ec673cc701_2048x1024.png) For something a little different, and fun, I’m combining my yearly tradition of a holiday gift guide (here’s [2021](https://www.lennysnewsletter.com/p/lennys-holiday-gift-guide) and [2022](https://www.lennysnewsletter.com/p/lennys-newsletter-holiday-gift-guide)) with the fact that my son is leaving his newborn stage, to collect an evergreen new-parent gift guide. Whether you’re a new parent, looking for gift ideas for new-parent friends, or embarking on the daunting task of creating a registry, this post is for you. None of these products have affiliate links, I’m not making anything off recommending anything here, and I’m not an investor in any of these companies. I use all of these products daily or weekly, and everything in this email is in my home today. In a few cases, I was able to secure a discount on the product for y’all (by asking nicely). If you want a sense for how much your life is about to change, just consider a product like this, and the conditions under which you are going to need it. ![Image from A new-parent gift guide](https://substack-post-media.s3.amazonaws.com/public/images/90cfbcc8-6a56-4ee1-85e6-8dc64cd3ee95_1200x1200.png) ## Preparing yourself for baby 1. **[Corrugated Cardboard Cutter](https://www.amazon.com/gp/product/B008RIS0UY?th=1):** You’ll be opening a lot of packages. This will transform your package-opening workflow. 2. **[WAOAW Sleep Mask](https://www.amazon.com/WAOAW-Sleep-Sleeping-Blocking-Blindfold/dp/B09712FSLY):** A returning favorite. Will help you get the most out of your precious sleep opportunities. 3. **[Taking Cara Babies First Five Months Bundle](https://takingcarababies.com/):** The most practical and easy-to-remember advice I’ve come across for taking care of a baby. I recommend watching these videos before your baby arrives. My wife initially hated Cara but then got hooked. It’s perfect for PMs: tactical, there’s a system to it, lots of acronyms, and you’ll see immediate impact. 4. **Read everything by Emily Oster:** She’s like Lenny’s Newsletter meets *Consumer Reports* meets Dear Abby meets babies. [Get her newsletter](https://emilyoster.substack.com/), get her first book *[Expecting Better](https://www.amazon.com/Expecting-Better-Conventional-Pregnancy-Wrong/dp/0143125702/ref=pd_bxgy_d_sccl_1/138-2388723-1714316?content-id=amzn1.sym.7746dde5-5539-43d2-b75f-28935d70f100)*, and get her second book *[Cribsheet](https://www.amazon.com/Cribsheet-Data-Driven-Relaxed-Parenting-Preschool/dp/0525559272/ref=pd_bxgy_d_sccl_1/138-2388723-1714316?content-id=amzn1.sym.7746dde5-5539-43d2-b75f-28935d70f100)*. ![Image from A new-parent gift guide](https://substack-post-media.s3.amazonaws.com/public/images/38cda242-a470-4326-877b-b03cc3564111_1600x1100.png) 5. ***[The Happiest Baby on the Block](https://www.amazon.com/Happiest-Block-Revised-Updated-Second/dp/0553393235?crid=2CIHUL8LL717C&keywords=The+Happiest+Baby+on+the+Block+paperback&qid=1700357993&sprefix=the+happiest+baby+on+the+block+paperbac%2Caps%2C148&sr=8-1)*****:** Quick read, and teaches you the fundamentals of keeping a baby happy and soothed. 6. ***[Moms on Call](https://www.amazon.com/Moms-Call-Basic-Baby-Months/dp/0985411422)*****:** The highest signal-to-noise book on baby care. Feels like a PM wrote it. 7. ***[The Birth Partner](https://www.amazon.com/Birth-Partner-5th-Childbirth-Companions/dp/1558329102?crid=U2JNIYIQC9UJ&keywords=the+birth+partner+5th+edition&qid=1700357934&sprefix=the+birth+partner%2Caps%2C154&sr=8-1)*****:** Most valuable book for preparing for birth. For something a bit shorter, check out [this book](https://www.amazon.com/gp/product/0976975823). 8. **[Rossetta Galaxy Projector](https://www.amazon.com/gp/product/B09NNBXZMW):** Vibes for the labor/delivery room. ![Image from A new-parent gift guide](https://substack-post-media.s3.amazonaws.com/public/images/69d3ff5a-5210-4a50-9887-3140ad1bb0c0_4032x3024.jpeg) ## Helping baby sleep 1. **[Huckleberry app subscription](https://huckleberrycare.com/):** If there’s one thing PMs love, it’s being data-informed. We tried a few baby tracking apps, and this one is the best combination of UX, functionality, and reliability. Some people prefer [Baby Connect](https://apps.apple.com/us/app/baby-connect-newborn-tracker/id326574411), which has better data but worse UX. Just be careful of getting *too* obsessed with the data. [![Image from A new-parent gift guide](https://substack-post-media.s3.amazonaws.com/public/images/69100a66-e1a8-4341-a431-c5ec7bf47559_2000x1125.png)](https://substackcdn.com/image/fetch/$s_!56yU!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F69100a66-e1a8-4341-a431-c5ec7bf47559_2000x1125.png) 2. **[Wonder Weeks app subscription](https://www.thewonderweeks.com/baby/apps/the-wonder-weeks-app/):** Eerily accurate at predicting baby behavior, milestones, and fussy periods. Based on [this book](https://www.amazon.com/Wonder-Weeks-Stress-Free-Guide-Behavior/dp/168268427X). 3. **[Baby Shusher](https://www.amazon.com/Baby-Shusher-Babies-Miracle-Soother/dp/B00D2JN87I?linkCode=df0&hvadid=198101723026&hvpos=&hvnetw=g&hvrand=9050610626857654012&hvpone=&hvptwo=&hvqmt=&hvdev=c&hvdvcmdl=&hvlocint=&hvlocphy=9031982&hvtargid=pla-358298711698&mcid=0c9c3d538a283ca099e89ecae4f407bc&th=1):** A handy device that saves your throat from endless shushing (a powerful lever for baby soothing). [![Image from A new-parent gift guide](https://substack-post-media.s3.amazonaws.com/public/images/4f394f86-e97a-442a-8148-57fd7c15efe1_488x488.png)](https://substackcdn.com/image/fetch/$s_!EqUy!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F4f394f86-e97a-442a-8148-57fd7c15efe1_488x488.png) 4. **[Decibel measuring app](https://apps.apple.com/us/app/decibel-db-sound-level-meter/id1227650795)**: If you’re using white noise, use this app to make sure it’s not too loud. What defines too loud is controversial, but [here’s Emily Oster’s take](https://emilyoster.substack.com/p/white-noise-and-developmental-delays). 5. **[Nanit Baby Monitor](https://www.nanit.com/products/nanit-pro-camera):** Packed with smart features and lots of thoughtful touches (e.g. a monthly birthday celebration photo, video compilations, and tons of stats). Though it can be annoying at times, we haven’t found anything better. There’s a 30% site-wide sale happening right now for Thanksgiving, and after 11/29, use code LENNY25 for 25% off (through the end of the year). Grab the [travel pack](https://www.nanit.com/products/nanit-travel-pack) for overnight trips. We also use this new [Nanit sound and light machine](https://www.nanit.com/products/nanit-sound-light) to adjust the shusher volume in the room remotely (which is the best tool we’ve found for helping your newborn sleep longer without having to enter the room). We tried the [Eufy Spaceview Video Baby Monitor](https://www.amazon.com/eufy-SpaceView-Pioneering-Generation-Wide-Angle/dp/B07GBP3GH9?crid=WR1YPWEEKWA7&keywords=eufy+baby+monitor&qid=1700263471&sprefix=eufy+baby%2Caps%2C184&sr=8-5&ufe=app_do%3Aamzn1.fos.18ed3cb5-28d5-4975-8bc7-93deae8f9840), which has the benefit of not relying on your Wi-Fi network or your phone, but we kept coming back to the Nanit because we always had our phones with us (and we discovered [Nanit’s background sound feature](https://support.nanit.com/hc/en-us/articles/115004915528-Can-I-still-hear-my-baby-without-having-the-app-open-screen-locked-on-my-phone-)). [![Image from A new-parent gift guide](https://substack-post-media.s3.amazonaws.com/public/images/b210d58f-3b76-411f-a30b-2655594980a5_253x512.png)](https://substackcdn.com/image/fetch/$s_!IeM7!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2Fb210d58f-3b76-411f-a30b-2655594980a5_253x512.png) 5. **[Hatch Rest Baby Sound Machine and Night Light](https://www.amazon.com/Hatch-Rest-Night-Light-WiFi/dp/B08QVG9759?th=1):** Another classic, another gem. [Use this link to get $15 off](https://www.hatch.co/lenny/). More reliable than the Nanit sound and light machine, with more features, but doesn’t have a shusher sound. We found that having two smart sound machines (I know, a luxury) in the room allowed us to have both white/pink/brown noise along with an adjustable shusher. I know [Huberman canceled using white noise](https://youtu.be/JVRyzYB9JSY?si=7_qwrdEfo_St18_M&t=3351), so we stick to pink and brown noise. But IMHO, in moderation, this feels essential to good baby sleep. 6. **[Hooga Clip-On Blue-Blocking Amber LED Light](https://www.amazon.com/Blocking-Rechargeable-Battery-Adjustable-Brightness/dp/B07Q87WJ7M?linkCode=df0&hvadid=343161280953&hvadid=343161280953&hvpos=&hvpos=&hvnetw=g&hvnetw=g&hvrand=144947304343770102&hvrand=144947304343770102&hvpone=&hvpone=&hvptwo=&hvptwo=&hvqmt=&hvqmt=&hvdev=c&hvdev=c&hvdvcmdl=&hvdvcmdl=&hvlocint=&hvlocint=&hvlocphy=9032091&hvlocphy=9032091&hvtargid=pla-699875264606&hvtargid=pla-699875264606&mcid=5ffa2a0adf6235ed8f26f17421d1ef4c&adgrpid=70737352722):** Perfect for creating just enough light in the nursery for late-night feedings, diaper changes, etc. However, turning it off makes a slight clicking noise that may or may not jolt your baby awake after he’s just dozed off. 7. **Portable noise machines:** We’ve tried a bunch; here are my favorites in descending order: 1. [Frida Baby 2-in-1 Portable Sound Machine + Nightlight](https://www.amazon.com/gp/product/B099FH2XKH) 2. [Babelio Mini Sound Machine](https://www.amazon.com/gp/product/B0BRB6S14Y?th=1) 3. [Yogasleep Hushh+ Portable White Noise Machine](https://www.amazon.com/dp/B0BMCY5C48) 4. [Dreamegg White Noise Machine](https://www.amazon.ca/gp/aw/d/B0B6G2BV9W?th=1) [Haven’t tried this one but seems great] ## Everyday essentials 1. **[BabyBjörn Bouncer](https://www.amazon.com/gp/product/B00BQYVOKY?colid=1VSRQYYNL3KOZ&coliid=I2FPZBEM73D1DN&redirect=true&vs=1&th=1):** I don’t know how you get anything done around the house without one of these. Babies love them. 2. **[Ubbi diaper bin](https://www.amazon.com/stores/page/F4A1D839-CECB-448A-94F8-FF34596C6CE1?ingress=2&visitId=640a9054-f10c-4081-a7b3-bdb4bb12bf5f):** We tried three other bins, with fancy features, and kept coming back to this one. Like Google Sheets—it just works. 3. **[WubbaNub Pacifiers](https://www.amazon.com/stores/page/DF7C5E26-7BE1-49D8-B3F8-AC06B23FA9F1?ingress=2&visitId=7d3f4c39-9b1c-4aab-a99b-0188a60c8ac7):** Not just cute, but also practical for wedging into places so that it doesn’t fall out. [![Image from A new-parent gift guide](https://substack-post-media.s3.amazonaws.com/public/images/85459903-385e-402f-9b3e-8428e52c94d0.tif)](https://substackcdn.com/image/fetch/$s_!iXyB!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F85459903-385e-402f-9b3e-8428e52c94d0.tif) 4. **[Keekaroo Peanut Changer](https://www.amazon.com/Keekaroo-0130009KR-0001-Peanut-Changer-Vanilla/dp/B00KSW970Y?crid=2K0Z31XEVP88F&keywords=Keekaroo&qid=1700340943&sprefix=keekaroo%2Caps%2C147&sr=8-1&ufe=app_do%3Aamzn1.fos.18ed3cb5-28d5-4975-8bc7-93deae8f9840):** Perfectly designed for its job to be done. 5. **[Ofie Mat by Little Bot](https://littlebotbaby.com/collections/ofie-mat/products/little-bot-baby-play-mat-ofie-mat-plant-eze):** A soft and textured mat for baby to play on. There are a few different cute design options, and many are two-sided for added variety. [![Image from A new-parent gift guide](https://substack-post-media.s3.amazonaws.com/public/images/9b33183e-4fb8-45e1-a672-927f1c867715_1512x1511.png)](https://substackcdn.com/image/fetch/$s_!TRmV!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F9b33183e-4fb8-45e1-a672-927f1c867715_1512x1511.png) 6. **[Overland sheepskin](https://www.overland.com/products/single-pelt-(2-x-35)--premium-australian-sheepskin-rug-80313?cl=ivry):** To change up the texture on the mat or nursery floor. Makes tummy time a little softer (and fancier). 7. **[Butt Spatula](https://www.amazon.com/Bumco-2-PACK-Diaper-Cream-Spatula/dp/B075VC9VNC?crid=1Z0DHSCAFONC&keywords=Butt+Spatula&qid=1700341019&sprefix=butt+spatula%2Caps%2C159&sr=8-6&th=1):** Get it and it’ll make sense later. 8. **[Oogiebear Booger Picker](https://www.amazon.com/oogiebear-Cleaner-Registry-Essential-Removal/dp/B07CZRHML9?crid=QXWI5MZJ5LBX&keywords=booger+picker+tool+newborn&qid=1700347813&sprefix=booger+picker%2Caps%2C163&sr=8-5):** Super-useful, super-satisfying. My wife loves to save the biggest boogers to show me later. 9. **[Haakaa Baby Nail Trimmer](https://www.amazon.com/Electric-Clippers-Manicure-Grooming-Fingernails/dp/B08H22JLBV?crid=1NDBNSX9CJQ4&keywords=cherish+baby+nail+file+electric+nail+trimmer&qid=1700430584&sprefix=nail+file+baby%2Caps%2C148&sr=8-6)**: I tried using regular nail clippers once, and it did not end well 🩸😭 10. **[Lovevery](https://lovevery.com/):** I know everyone you know is already telling you to get this subscription, so I’ll just +1 that. Elegant, thoughtful, and handy at every step of the baby’s journey. Some people also like the [Lalo](https://www.meetlalo.com/pages/the-play-boxes). 11. **[Summer Health](https://www.summerhealth.com/):** A service that lets you text a pediatrician any day or night with random questions and get an answer within 15 minutes. We’ve used it to settle disagreements about hand washing, to check to make sure we didn’t ruin the baby when our dog knocked a heavy water bottle onto his noggin, and whether his eye goop was normal (it was). It’s so much more convenient (and quicker) than asking our actual pediatrician questions, and it’s nice to get a second “It’s OK.” The team at Summer Health gave me a 20% coupon code to share: LENNY20. [Or use this link](https://www.summerhealth.com/?promotion_code=LENNY20). 12. **[The Getaway Bag](https://noreceptionclub.com/products/backpack-getaway):** An ingeniously designed diaper bag made especially for travel. They have [other great products too](https://noreceptionclub.com/). [![Image from A new-parent gift guide](https://substack-post-media.s3.amazonaws.com/public/images/1819d982-ff5e-4210-8450-ceb6a25e72e6_1000x1000.webp)](https://substackcdn.com/image/fetch/$s_!LiYN!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F1819d982-ff5e-4210-8450-ceb6a25e72e6_1000x1000.webp) 13. **[Ergobaby Omni 360](https://www.amazon.com/dp/B07B3TXCL6?th=1):** My wife loved carrying the baby in this. Even though there are prettier ones out there, this one was easy and ergonomic. Function over form. [Watch out for hip dysplasia](https://hipdysplasia.org/baby-wearing/). 14. **[Elvie Stride Plus](https://www.elvie.com/en-us/shop/elvie-stride-plus):** My wife grew to love this portable breast pump (after a couple of devastating initial leaks while she was figuring it out). As a bonus, it comes with a super-handy cooler for transporting milk to and fro. ## Clothes Most of our newborn clothes were hand-me-downs, but these were our favorite brands of the bunch: 1. **[Magnetic Me](https://magneticme.com/collections/baby-shop?tw_adid=611427025329&tw_campaign=904369644&tw_source=google&page=3):** Magnets and zippers (especially double-sided) are your friends. Buttons and clasps are your enemy. We ain’t got time for that. 2. **[Posh Peanut](https://poshpeanut.com/):** A friend gifted us a onesie from here, and it’s been our enduring go-to. Makes a great gift, especially if you add on the beautiful gift box. 3. **[Primary](https://www.primary.com/collections/baby?sizeFamily=baby&page=1):** Colorful, soft, and always draws comments from other moms. 4. **[The Ollie Swaddle](https://www.amazon.ca/Ollie-Swaddle-Nature-Collection-Sky/dp/B01831ZNWW/ref=sr_1_1?keywords=ollie+swaddle&qid=1700339934&sr=8-1&th=1):** We tried a bunch of swaddles but kept coming back to this one. Our second favorite was the [SwaddleMe](https://www.amazon.ca/Summer-Infant-SwaddleMe-Easy-Change/dp/B08J2F8M2L/ref=sr_1_6?crid=N7UUA9AYCT9G&keywords=SwaddleMe&qid=1700340001&sprefix=swaddleme%2Caps%2C240&sr=8-6). 5. **[Kyte sleep sack](https://www.amazon.ca/Kyte-Baby-Sleeping-Toddlers-Months/dp/B07PF1D4WD/ref=sr_1_9?crid=HAA1WCBA2KR0&keywords=Kyte+Baby+Sleeping+Bag&qid=1700340514&sprefix=kyte+baby+sleeping+bag%2Caps%2C129&sr=8-9&th=1):** Once you graduate from a swaddle. So soft, so cuddly. ## Bonus fun stuff 1. ***[Art for Baby](https://www.amazon.com/Art-Baby-Various/dp/0763644242?linkCode=df0&hvadid=312057607871&hvpos=&hvnetw=g&hvrand=1602346812400776707&hvpone=&hvptwo=&hvqmt=&hvdev=c&hvdvcmdl=&hvlocint=&hvlocphy=9032091&hvtargid=pla-420872741014&mcid=4773c688ddb03f39a1d772114d7b789e)*** **[board book](https://www.amazon.com/Art-Baby-Various/dp/0763644242?linkCode=df0&hvadid=312057607871&hvpos=&hvnetw=g&hvrand=1602346812400776707&hvpone=&hvptwo=&hvqmt=&hvdev=c&hvdvcmdl=&hvlocint=&hvlocphy=9032091&hvtargid=pla-420872741014&mcid=4773c688ddb03f39a1d772114d7b789e):** Practical and beautiful. There are also pull-out images you can tape to the wall with washi tape for a rotating gallery above the changing table. [![Image from A new-parent gift guide](https://substack-post-media.s3.amazonaws.com/public/images/2283a5b1-ddf9-459b-90a0-2cb35c058823_1000x1000.png)](https://www.amazon.com/Art-Baby-Various/dp/0763644242?linkCode=df0&hvadid=312057607871&hvpos=&hvnetw=g&hvrand=1602346812400776707&hvpone=&hvptwo=&hvqmt=&hvdev=c&hvdvcmdl=&hvlocint=&hvlocphy=9032091&hvtargid=pla-420872741014&mcid=4773c688ddb03f39a1d772114d7b789e) 2. ***[Go to Sleep (I Miss You)](https://www.amazon.com/Go-Sleep-Miss-You-Parenthood/dp/1250211492)*****:** Cute as hell, sweet as heck. [![Image from A new-parent gift guide](https://substack-post-media.s3.amazonaws.com/public/images/9c15029c-0744-4920-9a67-26f176b5d652_1500x1500.png)](https://www.amazon.com/Go-Sleep-Miss-You-Parenthood/dp/1250211492) 3. **[Little Moonjumper blanket](https://littlemoonjumper.com/Moonjumper-Crib-Blanket-p/mjc.htm):** You can customize the name on the blanket. Makes an amazing gift. What else do you love? Leave a comment so other people can find it 👇 [Leave a comment](https://www.lennysnewsletter.com/p/a-new-parent-gift-guide-for-product/comments) *Have a fulfilling and productive week 🙏* ## 👀 Hiring? Or looking for a new job? I’m piloting a white-glove recruiting service for product roles, working with a few select companies at a time. If you’re hiring for senior product roles, apply below. [Apply to join](https://www.lennysjobs.com/talent/) [![Image from A new-parent gift guide](https://substack-post-media.s3.amazonaws.com/public/images/31f01493-9703-40e3-9997-b26858557981_1492x1194.png)](https://substackcdn.com/image/fetch/$s_!0cYf!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F31f01493-9703-40e3-9997-b26858557981_1492x1194.png) If you’re exploring new opportunities yourself, use the same button above to sign up. We’ll send over personalized opportunities from hand-selected companies if we think there’s a fit. Nobody gets your info until you allow them to, and you can leave anytime. **If you’re finding this newsletter valuable, share it with a friend, and consider subscribing if you haven’t already. There are [group discounts](https://www.lennysnewsletter.com/subscribe?group=true), [gift options](https://www.lennysnewsletter.com/subscribe?gift=true), and [referral bonuses](https://www.lennysnewsletter.com/leaderboard) available.** Sincerely, Lenny 👋 --- ## [47/51] Lessons from going freemium: a decision that broke our business *P.S. Don’t miss [Lennybot](https://www.lennybot.com/), my AI chatbot that’s trained on every newsletter post and every podcast interview.* I’m increasingly on the lookout for stories of failures, because failure can hold the most enduring lessons. So when [Bobby Pinero](https://www.linkedin.com/in/bobbypinero/) (CEO of [Equals](https://equals.com/)) [tweeted](https://x.com/bobbypinero/status/1711753079601684679?s=20) about how adding a freemium plan nearly destroyed his business, I asked if he’d go one layer deeper and share his experience more widely. Below, Bobby tells the in-depth story of why his team decided to add freemium, why it didn’t work, and the many lessons they learned along the way. Every founder without a freemium plan grapples with the question of whether they should go freemium or not. My hope is that this post makes the decision easier for you. *For more from Bobby Pinero, follow him on [X](https://twitter.com/bobbypinero) and [LinkedIn](https://www.linkedin.com/in/bobbypinero/), and check out [Equals](https://equals.com/). And a big thank you to [Elena Verna](https://www.linkedin.com/in/elenaverna/) and [Patrick Campbell](https://www.linkedin.com/in/patrickccampbell/) for important feedback on early drafts of this post.* ![Image from Lessons from going freemium: a decision that broke our business](https://substack-post-media.s3.amazonaws.com/public/images/8a74f2b9-678b-41e1-a45d-2f10fb7a72a1_8000x4000.png) It seems almost every SaaS founder wrestles with the question of freemium. Do we or don’t we? ![Image from Lessons from going freemium: a decision that broke our business](https://substack-post-media.s3.amazonaws.com/public/images/8f8e2075-d338-4dac-a8bc-cd4c4ec1586c_1562x1151.png) The temptation is real. This is the story of what happened when we opened the floodgates by going freemium, and how it nearly destroyed our business. Below, I’ll share our biggest lessons, including: 1. **The customer can be wrong.** Users may scream for freemium. Investors and advisors will agree. It might even start OK (we 4x’d users right out of the gate). But initial usage is different from long-term usage. For us, engagement, retention, and revenue tanked. 2. **“Freemium” and “friction” are tied at the hip.** The success (or failure) of freemium can be directly impacted by friction in onboarding. If you change one, you probably need to rethink the other. 3. **Adding onboarding friction can be good.** The prevailing sentiment is that friction in onboarding is bad. Not true. Friction can be critical to driving short-term adoption and long-term retention. 4. **The allure of seeing a new product is the strongest motivator new users have to complete setup.** If you make onboarding too easy, they’ll never come back to do the hard task you let them skip. 5. **When freemium can work.** It requires a specific set of things to come together. And time, which you might not have. Ultimately, freemium didn’t work for us. That doesn’t mean it couldn’t work for you. My hope is that you’ll learn from our experience—and hopefully, we’ll learn from you too. ## How it all started First, some context. What is Equals? It’s a [next-generation spreadsheet](https://equals.com/)—one that allows you to query, analyze, and report on live data. Think business intelligence, but in the familiar and flexible form of a spreadsheet. We launched Equals in April 2022. We made a big splash. ![Image from Lessons from going freemium: a decision that broke our business](https://substack-post-media.s3.amazonaws.com/public/images/557bd7f8-355f-42b4-8253-a254e471bcaa_1600x1174.png) Because expectations for how a spreadsheet should look and feel are insanely high, we gated initial access to the product. We onboarded every single customer manually. We wanted to understand their use case. We wanted to establish a close relationship so they’d give us the benefit of the doubt when they inevitably ran into issues. From day one, you couldn’t get Equals without (1) jumping on a call with us *and* (2) paying up front. There was no trial. There was no self-serve version of Equals. It was about as high-friction an onboarding process as you can get in SaaS. ![Image from Lessons from going freemium: a decision that broke our business](https://substack-post-media.s3.amazonaws.com/public/images/ec5155af-2e5b-4680-98b0-3a8acda1239a_1600x879.png) That strategy worked really well. In fact, it worked so well that revenue took off. In just five months, we were able to raise a $16 million Series A funding round from one of the best investors in the world, a16z. And then we broke everything. ## Everyone wanted less friction After being in the market for a handful of months, we started to hear a lot of complaints on how we onboarded folks. It all boiled down to some version of “Equals looks amazing, just let us into the product!” They wanted a self-serve option. ![Image from Lessons from going freemium: a decision that broke our business](https://substack-post-media.s3.amazonaws.com/public/images/204ac9ff-6f0f-4749-9c82-13cfab97ccd6_1356x946.png) They wanted a way to skip our data source requirement during onboarding. ![Image from Lessons from going freemium: a decision that broke our business](https://substack-post-media.s3.amazonaws.com/public/images/36b33f3b-436c-40cc-8102-2dca23ee64fe_1600x904.png) And most of all, they wanted a free plan. Not a free trial. No time limit or credit card required. ![Image from Lessons from going freemium: a decision that broke our business](https://substack-post-media.s3.amazonaws.com/public/images/2fbd5ee3-a5ba-4ccf-8196-76d0021fa03e_1600x483.png) It felt like we were missing a massive opportunity. It was easy to imagine all of the customers and users we were turning away. It was easy to look at the darlings of SaaS—companies like Notion, Figma, Airtable, Canva—and think that what worked for them would work for us. Let’s get people into the product, we thought, and we’ll figure out how to monetize them later. This began a six-month journey in which we tried giving folks what they wanted: a faster and frictionless way into Equals. We started by introducing a free plan. ## Introducing freemium (and removing a lot of friction) When we [announced our Series A](https://x.com/bobbypinero/status/1590374986836897792?s=20), we opened up Equals to the world: - ✅ No more onboarding call required - ✅ Prices slashed for current and future customers - ✅ A generous new free plan. Stay under the limits, and Equals was free indefinitely for you. 🚧 However, we still did require people to connect a data source to get started. ![Image from Lessons from going freemium: a decision that broke our business](https://substack-post-media.s3.amazonaws.com/public/images/4e7b15fe-a8d9-406f-9ac3-d1c33857c5f4_1600x1077.png) Let the masses sign up, we thought. And they did. For a little while, at least. ![Image from Lessons from going freemium: a decision that broke our business](https://substack-post-media.s3.amazonaws.com/public/images/c92e527b-f382-465e-9df8-7f3313cea96b_1430x1392.png) We knew ARR would take a hit short-term, with the bet that we’d drive more companies to get stuck into Equals and drive ARR higher long-term. As a result, we reoriented the entire company, board, and investor base to focus on the metric of weekly active companies, not ARR. Our North Star was now to get as many companies using Equals as possible, with the belief that we’d later monetize them. Almost immediately, we 4x’d the number of companies using Equals on a daily and weekly basis. ![Image from Lessons from going freemium: a decision that broke our business](https://substack-post-media.s3.amazonaws.com/public/images/a23231e1-1591-4610-bcc2-679264e913aa_1600x1005.png) But then, over the course of the next few months, we stalled. And struggled to retain companies. ![Image from Lessons from going freemium: a decision that broke our business](https://substack-post-media.s3.amazonaws.com/public/images/d6de5cad-54fb-4689-91e2-ba3a9409e723_1600x1014.png) The initial surge in new, active companies came from pent-up demand. Many were people who were on our waitlist who for some time had been looking to try Equals. Once we’d worked through that initial demand, we quickly got to a point where we couldn’t grow our active company base. For every new company we’d bring in, someone else would drop off—a precarious situation. ![Image from Lessons from going freemium: a decision that broke our business](https://substack-post-media.s3.amazonaws.com/public/images/ba090a8b-9d92-4b60-a537-db10bd93457e_1390x900.png) For freemium to work, we knew we needed to quickly and aggressively grow the number of active companies using Equals. Knowing that only a small fraction of active companies would ever convert to paid over time, not growing our active company base was an early indicator that we’d struggle to grow revenue at the rate we needed to in the future. ## Giving people (more of) what they want While Equals was now free to get started, we still had a decent amount of friction in onboarding. We still required users to connect a live data source—you couldn’t create a workbook and actually see “the next-generation spreadsheet” until you’d completed this critical step. And it wasn’t working. So we heeded the feedback we continued to get: “Just let us in!” ![Image from Lessons from going freemium: a decision that broke our business](https://substack-post-media.s3.amazonaws.com/public/images/5fca0295-5da1-406a-9082-ab7a3c28715e_680x367.png) This only made things worse. As we embarked further down the path of less friction, our hypothesis and goal was to accelerate the number of new companies making it deep into Equals. We thought perhaps that the more they got into the product, perhaps the more motivation they’d have to ultimately get set up—by seeing Equals, they’d see the potential of what it could do! Perhaps some people would even use us without a data source. ![Image from Lessons from going freemium: a decision that broke our business](https://substack-post-media.s3.amazonaws.com/public/images/fc2bac6f-f8db-4266-8ddb-c411edb974c9_1600x995.png) We ran two key experiments. First, we allowed users to get started by using a CSV as a data source instead of requiring them to connect to a database or data warehouse. The thinking: everyone has access to and can upload a CSV file. Nope. This only hurt engagement further. Yes, more people made it to the step of using the product. But ultimately fewer of them became engaged, retained users. Not only were fewer people getting stuck in, but we were actually *losing* people who would have otherwise connected a live data source. It turned out that less friction *cost* us engaged users*.* Which in hindsight makes sense—a CSV is stale data. You’re missing most of the value of Equals when auto-updating analysis on live data. ![Image from Lessons from going freemium: a decision that broke our business](https://substack-post-media.s3.amazonaws.com/public/images/d01bef4c-63a1-45f9-ad69-cb681f1c1dc6_1600x528.png) Next, we tried a more extreme experiment. We allowed everyone to bypass the data source setup step altogether. Just get them in, let them see the next-generation spreadsheet. We also created setup guides, in-product nudges, and follow-up messages all pushing folks to connect a data source thereafter. And it worked! We blew up. Thousands and thousands of active companies using Equals. Just kidding. It was awful. ![Image from Lessons from going freemium: a decision that broke our business](https://substack-post-media.s3.amazonaws.com/public/images/3baed9e8-c97e-4b58-9a2d-8750926a9ed0_1375x1600.png) At this point, we were stuck in the mud. ## Undoing the damage The original plan: raise our next round of funding by showing an exploding base of active companies, and from there generate revenue over time. Yet here we were, stalled, unable to grow incremental active companies despite having listened to and acted on what everyone told us they wanted or what we should do. It was quickly clear that we weren’t putting ourselves in the best position to raise a meaningful Series B. As a venture-funded startup, we simply didn’t have the time to keep tweaking. To keep experimenting. To keep trying to make freemium work. Now we had the evidence we needed to act with conviction. Both the results we were seeing in the data and our early traction selling Equals told us we needed to (1) kill free *and* (2) add friction back to onboarding. Quickly. And once we did, everything changed. Although we didn’t bring back *all* the friction. We still held the fundamental belief that Equals should be self-serve. The next-generation spreadsheet should be something anyone could sign up for and get started with, so we didn’t believe it was right to go back to selling only through sales calls. We felt a strong pull to make a self-serve option work. Yet we intuitively knew that the data source requirement itself wasn’t enough for users to have “skin in the game”—to have that motivation to get to the aha moment and activate. So this time we decided to require every signup to start a 14-day free trial and input a credit card, a step between a free self-serve product and having to get on the phone with us. This worked. ![Image from Lessons from going freemium: a decision that broke our business](https://substack-post-media.s3.amazonaws.com/public/images/6edaa67f-0198-4408-870c-d2aeeb5897a4_1600x1168.png) ARR (and customers) almost immediately bounced back. And it’s important to add that we didn’t change pricing for anyone who signed up during the free period; we didn’t force anyone who originally signed up for free to suddenly start paying. This growth was all new customers. ![Image from Lessons from going freemium: a decision that broke our business](https://substack-post-media.s3.amazonaws.com/public/images/7e5a6330-d75a-465b-8ece-229078c5ae68_1600x966.png) But even more interestingly, the number of deeply engaged users went *up*. ![Image from Lessons from going freemium: a decision that broke our business](https://substack-post-media.s3.amazonaws.com/public/images/ec339f22-0c0b-4afe-9b23-74199447fbac_1600x1001.png) With the same number of new companies signing up, we were once again growing the number of customers and ARR but *also* the number of companies active in Equals. We were once again activating and converting people *who in the previous world would have signed up and dropped off*. Reintroducing the data source requirement certainly helped. But requiring the credit card up front—and getting rid of freemium—seemed to have the biggest positive impact in helping users activate. This is not what users were asking for. Nor what advisors told us. Nor what you’d imagine when you look at the darlings of SaaS. Which brings us to the most important lessons and reflections from this period. ### Onboarding is more sales than it is product Onboarding is a game of convincing a new user to keep going. It’s about momentum. We found two real ways to build and maintain momentum. First, the allure of seeing a new product is the strongest motivator a new user has to complete complex setup tasks. If you need your users to do something that you believe is fundamental to their seeing value from your product, don’t let them skip it. Their motivation to do it will only decrease. In all of our pursuit of getting people into the product, the thing we forgot is that the goal of onboarding is not for people to complete onboarding. It’s not to just get people into the product. **The goal of onboarding is for people to get their first moments of value from your product.** To get “activated.” And *removing* friction is actually detached from this goal. ![Image from Lessons from going freemium: a decision that broke our business](https://substack-post-media.s3.amazonaws.com/public/images/756ba8b8-f9e2-477f-8d97-291c25670440_1600x900.png) Second, we found that forcing users to invest upfront, in the form of a credit card and a limited-time window to make a decision, adds inertia and urgency to get set up. The act of putting in their credit card increases their level of commitment to go through the hard steps. A free plan does the opposite. *Your users may tell you otherwise, but this is why adding friction to onboarding can outperform.* ### Maybe freemium isn’t for every product Obviously for some companies it works. Notion, Figma, Airtable, Canva, Miro, Loom, to name a few. Many [still](https://twitter.com/Patticus/status/1719819631953588298?s=20) [believe](https://www.youtube.com/watch?v=134z2mHgaLs) it’d work for Equals. Having been through this at Equals, and drawing from our experience building Intercom, here are a few guiding questions to consider as you think about whether freemium could work for your business: 1. **Do you have a massive potential user base?** Can you viably drive tens of thousands of active users to your product, over and over? The funnel from visit to activated to paid is long, so you need a *very* largepotential user base. Remember, only a small fraction of free users become paid, and you’ll eventually need to build a real business. 2. **Do you have a really short time to value?** Minimal setup: minutes, not hours. The faster the time to value, the less inertia required to overcome to make it through onboarding and the more likely free is to work. This isn’t *always* the case, though, so… 3. **Is your product foundational for the end user?** Highly technical and longer-time-to-value products like AWS, MongoDB, and Sanity have successful free tiers, mostly because they serve users in the earliest stages of problem development, when the end user is just learning about the solution and needs a frictionless way to learn. 4. **Do you have a very low incremental cost to serve each customer?** Supporting a lot of free users who may never convert to paid can make your business model unviable. 5. **Do free users contribute to your growth model?** Are there viral loops that free users contribute to or accelerate? Are there network effects? Think of Loom and Miro. For every free user who shares a Loom (video), there’s likely at least one other person who might record a Loom in the future. It’s win-win. For us, we fell down in areas 2, 3, and 4. Our time to value is long. We’re more useful once someone has a business and real data to work with. And we’re still in a phase where we do need to support and help early users, fairly frequently. It’s costly. And again, as a venture-backed startup in a precarious macroeconomic environment, we don’t have time on our side. Freemium takes time to pay off—time that we simply don’t have, at least right now. ### Filter the noise Many users will kick and scream when you ask them to do the hard things to use your product. ![Image from Lessons from going freemium: a decision that broke our business](https://substack-post-media.s3.amazonaws.com/public/images/5dd3f75f-34d1-481c-b7a7-39cccb58cf5b_1518x390.png) I can now confidently read a message like that and know that this person doesn’t feel enough of the pain Equals solves. Not in any near-term window were they going to be a paying Equals customer. Since removing free, we’ve also brought back a very clear level of focus across the company. We know which users to pay attention to. We know who to support, who to build for, and who should inform our messaging and positioning. We’re clearly focused on building a *business*. ### Trust the process I’m glad we tried freemium, despite all the challenges and existential dread. It was a lesson we had to learn for ourselves. It’s an itch that, had we not scratched it, would have been something we’d have debated year after year to come. Startups are about experimenting. Every startup has a finite window of opportunity, and the winners are usually the ones that try the most things along the way. We tried, but I’m also proud of the fact that we tried, failed, and quickly reverted back to something that was working. So if you take only one thing away from this, I hope it’s that you must ship, learn, iterate, and ship again. As fast as you possibly can. *Thank you, Bobby! For more from Bobby Pinero, follow him on [X](https://twitter.com/bobbypinero) and [LinkedIn](https://www.linkedin.com/in/bobbypinero/), and check out [Equals](https://equals.com/).* *For more on this topic, check out Bobby’s related posts on [Every](https://every.to/p/how-freemium-almost-killed-my-business), and [the Equals blog](https://wraptext.equals.com/the-fallacy-of-freemium-in-saas/).* *Have a fulfilling and productive week 🙏* ## 👀 Hiring? Or looking for a new job? I’m piloting a white-glove recruiting service for product roles, working with a few select companies at a time. If you’re hiring for senior product roles, apply below. [Apply to join](https://www.lennysjobs.com/talent/) If you’re exploring new opportunities yourself, use the same button above to sign up. We’ll send over personalized opportunities from hand-selected companies if we think there’s a fit. Nobody gets your info until you allow them to, and you can leave anytime. **If you’re finding this newsletter valuable, share it with a friend, and consider subscribing if you haven’t already. There are [group discounts](https://www.lennysnewsletter.com/subscribe?group=true), [gift options](https://www.lennysnewsletter.com/subscribe?gift=true), and [referral bonuses](https://www.lennysnewsletter.com/leaderboard) available.** Sincerely, Lenny 👋 --- ## [48/51] Lessons on building a viral consumer app: The story of Saturn *P.S. Don’t miss [Lennybot](https://www.lennybot.com/), my AI chatbot that’s trained on every newsletter post and podcast interview.* I recently heard about an app called [Saturn](https://www.joinsaturn.com/) that reached the top of the App Store charts—and stayed there. This is incredibly rare. As I dug in and chatted with the founders, I was blown away by how methodically they were able to articulate what it takes to build a viral consumer app (particularly one targeted at Gen Z). They launched the company back in 2019, while still students at the University of Pennsylvania, and today have scaled the app to millions of users and nearly 20,000 schools. Their cap table is also unreal and includes General Catalyst, Insight, Coatue, Dick Costolo and Adam Bain’s 01 Advisors, and folks like Marc Benioff (CEO and co-founder of Salesforce), Dara Khosrowshahi (CEO of Uber), Ashton Kutcher, Robert Downey Jr., Mike Vernal (Sequoia), Bezos Expeditions (the personal investment company of Jeff Bezos), Elad Gil, and Dylan Field (CEO and co-founder of Figma). I’m not an investor, but I wish I were. Below, co-founders [Dylan Diamond](https://www.linkedin.com/in/dylancdiamond/) and [Max Baron](https://www.linkedin.com/in/max-baron-saturn/) share their biggest lessons on building a viral social consumer app, including: 1. **Embracing single-player mode as a wedge for social products** 2. **Building a product that users feel was built just for them** 3. **Why it’s OK to be unscalable—you can make it scale later** 4. **Building a familiar product is much easier if you’re solving a problem you’ve experienced** 5. **Playing the long game** I spend most of my time looking for patterns across many successful companies, but often you can learn more by studying a single example in depth. This is an excellent example of the latter. *For more on Saturn, check out [joinsaturn.com](https://www.joinsaturn.com/).* ![Image from Lessons on building a viral consumer app: The story of Saturn](https://substack-post-media.s3.amazonaws.com/public/images/adfeaba2-6c27-4959-b7d8-77683a216a95_4000x2000.png) Saturn is a social network built around the calendar. We started in high schools by building the most powerful real-time calendar ever made exclusively for students. Today we support millions of students at nearly 20,000 schools across the country, entirely bottom-up through the students themselves, without a single school partnership. ![Image from Lessons on building a viral consumer app: The story of Saturn](https://substack-post-media.s3.amazonaws.com/public/images/bd79830c-8ebb-4855-88a1-88f5ce4f507e_1600x898.png) It took years to build critical mass by launching at enough schools to see a significant inflection in our growth and the development of real network effects. This August, we reached fourth overall in Apple’s App Store and second on the Social Networking charts, while maintaining a tailored and closed network for each school. ![Image from Lessons on building a viral consumer app: The story of Saturn](https://substack-post-media.s3.amazonaws.com/public/images/c1724424-23dd-4d8f-8bd8-c5a5b989821e_2756x2796.png) We have a long way to go and millions more students to support, but here are a few lessons we’ve learned that might be useful in building your own consumer social product. *Quick note/disclaimer: No two apps, or growth journeys, are going to be exactly the same—so these lessons won’t be directly interchangeable, but hopefully you can draw from some of them in making your own product and go-to-market decisions. We also note some of the (many) lessons we’ve learned from other major social networks and social utilities since getting started ourselves in 2019.* ### **1. Embrace a single-player mode as a wedge for social products** Many people talk about the value of a “single-player mode.” The reason is simple: it usually unlocks retention, and retention unlocks time—time to iterate and improve on your product. In our case, having a single-player mode gave us more time to launch and refine key social features that improved the network effects of our product. Great retention reduces the cost of making mistakes, and allows you to take bigger risks and learn faster. Chris Dixon wrote about this in a 2015 [piece](https://cdixon.org/2015/01/31/come-for-the-tool-stay-for-the-network) called “Come for the tool, stay for the network,” observing that “starting a network from scratch is very hard. Think of single-player tools as kindling.” From the beginning, Saturn combined a (primary) single-player utility as a user’s daily calendar with a multiplayer or “social” value that came from being able to see what your friends were doing during the high school day. Over time, we’ve introduced new utility and social use cases and continue to invest in those, but our retentive hook has remained a calendar, originally single-player, eventually multiplayer, that perfectly supports each school. ![Image from Lessons on building a viral consumer app: The story of Saturn](https://substack-post-media.s3.amazonaws.com/public/images/6910c8d4-e804-46d5-a125-45c8668aaadc_1600x896.png) Since we started Saturn, many apps have achieved “hypergrowth” in various demographics with novel multiplayer social features and more impressive K-factors than ours, but, without a retentive single-player utility, most of them seem to have experienced a destructive inverse K-factor as well. As your friends start leaving, the product quickly gets significantly worse. That decay in value is *nonlinear*. Early departures disproportionally worsen the overall value of the network. Here’s an example of how this happens: A new app is super-popular. All of your friends are posting to it once a day. Over the course of a weekend, three of those friends don’t post—it’s not a coordinated effort, but they just aren’t motivated by the notification loops and existing content. Suddenly the library of available (and relevant) content has been significantly reduced, and the product as a whole has become significantly less compelling. Over the coming days, another three people open the app, just to check in, but don’t feel like they need to post. In the span of just a few days, you’ve lost 60% of your creators, and for those final four users, the product is a shell of what it was just a few days before. When the value of an app is almost entirely social, any change in the network will have outsized effects on its overall health. When a network starts shrinking, things spiral quickly, and when a few of your friends stop creating or participating, there is less of a pull for you to participate. These are products with great social loops but lack a legitimate single-player use case that keeps you coming back. This rarely works out. You want to build a product where users can survive in smaller pockets—or, better still, alone. Saturn works well even if you are alone, since our calendar provides single-player value and helps you manage your schedule, regardless of how many others may be on the platform. This shows in our new-user retention across the whole platform: ![Image from Lessons on building a viral consumer app: The story of Saturn](https://substack-post-media.s3.amazonaws.com/public/images/49096cd5-c18f-4d6d-aaa6-d584d1e168d3_1600x896.png) For context on D30 retention, all of Snap, TikTok, Twitter, and Facebook have D30 new-user retention between 28% and 40% ([source](https://a16z.com/do-you-have-lightning-in-a-bottle-how-to-benchmark-your-social-app/)).Ours is currently in the mid-30s. It’s important to note that there are social products that have built single-player utility after they built a network, and others, like Facebook, that never had to. But many did. For example, Venmo didn’t start as a social payment network with a robust activity page; it had a clear utility-based user story that was deeply valuable to you: “get paid by a friend.” Of course, over time, as the network formed, they developed a significant moat and a network effect that resulted in the story changing to “get paid by your friends—all of them—even faster.” There was a very clear utility-oriented use case along the entire journey—and one that helped them survive within friend groups, even if it didn’t work initially between them. **Takeaway:** Look for (and double down on) a single-player use case to increase retention (both short- and long-term) that will help unlock time to figure out multiplayer social features that create lasting network effects. ### **2. Build a product that users feel was built just for them** Most experiences on your phone feel remarkably impersonal. From day one, our approach helped make Saturn a refreshingly personal experience. We started by white-labeling an app for the students at Connecticut’s Weston High School. We spent a month working with our student ambassador there to deeply understand the complexities of her schedule and the challenges it resulted in for her and her friends. Then we built iWeston to perfectly support their calendar. The night we launched, more than half of the student body joined in just the first three hours. For our first 17 schools, we repeated this process of launching white-labeled apps, each with the school’s letter as its icon, making the app more recognizable and reducing friction to download on the App Store. Another benefit: it looked better on users’ home screens. ![Image from Lessons on building a viral consumer app: The story of Saturn](https://substack-post-media.s3.amazonaws.com/public/images/bd1fe36d-7749-477b-871f-53c24dd1b978_1600x896.png) When you logged in to any of these apps, you were greeted with an experience that was colorized for your school and perfectly supported the complexities of your schedule. It felt like the app had been built just for your school, because it was. ![Image from Lessons on building a viral consumer app: The story of Saturn](https://substack-post-media.s3.amazonaws.com/public/images/4ce2871b-a48b-4995-9262-4c93b3d0efb4_1600x896.png) These school launches were really exciting. We’d recruit an ambassador and then work with them to understand the mechanics of their school, which took less time as we became more familiar with complex schedules. We’d then work with them to spread the word on “launch night” and in the days that followed. They were consistently excited to launch at their schools, and frequently earned social capital for having been our ambassador. For the first few launches, growing at a school was as simple as orchestrating Facebook posts in school-related groups and texts in group chats to help make sure people knew the app was available. Over time, we honed this process, adding sharing links, developing custom landing pages, and adding dynamic content that could be shared directly to your social stories—all of this with the goal of making it easier to invite your friends to join you. By virtue of this product and growth strategy, we came to market with an experience that was unusually perfectly fit to the audience of a specific school. This translated into incredibly fast adoption at schools. It was common to win a critical mass at schools in hours: ![Image from Lessons on building a viral consumer app: The story of Saturn](https://substack-post-media.s3.amazonaws.com/public/images/37ad99de-b455-4bb3-a5ca-75c907874cd0_1600x891.png) By the time we reached 18 schools, we were balancing the need to ship new features and bug fixes and also launch at new schools. We decided to finally consolidate into a single app: Saturn. By consolidating, we unlocked a significantly faster school launch rate while preserving the personal touches users were loving. ![Image from Lessons on building a viral consumer app: The story of Saturn](https://substack-post-media.s3.amazonaws.com/public/images/90763ba8-1150-4342-b49f-d0620458d324_1600x891.png) We wanted the experience of joining your school to be magical regardless of our scale. Even today, you arrive, add your classes, and everything is reflected perfectly. It leaves you with a “how did they do that?” feeling. The calendar is what feels the most familiar—it’s your daily schedule, after all. The app is still colorized for your school, and you’re greeted on arrival with your school mascot and friends’ avatars. Delight *always* matters. ![Image from Lessons on building a viral consumer app: The story of Saturn](https://substack-post-media.s3.amazonaws.com/public/images/4225921c-396c-4bfb-80bf-f6b974f33dfe_1600x898.png) We chose to scale this personalized product approach, instead of changing the product to make it less personal. This now results in bespoke support for our nearly 20,000 schools. To be clear: we weren’t the first to do this. Facebook, for example, went to significant lengths to support their early schools well, which was fundamental to achieving significant depth in each. This got the network off the ground and eventually allowed them to expand to a broader product. There are two schools of thought around these kinds of bespoke models: 1. Avoid silos at all cost, as they will naturally inhibit scale. 2. Silos enable better product-market fit by solving for users who are very similar, and over time that will help you build a product that remains high-fit across the country. We are believers in the latter—although this approach requires patience and, if you’d like to scale nationally without compromise (as we did), a willingness to invest heavily in building unique tools and infrastructure and hiring more people. Some founders may not choose to do this or may not be able to raise the capital to support it. We didn’t really have a choice; our product was built around a utility that was complicated to develop and maintain. This forced us to build a larger, more experienced team, capable of handling the operational overhead that would come with growth. One note: When developing products for small audiences, be careful not to *overspecialize* for a specific area, community, type of user, etc. For us, this meant a school district, or geography. A good way to avoid this is to use an approach around opposites. If you’re launching urban schools, try suburban schools; if they are predominantly affluent schools, try schools with students from more mixed economic backgrounds, etc. Our first schools were all in southwestern Connecticut, a very affluent region by national standards. In order to ensure the product had fit with students from different backgrounds (and different types of schools), we next launched schools in more economically diverse parts of New Jersey, Massachusetts, etc. This is especially important if you want to raise venture capital. Investors will always want to know the “bounds” of users you have tested with: across age, income level, region, etc. The more types of users you’ve *proven* your product can win over, the better. **Takeaway:** When users are in your app, they need to feel at home. Much like a personal gift from a friend, building a deeply personal user experience earns user trust and engagement. Always be thinking about the things, big and small, that can make users feel that magic. ### **3. It’s OK to be unscalable—you can make it scale later** For us, this was not only relevant in the context of building custom apps for each school when we were getting started, but also building a team of local ambassadors to help us win over the students at each school. Using the calendar as the retentive “backbone” of the product presented a problem. We learned quickly that inaccurate calendars caused user churn, and it was very challenging to maintain accurate ones. Schools have unique schedules and are changing them constantly, for reasons as simple as the weather. A single storm system can cause chaos for millions of students, and our retention was only as good as our ability to maintain accurate data. Without it, users wouldn’t stick around. There was also no centralized source of data, which made this extremely difficult. To start, we sourced data on these changes from students on the ground, and also gave them responsibilities to help with growth. Many investors told us this ambassador program was fundamentally unscalable, and while we agreed that it added significant friction, the lessons we extracted from the program, the consistency of the early growth they provided, and the access to our users were so valuable that we grew the network to more than a thousand students anyway. Instead of discarding the program at a few dozen schools, we went deeper, refined it, and adapted our approach. And even when their growth responsibilities were eventually retired, we maintained a cohort from this passionate group and continue to leverage them as an invaluable resource for user research. Scaling our ambassador count to grow our user base wasn’t pretty, but it worked for years. We were able to iterate through the most challenging constraints of building the program and successfully use it as our default model to launch the majority of our first 1,000 schools. **Our ambassadors were helping us in three ways:** 1. Providing us with the data, context, and information about a schedule necessary to launch a school on Saturn, including keeping us in the loop as schedules changed 2. Helping to “seed” schools (remember, we have a product that works well even if you’re alone, so the first few users are still really valuable) 3. Spreading the word and establishing a larger initial cohort of users from which we could grow over time Eventually, we stopped trying to force scale through ambassadors and instead began to productize each of these responsibilities. It’s worth noting that some things can’t be productized, like the need for users who care enough about your product that they grow it organically through word of mouth. We began to source our data from users on a waitlist. When we launched our first one in July 2021, more than 100,000 students from 10,000 schools joined in 90 days. This gave us a backlog of the information needed to get more schools live. We turned to crowdsourcing to help maintain calendars, which was simple once the network hit sufficient scale. Instead of relying on ambassadors to keep a school’s schedule up to date, we could entrust our users with this responsibility and use consensus modeling to provide even more accurate data. In this respect, growth gave us optionality and allowed us to eliminate this dependency. The users’ interest was aligned with ours—if they submitted data, they would have an accurate calendar for themselves. It was a reasonable ask. In our case, overcoming this data challenge wasn’t optional; it was a *prerequisite* to creating a retentive platform. With more data on school performance over time, we began to see a very clear trend that schools were growing significantly year over year. This validated our hypothesis that once a school was “seeded,” we could invest in it for the long term and it would eventually become fully saturated. If we could get a school live, it didn’t really matter how we got the first few installs, and it was infeasible to launch tens of thousands of schools with a hand-picked student at each one. Once the schools were live at scale, it unlocked new (less targeted) strategies for the top of our funnel, like performance acquisition. Scaling this program resulted in a deep familiarity with the operational challenges we’d have to overcome and an understanding of growth at the school level—including how to reach and acquire users at a specific school and how to catalyze the growth flywheel consistently, both of which were critical for us to achieve national scale. In short, this most unscalable part of our business provided the insights and lessons we’ve leveraged since to hit a point where our social product could begin to drive real user value. **Takeaway:** An advisor once told us, “Startups exist to do things other companies wouldn’t do—or can’t do.” Be scrappy and have a high tolerance for “pain” at the beginning. It will often unlock key lessons you’ll need to scale. ### **4. Building a familiar product is much easier if you’re solving a problem you’ve experienced** Empathizing with other people is really hard. It’s much easier to self-empathize. Thus, it’s much easier to build a product that’s intuitive to users if you build it for yourself, or at least solve a problem you very deeply understand. This is especially important for consumer products. Saturn evolved from an app we built to solve our own problems when we were students. High school schedules happen to be unimaginably complicated: from bizarre rotation patterns asynchronous with the days of the week, classes starting at random times (almost never on the hour or half-hour), lunch waves, modified schedules, and periods with different lengths, to one-off schedule changes that make things almost impossible to keep up with. These were nuances that most people couldn’t see, and they fundamentally didn’t understand the problems and the use cases we were solving for. We didn’t start with a formal product roadmap. We had intuition informed by years of struggling to manage these byzantine calendars ourselves. Our demographic understanding informed what we added to the app and helped us build an early product with features that drove real value for users each day. Sometimes that demographic understanding comes with proximity of age, and that can be an unfair advantage. It was one of the key factors enabling us to recruit and earn trust with our ambassadors at the beginning. We were close in age, and they were motivated to help support us. It likely wouldn’t have been possible if we were twice their age, but it worked well given the circumstances. Lastly, almost all of the other apps that provided similar utility had been built for schools rather than the students—and so in selling to the schools, they were never solving the problems for their actual end users. This differentiated us, as we were always singularly focused on students’ problems and how we could effectively solve them. **Takeaway:** You’re more likely to be successful if you are building a product for yourself, or to solve a problem you deeply understand. Instagram was built by passionate photographers—it wasn’t an accident. ### **5. Play the long game** There are plenty of apps over the past few years that have rocketed to the top of the charts virtually overnight (in some cases eclipsing some of the aforementioned giants), with very strong growth mechanics on the back of a novel social use case. But they have almost universally failed to establish themselves for the long term. Many of these have struggled with an inverse K-factor that ultimately hurts them over the longer term. Major apps like Facebook, Instagram, and TikTok are at such a scale that ambient activity in their networks throws off tens of thousands of installs per day. That’s your competition—both for users’ attention and for chart positions. With TikTok, it took years, multiple iterations, hundreds of millions of dollars in paid ads, and various acquisitions to nail their growth mechanic. This is the most potent and *enduring* app (and growth model) anyone has seen since Snap. One of our investors calls our growth approach “fast and steady.” We have been willing to prioritize healthy, enduring, long-term growth at the community level, and build features that support this growth by solving real user problems. This meant skipping features that may have thrown off faster growth but would not meaningfully improve the actual user experience on Saturn. When you think about apps like Snap, TikTok, Instagram, etc., what’s impressive is not only that they have reached the top, but that they have stayed there for so long and remain relevant to so many different people who are demographically so distinct. With Saturn, for example, our initial TAM is high school students, which provides a natural ceiling. Within that group, we constantly need to be iterating to ensure that we provide value to every incremental user and school—even if they don’t look exactly like the schools we launched at in the very beginning. Reaching the top of the chart is just a signal that you’re acquiring users quickly. If you’re not looking at a massive TAM, you will start thinking about expanding your TAM faster than you’d expect. Be ready for that, and build a product that you think can be modified quickly to start expanding into new markets. For us, it’s been somewhat easier to be patient, with the knowledge that a new class of freshmen would arrive each year more excited about the product than the previous one, but it’s always tough to be patient when it comes to user acquisition. Our long-term focus has allowed us to be more thoughtful with the product and focus on helping each user get through their day. **Takeaway:** Be patient. Getting a consumer product right takes time and constant iteration. If you’re looking for overnight success, you run a higher risk of coming up short. You’ll invariably wind up forging your own path—and hopefully one of these lessons can help as you do. *Thank you, [Max](https://www.linkedin.com/in/max-baron-saturn/) and [Dylan](https://www.linkedin.com/in/dylancdiamond/)! For more on Saturn, visit [joinsaturn.com](https://joinsaturn.com/).* *Have a fulfilling and productive week 🙏* ## 👀 Hiring? Or looking for a new job? I’m piloting a white-glove recruiting service for product roles, working with a few select companies at a time. If you’re hiring for senior product roles, apply below. [Apply to join](https://www.lennysjobs.com/talent/) If you’re exploring new opportunities yourself, use the same button above to sign up. We’ll send over personalized opportunities from hand-selected companies if we think there’s a fit. Nobody gets your info until you allow them to, and you can leave anytime. **If you’re finding this newsletter valuable, share it with a friend, and consider subscribing if you haven’t already. There are [group discounts](https://www.lennysnewsletter.com/subscribe?group=true), [gift options](https://www.lennysnewsletter.com/subscribe?gift=true), and [referral bonuses](https://www.lennysnewsletter.com/leaderboard) available.** Sincerely, Lenny 👋 --- ## [49/51] The Best of Lenny’s Newsletter 2023 *👋 Hey, [Lenny](https://twitter.com/lennysan) here! Welcome to this month’s ✨ **free edition**✨ of Lenny*’*s Newsletter. Each week I tackle reader questions about building product, driving growth, and accelerating your career.* *P.S. Don’t miss my brand-new **[swag store](https://lennyswag.com/)** (find great gifts for your favorite PM, or yourself) and **[Lennybot](https://www.lennybot.com/)** (an AI chatbot trained on every newsletter post, podcast interview, and more) ✨* ![Image from The Best of Lenny’s Newsletter 2023](https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/0cc98a55-f0dc-4adb-9b1d-a50340365e7f_2400x1186.png) The end of the year is nigh, and as I do every year (here’s [2021](https://www.lennysnewsletter.com/p/the-best-of-lennys-newsletter) and [2022](https://www.lennysnewsletter.com/p/the-best-of-lennys-newsletter-d61)), I’ve revisited *every single* past post and podcast episode (over 400 of them!) and picked out the cream of the crop, organized by their job-to-be-done. **This post is now the single best way to find my best stuff across both the newsletter and podcast.** What this collection can help you with: 1. **[I want to hone my product skills](https://www.lennysnewsletter.com/i/139246365/i-want-to-hone-my-product-skills)** 2. **[I want to grow my product](https://www.lennysnewsletter.com/i/139246365/i-want-to-grow-my-product)** 3. **[Help me kickstart and scale my startup](https://www.lennysnewsletter.com/i/139246365/help-me-kickstart-and-scale-my-startup)** 4. **[I’m feeling stressed and overwhelmed](https://www.lennysnewsletter.com/i/139246365/im-feeling-stressed-and-overwhelmed)** 5. **[I want to accelerate my PM career](https://www.lennysnewsletter.com/i/139246365/i-want-to-accelerate-my-pm-career)** 6. **[I want to learn from how the best companies operate](https://www.lennysnewsletter.com/i/139246365/i-want-to-learn-from-how-the-best-companies-operate)** 7. **[I want to become a better leader](https://www.lennysnewsletter.com/i/139246365/i-want-to-become-a-better-leader)** 8. **[I need some benchmarks](https://www.lennysnewsletter.com/i/139246365/i-need-some-benchmarks)** 9. **[I need help hiring or interviewing](https://www.lennysnewsletter.com/i/139246365/i-need-help-hiring-or-interviewing)** 10. **[I want to get better at pricing](https://www.lennysnewsletter.com/i/139246365/i-want-to-get-better-at-pricing)** 11. **[I want to get better at sales](https://www.lennysnewsletter.com/i/139246365/i-want-to-get-better-at-sales)** To help make this more skimmable, I’ve added a 🎖️ emoji to posts and podcast episodes that are in the top 15 most popular of all time. To reflect a bit, this was a big year for me. The newsletter nearly doubled (approaching 600,000 subscribers!), the [podcast](https://www.lennysnewsletter.com/podcast) went from essentially nothing to a [top 10 technology podcast](https://chartable.com/charts/spotify/united-states-of-america-technology) in the U.S. (with over 3,000 5-star reviews), and the [YouTube channel](https://youtube.com/LennysPodcast) is about to hit 50,000 subscribers. Most amazing of all, the subscribers are increasingly getting together for [IRL meetups](https://www.lennysnewsletter.com/p/community) all over the world: My mind is endlessly boggled by how far this newsletter and community have come, and I’m *so* incredibly grateful to you for participating, reading, sharing, and supporting this work. Thank you, thank you, thank you. The best is yet to come. # 🎖️ The Best of Lenny’s Newsletter ### 1. I want to hone my product skills 1. **Fundamentals** 1. [Mission → Vision → Strategy → Goals → Roadmap → Task](https://www.lennysnewsletter.com/p/mission-vision-strategy-goals-roadmap) 🎖️ 2. [How to develop product sense](https://www.lennysnewsletter.com/p/product-sense) 3. [How to get better at product strategy](https://www.lennysnewsletter.com/p/getting-better-at-product-strategy) (plus [this](https://www.lennyspodcast.com/mastering-product-strategy-and-growing-as-a-pm-maggie-crowley-toast-drift-tripadvisor/) and [this](https://www.lennyspodcast.com/building-your-product-strategy-stack-ravi-mehta-tinder-facebook-tripadvisor-outpace/) podcast episode) 4. [How to get better at influence](https://www.lennysnewsletter.com/p/how-to-get-better-at-influence) 5. [How to get better at communication: The Minto Pyramid Principle and the SCR framework](https://www.lennysnewsletter.com/p/minto-pyramid-principle-scr) 6. [Prioritizing](https://www.lennysnewsletter.com/p/prioritizing) + [DRICE: a modern prioritization framework](https://www.lennysnewsletter.com/p/introducing-drice-a-modern-prioritization) 7. [Building beautiful products with Stripe’s Head of Design Katie Dill](https://www.lennyspodcast.com/building-beautiful-products-with-stripes-head-of-design-katie-dill-stripe-airbnb-lyft/) 2. **Frameworks and templates** 1. [My favorite product management templates](https://www.lennysnewsletter.com/p/my-favorite-templates-issue-37) 🎖️ 2. [The ultimate guide to JTBD | Bob Moesta (co-creator of the framework)](https://www.lennyspodcast.com/the-ultimate-guide-to-jtbd-bob-moesta-co-creator-of-the-framework/) 3. [The ultimate guide to OKRs | Christina Wodtke (Stanford)](https://www.lennyspodcast.com/the-ultimate-guide-to-okrs-christina-wodtke-stanford/) 4. [Build better products with continuous product discovery | Teresa Torres](https://www.lennyspodcast.com/teresa-torres-on-how-to-interview-customers-automating-continuous-discovery-the-opportunity-solution-tree-framework-making-the-case-for-user-research-common-interviewing-mistakes-and-much-more/) ### 2. I want to grow my product 1. **Growth strategy** 1. [The Racecar Growth Framework](https://www.lennysnewsletter.com/p/the-racecar-growth-frameworkexpanded) 2. [Choosing your north-star metric](https://future.a16z.com/north-star-metrics/) 🎖️ 3. [Winning at SEO](https://www.lennysnewsletter.com/p/crafting-an-seo-strategy-issue-34) (plus [podcast](https://www.lennyspodcast.com/videos/the-ultimate-guide-to-seo-ethan-smith-graphite/)) 🎖️ 4. [Winning at content-driven growth](https://www.lennysnewsletter.com/p/content-driven-growth-strategy) 5. [Picking a wedge](https://www.lennysnewsletter.com/p/wedge) 2. **Come up with growth ideas** 1. [Growth ideas](https://www.lennysnewsletter.com/p/growth-ideas) 2. [Generating buzz](https://www.lennysnewsletter.com/p/creating-buzz-at-launch-preview) 3. **Optimize funnels** 1. [Improving retention](https://www.lennysnewsletter.com/p/how-to-increase-your-products-retention) 2. [Improving conversion](https://www.lennysnewsletter.com/p/this-week-21-strategy-and-tactics) 3. [Increasing virality](https://www.lennysnewsletter.com/p/increasing-virality) 4. [Building a referrals program](https://www.lennysnewsletter.com/p/this-week-16-building-a-referrals) 4. **Marketing** 1. [Crafting your positioning](https://www.lennysnewsletter.com/p/positioning) (plus [podcast](https://www.lennysnewsletter.com/p/april-dunford-on-product-positioning#details)) 2. [How to get press](https://www.lennyspodcast.com/how-to-get-press-for-your-product-jason-feifer-editor-in-chief-of-entrepreneur-magazine/https://www.lennyspodcast.com/how-to-get-press-for-your-product-jason-feifer-editor-in-chief-of-entrepreneur-magazine/https://www.lennyspodcast.com/how-to-get-press-for-your-product-jason-feifer-editor-in-chief-of-entrepreneur-magazine/) 3. [How today’s top consumer brands measure marketing’s impact](https://www.lennysnewsletter.com/p/how-todays-top-consumer-brands-measure) 5. **B2B growth** 1. [GTM motions of 30 B2B SaaS companies](https://www.lennysnewsletter.com/p/gtm-motions) 2. [Five steps to starting your product-led growth motion](https://www.lennysnewsletter.com/p/five-steps-to-starting-your-plg-motion) (plus [podcast](https://www.lennyspodcast.com/the-ultimate-guide-to-adding-a-plg-motion-hila-qu-reforge-gitlab/)) 3. [The ultimate guide to product-led sales | Elena Verna](https://www.lennyspodcast.com/the-ultimate-guide-to-product-led-sales-elena-verna/) 4. [B2B growth with Elena Verna (Amplitude, Miro, SurveyMonkey)](https://www.lennysnewsletter.com/p/elena-verna-on-why-every-company#details) 6. **B2C growth** 1. [How the biggest consumer apps got their first 1,000 users](https://www.lennysnewsletter.com/p/consumer-business-find-first-users) 🎖️ 2. [Virality is a myth (mostly)](https://www.lennysnewsletter.com/p/virality-is-a-myth-mostly) 3. [Growth inflections](https://www.lennysnewsletter.com/p/growth-inflections) 7. **Marketplace growth** 1. [Developing a growth model and marketplace growth strategy, with Dan Hockenmaier (Faire, Thumbtack, Reforge)](https://www.lennysnewsletter.com/p/developing-a-growth-model-marketplace#details) 2. [Marketplace lessons from Uber, Airbnb, Bumble, and more | Ramesh Johari (Stanford professor, startup advisor)](https://www.lennyspodcast.com/marketplace-lessons-from-uber-airbnb-bumble-and-more-ramesh-johari-stanford-professor-startup/) ### 3. Help me kickstart and scale my startup 1. **Guides** 1. [How to kickstart and scale a B2B business](https://www.lennysnewsletter.com/p/how-the-most-successful-b2b-startups) (7-part series) 🎖️ 2. [How to kickstart and scale a B2C business](https://www.lennysnewsletter.com/p/kickstarting-and-scaling-a-consumer) (6-part series) 🎖️ 3. [How to kickstart and scale a marketplace business](https://www.lennysnewsletter.com/p/how-to-kickstart-and-scale-a-marketplace) (8-part series) 4. [A guide for finding product-market fit in B2B](https://www.lennysnewsletter.com/p/finding-product-market-fit) 🎖️ 5. [A guide for finding product-market fit in B2C](https://www.lennysnewsletter.com/i/48314350/how-do-i-know-if-i-have-product-market-fit) 2. **Improve your execution** 1. [Increasing team velocity](https://www.lennysnewsletter.com/p/increasing-velocity-issue-61) 2. [The secret to a great planning process](https://review.firstround.com/the-secret-to-a-great-planning-process-lessons-from-airbnb-and-eventbrite) 3. [Lessons from working with 600+ YC startups | Gustaf Alströmer (Y Combinator, Airbnb)](https://www.lennyspodcast.com/lessons-from-working-with-600-yc-startups-gustaf-alstromer-y-combinator-airbnb/) 🎖️ 4. [The ultimate guide to A/B testing | Ronny Kohavi (Airbnb, Microsoft, Amazon)](https://www.lennyspodcast.com/the-ultimate-guide-to-ab-testing-ronny-kohavi-airbnb-microsoft-amazon/)🎖️ 5. [Reflections on a movement | Eric Ries (creator of the Lean Startup methodology)](https://www.lennyspodcast.com/reflections-on-a-movement-eric-ries-creator-of-the-lean-startup-methodology/) 3. **Fundraising** 1. [Your startup idea probably isn’t venture-scale](https://www.lennysnewsletter.com/p/your-startup-idea-probably-isnt-venture) 2. [How to activate your investor network](https://www.lennysnewsletter.com/p/how-to-activate-your-investor-network) 3. [A fundraising playbook](https://www.lennysnewsletter.com/p/a-playbook-for-fundraising) ### 4. I’m feeling stressed and overwhelmed 1. [When enough is enough | Andy Johns (ex-FB, Twitter, Quora)](https://www.lennyspodcast.com/when-enough-is-enough-andy-johns-ex-fb-twitter-quora/) 2. [Redefining success, money, and belonging | Paul Millerd (The Pathless Path)](https://www.lennyspodcast.com/redefining-success-money-and-belonging-paul-millerd-the-pathless-path/) 3. [How to know when to stop](https://www.lennysnewsletter.com/p/how-to-know-when-to-stop) 4. [How to be prepared for layoffs](https://www.lennysnewsletter.com/p/how-to-be-better-prepared-for-layoffs) ### 5. I want to accelerate my PM career 1. **Fundamentals** 1. [14 habits of highly effective product managers](https://www.lennysnewsletter.com/p/14-habits-of-highly-effective-product) 2. [How to know if you’re doing a good job as a product manager](https://www.lennysnewsletter.com/p/doing-a-good-job-product-manager) 3. [What is product management](https://www.lennysnewsletter.com/p/what-is-product-management) 4. [How to get into product management (and thrive)](https://www.lennysnewsletter.com/p/how-to-get-into-product-management) 5. [Should I become a product manager?](https://www.lennysnewsletter.com/p/become-a-product-manager) 2. **Inspiration** 1. [The nature of product with Marty Cagan](https://www.lennysnewsletter.com/p/the-nature-of-product-marty-cagan#details) 🎖️ 2. [The art of product management with Shreyas Doshi](https://www.lennysnewsletter.com/p/episode-3-shreyas-doshi#details) 🎖️ 3. [Building a long and meaningful career | Nikhyl Singhal (Meta, Google)](https://www.lennyspodcast.com/building-a-long-and-meaningful-career-nikhyl-singhal-meta-google/) 🎖️ 4. [Building a meaningful career | Jason Shah (Airbnb, Amazon, Microsoft, Alchemy)](https://www.lennysnewsletter.com/p/building-a-meaningful-career-jason) 3. **What’s changing in product management** 1. [How to use ChatGPT in your PM work](https://www.lennysnewsletter.com/p/how-to-use-chatgpt-in-your-pm-work) 🎖️ 2. [AI and product management | Marily Nika (Meta, Google)](https://www.lennyspodcast.com/ai-and-product-management-marily-nika-meta-google/) 🎖️ 3. [The ultimate guide to product operations | Melissa Perri and Denise Tilles](https://www.lennyspodcast.com/the-ultimate-guide-to-product-operations-melissa-perri-and-denise-tilles/) 4. **Getting promoted** 1. [The Magic Loop: A framework for rapid career growth](https://www.lennysnewsletter.com/p/the-magic-loop) 🎖️ 2. [Managing up](https://www.lennysnewsletter.com/p/managing-up) 3. [Becoming a senior product manager](https://www.lennysnewsletter.com/p/senior-product-manager) 4. [Product management career ladders](https://www.lennysnewsletter.com/p/jobs-of-product-manager) 5. [How to get promoted](https://www.lennysnewsletter.com/p/how-to-get-promoted) 6. [Surviving as the first product manager](https://www.lennysnewsletter.com/p/joining-as-the-first-product-manager) 7. [What it takes to become a top 1% PM, with Ian McAllister (Uber, Amazon, Airbnb)](https://www.lennysnewsletter.com/p/what-it-takes-to-become-a-top-1-pm#details) 8. [A comprehensive survey of product management](https://www.lennysnewsletter.com/p/product-management-survey) ### 6. I want to learn from how the best companies operate 1. [Brian Chesky’s new playbook](https://www.lennyspodcast.com/brian-cheskys-new-playbook/) 🎖️ ← *Most popular podcast episode of all time* 2. [How Duolingo reignited user growth](https://www.lennysnewsletter.com/p/how-duolingo-reignited-user-growth) 🎖️ ←*Most popular post of all time* 3. **How they build product** 1. [How Linear builds product](https://www.lennysnewsletter.com/p/how-linear-builds-product) (plus [podcast](https://www.lennyspodcast.com/inside-linear-building-with-taste-craft-and-focus-karri-saarinen-co-founder-designer-ceo/)) 🎖️ 2. [How Shopify builds product](https://www.lennysnewsletter.com/p/how-shopify-builds-product) 🎖️ 3. [How Ramp builds product](https://www.lennysnewsletter.com/p/how-ramp-builds-product) (plus [podcast](https://www.lennyspodcast.com/velocity-over-everything-how-ramp-became-the-fastest-growing-saas-startup-of-all-time-geoff-charl/)) 🎖️ 4. [How Notion builds product](https://www.lennysnewsletter.com/p/how-notion-builds-product) 5. [How Duolingo builds product](https://www.lennysnewsletter.com/p/how-duolingo-builds-product) 6. [How Figma builds product](https://www.lennysnewsletter.com/p/how-figma-builds-product) (plus [podcast](https://www.lennyspodcast.com/videos/an-inside-look-at-how-figma-builds-product-yuhki-yamashita-cpo-of-figma/)) 🎖️ 4. **Additional inside stories from great companies** 1. [Lessons from scaling Stripe | Claire Hughes Johnson (ex-COO of Stripe)](https://www.lennyspodcast.com/lessons-from-scaling-stripe-claire-hughes-johnson-ex-coo-of-stripe/) 🎖️ 2. [The unconventional Palantir principles that catalyzed a generation of startups](https://www.lennysnewsletter.com/p/the-unconventional-palantir-principles) 3. [An inside look at Deel’s unprecedented growth | Meltem Kuran Berkowitz (Head of Growth)](https://www.lennyspodcast.com/an-inside-look-at-deels-unprecedented-growth-meltem-kuran-berkowitz-head-of-growth/) 4. [What working at Figma taught me about customer obsession](https://www.lennysnewsletter.com/p/what-working-at-figma-taught-me-about) 5. [An inside look at Figma’s unique GTM motion | Claire Butler (first GTM hire)](https://www.lennyspodcast.com/an-inside-look-at-figmas-unique-gtm-motion-claire-butler-first-gtm-hire/) 6. [What 5 years at Reddit taught us about building for a highly opinionated user base](https://www.lennysnewsletter.com/p/what-5-years-at-reddit-taught-us) 5. **Learning from failure** 1. [Lessons learned from a startup that didn’t make it](https://www.lennysnewsletter.com/p/lessons-learned-from-a-startup-that) 2. [Lessons from going freemium: a decision that broke our business](https://www.lennysnewsletter.com/p/lessons-from-going-freemium-a-decision) ### 7. I want to become a better leader 1. [The Power of Performance Reviews: Use This System to Become a Better Manager](https://review.firstround.com/the-power-of-performance-reviews-use-this-system-to-become-a-better-manager) 2. [How to fire people with grace, work through fear, and nurture innovation, with Matt Mochary (CEO coach)](https://www.lennysnewsletter.com/p/how-to-fire-people-with-grace-work#details) 🎖️ 3. [How to create an exceptional coverage plan for your parental leave](https://www.lennysnewsletter.com/p/how-to-create-an-exceptional-coverage) ### 8. I need some benchmarks 1. [What is good retention](https://www.lennysnewsletter.com/p/what-is-good-retention-issue-29) 2. [What is a good activation rate](https://www.lennysnewsletter.com/p/what-is-a-good-activation-rate) (and [how to determine your activation metric](https://www.lennysnewsletter.com/p/how-to-determine-your-activation)) 3. [What is a good payback period](https://www.lennysnewsletter.com/p/payback-period) 4. [What is good monthly churn](https://www.lennysnewsletter.com/p/monthly-churn-benchmarks) 5. [How to measure cohort retention](https://www.lennysnewsletter.com/p/measuring-cohort-retention) 6. [What is a good growth rate](https://www.lennysnewsletter.com/p/what-is-a-good-growth-rate) ### 9. I need help hiring or interviewing 1. [How to pass any first-round interview (even in a terrible talent market)](https://www.lennysnewsletter.com/p/how-to-pass-any-first-round-interview) 2. [How to interview product managers](https://www.lennysnewsletter.com/p/how-to-interview-product-managers) 3. [My favorite interview questions from 100+ guests](https://www.lennyspodcast.com/my-favorite-interview-questions-from-100-guests/) 4. [My favorite PM interview questions](https://www.lennysnewsletter.com/p/my-favorite-pm-interview-questions) 5. [Six rules of hiring for growth](https://www.lennysnewsletter.com/p/hiring-growth) 6. [When to hire your first product manager](https://www.lennysnewsletter.com/p/when-they-hired-their-first-pm) 7. [The 10 commandments of salary negotiation](https://www.lennysnewsletter.com/p/negotiating-comp) 🏅 ### 10. I want to get better at pricing 1. [The art and science of pricing, with Madhavan Ramanujam (Monetizing Innovation, Simon-Kucher)](https://www.lennysnewsletter.com/p/the-art-and-science-of-pricing-madhavan#details) 2. [Pricing your SaaS product, by Patrick Campbell](https://www.lennysnewsletter.com/p/saas-pricing-strategy) 3. [Going freemium, adding a trial, business model disruption, and more](https://www.lennysnewsletter.com/p/freemium-trials-free) ### 11. I want to get better at sales 1. [Founder-led sales, with Pete Kazanjy (Founding Sales, Atrium)](https://www.lennysnewsletter.com/p/founder-led-sales-pete-kazanjy-founding#details) 2. [The Transition: Layering sales onto a bottom-up self-serve product, by Pete Kazanjy](https://www.lennysnewsletter.com/p/sales-bottom-up) 3. [How to hit revenue targets in a recession, with Sahil Mansuri (Bravado)](https://www.lennysnewsletter.com/p/how-to-hit-revenue-targets-in-a-recession#details) 4. [How to build a killer sales pitch](https://www.lennysnewsletter.com/p/how-to-build-a-killer-sales-pitch) (plus [podcast](https://www.lennysnewsletter.com/p/a-step-by-step-guide-to-crafting)) For more fun, check out [Lennybot](https://www.lennybot.com/), or [browse the entire archive of posts (sorted by popularity)](https://www.lennysnewsletter.com/archive?sort=top). Thank you for another great year 🥂 ## 👀 Hiring? Or looking for a new job? I’m piloting a white-glove recruiting service for product roles, working with a few select companies at a time. If you’re hiring for senior product roles, apply below. [Apply to join](https://www.lennysjobs.com/talent/) If you’re exploring new opportunities yourself, use the same button above to sign up. We’ll send over personalized opportunities from hand-selected companies if we think there’s a fit. Nobody gets your info until you allow them to, and you can leave anytime. **If you’re finding this newsletter valuable, share it with a friend, and consider subscribing if you haven’t already. There are [group discounts](https://www.lennysnewsletter.com/subscribe?group=true), [gift options](https://www.lennysnewsletter.com/subscribe?gift=true), and [referral bonuses](https://www.lennysnewsletter.com/leaderboard) available.** Sincerely, Lenny 👋 --- ## [50/51] First-principles thinking *P.S. Don’t miss **[Lennybot](https://www.lennybot.com/)** ✨ (an AI chatbot trained on my newsletter posts, podcast interviews, and more) and my new **[Swag Store](https://lennyswag.com/)** (great gifts for your favorite PMs, or yourself!).* > ## Q: I’ve heard your podcast guests occasionally mention “first-principles thinking.” What exactly is first-principles thinking, and how do I use it in my work? First-principles thinking, or thinking from first principles, sounds a lot more complicated than it is. It’s simply a technique for approaching problems with a beginner’s mind. Instead of working within assumptions and what people around you “know” to be true, you do the hard work of figuring out what’s actually true and, thus, what’s truly possible. There are many ways to apply the technique (which I’ll share below), but essentially you do this by asking questions, challenging people’s assumptions, digging further than other people, and going directly to the source to find out for yourself. The concept of thinking from first principles comes from [physics](https://en.wikipedia.org/wiki/First_principle#:~:text=In%20physics%20and%20other%20sciences,empirical%20model%20and%20parameter%20fitting.), is also known as *[ab initio](https://en.wikipedia.org/wiki/Ab_initio)*, and encourages one to “start directly at the level of established science and not make assumptions based on existing models.” Aristotle phrased it as “the first basis from which a thing is known.” Any talk of first principles must include a quote from Elon Musk, so let’s get it out of the way: > **“We get through life by reasoning by analogy, which essentially means copying what other people do with slight variations. And you have to do that. Otherwise, mentally, you wouldn’t be able to get through the day. But when you want to do something new, you have to apply the first-principles approach.” —Elon Musk** Before we go further, it’s important to know that this technique takes a lot of effort. As [Ozan Varol](https://ozanvarol.com/about/) (former rocket scientist and best-selling author) explained in [this interview with Farnam Street](https://youtu.be/vJ4bXM185qE): > “**The primary downside [to first-principles thinking] is it’s really difficult. […]** > > Reasoning by analogy, or copying what others are doing, is sort of like being a cover band where you’re playing somebody else’s music. Whereas with first-principles thinking, you go back to the fundamental raw materials of music, which are the notes, and then you build an original song from scratch. That is first-principles thinking. > > It’s really difficult to do because a lot of what we do in life is informed by what we’ve done before, and also by what others are doing around us. > > **First-principles thinking, if you take it to an extreme, can be really inefficient, because we learn by emulating other people—[everything] from learning how to walk, learning how to talk, comes from copying others and modeling others.** > > Part of the difficulty comes from picking what to question, because you can’t go through life questioning every single thing you do. Picking what to question and also using knowledge in a way that will inform, not constrain, you.” [Watch on YouTube](https://www.youtube.com/watch?v=vJ4bXM185qE) That being said, many of history’s biggest breakthroughs came from someone making the effort to think from first principles. This includes the classic examples of SpaceX and Tesla, the breakthrough that led to the transformer architecture driving today’s AI revolution, the invention of human flight, the discoveries of nuclear energy and general relativity, and so many more. It’s not an accident that history’s most important scientists come at problems in this way—with a beginner’s mind: > “**I have no special talent. I am only passionately curious.**” —Albert Einstein > “**The greatest enemy of knowledge is not ignorance; it is the illusion of knowledge.**” —Stephen Hawking > **“Be less curious about people and more curious about ideas.”** —Marie Curie > “**Every sentence I utter must be understood not as an affirmation, but as a question.**” —Niels Bohr > “**To myself I am only a child playing on the beach, while vast oceans of truth lie undiscovered before me.**” —Isaac Newton > “**The task is not so much to see what no one has yet seen, but to think what nobody has yet thought, about that which everybody sees.**” —Erwin Schrödinger To make this even more concrete, let’s look at a bunch of examples across tech startups. ## Examples, big and small As you read through the examples, notice the way people go about thinking from first principles in practice. Essentially, they figure out what problem they want to solve, identify the levers that are keeping them from getting there, question every assumption about what’s possible within each lever, do the legwork to find out facts on the ground, and then act. ### Example 1: Building the Square Cash Card—[Ayo Omojola](https://www.linkedin.com/in/omojola) Watch this five-minute clip and notice Ayo’s approach to problem-solving: 1. Notice something important that isn’t good enough 2. Go to the source (e.g. the factory) and talk to people to understand why 3. Keep asking questions until you “get to the end” [Watch on YouTube](https://www.youtube.com/watch?v=EW6K8ZOWoIs) > “And so what happens is you go ask somebody something, and they would give you an answer which is the thing that they believe to be true. They’re not lying and it’s not malicious, but it’s just wonk. > > **So you just have to keep pushing until you get to an answer. I don’t really know the right way to articulate this all the way, but basically, you can’t stop until you get to the end.” —**Ayo Omojola, CPO at Carbon Health > > The way that I apply this today—and I’m sure people at Carbon Health will tell you this—is I end up asking lots of questions that people think don’t matter. Because I’m like: hey, we’re trying to optimize something. And when you’re trying to optimize something for the first time, you have to look at it like 15 different ways. And then every time two things are incongruent, you have to go and figure out why. **It’s just tedious work**.” ### Example 2: Building OpenAI—[Ilya Sutskever](https://www.linkedin.com/in/ilya-sutskever/) Watch this two-minute clip and notice that the breakthrough that led to GPT (possibly the biggest breakthrough in software history) was rooted in experimenting with an idea that “everyone” knew wasn’t going to work. [Watch on YouTube](https://www.youtube.com/watch?v=fCoavgGZ64Y) > “**Everybody knew that you cannot train deep networks. It cannot be done. Back propagation is too weak.** You need to do some kind of pre-training of some sort and then maybe you’ll get some kind of an oomph. […] Today we take deep learning for granted. *Of course* a large neural network is what you need. You shove data into it and you’ll get amazing results. Everyone knows that. Every child knows that. How can it be that we did not know that? How could such an obvious thing be not known? People were really focused on machine learning models, where they could prove that there was an algorithm which can perfectly train them, but whenever you put this condition on yourself, and you require to find a simple elegant mathematical proof, you really end up restricting the power of your model.” For more, [here’s another video of Ilya](https://youtu.be/13CZPWmke6A?si=J3hTLrO-gnBfiskW&t=1021) sharing this same lesson. ### Example 2b: The key to Stripe and OpenAI’s success—[Greg Brockman](https://www.linkedin.com/in/thegdb/) In this one-minute clip, notice how a company like Stripe, one of the most valuable tech startups today, didn’t do anything that special. They just built a much better product than was previously available, simply by “not being locked into the way that people had been doing it” before, by thinking about every single piece of what they were doing from the ground up. [Watch on YouTube](https://www.youtube.com/watch?v=Rp3A5q9L_bg) > “A lot of how we approached Stripe was thinking from first principles. I remember when we were pre-launched and we had some buzz going because we had some early customers, and one of my friends took me out to lunch. He was a VC, and he was like, ‘All right, look, I’ve been hearing about this Stripe thing. What’s your secret sauce?’ I was like, ‘I mean, we just make payments really good.’ And he’s like, ‘No, no, come on, you can tell me, what’s the secret sauce?’ And that really was the secret sauce. **We rethought every single piece of what we were doing from the ground up, from first principles. Not locked into the way that people had been doing it. We asked how** ***should*** **it be? Where’s the pain and does it need to be there?** > > In AI, we did much the same thing. We thought about, OK, there’s this field that we’re entering and that we hire a lot of people who had been in the field, but a lot of us also hadn’t been in the field, and we came to it with beginner’s eyes. That approach of just not being beholden to all the ways people were doing it, but also becoming expert in the way that things have been done. Because if you just throw everything out, you’re also just going to be starting from scratch, in a not-helpful way.” ### Example 3: Julia Child learning to cook ![The Art of Cooking: A Dialogue Between Julia Child and Craig Claiborne - Journal #65](https://substack-post-media.s3.amazonaws.com/public/images/b4512d26-1281-4412-9efb-1d8c51d5c63e_1600x1236.jpeg) Though not a tech example, I truly loved this story of first-principles thinking from Julia Child: > “**Learning to cook at the Cordon Bleu meant breaking down every dish into its smallest individual steps and doing each laborious and exhausting procedure by hand.** In time Child could bone a duck while leaving the skin intact, extract the guts of a chicken through a hole she made in the neck, make a ham mousse by pounding the ham to a pulp with a mortar and pestle, and turn out a swath of elaborate dishes from choucroute garnie to vol-au-vent financière. None of this came effortlessly, but she could do it. She had the brains, the considerable physical strength it demanded, and her vast determination. **Most important, she could understand for the first time the principles governing how and why a recipe worked as it did.**” —Laura Shapiro, *[Julia Child: A Life](https://www.amazon.com/Julia-Child-Life-Penguin-Lives/dp/0143116444)* ### Example 4: Becoming the #1 YouTuber—[Mr. Beast](https://www.youtube.com/channel/UCX6OQ3DkcsbYNE6H8uQQuVA) In this one-minute clip, notice the approach of working backward from simple fundamental facts and building your strategy from the ground up from there. It sounds simple but is rarely done. [Watch on YouTube](https://www.youtube.com/watch?v=C1jDk_2Yeno) > **“When you really boil it down**,just think about it.What do you think YouTube wants? I think YouTube just wants people to click on a video and watch it. I mean, that’s how they get their ad revenue. That’s how they keep viewers happy. I’m sure comments matter, but at the end of the day, they want you to click and watch a video. Click and watch a video and just do that as long as possible. > So to me, what’s important is click-through rate (getting people to click on your video) and then average retention average, or just relative retention. If people are clicking your video more than they click other videos, and they’re watching it longer then they watch other videos, as simplistic as that is, that’s what YouTube wants, and I think that’s how you be successful.” ### Example 5: Anne Wojcicki rebelling against what the science community thought was possible to build 23andMe Watch this two-minute clip and notice the tool she uses around making your identity about *rebellion*, and doing what others think is impossible. This can help you throw out assumptions and expectations and push through failure. [Watch on YouTube](https://www.youtube.com/watch?v=59cPbUdIfZ0) > “**23andMe came out of a rebellion. In some ways we’ve always meant to be a rebellious brand. It was always about ‘I want to change the whole system,’ and the beauty of Silicon Valley is that you can be totally unrealistic with your expectations of what you can do.** I tell people at the company all the time, we really can topple a $3 trillion industry. It’s going to be amazing. Little ol’ 23andMe. We’re trying to start a revolution. > > We came out of that sense of, I was super-frustrated with the industry. I was very clearly seeing that the consumer has no power, that there’s a potential for crowdsourcing, and I was fortunate to have the Stanford upbringing in this Silicon Valley community that was really supportive of thinking crazy thoughts and following your passions. And it’s OK to fail. Everyone fails at different times. Do it.” ### Example 6: James Dyson inventing a 10x better vacuum Speaking of failure, here’s a clip of James Dyson sharing his experience of trying to convince people that a better solution was possible (which now makes over $7 billion a year in revenue): [Watch on YouTube](https://www.youtube.com/watch?v=cz4NyqCmQs8) And his advice for discovering something new, from an interview with *[Fast Company](https://www.fastcompany.com/59549/failure-doesnt-suck)*: > “We’re taught to do things the right way. **But if you want to discover something that other people haven’t, you need to do things the wrong way. Initiate a failure by doing something that’s very silly, unthinkable, naughty, dangerous.** Watching why that fails can take you on a completely different path. It’s exciting, actually. To me, solving problems is a bit like a drug. You’re on it, and you can’t get off. I spent seven years on our washing machine [which has two drums instead of one].” ### Example 7: **Building Wise—[Nilan Peiris](https://www.linkedin.com/in/nilanpeiris)** In this three-minute clip, notice how Nilan approaches the problem he’s faced with, of getting money transfer fees lower than anyone else. How does one offer a money transfer experience that’s 10 times better than the competition? His approach: 1. Break down the problem into individual levers (i.e. what could allow us to cut fees?) 2. Explore each lever in depth (i.e. send a team to Singapore to set up a local bank) 3. Do it the hard/unscalable way and make sure it works 4. Commit, and scale [Watch on YouTube](https://www.youtube.com/watch?v=xZifSLGOrrw) > “If you look at our P&L, there are just three costs per transaction. You’ve got people costs, you’ve got the cost of risk, and then you’ve got partner fees. > > **If you’ve got this mission of moving the world’s money for almost nothing, or as close to zero as you can, and we’re trying to do this 10 times better than anyone else, how do you really change each of these?** > > Let’s do the risk one first. There are two risks we have. We have FX [foreign exchange] risk. You come to Wise and you see your rate, and then you may send us the money a little later. The rate’s locked and it could move against us, so we’d lose some money. If you look back, we’ve halved that cost over the last few years, and you can imagine through understanding the bits of the product, they generate exposure, and limiting it, and a bunch of algorithms behind that. But the more inspiring stuff is the people costs, and the partner costs, go through each of these one at a time. > > The people costs are our customer service team and operations teams. But I like to think of that as the cost of poor quality. So you bring up customer support if the products are clear; you hire lots of people in the back office. If you haven’t automated it. We get like 20% improvement year on year as we’re doing that. But to come back to your question, how do you step-change that? How do you do a 10x better experience? > > I’ll share with you a story from Singapore. It’s quite a fun one. Because we went to Singapore about six, seven years ago and we asked for a [bank] license. We had 20,000 people or so on the waitlist, saying, ‘Wise, please come to Singapore.’ And we went there and we asked the regular, ‘Hey, can you give us a license?’ They gave us the license, but they said, ‘You have to physically meet every single customer.’ > > Face-to-face. And this happens, this is... Remember, they’re banks that people use. So people go into banks usually, and you get face-to-face verified when you open a bank account. We’re like, ‘You don’t need to do this in Australia, in the U.K., in other countries around the world.’ They’re like, ‘In Singapore, for your license, you need to do this.’ So we sent a small team out to Singapore, and we opened an office there, and got customers. You went through this really slick flow, and then you got invited in to come see the team. And customers hated it, and it was really expensive, obviously. > > But the magic was we got the customers not to complain to us, but to complain to the government. And it took a year of lobbying, and a year of building, doing something unscalable effectively, before we got the world’s first eKYC license in Singapore. So you could take a selfie, a picture of your ID, and then you could get verified. > > **And that’s what I call a 10x better experience than anyone else in the market, and that led to advocacy and word of mouth off the back of it. And that loop of getting your customers to help was also one of the learnings of word of mouth.”** ### Example 8: Brian Chesky on designing a 10-star experience In this five-minute clip, notice how Brian keeps asking “what if” questions: [Watch on YouTube](https://www.youtube.com/watch?v=agVazRnnyI0) > “The moment of truth on Airbnb is when you check in, right? You’re like, is this going to be what I think it is? And there’s a really bad version of check-in, like the host didn’t show up. And there’s a good version of a check-in; they showed up. But we wanted to think to ourselves: what would make the experience something people *love*? > > And so we created this exercise. We thought, you know when you go on Airbnb—and it’s also true on Uber—a five-star mostly means nothing bad happened. And we thought, well, what if there was like a six-star [experience]. What would that be when you check into Airbnb? And the six-star is you get to your Airbnb and, you know, there’s like a bottle of wine waiting on a table and there’s some fruit and they have a handwritten note to you. OK, that’s really nice. And then I thought, well, what would a seven-star experience be? A seven-star experience is they get a limo, they pick you up at the airport, and there’s this whole curated experience. You get to the house, and they know you like surfing and there’s a surfboard there waiting for you and all that stuff. So then I thought, what would an eight-star experience be like? An eight-star experience: you get to the airport, there’s a giant elephant and you get on the elephant and there’s a parade in your honor and you go to your Airbnb. So what would a nine-star experience be? The nine-star experience is the Beatles check-in. You land and there’s 5,000 teenagers cheering your name, and you get to your Airbnb, you have to do a press conference in the front lawn. So what’s a 10-star experience? A 10-star experience, you show up and Elon Musk says we’re going to space. And you do get back eventually. > > The point of this story is that you maybe can’t make an 8-, 9-, or 10-star experience. But most people try to design something that’s just good enough. But if you can add that 6th or 7th star—if you can design something really amazing and you use the part of your brain, the handcrafted part of your brain, to create that perfect experience—then you can reverse engineer how to industrialize this millions of times over and over. And what happens is people love your product and they tell everyone else about your product.” ### Example 9: Elon Musk on Tesla In this 2.5-minute clip, notice Elon’s willingness to question everything he’s ever heard about what’s possible, instead going to the source to find out what physics would allow one to do and then figuring out what’s stopping him from doing that. As it turned out, nothing (other than a hell of a lot of work). [Watch on YouTube](https://www.youtube.com/watch?v=NV3sBlRgzTI) > “For batteries, [people] would say, oh, it’s going to cost you—historically, it cost $600 per kilowatt-hour, and so it’s not going to be much better than that in the future—and say no. OK, well, what are the batteries made of? **Thinking from first principles, you would say, OK, what are the material constituents of the batteries? What is the market value of the material constituents? OK, it’s got cobalt, nickel, aluminum, carbon, and some polymers for separation. And steel. So break that down on a material basis and say, OK, what if we bought that in the London metal exchange, what would each of those things cost? Like, oh geez, it’s like $80 per kilowatt-hour.** So clearly you just need to think of clever ways to take those materials and combine them into the shape of a battery cell, and you can have batteries that are much, much cheaper than anyone realizes.” ### Example 10: Elon Musk on SpaceX In the most quoted example of all, here’s a one-minute clip of Elon explaining his first-principles thinking that led to SpaceX—the first private company to successfully launch and return a spacecraft from Earth orbit, now valued at $180 billion. [Watch on YouTube](https://www.youtube.com/watch?v=vDwzmJpI4io) > “**Historically, all rockets have been expensive, so therefore, in the future, all rockets will be expensive. But actually that’s not true. If you say, what is a rocket made of?** It’s made of aluminum, titanium, copper, carbon fiber. And you can break it down and say, what is the raw material cost of all these components? And if you have them stacked on the floor and could wave a magic wand so that the cost of rearranging the atoms was zero, then what would the cost of the rocket be? And I was like, wow, OK, it’s really small—it’s like 2% of what a rocket costs. So clearly it would be in how the atoms are arranged—so you’ve got to figure out, how can we get the atoms in the right shape much more efficiently? And so I had a series of meetings on Saturdays with people, some of whom were still working at the big aerospace companies, just to try to figure out if there’s some catch here that I’m not appreciating. And I couldn’t figure it out. There doesn’t seem to be any catch. So I started SpaceX.” ## How to practice first-principles thinking 1. **Describe what you want your team or company to achieve** (e.g. “Build a 10x better way to buy books”) 2. **Identify each lever/component that is keeping you from achieving this goal/vision (e.g. lowest prices, fastest delivery, highest selection)** 3. **Systematically question every assumption that you and your colleagues have about what is keeping you from moving these levers** 1. **Ask fertile questions** 1. Confirming questions: “Are we sure that’s true?” 2. What-if questions: “*What if* this were possible?” 3. Possibility questions: “What would need to be true for this to be possible?” 4. Confidence questions: “How confident are you in that conclusion?” 5. Evidence questions: “What evidence do you have for that conclusion?” 6. Why questions: “Why is that?” ← You can repeat this multiple times 7. Dumb questions: “Can you explain this to me?” 8. Clarifying questions: “Can you clarify what you mean by that?” 9. Example questions: “Can you give me an example of that?” 10. Certainty questions: “What do we know to be absolutely true?” 2. **Go to the source** 1. Visit the factory 2. Read the primary research 3. Talk to the people making the raw ingredients (or APIs) 4. Push back on gatekeepers 5. Question “authority”—remember that we have a [bias to trust authority](https://en.wikipedia.org/wiki/Authority_bias) 3. **Try it before you conclude it’s not possible** 1. Run a quick experiment 2. Crunch your own numbers 3. Put together a skunkworks team to give it a shot ![False Dogma 2](https://substack-post-media.s3.amazonaws.com/public/images/4ef1adf2-ce53-46a7-965c-30f48d8cf5f6_1724x1831.jpeg) “With each of these questions, the challenge is to keep asking ‘why’ until you hit the floor.” —Tim Urban, [The Cook and the Chef](https://waitbutwhy.com/2015/11/the-cook-and-the-chef-musks-secret-sauce.html) ### Inspiration: Steve Jobs’s frame of mind [Watch on YouTube](https://www.youtube.com/watch?v=kYfNvmF0Bqw) > “**Everything around you that you call life was made up by people that were no smarter than you.** You can change it; you can influence it. You can build your own things that other people can use. The minute that you understand that you can poke life, and if you push in, something will pop out the other side—that you can change, you can mold it—that’s maybe the most important thing. To shake off this erroneous notion that life is there and you’re just gonna live in it, versus embrace it, change it, improve it, make your mark upon it. […] Once you learn that, you’ll never be the same again.” ### Inspiration: Albert Einstein’s frame of mind ![Einstein Thinking](https://substack-post-media.s3.amazonaws.com/public/images/6ed9a844-8d90-4d85-8247-54bf5088d898_1400x840.jpeg) > “It’s worth asking why Einstein discovered a new theory and his contemporaries did not. Both Lorentz and Poincare had already come up with many of the components of Einstein’s theory. […] > > Both men, the physicist Kip Thorne says, ‘were groping toward the same revision of our notions of space and time as Einstein, but they were groping through a fog of misperceptions foisted on them by Newtonian physics.’ > > **Einstein, by contrast, was able to cast off Newtonian misconceptions.** ‘His conviction that the universe loves simplification and beauty, and his willingness to be guided by this conviction, even if it meant destroying the foundations of Newtonian physics, led him, with a clarity of thought that others could not match, to his new description of space and time.’ ” > > —Walter Isaacson, *[Einstein: His Life and Universe](https://www.amazon.com/Einstein-Life-Universe-First-Printing/dp/B002AXQX4M/)* Tl;dr: Think different. [Watch on YouTube](https://www.youtube.com/watch?v=5sMBhDv4sik) ### 📚 Further study 1. [The Cook and the Chef, by Tim Urban](https://waitbutwhy.com/2015/11/the-cook-and-the-chef-musks-secret-sauce.html) 2. [Patrick Collison’s advice to teens](https://patrickcollison.com/advice) 3. [First principles thinking explained | Lex Fridman and Elon Musk](https://youtu.be/54OSbbtXrdI?si=VNeKODSDzDRwgv_p) 4. *[Where Good Ideas Come From](https://www.amazon.com/Where-Good-Ideas-Come-Innovation/dp/1594485380)* [by Steven Johnson](https://www.amazon.com/Where-Good-Ideas-Come-Innovation/dp/1594485380) 5. Listen to folks who’ve come on my podcast who think very differently: 1. [Brian Chesky](https://www.lennyspodcast.com/brian-cheskys-new-playbook/) 2. [Jason Fried](https://www.lennyspodcast.com/jason-fried-challenges-your-thinking-on-fundraising-goals-growth-and-more/?) 3. [Karri Saarinen](https://www.lennyspodcast.com/inside-linear-building-with-taste-craft-and-focus-karri-saarinen-co-founder-designer-ceo/) 4. [Claire Hughes Johnson](https://youtu.be/Mv0o9o4MRh0?si=a1WpyCta0WU4EcKh) *Have a fulfilling and productive week 🙏* ## 👀 Hiring? Or looking for a new job? I’m piloting a white-glove recruiting service for product roles, working with a few select companies at a time. If you’re hiring for senior product roles, apply below. [Apply to join](https://www.lennysjobs.com/talent/) If you’re exploring new opportunities yourself, use the same button above to sign up. We’ll send over personalized opportunities from hand-selected companies if we think there’s a fit. Nobody gets your info until you allow them to, and you can leave anytime. **If you’re finding this newsletter valuable, share it with a friend, and consider subscribing if you haven’t already. There are [group discounts](https://www.lennysnewsletter.com/subscribe?group=true), [gift options](https://www.lennysnewsletter.com/subscribe?gift=true), and [referral bonuses](https://www.lennysnewsletter.com/leaderboard) available.** Sincerely, Lenny 👋 --- ## [51/51] Taking the week off (and thank you!) In the spirit of the holiday season, I want to say *thank you*. Thank you for subscribing, thank you for reading, and thank you for being motivated enough to spend the time reading a newsletter like this. The fact that you’re reading this right now says a lot about you. Thank you for letting me do this work. Happy holidays, happy new year, and keep kicking ass. To leave you with at least something during this week off, here are a few fun things: 1. **My wife is a genius, and this is her latest concoction. Particularly poignant for Swifties, and new parents.** [michellerial](https://instagram.com/michellerial) [![Image from Taking the week off (and thank you!)](https://substack-post-media.s3.amazonaws.com/public/images/__ss-rehost__IG-meta-C00dWz8Oa0b.jpg)](https://instagram.com/p/C00dWz8Oa0b) A post shared by [@michellerial](https://instagram.com/michellerial) 2. **In case you missed it, you can pre-order the first-ever print version of this newsletter:** ***[The Best of Lenny’s Newsletter: Volume 1](https://lennyswag.com/products/vol-1)*****. It contains nearly two dozen of the most beloved and popular pieces, and all proceeds will go to charity ([GiveInternet](https://giveinternet.org/) and [Black Girls Code](https://www.wearebgc.org/)). We’ve already sold over $40,000 in books 🤯 [Learn more here](https://lennyswag.com/products/vol-1).** ![Image from Taking the week off (and thank you!)](https://substack-post-media.s3.amazonaws.com/public/images/62917694-bdcf-4723-a729-eaef58133164_2912x1456.png) 3. **Here are, in my opinion, the most underrated podcast episodes this year:** 1. [How to get press | Jason Feifer (editor in chief of Entrepreneur magazine)](https://www.youtube.com/watch?v=LZLdoAq3R7Y) 2. [How to tell better stories | Matthew Dicks (Storyworthy)](https://youtu.be/J4wguyJZI6A?si=AuTXzWQn349WDdGF) 3. [How to drive word of mouth | Nilan Peiris (CPO of Wise)](https://youtu.be/xZifSLGOrrw?si=nfwGZWsdcB9XYXdm) Till next year 🫡 ---