20Growth: The Golden Rule to $100M in ARR, Why CAC to LTV is BS Early On, Why Your First Growth Hire Should Be a Former Founder & How Ramp Does 200 Growth Experiments Per Quarter with Guillaume Cabane

Guillaume Cabane is a growth advisor to high-growth SaaS Startups, including Ramp, Spot, Airbyte, G2, Gorgias, Metadata, Madkudu, and others. Guillaume held VP of Growth roles at Drift, Segment, and other successful startups, where he helped them grow from ~50 to 300. Prior, Guillaume spent 6 years at Apple. In Today's Episode with Guillaume Cabane We Discuss: 1. Entry into Growth: How did Guillaume make his way into the world of growth? What are 1-2 of his biggest lessons from him time at Segment where he 4x revenue? What does Guillaume know now that he wishes he had known when he entered growth? 2. Enterprise vs SMB & CAC/LTV: Why does Guillaume think it is harder to go enterprise down than SMB up? What are the biggest mistakes companies make when scaling into enterprise? What are the biggest mistakes startups make with product-led-growth motions? Why does Guillaume believe it is impossible to analyse CAC/LTV in early companies? 3. Activation, Engagement and KPI Setting: What are the biggest mistakes companies and teams make in activation? What can growth and marketing teams do to guarantee engagement in prospects? Why are all KPIs not tied to revenue BS? 4. Hiring the Growth Team: What are the core characteristics of great growth hires? How quickly does it become apparent when you have made a bad growth hire? Why do founders make the best profiles when hiring your first growth hire? What are the biggest mistakes Guillaume has made when hiring for growth? 5. Why Growth is Like Venture: What is the secret to building a great growth portfolio? Why is it impossible to scale to $50M ARR with only one good channel? What is the right way to spread resources across channels? When is the right time to add new channels and diversify?

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Speaker 00

  When I care about how many experiments can I have running at the same time where I learn, if you can drive value about mistakes, problems of the business, you have discovered that your audience does not know, you will get engagement guaranteed. Reject any KPI that is vanity. You don't care about traffic. You don't care about any of those KPIs. The only thing you care about is weight adjusted pipeline dollars.

• 0:25Harry Stebbings?

  Welcome to 20 Growth with me, Harry Stebbings. Now, this is the monthly show where we sit down with the best growth leaders in the world to discuss their tips, tactics and strategies when it comes to scaling growth experiments and teams. Today's show is why I started this series, actionable granular advice that founders can learn from and use in their business today. And so with that, I'm thrilled to welcome G. Kabine or Guillaume Kabine, growth advisor to high growth SaaS startups, including Ramp, G2, Gorgeous and others. Guillaume previously held VP of Growth roles at Drift, Segment and other successful startups where he helped them grow from 50 to 300. And before that, Guillaume spent six years at Apple. But before we dive into the episode today, I'm refreshing the 20 VC Miro board and I'd love your input again. It's really

• 1:10Harry Stebbings?

  easy. Just head on over to miro.com/20vc and leave your guest suggestions for future shows and you can do it with a digital sticky note or a comment. You can head over to miro.com/20vc and Miro actually sponsored this episode. If you haven't already tried it, I think you'll love it. Miro is the online workspace for innovation. It's packed with the right capabilities to be your dream product's home base that you can visualize content, data and research findings, all in one space with no problem. It means this space is where you map customer journeys with the whole product team, create user behavior dashboards and map process diagrams. And finally, it's where you'll run productive team sprints using integrations with tools you already love

• 1:53Harry Stebbings?

  and use like Jira for developers, Asana for project managers, Figma for designers and so on. We use Miro and love it to brainstorm future shows, vote on potential guests and leave feedback for the rest of the team in our own time. And right now I'm using it to hear from you. Leave your thoughts on the board. Miro.com/20VC That's Miro.com/20VC And 20Growth is obviously focused on building the best growth teams. And great growth teams are obsessed with making data-driven decisions. But getting good data is hard and growth and product teams have to spend hours each week configuring metrics, setting up experiments and writing custom queries. Or what if your growth team could get this time back? With Statsig, they can.

• 2:38Harry Stebbings?

  Thousands of companies, from huge enterprises to startups, rely on Statsig to ship faster, automate experimentation and improve key metrics. If you're building software products, Statsig is the one-stop platform you need for experimentation, feature flags and analytics. After implementing Statsig, the growth team at Ancestry.com 10x the number of experiments they were running. If you're a startup, Statsig has a free tier and a special program for venture-backed companies. And if you're a large enterprise, they have transparent pricing with no fee-based pricing or ticky tack fees for small features. 20Growth listeners can also take advantage of a special offer, including 5 million free events a month and white glove onboarding support.

• 3:22Harry Stebbings?

  Visit Statsig.com/20Growth, that's 2020 growth, to get started on your data-driven journey. And finally, so do you know the impact of your marketing efforts? It's more important this year than ever to know the impact. Or how much you've spent so far this month and what you got as a result? You're not alone in not knowing these answers. Even though marketing is now all about the data, most companies still use manual spreadsheets for reporting and analysis. But if you want to supercharge growth, spreadsheets just won't cut it. Funnel is the world's first and only marketing data hub that takes all the manual effort out of data collection and lets you blend data from different platforms to unlock new, deeper insights. And the best part is this can all be achieved without writing a single line of code.

• 4:07Harry Stebbings?

  I can hear your sigh of relief. That's why it's used by more than 2,000 of the world's top brands and media agencies, including Samsung, Adidas, Sony and Havas Media. Start your own free trial by visiting funnel.io/20vc That's funnel.io/20vc.

• 4:25Speaker 00

  You have now arrived at your destination.

• 4:28Harry Stebbings?

  Gee, I am so excited for this. We last spoke in 2017, six years ago, which is just incredible. My word, I'm like Benjamin Button, but thank you so much for joining me today.

• 4:39Speaker 00

  I'm so glad to be here. It's been a while and I think we've got a ton more stuff to talk about.

• 4:44Harry Stebbings?

  Oh my God, we've got so much more to talk about, but I just want to start with some context. Growth is a weird world. How did you first make your way into growth and what you think is your first growth role?

• 4:54Speaker 00

  One is, I'm an old man now. I started in the early 2000s at Apple. And if there's one thing you want to know about Apple, especially, you know, I was based in Europe, is that it's a very centralized company and so you need to ask authorization for everything and you never get it in marketing, you just never get it. And so my boss, who was the head of marketing for Apple France, he was not running campaigns because he was not getting authorized. He was running experiments because for experiments he did not need to ask. We're talking about 2005 here, 2004. He didn't need to ask for anyone. And then when he got caught, he said, "Oh no, we're just running an experiment to see if the audience of the market reacts well to that." Like, that's smart, right? And the second founding story, a couple of years later, I was in IT security consulting firm, leading marketing over there.

• 5:38Speaker 00

  That's when I realized that leveraging engineers to build quasi-products, to build demand gen, drive people to the product that is different. So if people build something which is a quasi-product, it works really well, especially for technical audiences. Both of those things merged in 2014, 2015, when I joined Mention and I started using Segments. I'm like, "Hey, I'm fairly technical now and I know how to run experiments and I know how to do technical marketing." And at that time, it just started to be called growth. And I just landed in the right place at the right time.

• 6:10Harry Stebbings?

  I love that in terms of kind of an alternate tool that drives demand gen to the core product. I automatically think of actually HubSpot and the website creator which did it so well. Do you think that still works today? Or is it too commonly trodden path now where everyone's tried to do it?

• 6:24Speaker 00

  It's hard to come out with a really good product that you're not monetizing directly. First, because many people, if there is interest for a product, people have built a better version of it and have monetized it. So like a lot of those niche have disappeared. And the second is that the quality has gone down and people have become desensitized. Where they say, oh, there's like a free cost calculator, return on investment calculator, like one of those typical things, right? Or website grader. Most of those are terrible now. And so people will think like, oh, I'm not gonna like sign up or put my info, my P I I there. Because I'm not gonna get my values worth, right? But if you have something truly amazing, does it still work? Absolutely.

• 7:05Harry Stebbings?

  You mentioned Segment there. You grew revenue for I see Segment. What was your biggest lesson from your time at Segment?

• 7:12Speaker 00

  Segment is a, it's a technical product targeting a engineering audience. I know I often get founders who have a similar audience, want to sell to engineers and, and they're telling me, gee, like, you know, app on emails isn't work, engineers don't want to be sold to. And by and large, that's true. Though, if you're lucky enough to have a really good product, let's put aside those that have like a bad product. We have a truly good product that is useful. You have an incentive to have a free plan, a startup plan. Because engineers, well, stay engineers as they change jobs. And they no longer are in startups and they join a real legit company. And they will bring your product along with them. That's what we found at Segment.

• 7:50Speaker 00

  We did a crazy attribution logic where we found engineers across jobs by keying not on the link, not on the email. Because you, the email changes, domain changes, not on the name, that's not relevant, on the LinkedIn URL. Because unless you're a psychopath, you don't change your LinkedIn URL between jobs. It's the same slug. And so we just took from Clubbit all the LinkedIn URLs of other people and we say, hey, has that person came a few months ago, four, five months ago? And if yes, did they come through a startup plan? And then we did reverse attribution that way. And we found that a lot of people coming for like mid-market enterprise deals had used the product quarters ago at a small startup that had died. And that attribution was worthwhile. So if you can do that, go for it.

• 8:34Harry Stebbings?

  If you can do that, go for it. The thing I find really challenging, I told you I'm fucking up the schedule, but the thing I find really challenging with that is like, then you're doing kind of a PLG motion and an enterprise motion at the same time. And I'm always like to startups, you can't do both well. Do one focus and then move to another over three to five years, honestly. Am I wrong?

• 8:56Speaker 00

  Who does it well, Harry? Name me companies that at the early stage are really good at PLG or enterprise. It's very rare that they have one of the two motions like pinned down. And so most of the time, they try a bit of PLG, they try a bit of enterprise, they land most of the time in between. Segment, both PLG and enterprise, sells that. Drift, ditto. Gorgeous, ditto. All of the companies I worked for, I worked with, and we're going to talk about CAC, I'm sure, but like mostly for CAC reasons, they optimize for efficient acquisition and selling and they land with both motions.

• 9:34Harry Stebbings?

  So no one kind of does it well and they kind of do both at the same.

• 9:37Speaker 00

  No, it happens. It's rare. It's extremely rare that you have like super strong virality, a real PLG. I mean, most people who like say, I want to do PLG, they don't do PLG, right? They have a free plan. They have a self-service plan. It does not mean there's virality. It does not mean that people invite each other. Even the people I love and care about, you think of like something like a ramp, amazing company, like, do you think there's PLG? Do you think CFOs randomly invite other CFOs to use ramp? Hell no. It doesn't happen like that. It doesn't work like that. Maybe there are some network effects we can talk about, but there's no PLG.

• 10:12Harry Stebbings?

  I agree. You know what worries me most though, actually, is the fact that a lot of startups that I work with today essentially layer on the enterprise cost base of sales, marketing, customer success onto a PLG style price. And I'm going, that doesn't work. Am I right or am I wrong? Cause they are at a liquid scale.

• 10:32Speaker 00

  You're right, but there's worse. You're absolutely right. If you don't create the packaging, the pricing plans to support the high cost of the enterprise motion, then you're killing yourself. But there's worse. It's companies that are enterprise first with the entire like cost structure and product structure of enterprise software. And then want to open a PLG angles is, hey, let's let people like sign up on their own and like nothing works. Like the acquisition does not work. The product is not self-serve. You can't build like a self-serve like feature into like something was meant for your like CSMs to build the instance like. And that happens. I see those people come to me and it's like, this is just not going to work. It's impossible. You can't pivot that way.

• 11:15Harry Stebbings?

  Does it matter? And what I mean by that is you've got nothing to lose by opening that up.

• 11:20Speaker 00

  Focus. Success in startups is being able to focus your efforts to grow faster than your competitors. If you lose focus, your competitors grow faster than you, you lose.

• 11:30Harry Stebbings?

  So if I'm a startup founder listening to this and I hear her say, well, you kind of do both at the same time, try and make it work. How do I think about that? How do I think about messaging, resource allocation, marketing channels? They're so different. I'm torn between two worlds.

• 11:47Speaker 00

  Let's first talk like, why do you land in that situation? Generally, it's because you find one of the two motions. Generally, to be honest, like most people start with the SME market because you. You don't have what it takes to close like enterprise mid-market companies. You don't have SOC two compliance and whatnot. All right. And eventually, one exec at a larger company is more risk prone than others and likes is an early adopter. And will come to you and will offer like a three, four, five times your current ACV and you're going to take it. Of course you're going to take it. And then you're going to wonder, are there more like that? It happens like kind of naturally. It just happens. You just start closing a few of those. And then you need to start layering the cost structure. You need like to support them. Don't lose them because the churn would look bad.

• 12:31Speaker 00

  You put the logo on your page because you want like, that's an exciting logo. You put it in your board deck. So you need to support that. Prevent the churn. Most of the time it happens insidiously. It's very rare that I have people tell me I didn't. Not want to do enterprise features that don't want enterprise customers. I have one example, Zapier did that for very, very long. I talked with Zapier founders when I was at Segments and I wanted enterprise features. And he said, gee, we love you, but I'm sorry, we're not going to build those features. I'm like, why? I'd pay you for that. He's like, yes, but we are loose focus of the huge market of SMBs. And we want to close as many of those. Other people will take care of the enterprise markets. We don't want to go there. I remember it because it's extremely rare.

• 13:12Harry Stebbings?

  I totally agree with you. I always think Frank Slutman's narrow the focus, increase the quality. My question to you then is, how do you know when is the right time to expand the focus? How do you know when you should go from SMB to mid-market? And also, how do you think about diversification? I hate, sorry, I'm just ranting now. But I hate companies where it's like, we're just selling to like high-grade startups. And I'm like, yeah, there's that thing called a macro recession that's going to impact spending and funding. And I don't like concentration on customers, basically.

• 13:39Speaker 00

  I think often what you see is companies find one of the adopters market, one audience where in the words of Rand Bellford, there's like, there's a message to audiences or a product to audience fit. And you start just maxing that out. You have a competitive advantage, your message resonates well. And eventually you're going to plateau because you have convinced most of the early adopters, the people that are early into your product. And the others have made the conscious decision, they don't want your product, right? The friction increases and you're going to start looking for new audiences. You can think, hey, this small is too small for us. I can't raise my price. I can't convert more of those. I can't sustain my growth there, right? I can't do my 2X, my, no, 33222. So you're looking for new audiences.

• 14:23Speaker 00

  And those new audiences will be either in different industries, in different segments generally, more rarely in different GOs. So you tend to generally go like same company size, different industries. Then you go different segments, company sizes, and then you go into different GOs. That's the way that I see most companies grow.

• 14:42Harry Stebbings?

  You know this shit's getting real when I get my pen out. You said three, three, two, two when it came to growth. For people who don't know what that framework is, can you just explain that for us?

• 14:52Speaker 00

  The golden rule, to be in the top decile of startups in terms of performance, with us in terms of evaluation and funding and outcomes, you would have to grow past the first million, three X the first year, three X the second year, and then two X for every year for the next three years. So three, three, two, two, two, right? And if you do that, you end up at a hundred million plus in revenue in five years.

• 15:18Harry Stebbings?

  When we chatted before, thinking of kind of that growth mechanism, you said boards want, I'm just skipping to CAC, I love CAC. You said that boards want low CAC and high scale growth. I just want to kind of break that down. How do you define low CAC, G?

• 15:33Speaker 00

  It's a good question. So at first, like, why do boards want that now?

• 15:39Speaker 00

  Well, it's because we're in this kind of recession or tough times, I want to say, in a way where capital is scarce. And when capital becomes scarce, there's two ways to win. You either grow fast out of it, let's stop, or you reduce costs. And founders try to do a bit of both, right, to de-risk. When you think of all of the people asking about PLG for PLG, that's another way of saying they're looking for low CAC tactics. They're looking for customers that bring themselves, that bring other customers for free that you don't have to pay for. If you go beyond that, you can't do PLG, which most can't, as we discussed. I'd say low CAC, if you look at the, look at the top quartile of startups in terms of performance, post five million revenue,

• 16:22Speaker 00

  you're going to see that the roughly, it's about a dollar of revenue, sorry, a dollar of cost for a dollar of revenue. So you spend a dollar to get your dollar. That's the top quartile, and that's fully loaded CAC. Well, that means that takes into account like the marketing spend, the marketing headcount, the sales team, bonuses and whatnot, everything but building the product. Marketing generally represents about thirty percent of that, so about thirty cents on the dollar. And so if you take no on a payback time of twelve months adjusted, like one for one, that's about four months of payback time. Four months of payback time is really good. That's really good. You pay back, you think about it, it's just like if you're doing a loan. You actually loan four months to a third party, to your customer. After four months, you start being in the money. That's how you should think about it.

• 17:04Speaker 00

  Every time a customer turns before four months is a loan that has not been repaid. It's a default on your debt.

• 17:10Harry Stebbings?

  Four months is very, very rare, though. I never see four months. When it's 12, it's like, okay. Like, what is a good payback to you?

• 17:17Speaker 00

  Anything below 12 is good. Now, when you think of that, generally, like, that's a very simple framework. If you want to be a bit smarter, you're going to like CAC 12 TV.

• 17:25Harry Stebbings?

  Yep.

• 17:25Speaker 00

  Again, going back into, I mean, fintech these days with free app, more people on board a financial platform, global platform like, like RAMP, they tend to stay, to stick for very, very long, multiple years. And so you can afford, let's say, something much higher in terms of payback time because the LTV is huge. People stick for three, four, five, at the mid-market, eight years. So when they stick around for eight years, you can start being very aggressive. You can start spending like more than one year, maybe two years.

• 17:54Harry Stebbings?

  I don't like that because we're being very assumptive on the future state of markets. In five years' time, there may be a completely different financial protocol with, I don't know what it is, which is why it's an unknown. But the assumption that we can have eight to nine years as an LTV in the first two years of a company. I get it more if you're Visa, where we've got 50 years of data. But like, for a startup, I just think LTV is bullshit. You've got no fricking idea. Am I right or am I wrong?

• 18:22Speaker 00

  I understand where you're coming from. On financial products, you can see the rate at which companies have switched their payment platforms and their like expensing platform, it tends to be, especially at the mid-market, very slow. And it's unlikely that changes because the cost of switching is super high. And that's the, even if you look at Yignorian, but also Brex and others have raised so much money. It's because the VCs have made the same calculations and have decided, concluded that it is very likely that people stick for that long. That's the only reason like those companies are worth that much. It's because the churn is almost like slits.

• 18:58Harry Stebbings?

  So then why do boards want now lower casks?

• 19:01Speaker 00

  Because most people don't have an eight-year retention timeframe.

• 19:04Harry Stebbings?

  So then when we think about that and we think about the CAC 12 TV, what is good CAC 12 TV to you? And I know they're generalized questions, but there is kind of rules of thumb where you're like, oh, interesting.

• 19:14Speaker 00

  Yeah, three to one is really good.

• 19:15Harry Stebbings?

  Three to one is good and grade is five to one. When does that become relevant? Because I see it in seed fund decks.

• 19:21Speaker 00

  I don't think that you can calculate or you can attribute how or why customers have come to you at the early stage. I don't think it's worth it. You don't have the scale, you don't have the diversity. And even if you have found one channel that works, it's unlikely that you can scale it that way. And so to speak in simple terms, you can't take this Google Sheet cell and like drag it to the right. It's unlikely to to be real. And so don't try.

• 19:47Harry Stebbings?

  Do customers get more or less expansive to acquire from your experience? You've got one side which says more expansive, your core audience is saturated. So you're going to less obvious people. And then another one is that you get brand marketing come to play, word of mouth, PLG. It makes it cheaper. Where does it go?

• 20:06Speaker 00

  In most successful startups, the CAC will rise faster than the brand can compensate for that rise. As you said, like every new audience is slightly harder to acquire and convert. Because if not, you would have converted that audience sooner, earlier. That would be in the first audience as well. The people who have, as I said earlier, seen your ad, talked to you, took a demo and said, no. Can you really reach back to them, you know, after three months and say, hey, Harry? You told us no three months ago. Have you reconsidered your position? Nah, you're not going to do that. That just doesn't work. Eventually, I'll give you an example, Gorgeous, company that I love, right? Focusing on the e-commerce merchants.

• 20:49Speaker 00

  If you look at their total addressable market, we're talking of a couple of hundred thousand merchants in the US and Europe. That's the market. By now, they touch each of those merchants at least once a quarter. At least every single merchant at least once a quarter. So once you do that, how do you grow? Well, you go by, you know, you've maxed out your typical demand gen efforts. You're touching the people. You go by increasing price, by adding new products to convince people on products that you didn't have before. And by doing brand, by convincing them that their decision that they made prior is wrong. That is entirely new orientation and new business. It's completely different. This is no longer growth. That's no longer growth.

• 21:29Speaker 00

  Once you touch everyone every quarter, what takes you to the next stage is traditional marketing, traditional product. You're now an established business.

• 21:38Harry Stebbings?

  So how do you define growth then?

• 21:39Speaker 00

  Answer two questions, like one is growth, right? And what is growth? Let's start with what is growth? Growth is a risk adjusted way of creating value. What that means is that I have limited information. When I'm an angel investor, I have a limited due diligence. When I do growth, I have limited knowledge on that experiment, on that hypothesis. I'm going to do some simple heuristics and say, hey, is this a worthy bet? If I make not one, but 20 of those bets, can one of those pay back all the failures? That is typically a visa mindset. And that is the growth marketing mindset. I don't know what's going to work. You got to be very humble. You just need to move fast, have high velocity and to have just the right level of quality to be able to figure out, will this stick?

• 22:25Speaker 00

  So it is a multi-disciplinary way of creating competitive modes, whether that's in pre-sign up, acquisition or post-sign up in the product, it doesn't matter. And what it's not, it's I oppose it to core product, core marketing, the traditional way of, I'd say, releasing features or campaigns.

• 22:44Harry Stebbings?

  Question for you, you said about the speed that testing experiments you don't know. We were talking about the success we have in TikTok. It takes a lot of time often for new content initiatives to play out. How do you know whether an experiment is failing or whether it just needs more time?

• 23:00Speaker 00

  That's a great question. So first, the biggest mistake that I see happen in growth teams is they undertake an experiment without assessing the cost, the effort or the audience size. And often I ask, can we reach statistical significance here? Is the audience big enough for us to be able to learn the outcome? And often when I dig, the answer is no, there's just not enough people. And that happens very often in B two B SaaS products, which is like my stuff, post-product. It's very hard to get stats, Sig, post-sign up in the B two B SaaS because you're going to need like a thousand users to be engaging with the product in a short timeframe. Who has that? It's really truly it's rare. Just think about that.

• 23:39Speaker 00

  So you got to be able to like be ruthless and exclude those experiments where you won't be able to come out with a learning. What I care about is not so much the wins because I can't predict those. What I care about, how many experiments can I have running at the same time where I learn whether this is a failure or a success? And I store that information.

• 24:00Harry Stebbings?

  A lot of people don't actually get good learnings, I don't think. What's that? And it's like, yeah, it didn't work. What's a good learning and what's a bad learning?

• 24:08Speaker 00

  A good learning is a statistically significant deviation from your status quo. It's hard. I'll give you one example, okay? People often change their onboarding email, their welcome email, post sign up to get people to use the product. And they test and it's hard to get a lift there. You know what I tell them? Have you tested against a cold out, a control audience? And they tell me yes. And they tell me all the control is, is the standard emails. And no, you're wrong. The control is no email. Have you tried not sending a welcome email? Not sending, you know, the, the first three, four, five emails to get people to use the product? And of course they haven't. And I tell them, try it. Take 20, 30, whatever it takes to be statistically significant and don't send emails.

• 24:52Speaker 00

  And let's see what the true deviation in activation and retention is. And you know what happens, Harry? Most of the time, it's not statistically significant. The people who are going to activate will activate regardless of getting an email or not. And so the email has no value at all.

• 25:07Harry Stebbings?

  Did you do one where actually you changed anything and it did add a lot of value and activation went way up?

• 25:12Speaker 00

  Yeah, that's the value of experience. And I think it's Luke Leveque, who was the chief growth officer at Shopify, who said that. I think growth is one of those disciplines where the knowledge of something that has worked somewhere else and that is replicable is extremely valuable and rare. That doesn't really happen in products. Like you've done a product really well somewhere else. You can't really replicate that in another company. It just doesn't work that way. It's also not true in like in marketing or in like engineering. But in growth, if you have something where you're able to like tickle a human psychology just the right way, it's likely to work again in the next company because they're still the same humans. I gave you an example I heard recently. One company sent verification emails, but the product does not need verification emails.

• 25:58Speaker 00

  You don't need to click to verify your email. But they just tried, hey, what if we ask people to verify the email? Does that bring the people back into the product? What if we do it regardless of other than the product? And what if we said it twice? We're going to have to verify the first time. It works. It works great. It's interesting to find that that is an example of something that is very replicable in almost any SaaS business. It's very easy to implement and it will drive your user retention up.

• 26:23Harry Stebbings?

  What are the biggest mistakes you see companies make or do when it comes to activation?

• 26:28Speaker 00

  Generally, they take your working growth tactic like that one and they tone it down a bit. I'll give you an example. You often see emails where they have this like almost tone and cheek, personal for like the CS person or like a sales engineer, making it look like the text is personal, but it's wrapped in the HTML layer, which makes it very clearly it's not personal. And I tell them like, you got to pick, folks. Either this is a corporate email and it's corporate looking, or this is a text based email that's maybe sent through Gmail. Which behavior are you trying to like get your users to do? All right. What do you want them to believe? Is this coming from a human? It's not coming from a human. They haven't put themselves in the shoes

• 27:09Speaker 00

  of the recipient. They don't think, what feeling am I trying to create? So the biggest mistake is they don't think of the humans on the other side. They don't think of the psychology enough.

• 27:21Harry Stebbings?

  Okay. So they don't think of the psychology enough. It brings me to my biggest challenge. So actually with kind of growth and growth marketing, which is when you have horizontal SaaS products, it could be Airtable, it could be Dropbox, it could be any of these. They can be used by dentists, they can be used by product managers, and the use cases are so different. So to get messaging that resonates across that spectrum is so tough. How do you think about that horizontal product marketing being done well and resonating and getting in their psychology?

• 27:47Speaker 00

  You know what's fantastic? It's we live in 2023 and now you have AI products. You name it, all the ones that you love, and you can build personalized content with a skill that you never dreamed of before, which is at a quality that was unachievable before. What people care, especially in horizontal products, is that you talk about them, their problems, their challenges. Actually, I might go back when I said just earlier, you asked me what was the biggest mistake? Actually, it's probably because that companies, marketers, talk of them and their product first. They don't talk about you, the audience, and your problems. They say, hey, here's my product, here's what we do, here's our customers, here's why we are great. And you know what?

• 28:32Speaker 00

  As the recipient, I don't care. I really don't care. I've got other things to care about in my day than like a random company I never heard about. But if you reach out to Harry and you have context on his business, what he does, what he loves and care, what challenges you have a really good assumption that he's facing right now, it's much more likely that you can pique his interest. So these days with large language models and injected data about, hey, this is a dentist. What's the size of the dentistry? Well, they're based all day in the mission in SF. You can start being extremely specific and relevant and relevance creates reciprocity. Reciprocity gets you responses.

• 29:13Harry Stebbings?

  Can you just unpack that for me? Relevance creates reciprocity, reciprocity gets you responses. Can you just break that down?

• 29:19Speaker 00

  There are two things that work when you try to reach out to someone that you don't know, a prospect. Whether it's like by email, by whatever, whatever the communication channel. True value, your communication, let's call it an email, contains something that's really helpful. I can give you an example. And the second is reciprocity for humanness. They truly believe it comes from a human and thus they will feel compelled to respond because somebody else has spent some time. Let's unpack tho- those two here. Okay. True value. Give you an example. Gorgeous again, right? A support platform for merchants. Merchants sell, you know, these days a lot, of course, on TikTok, but also on Instagram. It's a major platform for merchants. And what we found out is that sometimes some customers, potential customers of the merchant or the brand posted negative comments on a brand's post.

• 30:04Speaker 00

  And nobody took care of that. We said, hey, that's a miss from the brand, but wait, can we scrape that? Can we automate that? We found out that we could. And we started scraping and automating the detection of negative comments on brand posts on Instagram, sending it to the brand owner, to the company owner, to the marketing leader. This is, hey, Harry, love your products, but just let you know, there's like a couple of negative comments here on your posts. And it's been 48 hours, you haven't responded and really you should. That's it. Don't talk about gorgeous, don't talk about the product. This works super. Why? When it's public. I'm not doing anything like, you know, sneezy, like it's, it's on Instagram. Like everyone can see that. True. It's true. You can seek and verify and click on the post. You will find the negative comment. You know it's not me.

• 30:49Speaker 00

  And second, like it's helpful. Absolutely. You should take care about it. You should respond if you haven't, right? You see those three things? The only response you can have is thanks. Thanks for catching it. Thanks. That's it. Of course, I'll follow up to that email with an ask for demo and of course you'll be compelled to give me your time. Because you would really be a douchebag not give me some of your time, given that I found some mistakes that you made in your brand. Alright, so super high response rates there. That's value. I have a million examples of that. If you can drive value about mistakes, problems of the business, you have discovered that your audience does not know. You will get engagement guaranteed.

• 31:28Harry Stebbings?

  Did that scale?

• 31:29Speaker 00

  Absolutely. The challenge is finding those opportunities, those pockets of opportunity and scaling those. That's a challenge.

• 31:37Harry Stebbings?

  But that does actually scale. I mean, that's much more scalable than say like paid.

• 31:41Speaker 00

  Think of the CAC of that. That's why I love growth. There is an upfront cost to finding that. Testing it, of course, we don't, we don't automate anything before we test it manually. We had like some G P people like send a couple of hundred manually to see if it works. And once we knew the response rates were huge, we then like invested in doing it with our engineers. But once you've built it and you've amortized the upfront costs, the marginal cost of that email is zero. You're just running a few scripts. The acquisition cost of doing that is zero. If your competitors are not doing it, you have like this like green ocean in front of you with like this no competition, zero dollar CAC. That's competitive mode.

• 32:15Harry Stebbings?

  What was the response rate? It's like, just so, is it like 50%?

• 32:18Speaker 00

  No, it's more like 10, 12%, 10, 12%, which is about 5X the standard response rate of a good cold email. Reciprocity. You want to go to reciprocity?

• 32:28Harry Stebbings?

  Yeah.

• 32:28Speaker 00

  What's the other thing that creates responses? Now, here's a thought experiment I want you and the audience to have. At home, you have a mailbox, a physical mailbox, and in mailbox, you receive junk mail, right? Most of it is junk mail. You take that junk mail, you throw it away. You don't even think about it. You don't care. You have no personal feelings. You have no emotions to that junk mail. You feel maybe even lighter about throwing it away. Now, let's say you go through the junk mail as you throw it away. There's this one letter, that's sealed letter. That's obviously written by a human, obviously by an old person. And there's your name, Harry, on it. Harry Stevens written on it. And there's the return address behind it. They even maybe like licked the stamp and put it on the envelope. You're very convinced as a human. How like you are you, Harry, to dig that envelope and throw it in the trash without opening it? No way, right?

• 33:12Speaker 00

  You would be a psychopath if you did that. I tested that thought experiment at Saster in front of hundreds of people. Not one person raised their hand, not one, which makes sense. Why? We have responsive.

• 33:24Harry Stebbings?

  But how do you do that with email? Because with physical, you can do the nice stamp, the nice textured letter, whatever it is. How do you do that with email?

• 33:31Speaker 00

  Give you an example. We're targeting financial platform, targeting CFOs. Notoriously difficult audience to engage with. Almost nothing can scrape about a company or CFO is useful. They're not posting about their financial issues on Twitter. It doesn't happen. What we did is we scraped.

• 33:48Harry Stebbings?

  I would love that. Wouldn't you love that? Oh, we've got so much data that we just don't know where it is. We're really missing our payments right now. God, this is so much better than LinkedIn's posting.

• 33:58Speaker 00

  So what we did is that we scraped very typical their LinkedIn profile, their colleges. And here's the trick. The trick is we thought about what's the commonality between CFOs? They're all well educated. They all went to college, like a hundred percent. I'd went to college, okay? In the US, very specific for the US, you had people who went to US college tend to be very passionate about their college sports team. Very passionate, right? So what we did is that we matched two data sets, the college where each CFO went and the upcoming games of that college against the opponent team. We then built a very simplified betting algorithm to see is the CFO's team likely to win or lose?

• 34:40Speaker 00

  And we send that in an email and say, hey, Harry, your team, the Sharks or whatever, is going against like the Bisons or whatever next week. And I'm ready to bet fifty bucks that your team is about to lose. If you went up on top, I'll give you fifty bucks. No question to ask. If you lose, I'll just ask for a twenty minute call. Now, that is a typical fifty dollar for a call email, but. But the sophistication of the email with this upcoming game that you know about, the ability to be able to bet for free, what looks for free on sports which people love, makes it feel so human. Nobody believes this is automated, but it is. Nobody believes it's automated. People are like, hey, somebody actually researched, somebody knows the upcoming game, somebody cares about something that I care about too. This is fun.

• 35:25Speaker 00

  The response rate here is twelve to fifteen percent, about the same. No one is so gorgeous. Again, for a very, very small cost and something that no one in their right mind would think of doing manually. That is resprocity. You see that, you immediately believe, hey, there's a human that cares. Like, at least I have to respond. At the minimum, I have to respond.

• 35:45Harry Stebbings?

  Does AI make this much, much harder? Because cold outbound, done well like you've done there, people think that it's actually a human and it's not. Kind of the wrapper of AI makes people just inherently more cynical that everyone's a robot. Does it make it harder?

• 36:00Speaker 00

  It will. I have a conviction that there are two possibilities. And I think two things will happen that will be true at the same time. Some part of the population will start rejecting communication coming from anonymous people because they won't know if it's a human or not. And thus they will by default think that it's a robot and thus that there is no resprocity that should be expensed. And some other part of the population, maybe the more tech side people, will not care and say, hey, is this information valuable? The problem is that because the marginal cost is so low, high quality text, high quality communication about you will become huge. It's going to be all the time, everywhere, and you just won't have the time for it.

• 36:42Speaker 00

  It's very likely that we'll start ignoring messages from real humans at a much higher rate because the quality of AI will be better than the quality of humans.

• 36:52Harry Stebbings?

  Does that mean cold outbound's dying?

• 36:55Speaker 00

  It's not cold outbound, it's communication's dying, personal communication's dying. It's not just cold outbound. The same is true on phone calls, phone calls, text calls, like blog posts. Anything that is a human-written content is soon likely to be better if done by an AI.

• 37:11Harry Stebbings?

  So then what do we do? What replaces it? The existing channels and tactics just get bigger in terms of portion of sales? Is there net new? If that's the total pie of net new, what is it?

• 37:22Speaker 00

  I love the worry on your face about the future, Harry. I think there's a few things. One is if you are on the cutting edge of tools and platforms, you will win regardless of what happens. Alright, you will because the others like anyone who's not doing the things that I said is already losing right now. Second, this negative pessimistic view of communication is a few years in the future. It's not a right now issue. So you have a couple of years to like handle it. Third, if you ask like a wild bet, I think it will be more about social proof, community and relationships. I've seen a product which instead of a chatbot on your SaaS homepage or pricing page, connects to your LinkedIn, your email connections, relationships,

• 38:07Speaker 00

  and says, hey, Jake, Harry's using this software. Do you want to ask him about it? And I thought that's really smart. Like instead of like doing random social proof about other companies or the people I don't know, it's hey, this connection of yours, this person you know and trust, use this software right now daily, just ask him about it. And because I have, I trust Harry, I know Harry, I'm like, yeah, Harry's a good guy, I know him, just give him a call. Harry says, yeah, this is, this is legit. I'm like, okay, cool. Done. That you can see has the immediate opportunity of solving the problem we just created.

• 38:39Harry Stebbings?

  Can I ask you, when we think about kind of different channels and getting to say 50 million in AR, I always think to Kip at HubSpot, who told me that it takes one channel to get to 50 million in AR and two to get to 100. From your experience here, you've been at segment, you've been at Drift. Is that the case? Is there much broader diversification? How do you think about that when you hear it?

• 39:00Speaker 00

  Hmm, I'm a big fan of HubSpot and what they've been able to build in the past couple of years, almost what is HubSpot. And they have one of the biggest addressable markets in the world. It's almost any business. It's a CRM. That's one. Second, their market is almost an oligopoly. There's Salesforce, there's HubSpot, maybe there's like Freshdesk, Zoho, that's about it. There's like less than five companies that are like decent when you look at the entire suite. Okay, which is extremely rare, given the size of the market that is of so few players in that market. And you need to have one. It's not like you can say, no, I'm good, but like. I don't need a CRM, I don't need a marketing objective, you need to. So you will buy one of those, which is why it's a great company, it's it they're doing so well.

• 39:44Speaker 00

  Almost no one has the combination of those market attributes. And I have never seen a companies I've worked with, neither at Segment or at the Drift, Cordia, so. And not in one of the companies I engage with, we were able to get to fifty million on one channel, not one.

• 40:00Harry Stebbings?

  The question I have from founders is like, hey, this channel's working, it's working well. How should I think about the other channels? And I'm normally saying, hey, don't get too cute. Facebook ads is working, just pummel it, keep going, keep going until it doesn't work. Obviously, you wanna transition quickly, don't be too cute too early. Do you agree with that or do you think actually diversification is important early?

• 40:23Speaker 00

  I'm in between, I'm in business, I don't like to be surprised. And what that means is if I'm gonna raise a series A or B, whatever your stage is, I wanna know like, can I actually spend that money? Do I have like more than like hypothesis that I know how to spend that money? And so I recommend increasingly as you go through the stages to test the CAC and the depth of those channels. I'll give you one example, let's let's take like paid on Facebook. Do you really know what's the depth of that channel? No, how do you do it? I recommend companies to two X the budget every week until it's that lines. Just do it for like four weeks, six weeks, it's not gonna like burn your budget, your entire like capital, but just two X on a week two.

• 41:06Speaker 00

  Two X on a week three, two X on a week four. Very quickly, you're gonna find out where the cap is, alright? You can find you're not getting more like engagement, more clicks, more revenue. And then you can scale back and can tell your board, hey board, we've pressure tested the depth of that channel. And we know how much money we can spend on that channel. And you then go and do the same on every other channel. I did the same for a bit on emails. What's the number, maximum number of emails somebody can receive before there's like negative outcomes? Is it like once a year, once a quarter, once a month? Let's just take a small sample and let's go down. Obviously, like there's like condition effects, but you should test it. Test the same way in every channel and they go back to you once, hey, we know the depth of email, we know the depth of like paid, we know that of every other channel.

• 41:50Speaker 00

  This is why we need to raise money, this is how we can spend it.

• 41:52Harry Stebbings?

  How do you know when you've truly hit it? Is it that obvious? Is that gray? Do you know what I mean? If we're doing Facebook and it's like, yeah, we're a couple of percent less effective, is that the depth?

• 42:03Speaker 00

  To exit again, and you'll find it. Eventually, you won't be able to spend more money. There's a point where you can't spend more money, or you're spending more and not getting more engagement. If you're not sure, to exit again.

• 42:13Harry Stebbings?

  I think people worry about destroying a channel too quickly.

• 42:16Speaker 00

  Think like a randomized sample of the audience. If you can't do that, it means your target market is too small, and you should be doing ABM. If you have like, let's take Gorgeous again, like if you have like 200,000 companies, can't you take 5,000 companies, 2,000 companies, the smallest audience Facebook will let you have, like 2,000, and like really increase the budget there? If you burn those 2,000 out of 200,000, burn 1%, and you've learned the outcome of the channel, is it not worth it?

• 42:46Harry Stebbings?

  I hear you here, and I'm like, okay, so we think about the depth and the returns driven, and that converts to sales. The question I have is, you know, I spoke to Fabrizia before the show, and he said that you're the master of aligning marketing KPIs to dollars. Can you just help me understand, how do you approach marketing KPIs to dollars? And just take me through it. Imagine I'm a founder trying to understand.

• 43:06Speaker 00

  Reject any KPI that is vanity. You don't care about traffic. You don't care about any of those KPIs. The only thing you care about is weight-adjusted pipeline dollars. So all of those KPIs, engagement KPIs, your growth team, your marketing team needs to convert them based on lead score, based on company size, on stage, your usual close rate. Every single logo that engages with your brand at any stage needs to be converted into a dollar figure. You then sum those, and you have a pipeline by stage that is not just for your sales team, that is also for your marketing team. Your marketing team has a funnel, TAM to MQLs, going, drilling down to SQLs, then over to your sales team. They should have a pipeline figure per stage.

• 43:51Speaker 00

  And based on your conversion rate, you should give them goals at every stage of that pipeline. The key learning is, what has worked for sales also works for marketers. If a marketing candidate that you're looking to hire does not own a pipeline figure, that is the wrong candidate, my friend.

• 44:07Harry Stebbings?

  Can I ask you a pipeline figure? I can give you bullshit, though. I can feed your pipe with a lot of low-quality leads.

• 44:14Speaker 00

  Then you don't have a good lead score. Then your lead score is bad. If your lead score is good and your pipeline is adjusted with the lead score, that should not happen.

• 44:22Harry Stebbings?

  Talk to me about that relationship between lead score and pipeline and how founders can and should use it.

• 44:27Speaker 00

  If, let's say, your ACV is 10K and your lead score predicts a likelihood to close of 30%, so the value of that company or pipe is 3,000 bucks. It's not 10, it's 3. If the lead score is shit, maybe it's 1. You don't count the 10, you count the 3. And if you can't make that prediction, then you should be working on the lead score.

• 44:48Harry Stebbings?

  How many people have this in place, do you think?

• 44:50Speaker 00

  All the ones who are winning. It's fairly easy to build a lead score. You know, you could, like, I was supposed to a company like Matt could do. You could build it on a modern AI platform like Akio. Like, there's, like, even Hopsport has, like, simplified models for that. If you haven't think of, like, the lead score, it means you haven't thought of your ICP. If you haven't thought of who's a good customer for you, you just stop everything and just go, define who are the good customers and what are their attributes?

• 45:15Harry Stebbings?

  Where on earth do these people sit in our company, G? These growth-minded people who are working on activation experiments, who are working on testing new channels. Are they in marketing? Are they in, they in product?

• 45:25Speaker 00

  Well, the answer to that, growth, but...

• 45:28Harry Stebbings?

  So it should be a standalone function in your mind?

• 45:30Speaker 00

  I love for that to be true. I have learned that I'm wrong, and that is rarely the case. The look-alikes of the world are the exception, truly. It generally rolls into, like, either product or, or marketing. I would love for that to be a standalone function. The lead score itself generally is within, like, ops.

• 45:47Harry Stebbings?

  When do we hire the first person? When is like, you know what, we've got enough data here. Let's test. Let's start this process.

• 45:55Speaker 00

  After a couple million revenue. Once you've handled the early adopters, you've scaled at least one channel that works well, and you're starting to think of optimization, testing aggressively, building a growth team, then you should have enough data for that happen. But let's flip the question the other way. If you don't have enough data, then your growth team can't learn. If the growth team can't learn, you should not hire a growth team.

• 46:18Harry Stebbings?

  Well, sometimes you need a growth team to get data. Well, if you think about actually like understanding whether a funnel works and is efficient, you need to drive people to that funnel. I'm playing devil's advocate here, but.

• 46:30Speaker 00

  Yeah, I don't think, I don't think that's a good case for a growth team because kind of like you said earlier, you can drive terrible pipeline to a funnel. I can drive terrible leads or your product. If you hire a growth team too early, will they get you user engagement? Absolutely. Is that going to be the right users? Your bet is as good as mine. People respond to incentives. If the incentive of the team is to drive signups and engagement, the problem is they will optimize for that, not for the long-term viability of the business. That's a huge risk. I'm French. I know how to cheat. Ten times out of ten. You give me anything as a goal that is not revenue and you incentivize me strongly for that, you're gonna get that KPI, but you're not gonna get the revenue.

• 47:13Harry Stebbings?

  Okay, so no, listen, I agree. So it's this kind of couple of million there. We've got enough data. We've got a couple of channels maybe working. Gee, you're an angel, you're an advisor to my business. I'm the founder. We're in that stage. Should I hire a senior person who's got years of experience? Should I hire?

• 47:28Speaker 00

  God, no. Stay away from that.

• 47:32Harry Stebbings?

  Who should I hire?

• 47:33Speaker 00

  A former founder. You know what the good thing about startups? Most don't make it out. Like nine out of ten die. That doesn't mean it's a bad founder. There's a million reasons for the startup not to have like survived. And most of the founders are amazing individuals. They know how to bounce back. They know how to pivot. They are focused on long-term outcomes and revenue. All of those things that I said are exactly the key attributes you want for somebody who'd be leading your growth team. If you don't have a former founder, go for somebody from like a consulting background with the big five. Somebody who's really focused on like data, on precision, on the running hypothesis and on running a process. Growth is about running a process, not about like being super smart. It's running a process.

• 48:18Harry Stebbings?

  We hire a former founder, probably one that hasn't worked out in the earlier stages. Is that it? Do we just hire one at a time?

• 48:25Speaker 00

  You want for a growth team to work out first, it exists after your product team, obviously. Otherwise, you don't have a product. Generally, after your first few marketers, right, who are doing the traditional campaigns, the core campaigns. And you're going to create this startup in the startup, this team within the team. And they're going to take risks, as we talk as like a VC. What do they need to be able to do that? They need to be able to build and to ship. That means you have this former founder who's like the head of growth PM running the process. You're going to have at least one engineer, maybe data analyst if the founder can do it. But you, the head of growth is the analyst in the early days. So you have like head of growth, engineer, and one marketer slash copywriter. That's your team.

• 49:06Harry Stebbings?

  That's the team. Now we know that as a structure. If you're advising me on hiring for that team, how on earth do I structure the hiring process for that first growth hire?

• 49:15Speaker 00

  You want to ensure that they can look at your data, which means you need to give them take home that has some of your data. I would recommend hiding a few Easter eggs in there, some outliers to see, have they looked at the data? Have they found the Easter eggs? And the question that the data set in those lines, that's the first thing.

• 49:34Harry Stebbings?

  Just so we're clear, when you say like Easter eggs, this is like an anomalous number that is outside of the pattern.

• 49:39Speaker 00

  Yes, absolutely. I will put a couple of people, a couple of like logos that have like very weird retention, revenue, acquisition, stuff like that, right? Behavior, things like that. Do they see that? All right. If they don't see it, like, can they really eyeball a data set? That's the first thing. And then what's their approach to risk, to making bets and coming out on top? How do they win when they face interesting challenge? What's their approach? One of the key questions I always ask that is really out there, people don't expect it. I ask them like, have you played video games? I used to be a gamer before I had kids. And maybe like, yeah, most people have played games at one point in their life, right? I'm like, cool, tell me about it. Like, what's the path form? What's the game? What's your strategy? How do you win? Teach me, indulge me. Tell me about the rules.

• 50:23Speaker 00

  What makes a really good player in that game? Do they understand the rules and can they think outside the box? Because that is growth is understanding the rules, thinking outside the box and making interesting valuable bets, risk adjusted bets. Again, as we said, the risk adjusted works for your pipeline, works for the growth, experiments works as a VC. It's the same logic. So I'm looking to find are they reasonable risk takers?

• 50:49Harry Stebbings?

  How many of the candidates do you find can actually do that? I'm thinking of mine now and I'm saying like, you know, I played FIFA a lot when I was younger with my brother. I don't know like what makes me win particularly and like there's very different styles. It's not like chess or a kind of formulaic game where maybe it's more black and white on what makes someone win. Do you see what I mean? So I'm like, that's hard.

• 51:09Speaker 00

  Have you played a board game like Starcraft?

• 51:11Harry Stebbings?

  I've been Monopoly. What makes you win in Monopoly is survival longer than anyone else.

• 51:17Speaker 00

  Okay, good. So how do you do that? Like, what's your approach to surviving? How do you ensure you can survive?

• 51:22Harry Stebbings?

  I stay at the table when everyone else goes for dinner.

• 51:25Speaker 00

  Yes, you can start drilling down to understand what is one person's approach. Obviously, it's easier when it's like a board game, like a Starcraft or, you know, a walk or something like that. And and also because games I know better, but even in more modern games, other games, like I try to understand that like. And maybe you're not a risk taker, Harry. I mean, you, Harry, are not the right candidate for that. That's my point.

• 51:45Harry Stebbings?

  Do you find that a bad hire is very obvious in growth or do you need time to know whether they're a bad hire?

• 51:52Speaker 00

  You mean somebody that I have hired and eventually comes out as a bad hire?

• 51:55Harry Stebbings?

  Yeah, exactly.

• 51:55Speaker 00

  It's fairly obvious, pretty fast. They won't try aggressive things. It's all about being very aggressive. Let's go back to the things I talked to you about today. I saw your face like you're thinking like, wow, that's crazy. That's out there. That's out of the box. Like, where's the box? That is just aggressively thinking of like, what can I do that stands out? That's really different. People will question, this has to be a human, this is really valuable. This is not like, can that person, can that candidate do that? Or are they going to say, hey, we're going to run some ads, we're going to talk about a product. Maybe that's a great marketer, that's a dimension person, but it's a combo of being very thoughtful about the odds and the bets and running the experiment and the scientific way and being aggressively creative.

• 52:37Harry Stebbings?

  How do you think about the sizing of bets? I'm thinking now in venture, but like if you have a budget and we're thinking about bets, is ten percent too big a bet to make on budget or is that not?

• 52:48Speaker 00

  My budget is my headcount and it's the time allocation of my headcount. My constraint is how many experiments can my small team ship? And if you look at a team like Weapp these days with like ten fifteen people on the growth team, they ship about two hundred experiments per quarter. Now, you go back to the individual, it's not crazy. Ten experiments per person per quarter, so like, you know, roughly a bit less than one per week. So it's not crazy. At the rate of two hundred a quarter, some stuff has to work or you're very unlucky. But some stuff has to work and you're getting like a good, you know, ten fifteen solid wins. So my constraint is headcount and velocity. That's why I optimize for those things.

• 53:32Speaker 00

  It's rarely budget because I'm not competing on budget.

• 53:35Harry Stebbings?

  What are the biggest hiring mistakes you've made? What are the, oh, fuck, gee, can't believe you did that?

• 53:40Speaker 00

  Hiring your senior, being like having stars in the eyes because somebody has had a huge track record and is very senior and believing what they tell me. And they tell me, yes, I'm excited by going back early stage and getting my hands dirty. That has never came out to be true. Not once have I hired a senior person in a position where there's no one else to empower them. And they told me they would get their hands dirty. Have they gotten their hands dirty? Not once, they lost it. It's almost like going back to your like your soccer, like FIFA game. There's an age and like, once you're past the age of playing soccer, you you become a coach. Do you ever become a player again? Absolutely not, it just never happens. You can't do that. Same thing here.

• 54:21Speaker 00

  There's one thing we can talk about here, which is why does it happen in marketing and not in engineering? It's very unique. As an engineer, you can be an L eight engineer, individual I see, right? Very experienced, you're the best engineer at this code base. You know, in and out and you will be respected and nobody will question it. As a marketer, do you know anyone who has done like five, six, seven years of the same role without becoming a manager? And you'd say, Yeah, that person's awesome at what they do. They're the best. Hell, no. Everybody in marketing is forced to become a manager pretty fast.

• 54:55Harry Stebbings?

  Why?

• 54:56Speaker 00

  Right. Because there is no respect for deep knowledge of one channel. I know exceptions, like for example Rex at HubSpot, unpaid ads is is like, but even him, he's a manager now. Actually, I don't think I can name one person who's still in IC, does not manage people, is getting their hands dirty on a daily basis and has like plus five years of experience. I don't think I know anyone. So you got to hire early because in Don't Hire Senior, they won't get the shit done.

• 55:23Harry Stebbings?

  Do you think marketing gets the respect it deserves?

• 55:25Speaker 00

  Sometimes, absolutely. When there's like very great and with this good campaigns, it depends where like if we're talking of like engineering companies, engineering like companies, engineering products like second, like it is it harder? Absolutely. For sure, it's harder. But the places like obviously I started my career at Apple, Apple is a marketing company. Do people respect Apple's brand and marketing? Absolutely. But that's more like the exception than the rule.

• 55:48Harry Stebbings?

  Final one, and then we'll do a quick fire. Now you're an advisor in many amazing companies. When should companies hire an advisor? When should they hire full time?

• 55:56Speaker 00

  You should always hire full time when you can. Like I always tell people like if you can hire the person you want, that's the right fit for you, go for it. I'm I'm not a good replacement for that. The hole that I plug, the problem that I fix is generally you can't make that hire. The experienced growth person or that founder that you care about that is amazing, do they want to take the risk with you at the series A? No, they want to go build their own company. And so who are you going to hire? You're going to hire a more younger, high on the execution scale. But they don't have the expertise. They don't have the experience. I'm the fix for that. But if you can hire the guy who that has experience, the skills, the knowledge and can like ship, hire that person. Absolutely. Ten times out of ten.

• 56:39Harry Stebbings?

  But it's ironic because they have to be that intermediary, given what we just said about the seniority. They have to be three years in, six years in, that middle ground.

• 56:47Speaker 00

  It's a tight overlap, which is why I have a business. I have a business because the people like me, like I know all people at like my level of experience in the U S. There's less than two hundred, there's three hundred and twenty people.

• 57:01Harry Stebbings?

  Dude, it's so funny. Like, you know, we have twenty growth fund now, which is Casey Winters, it's Darius, it's Luke Levesque, it's Elena Werner.

• 57:09Speaker 00

  Which one of those can you hire in a series A company? None. Yeah, you're laughing. None. Zero. Okay? Zero of those people are available on the market. Not one of the 120. A third is like semi-retired in VC and other things. A third is in like Great Walls like Luke and you're not going to approach Luke from like Shopify. And there's a third like me who's like doing like consultancy and like advisory and like other things. You can't hire those people. Not at the Series A at least. I mean, sure, if you're like Shopify, like everything's possible. But like you're a Series A, Series B, you're not getting those people. I want to be honest, like, that's just not happening.

• 57:42Harry Stebbings?

  I want to go into a quick fire round. So I say a short statement, you give me your immediate thoughts. Does that sound okay?

• 57:47Speaker 00

  Let's go.

• 57:48Harry Stebbings?

  What's your craziest experiment?

• 57:50Speaker 00

  Coffee, hot coffee, cappuccino on Segment's homepage.

• 57:53Harry Stebbings?

  Talk to me about that. What happened here?

• 57:55Speaker 00

  It worked. When you came to the website, instead of asking on the chat, how can we help you? Which is lame and not unique. We said like, how do you like your coffee? And because it was like a reverse IP running, pre-COVID, we knew what the HQ was, the company, the main, I knew the city. And we would just ship coffee to you, we would just ask for your first name, we knew you were Harry. Boom, ship a cappuccino to you. While you were waiting for the cappuccino that was run by Postmates, we would say, hey, do you have 20 minutes for a demo? Of course you'd say yes.

• 58:21Harry Stebbings?

  And then it came to them at the end?

• 58:22Speaker 00

  Of course. $20. $20 for a demo? Good CAC.

• 58:26Harry Stebbings?

  It worked well?

• 58:27Speaker 00

  Yeah, it worked well.

• 58:28Harry Stebbings?

  That's smart. What tactics have not died to death over the last five years? What is strong as ever?

• 58:33Speaker 00

  Email. People have called the death of Abdallah email every year and it's still going strong.

• 58:38Harry Stebbings?

  What tactics have totally died to death?

• 58:40Speaker 00

  One's back. I don't know if it has died to death, but the phoenix of tactics is cold call. Cold call was dead from like 2012, 2013 to 2022. And with LLMs now and tools like Orum, cold call is back big time.

• 58:56Harry Stebbings?

  What would you advise a new growth leader starting a new role today?

• 58:59Speaker 00

  Have strong connections to learn what others are succeeding. The key to success in growth is testing and learning. And so if you can outsource the cost of learning to other teams, either through advisory like I did in the early days or through like good relationships, you are saving a ton of effort and capital and you can deploy those learnings to your business and look like a fucking genius.

• 59:24Harry Stebbings?

  What's the worst strategy you've done, a worst growth experiment you've done, which did not work? It sucked.

• 59:31Speaker 00

  Generally, building bundles, like bundles are a terrible idea. When you start bundling different features, different products together into one, the size of the audience that cares about the entire bundle is smaller and smaller as the bundle increases.

• 59:45Harry Stebbings?

  What would you most like to change about the world of growth?

• 59:47Speaker 00

  The fact that it's not independent, growth is not an independent function. It has to roll up to marketing or product or not, and that that creates conflicts, which eventually leads into death of growth teams at late stage. There's almost no company at a late stage with a growth team, save for like Facebook, Shopify and a couple of those.

• 1:00:04Harry Stebbings?

  Final one for you. We've spoken about Ramp, we've spoken about Gorgeous. What growth strategy have you been most impressed by in another company?

• 1:00:12Speaker 00

  The one thing I've never had the opportunity to do myself and I always like admire is the typical virality. I think of the Dropbox of the world and like, you know, Prosumer, think of Zapier. I know those companies, I know the leaders, I know how they pull it off. And the combination of a huge market, a very viral product, a very sticky viral product, good product, creates opportunities unlike no other. The ability to have people, customers, bring other customers to no cost to you. I just wanna like sit back and relax and see the customers sign up. Man, I wanna be in that in my beach chair and see that. And for me, it's always been like hard work and I always imagine like the writers, you

• 1:00:54Speaker 00

  know, at Dropbox and other places thinking like, a million people just invited themselves last month. How cool is that?

• 1:01:01Harry Stebbings?

  Gee, this has been so much fun. Thank you so much for putting up my meandering and I've absolutely loved this.

• 1:01:08Speaker 00

  Harry, it's been great for me too. Let's talk again sooner than six years, next time.

• 1:01:13Harry Stebbings?

  As I said, shows like that are why I started 20Growth. Actionable granular advice that you can use today in your startup. If you wanna see more from us, you can of course check us out on YouTube by searching for 20VC, that's two zero VC, where you can watch the full episode in video. But before we leave you today, I'm refreshing the 20VC Miro board and I'd love your input again. It's really easy, just head on over to miro.com/20vc and leave your guest suggestions for future shows. And you can do it with a digital sticky note or a comment. You can head over to miro.com/20vc and Miro actually sponsored this episode. If you haven't already tried it, I think you'll love it. Miro is the online workspace for innovation. It's packed with the right capabilities to be your dream product's home base,

• 1:01:58Harry Stebbings?

  that you can visualize content, data and research findings all in one space with no problem. It means this space is where you map customer journeys with the whole product team, create user behavior dashboards and map process diagrams. And finally, it's where you'll run productive team sprints using integrations with tools you already love and use, like Jira for developers, Asana for project managers, Figma for designers and so on. We use Miro and love it to brainstorm future shows, vote on potential guests and leave feedback for the rest of the team in our own time. And right now I'm using it to hear from you. Leave your thoughts on the board at miro.com/20vc. That's miro.com/20vc. And 20Growth is obviously focused on building the best growth teams

• 1:02:43Harry Stebbings?

  and great growth teams are obsessed with making data-driven decisions. But getting good data is hard and growth and product teams have to spend hours each week configuring metrics, setting up experiments and writing custom queries. Or what if your growth team could get this time back? With Statsig, they can. Thousands of companies from huge enterprises to startups rely on Statsig to ship faster, automate experimentation and improve key metrics. If you're building software products, Statsig is the one-stop platform you need for experimentation, feature flags and analytics. After implementing Statsig, the growth team at ancestry.com 10x the number of experiments they were running.

• 1:03:24Harry Stebbings?

  If you're a startup, Statsig has a free tier and a special program for venture-backed companies. And if you're a large enterprise, they have transparent pricing with no seed-based pricing or ticky tack fees for small features. 20Growth listeners can also take advantage of a special offer, including 5 million free events a month and white glove onboarding support. Visit statsig.com/20growth. That's 2020growth. Growth to get started on your data-driven journey. And finally, so do you know the impact of your marketing efforts? It's more important this year than ever to know the impact. Or how much you've spent so far this month and what you got as a result. You're not alone in not knowing these answers. Even though marketing is now all about the data,

• 1:04:08Harry Stebbings?

  most companies still use manual spreadsheets for reporting and analysis. But if you want to supercharge growth, spreadsheets just won't cut it. Funnel is the world's first and only marketing data hub that takes all the manual effort out of data collection and lets you blend data from different platforms to unlock new, deeper insights. And the best part is this can all be achieved without writing a single line of code. I can hear your sigh of relief. That's why it's used by more than 2,000 of the world's top brands and media agencies, including Samsung, Adidas, Sony and Havas Media. Start your own free trial by visiting funnel.io/20vc. That's funnel.io/20vc. As always, I so appreciate your support and stay tuned for an incredible episode this coming Friday

• 1:04:53Harry Stebbings?

  with Dominic, founder and CEO at HelloFresh.