Lessons from scaling Ramp | Sri Batchu (Ramp, Instacart, Opendoor)

Sri Batchu currently leads growth at Ramp, the fastest-growing SaaS business (and fintech business) in history. Previously, he led growth strategy and operations at Instacart and was one of the first 50 employees at Opendoor, where he built, scaled, and managed a variety of business teams, including analytics, sales, and pricing. During his time there, the company grew from $100M to $5B+ in revenue and to 1,500+ people. In this episode, we discuss:• The surprising tactics behind Ramp’s unprecedented early growth• A breakdown of Ramp’s current growth org and growth channels• Why you need to be “failing conclusively”• Ramp’s unique approach to metrics and measurement• Examples of Ramp’s “secret sauce”: a data- and technology-driven approach to everything• Why Sri prioritizes employee autonomy and flexibility over hours worked• Why team structure is a red herring for growth teams, and what Sri focuses on instead• How to set good North Star metrics, and why you should have more than one• Why Sri prefers payback periods over CAC for measuring investment ROI — Brought to you by Attio—The powerful, flexible CRM for fast-growing startups | Coda—Meet the evolution of docs | Eppo—Run reliable, impactful experiments Find the full transcript at: https://www.lennysnewsletter.com/p/lessons-from-scaling-ramp-sri-batchu Where to find Sri Batchu: • Twitter: https://twitter.com/sri_batchu • LinkedIn: https://www.linkedin.com/in/sribatchu/ Where to find Lenny: • Newsletter: https://www.lennysnewsletter.com • Twitter: https://twitter.com/lennysan • LinkedIn: https://www.linkedin.com/in/lennyrachitsky/ In this episode, we cover: (00:00) Sri’s background (04:07) Stats surrounding Ramp’s hypergrowth (06:20) How Ramp set the stage for their remarkable growth (09:19) New customers vs. customer expansion (10:20) How Ramp has prioritized data-driven decisions (12:12) Ramp’s growth engineering team, and how it supports the sales team (13:41) The structure of the growth team at Ramp (14:36) The “skunk works” team (15:49) How Ramp maintains working at such high velocity (19:11) How Ramp boosts morale and keeps employees engaged and excited (21:45) How to promote hard work (25:10) Optimizing efficiency in your growth engine (27:28) Leveraging PR and fundraising (29:20) Traditional media vs. newsletters and podcasts (30:49) Building a repeatable and scalable growth process (32:28) Examples of good North Star metrics (37:09) Lower-level metrics (40:30) When it makes sense to use the North Star framework (42:03) Why Ramp doesn’t allow signups through personal emails, and how to reach out if you’re in that position (43:11) Efficiency metrics and volume metrics (46:49) Payback period vs. CAC for measuring ROI (48:55) Defining payback period and contribution margin (49:51) How to sequence growth tactics for B2B (52:18) Experimentation and the importance of failing conclusively (58:06) Ramp’s tool stack (1:00:32) How to hire great people (1:03:21) The importance of compensating employees properly (1:06:28) The MECE framework (1:09:21) Lightning round Referenced: • How Ramp builds product, in Lenny’s Newsletter: https://www.lennysnewsletter.com/p/how-ramp-builds-product • Eight Sleep: https://www.eightsleep.com/ • Keith Rabois on LinkedIn: https://www.linkedin.com/in/keith/ • Packy McCormick’s article on Ramp: https://www.notboring.co/p/ramps-double-unicorn-rounds-behind • Gibson Biddle’s framework: https://gibsonbiddle.medium.com/9-the-gem-model-65c89face5de • DoorDash’s business model: https://businessmodelanalyst.com/doordash-business-model/ • Airtable: https://www.airtable.com/ • Mutiny: https://www.mutinyhq.com/ • Gokul Rajaram on Twitter: https://twitter.com/gokulr • Claire Hughes Johnson on Lenny’s Podcast: https://www.lennyspodcast.com/lessons-from-scaling-stripe/ • MECE principle: https://productfolio.com/mece-principal/ • Never Split the Difference: Negotiating as If Your Life Depended on It: https://www.amazon.com/Never-Split-Difference-Negotiating-Depended/dp/0062407805 • Stories of Your Life and Others: https://www.amazon.com/Stories-Your-Life-Others-Chiang/dp/1101972122/r • Everything Everywhere All at Once on Hulu: https://www.hulu.com/movie/everything-everywhere-all-at-once-fa320000-8cf3-46fc-8c45-df5ec67b71f2 • Fellow kettles: https://fellowproducts.com/ Production and marketing by https://penname.co/. For inquiries about sponsoring the podcast, email [email protected]. Lenny may be an investor in the companies discussed.

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

• 0:00Speaker 00

  I do think there's actually a general path that most B2B companies take and should take. My view is you start off with founder-led sales. The early team needs to know how to actually sell. Then you hire your first couple of salespeople. Then you start some very kind of low-cost targeted marketing efforts. So whether it's like content, community, small-scale events, and then PR. After all of that is when you start paid and brand effort. And then SEO probably start around the same time that you start paid marketing efforts. The reason for the progression the way I've described it is the channels get more expensive as you go farther along and they get more effective as you understand more about your customers.

• 0:43Lenny Rachitsky?

  Welcome to Lenny's Podcast where I interview world-class product leaders and growth experts to learn from their hard-won experiences building and growing today's most successful products. Today, my guest is Sri Batchu. Sri was VP of Ops at Open Door, then Head of Growth at Instacart, and currently he is the Head of Growth at Ramp, which, as you'll hear at the top of the episode, is the fastest-growing SaaS business and the fastest-growing fintech business in history. They hit $100 million yearly run rate in two years, which is absurd, and in the last year grew 4X during a period where most companies barely grew at all. I recently did a newsletter post on how Ramp built product with their VP of Product, Jeff Charles. And in this episode, we zero in on Ramp's approach to growth.

• 1:27Lenny Rachitsky?

  We chat about what Ramp did in the early days to kickstart growth, how they mostly grow these days, how their growth team is structured, their prioritization framework, plus their North Star metrics, also how they operationalize velocity, which is at the core of their team culture. Ramp is a really special company that is clearly on an incredible journey, and I am really excited to share this glimpse into how they operate. Enjoy this episode with Sri Bhachu after a short word from our sponsors. This episode is brought to you by Attio, a new type of CRM that's powerful, flexible, and built around your data. Traditional CRMs were built for a different era with totally different speed, scale, and data demands. Attio is different. It allows you to quickly build a CRM

• 2:12Lenny Rachitsky?

  that matches your unique workflows and data structures. Within minutes of connecting your email and calendar, you'll have a CRM that's already set up, complete with customer profiles and automatic data enrichment. You'll also have real-time dynamic reporting at your fingertips. No more slow deployments, outdated user experiences, or tedious manual data input. With Attio, you can build and adapt your CRM on the fly, no matter your business model or company stage. Attio is the CRM for fast-growing startups. Get started today and get 15% off your first year at attio.com/lenny. That's A-T-T-I-O dot com slash Lenny. This episode is brought to you by Coda. You've heard me talk about how Coda

• 2:56Lenny Rachitsky?

  is the doc that brings it all together and how it can help your team run smoother and be more efficient. I know this firsthand because Coda does that for me. I use Coda every day to wrangle my newsletter content calendar, my interview notes for podcasts, and to coordinate my sponsors. More recently, I actually wrote a whole post on how Coda's product team operates. And within that post, they shared a dozen templates that they use internally to run their product team, including managing the roadmap, their OKR process, getting internal feedback, and essentially their whole product development process is done within Coda. If your team's work is spread out across different documents and spreadsheets and a stack of workflow tools, that's why you need Coda. Coda puts data in one centralized location, regardless of format, eliminating roadblocks

• 3:41Lenny Rachitsky?

  that can slow your team down. Coda allows your team to operate on the same information and collaborate in one place. Take advantage of this special limited time offer just for startups. Sign up today at coda.io/lenny and get $1,000 startup credit on your first statement. That's C-O-D-A dot I-O slash Lenny to sign up and get a startup credit of $1,000. Coda.io slash Lenny.

• 4:10Lenny Rachitsky?

  Sri, welcome to the podcast.

• 4:12Speaker 00

  Thank you, Lenny. Thanks for having me. I'm a huge fan and I've been following the podcast and the newsletter so excited to be on.

• 4:18Lenny Rachitsky?

  Really appreciate that. So let's talk about Ramp. So Ramp, where you lead growth, is apparently one of the fastest growing products in history. I believe it's the fastest growing SaaS product and business and also the fastest growing fintech business. So first of all, is that generally true and correct?

• 4:38Speaker 00

  Yeah, I mean, I'm sure you know of Paki and he's done a great analysis where he shared this work and compared us to a bunch of other companies. And when he released this, you know, a year ago, we were the fastest growing company to $100 million of, you know, annualized revenue at the time. I don't know if there's been others since, but certainly not in the fintech category as far as I know.

• 4:57Lenny Rachitsky?

  Okay. So you said a fast is going to 100 million. I think it took two years to get to 100 million in run rate, right?

• 5:03Speaker 00

  Exactly.

• 5:03Lenny Rachitsky?

  That's insane because rarely is there all of this money sitting around for a company to just come in and, you know, and accumulate and grab from people and provide that amount of value. So that's an insane stat. Maybe another question along these lines, is there any other just stats you could share, but just like the scale of Ramp or just the speed that Ramp has grown?

• 5:23Speaker 00

  We publicly disclosed that last year we grew Forex on top of that, you know, very sizable base from the year prior. And Okta actually released some recent stats on fastest growing software companies among SMB and mid-market and Ramp is by far the fastest growing, despite the fact that, you know, a bunch of others on the list were, you know, materially smaller. The company is still very lean for the amount of growth. We're, you know, under 500 people roughly today at that scale. And so definitely have a much higher kind of, you know, revenue per employee than some of the competitors and others in the space. And yeah, I mean, we've got a very thoughtful and smart finance team that I've worked with actually closely, our old head of strategic finance at Instacart.

• 6:05Speaker 00

  And they set ambitious goals for us on growth and I'm happy to say we consistently beat those ambitious goals over the last 16 months, 18 months since I joined.

• 6:16Lenny Rachitsky?

  Which is especially challenging in this environment.

• 6:18Speaker 00

  Exactly.

• 6:19Lenny Rachitsky?

  Extra, extra meaningful. Okay, so, so here's the big question I want to start off with. I know you weren't there at the beginning of Ram's journey, but from what you know, what do you think the team did early on to seed this level of growth and success other than just building an awesome product that people really love? And if that's the answer, that's, that's fine. But usually that's part of it. I'm curious, just like, is there any some, any clever, unique tactics that they used to help kind of create that incredible growth from the beginning?

• 6:49Speaker 00

  I think you're certainly right on the product side. Obviously, you've recently written about Ram's product engine with Jeff. And there's been incredible product market fit because of the product team that deeply understood the customer experience. And I think that's certainly helped initial word of mouth. But one thing that I did want to point out that Ram did that was interesting is, you know, obviously Eric and Kareem, the co-founders of Ram, were previous founders of another company that they had a successful exit on. So they had a strong, you know, reputation as founders and kind of came in with the right set of experience to build, build Ram. And one of the things that they did is what I call kind of cap table as a growth strategy, where they did a great job of getting a large number

• 7:32Speaker 00

  of, you know, early-stage founders and other influential operators and advisors onto the cap table at the company. And many of our initial customers were these companies and that, you know, were on the cap table or the founders were on, on the cap table for. And Ram today is actually not majority startups or tech companies anymore. The vast majority of our customers are, you know, mid-market enterprises. It's where our revenue comes from. But there's a lot of love among the tech founder community because of the early days, both the product quality as well as, you know, all of these investors that Ram got.

• 8:08Lenny Rachitsky?

  Wow, I have not heard of this strategy before. And I didn't know this was actually a big part of the initial story. So is there examples of folks that they had on their cap table that are examples of folks that helped them grow initially like this?

• 8:19Speaker 00

  Like, one example that I can think of is Aitchley founder has been very close to the Ram team, same with the pop founder. And then a bunch of, you know, VC firms that are investors in the company are also customers of the company.

• 8:32Lenny Rachitsky?

  Do you know if the strategy there was? VCs who connect them to small companies that would use Ramp? Or is it directly founders of companies that would immediately use Ramp?

• 8:43Speaker 00

  Yeah, I'll say it was more founders and executives of customers that can use Ramp. Certainly, we have a fantastic group of very sophisticated investors who have made introductions to Ramp as well, and that helped. But I will say that is not as big of a channel as one might expect because companies have their own decision-making frameworks for selecting a product like Ramp. And the investor opinion and recommendation matters, but it turns out it doesn't matter maybe as much as another customer who's actually used the product that they know or are actually experiencing the product.

• 9:17Lenny Rachitsky?

  Amazing. Awesome tactic. I've not heard that before. In terms of growth, how much of growth of early Ramp was new customers versus expansion within existing customers? Because what's cool about a credit card is people spend more. You make more money because you're taking a piece of that. So roughly, how much of the growth insanity over the first couple of years was from expansion within existing customers?

• 9:39Speaker 00

  Obviously, many of our early customers have grown quite a bit. And our whole strategy is to be safe companies' time and money so they can redeploy that in other ways for their own growth or other objectives. And we obviously are growing our product suite as well, like Bill Pay, Flex, et cetera, where our customers can spend more money on Ramp and get more value out of Ramp. Having said all of that, what's interesting is that the vast majority of our growth back then and even to this day is via new customer acquisition. It's just we are adding so many more customers that the growth of our customers, while a strong and important part of our growth lever, is not nearly as material, I think.

• 10:21Lenny Rachitsky?

  Okay, awesome. So that's a good segue to the next question I had, which is if you're going to create a pie chart of how Ramp grows, and ideally, if you could even share like early on and then now. Like, how does that pie chart look? What are the kind of the slices of that pie? And then what are the rough percentages of where growth comes from for Ramp?

• 10:37Speaker 00

  Rather than going into specifics, one thing I'll say about the growth system today is if you were to look at, what percentage of our business comes from outbound sales, paid marketing, field, and then a bunch of other channels? And then you compare it against industry benchmarks. I think the secret sauce of Ramp is not that we've found a channel that's like unique and that we've over invested or under invested. I don't think our distribution would be not that far off from looking at other companies at our size and stage. I think what we've done differently is we've really focused on making all of those investments very much driven by technology and data.

• 11:21Speaker 00

  And so like, one example that I'll give you is that like, our sales teams are actually incredibly efficient by any metric that we look at, and we obviously benchmark them. And the reason for that is because we actually have a growth engineering team that's dedicated to supporting that efficiency, including adjusting third-party data and using AI to automate much of their workflow, et cetera. We've been doing this well before AI has become the buzzword du jour for a lot of folks. But this is something, you know, we've had this team for almost two years now that's been working on sales automation and data to just make our sales teams more efficient. That's just one example, but we've got similar types of mandates for every channel that we invest in

• 12:05Speaker 00

  and thinking about how do we inform this better with customer and prospect data? And how do we automate and technologize it? So that we can build that competitive mode for each channel.

• 12:13Lenny Rachitsky?

  I'd love to learn more about this growth engine team that works with sales. How is that structured, maybe as the first question? And then just like, what is their, what are their goals? How do you measure their progress and success?

• 12:24Speaker 00

  You know, a lot of companies do it differently. I think what works really well with Ramp is that we have the same shared goal, which is the pipeline driven and the payback period. Of the channel. It's it's kind of unique to Ram where the engineers feel ownership of the quota. They're not like owning product metrics or what have you. There are obviously, of course, interim and input metrics that are important, but but they really do feel accountable for the the pipeline driven and the efficiency driven by that team. And I think that naturally allows them bottom up to come up with the right projects that they think will have maximal impact on efficiency and top line.

• 13:04Lenny Rachitsky?

  So what are the sorts of things they do for our sales team? Is it like they help them prioritize leads? Or is it they help craft their messaging? Like which parts of them may be most important?

• 13:15Speaker 00

  All of the above, helping find the right prospects, sending them the right messaging, as well as prioritizing responses and then drafting potential responses for the team as well.

• 13:26Lenny Rachitsky?

  Fascinating. How much impact could be seen that has on sales?

• 13:29Speaker 00

  It's incredibly helpful to our to our sales team and it's one of our most efficient channels as I as I've mentioned. So I think that there is something unique about about our ability to bring technology to every channel.

• 13:41Lenny Rachitsky?

  Super interesting. Maybe on that topic, can you just talk about how your growth team is structured at Ram? What are the kind of sub teams and how do you think about?

• 13:50Speaker 00

  We've got an organization today that might evolve. And if we if we get to that topic, we can talk about it. But historically, the way we've been organized is we've got channel based teams that are deploying spend in a given channel. So we've got a paid marketing team, a life cycle CRM team. We've got a field marketing team, et cetera. And then we've got a product engineering team that is supporting, you know, growth and sales and helping each of these channels be be more effective. That's dedicated to growth. And then separate from that, we've got a small, kind of what I call an innovation or skunk works type of team that works on cross channel. Just things that don't neatly fit into a box that we think could be cool or fun

• 14:33Speaker 00

  to try to just do more experimentation that's that is cross channel, cross team.

• 14:37Lenny Rachitsky?

  Definitely sounds like the most fun team. What are some of the things they've done or work on in the skunk works team?

• 14:42Speaker 00

  They they've done like, you know, a testing of new channels that don't necessarily fit into like a very and that includes like new online platforms. Like they've done some interesting stuff on TikTok and Reddit and other places, things like that. They focused on kind of. Referrals and how to make that a more delightful experience for the customers. First party events, things like that, things that are often kind of smaller scale. And if they work, we can invest more and make them larger scale later.

• 15:16Lenny Rachitsky?

  I love it. Okay, so the teams roughly is there's a paid growth team that just works on paid growth optimization, lifecycle CRM kind of team. Basically, it's like emails, I imagine is a big part of that.

• 15:26Speaker 00

  Exactly.

• 15:27Lenny Rachitsky?

  Then there's a field sales support team.

• 15:30Speaker 00

  Yeah.

• 15:30Lenny Rachitsky?

  And then there's the sales team, you kind of edge sales team they talked about. And also imagine there's like a self-serve.

• 15:37Speaker 00

  Yeah, exactly. There's a self-serve activation edge team as well. And then I missed, of course, there's there's SEO and kind of like website and bounty channel management teams.

• 15:47Lenny Rachitsky?

  And then this awesome Skunkworks team. I love it.

• 15:49Speaker 00

  Yeah.

• 15:49Lenny Rachitsky?

  Okay, so shifting a little bit, something that comes across often and consistently with Ramp. And this came across very clearly in the post that I did on how Ramp builds product with Jeff is velocity and how important velocity is at Ramp. There's this awesome quote that I'll read here from Keith Rabois, who's who I think led many of the rounds of Ramp. He started Founders Fund, famous investor. He said that Ramp's product velocity is absolutely unprecedented in my 21 years working with technology business. So here's my question to you. Can you just talk about what that actually looks like and feels like working inside Ramp with this intense velocity?

• 16:30Speaker 00

  Yeah, it's a great question and Keith is, you know, amazing and probably one of the smartest investors that I've ever had the good fortune of working with both here as well as at Open Door. And and I'll say like, he's absolutely right about that. And what you kind of see internally is what I'll say is like a razor sharp focus on reducing cycle time and bias to action. And, you know, how do we reduce cycle time? I think it's basically the core of it culturally to me is getting people to think about smaller minutes of time for decision making. Seems obvious, but I think you really have to reinforce it culturally.

• 17:08Speaker 00

  So one thing that Eric, our CEO, does, which I don't know if you've heard externally, is we have like a days. ramp.com where we can see how many days it's been since the founding of Ramp internally. It's day 1529 at Ramp. He has that number of days at every board meeting, at every all hands. It's just to remind people that we don't work in years, quarters, you know, weeks. We work in days. Each day matters. And so never put out something tomorrow that you can get done today. And that bias to action really permeates, not just, you know, in the product teams, but everywhere. So our, you know, growth team, which as I've just described, is extremely cross-functional.

• 17:50Speaker 00

  You know, a lot of marketing folks and other expertise on the team. But we work a lot like a product team. We work on two-week sprints. We cross-prioritize across these teams and we work all together rather than in kind of separate silos within the growth team.

• 18:08Lenny Rachitsky?

  Okay, so I pulled up the site you just mentioned, days.ramp.com. And not only is it days since launch, which is 1529 when I'm looking at it, there's a many decimal points.

• 18:21Lenny Rachitsky?

  1529.43453142. Oh my God. Okay. Is that, was that a new addition, the decimal point?

• 18:29Speaker 00

  No, I think that's always been there. It's like, it's, you know, it's just amping it up, you know, and how much time is passing. You know, it can be, it can be stressful at times, but I think that the mitigating factor is that it's been able, you know, as you know, A players want to work with A players, attract A players and retain A players. And Ramp has done a really great job of hiring people that are fantastic, that can work in this environment well and are motivated by the success and the winning from, from this sort of culture.

• 18:58Lenny Rachitsky?

  Yeah, I was actually talking to Eric about it for another piece I'm working on. And he was showing me some early board decks and every deck, as you said, has like days, day 544 of Ramp. So it's very real what you're talking about. Is there anything else that just like, as someone that came into Ramp from other traditional companies that also move really fast, Instacart and Open Door? That is just like, holy moly, this is, this is velocity. You know, you talked about a few things, but is there anything just like, holy shit?

• 19:26Speaker 00

  You, you can see the cycle time thing in terms of responsiveness from everybody at Ramp. And I think typically what you tend to see is like, as companies get bigger, they evolve, you know, off of Slack to email. And like, everything just kind of moves a little bit slower and there's process and, and, and then there's obviously a lot of good parts of that. But at Ramp, what I noticed when I joined and true to this day is like, how quickly people will respond on Slack and, and jump on things. Uh, and even if they don't complete it, like there's very clear like action item on who the owner will be and what the deadline will be, uh, even if it's not. And, uh, and, and that to me was always very impressive.

• 20:09Speaker 00

  Uh, just, and I think, I think it's one of those things we build in public. So everything is like very visible. So you can see how this is working, uh, across teams. And, uh, and I'm glad that we've been able to kind of maintain that culture, even as we've gotten much bigger.

• 20:21Lenny Rachitsky?

  There's two kind of effects of that. I imagine one is how do you stay in the flow and get work done if you're just expected to constantly respond? How does that actually work?

• 20:31Speaker 00

  I don't think the expectation is necessarily that one constantly responds, but it, it is something that, uh, I have seen people are good at. Uh, and so I think, uh, one of the things that, again, not like a novel, um, productivity tool, but, uh, something that, uh, Ramp does, uh, do is just trying to think about like focus time and response times and using calendar blocking to really effectively manage your time that way. And then doing calendar audits of yourself as well as, uh, of your team to say, okay, what are your highest priorities for this week, this day, this month? And, and how does your calendar reflect your priorities? Cause in many, in many ways you ship your calendar. Uh, and so thinking about how are you spending your time and blocking your time?

• 21:15Lenny Rachitsky?

  And is this mostly a cultural kind of just this is how we operate? Or is there principles or sorts of like processes that are set up to help people do those sorts of things?

• 21:24Speaker 00

  Yeah, it's it's cultural in terms of this is how we operate, but we also have templates. Like our people team has a template on how to do a calendar audit properly and things like that. So we've we've tried to, you know, create some learning materials as well for for folks that are new to, you know, get into the flow of this of way of working.

• 21:45Lenny Rachitsky?

  Awesome. Okay, so then the other elephant in the room with talking about working really fast and hard and responding really quickly is work-life balance and burnout and things like that. One thing I'll say is I I believe in working really hard and working long hours as a important ingredient to success. I know there's been a bit of a backlash against that and just like, no, you shouldn't work really hard. You can be successful without doing that. I don't think that's true. So with that said, I guess, what have you learned? And what have you think, what do you think Ramp has learned about how to find that balance and not just?

• 22:17Speaker 00

  Yeah. And you know, it's it's it's I completely agree with you. I do think, especially earlier in your career, hard work is so important, both for for learning, but also impact. And it's a tough balance that a lot of successful companies struggle with. I think my biggest learnings is A, it's like, some of it is like self-selection, right? You're hiring people that are excited about doing this work and and this way of of working. But at least I tend to find the people that I've worked with that are highly successful. Hours are not the problem. It's really, you know, autonomy, flexibility and and, you know, mission alignment and the general happiness they get from their work, right?

• 22:58Speaker 00

  And so that's what I try to focus on, which is like not the, you know, hours that someone's put in, but quality of the the work and and the impact. And and I think a big part of the the push to having great results and working hard is is really. Being grateful and appreciating the team when they do push themselves and celebrating wins. And I think we've done, we could always be doing a better job, but I think we've historically done a great job at that, at celebrating wins, you know, big and small. And I think part of that, like the culture of kind of building in public and open internally helps with that. So people are always sharing their wins. And then it's a very, one funny stat

• 23:41Speaker 00

  that I don't know if other companies track is we track engagement during all hands on this Zoom to see what percentage of people like participate. And it's like usually close to a hundred percent. Like people are talking, like the entire company is talking on the Zoom chat because they're excited about the wins that their friends and colleagues are shipping and the things that we're talking about.

• 24:05Lenny Rachitsky?

  How do you actually track engagement? Someone sitting there watching who's in the chat?

• 24:08Speaker 00

  No, it must be some tool our IT team can do it, can say what percentage of participants chatted or something like that.

• 24:14Lenny Rachitsky?

  I see. So it's not like who's looking at the screen. It's like who's talking in the chat?

• 24:18Speaker 00

  Yeah, exactly. Or reacting in the chat.

• 24:21Lenny Rachitsky?

  That's awesome. And it's not like you must engage. It's more just like, are we delivering?

• 24:25Speaker 00

  No, no. And by the way, like this is probably the first time I'm sharing this. Like, I don't think brand employees necessarily know this. I don't think we've actually shared this. I just heard it from our IT person recently. And I thought that was kind of a fun stat.

• 24:38Lenny Rachitsky?

  I love that because it's not like, yeah, it's more just like, are we providing value to people? Or they actually decided and interested in this sort of thing? I was gonna add on to your point about how working hard and working long hours can be seen as this like, oh, this sucks. I wish I was at home watching Netflix. But I find that the most fulfilling parts of my career are where I was just working insanely hard for a long time. As long as that work was meaningful, exactly like you said, if something that mattered and came out and shipped and people are excited about it. And if it wasn't like, oh, that was a waste of my life. So that super resonates.

• 25:09Speaker 00

  Yeah.

• 25:10Lenny Rachitsky?

  I want to come back to growth for a moment. I had a couple more questions I wanted to ask here. You talked about some of these teams that you have around ways you're driving growth. Is there area you think you're going to be investing more in over time or that you feel is working better? I know there's trade secrets here that you don't want to share necessarily, but just anything that you feel is like people are maybe underappreciating or underinvesting in that you think you might invest in more?

• 25:34Speaker 00

  What I'll say on that front is, look, we, like everybody else, are always focused on driving more efficiency in our growth engine. There are some channels that, and we have a diversified portfolio of bets, right? Like, one thing that's kind of interesting about the world of growth today is, I think historically, people that used to run growth were folks that had a marketing or kind of a product background. And what you're seeing these days, I think, are more folks like me, who actually come from an investor and analytics background to lead growth teams, because growth has become more and more about a diversified portfolio of bets

• 26:15Speaker 00

  at a reasonable ROI and building a system that's designed around experimentation and data-oriented, right? So the reason I say all of that is our goal is to, over time, of course, make all of our channels more efficient, but also allocate more to channels that are more efficient, as long as they're scalable, right? And so the more that we can push customer awareness via owned and earned media, the better for us. And so we've got a few different strategies on that front, but we're also working on making our other channels more efficient by today.

• 26:54Lenny Rachitsky?

  So mysterious, but I appreciate you sharing what you can. The point about the portfolio bets is interesting, because if you think about it, most companies initially grow from one, you talked about growth engines, that's the same term I use. Usually, there's like one thing that helps you grow initially, like SEO or word of mouth or maybe paid. And then eventually, every single company basically ends up doing all the growth channels and then has a team dedicated to like, just keep optimizing SEO, keep optimizing referrals. So I think that's a very typical path. And then it's exactly said, how do we make each of these as efficient as possible?

• 27:28Speaker 00

  Yeah.

• 27:29Lenny Rachitsky?

  Maybe as another last question around Ramp's growth, is there any other just really surprising, interesting, really effective tactics that helped Ramp grow over time?

• 27:40Speaker 00

  I think one thing that's been interesting is Ram's ability to leverage PR as a growth machine. And as you've seen, like, we've got a fantastic PR and comms team, and we get a lot of deserved, good, you know, press through that. And one thing that's been interesting is our fundraising, also as a growth strategy, kind of like, not obviously explicitly, we've got very clear goals for our fundraising. But what we have seen is anytime that we've been fundraising and we've been using that as an effective way of creating a market moment, it's driven actually a non-trivial amount of capital funnel for us.

• 28:22Lenny Rachitsky?

  People always talk about PR being like, ah, people over invest in PR, they think PR is going to be this magical growth lever. But it actually works sometimes. And in my opinion, it just, you have to have something really interesting for it to work. And obviously, you guys do. It's, you know, the company's growing like crazy, which is innately an interesting story. The founders are really important. And rarely is funding like, an event anymore for most companies. So I think it's, I mean, this says a lot that people care about your funding.

• 28:51Speaker 00

  What you said is exactly right, is you have to be thoughtful about your PR moments. Like, everybody wants to announce things about themselves. That's not necessarily interesting for the press or for an audience. And so thinking about, how do you compile enough value to the general audience with, so our fundraising announcements usually also have some additional, you know, color on something unique about the business that we share to, you know, provide more value to readers.

• 29:20Lenny Rachitsky?

  And then there's also newsletter people like me and Pak, you mentioned, who wrote about Ramp, because it's also just so interesting. What's your sense of that versus traditional PR? There's this like, I don't know, big debate of just like, Traditional media is no longer relevant. All these other people will go through newsletters and podcasts and things like that. What's your sense there?

• 29:38Speaker 00

  It's, you know, what are the audiences that you get with each of these tactics, right? And so we, we do, you know, both obviously get some earned coverage in these new newsletters and other tactics and, and we pay for some and we advertise in, in other cases. And, and what we tend to find is like, these are great reach, but they tend to work very well for actually hiring, improves Ramp's reputation as a company for recruiting and hiring, which, which helps. And, and they help with a certain audience of customers, which is typically tech founders and, and folks close to the tech ecosystem. But as I mentioned, you know, the vast majority of the world is not startups and the majority

• 30:21Speaker 00

  of Ramp's customers are no longer tech and startups. And, and so as we're thinking about ways to grow, I think channels like these are one piece of, of the equation, but I think traditional PR will remain another really important piece because they just target a different audience.

• 30:38Lenny Rachitsky?

  As you're talking and watching the days count up on this days that Ramp page still and stressing me out, I feel like I'm keeping you from doing work to keep growing Ramp, but let's keep going. I'm going to close this tab. You talked about growth engines. I'm curious what you've learned about building a growth engine in a company. And another way to put it is just a repeatable, repeatable, scalable growth process, whether it's at Ramp or Open Door or Instacart.

• 31:03Speaker 00

  People talk a lot about, you know, what should the right, you know, design of the team be or, you know, profiles of people on the team, et cetera. And I'm, I'm happy to talk about what are the right profiles of people. I think that's an important conversation, but I think like design of the team, people often, I think it's a red herring about team structure and team design and what's the right one, et cetera. I think most of that is irrelevant. What actually matters is culture and rituals and cadences rather than the, the team itself. And so what

• 31:38Speaker 00

  A great growth engine and a great growth team is one that where you've set the culture, like set very simple, you know, North Star metrics, usually one, at most two, right? And, and you've created a culture of defining hypotheses that are data-driven and a culture where that can be executed quickly and have like an MVP kind of mentality for product and non-product projects, right? Where people can, can fail and learn quickly and iterate quickly. So I think that part of it is more important than the specific people or their functions in many ways to me, especially when you're starting to build a growth engine.

• 32:17Speaker 00

  It's like, can you build a set of people that can generate new ideas and evaluate them effectively and move quickly? Is really what you're trying to design for.

• 32:28Lenny Rachitsky?

  Let's, let's unpack some of this because this is great. So in terms of North Star metrics, what are some examples in your experience of good North Star metrics? Like revenue is obviously a very common one, but often it kind of is too high level. Is you have a sense of what a good North Star metric is?

• 32:43Speaker 00

  I, I like having, you know, kind of two, right? One is something around volume and growth and you want that to be A, like very motivating and like intuitive for people to understand and also B, something that the growth teams can directly impact, right? Revenue is for better or worse, more important to the company, but also much farther down the, you know, line of whether or not the growth team can, can impact that, right? And so Instacart, for example, our North Star metric for, for growth was monthly active orders. And that's what we all rallied around and looked at every day, you know, what are, how are our model doing? And then obviously we had a large growth and consumer engineering team at Instacart, 300 plus people.

• 33:26Speaker 00

  And, and so there are people working on every single corner of the app and, and outside of the app on acquisition to, to drive growth. And, and it's like, some of the stuff is like minutia, right? It's like making the checkout flow slightly better or faster or something like that. So for, that's a good example, right? It's like, okay, well, so we're going to go that team on model, like how are they going to move, you know, monthly active orders by making the checkout flow slightly better? Maybe the, they can have an impact or maybe not. And so one of the things that we did is the actual, you know, local team. Has their own metric that they can directly influence. Like you want to actually, you know, hold people accountable for things that they can influence.

• 34:06Speaker 00

  And then we created via, you know, the finance and data team, a translation layer for every team's metric into Mao. It would be like if you got one extra weekly order because of your checkout flow from the same customer, it would have like point X impact on, you know, the company's Mao. And then you would just roll up all project plans as well as project impact back into this like singular Mao metric. And, uh, and, and the other benefit of doing something like that is that it also helps you cross prioritize much easier. Right. Should we add more engineering to this team? Should we add more budget to that team? It's like, okay, well, what's the Mao map? Like where is there more Mao per dollar or per engineer, uh, being built? Uh, and it just really helped us unify and, and move together.

• 34:52Lenny Rachitsky?

  I have questions about this. This is great. By the way, what, why is it monthly active orders versus just monthly orders? How can you be an inactive order?

• 35:00Speaker 00

  Sorry, orderer, uh, I

• 35:02Lenny Rachitsky?

  Oh, okay.

• 35:03Speaker 00

  So like monthly active users basically is what it is, but we call them orders because users can just log in and not order.

• 35:08Lenny Rachitsky?

  Right. Got it.

• 35:09Speaker 00

  You're actually ordering, uh, on the platform.

• 35:11Lenny Rachitsky?

  Yeah, I think there was this backlash against users at Facebook. I think it's monthly active people. And so I get it. Okay, understood. Interesting. So you find that instead of sub teams having a different metric that we just know is good. That's like one of the variables in the formula of monthly active orders. You actually have a translation that converts that specific metric moving to the Northster metric.

• 35:35Speaker 00

  Yeah, the team on their day to day for their sprints, whatever, are looking at their own metric. But for the purpose of planning and resource allocation and reporting, uh, we would use the translation layers, uh, to, to actually just look at everything on a Mao basis.

• 35:49Lenny Rachitsky?

  Knowing those sorts of formulas are often not perfect.

• 35:52Speaker 00

  Yeah.

• 35:53Lenny Rachitsky?

  How much weight do you put into that, that formula specifically?

• 35:56Speaker 00

  And, and I think like i- in general, like the planning process is not perfect, right? Like you can have a financial plan, uh, in Excel and the reality, uh, can diverge quite a bit. The only thing you can be certain of is that you're not going to accomplish exactly the plan. So we did a couple of things to that. One is like, you know, setting a culture of like, we know this isn't perfect. This is like seventy, thirty, eighty, twenty. It's to guide. So like, we wouldn't use the translation factor to make like a marginal decision, right? Like, should be like, you know, if something is five or 10% off. Those are done based on judgment. Because at the end of the day, regardless of what metric framework you use, marginal decisions are marginal for a reason. They're really hard things to decide.

• 36:38Speaker 00

  And so the the framework helped with like, just reducing the cognitive overload of decision making to only those that are, you know, marginal. Right? So the ones that are obvious, that are going to have big impact, like, it becomes clear, even if the measurement framework isn't perfect. And so that's kind of what we use. And the other thing that we just had as cadence is we would actually update all of the translations every six months for the new planning cycle. Based on new information that we knew on how, you know, moving X impacts now.

• 37:10Lenny Rachitsky?

  Just to make it even more real, what are some examples of those lower level metrics? Like, is it like increased conversion of signup by X percent?

• 37:17Speaker 00

  Any number of things. Like, it would be actually like load time of the app on open. There's a team that's like trying to make that faster and more efficient. Because we know that that impacts whether that person actually ends up ordering. If it takes five seconds to load versus, you know, two seconds to load. And so now, so the full customer experience, like, we're all segregated into different teams that were optimized. It's just like, how long does it take to open? Okay, like, number of searches that a user does on the app. We know the people, you know, and like number of items that are put into cart, like amount of time from cart to checkout.

• 37:54Speaker 00

  Things like that would be just like, we literally just like map out the any user's journey throughout the app and have like separate engineering teams that are focused on that.

• 38:04Lenny Rachitsky?

  And there's essentially some kind of regression analysis that tells you here's load times impact on. Mouse.

• 38:10Speaker 00

  Exactly. And the other thing that we did is just so we would have these translation factors. We could also just see what the cumulative impact of all of the work is at Facebook did this too, which is just long-term holdouts, right, for each surface area. So the checkout experience team that I've been talking about a lot for some reason would have their own holdout. And so we can see what the cumulative impact of, you know, monthly active orders on the people that got last half's experience versus this half's experience on the holdout. And that will make it very clear. So regression is one way to do it, you know, and then basically effective A B test, but with a small holdout.

• 38:46Lenny Rachitsky?

  Is there a holdout for the performance team where someone just has a really slow version of Instacart?

• 38:51Speaker 00

  I, I wonder, actually, but there's holdout for almost everything. There's a holdout for ads, for example. So there are some lucky Instacart users out there that are not getting ads and they've never gotten ads because they've always been part of Instacart's advertising.

• 39:07Lenny Rachitsky?

  That'll be a great revenue boost whenever they want to kill that.

• 39:12Speaker 00

  That's, as you can imagine, was the conversation internally on like, should there be a permanent holdout? Should it be like last year's experience? Like, how should we think about, especially because it's such an important driver of modernization?

• 39:24Lenny Rachitsky?

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• 40:06Lenny Rachitsky?

  you easily get to the root cause of any issue you discover. EPO lets you go beyond basic click-through metrics and instead use your North Star metrics like activation, retention, subscription, and payments. EPO supports tests on the front end, on the back end, email marketing, even machine learning claims. Check out EPO at getepo.com. That's getepo.com and 10x your experiment velocity. Maybe just one last question along this specific thread. Is this framework of having everything translated into a North Star metric something you bring to every place you work now? Is this just something you recommend? Like, for example, does Ramp approach things this way as well?

• 40:44Speaker 00

  I think it depends on the size of the company, right? Like, I think, I think this actually becomes much more important as companies get bigger because there's more teams to prioritize and more resources to cross allocate. And having a common currency makes that a lot easier. And so we do something similar at Ramp as well. We have translation factors for all of the various things the teams are doing that translate back to the North Star for Ramp.

• 41:07Lenny Rachitsky?

  Cool. And then are you up for sharing the Ramp's North Star metric? Or do you want to keep that?

• 41:12Speaker 00

  Yeah, I mean, like, I can tell you what we used to do in the recent past. We're evolving some things, but in the recent past, it was for, for the growth team, the North Star was dollars of SQL pipeline. So anything anybody did, we would try to estimate the impact into what would be the dollars of, you know, sales qualified lead pipeline generated for Ramp. So if, you know, the website team wanted to change language on, you know, the cards landing page, their direct impact would be conversion rate, right? Of an email submission or something like that would be what they would be optimizing for. And then you would have, okay, what does two bips of conversion rate mean for dollars of SQL pipeline? A lot or not a lot? And depending on that, it's like, all right, don't waste your time doing that project.

• 41:57Speaker 00

  Let's do something else instead. So that just helps us score and prioritize efforts.

• 42:03Lenny Rachitsky?

  Here's a fun story. I actually tried to sign up for Ramp when I was starting this newsletter and business and it didn't let me because I was, I had a personal email.

• 42:11Speaker 00

  Yeah.

• 42:12Lenny Rachitsky?

  So I moved on and that would have been such a, such a huge revenue opportunity. I'm just joking.

• 42:17Speaker 00

  I know, I know. And I'm glad you brought that up because we are obviously aware of it and we are working on something for users that have put in a personal email address.

• 42:28Lenny Rachitsky?

  Oh, my God.

• 42:28Speaker 00

  In terms of how to reengage them.

• 42:30Lenny Rachitsky?

  You're about to have 5X growth. Yeah, because I had no other domain at that point. Now I have, you know, Lenny's newsletter and stuff. So it's like, shit, I'm stuck.

• 42:39Speaker 00

  By the way, for anybody else that has that problem, they can just reach out to me. We'll, we'll figure it out. The reason we don't allow personal emails is because it's just. Typically very low intent users that are coming to the website that are putting in person.

• 42:51Lenny Rachitsky?

  Makes sense. I totally get it. I was not offended. I just like, all right, there's I had like no way around it. That's the problem. So I like that you guys are adding some some path around it. And you're saying email you or reach out to you.

• 43:02Speaker 00

  Yeah, you can find me on Twitter or email me. I'm just Sbotch at Ramp. Yeah.

• 43:06Lenny Rachitsky?

  All right. You're gonna have the most sales leads of any person at Ramp when this comes up. Okay. One other thing I want to touch on is success metrics. You talked about one of the keys to success and this kind of repeatable growth engine is clear success metrics. Is there any just learnings and tips you have for people when they're thinking about success metrics?

• 43:26Speaker 00

  Finding the right success metric, there usually should be two. There should be one on volume and another one on efficiency. And we can talk about what are good efficiency metrics and what are good volume metrics. On volume, I think the right success metric has a couple of things that are important. One is there's a clear linkage to value creation for the business. So if I move this metric, that will drive revenue and which will drive equity value for the business or whatever it is that this particular metric, metric, sure. And for Facebook, it was mail. For Instacart, it was effectively monthly active orders. And it's something that we know is important that will really drive the value for the business.

• 44:10Speaker 00

  But it needs to have the other component of it, which is it's very intuitive for all of the people working internally to the company. And it's also clear how if they're working on some minutia, how that can impact and actually move the the main metric. So it's usually like you have to find something that's somewhere in between, not too far, too lag, you know, towards revenue and value creation, but also not, you know, something that's actually like translatable to the efforts of various teams.

• 44:39Lenny Rachitsky?

  Is there an example of a good success metric that just comes to mind to make this a little bit concrete for people?

• 44:43Speaker 00

  It just depends on what your goal at any given time is, right? Sometimes you're trying to drive more users. Sometimes you're trying to drive more engagement. And you can reorient the company on what you're trying to do as the north star for growth during that period of time. And so users, obviously, we've talked about as a good one. For engagement, I think it's, I've often found what really helps is, and you've done actually really good benchmarking at some point, like the escape velocity metric for growth for a given company, I think. I don't think you phrase it that way, but that's kind of

• 45:17Lenny Rachitsky?

  I like that phrase.

• 45:18Speaker 00

  For a given user, which is, what does it take for somebody to become an engaged and active user or customer of a platform? And at Facebook, it was like, what, 10 friends the first seven days? At Instacart, it was, you know, three orders in the first month. And at Ramp for our activation, we've got like, it's like very specific to Ramp, but we've got like four events that the customer needs to do in the first 30 days. And if they do that, they have a high likelihood of being activated and successful. So our activation team focuses on that.

• 45:49Lenny Rachitsky?

  The framework you just described reminds me, Gibson Biddle has this really simple framework of JEM where you can basically prioritize one of three things: growth, engagement, or monetization. And his advice is always just like, all of them are great, just make sure you're all aligned on which one matters most at the time.

• 46:06Speaker 00

  Yeah. And it's very similar to, you know, we used to have this at Open Door, and I think DoorDash also uses a similar framework, which is, you know, speed, quality, and cost. Like, all three are important, but it's very hard to optimize all three at the same time. So you need to have, you know, a particular prioritization. And I think growth teams can also use that. It's like, okay, like, I think, the way I think about the growth team's journey is like, step one is like, build a system that can move fast, and then like, work on improving the quality, and then work on, you know, optimization of costs after. So similarly, you pick which phase you're on, because you can't do all three at the same time, whether it's growth engagement monetization, or just the other way of framing it.

• 46:49Lenny Rachitsky?

  Speaking of metrics, I have this note here that you're a big fan of payback period for measuring investment ROI versus CAC. Can you talk about why that is?

• 46:59Speaker 00

  Yeah, so a lot of people, you know, CAC obviously gets thrown around a lot. A lot of people are like, "Okay, you have to be reducing your CAC, CAC, CAC, CAC." There's a fundamental flaw to it, which obviously is that you're focusing on cost and not the value drive, right? And so when you focus on CAC and reducing CAC, what tends to happen is you actually might be doing something very damaging where you're succeeding in reducing CAC, but you're actually bringing in customers that are less valuable. Because those are the ones that you're able to attract with a lower CAC. And so reframing it away from CAC towards LTV is helpful, and that's better, right? So thinking about, "Okay, for better customers that are bigger, we want to spend more."

• 47:44Speaker 00

  So you might think, "Okay, well, LTV to CAC might be a better way of looking at that." I think the challenge with LTV to CAC, especially for a lot of, even Ramp, right, is only four years old, is it's really hard to predict LTV. It's like a DCF. It's extremely assumption laden, and it's hard to know, you know, what the final value will be. And especially if you think your churn is low and your LTV is very high, you might end up spending a lot of money because you're like, "Oh, like my LTV to CAC is great." And then a year or two into the business, you realize, "Actually, your churn is higher than you thought. Your initial customers aren't representative of your long-term retention." And all of a sudden, you've destroyed a lot of value by looking at LTV to CAC,

• 48:26Speaker 00

  which is why I'm like a big, big fan of payback period and, you know, and actually being really thoughtful about that, using, you know, contribution margin, not revenue or gross margin. Like, how long of contribution margin from this customer does it take to pay back their cost? And, you know, setting, this obviously is typically a mandate from the executive and board level, on like, "What is the payback period that we're comfortable with?" And then just orienting everybody towards driving that blended payback period down as much as possible.

• 48:55Lenny Rachitsky?

  For folks that aren't familiar with the concept of payback period or contribution margin, could you just briefly describe what those mean for listeners?

• 49:01Speaker 00

  Yeah, so contribution margin is basically the profit that you make on a given customer after you take into account all of the variable costs. So including the cost of production as well as any other variable cost to serve that customer. So that might include support and other things that scale with your with your revenue. And then payback period is literally just how many months of that profit would it take to pay for? Let's say it costs you $5,000 to acquire this customer and your estimated profit per month on the customer is 500, that is a 10-month payback period. So as I say that, I'm sure you've heard there, you still have to make assumptions for payback period,

• 49:45Speaker 00

  but at least they're more based in recency and you can evaluate them more quickly.

• 49:49Lenny Rachitsky?

  Awesome. Thank you for doing that. Just a couple more questions around growth specifically. So there's a lot of ways to grow through the history of a company. You can invest in SEO, you can invest in paid and sales and referrals and influencer marketing, brand marketing, billboards, all these things. Do you have an opinion on how to sequence these sorts of bets for a company, especially in B2B?

• 50:10Speaker 00

  Of course, a lot depends on who your customers are, what your unique value propositions are, and you know, how competitive the space that you're in. But I do think there's actually like a general path that most B2B companies take and should take, frankly, which is like my view is you start off with like founder-led sales, like the early team needs to know how to actually sell. Then you hire your first couple of salespeople, then you start some very kind of low-cost, targeted marketing efforts. So whether it's like content, community, small-scale events, and then PR. And after all of that is when you start paid and brand efforts.

• 50:50Speaker 00

  And then, you know, SEO probably start around the same time that you start paid marketing efforts. The reason for the progression, the way I've described it, is The channels get more expensive as you go farther along and they get more effective as you understand more about your customers and they're more scalable as well as you go farther along the, you know, the list that I've described. And so that's the intention behind sequencing them that way. SEO is a bit unique and the reason I recommended later rather than earlier, even though it's not necessarily that expensive, is it just takes some time to build and without domain authority, your backlinking or any media presence, you can end up just like flailing with SEO, creating content and not getting

• 51:32Speaker 00

  any actual, you know, traction for a long time. So there's like usually a good inflection point for your company to double down on SEO efforts and it's somewhat a little bit later than some of the other channels.

• 51:43Lenny Rachitsky?

  This touches on a great line that you have around experimentation where you talk about how you don't want to just fail fast with an experiment. You want to fail conclusively, if that's the word. Can you, is that right? And then can you talk about that?

• 51:57Speaker 00

  Yeah, I talk a lot about that with my teams, both here and at other places, which is, you know, A, like we celebrate failure. Growth experiments in my history are typically like 30%ish success rate. So the vast majority of things that you try don't work. And so you want to create a culture where people aren't afraid to take risks and aren't afraid to fail. And for me, failure is not that you didn't drive revenue. Failure is not learning. Like, so it's really important that you learn when you fail. And so we celebrate failure as long as you're learning. And you can only learn if you've designed the right test and you failed conclusively. Because otherwise, I think many of us have been in situations

• 52:41Speaker 00

  where there's intuition that something might work and it doesn't work. And then you end up doing it over and over for years, like, because every time I knew executive where somebody else has the same idea, you try it again. And it's because you haven't been able to design the test to fail conclusively. And it's

• 53:00Speaker 00

  Hard to do, but at the end of the day, there's only two ways to make an experiment successful. Either you have a very large N, or you have a very significant treatment, which is like what you're doing in the experiment itself. And in B2B, you don't usually have the luxury of large N, which you do in consumer. Facebook can get stats taken in two hours. A B2B company could take two years to get to the same number of touchpoints. And so, to counteract that, I recommend people just trying to maximize the treatment effect, which is like, if you have a hypothesis that you're testing, just throw all of the possible

• 53:42Speaker 00

  tactics and resources that you think would move that needle. Because you can always cost rationalize later if it works, right? And so, maximize the treatment effect, and if with all of that, it didn't work, then you can say, hey, we're not going to try this again, because we literally did try everything that we could to test this hypothesis. And if it doesn't work in the best version, and it's expensive as it is, this is not worth spending more time on. But if it does work, great, then you do another version of the test with like, half the tactics, or whichever tactics you think work better or worse, and you optimize over time.

• 54:16Lenny Rachitsky?

  Is there an example you could share when you did that?

• 54:18Speaker 00

  I mean, account-based marketing is something that is very common in enterprise software, right? Where you selected certain customers that you think are high priority, and you're saying, I want to touch them in as many nuanced ways as possible, to see if that drives conversion. And this is something I've seen tried many times, where people do it, but they kind of do it halfway, where they're like, okay, we tried these three things, conversion of the control group wasn't higher, and so, we think it does not going to work.

• 55:00Speaker 00

  And then a new go-to-market executive comes and they have to do it again. They have to do it again. It's like a very common one wherever this happens. And so when we did it at Ramp, we did exactly what I just described, which is like, let's really be thoughtful about the experiment design, both in terms of maximizing the number of people as well as maximizing the number of ways and types of ways that we're effectively touching these target customers to show the value.

• 55:31Lenny Rachitsky?

  So what it sounds like is the hypothesis isn't like this email will have a big impact on conversion. It's like this strategy of coming after customers is what we're testing?

• 55:43Speaker 00

  That's the example there, right? And I think if you, for example, if you had the, it's a, this kind of framework is more important for cross-functional, larger-scale, bigger tests, rather than like an email modification, right? But we could even use it on a micro example, like an email modification, right? Where you are like, okay, I think this particular email is underperforming because it's not talking to this part of the customer's pain point or journey. And you could just, the simplest test would be, okay, let me make some tweaks and to the text and edit that. And that could be the end of that test. And if that doesn't work, you're like, oh, maybe those weren't the right text edits.

• 56:27Speaker 00

  Let me do a different text edits or whatever. And that's fine. That's low cost. It's not the end of the world. And it's for you to be wrong there. But an alternative that you could do is like, oh, what are all of the things that I could change about this email in the same test? Is it the trigger of the email? Is it the text content of the email? Is it additional personalization? Is it the design of the email? Like trying to think of like, what are all of the various levers that you think could be wrong? And put them all together to test your hypothesis of this touch point is wrong. And how do I improve that?

• 57:02Lenny Rachitsky?

  Obviously, the downside of that is you don't, if it doesn't work, you don't know if it's like, oh, maybe it was this thing could have worked in the subject.

• 57:08Speaker 00

  Yeah, yeah. So there's always trade offs on this. And so, but what you're hoping is like, you've done a complete refresh where you did all the things that you thought were intuitive, that should work. And if it doesn't work, then you're like, okay, maybe my hypothesis is wrong. But you're right, there's always going to be a challenge. Maybe the execution is wrong. And I did too many things potentially in that case.

• 57:29Lenny Rachitsky?

  How does that go with the velocity culture? Is it just do those things real fast? Even though it's a lot, it's not like micro optimized, it's like go bigger, but do them fast.

• 57:38Speaker 00

  Yeah. So that's why I think it's like important to to frame where this matters, right? And so I, I think I I'm less worried about failing conclusively for things that are, you can fail really, really fast and and just redo, right? Things like website conversion, email, et cetera. I'm more worried about that for things that take a while to plan and cost money.

• 58:05Lenny Rachitsky?

  Got it. Okay, great. Maybe one last question around growth specifically. What are some of your favorite tools? For the growth team, either internally, whatever you can share or externally, that just allow you to operate efficiently and effectively?

• 58:19Speaker 00

  A couple of things that we've used, I mean, one simple thing is, you know, for sprint planning, actually, we we use Airtable. Because the the planning process and the scoring is so much more analytical and the translation layer. So we've got like a template on how we do our sprint planning and how we translate the various impact metrics into the common currency, which which I enjoy. But I don't think it has to be Airtable. It's just some form of organization that that works well for that. In terms of a very tactical, you know, growth tool that we've enjoyed recently is we use this company called Mutiny, which is also a current customer, which is a tool for website copy personalization. So they they hook up with our third party data sources that we pay for.

• 59:04Speaker 00

  And based on what we know about the customer as they're landing on our page, we can personalize copy and design based on that. And that's, that's how like, you know, material impact and allowed us to scale, you know, website experimentation.

• 59:18Lenny Rachitsky?

  Amazing. And then are there internal tools you've built to help with experimentation? Or, I don't know, sharing data, dashboard, I don't know, is there anything else that's just like, wow, this really helps us move fast?

• 59:27Speaker 00

  Eric, our CEO, has publicly talked about this. I think we as a company are very thoughtful about what we build in-house versus, you know, what we buy externally. I think a lot of engineering teams are often excited about building things in-house where there's, you know, off-the-shelf products that could basically work externally. And Ramp has historically been good at not falling into that trap. And we use, you know, third-party tools for a lot of our, you know, growth and experimentation, for things that are not, you know, proprietary, strategic, et cetera. Obviously, like, some of the automation, something we've talked about, we've built all of that in-house in terms of, you know, prospecting, lead scoring, and

• 1:00:09Speaker 00

  how we talk to our customers. But for the most part, we use external tools. Instacart and Open Door were not like that. We built our own internal, like, experiment tracking systems, A/B testing frameworks, and all of that.

• 1:00:25Lenny Rachitsky?

  That's what I would have guessed about Ramp, that it's with speed, you gotta not build stuff you don't have to build. So that makes a lot of sense. Okay, maybe one last topic to talk about. I want to talk about hiring. You have some really interesting approaches to how to think about hiring. One is, I think you have a really interesting strategy for how to find the best companies and also the best people at each of those companies to go after if you're hiring for a specific role. Can you talk about how you think about that?

• 1:00:51Speaker 00

  Gogol on Twitter has talked about some of this, which is like, there's kind of two ways to go about hiring great people. One way is basically a very thoughtful and tactical network search, where like, let's say you're hiring for head of SEO. You go ask your network, who is the best SEO person you know? Get introduction to each of those folks, and then ask them who the best person they know is. And you have a mapping of, you know, where are the best SEO teams and why? And if you can't get one of those people, 20, 30 people on your target list, you kind of go down the list of, okay, like, what is the next best person? You typically want to limit it to companies that are one to

• 1:01:36Speaker 00

  two stages of growth. After you. So you want somebody that has seen, you know, your stage of growth and beyond at a company that has a reputation for craft in the field that you're looking for. So that's a very classic way of doing that. And I think that works really well for people and companies that are really well connected, right? And then so there's another approach that I've actually used successfully is is much more kind of data driven and kind of external and not as network based, which is you can often look up data, a lot of it is like somewhat public, right? So you can look up information on which companies might be doing well. So for example,

• 1:02:21Speaker 00

  I'll just pick like, if you're looking for great email marketing folks, like CRM marketing lead or something like that, you can actually look up on similar web, like what percentage of traffic shows up via email to companies' websites. So you've got your target list of companies that are one or two stage beyond you that you respect as general companies. And you can go and see, okay, which ones of these are actually really effective at driving web traffic or app traffic or app downloads via via their email. And then go try to source from those teams and companies. And I think people underutilize that, even though it's very intuitive, right? It's just not something that occurs to people to do.

• 1:03:03Lenny Rachitsky?

  I love that. I've not heard that tip right there. The first piece, Gokul definitely recommends this. And I think the core part of that is, like, the core theme here is find the companies that are the best at the thing you're trying to hire for, and then figure out who at the company is the best once you start talking to people. I love it. Another strong opinion that I think you have is around paying people and how much to pay the best. Can you talk about that?

• 1:03:30Speaker 00

  Yeah, I think there's a lot of.

• 1:03:34Speaker 00

  Conversation around compensation is very much focused on like equality and like narrowing the gap and bands for compensation. And I think personally, I know it's a bit of a spicy take maybe, but I think it's like the exact opposite direction of the conversation that companies should be having about about compensation, which is I strongly, strongly believe that small teams of successful people can drive a lot more impact than than larger teams of mediocre people. And so I strongly believe you have to design a system where you're able to reward ten X operators with ten X the comp. And I actually do think the

• 1:04:15Speaker 00

  you certainly see that at the executive level, right? So if you look at the same executive at different companies at similar stages, the comp can be wildly different based for a variety of reasons. But one of them is the perception of performance and potential by the management team, right? And I think people need to be thinking about how to do that across more levels, which is if you can do that, and if you do that well, I think you're able to differentially hire and retain the best talent. And that'll be a great competitive advantage for companies that can do that well.

• 1:04:48Lenny Rachitsky?

  And do you think about this, like, within a team, pay the best people the most? Or is it more only hire these ten X people and then pay everyone the most?

• 1:04:58Speaker 00

  You know, people think of like, the talent density of your company as dependent on hiring. And that's obviously true. It's an important part of the ecosystem and the first part. But it's it's equally dependent on retention and performance management. A lot of companies can be good at hiring, but hiring has pretty high rate of false positive. Like, interview is the worst best way to hire somebody, right? And then there's lots of ways you can make the interviewing process better, make it more interactive, make it, you know, more effective. But at the end of the day, you still don't know about someone until you really work closely with the new team, with the new mandate at your at your

• 1:05:39Speaker 00

  company. So I think it's not about necessarily hiring ten X operators. Obviously, you're looking for that. But it's also about investing in people that are doing really well and accelerating their growth and rewards based on impact once they're there, as well as, you know, managing out people directly that didn't work out. I mean, and I typically think it's like, you know, Almost never when I've had to, you know, part ways with people is because someone's a bad actor. It's almost always that like, you know, it just wasn't the right fit for whatever reason, for their skillset, for their life goals, whatever it may be, and it just wasn't a fit for that role.

• 1:06:21Speaker 00

  And I think a lot of companies are hesitant to make those changes, and I think that's how they bring their talent bar down, frankly.

• 1:06:28Lenny Rachitsky?

  Absolutely agree. Sri, is there anything else that you wanted to touch on before we get to our very exciting lightning round?

• 1:06:36Speaker 00

  I don't know how many people use this. I'm still surprised when new folks come to me and it's like, I need to write, by the way, like a document of like, how do you work with me? Because I know it's like, a lot of people have been talking about it, I think Clarice Johnson's talked about it too. But I say that like, my love languages are the like spreadsheets and frameworks. And one very simple one that I've always liked that sometimes people are surprised to hear, but it's most consultants know, is what we call MECE, mutually exclusive, collectively exhaustive, set of things. So whenever you're trying to like, attack a problem and trying to brainstorm solutions or what have you, I really like to remind the teams to think about MECE.

• 1:07:22Speaker 00

  Because when you kind of think about that and then evaluate your set of solutions with that framework in mind, I think you tend to find that you've, you'll catch more potential solutions. And also you'll feel comfortable that you've been, you know, comprehensive in your solution development. So anyway, just a little thing for people that are earlier in their careers to not forget.

• 1:07:46Lenny Rachitsky?

  So let's make it a little bigger than a little thing. So MECE, mutually exclusive, collectively exhaustive. Is there an example of what that may look like and or visualize for people to think about what this means in practice?

• 1:08:00Speaker 00

  Yeah, and I mean, I'll give a really dumb example, but it will make the point, hopefully. It's like, okay, you're like, our profitability, or like, our revenue growth has slowed down is the problem that you're trying to solve. And so, okay, like, you start with, okay, like, what does this mean? Like, you've got.

• 1:08:25Speaker 00

  Revenue per user has gone down or customers gone down or number of customers have slowed down. Okay, that's step one of the VC framework. Then it's like, okay, like where does the revenue come from? What are all the various products that revenue could be coming from? Has it changed on any of them? And then customers, why have customers gone down? Is it new customer acquisition? Is it activation of customers that have signed up? Is it retention? And just kind of breaking that problem. So at each layer, you've collectively exhausted all of the possible ways that this problem could have arrived. And just having that framework whenever you approach every problem will prevent you from missing something important and also just more generally give you and others confidence

• 1:09:08Speaker 00

  that you're being comprehensive in your solution development.

• 1:09:11Lenny Rachitsky?

  Got it. So one way to think about this in this specific case is just like make a formula of all of the variables that play into the question you're trying to answer.

• 1:09:19Speaker 00

  Yeah.

• 1:09:20Lenny Rachitsky?

  Awesome. Well, Sri, with that, we've reached our very exciting lightning round. Are you ready?

• 1:09:26Speaker 00

  Yeah, let's do it.

• 1:09:28Lenny Rachitsky?

  What are two or three books that you've recommended most to other people?

• 1:09:31Speaker 00

  I tend to find most business books can be decks, but one that I really like actually is It's Never Split the Difference by Chris Woz. I found it super helpful for, it's a negotiation book. Find it super helpful for negotiation, but also for a lot of business decision making generally, to be honest, and life. And then another, I'm a big fan of sci-fi short stories. So anything by Ted Chaim or Ken Liu, I highly recommend.

• 1:09:57Lenny Rachitsky?

  I love those both. On the first one, I'm actually in the process of listening to it on audio. And I'm just, every time I'm in a place where I can negotiate something, I never remember anything that I've learned. Is there one thing that you've taken away from that book that's stuck with you of like, I use this?

• 1:10:11Speaker 00

  I think that the core of the book really is about listening behind the problem of negotiation and what is the person really asking for. So it's example of like, you know, if you're always trying to split things evenly, you'll end up with one brown shoe, one black shoe, where neither of you are happy. And so like, what is the, so rather than thinking about Batman and Zopa and all the other business school frameworks on negotiation, I think focus on like, deep down, what does this other person want? And how can I change the conversation about that rather than the thing that we're, you know, arguing over?

• 1:10:46Lenny Rachitsky?

  Awesome. Great. Next question, what's your favorite recent movie or TV show?

• 1:10:51Speaker 00

  I mean, obviously it won the Oscar, but I really enjoyed everything everywhere all at once. I thought it was such a wonderful story and it really, I think it's one of those, it's funny, the movie can also be, I think, everything because there are just so many different reads that you can get about that. You know, it's about family, it's about immigration, it's about queer love, like there's a lot of really interesting themes explored via one movie.

• 1:11:18Lenny Rachitsky?

  What's a favorite interview question you like to ask?

• 1:11:20Speaker 00

  I was gonna say, oh, I like to ask other people.

• 1:11:23Lenny Rachitsky?

  You like to ask, what did you think I was gonna ask?

• 1:11:26Speaker 00

  Oh, I thought, what was my favorite interview question that you've asked or others have asked?

• 1:11:31Lenny Rachitsky?

  Oh, I gotta clarify this. Okay, both are acceptable answers.

• 1:11:34Speaker 00

  I was gonna cheat on that one and say, the one that you asked me right before, because I'm a big fan of actually movies and TV shows and people rarely ask about that, interviews like this. But favorite interview question that I like to ask candidates, actually, is what's something that you're really bad at, but you still do and why?

• 1:11:57Lenny Rachitsky?

  What do you look for in their answer when you ask them?

• 1:12:01Speaker 00

  Yeah, a lot of people actually struggle with that question and can't answer anything that they do that they're bad at, which is a little bit of a yellow flag, which means that they're only used to doing things that they're successful at and they haven't cultivated interests that are not correlated to their own success at doing something and they haven't taken the time to do that. And then folks like that are gonna run at the first sign of trouble and then be like, oh, I'm not successful at this, so I'm gonna move on. And what I really wanna see is people that show examples of things that they're not successful at, that they do for other motivations and goals and interests. And so if you can tell me a compelling story like that, it's usually a winning answer, essentially.

• 1:12:42Lenny Rachitsky?

  What is a favorite product or two that you've recently discovered that you love?

• 1:12:46Speaker 00

  I already mentioned Eight Sleep once in this call. I love my Eight Sleep. I'm a big fan and there are customers as well. And so that's been a great pandemic purchase. So I guess maybe not as recent. And then maybe another one is like Fellow Coffee. Their kettles are, I think, just designed so beautifully. I don't drink coffee, I drink tea, but I use my Fellow kettle for tea. And I think it's just a delightful product to use.

• 1:13:15Lenny Rachitsky?

  I got a Fellow kettle for my tea also, and I found that the flow of the water was too slow. And it's just like, just standing here pouring this coffee pour over.

• 1:13:23Speaker 00

  Yeah, yeah, yeah. So they do have a non-pour-over kettle, which is what I have. Which makes it easier.

• 1:13:30Lenny Rachitsky?

  Okay, my mistake. Next question, what is something relatively minor you've changed in your product development process that you found to have a big impact on your ability to execute?

• 1:13:41Speaker 00

  Yeah, I mean, I don't know if this is minor or not, but one of the things that, you know, on the growth side, we used to have separate sprint planning for the product team, for the marketing teams, and each team had their own planning cycles. And one of the things that we did is we brought them all together into one. So like the lifecycle marketers joined the product activation team sprint cycles. And so their projects and work are very tightly aligned and work in the same pace and system as the rest of the product team. And that's had tremendous impact in our ability to work together.

• 1:14:19Lenny Rachitsky?

  Final question, Ramp is all about helping people save money. I'm curious if you have any pro tips on just saving money?

• 1:14:26Speaker 00

  I mean, it seems obvious, and I think I feel like negotiation's already been the theme of this lightning round, but everything is negotiable when it comes to contracts. People think contracts are standardized for software, and usually not. People are trying to sell you something, they're trying to grow to, they have their quotas to meet, they have their goals to hit. And so, I mean, Ramp obviously has a service for this, if you wanted to scale, use Ramps, but you can do this on your own, right? Always try to negotiate, be mindful of like quarter ends for salespeople, right? And so if you can push something out till near the end of the quarter, you can ask for, hey, I'll sign it by the end of the month if you give me a 10% discount. Will often work. So there's tips like that that you can do, but remember that you can

• 1:15:09Speaker 00

  always negotiate. And then the second one is, I would say, is just hire slower. I'm a big believer, and Jeff talks about this too, in your other interview, like hiring based on slope rather than intercept, I think will work well for you and like only hiring when people and teams are really stretched, right? I think this will serve you well, both on cost and on impact. There'll be plenty of scope for the people that you hire. And as I said, I'm a big believer in small teams accomplishing more, like, you know, Ramp being like a fraction of the size of some of our competitors with similar orders of revenue.

• 1:15:47Lenny Rachitsky?

  Sri, we've covered velocity, growth, hiring, so many topics, everything I was hoping we'd touch on. Two final questions. Where can folks find you if they want to reach out and learn more? And how can listeners be useful to you?

• 1:15:59Speaker 00

  Yeah, I'm a big fan of, you know, the fun place of the cesspool of Twitter. So I have a public Twitter account that, you know, you can DM me. My DMs are open. It's just my name, Sri underscore Batshu. And in terms of listeners can be useful, honestly, I think, you know, I really enjoy meeting like-minded folks. And as I may have mentioned in other places, Ramp is growing incredibly well. And then we're constantly looking to hire and we're still hiring. So if, you know, best-in-class growth and marketing folks that they can recommend, they hire at Ramp, I look here.

• 1:16:40Lenny Rachitsky?

  And I think the URL is ramp.com/careers. I just pulled it up.

• 1:16:44Speaker 00

  That's it. Thank you.

• 1:16:46Lenny Rachitsky?

  All right, Sri. Well, thank you again so much for being here and for sharing so much.

• 1:16:49Speaker 00

  Yeah, of course. Thank you.

• 1:16:52Lenny Rachitsky?

  Bye, everyone.

• 1:16:55Lenny Rachitsky?

  Thank you so much for listening. If you found this valuable, you can subscribe to the show on Apple Podcasts, Spotify, or your favorite podcast app. Also, please consider giving us a rating or leaving a review, as that really helps other listeners find the podcast. You can find all past episodes or learn more about the show at lennyspodcast.com. See you in the next episode.