Why Your SaaS Has a Growth Ceiling (And How to Break It)

0:00We've all heard this phrase, right? If you're not growing, you're dying. But is it true? I don't know. Maybe it kind of sounds right, but it also kind of sounds like the kind of thing a VC says to force you to grow unnaturally. I don't know. But um over the next 40 minutes, I'm going to assume that it is true uh and that you want to grow, and maybe growth is harder now than it was, or maybe it's always been hard. And so it'd be nice to have a couple of ways to grow uh

0:27faster. And growth is mysterious. Like this is a a chart of Lenny Rachitsky's newsletter subscribers. And uh he posted this on Twitter and we said, "Whoa, what happened there?" And he goes, "I don't know." [panting] Okay. But sometimes it's not so mysterious. The uh the founder of Projection Lab posted this. We said, "What happened there?" And he goes, "Well, I hired

0:49John." Who's John? And how can I get one? Well, turns out John's a marketer. [panting] Oh, so if you make something and don't tell anyone, sales are bad. And if you make something and tell people, like maybe it's better. What a mystery. Good growth is so hard to figure out. Anyway, even when you have it figured out, growth always slows, which is part of the the reason that

1:14we're, you know, talking about this. This is a actual data from a content affiliate campaign at WP Engine 10 years ago. You can see how it's good for a while and then I don't know, it tapers off and shrinks a little. So I'm going to explain why this always happens with marketing campaigns and other things. Uh for example, it happens at Buffer, or happened at Buffer. Buffer's a company we probably all love, right? They're super transparent. They did a lot of

1:39things first. The founders are awesome. Great company. But look, same thing as I just showed you that happened to Buffer. But Buffer also fixed it. Ooh. Don't you want to know how they did that? So of course we're going to talk about that. But I'm going to start by talking about cancellations because cancellations are financially a problem. I'll get to that, but to me cancellation feels very personal. And the reason is I think about the gauntlet of pain that a

2:06person goes through to sign up ever. Like they searched on Google or whatever, they saw an ad, they clicked it. That's already what? 1% at best chance that that happens. They come to the home page, they didn't bounce, they thought the features were pretty good, they saw the pricing page, that didn't scare them off. They maybe they looked at competition. They said find that price sounds pretty good, so they signed up. And then they onboarded and maybe they talked to support and maybe they had to configure some crap and upload their photo for the 8 millionth time and right? And then after all of that, they

2:34they were like, "No." I mean, they went through a gauntlet of pain. I mean, what is this? 1 in 10,000? Cuz like 1% get through the website, maybe another 1% after that pay. This is a 1 in 10,000 person and they're like, "I still don't want this." And it's like, "Oh my god, why?" Like Like you're the you're I mean, so so to me it's like an emotional personal thing even setting the finances aside. The whole point is that I want whoever that is to be successful. I failed them. I I really want to know

3:01why. But there is a good financial reason, so we should talk about that. Which is that cancellation beats marketing always. So, I want to explain [snorts] that cuz it's also useful to know more about marketing. So, this is a idealized but typical marketing channel. What happens is you figure it out like, "Oh, we figured out

3:18how to do the Facebook ads after all." And then very quickly you get to like, "Well, this is how many searches there are." And maybe you optimize over time so it gets a little bit better, but it kind of looks like that. But then over time it can look like this because you're kind of doing everything that you reasonably could, and then it often gets worse. It often starts sagging for lots of reasons. People have already seen the

3:38ad who are going to see the ad. They're not clicking. That's the deal, right? Or competition bids up the ads, so it's just not cost-effective to run the ad anymore. Or maybe it people just aren't using Facebook as much anymore, the wrong people are. There's lots of reasons, right? But it looks like this. Um for example, here's our content marketing campaign that looks like I mean this is real data that looks as much like the model as as you can imagine. And you can see, okay, it was

4:02good and then eh. And this is so common that I gave this the name the elephant curve. And so if you search online for elephant curve, if you're into this stuff, and you're like, I want to I want like 20 real world examples of this and why and a big long analysis, then search for

4:18elephant curve. Um I don't know. It doesn't really look like an elephant. I just I like I thought the elephant was cool. I wanted to give it a name. I could have called it Jason curve. That'd be really bad, right? So at least I called it elephant curve. Anyway, so um it always looks like this. Then you say, yeah, but I'm going to unlock more marketing campaigns. And I'll say, yeah, but uh if you stack multiple marketing campaigns that you unlock over time, it actually still adds up to exactly the same curve, which is part of why it's such a common phenomenon, cuz like all the math sort of like runs in this

4:47direction. Also, not all the marketing channels are very good. Also, you run out of them. There aren't infinite marketing channels. So one way or another, this is going to be it when it comes to like paid marketing, that kind of stuff. And you're going to get this curve. But cancellation does not work at all

5:03like this. This is the problem. So imagine a company with a thousand customers. And imagine the marketing is kicking in 100 customers a month. Who cares how expect how efficient it is? That's what they're doing. And suppose this company has a cancellation rate of 5% per month, which a lot of people in here would say, that's pretty good because you're

5:20cancellation is 5%, you think it's good. You're wrong, but okay, I get it. And so um so okay, so 50 so because it's a thousand customers, 5% means 50 leave. Okay, so this company's adding 50 customers a month. That sounds okay. And if this is something like you, one thought you might have is

5:37this is fine. Like if I just stay like this, status quo, I'm adding customers every month, some are leaving. And so I'll just grow 50 customers a month kind of forever. I mean forever, but you know, it'll it'll just go. And the answer is, nope. It absolutely will if you don't change anything, you will stop growing. And the reason is, imagine this company has 3,000 customers

5:57instead. Marketing doesn't care. Like AdWords doesn't care how many customers you have. It still just works the same way. It doesn't scale with you, but cancellation does. That's what 5% means. It means 5% of how big you are. That means it scales with how big you are. So, in this example, now 150 customers are leaving and this company is shrinking even though all we did is add more customers and change and kept everything else the same. So, as you grow, you go for you actually start growing more slowly and eventually even shrinking or really you just stay still. So, cancellation wins. That's what I mean by

6:30cancellation wins. So, here's an interesting thing you can do, should do. This is more real data from ConvertKit, now called Kit, another company that shows their data shares our data their data with us, which is awesome. This is just their new customer ads, so this is that new thing. They're not really declining yet. They're maybe slowing their growth, but

6:50like that's pretty good anyway. And let's suppose they had that 5% cancellation I just said. That would look like this over time as they as they grew. This is math. And as you can see, uh-oh, they stop growing here because cancellations catch up and then win because it always wins. So, if you were to add this up and add up all these new and that cancellation, this is what their top line growth would look like. They would grow for a while and then suddenly even sometimes suddenly stop. It's it's weird that it's so that it could be so sudden, but that's often what it looks like and they plateau because of

7:22cancellations alone because cancellations win. Oh, look, it's another elephant curve. Again, this this curve comes up for all kinds of reasons. To me, that's part of why it's so common. But anyway, so a good question is like, well, where is this for you right now? If you did nothing else, if you changed nothing about marketing or cancellation, when will at what point at what size

7:43will this happen to you? Now, that to me is a really interesting metric cuz it's scary as hell. Uh number of customers or MRR, either way. To say like we'll never get more than 2,500 customers unless we do something differently, kind of lights a fire under your ass in this in the way that like let's go from 5% cancel to 4.5% cancel, is that good? Kind of doesn't answer, right? So, I call this a growth ceiling, so hence the name of the talk, um or maximum MRR. And it's really easy to compute because you just go, well well when will this be? Well, it's when the

8:13cancellation amount equals the new amount, that's when you stop. And well, that's easy cuz cancellation dollars is just your size times how many people leave, that is the cancellation dollars. And so, it's actually quite easy. It's just the new dollars per month divided by the monthly cancellation rate. That is the max you will grow if you don't change something. So, in this example of of Kit, uh let's just call it around 150, obviously it changes per month. And with the 5% uh cancellation, that that would be 3

8:40million, which is what the chart shows. So, just showing that that it works. Okay. So, again, I think this is a powerful thing for you to do and track every month even because it's much more compelling. How close are we to that? What what is it that we need to do? I think is more compelling. This is what happened to Buffer. This is the explanation of why Buffer suddenly did this because guess what? Buffer's cancellation rate is 5% and it

9:04essentially hasn't changed ever. So, see? This is what happens. 5% is not good enough. Okay. Now, this did not happen to Kit because this is actually Kit's real top-line revenue growth over that same period. And as we know, that's what the new MRR looks like. So, what happened to the cancellation rate has to look like this

9:24in order for that growth to continue. So, they continually push down their cancellation rate and that is why they continue to grow like that. Hey, Rob Walling here. If you're watching this and thinking, I wish I could be in the room for talks like this. You can, and you should. So much of the magic at our

9:41events happens in the hallway track. That's where you connect with two to 300 like-minded founders who are trying to solve many of the same problems you are. I hope you'll join us at our next event. Head to microconf.com/events to grab your ticket. Our next one is in Iceland in September of 2026, and then

9:58we'll be in Austin in April of 2027. Yeah, so okay. How do you figure out why they're canceling? You could do something about it. That's the obvious question that now is raised. So, let me talk about this a little bit cuz I've been doing this for a long time, and I I would, you know, put up forms like this.

10:14Why did you cancel? And people fill this out randomly, it turns out. I've actually tested it, it's random. Because they're leaving. They don't They're not spending any time with you. And so, like, one of the things you'll probably see if you do this is a lot of people saying it's too expensive. Anybody ever hear that? Too expensive? Yeah. Why did I know that? Cuz they're

10:31picking randomly, that's why. Um so, here's a company Groove that you might also know. Um another another small bootstrap company. And they uh they tried all these different emails. They AB tested a bunch of emails, and this one worked pretty well. Um this one had a usable response rate of 10%, which was their way of saying, "I can actually This is actual feedback I can use to make the product better that might have prevented that cancellation." So, okay. And notice Notice the characteristics. It's not formal. It's not even capitalized. It's just from Adam. It's not formal. There's no There's no like uh uh There's no images here. This is not a company uh a

11:08template or anything like that. It's short. Remember, people don't read emails, remember? Don't send a long email. Um unless you're Liana, cuz then you're good at writing. You're not, so don't do that. Um and then [laughter] Okay, and then they asked, "Why did you cancel?" Pretty good. However, they kept AB testing, and then they tried at one one point, "What made you cancel?" And this slight change, just this, "What made you cancel doubled the usable

11:35uh uh response rate. Cool. Why? Well, they don't They didn't say Here's my fear. I don't know, but here's my theory. Um when you say um Why did you cancel? You're almost like uh putting the problem on the customer. What's wrong with you? Why did you cancel? What What did you What are you

11:51doing? It's okay, but here's what's better. You recognizing I failed you somehow. You went through that gauntlet, I failed you. Why did I push you away? What did I do that made you cancel? I know I did it, I want to know. Better. Easier for the person to say, "Well, you did this." or you didn't have this feature or whatever. Much easier

12:11than to turn it around from themselves. Just my theory. Obviously, what you should do is test this yourself cuz your customers will be different, right? This is not a formula, but you might want to start with this as a as a baseline might be better than some other baseline, so there's an idea. So, let me get back to this too expensive thing. It's really common, and it's totally It's never the reason. Why not? Remember what they did. One of the things they did when they went through this gauntlet is they saw the price, and then they

12:38bought it. So, it wasn't too expensive, right? Too expensive mean would be I didn't buy it because it was too expensive, right? So, it's not too expensive. There's some other reason. This is just the proximate reason, usually an excuse so that they don't have to think about it or tell you something hard to say or hard for you to hear, right? But you've got to get to the root thing. The root thing is something like, "Well, I thought this feature did this, but it didn't." or "I thought it integrated with this, but it didn't." or I don't know. Like some

13:06actual thing. And so, if you just listen to the first thing they say like it was too expensive, then you'll be tempted to do things like say, "Dude, we hear too expensive like 30% of the time. We should lower prices." But lowering prices would not have saved this customer cuz that wasn't the reason

13:22they left. There was something they wanted. That's the thing you need to fix. The thing they wanted is the thing to fix. Not lowering the price. Right? So, it's very important to get to the root of it and not just go to lowering the price cuz you know that Rob and I and many other people will always say raise the price. So, don't raise the

13:39don't lower the price cuz of this. Furthermore, like I say, once they're leaving, like they they don't want to talk to you anymore. So, it's better to catch them before they left when they're just in trouble. So, what does that look like in your product? It could look like all kinds of things, but like what are the signals? Even better, if you have some customers, is to use data. When people cancel, {comma} what kind of stuff were they doing a week before, a month before, or 3 months before that are different from

14:05what other customers do that stay? That are different from is key. A lot of customers have the same behavior regardless. Like a lot of customers call tech support whether or not they're in trouble. So, like calling tech support by itself may not be enough. But how what characteristics are different on the people that cancel than the people

14:21that stay? These are your early signals. So, you reach out to them then when they're not stuck out yet. Where they can maybe tell you why they're stuck cuz they're stuck now. And also maybe you save some of them. Yes. Right? But even if you don't save them and you just learn, that's that's still

14:34like worth the whole thing. So, before. The last little tip about cancellation is um if you're unsure, like gosh, there's so many things that we could work on with cancellation. I don't know what where would be the most impact. Almost always onboarding has the most impact with cancellation. And this is why. This is a video I did called the uh profit whale curve because I guess animals I just have to do animals. Smart bear and

14:59the elephants and the whales. I mean, this is Look, that's a whale and a bear. I don't know. It's It's a menagerie over here. Um okay, so so this is a graph of the people who are still watching the video after how much time. And as you can see, like half of the people leave after 30 seconds because I'm just so compelling and I'm so good

15:16at hooks, I guess. So, that's bad. Um I wonder what Rob's are. It's probably way better cuz he's he like what he's doing and things like that. So anyway, people leave. So So if I like maybe worked on that and did better, I probably could improve surely somehow. And if I did, like it's quite possible I could double the number of people who watched to the end of the video just because there's so much so much I could you know, so much slack there I could maybe do. I don't even have to do that much of a shift in order for it to have a big impact. And in a

15:43SaaS company, often your cohorts look exactly like this where a lot of people leave in the first 3 months or even the first week, day. Um but if they can stay and you get that long LTV, like you're good to go. And even just a few more people that stay a long time, that's a huge impact to your finances, right? So focusing on the beginning is smart. If on the other hand I like tried to save some people here, maybe I could save some but like this is that wouldn't make

16:06much of a difference, right? Um fortunately, there's also a talk coming um about onboarding. So there's going to be all kinds of more stuff about this very thing. As you can see, I'm a fan. Okay. So that's how to diagnose cancellations, maybe uh maybe improve them somewhat. But there are other ways to get around the cancellation problem because we can go back to this marketing question. I've been of course tacitly or explicitly saying that I'm talking about this kind of marketing

16:33where you pay to get that kind of stuff. And that's the part the cancellation will overrun. But there's of course other kinds of marketing that is proportional to how big you are cuz if you have 10 times the customers, you might be able to get 10 times the reviews or referrals if you have a program and so on. I'm not going to get into going to like get on the all these in detail like Rob said, you know, there's so many resources to talk about how to do these things right. But the point is that these two types of things are enormously different because one of

16:59them can combat cancels and the other one cannot. So that's that's a pretty good thing. You'll also hear more about marketing later on cuz we have another talk and this is true. This speaker has been introduced before on stage as the greatest marketer that has ever been. And she is going to speak at this conference. So just I don't know, wait for that. But I'm not I'm not the greatest marketer ever, so I'm not going to tell you about that. I'll just say um Here we go. Uh when you don't have a lot of customers, the stuff on the right doesn't do anything cuz there's no one

17:29there to promote you, right? [laughter] Um and so early on it's better to do the stuff on the left cuz you can. And then later on, maybe after it's growing or you have some customers, maybe product market fit, now this kind of stuff is a good idea to uh to combat that that growth ceiling problem because it can

17:46actually keep up with cancellations. There's one other way to keep up with cancellations, also. What if the people who remain pay you more? That would work. But it's it's hard, but it kind of works. And to show you why it can be hard, let's suppose we have this cohort of 10 customers, and every month we lose a customer out of the cohort, and the question is how would upgrades help this

18:07this uh this cancellation issue? And the answer is it helps somewhat, like especially when the cohort is still pretty big, and the percentage of cancels is pretty low, then upgrades can work because there's so many customers there, so many customers remain, that maybe we can make up for it with upgrades. But once there's cancellation rate is high, people are leaving in droves, up there's not enough people left to upgrade enough, right? And anyway, if people are leaving in droves, that's clearly the number one problem, and flogging the people that remain surely is not the solution, right? Surely it's fixing what the hell's going on in the first place,

18:42right? Okay, so [snorts] it it can work, but it's it's harder. Okay. That's plenty about cancellations, but it is usually the most important thing to do. Again, not just cuz of finances, but because it means a customer saying, "I don't want this." And uh you know, like that sounds like something to do something about. But now I want to move on to pricing, and you know what I'm going to say because you just guessed, and you

19:08guessed low. I stole this phrase from Pat Walls. I wish I had thought of it myself, but instead I have to give him credit. Dang it. It was just too good. Now, yeah, I know you've heard this before, so I'm not going to beat that to death. But you're afraid of raising prices, and you're not totally wrong because you know about the law of demand. And that's a pretty big word, the law of demand. It sounds like the, you know, the law of conservation of

19:30energy. Surely it's it's in inviolable. Of course, nothing in economics works that way. But or or at least you know this in in in in uh just intuitively that if it's price is low, lots of people sign up. And if you raise the prices, then people you'll get fewer sign-ups, and that's not good. And

19:45that's that makes sense. However, if you're too cheap, like on the left, then although you're pricing low and getting a lot of customers, it's so they're giving you so little money that you're not actually making that much money, right? And you're really not making that much profit. Because all the costs that are proportional to the number of customers are still there. So, whether it's marketing or other kinds of things, man, your profit is really bad. Whereas if on the right is also bad cuz okay, you charge so much, you get barely any customers. It's another kind of a problem. Usually more profitable, but other problems. Anyway,

20:18you want to be in the middle, some kind of Goldilocks-ish place, right? Where where like the area of the rectangle is maximized. And what you are worried about is that you're currently in the middle, and if you raise prices, you're worrying that you'll go to the right. But there's no way your prices are

20:34optimal. Full stop. [laughter] And probably they're too low. So, probably you're on the left, and raising prices will bring you to the right. And that's why it actually does make sense. Um maybe you priced too low because you were uncertain. Maybe the product wasn't very good. Like, there's lots of reasons, but usually that's the case. And that's why it works. However, this

20:54is often not how it works anyway. That's the That's the economics one, but remember economics doesn't really work. Otherwise, we wouldn't have all these uh, you know, emails about what happened in the market yesterday that was that is always surprised. Okay. So, often when you raise prices, sign-ups increase. [snorts] Which is completely contrary to any of those kind of laws of demand, but it's constant, especially with bootstrap companies, especially with people who

21:20use Indie Hacker hashtags on Twitter. Especially there, you raise prices and sign-ups go up. So, we have to explain that because whatever that is sounds like a good way to to grow. And um Tibo Maker this is his name on on on Twitter. Um talked about how he why this was true for him at Tweet Hunter which he bootstrapped. In fact, I think it was only him. Um a solopreneur and he sold it for $8 million and he explained this big thread why and so I'm I've excerpted a little bit to explain. So, this is this is paraphrased his words. We launched Tweet Hunter at $9 a month. Seems smart cuz

21:56people can afford it and then we raise prices all the time. And we expect that people would be pissed off and leave, but instead revenue exploded each time. Why? Because $9 a month customers attract casual users who quit. Whereas for $50 a month customers are business owners who need something to happen. They're much more serious. The $9 a month customer says, "This isn't working and anyway I don't care." And the $50 a month business customer says, "I need this to work. I'm going to do

22:24I'm going to make this work." Right? Hobbyists are optimizing for cost. That's who wants a low price product. Businesses want results. They don't care about $20 a month, 30, 50, doesn't matter cuz they're trying to do what you're often doing when you're hiring a vendor. Right? If a vendor could could generate uh half a million dollars of revenue next year, you're not going to quibble over whether it's $100 a month or $200 a month. Irrelevant, right? And those are

22:49the better customers. So, to me I like in my mind I modify this law of demand where with hobbyists I agree they're not serious in the first place and they don't have money. So, yeah, if you raise prices they're gone. Agreed. But, that's not how businesses work. The way businesses work is they see your your thing is $9 a month, and they say, "Well, that can't be good. That can't

23:10work." And so, you're just not there. And if you raise prices into a zone that makes sense for a business, because that's a product that might stick around and that is serious, it might have enough features and so on, might have support that works, now I'm interested. So, to me it looks like that. And when So, probably you're in the hobbyist zone, and you are right that with your current customers, if you raise prices, fewer of them will sign up, but they are bad customers. They

23:38have no money, and they don't care. So, when you raise prices, what you're doing is not just changing which of those curves you're on, you're changing the market into a healthier, better market, and that's why it works. And of course, there's other ones like enterprise, and you don't you you don't want to go up there, probably, right? Um so, there's there's there's different places with different things. So, the point is that this one curve is not how it works, and your pricing to get to a

24:01market. So, probably raise your prices, because you just guessed price turns the market, you're probably not in the best market that you could be in, which then raises the question, "Well, then what market should I be in, and how would I how would I think about that?" And that brings us to our third way to grow, cuz I still haven't gotten back to that

24:20Buffer and how they fixed it. Okay. I guess foreshadowing isn't as good when you remind people that you foreshadowed. Okay, never mind. I should have had a gun up here. Anyway. Okay. Uh so, who's your ideal customer? Who is your target market? Who cares? So, this is Craigslist. It is, in my opinion, the ugliest website on the

24:43internet. Oh. [laughter] And I got an applause for that if for those of you watching the video, or maybe you heard it cuz it was so loud and thunderous. So, I would say you You it's minimal, I would say it's hideously minimal. I guess it's minimal, all right. Damn, it looks like it was made in, you know, 25 years ago. In fact, here's what Craigslist looked like 25 years ago. It does look pretty much the same except more Times New Roman, okay. Maybe it wasn't even new. Maybe it was just Times

25:10Roman at that point. I don't know. [laughter] So, yes, not only hideously minimal, but they haven't changed in 25 years, really. So, they're also stagnant. Imagine writing this down as a strategy for a product. Okay, everybody, here's what we're going to do. It's going to be ugly. We're not going to capitalize anything and we're not going to change it for 25 years. That's the strategy. No

25:30way. [laughter] No way. Shitty strategy. That's why you get claps when people see how terrible it is. Okay. So, other companies had that thought and they're like, or other startups I should say, they're like, "Dude, let's let's take their lunch money. And we'll niche down, right? Niche down." Then we're going to That's another thing everyone tells you

25:49to do. You got to niche down. Sounds like a South Park thing. Get niche down. Okay. So, niche down. All right, so they said, "Let's niche down. Let's let's go let's go into these categories and build our own startups in there. We'll niche down into the category. We will be beautiful and well-designed and everything especially for the category and we'll, you know, not not to change the website ever. [laughter]

26:09We'll like evolve and stuff like that. We'll have the better strategy." Well, a lot of these companies failed because that's okay. That's what startups do. They don't all work. That's not necessarily bad. Many worked. All of these are examples of successes doing this. All of these are individually worth billions of dollars. Not saying you have to be worth billions of dollars. I'm just saying like that's how much opportunity there was and it

26:30was even realized by actual competitors. Okay. So, right, defeating Craigslist on their strategy is good idea. Um score one for niching down and not being stagnant. Um how did Craigslist fare? Cuz like they must be really in trouble since they didn't niche down and they still look like hell. Well, the last data I have is from 2024 in which they made a half a billion dollars in

26:52revenue with 50 people. They are like five times more profitable per person than Google, than Facebook. The only company that I know of that's more profitable per employee than Craigslist is OnlyFans. All right. It's true. But okay. [snorts] Still, this is a pretty good business model. It's the second best business model, I guess. Um [laughter] But what what the hell? Like I thought they lost to these things and I thought their strategy sucked. What explains

27:22this? So, here's my explanation. It is true. These things are true. However, these weaknesses enable strengths and enable them to have strengths that are more powerful than any competitor could because the other competitor is unwilling to take on those same weaknesses. So, it's very easy for a non-technical person to use Craigslist cuz it looks like a newspaper classified, which of course it replaced, as any newspaper person will sadly tell you with a

27:51forlorn face. And so, if you don't know about the internet and you're scared and maybe you have an old phone and stuff like that, you can use this. And the fact that it's stagnant is good because if you don't like tech, the last thing you want is for your apps and websites to change

28:06ever ever ever. So, these are strengths. Both are strengths for a certain person who's actually most people. Not people in this room, I know, but it's most people. In fact, Craigs Craig Newmark said that part of his point of Craigslist was he wanted to get people on the internet. So, this was intentional. So, but the point again that I really want to emphasize is that they are

28:29weaknesses for certain kinds of people. But for other kinds of people, it enables a strength better than any competitor. But the competitors won't copy your weaknesses. They'll only try to copy your strengths, but if you have special strengths cuz of those weaknesses, you see, you've got a unique strategy. That's what works for Craigslist. And if a lot of people can use it, most people you have big selection. We all know big selection is part of what makes a marketplace successful. And also, it's

28:55really low cost. There's no images here. These are pretty easy servers. It's crud operations. There's nothing going on. You don't need that many people. Server costs are low, so they can be very, very profitable only because it's hideously minimal. And if you don't make any changes, I guess you don't need a lot of engineers, right? [laughter] [snorts] You don't even need to pay You don't

29:12even need a lot of tokens from Claude. You don't need to do anything. Oh, I see I Damn it. I wasn't going to say anything about AI and then I said that. But I was making fun of AI, so it's okay. So, the point is it it enables it. So, I call these strategic choices meaning a choice which actually closes a door. Like if you don't like stagnant websites, you won't like this. But then it enables something that other people

29:35will not be able to compete on as well. They can They can either won't try or they'll try but not be as good as you because you've made other decisions that link up with it that they're unwilling to make. And so, to me that's a that's a good hallmark of a strategy. So, if you're a a hipster in in Portland, um then maybe you don't like it cuz you don't like things that are that are not uh cool and

29:56good-looking and everything. Um but if you're in the field with an old cell phone and you don't hate the hate the internet and technology uh and so and and so the internet connection's slow, guess what? Craigslist is going to load pretty well anyway. And not and and again, just emphasizing this, for this person, your weaknesses

30:13aren't even weaknesses. That's how much this person's the perfect person for you. That they're like, "Oh no, I'm glad it never changes. God damn it. I hate when anything changes." And I'm glad it's simple. I don't want crazy things to bop around weird things. I don't like that. So, they're they feel your weaknesses aren't even weaknesses that they're strengths, too. They think everything you do is a strength. They love you for

30:33you. And what do we call this customer? The ideal customer profile. To me, this is the definition of the ICP. The person that loves you for you, loves all of you. They see your weaknesses as either I don't care or even strengths. I'm so glad you're like that. So, this is the person that you that your strategy is built around and the person

30:54that you should build everything for. All the product features, all the marketing copy, all the positioning, all the advertising, all the community level stuff, all the events that you throw, it's all for them. Now, most of your customers won't be them. Most of them will be in the wider target market of people who aren't exactly like this. They don't completely agree. They sort of rather it wasn't quite as ugly, for example, but still

31:20the trade-offs still go in your favor. They're like, "Yeah, but given the alternatives, I still like this better." That's your target market. The people are like, "I still like this." But when you focus on your ICP and win them, then you'll get that rest of the target market, too, because you're so opinionated and special and you'll have a special strategy that others don't copy or can't copy. And this is what

31:39Buffer did. This Buffer, in fact, did the opposite of all my other advice today, except for the ICP part. Just to prove like I can give you advice, but like there's always an example of company that did the opposite, right? So, I know that. You have to decide for yourself. Too bad. Um So, Joel Gascoigne, the the CEO founder of Buffer, had this open strategy letter around that moment in time where he said, "We forgot. We forgot who our best customer is. We forgot what who we're for. We forgot our identity. We just tried to be everything to everybody. We forgot it's the prosumer. It's the 100 million people

32:18that are not very good at social media and kind of want to get on board. We forgot that's where we are strong. We're going to refocus on them and never forget that. And everything we do is going to be around that." So, then they lowered prices. [laughter] See? Like, "Dang it, I just But why why did that work, in fact, even

32:38though I just told you don't do that? Because there's a the the focusing on who you are and who you serve best and your primary customer, that's that wins that little debate. Their customers what do need lower introductory prices, free trial, stuff like that. That's what they need. So, that's more important than my

32:54stuff about raising prices. I do think the stuff about raising prices is right. If you don't know anything else about the business, it's more likely right. But if you do know your ICP, which you need to, that wins. They also didn't niche down and Craigslist didn't niche down. Does that mean niching down is a bad idea? Of course not. A lot of people here are successful because you niche down. And I just showed you many companies worth billions of dollars that niched out. So, once again, of course, it's not just like it is good or it's not good. The way I think of it is,

33:25again, the primary thing is, who am I? How do I stay true to that? And how do I only build everything for my ICP? And niching down is one of the ways to have that focus. To say, "This is my ideal person and so this is just the market I want to go in." That's a way to focus on your ICP. So, thumbs up. That's is a good way. But

33:45it doesn't have It's not the only way. It's not even the primary idea. The ICP is. Buffer proves that and uh Craigslist proves that. So, this is a big sentence. Strategy is is messy. I don't know what to tell you. Self-reinforcing choices that include weaknesses because the weaknesses are the things the competitors won't copy. But since they reinforce each other, that gives you

34:06something that is special, maybe unique. Unique is such a big word now it you know, in this world, but it doesn't have to be unique. But it does have to be special. That some segment of the of the world will call the the ideal customer profile loves and then you stay all true to that. And then I think it'll also be more fulfilling for you and your team because you know who you are. You're living fully into that. That's maybe a way of defining

34:29self-actualization. Besides maybe revenue growth, which So, that's good. It's a win-win. Okay, sorry. I just hate it when people use these kind of phrases. Okay. So, how to escape the growth ceiling, which is inevitable. Cancellation always wins. Oh, no. So, compute this max MRR so you can track it, do something about it. Got to figure out why they're leaving. And once you once you have some customers, there's like different ways to grow that

34:57that don't have this challenge. Set your price to be in the right market, let's just say. Probably that means raising, but okay. The right market, and the right market is this person who loves you for you, warts and all. And so now, if you'll allow me a small indulgence, I've written a book. Yay! It's available here under pre-order at hiddenmultipliers.com, and it's about

35:19all this kind of stuff. So, it's about ways to jump-start growth with your existing budget and team. And it's just uh like 300 pages of just like stuff like this for miles. So, if you like this kind of stuff, if it's like, "That was fairly interesting. At least one thing was good." then then maybe that's good. So, you can order it there, especially if you want like me, if you like a paper, then you can pre-order it there. But, I'm not here to uh charge money to MicroConf attendees. I would have the book in your book in your in your in your giveaway if if it was printed yet. Still in

35:51pre-order. But, if you email me, I will send you the manuscript in electronically, okay? So, I'm not trying to So, if you want to buy the book physically, all right, do that. Otherwise, just email me and tell me I was at MicroConf, and then tell me like uh I don't know what you're trying to what your challenges you're trying to get out of it, cuz that that'd be interesting,

36:08and maybe even starts a conversation. That would be fun. Anyway, so I'm happy to give it to you. All right. [snorts] End of Okay, [laughter] thank you. End of uh of indulgence. [applause] So, is this true? Not growing, you're dying. Actually, yeah, I think it's true. And my evidence is talk to anybody at a company that's shrinking and see what that's like. Is everyone happy? How's the morale? How are the employees feeling? Are you retaining your best

36:40talent? Are the founders happy? So, yeah, actually it feels really bad. It's not just some VC-ism. It does actually feel really bad to not be growing. But, does it have to mean revenue? Maybe it could mean profit. Uh does it have to mean even business metrics? So, I think it's true if we take it maybe a slightly expanded or different view of this phrase and ask if you the human are not growing, then you the human are

37:12dying. Like we all probably know people who work for 30 years and they retired and didn't last long after that. Or the spouse died and they didn't last long after that. Like we maybe we need purpose. One of those purposes is just our own growth and evolution. Um maybe evolving is a better way to think

37:31about growth. So, like yesterday I was talking to Sarah Savage who's here and um and she was saying how she never wants to have more than a thousand cu- will never have more than a thousand customers because she wants a special relationship with each customer. That's part of what the company is, what the culture is, what's fulfilling for her, and of course it's great for the

37:49customers, too. She will never grow on purpose. So, does that mean she's violating the the the the principle cuz she's not growing customers? No, because the next thing she said was, "Oh my god, we're doing all this stuff with infrastructure. We're using Cloud Code. We're I'm like trying to figure out how to reorganize everything around that. And we're everything's automated and I'm trying to figure out how to never have more than a few employees, so that has to all work out." In other words, it's just like nothing but

38:13innovation and fun stuff. So, growth at least if we define that as I would like to as evolution, like constructive evolution and not growth as in the only thing is number go up as the only definition of growth. I think if we say constructive evolution and of people, suddenly now I really believe this is in fact true. And if it's not true for you, if you're feeling stuck or burnt out, etc., that is a problem that just some like marketing tactics are obviously not going to fix. So, I think that may be the best way of thinking about that. So, this conference is a good moment to think about how it is

38:48that you could evolve like grow this way. You will of course get lots of tactics cuz although Rob said like this is not about tactics, we'll get I mean I just had a bunch of tactics. Like there's going to be tactic good. Like take the tactics. That'll probably pay for the conference just the

39:00tactics. So, awesome, right? But, I think a maybe a a deeper question is in what way are you growing, evolving or your team and are they? And as you talk to other people here who are like excited about things or even burnt out about things or etc., you could be asking yourself how is it that I'm going to evolve, like in what direction and

39:23how? That would be a really powerful thing to walk away with and this is the perfect place maybe even the hallway talks more than the actual talks to do that. So, that's what I would encourage you because if you are evolving then you are truly alive. Thank you. [applause] I've been running MicroConf for more than a decade and the thing I hear from attendees more than anything else is I wish I'd come sooner. Not because of any single or tactic, but because they finally found their people. Founders who get it. Founders who are building the same way they are. At our events, it's not just about the talks. In Portland,

40:01we organized waterfall hikes, food tours, happy hours, real time with other founders outside the sessions. And those relationships don't end when the event does. They turn into the people you text when something breaks or when something finally works. If you've been thinking about coming, I hope you'll join us in Iceland and Austin. Get your tickets at

40:20microconf.com/events. If you got something out of that talk, make sure you hit subscribe. We're putting out more of these every week. And that wasn't the only great talk from Portland. Go watch this one next.