The Ethos of MicroConf – Patrick McKenzie (Patio11) – MicroConf Growth 2019

0:00[Music] I feel like I asked this question every year when I come to my craft from the stage but I'll ask it again one more time why do we come out to micro cow why do we come out to Las Vegas I can't imagine it's for the things that typically bring people to Las Vegas usually it's like you know drinking and debauchery this year I participated in Michael Copps first hopefully annual DMD session like Dungeons & Dragons my palate in eight it's five minutes since the 15 minutes or so into this session and it was a paladin like neutral good halfling paladin consecrated to the goddess of less luck died in 15 minutes

0:38so that means poker should probably be off the menu for me for this year but why come to my house it's because I think we are a community of practice and community in a few senses of the word we have like a common set of aspirations roughly common set of values and also like most communities of practice we have a set of techniques that kind of works for us we've been developing the technology of running micro set mic ROKAF scale software businesses over the last goodnesses at eight years now and the community changes a little bit every year some new people join some people presumably to leave although most of the

1:16folks that I remember from having talks back in the day I seem to run into them every year but I think like all communities we're going through some of the challenges of success some of the challenges of growth just like our individual companies are in some cases having some of the challenges of success and challenges of growth so I'd like to talk a little bit about them and I'd like to bring in a little bit of the technology of managing growth from the growth experts which is Silicon Valley and hmm I think a recurring theme for myself in life is I find myself playing the role of an ambassador I've lived my

1:55entire adult life in Japan and as you can see I'm not exactly the standard model I built my business on being the one engineer that understood marketing or the one marketer who understood engineering and then I like myself conception is as an entrepreneur but I we have a day job these days and I bootstrap two businesses but I now work for a high-growth tech startup and I think sometimes we in the community over the years have been overly defined by what we're not like we're doing this bootstrapping thing which is totally not what those Silicon Valley folks are doing and I think we've often been a

2:35little bit let's say overly critical of what they're doing this is not just me talking the book I've actually felt like I learned a heck fall out over the last 2.5 years there and so I thought I would bring in some of the stuff that is relevant to our interests as we're scaling businesses and Silicon Valley does this is just my personal opinion two things really right and better than basically anywhere else in the world and they're intrinsically tied together the first thing is that Silicon Valley is willing to put money can we adjust the timer to actually time Thanks Silicon Valley is willing to put money

3:14into experiments trying to figure out what humans want and they're willing to fund thousands of tiny experiments in parallel in the knowledge that almost all the experiments will fail and there's almost no organization in the rest of the world that is willing to accept like a 1% hit rate for experiments universities won't back that funding bodies won't back that Silicon Valley will back that all day long because of the second thing that Silicon Valley does very well if an experiment works in Silicon Valley then they'll say hmm that's interesting we're going to deploy that worldwide within 7 years and whatever the obstacle is to getting it deployed worldwide in

3:56seven years we'll solve that so like a normal person if you hear we're going to need 800 million dollars to like take some technology and get it in the hands of a million people scattered across seven continents would say 800 million dollars is an unachievable a large amount of money Silicon Valley institutionally says what I'm hearing is you have 800 million entirely solvable problems if you hit your metrics in the middle of this we can find some combination of people that will have fully back that business and one of the things that Silicon Valley does in addition to providing capital is providing experts this sort of thing because seven years

4:36is not all that long with time and there are people who have watched companies repeatedly over the course of the years and go from like a hundred people at the end of year two mm of people just a short number of years later and they those executives like specialize in building the organizations that take a company from a hundred people to thousands or tens of thousands of people and I really think that like there is something that they are very good at that we can learn from and so I would love to share some of those things that I've seen from folks who are really good

5:10at operating this sort of thing scale we passed yourself how many folks here are currently in a phase where you are running up into like scaling challenges with the number of people in the business either you're bringing on your first employees or you are expanding the team because oh my goodness if we don't expand the team we're gonna die lots of hands cool I'll say something and it's a little bit self-indulgent but I wanted to give you a concrete example of a tactics that works for scaling yourself I'm going to give people advice later on how to price their software what advice am I going to give just shout it out

5:48great this might be the most effective thing that I've ever done in my career I turned that into a meme and now people in rooms that I'm not in when they're talking about pricing will say you know if patio 11 was in this room he'd tell us to charge more maybe we should do that and do that which means as a consultant telling people to charge more I am infinitely effective because for zero marginal effort like conversations happen they actually proposed it works that they would like to make a chatbot to be able to consult me on pricing things so someone would like put in a number and

6:22the chat bot would put in a bigger number and and I'm happy to be a live version of that chat bot for you later or any time you want but like the fact that that was a serious thing serious proposal is one thing and and then we didn't implement it because people thought it was a joke and I'm like I will literally implement that because it's going to work so well anyhow scaling past yourself is largely about creating processes and cultures that will cause the things that you do well to happen when you're not around to do those things well I want to give you some

6:58specific examples of ways that I've seen that work out but before I do my annual plug pricing advice seriously almost none of you are charging enough we're probably not charging enough nobody is charging enough in software maybe Oracle and for those of you that already have teams you're probably have meetings with having meetings with your teams and you're talking about the business and across the industry I think that these things are getting short shrift in your meetings and so I just want to call a couple of them out one is the actual words of customers and I really love the talk that we had the other day on this there is nothing like

7:39people's actual words to help drive product development help drive solving your problems figure out systems and processes like discussed in the other talks to bring those into your actual decision-making processes and you will almost never go wrong by having more people directly exposed to your customers and in places where it's tough to be directly exposed to your customers for that having the folks who are directly exposed to the customers bringing the insights from them directly into the decision-making process and tightening that loop I was talking so a major portion of my job these days is well playing the patio 11 character on the Internet is one part another portion

8:21is helping companies that are growing really quickly and the CEO at one of them a company that is doing quite well said that they know what they would do if they were doing the job of everybody in the company but they can't do the job if everybody in the company how do you cause other people to do the job and do the best possible version of the job and I said that what you should do is you should keep an eye on the people who are doing the work day to day and when you see things that work out extraordinarily well you want to highlight for the rest

8:54of the company particular things that worked out extraordinarily well and often these are stuff that happens at the absolute lowest levels of the company in terms of like org chart levels you know have an org chart these days that's weird for a solo founder and used to just be an org dot anyhow the find that find the folks and say hey Cyndi's work on this project was outstanding everybody why was that outstanding because then use the the fact that as a founder you probably have a holistic view of the business well it does this and this and this for the business and it is an instantiation of

9:31the values that we care care about Cindy did great work here and if you repeat that process a lot people will start to replicate the things that you call out as exemplars of the company culture and that is how cultures are created like one conversation at a time one active mimicry at a time one like tiny little brick in the wall at a time this is another thing you can't repeat certain things too often I can't repeat too often that you should charge more because you should you can't repeat the mission of the company too often partly because as you are ingesting people into the company there will be some folks

10:14that just haven't heard it yet if you've ever seen that xkcd cartoon that like 10,000 people on the internet see that like cool thing on the internet for the first time every day and so you should never assume that everyone has already seen that cool thing that is on the internet because some folks haven't seen it yet you should always assume if you are hiring actively that some people won't have 100% of context that you do since you've been there since the beginning and so you should feel free to to beat your important messages like a drum and one of those important messages is what is this company really about

10:46like what is our core objective so at stripe for example the core objective is we want to increase the GDP of the Internet and that gets repeated on there like weekly basis and it's funny because like folks who follow stripe for years like myself before I joined they're like the first time I heard it was talking to the other Patrick and the other Patrick said oh yeah we're here to increase the GDP of the internet like oh man that is amazing it's like wait you never heard that phrase before we've been saying it for years I'm like no I've fed my family out of a stripe

11:20account for like five years and I've never heard that and there are people who work at your companies who might have worked there for a long time who don't have the context on like the company lower etc that the various reasons why you do what you do the way you do and so you should feel free to repeat those more often than feels natural this is also a thing that happens in in teaching like you don't just say CAT cat because can't a see makes S sound test sound and it's been a while since I've been in elementary school teacher and it takes a while to

11:53sink in at all levels a discipline that we do at stripe and that has is done at some companies that I think are really really impressive Berkshire Hathaway etc etc and also some companies that are not quite as impressive bingo card creator is to write an annual shareholder letter this is a letter addressed to yourself and to your employees and if your employees aren't technically shareholders then call it the annual stakeholder letter whatever works for you and I'd encourage you to and to spend one day on this every year probably early in the year and just like take some time break out as a normal flow of operating the business and say

12:33okay what just happened last year what was important about that this is partly a quantitative assessment like you should definitely have your your top-line important metrics for your business in there or whether that is revenue customers churn rate etc etc you all know what the metrics are and so put those in one place so that you can find them in later years and also write a just prose assessment of how the year went what were the important things that happened what are you very proud that the team shift what are your thoughts your hopes your fears for this coming year and why do you write this

13:13the nature of living is that we're all writing history in real time but if you don't actually write it down it's very easy to forget and so if you can create the history for your business in real time you'll be producing a set of records that when your business inevitably gets to the point where people don't exactly remember what happened earlier the folks that are here now weren't there weren't there to see it in real time you've added new folks to the team memories are available you'll be able to say oh yeah that really did happen and this helps really concentrate the thinking and brings you

13:46back to the things that really matter systemically in your business and whether that's for example your company's unique values or things that like you know it is really easy to understand that the fundamental equation of SAS matters a heck of a lot for every SAS business and it is really hard on like any given Tuesday to like pick your head up above the email inbox and the ongoing contract negotiations and the you know 15 tickets in JIRA and say actually wait the health of this business is fundamentally dominated divided the fundamental equation of SAS so let's make sure that we know where those numbers are and that they're

14:19moving up into the right so makes a space for that here's the thing that is unreasonably effective in our industry particularly but also the case in most fields of human endeavor virtually everyone who is really really good at whatever it is that is important to your business is on the same internet that you are with a working email address and doesn't have nearly enough people attempting to talk to them today about the things that they have devoted their professional life to and so if you are ever trying to do something for the first time like maybe you're writing your first AdWords campaign you can write an email to someone who has done a

15:02whole lot more than one AdWords campaigns and say hey I'm writing my first AdWords campaign for an enterprise software company I wanted to talk to you about some ideas I had here my ideas ABC what do you think and odds are you get a very high quality conversation out of that and this is something that comes naturally to some founders not all of us many of us were you know shy engineering types but business oriented founders are often very comfortable with saying oh yeah I can work my network to find the best person in Ex and ask at the start of a new project all about the Xing and employees

15:35typically are very uncomfortable with this but it is a really really good discipline to get into because then you can I like to think that projects have a mistake budget and you want to spend your mistake budget and new interesting mistakes rather than reimplemented somebody else's mistakes that would they would be happy to tell you about and there's actually someone who has sent me an email recently he was attempting to get a job at a particular company and the company had sent him a written question and assessments like write your plan for doing blah and the thing that they asked for a plan about was honest

16:12thinking that I'm actually kind of decent at and he said hey Patrick I'm attempting to get a job at this company they have asked me to write a X page proposal with regards to this question if you were asked that what would you write I said oh wow hmmm asking me to do your homework is totally cool in capitalism isn't it like if you can convince me to actually write that answer your ITSO facto good at your job and so I I like yeah about this stuff here's my answer to this and then he replied back but ok I incorporated it here bla bla bla fingers crossed I think he's probably

16:51going to get that job or I'm dooming them who knows anyhow the this is a thing to tell your team's when you're starting a project particularly a project that breaks new grounds for you find the people who are the experts if you don't know who the experts tap your micro grab friends and say hey I'm working in lifecycle email marketing or etc etc for the first time who do you trust on the topic of lifecycle email marketing I think that you are probably not more than one or two hops in the microcast community from people who are legitimately among the best in the world at the like tiny slices of human reality

17:32that we that are like really relevant to our software businesses I get to see the insides of a lot of startups as a function of talking to a lot of people and working with a lot of startups at my day job and also being inside of a day job and there are some areas that typically tend to be like under invested in even knowing that we under invest in them so I want to run through some of them just to say like hey whatever you're doing on these maybe you should be doing 10 times as much as you're doing right now and this is true virtually across the board so content

18:09marketing is word I absolutely hate but when you think of like defensible forms of marketing that aren't going to go out of style so rob was talking the other day about like all tactics evah season and sometimes you know when I started bingo card creator back in the day AdWords clicks we're like five cents apiece and that was a wonderful wonderful time to be alive and there's very little that you can get from AdWords clicks four or five cents a piece of these days and but content marketing is just if you teach things to people then they will learn things from you it never goes out of

18:43style it is like the demand for it is virtually infinite because there are like if you think of yourself are there things that you do not know that you wish to know that is probably the case therefore you are still in the target market a target market for content marketing and you always will be no matter how much you learn to know and so there is basically like I have been unable to find a margin at which investing more into producing excellent material ceases to work for a business and and we have hmm so we're trying to explore those margins and I think we are probably like not within orders of

19:24magnitude of where the efficient frontier is on this kind of thing another one is email I built a few of myself for businesses on top of email I implemented emails basically my stock consulting engagement with b2b SAS companies for several years I've done quite a bit of email professionally in the last two years virtually nobody sends enough email and the ones that do you know it well shame any large LinkedIn sort of companies on stage oops but like we don't send enough and someone was tweeting with me earlier today's like I don't know I try to send email but I feel like people are just you know

20:08they're emailed out and my answer to that is that well people don't seem to be English tout because they wake up every morning and they still want to consume English that day and so if you figure out the right English that they would want to consume in a day then you just delivered that English over email and you're golden and I know that isn't maximally excellent actionable like learn to become a good writer who solves problems for people and then solve problems for people by writing for them is like not something that can be you know trivially like snap your fingers at any given Tuesday that's part of what

20:45makes it super defensible yeah even company is that devote like lots and lots of resources into this are sort of unable to make the magic happen on demand and so if you really understand what your customers need if you really understand their desires if you are good at the craft of writing or can hire someone that is good at the craft of writing there are a few margins at which sending more email will not get you more of what you want systemization of sales processes um who here feels like they have a totally dialed in sales process from from a busy you know everything that happens to and to get someone in

21:22from the front door to the point where they are happily paying your company for years nobody okay there exists at least some companies in the world that feel like they've got it on total lack and they might um but in our community this largely is not the case and even small cheeks at the margin like doing a retrospective on that deal that you won that worked out pretty well for you and saying okay what did we do to get the lead what was our first conversation with them like let's write down what we actually said what were their objections how did we get over them let's write

21:56that down and then let's try to repeat more of that next time and make this like something that is less you know you trying to just extemporize in real-time and more of no we're starting to write a script we're starting to just repeat the script we are making edits to the script rather than attempting to be our smartest selves every time like you wouldn't have your web app function by okay I'm just gonna like open a repple and service requests manually by typing really really fast because I'm a genius every time a web request comes in you probably shouldn't be handling sales that way and another one and one that you will get

22:34super amounts of value from if you talk to other people at Microsoft is internal tools and relative to most businesses in the world we have a superpower which is that we can write code that works on demand which companies find really really hard to do even for companies that you would expect have infinite amounts of money to throw out this problem and ask your fellow attendees at my craft what does your dashboard look like what does your admin page look like what software have you written to run yourself for business better and just ask like five people this and this question I will guarantee you you will

23:08have a like you know hit palm to forehead moment I won't do that it'll knock out that microphone and palm to forehead moment on oh man we could implement that like in a day and it would be amazing for our business so do that I think the community is starting to hit some of the challenges of success so those of us that were on the first like let's say those of us were who were at Microsoft for 2011 and we've all had a very eventful eight years and you know sometimes we're happy sometimes it were sad but in in the main the people that have run a business for the last eight

23:48years had a pretty good time of it and some of us are on our second third fourth Exeter acts and there's a big question of what happens next there's kind of a Tricia at Microsoft for responding to themes that were brought up in other talks so someone asked why are so many people who has like previously run software businesses now running running or investing in or cetera et cetera structures in the ecosystem around software businesses and so I have a personal reflection on this and it's brought to you by the musical Hamilton which I haven't seen um so I'm not exactly sure what it's about it's apparently a rap musical

24:31about an enterprise software engagement okay maybe it's not about that but they they literally do have a song that is about contract negotiation right it's how does it go nobody who knows how the parties get to yes the pieces that get sacrificed in every ever game of chess that's definitely a contract negotiation you know the name of the song is the room where it happens and the theme of the that the song is that people want to be in the room where it happens and I think entrepreneurs realize after you've done this for a few years that our careers are long but finite and so in the course of one's

25:10long but finite career you get maybe like five to ten chances at running a software business and but most of us who really really love the art and craft of running software businesses have many many more businesses that we want to be involved in than the five to ten that we will actually get to see before we retire and so I think one of the reason that people come back to my craft stay involved in the community attempt to become investors etc etc is so that they get to be in the room where it happens when someone else is running an amazing software business and getting it from

25:42you know the stage that is most intellectually motivating to them so that's my tiny personal reflection on this and I bet if you were to talk to all three people you'd hear reflections on it as well and I have a boss these days and that feels kind of weird and I love him he said hey we're going to do a performance review and before this is two and a half years ago when I started he said now I know people get worried about her performance review but I'm going to make this as easy as possible and don't worry I won't say anything to hurt your feelings and I said Taylor for

26:17the last ten years my performance reviews have been delivered by capitalism there is no way that you're going to be harsher than that but in the context of that whole like career-oriented conversation he asked me a question that I have never been asked before and I think about this all the time now forget the current projects you're working on forget this job zoom way back over the long arc of your career which is going to last 40 a 45 something years what do you want to accomplish what do you expect to be true and I think that is a deep thought question I think you should probably if you're like me spend

26:57more time thinking about it then you have previously so I feel like I'm 15 years into this career and I was thinking oh man 15 years it's been a while and when I asked that question I reflect oh well Wow most of it is still ahead of me what do I want to get accomplished in the next 30 years of it and I'll share my reflection with you and I picked a metric to optimize for and here it is I think the story of my first 15 years was finding community that I wanted to serve and that is basically you guys I am happiest and most fulfilled when I'm working on

27:34behalf of software people broadly defined so software entrepreneurs engineers etc etc I get them the best I have the best conversations when I build products for them they are much better than the products I build for other people and this feels like what I was meant to do and then okay if I found that as my community what do I hope to accomplish for that community and I think my answer and that is a little bit squishier but it's basically an impact their lives as pop as much positively as possible so my metric is take the number of people that I have touched and multiply by let's say the median impact

28:16and then that's my score and just optimize for things that improve that score subject to the usual constraints of end I want to have a little bit fun doing this and I want to you know see my family and that's been very clarifying about both some of the projects that I undertake on a like quarter quarter basis and also what I'm optimizing for over the course of the next few years of my life so I think maybe running that same exercise for yourself would be interesting as well and when I think of that exercise I think there's some open questions that we have here as a community to puzzle

28:52through so I'd encourage you to puzzle through these things as well one of my beliefs for the last couple of years has been so there exists the set of people who come to micro coffe and there exist many people who say there couldn't possibly be as many micro craft shaped businesses in the world has actually come to my craft clearly that's false we can like see the evidence around us that's false one of my beliefs about the world is that there are probably a hundred businesses kind of shaped like micro coffe that exists in the world for every person in this room and so I think an open question is

29:30how do we get those people into the community either by like actually bringing them out to the events or by somehow packaging the ethos that is micro micro craft the technologies that we figured out our way of being and getting it to them so that it can be helpful for them I think one of the questions is that especially for those of us who have been doing this for a few years we're at a different stage in our career right now than we were that first day was that we started at X number of years ago and but there are people that are much closer to where we started than

30:03we are currently some of them will be at starter tomorrow and so I'd encourage you to spend some time with the folks that they get together tonight make some new friends tell them that this is possible and that sure there are ups and downs in the business but this is actually achievable regular mortals like them did this I'm as much a regular mortal as everyone else I was terrified the first time I sold bingo cards to elementary school teachers for $24.95 and I've done a few things since then and I think that will be the narrative for most of the people that actually get something into the

30:39market and tried to grow it for a few years so I want us to be maximally supportive of that and I think answering my earlier question about why do I come to Vegas it's because this community is the one that is maximally supportive of folks that are just starting out at all the later stages of their journey so I'm employed by stripe these days my email address is petty 11 at stripe calm somebody else had gotten the Patrick at stripe calm email address he would also happily take email from you and that plays like a joke but actually serious if you ever have a problem with stripe

31:15please please please let us know we will fix it and like if micro confident has having an awesome experience with our products something has gone systemically wrong and my personal email address is up there as well and if any of you are looking to do something entirely different over the next couple of years and work on building products which are very very relevant to this community and solve real problems for entrepreneurs worldwide and we'd be happy to have that conversation too or if you know anybody subscribed Ofcom slash jobs or send them directly to me I'm happy to route them to the best person internally yeah thank

31:48you very much for coming today [Applause]