# Sub Club Podcast: 8 Principles for Sustainable Growth — Sean Ellis & Ethan Garr

Channel: Sub Club by RevenueCat
Video: https://www.youtube.com/watch?v=di0XmS2-j6o
Duration: 53 min
Language: English
Words: 10317
Transcript page: https://viewrankai.com/tools/youtube-transcript/di0XmS2-j6o

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[0:00] [Music] [Applause] hey you're listening to the sub club podcast a show dedicated to the best practices for building and growing subscription app businesses we'll share insider secrets from the top subscription apps on the app stores let's get into the show hello i'm your host david barnard and joining me today are shawn ellis and ethan garr co-host of the breakout growth podcast sean has worked on growth at some of the fastest growing companies in the world including dropbox lookout and eventbrite he not only coined the term growth hacking but literally wrote the book on it today sean helps companies around the globe accelerate customer and revenue growth through workshops keynote

[0:42] presentations and select advising roles ethan got a start in subscription apps working on product at tel tech which was acquired by iac in 2018 he co-invented and led the company's flagship app robokiller and helped grow teltek's other top communication apps including tropical and tape a call ethan now helps other companies improve their trajectories through workshops coaching and as a trusted advisor on the podcast we talked with sean and ethan about the importance of a north star metric optimizing for speed to value and why product market fit needs to be dialed in over time hey sean and ethan thanks so much for being on the podcast i wanted to kick

[1:26] things off and just hear the story of how the two of you met and started podcasting together seems seem a bit like the odd couple to be kicking off a podcast together so i'm really curious yeah thanks for having us on uh we're really excited to be on the sub club podcast we're both fans and uh yeah we have the breakout growth podcast but uh sean and i actually met more than 20 years ago at uproar.com where i believe shawn's title was vp of marketing and i had been working for the company's uh pr firm and got poached by the company and then uh this was during

[1:59] the dawn of the dot-com era so it was a little bit of a crazy time i went through three or four roles in rapid succession i think if i remember correctly i was basically telling sean that it was time for me to move on because i'd sort of run out of people to work for and he said i think i have a great opportunity for you and it turned out to be just that because sean really introduced me to this idea of this test learn approach where experimentation drives growth so at the time uh we were doing a lot of paid marketing and the specific role was around

[2:32] testing creative which at the time was these by 60 banners um so we had a lot of fun with that uh and we have some great stories from that but um yeah and i think sean and i really very quickly realized that we had um sort of a shared passion and curiosity around growth and uh so even after uproar.com sean went in some different directions i went in some different directions both entrepreneurial and both really trying to understand and learn growth but we always stayed in touch and you know formed a really nice friendship along the way i think i mean i guess sean will have to confirm that

[3:07] mostly because we both sail so it gives us something to talk about um but then as i was moving on from uh tel tech and robo killer um sean had started this podcast the breakoutgrowth podcast and i think i was his first recording though not his first guest um but i was giving him some uh thoughts on the background and helping him with a few things we wrote some growth studies together um and eventually it just led to us sean i think sean just got tired and i broke him down and he said okay fine you can you can be my co-host um but it's been really great and um you know i

[3:38] think uh especially like you know with sub club you guys focus more on subscriptions obviously and and mobile apps um yeah we're focused more with our podcast on learning from the world's fastest growing companies um and trying to understand how they operationalize growth how they build growth but there's a lot of things that are connected between those so it's really cool to be invited on to talk to you today yeah and and that's actually where i wanted to kick things off so so ethan you you probably have a little more subscription app specific experience having worked at tel tech which makes robo killer and then got

[4:12] acquired by iac and then you know you you kind of were in iac for a bit um and then sean you've just worked with so many amazing companies including subscription app companies um but on your brick outgrowth website you have this really great uh downloadable pdf about the principles of sustainable growth and it's really cool how so many of the principles of growth really do apply fairly universally but then i'd love to kind of walk through these principles of sustainable growth maybe with just a little more bent towards our audience of subscription apps so let's go through each of those and i'd love to just kind of hear some

[4:48] high-level thoughts on like what those mean to you and then maybe i'll pester you with with questions on uh on how it maybe it more even directly applies or doesn't apply uh to to subscription apps so so the first one on the list is dial in the must-have experience sean what what what does that mean to you what is what is dabbling in the most tab experience why is that a principle for for growth yeah so essentially um you know i i think it's pretty well accepted these days at least in in the the startup world that um without product market fit you really can't drive sustainable

[5:24] growth and what that really means is that essentially if people try your product and they don't keep using your product eventually you're going to be losing people faster than you're bringing people in and so so it's really retention at the core of this but then then it's really what what drives retention and the thing that drives retention is that when someone does try your product they say wow i really need this and and it's it's a must-have for me it solves a really critical need that i have and so that that ultimately becomes the foundation of growth whether you're talking about a um you know subscription

[6:02] business or really any type of business if if it doesn't perform the job that it's being hired to do um then people aren't gonna they're not gonna keep using it and uh and so obviously there's some there's some products that are um not necessarily long-term use cases but um for for long-term use case products that's best represented in retention and so what the must-have is really about is is getting into the the qualitative of what what type of experience does does the product need to deliver to the right people who have the right need in order to make it a must-have and so that's that can be a super long process

[6:46] of of dialing that in and and a lot of companies never get that right and as a result go out of business but that's that we we definitely thought that was the the most critical of of all of the principles so that's why we started with that yeah i mean and ethan if you want to chime in and and i'm just curious for both of you though like what does that dialing in process look like so you know i'm assuming this must have experience i think you know a lot of apps get built where where they think it's a must-have or it's a must-have for them but it's not

[7:18] necessarily a broader market and and you know a lot of folks it try the if they build it if i build it they will come approach of like they you know come up with their own problem but it's not a real problem in the market so it's not truly a must-have so how do you go from i think this is a must-have to like actually kind of like proving out the market and understanding what that real that yeah let me let me take that one just yeah just because that's i've basically i put out a process for that that now is pretty widely used and um the idea just

[7:52] as you said i think it's a must-have i think a lot of people kind of get get into that mode so the only way to know if it's a must-have is is to get it in the hands of of potential customers and and ultimately ask them how they would feel if they if if they could no longer use it if you stopped if you cut them off from the product would they would they even care if they wouldn't care then um then your product's not a must-have and even if they say i'd be somewhat disappointed and your products still are nice to have and so the way

[8:28] that i've honed into on that over you know more than a decade now is with a single question where i ask that how would you feel if you could no longer use this product and i give them the choice very disappointed somewhat disappointed not disappointed and uh those who answer very disappointed are giving me that signal that that they they consider the product a must-have and then so how do you actually dial it in you learn everything you can about those people what problem were they solving how were they solving it before what what is their profile you know and so you can you can really filter survey

[9:04] results to um you know if uh you know the the most basic of filters might be let me just see what the men say let me just see what the women say and um you know if it's a product that's that's more of a feminine needs product then it's gonna not be really important for most men and it's gonna be probably really critical for women or vice versa and so um but but obviously there's a lot of different ways you can you can segment the data and um and so what you're really trying to do is find that white hot group of must-have need there and and then build a growth engine

[9:44] to acquire more of those people and bring them into the right experience so ethan is there anything you would add on on top of what i discovered there well just uh you know i think with that question i think what uh and sean actually uh led a workshop for us at tel tech years ago and we actually really understand to understand that question in the context of other questions and how to really use that to operationalize our our growth so we would actually ask that question as a part of a survey every week while we were growing robo-killer with every change we were trying to look at that

[10:16] and really understand the dynamics of what was driving value for for end users how they were because i think you know another thing that you know sean and i have talked about extensively is that companies fail because they don't find product market fit all the time but they also fail to grow because they don't understand their product market fit so i think using that as a tool as opposed to just like you know when we talk about these as principles um what sean and i always want to do is try to make them actionable and i think that survey um and i think sean you um you put that up

[10:47] i want to make sure i get the url right but i think it's pmfsurvey.com where you actually have that sample survey um it's really a good tool that that teams can use um in mobile and subscription business i think it's great but i think really any business to understand where they are on sort of that product market fit kind of continuum because i don't think it's a gate that you get to and stop i think it's a gate that you pass through and continue to dial in over time yeah so and then at celtec when you were kind of operationalizing this would would you like prototype a new feature and then

[11:20] have folks use it for a little bit or would you kind of roll out like fully flesh features and then ask those questions would you would you do this in beta would you do it in production like what was the like operational uh uh dialing in process look like for for for a subscription app specifically well with robo killer like you know we co we invented robo killer and then grew it from zero to what it became you know an eventual the act was eventually the acquisition by ic so i think we were moving so fast that um it was a little bit of a combination of both um some of

[11:54] the things we just hadn't finished yet i think as we were building it out and we were learning along the way one of our you know our core features our answer bots was sort of a response to like well what do we do here what do we do next um and turned out to be uh life-changing for us uh the answer to that but um but i don't think um i don't think there's a clear-cut answer for that for every business i think it's gonna depend on your sort of where you are with our other products uh such as tape call and trap call which were more

[12:22] seasoned at the time and they you know they had a following audience i think it was a little bit more systematic in that approach right yeah that's really interesting um it's it's uh early on in the in trying to find product market fit it is really tough to find that balance of like you know would this feature be and would this app even with this idea you know kind of be more valuable once it's fully fleshed out or you know what what fidelity of kind of mvp do i need to build to actually get a real answer from from users as to whether or not it really is

[12:58] a must-have yeah i know ethan's got it it looked like you were about to jump in let me just kind of say one piece and then i'll do do it short but i think i think there's this belief that um you know if i if i put more stuff in it it's going to be more valuable to people and so a lot of times someone feels like oh my vision has to be kind of fleshed out before i can really get that feedback on on the must-have and you know one of the things i i learned from i have a course called go practice.io where where we really talk a

[13:32] lot about this how how to get to product market fit and my co-creator on the course is a former data scientist from facebook but has a lot of early stage startup experience as well and uh he he essentially shared a quote that i think is a really like profound one that i wish i understood earlier um in my quest for product market fit is is that it's it's really hard to iterate something that's already complex it's much easier to iterate something that's that's simple and and and and the fact that in most cases product market fit requires iteration so the more that it has jammed into it

[14:11] the harder you're going to be able to do to find that line so it's not to say that complex products can't be successful but complex products that are that start as simple products that solve a really basic need in an elegant and good way once you have achieved that must-have status on that on that narrow set of functionality right then you can start to say okay now how do i work toward my vision where i make this more defensible about building in that richness and and you know work with that feedback loop of of customers to build something that's that's really tight around that core benefit so i don't know ethan if

[14:49] what you were going to say sort of uh supports that assertion or maybe maybe it takes it a different direction no i i agree i think you're talking about what job are you trying to accomplish what's the job to be done for that product and really focusing on that and i i agree with that i think i was just going back to a tel tech one of the challenges and i think this is you know where it's very hard to just look at you know with a broad brush at all apps or um but because we were a tele we were using telecom systems systems that were

[15:17] external to our product um it could be very hard to make an mvp of a product where you know to test those things so sometimes you have to get really creative and in how you ask questions of potential users but ultimately you have to make some big bets um but i do think right if the big bets start with what is our product market fit why do users love what we do and what do they actually get value out of instead of just jumping to sort of those tactical solutions you're much more likely to find features that matter um because certainly um i'm guilty of building things that no one wanted yeah

[15:51] we've all been there yeah i just i want to actually add one more thing too that i think is kind of interesting here that i would say um my time at dropbox right out of the gate we had pretty strong product market fit but what i realized pretty quickly was that the customers who loved the product the most were using it in all the ways it could be used so they're they're synchronizing their data across devices they're sharing files to people who don't even have dropbox they're setting up collaborative folders with other people with dropboxes there's just a lot of different things you could do with

[16:25] the product and so the initial thought is okay for new people i'm gonna i'm gonna promote all of these things you can do with the product and and really get them to that that must-have experience of being able to do all of these things but but i found that actually that didn't work very well because that complexity scared people they could see themselves having one need but they couldn't necessarily visualize the the need for all of those things so what we had to do was figure out what was the right narrow use case that we could you know and functionality that supported that use case that we

[17:00] could onboard people into once we converted them on that use case then spoon feed the rest of the product to them kind of one at a time until they until they had that full experience within the product but even once we converted them on a single use case like a file share so if somebody shared a file with them that's what they looked at the product as and so once we converted them to the file sharing use case then you know you can you can actually set up a full collaborative folder so what's what's the next most contextually uh relevant thing to that first use case

[17:39] and then eventually you know you can you can actually just use this for yourself to synchronize your data across all of your devices and and then we knew once we got people doing all of those things um when we asked that question how would you feel if you could no longer use dropbox if they were using everything it was like they got up to like 80 of the people saying they'd be very disappointed without the product but any one of those things typically it was you know between 30 and 40 percent and so um but the fact is that if you can get to around 40

[18:11] that's that's the benchmark that i've seen that it becomes good enough that you can generally build a a good sustainable business on it yeah and i was gonna ask this later but since we're going so deep into product markets fit um we talked previously about in our prep call about how understanding your product market fit is the key to operationalizing it um and so you're kind of like dancing around that a little bit just then kind of talking about you know layering on the different features and not overwhelming people but there's also this idea that you can you can have product market fit but kind of not fully

[18:49] understand it so right what what do you mean by that and then how do you because if you ask this question and people say you know okay you know i love your product i may be terribly disappointed if it goes away but that might still not tell you why they care so then how do you dig deeper into those aspects of product market fit to really understand what it is that people care about and and i love ethan you brought up the jobs to be done framework i love that job to be done thinking of of like you know what are they hiring your your product to do

[19:21] and how do you get that out of your your users how do you really understand that from them yeah if i could zoom out a little bit on on that question and then come back into it but kind of giving giving that full life cycle so i think i think it's not just about okay you get to product market fit you understand it and then you operationalize growth um i actually think there's there's sort of more of a more time in between that most startups skip and and ethan alluded to this that getting to product market fit is the challenge that causes a lot of companies to go out of

[19:54] business and then not understanding their product market fit is another big issue i think most of the ones that don't understand their product market fit still still have some level of success they just they just fall well short of what their potential is but if they truly understand it they get they can build a great growth engine and so really before you get to the operationalizing of growth you you have to build that initial growth flywheel and i think that's a that's a pretty different skill set than the operational side and so that that flywheel starts with really understanding who needs it why do they need it

[20:32] what's the experience that makes them realize they need it so that's usually the first thing that i'm doing when i'm starting on a new business is really just that the the deep insights around that product market fit and and it's a lot a lot about just like who and how and then and then trying to build a flywheel of growth about what's the initial check because you get to remember in the beginning you just you don't have a single channel that's even working and so operationalizing and kind of building out dashboards and other things you sort of have nothing to manage yet at that point and so um really figuring out what

[21:10] is that first channel and so before you figure out the channel you have to figure out who am i reaching and so who and then why do they need it and then what are the various channels that i could could could tap into to reach them and so it's kind of my channel hypothesis at that point and then going through the testing of those channels but you also have to think if i'm going to if i'm going to use this channel to reach them what does my business model have to look like like so if if if i think i can grow this product virally then i'm probably

[21:41] not going to have an ultra premium product because that the cost is going to is going to really slow down that viral loop but if i have to if i have to pay a lot on the customer acquisition side let's say i'm going to focus mostly on google adwords and it's a pretty competitive set of keywords i'm gonna need a pretty high price to to serve uh you know to essentially reach those people and and pay to convert them as customers and so you're you're not just experimenting with the channels you're experimenting with the business model that's compatible with those channels you're experimenting with the with the

[22:17] onboarding flows so at logged me in we kind of had everything working right we had the right business model we had the right right channel to get people but we couldn't make it work in any kind of scalable way until we dialed in that first user experience and and really iterated to get new users to a great experience quickly in the product and then once with that was the final piece that essentially said now this whole thing works and we we could we could start to build a really scalable engine that that ultimately created a multi-billion dollar business but yeah anyway so you need to get a lot of

[22:54] pieces right first and so i think the all of the product market fit insights sit at the at the foundation of getting those pieces right and um and then and then once once you have an initial proven channel that scales now it starts to look like a real business where where you can start to operationalize growth yeah and then i mean ethan if you want to chime in i mean i'm curious to from your perspective like you know when you were doing those quick iterations on robo-killer and other products at tel tech um were there questions that you would follow up on to to understand to better understand you

[23:33] know what that job to be done was what you know so you're you know when you would send out a survey saying uh you know how disappointed would you be if this went away did you follow up with specific a specific series of questions to understand why and how and and you know tease out some of that that understanding of your product market fit yeah for sure i mean what we wanted to do was really understand at different kinds of users with different use cases how they were finding value with the products so certainly looking at um the survey question in not just in in a in a

[24:05] vacuum like to me like that's sort of like if you just look at like nps score right it doesn't really tell you what to do right um right whereas i io is really like sean's uh product market fit question um because i think when you contextualize it with other questions um it does become very actionable so who are the must-have users uh that you know who said they'd be very disappointed and then what features did they engage with what features do they like what don't they like um if you could break it down um you know segment those those users and those audiences you had a better ability

[24:40] to understand how to make how to improve the product to meet their needs so um yeah absolutely it was a it's a process of using that question uh contextually with other questions um and i also think as you zoom out and you start to actually talk to people in the wild it's not just about the survey it's about trying to understand right uh you know we know certain things from these surveys now that we're talking to other human beings um really trying to understand are they do they fit which categories do they fit in how would they describe the product what are the challenges they face with

[25:11] the product and how do they kind of fit into that system so i think um especially with apps i think it's really easy to not talk to your users and we i was guilty of this i would i would um you know i'd stand in front of my team and be like we need to talk to more users but i had no plan for it at times and like yeah you know if i could go back in time and and do things over um that's one of the areas where uh i would have you know i would put more effort to try to really come up with a plan for speaking to

[25:39] individuals as individuals really engaging the community you know we keep hearing sean and i keep hearing on our podcast a lot about community-led growth um and i'm not sure every business is uh you know there's a community to be built or community is really a channel for it as a growth channel but i think community engaging your community is always important if you want to get more learning out of them so yeah i think just one way to be deliberate about that i had a vc who kind of kind of annoyed me in the beginning of logged me in um because he just every time i talked to

[26:12] him he'd say when was the last time you talked to a customer you know and i was like you know eventually you know i think first answer i gave him was sort of a smartassy you know i don't really care what customers say i care what they do and i study the data and i'm i'm very deep in the data and he's like that's nice when was the last time you talked to a customer so and and so you know initially i did it just to appease him but he would just randomly show up in our office and i just wanted to be able to always give him the answer well today

[26:40] in fact and so um so a couple things one i i started to find i ran much better experiments when i actually talked to customers a lot like i just had so much more context into what they were doing but the other piece is and this comes back to the the plan side that ethan was just saying because i kept thinking he might stop in today and i want to be able to answer today just being deliberate and saying every single day have at least one customer conversation is super powerful to to stay plugged in and not just think of people as a bunch of numbers

[27:15] wow that and that's hard to do and i think that's why a lot of companies don't do it it's it's it's just easier to build in your silo it's easier to look at the data yeah and you know getting on the phone every day with a customer is it's transformational but it's it's hard yeah and it's also which which customers do you talk to and that's where i think the survey is super powerful in helping to uncover the ones who say i'd be very disappointed without this without the product but once you once you've uncovered a list of those like that's a really rich group of

[27:46] people to have conversations with yeah absolutely and then i love how the next step on the principles of sustainable growth is to quantify improvements within northstar metric so it's not that you don't look at data it's not that you don't collect data it's that you contextualize it after starting with the must-have experience and really talking with your users so so i think a lot of people get overwhelmed myself included of like what metrics to track you know what really should my north star metric be so i'd love to to have you kind of simplify that for me to you know and then you know ethan if you want to talk

[28:24] even more specific to to some of your north star metrics with subscription apps um but yeah sean tell me about this north chart metric and and and how to contextualize the data and look for the right data to be actually paying attention to yeah so i totally agree like uh it's it's super easy to just get a wall of numbers where where it gets overwhelming and so i think the beauty of a northstar metric is that it's it's one metric that rules all other metrics but it's not it's not shouldn't be confused with the concept of the one metric that matters and sometimes people kind of conflate

[28:58] the two a lot of metrics matter in the business right but the beauty of a northstar metric is that it it reflects what you're trying to do with the north star metric is reflect how much aggregate value are am i actually delivering to my customers so you once you understand what the must-have experience is with the product how many units of that experience am i delivering and so you might say like why that instead of just revenue like revenue is is where it all hangs off of but if you if you just focus on revenue and and value is not moving at the same pace as

[29:38] revenue then eventually revenue is going to crash and you're going to be disappointed but if you can focus on how do i keep growing that footprint of value and have revenue be a function of that value then then revenue is going to be much more sustainable and so figuring it out then becomes it becomes a challenge but um the way that i tend to do it is um i i go through an explanation i give some examples of companies so like like facebook being uh daily active users but slack is also daily active users so it's not just a b2c metric and then you know uber would be weekly

[30:18] rides and so once people hear a few examples they start to they start to kind of understand the concept better and then and then i have i essentially in a workshop get everyone to come up with their own ideas for the north star metric and what i tell them is you can debate it for six months and then you don't get the power of the north star metric and it's probably not going to be any better than if we spend 30 minutes or an hour on this and at the end of the hour we're going to commit to something and if we you know in a few months need to change

[30:49] it so be it we change it but like let's let's commit to something and so um but it really starts with what is the value that people get from the product and how do i make sure that the metric so you have to be able to track the metric that's one one thing so right so a lot of metrics like oh that would be a perfect match so so particularly in marketplace types businesses where they may not be actually tracking the transaction they're more of just matching people up um i've seen people have have a hard time kind of coming up with a metric that that really works well there but if

[31:21] you can if you like in the case of of uh uber that we talked about every time there is a ride delivered on uber somebody gets value the writer got where they needed to go and a driver made some money taking them there and so if i just track how many rides i'm delivering in aggregate across the system in in on a weekly basis so that kind of normalizes for differences on different days of the week and i know that's going up every single week then my footprint of value is growing a lot and a lot of times people get kind of caught up in yeah but if it's a drive to las

[32:00] vegas versus a drive to the grocery store around the corner like you're not properly representing that and and i think it comes back to what ethan was saying and the jobs to be done the job is to get where you need to go and so every time you help someone achieve their goal you're not just providing value but you're also building a habit around we are the product that helps you achieve that goal and so long term one ride to las vegas might be more money for the business but if i could have a hundred rides that add up to the same cost as that one ride

[32:36] that's way more valuable because a hundred rides created a a habit of now whenever i need to get somewhere uber comes to mind first as as the way i get there yeah that's such a fantastic example yeah and then i was going to ask ethan any specific examples related to to your work at tel tech or just industry you know subscription app specific kind of north star metrics you think about yeah just going back to what sean said i think one of the key things is just keeping it simple i always say like if i'm trying to train a company on growth and we're talking about north star

[33:09] metric i'm like if it's an algorithm and it comes out to 0.61 right it's not gonna like it's too complicated right um you know in the telecom business a lot of times like calls handled often would be a good metric but you know that doesn't work for every business and you could have two companies competing in the same space with two different north star metrics because it's really about the shared understanding amongst the team and i think that's where uh and we learned this with sean through his workshop and um you know something i really believe in like it's that shared understanding of the north star metric that's

[33:40] important it's everybody looking at you know what it it really breaks down silos when everyone's looking across the organization and say what really matters to end users what how is how do we quantify value right because ultimately if what you're doing isn't impacting value for end users you got to ask yourself why are we doing it so um you know i think it's a it's an incredibly powerful tool but i think it's easy to complicate um shawn and i often hear companies say we ask them what their north star metric and they say well we have a bunch of them and i'm like well there's only one north star in

[34:12] the sky there are cases where it makes sense to have more than one but i think right people right away go down to some of the kpis thinking those are north star metrics and again what to you know if if people get anything from this conversation it's not saying you only need one metric it's saying a north star metric helps align teams get everyone pointed in the same direction around value but there are many other metrics that will matter that ladder up to that and i think one of the key things i look at when coming up with the north star metric i try to walk through like

[34:44] retention referral acquisition activation i try to ask myself how would anything in this growth engine impact that north star metric because if i can't really tie like how more people coming into the app or more people staying longer or telling their friends about it would impact that metric it's probably you know not the right metric for me but um but i do think keeping it simple and understanding that you may have to adapt evolve it over time as you know keys to being successful with the north star metric yeah and the the next thing on your principles is diagram your value delivery engine i imagine that exercise

[35:22] um actually might even help you better understand that what really should be your north star metric and just better help you understand your business so what do you mean sean by by diagramming your value delivery engine like what how how do you do that so ethan actually just touched on it right there it's it's really thinking about if you start with your northstar metric and you just start to think what are what are the different ways we could move this and and traditionally people just think okay we we're more effective on customer acquisition and that's going to move the north star measure we get we get more

[35:56] people in the door and that's going to move it but if if the majority of the people you get in the door never actually experience the product then they then they contribute nothing to that north star metric so they got no value so then it becomes okay activation how do i actually get them to experience that value the first time is is a big part of that engine so so and then with the with the recognition that if it takes them you know months and months to get to that first experience of value most people are going to give up on that before before they ever

[36:30] experience it and so speed to value is part of that that that kind of equation there but um but there's a lot of ways to move i can get my existing users to bring in additional users so my my referral engine on the business even revenue loop to some degree while revenue may not grow the north star metric directly it funds the programs that grow the metrics so it's kind of it's more of a dependent variable on on acquisition for example or even activation if i've got an incentive to drive activation or referral um having more money that's generated from my customers is going to help that and then

[37:07] engagement is obviously a huge one as well if i can get people to experience the product more often for for longer times each time they experience it that's going to you know one person can contribute a lot more to the northstar metric but i think that the real key here is just as ethan was saying earlier it's not just quantifying value and knowing that revenue sustainability is going to be tied to value delivery sustainability but it's also now you start to get toward that operationalizing of growth where one of the biggest detriments to growth that i see in a business is that silo that just happened naturally as you

[37:46] grow you get more specialized skills i've seen a sales culture be stronger than the company culture or you know customer support culture be stronger and have almost no communication or context with other groups and and then and then i have my metric that's important which might be engagement on customers if i'm say on the customer support side and then i get upset when the when the marketing team brings in lower engaged customers even though maybe those lower engaged customers are hugely profitable for us and help to move the north star metric in aggregate but just on average they don't help as much which hurt this other group's

[38:28] metric so if everyone can zoom out and say okay this is the metric i'm focused on but the most important metric is the north star metric and so if i'm if i'm having a strong conversation with another group that maybe hurts my metric the tiebreaker is but does this help the north star metric and it it really starts and then what's kind of cool with that is that you have this like common metric that starts to matter but you also have you know the north star metric tends to map a lot more to the the mission and vision of the business as well and so i think another problem with with the

[39:08] siloed world is that people lack context on the big picture and their job starts to suck if they if they don't have context on the big picture and so if you can reinforce mission and how the north star metric is progress against that mission and this is my role in moving the north star metric and helping us progress against that mission there's just a lot more meaning in in everyday work for people as well yeah i would echo that and i think where you know just it can be eye opening just to look at your growth engine as this diagram and start looking at how these pieces interact with each

[39:43] other and how they do eventually move the north star metric and i do think that you know i mean a good old example was yeah when we were at uproar.com i drew this this banner ad and uh sean will get a kick out of it because we were i was trying to beat our existing mix of banner ads every week and i finally was bored when i couldn't think of anything really one day and i can't i put my finger on a piece of paper i drew an outline around it and i came up with the pull my finger banner and right away like we were like

[40:12] with a little audio symbol on there that you're gonna hear something if you pull the finger i'm not real proud of it but it was funny um but um but yeah like when we when we came up with that at first when we saw the you know people were just they were clicking on it like crazy and i got so excited about it later on you know we started to realize that it wasn't really reflective of the value we were creating and it didn't you know it didn't have the i mean it had such a high click rate that it made up for it but the conversion rate wasn't very it

[40:43] wasn't really that good and i think it was sort of one of those eye-opening experiences where you start to realize that um all of these things work together if you don't understand your product market fit and how to dial it in um then the best growth engine in the world is probably not going to be super useful having that north star metric to tie every tie it all together i mean i think if i could have seen like okay well i can bring these type of people in they're not necessarily our regular users what you know what games in our portfolio might appeal to them but yeah

[41:13] i was pretty young at the time one thing just just to build off that real fast sure because i think that's a really important so we didn't call it a north star metric back then yeah like i don't think that that term i even became familiar with it until like within the last 10 years but what we did know was that value was represented in the amount of time people spent playing games on the site and because we optimized everything for that so we took that high click-through rate on that banner that ethan created and then ultimately said what is the cost per unit of engagement in our product

[41:48] and then that one actually did make a pretty good cut even though the average engagement of those people was lower but when you actually zoom out and look at that business we had the highest average engagement of any company on the planet at a time when most people were you know they consider it sophisticated to go beyond cpm tracking to cpc tracking we were we were literally down to every dollar spent here how many hours of engagement or minutes of engagement were we creating per dollar spent in our campaigns and so that required really sophisticated tracking but i think it got it got everybody in in the company on the same

[42:28] page and um and and gave ethan and i a really good foundation to then carry over into our you know more more business type software so my my next gig from there was was uh logged me in and ethan's next software company was tel-tech where where we both operated in that in that idea that it goes beyond just customer acquisition to to really engaged happy customers are a big part of the success in the the businesses that we worked on it also had some good entertainment value for sean and i that has gone on for 20 something years nice um looking at the clock and looking at

[43:07] the list we're not even gonna get through the eight principles of sustainable growth today yeah the good news is i did actually i did actually touch on number five right there which was a line teams with the shared mission exactly and and so i'll go through the others there's one quite there's one that i do want to get to just for a few minutes as we as we kind of speed run the last few minutes here but um you know listeners you can download this pdf on their site we'll have a link in the show notes uh it's breakoutgrowth.net right and so the other ones are experiment to accelerate

[43:38] learning which we've kind of covered and we've talked a lot about on the podcast about experimentation i would actually love to get your take on experimentation but we'll have to save that for another time align teams with a shared mission optimize for speed to value build brand through experiences and the last one which i really love that you put this on there is place principles before profits i think a lot of a lot of folks these days don't take a principled approach and it leads to businesses that not only can you not be proud of but in the subscription space it leads to high churn like if you burn

[44:11] your users you're going to lose them and you know you need to respect your users and take a principled approach to business but the one i wanted to speed run real quick as we wrap up is optimized for speed to value i think that's just such an important thing that just gets missed so many times when people are trying to you know copy these long on-boarding flows or you know think they need to do this and that yeah what is optimized speed to value look like i've touched on it a bit so ethan why don't you build on on what i've i've already touched on yeah i think uh as sean was saying when

[44:45] you look at your value delivery engine obviously getting more people to those aha moments rapidly and meaningfully is going to be really important and if you can look for ways to take take out friction between those points i think it's going to improve your odds of turning people into white hot fans who love what you do and want to stay engaged but i think with that you have to also understand that it's also speed to value doesn't necessarily just mean get them to put from point a to point b without anything in between in fact if you look at heads uh headspace or com or uh nume was the uh the one we

[45:27] interviewed on our podcast they had like 21 st maybe 40 something steps and there's actually 60 steps 60 steps in their onboarding process now but i think if you look at how they did those steps each step gets you as the user feeling like you're making an investment and the more you invest here the better your results are going to be and the more valuable this will be for you um not every business is like that i mean with robots let me let me just jump in on noon because i want to reference that because i think it's a really critical point here so i i coached newm

[45:59] in the early days of that business and um i i was sort of surprised where they where they went with that but they very much tested their way into into that and and the the big question is sort of like at what point are you convinced on a weight loss app so so obviously they position themselves as broader health but i think weight loss is the job to be done that most people go there for and so if you get them to the point really quickly where they've signed up and put their credit card in that seems good but but ultimately like trying to figure out what is that aha moment for

[46:34] them is it is it after you've lost five pounds is it you know like and and so ultimately what we what we talked a lot about at that time was the point of which someone really being converted to where they become a long-term retained customer is when they truly believe they will lose the weight with neum and what they are doing with those 60 steps is that they're essentially reinforcing the process by which you lose the weight and i i lost a lot of weight with neum so i'm like i've kind of experienced it on both ends and when i went through the the process it sort of says are you are

[47:12] you do you want to lose it fast you want to lose it slow what are you willing to do tell us more about yourself and so each step you're you're investing more into the app with information and it's essentially saying oh if you want to hit that weight target initially we think uh you're not going to hit it so we if we take ourselves now we're in april you're not going to hit it until september and you're like oh september's pretty good but enter a bit more information we give you a more accurate assessment and then based on you you're pretty unique it looks like you actually could

[47:42] hit it even in july and so you get these like aha fun moments as you're going through and i watched my wife fill it out as well and and actually watched her get excited she got positive feedback as she went through through the the onboarding process and so i think in that case they know that that aha moment for them is really hard to get you to the point where you truly believe you're going to lose the weight and so 60 steps makes sense for them so it's really like speed to the to the really delivering on the value proposition in a in a credible way is is what we're trying to do here

[48:18] but it doesn't always mean fewer steps we could we could talk an hour on this um but i think one of the things a lot of people miss too is the subtleties in what's actually creating value we kind of talked about this with product market fit but when you think about that arm boarding it's like part of the value that's being created there is the excitement and the the the feeling that you're gonna be successful in doing this and so the so it's valuable to have that success feeling because then that helps you ultimately get to the final value of actually losing the weight and building

[48:51] that momentum and the positivity and everything else and so like yeah and like with my weather app i think about this all the time like weather forecasts are not accurate like what what's the real job to be done and honestly there's entertainment is is a value of of a weather app and like there's a there's a lot of value that's created incidentally that understanding that does help you better get people to those aha moments i wish we had an hour to talk about it but ethan real quick said we'll speed run this you know it really is you can't just that's why it's so important not to just jump into the

[49:23] tactics right because you know just putting a countdown timer on your onboarding which you know like because someone else did it isn't the answer to your to your onboarding success issues right you have to really think about it individually you have to and as sean said it's about experimenting into it as opposed to you know you have to pick a direction and start from there um but being rigidly tied to we have to have as few steps from point a to point b or as many steps from point a to point b probably not the right approach it's probably a good idea to start with a direction

[49:53] come up with the why behind that why is that going to work for us and then experiment with different ways to understand if that is actually the the right way to get people to that value awesome well with that i think it's a great place to wrap up so the breakout growth podcast we'll have links in the show notes um and then are the two of you uh currently taking clients uh i know you both have consulting businesses yeah so i'm shifting to doing more intensive single company like to tune the flywheel right when they reach product market fit um being able to to to get them to the point

[50:31] where they can operationalize growth and ethan's ethan um you can fill in the gaps but you know tends to be working with more companies he's really great on on operationalizing growth and and helping companies stay on a strong growth curve and so it makes us super complementary because most of the work that i'm doing i'm getting equity in the businesses and um and so being able to make sure that long term they can manage that growth and accelerate that growth well is is critical and so ethan and i both overlap a lot in the things that we do but we we also specialize so any anything else you want to do in

[51:09] terms of specifics of what you cover no i think you pretty much covered i i obviously try you know i do tend to lean towards mobile and subscription apps uh quite a bit um but yeah i have room for maybe a few more clients but i'm being stretched pretty good right now for me it's feast for famine because i am going deep into companies so i'm actually evaluating a few different opportunities uh at this moment but uh yeah looking for like a a longer term three or four month kind of engagements where ethan can go a lot longer but uh lighter engagements yeah awesome well we'll put

[51:44] links to to to reach out to y'all and to the podcast and everything else uh any any last thoughts as we wrap up uh no this has been fun i mean we're we're both big fans of the podcast so um we're we're gonna uh keep listening and uh it would be exciting to actually hear ourselves on it for a change yeah for sure i mean we've uh we've actually had i think one or two guests in common we had ron schneiderman of all trails i loved the interview you guys did with him and i think it was neat to have sort of a different angle on that

[52:11] so i think i i think our podcasts are complimentary in that respect but a super big fan of both podcasts and revenue cat as a whole so uh yeah thanks for having us really appreciate it yeah thank you so much to make sure you never miss an episode subscribe to the show and your favorite podcast player thanks so much for listening until next time [Music]

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