Podcast Summary
The Importance of Professional Ship and Tempo Framework in Team Building and Entrepreneurship: To achieve success in entrepreneurship, it's crucial to prioritize a high frequency of shipping and maintain a smart team that understands the importance of professional ship and tempo framework, rather than just focusing on organizational design.
Patrick Campbell, founder and CEO of ProfitWell, believes that real professional ship and tempo framework are more important than organizational design.This means that it's essential to maintain a high frequency of shipping, regardless of your role as a marketer, product person, engineer, or ops person.Having a smart team that plans a lot but does not ship often may indicate a lack of alignment and understanding of what good tempo looks like.In this episode of Lenny's Podcast, Patrick shares his insights on team building, bootstrapping, shipping, competitive analysis, user research, pricing, and retention, making it an action-packed episode not to be missed.
The Importance of Focusing on Mission Over Pleasing Everyone When Building a Team: When building a team, focus on the mission and goal, and create a culture that aligns with those objectives. Defining values with trade-offs is crucial, and prioritizing people ops can lead to a successful team.
When building a team, the biggest mistake is trying to please everyone instead of focusing on the mission and goal.The average tenure of a manager in tech is about 15.7 months, and the average time a report has the same manager in corporate tech is only about 10.8 months.Therefore, it is important to focus on people ops as an integral part of the mission and set up the culture and team in a way that aligns with the goal, instead of just hiring people and hoping they are happy.Defining values that have trade-offs is also crucial for a successful team.Remember that team is everything, but most companies do not act according to this belief.
Prioritizing long-term success through value alignment and constructive conflict resolution.: Clear values and priorities, supported by hiring and communication processes, can create a more productive and successful workplace by fostering long-term thinking and constructive conflict resolution.
Optimizing for long-term success may mean sacrificing short-term gains.At ProfitWell, the company valued the concept of assuming the most charitable interpretation in conflict resolution, meaning taking conflict as an opportunity to handle it constructively.ProfitWell hired people who believed in this approach and made sure to communicate their values and priorities during the interview process so everyone was on the same page.It's important to have clear values and priorities to ensure everyone in the company is aligned and working effectively towards a common goal.Ultimately, creating a culture that values constructive conflict resolution and long-term thinking can lead to a more successful and productive company.
Bootstrapping vs. Funding: Know Your Goals and Needs as a Company: Before deciding whether to bootstrap or seek funding, understand your company's goals and needs. Building a cash flowing business without external investment may be a better fit for some ideas rather than chasing billion-dollar revenues through funding.
Bootstrapping is a way to build businesses that focus on cash flow and lifestyle.Funding, on the other hand, is for companies aiming to create billion-dollar annual revenue.However, it's important to know who you are as a company and what your goals are.It's not always necessary to raise money and build a large company if your idea is not a good fit for funding.Instead, focus on building a great cash flowing business that can still be large without funding.Don't get hooked on efficiency, and take a step back to assess whether raising money is truly necessary for your business goals.
Bootstrapping, Revenue Goals, and Pricing Strategies: Key Lessons for Early-Stage Companies: Bootstrapping in the early stages can help maintain equity and increase the chances of successful funding. Setting revenue goals and understanding market potential is crucial. Focusing on revenue per customer and implementing pricing strategies can increase profit margins.
Patrick Campbell emphasizes the importance of bootstrapping early-stage companies to maintain equity and increase the likelihood of raising successful funding later on.He also emphasizes that a business should aim to achieve a billion dollars in revenue if it wants to be considered as a venture-scale business.However, it is crucial to know your limits and understand the market's potential to pay enough money that could make your business a billion-dollar one.Additionally, when it comes to pricing, Campbell suggests that businesses should focus on their revenue per customer and implement one pricing strategy every quarter to increase their profit margin.
Importance of finding the right pricing metric for startups: Startups should focus on finding the right pricing metric to ensure customers pay based on their value and consumption, avoiding overpaying for unnecessary features. Regular pricing exercise every three months can lead to success and growth.
Founder and CEO of ProfitWell, Patrick Campbell suggests startups focus on finding their pricing metric, which is how they charge their customers, such as per user or per visit.Once you get this aspect right, even if other elements of pricing are not great, you tend to be okay in terms of monetization.This step also ensures that customers pay based on their value and consumption, which avoids them overpaying for features they don't require.Campbell recommends doing a small pricing exercise every three months, which will lead to some successes and some failures, but over time, the numbers will go up.
The Importance of Strategic and Tactical Retention in Product Management: Addressing tactical retention, such as payment failures and cancellation flows, can decrease churn by 25-40%. Asking departing customers multiple-choice questions about why they're leaving and what they liked about the product taps into the nostalgia effect and can help save otherwise lost customers. ProfitWell's free product can help notify customers of expiring credit cards and improve retention.
Retention is a crucial part of product management that many teams overlook.There are two types of retention: strategic (like features and roadmap) and tactical (like payment failures and cancellation flows).Tactical retention can account for 25-40% of churn, so it's important to address it.One way to decrease churn is to ask customers two questions when they hit the cancel button: why are you leaving (as a multiple-choice question) and what did you like about the product.This taps into the nostalgia effect and can salvage otherwise lost customers.ProfitWell offers a free product that can help with retention by notifying customers of expiring credit cards.
Focusing on Active Usage and Value-Oriented Features Enhance Product Retention while Establishing a Strong Tempo Framework is Crucial for Successful Shipping: ProfitWell founder emphasizes the significance of incorporating value-oriented features, establishing a proper tempo framework, and automating subscription growth to enhance product retention and success in SaaS products.
In this segment, Patrick Campbell, the founder of ProfitWell, discusses the importance of product features and retention rates in SaaS products.He explains that products which offer active usage or offer value without requiring regular usage have the lowest churn rates and highest retention.Additionally, he suggests that establishing a clear tempo framework is more important than organizational design for successful shipping.ProfitWell metrics is offered for free because analytics products do not typically retain well and are difficult to sell.Automating subscription growth is a guiding principle for ProfitWell.
ProfitWell's Framework for Success in SaaS: ProfitWell establishes a framework for org leaders to align expectations and reality, using first principles thinking, to create a high output team and achieve their mission metric of revenue on the platform.
ProfitWell's mission metric is the amount of revenue on the platform and they aim to be the most helpful brand in SaaS.The company established a framework for each org leader (e.g. marketing, sales) to determine what good looked like in terms of shipping, and then worked to close the gap between expectations and reality.Without this framework, misalignment between teams and resentment can occur.First principles thinking, which involves breaking down complex problems into basic concepts and building upon them, is also important to ProfitWell's approach.By continually working to improve tempo and address issues, the company can create a high output team and achieve its goals.
First Principle Thinking: Breaking Down Problems to Unlock Effective Solutions: By breaking down problems into their root causes and aligning solutions to each cause, the problem-cause-solution model unlocks the power of first principle thinking, ensuring comprehensive and actionable results for big, medium, and small challenges.
First principle thinking is a problem-solving approach where you break down a problem into its causes, then rank them by magnitude before aligning solutions to each cause.This framework helps to address big, medium, and small challenges, and ensures alignment and actionable results.The problem-cause-solution model is an effective means of unlocking first principle thinking for people who are not great with it.By breaking down problems into their root causes and brainstorming solutions that mitigate each cause, you can address the problem in a more comprehensive and effective way.
The Importance of Customer Research for Business Success: Conducting customer research and developing buyer personas can lead to better NPS, efficiency in the funnel, growth, and retention rates. Continuous implementation is crucial to understanding customer perception and justifying pricing.
Customer research is essential for any business to succeed.Only one in five companies have buyer personas or ICPs, and only one out of 10 companies actually do customer research or development on a quarterly basis.However, customer development functions or even just having ICPs or buyer personas can lead to higher NPS, willingness to pay, efficiency in the funnel, LTV to CAC, growth, and retention rates.While customer research is hard and not always 100% accurate, it is crucial to understanding how customers perceive your products and justifying your price.It's time for companies to take customer research seriously and implement it on a continuous basis.
The Importance of Customer Research in Building a Successful Business: To build a successful business, companies should prioritize customer research and set achievable goals such as having 10 non-sales customer conversations a month or sending out a survey to truly understand the market and customer sentiment.
The use of AI can help companies understand customer sentiment and other important factors without having to manually do the work.However, many companies do not prioritize customer research because they believe it is not necessary or they can brute force their way to success.To improve, companies should start small by setting a goal to have 10 non-sales customer conversations a month or sending out a survey.It is important to truly understand the market and the customer to build a successful business, and companies should not overlook the value of customer research.
The Importance of Developing a Competitive Strategy in the Tech Industry: Understanding your competitors is crucial for remaining competitive and effectively meeting customer needs in a crowded market. Through methods such as white label surveys and competitor marketing pages, businesses can gain valuable competitive intel and establish a proactive approach.
In the tech industry, there is a high level of competition, with many companies offering similar products or services.While it is important for product teams to focus on the customer, it is also important for businesses to understand their competitors and have a strategy in place.This can involve gathering competitive intel through methods such as white label surveys or creating competitor marketing pages.As the market becomes increasingly crowded and marketing channels more dense, businesses must take a proactive approach to understanding their competition to remain competitive and meet customer needs effectively.
The Benefits of Hiring Veterans and Industry Diverse Employees for Startups: Hiring veterans and industry diverse employees can bring unique perspectives and expertise. Local strategies and basic humanity should not be overlooked in the age of the internet. Investing in the intelligence community may also prevent conflicts from escalating into war.
Hiring veterans, particularly those with intelligence backgrounds, can be valuable for startups because they bring a unique way of thinking.However, you need to be careful about hiring someone who may be too bureaucratic in their approach.It's also beneficial to hire people from different industries, as they can provide domain expertise and new perspectives.Additionally, putting more money into the intelligence community may be useful as conflicts can be stopped before they turn into war.Local strategies, such as meeting prospects in person, are important because people like to buy from people.It's essential to remember the basics of humanity and not get too caught up in the scale of the internet.
The Power of Meeting Prospects In Person for Your Business Growth: Studies show meeting prospects in person can lead to higher revenues, lower churn rates, and increased expansion revenue. It doesn't have to be expensive - get creative with cheap breakfasts, lunches or meetups. It's an actionable strategy to boost sales even if your numbers are falling short.
Meeting prospects in person can have significant benefits for your business.Studies show that prospects who meet you in person are more willing to pay (10-30% higher), with lower churn rates (typically 20% lower) and higher expansion revenue (15-20% higher).This applies not only to hand-to-hand sales but also to scaled products.You don't need a big budget; breakfast and lunches are super cheap, and meetups can be extremely inexpensive.Get creative with events and make sure to get out of the office or desk at home.This is an actionable strategy to boost sales if your numbers are falling short.
The Power of Freemium for Middle-of-the-Funnel Success: By focusing on a pool of leads that are already aware and engaged with your company, and using a freemium model to build relationships and let them convert on their own timeline, businesses can find great success in the middle of the funnel.
The middle of the funnel is the biggest opportunity in sales and marketing today.The problem with top and bottom of the funnel efficiency has plummeted, meaning companies need to focus on a pool of leads that are aware of them and interact with them regularly, creating a river of demand generation.The best way to create this pool is through freemium, which has a higher retention rate and NPS than those who convert from a free trial or traditional sales process.By building a relationship with leads and letting them convert on their own timeline, companies can increase their chances of success in the middle of the funnel.
The Power of Inbound Media for Building a Customer Base: In addition to SEO and eBooks, incorporating podcasts and video series into inbound marketing strategies can help increase awareness and attract potential customers. Treating the middle of the funnel like the top of the funnel is crucial, but each situation requires analysis for the best approach. Recommended reads include High Output Management, Thinking in Bets, and Powerful by Patty McCord while favorite TV show is The West Wing.
In order to build a pool of potential customers, it's important to have something for them to interact with, even if you're a big enterprise solution.Inbound marketing is becoming all about SEO and eBooks, but inbound media, such as podcasts and video series, can help build awareness and become a valuable resource for potential customers.The middle of the funnel is the new top of funnel, and it's important to treat it as such.However, it's important to remember that every situation is different and requires analysis to find the best solution.Recommended books include High Output Management, Thinking in Bets, and Powerful by Patty McCord. Favorite TV show is The West Wing.
Patrick Campbell's Go-To Interview Question for Assessing Cultural Fit and Top SaaS Products of ProfitWell: Patrick Campbell of ProfitWell believes that gauging how a candidate responds to conflict and assessing their judgment is essential to ensure cultural fit. Notion, Descript, and K-Tool are some of the favorite tools he uses.
Patrick Campbell, CEO of ProfitWell, shares his favorite interview question to test a candidate's fit within their culture.He presents a scenario where someone responds to a benign report shared on Slack with something indirectly offensive and asks the candidate what they think should be done.This allows him to gauge how a candidate responds to conflict and assess their judgment.He also mentions SaaS products that he and his company use and love, including Notion for documentation, Descript for video editing, and K-Tool for curating a weekly newsletter of articles and documents sent to his Kindle.
Patrick Campbell's Favorite Lesson from the NSA Experience and Tech Recommendations: Don't trust your first reaction when things seem simple. Seek understanding before reacting. Use helpful tech tools like Tweet Hunter and the Apple Watch Ultra to improve social media and stay off-screen. Connect with Patrick on Twitter or email.
Patrick Campbell shares his favorite lesson from his NSA experience, which is that most things are more complicated than they seem.He cautions people to not believe their first reaction and to seek to understand before reacting or responding.He also shares his tech recommendations including Tweet Hunter, a tool that uses AI to improve Twitter discovery and the Apple Watch Ultra, which helps him stay off-screen and take his attention away from his phone.People can find Patrick on Twitter @patticus and reach out to him via his personal email pc@patticus.com.
