The Exchanges

Q actually finding their channel. I'm with you. And then I have some companies that find it and it works and I sit down with the teams and they go, ah, but we need to diversify. We need, and I'm like, you're getting too cute too soon. If it's working, just Like, pummel it. Do you agree, or am I actually leading them down the wrong path, as most VCs do?

A Completely agree with you. No, I do agree. Assuming that you're talking about early stage companies, where I disagree is, like, once you're later stage, like, I'll take a Stitch Fix anecdote, right? Like, we, this was around 2016, 20 17, Cambridge Analytica. Do you remember the whole Cambridge Analytica thing? Basically, like, Facebook ads. There's a lot of, kind of, um, conspiracy on, like, what exactly made Facebook ads not performant for everyone at that time, but there was a period of time when, like, The shit just wasn't working for people and performance took a big hit basically across the board. And we had a constraint that I saw with my team was we would not get more than 50% concentrated in any one channel, even if it were short-term optimal to do so. Because part of it, we were getting closer to IPO, but like you don't want to be too exposed to any one channel. And there's just a, you know, at scale, there's a lot of kind of, you know, just diversification risk. And so we actually weathered through that just fine. Even though Facebook took a hit, we were, we were nimble enough to be reallocating during that time. We had a broad channel mix. Uh, where we, we were running a pretty diverse portfolio at that time, but early on, I think I totally agree. It could be problematic. And actually there's all sorts of other reasons why you don't want to be too broad early on. Lik…

AI assessment note: “Completely agree with you. No, I do agree. Assuming that you're talking about early stage”

Q Totally. Listen, I want to ask, you mentioned obviously Stitch Fix there. It was a very transformational time for you and for the company. When you think about like one or two big lessons for you in terms of takeaways and how it impacted your mindset to growth from your time with Stitch Fix, what would you say those one or two lessons are?

A Yeah, I mean, there's a bunch. The first one's probably about the importance of getting your objective function right. And so when I initially joined, there was a retention team. Uh, and there was a VP retention who's fantastic. She was my counterpart. And then I was hired to go run acquisition. You know, our early emphasis on retention meant that we had a strong understanding of our users and really an amazing foundation to add acquisition to. But with a structure like this, teams ended up thinking, you know, less holistically, and they really were focused on tools that they have within their disposal to move one particular metric. Uh, and so if I viewed my metric as new users in CAC, I could have only, I could have destroyed her, her retention metric downstream by just letting in kind of Shitty quality users and optimizing for an affiliate channel or something like that. And so I think, you know, it's important for teams to have a holistic view of what growth actually means for that business. You know, for us redefining our KPI to some down funnel metric was really impactful. And so there's more color on that I could go into later, but I think that like the meta point there is kind of getting your objective function. Right. I think as a related point to that, you know, many companies today start doing things to grow without really having an understanding of their growth model…

AI assessment note: “The first one's probably about the importance of getting your objective function right.”

Q there's no documentation, there's like, they didn't know it happened at all. My question to you is when you think about documentation and codifying the lessons, like the learnings from those experiments, how do you think is the right way to do this? Is this a notion doc? Is this a coder doc? Is it a weekly meeting that just the growth team sit in on? How does that work?

A Yeah, yeah. So two, Pete, it's good. These were actually the last two steps of the process I was going to get at, which is I think like having, uh, so we would do weekly experiment reviews as a growth team. Every week we had a meeting on completed experiments or anything that completed, uh, over the past week. Uh, the PM or whoever was responsible for it would go in and present on that, uh, lessons learned, implications, and then go and suggestions for other functions too that were sitting, uh, around the table there. And then we would use that form to go and kick off new experiments, right? And so anything that was going to go live or that was kind of in process, like we would go and discuss those two. So that's within the growth team. I think company-wide is, is, uh, equally if not more important. And so the, and this is practical at certain company scales, like until, I don't know, we were a hundred people and We would do this for every all, we do weekly all hands and every all hands, the growth team would get up there and talk about these ideas. And sometimes like engaging the company was important. So we would do sometimes like a guess which variant one game. And it was, it was fun. It actually helped spark curiosity from different corners of the org on, Hey, you know, this, um, uh, this intuition or kind of belief that I had on a certain part of the product was actually w…

AI assessment note: “Communicating that out, um, I think live is best and weekly growth team meetings”

Q Yeah. I totally get you. I want to finish on one small, small question of cat to LTV, which kind of is a metric that defines so much of founders decks in our industry. Um, why do you think it's a flawed metric, my friend?

A Yeah. So there's two primary flaws with it. I think one is just this notion of lifetime, which is the, L and LTV. Like, early in a company's journey, it's rare to have a real idea of what a reasonable customer lifetime is. Like, if you're two years in, like, how are you gonna say you have a five-year lifetime? Like, it's really, you know, um, so that, that's obviously flawed. And then it's also, you know, too coarse. So, I think many companies will look at this on a blended basis and disregard that there's actually a bunch of variance in customer quality by channel, keyword, audience, um, et cetera. And so, The better method, which I was kind of getting at was payback period, which removes the notion of lifetime, but also it could be calculated on a more granular level. And so, you know, paybacks, the however months of growth margin, it cost to pay back the initial incremental CPA. You want to make sure you're calculating this paid over paid. So use paid CAC, not blended CAC. And then with scale, you could get to more granularity. So not only looking at it on a channel level, but actually a keyword level. So at Stitch Fix, you know, you should have different basically CAC thresholds for someone who's bidding on Uh, or someone who's actually searching for, you know, high price dresses versus kind of discount shoes, right? That's, that's the important thing. You know, one caveat …

AI assessment note: “there's two primary flaws with it. I think one is just this notion of lifetime”

Q and how you do it to prevent that, so totally agree. The next question is, okay, so let's say we put it under product. I see a lot of people Actually go, and this is interesting, go too soon on growth teams and look at it as a silver bullet for product market fit even. How do you think about when's the right time to make your first growth hire?

A I get asked this question a lot in, in, uh, new gig as venture capitalist, you know, I think there's a few principles I think about here and there is no, again, there's no one size fits all answer, but I think one principle that for sure is true is like never hire a growth person, pre-product market fit. Um, I do think it's okay to have generalist athletes at this point, um, but they should really be talking with users and aggressively trying to find product market fit, and sometimes, like, people, um, who might have growthish backgrounds could be helpful on that, but they should not be running a growth team at that stage. Um, I think prematurely scaling top of funnel before you have a cohort of users that's really retained, and also understanding who those users are, like, that could be detrimental to a company, and so for sure agree with you on that point. Um, the second, you know, I think analytics is a really necessary foundation for this. And so, you know, one, one question that's related to what you're asking is, um, you know, who's your first growth hire? What should they look like? Um, I think for me, my first, my first growth hire is typically an analytics person. You know, in Silicon Valley, we talk about the concept of tech debt. I think that's widely understood. I think analytics debt is just as common, if not more common. I've had a lot of success hiring people fro…

AI assessment note: “never hire a growth person, pre-product market fit.”

Q but I want to go back to this hiring process. So we have this fantastic person, and we know that we want someone with a more analytical mind, as you said, kind of an analyst style. I've never hired anyone in this process before, so I'd love your help. What is the right process in terms of structure to hire this first growth person? What should those stages look like?

A Yeah. Well, we could talk about it like it's like kind of a linear, very clean process. Oftentimes there's a lot of randomness to this, but let's, uh, uh, let's go through it anyway. I think, you know, step one is, is defining success, right? And so you, you kind of got at this with your last question, but a lot of growth hires will ultimately fail in part because a company doesn't have a clear idea of what they're hiring for. Um, and so the fail case is, Hey, we have a great product. Now let's go hire someone to help us grow it. And this might be true, but founders need to get a step more specific on what success or failure looks like for the role. So even if it's not a set of specific KPIs out of the gates, what are the outcomes or systems they want to be in place? So it could be, you know, hey, we want a growth model by month or year, like it's more of an analytics person, et cetera. So defining success is, is kind of step one. I think step two is calibrating. So determine some set of companies with, uh, relevant growth patterns to yours. So, you know, um, for you, it might be Other kind of, you know, creator kind of like content oriented businesses and go have calibration conversations with early growth leaders there. And so at tilt, for instance, like we knew that our growth playbook was going to be community by community. So we want to talk to early leaders at different, …

AI assessment note: “step one is, is defining success, right? ... step two is calibrating.”

Q favorite product and tell me how it grows. I was thinking for a minute, shit, what would I answer? Um, my question to you though, it's like, what other questions are there? Because I, I have found this and they're like, ah, what else do I ask? So are there some others which really just like that question can reveal a little bit more about the quality of the candidate?

A What I'm about to say in some, some ways is a cliche interview question, but I think it's important for growth, which is like, tell me about a time you failed and what happened from that. I think for, for growth, one of the important things that you're looking for is somebody who's not afraid to fail. Right. Failure is part of the experimentation process and actually like the worst thing one could do in a growth role is go and try to cover up failures or just like not acknowledge that happened because what an opportunity to learn. And, um, and I think that's, that's like, you know, you were looking for someone's risk appetite, but then kind of appetite to go and just put themselves in the stream of learnings that oftentimes comes from, come from failure and then go iterate on that. And so that's one. There's, um, a few that get a step more tactical, which is like, show me your daily dashboard. Is, uh, is one that I like. This maybe gets a little bit deeper and it is can be used in an exercise. It could also be used in a, in a live kind of conversation where you just ask someone to write it out on paper. Um, but you're looking for someone who's analytical in nature with high signal and noise and is able to tie data back to a business context. Um, and if they're too complex or like, you know, showing too many metrics or they're unwieldy with it, that could be a red flag, you know…

AI assessment note: “tell me about a time you failed and what happened from that.”

Q So I really like those three questions is like a foundational layer. You mentioned exercises there as well. When we think about tests or exercises, what can we do to go a little bit deeper to assess that quality and what are we looking for in those tests and exercises?

A Yeah. So there's a, there's a couple more that are really an extension of what we're talking about. So, um, one that I like is bring me a, Prioritize experiment roadmap for X feature, right? One of the important points of running a growth team is like, you need to have a system on triaging different experiment ideas and, and, um, really having an ROI mindset. So some people are going to come in and bring a laundry list of everything they want to go test down to like button colors, uh, without having a system or some higher order context. And, and sometimes I think that's a fail case actually for, for kind of a new head of growth. You just come in and say, Hey, I want to have an impact. I'm just going to go and test everything and be the A-B tester. And if you're doing that without kind of like, you know, high order context of what's actually going to move the needle on a business, that's problematic. And so prioritization of an experiment roadmap is one way of getting at that.

AI assessment note: “one that I like is bring me a, Prioritize experiment roadmap for X feature”

Q I think you said about loops there and you said about loops before in our conversation. And, and it took me to a sentence that you said to me before, which is the importance of operationalizing growth as a set of loops versus funnels. Can you help me? What is a loop? What's an example of one?

A Yeah. All right. So, uh, growth loops are a concept that, uh, again, I've referenced Reforge a few times. It was popularized there and I have to drop Greylock here for a moment because Kevin Kwok and Casey Winters, two of the people that kind of like, uh, made this concept and they were at Greylock at the time also working on Reforge. I think in general, the definition for loops is like they're, uh, closed systems where the inputs through some process generate more of an output then reinvested back into the input. And so there's different types of loops. I referenced the content one from Pinterest early on. That's actually a good example. Like a user onboarding and using the product generates the output of that generates more content that goes and feeds back into the search algorithms. That is the input into inquiring new users. Right. And so like that, Like basically usage begets more usage, new users beget more users like that. That's really the concept that you're looking for. And so loops, they're powerful because they lead to, they lead to compounding growth systems versus typically funnels, you know, are, are more linear growth trajectories that will oftentimes decay with, um, with scale. And so the way to engineer loops oftentimes involves kind of product efforts versus, versus just marketing. And that's when, when we talk about growth, that's a concept that's kind of fu…

AI assessment note: “definition for loops is like they're, uh, closed systems where the inputs”

Q So totally get that in terms of the circularity of loops and how it feeds back into each other. What's a funnel then? Just so I have that clearly.

A Yeah. I mean, that's the traditional way that marketers think is, is funnels. So just looking at, it's a very common way of just looking at the path of marketing or growing a business. So one framework, I think this might be Dave McClure's, but, um, it's the pirate framework R, you know, so, um, uh, A-A-R-R-R. So top of funnel really starts with awareness. Um, Then acquisition, activation, retention, revenue, and some might add referral to the end. The problem with this is this leads to siloed teams. Typically brand marketing might do the awareness stuff, then you have performance marketing doing acquisition, and then that might get handed off to some conversion PM that's working on activation. Um, and so you're really missing opportunities to have interplay between these steps and go and reinvest outputs from one step into the other. For some businesses, again, like e-commerce stores, like it's just the most practical way to look at a business. So it's not like You know, um, funnels are bad all the time. Uh, but I think, uh, if you look at your growth this way, you will typically see a degradation of performance with scale. And that, that's, R is probably the best, you know, the most common framework for funnels.

AI assessment note: “top of funnel really starts with awareness. Um, Then acquisition, activation, retention, revenue”

Q If we think about optimizing loops, we need to build this like habit of experimentation and iteration within the business and learning. Uh, how do we build a process around that? Because there's a lot of kind of buzzwords that iteration, experimentation. How do we do that?

A Okay. Yeah. So there's, there's two principles, you know, I try to emphasize before getting into the, um, mechanics that you run this process. I think one is the best ideas could come from anywhere within the org. So Reducing friction or bring forth ideas is something that I think the head of growth should, should think of themselves as responsible for. And the second is like the only real failure is not implementing learnings from an experiment. So you need to have a culture where it's actually okay to, um, to take risks and fail in the spirit of, in the spirit of learning. Um, any process could sometimes be, uh, have a negative connotation as, hey, it slows you down. And, you know, sometimes people that are hyper aggressive and want to move fast End up in process averse. So really when I think about process here, it's, it's designed to ensure we're working on the right set of things and are then going and compounding learnings. Uh, it's not to like force unnecessary approval layers or, or, um, or slow us down. So I think the mechanically, like the process I've introduced in both the companies I led growth for there's, there's kind of four main components of it. So I think first is experiment one pagers. Um, so anyone could submit an experiment idea, anyone, not if you're, even if you're not on the growth team, but we built this very simple, uh, kind of one pager framework tha…

AI assessment note: “mechanically, like the process I've introduced in both the companies I led growth for”

Q actually finding their channel. I'm with you. And then I have some companies that find it and it works and I sit down with the teams and they go, ah, but we need to diversify. We need, and I'm like, you're getting too cute too soon. If it's working, just Like, pummel it. Do you agree, or am I actually leading them down the wrong path, as most VCs do?

A Completely agree with you. No, I do agree. Assuming that you're talking about early stage companies, where I disagree is, like, once you're later stage, like, I'll take a Stitch Fix anecdote, right? Like, we, this was around 2016, 20 17, Cambridge Analytica. Do you remember the whole Cambridge Analytica thing? Basically, like, Facebook ads. There's a lot of, kind of, um, conspiracy on, like, what exactly made Facebook ads not performant for everyone at that time, but there was a period of time when, like, The shit just wasn't working for people and performance took a big hit basically across the board. And we had a constraint that I saw with my team was we would not get more than 50% concentrated in any one channel, even if it were short-term optimal to do so. Because part of it, we were getting closer to IPO, but like you don't want to be too exposed to any one channel. And there's just a, you know, at scale, there's a lot of kind of, you know, just diversification risk. And so we actually weathered through that just fine. Even though Facebook took a hit, we were, we were nimble enough to be reallocating during that time. We had a broad channel mix. Uh, where we, we were running a pretty diverse portfolio at that time, but early on, I think I totally agree. It could be problematic. And actually there's all sorts of other reasons why you don't want to be too broad early on. Lik…

AI assessment note: “Completely agree with you. No, I do agree. Assuming that you're talking about early stage”

Q and how you do it to prevent that, so totally agree. The next question is, okay, so let's say we put it under product. I see a lot of people Actually go, and this is interesting, go too soon on growth teams and look at it as a silver bullet for product market fit even. How do you think about when's the right time to make your first growth hire?

A I get asked this question a lot in, in, uh, new gig as venture capitalist, you know, I think there's a few principles I think about here and there is no, again, there's no one size fits all answer, but I think one principle that for sure is true is like never hire a growth person, pre-product market fit. Um, I do think it's okay to have generalist athletes at this point, um, but they should really be talking with users and aggressively trying to find product market fit, and sometimes, like, people, um, who might have growthish backgrounds could be helpful on that, but they should not be running a growth team at that stage. Um, I think prematurely scaling top of funnel before you have a cohort of users that's really retained, and also understanding who those users are, like, that could be detrimental to a company, and so for sure agree with you on that point. Um, the second, you know, I think analytics is a really necessary foundation for this. And so, you know, one, one question that's related to what you're asking is, um, you know, who's your first growth hire? What should they look like? Um, I think for me, my first, my first growth hire is typically an analytics person. You know, in Silicon Valley, we talk about the concept of tech debt. I think that's widely understood. I think analytics debt is just as common, if not more common. I've had a lot of success hiring people fro…

AI assessment note: “never hire a growth person, pre-product market fit.”

Q Can I ask what makes good learning versus bad learning?

A It's, it's hard to answer with precision. I mean, I think in general, a good learning is specific enough to impact the way you move forward, um, on the next iteration of a product or strategy. And so a bad learning might be one that's, you know, not quantified or not Not specific enough to change your core product strategy. A bad learning also might be one that's just held within a single function and not propagated out to impact other teams. And so, you know, paid marketing is easy. Like, you know, a learning that you get from spending millions of dollars on, on, uh, Facebook ads on like what creative or copy like resonates best. That should definitely inform your messaging on the product. And if, if those learnings don't kind of make its way out, like that's, that's kind of a, you know, it's a missed opportunity.

AI assessment note: “a good learning is specific enough to impact the way you move forward”

Q I totally agree with you. I think most often it's probably ego and insecurity. Um, but I speak as a VC and you as a VC too, so we're not ego or insecure. Um, Just kidding. I've only interviewed 3000. Um, uh, listen, final one, my friend, what recent company growth strategy or company growth strategy, I'll give it to you, uh, have you been most impressed by?

A All right. I'll reference Fair another time. Like, I think their B to B referral mechanic was insanely powerful. And early on, like, that was the only thing that was working for growth and that continued to carry them, uh, this far. I think referral systems and referral engines, typically there's always more juice from a referral program. Uh, to squeeze and companies realize, but, but they typically are thought of in a consumer context. I think fairs, B to B marketplace, pulling in cross side referrals, like that, that was huge. And I, you know, I totally admired the way that they built that and kind of scaled it out over time. Um, so that's probably the one that I, that I go to.

AI assessment note: “I think their B to B referral mechanic was insanely powerful.”

Q on number one there, because really a lot of it centers around ambiguity of growth, your growth model, and how you think about what growth really means in your organization. I think there's a lot of, again, this series is for founders building growth Teams or hiring their first growth leaders, and I think there's a lot of ambiguity there. What does the role of head of growth mean, Mike?

A Yeah. So I might give you a, you're right. It's very inconsistent. I kind of prefer a broad definition, which is, uh, someone who's responsible for, for, for two things. One is accelerating the company's pace of learning. This is typically done through experiments. Um, but that's a very important, important piece. Like essentially the growth team and the head of growth should be operating at a, at a faster drumbeat than the company and bring those learnings back into, into kind of the core product and what's actually happening. And the second description might be, you know, Engineering systems that help a company build more control over its Northstar metrics. And so that's when I look at a head of growth, that's kind of more what I look for. And, and I understand that definition might be a little bit, a little bit vague, but I think that could apply to product marketing, you know, sales, other stuff.

AI assessment note: “someone who's responsible for, for, for two things. One is accelerating the company's pace of learning”

Q Totally. Listen, I want to ask, you mentioned obviously Stitch Fix there. It was a very transformational time for you and for the company. When you think about like one or two big lessons for you in terms of takeaways and how it impacted your mindset to growth from your time with Stitch Fix, what would you say those one or two lessons are?

A Yeah, I mean, there's a bunch. The first one's probably about the importance of getting your objective function right. And so when I initially joined, there was a retention team. Uh, and there was a VP retention who's fantastic. She was my counterpart. And then I was hired to go run acquisition. You know, our early emphasis on retention meant that we had a strong understanding of our users and really an amazing foundation to add acquisition to. But with a structure like this, teams ended up thinking, you know, less holistically, and they really were focused on tools that they have within their disposal to move one particular metric. Uh, and so if I viewed my metric as new users in CAC, I could have only, I could have destroyed her, her retention metric downstream by just letting in kind of Shitty quality users and optimizing for an affiliate channel or something like that. And so I think, you know, it's important for teams to have a holistic view of what growth actually means for that business. You know, for us redefining our KPI to some down funnel metric was really impactful. And so there's more color on that I could go into later, but I think that like the meta point there is kind of getting your objective function. Right. I think as a related point to that, you know, many companies today start doing things to grow without really having an understanding of their growth model…

AI assessment note: “The first one's probably about the importance of getting your objective function right.”

Q but I want to go back to this hiring process. So we have this fantastic person, and we know that we want someone with a more analytical mind, as you said, kind of an analyst style. I've never hired anyone in this process before, so I'd love your help. What is the right process in terms of structure to hire this first growth person? What should those stages look like?

A Yeah. Well, we could talk about it like it's like kind of a linear, very clean process. Oftentimes there's a lot of randomness to this, but let's, uh, uh, let's go through it anyway. I think, you know, step one is, is defining success, right? And so you, you kind of got at this with your last question, but a lot of growth hires will ultimately fail in part because a company doesn't have a clear idea of what they're hiring for. Um, and so the fail case is, Hey, we have a great product. Now let's go hire someone to help us grow it. And this might be true, but founders need to get a step more specific on what success or failure looks like for the role. So even if it's not a set of specific KPIs out of the gates, what are the outcomes or systems they want to be in place? So it could be, you know, hey, we want a growth model by month or year, like it's more of an analytics person, et cetera. So defining success is, is kind of step one. I think step two is calibrating. So determine some set of companies with, uh, relevant growth patterns to yours. So, you know, um, for you, it might be Other kind of, you know, creator kind of like content oriented businesses and go have calibration conversations with early growth leaders there. And so at tilt, for instance, like we knew that our growth playbook was going to be community by community. So we want to talk to early leaders at different, …

AI assessment note: “step one is, is defining success... step two is calibrating”

Q favorite product and tell me how it grows. I was thinking for a minute, shit, what would I answer? Um, my question to you though, it's like, what other questions are there? Because I, I have found this and they're like, ah, what else do I ask? So are there some others which really just like that question can reveal a little bit more about the quality of the candidate?

A What I'm about to say in some, some ways is a cliche interview question, but I think it's important for growth, which is like, tell me about a time you failed and what happened from that. I think for, for growth, one of the important things that you're looking for is somebody who's not afraid to fail. Right. Failure is part of the experimentation process and actually like the worst thing one could do in a growth role is go and try to cover up failures or just like not acknowledge that happened because what an opportunity to learn. And, um, and I think that's, that's like, you know, you were looking for someone's risk appetite, but then kind of appetite to go and just put themselves in the stream of learnings that oftentimes comes from, come from failure and then go iterate on that. And so that's one. There's, um, a few that get a step more tactical, which is like, show me your daily dashboard. Is, uh, is one that I like. This maybe gets a little bit deeper and it is can be used in an exercise. It could also be used in a, in a live kind of conversation where you just ask someone to write it out on paper. Um, but you're looking for someone who's analytical in nature with high signal and noise and is able to tie data back to a business context. Um, and if they're too complex or like, you know, showing too many metrics or they're unwieldy with it, that could be a red flag, you know…

AI assessment note: “tell me about a time you failed and what happened from that”

Q I think you said about loops there and you said about loops before in our conversation. And, and it took me to a sentence that you said to me before, which is the importance of operationalizing growth as a set of loops versus funnels. Can you help me? What is a loop? What's an example of one?

A Yeah. All right. So, uh, growth loops are a concept that, uh, again, I've referenced Reforge a few times. It was popularized there and I have to drop Greylock here for a moment because Kevin Kwok and Casey Winters, two of the people that kind of like, uh, made this concept and they were at Greylock at the time also working on Reforge. I think in general, the definition for loops is like they're, uh, closed systems where the inputs through some process generate more of an output then reinvested back into the input. And so there's different types of loops. I referenced the content one from Pinterest early on. That's actually a good example. Like a user onboarding and using the product generates the output of that generates more content that goes and feeds back into the search algorithms. That is the input into inquiring new users. Right. And so like that, Like basically usage begets more usage, new users beget more users like that. That's really the concept that you're looking for. And so loops, they're powerful because they lead to, they lead to compounding growth systems versus typically funnels, you know, are, are more linear growth trajectories that will oftentimes decay with, um, with scale. And so the way to engineer loops oftentimes involves kind of product efforts versus, versus just marketing. And that's when, when we talk about growth, that's a concept that's kind of fu…

AI assessment note: “closed systems where the inputs through some process generate more of an output”

Q So I really like those three questions is like a foundational layer. You mentioned exercises there as well. When we think about tests or exercises, what can we do to go a little bit deeper to assess that quality and what are we looking for in those tests and exercises?

A Yeah. So there's a, there's a couple more that are really an extension of what we're talking about. So, um, one that I like is bring me a, Prioritize experiment roadmap for X feature, right? One of the important points of running a growth team is like, you need to have a system on triaging different experiment ideas and, and, um, really having an ROI mindset. So some people are going to come in and bring a laundry list of everything they want to go test down to like button colors, uh, without having a system or some higher order context. And, and sometimes I think that's a fail case actually for, for kind of a new head of growth. You just come in and say, Hey, I want to have an impact. I'm just going to go and test everything and be the A-B tester. And if you're doing that without kind of like, you know, high order context of what's actually going to move the needle on a business, that's problematic. And so prioritization of an experiment roadmap is one way of getting at that.

AI assessment note: “one that I like is bring me a, Prioritize experiment roadmap for X feature”

Q So when you say about operationalizing growth as a set of loops versus funnels, what does that mean now we know what loops and funnels are?

A Yeah. All right. So when I think about the practice of growth, it's about Like building distribution strategy into your product strategy and then finding harmony between products, channels and monetization. And so this is very different than, uh, saying, Hey, we have a product team that's going and building stuff. And then we have a growth team, whether that be marketing or sales or whatever, going and growing stuff. And I think like the whole practice of growth is about like, you know, creating more harmony and actually introducing distribution strategy into your product. And so Part of getting at this is org structure, right? So as I mentioned before, structuring org around a funnel creates silos, um, and teams will optimize at the expense of one another. And so I gave the Stitch Fix example of like, hey, I could send a bunch of shitty quality leads through and then, uh, and then retention is hit. Um, so when your company thinks in terms of loops, teams are forced to think about the interplay between different components. And so it's less about road mapping tactics to reach some local optima on a specific metric. And more about seeking these compounding results. And so most teams decide that cross-functional teams are, are kind of the best solution. And this is a core part of operationalizing because I think these cross-disciplinary teams also come up with better ideas, but t…

AI assessment note: “when your company thinks in terms of loops, teams are forced to think about the interplay”

Q Now I have to dive into paid marketing. It's where you're an OG, uh, according to so many people, but especially Mike, he worked with actually, Stitch six. Uh, you said that paid marketing is, I love this, an accelerant and not a crutch. Hit me, my man. What does that mean?

A Yeah, well, you know, it's funny cause like my, I do harp on this stuff now at Stitch Fix, my job was to run our marketing budget, right? And so like I, I learned, uh, there's a lot of power also with power comes great responsibility. And so there's, there's a lot of lessons I learned here. Also a lot of stuff on what not to do, right? So what I mean by that comment, so all right, take a step back. Like one measure of product market fit health is what happens when you turn off all non-organic acquisition activities. And so ideally you should see some Ongoing user base that's retained and ideally generating new users, even if at a much slower clip, right? If you don't have that, you don't have product market fit. Um, I think going too heavily into paid marketing too early can lead to a number of problems. Paid marketing is relatively simple and straightforward to go and acquire new users. And so it gets kind of addicting when you're more likely to design a single discipline marketing function and miss the opportunity to do more challenging kind of cross-functional initiatives. When you see the magic of being able to put money into the Facebook machine and deliver users back. The thing that many people miss early on is that paid degrades with scale. Yeah. Everyone says like, you know, you'll get better at it. So you'll fight kind of the laws of gravity that might happen in a shor…

AI assessment note: “going too heavily into paid marketing too early can lead to a number of problems”

Q And you've done paid marketing at Stitch Fix. You've done paid marketing at Tilt. You advise many companies now as an investor on paid marketing and doing it effectively. Broad, horrible question, but what have been some of the biggest lessons for you in terms of what it takes to do paid marketing really effectively? And where do people go wrong?

A Well, I think I harped on this measurement thing earlier because I think, and look, this might be changing now with like, uh, the IDFA stuff and kind of ATT, uh, which is its own conversation. But I think one of the lessons I had in doing the stuff at scale was I started buying Facebook ads in 2012 and, and at that time there was a lot of alpha from just being like a savvy media buyer and like the people I used to learn from and talk with were like these, you know, uh, basically degen, uh, growth types that, you know, would, um, just continue to try to find kind of like basic arbitrage opportunities. And I'm talking specific to Facebook, but this kind of applies across most channels. Like, you know, that type of, uh, You know, alpha gets arbitraged away over time, and ultimately what, what makes one great, or the only sustainable advantage on, on channels, um, is having great measurement, being sophisticated measurement, and then having great volume of creative, um, and, and great creative that performs. And so ultimately, like, you know, the practice of performance marketing gets back down to, you know, do you have a unique kind of user hypothesis, and are you generating creative that resonates with them at, at enough scale? And so, like, some of the biggest, most impactful changes we made at Stitch Fix were, Lowering the bar to actually like creative content we just put out t…

AI assessment note: “the biggest lesson I will go back to is incrementality testing”

Q on number one there, because really a lot of it centers around ambiguity of growth, your growth model, and how you think about what growth really means in your organization. I think there's a lot of, again, this series is for founders building growth Teams or hiring their first growth leaders, and I think there's a lot of ambiguity there. What does the role of head of growth mean, Mike?

A Yeah. So I might give you a, you're right. It's very inconsistent. I kind of prefer a broad definition, which is, uh, someone who's responsible for, for, for two things. One is accelerating the company's pace of learning. This is typically done through experiments. Um, but that's a very important, important piece. Like essentially the growth team and the head of growth should be operating at a, at a faster drumbeat than the company and bring those learnings back into, into kind of the core product and what's actually happening. And the second description might be, you know, Engineering systems that help a company build more control over its Northstar metrics. And so that's when I look at a head of growth, that's kind of more what I look for. And, and I understand that definition might be a little bit, a little bit vague, but I think that could apply to product marketing, you know, sales, other stuff.

AI assessment note: “someone who's responsible for, for, for two things. One is accelerating the company's pace”

Q Can I ask just so I can understand if we think about increasing a pace of learning, what's an example of that?

A All right. Here's a good example. If you look at paid marketing and if you think about, you know, What a marketing team might be looking to do is set up a set of kind of different landing pages to actually capture different forms of intent and, and better convert users, right? And so you could actually want one way of, of actually capturing learnings on conversion would be to just throw up a page, send organic traffic through and just see what happens. I think, uh, the role of a paid marketing team here or a growth team could actually be, Hey, we're actually going to go up funnel, uh, spend money in the, in the, in the spirit of learning and actually drive much more traffic Through a set of ads that are actually testing different messaging that will eventually roll up into, into our landing pages. So that's, again, that's a very tactical one, but that's like one, one example. I think maybe the better answer is more of a, uh, kind of a, a general point, which is, I think, um, you know, the way most organizations are structured have some form of dependencies. You have an engineering team, a product team, a marketing team, et cetera. I think part of the magic of, of, uh, cross-functional growth pods, which is generally the structure I prefer, is you can actually Be fully autonomous in going and running an experiment to validate or invalidate a hypothesis without actually needing t…

AI assessment note: “Here's a good example. If you look at paid marketing”

Q So if I'm a founder, I've got Google Analytics set up, Is that enough for you?

A So that's the problem. A lot, a lot of people go to, uh, visualization tools as, and Google Analytics is a little bit different, but say, you know, Looker, Mixpanel, whatever, like they go to, um, visualization tools and say, hey, we have dashboards, like that's, we have our problem solved. The reality is, is, you know, garbage in, garbage out. I think poor instrumentation of, of a product is actually a very common problem here. And so what I mean by instrumentation is like, if you're not actually capturing key user events in the product, it's maybe simplest to understand this in e-commerce, right? Like, Add to cart, check out, you know, revisit site, et cetera. But for like social products, it's much more challenging. Uh, if, if you're not actually logging the right events there, then you, you have no idea what's happening inside your product and you can't start working on growth until, until you have that lens.

AI assessment note: “if you're not actually logging the right events there, then you, you have no idea”

Q question to you is like, you mentioned kind of the dashboarding and the analytics that they have. I think the big problem that I see often with a lot of early stage founders is they don't really know what their core number is. And what I mean by that is what their North star is. How do you advise founders on trying to understand what their North star should be?

A It's a tricky problem, and I think it, it will evolve over time for a company. I think one of the things, again, harp on it, Reforge, but I think is generally important across companies is actually having a growth model, and oftentimes this starts by just getting into a spreadsheet, or actually pre-spreadsheet, write down how your product actually grows, right, and how, how it should grow. So for a business like Pinterest, uh, and there's a concept called growth loops that maybe we could talk about later, but like new users coming in, Go and post new, uh, get brought in by existing content, go and post new content, which feeds the SEO engine and kind of drives more users there. And so maybe for a business like that, at some point in time, it's probably number of pins or kind of like active pinners at any given time. I'm not sure exactly what, what it is today, but I think like the point is having a, just a conceptual understanding of like, what is the mechanic of your business that actually is. Driving kind of the main metric that you care about for most businesses that ultimately ladders up to revenue for some, it might be users early on. Like that, uh, just writing it down before you actually get into a spreadsheet is important.

AI assessment note: “having a growth model, and oftentimes this starts by... write down how your product actually grows”

Q Can I ask what makes good learning versus bad learning?

A It's, it's hard to answer with precision. I mean, I think in general, a good learning is specific enough to impact the way you move forward, um, on the next iteration of a product or strategy. And so a bad learning might be one that's, you know, not quantified or not Not specific enough to change your core product strategy. A bad learning also might be one that's just held within a single function and not propagated out to impact other teams. And so, you know, paid marketing is easy. Like, you know, a learning that you get from spending millions of dollars on, on, uh, Facebook ads on like what creative or copy like resonates best. That should definitely inform your messaging on the product. And if, if those learnings don't kind of make its way out, like that's, that's kind of a, you know, it's a missed opportunity.

AI assessment note: “a good learning is specific enough to impact the way you move forward”

Q If we think about optimizing loops, we need to build this like habit of experimentation and iteration within the business and learning. Uh, how do we build a process around that? Because there's a lot of kind of buzzwords that iteration, experimentation. How do we do that?

A Okay. Yeah. So there's, there's two principles, you know, I try to emphasize before getting into the, um, mechanics that you run this process. I think one is the best ideas could come from anywhere within the org. So Reducing friction or bring forth ideas is something that I think the head of growth should, should think of themselves as responsible for. And the second is like the only real failure is not implementing learnings from an experiment. So you need to have a culture where it's actually okay to, um, to take risks and fail in the spirit of, in the spirit of learning. Um, any process could sometimes be, uh, have a negative connotation as, hey, it slows you down. And, you know, sometimes people that are hyper aggressive and want to move fast End up in process averse. So really when I think about process here, it's, it's designed to ensure we're working on the right set of things and are then going and compounding learnings. Uh, it's not to like force unnecessary approval layers or, or, um, or slow us down. So I think the mechanically, like the process I've introduced in both the companies I led growth for there's, there's kind of four main components of it. So I think first is experiment one pagers. Um, so anyone could submit an experiment idea, anyone, not if you're, even if you're not on the growth team, but we built this very simple, uh, kind of one pager framework tha…

AI assessment note: “there's kind of four main components of it. So I think first is experiment one pagers”