The Exchanges

Q Can you give a, just a few of the questions that you find most illuminating in those conversations?

A So the first thing we'll do is we ask them, okay, tell me in your own words, what did you buy? Obviously it's a little weird because, you know, it's my company. I just sold it to you. Of course I know, but that anchors them on the purchase. And then the next question is what would that enable you to achieve? So we're immediately taking the conversation away from your product and we will never talk about your product in the rest of the interview. To their goals. And they're probably going to tell you some basic functional goal. Like, you know, I needed to, you know, get this all in one place and stop using spreadsheets or whatever. And then we need to explore more around that because there's probably more to the story. So like, why is that so important to you? Who else cares about this outcome? So ask some questions and probe and just really try to get a sense of like, what are all the layers to their goal? And then the next thing we need to do is map the customer journey. So we'll say, okay, do you remember the first time you started trying to do X? Oh yeah. You know, it was two and a half years ago and my boss put me on this new project and blah, blah, blah. Okay. What did you do then? And then we're just going to go through that journey. Well, first I Googled this and then I tried this product, but it didn't work. And we just go through that whole journey. And I'm listening f…

AI assessment note: “tell me in your own words, what did you buy?”

Q want more from Matt, we've also linked a preview of his book in the description of this episode. Now, let's dive into my conversation. I thought maybe we could sort of start at the top, which is sort of outlining how you think about growth levers, maybe what's unique about it, and what do you think most people don't get about the topic in the context of early stage startups?

A So the whole idea of growth levers, this came to me when I started, like when I first became a VC, and you're a VC, right? You get pitched and you look at these decks. And since my background was growth, I'd really focus in on their go-to-market, their strategies. And most of these plans were just lists of tick box of like ChatGPT could have written that slide. No problem. But most of these things aren't going to work. And most of them, even if they did work are going to be small and like, fair enough, these people don't have growth experience and they haven't really started to scale. It's early stage. But I thought about my time at PayPal and like, when I look back on it, all of our growth, all of like, 95% of it came from like five things. So in the beginning, before I got there, It was just getting on eBay, getting eBay sellers to start using it and that turned into a network effects loop. And then when Dave hired me, it was all about web developers because developers are building all the checkout flows. So we can just do developer relations and get out there. And so that was like S curve number two. And then shortly after that, we started partnering with all the e-commerce platforms, the shopping carts and hosts, and like the progenitors of Shopify. Because of course, you know, if you're putting up an e-commerce site, you're eventually going to need to add payments. Find th…

AI assessment note: “most startups, you just get one thing working really well”

Q When you think about the levers, you were mentioning this a second ago, is it generally just in a handful of buckets? Like there's a handful of areas you can pull from? Or every now and again, you do have true invention in something net new.

A It's generally going to be pretty similar, right? There's some network effects playbooks, there's some ad playbooks, there's some influencer playbooks. But as soon as you get more specific than that, that's where you need to get creative. And it's not always novel, but sometimes you're copying someone who solved an analogous problem in another business. But a lot of these businesses end up combining a couple of things together. There's content and inbound, and then there's a network effects flywheel or something like that. Once you've got your particular bottleneck, I'm looking at who solved this particular thing really well. So for example, multiple use case customer, heterogeneous customer segments. So Calm solved that really well with their boarding flow where you kind of have this multiple choice questions about what you're trying to achieve. So I've now used that with B to B businesses where they have multiple use cases and they go into a similar boarding flow there. No one's doing that in B to B and it works great. Einstein said, if I had an hour to solve a problem, I'd spend 55 minutes thinking about the problem. So it's really getting super clear on what it is you're trying to solve. And then often when you get in there, like sometimes you need to invent, often you can copy something, but it probably won't be from a competitor. It'll probably be from someone who's in an…

AI assessment note: “It's generally going to be pretty similar, right? There's some network effects playbooks”

Q How do you figure that out in the context of customer development? Or is this just something you're on the hunt more broadly? It's not something you're trying to prosecute in a customer conversation.

A No, I am. So in a customer conversation, I'm like, okay, where did you, when did you first realize you needed to do this? Where did you look? Who did you ask? What did you do first? What did you do next after that? What did you do next after that? And usually in some conversation that'll come up. So I have an example in my book. There's a guy named Bob Mesta. He is the, uh, one of the co-creators with Clayton Christensen of the Jobs To Be Done Framework. And he told me this story. He had a, his business was selling houses to empty nesters. So smaller houses when the kids, you know, leave and you're going to downsize. And he was interviewing a customer and he said, you know, okay, do you remember like, you know, take me back, talk me through it. When did you decide to buy this house? And she said, okay, I was having brunch with my husband. And he's like, okay, where were you? We were in this diner downtown. What were you wearing? And she said, God was wearing a black dress and you were wearing a black suit. Why were we wearing a suit to brunch on a Saturday? Oh yeah. We would just come from a funeral. One of our friends had died of a stroke. You know, he was 53 and it was like, oh my God. And we sort of realized life is short. And then we were like, you know what? We've been thinking and hemming and aahing about buying this house. Life is short. We should just go ahead and buy t…

AI assessment note: “No, I am. So in a customer conversation, I'm like, okay”

Q You talked about this a few minutes ago about some of the characteristics of early growth hires when you start to figure this stuff out, but is the fundamental framing as to when I should begin to hire somebody when I've established a few of the growth levers that are working myself?

A Often your first growth people are just going to be internal, you know, analysts or customer service reps or product people or engineers, and that you're going to start getting them working on growth. So that's often your first hires. As far as an outside hire, again, if I know a smart generalist and I can just sort of bring them in and like work in a co-pilot relationship with them, can do that. But before you really scale hiring in any meaningful way, you need to understand what's our first lever. How are we going to get, what's one way we can reliably get customers if we just double down? And I guess maybe finding levers makes it sound simpler than it is, right? It's one thing to say, okay, you know, we're mostly going to do inbound and content marketing. It's another thing to really You know, there's a 102 hundred experiments to really get that working in a repeatable, scalable, profitable way. So, you know, that's where your effort's going to go at that point.

AI assessment note: “before you really scale hiring in any meaningful way, you need to understand what's our first lever”

Q Is that the way you get around that sort of cognitive trap? Basically the, the sort of experimentation model that you outlined will, will reduce the chances you get caught in these cognitive traps or loops.

A The pace and quality of learning is absolutely number one. Now the cognitive trap is also what slows us down. I mean, there are just people who have kind of an adversarial relationship with new information for whatever reason. They're defensive. They're set in their ways. They have cognitive dissonance of what they, you know, been telling the world. And so those people are already going to test and learn more slowly, be less willing to test things that threaten their mental worldview. But then the experimentation is the anecdote to that too, because once you try a few things and you're like, I'm wrong, but we're growing faster. You suddenly start to realize that there are more important things than your, your ego. So I do find that this process of like experimentation in public and not public public, but within your company. So I encourage teams to Post an experiment in Slack and get everyone to vote on which one they think is going to be the winner and let the founder and the head of products and the head of growth be very public about their bets. And then they're going to be wrong and let them be very public about, Hey, I was wrong about this and I just learned this thing and therefore we're changing. And so if you sort of model the behavior, you can help open people's minds to this sort of curiosity and humility that is necessary for quick learning.

AI assessment note: “experimentation is the anecdote to that too, because once you try a few things”