The Exchanges

Q Let's, let's unpack some of this cause this is great. So in terms of North star metrics, what are some examples in your experience of good North star metrics? Like revenue is obviously a very common one, but often it kind of is too high level as you have a sense of what a good North star metric is.

A I like having, you know, kind of two, right? One is something around Volume and growth. Uh, and you want that to be a, like very motivating and like intuitive for people to understand and also be something that the growth teams can directly impact, right? Revenue is for better or worse, more important for the company, but also much further down the, you know, line, uh, whether or not the growth team can, can impact that. Right. And so at Instacart, for example, our North star metric for, for growth was monthly active orders. And that's what we all rallied around and looked at every day, you know, what is, how are our mouth doing? And then obviously we had a large, uh, growth in consumer engineering team at Instacart, 300 plus people. And, uh, and so there are people working on every single corner of the app and, and outside of the app on acquisition, uh, to, to drive growth. And, and it's like, some of the stuff is like minutia, right? It's like making the checkout flow slightly better or faster or something like that. So that's a good example, right? It's like, okay, well, so we're going to go that team on Mal, like, how are they going to move, you know, monthly active orders by making the checkout flow slightly better? Maybe they can have an impact or maybe not. And so one of the things that we did is the actual, you know, local team has their own metric that they can directl…

AI assessment note: “at Instacart, for example, our North star metric for, for growth was monthly active orders”

Q Speaking of metrics, I have this note here that you're a big fan of payback period for measuring investment ROI versus CAC. Can you talk about why that is?

A Yeah. So a lot of people You know, CAC obviously gets thrown around a lot, and a lot of people are like, Okay, you have to be reducing your CAC, CAC, CAC, CAC. There's a fundamental flaw to it, which, uh, obviously is that you're focusing on cost and not the value drive, right? And so when you focus on CAC and reducing CAC, what tends to happen is you, uh, actually might be doing something very damaging where you're succeeding in reducing CAC, but you're actually bringing in customers that are less valuable, um, because those are the ones that you're able to attract. Uh, with the lower CAC. And, and so reframing it away from CAC towards LTV is helpful and that's better, right? So thinking about, okay, like for better customers that are bigger, we want to spend more. So you might think, okay, well, LTV to CAC might be a better way of, of looking at that. I think the challenge with LTV to CAC, especially for a lot of, even ramp, right? It's only four years old is it's really hard to predict LTV. It's like a DCF. It's extremely assumption laden and, uh, and it, and it's hard to know. You know, what, uh, the defiant value will be. And especially if you think your churn is low and your LTV is very high, you might end up spending a lot of money because you're like, oh, like my LTV to CAC is great. And then a year or two into the business, you realize actually your churn is higher tha…

AI assessment note: “There's a fundamental flaw to it... you're focusing on cost and not the value”

Q Amazing. And then are there internal tools you've built to help with experimentation or, I don't know, sharing data, dashboard, I don't know, is there anything else that's just like, wow, this really helps us move fast?

A Eric, our CEO, has publicly talked about this. I think we as a company are very thoughtful about what we build in house versus, you know, what we, uh, buy externally. I think a lot of engineering teams are often excited about building things in house where there's, you know, off the shelf products that Could basically work externally and, and ramp has historically been good at not falling into that trap. Uh, and, and we use, you know, third party tools for, uh, for a lot of our, uh, you know, growth and, and, and experimentation for things that are not, you know, Proprietary, strategic, et cetera. Obviously, like, some of the automation stuff that we've talked about, we've built all of that, uh, in-house in terms of, you know, prospecting, lead scoring, and, uh, and, and how we talk to our customers. But, uh, but for the most part, we use, uh, external tools. Instacart and Opendoor were not like that. We built our own internal, like, experiment tracking systems, uh, A-B testing frameworks, uh, and all of that.

AI assessment note: “we use, you know, third party tools for, uh, for a lot of our”

Q What do you look for in their answer when you ask them?

A Yeah. I, a lot of people actually struggle with that question and can't answer anything that they do that they're bad at, um, which is a little bit of a yellow flag, which means that they're only used to doing things that they're successful at, and they haven't cultivated interests that are not correlated to their own success, uh, at doing something, and they haven't taken the time to do that, and then folks like that are gonna run at the first sign of trouble, uh, and, uh, and then be like, oh, I'm not successful at this, so I'm gonna move on. And what I really want to see is people that show examples of things that they're not successful at that they do for other motivations and goals and interests. Uh, and so if you can tell me a compelling story like that, it's usually a winning answer.

AI assessment note: “what I really want to see is people that show examples of things that they're not successful at”

Q I'd love to learn more about this growth eng team that works with sales. How is that structured maybe as the first question? And then just like, what is their, what are their goals? How do you measure their progress and success?

A You know, a lot of companies do it, you know, differently. I think what works really well, uh, with, uh, ramp is that we have the same shared goal. Uh, which is the pipeline driven and the payback period of the channel. It's, it's kind of unique to RAMP where the engineers feel ownership of the quota. They're not like owning product metrics or, or what have you. There are obviously, of course, interim and input metrics that are important, but, uh, but they really do feel accountable for the, the pipeline driven and the efficiency driven by that team. And I think that naturally allows them bottom up to come up with the right projects that they think will have Maximal impact on efficiency and top line.

AI assessment note: “we have the same shared goal. Uh, which is the pipeline driven”

Q Is there an example you could share when you did that?

A I mean, account-based marketing is something that is very common in, uh, in enterprise, uh, software, right, where you've selected, uh, you know, uh, certain customers that you think are high priority, and you're saying, I want to touch them in as many, you know, nuanced ways as possible, uh, to see if that drives conversion. And this is something, you know, I've seen tried many times where People do it, but they kind of, you know, uh, do it halfway where they're like, okay, tried these three things, conversion of the control route, like wasn't higher. Uh, and so we're, you know, we think it's, it's not gonna work. And then a new go to market executive comes and they have to do it again. They have to do it again. They have to do it again. It's like a very common one, wherever this happens. And, uh, and so when we did it at ramp, uh, we, we did exactly, you know, what I just described, which is like, Let's really be thoughtful about the experiment design, both in terms of like maximizing the number of people, as well as, you know, maximizing the number of ways and types of ways that we're effectively, uh, touching these target customers to show the value.

AI assessment note: “when we did it at ramp, uh, we, we did exactly, you know”