The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
00:17:38 · Federico Simionato, Harry Stebbings
[00:17:38] S2: I think 50% or 60%, something like that. [00:17:41] S1: Okay. That's quite a lot. Yeah. That is different to a Netflix, like a dollar difference where you're like, fuck it. But what's interesting is that proportionally to the churn numbers, increase prices by 50 or 60% and people go, woah. You're making a lot more money in that case. [00:17:54] S2: Yes. And and on one hand, it's like economic play. It's a financial play where where you're where you're making more money. The thing I like about it is that it all boils down to how useful the product is for you. And if it's more useful than what you're paying for it, it's a no brainer decision to stay retained, to stay subscribed. [00:18:11] S1: Absolutely. And also, like, as you said, it separates the flexi user who had just switched to another tool very willingly versus something different. [00:18:19] S2: Yes. [00:18:19] S1: Do you have any lessons on pricing communication in terms of how to let users know a price is changing, the right words to use, is email the best way, is it push notification? Any lessons?
00:18:19 · Harry Stebbings, Federico Simionato
[00:18:19] S1: Do you have any lessons on pricing communication in terms of how to let users know a price is changing, the right words to use, is email the best way, is it push notification? Any lessons? [00:18:32] S2: I think what you want to do is you want to be confident about what you're doing so that you don't fear communication. If I'm confident that the price I'm asking you to pay is fair, then I can tell you 10 times, and you will still make the decision of staying retained. If you're trying to, like, shy away and, like, should we, like, use bullshit language and and not really tell people that we are increasing their prices? That's a bad move, and I and I and I wouldn't... It means that you're not confident that your product is delivering value to people. You just need to accept the fact that some people... This new price is going to be over their threshold for for usefulness and just be confident that what you're asking is best for most people. [00:19:12] S1: Do you think you make it easy enough for people to unsubscribe from your products?
00:19:12 · Harry Stebbings, Federico Simionato
[00:19:12] S1: Do you think you make it easy enough for people to unsubscribe from your products? [00:19:16] S2: Yeah. Yeah. We we invest a lot. I mean, at the end of the day, being here for the long run... It's not just about Evernote. Right? It's about Bending Spoons, all of our products. We we are acquiring bigger and bigger products. Instead of making a 2% more revenue on Evernote, it's much more important to build a reputation of a company that you can trust. And so instead of, like, some newspaper, I think, famously asked you to call a phone number to unsubscribe, and that was the only way to unsubscribe, and then you had to wait half an hour to unsubscribe. Instead, we we we review the unsubscription process regularly so that it's not too cumbersome, too frictionful. [00:19:56] S1: That's fascinating. So we have the idea process and then we have the, oh, we've got something that could be a good idea. How do we go from idea to early testing in MVP? What does that look like?
00:20:08 · Federico Simionato
[00:20:08] S2: Yeah. It depends a lot product by product. So on Evernote, it's more about sitting down with customers, having conversations with them, showing them prototypes on Figma, for instance. Does this look like something that you think is useful for you, for your use case? And then over time, we've started knowing our customers better. We have a panel of Evernote experts that we know well and we know their use cases. And so we know that we can always count on them on providing feedback on advanced features. When it's a more casual feature, maybe we we will want to talk to a more like average customer. So the way we identify the feature that works on Evernote is we just sit down with people and we show it to them. We show the prototype to them. We show the Figma to them. And based on their feedback, we just tweak it or maybe even discard it. How do you know when to ingest advice and change versus discard it with customer feedback? It's especially important to realize when people are telling you, I don't need this. And people never tell you, I don't need this. They generally tell you, yeah, it looks fine. It looks okay. And so you have to be... There's a great book. It's called The Mom Test that you can read, and it tells you... If you ask your mother, did I do okay? She's always gonna tell you that you did okay. Right? It's... She's never gonna tell you, yeah, you did poorly or this is not good. You should ask questions in a way that forces people to tell you, yeah, I would actually not use this. So for instance, instead of asking you, how often do you work out? You will come up with an ideal version of you that says, like, yeah, I work out three times a week. But then I ask you, how many times have you worked out last week? And you're like, only one, but actually it's because I had a meeting and it was away. Okay. Well, how many times did you work out the previous week? Still one because of this other thing? The previous week. Still one. And and so after a while, notice that the things that people actually do are different from the things that they say. And so you should ask people, instead of do you like this feature or would you use it, you should ask them, what's a use case that you had in the last month for which this would have been useful? And if they can't come up with any, it's it's a red flag. Right?
00:22:12 · Harry Stebbings, Federico Simionato
[00:22:12] S1: Any other questions that are very helpful in identifying that? I love that. What's the use case in the last month? Any others? [00:22:18] S2: It depends a lot on who you ask. Like, if we select a user that we know is very active, then what we can ask is more like, how have you organized your system on Evernote, your your hierarchy of information on Evernote, your notebooks, your notes in a way that powers your business or powers your professional life, for instance. Instead, if you are selecting a user that is maybe a bit more casual or newer, then we we should ask more specific questions about, like, recently, what what did you do recently on Evernote? What reasons did you have for taking notes? [00:22:50] S1: It's very difficult when you have a broad set of customers, ones which are incredibly advanced power users and ones which are much more casual. How do you advise people on building products for both without alienating either?
00:22:50 · Harry Stebbings, Federico Simionato
[00:22:50] S1: It's very difficult when you have a broad set of customers, ones which are incredibly advanced power users and ones which are much more casual. How do you advise people on building products for both without alienating either? [00:23:06] S2: Mhmm. It's not easy. It's it's not... There's no, like, silver bullet that you can pull that that makes both happy. Sometimes you can find things that are useful to both groups. You should think about your product very specifically, like Evernote. Should we build Evernote for casual users? What would casual users do? They wouldn't pay because they are casual, and so they they wouldn't invest much on a on a product that just gives them, like, basic functionality. They have loads of competing products that they can choose from, Apple Notes, Google Keep, and stuff like that. And so it doesn't look like it's a great arena to fight. You have great competition that's free and that's preinstalled on your device. How can you win that battle? Instead, advanced users, you cannot use Apple Notes if if you're very advanced. If you cannot use Google Keep if you're very advanced. So that's a battle that we can win. So it's very important to realize what arena you choose before you start. It's very much the same for content, by the way. [00:24:04] S1: I mean, you're very kind in saying that you like the show. You know, we very much have this question often of do we go deep for fewer or broad for many? [00:24:12] S2: Mhmm.