The Physics of Startups
00:26:44 · RC, Rob Snyder
[00:26:44] S0: Yeah. And the um what that uh maybe real quick, I I realize I didn't get the examples. Uh can you give me two exam one or two examples of a case study? Like what is um, yeah, what is that what does that look like? [00:26:59] S1: Yeah, okay. Let's let's just do like mine with lovable. That's like a this is a classic one, or or even yours with lovable recently, as as uh we could talk about, which is um I want to create a website, I want to update a website that reflects my my kind of brand needs or whatever. Um right now, because I don't know, I'm about to release a book. That was my case, about to release a book, and my Google Doc website is not good enough. Um uh, but I consider using Squarespace or Wix or one of those point and click ones. And I the limitations on that are I don't hate myself enough to spend five hours clicking around in a point and click thing. I don't have the skill or patience to do that. So I am right, like I am stuck in that situation. Lovable comes around and says, Hey, maybe just tell us what you want to build and we will do it for you. And so I just rage type a three-paragraph essay and I have a website and it's done. And so, and so that's like the example, but but every single example of poll that we've given in this podcast, it in all of my newsletters and everything that like those are all just case studies.
00:28:10 · RC
[00:28:10] S0: Yeah, perfect. Okay, thanks. Just wanted to bring that and actually I kind of like that one because literally I heard your case study and it pulled and and then I pulled through that and like switched my website to lovable because I also had a deadline that I was gonna hit and I needed to not need to wrestle with a website for 15 hours or 20 hours or whatever, multiple weeks. Um, anyways, let's okay, you just brought up constraints. Um, okay, so pipeline sales delivery, like, okay, I get it. You gotta find people, or they've got to find you, or I've got to sell to them, I've got to deliver it to them. Um, why is uh pretend I'm an idiot, which shouldn't be super hard. Why have I been doing this whole time? Exactly. Why where does constraints come in? Like, what does the constraint look like? Um you know, choose, let's say that it's let's put it in the middle. Actually, sales is your constraint. It's not pipeline and it's not delivery. What like what does that constraint look like and why why is that the thing that you need to tackle rather than optimizing pipeline or optimizing delivery?
00:29:14 · Rob Snyder, RC
[00:29:14] S1: Yeah, so so um what that what that would look like is um you are having 20 sales calls a week and no nobody is buying, or like very few people of those are actually turning into customers and they're dropping off for a variety of reasons. And so what you can see there is like, okay, cool. Um if I make my product better in that situation, it's not gonna matter because I'm having 19 sales calls per week that are not converting into customers. If I increase the number of, if I double the amount of sales calls I have per week, my life just gets double as bad, like twice as bad. So there is if I like improve that, the pipeline step here, it's not going to change things. Really. It's like it's not gonna improve the number of case studies that I produce um at the at the end of this factory. [00:30:09] S0: Um and especially for uh like for a software or for an AI solution where delivery is basically unconstrained frequently there. It's like, you know, there's probably some setup, but that frequent but that is probably not the constraint, or it might not, it's you know, you can infinitely focus on improving your your products, or you know, but but as long as sales is the uh is the constraint, and you mentioned like they're either not converting, it can also take the form of it takes six months to sell to them, or you know, it's uh it it involves.
00:30:42 · Rob Snyder
[00:30:42] S1: It takes all of my effort to close these deals. Everyone is magical. Like it could be, it could be a variety of things like that to where we say, okay, cool, let's right. Improving pipeline is not going to change things. Improving delivery is not going to change the kind of production of case studies, the like throughput, the the amount of output of case studies here. Yeah. And and so we're like, okay, cool. The constraint on growth is the sales process. Then we can also we can import a bunch of other men, like manufacturing people have thought about this a lot. They have a concept called five whys, which is you just try to figure out, okay, why is our conversion rate so low? Why is it doing and then we just get down to the root cause of that, attack whatever that thing is, and then your constraint will move. So let's say it's, oh, it turns out, this is very common. Uh it turns out that our sales problem, the reason we're converting one out of 20 customers when we're having 20 calls per week, is that we are targeting the wrong kind of person. We're targeting a person who doesn't have pull. Right? That's an example. Okay, cool. So what do we do? We change targeting for the pipeline step. And then we see, okay, cool. Now we have 20 meetings a week and 10 of them convert or something like that. It's like, okay, cool. Now there's probably another constraint in the factory. There's like maybe it's still the sales step, because when we look at the number of people, you have 20 sales calls per week, 18 of them have pull, but only 10 of them close. Then the question is, okay, what uh what's going on with those other eight? And you go and root cause analyze that and say, okay, this is if we can solve this, we're gonna go from 10 to 18 case studies produced per week, or whatever it winds up being. But just illustrative, but this is the kind of the and and the kind of the interesting thing here is this is you you just ask the same question every single day. What's the constraint? What do we and and therefore what do we need to dig into, get to the root cause, ship a fix, and then move to the next one?
00:32:51 · RC, Rob Snyder
[00:32:51] S0: Yeah. So that's actually a good exercise if any unfortunate founder has made it this, you know, 32 minutes into our conversation. Um the like just ask yourself, like, where where is the constraint? And if um Rob, let's say that they do founders you work with dozens, hundreds of founders at this point. Do they all know where the constraint is in their business? [00:33:12] S1: No, no, just add as a add AI Rob or whatever, like uh-huh. I've designed AI Rob so you can plug it into your data and it will tell you what your constraint is. And so um, feel free to give that a try. Or, you know, I'm happy, right. In a in a 10 minute 10 minutes of me grilling you, we can figure out what your constraint is. Um the questions I'm asking are at the end here. It's like, okay, um, what is pull? What is your case study? And then like, okay, how many meetings are you having per week? How many of those convert? How many of those, how many of those turn into actual customers? Is it's pretty straightforward. I'm just like, I'm just speccing out the factory in my head.
00:33:50 · RC
[00:33:50] S0: Yeah. Um, you know, there's one other thing that you write, Rob, here that I I wanna I want to pull in, um, because seems obvious, is actually not super intuitive, and is different, meaningfully different from what a lot of startup theory out there, or you know, what a lot of you know, popular whatever that everybody has heard um uh tells you you should be focused on. And what you're focus what you're saying is think of your startup as a uh as of a case study factory, focus on the constraint. Here are some other things. If you could just like rip rip into these real quick, um you're right. Importantly, you do not get this intuition from any other way of looking at your startup. You're either building a product or selling it, gets you none of this. Neither does thinking about the company as a quote unquote software factory or a vehicle for your vision, nor does optimizing for revenue, thinking about marketing as a funnel, et cetera, et cetera, et cetera. Um yeah, you mentioned uh the software factory. When I hear that, I'm like, okay, that's actually the the delivery machine is like it's like a part of that. Yes. Um thinking of the marketing as a funnel, like why are these the wrong way to be conceptualizing uh and making decisions about where to spend your time as a founder?