Lenny's Podcast: Product | Career | Growth
01:07:12 · Rob Snyder
[01:07:12] S0: Yeah. So I found that I didn't really have a good way to think about what happens after people buy. And so I felt like the dog who got a car, and I just kinda, like, threw the software over the over the over the fence and, like, good luck. What I've learned since then the hard way, obviously, is that, look, retention is super important and it's not obvious. And so the way I think about, like, delivery post sale is that basically everybody who buys is guaranteed to churn until x, in which case they're weird to churn. And all delivery is... Everything is about figuring out what is x and how do you design a bullet train so every customer gets there. And so x is... You might think of it as, oh, they're using the product or they have high NPS or whatever it is. It's almost never those things. Marc Roberge has this kind of leading indicator of retention, which for Slack was like you've sent 10,000 messages or 1,000 messages in your first x amount of time. If you hit that, it's like... It'd be weird if you churned. You're... It's the leading indicator of retention. For my startup, we gave retention software to restaurants. If they got a notification that somebody was going to quit, that they could prevent within the first two weeks after purchase, they would go insane. They would tell all of their friends about it, and it would be weird if they churned. And so we just designed the onboarding process to that. And so what I recommend is once you have a couple people who are saying yes, don't just throw the product over and send them a login and pray. Go deliver firsthand as well, and you're gonna learn a ton from that. And keep asking the question, you gonna churn now? Are you gonna churn now? Like, what? And try to find the moment when when they're like, oh, okay. Cool. I can't live without this.
01:09:06 · Lenny Rachitsky
[01:09:06] S1: I love how your mind works, where it's these formulas and these templates and just everything is this. And, obviously, it's not like this clean-cut, but it's really helpful, I think, for people to just think of it in these very structured ways to take these general ideas of what it looks like when things are going well and how to find an idea to just like, here's what you plug in, talk about the specific thing, it's working, adjust. So this is great. On the churn piece, is there... What's like a sign? Okay. Shoot. Everyone's churning. Just like a sign of like, okay. They thought they didn't, but that it's not working. Anything there? Just like, what's a sign at this stage? Okay. Maybe it's not working versus it is.
01:09:42 · Rob Snyder
[01:09:42] S0: Yeah. So if everybody's churning, it is unacceptable for you to not figure out why. And so what I've actually seen is in a lot of cases, like for a lot of horizontal products, you're going to have a lot of user drop off. One one startup I know, they they were a horizontal AI workflows product. Cool. Join the club. Right? But they found through being a horizontal AI workflows product that one or two kinds of customers kept using it while everyone else was churning. And so if a bunch of people are churning, 90% plus of your cost... Your customers are churning. First of all, I'm sorry. It sucks. It really... You know, you wake up at 4AM every morning just sweating. But in that, you often can figure out why. And is it something that you're doing, or is it something about them? And that can tell you, okay. Who actually had pull that we can sell, deliver, retain? And and for, like, that horizontal workflows product, they found that freight forwarders were using it for one specific workflow. So they pivoted the entire company to focus on that. And so they went from being this horizontal product with massive churn, low price, to a very premium product for freight forwarders.
01:10:54 · Lenny Rachitsky, Rob Snyder
[01:10:54] S1: There's no point at which like, okay, we figured it out. We're gonna be a massive success. Like every moment of the startup journey is an uncertain moment. But what's great about this process so far is every step you get, it's more and more certain. There's something here at least. And then there's like the in forever doubt of like how big can this get. I remember talking to the founder of Databricks, is now like a bazillion trillion dollar company. And he said something like, even at a 100,000,000 ARR, they were still very unclear if this was a thing that will last. And I think it's very common. So that's it's like its own topic of just like That's [01:11:26] S0: nice to know. That's nice to know. Because everyone... Yeah. Ever... Everyone's like, how will this become a big thing? It's like, I don't know. We'll figure it out. [01:11:34] S1: Yeah. It's just kind of one step at a time. And and so so in this conversation, the final step in my mind is this idea you have of this use user case study factory, which kind of takes you from things are starting to work to okay, now we can create a repeatable system that helps us grow. So talk about that, what that looks like, what that's about.
01:11:53 · Rob Snyder
[01:11:53] S0: Yeah. So this is the thing that whenever I talk about, everyone just, like... Everyone's eyes glaze over, and so I haven't found found a useful way to talk about this yet. So just free warning. I think it's the most important thing in in all of this, which is how do you think about your startup? What's your conceptual model for your startup? And, like, you need to have a way to think about your startup to know how to grow it as fast as humanly possible. So what winds up happening is you find somebody who has pull. You give them a product or service or whatever that they pull out of your hands. So it turns out they were trying to do x, their existing options weren't good enough for y, and you offer z that helps unblock them. That sounds a lot like a case study that you would feature on your website. And it's a helpful thing because, okay, my job as a founder is not to produce a 100 different case studies, totally different case studies, because that's not scalable. That's not repeatable. I'm looking to build one case study where a customer says hell yes before they buy and after they buy and just repeat that a million times. And so that model helped me go from thinking that startups were a bunch of different things. I need to know all these different things to like, No, a startup is just a thing that repeats one case study infinite times. And all the stuff that I do is to build a factory for repeating that case study. And if I do this right, there's a case study where customers say hell yes, and they pull themselves through each step of the factory. The steps are the pipeline step, how do we get people to talk to us? Sales step, how do we turn potential customers into actual customers? And the delivery step of the case study factory, which is how do we get people who are customers to be weird not to churn? And so everything we do kind of fits into this case study factoring. If you see this in your mind, it radically simplifies a startup, how it works. And then you can use the theory of constraints, we're gonna get really nerdy for a second, from manufacturing to look at your case study factoring and say, okay, where the bottleneck to our growth? Is it that we don't have enough pipeline? Okay, cool. If that's the bottleneck, then that's the only thing that matters right now. Let's solve that bottleneck and then we'll move to the next one.
01:14:06 · Rob Snyder, Lenny Rachitsky
The next one is our close rate is lower than it should be. Okay, cool. That's our bottleneck. Now we're going go all in on that. And so it lets you go... The case study factory model gives you a way of thinking about your startup and knowing exactly where to focus at any one point in time. [01:14:23] S1: It's a really interesting way to think about it, where instead of we are trying to just get more customers closed and more deals closed, instead we're looking, we're building case studies, like almost like working backwards from what's the case study going to be of this company we're talking to, say we're talking to SpaceX, just like we want it to look consistent across all the companies we're talking to, people talk about, call this repeatable sales motions. But I like the idea of thinking about, like it's almost like working backwards from the press release, but for What is the case study we're gonna write about SpaceX? Okay, here's how we got them, here's how we got sold them, here's how we delivered it. Then the year is just like create like consistent repeatable case studies that you'll later be able to share.