What happens when you talk about too many goals

This post is by DJ from A Founder's Notebook

From How Jeremy Corbyn Lost The Election – And Started The Race To Replace Him:

One big problem was the sheer size of the manifesto and the number of policies on offer. Candidates complained that they didn’t have a single five-point pledge card like the one Tony Blair made famous. While the Tories had a simple message of ‘Get Brexit Done’, Labour lacked a similarly easy ‘doorstep offer’. “We had so much in the manifesto we almost had too much,” one senior source said. “It felt like none of it was cutting through. You needed to boil it down.”

(1) This is a fundamental point about successful communication, and therefore applies to managers as well.
(2) See What’s your “simple scoreboard”?

The key to success? Do less.

This post is by DJ from A Founder's Notebook

Excerpt from How to Succeed in Business? Do Less by Morten T. Hansen:

Most top performers in business have one thing in common: They accept fewer tasks and then obsess over getting them right.

The common practice we found among the highest-ranked performers in our study wasn’t at all what we expected. It wasn’t a better ability to organize or delegate. Instead, top performers mastered selectivity. Whenever they could, they carefully selected which priorities, tasks, meetings, customers, ideas or steps to undertake and which to let go. They then applied intense, targeted effort on those few priorities in order to excel. We found that just a few key work practices related to such selectivity accounted for two-thirds of the variation in performance among our subjects. Talent, effort and luck undoubtedly mattered as well, but not nearly as much.

The research makes clear that we should change our individual work habits if we wish to perform better, but the implications are much more far-reaching. We also need to change how we manage and reward work, how we measure economic productivity and perhaps most important, how our culture recognizes hard work. We should no longer take it as an automatic compliment to hear that we’re “hard working.” Hard work isn’t always the best work. The key is to work smarter.

(1) This doesn’t mean that companies should adopt fewer goals. Companies may achieve more by having teams or individuals working on different goals. But individuals must focus.
(2) My Continue reading “The key to success? Do less.”

How to manage legal, finance, IT, and HR to enable you to move fast

This post is by DJ from A Founder's Notebook

Edited excerpt from Lean Startup’s Eric Ries on How to Make ‘Gatekeepers’ a Source of Power and Speed:

Eric Ries calls functions like Legal, Finance, IT, and HR “gatekeepers”: Gatekeepers are the functional teams whose beneficiary is predominately the company itself, versus the end customer. They often impact the ability of the makers and sellers of the product — Product, Design, Engineering, Marketing and Sales — to reach customers.

The top tip for non-gatekeepers: Avoid the eleventh-hour ask. What they experience is someone calling them with no lead time, pitching a complex plan and asking for a thumbs up or down by end-of-day. From the gatekeeper’s point of view, that’s a lose-lose proposition. Either she has to say yes to something that has more liability than she’s comfortable with, or she has to say no and be the evil one. Instead, employ a cross-functional team from the start.

The top tip for gatekeepers: Revere how others build, be flexible in how you build. The best-performing gatekeepers have entrepreneurial virtues. They’ve got a tolerance — even comfort with — uncertainty and ambiguity and understand why entrepreneurship is challenging. This translates to empathy for what the product teams are going through. That flexibility brings a learning-first mentality. You want a gatekeeper who’s informed, but not always coming in with all the answers. She should be able to synthesize her expertise with what the company is doing.

The top tip for CEOs/founders: Foster an environment where gatekeepers can serve, not just respond. The Continue reading “How to manage legal, finance, IT, and HR to enable you to move fast”

Five key takeaways from Peter Drucker’s “How To Be An Effective Executive”

This post is by DJ from A Founder's Notebook

In his book How To Be An Effective Executive, Peter Drucker identifies five key habits of effective executives:

1. Manage time. Use a three-step process: (i) Track your time use, and eliminate time wasters. (ii) Delegate by identifying tasks which can be done equally well by someone else. (iii) Don’t waste the time of those who work for you or with you. Ask: “What do I do which wastes your time?”.

2. Focus on contribution. Ask yourself what you can contribute that will significantly affect the performance of your company. If you don’t ask this, you’ll aim too low or at the wrong things. Look to contribute in three areas: (i) Direct results. (ii) Building and re-affirming values. (iii) Building and developing people for tomorrow.

3. Build on strengths. To “staff for strength”: (i) Make sure all jobs are designed well. Identify any job that has defeated two or three people in succession and get rid of it. (ii) Make each job demanding and big, as a challenge brings out strengths. (iii) Start with what a person can do, rather than what a job requires. Ask what a person has done well, and therefore what they are likely to do well in future. That includes yourself. (iv) Tolerate weaknesses.

4. Concentrate time, effort and resources. Do first things first, and only one thing at a time. Embrace the opposite of multi-tasking. Allow a fair margin of time over what you think you’ll need, and don’t race. Say “no” Continue reading “Five key takeaways from Peter Drucker’s “How To Be An Effective Executive””

Why revenue retention is the wrong operating metric to combat churn

This post is by DJ from A Founder's Notebook

Edited excerpt from Why Retention Is The Silent Killer by Brian Balfour:

When I ask someone from a SaaS business, or another subscription model business, about their retention, I almost always get an answer involving monthly or yearly revenue retention. This is a red flag for me. I’m far more interested in how retention is reflected in the breadth and depth of product usage.

Why, you ask? Revenue retention is the output of engaged users. The usage is the input, and looking only at revenue retention as a proxy for usage retention has two big problems:

1. Revenue can hide what is going on under the hood with product usage, and shield you from signals about your product’s health over the longer term. You may earn a month or a year’s worth of revenue from a paying subscriber, but if that person isn’t using the product, they will churn when that month or year is up.

2. If you are trying to improve retention but only tracking revenue retention, the game is over before you’ve even had the chance to play. Once a paying subscriber has churned, winning them back is almost impossible. If you want to improve retention you need to look at usage retention first.

(1) Contrast Brian’s emphasis on product usage with David Skok’s approach in How to reduce churn.
(2) Cf. The relationship between frequency of habit and customer retention.
(3) Cf. How to reduce churn by identifying your “red flag metrics”.
Continue reading “Why revenue retention is the wrong operating metric to combat churn”

Mobile vs. desktop usage habits

This post is by DJ from A Founder's Notebook

Edited excerpt from How Meredith built Allrecipes into a digital-to-print, multichannel success by Cobus Heyl:

When designing each experience, we look to the unique strength of each medium.

Web provides a high degree of interactivity and utility: A keyboard and mouse allow the consumer to actively share their experiences through text. The large screen allows them to engage and to interact with the content through drag and drop functionality, and allows many items to be present on the page at the same time.

Mobile is all about mobility and constant connectivity: We take advantage of the likelihood that the home cook is most likely on-the-go or in-store when using their phone, so we are very much focused on helping them quickly find and share dinner solutions. The phone’s geolocation technology pinpoints the cook’s location so we can deliver hyper-local grocery offers that match their location and preferred retail outlet. We also take advantage of touch, voice and motion to allow them to enhance the brand experience. Mobile devices are also more likely to be a personal vs. shared device, so we can pay attention to their past behaviours to deliver a more personalized experience uniquely tailored to their interests and needs.

Print is an experience where cooks are most likely interested in having us curate the experience for them: The team pays close attention to the trends and behaviours we are seeing play out on the web to inform the editorial framework and focus of each issue. They are Continue reading “Mobile vs. desktop usage habits”

Improving retention helps growth in 4 ways

This post is by DJ from A Founder's Notebook

Excerpt from The One Growth Metric that Moves Acquisition, Monetization, and Virality by Brian Balfour:

Most people think retention is so crucial simply because it means you lose fewer users than you otherwise would. Though this is true, it misses the critical point. Retention is the core of your growth model and influences every other input to your model. This is important because if you improve retention, you’ll also improve the rest of your funnel:

1. Retention drives acquisition. For many products, especially those that grow through virality or user generated content (UGC), retention has a double effect. As you retain more users, those additional users take more of the key actions that accelerate acquisition, either through sharing, inviting, word-of-mouth, or creating content. As more of those new users retain, more are acquired – improving retention sets off a self-reinforcing cycle that drives acquisition.

2. Retention improves monetization. When it comes to monetization, two important things happen with improved retention – you can retain a larger proportion of a cohort, and in doing so, make more money from that cohort within a given period of time, and you can increase the length of time that a cohort retains, increasing LTV.

3. Retention builds an acquisition competitive edge. As you increase retention, monetization, and LTV, you can pay more to acquire a customer. In doing so, you can push competitors out of acquisition channels, open up new channels that were previously too expensive, and grow faster.

4. Retention accelerates payback Continue reading “Improving retention helps growth in 4 ways”

Four ways to show you care about your team’s careers

This post is by DJ from A Founder's Notebook

Excerpt from The Front of the Jersey by Doug Weaver:

Call out the elephant in the room. “We both know that you won’t necessarily always work here…” can be the phrase that really opens up your dialogue with your employees and shows that you’re treating them as adults, not assets.

How does today’s action create long term value? Want your team members to get better at something? Frame the discussion around their long term value in the marketplace. Every rep has a stock price and that stock price is either going up or down.

Commit to them. Tell them that you want this to be the best place they’ll ever work, and that you’d like to be remembered as the boss who made them better at their craft. Then do what you say.

Put the relationships in long term context. Will there be a network of people out there who speak well of them in the future, or a network that’s felt slighted, overlooked or abused?

(1) Thank you Brad Westbrook and Alon Zieve for the tip.
(2) Cf. Laszlo Bock’s eight steps to being a good manager
(3) Cf. Build self-confidence — but not your own

The most important job of a product leader

This post is by DJ from A Founder's Notebook

Excerpt from How to Run a Quarterly Product Strategy Meeting: A Board Meeting for Product by former VP/CPO at Netflix and Chegg, Gibon Biddle:

I think the most important job of a product leader is to outline a cohesive product strategy, along with metrics and tactics against these strategies. The way I define the product leader’s job is to delight customers, in margin-enhancing, hard-to-copy ways.

Your product strategy should define your key hypotheses about how you plan to deliver on these three dimensions. The metrics are how you measure your progress, and the tactics are simply projects or experiments against each of your key strategies.

(i) Thank you Alon Zieve for the article recommendation.
(ii) Cf. First principles for startup founders (and product managers).
(iii) Cf. The heart of any growth strategy is core product value.

When freemium makes sense

This post is by DJ from A Founder's Notebook

Excerpt from Subscription Business Models Are Great for Some Businesses and Terrible for Others by Robbie Kellman Baxter:

I love freemium, the idea of combining a premium paid membership with a free membership that provides value forever. But freemium needs to work in service to a larger business strategy. Freemium works best in three scenarios:

– As a means of trial. Many people who have a free subscription to Dropbox get all of the online storage they need. But for others, as they make Dropbox part of their daily routine, they find they need more storage and greater functionality. As a result, they upgrade to the premium service.

– To create a networked effect. Each new member that joins LinkedIn for free creates additional value for the recruiters, salespeople and jobseekers paying for LinkedIn subscriptions. And if no one used the free version of LinkedIn, there’d be little reason for those people to pay at all.

– To serve as a marketing channel. Some people never pay for a SurveyMonkey subscription, because they only need small surveys sent to a few people, with limited analytics. But when those people send out their surveys, they are advertising for SurveyMonkey to everyone who receives the survey. If one of those survey recipients subscribes to the premium offering, the sender (who’s a free member) becomes a marketing channel for attracting and converting new members.

(1) Thank you Daniel Shvartsman for the article recommendation.
(2) Note the similarities with Tom Tunguz’ The Continue reading “When freemium makes sense”

Managers’ biggest HR mistake, and how to fix it

This post is by DJ from A Founder's Notebook

I was chatting with someone who ran HR for a Fortune 500 company and is now an HR consultant. “What are managers’ biggest mistakes in HR?”, I asked him. “And what’s your best advice for them?” His answer:

Most companies succeed because of a small number of outstanding employees — the stars. But managers frequently make the mistake of devoting the majority of their time to under-performers. Instead, they should be devoting their time to these stars who truly drive their company’s performance.

So the most impactful advice I give managers is: identify your stars; let them know they are stars; and spend time thinking about how to empower them — how to give them responsibility, how to ensure they’re on challenging and impactful projects, and how to coach them for promotion.

(1) Cf. The best thing you can do for your team.
(2) Cf. Should you hire superstars?

Chris Fralic’s 7 rules for making memorable connections

This post is by DJ from A Founder's Notebook

Edited excerpt from How to Become Insanely Well-Connected by Chris Fralic:

1. Convey genuine appreciation — think about what they know that you don’t.
2. Listen with intent — demonstrate you’ve heard exactly what was said by the other person, and encourage them to continue.
3. Use humility markers — acknowledge your own fallibility and imperfection so you’re relatable; act in a way that implies your time is no more important than theirs.
4. Offer unvarnished honesty — in what will actually have utility for the other party.
5. Blue-sky brainstorm — with them, not for them.
6. End every meeting or conversation with the feeling and optimism you’d like to have at the start of your next conversation with the person.
7. Don’t fake it — know exactly why you care about that person or their company, based on diligent preparation.

(1) According to Chris, the over-arching principle is: Imparting energy is more important than sharing new information.
(2) Perhaps this advice applies to all relationships, not just business connections.
(3) Note Chris’ advice about how to listen with intent — “demonstrate you’ve heard exactly what was said by the other person, and encourage them to continue”. Cf. How to be a better listener.

If you have any paying customers, don’t quit

This post is by DJ from A Founder's Notebook

Edited excerpt from The Right Sales Metrics For Your SaaS Startup, an interview with Jason Lemkin:

Q: You share a lot of advice about business growth on your blog, Saastr.com, taken from your own experiences. What was the most important lesson you took away from growing EchoSign or NanoGram?

A: The most important lesson, especially for earlier-stage entrepreneurs, is don’t quit. What I’ve learned from both my startups is if you have anything at all, build on it. Every SaaS company has a different story of how they got to initial traction, that $1 million to $1.5 million run rate. Some got there in 2 months, others took 4 years to get to a million in revenue. It may seem bleak if you’re doing just $10,000 or $5,000 a month, but it’s almost impossible to get anyone to buy anything. They don’t need any more business web services. So if you have something, even if it that doesn’t pay everyone’s salaries, don’t quit.

(1) Cf. Why SaaS and subscription businesses often take longer than B2C.
(2) Cf. For SaaS startups — how to avoid increasing costs inefficiently and prematurely.

“Job To Be Done” for seed stage startups (#JTBD)

This post is by DJ from A Founder's Notebook

Yesterday I ran a workshop for seed stage startups about how to use the Job To Be Done framework to raise their chances of achieving product-market fit. The surprise: many seed stage startups are unclear about who their target customer is. A simple Job To Be Done exercise exposes the lack of clarity and helps resolve it.

Here’s the presentation and exercise:
“Job To Be Done” for seed stage startups

A better format for brainstorming

This post is by DJ from A Founder's Notebook

Maoz is a not for profit which helps leaders in the Israeli public sector make better decisions by inviting input from a network of smart volunteers. This is how they conduct their brainstorming sessions:

  • The “owner” presents the problem / issue.
  • Participants ask questions for 15 minutes.
  • Participants discuss possible answers and approaches; the owner observes the discussion but doesn’t participate in it.

(1) Brilliant. Dedicated question time forces participants to ask questions before expressing opinions. And excluding the owner from the subsequent discussion removes the risk that the owner will get defensive, anchor the conversation in their current approach to the issue, or not listen because they’re thinking what to say next.
(2) Cf. Group brainstorming doesn’t lead to creativity; this does. Perhaps Maoz’s brainstorming is different because it involves external players, not the members of a team responsible for achieving a goal.
(3) Cf. When you’re given advice, here’s how to listen with an open mind.

How to find out in an interview if someone is a giver or a taker

This post is by DJ from A Founder's Notebook

Edited excerpt from 1 Interview Question That Cuts Through the BS to Reveal Someone’s True Character by Betsy Mikel:

Organizational psychologist Adam Grant says that the more often people help each other, the better the organization does. To create a culture of helping, you need to hire the givers, not the takers. However, just because someone is agreeable doesn’t mean they’re a giver — there are plenty of agreeable takers and disagreeable givers in this world. To find out whether someone is a giver or taker, irrespective of how agreeable they are, ask:

Can you give me the names of four people whose careers you have fundamentally improved?

The takers will give you the names of four people who have more influence than they do. They care more about influence than they do about helping. The givers will give you the names of four people you’ve likely never heard of, who are equal to them or below them in power. That’s because givers aren’t in the business of helping to help themselves succeed.

(1) Thank you Hana Abduljaami for the tip.
(2) This is very different from most other recommended interview questions, such as Sonya Meloff’s, Peter Thiel’s, Spencer Rascoff’s and Lou Adler’s.

Don’t let self-criticism become self-flagellation

This post is by DJ from A Founder's Notebook

From The School of Life, via The Difficult Art of Self-Compassion by Maria Popova:

To survive in this high-pressured, crazy world, most of us have to become highly adept at self-criticism. We learn how to tell ourselves off for our failures, and for not working hard or smart enough. But so good are we at this that we’re sometimes in danger of falling prey to an excessive version of self-criticism — what we might call self-flagellation: a rather dangerous state, which just ushers in depression and underperformance. We might simply lose the will to get out of bed.

For those moments, we need a corrective — we need to carve out time for an emotional state of which many of us are profoundly suspicious: self-compassion. We’re suspicious because this sounds horribly close to self-pity. But because depression and self-hatred are serious enemies of a good life, we need to appreciate the role of self-care in a good, ambitious, and fruitful life.

(1) “Treating yourself with the understanding, mindfulness and kindness with which you would treat a friend – leads to far greater resilience, productivity and well-being.” From Stop beating yourself up.
(2) At the management level: (i) Build self-confidence — but not your own, and (ii) A simple litmus test for great managers.
(3) At the company level: Why celebrating wins is so hard, but so important.

VCs make two common errors, the data shows

This post is by DJ from A Founder's Notebook

Excerpt from the Startup Genome Report — A new framework for understanding why startups succeed:

1. Many investors invest 2-3x more capital than necessary in startups that haven’t reached problem solution fit yet. They also over-invest in solo founders and founding teams without technical cofounders despite indicators that show that these teams have a much lower probability of success.

2. Investors who provide hands-on help have little or no effect on the company’s operational performance. But the right mentors significantly influence a company’s performance and ability to raise money. (However, this does not mean that investors don’t have a significant effect on valuations and M&A.)

(1) Re. “Many investors invest 2-3x more capital than necessary in startups that haven’t reached problem solution fit yet.” Cf. (i) The real difference between funding rounds and (ii) Why you should bootstrap your startup before raising money.
(2) Re. “Investors who provide hands-on help have little or no effect on the company’s operational performance.” Cf. VC pitfalls to watch for: trying to fix companies.

How money can mess up your startup

This post is by DJ from A Founder's Notebook

Edited excerpt from MailChimp and the Un-Silicon Valley Way to Make It as a Start-Up by Farhad Manjoo:

Start-ups fueled by venture capital often need to figure out how to run like ordinary businesses; they embark on unsustainable growth, they forget about earning money, they don’t learn how to weather tough times. The tech economy is littered with companies that raised too much money — and suffered for it.

“One of the problems with raising money is it teaches you bad habits from the start,” said Jason Fried, the co-founder of the software company Basecamp. “If you’re an entrepreneur and you have a bunch of money in the bank, you get good at spending money.”

But if companies are forced to generate revenue from the beginning, “what you get really good at is making money,” Mr. Fried said. “And that’s a much better habit for a business to work on early on, to survive on their own rather than be dependent on money people.”

(1) Thank you Russell Rothstein, Founder CEO of IT Central Station, and Zach Abramowitz, Founder CEO of ReplyAll, for recommending the article.
(2) For startups that have already taken VC funding, see (i) Give your startup time and options — burn less (ii) Get to profitability — here’s how, and (iii) “We simply can’t cut costs without hurting our growth”.
(3) Cf. Why startups shouldn’t scale prematurely.

Can digital products leave space for silence?

This post is by DJ from A Founder's Notebook

Edited excerpt from I Used to Be a Human Being by Andrew Sullivan:

Has our enslavement to dopamine — to the instant hits of validation that come with a well-crafted tweet or Snapchat streak — made us happier? I suspect it has simply made us less unhappy, or rather less aware of our unhappiness, and that our phones are merely new and powerful antidepressants of a non-pharmaceutical variety.

Our need for quiet has never fully gone away, because our practical achievements, however spectacular, never quite fulfill us. They are always giving way to new wants and needs, always requiring updating or repairing, always falling short. The mania of our online lives reveals this: We keep swiping and swiping because we are never fully satisfied. The late British philosopher Michael Oakeshott starkly called this truth “the deadliness of doing.”

There is the option of a spiritual reconciliation to this futility, an attempt to transcend the unending cycle of impermanent human achievement. There is a recognition that beyond mere doing, there is also being; that at the end of life, there is also the great silence of death with which we must eventually make our peace. From the moment I entered a church in my childhood, I understood that this place was different because it was so quiet. The Mass itself was full of silences — those liturgical pauses that would never do in a theater, those minutes of quiet after communion when we were encouraged to get lost in Continue reading “Can digital products leave space for silence?”