How to supercharge email newsletters


This post is by DJ from A Founder's Notebook

Edited excerpts from Engagement beats scale: Inside Morning Brew’s approach to subscriber growth by Jenny Rothenberg:

Onboarding: The primary goal of our welcome email is to ensure our emails get delivered to the right place — they can’t open our emails if they don’t see them in their inbox. Since this is so important, our welcome email is super straightforward, focused on this singular goal as opposed to overwhelming them with content or trying to get too cute.

Subject lines: Our data has shown that getting an early subscriber over the hump from 0 opens → that first open is crucial. If a user doesn’t open at all in their first few weeks, it’s unlikely they ever will. So we test our subject lines four ways every morning. Each of the four subject lines is sent to 3% segments of our audience at 5am. The winning subject line by measure of opens gets sent to the remaining 88% at 6am. We’ve seen open rate test results vary by as much as 10% depending on the subject line.

Email list cleanliness: Subscribers who aren’t engaging with our content aren’t doing anything for us except potentially harming our deliverability. Our newsletters ending up in spam is quite literally the subject of my nightmares, so to prevent this we have a strict churning process in place. A reader will enter our churn flow if they (i) signed up 18 days ago and have not opened or clicked at all, or (ii) have not opened or clicked in 90 days, regardless of their signup date. When either of these criteria is met, we send them an automated email asking if they’re still interested in receiving our emails. Here, we remind them what they are all about and give them access to recent content. If they don’t re-engage within a few days, we remove them from our list and send them a notification email that we have done so, with one last opportunity to opt back in.

Referral program: Our referral program has been core to our growth. Each user has their own unique link to share with others . Anytime someone signs up with a reader’s unique link, they get the credit. As readers hit the referral milestones (outlined below), they earn rewards. Here’s a complete overview of the program. Our data has consistently shown that subscribers who come in from the program are among our most engaged group of users. When a friend goes out of their way to recommend you check out a new product, you’re likely to give it an honest try.

Paid acquisition: We were fortunate to have such a strong monetization strategy early on that even as a bootstrapped company, we were able to start spending on paid acquisition. When allocating our budget and optimizing our spend, it all comes back to the north star: Quality > Quantity. Opens > List Size. For our hundreds of active sources, we are monitoring not just the cost to acquire a new user (CAC) but the high-quality percentage of each. We define a high-quality subscriber as one that opens six or more of their first 12 newsletters. Two weeks is obviously short in the broader picture of a user’s lifetime with us, but our data has shown that a subscriber’s actions in this timeframe are generally indicative of their longer-term behavior. If the source is paid, we evaluate everything based on its high-quality acquisition cost (HQ CAC). So for example, if a source has an acquisition cost of $5 per subscriber and 50% of those subscribers are high-quality, the HQ CAC is $10. While it’s not baked into the HQ metric, we also take into account a reader’s likeliness to refer based on the source they came from and optimize for that. For example, one of our top ad sets in Facebook Ads has been a lookalike audience built off of existing readers who have referred before. If you’re looking for an engaged newsletter subscriber, don’t go too far away from the platform: email. People who like newsletters…like newsletters. We’ve sponsored ($) and cross-promoted (bartered) with newsletters focused on topics ranging from travel to wellness to personal finance to sports. We’ve had varying success with programmatic ad campaigns within email. Email-based is the only type of programmatic that’s worked for us in any capacity.

Notes:
(i) Morning Brew is a free newsletter, monetized with ads. But email newsletters can also be a strong customer acquisition tool for subscription products. See How paid content site De Correspondent acquires users.
(ii) The article doesn’t explain how Morning Brew’s team values a quality user, which determines how much it is willing to pay in customer acquisition cost (CAC). On valuing a customer for paid acquisition, see Lifetime value can mislead you into excessive spending on marketing, and also characteristic number 6 in The 10 characteristics of a great consumer subscription business.

The 10 characteristics of a great consumer subscription business


This post is by DJ from A Founder's Notebook

Edited excerpts from 10 Factors To Consider When Evaluating Consumer Subscriptions by Nikhil Basu Trivedi:

Great consumer subscription businesses have these 10 characteristics:

1. “Must Have” service. To be a must have, the product or service solves a real need for the customers, and delivers a solution with higher convenience, better cost, or higher quality than other options, and often with a combination of those elements.

2. Taps into existing recurring behavior. It’s much easier to build a subscription business that draws on an existing recurring consumer behavior, instead of trying to create a new recurring behavior.

3. High conversion rate from free tier or trial to paid subscriber. The higher the conversion rate, and the faster the duration of conversion, the more effective the free tier or trial.

4. Annual gross profit per subscriber is high. To calculate the annual subscription gross profit, take the annual revenue per subscriber and subtract the cost of goods sold (COGS).

5. Strong customer, revenue and usage retention. Retention should be measured for cohorts. Revenue retention should be higher than customer retention, because subscribers that stick around are able to spend more on the subscription over time. Usage retention is a leading indicator for customer retention.

6. Rapid payback on customer acquisition costs. The best subscription businesses have very quick payback on customer acquisition costs, perhaps even instant payback. A payback period of over a year is challenging.

7. Large total addressable market for the initial subscription offering. It should be able to support $50 million in annual subscription gross profit, creating the potential for a $1 billion valuation.

8. Attachment and bundling potential for Act II, III, and beyond. Most great subscription companies have an Act I that gets them to tens or hundreds of millions, or even billions, of dollars in revenue. But they follow that up with more products and services that lead to secondary and tertiary subscription offerings (Act IIs and Act IIIs) that expand the size of the business and the total addressable market.

9. Win-back potential. Can the company turn previously churned subscribers into paid subscribers again? For example, a free tier enables ex-customers to continue to see value out of the service, and to be engaged to convert back to being a paid subscriber over time.

10. Network effects. The best consumer subscription businesses leverage network effects to increase the value of the subscription offering, to boost many of the factors listed above, and to provide a moat against competition.

Notes:
1. On rapid payback on customer acquisition costs, see Why capital efficiency is critical for SaaS and subscription businesses.
2. On network effects, see Building a moat – barriers to entry for SaaS companies.

The 10 characteristics of a great consumer subscription business


This post is by DJ from A Founder's Notebook

Edited excerpts from 10 Factors To Consider When Evaluating Consumer Subscriptions by Nikhil Basu Trivedi:

Great consumer subscription businesses have these 10 characteristics:

1. “Must Have” service. To be a must have, the product or service solves a real need for the customers, and delivers a solution with higher convenience, better cost, or higher quality than other options, and often with a combination of those elements.

2. Taps into existing recurring behavior. It’s much easier to build a subscription business that draws on an existing recurring consumer behavior, instead of trying to create a new recurring behavior.

3. High conversion rate from free tier or trial to paid subscriber. The higher the conversion rate, and the faster the duration of conversion, the more effective the free tier or trial.

4. Annual gross profit per subscriber is high. To calculate the annual subscription gross profit, take the annual revenue per subscriber and subtract the cost of goods sold (COGS).

5. Strong customer, revenue and usage retention. Retention should be measured for cohorts. Revenue retention should be higher than customer retention, because subscribers that stick around are able to spend more on the subscription over time. Usage retention is a leading indicator for customer retention.

6. Rapid payback on customer acquisition costs. The best subscription businesses have very quick payback on customer acquisition costs, perhaps even instant payback. A payback period of over a year is challenging.

7. Large total addressable market for the initial subscription offering. It should be able to support $50 million in annual subscription gross profit, creating the potential for a $1 billion valuation.

8. Attachment and bundling potential for Act II, III, and beyond. Most great subscription companies have an Act I that gets them to tens or hundreds of millions, or even billions, of dollars in revenue. But they follow that up with more products and services that lead to secondary and tertiary subscription offerings (Act IIs and Act IIIs) that expand the size of the business and the total addressable market.

9. Win-back potential. Can the company turn previously churned subscribers into paid subscribers again? For example, a free tier enables ex-customers to continue to see value out of the service, and to be engaged to convert back to being a paid subscriber over time.

10. Network effects. The best consumer subscription businesses leverage network effects to increase the value of the subscription offering, to boost many of the factors listed above, and to provide a moat against competition.

Notes:
1. On rapid payback on customer acquisition costs, see Why capital efficiency is critical for SaaS and subscription businesses.
2. On network effects, see Building a moat – barriers to entry for SaaS companies.

How to make zoom video meetings spectacularly successful


This post is by DJ from A Founder's Notebook

From Tomasz Tunguz’ The Secret to Productive Group Meetings over Video (with edits):

Say you want to brainstorm ideas for a new product you’re going to launch. Schedule a video meeting for the relevant people from sales, product, marketing, engineering, and customer support.

Create a Google document with ten pages, a page with each person’s name on top. Ask everyone in the meeting to find the page with their name on it and answer the question: “what are the top three features our new product needs?” in the first ten minutes.

Time’s up; hands-off keyboards. Coalesce the lists in front of everyone. By the time you’ve completed your work, the team has read the others’ contributions and is ready to discuss. The group steps through the bullet items in the remaining time.

I’ve participated in sessions like this for brainstorming, 360° reviews, project planning, pipeline evaluation, team standups, all kinds. Each session is remarkably more productive with video and Google Docs than in person.

Notes:
(1) I love this advice. But the final step (“the group steps through the bullet items in the remaining time”) seems vague.
(2) One possibility: After the brainstorming, get the participants to name their top candidate from the combined list and explain why. I’ve found that asking participants to vote or to provide a rating (How much do you like this, one to ten?”) helps get meetings to an actionable conclusion. See: How to end meetings.
(3) On deriving value from a meetings as fast as possible, see The antidote to bad meetings.

How to make zoom video meetings spectacularly successful


This post is by DJ from A Founder's Notebook

From Tomasz Tunguz’ The Secret to Productive Group Meetings over Video (with edits):

Say you want to brainstorm ideas for a new product you’re going to launch. Schedule a video meeting for the relevant people from sales, product, marketing, engineering, and customer support.

Create a Google document with ten pages, a page with each person’s name on top. Ask everyone in the meeting to find the page with their name on it and answer the question: “what are the top three features our new product needs?” in the first ten minutes.

Time’s up; hands-off keyboards. Coalesce the lists in front of everyone. By the time you’ve completed your work, the team has read the others’ contributions and is ready to discuss. The group steps through the bullet items in the remaining time.

I’ve participated in sessions like this for brainstorming, 360° reviews, project planning, pipeline evaluation, team standups, all kinds. Each session is remarkably more productive with video and Google Docs than in person.

Notes:
(1) I love this advice. But the final step (“the group steps through the bullet items in the remaining time”) seems vague.
(2) One possibility: After the brainstorming, get the participants to name their top candidate from the combined list and explain why. I’ve found that asking participants to vote or to provide a rating (“How much do you like this, one to ten?”) helps get meetings to an actionable conclusion. See: How to end meetings.
(3) On deriving value from a meetings as fast as possible, see The antidote to bad meetings.

The most important thing to remember as a founder / CEO


This post is by DJ from A Founder's Notebook

From Redpoint’s profile of VC Tomasz Tunguz:

Best learning as a founder?
Things are never as good or bad as they seem. Throughout the rollercoaster ride, your have to keep your head, even if all those around you are losing theirs.

Notes:
(1) Peter Fenton thinks the most important quality of a successful founder is “profound, deep, innate motivation”. Perhaps that is related to Tom Tunguz’ point. To succeed, your motivation must be independent of short term success or failure.
(2) Wondering about the relationship between Tom’s “Things are never as good or bad as they seem” and the ancient adage “This too shall pass”?

To reduce churn by more than 2 percentage points, you have to raise product value and usage


This post is by DJ from A Founder's Notebook

From Churn is the single metric that determines the success of your subscription service by David Packman:

“There is a laundry list of optimizations subscription services implement to improve retention, and collectively these have a positive effect—re-billing insufficient fund accounts on the 15th and 30th of the month, allowing members to pause their service, allowing members to reduce the frequency of delivered goods, winback campaigns to churned members, etc.

But a key observation about businesses which show high churn in their early stages is that the churn will not meaningfully reduce. That is, you can expect your optimization efforts to maybe move churn 1% — 2% (absolute points) or so, but they will never halve churn or reduce it dramatically beyond this. This is because churn is a statement from your customers about how habitually valuable your service is to them. In my experience, the only way to meaningfully reduce churn in high-churn businesses is to essentially redesign the service and the value proposition.

For clarity, I have looked at close to a hundred subscription services and have never seen churn improve from, say, 12% a month to 7% a month without fundamentally changing the service…but I have seen it move from 12% to 10% or thereabouts through optimization.”

Notes:
(1) Re. “Churn is a statement from your customers about how habitually valuable your service is to them” — see The relationship between frequency of habit and customer retention.
(2) The optimizations which David Packman argues have limited ability to reduce churn do not address insufficient product usage. For an alternative approach, see How to reduce churn by identifying your “red flag metrics”.
(3) We’ve raised retention for Seeking Alpha Premium by (i) identifying our most valuable product features, and (2) redesigning the product UX to increase the usage of those features. For example, our ranking of the top stocks in each industry is valuable because it enables investors to discover stocks which subsequently outperform the market, so we’ve redesigned our product to increase usage of those rankings.

To reduce churn by more than 2 percentage points, you have to raise product value and usage


This post is by DJ from A Founder's Notebook

From Churn is the single metric that determines the success of your subscription service by David Packman:

“There is a laundry list of optimizations subscription services implement to improve retention, and collectively these have a positive effect—re-billing insufficient fund accounts on the 15th and 30th of the month, allowing members to pause their service, allowing members to reduce the frequency of delivered goods, winback campaigns to churned members, etc.

But a key observation about businesses which show high churn in their early stages is that the churn will not meaningfully reduce. That is, you can expect your optimization efforts to maybe move churn 1% — 2% (absolute points) or so, but they will never halve churn or reduce it dramatically beyond this. This is because churn is a statement from your customers about how habitually valuable your service is to them. In my experience, the only way to meaningfully reduce churn in high-churn businesses is to essentially redesign the service and the value proposition.

For clarity, I have looked at close to a hundred subscription services and have never seen churn improve from, say, 12% a month to 7% a month without fundamentally changing the service…but I have seen it move from 12% to 10% or thereabouts through optimization.”

Notes:
(1) Re. “Churn is a statement from your customers about how habitually valuable your service is to them” — see The relationship between frequency of habit and customer retention.
(2) The optimizations which David Packman argues have limited ability to reduce churn do not address insufficient product usage. For an alternative approach, see How to reduce churn by identifying your “red flag metrics”.
(3) We’ve raised retention for Seeking Alpha Premium by (i) identifying our most valuable product features, and (2) redesigning the product UX to increase the usage of those features. For example, our ranking of the top stocks in each industry is valuable because it enables investors to discover stocks which subsequently outperform the market, so we’ve redesigned our product to increase usage of those rankings.

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.”

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

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.”

Notes:
(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.

Notes:
(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 golden management rule: in every interaction with people in your company, ensure you Focus, Empower, and Inspire. This excerpt provides one of the ways to help people become more focused — help them to accept fewer tasks.
(3) Cf. (i) The best work question to ask yourself every morning, (ii) If you want to get more done, stop doing these things, (iii) Saying “no” to good ideas.

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.

Notes:
(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 golden management rule: in every interaction with people in your company, ensure you Focus, Empower, and Inspire. This excerpt provides one of the ways to help people become more focused — help them to accept fewer tasks.
(3) Cf. (i) The best work question to ask yourself every morning, (ii) If you want to get more done, stop doing these things, (iii) Saying “no” to good ideas.

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.

Notes:
(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 statement you must be able to make is: The gatekeeping functions serve their customers rather than just respond to them. Keep gatekeeper functional heads accountable according to the cycle time of teams. Create metrics pertaining to how fast you want the team to turn things around.

Notes:
(1) Thank you Andrew Fine, an outstanding “gatekeeper”, for the tip.
(2) Cf. In your startup, the goals and culture must become a mantra.

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” due to courage, not analysis, by picking the future over the past, focusing on opportunities not problems, choosing your own direction rather than the norm, and aiming high.

5. Make effective decisions. Decisions are made well when based on the clash of conflicting views. Encourage opinions rather than seeking out facts, as those who give you opinions should provide the facts. Know what you need to know to test the validity of a hypothesis. Organize disagreement, for example by identifying why people disagree.

Notes:
(1) Here’s an excellent video review of the book which presents these points. And here’s another written summary.
(2) On time management, see: Do the most important stuff first thing in the morning.
(3) On “build on strengths”, see: The two factors which determine how successful and happy you will be at work.

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” due to courage, not analysis, by picking the future over the past, focusing on opportunities not problems, choosing your own direction rather than the norm, and aiming high.

5. Make effective decisions. Decisions are made well when based on the clash of conflicting views. Encourage opinions rather than seeking out facts, as those who give you opinions should provide the facts. Know what you need to know to test the validity of a hypothesis. Organize disagreement, for example by identifying why people disagree.

Notes:
(1) Here’s an excellent video review of the book which presents these points. And here’s another written summary.
(2) On time management, see: Do the most important stuff first thing in the morning.
(3) On “build on strengths”, see: The two factors which determine how successful and happy you will be at work.

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.

Notes:
(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”.
(4) …and the other posts in the Churn & Retention section of Best practices for startups — a list by topic.

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.

Notes:
(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”