Teso Talks: Growth Hacking with Sean Ellis

[Music] thank you for the testament team for bringing me out and interestingly I this is not my first time in Vilnius I actually was here 27 years ago I I had studied in Budapest Hungary and had $200 left so with a friend spent half of that on a train to get up to up to these Baltic countries and the other half to stay in a hotel every two or three nights and sleep in parks and on benches the other nights but I have to tell you Vilnius has come a long way since I since I saw at 27 years ago I have to I was i was much smellier back then because I was not staying in very many hotels but I'm really excited to be here and to talk to you guys about growth hacking so growth hacking is something that I actually really started doing for at a couple of companies that we started in in Budapest Hungary so we started LogMeIn in Budapest and then before that a company called uproar calm which became uproar we started in 1995 and it became the number eight website in the world and was a gaming site so the number one gaming website we sold it to a company called Vivendi Universal and then after we sold that we started logging me in and then I've had a chance to work on some other great companies and so I what I realized a part partly I had not been trained kind of in traditional marketing and I had actually invested in the very first company I joined so I was really focused on how do you actually create something that's successful and was a lot less worried about looking good or trying to try to do things the way that they've always been done which it turned out that was a really good approach to have because it was the very early days of the internet where there's a lot of opportunities and different ways you can grow with the internet so I've kind of used a different approach from the beginning but I also found when I moved to Silicon Valley in 2008 very actually late 2007 that there were some other really fast-growing companies that also were using a different approach and so I put a name on it called growth hacking but it's not something that I necessarily invented I just put a name on it because I saw companies growing really fast using this different approach so that's what I'm going to talk about today so I'm gonna talk about one what is growth hacking how is it that companies are using this approach to grow very quickly and then the next thing I'll talk about is it's not just about growth if you if you grow and then you very quickly fall then what's the point so it's it's about sustainable growth doing something that you can build something great over time and and continuing to be big and great and then and then we'll talk about so growth hacking is about experimentation and the challenge of growth hacking is that you need to experiment not just in the marketing side of things but really across all parts of the business so how you acquire convert and activate new customers and how you retain those customers and so we'll talk about some of the complexities of that which takes me into the last part which is some of the barriers to success and what can prevent you being successful with growth hacking is that it requires not just one group of people to think about a different way to operate the business but really the entire business has to have to rethink growth and that's why I call this presentation rethink growth so let's start with what is the purpose of growth hacking and it's it's to create something that is life-changing and and really impacts people in different ways and so when you look at some of the companies that have emerged in recent years they've changed the way we do everything from the way we shop everything I buy now I my first instinct is to pull out my phone and order something from Amazon and even even when I know I could get it in ten minutes if I just drove to the store it's just often so much easier to just pull out my phone and order it there's a company called acorns that I'll take you through and and I'll talk about how that that company is changing the way young people invest and most most young people didn't invest at all before and now a lot of them at least in North America are are much more active investing because of this app called acorns uber of course changes the way we get around it's just amazing that I can arrive at the Vilnius airport and fortunately yeah yonus came and picked me up but if I wanted to I could just push a button and Anna nuber would come come and get me and I can do that in countries around the world this is really easy to get from point A to point B and then of course Airbnb makes it so that I can I can stay anywhere I want and you know there's it's just so it changes the way that that we travel and get around that but of course if there's a lot of pain that comes with it as well so if you're a taxi company you probably don't like uber very much or bolt or any of the other companies that are out there disrupting the taxi industry the hotel companies don't like Airbnb the local stores don't like don't like Amazon that there's there's a lot of pain for the companies that have not been able to operate in in as flexible a way to quickly capture growth and and reach customers and keep customers so the companies that are doing it effectively are taking a very different approach to growth and that's and that's what I call growth hacking and so growth hacking is really just about being able to look at the big picture and find opportunities to accelerate growth so it's not just on the marketing side but it's really all parts of the business and then coming up with ideas for ways that you can improve how you acquire and convert companies or customers and then ultimately testing those ideas in in analyzing if they work and so as you continue that process you get smarter and smarter about driving growth while it's relatively new it's actually based on something that's been around for hundreds of years which is just the scientific method so it's it's really taking the same science that drug companies use to approve a new drug or any kind of inventor uses where they have a hypothesis and they test something and that ultimately we're just applying that test and learn process now to growth instead of to innovation and so when we do that we're able to drive a result over time and so in the big picture you want to be systematic and really use analysis as you as you're running that testing but the but the truth of it is that it really boils down to a really simple formula that the more testing you do generally the more growth that you get so all of that experimentation leads to learning and every time you run an experiment you get smarter about how to grow the business and so what you're looking at here is the growth that Twitter had over a lot of years and you can see that in 2000 late 2010 early 2011 Twitter started to flatten out in their growth and so around 50 million users they started to flatten out but a new head of product came into the company and he said you know how many tests are we running we have 50 million users on this product lots of people coming for the first time every day how many tests are we running and he realized they were only running about two tests per month and he thought you know we need to run more tests than that so he could have he could have looked at the business and said oh we can we can do better in how we acquire customers here or how we get people to use more often here but he just said something really simple he said let's just focus on running ten tests per week and I'm confident if we run ten tests per week we're gonna grow faster and you can see as soon as they increased till ten tests per week their growth curve resumed and they grew for many years and so it's not just Twitter that's done this company after company has used testing and experimentation to drive growth in fact one of the most valuable companies in the world there's only I think three or four companies that are worth more than a trillion dollars and Amazon is one of those companies and this is a quote from the Amazon CEO which is our success at Amazon is a function of how many experiments we do per year per month per day so this experimentation is ultimately what drives growth what unlocks growth what helps these companies make more and more impact on their customers and so that's what growth hacking is all about now it's not just randomly doing experiments but again in in line with that scientific method it's about having clear seas of what you're trying to figure out when you run an experiment essentially you have a guess I think this is going to happen when we run this experiment and then you run the experiment and either that thing happens or it doesn't happen and you learn something every time and so when I say experiment what am I talking about that can be a little bit confusing so I'll give you just a few examples of some of the early experiments that we did at Dropbox when I was there and so at Dropbox it was essentially the the screen that people spent the most time on was when you clicked on the taskbar you get a drop-down of your recently saved files and so people wanted a shortcut to those files that they recently saved to Dropbox from any of their devices and what we thought was you know a lot of these people are discovering Dropbox when they get a shared file from someone so if someone shares a file with them that's their first experience with Dropbox let's make it really easy to share files so that would be our hypothesis is if we make it really easy to share files people will share files more often and more people will get exposed to it so we put this share link when you hovered over a file you'd get a share link where you'd be able to copy a direct link to that file and then you can see the screen that comes up we could have made it so that you actually had to sign up for Dropbox to get that file or the extreme opposite is we could have made it that you that you could just get the file and not even know it came from Dropbox and so these are all tests that could be run over time what worked best was to put a dialog box over the top of your file that says download and save and and save to your Dropbox by creating an account and then if you didn't want to do that you could just close that and see the file but you see it in a wrapper that says Dropbox and so that worked best there so there's really a whole loop of tests that could be run just on this file sharing over time and even this thing that says shared link it could say share this file there could be lots of different ways to say that we also added an upgrade link there so that you could get more space but we could have tested get more space so there's a of different tests on just getting people to spend money there and then we inserted this layer that's kind of a promotional layer right this one's more of an educational one so keep your photos safe by moving them to Dropbox that's going to do two things the more people put in their Dropbox the more likely they're going to keep using Dropbox but the other benefit is if they save their files to Dropbox they're gonna fill up their free version and then they're likely going to upgrade to the premium version so you can see just on one single screen there's a lot of different tests obviously a lot of different things could go into that promotional box as well so that's it's just getting into that mindset of there's a better way to do everything we're doing let's run lots and lots of tests and so it turns out that every test you run you're gonna learn something so even if even if the test isn't successful you learn that that didn't work and so it's really about the more you repeat this process you're going to get some things that that are going to go into the box of okay these work and these we can keep doing this more often and it will drive better results but even the ones that didn't work you're going to get smarter about what does work and how you can grow the business so as I mentioned before it's not just about running lots of testing to drive up a growth curve because we've all seen that before so if you're just running lots of testing for example to drive registrations and then that crashes you didn't really create much value and impact in the world so we don't want growth to crashes we want growth that's sustainable over time so what is it that drives sustainable growth turns out that value drives sustainable growth if you don't get people to a valuable experience with your product they're not going to keep using it so first of all you have to validate that you actually have a product that's valuable for anyone so a lot of startups get stuck in just creating something that nobody cares about but once you have validated that someone loves this product then you need to understand what that experience is that makes it so that people love the product and the more you can get new people into that experience and get existing people to experience it more often the more that you'll be able to build sustainable growth that that happens over time and so one of the things that I learned from Facebook and it's now very popular in Silicon Valley with most the fast growing companies is that they came up with a metric for capturing this values so this metric that represents value is the most important metric in the whole company for the companies that have identified it and it's called a Northstar metric so it's really about looking at when new customers come in and get value the metric grows but if I get existing customers to get more value more often the metric also grows so it's about coming up with a metric that if you're focused on growing that metric you'll drive sustainable growth over time so that can get kind of confusing so I'll give you some examples of what are some northstar metrics so for companies like uber and lime so the the scooters that you can kind of rent and get around on or bikes they also have it's all about trying to drive weekly rides so in fact the first head of growth at uber was previously the head of international growth at Facebook and the very first thing that he did when he joined uber was sit down with the CEO of uber and he said we need to figure out a Northstar metric so something that everyone in the whole company has focused on growing and that's where they came up with weekly rides and so every day they're reporting how how the weekly rides number is growing and everyone in the company is focused on growing that because they know every time a ride happens there's value for a rider somebody got where they needed to go and there's also value for a driver somebody made some money when they got where they needed to go so they could look at how many people downloaded the software or you're the app but those downloads often don't get used so maybe there's not value that's happening or maybe it gets used once and then never again so there's not that much value that's created but by focusing on rides they really get a good indication of how much value is happening every time someone takes an uber so for some other companies like slack and Facebook they're focused on daily active users so what they know is the more daily active users there are on slack and on Facebook the more people are getting value in those platforms they're they're really platforms for connecting people so their value metric is going to be how many active people are on those platforms so again everything they're doing in the business when they're running experiments it's all about trying to grow their daily active user number so some people might be saying why wouldn't you just look at revenue revenues a good number it's actually a great number the problem is that revenue is not always directly correlated with value being delivered so if value and revenue are going together then you're going to make the right decisions but if you have a subscription-based software product so like SAS product and people have bought an annual subscription and they stopped using after one month that's gonna look fine on the revenue you for the whole year it looks like that revenue strong but for 11 months those people didn't get any values so if as long as you're focusing on growing value and you also of course want to focus on revenue but you want to make sure that your revenues not growing faster than your value or it will crash eventually and so so that's why that's why we use a value metric a northstar metric instead of revenue now it's all about growing value it's all about experimenting really quickly to grow that value now where do you run those experiments it looks like this so we we used to think of growth as really being more of just the funnel so kind of this acquisition and activation but the truth is that there's there's some kind of recurring loops that feed the Northstar metric as well so if I can get an existing user to use a lot more often that's going to be an engagement loop that I'm trying to get people coming back more and more if I can get existing users to bring in other users that's a referral loop revenue is something that repeats that feeds the whole engine and all of this is working to drive your North Star Metrix so I want to show what this looks like for a specific company and it's a company I referenced already it's called acorns and so acorns is is a company that they originally set out to solve the problem of young people were not investing for their future very much and so for whatever reason and it's complex they wanted to maybe didn't want to sacrifice the current lifestyle they didn't want to have to figure out you know where should I invest and so that's the problem they went out to solve and they wanted to make it really easy to do that investing and so the way that acorns works is that you sign up for the service and then every time you use a credit card if you spend say 1 euro in 20 cents then 80 cents will go into your investment account so it always rounds up to the closest dollar and you feed your investment accounts so it's it's really doesn't feel like you're investing much but over time it adds up and and you start investing quite a bit so they're northstar metric then is active investors and you what you can see is that that starts to align with their mission as well so every time they get a new investor on the platform they're helping to solve the problem that they went out to solve was which was to get young people to start investing more and so they're all about trying to grow those active investors now I can walk you through every single step in this value delivery engine for acorns but that would take too long so I'm not going to do that and it's pretty complex but you can see there's a lot to growing this and so it becomes really important for your business you want to figure out not just what your North Star metric is but what is that entire engine look like that drives your North Star metric so the referral loop is really powerful for these guys for example they have five hundred and fifty seven thousand app store reviews they're almost a five-star rating in the App Store people love it they make other people feel a lot safer when you see five hundred and fifty seven thousand people who've reviewed it positively you feel a lot safer putting your bank account information in there they know activation they know what they need to do to get someone to use the product they know what they need to do to get people coming back a lot and then they can test try to improve that so this activation is something that most companies can get a big gain in their growth rate but just focusing on activation as a starting point and so for acorns it's all about getting them to make their first investment in five minutes so in less than five minutes and so it's pretty challenging when you think they have to not only sign up for the app they have to download the app sign up and then also connect their credit cards their bank account and make their first investment all within five minutes that's a that's a big hurdle to cross but they've done it they've done it really effectively and they now have seven million active investors on the platform and a couple of months ago it was at five million active investors so they're growing really fast and in fact their vp of growth used to work with me at the company I sold last year and she I interviewed her for my podcast so if you're want to snap a picture of that and actually hear how she's driving growth there particularly running experiments inside a mobile app is a lot harder so she shed some some light on that and she's she's super talented so I I recommend that so but the important thing to recognize for for acorns is that last slide where that I that I mentioned is that that speed to value is so critical for driving growth so before someone's tried your product they're interested in it but they're in that real danger zone of if this thing is complicated or complex they're they're likely to hit some kind of barrier if their desire isn't really high and they hit any kind of friction they're gonna give up so the faster you can get them to value the more likely you're going to get them to a place where then you can focus on how do I retain them long-term and so speed to value is one of the critical things for today so if I said some things that you should really focus on from from this one is sustainable growth is based on value speed to value is the fastest way to accelerate sustainable growth your North Star metric is how you measure it and then focus a lot on experimentation and so these just some examples of other companies kind of speed to value what's their activation metrics so for facebook they know if they acquire someone if they only make one connection that person didn't get very much value if they make two connections there's still a good chance they're going to lose that person and so it's not really until they get to about seven connections so after really analyzing the data data and studying the data at seven connections they learn that's when someone is likely to keep using Facebook in the long term so everything they're doing for a new user is getting them to seven connections so they're constantly putting people you might know in front of them once they have two connections then they start to find the people they have in common do you know this person do you know that person so trying to make additional money through advertising from those people at that point it's kind of short-sighted it's better to get them to the experience that they're long-term locked in so they can make advertising money for the next ten years or longer and so what they recognize is if they can't get them to seven friends in ten days then they're likely going to lose that person so if it takes twenty days to get to seven friends most people aren't gonna wait that long uber I already talked about first ride once you get in the car and you get somewhere you got enough value that you understand uber as a writer and the same thing from the passengers or from the driver's side once you've taken a passenger somewhere and they they credit some money in your account then you're feeling like okay Uber's uber is valuable I'm gonna keep using it for slack how many how many people no slack here familiar with that company okay good so for slack it's amazing because most of you probably have never seen a slack advertisement but you all know what it is and this is because it's all through invites and word-of-mouth that's it's grown really quickly to a multi multi-billion dollar company and one of the things they figured out pretty quickly was that companies that don't get to 2,000 messages almost always cancel once they get to 2,000 messages inside slack they have about a 96 percent retention rate so everything slacks doing when they get a new company using slack is trying to get them to that 2,000 messages so how do we increase the number of invites that are going out how do we make it so people respond faster with the right with the right prompts when they get a message all of those helped to feed that 2,000 number the challenge with all of this experimentation that I'm talking about it's not just marketing so if if if this presentation was on you should use testing and data in marketing everyone would say yeah that's that's how much things been done for years that's the right way to do online marketing the challenge is I'm talking about these activation numbers and how to build engagement loops in the business and how to drive referral and what's the right revenue model and when you start talking about all of those things now you're talking about getting people across different teams in the company trying to work together on this experimentation and that's what's really hard so that journey crosses multiple teams most of those teams are not used to this kind of test test learned process and so that's where you can expect to hit some challenges so I'll just give you I'm not going to go into all the things you can do to overcome those challenges because we don't have that much time but here's the here's the best thing that you can do and Mark Zuckerberg surprisingly I I knew that that Facebook was really kind of the pioneers on the growth team and pioneers on this concept of northstar metric but I still with those two concepts on most companies getting stuck with growth hacking and and not able to effectively keep it going and so I started doing research I thought you know it's this cross-functional challenge that stops companies I'm going to try to find how do you overcome the cross-functional friction to this testing who who are the management philosophy people behind cross-functional and then I find this article that the surprising management genius Mark Zuckerberg has figured out cross-functional and really appointed to these three things so having a team that is designed to work cross-functionally that's the idea of a growth team that's really focused on growing that northstar metric and keeping the company running a high velocity of experiments and then having that Northstar metric being something that aligns with the mission of the business and everyone knows that's the key success metric in the business and then the third thing that I got from the article was this this importance of mission and if you had asked me before I would say mission is something they teach in an MBA course so I'm gonna write a mission statement it's kind of boring but that the truth is that mission is purpose mission is what what are we trying to accomplish in this business why is this business important that's the one thing that if you've got a marketing team a sales team a product team it's part of the one thing that everyone should be able to agree on why are we doing something important and if you can articulate what that mission is and get people focus on that mission and the metric is tied to that mission and the growth team and everyone is really focused on growing that metric you can start to drive that alignment that leads to two breakout results so what they said was Zuckerberg is that he's he finds a way to get mission into every conversation that he has inside and outside the company he's mind-numbingly efficient about getting it into every conversation a couple of times and so bring the world closer together is what they're trying to do and then growing the daily active user number is is the success metric that shows they're making progress on that so where do you start you've just you've learned a lot here so where do you start with all of this this is the framework that I like to use to figure out where to start level one is basically you cannot grow sustainably if you don't deliver value product market fit essentially means you've created something that's really valuable for at least somebody hopefully the market and product market fit is big enough that you you can create something that's really meaningful as a company but it means that your product fits for the market so once you validated that you have product market fit people keep using your product if you're another way to look at it is something called product market fit survey which is a free survey I have online that you can kind of get a leading indicator on there some directions on how to use it but once you validated you have product market fit then you can talk about what is our North Star metric it's gonna be a function of the value that you realize in product market fit you build in the rest of the the tracking systems then you can start experimenting you can't experiment if you don't have the right tracking systems in place so that's what that level two is but once you start experimenting that's where a growth team starts to make sense having kind of a weekly meeting of testing and learning and keeping track of what you're learning and then you work to be able to test across all levers and then ultimately trying to build this company wide mindset and culture of growth which is what you see in the fastest growing companies so that gives you a good overview of how to get started with growth hacking these are the key takeaways I recommend for you so value drives sustainable growth be focused on expanding value and you'll be able to keep that growth going up to up into the right the growth hacking process is about testing and learning very quickly on how you accelerate growth apply the growth hacking process across all parts of the customer journey and then shared mission is going to help you overcome that biggest hurdle which is getting these cross-functional teams to work together if you're an early-stage startup it's way easier the bigger you are and the longer you've been around as a company the more you're gonna have to fight the friction of getting teams to work well together so hopefully have some time for some questions thank you how do you gain trust from leadership to bold experiments don't say to gain trust with little experiments they don't sign on bold ones yeah I think I think what you have to do for for leadership is that they you need to you they need to understand the big picture importance of this is how companies drive success today and it's I mean give them a copy of my book might be a good start but I think that ultimately ultimately that's this this is the way that companies are successful today and and if they don't if they don't understand that then it's it's going to be a lot harder to convince them that this is exactly how to do it and how to get started with it and so I that that would be my recommendation is is that the starting point of being you know maybe it's a direct competitor that you point to that these guys are committed to sting and learning and and then and then from there you can start to worry about how cool you talked a lot about growth hacking for b2c could you please command a bit more on b2b industry where sales cycles are super low super slow as well as time value yeah so well b2b obviously is a pretty broad category the slack example I gave is b2b but how they grow is much more in a consumer way you have other companies that might have one year sale cycles and and very big enterprise customers I would say where this a--probably applies the most in that later latter example would be once you make the sale being able you know depending on the product but I just interviewed on my podcast the chief marketing officer for a company called trip actions and they went from kind of zero to four billion dollar valuation in four years and selling to primarily the biggest biggest enterprises out there and she was really focused on one of the huge drivers for that is that they they essentially have a solution that is just so much better for the action it's a corporate travel solution so it's so much better for the actual travellers inside the corporation that the pitch has gotten very strong so it's kind of more of a traditional approach to the channels themselves so they're they're going to trade shows and and different conferences and you know building brand and and you know talking with influencers and all of that but it's it's being able to being able to make that argument that all of the legacy players so what are people already doing most of them are on these platforms that were around for 30 or 40 years and trip actions was built for you know from the ground up as a mobile first business and so mobile is is what you need when you're traveling and so being able to kind of stress what the end user value proposition is and not over indexing on the on the buyer persona which is what a lot of I think b2b people do so when you look at the end user piece even though their transaction size has been their sales cycle might be big it's that end-user value proposition and really iterating with this test learned process on creating a lot more value for the end-users which has become their competitive advantage which is why they've been able to grow so quickly okay who is your favorite MB player okay question from Igor what some macro experiments you have found useful in the early stage startups some macro experiments yeah macro yeah I mean I think to me the in the really early stages of a startup it's about trying to trying to get that value proposition right and so I think you know one of the mistakes that the challenge early stages obviously to get enough people to get a big enough sample size to actually know if a test is successful so what you should not do in the early stages is very little headline tests and button color tests and little tests because that's going to require tens of thousands or you know millions of users potentially to get a kind of statistically significant results on it so do big bold tests where you're trying completely different positioning and layout on on pages I was reading in the last couple of days about an icon test that that someone ran that that just just the app icon for a game being a massive difference like like made the difference in how quickly that business was growing that's a pretty easy test to run but it's every single person is seeing that as kind of the main image of the of the game so I think just think very big bold tests how do you understand and tell others when it's enough to iterate on the experiment and it's time to kill it so it obviously there's kind of statistical significance that tells you if it's if it's time to kill it or not we just talked a little bit about if you if you really having a hard time getting to statistical significance probably because you're too minor on the experiments that you're running I think the kill versus keep going question is more usually around an opportunity that you're trying to drive improvement so an example that I like to share is at that LogMeIn we found a channel that sent two hundred thousand people a day through this channel for two cents each so a super cheap channel that brought them in and there was actually a 10% signup rate from that channel so it looked like this is going to be great twenty thousand people a day signing up well within our expected signup cost but then at the download step ninety percent drop off so ninety percent of the people get dropped out of the funnel after signing up when they got to the download step and so initially we went in and just ran lots of tests there lots of just you know maybe they don't see the button let's make it bigger you ran out of screen space eventually and let's let's make it clear this thing's free and so we ran probably ten or twelve tests and none of them succeeded so that would be a time where I think a lot of people would have said okay let's move on maybe this just isn't going to work for us but we said you know we have 18,000 people a day who are signing up and giving us their email let's ask them why are you signing up and not downloading the software and we didn't have a really clever survey or anything we just just kind of automated a message out to them that said you know look like it came from customer success that just said hey notice you signed up and and didn't use what happened and we got a bunch of people saying I just didn't believe it was free and so now we were solving for a known problem our next test gave us a 300% increase in the download rate and it was simply giving them a choice download the free version or download the paid version and we put a big checkmark on the free version but now they believed we had a free version when they saw we also had a paid version so that's it's really hard to know when to give up but that's an example of when it would have been easy to give up but we we made a channel really impactful and big for us by not giving up okay draw box referals thing what is the result of constructive experiments was it a result of constructive experiments or a sudden success so I think it's it's partly for the Dropbox referral program it's partly understanding what was already working in the business so before we incentivize referrals we had a really high referral rate and and it wasn't just because people were sharing a file and getting exposed or you know getting invited to a collaboration folder it was mostly the biggest driver was people who loved the product who were telling other people about it and so when you already have that it's not that hard to double down on it and accelerate it more so we built the program we tested different prompts on how to promote the program like one of the things that worked really well was you know I I have I have for example Tesla has a referral program and I have a friend who who used my referral code for buying a Tesla and I never got anything that said he used my referral code they just added some free charging for me and so that's not a good example and and not surprisingly they've killed their referral program because it didn't work very well so one of the things we did with Dropbox was every time someone you referred even if you didn't sign up for the program and you just shared a file with them and they signed up we'd give you a notification that said someone just signed up you got some free space and that became the trigger to get other people to sign up so there's it's not the whole program it's it's kind of lots of little touch points that made the program work you know for anyone who didn't hear the question he was asking was it easy for leadership to sign on so first of all there was eight people when I was there so leadership was me talking to drew across the table and and so it wasn't like lots of layers but it was it was literally calculating a customer acquisition cost if we went out how much could we pay to acquire someone how much initial it was 250 megabytes of free space how much does 250 megabytes cost us that's way cheaper than then what we would normally be paying through a pay channel so yeah was it was very easy do you think growth hacking could be applied to gambling or lottery businesses where a value for the user is just the belief to win what could be the North Star metric thanks well I'm probably northstar metric there is money so sometimes sometimes money does end up being a North Star metric but yes I do in fact one you know one of the things I didn't get into on here that you you might have seen up on the screen was this idea of the engagement loop and I highly recommend a book but book by neri all called hooked and it's it's all about use how do you optimize an engagement loop and one of the key components of that is a variable reward and so it's the idea that if you had a predictable reward every time that is not as exciting the reason that email is something that you have to keep checking is because it's it's actually a variable reward you almost always have email when you check most of the time it's neutral every once in a while it's a really positive email it's that one client who finally got back to me or that one prospect or on the other side we just I got a notification that we just lost our most important customer or something like that that that excitement is the same excitement you get when you're gambling and and you know pulling a slot machine and you know the the fact I that's kind of interesting I when I interviewed the Gila from acorns we were talking about all of their growth happened at the time when the stock market has been really really strong in the United States and so what would happen if the stock market was going down what a lot of these people not want to invest and you know all you have to do is look at Las Vegas where most people lose money but people keep pouring lots of money in there because of this this variable reward component so I do think it works there you have to I think Las Vegas has has has kind of figured out that it's the it's the excitement it's the thrill that someone's reason that someone signs up it's not necessarily just to earn money from it and so it's you have to kind of figure out what is the what is the emotion that you're selling into the benefit that you're selling into you might not always be obvious okay and the last question from slide though when you raise your poultices and run a/b tests what percentage of of growth is meaningful them to make a change to five ten or more persons it depends how big are you if your Facebook 0.001 is probably worth tens of millions of dollars for for most of us you know I think it's one of those things that anything that's an improvement is worth keeping and so you know where you're you're making lots of these improvements that add up over time but the truth is that every time you're running experiments you're you're kind of pulling the the slot-machine kind of hoping for the jackpot because occasionally there are experiments that do give you that 10x or 100x accelerant and you have to get lots of little wins but why would you not take a little win if you if you've got it and so it's really does that is that little win still in the margin of error on the experiment in which case it's you didn't run it long enough to be able to to be able to say it's a winner but if it's if it's you know a statistically significant win then it's worth keeping so I'm going to repeat it because in the back they probably hear you so what what is the value of outsourcing growth hacking you know I think that the I think that outsourcing marketing makes a lot of sense like top not completely outsourcing but but having the help of an agency when you know somebody's going to have really deep expertise on Facebook maybe and and and Google and you know these evolving platforms if you can tap into that knowledge that can be really valuable but as I talked about the biggest barrier to adoption here is running experiments that are deeper in that customer experience and it's it's really hard to do when you're full-time inside company to convince those other teams to do that so I Kissed can't imagine how an external agency could help to drive that type of adoption yeah so a lot of people are very annoyed that that you have a lot of people who've never done anything who just going update their LinkedIn profile to say growth hacker and I don't find that annoying mostly because I think I think that growth you know the reason I came up with the term growth hacking was when I was leaving Dropbox I most of my income in working with Dropbox came from equity that I had came from you know having a company become worth billions of dollars and so that little bit of stock so I wanted to have I wanted to have the person who took over growth approach it in a way that I thought they could be really effective and the problem was almost every resume I got was was you know we're gonna I'm really good at branding and positioning and and you know building awareness and you know and it's not to say that those things don't matter but when the company is eight or ten people you have to be focused on experiences how do how do I get new people to experience the product in a way that costs less than they're worth to us and that those experiences get other people and you've got to you've got to be like kind of more results-driven and that to me that's what growth hacking is and and you know later stage when you then add some awareness and branding and some other things that can it can be an accelerant on a lot of those things and so I think that's the benefit of the term gaining a lot of popularity is that least it gets conversation going is it is it not what you know that's just marketing done the right way and that okay like I mean I think I think the dialogue leads people to find a better truth than maybe what they had before so at it doesn't bother me at all and maybe last question before short break yeah I didn't I just interviewed them I think I think they they prompt it quite a bit but I think part of it is it's just it's such a great solution and when you they have seven million people and five hundred and sixty-two thousand reviews so less than 10% of the people review the product and but a lot of it is is just prompting people to to review us in the app store in fact that that tends to bring your average rating up when you do that because otherwise the people who review you are usually the ones who are who are upset so being able to get people who are actively using and giving them the prompt to do that is it's it's a good thing but I think I think it's directly a function of passionate customers on the product and having passionate customers on the product is a function of having a team that's really obsessed on how do I get people within five minutes to actually make that first investment and overcome all of those hurdles and and constantly run experiments to shorten that first investment time so I think it's more a function of just being really good at the overall value delivery growth engine [Music] all right I'm gonna go ahead and get started and we'll assume people will file in and grab their seats so I'm excited to kick off this panel in fact I'm actually recording this panel for my podcast so it's a it's a I kind of ran into a situation where I knew I was going to be here this week and I have to release a podcast episode every week and so I was really excited when I could kind of kill two birds with one stone and actually do a podcast episode as well but a little bit of context on what brought me here was that I am a stir day to spend time with Tesla net and to really work with the team on on growth hacking and trying to adopt the lot of the processes that we just talked about in the in the last presentation so I really appreciate the opportunity from the testimony met team to be able to be here and had had a good time really connecting with the team and helping a company that's already had a huge amount of success look for opportunities to further accelerate that success so thank you yeah absolutely so we'll see if if the if the workshop actually does that or not so I'm sure I'll get an angry note if it doesn't we promise you thank perfect so why don't we start and we'll just actually go in this direction on the introduction so the the idea here is that we're going to talk about a lot of what we just covered there but but how it applies directly in some really successful companies and and we'll also look at JBL give us some feedback on sort of on the b2b I know there were some questions around that as well but I'll I'll start with an introduction so yonis you can help you with the last name on how you pronounce your last name it doesn't matter okay it didn't look like it says doesn't matter but I guess that's that's good please okay there we go that was special Lithuanian pronunciation so he's the co-founder of Tesla net and if you didn't know it already they're they're a really successful company here and I'm excited to welcome him and if you could give us a brief introduction to Tessa net what you guys do yes so Tessa net once was a small start-up and now it's a big startup actually we test Annette is an accelerator for different products and projects and tests Annette invests money in other startups and companies and yeah the company is now quite big and we have almost thousand people right now yeah and one of the focus of areas is cyber security yeah so pretty much it all right and then Jonas is left we've got I'm gonna need some help on your last name as well so JB dog gun yeah how do you pronounce it beggin me there we go gonna try so JB is from France but he's he's based here with a comic called 770 ventures which is a revenue accelerator for b2b startups so welcome JB do you want to give us a little more of an explanation of what you're doing sure so glad to be here the long story short is I'm a sales guy eventually I became an entrepreneur and today I'm an investor and the short story of what I do is I start my day by eating sighs for breakfast and I have b2b sales for lunch and I finish it with data for dinner and eventually how we have startups from the very beginning we helped founders to repeat what they have been successful at and putting them in front of customers with a specialized sales team that will basically look for leads the same way the founders would look for them and book meeting for them so early on the founders only spent time on the part of the b2b sales process that add value and was very interesting to look at how you do growth hacking because we do tons of testings and we value data over opinions hundred times mm-hmm that's that's a key component of growth hacking opinions are not worth very much opinions are hypotheses so and then we have next to JB we have Thomas limas they probably slim us okay hopefully you guys all know that I'm butchering that because he's the the second Lithuanian on the on the panel here so Thomas is the CMO and co-founder of uber low a company that was founded here in Lithuania and pretty quickly got acquired by Shopify so congratulations on that that is awesome and so now he's also a director of online marketing at Shopify so welcome can you give us a brief introduction to what you guys do it over low and the problem you solve sure glad to be here so Alberto is now parts of Shopify and together with Shopify we help entrepreneurs start their businesses and grow with them and we support them throughout their journey okay alright and then finally we've got Thomas kanga almost so he's the CEO of vented and I'm really excited to have Thomas up here because I think there's a really unique story and invented it's a company that was founded here in Lithuania and it's unicorn status so there's there's the that's a hard status to get to you but I think what's particularly interesting is that Thomas came in as part of a turnaround effort there and so to be able to help drive a turnaround to build a unicorn company I don't care what country you're and I have not heard about that so that that is super exciting can you give us a little bit more details on what vintage is all about yeah well Vincent is a pretty simple we we sell second-hand clothes so we really know well how to sell your clothes and that's about it I don't know stuff but practically that's what we do well and since 2016 we kind of found out how to do it because before that it was like a really nice idea and people loved it but then we found the economical model on how to make it scalable business fantastic well we will definitely dig more into that story as we go on but I wanted to start by just you know looking at it from the local angle here there's there's some huge advantages to being based in Lithuania but there I'm sure there's some challenges as well especially relative to being in say Silicon Valley where there's a big network for startups I'd love to get some of your thoughts on and I won't have much to contribute here since I have not been based here but some of your thoughts on sort of the advantages and disadvantages of being based here and in Vilnius anyone want to take first shot at it let's try so of course it depends you know on area I think because if you want to start business in and to have basketball business probably you know it's the best place on earth on the other hand you know if you want to achieve something in soccer it could be a bit difficult but being more serious actually I you know I never thought about you know pros and cons being based in Lithuania because you know we are all Lithuanian sand just started business here but the most important thing I believe is people because you know we have so many great talented you know curious hard-working people so it's actually the best place to be of course our market is quite limited because you know we have fewer than 3 million people and if you take into consideration kids and elder people it's even more of you mm-hmm so but yeah and maybe you know if you need some money or you think about venture capital airy and trendy venture capital companies it could be quite difficult because it's not a secret that you know not everyone knows Lithuania because probably we need more unicorns not only one yes my thoughts so what about you know you mentioned that there's 3 million fish population here that that probably most companies that would start here would be looking externally right from the beginning that that maybe would be a bit of an advantage would you agree I don't know I think sounds small three million but on the other hand it's big enough you know you got a thousand people so you know in in the bigger context of things we guys around the corner people are easily moving around through the Baltics or from Poland to here I don't see it that much as in as a constraint I meant more as a target consumers outside of little yeah so consumers don't try to search that mainly training ah because I it doesn't make sense at all I mean it's it's so small yeah like you'll just like you're gonna make a product with a language that is difficult as difficult as Chinese and then you have a target population that is so small no so definitely build something that is scalable around Europe u.s. or whatever it is I mean I think I think that's one of the beautiful things you know both of you guys have have done here and but in terms of of people it's it's absolutely an advantage to be here I mean they're there the population is very well educated people are working really hard they're not just working for money but they want to show that they can make something from here which is a different driver emotionally that that makes people do things that they will never do when they're from Berlin or from London or San Francisco I mean just just to a point where we were at a company firing half of the company the other people that stayed they actually stayed I mean try to do that in Berlin you're saying like well you know guys our revenue is declining the rest of the money left over we're gonna burn on television and we're gonna cut out half of all the revenue streams and we would love you to stay over for a couple more months to see if it's gonna work like in Berlin everybody would being out of the door to the next day right right here Lee too many people are like hell yes let's give it a try you know and and that's that's an attitude that comes from having a driver to build businesses here that is more than to make money and I felt enormous Lee attracted to that I felt at home in that and and it makes teams do weird things that I've not seen them do in Berlin or in New York and I think I think that's a massive advantage that we have here awesome I love that I could I could second that I I do agree with what Jana stand said I would just add the nuance here is that due to the lack of optionality in this market because it's this very small people have less experience in in in in their kind of disciplines and due to that they are more loyal because they have less personality not only more loyal but they are also more excited about opportunities because there is less optionality and then they require from the company a little bit more kind of guidance education etc so that creates all this kind of environment where companies invest in people like that's not invest heavily in people we invest heavily in people event that has has invested in people and we you invest a lot in people because they bring less experience and but that in turns brings more loyalty and I think that's a very good dynamic whereas in Berlin the relationship is very much transactional because you can get employed at any other company next month but also they can bring some some good power I guess were the disadvantage of Levin is is is their English language we're like in order to sell to outside of the Fania which we all do you need to tell the story really well mm-hmm for your eyes for your creative for your sales message and if you if you don't if you don't you know kind of if you haven't employed the craft of English language well and and you can't sell then I think that will be a problem so I think that's kind of a big disadvantage and that's the reason why many of us employ marketing teams in Berlin for example okay but if you think of it like the difficulties of localization is is way smaller than the difficulties of building an actual company and a product so building your actual product here with people here and then fine-tuning the the combs and marketing from Berlin I think it's actually a fantastic combination that is easily done right and that's and and some of that is is pretty easy to outsource on the on the kind of communications and marketing side of things where most of the rest of the stuff is pretty hard to outsource anything you know definitely on I mean I'm super glad to hear a lot of stuff I can relate to about you know the people on the energy you get there and and I mean I've lived on walked in in the UK in Denmark and also in France and I mean you talk about English level I mean have you work with French people before I think you guys know converse but like back six years ago on maybe almost seven years ago when I started to interact with the ecosystem here there was just the first VC coming to town so the ecosystem was just blooming just getting started and I remember bringing my friends here to talk at login and to do some workshop from Copenhagen from like the b2b size scene and they were like this is great I mean almost telling me that this is cute what we are doing here and that we are like oh five six maybe seven years behind and I was like we don't have time - we don't have seven years and like what's the options and then of course we could expand and many companies were doing this opening in London and so on but also many companies decided to invest back in a talent scene and I think what all the ecosystem have invested we got it ten times back and we are definitely ahead in now in some kind of niche comparing to to the competition especially if you look at fin tech I think laughs what were put in this direction and we have some great fin tech companies but then also I'd like to say that when it comes to product and you know building technology here like we are definitely the underdogs like no one expects you but then you know you can get off get beaten in the house and that was Luke - Vania right awesome so so Thomas when you when you came to let the way new did you know much about Lithuania before you before you decided to be part of this turnaround know first that confuses with Latvia painful very ignorant and they booked me I came at night in this super they booked me in a super old Congress hotel or something like that where like carpets are red and the carpets go up to the wall that's that's the place they put me actually I came in at nights from New York and I'm like getting into this out of a cab into this I'm like oh my god this is gonna be Sophie at all the way so so and then the next morning I woke up and it was like elderly people having breakfast was like a German elderly tourist or something in my notes I was like oh wow but then I walked out and I saw it's actually a beautiful city then I met the guys and and that's where you know I met the people at Vint it and I saw with how much passion they were working and I don't know I didn't didn't matter anymore you know right so it's it's all it was all different than I expected and you know I stayed because I loved it so you know very quickly I realized it was a great place to do business and to live actually so Wow so let's let's dig in a little bit more to what you actually did because again that was I was I was so excited when I saw I was gonna be on the panel with you given given that story so you know what what was the problem that was holding that growth and what were some of the key things that you guys did to turn things around yeah so I think I came in at the beginning of your talk and a couple of key points that you laid out were exactly missing and one of the elements that you said for example what is the value that you deliver to customers so the first thing that we did is I mapped out okay what's our value proposition towards customers so we looked at okay and what we're doing we're selling clothes okay where can you sell your clothes okay let's look a Bay Klein and zag and laboum quant that we put down all the propositions looked at what their offer was then we did tests like how fast you sell clothes there and it practically became super clear like we were the most expensive and you soldier clothes the slowest if you were even lucky to sell it and so that was the first thing like okay our value proposition is not on par with the rest so how do we add more value well we need to may become the cheapest and we need to sell the fastest okay sell the fastest that means our sell true rate needs to be within a certain point so you looked at what our success metrics while a Northern Star is unique sellers so we need to build the biggest community with unique sellers how do we do that by making the time to sell as fast as possible so we need to reach a certain sell to rate within certain days and to be very honest that was actually it so so it was really driven from how do we give value to people when do they are happy with us and how do we reach as a fast as possible and then just turning every arrow in your company to that's right and it pregnant isn't what we did that's fantastic it's so so cool to actually follow on from what I was just talking about and and here kind of I mean talk about things being a before and after tests so so much of my experience was sort of customer zero opportunities where I went in you know with Dropbox there was eight people when I was there and you know customer zero at logged me in an uproar and so I didn't really have that contrast of the before and after in doing a lot of these things so it's just it's amazing to hear when you went in and and just added this that it made that big of a difference and of course I'm sure that there's a lot of operational things and other things that you brought to the table but that's and I think like constantly still even now I think even Alan thinks are going well you need to constantly ask yourself what is the value that we actually adds are we're not getting outpaced and and one of the elements that we figured out later is like a we can play with the shipping pricing for example as well and we brought again another growth loop into the game like hey we're not just a UX marketplace we actually are the full funnel of this and I think if you if we look at where our marketplace is moving and I think you can even tell more about that is that actually we went from being marketplaces that was practically affirmed with a certain product that made you sell and now we see that actually the vertical ization into shipping payments customers portraits and safety products really finding in each of these elements quote loops and vertical izing and building businesses within that is every time when you practically need to apply these growths hacking tactics that you're you you talked about today because each of these elements are actually business within your ecosystem and we're going from let's say we're tech companies were just a tech surfaced supplying some kind of element to becoming like full-service companies and really on all these parts so I think even along the way not in the beginning it stays relevant to test yourself towards these things yeah I think people miss that so often with growth that they assume it's just about getting more customers but if you mess up those touch points those operational touch points throughout the business you can't keep the customers you just you're not going to be able to drive sustainable growth if you think of that right so if you are if you are constantly just focusing on that's how can I get a better conversion rate to list or to buy or whatever and that's anything that's your job you know that's not what Jeff Bessel's did when he built build his marketplace he was selling books and he ended up with a Kindle right so so you need to think like me where's going books next it's not about just a conversion rate it's about really understanding the whole element of reading books like how can we do it better how can we service all these elements in there right awesome well I have to set the record straight on something the hotel that they put me up is one of the nicer hotels I've ever been in so I'm not in the same place so I will I will transition to yonis now so tell us a little bit on on Tesla net I mean it to be pushing a thousand employees now what what did you guys like what why did you even decide to start the company and and what were some of the important things you did in the beginning that put you on that kind of a trajectory so you know at the beginning we were we were thinking about global warming poetry you know huge scale of conflicts Wars and the lack of education but actually no you know we were always driven and we are still driven by no curiosity to do something online you know to create new business to try to gain rate you know some traction due to those projects and you know we we are no growth hackers from the very beginning you know so nothing special I believe you know just you know inside you know something something inside yeah well so I mean I'm hearing this kind of theme of curiosity come up a couple of times do you think that's that's something that's pretty natural to the Lithuanian culture as having curiosity we're just people in general what do you what do you think could you be actually we have seven values that we check when we hire talent and one of them is curiosity okay yeah and we hired hundred people in ten months here in the tween so there's at least a hundred people who had it and what was the did you have to talk to ten to find one that fit I actually am NOT in charge of that part okay you assume no no but but I still believe yes of course there is a lot of curiosity in the market but I will also say that sometimes and I would say people are naive but in a good way like you know trying and not being afraid to fail at stuff they want to experiment mhm and I guess also like walking with the first or the second generations that is looking west on that East here is kind of driving and fueling this curiosity that even if you are the first company selling you know second-hand online in Lithuania you will be the first to do this form Lithuania like selling whatever product online on whatever and that's just creates a lots of Drive that is linked to curse it that's I think it's very great well so that's why don't we transition to sort of your your expertise in in the b2b side of things when you when you look at so what you just heard about vented there and some of the things I talked about it was more more b2c focus what do you think are some of the biggest differences in b2b that people who are focused on being abused before looking at I mean it's just that in the type of b2b business where I walk we have a much more so like you said with Dropbox and slack it's very close to consumer with the self-service experience where it's heavy on on the UX and the marketing side of it on the product marketing I guess if you call it like that and in the with the type of between companies we work with it's more what we call the SMB on enterprise market where you have this heavy human cells touch in the process and so that's the key difference that impacts the cell cycle button as well what is very similar still is we focus on always start with the ideal customer profile and I guess you also work with personalized in in b2c that you want to target you know the eye customers and the main difference in b2b is that we have more stakeholders so we'd have the decision-makers influencers and the bigger the companies the more of decision makers and influencers you might have in the process you might even have several layers of influence Oracle champions whatever so I guess that's the key difference that you need to keep in mind but at the end of the day what we always say is that even if it's b2b people still buy stuff for personal reason and the personal reason they would buy it is you will help them to reach the KPIs faster and of course you being in the industry for let's say ten years might help to have people picking up the phone when you call them but at the end they will not buy it because they know you they would buy it because you have them to reach the api's faster and they might get a bonus or might just get to keep their job or who knows might just get home and watch more TV but at the end it's your personal reason so what would you say is the most common mistake you see when you get involved with a company companies were in love with their products and don't talk enough with customers uh-huh so they just they feel like I'm b2b maybe that they that they just come out with a solution and maybe don't need to do as much customer research as you would on consumer yeah most likely and I think this is just a problem of with human beings we just tend to go more where we get positive and feedback or compliments and what you get from customers is not always that that's just how you grow so how do you overcome the risk I've always had this assumption that you know would be to see if you're growing there's there's a pretty good chance that you have product market fit but with b2b maybe you got really good salespeople or selling a dream and the product just does not deliver on that and so you can be great how do you yeah and that that's a very good point and actually you mentioned well how this know start metric is important according to revenue yeah and I've been with companies and part of sales floor where we just oversell it and we are super good gate closing yeah yeah and then eventually we get churn because you know we have the newbies team that just has a new base target bring new business new new revenues then we give it to the customer success team and like guys we've done our job and they cannot deliver and I think and that's one of our other seven key values delivery it's actually on the top and and why you need to align on then why I think if you focus so much on the personas and making sure that you align on that you are going to create value because you can help them to reach their KPIs you can help a lot actually one book that I'll mention a lot when I train salespeople is delivering happiness by the guys from Zappos we actually said that whenever customers cannot find the shoes they are looking for on Zappos customer success or customer support whatever we look for shoes on whatever other website and sending the link and they believer they believe that this is how they deliver value and that people will come back to Zappos because they still found the solution on Zappos yeah and I think it's very important as well for salespeople in b2b to be able to do the same like if you find out that the solution the customer is looking for is not yours you see on and if you can of course suggest something else and you will still deliver value and next time you reach out and the pain they have matched your product which is painkiller then they will still look at you like oh this guy delivered value to me already right so they can do it again and then you have the trust - yeah exactly yep so Thomas let's let's talk a bit about uber low how how long did it take for you to sell to Shopify from the time you started the business yeah it was two years actually two years that's that's amazingly fast so what was it that you what was it that you sort of saw as a market opportunity that that just how did you know to go after that opportunity in a way that you would get enough traction to be an attractive acquisition target so quickly sure so we never plan to sell we actually tried to hire Thomas so I think it links to the experimentation and to what you just talked about or maybe actually before that when I set up all the finance done speaking English I think we speak really well better than many other European nations absolutely what I was referring to it was more like to write a copy that's really it requires excellent knowledge of language and marketing speak no anyways so why how a borough grew and and how it links back to the growth and growth framework that you've proposed or talked about is I think what is very important is actually the mission and the purpose before any experimentation because I mean if Facebook didn't have an objective or a mission you could easily increase the daily active users by just sending more notifications on a mobile phone so all the KPIs are very easily played especially in bigger organization so I think it's very important to kind of nail down while you're doing what and and how does that help users and why they're using that product so we launched uber low as a leading port through to actually helped people import products from Aliexpress which was a very kind of technical and transactional relationship or like we we helped it was like a feature more so than a business how we grew actually links to this us understanding why we exist and how do we bring value to the merchants we basically asked them why do you use uber law and how how do you find it what problem does it solve you we basically talked with our customers and and what they said is they didn't use a burro to complete kind of complete a task they used to barolo to start business and for us it kind of unlocked all the marketing opportunities that hey maybe our users are not the people who are looking to import products from somewhere to somewhere maybe our users there are people who want to earn more money and travel the world right that's a much bigger audience than the people who are actually starting kind of importing products from one place whenever and I think once once we once that was unlocked and it was all qualitative it there was no data there which is you know it doesn't sound great but it's it's just like us thinking about our business and and what what is the value that are we're bringing and what is the opportunity out there yeah and then from there we've grew and and that caught the attention of Shopify fantastic and clearly Shopify is like one of the hottest rocket ships on the planet so what what did you learn about growth from Shopify because clearly they've got something figured out over there yeah Shopify is going quite a bit but I think what you will find a job for is unconventional thinking if you know all of these companies are following like pre standard framework of growth and how people come in and how they get activated and move on I think Shopify is unconventional in a way that it really went after the low end of the customers if a traditional way of growing your kind of revenue your customer bases is you look at all the segments of your customers and you identify who are bringing the most money and where you have them or the biggest arrow I and it would double down on them and you would bring more of them I think what Shopify did they looked at all of them and said we are going after the lower end even if they're not bringing any money mm-hmm because the reality is everyone starts somewhere and deserves that chopper does and so all the kylie jenner's all the gym sharks and all the other kind of unicorn e-commerce stores started as small and when you start with shop for it's pretty hard to switch places so I think it's similar to AWS like mm-hmm it's a default starting place for many startups and it's very hard to switch your hosting solution later on so I think Shopify did that which is unconventional and I think that's just one of the many examples of how differently Shopify thinks than the rest of the folks in the industry yeah I actually heard the same thing about Zendesk that they they got Airbnb and they're really early days and and and then it turned into a massive client forum but it was it was kind of not a not a big client when they joined there so I think being able to yeah being able to serve companies and scale with companies can be can be a really good strategy for getting rolling so clearly I think for for definitely for a Tesla net and and probably for everyone the the difference between kind of running the business in the early days and then later on when when you have lots and lots of people and all the challenges with that whatwhat is how how is it significantly different now than it maybe was in those early days from for both like kind of operational and also continuing to serve customers and not become a silo'd and keeping people focused on mission anyone want to take that yeah so then your big it's let's say easy to think about growth because you know you have a lot of tools for that you have money you know to invest you have talent around you you have experience you have user base you can even think about you know acquiring your competitor but then you are small you know you are quite limited so maybe your creativity works a bit better so I personally believe it doesn't matter you are big or small you know you have to always think about growth and yeah you should always look for opportunities in a product or marketing doesn't matter mm-hmm I think you you kind of wanna replicate like little little companies within within your companies like little teams who-who have that that similar Drive and culture as you had when you were sitting with a smaller group together in the beginning and that's that's a bit tough but on the other hand if you do it it creates so much more fun because you get all these little groups who are like solving their own problems running their own businesses their jobs become more interesting and their output becomes better and impact on businesses is bare so I think that's like I just always try to think like how I'm gonna get this group of people into having an exciting fun job right and and I think that you know trying to stimulate that type of behavior helps a lot because actually what he what he says it's it's it's very true you can very easily get lazy and think like well let's just buy these competitors out and that's let's move on with this but it's much nicer to to set up a team to kill that competitor and come up with all kind of creative stuff to do that and I think it's just more exciting and I think that's a hard thing of course obviously when you have a thousand people or or even more it becomes more and more difficult yeah and so it's interesting I think that the the kind of trying to get people passionate about the mission and and and you mentioned like the the fun of success and the challenge of that and you compare that to the number of companies that feel like oh we need to we need to bring in ping pong tables and and you know do things to kind of create a fun culture where it just it seems foreign to me that that the pursuit of success would not be fun in and of itself so it's it's an interesting contrast and you know it's fun then you can buy your competitor faster than two years I think another way to put it at is that over time people start focusing more on the internal things rather than external so when you're a very small startup everything you hear about is how to get more customers what customers are telling about you what is the CAC like all these opportunities out there and as you grow people just care about internal stuff like what tools you use what are the procedures who's reporting to who and how does that work yeah and I think if in line with kind of building small teams or staying creative I think it's how do you keep everyone focused on the external science because all the opportunities of growth are out there yeah it's not actually within so I think that is an extremely important point and you should not hire people who care about a ping-pong table right because that's like they should become professional ping-pong players like you should hire people who are passionate about building stuff and building it together with you and I think filtering out that in the beginning especially when you're like cool company like this on that so you give big events and everybody's like that's nice they'll probably have good pancakes at breakfast you need to make sure they don't join your company right right and the guys who are don't give a oh sorry don't care too much about doing the unsexy stuff but really love to build things those are people who are actually I think similar to us and you know we'll build a company that that you know can't afford ping pong tables right so I think I think that brings us to a pretty good transition of what is the difference between companies that just achieve this breakout success and and so many other companies kind of languish and go out of business what do you think some of the key facts there's an on the on the two binary outcomes are if we knew we would be incredibly rich we wouldn't be CEOs of these companies who would run in the world so so in other words maybe luck I think luck is a big factor but it's also like having teams that work really hard for it and and I think there's so many different successful companies that you know if there was a very simple five points to point out what to do you know that it would be very clear but I think to nobody that is and I think all of us have very different stories on how we reach different times success right so I think the only thing that you know is that nobody knows and you have to try a lot of stuff why do you talk about doing so many experiments because nobody knows right and and you just try a lot of stuff you work really hard start a point in time you hit something like oh my god this is working well let's try something similar again and let's see that builds up right so I think you need to just work hard and try a lot yeah yeah I need to be fast learner every time because you know we saw an examples like examples like Yahoo or Nokia they were at the top you know and I thought it's impossible to be in companies like like this but actually when you are fast learner you're curious so you can achieve whatever you want but yeah hard work also comes together and other stuff and I guess the pattern I see walking with so many successful entrepreneurs is maybe brutal honesty so to have this capacity exactly when you run Nokia to say we brutally honest with ourself right now are we really whatever right no we are so big right I think that this kind of mindset of being always brutally honest with yourself on the team is how to keep probably and and maybe it's one of the pattern we've seen successful companies yeah right right I like the brutal honest piece what I would add to that is that it's pretty hard to see what you can see and I think that's where kind of that diversity comes in in terms of you're building a company and making sure that there are people who understand things that you don't understand so to grow a successful company you really need a representation of everything and if you are we kind of talked a lot about a lot about this lately but you really need a representation of everything within the company that will help you find all these blind spots that you can't see because I think kind of the folks at the awkward Nokia and and other companies that filthy they basically didn't see what they didn't see right which is you know how could you solve for that yeah so it's a scary lesson for a lot of people hopefully it's it's it's one that that keeps people's eyes a little wider open when you see big big giants like that fall there are more examples like bran less all the Softbank investments the pizza delivery truck and right yeah absolutely so even yeah perceived hot new companies sometimes are little more smoke and mirrors than they then they may seem so I I do think though that you know one of the things that Thomas you you had mentioned was the you you went in and and the team hadn't really articulated what the value was at vented I think a lot of times that I was kind of joking when I said is it just luck but but I do think that in creating value in the first place there's a little bit of luck involved there that that you mean it starts with it's not that hard to validate that a problem exists but to get the solution right that addresses that problem is pretty tough yeah and if you listen to these things we agree a lot with what they're seeing actually what you hear is like how do I increase my probability so luck right yeah I'm gonna take a lot of different people that look at this problem from a different angle so I got like many different ways to look at it which increases my probability of seeing it I'm gonna be very honest about what doesn't work because then I can write off a lot of stuff and we're gonna lie to myself pretend things are are there and then I'm gonna try effort least lead to do that and you know if you look at it those are all ingredients that you know tries to you know gamble with that luck because in the end all those things that you're building usually they've not been built unless you're a rocket internets and York opening or working model it's it's actually a good approach because you eliminate a lot of that locker but so I think in those cases it's a lot about you know how can I increase probabilities right and being humble about it that you know many of these things are luck you know yeah and and when you got something then really try to operate on that lucky bits yeah well yeah yeah so once once you've once you've created that value work hard to understand that value understand how you create that value understand all of the elements that that build on that value and then just turn it up as much as you can so there's that execution and hard work and building the right team yeah exactly and when you found it luck realize it's luck right yes because don't think you're super smart like you're not I mean if you look at the soul funk success that guy who had that thing you know he got very lucky with his previous investments in China specifically one company that it really well doesn't mean that every time you throw a bunch of money at something is gonna work yeah yeah so really realize like okay I got lucky this time I'm gonna keep on doing the same thing of being humble and trying a lot of stuff to make sure this luck keeps on running instead of thinking about we were so smart you know so big were so smart no or not man we got lucky a couple times and really willing to continue to to invent on top of that yeah it reminds me when I when I left log me in so much of our growth was was buying intent people were looking for remote access solutions because we had a competitor who was spending hundreds of millions of dollars building demand and charging a lot for a product that we gave away for free so we would just buy through search engines yeah same thing but free so we didn't even focus on differentiation it was just like harvesting all of that and then they get to Dropbox thinking oh that playbook I can't wait to do it again and nobody was looking for Dropbox nobody knew what the heck a Dropbox was and so it was it's that that when you think you've got it figured out being able to recognize pretty quickly that like you know what I got to figure out a new playbook because this one's not going to work and so it could be a little scary cool so any any parting words that you want to share with everyone out here and I'm not sure if we are supposed to open up for questions but but we'll have some parting words and then maybe questions over be here afterwards what's the one recommendation you would give someone who's who's trying to make their business a success yeah so I would I really like the way to look at it the probabilistic ly to your success so it's not binary it's not the failure or success we are all kind of working on something that has a chance and your goal is to maximize that chance and and I think one important thing which is kind of my takeaway is when you look at it probabilistic ly you want to kind of make sure that the upside is really big because you multiply the upside by the probability to get the expected value and and then if you're upside is you know taking over Aleph a Nia that's a probability of ten over three million people which is very not exciting thing so you really you really have to ask yourself a question not a whether that that's gonna work but if it's gonna work how how big it can be and I think that's a huge takeaway that we in lafha especially sometimes tend to like overlooked we we really focus on kind of just the local market so really aim big because kind of the success will be eventually end of the function of probability and yeah I would take that and say anytime you're doing any individual test that that being able to have a lot of upside on any individual test is makes it more likely that if if it's successful it can be a game-changer in your business so yeah any other parting words I guess based on that and what you were saying earlier about you know figuring out in one place and then doesn't work necessarily the next time is probably also set expectations that you sure about to start something already working for something don't look for shortcuts they are now and that's a sad sad reality right then you just like and I see many salespeople or founders trying to kind of copy/paste some playbook it's like play books are there for inspirations for you to kind of tweak on but you cannot just copy-paste it and I assume it's going to walk and that's gonna be your shortcut to market right maybe to work with bitcoins yeah that was the exception to the rules absolutely I would suggest not only look for huge improvements but for small ones as well because you know when you have five percent conversion rate improve increase 'men per month fee and when you combine you know all these improvements and you can see in the end of the year that it's 80% for example so and when we you know divided our business into very into a lot of different small parts and try to improve each of each of those so you know after one or two years you know we saw 500 or 600 percent no improvement so you can be very successful if you you know try to look for growth in every part know of your business so agree with with those points and I think to the point of of Thomas so from the Thomas corner then I really like the point and I think when you make those bets in the beginning you start think about we really realize and don't be ashamed about the fact that you're gonna fail like 10 15 times before you really gonna find it so don't don't don't feel shaming in in failing be honest about it and be don't be thinking about you know it's gonna be a sexy ride you be cool found they're gonna be CEO you know all the sexy stuff no man it's the unsexy stuff that make the business work and that means failing 10 times and I think all of us at least feel that 10 to 15 times before we got something working and I think if you put that mindset on and you put it in probabilistic stuff and realize these things that small changes mattered and all of that together you know might get you there right but but realize it's just gonna be tough like I think all of us have gone through super tough periods and and many of our teams as well and then it's not a sexy right you know get ready for that if you want to start doing this stuff right absolutely so the one thing I would I would leave on top of everything else is just figure out what matters right now in your business figure out that thing that matters the most and so for some it might be do we have any value at all that's like that kind of product market fit do we have a product that anybody wants once you know that some people want it then it might be how well do we articulate it how do we start to get enough people in the door and then eventually maybe it's how do we start to find massively scalable channels and how do we fix the support problem or whatever it is but just putting a lot of energy behind the thing that matters most in your business at any given time it gives you the the highest likelihood of actually being able to solve it excellent well thank you guys that was that was fantastic really appreciate it [Applause] [Music]

Channel: Tesonet

Views: 13,784

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Id: 1vqEggR8rt8

Length: 97min 59sec (5879 seconds)

Published: Sat Feb 22 2020