Tackling "shiny-penny" management ✨🤑
A truth-telling exercise for founders, tying an org's focus with its unit economics, and why you cannot ignore the when and where of product feedback.
Hi there,
Welcome to the twenty-sixth edition of The Baton. A fortnightly newsletter that brings you three, hand-curated pieces of advice drawn from the thoughtful founder-to-founder exchanges and interviews taking place on Relay and the interwebz. So, stay tuned!
In this edition, you’ll find instructive and inspiring pickings from the brains of mmhmm’s Phil Libin, Workboard’s Deidre Paknad, and Intercom’s Des Traynor.
#1: Managing a persistently baffling founder dynamic: "You’re going to be the first person to know and you’re going to be the last person to admit it.” — mmhmm’s (formerly Evernote’s) co-founder and CEO, Phil Libin, on an essential method of truth-telling he has long adhered to. (Source: The Accidental Creative)
I got this advice as a CEO at Evernote. A while ago. And this was from one of our investors. I think it was from Henry Ellenbogen… This is amazing. I’ve given this advice a lot and I follow it all the time. He said, being the founder and CEO, you’re going to be the first person to know when something is really wrong. You’re going to be the first person to sense, ‘look, this isn’t going right.’ Something bad is happening. Company isn’t doing what I think it should be doing.
You’re going to be the first person to know and you’re going to be the last person to admit it. Which is a brilliant formulation, right? You have your fingers everywhere. You have more information than anyone else. You just need to have a feel for it. You’re going to be the first person to know when something is wrong. But as you also have the most invested, you’re going to be the last person to actually admit it.
So what you have to do is, be aware of that and then try to defeat it. How do you use the superpower, being the first person to know and mitigate the fact that you’re not going to admit it to yourself because you have so much at stake.
He suggested a process which I still do with every project. Which is:
Find a time when you’re in a pretty good mood. You don’t want to do this when you’re frustrated.
Just write down and you don’t have to share it with anyone, just write it down for yourself.
What do you want to accomplish in the next six months or twelve months, whatever time frame, you want, that if you accomplish it in that time period, you’re going to be like, ‘yup, we’re doing great, things are going according to plan.’
And if you don’t accomplish it, you’re going to be like, ‘oh something is seriously wrong’ Decide that, write it down, you can share it if you want. I usually don’t…
And then just put it aside. Then, look at it, when times are tough in six months.
Both ways work really well. Sometimes, six months go by and you actually feel like crap. And you look at this thing and you’re like, ‘oh, wow, we did all of that stuff.’ It’s hard to acknowledge because in the day-to-day, you focus so much on what’s going wrong. But actually, look, six months ago, I said that I’d be super happy if we accomplished these things and we’ve done it.’ You need to be super happy.
That’s actually really useful.
Or sometimes you’re pretending that things are great. But you look at this and see, well, six months ago, you said, we’ll have to do these things but we’ve not done any of them. Why do I still feel good? Am I just lying to myself?
That kind of conversation. Overcoming the founder dynamic of, doubling down on being the first person to know when something is wrong but defeating the ‘being the last person to admit it’ has been super powerful.
#2: Tackling “shiny-penny” management — Workboard’s co-founder and CEO, Deidre Paknad, traces back the impetus of having an org-wide focus and reducing operating friction to unit economics and shares how that informs their approach to winning verticals. (Source: Scaleup Valley Podcast)
So, this goes back to the unit economics I talked about. So if we’re quite focussed on 145 companies in a particular vertical in large enterprise, we’re not focussed on 10,000 other things. We’re focussed on these 145.
And those are all in the same vertical. So when my sales reps go to call on company #20, and they reference the 19 other customers that are in the same space, maybe even competitors to company #20. Company #20 says, ‘huh, you understand my business, you’re in my world, and those reference example are relevant to me.’
And what I find is that shortens your sales cycle. Oh, btw, your users in company #16 and #17, just got jobs in company #20. And they bring you in…
So, to me, it’s about how cost efficiently can we dominate a particular market category. And so I like to pick verticals that are sequential. And I like to pick them, so that the next vertical, recognises the one before it as similar to them. Those references. Those customers you have. Their business is like mine. And the, what I think of as the reference value, flows over.
What that does for your sellers is, it means, they can be fluent and effective communicating value in a customers’ context. Right? Because everybody they talked to this week, this month, this year has a shared context. Vs, for instance, you go to P&G on Monday, you go to Saber on Tuesday. Everyone has a different business. So you’ll have to be a lot more savvy to understand a customer’s pain and problems.
All that does is slow down your sales cycle. For me, it’s about how much friction there is. And what are we doing to reduce that friction.
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It’s super easy for me to say we’re focussed. Partly it’s what we do. And something I believe deeply in. But it’s… really the unit economics, right? What’s the math to drive growth? When I think about where we’re going to focus our time and effort, I think, what will cause me to acquire a dollar in revenue. If I spent a dollar to acquire two dollars in revenue, I have more to invest to acquire more of that revenue.
If I’m less efficient about that and we’re all over the map. We have too much friction. And we’re sloppy and because we’re trying to do a bunch of things, we don’t have time to do things very well. Then the things we actually do cost us more. And so then we have less capital to invest in growth.
To me, this is what I think of as smart, fast growth. Makes it really easy to say: ‘No, we’re not going to Europe right now. No, we’re in the US. And enterprise. And no, we’re not going to be in the credit card business, we’re going to be in the enterprise business.’ It’s really, really easy.
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Getting aligned, what that really means, is declaring what it is we’re trying to accomplish, declaring the measurements that tell us what success really is and then staying tuned into that. That reduces distraction and what I call, ‘shiny-penny management.’ It reduces that a lot. Because you’ve given people a thing to focus on. And if we don’t have a thing to focus on we’ll just look in every direction. And then our resources get all over the map.
#3: The when and where of product feedback — Intercom’s co-founder and CEO, Des Traynor, on how just interpreting just the ‘what’ and ‘who said it’ of feedback can (and often does) paint a skewed picture. (Source: Inside Intercom)
So when new users insist a certain feature is missing, or isn’t working properly, bear in mind this is their first rodeo. Knee-jerk reactions shouldn’t be the core of your product feedback.
Likewise, a lifelong user’s feedback will be skewed by how they’ve adapted themselves, their team, and their workflows around your product, warts and all. This type of feedback is not necessarily invalid, but it’s certainly atypical.
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So when you’re getting good product feedback, make sure you’re recording the basics.
Who is the user – are they a free or paying customer? Active or inactive?
When did they say this – was it on their first session? Or their 300th?
What are they saying – was it a feature request? Or a bug report?
Where are they saying it – was it on the “teams” page? Or on the “new project” page?
How are they saying it – are they positive or negative? Patient or urgent?
Every piece of feedback contains so much information. It’s a mistake to only index on one.
Until next time,