Martin Gontovnikas (Gonto): The Biggest Mistakes Startups Make When Scaling into Enterprises | E1115

1. 0:00 – 0:44

   Intro

   1. MGMartin Gontovnikas0:00

      Psychology is key to marketing. When people think about scaling to enterprise, they think it's an on-and-off switch. They think, like, "Okay. We were selling to users before. We were bottoms up. Now we're gonna sell to enterprise." If you forget about who your users were, you eventually go out of business. I think that a product-led growth company should always start with design partners because first impressions matter a lot. And you can only get first impressions once.

   2. HSHarry Stebbings0:26

      What's the biggest mistake you see first-time founders make in growth?

   3. MGMartin Gontovnikas0:30

      The biggest mistake that I see is that-

   4. HSHarry Stebbings0:35

      Gonto, I have heard so many great things from your wonderful partner, G. But thank you first for joining me today.

   5. MGMartin Gontovnikas0:41

      Thank you so much for inviting. Very happy to participate.

2. 0:44 – 1:46

   Entry Into the World of Growth

   1. MGMartin Gontovnikas0:44

   2. HSHarry Stebbings0:44

      Listen, I'm excited for this one. But I wanna start, 'cause the world of growth, it's a bit of a weird world, if we're honest. And so, in terms of the entry point, how did you make your way into the world of growth?

   3. MGMartin Gontovnikas0:54

      I would say I got into growth by chance. I wanted to become a developer advocate, so I was interviewing a sh- and joined Auth0, which is an authentication startup, to do developer advocacy there. While I was doing that, what we realized is that most of the revenue were coming from people that were signing up to the platform and trying it out. So because of that, I was promoted to be the head of self-service. I'm not a marketer, so I knew nothing about marketing, so I didn't know what the fuck to do. So based off of that, I decided that I was gonna apply engineering to try to improve our numbers. And that's how I thought about growth. But when I joined doing growth, I literally did not know that I was doing growth, at all.

   4. HSHarry Stebbings1:38

      I mean, I- I love that. Sometimes the best things are accidents, uh, as my parents always remind me of my conception. Uh, but, uh... (laughs)

   5. MGMartin Gontovnikas1:45

      (laughs)

   6. HSHarry Stebbings1:45

      Uh,

3. 1:46 – 3:48

   Lessons from 7 Years at Auth0

   1. HSHarry Stebbings1:46

      but- but you spent seven years at Auth0, and it's an incredible journey. What are one to two of the biggest lessons for you that you've taken with you from seeing that trajectory and being in the coal face, so to speak?

   2. MGMartin Gontovnikas1:58

      I think I have two main learnings. Um, number one is that, being an engineer, I was always thinking, like, branding and psychology and all of those things made no sense. But after being at Auth0, I realized that even when you sell to developers, psychology is key to marketing. Because as Daniel Kahneman says, "All decisions are emotional." And I actually think you can, in a lot of cases, use biases that we have to our advantage. And I'll give you a very specific example. But in a lot of cases, in the beginning, we were using emails with a lot of data, and we actually moved them to have almost no data and just focused on making s- sure that the story was coherent. And those converted better. And I think using psychology, even with a more mathematical way of thinking of biases, system one and system two, I think was one of the biggest learnings. The second big learning is there's no exponential growth company that happens without problems and without crazy events. I've seen that with so many companies now. So now I believe that taking big risks is absolutely important to having exponential growth. At Auth0, for example, we had a big problem where we were trying to grow from 40 mil to 80 mil in ARR, and there was no way we were gonna hit those goals. So we decided that half of the marketing team and a big chunk of the product team were only gonna focus on bringing sign-ups up and getting activation, and they would not do anything else. That was a bold move because we didn't do any product marketing. We didn't do any launches. We just focused on usage and revenue. And without that, the company would have ceased to exist. So g- big risks and taking big bets, very key to having exponential

4. 3:48 – 4:34

   Importance of Taking Risks

   1. MGMartin Gontovnikas3:48

      growth.

   2. HSHarry Stebbings3:48

      Two questions. One, do you think teams are willing to take risks today? Do you think they are too frightened to take risks, in general?

   3. MGMartin Gontovnikas3:56

      Most people in general are always frightened to take risk. I'm frightened to take risks as well, but I always think that brave people are not the people who are not scared. Brave people are the people who are scared but do it anyway. The other are just unconscious. So I think taking the chance and- and if you know in your mind that you have, at some point, take big risks because you're not gonna make it, then you're a bit more prepared to take some of them. But in general, I think it is very hard for people to do so, mostly because they are scared of what if it doesn't work? But if you don't take any big risk, it will never work.

5. 4:34 – 5:37

   Creating a Culture of Risk-Taking

   1. HSHarry Stebbings4:34

      How do you, as a leader today, let your team know that they can take risks, and if it doesn't work, it's okay?

   2. MGMartin Gontovnikas4:43

      Couple of things. Like, number one is, I think having a budget so that people can take risks and just do it. One thing, for example, that I'm doing now is if you have an experiment and you have an idea, you wanna try it out, it's well framed, you've done the research, you understand, you have a gut feeling but you have a way to measure it, as long as it's less than 10K- 10K, you can just try it and do it without approval. So then people feel a bit more encouraged. The second one, of course, is when somebody fails at something, you do not give them shit. It's more about, have you learned anything? If they haven't learned anything, you can fire them. But if they learn something, that means that at least they can iterate. But this area talks about the culture of failure, but to me it's just this. It's like, do not treat people bad or poorly when they try something and- and failed if everything was set up correctly and they were actually taking a big swing.

6. 5:37 – 6:52

   Learning from Failure

   1. MGMartin Gontovnikas5:37

   2. HSHarry Stebbings5:37

      Can I ask, everyone talks about this, like, "Oh, we learn from our failures." And that always sounds rather nice. Um, how do you specifically learn from failures? So we try something, it doesn't work. Do you do a post-mortem? Do you do a group meeting? What does that learning look like, post-failure?

   3. MGMartin Gontovnikas5:54

      ... to me, it's for sure you do a postmortem. And you start talking specifically about what didn't work. And I think I'm a big believer that qualitative information is a lot more important than quantitative information in growth. So when I think about failures, okay, if we failed, we're gonna talk to people to understand why didn't do, why didn't they do what we wanted, what happened, what were the takeaways? And I think if you actually do the research and you talk to people and you have interviews, you will learn something. And then I think it's about talking about that learning all of the time with everybody and having a database that is searchable of some of those learnings. Lately, for example, one thing I've done is all of the learnings I have them in Google Sheets with what did we learn, some tags and stuff like that, and I created, like, a GPT from it. So now when I wanna do something new I can ask it questions, like, "Hey, I'm thinking about this. Did I fuck up on something on this in the past or can I just do

7. 6:52 – 8:10

   Essence of Growth

   1. MGMartin Gontovnikas6:52

      it?"

   2. HSHarry Stebbings6:52

      I love that in terms of creating your own GPT. You said there about kind of qualitative over quantitative. I think a lot of people think about growth as like, bluntly data scientists A/B testing colors of red or green buttons in many cases. When you think about, like, growth today as a term, what does it actually mean to you?

   3. MGMartin Gontovnikas7:10

      To me when I'm thinking about growth as a term, like if I had to say it in just one word or one sentence, is applying the scientific method to KPIs. So it's slowly trying to improve on KPIs by trying different things. But in reality, most people will tell you that you have to look at data and then data will tell you what to do. Data does not tell you what to do. Like, that's why growth people who are creative, who thinks about unique ways to drive exponential growth are always gonna be a win and are always gonna be much better than anybody else that is out there. So it's more about that than anything else. It's understanding your customer persona, trying to be in their shoes, doing qualitative interviews and better understand what's going on and why, and then trying to use your creative juices and creative power to think about different unique experiences to drive your KPIs to grow.

   4. HSHarry Stebbings8:05

      I absolutely love that in terms of the kind of qualitative and more boutique artisanal

8. 8:10 – 10:11

   Role of Data in Growth

   1. HSHarry Stebbings8:10

      approach. Can I ask, though, if you were to let A/B testing, does that not tell you what to do? I'm, I'm purely thinking about how we run the media company today. We'll A/B test two thumbnails for an episode and one gets 38% click-throughs and one gets 84% click-throughs. Great, it tells me what to do. I'll do the 84%. It... does that not tell you?

   2. MGMartin Gontovnikas8:31

      It does give you some information. What I'll share is I think doing A/B tests it's a lot easier in a B2C than in a B2B. If you're Instagram and you have hundreds of millions of users, you can test anything because I actually have a friend that works there. In 12 seconds you'll have the answer on what works better. If I can try something, get a result in 12 seconds and then iterate, for sure, I'll try to do that. In a B2B numbers are smaller and the decisions are made by team, not individuals. So what you get from an A/B test is useful but is not always the right answer. Because of course if I try to do something and it says 84% better on B, then great, I'll implement it. But the question is maybe there was an option that was 800% better that I never even thought about, that I never even tested about. So getting to some of those I think is where the key of trying some of these new growth experiments come from. I only think about A/B test in two ways. Number one is big swings. For B2B if you wanna get results you need to try something that is completely different because then you will get results a lot faster than if you did any other way. The other way that I use A/B tests is to not get my metrics down. So when I build a home I feel the home that I'm building is much better, I will ship that and look at the A/B tests to make sure that the number doesn't go down. If it does, I iterate. But if it doesn't go down, eh, and e- even if it doesn't go up, I still keep it because I'm a big believer in the future it will do better.

   3. HSHarry Stebbings10:07

      I absolutely love this. And when I write on my hand, it's when I really, uh, am learning

9. 10:11 – 10:46

   Budgeting for Big Swings

   1. HSHarry Stebbings10:11

      a lot. Uh, so two things from that. You said about, like, big swings, and I totally agree with you, you just get incremental growth if you try any tinkering. But how should a leader today think about budgeting for big swings? Does big swings need I need to put big budgets to it, and how would you advise me thinking about how I should budget big swings?

   2. MGMartin Gontovnikas10:29

      When I think about big bets, it depends on what type of big bet you're doing. But typically the investment is more in humans that are building something or doing something or something like that, rather than the money that I need to spend on buying something or going to an event or

10. 10:46 – 11:54

    Timing the Introduction of a Growth Team

    1. MGMartin Gontovnikas10:46

       something similar. So in that sense it's not as much incremental money, it's more about what are the trade-offs? What are the things that I'm not doing with the people that are focusing on the big swing? How I try to think about big swings is like bets. I I like thinking about the bets. And if you think about that, you have small bets, I change the button color. I have medium bets, okay, I'm changing one page in the onboarding. I have a big bet, I'm blowing up the onboarding and doing something completely different. The big swings will take some time to work. Maybe in the first, the first three that I do do nothing and it takes me six months. So when I think about that, it's about planning on, okay, in the next quarter I do six small bets because they take me very little time, two medium bets and one big bets. I do the small bets so those give me an incremental increase that allows me to continue to hit my goal while I wait for one of the big swings to hit it. Once a big swing hits, I will have a step increment, like a big step change. But I need to buy time for it by trying some of those incremental changes until I get to that big success.

11. 11:54 – 14:07

    Building a Growth Team

    1. MGMartin Gontovnikas11:54

    2. HSHarry Stebbings11:54

       For a big bet, do you time bound how long you're willing to wait for it to work or do you just hold it but in perpetuity?

    3. MGMartin Gontovnikas12:02

       I think you always have to time bound everything and to be honest-... you will get a gut feeling on how it's working. And again, if you start doing interviews and start talking to people, you'll understand it a bit more. I'll give you a very simple example on it. We're starting to do outbound, for example, at Auth0, and we're doing outbound for specific industries and for specific roles. When we were doing that outbound, it didn't work at all, even though we were going like good direct mails, good offers, good everything. All of the data didn't tell us why it wasn't working. We didn't know. So what we ended up doing is, I started to contact a lot of those people by sending them a message on LinkedIn or Twitter, and like, "Hey, I know we tried this outbound campaign on you. I don't know why it didn't work. I will not talk to you about the campaign, I will not sell you. I just want to understand why." And by doing that research, we learned that people thought like, "Oh, Auth0's interesting, but there's no initiative. There's nothing going on in the company that makes me care about changing my authentication provider." By doing that, we realized that the initiative mattered more than the industries. So for example, if a company is upgrading the technology stack, moving from JavaScript to Java, then at that point, it actually makes sense for them to think about an authentication provider. So we changed our entire, um, thinking of this to actually start scrapping LinkedIn to see what programming language they were hiring developers for. We scrapped hiring pages to see what they were hiring for, and if the people they had now were different than what they were hiring, we guessed that they were going to change their tech stack, and therefore do outbound then. And when we started to do that, that started to work. So we did try for some time only, for one or two months, on this industry test. But really, once it started to not work, instead of just stopping, we started to talk to people to better understand why they didn't care.

    4. HSHarry Stebbings13:57

       Gonzo, do you ever get too big to take big bets? When you are a public company, is it, are you too big to take big bets?

    5. MGMartin Gontovnikas14:05

       I think the big

12. 14:07 – 14:55

    First Impression in Product-Led Growth

    1. MGMartin Gontovnikas14:07

       companies that still succeed are the ones that take big bets. All of the others eventually get killed by a startup. That's why I like Amazon. Amazon did a very big bet by shipping the Kindle phone. Kindle phone was so bad that it disappeared, but they were at least willing to try it out. And if they weren't willing to try Kindle phone, they would never be willing to try AWS, and AWS is now where they get most of the money. Why does Amazon win? Because they still build small teams, they put walls around them, and they allow them to test and do big swings, unlike any other big company.

    2. HSHarry Stebbings14:45

       Tell me, growth often held in a separate part of the company. Facebook held like the growth team. Do you think that growth should be held in separate parts of a company or

13. 14:55 – 16:00

    Integrating Growth Team in the Organization

    1. HSHarry Stebbings14:55

       should it be interspersed between all functions?

    2. MGMartin Gontovnikas14:57

       Ideally, I think it should be interspersed, uh, a- among all functions. And that's the reality I think for most startups. Sadly, when the company grows, I don't think that can happen anymore. Because if you think about it, what ends up happening is you start seeing companies that grow, for example, their product teams, let's say like a growth product team. And when the product team starts growing, that means that they need to now we- build features for checklists that enterprises will do to see if they wanna buy some- something or not. They need to start doing support. They need to do bug fixing. They need to maintain previous versions. And they take s- they, they need to do so many things that there's now no other place for innovation. There's no place for growth. Because of that, I think they all end up creating like separate teams for innovation and growth to do that. Ideally, you instill it around the org. I have never seen a place where that is a success yet. I, I wish I could.

    3. HSHarry Stebbings15:51

       Okay. The other question that founders have is, this all sounds great. When do I start building a growth team? When do I have my first growth hire? How do

14. 16:00 – 17:14

    When to Start Building a Growth Team

    1. HSHarry Stebbings16:00

       you advise me on that?

    2. MGMartin Gontovnikas16:01

       When I think about doing growth in the beginning, to me it's more about the mentality of, I'm gonna try to do something creative, unique that the rest are, are doing. I'm gonna look at data to see what works and didn't, and then iterate based off of that. So I would say you have to start with that mindset in the beginning. One thing, for example, that we've done to make growth people be competitive is build dashboards similar to what you do with account executives, where instead of having a quota, you actually have growth person and how much pipeline they created. And you get them to compete on how they've created new pipeline and why, one with each other. And you become published at once a month, once a quarter, similar to sales. So I think having that some of growth mentality should be there in the beginning. When I think about the growth manager, how they call the role, it's more somebody who can be creative, understands the persona, and can get people to try things, but they always need a partner who better understands who you're targeting.

    3. HSHarry Stebbings17:04

       I'm just always stuck when it comes to timing because I'm like, everyone's like, "Oh, after product market fit," because you have data after product market fit. But sometimes you need a growth person

15. 17:14 – 18:41

    Role of Founder in Finding Product-Market Fit

    1. HSHarry Stebbings17:14

       to get enough data. How do you think about that? And should growth always then just be after product market fit?

    2. MGMartin Gontovnikas17:20

       I would never hire somebody for growth before product market fit. I think that before product market fit, it's the job of the founder to get to see if there's product market fit. If the founder can't do what needs to be done to find product market fits, I think they will never succeed and you should not invest or work with, with those people. When I think about even for product-led growth companies, the idea of product-led growth is I open it up and anybody can sign up. I think that a product-led growth company should always start with design partners. You should always start closed with six to eight customers, um, that you can find through your network, your VC's network. You get to better understand, get closer to PMF at least with those six or eights, and then build a good onboarding, a good experience, and then open the floodgates because-... first impressions, I think, matter a lot. And you can only get first impressions once. It's very hard to get people who tried something to come back, than to get people to come back for the first time. Because of that, I do not think you open the floodgates of product growth until you actually get some vibes from these six to eight customers that you're building what's right, they, uh, you understand what should be on the onboarding and you understand that the best experience they will get is that first, um, impression that

16. 18:41 – 19:38

    Creating a First Impression in a PLG Motion

    1. MGMartin Gontovnikas18:41

       they will have.

    2. HSHarry Stebbings18:41

       What are the most common ways that companies make a bad first impression in a PLG motion?

    3. MGMartin Gontovnikas18:47

       For example, you don't do any onboarding and you just drop them in a blank s- like, blank dashboard with no data-

    4. HSHarry Stebbings18:55

       Yeah.

    5. MGMartin Gontovnikas18:55

       ... even though it should have data. That is always, like, a very bad impression. You can't get out of that. Another one is, for example, you get them to implement features that you want them to use because they are the ones that are gonna pay the most, but you get them to implement them too early before they really understand the product. And you have to slowly get them to first understand the basic features and then get to more advanced. If you do that, I think the first impression is, is broke and people will leave. When you don't understand the different use cases of your product and you try to push somebody on a use case that is not theirs, you also lose a lot of people in that first impression. So I think thinking about that first impression and first onboarding

17. 19:38 – 21:20

    Designing Effective Product Tours

    1. MGMartin Gontovnikas19:38

       is key.

    2. HSHarry Stebbings19:38

       Okay. So say we get into a product and we go into a dashboard. Often, there's a product tour. You know, the little kind of clippy here's this and here's that. And everyone's kind of like, "Just leave me alone." Like, no one wants that. Is there a right way to do that product tour, then? Because the alternative is nothing, and you just get dropped in. How do you advise me on that?

    3. MGMartin Gontovnikas20:00

       I don't think the alternative is nothing. Um, one of the big swings, for example, that we did at, at OutsidO was trying two different versions of the onboarding. One was more, "Click here, you do this, you do this, you do this." The other version was more about, "OutsidO. This is how it works. These are the different components, these are the different things that exist. Now you go and solve it and figure it out however you want." We actually tested the two of them, and they were very similar. Again, when we did a bit more qualitative interviews, what we learned was that more junior developers wanted a point-and-click, like tell me here, tell me here, tell me here so I can just get done with it. Somebody that was more senior and had more experience felt that that was condescending. So they wanted somebody to explain what are the big boxes, what are the big things to do, and then based off of that, just leave me alone and let me be. So in the end, we ended up implementing different onboarding experiences depending on the seniority of the person and depending on what they wanted. So what I'll say with that is for some people, product tours are a good experience. Like, I always think about this with ads. I deeply hate ads and I deeply hate gated content, but people download them and people click on them and they make money, so there's people for everything. That means that the point-and-click sometimes work, just not for all, and you need to understand what are the other things you need to do to make it work for the

18. 21:20 – 22:41

    Addressing the Needs of Horizontal Products

    1. MGMartin Gontovnikas21:20

       others.

    2. HSHarry Stebbings21:20

       Can I ask, what do you do or how do you advise people with horizontal products, Notion, Airtable, where it's like dentists and data scientists both use you at the same time? It's so difficult to know who's using you for such a wide array of things. How do you advise them?

    3. MGMartin Gontovnikas21:38

       I think two things are useful for some of those products. Um, for Notion, for example, what I would do, and I think they do part of this, is I would have templates for all of the different use cases. There are some built by the community, some built by them specifically. I would do the same with trying to have content on explaining how you use for all of them. Then, when somebody signs up to the product, I would look before they signed up at what templates did they look at, at what blog post did they look at. And then based off of that, I would guess what is their use case and try to change how the product looks like or what the options do they have or what is the order based on that. So then you fine-tune the experience in the product based on what they've seen in the past, and based on what they've seen, you know what's their use case and what they care about. So that's, that's why I think building a templates engine and templates library is key, not because of the templates that the user will receive and how fast they will act on it, but because they self-service, sa- self-servicely give you a lot of information about who they are and what they

19. 22:41 – 32:03

    Mastering Bottoms-Up Motion

    1. MGMartin Gontovnikas22:41

       care about.

    2. HSHarry Stebbings22:41

       We've jumped straight into product tools there. Uh, you said something brilliant before to me, uh, before the show, that combining a really good bottoms-up motion with a strong top-down is how you master PLG. My question to you on the back of that is, breaking them in two, what are the biggest lessons it takes in doing a great bottoms-up motion? It's not easy. What are the big lessons?

    3. MGMartin Gontovnikas23:03

       If you do a product lead growth and bottoms-up, that means that you will get the users coming to the product. In most cases, users who are trying something out do not want to be bothered. They don't want to hear from your sales team. They don't wanna hear from you. They just wanna try it out and see if it's useful for them. So I think that is the number one thing to figure out. And it's like, how do I know when they are ready to talk to somebody? And then at that point, talk to them and try to convince them to, to buy. That is the art that exists in bottoms-up. How do you do it?

    4. HSHarry Stebbings23:37

       How do you do it, yeah.

    5. MGMartin Gontovnikas23:38

       Exactly. There's different ways that I, I think you can know of it. I'll give you a few examples that I've done in the past. Number one, one thing I've done a lot is try to guess when people are blocked by using your product. So they started, for example, to use something in the product, and then you see that they click on a section of the dashboard, they click on the documentation to see how to do it, they go back to your dashboard, and then they do nothing. That means they tried to understand, they understood nothing, and then configured nothing. Or they click in a section in the dashboard, then click on another one, then click again, and they are, like, constantly going back from one to the other just looking at the screen for at least 30 seconds and doing nothing. So if you guess when they are blocked, you can help unblock them to get to activation, which I think is the priority in the beginning. And the good thing about that is that if you help-... proactively unblock them, then they will feel they owe you something. So then if you're like, "Hey, do you wanna talk to sales," uh, "do you wanna do something like that," they're, that's more likely, um, to happen. I think when, when that happens also, it's important that if somebody reach out, it's somebody that they feel related to. Like if you are doing a product for developers and you have an SDR reach out, it's never gonna work out. An developer doesn't wanna talk to that. So for example, one thing we did at Vercel was build a team that's called product advocates. That team of product advocates is literally people that are sort of technical that when, when somebody gets blocked in the dashboard, you'll contact them and help them unblock it, so you add value and then you connect them to sales. How we find these people, for example, what we did was we hired people from Apple Genius Bar or Best Buy tech support or people who did like Lambda School or some CS boot camps. So they are slightly technical, still very junior, salary similar to an SDR, so on merging perspective it makes sense, but it still is somebody that they can connect and talk to.

    6. HSHarry Stebbings25:35

       How do you provide enough value in a bottoms-up motion, but also not give away too much? There's that, uh, how much a freemium is too much to give?

    7. MGMartin Gontovnikas25:44

       I think that's a very hard choice to do. On this, I do believe in data. Um, what I've done in the past is once you start getting some users try and use your product, you'll start to see clusters of usage. So I've done like a clustering algorithm based on usage of the product where you start to see how features cluster with each other on usage. Once you see that, what I typically try to do is each of those clusters is one of the plans, but I always remove one or two features that are very useful from one cluster and move it to the next as an excuse for people who are like, "Okay, I start to use the product. I use this, this, this, this. Now I need this extra one." Oh, for that extra one, you need to get to the next plan. Once they get to the next plan, they're like, "Okay, I'm paying, so let's see what are the other things." So they start using them, and again, they need one extra one. So thinking of clusters, but with everything but one could be a good way to think about how you move people from free to self-service to committed deals or enterprise deals.

    8. HSHarry Stebbings26:44

       You said to me before about anti-retention patterns. What is an anti-retention pattern and, and how do you find them, Guente?

    9. MGMartin Gontovnikas26:52

       When I think of anti-retention patterns, I think about them as things that will try people to immediately drop off the product. Everybody that thinks about growth, they only think about one thing, which is what is the activation moment, what is retention, and how can we get them to that? What they typically never look at is what are the things that will make or break activation instantly? For ex- and I'll give you an example. Um, at Auth0, one of the features we had was multifactor authentication. Now everybody uses multifactor, but back then when we started 10 years ago, nobody knew what it was and it was very complicated. So what we realized was that anybody who implemented multifactor authentication in the first week stopped using Auth0. Anybody who implemented multifactor authentication between month one and month one and a half was very likely that they would be retained. Why? Because you were implementing Auth0 in the first week, and if they not first week you implemented multifactor and then you started to get errors, things started to happen that you didn't understand, they were like, "Oh, this is not the product for me." The feature was too complex for the knowledge they have of the product on those seven days. We needed them to get embedded into the product for a month with other features, understand how it worked, so they got the mental model and the mental capacity to say, "Okay, now I can understand what multifactor is and implement that." That was key to not have people, like lose them in activation retention. How we figured it out was we actually built, we built a dashboard of people who after one year were still retained in the product and comparing them to people that after a year were not retained in the product. And we built a table that was like all of the features and at when did they implement it, in the first day, first three days, first week, first month, et cetera. And we compared the path of people to starting to look exactly on what were the path that were getting people to lose activation at that exact time.

    10. HSHarry Stebbings28:55

        Huh. Data. (laughs) It has-

    11. MGMartin Gontovnikas28:59

        Yes.

    12. HSHarry Stebbings29:00

        It, it has some value. Uh, can, can I ask one thing, which is like, you know, when we think about retention, I think often people, like, misunderstand numbers. What are, like, the retention figures that you really zoom in on? Like what is success for you? And maybe it's case-specific, but is it usage? Is it number of hours spent on site? What does that look like?

    13. MGMartin Gontovnikas29:19

        It's always about the, u- using the core value prop or what is the core value every week or every month depending on how, how, w- what's the frequency that people use your product. But to me, the retention is making sure your, they feel your value metric, they feel your main value prop all of the time. It's not about money, because I think that if people are retained in the product, eventually they will convert. One thing I'm a big believer of, for example, is not just people using the product and being retained for work projects, but actually a lot more for personal projects. Because if you get a user to use you for a personal project all the time, that means that whatever company they will go throughout time, they will always remember you and try to use you. So I think thinking about that and taking that into account when you think about retention is key.

    14. HSHarry Stebbings30:11

        A lot of consumer subscription apps have quite hard pay walls where if you look at them, they really sometimes don't let you continue in the app at all for any functionality unless you pay.To what extent do you feel that has a case today or should that not ever exist? Should you always give the users something to play with?

    15. MGMartin Gontovnikas30:30

        I don't think that that's- should exist anymore, like the idea of a paywall without you using it, I think it's a very- uh, it- it's very hard to get people to experience things. I'm a big believer in experience so it's like, okay, if you explain me a feature but I cannot try it out, then how do I know if I like it? If I will connect with it or why? So to me, it's more about you let them use anything and then once they are hook, if they're over quota, you ask them to pay or you remove, um, the access. For example, one thing I've always think about when thinking about what to give access and what not to, to me it's they have access to everything. Once the trial ends, maybe you give them access read-only so they can still see what they've done but not create new things.

    16. HSHarry Stebbings31:16

        Yeah.

    17. MGMartin Gontovnikas31:16

        But I think taking that into account is very important. To give you a specific example, at OutSider, even though we had plans, we had enterprise, you could do everything all the time. There was literally no way to cut features. The only thing you could do is cut the entire account. So what- because most enterprise will not use it if you don't have a contract or SLA, they would still eventually pay, and we were talking about the free trial, we were talking about no access to feature, but that wasn't true. You could use anything. And in reality what happened was that once a quarter, we went and looked who were over quota, meaning using extra features, extra things that they wouldn't pay and we would ask them to pay and because they were already hooked on it, because they were using for six months, even though we told them they couldn't, most would

20. 32:03 – 37:03

    Scaling in Enterprise and mastering Top-Down

    1. MGMartin Gontovnikas32:03

       eventually pay.

    2. HSHarry Stebbings32:04

       Okay. So this is how we do bottoms-up, like real customer adoption at the product level. In terms of top-down, not easy to do either. Very few startups do top-down well. Where do so many fuck up, Guento? (laughs)

    3. MGMartin Gontovnikas32:18

       I think that if you're doing bottoms-up, if you have product level growth, most companies think that top-down is something completely different, that it's a new silo, it's a new thing that they need to do. But in reality, you should do them combined. You should do them together. What do I mean by that? For example, let's say that you have a product and somebody from Coca-Cola that is a developer from Coca-Cola just signed up to your product to try it out. Instead of doing outbound to a cold company that has- has- has never known of you, why don't you do outbound to directors of engineering or directors of product or VPs of engineering of Coca-Cola and you can tell them, "Hey, somebody's using the product from Coca-Cola. Why don't you check it out?" And talking about- we were talking about psychology before. I think using biases for this is key. One example that I'll give you is let's say the developer of Coca-Cola is using the platform. You start seeing that the developer of Coca-Cola starts using more and more features and is still retained for some time. That means likely they will want eventually to buy it so you should help that developer convince the rest. What we do at that time is we start doing ads for directors of engineering, director of product, VPs of engineering and VPs of product. We don't do the ads to them because we want them to click them. I don't care if they click them. It's more so that they see our brand and they see the ad. Because of availability bias then if the developer brings up our company to the director of engineering, they will be, "Oh, the name sounds familiar." They maybe don't remember where, but because it sounds familiar because of availability bias, they will trust us more. So thinking about how do we help them is important. You could also build a how to convince your boss kit which basically gives that Coca-Cola developer a message that they can send in Slack or in Teams to their manager to help them convince on why they should do the product. Or you can potentially give them examples of reference that they can talk to other companies or white papers on build versus buy and why Forrester says that our product is fantastic. But arming people on- in helping them talk to others and doing outbound combined with the bottoms-up old motion that you already have is where you'll likely win.

    4. HSHarry Stebbings34:34

       So number one, uh, I had the founder of Slice, the, like SMB rational software company on and before he raised money, he parked a van with Slice on it outside the VC's office for two days. So he'd say, "Hey, I'm from Slice." And he went, "Oh, I see you guys everywhere." Good thing. Love that in terms of old school. The second thing I'll just say though is, like when you think about arming people with a message for their boss, I go granular 'cause b- people love it and listen, and especially when it's granular. What should it say in that message? It should say the benefits to them, the benefits to the company? Because everyone has different goals. How do you think about the best way to sell it up?

    5. MGMartin Gontovnikas35:14

       I think that for those cases, I would always start with what's the benefit for them because I'm a big believer that you have to be specific. Most marketing that exists right now, it's full of crap and full of shit. Like people like to put three adjectives per noun and they use to- they used what I call magic words like seamless. They say nothing. So I think specificity will always win. So to me, the first part of the message should be specific about how the product helps that user. Once you talk about that and that specificity then you can say how that help to that person can actually help the director of engineering and I'll give you a very specific example. Let's say that a developer using Vercel will be much faster at, um, deploying stuff to staging, at giving feedback with things to their preview feature and writing why, uh, one thing should be changed and they're very much faster because of it to work with design. All of that means that if they're faster at staging and then faster at doing the changes fast, that means that they will ship faster. So if they will ship faster, that's useful for the director of engineering because their projects will be shipped on time. But I think you always start with something specific.Last thing that I'll say on this is that it depends what the company size is. For example, if you're selling to an enterprise company, I think what Gartner, Forrester say matter because they are like the analysts. So in those cases, sending something like a Forrester Total Economic Impact, like the ROI white paper, is very useful. If you're selling to a startup, they don't care about what Gartner is saying. For them it's more about, how can this product make me more unique, make me ship something that the rest doesn't have? So thinking about who you target to, I think, also changes slightly a

21. 37:03 – 42:46

    Delivering Effective Demos

    1. MGMartin Gontovnikas37:03

       message.

    2. HSHarry Stebbings37:03

       Okay, I'm sold, Gunther. I'll give you some time. Uh, I'll do a demo, sure. How do people do demos really well and what's important with demos?

    3. MGMartin Gontovnikas37:13

       Couple of things on that is, number one, I think if you can arm the user to do a demo internally, I think those things are really, really good, where instead of doing a demo with your sales team, sometimes what, uh, what we've done is give them something that they can demo that is already backed up and it explains what are the things to try, um, so that they demo it internally themselves. If a developer shows them that they go- downloaded something that already works and shows them to their boss on why, and it's them putting their authority, their respect in line and send the product for you. So if you can find a way to do that, I think it's key. If not, I think doing a demo and showing the product, of course, is very important, but the most important part there is being able to talk to the person that you sell at the same language. At OutZero, back then our competitor was Okta. One thing that we did very unique when we were selling was taking enterprise architects to our sales, sales calls. Why? Because the enterprise architects would talk to the customers or the prospects' enterprise architect talking about how each of the services and the products connected with each other, talking about the boxes, talking about strategy. And that's something that a sales engineer or even an account executive cannot do. So if you can talk the language of the prospect in a way that your competition can't, that is a unique value prop. We were... Our demos all required whiteboarding sessions where we whiteboarded with them how to think about a strategy and how to think about us. That value, no other company gave because it was doing things that do not scale. But eventually, if they do work, you can scale them.

    4. HSHarry Stebbings39:00

       Do you create verticalized playbooks then? Because if you're gonna do whiteboarding and you're gonna help, I don't know, e-commerce sites or you're gonna help, I don't know, uh, SaaS startups, you need domain knowledge that's built in a vertical. Do you verticalize or do you just read up beforehand to get good enough?

    5. MGMartin Gontovnikas39:18

       To me, it's not verticalized, but it's use-case based. I think that typically you pick, I would say, the main four or five use cases and you do become very specialized in those four, five use cases that you sell to everybody. If you're kind of a product-led growth startup, you can see what people use you for, so you can pick one of the four or five most used use cases. And when you see new ones come up, you can eventually carry SMEs to start doing some, some of that. I don't think they are industries, because sometimes three industries have the same use case. So that's why I think grouping them by use case makes more sense than just grouping them by a specific industry.

    6. HSHarry Stebbings39:55

       Okay. So we're doing this and we're selling well into enterprise. Good. Question is... Sorry to go back on this. Should we be selling into enterprise at all? I often find that actually SMBs is such a deep market. We just released a show with the founder of HubSpot. HubSpot have built a 28 billion dollar company through SMBs alone. So the question I have is, when's the right time to scale into enterprise?

    7. MGMartin Gontovnikas40:22

       When I think about enterprise, I think about enterprise at mid-market, more similar to themselves that are just like SMBs on, on the other side. What I'll say is, most self-serviced or product-led growth companies eventually become mid-market or enterprise. If you look at all of the companies like Atlassians of the world, like the Twilios of the worlds, OutZero, or even Vercel, most of them, what ends up happening is that 80, 85% of their revenue comes from mid-market and enterprise, 15% come from SMBs, but that 15% is thousands and thousands and thousands of accounts, and the other one is maybe a few hundreds. So eventually I think it happens to all of them. What I think is important there is when to think about this. There's no specific moment for all, but it's more about when you start seeing that mid-market or enterprise companies are starting to sign up to your product and they are basically starting to see interest. So when you start to see that interest, I think it's about doubling down, um, to... on, on, on those, so you can start building that. I do agree with you that you can potentially create a business from SMBs. I just think that in a lot of... it's, it's a lot harder, to be honest. Because enterpriser means market. You don't need that many customers on one side. On the other side, it's a different game, because if you have a B2B and you sell to SMBs, that means that at most, typically, each of them be... will give you a small, uh, revenue per year. That means that if they give you a small revenue, you can invest very little to get them. So the tactics that you can do to get them from a marketing sales perspective are very different to a mean market or enterprise. Maybe it's mostly ads, or you can do some type of content. But you can't do a lot of high-touch stuff like Michelin star dinner, like going to a yacht, like starting to go to some of these big co- big conferences and stuff like that. So I personally think most companies end up going to something that is mean market or enterprise just because it's easier. It's easier to spend money to get eventually bigger companies, I think, than trying to spend very little to get a lot of them. You have to really nail a need and a use case for a big amount of people to succeed in SMBs. In enterprise, if you can hit...... a, a need on a few company that have a lot of money, you can maybe be equally bigger as an SMB-focused company.

22. 42:46 – 44:39

    Challenge of High Cost Base & Low Revenue

    1. MGMartin Gontovnikas42:46

    2. HSHarry Stebbings42:46

       Gonto, I have a problem with some companies that I'm invested in, a lot that I see, where the cost base that they have to acquire customers, to look after customers, customer success, is very high, enterprise level, but the revenue is absolutely SMB level. So my question to you is, like... And they respond to me and say, "Well, they're gonna scale with time and it's the PLG motion, they're gonna add more..." See, how should I respond to this? And when is it valid and when is it not?

    3. MGMartin Gontovnikas43:19

       To me the question there is how much time? Like, if they take more than a year, I would say, to expand to a really big deal, it's likely never gonna expand. Like, that's number one thing. Number s- like, second thing that I would ask them is what are they doing to actually get the deal to expand? And like, you can foster them. If you don't foster that, it won't just happen and I'll give you an example. At OutZero a lot of times we had a very small land, like 30K land, but then we actually asked our champion to invite other people from inside the company that could potentially use us for a workshop. We then sent our DevRel team there to do interviews, to talk to them, and to convince other champions to use us, and then try to get them to acquire us. If you're not doing that, if you're not trying to generate other business in other, uh, uh, more business in other business units, I don't think you're doing enough. And even though you say they will come, they will not come. If you're selling to an enterprise, they will not come. You need to take action to get them to expand. I think that's something that is very, very important. If they just say that they will come, that's a lie. It's like saying, "No, the product just sells by itself. You don't need to do anything else."

    4. HSHarry Stebbings44:35

       (laughs) Sometimes taking action can lead to mistakes.

23. 44:39 – 48:09

    Misunderstandings in Scaling to Enterprise

    1. HSHarry Stebbings44:39

       Can I ask, when you think about big mistakes or misunderstandings even, I think people under- misunderstand the product complexity that's required to go from an SMB product to a s- to a full licensed enterprise product. What are the biggest misunderstandings you see startups make when thinking about scaling into enterprise?

    2. MGMartin Gontovnikas44:57

       When people think about scaling to enterprise, they think it's a- an on and off switch. They think like, "Okay, we were selling to users before. We were bottoms up. Now we're gonna sell to enterprise." And when you sell to enterprise, you forget about who your users were. If you forget about who your users were, which was the base, you eventually go out of business. I, I, I have, like, one of- great example for this, I think, is New Relic. New Relic was the king of observability for developers and they totally-

    3. HSHarry Stebbings45:30

       Did they go out o- did they go, did they go out of business or did they just get bought?

    4. MGMartin Gontovnikas45:33

       No, they didn't get got out of business, but their market cap was shit compared to the past. I think they got bought by a private equity.

    5. HSHarry Stebbings45:39

       (laughs) Yeah, okay. No, absolutely. I'm just checking out. Uh, yeah, you're right. There we go. They got bought out by private equity. Done.

    6. MGMartin Gontovnikas45:49

       They were very big and they were poised to be the Datadog. They were Datadog before Datadog basically, and they w- every developer was using them. They were connected to Heroku. Everything was fantastic. But then they were like, "Okay, we're gonna focus on enterprise." So then they started to get a sales team and started to sell to directors of engineering, to directors of product. When you become and you start selling to an enterprise, the sale is different. When you sell to a user and you do bottoms up, you sell an experience. You sell how they use the product, how they feel about it, how that makes them faster, how that makes them better. When you sell to enterprise, you sell checklists. That what, like, companies at enterprise will do, like, an RFQ, like, "Okay, let's get a request for a quote. These are the features that I need," and they give you a checklist of 200 things that they give you because whoever is working in an enterprise has a very comfortable job and they do not want to be fired. What's the easiest way to justify not being fired? They cannot justify experience. They can justify checkbox. So what they will do is, "Look how many of my 200 checkbox are checked by each startup and if I check the most, they will buy me." At the, in the beginning, that will always work. So then in the New Relic case, I imagine they were selling a lot because they were building a lot of features so that it works for that checklist that the prospects had. What they didn't realize is by adding one of those features to hit the checklist, they added a lot of bloat in the product. That bloat made the experience be a lot worse. When the experience became a lot worse, developers stopped to use it. What New Relic forgot about was that the enterprise, they were having this checklist conversation with enterprise because a developer brought it up to that enterprise in the first place. When they focused only on bloat and checklists, they closed a lot of enterprise customers that they had in the pipeline, but they stopped getting new customers, new prospects in the pipeline because now the experience was shit, it was bloated, and no developer wanted to use it. And at that point, it breaks. If you want to become enterprise, you need to add some of the checklist features, of course, but you should never forget about the experience because if you forget about the experience, the user will never bring you up again and then you're,

24. 48:09 – 54:06

    Role of CTMO in Marketing & Product Alignment

    1. MGMartin Gontovnikas48:09

       you go out of business.

    2. HSHarry Stebbings48:10

       Dude, help me out. You've sold multiple different products, top, like, bottoms up very successfully and then layered on top down. What do the top down care most about? Is it security? Is it cost? Is it cost saving? What are the top priorities that you see most?

    3. MGMartin Gontovnikas48:25

       To be honest, I think there's too many things that somebody who is an enterprise cares about. Number one, I wanna buy something and not get fired because of it. I wanna keep my lovely, beautiful job that is 9:00 to 5:00 and I don't need to do much more and that's it.... the second one is I want to get promoted. Will I get promoted if I buy this software because it helps my team so strongly? I think that humans are mostly egocentrics in the beginning. They are like, they have ego and that's the main thing, to be honest, that they care about. Why do they care about security and privacy and compliance and Gartner and Forrester? Because it's ways to prove that if the product doesn't work or if I made a mistake, at least my mistake was validated by this Gartner and this Forrester and these things. So I always see it as a, as, as a different, as a push between the fear of getting fired with my desire to be promoted. My desire for, to be promoted will push me to try new things that other people hasn't tried because if I try and do the same thing as others, I will not get promoted. It will not be different. I'm doing the same as everybody else. However, if I try something new and unique, maybe it helps my company so much that I will get promoted. But at the same time, I'm scared so to me, it's playing with those two things on thinking about who will take what I want so they are promoted, who will be so scared that they will just pick the status quo? And that's the fight that you need to push when you're selling to enterprise.

    4. HSHarry Stebbings50:00

       You said there about new, disruptive, willing to take risk. You've said to me before that you should think about the CTMO role for PLG companies. CTMO role, just for everyone listening. I've never heard of this role so speaking of disruptive, I mean there's nothing more disruptive than how we organize our companies, Chiquito. Like what, what is this role and how do you see it? Like why should I have it?

    5. MGMartin Gontovnikas50:23

       To me, CTMO, I call it a chief technology marketing officer. If you look at most companies right now, they are all grouped the same way and they have a CRO that typically has marketing, customer success, and sales all leading up to them. When you're doing a marketing-led company or a sales-led company, of course that makes sense because if it's marketing-led, then marketing starts selling you something. Eventually, they will send you to sales and then sales will close it. If you're doing a sales-led company, sales is doing outbound to the people that they know and they need help with marketing to send them specific things. So by having them together, it removes silos and it makes the experience better. The world where we're moving to with, uh, with more product-led growth, with more bottoms-up, with more people trying new things, I think the links that are the most important right now are marketing and product together. Not sales and marketing. Why? Because when you think about marketing, what marketing is doing on their website is they are promising what your product will be about. Then because there's no sales, people will click on sign up and then they will use and try your product. That means the product's job is to prove marketing's claims. Your marketing claims are in the websites, the product should prove them and show you the value so then marketing and product need to be intertwined and work really, really well together because the promise has to be the same of the value that you deliver. Because if you overpromise and under-deliver, you're fucked because people expect one thing and it's not what they are gonna get.

    6. HSHarry Stebbings51:56

       Can I just jump in there? So just, uh, again, tactical as possible. Remove the silos between marketing and product. What does that actually mean in reality? I bring marketing into product reviews, I remove titles. What do I actually do?

    7. MGMartin Gontovnikas52:10

       For example, one thing that I try to do there is I try to instead of having a separate growth team, I try to have a growth team in marketing that focuses mostly on driving activated sign-ups and I try to get a growth team in product that focuses mostly on retention and conversion. Those two teams which end up expanding needs to work very well together and I think that the place where they both show in is the onboarding and getting to activation. So at first step in the product where they get onboarded, they answer some questions, and they start understanding is the most important bridge, the most important part. That part has to be co-owned by marketing and product where either team can make modifications but they have to get approval from the other side so that they get to a better solution because if one team picks one, then maybe they fuck up the experience. I'll give you a very simple example on this. At Outsidio, we wanted to get more people to contact sales. So what the marketing team wanted to do was add in the onboarding of the s- of, of, of people signing up something like, "Why don't you talk to sales now?" And clicking on talk to sales. Product hated that because that meant that people would not even go to the product and they would talk to sales. So they worked together on getting on a better solution in the middle. What was the solution? If the person who is signing up is not a developer who is our user and is a director level, we can show the option. If not, we cannot. Unless it's from a very big company in which case, we offer that option. So we got to a middle ground where most people will go through the product, but in some cases maybe it is better to talk to sales which is what marketing wanted. That only happened because we created healthy conflict between marketing and product and getting them to work together on that transition from one to the other.

25. 54:06 – 1:02:57

    Hiring & Embracing Diverse Perspectives

    1. MGMartin Gontovnikas54:06

    2. HSHarry Stebbings54:06

       What's the hardest part of the transition? Where do people fall down and it doesn't work?

    3. MGMartin Gontovnikas54:10

       I think the biggest problem is that marketing overpromises all the time, and they will tell you that the product can do everything literally on the marketing website, and then you go into the product and you cannot do everything that marketing promised, number one. Number two, it's not that easy to understand. Number three, if it is, people don't know how to get to that. So that to me is one of the biggest problems because people, it, it's a matter of expectations. I expect the product to do something based on what marketing said, but it doesn't do that. So when my expectations are not hit, I'm unhappy and I don't want to use that product, um, anymore. That's number one. Number two is-... products. Even though product should be meeting with customers and understand a bit more about customers, I think sometimes they lose touch with reality. I've worked with so many companies where the product managers don't really know the user as much. Marketing has to know the user because they are in events, they are in trade shows, they are online, and they need to send that information back to products and they need to work together on that. So in that loop, it also improves a lot more on your product building if you're closer to marketing.

    4. HSHarry Stebbings55:18

       Totally agree with you in terms of the kind of, uh, proximity between product and customers. I think that's absolutely crucial. Can I ask, when we talk about these people, it sounds great. The hard thing is fucking finding them, Gonto. And I think a lot of founders have no idea how to hire anyone in growth. Often this is the first time they've hired for growth. Can I ask you first, what is the right profile for a first growth hire? Should it be a big logoed person? A junior? What's the right first growth hire?

    5. MGMartin Gontovnikas55:45

       I'm personally a big believer in a term that I call hunger for glory. I think there is people who have hunger for glory because they need to prove it to themself that they can do it. I don't know why. Sometimes because your dad is, uh, has a lot of success and you want to have that success. Sometimes because your life sucked when you were a kid and you want to overcome that. Sometimes because of something specific and that driver is what drives people to success. So I'm a big believer in trying to find people who have this hunger for glory. So if you're a startup, I would say in a lot of cases it's better to hire people that do not have the experience but they have the main characteristics that you need. For growth, I think you need somebody who is creative so that they can think of other ideas. Ideally somebody that understands your user persona very well. They are one of those types or something similar so they feel related to them. It's somebody who is competitive, so they wanna compete and make it better. And they are scrappy, um, which they can like just tie things around and make it work with very little time and with the least effort, so they try it out. That, to me, is the most important one. One thing that to me is fascinating about this is that I always think about history is written by the winners. Like, when you win, you can write about it. A lot of times you will see that Slack, or- or even in Reforge, there's a lot of frameworks. There are frameworks about like a growth loop, what a growth loop does, why you should care about it. Slack will have frameworks on how they implemented things. But if you actually go to the companies where Reforge will tell you that CEO implemented growth loops, that LinkedIn implemented growth loops, that Slack implemented growth loops. When you go to the leaders in Slack and LinkedIn at those times, they will tell you they were not- they were not implementing growth loop. They didn't know what a growth loop was. They were trying to find creative ways to get other users and other people to come. But once they did it, they went back and they were like, "Oh, this is what we did. So we should write about it so others do it." So they were the winners, they get to write history. But at the moment when they did it, they were not thinking about that. They were trying to come more creative, more unique things that drove users. And if that's the case, then that's what you need to find. It's those people.

    6. HSHarry Stebbings58:06

       I love that and I- I'm totally with you, 100%. Uh, can I ask you, when it comes to like... Actually, you mentioned, you know, the playbooks, the- the Reforge case studies. When you think about case studies and interview processes, do you test out their skills, their creativity? How do you think about that case study test in an interview process?

    7. MGMartin Gontovnikas58:24

       I'm a big believer in doing... We do, we call them exercises, but it's the same as a case study. I'm a big believer in them. To be honest, I think I learn more from case studies than from any other interview that I do to hire these people. Why do I like out exercises is that you get to see people in action. What I think is important about the exercises is to make them the most abstract possible. If you make them abstract, you're giving people a chance to reflect about them, ask questions to better understand and then refocus on something to try to be creative. If you give them something very specific because you want a very specific answer, that means that you're guiding- you're leading the witness. Like, if you give something very structured to get a very structured answer, that's not what you want from growth. From growth you want somebody who does something unique. So if you guide them to get a very structured answer, they will give... If they give you that structured answer, they are clearly not the person that you want. In a lot of cases, what I do is I do a very abstract exercise, like, "We have this problem. This is some of the interviews we've done. This is some of the data that we have. What would you do?" To me, it matters, like, we add them to our Slack to do an exercise, and to me it matters more what questions do they ask about that exercise? What things do they want to know more of? What things do they want to less- c- like know less of? What things have they u- researched? What things can they explain that we didn't maybe even know about before? In a lot of cases, the end result does not matter. I don't care where they end on the case study or the exercise. I care about what was their process, how did they think about it, what did they ask, and how did they arrive to that? To me, growth is not just about the results, it's more about how do they get there, because if the process and how they get there is good, they will eventually find a great result.

    8. HSHarry Stebbings1:00:12

       Gonto, have you made any hiring mistakes before?

    9. MGMartin Gontovnikas1:00:16

       Yes. Of course.

    10. HSHarry Stebbings1:00:17

        Okay. I always think we learn more from mistakes. Like you said that kind of, "Eh, history means you can- the winners can write it," but actually you really learn from mistakes. Like my mistake is always I am overly impressed by logos. I think it might be a tendency of younger founders who are impressed by that social validity. What would you say your biggest hiring mistakes have been and what did you learn from them?

    11. MGMartin Gontovnikas1:00:39

        For example, at OutsidR when the company grew, because I had no experience in marketing, I thought that I had to bring a lot of people who had a-... a lot of really good experience. Good logos, good places, and stuff like that. I gave priority more to that than to what the person could do, how smart they were, and why. So in a sense, I ended up hiring because of their resume and what I thought we needed or what everybody else was doing. And that was a big mistake, um, number one. Number two mistake is the opposite, is at one point I hired all people that were exactly like me, and if everybody is exactly like me, then we cannot get more unique point of views or something that is different. I think you need to hire on your weakness and get other people who are not your point of view. One thing that I always think about is, on the people that report to me, I always try to get at least one person that I don't like because if I don't like them but they are smart and they can get shit done, I will hate everything they say but I will put my thoughts into believing them, trying to think about them, trying to think why they're coming with that, and that, I think, makes me a better leader and makes our team much better because we have a diverse set of opinions.

    12. HSHarry Stebbings1:01:55

        I absolutely love that. That's hilarious. Can I ask, again, to the point on that you learn from mistakes. When you talk about growth tactic mistakes you've made, what's been the biggest you've made? Could be at Vercel, could be at Auth0, and how did that impact your mindset?

    13. MGMartin Gontovnikas1:02:09

        I have two mistakes, um, that I can mention. Number one is, uh, easier, I would say. The second one was harder. The easier mistake was we spent a lot of money on ads to drive sign-ups and we spent 300K. But what we didn't think about then was we got a lot of sign-ups but none of them activated or very few of them activated. That meant that most of them weren't retained and then eventually they didn't convert. So we just spent money to have a nice number to share with the board that then didn't help us to get the pipeline on the numbers. That was very painful because it was in the beginning and we lost a lot of money. The-

    14. HSHarry Stebbings1:02:47

        Wha- what did you... What did you learn from that, that paid ads aren't targeted enough? Like wha- how did that change how you operate?

    15. MGMartin Gontovnikas1:02:55

        The learning was that you

26. 1:02:57 – 1:05:53

    Learning from Growth Tactic Mistakes

    1. MGMartin Gontovnikas1:02:57

       always have to put as a KPI something that affects the bottom line and is not a vanity metric. Getting more sign-ups was a vanity metric. What mattered most, how can I get more sign-ups that are eventually gonna pay or are eventually gonna get us someone that can pay? But we cared so much about hitting the number for sign-ups that we had as an objective, that we put in the CFO plan, that we just spent the money for nothing. So to me it was more about that than anything else. One thing that was related to this, um, another example I can give you related to this. We were working on the emails, um, for the onboarding and for the product and we were very proud that our open rate and our click rate was going up in all of the emails. So we knew we were kicking ass. We were cheering about that. However, at one point in time, we realized that maybe we should care about something more down the line, like activation retention. So instead of just looking at open and click rate, what we did was to 10% of the users we sent no emails. To the other 90% we sent the emails and we compared which of them were more retained. What we saw is that the people who got no email were 20% more retained. So at that immediate time, we stopped and killed all emails and then we went to learn what was going on. Why was our open and click rate increasing? Because we were better at having better subjects, better titles, and more people to come and click on things. The problem was that the emails were so confusing that the more people were opening and clicking on them were like, "What the fuck are they telling me?" And then they were dropping from the product because of that. That was also a very hard learning on sometimes picking vanity metrics just because everybody else picks those as well.

    2. HSHarry Stebbings1:04:40

       I totally agree with you. The gamification of metrics, I think, is the most dangerous thing in companies 'cause also everyone can just, like, as you said, gamify them. You want sign-ups? Great, I'll put money in paid ads. You want retention? It's a different thing. Um, listen, I wanna do a quick fire round. I could talk to you all day, Gonto. So I say a short statement, you give me your immediate thoughts. Does that sound okay? Okay.

    3. MGMartin Gontovnikas1:05:00

       Sounds great.

    4. HSHarry Stebbings1:05:01

       So what have you changed your mind on in the last 12 months?

    5. MGMartin Gontovnikas1:05:05

       I think it's the increased importance of marketing ops and engineering in marketing on the future. Um, and I'll explain a bit more about this but it's more about... around the fact that in the past when you were thinking about, uh, marketing, you could just have SDRs reach out to people as humans. They were sending emails, they were doing outbound and stuff like that. More and more now with GPT and other things, you can actually get engineers to scrap websites, to look into things, or use AI to look at intent sources and why somebody can buy you. You can then use fine-tuned models of GPT to fully personalize emails in the name of an SDR without a real SDR. You can even, uh, we've created this. You can even create deepfakes of CEOs

27. 1:05:53 – 1:11:01

    Quick-Fire Round

    1. MGMartin Gontovnikas1:05:53

       telling you something on a video, on an email, even though it's not really the CEO. So all of that requires marketing ops and engineering. And as, as we get more sophisticated with AI and automation, I think marketing ops and engineering are gonna be so key in marketing that it's gonna change the entire landscape.

    2. HSHarry Stebbings1:06:13

       Can I push you there and just ask the question?

    3. MGMartin Gontovnikas1:06:16

       Yeah.

    4. HSHarry Stebbings1:06:16

       Maybe not push you, but, like with the commercialization or democratization of these tools like a HeyGen or a Synthesia, the technical knowledge required to do the deepfakes, to do the AI automated outbound is much less. And it is, uh, not... I mean, yes, commoditized but it is really, uh, available to everyone.

    5. MGMartin Gontovnikas1:06:38

       I agree with that. The problem is that if you do the same as everybody else does, nobody's gonna buy you. It's like content now on SEO. I don't know if it's the same, but to me it's... The more unique you can make it, the more it will work with people. So to me what will change on that is you will still need, I think, need engineering and ops because as more things get automated and you get more ease of access to some of those, they will start working less and less every month and you will need to switch to something that still needs some type of custom development to be the n- the one that is shown as a different, um... in the pack.

    6. HSHarry Stebbings1:07:17

       Tell me, what growth tactic do you think will become more and more prominent?

    7. MGMartin Gontovnikas1:07:21

       I think it's about using...... intent-based data. Like the example I was telling you before on, on Vercel, on, um, we're gonna look into how many, like companies, how many engineers do they have right now that are using JavaScript? How many engineers are they hiring that is on Java? And based off of that, guess if they are (air whooshing) up in the technology stack. But it's more and more trying to guess based on what's on the web, what's in different places, where can you find information to do this intent-based outbound. So they are hyper-personalized, hyper-clear for that specific use case and, um, to have something that basically bas- based off of that has an increased conversion.

    8. HSHarry Stebbings1:08:02

       What's the biggest mistake you see first-time founders make in growth?

    9. MGMartin Gontovnikas1:08:06

       The biggest mistake that I see is that they start very, very late if the PMF is very strong. I've seen a lot of companies that have a very strong product-market fit and because of that, in the beginning, they just, uh, start getting a lot of revenue because peop- companies care and care and care. Eventually, they get so much revenue that it's very hard for them to continue to double. And at that point, now they need to start building a growth team and an ops team and an engineering team for that and stuff like that, and it takes them so much time that maybe they miss a year or they miss a few quarters or they're slightly fucked. Um, so I see a lot of that, um, as well as I see a lot of people focusing on growth before PMF. So I think thinking about the right timing of when to do growth is key, uh, for founders.

    10. HSHarry Stebbings1:08:56

        I also just see people thinking of growth as like this, like magic pill for whatever problem they've got. Even if they have PMF, it's like, "It's gonna solve this." It, uh, may not, like completely solve retention. (laughs) Um, so I, I agree with you. Uh, tell me final one, what's the most recent or recent growth tactic that you've been most impressed by?

    11. MGMartin Gontovnikas1:09:17

        One thing that we've done with Clerk, one of our customers recently that I'm very impressed about, is the power of sponsoring YouTubers for driving growth. What we did with them was... The first thing that we did was what every other company that I know did, which is we went to find a really known YouTuber and we pay them to do an entire video about us, an entire video about Clerk. When we did that, that had literally no effect. That didn't work at all. One of the ideas that Nick had, the head of marketing here, was doing something different, where instead of paying one video, maybe we could pay four or five videos. And instead of paying them to highlight us as the main thing, as the main focus of the video, what they would do is they would build an app. They would build any type of app and as they were building it, they would use Clerk without mentioning it and without talking about it. And then we would say that Clerk was sponsored in the end of the video. Because of that, that worked really, really well. Why? Because an influencer was talking about their product, it seemed as it was organic because they didn't mention it, they weren't talking about it, and they were just using it naturally. That created a lot of curiosity on people on, "Why are they doing that? Let's go and learn it." And by getting people to go and learn it, they actually were more likely to try it out, mostly because they felt it wasn't sponsored even though it was.

    12. HSHarry Stebbings1:10:38

        That was a really good answer, (laughs) specifically. Um, look, Alfonso, I've loved doing this. You and G must have like the most enamored and like-

    13. MGMartin Gontovnikas1:10:48

        (laughs) .

    14. HSHarry Stebbings1:10:48

        ... energetic discussions I've ever seen. You both are like, you, like having a ten Lucozades. It's incredible the energy you bring. So thank you for joining me and I've loved this.

    15. MGMartin Gontovnikas1:10:57

        Thank you so much for inviting. This was a lot of fun. Hopefully eventually we can do it again.

Episode duration: 1:11:01