Matt Lerner: How to Hire Growth Leaders and Teams and Why in a World of AI | E1159

1. 0:00 – 0:47

   Intro

   1. MLMatt Lerner0:00

      There's really only, like, six channels in the world. If you think about how are the ways you find out about stuff. You hear from a salesperson, some partner brings you in 'cause to enable you to do something, you do a Google search, or there's some content or inbound, paid ads, or maybe you hear about it from an influencer. I'll say categorically, the best growth people I hired and managed in my time at PayPal had no marketing experience, had no product experience at all. (camera shutter clicks)

   2. HSHarry Stebbings0:23

      Ready to go? (instrumental music plays) Matt, I cannot believe it has been, oh, I think it must be, I mean, eight, 10 years since we first met. You were one of the first people I met in tech in London, so thank you so much for doing this.

   3. MLMatt Lerner0:45

      Likewise, it's my pleasure. Thanks

2. 0:47 – 1:56

   Journey Into the World of Growth

   1. MLMatt Lerner0:47

      for having me.

   2. HSHarry Stebbings0:47

      Now, I would love to start with some chronology. So how did you make your way into the world of growth and what was that entry point for you?

   3. MLMatt Lerner0:53

      I guess, I mean, my career started in Silicon Valley. And, you know, I was, like, humanities, Philosophy and Rhetoric undergrad, and so I was kind of taking any job I could find, and what, what I sort of got pulled to was this figuring out how to get customers stuff. Um, and eventually in, in 2004, I joined the growth team at PayPal. And obviously, you know, we know how that story went. Um, and I learned just a ton of stuff in almost 10 y- almost 11 years there. And then after that, I left, I became a VC myself. That's kind of when we met. And I got to see, you know, as a VC, you just get to see so many startups rapid fire, and see inside of them, and what's happening, and their metrics and the people's personalities. And I just, to be honest, I started to see a lot of teams wasting a lot of money and a lot of real talent making the same mistakes over and over again, very preventable mistakes. And, you know, that combined with the fact that I didn't love fundraising-

   4. HSHarry Stebbings1:45

      (laughs)

   5. MLMatt Lerner1:45

      ... as we were just talking about. So I left VC and I started my own business where I work with startups and kind of help them avoid those preventable mistakes and find their, their high impact growth

3. 1:56 – 5:24

   Lessons form PayPal

   1. MLMatt Lerner1:56

      levers.

   2. HSHarry Stebbings1:56

      If we just unpack a, a couple of elements there-

   3. MLMatt Lerner1:58

      Yeah.

   4. HSHarry Stebbings1:58

      ... 11 years at PayPal is a hugely, uh, impactful, uh, segment of your career. What are one or two of your biggest lessons from that 11 years?

   5. MLMatt Lerner2:07

      So many of them. I think, you know, towards the end it got to the point when you're in a big company where having the right answer is like 5% or 10% of the problem, and getting the entire organization and to change people's mindset and align resources ends up becoming like 80% or 90% of the problem. I'm sure I've messed up the math there, but something like that. And so I'm very much more shifting my time and my hiring strategy and everything more around influence. So, that was a big piece of it. The other big one is when I look back on my time at PayPal, 90% of our growth came from like 10% of the stuff that we did. And by that I mean like I could go back and say, you know, there are five or six things, obviously before my time, getting on eBay, uh, referral bonuses and, you know, network effects growth, getting early, getting engaged with web developers who were building the sites and implementing the payment systems, getting pre-integrated with shopping carts and hosts, some outbound sales. Like, that drove almost all their growth. But they did still, like, a ton of other stuff. They spent hundreds of millions of dollars on marketing campaigns, building products that frankly nobody ever used. And you can do that when you're generating hundreds of millions per year in free cashflow. But startups don't have that luxury. But then, you know, when I step back and, as a VC, and start to look at other success stories, I start to see that pattern repeat of like 90% coming from 10%, you know, and you can see it. You know, you've had these people on your show, Canva and Dropbox and, and all of these. And so that sort of got me into this question of like, okay, as an early stage startup without all that free cashflow, how can you figure out what that 10%-

   6. HSHarry Stebbings3:35

      Mm-hmm.

   7. MLMatt Lerner3:35

      ... is as quickly as possible?

   8. HSHarry Stebbings3:37

      Incredibly challenging. Uh, so now, uh, you've had 11 years, you've also seen so many preventable mistakes from the side of the investor. When you sit here today, what do you know now that you wish you'd known when you entered the world of growth?

   9. MLMatt Lerner3:50

      I think the biggest thing is how much of growth is actually figuring stuff out, is actually information discovery rather than running playbooks, doing best practices, copying what other companies did. You know, it doesn't take a rocket scientist to figure out you can do SEO, you can do ads, you can optimize your funnel. But figuring out the details of, you know, Google has 100,000 search results for any query. You know, how are you gonna be in one of the top three results, which are the only ones anyone's gonna click on when you've got companies with way more money than you and 10 years of head start who are locked into those top three positions? Ads are sold at auction, right? So which means you've gotta be able to outbid companies. And right now, the ones who are winning those auctions have the best unit economics, the smoothest funnels, the most creative testing behind them. So, so much of growth is just trying to figure stuff out as quickly as possible.

   10. HSHarry Stebbings4:42

       What's the hardest thing about figuring stuff out in growth?

   11. MLMatt Lerner4:46

       The hardest thing about figuring stuff out is, uh, honestly, I, I think it's hubris. I think it's that people come in and they don't realize they need to figure stuff out. They have their best practices, they have what worked in their last job, they have what they heard on your podcast and they're like, "All right, let's do this." And, and like, turn on the tap. And so, I mean, you see so many startups make this mistake where they overinvest in time and money and energy in building a product and launching some massive campaign, and it doesn't survive first contact with the customer. And they did that 'cause they were sure they were right, but they weren't. And so just having that humility and that curiosity going in can save you so many wasted cycles, so much

4. 5:24 – 8:13

   What is Growth, What is It Not

   1. MLMatt Lerner5:24

      time and resource.

   2. HSHarry Stebbings5:25

      There's so many questions that I wanna dig in straight on, but I wanna set the foundations of like what growth is and what it isn't.

   3. MLMatt Lerner5:30

      Okay.

   4. HSHarry Stebbings5:30

      'Cause it is so widely embastardized as a term. Like, what is growth to you and what is it not?

   5. MLMatt Lerner5:35

      The simple definition I use for growth is you've got some value that you deliver, you help customers do something they're trying to do, they're struggling. And growth is the ability to find customers and help them understand the value that you're gonna deliver to them and get them to use and love your product or service. And the way that's sort of different from traditional job functions like marketing or product or sales is kind of different in three ways. First of all, most of the time with growth, there's no playbook.So, you know, if you're marketing w- dish soap at Unilever and you hire someone from Procter & Gamble, like, they're gonna walk in, they're gonna know 90% of the job. But you're creating a product that no one's ever sold before, maybe even a new category, so there isn't a playbook to do that. And that brings me to the second thing, which is that you're trying to sell a product that nobody's looking for and, again, maybe a category no one's even looking for. So you've got to figure out who is this customer? What is it they're struggling to do? What do they think they're looking for? Where are they looking for it? And so you can turn up there and look like that thing, and answer those questions that they're gonna have. And the third piece that's really different is it cuts across disciplines.

   6. HSHarry Stebbings6:42

      Mm-hmm.

   7. MLMatt Lerner6:42

      You know, if you're in financial sales, you can mostly just, like, do your job and not have to worry about engineers-

   8. HSHarry Stebbings6:48

      Stay in finance, yeah.

   9. MLMatt Lerner6:48

      Yeah. And so growth leaders and growth teams have to be... And everyone on your podcast has said this, but they have to be super cross-functional, r- and really good relationship builders, and able to help the other people around them be successful.

   10. HSHarry Stebbings6:59

       So, the most, uh, challenging question for you to answer. But given the multidisciplinary nature there, as you said, um, and element of there not being playbooks and figuring stuff out, is growth an art or is it a science? If you have to choose one.

   11. MLMatt Lerner7:14

       I have to choose one?

   12. HSHarry Stebbings7:15

       You have to choose one.

   13. MLMatt Lerner7:17

       I'm gonna make the argument that it's both, but then I'll, I'll choose one.

   14. HSHarry Stebbings7:19

       Okay.

   15. MLMatt Lerner7:19

       I think the argument that it's both is that when you see growth science without art, and you know these websites, uh, I mean, I guess if we're naming names on this show (laughs) like some of the travel booking sites, you know. You know, and these flows where they've just over-optimized and refined and A/B tested every little thing, and then sometimes it's- it's like a yucky experience, but it's the optimal blend of conversion rate and AOV and, you know, blah, blah, blah, and they're just not great experiences. And then there's all these famous examples of ad campaigns where people have spent gazillions of dollars in Super Bowl ads and all this stuff, and- and they just haven't sold more beer or shoes or whatever it is (laughs) that they're trying to sell because it doesn't resonate with customers. It's just good entertainment. Um, so I think, you know, the... At its highest form, it blends both, um, and the trick then is to be able to get artists and scientific people to work together, but (laughs) that's like a whole other

5. 8:13 – 12:11

   User Experience vs Conversion Tension

   1. MLMatt Lerner8:13

      story.

   2. HSHarry Stebbings8:13

      Just picking up on that, you said about travel sites where the flow is maybe, uh, suboptimal for the user experience, but it's, like, optimized for the conversion funnel for the AOV. Does user experience not correlate to the highest AOV and the best conversion funnel? Like, do you see what I mean? Can they be at odds?

   3. MLMatt Lerner8:31

      Yeah, I think that's- that's a really, uh, important misconception actually. It's a- it's a huge false dichotomy there. So, a lot of times you'll get the best customers in situations where you're actually introducing friction into the funnel.

   4. HSHarry Stebbings8:45

      Huh.

   5. MLMatt Lerner8:46

      So, one example of that is, I don't know if you've ever, probably not, tried to sign up for Noom or Calm, and they have these onboarding flows where they're like, "What brings you here today? And what are you trying to achieve? And what have been your problems in the past? And how much do you weigh? And what's your target weight?" And ƒ (00:03:42) . And they'll be 20 or 30 questions long and these- these long flows are actually really good at building intent, and they A/B test and optimize the shit out of these flows. And it is more of an onerous user experience.

   6. HSHarry Stebbings9:12

      And what do they get from that? They get a higher quality lead that's like got sunk cost fallacy because they've put enough time in to get through 30 questions? What, like, w- what is the... Why- why do they do that?

   7. MLMatt Lerner9:24

      So, sunk cost is part of it, like, you're not gonna m- you know, not want to see your results when you get to the end of answering 30 questions. But a big piece of it is actually, and this, uh, I think is brilliant, is they're sort of taking people through the mental purchase journey. So, if you're selling expensive software, you can afford salespeople, and they're going to answer your questions and explain and demo and blah, blah, blah. But if your product costs 10 bucks, 30 bucks a month, you can't. So, y- your users are coming in and wondering, "How is this thing going to help me? Why are my friends recommending it? Does it work in my specific case? What about this? What about that?" And each of these questions doesn't just get some information from the customer and help qualify them, which is useful, but it builds intent. Because if, you know, if you go to the doctor and you say, "Well, it hurts here." And then the doctor says, "Well, does it hurt when you do this? And does it hurt more at night?" And if you're like, "Yes, yes, yes," then you believe whatever the doctor says-

   8. HSHarry Stebbings10:15

      Yeah.

   9. MLMatt Lerner10:15

      ... is more likely to be accurate. So, they're actually showing that, yes, we understand you, and that builds intent.

   10. HSHarry Stebbings10:22

       I got you. This is fascinating, isn't it, that actually, like, a poor user experience can actually create higher conversions and be better for the business. It's kind of paradoxical.

   11. MLMatt Lerner10:30

       I guess it depends how you define poor, but I think most people traditionally think of that as, like, lots of form fields-

   12. HSHarry Stebbings10:35

       Yeah, I get you.

   13. MLMatt Lerner10:36

       ... that you've got to fill out.

   14. HSHarry Stebbings10:37

       Can... So, the other kind of challenge I find with growth as a definition is, and I have two different people on the show, and some are like, it's about optimizing funnels, you know, um, A/B testing everything, and then others are like, it's about taking the big swings, seeing outside the box and going, "We're gonna test th- a few things, but big things." Is growth about moving the needle with big projects, or is it about actually optimizing lots of little things?

   15. MLMatt Lerner11:03

       So, the answer, of course, is it depends.

   16. HSHarry Stebbings11:05

       Yeah.

   17. MLMatt Lerner11:05

       So, let me just give you a simple set of rules to figure out which. At any given time it's gonna be, you know, 70/30 one way or the other, and one way or the other depends on where you are in your company's growth. So, in the beginning y- you, it's premature to start optimizing, you need to figure out the big stuff first. Once you've got one lever working, two levers working, then you can start devoting resources to optimizing and trying to squeeze more juice out of that lemon, but then you've always got kind of your 30% who are like, "Okay, what's the next big lever? Is there a market segment we're missing?" You know, "Is there a use case that we're missing?" Something like that. "Is there a channel that we could start to develop?"

   18. HSHarry Stebbings11:42

       Okay, when you look at... Going back to the art or science, I just want to get an answer on this. Pushed, which one is it today? And has it changed actually? Like, we look at a world of AI where maybe creativity is more front and center, but what is it if I push you?

   19. MLMatt Lerner11:55

       I mean, if- if I were running a company and you had a gun to my head and I had to choose one, I'd say science.

   20. HSHarry Stebbings12:01

       Mm-hmm.

   21. MLMatt Lerner12:01

       Because science without art can deliver business results, and art without science-... just, if it does, it's very rare and exceptional, down to luck. It just

6. 12:11 – 13:17

   Data vs. Intuition in Growth Leadership

   1. MLMatt Lerner12:11

      doesn't.

   2. HSHarry Stebbings12:11

      Okay, so science without, uh, doesn't. When we think about data versus intuition, that kind of gut feel, can you take me to how you think about how the best growth leaders act on data versus intuition, and what's worked for you?

   3. MLMatt Lerner12:25

      The best growth leaders understand if they possess the knowledge base to start to be intuitive. So, it's easy to walk into a room, you know, and t- the highest paid opinion, the, the alpha in the room is gonna spout all their intuition and all their opinions, and they could be right (laughs) or they could be wrong. You know, ChatGPT will just very confidently tell me things that are patently, scientifically false, right?

   4. HSHarry Stebbings12:47

      (laughs)

   5. MLMatt Lerner12:48

      So, you get to a point to have good intuition when you understand the grow- growth as a system-

   6. HSHarry Stebbings12:53

      Yeah.

   7. MLMatt Lerner12:53

      ... in your business. And that has a few parts. You need to understand the customer's context. Who are we selling this to? Where are they stuck? What are they trying to do? What do they think they're looking for? Where are they looking for it? And then you understand sort of your growth model mathematically, and you know where the biggest points of leverage where you should be focusing for the maximum impact. And once you have end, then you know your, your business and your capabilities and what you're good at and can be great at, and what

7. 13:17 – 13:53

   Starting Your Growth Model

   1. MLMatt Lerner13:17

      you can't.

   2. HSHarry Stebbings13:17

      Where does a growth model actually start, Matt? Like, I think so many people who listen to this, and so many founders listening will be like, "Oh, yeah, sounds great." Is... Step one, I've got a company today, we sell, um, uh, accounting for SMBs. Where do I start on my growth model? 'Cause I don't really have one.

   3. MLMatt Lerner13:34

      The way to map your growth model is you start with your north star.

   4. HSHarry Stebbings13:37

      Yeah.

   5. MLMatt Lerner13:37

      And that's gonna be a metric that increments when you deliver value to customers.

   6. HSHarry Stebbings13:41

      Mm-hmm.

   7. MLMatt Lerner13:42

      And something that encompasses the entire funnel. And, you know, you stress test it a bit so it's not creating perverse incentives, like, "Hey, is there a way we could game this and make this number go up without actually delivering, you know, business value?"

8. 13:53 – 21:50

   Picking a Northstar Metric

   1. MLMatt Lerner13:53

   2. HSHarry Stebbings13:53

      Do most startups choose the right north star or the wrong north star, and what metric-

   3. MLMatt Lerner13:57

      (laughs)

   4. HSHarry Stebbings13:57

      ... and what mistakes do they make in choosing it?

   5. MLMatt Lerner13:59

      The biggest mistake with north star, and it's a very reasonable one, is they choose their north star as revenue.

   6. HSHarry Stebbings14:04

      Oh.

   7. MLMatt Lerner14:05

      Or profits.

   8. HSHarry Stebbings14:05

      Always.

   9. MLMatt Lerner14:06

      And, you know, as an investor, you're like ex- you have to straw man that for me. Like, why wouldn't my north star be revenue? Like, we're a business, right? And the problem is, at early stage, or at any stage, but there's so many ways to deliver revenue without actually delivering customer value.

   10. HSHarry Stebbings14:20

       Mm-hmm.

   11. MLMatt Lerner14:20

       And as an early stage startup, you know, decreasing password sharing, or bundle, or upsells, things like that, you know, they'll make you a little more money, but no one's gonna hyper-grow because they shut down (laughs) password sharing, right?

   12. HSHarry Stebbings14:32

       (laughs)

   13. MLMatt Lerner14:33

       So, you need to focus on things that deliver value to customers. And the second problem with money is if you take, you know, your six functional heads in your business, engineering, product sales, whatever, and say, "Give me your best ideas for making money," they're gonna give you six different strategies with six different resource sets, moving in six different directions. And a startup can't move in six directions. But if you tell your marketing person, your growth person, your salesperson, your engineer person, "How do we get more weekly active users?" they're gonna have a productive discussion, and they're gonna be able to figure out how they each fit into that value chain.

   14. HSHarry Stebbings15:03

       I always think that actually it should go back to, like, a user behavior. Like, number of sheets created or... D- do you know what I mean? Number of tables shared, number of whatever that is. Because there's so many different ways, also, like, weekly active users, you could have people who use it, like, once a week for a month. If it's, like, an accounting solution, maybe end of month. Doesn't mean they don't love it or not getting value, but it's just, like, the intensity-

   15. MLMatt Lerner15:22

       But they could use it once a month.

   16. HSHarry Stebbings15:22

       ... of the usage.

   17. MLMatt Lerner15:23

       Yeah.

   18. HSHarry Stebbings15:23

       Do you see what I mean?

   19. MLMatt Lerner15:24

       So I say, "How would a normal customer behave if they absolutely loved your product? And how many of them are behaving that way?"

   20. HSHarry Stebbings15:31

       Hmm.

   21. MLMatt Lerner15:31

       And track it in cohorts and make it go up over time.

   22. HSHarry Stebbings15:34

       Do you agree with the, I think it's the Sean Ellis or the Rahul at Superhuman, which is like, "If my product were removed, how many people would, like, be viscerally upset?"

   23. MLMatt Lerner15:42

       I think that's a really good test of the strength of product-market fit. Absolutely.

   24. HSHarry Stebbings15:46

       Yeah. I, I, I-

   25. MLMatt Lerner15:48

       But you can have product-market fit with six customers, and next year, it's seven customers, and you don't have a business. (laughs)

   26. HSHarry Stebbings15:53

       (laughs) It depends how much they pay. Uh-

   27. MLMatt Lerner15:56

       Yeah.

   28. HSHarry Stebbings15:56

       ... can I ask you, when does the north star change? Or does it change?

   29. MLMatt Lerner16:00

       So the time the north star would change, first of all, in the beginning, sometimes before product-market fit, you're just still figuring out how you deliver value to customers.

   30. HSHarry Stebbings16:08

       Yeah.
9. 21:50 – 25:51

   Early Channel Strategy & the Risks of Over-Diversification

   1. HSHarry Stebbings21:50

      ARR, but actually so few, even have one ever, that really works.

   2. MLMatt Lerner21:54

      Mm-hmm.

   3. HSHarry Stebbings21:54

      Actually, I think it was, um, our last guest who said... Adam Gross, who said that if you do paid under 100 million in ARR-

   4. MLMatt Lerner22:02

      Mm-hmm.

   5. HSHarry Stebbings22:02

      ... you're not really product-led growth. My question to you is, do you agree, in terms of channel diversification too early being a massive problem that you see founders make, and how do you think about that early channel strategy?

   6. MLMatt Lerner22:14

      So, first of all, I, I think the exception on paid below 100 million ARR is it's a good way to get eyeballs quickly for testing.

   7. HSHarry Stebbings22:20

      Mm-hmm.

   8. MLMatt Lerner22:21

      So, it's a good way to validate stuff quickly. But it shouldn't, obviously, be the crux of your growth early on. Um, you know, the channel thing, I think people th- over-think that a little bit, too. So, obviously, "Let's try them all and see what sticks" is not efficient, 'cause none of them are gonna work the first time you try them.

   9. HSHarry Stebbings22:37

      Sure.

   10. MLMatt Lerner22:37

       Or Facebook will work a little bit in the beginning 'cause they wanna get you to spend more money, but pretty quickly, as you try to scale, your unit economics will deteriorate. Or Meta, whatever. But the truth is... So, first of all, it's, it's kind of a false distinction, because most successful businesses end up using some combination of this sort of post hoc hierarchy of channels we put on it. Like your business, right? Is it an influencer business? You, you know, you bring on someone famous and their audience starts to follow you.

   11. HSHarry Stebbings23:01

       Sure.

   12. MLMatt Lerner23:01

       But it's a content business, right? 'Cause you're creating all this content, it's gonna rank for search, people love it. Like... So, there's gonna be all these sort of... And then it's a network effects business as well, because your influencers bring in their networks and blah, blah, blah. So, it's kind of a false distinction, but there's really only, like, six channels in the world. If you think about, how are the ways you find out about stuff? You hear from a salesperson, some partner brings you in 'cause to enable you to do something, you see some ads, you do a Google search, or there's some content or inbound, um, you know, paid ads, or maybe you hear about it from an influencer.

   13. HSHarry Stebbings23:35

       Yeah.

   14. MLMatt Lerner23:35

       Like, that's, that's really kind of it. And then if you're in, like, B2C, you probably can't afford salespeople, partners probably won't make sense, so you... It's even a shorter list. And you can just sit with that list in an hour with your co-founders and whittle it down. If, if there's... No one's googling anything related to your product, you're not gonna do SEO. If your unit economics are tight and you have a long payback cycle, you're not gonna do paid. (laughs) Like, you can pretty qui-... If your product isn't expensive, you can't do sales. So, if you just take these six channels and, like, cross off the four or five that probably don't work, you've got your channels, and that's like 1% of the, the challenge. 99% of the challenge is getting it to work, because each of these channels is hard. You know, we talk about, like, Google, and ranking in the top three for anything these days is gonna be very hard. Um, paid-... ads are sold at auction, so you're gonna have to outbid people who are spending $100 million and have huge teams who've been optimizing this for decades. Sales, outbound, like, how many email, you know, sales emails do you get and LinkedIn messages, and how many of them do you ignore? (laughs) So, really doing the experimentation to refine and get a channel or a combination of channels working is really where people should spend their time, not, as you said, trying the checklist of different ideas.

   15. HSHarry Stebbings24:49

       The thing I find funny is content. Everyone now moves to content, and they're like, "Ah, I'm gonna..." Yeah, everyone has a fucking podcast. (laughs)

   16. MLMatt Lerner24:57

       (laughs)

   17. HSHarry Stebbings24:57

       Uh, and I just find that so funny because it's like, you will have to do 200 shows. No one will care. You will not make any money. And then you will also have no proof that it works, still.

   18. MLMatt Lerner25:06

       (laughs)

   19. HSHarry Stebbings25:07

       (laughs) Good luck. And everyone's just like, uh, uh... It's just so funny for me 'cause the other thing that's really hard that I find with a lot of channels is it takes a long time, and you often don't have data knowing it works. You almost just have to suspend disbelief and say, "But it could work." Do you know what I mean?

   20. MLMatt Lerner25:23

       I mean, that's the whole entrepreneurial journey, right? It's not like, you know, I mean, I see, I know you, you're a runner. Like, it's not like you practice every day and you get a little bit better every day, and after a year you've cut 30 seconds off your mile or whatever. It's like nothing, nothing, nothing, something, nothing, nothing, something, something, nothing, nothing, bang. And yeah, that's an emotionally very hard journey to get used to.

   21. HSHarry Stebbings25:45

       Yeah, it's tough in that way. Um, okay, I do want to say, in- in- in part of the book, you mention a locksmith moment.

10. 25:51 – 27:15

    What is the “Locksmith Moment”

    1. HSHarry Stebbings25:51

       Uh, I just wanted to unpack what a locksmith moment was for startups and how you think about it.

    2. MLMatt Lerner25:56

       The locksmith idea crossed my mind. It was early in my time at PayPal, and I was living in San Francisco in, like, a gated apartment complex. And one day, I walked home and I got to the gate that led to the courtyard to all the apartments, and there was a sticker over the lock. It said, "24-hour emergency locksmith," and it had a phone number on it. And I thought, "This is a clever locksmith."

    3. HSHarry Stebbings26:15

       (laughs)

    4. MLMatt Lerner26:15

       She could've bought ads, you know, on public transit or, you know, pod, sponsored podcasts. I wouldn't have remembered. But she figured out where I'm gonna be s- and, when I'd suddenly realize I need a locksmith more than anything else, which is locked out of my apartment complex 'cause someone squirted glue in the lock 'cause it's San Francisco, right? And I thought, "Okay, that's the key." So every successful startup finds this kind of exact moment of highest need and figures out a way to insert themselves there.

    5. HSHarry Stebbings26:42

       Is finding people where they need it the most the key? Like, can you create demand from nothing, like from synthetic air? (laughs) Do you know what I mean? Does, does that make sense? So, like, you said there about the locksmith, which is like, you know, someone puts glue in the lock and you know you need it now. Like, some problems, you don't need now. How does the role of growth vary in those two opposing worlds of like, "Oh, shit, I broke my leg, I need it now," versus, "Oh, that would be cool"?

    6. MLMatt Lerner27:08

       I know it's possible 'cause I see it. Like, Athletic Greens.

    7. HSHarry Stebbings27:11

       Yeah.

    8. MLMatt Lerner27:11

       Like, we were all just fine before Athletic Greens, and yet some people spend tons of money

11. 27:15 – 29:17

    Effective Messaging for Horizontal Products

    1. MLMatt Lerner27:15

       on it. (laughs)

    2. HSHarry Stebbings27:15

       In terms of finding that person, I think the hard thing is they do have different, um, needs, and different things resonate. What are some lessons on what works in terms of the messaging that you use? Because for one person on Athletic Greens, it might be recovery, and for other it might be optimal brain function or whatever that is. How do you think about effective messaging in a more horizontal product?

    3. MLMatt Lerner27:38

       So for a very horizontal product, like Airtable, I mean, it's really hard, but you're gonna find initial use cases, and you're gonna kind of start there and expand. But if you came to me with your startup and said, "We have this product. We need to find our customers," I start by kind of using survivorship bias on our side. So I tell you, "Let's find some people who actually did sign up for your product, and assume that whatever they think you do for them, that's the thing your customers want." And then I go and start to interview those people. And we use the jobs to be done interview technique, which un- kind of gets to the core of, like, what was their problem and what were they trying to achieve? And what they're trying to achieve, I, I say like a good headline on a landing page, completes the sentence, "Now you can..."

    4. HSHarry Stebbings28:17

       Hmm.

    5. MLMatt Lerner28:17

       So the, "I'm trying to do this," and, "Oh, now you can," you know, "close out your quarter in minutes, not days," or whatever their, it is that they're trying to do. So then I'm gonna do those interviews. I'm gonna find out the different "now you cans," the different outcomes that people have. And then, you know, if I've got 10 or 50 customer interview transcripts, now, like, what I used to do is just read through them and I'm looking for the verbs. Uh, now you can use a large language model to do that, and it's like pull out all the verbs, all the outcomes of what people are trying to do. And then I've got a shorter list, and then sometimes I'll just show, I'll mock those up as home, landing pages and show them to people, and like, "What do you think that means, and what will that enable you to do?" Or the other one is just very quickly, like in a week for 500 bucks, you can just test a bunch of ads. So you have one ad design and six different "now you can" headlines, and you show it to, like, a lookalike audience or highly selected target that looks like your customers. And these ads won't be profitable. That's not the point. But the point is you can test half a dozen, six, 12 messages in the space of a week against your audience and see what gets

12. 29:17 – 45:24

    How to Hire & Manage Growth Teams

    1. MLMatt Lerner29:17

       them to click.

    2. HSHarry Stebbings29:17

       Yeah, I'm so pleased that you said that about kind of really, uh, almost kind of the importance of the testing process to find product-market fit, because everyone on the show says when it comes to timing of hiring a growth lead or a growth team, post product-market fit. It's always post product-market fit. And then there was one guest who said, "No, you actually sometimes need to create demand to understand what product-market fit is, to understand what resonates," da-da-da-da. "And so you should hire them pre-product-market fit for those reasons." Where do you sit on when is the right time to hire growth?

    3. MLMatt Lerner29:50

       Okay, so I'm gonna contradict what a lot of your previous guests have said.

    4. HSHarry Stebbings29:55

       Great. Fantastic.

    5. MLMatt Lerner29:56

       And the reason I'm gonna do that is because your previous guests, eminent as they are, work for companies like Shopify and HubSpot and Segment, and they have gazillions of dollars, and they have huge budgets, and they have brand appeal. The best growth people in the world would be thrilled to go work for those companies. Little startups don't have the broad recognition. I mean, they're, they're not really great jobs. (laughs) Uh, they don't have a ton of money. The equity is, you know, a bit sus. And so you just, you can't necessarily hire a growth genius at that stage. So, part of it is just the level of talent you can hire, and if you think about, like, growth, this is something that cuts across every function. It's the hardest thing your company's gonna do, so you want the most talented, smartest person in your company who's closest to the customer, the most inpatient, the fastest mover.... and that sort of starts to look a lot like a founder. So, I-I really believe very strongly that your first head of growth is your founder. And their first hires, I wouldn't start by hiring somebody senior. So, I've seen this play out badly a lot, where people are like, "I'm gonna bring in the magical growth wizard and they're gonna grow my company," and it just goes pear-shaped more often than not, um, 'cause these people are, like, bringing their playbook they ran at their last company, or their bag of tricks or whatever, but they don't fundamentally understand your business. And you probably wouldn't let them do the ... if they were good, you wouldn't let them have all the engineering (laughs) resources and all the product resources and all the ... Like, you wouldn't let them do the stuff that they need to do to be successful anyways. So, first hires for me. Like, once you understand roughly how your business is gonna grow, maybe it's content and inbound, maybe it's paid, whatever, hire people ... I say hire people who can do 50% of the hard things you need and figure out the other 90%. You've got a list of hard things you need, you know, whatever, good direct response copy, user experience, funnel optimization, deep analytics about retention cohorts. You're not gonna find someone who can do all those things, so find someone who can do half of them, and then the other 90% is between the time you write the job spec and the time that their butt hits the seat, everything's gonna be changed. And six months later, everything's gonna be changed again. So, fundamentally, what you're going for is, what is their rate of learning? So, I'm looking fundamentally for bright generalists who can do some of the things I need as my early growth hires, with the idea that if these are really talented, bright people, hopefully someday one of them will be able to grow into my head of growth.

    6. HSHarry Stebbings32:11

       Okay, so we're gonna go through, like, the process. I'm an angel investment of yours and you're gonna advise me. Okay, so I've got that person who kind of knows 50% of the core skills and then they can learn and adapt fast enough. Um, how do I find these candidates, Matt? I don't have a growth, uh, network to pull from. What is the right way to start the process and start getting candidates in pipe?

    7. MLMatt Lerner32:32

       I've actually found, even when I've worked for kind of unknown startups, that general broad inbound tends to work. I find the mistake people make is that they apply too many filters to the search, right? You know, you write the job spec and the recruiter's like, "Well, what do you want?" and you're like, "Six years of experience in a Series B high-growth fintech in London, went to a good university, former management consultant." And it's like, "Okay, but she already has a job. Like, what about the rest of the world?" And so if you just remove filters like geography or, like, a certain university degree or certain work experience, often you can find these bright generalists. I mean, the best ... I'll say categorically, the best growth people I hired and managed in my time at PayPal had no marketing experience, had no product experience at all. I mean, they were coming to an organization where they were surrounded and supported, but they were both former scientists, and they were really good at figuring things out.

    8. HSHarry Stebbings33:26

       Did they have commonalities in their backgrounds around that, then? Were they, uh, all maths grads? Were they all ... Was, was there other things in their profiles that were common despite the lack of marketing?

    9. MLMatt Lerner33:38

       I mean, o- one of them was a physicist, the other one was a computer scientist, but in a university doing academic research.

    10. HSHarry Stebbings33:44

        Hmm.

    11. MLMatt Lerner33:44

        And so both of them understood data and they could think from first principles and they understood this idea of causation and correlation-

    12. HSHarry Stebbings33:53

        Okay.

    13. MLMatt Lerner33:53

        ... and experimentation.

    14. HSHarry Stebbings33:54

        So it is like a, a science-rooted mind, say?

    15. MLMatt Lerner33:56

        Yes. Scientists are always aware of what they don't know, unlike, you know, most people in most jobs. You're just always ... You're wrong all the time, you're at these ... You see these big gaps in humanity's understanding of whatever your discipline is. And you've got to come into a startup with this assumption that you only know, like, 10% of all the stuff you're gonna need to know for this to be hugely successful. And scientists come in with that curiosity and humility.

    16. HSHarry Stebbings34:19

        I mean, as a venture capitalist, we're never wrong, so-

    17. MLMatt Lerner34:22

        (laughs)

    18. HSHarry Stebbings34:22

        ... you're simply wrong. (laughs)

    19. MLMatt Lerner34:24

        I mean, 'cause, you know, you feel great every time you make a check, right? You write a check, you're like, "I feel great about this company." And then the data tells you, "Well, no, you were stupid about 80% of these companies," right?

    20. HSHarry Stebbings34:33

        A hundred percent. It is one of the most unique jobs in the world.

    21. MLMatt Lerner34:35

        It's so humbling.

    22. HSHarry Stebbings34:35

        I said to my mother the other day, "Can you imagine like a chef in a restaurant where 90% of the meals-"

    23. MLMatt Lerner34:39

        (laughs)

    24. HSHarry Stebbings34:39

        "... they produce can be terrible, the worst. As long as 10% are great, you are ... You can be the best in the world."

    25. MLMatt Lerner34:45

        You're the Michelin star, yeah. (laughs)

    26. HSHarry Stebbings34:46

        She's like, "I don't get this at all." (laughs) I'm like, "You know, it's a unique position." Okay, so we have this profile. I love that in terms of actually the best hires not necessarily coming from that background. So, we put that out, put it on Indeed, put it on, you know, whatever we wanna do, and we have this top of funnel. We start the interview process. Interview one. What am I trying to achieve from that first interview, Matt? I've never done this hiring process before. What questions do I ask? How do I do it?

    27. MLMatt Lerner35:11

        So, remember I said you want someone who can do 50% of the hard things you need to do and figure out the other 90%. So, my entire interview process is gonna be focused around figuring that out. So, I've got my little list of, like, there's five hard things, and I'm gonna start like a funnel. I create rapport. I start with really broad questions. What are you great at? You know, what, what's your favorite work to do? What would you rather delegate? By their answers to that, I can already start to tick off things on my list where I'm like, "Okay, it's obvious they can do this. I'm not worried about their ability to do that." I'll end up with one, two, three things where I'm not sure if they've got it or not, and then I'll go deeper into questions about that. And those are gonna be questions typically that don't have a clear right or wrong answer, but are important. So, uh, marketing attribution. You know, how do you think about, you know, first click versus last click and how to learn and spend your money wisely. Or, you know, talk me through how you think about ... how you'd break apart a retention problem, or whatever the ... H- how do you get resources from a department where you don't have any o- official authority over them? Whatever that thing I think they're gonna need. Um, I usually use question pairs and talk me through it and tell me about a time when ... um, who does this well in your opinion and why? Things like, who do you follow, who do you copy? Things like that. And then the other questions are really around that 90% of what they're gonna need to figure out. So, I'm trying to figure out literally do they have a growth mindset. And these are the questions, I've been using them again and again for years, and they just never fail. And, and it's never close. No one's ever like, "Kinda maybe." So, the first one is just like, "What are you hoping to learn in this role?" And good people will already have thought ... They may not have, like, a stock answer, but they're gonna have thought about where they're at in their life and what they need to learn to get to where they're going.The second one is, tell me about a mistake you've made. And it's just- some people are comfortable talking about their mistakes, and some people think it's like a trick question to find out their weaknesses, and they have some scripted answer. And then if they tell you about a mistake, like what are their non-verbals? Are they comfortable talking about it? And then do they, unprompted, do they tell you the lessons and what they'd do differently? Like, had they thought about this mistake before the interview? The third question is just, "Do you have any questions for me?" Because good growth people are annoyingly curious. Like, not fun at cocktail parties, but, (laughs) but very good. They ask all these, like, sounds obvious, but, "Oh, hold on," kind of questions. And then the other piece I need to figure out there is are they gonna c- are they a playbook runner? Are they gonna come in with their playbook and execute it, or are they gonna try to write a new playbook? Because the way you get promoted in a lot of companies, in product and marketing, is by doing the stuff you're supposed to do, but doing it faster and doing more of it, and making fewer mistakes, and managing more people and more budget and making good decks. And none of those things are useful in an early stage startup. You actually don't want to do most of the things, and you don't want to spend most of the money, and you can't hire the people. And y- no one needs decks. So, to find the playbook writers, I'll ask things like, "What do you see as the big open questions right now in our business?"

    28. HSHarry Stebbings38:00

        Do you prep them ahead of time for that then? Do you send them a deck? Do you- a fundraising deck, maybe from the last raise? Do you send them prep on the company itself? Just so people are informed enough to come in and be like, "Oh, I know your business," or is it, like, on the fly, "Let's see how quick they think"?

    29. MLMatt Lerner38:14

        It may not be a first round interview question, but I don't prep them.

    30. HSHarry Stebbings38:18

        Mm.
13. 45:24 – 49:05

    Growth Experiment Failures: Convictions vs. Reality

    1. MLMatt Lerner45:24

       this business work?

    2. HSHarry Stebbings45:25

       Can I ask, what growth experiment did you have the most conviction in that then turned out to be wrong?

    3. MLMatt Lerner45:30

       LinkedIn, actually. For my business now, um, someone who I really respect gave me advice to start posting on LinkedIn, uh, as like a way to build my list, and I was really dismissive of it. I f- don't remember why, but I just didn't like the idea at first. But I respected this person enough, and I was like, "You know what? I'm writing these weekly emails anyways, I might as well turn them into LinkedIn posts," and I started doing it. And just like you said, like nothing, nothing, nothing.

    4. HSHarry Stebbings45:53

       Mm-hmm.

    5. MLMatt Lerner45:53

       And eventually like one started to get some traction, and then nothing, nothing, and then one got a lot of traction, and- and it really snowballed and it turned into, you know, kind of my main source of new subscribers to my list now, but I was completely dismissive of that at first.

    6. HSHarry Stebbings46:06

       Is subscribers to your list the North Star metric for your business?

    7. MLMatt Lerner46:10

       No, it's- it's just a funnel driver. The ultimate North Star metric for my business is, how many startups can we help?

    8. HSHarry Stebbings46:15

       Okay.

    9. MLMatt Lerner46:15

       Can we properly, positively impact?

    10. HSHarry Stebbings46:17

        Okay. What have been some lessons in the LinkedIn building? I- you know me, I love content.

    11. MLMatt Lerner46:21

        Yeah.

    12. HSHarry Stebbings46:21

        Like, any big lessons for you in building the LinkedIn following?

    13. MLMatt Lerner46:24

        It's humbling, 'cause I have all this stuff that I think is amazing and some of it doesn't perform, and some of it does, and I'm always surprised.

    14. HSHarry Stebbings46:30

        Often the more intellectual stuff I find doesn't perform. I will often tweet stuff about kind of, I don't know, temporal diversification of different vent- venture ventures.

    15. MLMatt Lerner46:38

        (laughs)

    16. HSHarry Stebbings46:38

        And h- and people are like, "Nope." (laughs)

    17. MLMatt Lerner46:41

        Your stuff is amazing.

    18. HSHarry Stebbings46:42

        But- but then, you know, you tweet stuff about like perseverance and grit, boof.

    19. MLMatt Lerner46:45

        It goes crazy.

    20. HSHarry Stebbings46:46

        Yeah, yeah, exactly.

    21. MLMatt Lerner46:47

        I think there's something there. Like, you know, if I look at people's most successful LinkedIn or Twitter posts, a lot of times there is some emotion. There's this- a human story in there, even if there's some data.

    22. HSHarry Stebbings46:58

        Ca- final one before we do a quick fire, which is like, what's a growth loop to you? Everyone always says on the show about growth loops, and everyone has very different definitions. We talked about kind of that, kind of channel leading to core base and whatnot. What is a growth loop and how do you think about how startups should think about it?

    23. MLMatt Lerner47:15

        I mean, fundamentally it's- it's any positive feedback loop anywhere in your business. It- it basically means if you like go to sleep and stop doing it, it keeps running itself. So that could be a classic thing like a referral loop, um, it could be a financial loop. You know, if your ads are paying back 5X in 30 days, then you have a positive ad spend growth loop. You know, there's these network effect loops where you bring people on your show, they create content that brings you more listeners.

    24. HSHarry Stebbings47:39

        For sure.

    25. MLMatt Lerner47:39

        You know, which then increases the desirability of your show, which brings you better guests. You know, virtuous circle. So, anywhere, once you've mapped your growth model, you look around and say, "Where can we find a positive feedback loop here?"

    26. HSHarry Stebbings47:49

        And then you double down on the growth loops that you find?

    27. MLMatt Lerner47:51

        Yeah.

    28. HSHarry Stebbings47:51

        Yeah. Can you double down on more than one or two at once?

    29. MLMatt Lerner47:54

        It's hard.

    30. HSHarry Stebbings47:55

        Mm-hmm.
14. 49:05 – 56:35

    Quick Fire-Round

    1. MLMatt Lerner49:05

       into us.

    2. HSHarry Stebbings49:05

       Listen, I wanna move into a quick fire round, and I wanna start with, you wrote the book. What's the hardest part of writing a book, Matt?

    3. MLMatt Lerner49:11

       So for me, 'cause I'm- I love writing and I write emails and LinkedIn posts, so I'm used to writing on short form.... and then turning that into a full book, I completely underestimated the magnitude. That's like an architect who designs, like, loft extensions having to design terminal five of Heathrow. It's just a completely different level of thinking, and I was hopeless. And thankfully, I found really good editors who were able to help me, and I talked about, you know, the philosopher, really sort out and sequence my thoughts and, and turn that into a concise book.

    4. HSHarry Stebbings49:40

       What's the biggest mistake that people make when hiring for growth?

    5. MLMatt Lerner49:43

       The biggest mistake is being dazzled by the names on the CV and going for people with lots of impressive experience or-

    6. HSHarry Stebbings49:49

       The hard thing about growth is there really is very few growth pros, like true growth pros. Do you know what I mean?

    7. MLMatt Lerner49:54

       And the ones who are out there aren't gonna come to work for you.

    8. HSHarry Stebbings49:57

       That's it.

    9. MLMatt Lerner49:57

       (laughs)

    10. HSHarry Stebbings49:57

        I mean, a- and they're like a million dollars each. Like, you know-

    11. MLMatt Lerner50:00

        Yeah.

    12. HSHarry Stebbings50:00

        ... your Alena Vernas at Dropbox, like, she's not gonna come join your, like, Series A company in London.

    13. MLMatt Lerner50:05

        Yep.

    14. HSHarry Stebbings50:05

        Yeah, I agree with you. So you have to find the diamonds in the rough.

    15. MLMatt Lerner50:08

        That's why I'm thinking so much about talent and ability, and just get them in there and see how they grow. 'Cause every one of these great growth people started as an SEO person or an analyst or a content marketer, and just learned and grew... or an engineer, and just learned and grew very quickly.

    16. HSHarry Stebbings50:23

        So many of the great growth people started in SEO. That's one thing I really see from doing the show, actually.

    17. MLMatt Lerner50:28

        And that's because it forces you to think about customer intent, right? We talked about, like, you've got your product, but your customer has this context, this thing they're trying to do, this thing they're looking for. And you literally cannot do SEO unless you spend your whole time thinking, "What are people looking for, and what are they trying to do?"

    18. HSHarry Stebbings50:45

        How does growth change in a world of AI?

    19. MLMatt Lerner50:47

        So what I see right now happening is a few things. First of all, the floor for creative has gone up. Like, AI models can now do design and copy better than 90% of people, so there's just no excuse for doing that badly.

    20. HSHarry Stebbings51:00

        Mm-hmm.

    21. MLMatt Lerner51:01

        Two is they can automate previously hard-to-do tasks, like cold outbound. That all becomes a lot more effective.

    22. HSHarry Stebbings51:07

        It becomes more effective or less effective in the commoditization of it? 'Cause you actually have, like, this infinite supply now of it, and actually it's relatively generic in how it's done for the majority

    23. NANarrator51:19

        of our budget.

    24. MLMatt Lerner51:19

        To me right now, it feels like we're still on the ascending curve. Like, suddenly, lots of people-

    25. HSHarry Stebbings51:23

        Yeah.

    26. MLMatt Lerner51:23

        ... are getting good cold outreach in a way that they didn't.

    27. HSHarry Stebbings51:26

        Okay.

    28. MLMatt Lerner51:26

        They will become inured to that in a year. But at the moment, the window's kind of still open, I think.

    29. HSHarry Stebbings51:31

        That's my one worry is, like, w- we'll see outbound really just decay and die as a channel completely, because you just have infinite supply of it.

    30. MLMatt Lerner51:40

        (laughs)

Episode duration: 56:35