Mike Duboe: Top 5 Lessons Scaling Stitch Fix to IPO; Why CAC/LTV is a BS Metric | 20VC #978

1. 0:00 – 0:53

   Intro

   1. MDMike Duboe0:00

      Anyone could submit an experiment idea, even if you're not on the growth team. But we built this very simple, kind of one-pager framework that included an objective, a hypothesis you're testing, design or resources, uh, required to execute the experiment, timeline, so how long you need the experiment to run, and then what success quantifiably looks like, so you're not actually going and having revisionist history on like, "Hey, it actually did work even though, you know, the data showed this." And then finally, the next steps that one takes if the experiment fails or succeeds.

   2. HSHarry Stebbings0:27

      Mike, I am so excited for this. We've known each other for a while. We've been back and forth on Twitter DM. So first, thank you so much for joining me today, Mike.

   3. MDMike Duboe0:34

      Thanks for having me, Harry. I've been a longtime listener and learned a lot from your show over the years, so thank you.

   4. HSHarry Stebbings0:39

      Do you know what? I really needed that ego inflation. So thank you for that.

   5. MDMike Duboe0:42

      (laughs)

   6. HSHarry Stebbings0:42

      But, uh, I would love to dive in, you know. Growth is a weird and a wonderful world. And so how did you make your way into the world of growth and how did you come to lead the growth team at Stitch Fix?

   7. MDMike Duboe0:52

      Yeah, so I'll go back

2. 0:53 – 4:58

   Who is Mike Duboe?

   1. MDMike Duboe0:53

      and I'll start with my undergrad. So I studied engineering undergrad. I finished up University of Michigan in 2007. Most folks at that time out of engineering school were either going to work in the auto industry in Detroit or move to Chicago or, or New York to work in, in "business," uh, I'm using air quotes. Uh, Google was just kinda opening up their Ann Arbor office at the time. And, you know, my, my objective when I was thinking about what I wanted to go do was really to go avoid r- routine, uh, so avoid getting bored, and then go optimize for learning, which is a theme that's held true throughout most of my career. I felt like in general, I was most stimulated by starting at the base of a new learning curve, working my way up and moving to the next, kinda like engineering problem sets. And so right outta school, I joined Bain, (laughs) uh, because of this pattern. I think from a distance it felt like, uh, the breadth of problems and clients w- would kind of offer that. Um, I actually had a great time and, and if anything, it trained my brain to be a structured thinker, but I always wished I could have been better aligned, I could have better aligned how I spent my time with what I actually cared about or had some passion for. And so at the time, uh, one of my colleagues at Bain, um, had went to go work for Danny Meyer and then Grant Achatz and Nick Kokonas who were running this big restaurant group, you know, the Alinea Group.

   2. HSHarry Stebbings1:59

      Yeah.

   3. MDMike Duboe1:59

      I think at that time, it was the best restaurant in the U.S. Um, and I was a food and restaurant geek. I think Chicago is like one of the best food scenes in the country and I was always deep studying the floo- food bloggers and tracking new restaurant openings. And, um, and I was always inspired by that. So when I moved to the Bay Area in 2011, I started looking for interesting opportunities in the food space, um, and we're looking at food startups. Uh, turns out those are really hard businesses. But I ended up working with-

   4. HSHarry Stebbings2:22

      (laughs)

   5. MDMike Duboe2:22

      ... this chef marketplace called Kitchit that I fell in love with, essentially a marketplace connecting chefs in notable restaurants with diners. Uh, and it was really my first experience being the generalist athlete in a room of five to 10 people just trying to make stuff work early on. Um, I didn't really know what growth was at the time, but that's kinda what I was doing. One of the things we did there is we launched this group payments product and it was a real needle mover on conversion. And so shortly after, when I learned about this YC company, Tilt, um, what they were doing around building this crowdfunding or group payments API, I got really excited and I cold emailed James Bashara, um, who I think you know, and ultimately joined, uh, shortly after the company finished YC and raised its first round of funding from Andreessen Horowitz. Most of the company at that time was writing code and I was, kinda helped to figure out, uh, why the company was growing (laughs) 20% month on month and then help engineer things to help it grow faster. Um, and I'm happy to share more journey, uh, more on that Tilt journey later. But, uh, the stepping stone at that point, so our COO there, uh, who hired me, Brian Birtwistle, he was I think the first BD person at Amazon, had been around for a while. Um, ended up being a close friend and mentor. Three and a half years later when I was leaving Tilt, which didn't work out the way we wanted it to, uh, he introduced me to his wife, Julie Bornstein, who was the COO at Stitch Fix. Uh, the story there was they had grown on the heels of organic and strong retention for the first few years, and famously had a hard time raising venture money so decided to just say, "Hey, we're gonna operate on the constraints of profitability." There's a lot more color on that, uh, but really, you know, uh, essentially they never had to invest in building an in-house user acquisition muscle until relatively late in the journey. So I saw this unique opportunity and I was, I was also coming off a time, uh, where I felt kind of burnt by this high growth, high burn startup, uh, failure. And so Julie kinda took the bet that I was sufficiently analytical and competent to operate at that next level of scale, and that's how I, how I ended up there.

   6. HSHarry Stebbings4:04

      So, I mean, we're gonna dive into a couple of different aspects there. I actually tweeted the other day, I was 18 in San Francisco, first ever trip to the U.S., and I cold emailed James Bashara. Tilt was the hottest company in San Francisco at the time. And he responded and invited me for lunch at Tilt's HQ and gave me an hour and a half of advice, wisdom. I was 18, nobody. He was CEO of the hottest company in San Francisco at the time. I always remember that. What a good person. Um, yeah.

   7. MDMike Duboe4:31

      Yeah.

   8. HSHarry Stebbings4:32

      Important to say that, but-

   9. MDMike Duboe4:32

      There was some magic in... Yeah.

   10. HSHarry Stebbings4:34

       Such a...

   11. MDMike Duboe4:34

       And there was some magic in being in the Bay Area back then too. Um, uh, and, and yeah, um-

   12. HSHarry Stebbings4:39

       Yeah.

   13. MDMike Duboe4:39

       ... very typical James there, so it's... (laughs)

   14. HSHarry Stebbings4:40

       Totally. Uh, listen, I wanna ask, you, you mentioned obviously Stitch Fix there. It was a very transformational time for you and for the company. When you think about like one or two big lessons for you in terms of takeaways and how it impacted your mindset to growth from your time with Stitch Fix, what would you say those one or two lessons are?

   15. MDMike Duboe4:57

       Yeah, I mean,

3. 4:58 – 7:31

   Lessons from Stitch Fix

   1. MDMike Duboe4:58

      there's a bunch. The first one's probably about the importance of getting your objective function right. And so when I initially joined, there was a retention team, uh, and there was a VP of retention who was fantastic. She was my counterpart, and then I was hired to go run acquisition. You know, our early emphasis on retention meant that we had a strong understanding of our users and really an amazing foundation to add acquisition to. But with a structure like this, teams ended up thinking, you know, less holistically and they really were focused on tools that they had within their disposal to move one particular metric. Uh, and so if I viewed my metric as new users and CAC, I could have ultimately, I could have destroyed her, (laughs) her retention metric downstream by just letting in kinda shitty quality users and optimizing for an affiliate channel or something like that. And so I think, you know, it's important for teams to have a holistic view of what growth actually means for that business. You know, for us, redefining our KPI to some down-funnel metric was really impactful. And so there's more color on that I could go into later, but I think that like the meta point there is kinda getting your objective function right. I think as a related point to that, you know, many companies today start doing things to grow without really having an understanding of their growth model or a holistic understanding of it. And so I think growth could be really detrimental, um, if you're not focused on moving the right set of metrics. And, and that's a really important point that's kind of been etched in me since then. I think the s-The second point, um, which is a little bit more tactical, and it's, and it's really around the importance of understanding incrementality. This is specific to paid marketing, but I mean, Stitch Fix had a lot of, uh, data science DNA from Netflix, um, and that was instilled in the company. One of the things Netflix, you know, uniquely did was they, they were pretty fancy at running at-scale performance marketing. Everything they did was... All their measurement was based on these holdout tests. They didn't use any precise attribution models. I think many growth marketers aim for this, like, uh, almost a false sense of precision to give credit to a conversion on any one channel or any pro- any fractional set of channels. Um, oftentimes, that's just false precision. And so even though we were highly analytical at Stitch Fix, uh, we realized that marketing is, is rarely, like, really direct response, and the best way to really quantify efficacy is to measure lift, um, by doing some version of holdout testing. And so that one's more tactical, but I think so many people could actually, like, um, uh, expect almost false precision out of paid marketing, and that was a really, uh, important, important learning there, so, mm-hmm.

   2. HSHarry Stebbings7:10

      No, I, I love that in terms of the tactical, and we're gonna go into the tactical later. I do... I want to touch on number one there because really, uh, a lot of it centers around ambiguity of growth, your growth model, and how you think about what growth really means in your organization. I think there's a lot of... Again, this series is for founders building growth teams or hiring their first growth leaders.

   3. MDMike Duboe7:30

      Yeah.

   4. HSHarry Stebbings7:30

      And I think there's a lot of ambiguity

4. 7:31 – 9:48

   What is the Head of Growth’s role?

   1. HSHarry Stebbings7:31

      there. What does the role of head of growth mean, Mike?

   2. MDMike Duboe7:35

      Yeah. So (laughs) I might give you a... Uh, y- you're right, it's very inconsistent. I kind of prefer a broad definition, which is, uh, someone who's responsible for, for, for two things. One is accelerating the company's pace of learning. This is typically done through experiments, um, but that's a very important, important piece. Like, essentially, the growth team and the head of growth should be operating at a, at a faster drumbeat than the company and bring those learnings back into, into kind of the core product and what's actually happening. And the second description might be, you know, engineering systems that help a company build more control over its North Star metrics. And so that's... When I look at a head of growth, that's kind of more what I look for, and, and I understand that definition might be a little bit (laughs) , a little bit vague, but I think that could apply to product marketing, you know, sales, other stuff.

   3. HSHarry Stebbings8:16

      Can I ask just s- so I can understand?

   4. MDMike Duboe8:18

      Yeah, yeah.

   5. HSHarry Stebbings8:18

      If we think about increasing a pace of learning-

   6. MDMike Duboe8:20

      Yeah.

   7. HSHarry Stebbings8:20

      ... what's an example of that?

   8. MDMike Duboe8:22

      All right. Here's a good example. If you look at paid marketing, and i- if you think about, you know, what a marketing team might be looking to do is set up a, a set of kind of different landing pages to actually capture different forms of intent and, and better convert users, right? And so you could actually... One, one way of, of actually capturing learnings on conversion would be to just throw up a page, send organic traffic through, and just see what happens. I think, uh, the role of a paid marketing team here, or a growth team, could actually be, "Hey, we're actually gonna go up funnel, uh, spend money in the, in the, in the spirit of learning, and actually drive much more traffic through a set of ads that are actually testing different messaging that will eventually roll up into, into our landing pages." So that's a bit... That... Again, that's a very tactical one, but that's, like, one, one example. I think may- maybe the, the better answer is more of a, a kind of a, a general point, which is, I think, um, you know, the way most organizations are structured have some form of dependencies. You have an engineering team, a product team, a marketing team, et cetera. I think w- part of the magic of, of a cross-functional growth pod, which is generally the structure I prefer, is you can actually be fully autonomous in going and running an experiment to validate or invalidate a hypothesis without actually needing to step in the roadmap of other teams in a company. These are problems that are more... that happen more, like, at scale. But that's, that's more the, the kind of, um, you know, the, the, the kind of sense what I'm looking for.

   9. HSHarry Stebbings9:41

      Oof, you dropped in a little pearl there in terms of your preference being a cross-functional team.

   10. MDMike Duboe9:46

       Yeah.

   11. HSHarry Stebbings9:46

       Because this was my other big question.

5. 9:48 – 13:10

   Where does Growth fit on the org chart?

   1. HSHarry Stebbings9:48

      I have a lot of founders be like, "Where does it fit into my org? Is it a standalone? Is it in product? Is it in marketing?"

   2. MDMike Duboe9:54

      Yeah.

   3. HSHarry Stebbings9:54

      Why do you prefer cross-functional? Why is that better, and what's the right structure?

   4. MDMike Duboe10:00

      Yeah. You know, so it's interesting. There's one meta point we, (laughs) we talk about at Reforge, uh, which is a great, y- and, you know, uh, education program and set of content arou- around growth. But one point that I very much agree with is, like, if the practice of growth is successful, it should eventually abstract itself away and just be how product and marketing are run. So this is a discipline that I think can be instilled into other functions. But sometimes, you know, having a standalone growth team might not be the best wrong- like, long-term answer. So I just want to caveat all this stuff with that upfront. But yes, th- there is a role in, in, in many companies' journeys where it's really important and it might be the most pragmatic solution. So I think, you know, there's typically two structures. Um, there's, like, single function, which is actually how we had it at Stitch Fix, which is, you know, some VP of acquisition with different channel directors reporting to that. This is more common for e-commerce companies or ones where it's a pretty straightforward or linear conversion funnel. The second model, which I kind of just referenced, is a cross-functional pod where you have a PM, an engineer, marketing, analytics, design, user research working on shared business problems. Typically, the PM might be kind of, like, the most accountable person on that pod, but, but in general, those are, like, everyone's, you know, taking different disciplines and working towards a shared objective. I think where it sits is-

   5. HSHarry Stebbings11:09

      So, so can I- can I just-

   6. MDMike Duboe11:10

      Oh, go ahead, Harry.

   7. HSHarry Stebbings11:10

      ... ask? Sorry. On that cross-functional, so there's no actual, like, growth team, you're just asking for a growth mindset within the PMs, or they are actually a separate team?

   8. MDMike Duboe11:19

      No. Sorry. Yeah. What I, what I was referring to was a growth team there. So that, that is like... That would be the way the growth team is structured. You would have a head of growth and various different PMs, and then those other functions, engineers or whatever, either dotted-lining in or actually sitting within the growth team, um-

   9. HSHarry Stebbings11:33

      Gotcha.

   10. MDMike Duboe11:33

       ... and, um-

   11. HSHarry Stebbings11:33

       Okay. Totally get you.

   12. MDMike Duboe11:35

       And that's one thing about it. Yeah. And so where it sits, which was your first question, it's, it's kind of an age-old question, and I should just say many companies are gonna see this change quite a bit over time. I remember Casey Winters is a g- (laughs) is a good friend. I think you've had him on the pod, and, like, I remember at Pinterest, I mean, that would, that would switch over, like, quite a bit, um, between marketing and product. So I think many successful companies have growth reporting into the CEO, um, and this is important given that, (laughs) you know, you oftentimes need a blessing to just go run really aggressive tactics, and dependencies, like I said, could really hinder a growth team. And so the... one way to solve that is just have it roll into the CEO. Between marketing and product, you know, because the CEO... At a certain scale, it might not be practical for that to be the case.I typically say this work better under product. Um, I think many sustainable growth programs require with engineering and product discipline. Um, marketing really only makes sense for e-commerce companies where the product is, like, simple and linear. You're likely gonna have a performance marketing team sit within marketing, and that's fine. And sometimes that's used interchangeably with growth marketing. But if we're talking about, like, you know, growth programs that are going to touch the product, I think it's much more, uh, ideal to have it sit under product.

   13. HSHarry Stebbings12:37

       I totally agree. I think the biggest mistake that I see within portfolio companies within growth teams is growth teams come in, bluntly tinker with code, and then fuck off. And engineering teams are like, "What?"

   14. MDMike Duboe12:48

       (laughs)

   15. HSHarry Stebbings12:48

       And it just... And so having that lock in together means there's a l- lot more alignment early on as to why you're doing what you're doing and how you do it to prevent that.

   16. MDMike Duboe12:55

       Yeah.

   17. HSHarry Stebbings12:55

       So, totally agree. The next question is, okay, so let's say we put it under product. I see a lot of people actually go, and this is interesting, go too soon on growth teams and look at it as a silver bullet for product market

6. 13:10 – 14:54

   When to Make Your First Growth Hire

   1. HSHarry Stebbings13:10

      fit even.

   2. MDMike Duboe13:11

      Right.

   3. HSHarry Stebbings13:11

      How do you think about when's the right time to make your first growth hire?

   4. MDMike Duboe13:16

      I get asked this question a lot (laughs) -

   5. HSHarry Stebbings13:19

      (laughs)

   6. MDMike Duboe13:19

      ... uh, in, in, uh, new gig as, (laughs) as a venture capitalist. You know, I think there's a few principles I think about here, and there is no, again, there's no one-size-fits-all answer. But I think one principle that for sure is true is, like, never hire a growth person pre-product market fit. Um, I do think it's okay to have generalist athletes at this point, um, but they should really be talking with users and aggressively trying to find product market fit. And sometimes, like, people, um, who ha- might have growth-ish backgrounds could be helpful on that, but they should not be running a growth team at that stage. Um, I think prematurely scaling top of funnel before you have a cohort of users that's really retained and also understanding who those users are, like, that can be detrimental to a company. And so for sure agree with you on that point. Um, the second, you know, I think analytics is a really necessary foundation for this. And so, you know, one, one question that's related to what you're asking is, um, you know, who's your first growth hire? What should they look like? Um, I think for me, my first, my first growth hire is typically an analytics person. You know, in Silicon Valley, we talk about the concept of tech debt. I think that's widely un- understood. I think analytics debt is just as common, if not more common. I've had a lot of success hiring people from biz ops teams out of s- a company like LinkedIn or, or kind of elsewhere who are really kind of SQL proficient, maybe, you know, uh, engineering or stats backgrounds or math backgrounds, but they still understand the business context. And so to be clear, this is not a data scientist. Uh, these are people that actually are analysts but also are technical enough to be laying a lot of the a- uh, analytics engineering foundation. I think eventually you should have PM see instrumentation as part of the core product development process and not rely on a separate team. Um, but in the early days, I think having, uh, analytics to really help demystify the current state of affairs, that's really helpful.

7. 14:54 – 16:41

   What is “Analytics Debt”?

   1. MDMike Duboe14:54

      Um, so one of-

   2. HSHarry Stebbings14:55

      Can I just remind... Uh, sorry.

   3. MDMike Duboe14:55

      Yeah, go ahead.

   4. HSHarry Stebbings14:55

      Can I just interrupt you? Analytics debt.

   5. MDMike Duboe14:57

      Yeah.

   6. HSHarry Stebbings14:57

      What is it? And for me, with you advising me as an early stage founder-

   7. MDMike Duboe15:02

      Yeah.

   8. HSHarry Stebbings15:02

      ... what can I do to make sure that I have the right data foundations or analytics foundations for you to come in and do your job properly? What should I set up for you?

   9. MDMike Duboe15:13

      Yeah, I mean, a good, um, indicator of analytics debt is if I come in and ask, uh, a v- a very basic question, say, "Show me, you know, last month's cohort of users, um, and kind of h- you know, how they're retaining at D30," uh, for instance. Not being able to answer that question in a simple way or a series of questions that one should be able to answer, or there being a really high cost to go answer those questions, like someone needs to go do a custom query of the database and it takes a few days, like, that's a good indicator that you have analytics debt. In general, it's l- like, being way too hard or costly to answer, uh, questions about how the business is performing. So-

   10. HSHarry Stebbings15:46

       So if I'm a founder-

   11. MDMike Duboe15:48

       Yeah.

   12. HSHarry Stebbings15:48

       ... I've got Google Analytics set up.

   13. MDMike Duboe15:50

       Yeah.

   14. HSHarry Stebbings15:50

       Is that, is that enough for you, or w-

   15. MDMike Duboe15:51

       So that's the problem. A lo- a lot of people go to, uh, visualization tools as... And Google Analytics is a little bit different, but say, you know, Looker, Mixpanel, whatever. Like, they go to, um, visualization tools and say, "Hey, we have dashboards. Like, that's... We have our problem solved." The reality is, is, uh, you know, garbage in, garbage out. I think poor instrumentation of, of a product is actually a very common problem here. And so what I mean by instrumentation is, like, if you're not actually capturing key user events in the product, it's maybe simplest to understand this in e-commerce, right? Like, add to cart, checkout, you know, revisit site, et cetera. But for, like, social products, it's much more challenging. Uh, if, if you're not actually logging the right events there, then you, you have no idea what's happening inside your product and you can't start working on growth until, until you have that lens, so.

   16. HSHarry Stebbings16:33

       Can I ask, you work with many different companies now-

   17. MDMike Duboe16:35

       Yeah.

   18. HSHarry Stebbings16:35

       ... and this is very sort of off schedule.

   19. MDMike Duboe16:37

       Yeah.

   20. HSHarry Stebbings16:37

       But when you think about who's done analytics the best and why,

8. 16:41 – 18:21

   Which company does analytics the best?

   1. HSHarry Stebbings16:41

      who's done it the best and what did they do to be so good at it?

   2. MDMike Duboe16:45

      Hmm, that's a good question. You know, I'm tempted to give the answer, like... (laughs) I, I won't give the answer Facebook because, like, I think, you know, late stage they have a fantastic analytics team and actually their, their VP of growth, Alex Schultz, who we- who was an advisor at Tilt, was lucky to learn from him, was VP of analytics there as well, and so the- these two functions are often cousins. Uh, one of the businesses that I'm a huge fan of that I was invol- Like, I, I knew Max early on. Like, Faire is a great business and I think, like, they had... Again, it's maybe a little bit easier for a marketplace business where you're ultimately looking at transaction data versus, you know, social actions, which become a lot harder. I'm not close to as many, like, modern consumer social companies to have a good answer for that now. But I think if I look at Faire and think about what were the indicators early on when we were talking that, that showed me they were really healthy on analytics? It was, you know, if you look at the dashboards and kind of what they're reporting out on, it's just very high signal and noise, and so they are... Rather than going and tracking everything and reporting on everything, it was here's actually the three things that matter f- to our business, and this is what we're gonna, like, have Ridharaan reporting on every month. And I think, like, you know, looking at... (laughs) I'm not an investor in the company, caveat, but I, I, uh, you know, was close to that journey early on. Um, Dan Hockenmyer there currently runs analytics and is a friend, and I know he harps on, like, growth models. I think they clearly had this set early on, and I think that propagated through their dashboards and everything else, so.

   3. HSHarry Stebbings18:02

      I think, uh, so I, I'm, I totally agree with you. I think Max is great. Sadly, not a fucking investor there either. Um, (laughs) shame. Uh, but, uh, I, I, my question to you is, like, you mentioned kind of the dashboarding and the analytics that they have. I think the big problem that I see often with a lot of early stage founders is they don't really know.... what their core number is. And what I mean by

9. 18:21 – 19:28

   How to Find Your North Star Metric

   1. HSHarry Stebbings18:21

      that is what their North Star is.

   2. MDMike Duboe18:22

      Yeah.

   3. HSHarry Stebbings18:22

      How do you advise founders on trying to understand what their North Star should be?

   4. MDMike Duboe18:27

      It's a tricky problem and I think it, it will evolve over time for a company. I think one of the things, again, that harp on at Reforge, but I think is generally important across companies, is actually having a growth model. And oftentimes, this starts by just getting into a spreadsheet or actually pre-spreadsheet, write down how your product actually grows, right? And how, how it should grow. So for a business like Pinterest, uh, and, and there's a concept called the growth loops that maybe we could talk about later. But, like, new users coming in, go and post new... Uh, get brought in by existing content, go and post new content, which feeds the SEO engine and kinda drives more users there. And so maybe for a business like that, at some point in time, it's probably number of pins or kind of, like, active pinners at any given time. I'm not sure exactly what, what it is today. But I think, like, the point is having a, just a conceptual understanding of, like, what is the mechanic of your business that actually is driving kind of the, the main metric that you care about. For most businesses, it ultimately ladders up to revenue. For some, it might be users early on. Like, that, uh, just writing it down before you actually, like, get into a spreadsheet is important.

10. 19:28 – 21:09

    20VC’s Growth Loop

    1. MDMike Duboe19:28

    2. HSHarry Stebbings19:28

       It's interesting. I, I did this with the show actually because I let- you know, I have funds business and I have the media business, and the only thing that matters to me is the quality of guests on the show.

    3. MDMike Duboe19:37

       Yeah.

    4. HSHarry Stebbings19:37

       So if we start at number one, quality of guests leads to more listeners, more listeners leads to more founders wanting to take my money, more founders wanting to take my money leads to more investors, LPs wanting to give me money, and that feeds back into the core business. And so it's this circle of life. And so when I'm stressed, I'm like, "Fucking great guests."

    5. MDMike Duboe19:55

       (laughs)

    6. HSHarry Stebbings19:55

       "That's all that matters." (laughs) And it's-

    7. MDMike Duboe19:57

       Yeah. That's your growth number.

    8. HSHarry Stebbings19:57

       ... it's very delusion.

    9. MDMike Duboe19:58

       I mean, and, and there's going to be, this actually is a good one to dig into because, like, at a certain point in time, maybe early on, it's just like, you know, getting, uh, guests that have over a certain threshold of audience is probably, like, what your, your North Star metric for the first couple of years. And then later, there might actually be, like, a, a guest retention metric to actually get their next audience on as it's, as, you know, their own reach is expanding. And then as eventually kinda converting listeners to, to hosts (laughs) , or sorry, to guests, might actually be, like, another kinda conversion metric that you care about later. And so probably over your lifetime, there's gonna be different North Star metrics. And I think this is actually a good example to illustrate that.

    10. HSHarry Stebbings20:32

        I think the hardest thing with... Actually, so I'm just ranting here.

    11. MDMike Duboe20:35

        Yeah.

    12. HSHarry Stebbings20:35

        The hardest thing with my business is, like, it's a new economy startup in the way that, like, you know, I need a head of YouTube, I need a head of Instagram, I need a head of TikTok. These are all very specific disciplines that actually are relatively new skills. Um, and so it's very... And if you're really good at them, you have your own YouTube channel. (laughs)

    13. MDMike Duboe20:53

        Yep. Yeah.

    14. HSHarry Stebbings20:53

        And so it's, it's tough in that way. But I wanna go back to this hiring process.

    15. MDMike Duboe20:57

        Yeah.

    16. HSHarry Stebbings20:57

        So we have this fantastic person and we know that we want someone with a more analytical mind, as you said, kind of an analyst style. Uh, I've never hired anyone in this process before. So I'd love your

11. 21:09 – 32:17

    Hiring for Growth

    1. HSHarry Stebbings21:09

       help. What is the right process in terms of structure to hire this first growth person? What should those stages look like?

    2. MDMike Duboe21:18

       Yeah. Well, we could talk about it like it's, like, kind of a linear, very clean process. Oftentimes, (laughs) there's a lot of randomness to this, but let's, uh, uh, let's go through it anyway. I think, you know, step one is, is defining success, right? And so y- you kinda got at this with your last question, but a lot of growth hires will ultimately fail, in part because the company doesn't have a clear idea of what they're hiring for. Um, and so the fail case is, "Hey, we have a great product. Now let's go hire someone to help us grow it." And this might be true, but founders need to get a step more specific on what success or failure looks like for the role. So even if it's not a set of specific KPIs out of the gates, what are the outcomes or systems they want to be in place? So it could be, you know, "Hey, we want our growth modeled in one three," or like, it's more of an analytics person, et cetera. So defining success is, is kinda step one. I think step two is calibrating. So determine some set of companies with, uh, relevant growth patterns to yours. So, you know, um, for you, it might be other kind of, you know, creator or kind of, like, content-oriented businesses, and go have calibration conversations with early growth leaders there. And so at Tilt, for instance, like, we, uh, knew that our growth playbook was gonna be community by community. So we went to talk to early leaders at different, uh, products that grew city by city or community by community. So Grubhub, Uber, Postmates, et cetera. Um, the goal is really to build an intuitive sense of, like, what great looks like. Um, and sometimes those people end up being, being poachable, um, and so that's, that's an important step as well. The third, you know, writing a job spec and then the exercise. The spec oftentimes, as you know, like, the, the best leads are not kind of, like, cold applying on your site, but writing the spec actually forces clarity on what one is looking for. And then the next-

    3. HSHarry Stebbings22:53

       Can I ask, what ma- what ma- Sorry, fine, I'm interested.

    4. MDMike Duboe22:55

       Go ahead, yeah.

    5. HSHarry Stebbings22:55

       What makes a good spec? I never see good specs.

    6. MDMike Duboe22:59

       Yeah. I think (laughs) , yeah, you're right. I mean, I think there's two goals. Like, one is you're marketing the opportunity to people and getting them interested, right? Including marketing them to your investor network and, and people that are gonna wanna go and circulate them. And so half of it's probably just, uh, you know, underscoring what a unique opportunity and moment in time this is for the business, and then explaining why there's a set of growth challenges that are really interesting to work on there. The second piece is actually forcing some, like, I, I do believe that there is still some, um, benefit to articulating, like, what, what a good kinda fit for the company in that particular role looks like. And so maybe the different facets of it could be a specific experience that you won't want to have. I think, uh, this gets a little bit tactical, but, like, if you're hiring someone, if you know that you're gonna be a performance marketing heavy company and you're actually starting to hire someone who's, like, seen, who's been operating at scale, there's probably certain filters where, like, you don't want someone who's just been doing, uh, sales or product to be your, your head of performance marketing, right? So there are different filtering mechanisms there. I think, uh, defining what success looks like, this could actually be, uh, written in a way that's specific to your company. And so maybe, maybe culturally, you actually need someone who's going to come in and be very aggressive and kinda go and challenge preconceived notions of how things are done. And actually putting that in the spec does filter out for certain, like, types of, um, types of personalities.

    7. HSHarry Stebbings24:15

       So if we have this growth spec now and we take it out, we put it on LinkedIn and Twitter and everywhere, give it through our investor networks, all this, uh, okay. So now we have, like, leads come in, which is kind of slightly dehumanizing, but say leads come in.

    8. MDMike Duboe24:28

       (laughs)

    9. HSHarry Stebbings24:29

       Um, how do we structure that process and how do we make sure that we run an efficient hiring process once leads are in?

    10. MDMike Duboe24:37

        Yeah. All right. So again, in- in my experience, there's not that many people out there, uh, that, um (laughs) , that understand this stuff, like, that- that well. And so I do think, like, you're either taking a bet on someone that hasn't done growth before and that's- that's, you know... All of us were there at some point. Or you're probably not running a very high volume process. And so I think of this as, like, you know, I would much rather be targeted. Um, and I think in getting the spec out there, I kind of skipped this, but, like, I don't think of it as, "Hey, we put it on the website and then we see who comes in." It's you're sending it to investors and close friends in your network, as well as target growth communities, maybe like a Reforge or something. I don't think it's, like, gonna be a- a very high volume of leads for most roles. Um, and so one thing that I like to do early on, a- and you obviously have a fantastic network, um (laughs) , you go and reference early in the process. And you could get, like, really important signals on people, uh, with reference calls. Obviously you want to respect the candidates' confidentiality, um, but th- there are ways to actually, you know, kind of just... I think one of the biggest mistakes people make is doing references too late and kind of treating it as a formality. Doing them early on, I think, is a- is a great way to kind of filter. And then I think, you know, um, there are a few... Once you actually do get people in process, I do think there's a role for, like, early filtering questions before kind of, like, a broader exercise later. And so one, I think, you know, one of the questions I really like to ask people is, "Pick your favorite product and tell me how it grows." Uh, it's a really simple question, but it kind of gets at whether someone understands, like, the system and is able to think holistically versus specifying just one case study or one anecdote. Um, uh, and it also covers both, like, left and right blain- brain thinking. And so mo- most systems should be grounded in both quantitative and user psychology, and I think that's, um... You know, this is, uh... Tha- that's, like, one good question to ask for that. Um, uh, and so you could actually even ask that before someone actually, you know, comes in the door, uh, just as a filter to see if someone actually is thinking the way you want. And then there's a bunch of exercise questions I'm- I'm happy to talk about- about later.

    11. HSHarry Stebbings26:34

        Well, I- I want... Before we t- dive on the exercises, I- I love that in terms of, you know, "Pick your favorite product and tell me how it grows." I was thinking for a minute, "Shit, what would I answer?"

    12. MDMike Duboe26:41

        (laughs) .

    13. HSHarry Stebbings26:41

        Um (laughs) , my question to you though is like, what other questions are there? Because I- you- I have founders and they're like, "Uh, wh- wh- what else do I ask?" So what, are there some others which really just, like that question, can reveal a little bit more about the quality of the candidate?

    14. MDMike Duboe26:59

        What I'm about to say, in some- some ways is a cliche interview question, but I think it's important for growth, which is, like, "Tell me about a time you failed and what happened from that." I think for- for growth, one of the important things that you're looking for is someone who's not afraid to fail, right? Failure is part of the experimentation process and actually, like, the worst thing one could do (laughs) in a growth role is go and try to cover up failures or- or just, like, n- not acknowledge they happened because what an opportunity to learn. And, um, and I think that's- that's like... Y- you know, you are looking for someone's risk appetite, but then kind of appetite to go and just put themself in the stream of learnings that oftentime comes from- come from failure, and then go iterate on that. And so that's one. There's, um, a few that get a step more tactical, which is like, "Show me your daily dashboard," is- uh, is one that I like. This maybe gets a little bit deeper and it is... Can be used in an exercise. It could also be used in a- in a live kind of conversation where you just ask someone to write it out on paper. Um, but you're looking for someone who's analytical in nature with high signal-to-noise and is able to tie data back to a business context. Um, and if they're too complex or, like, you know, showing too many metrics or they're unwieldy with it, that could be a red flag. You know, so that's... That- those are another couple ones I like. I mean, there- there's (laughs) a much longer list, but I think, uh, hearing specific anecdotes through references and actually through experiences they had in the seat, ultimately those are most important and getting as specific as possible is kind of just general- general guidance.

    15. HSHarry Stebbings28:15

        So I really like those three questions as, like, a foundational layer.

    16. MDMike Duboe28:18

        Yeah.

    17. HSHarry Stebbings28:18

        You mentioned exercises there as well.

    18. MDMike Duboe28:20

        Yeah.

    19. HSHarry Stebbings28:20

        When we think about tests or exercises, what can we do to go a little bit deeper to assess their quality and what are we looking for in those tests and exercises?

    20. MDMike Duboe28:29

        Yeah. So there's a- there's a couple more that are really an extension of what we're talking about. So, um, one that I like is, "Bring me a prioritized experiment roadmap for X feature," right? One of the important points of running a growth team is, like, you need to have a system on triaging different experiment ideas and- and, um, really having an ROI mindset. So some people are gonna come in and bring a laundry list of everything they wanna go test, down to, like, button colors, uh, without having a system or some higher order of context. And- and sometimes... I think that's a fail case actually for- for kind of a new head of growth to just come in and say, "Hey, I wanna have an impact. I'm gonna- just gonna go and test everything and be the A/B tester." And, uh, if you're doing that without kind of, like, you know, high order of context of what's actually gonna move the needle on a business, that's problematic. And so, prioritization of an experiment roadmap is- is one way of getting at that.

    21. HSHarry Stebbings29:15

        But what... Like, if I'm a founder, how do I do that? Do I give them a problem and tell them to figure out the growth model around that problem? Like, j- can you just help me literally? I'm really thi-

    22. MDMike Duboe29:27

        Yeah. Yeah, yeah. Sure. So let's think about it. So all right (laughs) , I'll go back to Facebook, right? 'Cause

    23. NANarrator29:32

        (laughs)

    24. MDMike Duboe29:32

        ... a great growth team early on. Like, I know that one of the things they actually put the growth team on was when they spun out, uh, Messenger from the core app, uh, it was the growth team that actually ran (laughs) the product on that early on to, like, drive a bunch of adoption to it, right? And so one thing, uh, one question there could be... And it actually... This is separate from going and writing a whole growth model. Although, it- it- it's probably helpful context to have one in place, but if you actually say, "Hey, your job is to come in and actually grow DAUs on Messenger from- from X to Y, what's your three-month roadmap on how to go- how to go and do that?" And, uh, so it's... That's how I'd ask the question. Yeah.

    25. HSHarry Stebbings30:05

        Got you totally. No, that makes total sense.

    26. MDMike Duboe30:07

        Yeah, yeah.

    27. HSHarry Stebbings30:07

        Are there any other exercises that we can/should/would do to understand quality?

    28. MDMike Duboe30:13

        Yeah, I think writing the growth model is one. And we- we talked about this a little bit earlier, but kind of write out a growth model for X product. Um, and if- if... You know, it should be relevant to the business that you're running, so if you're running a marketplace company, have it be another marketplace business, um, just so people understand, like, the set of levers and the interplay for that particular type of business. Um-

    29. HSHarry Stebbings30:30

        Do we give... Sorry. Do we give them time for these exercises? 'Cause that... I mean, it takes some cognitive loads (laughs) .

    30. MDMike Duboe30:35

        Yeah.
12. 32:17 – 33:52

    Lessons from Keith Rabois

    1. MDMike Duboe32:17

       I like going back to, Keith Rabois gave this awesome talk like eight years ago at startup school on being a great operator. One point that always resonated was around barrels versus ammunition. I don't know if you've heard this before.

    2. HSHarry Stebbings32:27

       No.

    3. MDMike Duboe32:27

       Um, but, you know, he, he basically states that all companies need high quality people in both ammunition roles and then barrel roles. But no matter how much ammunition you have, uh, if you only have five barrels, you can only do five things simultaneously, right? And so as you're hiring people, just keep an eye out for who those barrels are, and when you find one, do everything in your power to keep them engaged, throw more responsibility at them, more equity, whatever, et cetera. Because that's ultimately determining how much you can get done as a business and how fast you can move. And so I think, like heads of growth... In my experience, and obviously I have some bias here, but, like great growth people, especially those who join early, can be those barrels that a company really needs. And I think, you know, one that I just c- uh, I'll go back to Fair, like uh, Olivia was the, was the first, um, kinda PM there, and early on, uh, initially led growth and then eventually like most roles in the company over some point in time. Like a lotta companies have this individual and they're oftentimes not e- like as publicly talked about or whatever, but they were the first barrel in that company, and when you find that person, man, you, uh, (laughs) you do whatever it takes to kinda keep them around, um, uh, because-

    4. HSHarry Stebbings33:35

       Can-

    5. MDMike Duboe33:35

       ... they'll probably hire other barrels too.

    6. HSHarry Stebbings33:36

       Can I ask salary range? Just-

    7. MDMike Duboe33:38

       Yeah.

    8. HSHarry Stebbings33:38

       ... hit me with some... Uh, I tweeted today, (laughs) so I'm gonna be direct with you.

    9. MDMike Duboe33:43

       (laughs) Yeah.

    10. HSHarry Stebbings33:43

        I tweeted today, "Founders, when, when you are asked for your revenue, if you start with anything but a number, you are wrong." (laughs) My Twitter at-

    11. MDMike Duboe33:51

        Yeah. Yeah. Like trying to not get myself in trouble

13. 33:52 – 35:36

    How Much Should You Pay a Growth Hire?

    1. MDMike Duboe33:52

       here too, but yeah, sure. I mean, I don't... Um, uh, all right. Series B company, um, someone who's kind of, you know, probably mid-career, right? 'Cause you actually don't wanna hire execs too early on, but it's also not someone who's, you know, a few years outta school. Probably you could go between 150 and 250, um, in salary, uh, and then maybe like a sliding scale, uh, you know, between c- cash and, and kind of equity. Um, and I think equity could go up to... I mean, I don't know, for a series B company, I mean at, at the high end these people could be getting, you know, north of a point. Um, I think, uh, if you're already series B and you've taken some dilution already it might, it might be, might be shy of that, call it. You know, but, but you should be willing to part with, you know, half a point to a point I think for people like this.

    2. HSHarry Stebbings34:37

       I thought the salary would be higher actually-

    3. MDMike Duboe34:38

       Yeah.

    4. HSHarry Stebbings34:38

       ... if I'm honest. Uh, but that's fascinating. No listen, and I totally get the ranges there and so, you know, there's the caveat of, you know, the ranges, so for me.

    5. MDMike Duboe34:45

       Yeah. Look, I mean, I, I think there was a period of time when, through personal experience, right? Like I mean these things get up to, it could be north of 300. Um, typically that happens a little bit later when a business is like more proven. Um, I think as you're saying that, you're right, 150's probably on the low end, uh, and that would be someone quite probably junior that who might actually opt for more, for more equity, maybe go up to a point and a quarter. But, um, but yeah, I think like I would be hesitant if someone were asking for a whole lot more than like the high end of that range for a company that's like not really proven yet. Again, I might have a bias towards like more of the companies I work with are like a little bit earlier. But yeah, maybe it, maybe it's, you know, maybe 300's the top end of that range, but I- certainly anything north of that would be, would be problematic I think.

    6. HSHarry Stebbings35:26

       You said about loops there, and you've said about loops before in our conversation, and, and it took me to a sentence that you said to me before, which is, "The importance of operationalizing growth as a set of loops

14. 35:36 – 42:11

    Loops vs Funnels

    1. HSHarry Stebbings35:36

       versus funnels."

    2. MDMike Duboe35:37

       Yeah.

    3. HSHarry Stebbings35:37

       Can you help me? What is a loop? What's an example of one?

    4. MDMike Duboe35:40

       Yeah. All right. So, uh, growth loops are a concept that, uh, (laughs) again, I referenced Reforge a few times, it was popularized there, and I have to drop (laughs) Greylock here for a moment 'cause Kevin Kwolek and Casey Winters, two of the people that kind of like, uh, made this concept, and they were at Greylock at the time also working on Reforge. I think in general the definition for loops is like they're, uh, closed systems where the inputs through some process generate more of an output than reinvest it back into the input. And so there's different types of loops. I, I referenced the content one from Pinterest early on, that's actually a good example. Like a user onboarding and using the product generates... The output of that generates more content that goes and feeds back into the search algorithms (laughs) that is the input into inquiring new users. Right? And so like that, like basically usage begets more usage, new users beget more users, like that, that's really the concept that you're looking for. And so loops, they're powerful because they loot to... They lead to compounding growth systems versus typically funnels, you know, are, are more linear growth trajectories that will oftentimes decay with, um, with scale. And so the way to engineer loops oftentimes involves kind of product efforts versus, versus just marketing, and that's when, when we talk about growth, that's a concept that's kinda fundamental to it.

    5. HSHarry Stebbings36:48

       So totally get that in terms of the circularity of loops and how it feeds back into each other. What's a funnel then? Just so I have that clearly.

    6. MDMike Duboe36:55

       Yeah. I mean, that's, it, the traditional way that marketers think is, is funnels. So just looking at, it's a-... very common way of just looking at the path of marketing or growing a business. So one framework, I think this might be Dave McClure's, but, um, it's the pirate framework AARRR, you know, so, um, uh, A-A-R-R-R. So top of funnel really starts with awareness, um, then acquisition, activation, retention, revenue, and some might add referral to the end. The problem with this is this leads to siloed teams. Typically brand marketing might do the awareness stuff, then you have performance marketing doing acquisition, and then that might get handed off to some conversion PM that's working on activation. Um, and so you're really missing opportunities to have interplay between these steps and go and reinvest outputs from one step into the other. For some businesses, again, like e-commerce stores, like, it's just the most practical way to look at a business. So it's not like, you know, um, funnels are bad all the time. Uh, but I think, uh, if you look at your growth this way, you will typically see a degradation of performance with scale. And that- that's- AARRR is probably the best, you know, the most common framework for funnels, yeah.

    7. HSHarry Stebbings37:57

       So when you say about operationalizing growth as a set of loops versus funnels, what does that mean now we know what loops and funnels are? (laughs)

    8. MDMike Duboe38:05

       Yeah. All right. So when I think about the practice of growth, it's about like building distribution strategy into your product strategy, and then finding harmony between products, channels and monetization. And so this is very different than, uh, saying, "Hey, we have a product team that's going and building stuff," and then we have a growth team, whether that be marketing or sales or whatever, going and growing stuff. And I think like the whole practice of growth (laughs) is about like, you know, creating more harmony and actually introducing distribution strategy into your product. And so part of getting at this is org structure, right? So as I mentioned before, structuring an org around a funnel creates silos, um, and teams will optimize at the expense of one another. And so I gave the Stitch Fix example of like, hey, I could send a bunch of shitty quality leads through and then, uh, and then retention is hit. Um, so when your company thinks in terms of loops, teams are forced to think about the interplay between different components. And so it's less about road mapping tactics to reach some local optima on a specific metric and more about seeking these compounding results. And so most teams decide that cross-functional teams are- are kind of the best solution. And this is a core part of operationalizing is I think these cross-disciplinary teams also come up with better ideas. But the important, like other things that might kind of fall under operationalizing is going and redefining new interim metrics and saying, "Hey, like this is actually something that lives between acquisition and retention, but this is actually gonna be, you know, this maps more closely to the North star of our business and this is what we're gonna try to move."

    9. HSHarry Stebbings39:28

       If we think about optimizing loops, we need to build this like habit of experimentation and iteration within the business and learning. Uh, how do we build a process around that? 'Cause there's a lot of kind of buzzwords there.

    10. MDMike Duboe39:40

        Yeah. (laughs) Yeah.

    11. HSHarry Stebbings39:40

        Iteration, experimentation. How do we do that?

    12. MDMike Duboe39:44

        Okay. Yeah. So there's, there's two principles, you know, I try to emphasize before getting into the, um, mechanics of how you run this process. I think one is the best ideas could come from anywhere within the org. So reducing friction to bring forth ideas is something that I think the head of growth should- should think of themselves as responsible for. And the second is like the only real failure is not implementing learnings from an experiment. So you need to have a culture where it's actually okay to, um, to take risks and fail in the spirit of- in the spirit of learning. Um, any process could sometimes be, uh, have a negative connotation as, hey, it slows you down, and, uh, you know, sometimes people that are hyperaggressive and wanna move fast end up being process averse. So really when I think about process here, it's- it's designed to ensure we're working on the right set of things and are then going and compounding learnings. Uh, it's not to like force unnecessary approval layers or- or, um, or slow us down. So I think that mechanically like the process I've introduced in both the companies I- I led growth for, there's- there's kind of four main components of it. So I think first is experiment one pagers. Um, so anyone could submit an experiment idea, anyone, e- not if you're, even if you're not on the growth team. But we built this very simple, uh, kind of one pager framework that included an objective, hypothesis you're testing, uh, the design or resources, uh, required to execute the experiment, timeline, so how long you need the experiment to run, and then what success, uh, quantifiably looks like, so you're not actually going and having revisionist history and like, "Hey, it actually did work even though, you know, the data showed this." And then finally, the next steps that one takes if the experiment fails or succeeds. So when you have that one pager, those ultimately fall into a triage list, which is most of the time is just a Google, a Google Sheet. So in one spreadsheet, anyone in the company could go and look at a prioritized list of experiments and see what's running at any given time, what were the results of ones that ran in the past? And also, you know, the head of growth and the growth team should be triaging these. And so one framework that's used to triage that's common is the ICE framework. So impact, confidence, level of effort. You score every idea on these three attributes and it's a little bit rough, but that kind of prevents the test everything mindset and the stuff that is the right balance between high impact but, you know, maybe not high cost and a reasonable level of e- uh, confidence that- that it might work. Uh, those will rise to the top.

    13. HSHarry Stebbings41:53

        I- I love that in terms of the experimentation one pager.

    14. MDMike Duboe41:56

        Yeah.

    15. HSHarry Stebbings41:56

        I- I haven't actually seen that strategy before, and, uh, so I love that.

    16. MDMike Duboe42:00

        Yeah.

    17. HSHarry Stebbings42:00

        My- my, I also think it's great because the biggest problem I see is growth teams come in and try to experiment on things they've already been experimented (laughs) on.

    18. MDMike Duboe42:08

        Yeah.

    19. HSHarry Stebbings42:08

        But because there's no documentation, it's like they didn't know it happened

15. 42:11 – 45:15

    How to Codify Lessons Learned

    1. HSHarry Stebbings42:11

       at all. My question to you is, when you think about documentation and codifying the lessons, like the learnings from those experiments, how do you think is the right way to do this? Is this an Notion doc? Is this a Coda doc? Is it a weekly meeting that just the growth team sit in on?

    2. MDMike Duboe42:27

       Yeah.

    3. HSHarry Stebbings42:27

       How does that work?

    4. MDMike Duboe42:27

       Yeah, yeah. So two piece, it's good, you, these were actually the last two steps of the process I was gonna get at, which is I think like having, uh, so we would do weekly experiment reviews, uh, as a growth team. Every week we had a meeting on completed experiments or anything that completed, uh, over the past week, uh, the PM or whoever was responsible for it would go in and present on that. Uh, lessons learned, implications, then go, and suggestions for other functions too that were sitting, uh, around the table there. And then we would use that form to go and kick off new experiments, right? And so anything that was gonna go live or that was kind of in process, like we would go and discuss those too. So that's within the growth team. I think company wide is- is, uh, equally, if not more important. And so the, and this is practical at certain company scales, like at Tilt, I don't know, we were 100 people and we would do this for every all, we did weekly all hands and every all hands, the growth team would get up there and talk about these ideas and sometimes like engaging the company was important. So we would do sometimes like a guess which variant won game (laughs) . And it was- it was fun. It actually helped spark curiosity from different corners of the org on, hey, you know, this, um...... uh, this intuition or kind of belief that I had on a certain part of the product was actually wrong and the growth team went and kind of invalidated that. And so yeah, like, communicating that out, um, I think live is best and weekly growth team meetings and then kind of some presence at regular all hands for, for probably the most impactful learnings, uh, specifically, I think, is important.

    5. HSHarry Stebbings43:45

       Can I ask, what makes good learning versus bad learning?

    6. MDMike Duboe43:47

       (laughs) It's, it's hard to answer with precision. I mean, I think in general a good learning is specific enough to impact the way you move forward, um, on the next iteration of a product or strategy. And so a bad learning might be one that's, you know, not quantified or not specific enough to change your core product strategy. A bad learning also might be one that's just held within a single function and not propagated out to impact other teams, and so, you know, paid marketing is easy. Like, you know, a learning that you get from spending millions of dollars (laughs) on, on, uh, Facebook ads on, like, what creative or copy, like, resonates best, that should definitely inform your messaging on the product. And if th- if those learnings don't kind of make its way out, like, that's, that's kind of a, you know, it's a missed opportunity.

    7. HSHarry Stebbings44:27

       Yeah. I totally get you. I've actually seen some where there's ambiguity as to conversion, and so you misalign what caused an uptick in conversion and it's actually not what you thought it was. So in certain cases it was like, you know, increasing spend on Facebook ads on Friday evenings, but that Friday evening also happened to be World Cup evening-

    8. MDMike Duboe44:46

       Yeah.

    9. HSHarry Stebbings44:46

       ... where people were buying more X. And it then caused this, uh, misalignment 'cause people then spent more on next Friday evening and it wasn't the same, and so it led to, like, wrong actions. Do you see what I mean?

    10. MDMike Duboe44:56

        Yeah. This is precisely why, by the way, having, like, uh, an- like, good analytics function in-house is really important (laughs) 'cause, like, they'll, they'll keep you honest on experiment design. Sometimes it's gonna be hard to isolate all the variables, but if you're running a test, like, you need to hold other variables constant. And sometimes, like, software (laughs) , uh, as great and as optimized as your others might be, like, d- it won't, won't

16. 45:15 – 55:31

    Paid Marketing Tips

    1. MDMike Duboe45:15

       capture this stuff.

    2. HSHarry Stebbings45:16

       Now, I, I, I have to dive into paid marketing. It's where you're an OG, uh, according to so many people, but especially Mike who you worked with at sht- Stitch Fix.

    3. MDMike Duboe45:24

       Mm-hmm.

    4. HSHarry Stebbings45:24

       Uh, you said that paid marketing is, uh, I love this, an accelerant and not a crutch. Hit me, my man. What does that mean?

    5. MDMike Duboe45:32

       Yeah (laughs) . Well, you know, it's funny 'cause, like, my, I do harp on this stuff now. At Stitch Fix, my job was to run a marketing budget, right? And so (laughs) like, I, I learned, uh, there's a lot of power, also with power comes great responsibility (laughs) , and so there's, there's a lot of lessons I learned here, also a lot of stuff on what not to do. Right? So what I mean by that comment, so all right take a step back. Like one measure of product market fit health is what happens when you turn off all non-organic acquisition activities, and so ideally you should see some ongoing user base that's retained and ideally generating new users, even if at a much slower clip, right? If you don't have that, you don't have product market fit. Um, I think going too heavily into paid marketing too early can lead to a number of problems. Paid marketing is relatively simple and straightforward to go and acquire new users, and so it gets kind of addicting when you're more likely to design a single discipline marketing function and miss the opportunity to do more challenging, kind of cross-functional initiatives when you see the magic of being able to put money into the Facebook machine and deliver users back. The thing that many people miss early on is that paid degrades with scale. Yeah, everyone says, like, there, that, you know, you'll get better at it so you'll fight kind of the laws of gravity, uh, that might happen in, in a short term, but in a long term time horizon, performance always degrades. That's just how it works. And so you could really get false signal on early tax as a business, um, when at low volume and end up with a business maybe a year or two down the line whose economics just straight up don't work, and that can be very, very problematic (laughs) given the speed of the feedback loops here, it's addicting, uh, but I think if you haven't kind of, like, done the harder stuff up front, like, you could really just head down a path you don't want.

    6. HSHarry Stebbings47:01

       Sorry, I'm just too interested. You've got so many things that I want to pick up on-

    7. MDMike Duboe47:03

       Yeah (laughs) .

    8. HSHarry Stebbings47:04

       ... but, like, what's too heavy? Just for founders listening, what's too heavy and what's the right mix early of, like, organic to paid?

    9. MDMike Duboe47:11

       Yeah. Man, I mean, it's gonna vary a lot by business, right? Like, if you're, if you're a business that's, like, an e-commerce, you know, uh, store, I mean, you're probably gonna be, I don't know, 30 to 50% like paid marketing, right? And so, like, getting (laughs) if you see a business that's north of 50 for any type of business, that's, that's probably, like, a flag. But again, this answer itself, th- this question itself is flawed, right, because I think this goes back to the point on incrementality, attributing a single source of acquisition to a given user, like, is usually, like, a fallacy, right? And so, um, I'm not dodging the question here, but I just think it's, it's, like, even this line of thinking actually, um, is, is part of the problem. Um...

    10. HSHarry Stebbings47:51

        I saw the other day it takes seven to ten touch points with a brand for you to, for a single user to convert, so if we take that as an example, you could see it in a billboard on the highway and then also the Google ad and then the Facebook ad and then it's like, "Well, where do you attribute true success in terms of channel performance too?"

    11. MDMike Duboe48:08

        Yep. Yeah. Yeah. And the caveat on, on the answer on kind of, like, accelerant not a crutch thing is, like, most businesses don't find their one channel that works, and so if it needs to be paid, like, that might be okay, just make sure you have enough room in your AOVs or, or customer value to support that, and so, you know, the payback calculation is very important.

    12. HSHarry Stebbings48:26

        You said there about few people actually finding their channel. I'm with you, and then I have some companies that find it and it works, and I m- sit down with the teams and they go, "Ah, but we need to diversify. We need..." And I'm like, "You're getting too cute too soon."

    13. MDMike Duboe48:39

        Yeah.

    14. HSHarry Stebbings48:39

        "If it's working, just, like, pummel it."

    15. MDMike Duboe48:42

        Yeah.

    16. HSHarry Stebbings48:42

        Do you agree or am I actually leading them down (laughs) the wrong path as most VCs do (laughs) ?

    17. MDMike Duboe48:46

        Completely agree with you. No, I, I do agree, assuming that you're talking about early stage companies.

    18. HSHarry Stebbings48:51

        Yeah.

    19. MDMike Duboe48:51

        Where, where I disagree is, like once you're later stage, like I'll take a Stitch Fix anecdote, right? Like we... This was around 2016, 27- 2017, Cambridge Analytica, do you remember the whole (laughs) Cambridge Analytica thing? Basically-

    20. HSHarry Stebbings49:01

        Oh.

    21. MDMike Duboe49:01

        ... like Facebook ads. There's a lot of kind of, um, conspiracy on, like, what exactly made Facebook ads not perform and for everyone at that time, but there was a period of time when, like, the shit just wasn't working for people and performance took a big hit basically across the board. And we had a constraint that I set with my team was we would not get more than 50% concentrated in any one channel even if it were short term optimal to do so, because part of it, and we were getting closer to IPO, but, like, you don't want to be too exposed to any one channel. And there's just a, you know, ad scale, there's a lot of kind of, you know, just diversification risk. And so we actually weathered through that just fine (laughs) even though Facebook took a hit, we were, we were nimble enough to be reallocating during that time. We had a broad channel mix, uh, where we h- we were running a pretty diverse portfolio at that time, but early on I think, I totally agree, it could be problematic, and actually there's all sorts of other reasons why-... you don't wanna be too broad early on. Like, it just makes measurement harder too. You're looking at more interactions, um, between channels that are harder to capture. And so, I think at scale you wanna be diversified. Early on, find your one. Ideally that one channel's (laughs) like not necessarily paid marketing, but yeah. I'm, I'm, I'm with you on that, Harry.

    22. HSHarry Stebbings50:03

        And you've done paid marketing at Stitch Fix, you've done paid marketing at Tilt, you advise many companies now as an investor on paid marketing and doing it effectively. Broad, horrible question, but, uh, what have been some of the biggest lessons for you in terms of what it takes to do paid marketing really effectively, and where do people go wrong?

    23. MDMike Duboe50:20

        Well, I think... I harped on this measurement thing earlier because I think... and look, this might be changing now with like, uh, the IDFA stuff and kind of ATT, uh, which is its own (laughs) conversation. But I think one of the lessons I had in doing this stuff at scale was, I started buying Facebook ads in 2012 and, and at that time there was a lot of alpha from just being like, a savvy media buyer, and like, the people I used to learn from and talk with were like, these, you know, uh (laughs) , basically degen, uh, growth types that, you know, would, um, just continue to try to find kind of like, basically arbitrage opportunities. And, uh, I'm talking specific to Facebook but this kind of applies across most channels. Like, you know, that type of, you know, alpha gets arbitraged away over time and ultimately what, what makes one, uh, great, or the only sustainable advantage on, on channels, um, is having great measurement, being sophisticated at measurement, and then having great volume of creative, um, and, and great creative that performs. And so ultimately (laughs) , like, you know, the practice of performance marketing gets back down to, you know, do you have a unique kind of user hypothesis and are you generating creative that resonates with them a- at enough scale? And so like, some of the biggest, most impactful changes we made at Stitch Fix were lowering the bar to actually like, creative content we just put out there. So rather than having very high produced kind of, uh, video ass- TV kind of quality video assets, let people shoot stuff on an iPhone and just get a lot more out there and feed it into the algo. I think the, the biggest lesson I will go back to is incrementality testing as, as like a real north star, and this is... Like, so many marketers just rely on these either overly simplistic last click attribution models which give basically 100% of your credit to, to one channel, um, which oftentimes looks like (laughs) search just because it's the most high intent channel you have in your mix. Or like, some black box model that you're paying millions of dollars a year for to go and assign fractional credit and, and try to get you precision on like, optimizing your, your channel mix down to a T. Like, the reality is, is, you know, impact is rarely that direct and so, uh, that doesn't mean that you shouldn't be measuring stuff, and I think a lot of brand marketing gets, you know, it's kind of like, "Hey, this is marketing that's not measured." I would argue actually brand marketing should be held to performance guidelines, just on a longer time horizon. But incrementality testing, I think, you know, involves running holdouts across channels that actually incur a cost, but help you... I'll, I'll take a TV example, right? So this is actually an anecdote at Stitch Fix. TV was a important channel for us over time and we ran it out of our performance marketing group, it wasn't a brand marketing channel. Typically when you're running TV the, the measurement method you will use is called spike analysis. So, run a spot and you get post logs back from whoever you're buying TV from, uh, basically, uh, down to the minute. If you look at, call it a seven minute window around the time a spot airs, uh, the lift in traffic above what their baseline traffic should be at that time gets attributed back to TV, and then you could apply conversion assumptions and that's kinda who comes in. That's gonna make your TV look very expensive, right? Because like, that's ignoring any halo effect or kind of lift on other channels. And so for us, like, when we wanted to decide, "Hey, uh, how much do we wanna scale up TV?" We ran... and w- we were public when we did this, we were getting a bunch of like, analysts covering us being like, "Hey, Stitch Fix went off TV. Like, are there problems?" But we ran an eight week holdout test where we actually paused national TV advertising, and we would always buy nationally because it was a lot cheaper from a CPM standpoint to do so. We paused national for eight weeks, we picked five regions and we went and go bought local TV spots and we measured the overall lift in those markets and the interaction between other channels that we were running, and came up with awesome insights on actually what was the interplay from TV and our Facebook ads and, and what was actually the true kind of like, incremental CPA. And when you understand incrementality you could actually go back into your kind of a- whatever attribution model you're using, whether it be last click or whatever, and go and apply incrementality multipliers to them, and then you actually are getting, you know, maybe the sense of precision that a lot of growth marketers are looking for. But without incrementality testing you're really... you could be drawing like, very wrong conclusions on, on kinda how your channels are working.

    24. HSHarry Stebbings54:11

        I love that example. My question to you when I was listening to that is, okay, if I'm a founder, how do I know how to allocate budget to paid marketing? Like, what's too much? What's too little? I know that's a really base question but like, uh...

    25. MDMike Duboe54:23

        Yep.

    26. HSHarry Stebbings54:23

        How much?

    27. MDMike Duboe54:24

        Yeah. Well, I think, you know, there's kinda tops down and bottoms up. I, I think maybe the most teams should actually have some return on ad spend th- like, either ROAS or kinda payback threshold. And so, it really comes down to like, what's economical for your business at a- at any point in time, and you can be tight with payback. So like most, most consumer companies, if you're not paying back, like, if you're a subscription business and you're not paying back within a year, that's probably problematic. Uh, ideally if you're e-commerce you're paying it back on first transaction because, you know, a year is making all these conversion and repeat assumptions that you might not have at that point. And so I do think ultimately payback, payback period's probably the, the guiding metric that you want to make that decision. At Stitch Fix, like, from a gross margin payback sta- or sorry, contribution margin payback standpoint, uh, like, a year was our final threshold I think. But we had enough data on, you know, what w- what was repeat, um, where we kind of were able to like, be like relatively kind of tight on that. But yeah. It, that, the how much kind of ultimately I think should boil down to, uh, whatever payback makes sense for your business and typically that's either gonna be first transaction or like, some period of time.

    28. HSHarry Stebbings55:29

        Yeah. I, I, I totally get you. I,

17. 55:31 – 58:26

    Why CAC to LTV is a Flawed Concept

    1. HSHarry Stebbings55:31

       I wanna finish on one s- small, small question of CAC to LTV which kind of is a metric that defines so much-

    2. MDMike Duboe55:37

       Yeah.

    3. HSHarry Stebbings55:37

       ... of founders' decks and our industry.

    4. MDMike Duboe55:39

       Yeah. Yep.

    5. HSHarry Stebbings55:40

       Um, why do you think it's a flawed metric, my friend?

    6. MDMike Duboe55:43

       Yeah. So there's two primary flaws with it. I think one is just this notion of lifetime (laughs) , which is the L in LTV. Like, early in a company's journey it's rare to have a real idea of what a reasonable customer lifetime is. Like, if you're two years in, like, how are you gonna say you have a five year lifetime? Like, it's really... You know. Um, so that, that's obviously flawed, and then it's also...... you know, too coarse. So I think many companies will look at this on a blended basis and disregard that there's actually a bunch of variance in customer quality by channel, keyword, audience, um, et cetera. And so the better method, which I was kind of getting at, was payback period, which removes a notion of lifetime. But also, it could be calculated on a more granular level. And so, you know, payback's the however months of growth margin, it- it, cost to pay back the initial incremental CPA. You wanna make sure you're calculating this paid over paid, so use paid CAC and not blended CAC. And then with scale, you could get to more granularity. So not only looking at it on a channel level but actually a keyword level. So at Stitch Fix, you know, you should have different basically CAC thresholds for someone who's bidding on, uh, or someone who's actually searching for, you know, high-priced dresses versus kind of discount shoes, right? That's- that's the important thing. You know, one caveat on all this stuff, I think (laughs) and I'll- I'll go back to... Bill Gurley was on our board at Stitch Fix and I remember he- he once wrote an article people should read called The- The Dangerous Seduction of the LTV Formula. I remember I first learned about this the night before presenting at my first board meeting there, uh, where I was presenting, like, our new paid acquisition strategy as a guy that ca- came in to, like, scale up our- our ad budget, um, and I was just terrified. But he's right, like, the poi- one of the important points he made there is this is a tool and not a strategy. I think too many performance marketers use this formula as a way to justify more budget, and so many people out there are, like, competing on the size of budgets that they manage, and there's these weird kind of power dynamics and stuff. Like, I think at a certain point, having a deeper understanding of user psychology and being great at creative provides more of an edge than, um, some of this kind of, like, mechanical kind of LTV/CAC op- optimization. So anyway, I made a few different points there, but I think the- the primary flaw is, again, I just think this notion of lifetime is the bane one, but also, like, the granularity, you're able to get at that better if you- if you have a payback kind of framework.

    7. HSHarry Stebbings57:46

       I- I think for me, it's also just, like, two things, which is on the customer acquisition cost. As you said, it- it, most often when you do paid, it goes to the most specific and targeted first, and so it'll always be lower and it'll get worse over time, one. And two, on the flip side, it doesn't take into account word of mouth and brand marketing becoming more and more effective over time, which is like Stitch Fix could have seen actually a reduced CAC because daughters talk to their mothers, and mothers talk to their sisters, and sisters talk to their aunts, and suddenly you're not actually paying the same CACs but it doesn't take into account any of that.

    8. MDMike Duboe58:16

       Yep.

    9. HSHarry Stebbings58:17

       Do you see what I mean?

    10. MDMike Duboe58:17

        Totally, yep. Yep.

    11. HSHarry Stebbings58:19

        So I totally agree. Listen, I wanna do a quick fire round, Mike. So I say a short statement, you give me your immediate thoughts. Is that okay?

    12. MDMike Duboe58:25

        Sure, let's

18. 58:26 – 1:01:55

    Quick-fire Round

    1. MDMike Duboe58:26

       do it.

    2. HSHarry Stebbings58:27

       James Beshara question, "What did you believe about growth five years ago that you no longer believe?"

    3. MDMike Duboe58:33

       That growth solves all problems, which is something we used to say back then. But I think growth might mask certain problems, but there's always second order effects and subsequent hills to climb, uh, so it's important to be deliberate and strive for control versus having a growth-at-all-cost mindset.

    4. HSHarry Stebbings58:46

       Andy Weisman submitted-

    5. MDMike Duboe58:47

       (laughs)

    6. HSHarry Stebbings58:47

       ... "How do you best prepare? What do you do to surrender to the flow?" I don't really get this-

    7. MDMike Duboe58:52

       (laughs)

    8. HSHarry Stebbings58:52

       ... but what do you do to surrender to the flow?

    9. MDMike Duboe58:54

       Well, I love that Andy found a way to squeeze in a reference from the best band in the world. Um, uh, outside of reading The Helping Friendly book, I would just say conversations with smart, curious people from a wildly diverse set of backgrounds leads to eternal joy and never-ending splendor. I'll leave it at that.

    10. HSHarry Stebbings59:09

        (laughs) Fantastic. Thanks, Andy. Great shout.

    11. MDMike Duboe59:12

        (laughs)

    12. HSHarry Stebbings59:12

        Um, what would you say is the biggest mistake founders make when hiring growth teams?

    13. MDMike Duboe59:16

        I'll give two. Uh, not referencing deeply enough to contextualize what growth means in that hire's company. So hiring a head of marketing to go run a product function (laughs) might not work out. And then also, uh, the second is probably assuming that, uh, growth is just the growth team's job, um, and setting your org up that way. The person's just, um, you know, destined to fail.

    14. HSHarry Stebbings59:35

        We mentioned James Beshara. Lessons from Thilt on scalable versus non-scalable growth?

    15. MDMike Duboe59:41

        Yeah, I mean, the meta lesson at Tilt was about focus, but- but if I go down to growth, I would say the main lesson, one lesson for me personally was around over-incentivizing usage. Um, we knew that we had a product that grew, uh, contributor acquisition through organizer retention, and so that was our kind of growth model. Um, we often incentivized organizers to come back. Once someone get- gets hooked on a promo, even if it's small, it's very hard to go back to, like, you know, non-incentivized behavior, and so I took this lesson into Stitch Fix. Like, we never discounted any product there, which is rare for e-comm actually and was a core part of the company's discipline. So it would come down to over, uh, incentivizing kind of usage.

    16. HSHarry Stebbings1:00:16

        What would you most like to change about the world of growth?

    17. MDMike Duboe1:00:18

        People assuming that it's a set of micro-optimizations versus, um, versus a holistic kind of s- system which can include big bets.

    18. HSHarry Stebbings1:00:26

        Speaking of it kind of being much bigger than just micro-optimizations, I'm just too intrigued. Do you think we'll see many more growth practitioners in the next few years or do you think it will continue to be this, bluntly, quite exclusive club?

    19. MDMike Duboe1:00:37

        I hope we see more, and I also hope we see more heads of product and heads of marketing that actually just understand these principles and roll that into their functions. And so, yes, I think this discipline is- is kind of making its way out there. I don't know whether that shows up in titles, but y- yes, I do think it will continue to accelerate.

    20. HSHarry Stebbings1:00:50

        I totally agree with you. I think m- most often it's probably ego and insecurity, um, but I speak as a VC and you as a VC too, so we're not ego or insecure (laughs) .

    21. MDMike Duboe1:01:01

        (laughs)

    22. HSHarry Stebbings1:01:01

        Um, (laughs) just kidding, I've only interviewed 3,000.

    23. MDMike Duboe1:01:03

        (laughs)

    24. HSHarry Stebbings1:01:03

        Um, (laughs) , uh, listen, final one, my friend. What recent company growth strategy or company growth strategy, I'll give it to you, uh, have you been most impressed by?

    25. MDMike Duboe1:01:12

        All right. I'll reference Faire another time. Like, I think their B2B referral mechanic was insanely powerful, and early on, like, that was really the only thing that was working for growth and that continued to carry them, uh, this far. I think referral systems and referral engines, typically there's always more juice from a referral program, uh, to squeeze than companies realize, but- but they typically are thought of in a consumer context. I think Faire's B2B marketplace pulling in cross-side referrals, like, that- that was huge and I, you know, I totally admired the way that they built that and kinda scaled it out over time, um, so that's probably the one that I- that I go to.

    26. HSHarry Stebbings1:01:44

        Mike, I've absolutely loved this. I can't thank you enough for- for putting up with my deviations away from schedule, but you've been fantastic. So thank you so much for joining me today, my friend.

    27. MDMike Duboe1:01:53

        Really enjoyed it, Harry. Thanks for having me.

Episode duration: 1:01:55