WP Engine's Jason Cohen: Why churn caps every company's size

1. 0:00 – 5:19

   Introduction to Jason Cohen

   1. LRLenny Rachitsky0:00

      A lot of product teams, a lot of founders build something, it starts to show some success, and then all of a sudden it just stops growing.

   2. JCJason Cohen0:05

      There's a series of questions that I ask to diagnose why is growth slowing? The first question is, are customers leaving? Think about the gauntlet they went through to get to the product. How do they even find out about me? That was hard already, and improbable. They didn't just bounce off the homepage, [chuckles] which is again, improbable, and they got to the pricing page. That didn't scare them off. They actually had the budget and bought the stupid thing, and after all of that, which clearly means they wanted it to work, they're like, "No, bye." [chuckles] What? Like, like just on an emotional level, you gotta go, "Wait a minute, that's terrible!"

   3. LRLenny Rachitsky0:34

      Step two is pricing, positioning.

   4. JCJason Cohen0:36

      Your prices are way too low because you just guessed and you haven't changed them. What often happens is you raise prices and sign-ups don't change. Just think about a company with 1,000 employees and $400 million in re- revenue or whatever. If they see a product that's $2 a month or even $100 a month, the thought is like, "Well, that can't be good enough."

   5. LRLenny Rachitsky0:52

      We position this conversation as how to deal with stalled growth, but it's actually just as useful, how do I grow more?

   6. JCJason Cohen0:58

      Do you know right now which channels are saturated and which aren't? You can't just rely on marketing forever. Just adding one little feature and then hoping we can flog AdWords is not going to work.

   7. LRLenny Rachitsky1:07

      What comes next?

   8. JCJason Cohen1:07

      The last question is, do you need to grow? We all have heard the phrase, "If you're not growing, you're dying." Is that true, or is that the kind of thing that investors use to make founders try to grow even when they shouldn't?

   9. LRLenny Rachitsky1:18

      [music] Today, my guest is Jason Cohen. Jason is a four-time founder, including two unicorns, one being WP Engine. He's not just an incredible builder and entrepreneur, he's also an incredible writer and sharer of product wisdom. He's been sharing his advice online for over 20 years now. I've been a huge fan of Jason's from afar for so long, and it was such a treat to have him on the podcast. There are a million things we could have talked about, and I'm definitely gonna have him back. In this conversation, we spent the entire time talking about his very actionable and a very helpful framework for what to do when your product's growth stalls. I found his way of looking at the problem incredibly practical and real and actionable, and if you're looking for ideas for how to rekindle your product's growth or just accelerate the growth of your product, you're gonna walk away from this conversation with your mind buzzing. Also, I'll add that after 20 years of blogging online, Jason is about to publish his very first real book. It's called Hidden Multipliers. You can now pre-order it online at hiddenmultipliers.com. I am gonna grab a bunch. I bet after listening to this conversation, you will, too. If you enjoy this podcast, don't forget to subscribe and follow it in your favorite podcasting app or YouTube. And if you become an insider subscriber of my newsletter, you get a year free of over 20 incredible products, including a year free of Lovable, Replit, Bolt, Gamma, n8n, Linear, Devon, PostHog, Superhuman, Descript, Whisper Flow, Perplexity, Warp, granola, Magic Pattern, Drake, Cast, Sharpair, dMobit, and Stripe Atlas. Head on over to lennysnewsletter.com and click Product Pass. With that, I bring you Jason Cohen after a short word from our sponsors. This episode is brought to you by 10Web, the company that pioneered AI website building before ChatGPT. In the last three years, over two million websites have been generated with 10Web's Vibe Coding platform. 10Web's Vibe Coding platform is a powerful way to build websites. Think of it as lovable for WordPress, front-end, and back-end. Users can build any website at any complexity: e-commerce, portfolios, information websites, blogs, and it comes with a WordPress admin panel and thousands of ready-to-use plugins. 10Web also offers website generation as an API as a service for SaaS companies, marketplaces, hosting providers, MSPs, and agencies. SaaS companies can embed it via API, so that users can launch AI-generated sites directly inside of their platform, connected to their own data. Agencies and MSPs can get a white label dashboard to manage clients and resell under their brand. Hosting providers can self-host the API builder on their own infrastructure. Check it out at 10web.io/lenny and use code Lenny for exclusive free credits and 30% off API or white label solutions. That's the number 10W-E-B.io/lenny. Vibe Coding platform as an API. This episode is brought to you by Strella, the customer research platform built for the AI era. Here's the truth about user research: It's never been more important or more painful. Teams want to understand why customers do what they do, but recruiting users, running interviews, and analyzing insights takes weeks. By the time the results are in, the moment to act has passed. Strella changes that. It's the first platform that uses AI to run and analyze in-depth interviews automatically, bringing fast and continuous user research to every team. Strella's AI moderator asks real follow-up questions, probing deeper when answers are vague, and surfaces patterns across hundreds of conversations, all in a few hours, not weeks. Product, design, and research teams at companies like Amazon and Duolingo are already using Strella for Figma prototype testing, concept validation, and customer journey research, getting insights overnight instead of waiting for the next sprint. If your team wants to understand customers at the speed you ship products, try Strella. Run your next study at strella.io/lenny. That's S-T-R-E-L-L-A.io/lenny.

2. 5:19 – 8:25

   Jason’s writing journey

   1. LRLenny Rachitsky5:19

      [music] Jason, thank you so much for being here, and welcome to the podcast.

   2. JCJason Cohen5:26

      Thank you. It's an honor to be here.

   3. LRLenny Rachitsky5:28

      It's an honor to have you here. I have wanted to get you on this podcast for so long. You are both an incredible builder and a founder, and you're such a great communicator. You have been writing at, uh, asmartbear.com, which I want to get the backstory on, for so long. How long have you been writing, uh, there, by the way?

   4. JCJason Cohen5:47

      Almost 20 years.

   5. LRLenny Rachitsky5:48

      Oh, wow.

   6. JCJason Cohen5:48

      I started when blogging was cool. [chuckles] And I'm still- I'm waiting for blogging to come back and be cool again, but it's not yet. [chuckles]

   7. LRLenny Rachitsky5:55

      I think it is cool.

   8. JCJason Cohen5:56

      It is? Okay.

   9. LRLenny Rachitsky5:56

      Newsletters are cool now. Yeah.

   10. JCJason Cohen5:57

       Newsletters are cool. Okay.

   11. LRLenny Rachitsky5:58

       I don't know if you saw Twitter now is encouraging long-form writing. There's, like, this articles feature, so I think it's cool. I think you've survived- [chuckles]

   12. JCJason Cohen6:04

       Yes

   13. LRLenny Rachitsky6:04

       ... the trough.

   14. JCJason Cohen6:05

       Okay.

   15. LRLenny Rachitsky6:06

       ... Uh, I was also, uh, talking to Gemini, trying to figure out how many posts you've written. I was like, "Count the number of blog posts on asmartbear.com." How many-- Do you have a sense of how many things you've written on there?

   16. JCJason Cohen6:14

       Yeah, it's not that many. Uh, it's something like maybe a hundred and... Well, I would say between one hundred and fifty and two hundred that I'm proud of-

   17. LRLenny Rachitsky6:21

       Mm-hmm.

   18. JCJason Cohen6:21

       - and probably about three hundred, three fifty, and that's it, over, you know, about eighteen years. And that's because I only write, uh, in depth. Some are long, n- not all are long, but none are short, I guess. And, um, I, I've always had a rule, even though you're supposed to write really regularly, and not just for algorithms, but they used to say, again, back in the aughts, where I started, "Oh yeah, it needs to be, like, really regular, so people know when to expect your thing, and they, they plug it into their day," and all this. So it's always been true that you should be, that, that you should be regular, and I never was because my attitude was, was always: I will only put out stuff if, uh, if it's the best that I can do. It's up to the reader to decide if it's good or useful. Um, and if I... So if I don't have that, I'm just not gonna publish. That's the way it is. And so there's years where I've published once or twice only the whole year. Maybe I was busy or didn't have the energy. Other years where, yeah, I posted, you know, forty times or something. But even then, it's only that, 'cause I can't, I can't do something of that magnitude. And also found unicorns, which I did [chuckles] during that same time, and run them. You know, I can't do that all at the same time, um, and produce a lot. So it's fewer and hopefully better, but that's in the eye of the reader, of course.

   19. LRLenny Rachitsky7:29

       I like when you say, "I've, I've done three hundred, not too many."

   20. JCJason Cohen7:32

       Well, not for eighteen years. That-- Right? [chuckles] Like, over that time, you expect-

   21. LRLenny Rachitsky7:34

       But I think this actually, this is where I was gonna go, but I think this is a really important lesson I've also learned. I always used to tell people the, the key to being successful writing stuff online and just content in general is quality and consistency, but I've just more and more realized quality is actually the only thing that matters, and the consistency doesn't matter. So the only difference is, like, the more rarely you write, the more awesome it has to be.

   22. JCJason Cohen7:58

       It is a lot of pressure. I feel that. And then I tell myself: You-- That will just prevent you from writing anything, and that's not good. So yeah, you tend to want everything you make to be the best thing you've ever made. And on the one hand, I wanna hold onto that because it- it's motivation to be good and not to let the bar slip. On the other hand, you, you can go into a paralysis, which is obviously bad. So yeah, I, I still struggle with that, but I think that's,

3. 8:25 – 18:17

   Questions to ask when your product stops growing

   1. JCJason Cohen8:25

      that is the tension.

   2. LRLenny Rachitsky8:26

      Okay, so with three hundred-ish posts, two hundred you're proud of [chuckles] , there are so many directions we can go. There's a few that I've picked that I wanna spend most of our time on. The first is, you have a really pragmatic way of approaching, uh, growth stalling. And the reason I wanna spend time here is because a lot of product teams, a lot of founders, build something. It starts to show some success. There's-- It's going, it's growing, and then all of a sudden, it just stops growing. And I think that's one of the most painful things to go through, and there's never... I've never come across a, a way to think about: How do I solve this? Because I think a lot of people are just like: "Okay, I guess that is not working. Let's move on to something else." You have a very specific way of approaching this problem, and I wanna, I wanna read actually a, a quote from Will Smith, and this is something that has stuck with me ever since I read it because it's so true. So in his biography, he has this line. People ask him: What's it like to be famous? And his answer is, "Becoming famous is amazing. Being famous is a mixed bag. Losing fame is miserable." [chuckles]

   3. JCJason Cohen9:29

      [chuckles] That's funny. So first of all, I think a lot of people are experiencing this right now. You have a lot of companies that have reasonable products, and they've, their, their growth has slowed. Why? Could be the economy, 'cause it's not as good as a lot of indicators say. We all know that, for example, jobs are not as good as the indicators say. It could be because AI, or the threat of AI, or the expectation of the- of AI, blah, blah, blah, who knows? It also can just be size. As you get bigger, growth slows because you know what? You're not gonna grow two X a year forever, so it slows. Um, there's, like, just mechanical things. So there's many reasons why things slow, and sometimes it's all of a sudden, although then maybe there's some event, like an algorithm changes or, you know, something happens. But actually, I think what's really common is it just slowly gets slower. [chuckles] In other words, it decelerates. But just, it, it, it kind of s- it, I don't-- I wouldn't say sneaks up on you, 'cause n- most people are looking at growth all the time, so it's not sneaky. But it is, it is sort of, um, uh, a gra- a little bit more gradual, where just, like, you just feel more like you're running through mud. Like, ah, God, we're just still doing so much work, and it's not having as much of an impact. And so, um, i- that's what I see. And when I say that's what I see, so I've built four companies. The last one is a unicorn. The one before that is also a unicorn. Their boot- the, the, the previous one was bootstrapped, this one was VC-funded, and I've invested in about sixty startups. Some of them failed completely, some of them were very successful, some in the middle, 'cause of course, [chuckles] right? Um, and uh, so when I say that's what I've seen, this is-- that's the, the context of what I mean by what I've seen. So there's a, there's a, I wouldn't say a checklist, but there's a, there's a series of, of questions that I ask to, to diagnose why is growth slowing in this order, because it's one of these things where the first one that's a problem, i- if you don't fix that, it doesn't matter if you fix one of the ones below. Um, just like if, I don't know, maybe if you had a marketing funnel and there's a step where everything falls apart, and you're like, "Well, I'll, I'll just, uh, tune the bottom of it a little," it's like, that's not gonna work. [chuckles] It's not gonna help enough. Like, you gotta, you gotta go where the biggest issue is. So this is in that sort of order. So the first question is, uh, is: Are customers leaving? i.e., logo churn, right? Churn with N. You can do churn with MRR too, but, uh, just for simplicity, let's say, uh, let's say with customers. And it's the worst problem for a couple reasons. One is, there's nothing you can do about it once it happens. Like, they're gone. There's no saving them, increasing their revenue. Like, there, there's nothing in the future you can do. Also, it's often correlated with things like negative reviews or other things on social media, which is another kind of preventing growth. So it's kind of the two, two, uh, a two-punch thing of like, they're not here, and they may be, like, actively h- hurting your growth, so that sucks.... the math is undeniable, which I wanna talk about, because this is something where, uh, there's a metric I like that is unusual and, um, uh, pe- people find, uh, useful. But before I get to the metric, there's also this kind of visceral thing, which is the customer's saying, "This product, I don't want it." And when I think about the gauntlet they got- they went through to get to the product, they-- How do they even find out about me? That was hard already, and improbable that they see an ad or hear it, and then they clicked, which is improbable, and then they s- they didn't just bounce off the homepage, which is, again, improbable. [chuckles] They actually were like, "Oh yeah, this sounds pretty good." And then they got to the pricing page, and that didn't scare them off. They actually had the budget and bought the stupid thing. Then they went through onboarding, invested their time, et cetera, et cetera. That is a crazy gauntlet that almost no one gets through, and after all of that, which clearly means they wanted it to work, they're like, "No. Bye." [chuckles] What? Like, like just on a, just on an emotional level, you gotta go, "Wait a minute, that's terrible! I'm- I'm fundamentally not fulfilling whatever promise I made or they thought I made," which is whether that's a product issue or a communication issue. Okay, like, there's lots of... But one way or another, like, something is really fundamentally broken just in terms of, like, I'm a product person, so what I wanna do is make a product that other people wanna buy and use, and if they don't, like, uh, no matter what the metrics say, I'm, you know, I'm a- I'm-- we're failing our mission, our customers, whatever. So there's just even that non-mathematical reason to go, "Oh, my God!" Right? So, uh, so to me, that's already enough [clears throat] reason, but the, the, the math is very interesting, and what I find is when I talk to people, especially on Twitter or something, where people are just, you know, yapping around and whatever they're doing, you know, you say thing- I say things like, "You know, anything above three percent per month cancellation is, is, is terrible." And people are like: "Oh, no, it's okay, five is fine, seven, six." Everyone's yapping about what they... And it's very abstract. Like, who, w- wh- is four be- much worse than five? Like, I don't know, and I heard someone else, and blah, blah, blah. It's, it's very, um, I don't know, like, like generic and rough. So there's a different metric that I like to use, which is, uh, wh- which, which, um, which keys off of this idea that I think again, people, uh, don't appreciate, which is cancellations grow faster than marketing, and so cancellations overpower the growth of the company and slow it to a halt, i.e., growth slows, right? To where you literally cannot grow anymore. There's a maximum ceiling of how big you could ever be, thanks to cancellations, and when you know what that number is, it's much more real and visceral and scary. And so just to kind of justify what I just said, just imagine any company, and imagine you just tripled the number of customers that are there and paying, and the same kind, the same age, you know, just the same kind of stuff, just tripled, right? Overnight. So the next month, would marketing deliver more new customers than a month before? No, because marketing doesn't- it- none of your marketing efforts care how many customers you have. AdWords delivers the same number of leads, and [chuckles] you know, SEO delivers the same... Like, it, it does not care how big you are, these, these, these efforts. So you're, you're, you're still gonna be growing at the same rate as you were the previous month. But cancellations, in absolute terms, like the number of customers who leave, will triple. 'Cause you have five percent cancellation, and triple it, okay, so still five percent of a tripled number is triple, right? [chuckles] Like, so this is the point, is that cancellations automatically grow as you grow, even if you're doing everything right, but marketing doesn't. Marketing grows only as fast as you can improve marketing. We all know that's quite hard, actually. It's linear. It's hard to find new channels that aren't trivial. Like, it's hard. And of course, we're gonna do it, but like, it's, it's hard, whereas cancellations grow automatically as you grow, [chuckles] right? So cancellations always overtake marketing for this reason.

   4. LRLenny Rachitsky15:58

      Like, the metaphor here is a leaky bucket, where are you adding enough water to keep up with the leak, essentially?

   5. JCJason Cohen16:03

      Right, except the leaks automatically increase, and that's what people don't appreciate.

   6. LRLenny Rachitsky16:07

      Mm-hmm, because it's a percentage of your entire customer base.

   7. JCJason Cohen16:10

      Yes. See, we say when, in marketing, we say things like, um, "I'm adding a hundred leads a month," but in cancellations, we say five percent. Why'd you say percent? 'Cause it's based on your size, and it's exponential, that's what five percent is, an exponential. And, and so there's this maximum size you could ever be. It's when churn equals growth, right? [chuckles] Like that's, that's the math.

   8. LRLenny Rachitsky16:28

      Yeah.

   9. JCJason Cohen16:28

      So how would you compute that? It's actually quite simple because you, let's say you have this five percent per month, just let's take a number. So it's simply the amount of new customers you add, divided by that cancellation rate. That is the amount that, that is the limit. So let's suppose you add a hundred customers a month, and you have five percent cancellation, so a hundred divided by five percent is two thousand. So a company like that will never have more than two thousand customers, and by the way, as you approach that number, growth is very slow because you bring in a bunch of customers and almost the same number leave, so growth is slowing. Ah, look, we've diagnosed why growth slows automatically at all SaaS companies. So that is why this is the first thing, 'cause it's so- it's such a hard cap limit, and it means that people don't want your product. Like, these are two reasons why it's the most important thing.

   10. LRLenny Rachitsky17:15

       Just to clarify, this is logo churn, this is like number of customers-

   11. JCJason Cohen17:18

       Yeah

   12. LRLenny Rachitsky17:18

       ... not revenue churn?

   13. JCJason Cohen17:19

       Yeah. Well-

   14. LRLenny Rachitsky17:20

       Cool

   15. JCJason Cohen17:20

       ... it is both logo churn and revenue churn. They do the same math. You could say dollars in divided by dollars cancellation rate or number of cu- I've been saying number of customers just to keep it simple because I think when, when you look at it and say, "Wow, we will never have more than two thousand customers," it's just such a, like a, like a visceral, "Oh my God, we gotta do something about that!" [chuckles] You know? Now, of course, one thing you could do is have more marketing, but you know that already. If growth is slowing, you're already thinking, "How do I get more out of marketing?" You knew that. The point is that cancellation is this hard limit pulling you down with all these other really bad either implications or side effects, which is why it's so important.

   16. LRLenny Rachitsky17:58

       Cool, and when you say marketing, just to clarify, this includes basically all growth work, PLG stuff-

   17. JCJason Cohen18:02

       Yeah

   18. LRLenny Rachitsky18:03

       ... marketing, sales.

   19. JCJason Cohen18:04

       Yeah, yeah.

   20. LRLenny Rachitsky18:05

       Yep.

   21. JCJason Cohen18:05

       Right.

   22. LRLenny Rachitsky18:05

       Great.

   23. JCJason Cohen18:06

       Yeah, PLG is nice, but that doesn't, uh... You still need marketing to bring the people in in the first place. PLG just means there's not a salesperson unless you're expanding or some other segment.

   24. LRLenny Rachitsky18:14

       Cool. Yeah, it's like the whole bucket of just bringing new customers in.

   25. JCJason Cohen18:16

       Yeah.

   26. LRLenny Rachitsky18:16

       Awesome.

4. 18:17 – 20:27

   Getting real customer feedback

   1. JCJason Cohen18:17

      Yeah.... So, okay, so assuming you agree, like, "Yeah, I don't like customers leaving, that sucks." Um, [chuckles] so obviously, we've got to find out why they're canceling and do something about it. And the, the, the kind of root issue here is they don't wanna tell you. Like, they're already out the door, they've already, like, stopped investing in you, like, mentally, so the last thing they wanna do is spend time with you, or like really think about it and diagnose it with you. And, uh, I have a funny story about this for myself. So, um, at Smart Bear, people would cancel. We'd put up this, uh, form and, and, uh, a drop-down list, you know, too expensive, uh, project ended, you know, those little stuff like we do, so we could gather data. And um, one of them did have more, uh, more selection than the, than the rest, and I realized it was the first one on the list, and I thought, "Huh, I wonder if people are just picking the first one?" So then ev- then we randomized the list, so everyone saw a different order of the list, and now all the items were picked equally. [chuckles] Like, oh, right, it's complete noise. And, uh, I know other companies have done similar things also with the similar results. So this is, this is a global phenomenon. So okay, so what do you do? [chuckles] Like, the point is, it's hard, right? So the first thing is, what you wanna ask open-ended questions. I, I know it's e- you want to just get a list, but this is the problem. At least with open-ended questions, I mean, most people won't answer, but at least you might be able to get some kind of thing that they generated. And when you do this, the, the wrong way is to ask, "Why did you cancel?" Because again, this allows them to say something really simple like, "Budget," which may or may not be true. I'll get to that in a second. What you wanna do is say: What made you cancel? In other words, what about the product or situation or whatever caused the cancellation? Just phrasing it that way, you get much better results. And I stole this from a company called Groove, who has this great case study online about this very thing. They had an email th- that they sent out, which is a very, a great email, and um, and they started by asking: Why did you cancel? They got 10% usable responses. They changed it, same email to why-- "What made you cancel?" And it's 20% u- usable responses. So this is, this is m- there's like, I guess, maybe some anecdata that this is a good idea. But the point is, you really want them thinking about the product and not just coming up

5. 20:27 – 26:54

   Analyzing cancellation reasons

   1. JCJason Cohen20:27

      with an excuse. The next thing is when you, when you can, the few times you do talk to them, so you wanna like, go into, you know, delve as m- as far as you can into there, 'cause most people won't talk. The temptation is to hear what they generate at first and say, "That's the answer." So, like a really common one is: It's too expensive. I think anyone who's looked at cancellation data at any company will agree that too expensive is often the number one, or at least like top three reason, in one form or another. And that is never, ever, ever the reason. How do I know? Because they already looked at your homepage, read all the stuff, saw what you promised, looked at the pricing page, and decided to buy it. That means it, whatever's in their mind of what it is, is not too expensive. It was-- They already decided with their actions, it was not too expensive. Something else happened, like, but you didn't fulfill the promise that at least they thought you made, or something else didn't work. Or s- you know, now it is possible they lost budget, but that doesn't mean you're too expensive. That means they lost budget. [chuckles] That's a very different reason, right? [chuckles] That's not that you're... So it's sort of like, um, th- this happens in, uh, in healthcare, for example. So when someone dies, the doctor has to write the, what's called a proximate cause, which is what-- why did they actually die? But then you try to also write down the real reason. So let's say someone comes in and they... The, the proximate cause of death is they stopped breathing. Well, you could stop there, and that's like listening to, "It's expensive," and going, "That's it!" Well, why did they stop breathing? Um, because they, they had, they, they, uh, ran their car into a telephone pole and were injured so much that eventually they stopped breathing. Why did they run their car into a telephone pole? 'Cause they passed out at the wheel. Why'd they pass out at the wheel? 'Cause they had undiagnosed diabetes. Now we're getting somewhere. It still isn't just one root cause. Another, as a sidebar, I hate the idea of a root cause. Complex systems do not have one root cause. They often have many interlocking things that could be done to detect earlier or to change it, or to reduce or, mm, and not one root cause. So the root cause analysis to me is, by the way, an incorrect thing. I'm explaining why right now with the healthcare, right? Because, well, what about this undiagnosed? Well, maybe part of the problem is we have a healthcare system that isn't preventative, and part of it is that, but they didn't go to the doctor anyway. But, you know, okay, so there's all kinds of things that could be useful and interesting to prevent this or make it better. That's the point. That's what analysis should be, is this array of things, not the root cause. Anyway, something along the lines of undiagnosed diabetes is much more of a cause than stopped breathing. So when we say, uh, it's too expensive, and, uh, that's the reason, you're making this fallacy, you gotta go into, "Well, they wanted this stuff, but it didn't work with Linear, which is what they use. It only works with Jira, and so there's a lack of integration." Now, maybe we should write that integration, and maybe we shouldn't. Of course, it depends on how much we hear about it and, you know, of course it's gonna depend on other things, but that's the reason, not it was expensive, [chuckles] right? And so, so this idea of like getting into, not even the root cause, but let's say rooter causes, [chuckles] than the- The roots cause. Yeah, the more root. Um, I think some people probably say five whys and just paper over what I just said with that, and maybe so, but I just, you know, let's not be so simplistic about that, 'cause again, five whys sometimes implies that there's some root cause at the bottom of the whys. Let, let's be a little bit more- let's be a little more smart about that. So anyway, these things too expensive, this is not it. Maybe project ended really is project ended, okay. But even there, I see just today, today, on a, on a, on an entrepreneur forum I'm on, I am on, someone said, um, "Yeah, you know, uh, we're starting to see more people have project ended a- as the reason, and so there's nothing we can do about that." Now, see, that's incorrect. That's only true if you only look at the proximate thing, which is project ended. You're correct that you can't make that project not end exactly, [chuckles] right? Yeah. Okay, but wait a minute-... if your software was more successful and the project was more successful, would it ha- uh, have ended? Or is that actually an indicator that your product wasn't that useful or didn't do its job? It's possible, like in this case, who knows, right? But that's possible, that it really is your fault. Um, another example is, but you picked what target segments you were going after. Did you pick, like, a market segment that was easier to sell to, but their projects end, like small business and consumers, where very often the small business does go out of business or the project ends, et cetera, because when things are small, they're, they're, you know, have high variance and lots of things can knock 'em off the, the path, and so on. And so is it your fault for picking the wrong ideal t- customer profile or target segment? A- and so, yes, that one case or that one project, that's "not your fault," quote, unquote, but by saying that, you're, you're, you're just, like, ignoring the fact that there is maybe something to do about it. Now, all this is maybe. None of this proves you should, like, change your market tar... Right? But, but the fact-- but when you say it's, uh, "There's nothing we can do about it," you are cl- you are closing the door on these things that might be the right thing. And very often, as I think probably a lot of people here on this, on this, listening to this know, the market segment you pick has a lot to do with your retention rate, [chuckles] 'cause everyone acts differently, right? And so anyway, um, so I, I know it's, it's a, it's a lot on this topic, but it, I just feel constantly people make this particular mistake of not, not getting, you know, not, y- just, like, abdicating responsibility or just listening to the first thing they, they hear and saying that's the reason, and, and that's not right. So that's, that's the big thing about listening. Another thing is you gotta ask when people are in trouble, but not yet canceled. You might be able to save them. You certainly can learn more because you can talk to them, like, they're, they're, they're not shut off yet from you. So this might be... They never uploaded their data, so they're not being successful. They are calling tech support too much, they're in trouble. They're not calling tech support enough. [laughing] They, uh, they, they, they're not engaged. Um, they didn't log in for a while. Like, there's all kinds of things where it, where... Now, of course, this is all gonna de- the details are gonna depend on the product, obviously. But there are signals that are correlated with cancellation. Now, if you have a lot of data, you can literally correlate signals with cancellation [chuckles] and try to extract that, um, you know, you know, precisely. But even without data, you can guess, and guessing and having a theory, acting accordingly, and as you get more data, adjusting your theory, this is a, this is a wise way to proceed, even without data. So if you can catch them when they seem like they're off the happy path, they're in trouble, like, that's, that's a

6. 26:54 – 29:35

   Onboarding and activation

   1. JCJason Cohen26:54

      better time to do it. And then the last thing I would say about, about, um, about this detection is, if you don't know what to do, or all else being equal, then focus on onboarding. Um, all- almost all companies have a whole lot more, uh, cancellation in the first day, 30 days, 90 days, depends, right? But the first period, than the whole rest of the customer's life. And also, small changes in the onboarding can have large effects on cancellation, whereas later on, that's not necessarily true. It could be, but it's not necessarily true. So, uh, a really dramatic version of this is if you've ever done YouTube videos, which I know, I mean, I know you have, but if, if a listener has ever done a YouTube video and you see the "retention," quote, unquote, of the, of the viewer on a YouTube video, it has this thing where it, it falls, like, just so much-

   2. LRLenny Rachitsky27:40

      It's brutal

   3. JCJason Cohen27:40

      ... you can't believe-

   4. LRLenny Rachitsky27:41

      It's brutal

   5. JCJason Cohen27:41

      ... in the first 30 seconds, and then if, if it's a decent video, it'll flatten out as people, you know, decide to watch the video. So in that, in that crazy-looking curve, for the people that watch it for 15 minutes, maybe there's something you could do to keep a few of them staying to the end, but that's not gonna change very much how many people get to the end. Whereas, like, for me, I've only done a few, but I... What, what I see is about 50% fall off in the first 30 seconds. Well, if I can get that from 50% to 55% stay, um, that's an additional... A- a- and, and at the end of, of the line, I only have 20% still there, which is pretty good for a long, longer video. But if I get it from 50 to 55, I might get it, go from 20% to 25% staying. In other words, if I shift it 10% at the front, which maybe I could do, like, I can't be dramatic, but maybe a little, then in the output, I might be able to increase it by 20, 30%. Uh, so that's a huge change. And so in the SaaS equivalent is, as we all know, if they leave early, not only is it bad, but it's super unprofitable, 'cause you spent all this money to acquire them, and then they never stayed around long enough to pay it back, much less to be profitable. So if you can do a little bit in the onboarding, uh, or shift the onboarding percentage a little bit, it pays off enormously in revenue and profit over time by, by, uh, by making them successful. And, uh, so again, if you don't know what to do, onboarding is, is a good bet. [chuckles] And even if you do know what to do, I'll, I'll still bet that onboarding is a good bet [chuckles] for where to go.

   6. LRLenny Rachitsky29:07

      Oh, man, I'm so happy we're spending so much time on this very specific first step of logo churn, because the way you described it is so visceral. You've spent s- it took so much... It's, like, impossible how far this customer got already. Like, they are using your product [chuckles] -

   7. JCJason Cohen29:22

      Yeah

   8. LRLenny Rachitsky29:23

      ... and understand it, uh, mostly, and then they still decide to leave-

   9. JCJason Cohen29:27

      Yeah

   10. LRLenny Rachitsky29:27

       ... so brutal the way you-

   11. JCJason Cohen29:29

       And, and you're gonna believe them when they say it's because of, of the cost?

   12. LRLenny Rachitsky29:32

       Mm.

   13. JCJason Cohen29:33

       Right? Like, it just doesn't even make sense when

7. 29:35 – 35:46

   Quick summary

   1. JCJason Cohen29:35

      you put it that way, right?

   2. LRLenny Rachitsky29:36

      So let me, uh, let me kind of, uh, summarize the advice you shared here, 'cause this is so good. So step one is, look at logo churn. The way to understand, and essentially to understand how big of a problem this is and why you need to spend time here, is, uh, look at this- basically, do the math. Uh, what's- how many new customers you're getting, divided by the cancellation rate, and that essentially tells you what's like, if that doesn't change, what's the maximum number of customers you will ever have?

   3. JCJason Cohen30:01

      Exactly.

   4. LRLenny Rachitsky30:01

      Yeah, that's gonna be a sad number.

   5. JCJason Cohen30:03

      Yes.

   6. LRLenny Rachitsky30:03

      And then the question is, okay, cool, how do I reduce the cancellation rate?

   7. JCJason Cohen30:05

      Yeah.

   8. LRLenny Rachitsky30:06

      Obviously, as you said, everyone wants new customers, more new customers.

   9. JCJason Cohen30:08

      Yeah, and you'll- I know you're gonna do that anyway, but you got this cap.

   10. LRLenny Rachitsky30:11

       Exactly. Okay, so the way- so a few things you've shared here. One is, instead of asking people on a option, uh, multiple choice, "Why did you decide to cancel?" You make it free form, and you make the question... How would you just say it? Was it, uh, "What made you cancel?"

   11. JCJason Cohen30:26

       What made you cancel?

   12. LRLenny Rachitsky30:26

       What made you cancel?

   13. JCJason Cohen30:27

       Yeah.

   14. LRLenny Rachitsky30:28

       Great.

   15. JCJason Cohen30:28

       Yeah.

   16. LRLenny Rachitsky30:28

       And then you could use AI to help summarize these things, I imagine, instead of-

   17. JCJason Cohen30:32

       Yeah, um, I think what I find with AI is this, with this sort of thing, with surveys-

   18. LRLenny Rachitsky30:36

       Yeah

   19. JCJason Cohen30:37

       ... um, is this.... AI is good at picking out themes.

   20. LRLenny Rachitsky30:40

       Yeah.

   21. JCJason Cohen30:41

       It is bad at picking out details that are actionable.

   22. LRLenny Rachitsky30:44

       Mm-hmm.

   23. JCJason Cohen30:46

       When I say AI, of course, I mean LLMs, which is probably what we mean when we, when we're looking at natural language, right? Um, [clears throat] and if you think about it, it sort of makes sense because the LLM is an averaging machine, right? It's predicting the most likely-- that's an averaging kind of a thing. And so when what you're looking for is a kind of average, it's usually pretty good, so summarisation, topics, themes. But when you're asking for, like, what is interesting and not average, it's actually pretty bad at it. One, uh, one way that I've found that's sort of useful is, yes, I'll ask it about themes, but then I'll say, "Now pick out every specific detail that goes under one of these themes. Put it along with, like, which customer said it, and the link to..." You know, blah, blah, blah. Um, so you'd have to, you know, play with this to tune it, right? But, like, that kind of thing, so that a human being can then still see the detail, which is what triggers in your mind: "Wait a minute, but that means we should do this," right? 'Cause the topics won't do that. The topics will be... I already know what the topics will be. It'll be stuff like, "I couldn't figure out how to do this, this integration," right? Like, the, the, the, the topics are actually not going to be that surprising, probably. It's the details that are gonna be the triggers for actiona- a- actionable stuff or patterns or something like that. So a, a- yeah, AI is not useless, but it's not as useful as it sounds. It's probably still a good idea to just read all this stuff. Although AI might be able to clean up... You know, maybe people's grammar is bad, it's a weird language. Okay, yes. [chuckles] Like, that's annoying. You could clean that up, but I wouldn't rely on AI to do the thinking for that reason.

   24. LRLenny Rachitsky32:20

       That's such, such good advice. I actually have a really cool guest post coming out soon that gives a bunch of really specific techniques to avoid AI, uh, hallucinating or just giving you really bad, uh, results from this very specific synthesis work, because it turns out AI is very, uh, not great at actually being honest about some of the stuff, so-

   25. JCJason Cohen32:39

       [chuckles] That's good

   26. LRLenny Rachitsky32:40

       ... I will link to it if it comes out before this. And, like, I think in real life, most people don't have that much. The volume of these cancellations is, unless it's like a super consumer app, is not that high. So you don't even need AI for this. Just, like, read it, and then this is a good segue to your next piece of advice, which is, uh, essentially the five whys, but not the five whys, where you kind of force yourself to dig into what's the real reason that forced them to cancel. It's probably not pricing. It's probably not the project ended. There's something deeper.

   27. JCJason Cohen33:06

       Yeah.

   28. LRLenny Rachitsky33:07

       And then, uh, advice number three is try to catch people early. Try to catch them before they churn. If you don't have a lot of customers, it's a lot easier. If you have a lot, it's obviously harder. Uh, there's always been this, like, holy grail idea of a product that just, like, watches metrics and tells you this person-

   29. JCJason Cohen33:21

       Yeah

   30. LRLenny Rachitsky33:22

       ... is about to cancel. I haven't seen that.
8. 35:46 – 41:46

   Revisiting pricing strategies

   1. JCJason Cohen35:46

      So the next, the next question I have is: Is the pricing correct? Which, of course, pricing is a perennially interesting topic, I know. There's this funny thing of, uh, especially with newer companies, that the pricing is always too low. It's not always, but, like, that's the common thing. Patrick Campbell, who h- has forty-two hundred data points about startups, let that sink in a little, um, has this great quote, which goes like this: "Your prices are way too low because you just guessed, and you haven't changed them." [chuckles] It's like, yeah, if you really, like, look, look deep within, you realise, like, yeah, or we just picked whatever our competitors are doing and, and, and that's it, or we added or subtracted something because reasons, and [chuckles] like... Right, that's probably not good. And people are scared to raise prices for obvious reasons, but the, but the-- if we set aside the emotional reasons, uh, whether they're correct or not, the, the sort of economic reason people normally give is they have in their mind this ec- this microeconomic supply and demand curve thing, and the demand curve says that if you raise the price, demand goes down. That's why demand curve is always going that way, right? And so-... they understand, I think everyone understands, right, but maybe you raise prices by ten percent, but sign-ups go down only five percent, so overall it's better. But the opposite could happen, too, if I'm on the other side of the demand curve, and okay. So that's, that's how most people think of it. However, this is not how it works. So that's how it works in microecon- Microeconomics 101 textbooks, that's not how it works in the real world often. So what usually hap- what often happens is you raise prices and sign-ups don't change. When I say sign-ups, I mean the, like, sign-ups per month, you know, the rate at sign-up. Or sign-ups go up. This happens all the time. Even, even for, like, solopreneurs on Twitter, who have, you know, strange projects or everything, happens all the time. They raise prices, they're like: "I was scared, but then, then sign-ups went up." I once talked to a guy, this is, this is really funny. I'm, I'm not... I'm gonna not say the name to protect the, [chuckles] protect the name, right? But, but, um, but, uh, so he had a product that was- that he was selling essentially to enterprise and government, so larger companies, and it was, to me, way too cheap. So he said something like, "Yeah, I charge three hundred dollars." I'm like: "Three hundred dollars a month? That's not enough." He goes, "No, per year." [chuckles] I'm like: "Okay, wait." I said, "Okay, just do me a fa- like, how many sign-ups do you get a week?" And he's like: "One or two," because this is enterprise, and it was a start-up. I said: "Okay, um, just for fun, just change it from per month, per year to per month." [chuckles] So in other words, we're twelve X-ing the price, right? So he did, and he still got one or two per week, like, nothing changed. I'm like: "Okay, what, what are you gonna do next?" And he goes, "Oh, my gosh! Well, now I have so much more money and profit, so I'm gonna, like, hire an engineer, I'm gonna do this marketing..." And I'm like: "Time out. What you're gonna do is raise prices again. Like, you just told me you, you twelve X'd the price and nothing observable changed. [chuckles] That means you're not near the price yet, right? You're gonna-- You don't have to ten X it again necessarily, maybe you two X, maybe fifty percent, but, like, you're not done. I mean, you can do these other things, too, but you're not done with the price." [chuckles] Like, it didn't even occur to him still. [chuckles] Okay, so why does this happen? Um, the reason is that pricing selects the market. So if you only think of the market as people with, uh, very limited budgets, barely can do anything, not getting much value out of it, then it is true that if you raise prices, you'll get fewer of them. 'Cause they were never getting that much value out of it anyway, they don't have that much money, so if you raise prices, they're gone. But think about just even a mid-sized company, forget about enterprise, just think about a company with a thousand employees and four hundred million in re- revenue or whatever, and, um, if they see a product that's, you know, two dollars a month or even t- a hundred dollars a month, their thought is like: "Well, that can't be good enough. They're not mature enough, it's not gonna do enough, the support's not gonna be good enough, they probably don't have good governance policies or other things that we need, you know, et cetera." Whether that's true or not, like, this is what it looks like, 'cause it's low quality, cheap, whatever, aimed at SMB. So they just won't buy. They're not in the market for the thing. So it's not true that they have this demand curve where, oh, since it's cheap, they all want it. That's what, that's what microeconomics curve says, it's so cheap that they should all want it. No, they don't. None of them want it, 'cause it looks bad. So as it gets into a price range that makes sense for the kinds of things that they need, then their demand actually goes up. Then it can stay up while it's in a good range, and then, of course, at some point, you are priced out of that. That particular kind of company's like: "Look, I'm not gonna spend ten million dollars a year on it. [chuckles] Are you kidding?" So yes, it does slope down and go away. So it's not a normal curve, but it is, like, it slopes up, and then it's something and slopes down. Who knows exactly what it looks... what, what shape it is? Probably none of us know. But it's more like a mesa and not a line that goes, uh, up to down, like we- like in the textbook. For that market, it's only the very l- lowest, you might even say worst, in terms of metrics, end of the market that has the microeconomic slope that you're worried about. So what happens is you raise prices and you enter a different market, and that's why the sign-ups go up or are okay. Uh, and you leave behind perhaps a worse market anyway. And of course, everyone will tell you, you know, the more they pay, the higher retention is, and the, you know, the, like, all the, all the kinds of stuff gets better when you, when you, um, when you charge more. So this question, is pricing correct? This is kind of what- what's in my mind when I ask that question. It's like, uh, 'cause probably the answer is no, 'cause pricing is very hard. It's just as much art as it is science. Um, you've had some really good people on here on pricing. In fact, so good that I've bought some of the [chuckles] books that those people have talked about, 'cause I lo- I love the interview so much, right? So, so, like, um, so I, I believe in all that, no pro- no problem, I believe in it. Um, nevertheless, they also say it's art and science, and it's, it's, it's very difficult to, uh... A- and also, once you auger it in, the world changes. Like, five, ten years later, the market is different, the world's different, and, uh, so it's

9. 41:46 – 47:52

   Positioning strategies

   1. JCJason Cohen41:46

      still, it's still unclear. Also, price is not just the number on the web page. It's easy to think that, right? But how it's structured is just as important, how the product's positioned is just as important. So, for example, the, the... This example I've written about before, um, online, is, uh, uh... This example, it, it, it actually was something that, um, that I, that happened in my life, but I, I changed the story to make it, like, simple [chuckles] and, and, and visceral and clear, without having to get into lots of detail. So the, the sort of story version is, uh, how this company was able to charge eight times as much for the same product, just by talking about it differently. So just by positioning it differently, eight times as much. Again, this happened to me, but it's, it's too complicated, it's not, not interest- those details are not interesting. So say there's this company called Double Down, and the idea is that it halves the cost of your AdWords, 'cause it makes it so efficient. So that's what it says on the web page: "Cut your AdWords costs in half." Which is a very good pitch, isn't it? Simple, obviously valuable. But when you think- so let's suppose, uh, I have a, I'm a customer, and I spend forty thousand dollars a month on AdWords.... what am I willing to pay for Double Down? Well, if you do cut my AdWords in half, then all right, I saved, I saved 20K, but I'm not willing to give 20K to Double Down because then I'm not saving any money. [chuckles] In order to actually save money, I need to give Double Down less money. How much less? I don't know. Let's just call it a quarter. So I pay Double Down 5K to save 20, so I'm save- I'm really saving 15. Double Down's making 5K a month. That's pretty good. Everyone's pretty happy at this five grand a month price point. So there's nothing wrong with this. No one's doing anything wrong, like, that's a perfectly valid company. However, think about these two situations that the CMO might be, or the chief product officer might be in, in talking to the CEO at the end of the year. "Well," scenario one goes, "we started using this tool, Double Down, and it halved our costs, so we got- we able to spend that money on some other stuff. We were able to save money." And the CEO go- would say, "Great. That's good. Let's-- we're gonna renew, and I'm happy to hear it." Again, nothing wrong here. But let's take a different tact altogether. What does the CEO want to hear more, growth or saves money? Both are good, [chuckles] but I know which one is healthier for the company, increases market share, uh, is better competitively, and also makes the company more valuable. It's the growth. [chuckles] So what we'd really like the CMO to tell the CEO is, "I increased the growth rate of the company," not so much, "I saved money." That would be way better. So here's how we could do that with Double Down. Yes, Double Down halves the cost, but what that means is, right now, right now, the company is paying 200 bucks per lead. Let's call them leads, right? Whatever, whatever this is outputting, right? Well, if I halve the cost of a lead, I could get twice the leads for the same money. I'm already willing to spend $200 a lead, and I'm already spending 40K a month for it. So if Double Down halves the cost, it means I can get more leads. [chuckles] So what I-- the way I could pitch Double Down is, "Double the leads per month with..." Period. Now, if I'm willing to spend 40K for this number of leads, how much am I willing to spend to double the leads? 40K. I just said I'm willing to spend 40K [chuckles] for this number of leads. So doubling it, I'm willing to spend 40K to double it. So if I give Double Down 40K, not five, for the same product, which is the leads are cheaper, but the- now the pitch is, I doubled the leads for 40K instead of ha- instead of halving the cost for 5K. So Double Down gets 8X the money, 'cause it gets 40K for this product, not eight- not, not 5K for this product.

   2. LRLenny Rachitsky45:43

      Amazing story.

   3. JCJason Cohen45:44

      And everyone's happy because the CEO goes: "What did you do?" And they said, like, "Oh, my God, I doubled leads." "What?" "Yeah, I mean, at the same, at the same pr- at the same ROI as we had before, same CAC, I doubled leads." CEO goes: [chuckles] "How can we do more of that?" Like, I mean, just everything is so much better, same product. Now, I know it's a little bit of an exaggeration, et cetera, 'cause I'm trying to make a point, right? But the, but the, the big point is... Uh, or the, the largest point is pricing is not just the number on the page. It's positioning, it's how their budgets work, it's how it's structured, like it's per site, or it's per usage, or it's per seat, or it's per... All of this stuff is part of what pricing is. And often, even if it's the same price or the same product, depending on how that's structured, it either seems, um, fair and, and, and good, or it seems like unfair and too expensive or whatever. Um, and so in particular, with the positioning, the big lesson for product managers is sell more of what the company values, like growth. It doesn't have to be growth, it could be something else, uh, their, uh, it's retention for their customers, com- com- their competitive, uh, how competitive they are in the market. Like, there's various things they could value. Growth is an obvious one. Sell them that they're gonna get more of what they value, as opposed to saving, cutting, ROI, saves time, saves money, more efficient. And again, there, there's nothing wrong with saving money, saves time, it's just that it caps this price and this value that is pr- they perceive that you do. Whereas if you deliver more of the value that they already value, it's, I don't wanna say uncapped completely, but, like, the cap is maybe an order of magnitude higher than saving. So again, it's, it's, it's valuable to save. [chuckles] You're not doing anything wrong. Like, that's not how to talk about what it is, and therefore s- help set the price. So yeah, so it's a, it's a long way of saying... So when I, again, when I think, is your pricing correct? I'm thinking in a m- maybe a more general way than just, like, the number. I'm thinking about the structure, the positioning, and all that. And my guess is, when growth is slowing, um, no, it c- that there's a lot of improvement that could be, that could be

10. 47:52 – 52:06

    Why pricing is inseparable from your strategy

    1. JCJason Cohen47:52

       had there.

    2. LRLenny Rachitsky47:52

       Oh, man, this is such... This story is so powerful. Who does not want to change some copy on their website and double their growth and triple their price? Um, and the, the biggest takeaway here is, when you say, "Is pricing correct?" Isn't like, what is the number, 20 or 25 or 100? It's- it's almost, is the market we are going after correct? Is the way we are selling to them correct? Is this price communicating the right sort of story? And then also, is the positioning of what problem we solve for you correct? So there's a lot here-

    3. JCJason Cohen48:24

       Mm-hmm

    4. LRLenny Rachitsky48:24

       ... and luckily, I've done a bunch of episodes along this stuff-

    5. JCJason Cohen48:27

       Yes, yes

    6. LRLenny Rachitsky48:27

       ... which we'll point people to-

    7. JCJason Cohen48:29

       Yes

    8. LRLenny Rachitsky48:29

       ... to go much deeper, 'cause this is a very-

    9. JCJason Cohen48:31

       Right

    10. LRLenny Rachitsky48:31

        ... this is a deep skill-

    11. JCJason Cohen48:33

        Yes

    12. LRLenny Rachitsky48:33

        ... and there's a lot to do here.

    13. JCJason Cohen48:34

        Yes.

    14. LRLenny Rachitsky48:34

        Um, one thing I'll mention specifically, so Jen Abel, a recent podcast guest, it was her-

    15. JCJason Cohen48:38

        I love her

    16. LRLenny Rachitsky48:39

        ... second visit to the podcast.

    17. JCJason Cohen48:40

        Mm-hmm.

    18. LRLenny Rachitsky48:40

        She has a lot of really good advice on this, of just how to price and how to reposition the way you're selling it. Specifically, she had this really interesting insight that enterprises, their sweet spot for contracts is, like, 75 to 150K. That's, like, how they pl- normally buy SaaS software, and it sounds absurd, but that's kind of what you want to... You want your product to be in that bucket, versus like, 1,000 a month, 2,000 a month.... and everything just gets easier if you're like: "Okay, this is one of those. Okay, cool."

    19. JCJason Cohen49:05

        It gets easier. Um, the thing, uh, uh, I don't wanna go off too much of a tangent, but the th- the, the thing you have to remember is that pricing is not this knob that you can turn separate from the rest of your strategy. So when you say, like, even when I just said, "Raise prices," or whatever, um, but you can't just raise prices. Like, these new customers have different demands. Now, maybe you need SOC 2. Now, your other governance stuff matters. Now, integrating to certain s- systems you didn't know about matters. Maybe now they need professional services. Like, you can't just raise prices and change marketing, like that's it. And maybe that's wise to do, but maybe it's not. Maybe you realise that, sure, of course, that other market has certain advantages, but they also have disadvantages, and we don't want those, either because we'll no longer be competitive, 'cause the way that we're distinguished, competitive, special, interesting, valuable, is only valuable in the market we're in. It-- the, the next market does not value it li- like that, and so, uh-oh, um, actually, that would be really bad for us. Or it could even be cultural. We are a company... Like, Buffer is a great example. Buffer could go upmarket and try to sell, you know, social media tools to whatever, but they realised: "We are a company for the little people. I don't want to sell to a big company. We're never gonna make a product for them. We don't want to. This is who we are, this is what we wanna do. This is what's fulfilling to us, so we're not gonna go there." So it can be cultural, it can be certain goals, it can be, it can be other aspects of, of the business model or the strategy, but you- it's not this kind of, like, "Oh, I'll just, I'll just change this." It's a decision about the whole strategy, and, and that, too, we could talk about for hours, um, but, um, I'll just- let's just caution that, uh... "Oh, I'll just go enterprise!" Like, is, is of course not how it goes.

    20. LRLenny Rachitsky50:53

        We'll just go SR-5K.

    21. JCJason Cohen50:53

        Yeah, I love Jen.

    22. LRLenny Rachitsky50:54

        We got this.

    23. JCJason Cohen50:55

        Yeah. I love Jen. Her pricing and s- and sales stuff is good. She's great on Twitter, too. She's- I love her. I love Jen.

    24. LRLenny Rachitsky51:00

        And that is such an important nuance. You know, don't build the thing you're miserable building, and just like: "Okay, I listened to a podcast. We're gonna raise our prices 10X, and life will be grand." There's also downsides.

    25. JCJason Cohen51:09

        Yes. [chuckles]

    26. LRLenny Rachitsky51:11

        Yeah. Yeah, okay. Uh, amazing advice. Okay, there's so much here. Again, this could be its own conversation, pricing, positioning.

    27. JCJason Cohen51:16

        Yeah, yeah, for sure.

    28. LRLenny Rachitsky51:17

        I'll link folks to a bunch of cool advice that, um, we've covered on this podcast, too. [upbeat music] If you're a founder, the hardest part of starting a company isn't having the idea, it's scaling the business without getting buried in back-office work. That's where Brex comes in. Brex is the intelligent finance platform for founders. With Brex, you get high-limit corporate cards, easy banking, high-yield treasury, plus a team of AI agents that handle manual finance tasks for you. They'll do all the stuff that you don't wanna do, like file your expenses, scour transactions for waste, and run reports, all according to your rules. With Brex's AI agents, you can move faster while staying in full control. One in three startups in the United States already runs on Brex. You can, too, at brex.com.

11. 52:06 – 1:00:25

    The importance of net revenue retention (NRR)

    1. LRLenny Rachitsky52:07

       Let's keep going through this, uh, checklist.

    2. JCJason Cohen52:08

       Yeah.

    3. LRLenny Rachitsky52:08

       So one was look at logo churn.

    4. JCJason Cohen52:11

       Yeah.

    5. LRLenny Rachitsky52:11

       Two is look at, is your pricing correct?

    6. JCJason Cohen52:13

       Is the pricing right? And why do we, why do we think it is? [chuckles] 'Cause we probably don't have good reasons yet.

    7. LRLenny Rachitsky52:18

       Mm.

    8. JCJason Cohen52:19

       Okay, so the third one is, are existing customers growing? I think everyone probably knows this, but just to say it, um, okay, if, if cancellations overtake marketing and, and, and, and, uh, magnitude, one way to come back... I mean, one thing is, okay, make the cancellations lower, but they can't be zero. So another- what else do we have to combat cancellations that would be proportional to our size so that it keeps up? [chuckles] Unlike marketing, right? Or, you know, tr- basic direct marketing. So one would be, all right, 2% left, but of the remaining 98%, some of those upgraded or otherwise paid us more, maybe it's usage-based. Whatever it is, they're paying us more, and so that, that covers the gap, and that's-- and, and yes, if I tripled the company overnight, that would triple, and so that's the answer. So it is an answer, and maybe that's obvious, but, you know, it's useful to tie it back to the, the sort of model- mental model we've got going. Um, and of course, the, the metric here is NRR, net revenue retention, and the way that's computed is you say: What is the revenue of customers right now? Like, so existing customers, existing whatever, just the whole total, and then one year from now, what of that remains? So not new customers coming in, not talking about them, 'cause we're asking about the cohort that exists. What remains? So, with cancels, it goes down, with downgrades, it goes down, but with upgrades, it goes up. So when I say "remains," it could end higher than we started if upgrades exceed cancellations and downgrades. And now we are talking about MRR and not N, 'cause N doesn't have this, N doesn't have an upgrade. [chuckles] N just only goes down, which again, is why I think the N is actually the most important one. Because think about it, like, a lot of times people think-- so if you've heard of NRR, you might think, "Well, that's my golden metric, I'm done." But the issue is, if NRR is positive, but N goes down too fast, it doesn't matter, 'cause not enough people are left, and so there's not enough people left over to upgrade, and so actually you're wrong. And so NRR does not, does not include that, and therefore, it actually undercounts what's going on i- i- in a bad way, like, in a way that's ne- that, that hurts you. There's yet another way to see why what I'm saying is right. You know, there's this, this thing in investments where, let's say, I started out at $100, and the stock goes down 5%, so now it's at 95... or no, it goes down 20%, now it's at 80. Then it goes up 20%. Is it back to 100? No, because 20% more than 80 is 96. So if it goes down 20% and up 20%, it does not come back to zero, it's worse. When you have a loss, a percentage loss, you have to have a greater percentage gain just to get back to s- where you were.... in this case, a loss of 20% requires a gain of 25% to get back to where you were. This is why NRR isn't quite right, 'cause NRR is saying that a loss of 20% from cancellations is offset by 20% from upgrades. As we just saw, no, it's not. That only gets us to 96%, actually. So this is why, like, a- again, I believe in NRR. I'm saying you gotta log- track it, like, it's good. Just in the back of your mind, realize it's not quite that good, and looking at N helps me keep-- keeps you honest about what's really going on with these customer cohorts, right? So that's why they're both useful, in fact, uh, but that's-- this is why they're both useful. So NRR, uh, of course, is important. A nice way to see this is, i- if all this is... If everything I'm saying is true, and there's these limits and stuff because of cancellation, then there should be no way to get a big company like a public SaaS company, unless NRR is greater than 100. Like, otherwise, cancellation should just win, and that is, in fact, the case. There's over 100 SaaS public companies, and something like two of them have NRR less than 100%. [chuckles] Like, that's how it goes, and those companies have horrible financials, and their values- valuations are b- are bad. Like, it's not good. [laughing] It's not a good thing, right? So and in fact, the median for a, a IPO'd SaaS company, like at IPO, the median NRR is 119%. So that's-- so yes, that's what it takes. You can't do this. You're, you're limited unless... Now, your, your goal may or may not be to get that big, but the point being, it's mandatory for growth. Now, if the literal customers are just leaving, like, uh, you know, that you gotta, you gotta plug that hole first, like you said. But okay, if the-- if they're okay, that's why this is in order. If that's generally okay, now we turn to NRR to say: Okay, but the ones who stay, they're hopefully happy, they need to grow. Okay, so that's the kind of the full story of NRR. I, I think people don't quite-- people who've heard of NRR don't necessarily think about all those things and, and realize that. So a good question is, "Okay, what do I do with NRR?" Uh, but I think the answers are pretty clear. Like, you add features, you have different tiers, you change the pricing in some way, uh, with, with usage or seats or something that kinda goes up automatically as they get more value out of it. So I, I don't think that's terribly interesting to, like, double-click into. It's, it's sort of obvious. I would say, "Oh, look, it's tied into pricing," because their behavior... But the main thing is, you want it to, so to where the customer themselves would agree when they pay more, that they are getting more value. Hopefully, they even think they're getting far more value than the price going up, right? The, uh... I'm, I'm, I'm, I'm gonna say this as if it's precise, which it's not, but they, they need to feel like if the price doubles, "Yeah, but I'm getting five times the value, so that's fine." Like, that should be the feeling, whether they can measure it or not. A, a good way to do that is to say, well, then, you should be measuring whether they're getting value out of it. Often, we measure, like, usage metrics and other kinds of metrics within our product because we can, but actually, what's really important is to measure: How does the customer value this? And we need to measure that so that we make that go up, 'cause if we make that go up, they'll be willing to pay in whatever structure. [chuckles] And if that isn't going up, they won't be willing to pay. So even if we start making them, they'll leave. And we all know, we've all probably done it ourselves, we've all had products we love, but then, as we scale, the price goes up faster than we feel the value is, and then we start looking for other products. Like, we've all experienced that, so that's what I'm saying. To do that, you want some sort of measure of the value the customer is getting. If you're really lucky, that can be a number. That'd be wonderful, then go do that, and maybe that's your North Star. But, um, admittedly, it's not always possible. So then the question is, the usual questions and metrics, are there proxy metrics that we understand are not the full picture, but they're helpful, they're part of the, you know...? Um, and, and I'm a big believer in saying, not all important things are numbers. I mean, even things like how differentiated are we in the market? Not a number, but it's very important. So this might be one of those things that's important, but un- not a number, so okay, can we get some proxy metrics, even of behavior and other things that's something, um, s- something better than some metric that's, you know, just operational? And even if it's qualitative, okay, can we do that? [chuckles] Can we talk to customers and ask them qualitative questions to try to see... Like, you know, uh, I would just say, like, do your best here, because only when you generate more value for the customer, you can then decide how to split that with the customer in terms of things like price, you know, right? Um, but that's, that's my, um... That's, in fact, how I think of it, that very phrase. How do we ch- create more value for the customer, and then split that with them? And when you do that, you're keeping the customer forefront in mind. You are taking some-- like, splitting means you get some. Like, like, let's not forget, [chuckles] it's not a charity. And on the other hand, first, we should think how are we generating value for customers, and then think, and then we can take a little-- we've now earned the ability to take a little piece of that. So to me, this is the right way to think about NRR, not just, well, add a feature and make them pay. True, but let's actually take it from this different-- let's get there from this different perspective.

    9. LRLenny Rachitsky1:00:10

       Amazing. There's a, uh, in the recent Madhavan episode, where we go into pricing, he actually has some really good tactical advice for measuring the value that you're giving to a company to quantify that, uh, which I- feeds into this idea of: How do I create more value for you, and then how do we split it?

    10. JCJason Cohen1:00:24

        Yeah.

12. 1:00:25 – 1:04:34

    Asking whether or not this is good for the customer

    1. LRLenny Rachitsky1:00:25

       The other element of this that's top of mind is just this land and expand strategy. There's a lot of companies that are just like: "Okay, cool, we'll get in with some price. We'll expand. That'll be amazing."

    2. JCJason Cohen1:00:34

       Yeah.

    3. LRLenny Rachitsky1:00:34

       Which is essentially expanding his NRR going above 100%.

    4. JCJason Cohen1:00:37

       Yes.

    5. LRLenny Rachitsky1:00:37

       Something Jen actually shared on her- in her chat that was really important, is that you can't expand that much in ter- at least for a while, because if you get in for, like, 10K, uh, if you go up to, okay, now it's 100K, someone's gonna be like, "What is this? Why is- this can't go up 10X. Are we getting 10X value from this?" So you can't just raise prices later. You're kind of stuck at that reference point, so you have to be really careful there.

    6. JCJason Cohen1:00:59

       Yeah, I think that's right. Um, and maybe you don't deserve it. Like, in other words-... especially when there's investors or other sort of forces saying like, "Hey, we need to X, Y, and Z." Forces that are not the customer saying that. Um, yeah, we, y- you, you can, you can be, you can be coerced into making pricing or other kinds of policies that, in fact, are not good for the customer. So, so one, one, uh, tool I use, uh, is w- when, when anyone claims anything, [chuckles] really, is, is, i- is that really true, or is that really actually good for the customer? 'Cause, look, we are gonna do things that are selfishly good for us. We have to. We can't just do things that are bad for us. But, but is this, in fact, good for the customer? Because often, often even in an internal proposal, we say it as if it is. "Oh, this pricing will be good. It, it'll raise prices on everyone, but it's better because of this reason," that we- we're sort of justifying, right? It's like, well, is it... W- will the customer say this is better? If the answer is no, it's like, okay, it's not- it's better for us, [chuckles] but sorry, we have an equation where it has to be better for us and better for the customer. Sorry, it's an and. [chuckles] You know? And of course, not all companies do that, and we ex- and we experience that on all of us, um, as, as consumers on the other end of that, and we don't like it. And, and that's not a good long-term strategy, even though it might, might work in the short term, as many bad long-term strategies are.

    7. LRLenny Rachitsky1:02:21

       I love just how, uh, this third step just reveals how powerful the sequence is that we're going through. Step one is this logo retention. Essentially, do we have product-market fit? Step two is pricing, positioning. Essentially, are we going after the right market and charging them the right amount, roughly? And then here, it's just, can we, can we grow? Is there something here that can continue to expand? Because you're gonna get eaten alive if you're... Especially, and this is-- just to be clear, this is B2B SaaS primarily that we're talking about here. It's harder to grow NRR if you're a consumer product that has, I don't know, just like a tier two.

    8. JCJason Cohen1:02:55

       Well, what, what I would say is the, the rules are true everywhere because they're based in the mechanics of finance in the business.

    9. LRLenny Rachitsky1:03:02

       Mm-hmm. Agreed.

    10. JCJason Cohen1:03:03

        Now, you are right, that a cons- that in the consumer segment, or small business segment for that matter, um, they tend not to grow. So that doesn't mean the NRR question is invalid, it means, "Dang, we can't think of anything."

    11. LRLenny Rachitsky1:03:15

        Mm-hmm.

    12. JCJason Cohen1:03:16

        That's okay. Then you go on to the next question, 'cause you can't think of anything. But you know, but it would be more strategic if we could.

    13. LRLenny Rachitsky1:03:24

        Mm-hmm. Yeah.

    14. JCJason Cohen1:03:25

        And are we trying hard enough? A- as a consumer, I do not wanna spend more with AT&T, but they're also not giving me any more value.

    15. LRLenny Rachitsky1:03:32

        Mm-hmm.

    16. JCJason Cohen1:03:33

        But there are other products as a consumer, like Amazon, where they do. So you're right, but it would be... As a product manager, it would be ten times more valuable for you to think of something like that, [chuckles] you know, than to move on to other things, and et cetera. Or there's other ways, like other products. Like we didn't talk about it, and it's okay, 'cause, of course, each one of these is, you could go on forever, right? But another way is a second product. A second product sold to the same segments that you're in, so that your existing customers can buy it. Well, I don't know why that wouldn't work in consumer. It certainly works in consumer and apparel.

    17. LRLenny Rachitsky1:04:09

        I think about AG1, which has all these new... Like, I'm doing their sleep, uh, supplement, and there it goes. They're just like: "Yeah, here's a new thing you can buy."

    18. JCJason Cohen1:04:15

        Yeah.

    19. LRLenny Rachitsky1:04:16

        Yeah.

    20. JCJason Cohen1:04:16

        So like, like, so is it harder? Yeah, of course, of course.

    21. LRLenny Rachitsky1:04:18

        Yeah.

    22. JCJason Cohen1:04:18

        Like, all of these are, like, easier or harder in different segments and ways. Like, of course, of course. I'm not trying to say otherwise. I... but I would say the mechanics of how the finances work is the same. You're just saying: "I don't have this lever to pull." And then I would say, "Okay, well, then you need different levers."

13. 1:04:34 – 1:06:42

    Leveraging existing customers

    1. JCJason Cohen1:04:34

       Um, one that we didn't talk about, um, is one way to offset the cancellations is as existing customers grow, but another way is if existing customers bring in new customers. So they didn't grow, but they brought their friend. Now, this is absolutely something that happens in consumer, but it's also an answer to this thing, where cancellations grow exponentially, you know, because existing customers bring in new does triple if you have more existing customers. Aha! So this is stuff like, um, you know, refer a friend and all this kind of stuff. Again, like, some of this is, is obvious. We don't need to enumerate that. But, uh, so, so those things are good. And so in consumer, you might say: "Oh, it's easier to try to get someone to invite a friend with a coupon, and blah, blah, blah, blah, than it is to try to get them to grow." But in B2B, that may not be true, right? I don't get a mid-sized company to refer... Like, that doesn't make sense. So I, I, uh, so once again, this question of: How do we have the existing base help us grow? Is still correct in consumer, but its manifestation could be very different. Of course, I agree with that. But, um, I mean, how could, how could we not say... I mean, of course, things like word of mouth and invite a friend, of course, that's enormous with consumer, and this is, this is one of the reasons why.

    2. LRLenny Rachitsky1:05:43

       I'm, uh, I just love picturing the people listening to this, especially product folks, founders. I, I imagine many of them are just sitting here taking all these notes of how to help grow their product because as this is- we've positioned this conversation as how to, uh, deal with stalled growth, but it's actually just as useful, how do I grow more?

    3. JCJason Cohen1:06:01

       Oh, for sure. Right. Right, right.

    4. LRLenny Rachitsky1:06:03

       Which is awesome.

    5. JCJason Cohen1:06:03

       It's clearly it's more growth. It's just maybe a little more evocative. [chuckles]

    6. LRLenny Rachitsky1:06:06

       [chuckles] It's so good.

    7. JCJason Cohen1:06:07

       It's because if growth is good, yeah, sure, you wanna grow more, but it's not the problem. Like, if growth is really good, the problem is generally operationally scaling to meet the growth, uh, and so you're focused on that. It's when growth slows, you're like: "Whoa, wait, wait, wait, wait." [chuckles] Right? We, we have to focus on growth now. Must, as opposed to, of course, it's always nice. So yeah.

    8. LRLenny Rachitsky1:06:28

       Yeah, and I was thinking as you-- we were talking about consumer NRR. If you look at Duolingo, they've done a great job here. They have so many ways you can pay them more for all these little-

    9. JCJason Cohen1:06:36

       Yeah

    10. LRLenny Rachitsky1:06:36

        ... advances, get all these gems, change the color [chuckles] of your app to, like, something fancy.

    11. JCJason Cohen1:06:41

        Yeah. Yeah.

    12. LRLenny Rachitsky1:06:41

        Yeah.

14. 1:06:42 – 1:09:41

    Are your acquisition channels saturated? The “elephant curve”

    1. LRLenny Rachitsky1:06:42

       Okay, so there's more. Let's keep going.

    2. JCJason Cohen1:06:44

       More, okay.

    3. LRLenny Rachitsky1:06:44

       So we've done three. There's more-

    4. JCJason Cohen1:06:45

       We've done three

    5. LRLenny Rachitsky1:06:45

       ... more you can do.

    6. JCJason Cohen1:06:47

       So okay, logo churn, um, uh, uh-

    7. LRLenny Rachitsky1:06:51

       Pricing.

    8. JCJason Cohen1:06:51

       Pricing.

    9. LRLenny Rachitsky1:06:52

       NRR.

    10. JCJason Cohen1:06:53

        NRR, and then maybe it stalls. So this is really a stalled question. Maybe your acquisition channels, your marketing channels, are saturated. We're done. I mean, we're, what, what we tend to do is flog the people doing AdWords, "Get more!" Flog the SEO people, "Get more searches," right? It's possible that this is it.... maybe this is it in some sort of physical law, there literally isn't anything else, or maybe this is it, just this is how good we can be. [chuckles] Like, we're just not, uh, this is it, right? But there really are, uh, limits, you know, the- it's- the- there's different words for it. Inventory is, is sort of the old word, like with magazine ads, uh, inventory was the word. But there's just this, uh, amount. Like, there is only so many searches in your area, and you can only appear once in the search results for a given keyword. So there is this limit of, like, what you can get, even if you were number one position and for everything, you know, other things that are, that are not even practical, uh, there's still a limit. And there's some kind of practical limit that's below there that we, we don't really know, but, you know, maybe we're there or maybe we're close. And worse, channels tend to decline over time. So I think people talk about S-curves, right? "Oh, I'd, uh, I didn't figure out this market, then I figured it out. You know, we, we, we, we unlocked it. Now we're getting, you know, 100 leads per month through Facebook or whatever." But then it kind of taps out, and then we go into this optimization mode. Can we eke out another blah, blah, blah, blah? Which is right. Oh, that's right, and you call that an S-curve because it's shaped like that. But that's not what happens. What happens is, it starts with an S-curve, and then it starts sagging. Its butt starts sagging down. So I wrote an article about this called the elephant curve, which is what I named it. Right. [chuckles] 'Cause it's like this trunk, and then, but then it's this butt. [chuckles] And w- what-- and, and there's different reasons why this happens, but if you talk to any marketer, they'll, they'll all tell you, "Oh, my god, let me tell you this story," right? [chuckles] They all have stories about it because, yeah, this is what happens. Um, there's different reasons that, uh, first of all, the, the audience gets saturated, you know, 'cause there- there's all these little marketing isms, and I don't know if they're true or not. I don't, I don't think any of it has any data that actually proves it, but whatever. Uh, like, you know, if worms... if, if words, uh, start with the same letter, that's better. [chuckles] Like, I don't think, I don't think anyone's ever proved that's true, but marketers seem to think so. Okay, well, one of the things is someone has to see it seven times before they act. Okay. All right, well, maybe they saw it seven times already, so they don't want it. [chuckles] You know, or they saw it 20 times, right? So, so, so you, you-- initially, you got-- you hit people who hadn't seen it yet, right? But now you have, and, you know, especially with magazine ads, as I used to do before there was no such thing, [chuckles] um, uh, that's exactly what would happen. You'd have this nice surge, and then, like, "Well, we've seen this. We've seen it before." So you, you still get a little trick-- you still get some because, you know, it was just that moment they needed to see it again. Okay, but, like, there's this sort of, uh... um, but a lot of people have already seen it, and they don't want

15. 1:09:41 – 1:12:04

    Why all marketing channels eventually decline

    1. JCJason Cohen1:09:41

       it. Or the channel is declining, and they'll never tell you. When I did magazine ads, every year, they would tell you what their circulation is, and every year it would go up, and then the magazine would go out of business. Conferences are the same way. [chuckles] Attendance is great, attendance is great. Oh, wait, we're out of business 'cause we couldn't get enough people to come. What? What? [chuckles] They said it was great. And but at-- but, you know, more quietly, AdWords, Facebook Ads, even SEO searches, it's, uh, this does happen all over the place. Affiliates, it can happen, and now with AI, I mean, I don't even know, right? It's disrupting everything. I... you know, we've all heard stories going all different directions. I think the answer is, I don't know. [chuckles] Like, shrug is the answer. And what will it be like in two years? Another shrug. But the point being, they're not all, they're not all gonna be growing a lot. Like, that's not, [chuckles] that's not one of the futures that AI will bring us, so it has this sag. That's just a very long way of maybe trying to prove this point, but it's yet another reason why you can't just rely on marketing forever, 'cause they not onl-- you try to stack things, but there's not, like, infinite number of marketing channels you could advertise in, that your customers are actually going to. And they sag. Oh, no, like, it's even harder to keep up. So, so it's kind of like the secret, like, in reinforcing my very first point here with, with this. But here, are they all saturated? Because we could flog marketing all we want, it's not gonna work. So maybe growth is slowing because this is, all our channels are saturated, possibly even sagging, but even if not, okay, not growing, and so we can't just flog the marketing department. It's going to take something else, [chuckles] right? Um, then the obvious thing is get more channels, but again, maybe there aren't any. So again, there, there's many possible things to do, but this is, like, this critical thing to notice, 'cause I guess I would put it this way: Do you know right now which channels are saturated and which aren't? If the answer is no, I'm like, well, okay, maybe that's... 'cause the answer is all. You know, that needs to change what you, how you think. Just adding one little feature and then hoping we can flog AdWords is not going to work. Even if the feature's great, not going to work. So there's, there's different things that could work, but that's not one of them, and yet that's probably what we're doing. Let's add another feature, and marketing can flog it, [chuckles] is, is often the answer. But if you're in this state, that isn't the answer. So this is, this is why, like, you could say it's obvious to say this and that, but if, but are, are you acting like this is true? [chuckles] You know, often we don't.

16. 1:12:04 – 1:13:36

    Direct vs. indirect marketing channels

    1. JCJason Cohen1:12:04

       Um, okay, so, so there are many things to do. Again, we don't have to enumerate all of them or something. Um, it's just simply the right question to ask. But for example, uh, some people are like, um, "We've done direct. Maybe we should try things like SEO and social and these other indirects, or vice versa. We're really good at SEO, but we've never taken out ads." Often, if you've done ads and they're optimized, you know what content might be good to write stuff for SEO, and maybe even vice versa, maybe. So it's a good idea, and sometimes it works, but here I have no data. I only have my, my feeling here, and a- actually, you probably have a lot more visibility into this. But my experience is, a product that's sold really well direct actually doesn't do well on things like social and SEO, and vice versa. If you're getting a lot of traffic through SEO, adding ads often, like, costs a lot and doesn't really move the needle. But you can tell me, like, is that... 'Cause I don't have data to support that, that theory.

    2. LRLenny Rachitsky1:12:55

       Yeah, my take is, like, you can always get some percentage of win from all these different channels, usually one channel's where most of your growth will come from. And so over time, everyone just adds every channel. Everyone's doing ads, everyone's doing SEO in some form, but it's usually, like, sales or word of mouth or ads that drives everything. Everything else is kind of this, like, little layer on top.

    3. JCJason Cohen1:13:15

       ... yeah, so, it, you know, should you do that? Yeah, probably, especially if you're at some scale, and you can just afford to, 'cause it's such a clear thing to do. But probably you'll have to get more creative about what it means to add a channel, or something like a new product or a new market, where it's, it's, it's actually new. It's expanding in a new way, rather than trying to incrementally expand what you're already doing.

17. 1:13:36 – 1:19:04

    Getting creative with new channels

    1. JCJason Cohen1:13:36

       So an example of getting creative on a channel is what Constant Contact did when they had this very problem of, growth is slow, we don't know how. We sell email marketing newsletters to small business before all these modern tools existed. And one of the things they did that restarted growth is they physically went to a bunch of cities and held workshops showing: here's how to do email marketing for your small business. So the restaurateur, and the dentist, and everyone would come to these sessions, and they'd teach them how-- of course, teaching them how with Constant Contact, [chuckles] so they became customers, right? Now, you would think there's no way this is cost effective. Physically being in these cities and dragging people in for a, you know, $20 a month product, like, no way. It was very effective and actually solved, in that moment, their, their, uh, restarted growth. They were very clever about... First of all, it's a clever idea, but then they were clever about how to do it. They took, like, power users who were also agencies, so, like, these could become customers of their... Okay, so it's all, like, you can be clever about, like, how is it that we do something, uh, something different, something new? So that's possible. Of course, it's always hard to say, "Think of something clever." That's, that's a weird finger-wagging thing to do, but okay, it's true. But, uh, yeah, it, it, it could be a different type of channel. For example, um, HubSpot famously, uh, this, uh, tested selling through agencies instead of direct. It ended up being 50% of their revenue after four or five years, so it's one of the main reasons why they were able to continue growing. Um, same thing happens with, uh, my company, WP Engine. Tons of our, uh, websites are sold through, uh, through, uh, uh, uh, agencies that create WordPress sites. So, um, so there could be something that's not direct anymore, that's, you know, another channel of human beings or something like that, could be... could, could in fact dramatically change your growth rate. Uh, there's lots of examples like those. So, but, but it could be, like, it's time for the next product. Like, and I said that earlier, because it's always possible. Of course, we all know that's very hard. It's, it's risky. I have sort of a framework that I use to think about that kind of expansion, which I'm happy to, happy to provide. I've also written it up, but I'm happy to just say it right here. But, uh, usually, you wanna stay in the target- in the target market you're already good at, and grow from there. But sometimes the whole point of the expansion is to change the t- or change the target market, or add something, where you're leveraging something else about the company that you have as an asset, going somewhere else. So this is what this framework helps decide. But, um, one way or another, you probably wanna, uh, plant one foot into some strength or asset that you have, move the other foot, which is the risky part, [chuckles] but the idea is that, yeah, but we have this big upside, so we're, we're taking that bet, and, like, that becomes a smart bet. Um, so with things... Uh, of course, that's true for any of these things, but especially if acquisition channels are full, and it's like, we literally can't ask the marketing department. Like, that's just not one of the choices. It almost forces us to start taking these more drastic bets, to say, "Well, we've got to do something," [chuckles] and that's not one of them.

    2. LRLenny Rachitsky1:16:29

       I just wanna keep saying how awesome this advice is, and how many people are gonna benefit from... Like, you know, none of this is like, "Oh, I've never ever thought of any of this."

    3. JCJason Cohen1:16:37

       Right.

    4. LRLenny Rachitsky1:16:37

       It's just, like, the very methodical, uh, sequence of questions you should be asking yourself to help you not just undo stalled growth, but also just come up with a bunch of great growth ideas. And this specific section, it's like, it makes sense. Somebody's discovered alpha in a growth channel. Say, uh, Snapchat just launched, TikTok just... You know, there's like, "Oh, cool, what's the new thing? Okay, let's get there quick." And then you drive a bunch of growth. It's awesome. Eventually, everyone's gonna start doing that, and so you should assume everything that is working for you now will slow down. Uh, I've never- uh, I've missed your post on the, [chuckles] the elephant, uh, S curve. [chuckles] What do you call it, the elephant curve?

    5. JCJason Cohen1:17:15

       Yeah, elephant curve.

    6. LRLenny Rachitsky1:17:16

       It's so- yeah, that's so real. Just- it's not just this S curve that will forever continue to drive when it will actually dip and [chuckles] decline over time-

    7. JCJason Cohen1:17:24

       Yeah

    8. LRLenny Rachitsky1:17:24

       ... because other people discover it and start using it.

    9. JCJason Cohen1:17:26

       Yeah.

    10. LRLenny Rachitsky1:17:26

        Uh, I love that. So the idea here is, and the classic advice is, uh, like, not, uh, whether it's an S curve or an elephant curve, think about, are you starting to approach the, the, the apex of that? And start to explore other channels before you slow down or start to dip.

    11. JCJason Cohen1:17:44

        Yeah, it's easy to hear stuff like, "Well, if marketing is, is full, do something else," and you go, "I know." But then you look at people's behaviour, and it's like, well, you're not acting like you know. [laughing] You know, so maybe it needs to be said in enough detail that you actually do something about it.

    12. LRLenny Rachitsky1:17:59

        And this is- it's important to note, this is a very hard problem. Most companies do not really solve this. They- something worked for them-

    13. JCJason Cohen1:18:05

        Sure

    14. LRLenny Rachitsky1:18:05

        ... and then it, it stops working, and then like, "All right, well, we found something," and then it just kind of g- went away.

    15. JCJason Cohen1:18:11

        Mm-hmm.

    16. LRLenny Rachitsky1:18:11

        There's a couple posts we're gonna link to in the show notes that will help you come up with ideas that are all around new growth channels that are emerging. One is by Emily Kramer around ecosystems as a new growth channel, and there's a lot of really cool advice there around this kind of emerging combination of influencers, and content, and partners, where it's your ecosystem that helps grow. Basically, there's a quote from the head of growth at Wiz, where it's like: "Why start with zero when you can start with 10,000?" Essentially growing through someone with an audience already. And then there's gonna be a post out by the time this comes out, around ChatGPT's app store, which is gonna let you submit apps, and that's a really interesting, potentially huge new growth channel for companies. So cool stuff happening there. So just to summarize, logo retention, pricing, NRR, marketing channel saturation. What comes next?

18. 1:19:04 – 1:25:57

    Do you actually need to grow?

    1. JCJason Cohen1:19:04

       The last question is, do you need to grow? So okay, growth is stalled, and if we assume every question before has been answered sat- in, in a satisfactory way, you could ask, "Hey, is that a problem?" What do we mean by grow?... what do we need to do exactly? Now, of course, you should know these kind of things, the goals, all the time, but, a- and again, like, obviously, the answer could be once again, "Oh, new products." The- these other things where, like, this company, when we say, "Do you need to grow?" If we define you as this product in this market, in this company, the answer might be no. What, w- what we need to do is have a different product or in a different market or a different thing. Or, uh, you could, you could change the word, uh, revenue. If you say, "Do you need to grow revenue?" You could change the word revenue and say, "You know what? What we could do is maximize profit instead of revenue now. We've been maximizing revenue, but maybe we maximize profit instead." And so this is a company like 37signals, or really lots of bootstrap companies who have hit some sort of limit and realized that's okay. Like, the founders are getting paid millions of dollars a year in dividends, and like, it's okay. [chuckles] You know, like, maybe I don't have to get... In fact, if I got bigger, it might be an organization that I don't like, or serving a market segment that I don't wanna serve or whatever. Um, and so maybe, maybe growing forever isn't the goal actually, or growing revenue isn't. Um, you could ask philosophically: Why grow anything? Why isn't it just okay to have stasis? And we all have heard the phrase, "If you're not growing, you're dying," right? This is a classic company thing. Is that true, or is that the kind of thing that like investors use to, like, make founders grow e- or try to grow even when they shouldn't? It might be, but I would submit that even at a bootstrap company that has other values and culture, um, other than growth at, at all costs, that that phrase is still fairly relevant because if the company's stagnant for years, is that a great environment for everyone? As the founder, did you start this company in order to do the same thing every day? Is that, is that why you did it? Do you really wanna do-- Is that fulfilling for you? What about everyone else? Nobody, nobody wants to further their career, they just wanna do the same thing every day and never further their career, not really learn anything, not really innovate? Does it feel good to just not be, not, not be growing? The answer could be yes. Uh, you know, if I'm a CPA, and I have some clients, and life is good, [chuckles] um, the answer could be yes. Like, you know, I'm not, I'm not saying... I'm not dictating the answer here, right? I'm just asking, 'cause a lot of times, whether it's our careers or as founders, our companies, a lot of times we've just been in the mode of, "I've gotta grow, I've gotta get promoted, I've gotta do more, I've got my resume." We've got in that mode for so long, like, maybe our whole life, that I was gonna say lose sight of, but maybe we never had sight of: Wait, does this make me happy? Is this what I really want? Am I fulfilled doing this? Or even if I do have these goals, have I gotten stuck in a rut, where my goal is growth and, you know, I don't know, more money, more everything, and I'm-- but I'm stuck in a rut here? Like, what-- Sometimes we forget to take a step back and go, "Wait a minute, what? [chuckles] Is this, is this still right, or do I need to turn the page and have a new chapter of life right now?" You know, s- and so this question, do, do you need to grow, or if you're not growing, you're dying. Well, for some people, no, they like doing the same thing forever, and, and, and, uh, that's great, actually. That's a, that's a... That's nice. But for many people, especially the kind of people who want to get into product and build stuff and innovate, and people who start companies, a lot of people like that are not the kind of people that wanna just, you know, kind of do rote things for twenty years. And so the not growing part, what I like to say is maybe the you in, "If you are not growing, you're dying," is you, the person, as opposed to you, the company. It's also you, the company, right? But, like, what if we took it to mean you? If you are not growing, then in some sense, maybe for some people, you're dying. Maybe if you're listening to this, that's you. You gotta-- You're a shark, and you gotta go. And we all know people, too, who claim they hate work, or maybe they do hate work. Let's not say claim. They do hate work, but then they retire and, and, and kind of go downhill because they don't have a purpose or this or that and the other thing. In the e- in that case, it was true. If they're not growing, they're dying, literally. So, uh, you know, again, I don't mean to overstate this, and I certainly don't mean to claim that there's some answer that's right for everybody, of course, but surely, this is the right kind of question, and surely, for many people who are listening to this, the answer is yeah. I mean, in some sense, some very rough sense, that's probably right for me. And so if I'm in a stagnant situation, and really every other option has been exhausted and isn't gonna happen, this is simply a stagnant thing. Maybe there's something else needs to happen. I need to leave, the company needs to change some drastic way. I sell the company, I change jobs. I, I don't know. Like, of course, it's gonna be super context-specific and, and, and personal, right? But, like, something dramatic may need to change because nothing incrementally is changing. So this l- final question: Do you need to grow? Or if you're not growing, you're dying, is that true, and are you therefore dying, and what needs to happen? You know, so if you were looking for more metrics and another framework, sorry, this ex-- is as exi- existential, but it is. It is existential. So, uh, uh, do you have to only ask this at the end of the chain? No, of course, you should feel fulfilled, and, you know, of course, you wanna be checking in with yourself at least annually, of course. But, um, I sort of put it at the end of my list in the sense that I'm assuming the original question is about the company, [chuckles] you know. Um, uh, but, but especially with smaller companies, but, but also, also with big public companies. There's plenty of big co- public companies that aren't growing, aren't there? [chuckles] So, like, this is, this is, uh, this is true of all scales because there are natural sizes for things. Um, so yeah, it's a little philosophical, but, uh, I think it's quite important.

    2. LRLenny Rachitsky1:25:18

       Such a beautiful way to wrap up this piece. Uh, a lot of people listening to the podcast are bootstrap founders, and-... for them, this is actually very much an option.

    3. JCJason Cohen1:25:27

       Mm-hmm.

    4. LRLenny Rachitsky1:25:27

       They can just be happy with the revenue they're generating. Like with my newsletter right now, I'd be very sad if it stopped growing, but also just it's, uh, amazing the life it has created for me. And even if it did stop growing and just stayed flat and doesn't become an elephant curve, that'd be incredible. In like, in practice, psychologically, still hard for that to be the case, and that's why this component of the, of the sequence is really important. Like, why do you actually need it to grow? Is that just your ego? Is that just like, I'm used

19. 1:25:57 – 1:29:27

    Deciding when to quit

    1. LRLenny Rachitsky1:25:57

       to growth?

    2. JCJason Cohen1:25:57

       It can also help you d- help you avoid doing unnatural things that you actually regret to grow. So like, i- if growth at all costs is just the, the thing, like, there's probably ways you could, quote, unquote, "grow the newsletter" that you would just say, "I just wouldn't be proud of that, and the newsletter's doing so well, I don't need to do that." And so again, maybe that's a softer version, 'cause growth hasn't actually stopped, but okay, it's a softer version of, um, I certainly don't agree with gr- you, you might say, "I certainly don't agree with gr- growth at all costs. I'm gonna grow as much as possible within the things that I'm proud of." Like, if we grew fast but the content was crappy, I'm just not willing to do that. It's, like, not the point, you know? And so it helps set up these boundaries of like, wait a minute, not if, dot, dot, dot. And, uh, you know, early on, we may not have that, um, that flexibility. You could argue that you should have those values early on because that's who you are and that's what you're doing and people will respond. So I could argue you should have that all along. But I could also argue that at the beginning, you're just trying to do something where you don't die. You're starting to blog, you're probably copying other people's style. You probably don't have that much, uh, unique things to say, so there's a lot of re... That's okay. You're just trying to get going. It's okay. Now, 20 years later, if you have no style and no voice of your own and nothing new to say, that's probably not good, but to get going, sure. So, um, sometimes we have this thing where we get going with maybe looser, I don't wanna say values, I'm not saying that's unethical, but, like, looser sort of bar or a pride that we have in our own work, and we tighten it up as we're sort of able, [chuckles] um, as we can afford to, you might even say. So good, but that's a, th- then that becomes a nice filter here of like, what, what is it, in a greater sense, I'm trying to do here, I'm willing to do here? Um, so if you're not growing, you're dying fair, but, like, that has to come with these limits, and, and the, the more successful you are, the more you can be serious about those limits.

    3. LRLenny Rachitsky1:27:43

       I think an important element of this is also the product you're currently working on, maybe it's okay for it just to not grow. There's a good opportunity to do something else, have this thing maybe running on the side, maybe sunset it at some point, but it's a good opportunity to be like: Okay, wait, what else is out there? We had a, a recent podcast conversation with Matt McKinna- McGinnis, uh, CPO at Rippling, and there's some really good advice he shared on just when to quit, when to quit your startup. Just like, you know, if it's like four or five years in and it's just not clicking, maybe it's time to, to move on. And even though people do succeed years in, uh, most likely, it's not gonna be you.

    4. JCJason Cohen1:28:16

       I have a book almost out now that's on pre-order about topics like what we've been talking. The next book I wanna write is on this topic of: how do I make these decisions of uncertainty? Like, maybe it is time to quit. Maybe I should move to a different city. Maybe I should marry this person. Maybe I should launch this company. Maybe it's time to... Maybe I should use this strategy, where you wanna u- you, you want to use probability and expected value. It's unlikely that, dot, dot, dot, right? But the truth is, we don't know what the probability is. We don't know what the probability curves look like. [chuckles] We actually can't use expected value, and anyway, even if you could have expected value, I am a human being, this is my life, and I either sell the company or I don't. And so [chuckles] all this stuff about probability and, like, that's not-- that doesn't apply to me. I need other ways of, of sorting this out. So I guess I would just say, briefly, um, probability is not going to work for these decisions.

    5. LRLenny Rachitsky1:29:12

       Mm.

    6. JCJason Cohen1:29:12

       So that doesn't say what is right, um, but it's not that. And so, uh, which is nice, 'cause you can put those tools down. I'll do some market research to see if I'll sh- I should sell my company. Nope. [chuckles] That's not where the answers are.

    7. LRLenny Rachitsky1:29:26

       More, uh, more questions

20. 1:29:27 – 1:33:21

    Book announcement

    1. LRLenny Rachitsky1:29:27

       than answers on that one.

    2. JCJason Cohen1:29:28

       [chuckles] Yeah.

    3. LRLenny Rachitsky1:29:28

       Um, speaking of the book, um, let- let's give you a chance to share what is, what you're working on, and when this is coming out, and when, where folks can find it.

    4. JCJason Cohen1:29:36

       Sure. So the book is called Hidden Multipliers, and you can pre-order it at hiddenmultipliers.com. Or I guess if this is out long enough, I'll, [chuckles] it'll be-- order it, I guess, depending on when you're listening to this. And it's, it's a lot of stuff, kind of like we were talking about today, um, these questions of, uh... It's called multipliers because the idea is little things that you can do or little decisions you can make that have a huge impact, and like moving the cancellation rate from five to four%. [chuckles] Sounds small, has a huge thing. Onboarding, as opposed to later, huge thing. So those are some examples, but the book is, is of course, full of different kinds of topics, but all of this idea of the stuff that has such a big impact on things like revenue or profit. Um, and either, just as you said earlier, either like, either maybe you have never thought of it that way, so you didn't really-- you weren't thinking about it right, or yeah, you, you've heard that, you say, "I know," but your actions don't reflect it. And so if we go deep enough with examples and specific things to do, then you can actually act on that, [chuckles] on that supposed knowledge and, and, and realize those multipliers.

    5. LRLenny Rachitsky1:30:40

       And, uh, just to remind people, you're on hiddenmultipliers.com.

    6. JCJason Cohen1:30:44

       Yeah.

    7. LRLenny Rachitsky1:30:45

       And there's an S at the end, Hilton- Hidden Multipliers.

    8. JCJason Cohen1:30:48

       Right. There's more than one. [chuckles]

    9. LRLenny Rachitsky1:30:50

       There's many. Yes, more than one.

    10. JCJason Cohen1:30:51

        Yeah. Yeah.

    11. LRLenny Rachitsky1:30:52

        Jason, I had other things I wanted to talk about, but I feel like this episode's actually gonna be stronger if we just focus on the thing that we've been talking about, which is on stalling growth. So if we do that, is there anything else you want to mention or leave listeners with before we get to a couple corners and then the lightning round?

    12. JCJason Cohen1:31:13

        I think if you, if you tried to find a common thread throughout all this stuff about growth, it comes back to the customer getting value. And I know we just, we already talked about that, but I think if, if there could be one thing-... where it would help solve kind of all of it, it would be that they really are getting value. Your product actually promises the right thing, and then it actually delivers on that thing, and the customers can onboard so that they can do the thing, and the customers know, they realize that they're getting the thing [chuckles] and you're measuring the thing, so you know it's increasing. Um, it- that is probably if I was an LLM, I'd probably say that's the common thread. Or if, you know, there's many ways that manifests, of course, but, but, but, but if that's your North Star, is how are we actually creating value in the way the customer values it, in their language and their way, and their way of understanding it? I wouldn't say all the pieces magically fit into place, but certainly isn't that sort of the, the root thing that, that is going to make all this stuff work? Then there will be a good way to do pricing, and they will stay as long as possible, and, you know, like, these things will probably be right if, if that... So this idea of creating value for the customer and spl- and then figuring how to split with them is probably the root idea. And of course, I hesitate, 'cause platitudes like that are actually not actionable, [chuckles] not very actionable. Like, all right, well, I'll move on with my day, and that's why Twitter's not so useful. But given that we've gone into so much detail, perhaps that's a nice way of summarizing it.

    13. LRLenny Rachitsky1:32:39

        I think that's such an important point. I think what's also interesting is some of your advice is the value may- you may be picking the wrong customer, the wrong market, you may be positioning it wrong. So the value may be there, you're just trying to convince the wrong people about it.

    14. JCJason Cohen1:32:54

        Yeah. Yeah, there's so many ways to get it wrong.

    15. LRLenny Rachitsky1:32:56

        [chuckles]

    16. JCJason Cohen1:32:57

        Uh, there's... Right? Because, because all the-- like we said, all these things have to be right. And you're, you just said another one, which is, and you have to say it in a way that when this person hits the homepage, they know it. [chuckles]

    17. LRLenny Rachitsky1:33:05

        Mm. Mm.

    18. JCJason Cohen1:33:06

        It's true, but do, do they know that? [chuckles] You know, it's just so many things have to go right.

    19. LRLenny Rachitsky1:33:11

        What a, what a tough job we've got over here.

    20. JCJason Cohen1:33:13

        Yes.

    21. LRLenny Rachitsky1:33:13

        Just solving people's problems. Come on!

    22. JCJason Cohen1:33:15

        Well-

    23. LRLenny Rachitsky1:33:15

        Okay

    24. JCJason Cohen1:33:16

        ... at least we're growing.

    25. LRLenny Rachitsky1:33:17

        [chuckles] So now we will be, after this conversation.

21. 1:33:21 – 1:34:35

    AI corner

    1. JCJason Cohen1:33:21

       [chuckles]

    2. LRLenny Rachitsky1:33:22

       Okay, so I'm gonna take us to, uh, a recurring corner, a recurring segment on the podcast that I call AI Corner. What's one way that you have discovered, uh, using AI in your work or in your life, that might be helpful for folks to hear?

    3. JCJason Cohen1:33:37

       There's a lot of data on the internet, and it's often in things like images, which makes it hard to do your own analysis or plug it in or et cetera, uh, come up with your own models or apply it. But I found that AI is really good, actually, especially Gemini, at say- you just give it to it, and- give a chart to it and say, like, "Make this into a table that I can paste..." Like, literally say, "That I can paste into Google Sheets." And it will do it in a way that literally you can copy, and, and it will actually paste correctly into Google Sheets, and then you can do stuff. So especially with the book and, and, and my articles, uh, I, I, I love to use real data and as- whenever I can, of course, and, um, um, so I, I do that all the time. So, um, I think that kind of interpretation is, uh, it is very useful. And so all of a sudden, you can get 10 examples of something and test a theory, where before it was kind of just too hard and you didn't.

    4. LRLenny Rachitsky1:34:23

       That's an awesome tip. 'Cause people know you can generate all these infographics-

    5. JCJason Cohen1:34:27

       [chuckles]

    6. LRLenny Rachitsky1:34:27

       ... with, um, especially with, with Gemini and OpenAI and all these things. Uh, that's really cool to know you can just feed it, "Here's a, here's a chart, make it, make it text."

22. 1:34:35 – 1:37:43

    Contrarian corner

    1. JCJason Cohen1:34:35

       Yeah.

    2. LRLenny Rachitsky1:34:36

       Okay, I'm gonna now take us to Contrarian Corner. The question here is, what's something that you believe that most other people don't?

    3. JCJason Cohen1:34:43

       A/B testing doesn't work very well, and it doesn't work on most things. It won't work on strategy or vision or insights, like nothing actually important to the success of the company. You don't A/B test whether Uber is a good idea. Um, and then even when you do A/B test, the details, where I agree, like sometimes that can work, what happens is people will try things like, "Oh, I'll just, you know, try this verb and that verb, and this ad and that ad," and then like, "Oh, the seventh or eighth one, I got a positive result. That must be good." And what happens is, um, you keep doing that. You pick the good- best one, and then you, you go on and you find another one, you pick the best one. And then a, a year later, you look back, and you should be like 50 or 100% better, 'cause you've stacked these things, and you look back and like nothing's different. The conversion rates are the same as they've always been. You say: "What the hell happened? I thought I picked the, the winner." And the, and the answer is, in a combination of the tools not being statistically accurate, which they're not, and the fact that you will get pro- false positives, even if the tool is statistically accurate, means that most of them are false positives. Even if the tool's 95% accurate, when the thing you're looking for is rare, which it is, in the case of A/B testing, uh, it- the false positives are, happen more often than the actual thing happens. And so most of the results you get are false positives anyway. So as a result, this isn't true of all A/B testing, but for mo- what most people do when they just do the sort of the, the mundane A/B testing, you can't A/B test the important things, and the details are mostly false positives, so it's an enormous waste of time unless you're incredibly sophisticated. I know there's special groups that actually are very sophisticated. Fine, if you're not doing that, it's sort of like the poker table. If you don't know who the patsy is, it's you, right? If you don't have all of this information and, and knowledge about A/B testing, then you're the patsy.

    4. LRLenny Rachitsky1:36:31

       Bam! All right. [chuckles] Uh, I will just say that I have found A/B testing useful in my career. I think it's maybe at a certain scale, when you're just kind of trying to optimize and continue growing-

    5. JCJason Cohen1:36:42

       Yeah

    6. LRLenny Rachitsky1:36:42

       ... you know, where it's like millions of users-

    7. JCJason Cohen1:36:45

       Oh, yeah

    8. LRLenny Rachitsky1:36:45

       ... like a percentage gain is like millions of dollars.

    9. JCJason Cohen1:36:47

       True.

    10. LRLenny Rachitsky1:36:47

        Most people are not working at that scale.

    11. JCJason Cohen1:36:49

        Right.

    12. LRLenny Rachitsky1:36:49

        Most people-

    13. JCJason Cohen1:36:49

        Right.

    14. LRLenny Rachitsky1:36:50

        Yeah.

    15. JCJason Cohen1:36:50

        Yeah.

    16. LRLenny Rachitsky1:36:50

        So just wanted to c- uh, [chuckles] for folks that find it valuable.

    17. JCJason Cohen1:36:54

        That's true.

    18. LRLenny Rachitsky1:36:55

        Uh, but I love it.

    19. JCJason Cohen1:36:56

        However, even so, on your, on your own podcast, when you were interviewing-

    20. LRLenny Rachitsky1:36:58

        Yes

    21. JCJason Cohen1:36:58

        ... the guy from Shopify, um, and he was saying how, uh, maybe a third of the things that they found with their systems-

    22. LRLenny Rachitsky1:37:06

        Mm

    23. JCJason Cohen1:37:06

        ... just disappear. They just magically disappear.

    24. LRLenny Rachitsky1:37:08

        Mm.

    25. JCJason Cohen1:37:09

        And they're- they have a team of 100 people, and they're really good at it.

    26. LRLenny Rachitsky1:37:12

        Yeah.

    27. JCJason Cohen1:37:12

        And, like, their effects disappear all the time. So they double-check later whether the, whether the immediate effect goes away, because even then.

    28. LRLenny Rachitsky1:37:19

        Right. I think that was the CTO of Shopify conversation.

    29. JCJason Cohen1:37:21

        Oh, yeah. Okay.

    30. LRLenny Rachitsky1:37:22

        Yeah.
23. 1:37:43 – 1:46:03

    Lightning round and final thoughts

    1. LRLenny Rachitsky1:37:43

       go. Well, Jason, uh, I am, uh... It's always a really good sign when I'm just like, "I can't wait to get this conversation out the door and, and into people's minds," because this, there's so much value here. Uh, I'm just, uh, already anticipating all the people are gonna reply and just like, "I get so many ideas for what to do with my product," um, which is exactly the goal. And with that, we have reached our very exciting lightning round. I've got five questions for you. Are you ready?

    2. JCJason Cohen1:38:06

       Boy, uh, y- yeah, I mean, I don't like talking a long time anyway, so lightning is great. [chuckles]

    3. LRLenny Rachitsky1:38:10

       Here we go. [chuckles] What are two or three books that you find yourself recommending most to other people?

    4. JCJason Cohen1:38:16

       For writing, On Writing Well by William Zinsser. I know I'm not the only one, but that's kind of the point. Um, on my best day, I write like that. Um, and then for, for, uh, for product, I actually like Crossing the Chasm, which of course everyone's heard of, but what I find is no one's read it. [chuckles] So that you know the little picture, and you think you know what the chasm is... What I find is very quickly I, I realize, "Oh, you haven't read the book. You saw a blog post," and you- and there's so much good stuff in there. How to define a market and really what to do with this model. It's fantastic, so I highly recommend reading the book.

    5. LRLenny Rachitsky1:38:51

       I've had Geoffrey Moore on the podcast. We dove into a lot of this stuff. One of the things that always stuck with me is, um, when early companies are looking for someone like them to adopt the thing, that's something that really stuck with me. It's not like they're looking for an early adopter to be like, "Oh, this is awesome!" Like, they're looking for someone that feels like them to say, "This is great." And so the early adopters are just gonna spread to other early adopters, and there's, there's work to do-

    6. JCJason Cohen1:39:14

       Yeah

    7. LRLenny Rachitsky1:39:14

       ... beyond that.

    8. JCJason Cohen1:39:14

       He- part of that's 'cause he defines a market in, among other things, as, and the people in the market respect the opinions of the other people in the market.

    9. LRLenny Rachitsky1:39:23

       Exactly.

    10. JCJason Cohen1:39:23

        And that's when you realize: Oh, so jumping to a different market, it's not impossible, it's just, you- like, like, case studies aren't gonna work.

    11. LRLenny Rachitsky1:39:29

        Mm-hmm. Yeah, it's a new thing.

    12. JCJason Cohen1:39:30

        Yeah.

    13. LRLenny Rachitsky1:39:30

        Okay. [chuckles] Uh, and then On Writing Well, such a huge fan of the book. That's, like, the book that most helped me write, and if you summarize the book, for me, it's just cut. Cut more and more of your stuff. [chuckles] There's always-

    14. JCJason Cohen1:39:42

        Yeah

    15. LRLenny Rachitsky1:39:42

        ... to cut.

    16. JCJason Cohen1:39:43

        I love this phrase where he's, he's, um, he's on a panel with, with this guy who is, like, an amateur writer, and his, his kind of summary is, to that guy is, I, I, uh... He- the, the guy told him, "I never knew writing could be hard," and Zinsser says, "I never knew writing could be easy." [chuckles] And I think both of those kind of summarize the, the, uh, the turmoil of being a writer.

    17. LRLenny Rachitsky1:40:07

        Yeah, the classic maybe Hemingway, maybe not, quote: uh, "Writing is easy. I just sit at the typewriter and bleed."

    18. JCJason Cohen1:40:14

        And bleed, yeah.

    19. LRLenny Rachitsky1:40:15

        So good. Okay, moving on. Favorite recent movie or TV show?

    20. JCJason Cohen1:40:19

        ER, from 1994.

    21. LRLenny Rachitsky1:40:22

        Controversial. [chuckles]

    22. JCJason Cohen1:40:23

        15 seasons.

    23. LRLenny Rachitsky1:40:24

        Mm.

    24. JCJason Cohen1:40:25

        Why do I, why do I say that? Besides the fact that I think it's good, I have a 16-year-old daughter, and we have- we're now on Season, I think, 13, watching this whole thing. She says it holds up after 25 years, and being, you know, Gen Alpha or whatever, I don't even know what it is. And so if, if this is an era, uh, uh, an era when, you know, shows were an hour long and seasons were forever, and, uh, and she says it's great TV, it must be great TV.

    25. LRLenny Rachitsky1:40:51

        Mm. Wow, I've not had that [chuckles] on this podcast yet. Um, also The Pitt. I don't know, if you enjoy ER, you'll enjoy The Pitt, which just won all these awards-

    26. JCJason Cohen1:40:59

        Yeah, it's good

    27. LRLenny Rachitsky1:40:59

        ... on Netflix. Um, fun fact, my cousin was in ER, not as a recurring character, but she was, like, a young girl patient-

    28. JCJason Cohen1:41:07

        Nice

    29. LRLenny Rachitsky1:41:07

        ... and now she's a fancy actress in the world.

    30. JCJason Cohen1:41:10

        Oh, cool.

Episode duration: 1:46:03