Craig Zingerline Reveals Secrets to Scaling Your Startup

Hey everyone, how's it going? My name is Ayan Isaacs, I'm the head of global growth for the Founder Institute. Thank you so much for being here today, it's another global event for us, for those of you who attended a few of our events, we do these events usually twice a week, this is I think our third or fourth one for January, we've already started and like each one of them have been amazing, today we have another amazing guest, his name is Craig Zingerlin, I don't even know how to describe this guy, but he's like a like an awesome individual. He's personally mentored me over the last few years. So super excited for him to come on board and share his knowledge and intel around growth startups and a lot of amazing things. We've had about 650 people sign up for this event. We're gonna be expecting about 300, 300 people or so. Before I bring Craig on to self-introduce himself and showcase his content, I just wanna kind of go over some housekeeping real quick. So the first order is, as you can see, this platform is known as Airmeet. There's a chat function on the right-hand side if you're on your laptop or tablet, please use the chat function to communicate with everyone. So I guess the first question I usually ask is where's everyone calling in from? So I'm based here in Dubai, UAE. I know Craig's based in, I think, Alexandria, but yeah, we have a pretty international audience. Okay, so I see Portugal, Dallas, Romania, Delaware, Chicago, awesome. Vancouver, so pretty, Virginia, Barbados, wow, okay. Ottawa, represent. Yeah, you went to Carleton, cool. Okay, I'm super excited for everyone to be here today. Apart from the chat, underneath the messaging icon, you'll see a Q&A button. Please use the Q&A button to feed me questions. What's going to happen is I'll bring on Craig, Craig will do about 20 minutes of content, then we'll do about 15 minutes of Q&A. I'm only going to use the Q&A button. So if you have a question specifically for Craig, throw it into the Q&A button, the Q&A tab. Last but not least, at the bottom you'll see a bunch of emojis. Please use the emojis to give any reactions or to, if Craig is saying something interesting or not, just like it's a good way for us to understand what the audience is thinking. Okay, with that being said, I'm gonna bring Craig on stage. While that is happening, I wanna run a quick poll to know, so I know who the audience is. Publish on this and then, okay, so everyone should be able to see, just, we wanted to know at a very high level where, where you folks at in terms of startup, are you guys pre-revenue or currently generating revenue? Cool. So while that's coming in, okay, Craig, you're, you're with us.

I am just like, thank you so much. Thanks, Founder Institute, for having me. And thanks everybody for making the journey with me today. I am based in Alexandria, Virginia in USA, but truly appreciate a global audience. Ethiopia, amazing. I saw, I think it was Founder Institute Ethiopia had tagged me in one of their posts. Thank you for being here. For some of you, it's the middle of the night. For some of you, it's early morning, and I'm really grateful for you to be here. So I've got about 20 minutes of content. I've actually got about an hour's worth of content packed into 20 minutes. Okay, so we're going to move really, really, really quickly, and I'm going to share my screen. Everything will be available, the recording, the assets that I'm going to present today. Everything will be made available to you after this, so don't panic if you don't have time to get it. Today I'm gonna talk through what I consider the essential elements of startup growth. And this QR code, what this will give you access to is a set of tools. It'll download an Excel spreadsheet for you that you can use. I just ask if you're gonna download it, don't be playing with that while we're going through the talk because I think the talk will be a lot more relevant, but you can play with the tools. After. If you have any issues, just reach out to me, but I will share this again later. But if you have an opportunity, download these tools because it forms a lot of the basis of what I'm going to cover today as we go through the material. So with that, I'm going to dive right in. So the— by the way, so many of you are pre-revenue, which is, which is awesome, right? So like this, I think it's going to be super relevant because we're even going to talk about startup validation. It looks like 84% of you are in this pre-revenue state, so that's, that's super cool. Hopefully you find a lot of value in this. But for those of you that are just getting going, startups are hard. And we all started companies because we think we can change the world, but the reality is the vast, vast majority of startups fail within 5 years. And guess what? I know failure really well, unfortunately. Okay, so of those startups that make, make it, right? So this is just the startups that don't die, and these are the SaaS-specific. Only 13% of them are able to ever make it to $10 million in ARR after 10 years of being in business. And this is from a ChartMogul report. Not to get too scary here, but like, growth is also probably slower than what you read about on TechCrunch or what you hear from investors. Like, most of us are in the weeds grinding it out And we still don't see growth rates, um, like the ones that are on the screen, right? So the median SaaS business grows at about 2% per month. Yes, all slides will be shared, by the way. But some companies hit what we call escape velocity or warp speed. And so again, from ChartMogul, um, the best-in-class SaaS businesses reach $10 million ARR in 3 years. I mean, that's just totally bonkers. It's totally crazy. And you can see in green here, this best-in-class does it in 2 years and 9 months. This is $10 million in ARR. But most of us will, if we survive, we're going to kind of be in this end, right? What I'm going to talk about today though is what separates the people that don't end up getting on this list at all and the ones that end up over here in green and what some of those characteristics are and some of the things that they work on along the way. So why is this so hard for most of us? Like, drop in chat why you think so many startups die or so many startups just don't get to revenue. Just put it in chat, there's no bad idea here. Why do so many startups die? Poor planning, wearing too many hats, limited focus on distribution, Less momentum, creating a product that people don't want, idea validation, bad market fit, no product-market fit, poor team. Keep it coming, this is awesome, right? This is amazing. Undercapitalized, not clear market fit. Okay, so I study this stuff, but before I dig into that, I'm going to just tell you a little bit about me. I'm a 6-time founder, current CEO and founder of a company called Velocity Growth. I've had executive roles at Sandbox, Upside Travel, Red Tricycle, Votion, New Signature, I've had some pretty good wins along the way, um, and some complete epic failures, like everybody gets laid off, the whole thing gets shut down, um, and you regroup and you go find another job type of situation, and everything in between. Um, I have the privilege of having visibility into dozens and dozens of startups, both as a mentor, as a vendor, and as an advisor and a small check-writing investor. And so a lot of what I'll share today comes from both my internal experiences with companies but also from what seeing on the ground in the market. And here's what I found. I found that most of the successful startups that I come across, regardless of their industry, follow the same general playbook, and that is that they validate concepts before building. A lot of you actually said idea validation in here. They build a highly efficient and effective product strategy. They know their key inputs and outputs of their business. They understand how to build customer acquisition and activation loops. They know how to retention. They know how retention works. They know how to model it. And in many ways they actually use retention as their superpower.

Okay.

So we're going to keep moving relatively quickly here. So let's talk about failure a little bit more for a second. CB Insights in 2018 came out with this report and they've updated this a couple of times, but this is the best one that I've seen. These are the 20 reasons why. Companies fail. I'm gonna move really, really quickly. Again, this is being recorded. In 2006, Paul Graham put out The 18 Mistakes That Kill Startups, and just take a quick glance at these. And finally, Startup Genome studies startup success and failure, and, um, what they found is that the companies that make it, uh, and that are successful long term, they're actually— they're not perfectionists. They write fewer lines of code, hire more slowly, and they don't spend as much money, right? And these are all direct correlations that result in success or failure. I just find this super interesting. But the reality is, if you look at those metrics and then if you're in the game for long enough, you realize that value generally is not about the product at all. It's actually not. But that's the thing that we all obsess over, over and over and over. And I'd say the number one rule for all of this, for getting started on the right track, especially for those of you that are in the early stages and are pre-revenue, is that you have to validate your concepts and your ideas before building. Okay, this is what usually happens, and I know I'm moving quickly, but I have a lot to cover, so you'll get the slides, we'll get the recording. You probably think you've got a great idea. Like, why the heck would you start a company if you don't have a great idea, right? Everybody thinks they've got a great idea. Maybe you talk to some people who agree. They build, then you build a bunch of stuff and then you launch and then it's crickets. You're like, what the hell happened? Nobody, nobody cares. Okay. And then you have this like, oh crap moment. Like, what did I just spend 6 months doing? I've been there a couple of times actually. And then you start to think about validation and how you get in front of people and distribution. And all of those things that we're going to cover today. What amazing founders though, what they do is they value customer input over product velocity early on, meaning they, they will actually slow down a build to get validation from customers or potential customers, and they build in distribution loops while they're building their MVP or their market testable product. And these companies generally will find product-market fit in a segment before they expand out. And so, um, it just means they're very, very intentional about what they're selling and who they're going after and actually how they're doing that from a distribution standpoint. More tactically, what this means is that they run willingness-to-pay interviews, they run performance marketing to validate demand, they might do cold outreach. To people to get their input. They might talk to people in coffee shops. They'll get input on prototypes. They'll do pre-sales before launch. But the hustle is real, everyone, right? Like, the hustle is real. Like, you might see on LinkedIn that you can work 5 hours a week and be successful, but that's just not what I found. Either like I'm dumb or I've just not been lucky enough, or just not the reality. Like, most of us have to really hustle and work hard. And a good way to have some perspective on this is that Airbnb almost didn't get off the ground. They sold cereal to keep their dream alive. And so when they got into Y Combinator, or through the interview process, Paul Graham was kind of like, I don't really think this concept's going to work. And then they told them that they got people to spend $40 on boxes of cereal and they sold $30,000 worth of product. And Paul Graham said, if you can convince people to pay $40 for a $4 box of cereal. Maybe you can get strangers to stay in other strangers' homes. And that's part of that founder origin story of Airbnb. So the hustle is real, and I think it's important. The next thing that companies that do well that I see do is they build highly efficient product strategy. This is what we think we need to do on the bottom here. Like, we think we're going to build a product backlog, sprint backlog, a sprint, and then launch a bunch of stuff. But like, what actually works is building the things that you know you have to build in order for your idea to be viable, right? So I, I've run, um, growth at two different companies that had a travel component. If you couldn't sell travel, there was no product. So we had to build the travel component, but everything else is an experiment-led stream. And great founders get this, and they're relentless about not building features too early. So tactically, they don't just build They run these willingness-to-pay interviews, they run all these things, they do all these things that I talked about before, right? But they also don't build every feature they think of. And this data here comes from a source that I found recently. So there's a Medium post by this guy named Paul Levchuk, who I don't actually know, but I came across this data. And anecdotally, I felt this as a product manager for a long time, that the more crap you build, the worse retention is. Well, why is that? And what he found through a lot of statistical analysis is that the— as a rule, the more popular a product feature is, the lower its retention is. Some product features can even harm retention, and up to 80% of product features have no impact on retention at all. So what is that telling you? It's not about just building a bunch of stuff and putting it out there. It's all those other principles around making sure that you're building the right thing for the right type of audience, that it actually adds value. Okay, so the next section here, and this is a hard and fast rule for literally every company that I've ever seen exit or do really, really well, is that they at their operating core have a solid growth model that they're working on. And again, you can download the tool set here. I'll pause for 5 seconds. Download the tools, they will be made available after as well. This is a set of spreadsheets that I use every single day with my companies that I run. Okay, so you need a model. I'd like to say that you can't strategically grow your business if you don't understand what's actually the most important stuff to be tracking. Okay, are we getting a page does not exist? That is a problem. If that page does not exist, I will make sure that that gets updated. Huge apologies on that. Um, I will send out to Ahan the direct link for that. Um, but what this is comprised, comprised of— so growth model, um, is comprised of a cost per unit, a number of units sold within a period of time, or like a month, monthly growth rate. And then if you're a subscription business, you also have total number of active subscribers and a churn unit per time. And what you end up with is a model that looks something like this, where you're starting to look at forward-looking projections of what's happening, what you think is going to happen in your business. So this is the forward-looking thing. And so with this model, um, and I apologize for my spreadsheet download not working, we will fix that and I will get that to you, but this literal example is in there and you can update and plug your own numbers. At a $29 cost per month subscription product with a 20% growth rate and 20% monthly churn, you can see that at the end of year 1, I need to pull in— I'm going to pull in $80,000 in revenue, but I'm going to spend $100,000 to hit that growth rate. So that is a company that will inherently have to raise capital, right? Um, and in fact, this company isn't profitable from a unit economic standpoint until year 3. So the reason why I bring this up is that 20% growth rate is pretty common for for, for companies that raise, um, angel rounds or seed rounds or Series A rounds. But 20% monthly churn is a business killer here, right? And so in this, in this particular case, you never really get above water, and you're likely going to have to be a highly capitalized startup. And what's even worse is when you start to add in headcount costs and other expenses, you can see that we're, we're quite literally losing millions of dollars by the end of year 3. And this, in fact, is how a lot of startups operate. And there's nothing wrong with operating this way if you are able to raise money and you have a growth plan. And this is how a lot of companies kind of prior to 2023 were operating. This isn't really reality anymore, right? You have to have positive economics, certainly to raise money, and certainly to pay yourself a living wage, you're going to need a model that actually works. So take it really, really seriously. With my company, I know within $1,000 every month exactly where we're going to be. Right? And I try to anticipate the tough times that we might have or the wins that we might get, and I try to normalize that. The next area of focus, and this is like a huge topic, but acquisition and activation. What I, what I wanted you to think about is that there's a direct handoff between customer acquisition and monetization, and I call this EPAG or Endpoint Acquisition Call. So this is that hand handoff between top of funnel and your product marketing. And so here what we're going to look at, at the top of funnel, we're going to look at visits, views, clicks, click-through rates, cost per click, and things like that. Like stuff you can basically run in ads or see through Google Search Console. For product metrics, we're going to look at downloads, email captures, free trials, maybe demos. And then you're going to have this lagging indicator that's revenue. So new subscribers, purchases, et cetera, CAC, LTV, all that good stuff. And what I see the successful startups do is not only do they have a forward-looking model that I showed you earlier, but they have a backward-looking model that they can be reactive and respond to. Um, and this is an example of a growth dashboard or a scorecard that with my marketing company we work with. 100% of our companies get one of these, and we work really closely with them. For my companies We have this that we use internally, and, and what this does is it gives you a week-by-week cohort view of what's happening in your business. So you've got your top of funnel metrics, your middle of funnel metrics, and your revenue metrics. And then you can start to layer in things like spend and customer acquisition costs, conversion rates. And the stuff in yellow and red are things that are going well or not going well. And what's beautiful about a simple model like this is that you'll start to spot trends relatively quickly, and you can annotate this with notes and then share this with your team. What I end up doing is I end up running a weekly meeting with my team every Monday morning to go through our metrics. And the companies that I work with that do this just fully own their metrics, and they're not guessing about where the heck they're at when somebody asks where they're at, and they're not guessing about how much revenue they need to bring in, or how much budget they have to hire the next person, or if they've got enough to run on marketing. And so ritualize this stuff. Choose an interval to report on, report on the week's prior metrics, and do it every freaking week. So for me, that means Monday AM, and I look at Monday through Sunday reporting. Uh, we do this with every client. I do this with my company. I can't stress enough, and I'll pause for a second here, that the best founders that I work with are in the weeds. They know their numbers better than anybody else. You cannot delegate this. You'll only delegate this maybe when you hire a CFO. Even a controller is not going to have the same context that you have running your own company. So those of you that are pre-revenue, it might seem a little silly to put an effort here. Take it seriously because it will separate you from your peers who have no idea what's going on from a metrics level in their business. The next thing around awareness and customer acquisition that I like to look at is the simple awareness flow. And, and I'm not going to spend a lot of time here, but what essentially you're looking at when you're looking to find early customers for your business, early in building that early demand, is do users know that they've got a problem that they're trying to seek a solution for? Yes or no? And if the answer is yes, then the channels that you're going to end up working in are going to probably be SEO and SEM. If the answer is no, like if they're not problem aware, then you're probably looking at paid social, influencers, content marketing, organic social, all of that good stuff. Cold outreach kind of can happen across both of these, but then the loop continues, right? So I often talk about the law of intentionality or intentionality in general. How you should think about building distribution should be directly aligned with how your users think about their own situation and your knowledge of if they're problem-solution aware or not, right? It's probably the simplest thing you can do, but it's one of the most important things to do before you go blow a bunch of money on channels or hire an SEO person if you don't even know if there's intent. If there's no intent, SEO is going to be a very long game for you. That's probably not going to be lucrative, at least early on. If there's high intent, invest in SEO and potentially shortcut that by also investing in paid search, right? And vice versa. And use the tools— Webmaster Tools from Google, SpyFu, Semrush, Facebook Ad Library, the Google Ad Transparency Network. Like, look at what your competitor's doing. A great hack or shortcut is to look at where your most direct competitor is who's like 1 to 5 years ahead of you and see what they're doing. Are they running ads? Are they not running ads? What does their messaging look like? How do they position their company? What's their pricing? Can you, can you infiltrate and figure out what their retention is? And can you build your model against that? Having competition is good. If you have no competition, I worry that your idea might be too niche for you to build a really big business on in 2024. But I could be proven wrong. And then, um, we got 2 more sections and then, and then we'll go into Q&A. The activation loop. So when you hand off from customer acquisition and you figure out your channels and then you bring people to your website or your app download, you're gonna have probably a multi-step activation loop that you're trying to bring the user through for them to experience value and eventually for you to monetize them. So I just want you to know, like, there's usually an end goal with activation and it's usually some kind of revenue-based goal. But the reality is you might have multiple steps to go through along the way with your user base before they're just going to go and skip to the end. Okay, so I'm going to show you how Miro does this because I think they do it amazingly well. So this is Miro's activation pathway. So I just saw an ad on Twitter or X or on LinkedIn. I clicked on it and I get brought to their landing page, which is beautiful, by the way. And then I click get started for free. I come in, they ask me for my name, work email, password, and then they give me a bunch of different ways to sign up and they tell me what's included. 3 editable boards. Okay, remember that. Then you— then they ask you to set up your team. So this is step 2. They ask what your company size is. They ask like, do you want anybody from your domain to join? Set up, continue. Step 3, like, talk about friction. Like, they've really slowed this process down, right? I don't think it's really hurting the business. Um, Invite from Slack, invite from Gmail, copy this link and put it into Slack, put drop emails in your— I mean, these guys are relentless, right? You wonder why they're growing so quickly. Well, watch what happens once you do that. You go into the process, right? And they personalize what you're going to do next. And when I click meetings and workshops, it brings me right into their screen and then I'm done. Okay. But what is their constraints, right? You created a board by going through onboarding, and then you probably invited a teammate who went through onboarding, and they probably invited somebody else. But the first person that you invited also probably created a board. So now you've created 2 boards. The person that— the person you invited invited created a board. Now you've got 3 boards. And remember what their constraint is before monetization— it's that you create 3 boards. So now you've got 3 people from your company using the product. That's through and through product-led growth, but it's also product-led growth that leverages constraints. And, um, and a built-in network effect. And they do it amazingly well. And this is how that loop works. So if you're wondering like, well, how the heck do I get started with all this stuff? Like, you're not going to become Miro overnight, but you can certainly look at them and look what they— look at what they do. Take a bunch of your competitors, take other mid-market SaaS companies who do this really well, and then compare what they do against what you do. And regularly audit your properties. Look at each step of your funnel or your growth loops. Understand your goals and then pick off the lowest effort, highest return things that you can do to try to influence those conversion metrics that you're going to be reporting on on a weekly basis and build that into the life cycle of how you think about growing your company. And so for me, with my current company, it's all about getting, um, getting people on a, on a strategy call, right? Because if I can talk to somebody for 30 minutes about growth and I'm not selling anything I'm just trying to help them. I do a lot of free mentorship and stuff like that. If I'm successful there, then they're more likely to want to work with me. Um, but it took me a while to figure that out. So once you figure that out, then you want to build your entire funnel against that endpoint goal, which is whatever it's going to be for your business, but it's going to be different for my business than your business. Okay. And the last theme here is the importance of retention. So if you're not yet tracking net revenue retention, and most of you probably aren't yet because you don't have revenue, Later stage companies are obsessed with NRR, and what NRR is, is net revenue retention. It's the total revenue minus churn plus revenue expansion, and it's looked at monthly or annually. And according to ChartMogul, SaaS businesses with over 100% net revenue retention last year grew 54% over the year, versus companies that had net revenue retention between 60 and 80% only grew at 12%. Um, so, you know, an order of magnitude difference here based on that retention. So retention is really, really, really key. But the, the challenge with retention is like, so everybody's like, oh, focus on retention, but retention is hard because it takes months or years to measure. But you have a shortcut. Your shortcut is what I call a proxy metric, and this is a metric that's a user action that impacts retention. So I've got 3 examples, and I'm only going to talk about the first one because we're running out of time. But Netflix relentlessly obsesses over trying to get their subscribers to consume 19 hours of content per month. This is why they spend billions of dollars a year on new content production. If they— they found that if they can get 19 hours of content consumed by a user, that user is highly unlikely to churn. So go look at their product, look at their— like, the fact that you autoplay into the next episode if you're watching a series. The fact that when you're on their web experience, if you hover over a video, it starts playing their sound, it's enriched, it's engaging, it's, you know, pulls you in. It's to get you to that 19-hour metric. And good activation curves look something like this. This, like, if you have an activation curve like this where your core user action that you're trying to plot user against kind of flattens out in a nice way, you might be at product-market fit. This is how I think about it. But the thing that you're gonna wanna do relatively early on is take user cohorts. And this is fairly advanced stuff. I'm happy to chat about this offline. I've got a bunch of course material on this. It's all free if you're interested in it. Plot your user cohorts month over month and get a sense of like, how many users do I have coming in that are subscribing or doing the thing I want them to do that are new each month? And how many of them are sticking around in subsequent months? And then you've got a retention percentage and then you can plot those month over month on a chart and you can see like, am I getting better or worse? Over time. Again, fairly advanced stuff, probably not as relevant for like super early stage, but you know, when I've come into Series A or Series B companies or even seed stage companies that are trying to raise money, one of the first questions that investors ask is to see stuff like this. So like if you're going that route, this will become more and more important as you go. And then finally, just know that like not all retention is equal by channel, um, and so in this case it looks like the Facebook traffic that was driving new customer signups had like, like pretty good month 1 and 2 retention, but then it fell off a cliff after that. So there's something about the way that those customers were acquired from that source that didn't add up. And finally, you can start to build your lifetime value model. So again, lifetime value is a long-term metric, usually it's over a year, but you can find signals early. Break your LTV down into 3, 6, and 12-month views and use that as a proxy for what's going to happen over the next year in your business? And if you can do all this, you will have the ability to basically predict where you're going to be based on the inputs to your model. And that's a really strong spot to be, especially in a down market. And you can have that honest conversation with yourself and with your team about what resources you need to survive and thrive in the market that we're in. So in summary, the best startups that I come across validate their ideas, They build efficient product strategies. They know the inputs and outputs of their models, and they build growth models to work on this. They build sustainable customer acquisition and activation growth loops. Um, like Miro's a great example of this. They know how retention works, they model it out, and they use that as their superpower. Um, and with that, I'm happy to take questions. Um, this QR code hopefully works. Um, this will give you 30 minutes free with me if you're interested in booking time. My calendar is a little jammed in January, but if you find time and you're interested in talking, feel free to use me as a resource. Thank you so, so much. I'll take questions.

Craig, thank you so much. That was great. I think I've heard this talk maybe 4 times, but each time I hear it, it's like always super insightful. I think I was chatting with the marketing team. They were like, hey, this stuff looks very familiar because I started implementing like standups and like retros and like, hey guys, like, what's your metric? You're gonna own this one metric. And like, Daniel's like, where'd you get— and then he's like, did you get all this from Craig? I'm like, yeah, Craig inspired a lot of the stuff that I do internally at work for the last, I'd say, 3 years or so. So like, this stuff works, folks. Like, please, like, Craig's knowledge here is gold. All right, Craig, let's switch over to Q&A. There's a bunch that's coming in, folks. Please use the Q&A button. You can upvote I'll bring them on stage and then we'll go through them. All right, so Laura from Asheville is asking, at what point do you know you have validation for your product? What percentage of positive feedback? And I think keep in mind these are early stage companies, so maybe if you wanna dive deep into qualitative versus quantitative feedback, if you're comfortable with that.

Yeah, awesome. That's a great question. So yeah, there's kind of different ways. To look at this. So there's kind of like statistically significant results and then directional results. So on the, um, on the quantitative side, like what, what I like to do— and, and this is a little, it's a little hard because like I have a team and resource to be able to do this— but on the quantitative side, I actually like to run paid ad experiments that are like relatively cheap, but the, but the Input that I'm looking for is, do users engage with this messaging? So it's a really quick way to get feedback on messaging and positioning statements and things like that. But generally those lightweight paid experiments are not gonna drive like real leads. You're not gonna, it's just, it's not that easy, right? Which is where the qualitative side comes in. And on the qualitative side, generally what I find is that if you have between 10 and 15 like real honest customer discovery calls, you're going to start hearing the same stuff over and over and over and over and over again. Um, and I don't know if that's like scientifically backed or not, but like, um, but that's anecdotally what it's felt like. So it— part of this depends on your risk tolerance, but if the only people that you've talked to to validate your idea are like your spouse or your kids— well, my kids would probably trash my idea. But like, you know, like if it's your neighbor or your cousin or your parents, like they're not going to give you great feedback, right? Like they're gonna be like, oh, that's the best thing I've ever heard. Or like if somebody gives me a pitch, like I want to give them the benefit of the doubt. I default to being like, that's such a great idea. And then I'm like, actually, that's a really crappy idea. Like how many people did you talk to? I would never pay money for that. So So like what you're going for is that, is that you can get somebody down the buyer journey far enough that they understand the value, that they're almost ready to pay you right now. And if you can get a few people to do that, then you're golden. Um, so before I started Velocity Growth, I was just doing training and I had this SaaS-based training module that I was selling, um, for $1,000 a seat. And I had distribution, so I was able to sell a lot of those seats. But prior to that, I had this like rudimentary growth training product that I didn't know if I could sell it, and I had a very small audience. But I, I put the feelers out there, and I had a few people be like, yeah, I'm willing to pay for it, but they weren't willing to pay $1,000 for it. So I was like, well, how much are you willing to pay for it? One's like $250, and now they paid me like $300. So in the early days, like, I literally built some of my pricing off of the willingness to pay by asking people how much they would pay and then getting them put in their credit card. After a while, I realized that like it wasn't as price sensitive as I thought it was, and I was able to raise the price up to a point. So hopefully that gives you some stuff. Like there's directional and then there's kind of like quantitative. The quantitative stuff you really have to do at more of a volume, and the qualitative stuff you don't need a ton of data. You just need honest conversations and you need to roll up those conversations in a meaningful way so that you can understand the findings of each of those conversations and look at it from an apple Apple's comparison standpoint.

Perfect. Yeah, that was very, very helpful. The only thing I would add to that is because we get this asked a lot at FYI, and also just like, get asked for this personally, is the difference between B2B versus B2C. And I tell folks, like, still do your— do your customer development calls even on the B2C side. If you have 20 or 30, like, to your point, you're looking for trends and you're looking for those common, uh, common keywords. What I also do recommend to people now is try to get transcripts or know your notes for those calls and run it all through GPT-4 and tell GPT to just like tell you, hey, like, are you seeing anything that's relevant? You just have to format the table properly.

Yeah, we use GPT all the time and like when I do customer discovery interviews, I will write them kind of long form or record them and then yeah, put 'em in the GPT and you put 10 of 'em in, you ask for a summary.

Yeah, it's a great— like, I, I remember back in the day going through that and it was like it would take like at least 3 days, and now within like a minute it's done.

You're like, okay, I've spent months of my life just doing customer discovery within startups. And, and like, yeah, the tools we have available now are amazing. Most of my career was actually spent as a product manager, so I did a lot of this stuff as a profession before. And, and unfortunately, a lot of startups skip this phase because it's really hard. It's hard to say— it's hard to hear no after you've been thinking about this thing obsessively to the point where like you quit your job to start a company.

Yeah, for sure, I totally agree. So we have quite a bit of questions here. So this one's from Adrian from Prague. He's asking like specifically on this, what do you mean by run willingness to pay interviews? There's like 2-3 people asking this similar, like are you paying cash? Like, like how are you structuring this?

Yeah, I'll share a resource here. Um, actually Hotjar has a great example and I'll just I'll just put this up in chat, but by willingness to pay, what I mean is that you essentially run a survey or discovery process where you're asking questions around at what price point would it be too cheap and devalue the product? At what price point would it be too expensive and you wouldn't be able to consider buying it? At what price would you consider this thing a bargain? Now that's way different than getting somebody onto the darn call. That's really hard to do. Um, and so actually I have a, um, I'm experimenting with a product idea which is a, um, if you, if some of you might have seen this and even applied, right? I had a LinkedIn post that went viral and I had asked, um, I'd asked the community like, hey, I've got a bunch of startups that I work with that need help validating their ideas and like validating their messaging and positioning and stuff. And I literally had thousands of people on the supply side said that they're interested in doing that. So there's a real interest in this stuff. But the reason why I put that call to action out there is because I've got a lot of startups that ask me the same question. They're like, how do I get people to just— like, people are so busy. How do I get them to just give me feedback? And the short answer, and I think somebody asked like, do you give a Starbucks gift card or whatever? Look, whatever it takes, but you have to make sure that like your— the feedback that you're getting is honest and that the person isn't just blowing smoke because they want your gift card. So you have to have some kind of qualification process in there. And once you get through that, whether it's give away a gift card or run a raffle— I mean, when I ran growth at a business travel company, I think we were paying $50 or $75 for a customer discovery interview, but you had to be qualified to be on it. And I use some of these calls, like I get paid once in a while to give feedback, and I really try to be objective about the feedback because it's not really about the money, it's about actually giving the feedback. So you might have to get creative. Um, if you're in a spot where you need a lot of help with finding people to get on, um, get on discovery call and you're in, you're like, okay, paying a little bit, um, get in touch with me. I've got a huge network of people that want to give help but I need to pay them, so it's basically this. And yeah, to Bart, I'm— I am referring to the Van Westerdorp price sensitivity method. Um, and yeah, it's, it's a great method, right? It's like fairly old, but it's pretty accurate. There's not just one size fits all with this stuff either. I would say like get people on a call, run some of the Van Westerdorp price sensitivity, run your own ad hoc versions, and just run open-ended, um, conversations with potential buyers in your ICP segment. To really get from them like how they're thinking about your product. But the, the important thing is that you don't lead them with questions. It has to be open-ended because we have a bias, and when we ask a question, especially a binary question, we're going to lead them down the wrong path in most cases.

So yeah, you know, that's super helpful. I think the other thing I suggest to folks all the time between B2B and B2C pricing is that like, because I find B2C significantly harder than B2B, right? Because B2C is my own money, B2B is like my boss's or my company's money. So it's very hard. Yeah, it's a psychological difference. But the other thing I think about is like, you know, on the B2C side, if I'm selling a product for like, you know, $50, it's like you always compare what can I get that $50 instead. Like, you know, I can get 5 coffees at Starbucks, you know, I can go to Walmart and get this type of products or these type of things.

Yeah.

So it's just, it's just more of an anchor for you to understand, well, what's the value of exchange? Like, how valuable do you need to be? And I think on the B2B side, it's a little bit— you have a little bit more leeway because if all your competitors are priced at like $10,000, $20,000, $30,000 ARR, then you can like, can I come in at $5,000 or should I come in at the $25,000? So I think that's it.

Yeah. I mean, I have a— there's a company that I'm working with that is able to actually just completely undercut the market with pricing. So, you know, willingness to pay on that is going to be a lot different because you're, you're, you, you might hear certain things, but you know in the back of your head though, like, I can undercut this, you know, this competitor that I have, and that could be a huge win. Now, there might be something fundamentally wrong with the model if you can so dramatically undercut the competition. Like, why didn't that already exist? But here's a crazy stat that I read, um, is that I think this was from Patrick from ProfitWell that got bought by Paddle. He said like, I don't know how many minutes it was, but people think about pricing and pricing strategy for like minutes, not hours or days during the life cycle of their business. Um, and so that's what— that was like really shocking. Like, you definitely want to think a lot about monetization strategy. The other thing that I would say though is that everybody that you talk to is just like Oh, just double your price or increase prices. It doesn't always work. Like, I've tried and failed so many times to like double my price or whatever. Like, just go in and just own this stuff, right? Like, yes, take my guidance, take other people's guidance, but like, if you're a SaaS founder and you're like, oh, I keep hearing like I'm underpriced, I'm underpriced, and you try to double your pricing, you might lose a bunch of customers. So just be mindful of that too.

Yeah, that's super sound advice. All right, this is gonna be an interesting question. Karen from Cologne, Germany is asking, at what point should startups start caring about the growth metrics? And I guess maybe to add to that, like when they should, should they start that documentation in your opinion?

I think you should be thinking about it before you start the company because the type of company that you're gonna build is, um, is going to be dependent on the model, or the model is going to be dependent on the type of company that you're going to build. So for example, um, my highly scalable growth training company was a very different model from an economic standpoint than my marketing agency, which is a service company, versus like a media consumer company that I ran before. And so I would think about it really early. Don't— I mean, you don't have to obsess over this stuff right? Just like download the sheet, plug some stuff into it, evaluate it on a weekly basis, you know, and take it seriously. But just know that like if you're gonna try to build a startup that's going to go after venture capital, like you're gonna have to have solid growth metrics, right? So if you're going to go for investors, then, then you need to be thinking about that right now. If you're going to bootstrap or if you're a service business, you probably don't even really need the model in the earliest of days because you're just like throwing stuff out there. So I mean, I don't know what the best answer is, but like if you're gonna go the, the capital route, then you need to be on this stuff like really, really early. And if you're going to go the bootstrap route, um, within a few months, once you start to talk to customers and build any kind of pipeline, that's when you want to start looking at it. Because if you don't track that, then you're going to have no sense of like understanding where you're at. And, and the thing with like running companies that people don't really get until you're running the company is that if you're going to build a team and you're going to stick around doing it and you're convincing your spouse, your partner, that this is worth your time, like the thing's gotta at least be like at a baseline or growing. Like the best people don't work at companies that are not growing. The best people in the industry, you wonder why like talent moves every 2 to 3 years, it's generally because like the company's not providing them the opportunities that map where they want to be with their career. That's why I've left jobs. So you have to grow, right? And so, but inherent with that growth model is like the type of business that you're going to go after. So that's how I think about it.

Yeah, that's, uh, that's great, great advice. I'm just having a picture of you coaching a little league game and you guys have to grow, let's go. But let's do the last question before we wrap up here. I think this, I'll kind of ask this because you touched upon this on the VC side. So I don't know how many people in the audience know about your background, but you've gone the venture capital route, you've gone bootstrap route, funding market is extremely chaotic, SaaS funding is down. So I think it'd be good, you know, as the last question before we break up for networking, What are some of the trends you're seeing? If I was a founder, if you were a founder starting out right now, would you be leaning towards that bootstrap route versus the venture funding route? Because that's a topic that comes up quite a lot here.

Yeah, and it's funny because we were both at SaaS Stock in Dublin a couple months ago and I was hearing from people there that 2023 had been the hardest sales year many of them have ever experienced in their lives. Now, I'm old enough that I went through the downturn of like '99, 2000. Um, I went through the 2007, '08 stuff, um, and, and now this. And I will say that 2023, like, even for my business, um, um, you know, and, and we're really good at what we do, 2023 was a very hard year even for us. And we saw we saw companies left and right going out of business. We had companies that, you know, you know, I saw companies that were trying to raise, you know, tens of millions of dollars because they needed the capital, raise a fraction of that and then let everybody who's not essential go. I mean, it was a really tough market. We're continuing to be in a tough market, um, at a global economic level. I think until like interest rates come down and like things stabilize a little bit more in the world. There's just— there is this like global impact that, um, you know, that we, we didn't necessarily have even 10 or 20 years ago. So that's playing into it. Um, but look, the market's also going to be hard until VCs decide to start investing capital into companies and injecting some of that artificial growth. So while that is not the healthiest thing ever, right, it does— the VC space creates a lot of opportunity in a, in a kind of way that you can't replicate as a, as a, as just a bootstrapped ecosystem. But my guidance right now in early 2024 is go for revenue, keep your unit economics positive. If you can just stay in the game and hang on, if you struggled last year and you're still pulling it off and you, and you've got viability If you can make it through 2023 and probably the first half of this year, these are when great companies are built because it's the toughest time to build a company. And what generally happens is that in a market like this, all of your problems are exposed. Every problem in your business is like out there for everybody to see. And in a market where there's a ton of capital flowing in, you can squeak by or even thrive. With a crappy business plan, like no, like, real growth, just pumping money into ads, and like, and just, you can kind of game the whole thing. That's not the market we're in. So I would heavily steer towards bootstrap right now and then opportunistically watch the market. And when the market starts to pick up, yeah, figure out if, if the capital route is for you. It's not for everybody.

Yeah, I wish, I wish we had more time to dive into this, but I want to make sure we have enough time time for networking. Craig, this has been awesome. I really appreciate you for coming on board, and, and, you know, we should definitely get you back on, um, to get all to see your, your co-founder as well. But, um, folks, we're going to wrap up now. I'll end this session here shortly. Uh, you'll see a bunch of tables, virtual tables. Craig will have a table. Hopefully you can spend 5-10 minutes on that table, uh, talking to some of you. Um, I'll be on a couple tables. Uh, the whole point of this is to network with each other for about 15-20 minutes. Discuss some of the content with each other and then you can kind of accelerate your learning. But Craig, and before we wrap up here, once again, thank you so much. We had about 350 people live. So just before we wrap up here, any last words of wisdom for the audience?

I mean, just keep your head down and put in the work. There's a lot of like hacky stuff that's being promoted on LinkedIn and other channels. None of it works. You can't arbitrage SEO and not get penalized by Google. You can't like do a single channel focus and think you're going to scale your entire company. Like, you need to go, you need to go like wide and deep. That's reality. And there's a lot of competition. So just keep your head down, work hard, try to have some fun with it, put everything in perspective, and just reach out if you got questions. I'm always happy to chat. Thank you.

Take Craig up on that offer. I guarantee you it's going to be worthwhile. All right, I'm gonna end the session here. Everyone, thank you so much for joining us. Hopefully we'll see you next week. We've got some more, some great webinars coming up. We'll send out some more information about the Founder Institute and our upcoming events as well. With that being said, enjoy the rest of your day. All right, thanks.