The Secret to Building Great Subscriptions with Leading Silicon Valley Product Builder, Tom Willerer

Tom, welcome to the show.

Thank you for having me. Excited to talk with you.

So I want to talk about your experience designing products, and particularly products that are designed for recurring use and even recurring revenue. You told me once that the place where you like to start is really focusing on understanding the problem, which is not necessarily what everybody does. What do you mean by that? Why is understanding the problem the most important thing to do in product development?

Oh, you're touching on one of my favorite topics right out of the get-go. I love it. And what I would say to this question of why focus on understanding the problem first, I'd give a few responses to this. One, It's where everything starts. If you don't have a deep understanding of the problem you're solving for your customer, whether that's a B2B customer or a consumer customer, you're not gonna be able to design solutions or a value proposition that is long-lasting and actually is something they're gonna wanna pay for and subscribe to and like keep going on. So that's kind of like a foundational step is one really easy answer. The other answer I'd give to this is it's often a step that we forget, and we assume everyone agrees to the problem that we're trying to solve, and we instead go to what is really the fun stuff, which is coming up with solutions. And that's kind of where we all end up starting. So you know, we skipped the first 2, which is like find your narrow set of users and like really deeply understand their problem. And instead we go straight to the solution piece and go, ah, I got an idea. Here's my idea. My idea for how to do this is XYZ. Let's go and try it and test it. And what can end up happening in that is like no one really went and did the hard work to understand your customers to understand their problems, the jobs that they're trying to solve irrespective of your solution. And therefore you're kind of just now throwing darts at, you know, at the wall to see, or throwing spaghetti at the wall to see what sticks because you're going, you're in solution mode. And what happens is you end up not going super deep in any one solution space because it's not attached to any problem. So you're like, did this work? Nope. Okay, throw it away. Try it, try another thing, throw that away. And instead, what I would advocate for is like really deeply understanding qualitatively and quantitatively your customers' problems, their needs, the jobs that they're trying to solve. And because of that, you can have conviction to keep going after that problem. Even if solution 1 that you try doesn't work. Okay, that didn't work, but we believe this is the right problem to solve. So let's go try solution 2. So, you know, so your, your trajectory of ideas become more long-lasting and feel less, quote, random, because you've really nailed the problem. And you're— that's where you've developed your own deep conviction. And that's where you've developed alignment with the organization on where you need to go spend time. that then allows you to have a little more flexibility on the solution space, that even if you get a couple of them wrong, you're still going to keep whacking at that problem and try to find the right solution for it.

So, so interesting. And I actually had a little epiphany, which is that your, your point about focus on really understanding the problem, really, really understanding the problem before you start throwing out solutions, is probably also a good management technique. I find that so often people almost don't let you explain the problem before they have a solution for you.

So it's, it's, it's 100% true that, I mean, it's kind of a lifelong life lesson in some ways where I will, and it's again, it's like there's some psychology that I won't be able to describe, but I know I've done it, which is I just zoom straight to solution space first and I get enamored with my own ideas. I fall in love with it, and then I realize, well, it didn't work. Okay, move on to the next thing. But like, I never went back and did the hard work and like the foundational work to really understand the problem. So it is absolutely first step.

Sit with the problem wherever you are, and especially if you're trying to, trying to build a product solution. Can you give us an example? You've worked at some fantastic companies leading product teams— Coursera, Opendoor, Netflix. What— can you share an example of a time either that you sat with the problem longer than people wanted to and it led to a great outcome, or maybe the reverse where you jumped to the wrong conclusion and had to go back and reexamine the problem?

Yeah, I can give you an example of a failure mode because I think these are very interesting and ones to learn from. And it was from my time at Netflix. And rewind the clock to probably 2010, 2011, somewhere in that ballpark. And the context here is we were just starting to grow internationally. We'd launched our streaming service. It was very early. As everyone knows, or maybe they don't know, Netflix transitioned from DVD to streaming. So we'd launched the streaming service and we were trying to grow internationally and we were very nascent in that. And we had seen Facebook grow and get very large. And we'd seen companies like Spotify, which started in Sweden, and then moved internationally. And a lot of how they grew was by getting their audience of subscribers and listeners to share everything that they're listening to Facebook with their friends. And that then created this like viral loop of those people wanting to listen to that song and seeing that and then going and signing up for Spotify. And we at Netflix saw that and we fell in love with the business problem. of how do we grow faster? So it's like a good nuance on problem. When I'm talking about problem, I'm like, go deep on the consumer problem because the other—

Not our problem.

The other thing that happens is like you go deep on your own business problems. And this is what we did at Netflix. We went deep on the business problem of how do we grow and how do we grow from an acquisitions perspective without spending exorbitant amounts of dollars? And if we could figure that out, wow, would we create an awesome business. So this was like solving the business problem and like maybe a go-to-market or a marketing challenge that we had. And we were using examples that we'd seen in the market. So we did this, we went out and we tried it in the US and we went kind of more aggressive in some smaller countries where we hadn't grown as big yet because there was some risk to doing this and we wanted to experiment pretty liberally. And with that, we had people sign up, they connected their Facebook account and Netflix account. That became their account creation tool. And when they started watching anything on Netflix, it shared to Facebook. And that was interesting. We did see some growth advantages to this. We saw some member advantages to this because they were able to see, like, what are my friends' favorite on Netflix? And that gives me good suggestions of things to watch. But we saw a lot of complaints from our members because When we went and did the research to really understand the problem that this could be solving, we realized there was no customer problem that this was solving. Actually, this created problems for them because people didn't expect everything that they watched to either be shared, you know, automatically or at all. They didn't want it or expect it. And when it happened, they were kind of like, I don't want my Facebook feed to be clogged with like all the episodes I watched of what, Say Yes to the Dress or The Bachelor or whatever it is. And when you proactively share stuff, you curate it much more. You know, my, my view of what I watch is different than the reality of what I watch. And what I want other people to think I watch is different than the reality of what I watch. So I'm going to tell people about that, like obscure indie film that, you know, is going to win awards because it makes me look a certain way or a documentary that makes me look a certain way. But like, the reality is I love watching Jeopardy or whatever, whatever the show is that— or, or like, uh, Say Yes to the Dress, because it's just fun and it's, it's like entertaining content, uh, or Cake Boss or whatever these shows are. But that's not what I want to project out to the world. So that, that became a real mismatch there. And it illustrates for me a few things. One is It's really easy to fall in love with the wrong problem first, which is the business problem. And the reality is it's like you have to go start with what is the customer problem and then figure out what is the solution and how does that solve the problem for us and how do we as a business create something of value for them and then extract some of that value, not all of it. And 2, we went straight to solution mode. It was like, wow, look at this other company that we want to emulate and be like they're doing it. We should do the same thing too. Let's go try that. It's definitely got to work for us too. And we didn't go and really live with the research and honestly live with the qualitative feedback because we went and after we saw some negative sentiment come, we probably did 30 qualitative interviews and it was universal. People didn't want it, nor did they expect it. It was like, okay, obvious here. This wasn't like it needed a multi-month ethnographic study to figure it out. It was like, go talk to 30 people about this and you're going to get a pretty good response. Yeah.

A couple of really interesting things about that story. First of all, I think most people think of Netflix as being phenomenal at understanding the problem. And so I appreciate you sharing one misstep. I think about sort of understanding the problem of, I don't want to run out and get a movie. I can't remember what movies I want to see when I actually get there. Solving those 2 problems, the convenience and the choice, were such great, great examples of things that they've done. The other thing that came up for me when you were telling the story that I also get, having worked, consulted at Netflix for a couple of years even prior to that, people often will start the conversations, you're prospective clients or existing clients of mine that are focused on subscriptions, we want the Netflix playbook, right? And to me, that's also really dangerous. And your story, including the part about, well, Spotify was doing this and it worked, and Facebook was doing it and it worked, but Netflix is neither Spotify nor Facebook. And so you have to also understand what's unique about your product, your audience, the use case. All of those things, which I think sometimes organizations just miss the boat on. One example of this, which may relate to Coursera and may bring up another story for you, is a lot of professional development and educational companies want to take a page from the Netflix playbook. But there is a huge difference between watching streaming content that's entertaining and watching it for work. Right, either because your boss told you to— like, very few people binge LinkedIn Learning courses, I don't, I don't think, unless they're trying to get a job. But it's not the same as, wow, it's, it's already 4 o'clock and I've spent the whole day watching Cake Boss.

Yeah, oh, absolutely. I mean, solving the problem— it's almost like smart people don't always eat their veggies, even though smart people know that that's the right thing to do. And I think you're absolutely right. Netflix is seen as a company that had smart people running it, but didn't always do things in the way that we should have done it. And there are several examples of it. And I think these are worth highlighting because they get glossed over when you see the up into the right chart of all the moments when you made mistakes. So it's good for me to go and remember those because I can remind people that they think like, oh, if I just make a mistake, maybe I'm not good enough. And it's like, no, no, no, every company, the best companies do this type of stuff too. And when you were talking, it did remind me of another example that's a little more nuanced from Coursera when, and I'll go into that one, which is when I joined Coursera, we had a business problem and a customer problem and it was the way in which we ran our courses. So we basically took the old model that existed in universities. Coursera is taking university content, putting it available and online for people to access all over the world. So we were digitizing a lot of what had been locked up behind the ivory towers of some of the world's best universities and then making that accessible to everyone around the world. And in the first incarnation of this, we just took the old model, which was classes are available in the spring and the fall. And then we said, okay, put it on Coursera and they'll be— we'll run them in the spring and the fall. And that kind of does make sense in a world where the professor and TA time is scarce. But in a world where all of this is prerecorded, it doesn't really make sense. And then we also saw the customer problem of, well, I don't always have time to learn in the spring and the fall, but I do want to learn this content. And sometimes Summer or winter break is better for me because I've got that gap in my schedule and my time. So it was like, okay, there's a real customer problem here. We also saw a business problem, which was we weren't able to grow as fast if our content was gated on a spring and fall release schedule. There, you know, like it needs to be smooth, smoother than that. Like, yeah, and very— should be more available than that for growth to really take off. So, and then like I had just come from Netflix and it was like, oh, obvious thing here, the content should be available on demand. And so we kind of rebuilt the platform, redesigned things so that the content was available on demand. And what we missed, we were hearing from our university partners, which was it's not just about the growth piece or the top of the funnel part. It's also about getting people to complete a course. And so when we launched this, we saw phenomenal numbers at the top of the funnel. We got lots of people engaged. It validated our hypothesis that people wanted to learn no matter what time of the year, like this content should be available, but we also made it completely flexible for them to move through at their own pace. It was, it was just like Netflix, click, go whenever you want to go, you move at your own pace. And it's like on demand and available to you whenever you want. Like, we thought that would be the right benefit to both get growth and get people to give the flexibility to finish the courses. And it turns out it did get growth, but didn't solve the problem around getting people to complete the courses. And we had heard this critique from our university partners. Because they are in the job of educating people. So they know what it takes to get people through these courses. And what they said was, you're losing all of the cohort elements, the elements around keeping people together and through something. And because of that, no one's going to finish. And that was one. And then 2, it was like, yeah, learning's a little different than entertainment, to your point. You need a little more structure to do the learning than you need to just sit down and zone out and watch Netflix. Maybe unfortunately for the world, but that's how it works. So, and, but we were pretty bullheaded and thought like, yeah, whatever, we know, we came from Netflix and we'll figure this out. So we did it and we learned that like part 1 of the hypothesis was right and part 2 was totally dead wrong. So we got many more people in the top of the funnel and many fewer people at the bottom of the funnel completing. And it led to an iteration because we felt confident in the customer problem that we were solving and we got part of it right. It led to an iteration where we kept the availability but basically made like frequent train schedules. So on really popular courses, the start date was every week, or you could do it twice a week. And then with that, you had a cohort effect, people that you were moving through this with. And one, and even more importantly, you had deadlines and due dates that you were implicitly signing up for by starting it on a certain date. And then we could say, okay, week 1, the assignments are due, you know, by this date, week 2, this date, week 3, this date, etc. And you had a— it went from the like important but non-urgent quadrant to the important and urgent quadrant by giving it the structure around due dates and deadlines. So we learned that like you kind of need the availability, but you also need the structure around it to get people to really invest in the, in the learning to move through this at the right pace. And with that change, it's still the way Coursera works to this day. And we basically captured the best of both worlds where we drastically increased completion rate through courses and we were able to hit our growth goals and make the content available to customers whenever they wanted it.

Yeah. This leads directly into the next thing I wanted to ask you, which is, how does this kind of problem-solution balance play out with subscription? And one of the things that I heard you say is there are acquisition challenges. How do we get people to sign up? And there are engagement and retention challenges, right? How do I get them to stay? And certainly in— Product-centric companies, and I'm thinking about companies that sell a big product one time and they're done, as opposed to the ones that depend on many small payments. If you can get them to drive the Lamborghini off the showroom floor, that's their problem. You don't have to worry about how engaged they are with the car once they get it home. But if you're relying on them to continue consuming your content or continue using your service, Both pieces start to matter, and that I think makes it even— I believe it makes it even more important to understand the full problem and the ongoing nature of it.

Yeah, I think that's absolutely right. It's like, to me, it's just really easy to— and I don't mean this in a slight, like, I do this all the time— it's really easy to fall back on, like, one-dimensional thinking when in many ways these problems are very multidimensional. So in the Coursera example, we were more one-dimensional in thinking growth was what we really needed to optimize for. But it wasn't, it wasn't just growth, it was sustained growth, you know, just because you get people starting, but because they're not finishing, that was a failure. So it would have been easy to just say, ditch the experiment, didn't work, go back to the old model, because The old model was objectively better than the new model because—

Interesting.

We hadn't thought through the multidimensional problem of like, how do we keep people going? And we thought too simplistically about that part of it and kind of dismissed some of the qualitative signals we were hearing from who otherwise were experts in this where we were not and fell back on our own experiences in a model that, again, it's like the Spotify Netflix example where like, Netflix didn't map completely to Coursera, and we took too many lessons from it and said they all map perfectly.

Yeah.

And we should have said there's inspiration from this, but we've got to go deep and really listen to some of the experts here. And that would've probably saved us 6 to 8 months where we kind of churned through the next iteration of this. It wasn't in the grand scheme of things, it didn't diminish Coursera's ability to find success. But it was slower and required more resources because we didn't go about it in like the multidimensional way of thinking about both growth and retention at the same time.

So does that part— the thing that you did really well, I think, is to really get clear on what the problem was for the customer, right? September and, you know, whatever it is, September and March are not necessarily the best times for me to start A new course. But what you didn't do was come up with the right solution the first time, which you pointed out early on is okay, right? Because that happens. Are there things— I'd love to get your thought tactically on how you do these 2 things. Do you feel like you could have spent more time on the problem or do you think that you were too quick to jump to a solution that had been successful in another organization, in this case Netflix?

So it's kind of like, you know, when you're launching a new thing, there are many ways to validate it. One is through direct consumer interviews. Another might be through like expert interviews. You could do surveys to get data on this too. And, but if you just take those first 2 of like, go deep with your customers, we did that. And customers liked the idea of it being available whenever you wanted. They also liked the idea of it being on demand.

Yeah.

So interestingly, they were like, yep, that's right. Now, if we would— we didn't go out, we didn't set out to do expert interviews, but because of the way our platform is, is how we were a platform company in a marketplace, we needed to go get our university partners, most notably professors, bought into this. And because of that, they gave us their expert opinion and we, we heard them say, people aren't gonna complete this. They need the— they need these other elements. customers aren't gonna say that to us. You know, you need an expert to go tell you that type of thing.

Yeah.

Because it's like the expert customers don't always know what's there. They can tell you parts of it, but they can't always give you the full picture of it. And the experts were telling us, we just didn't listen to it. We thought we were smarter than the experts. And if we would've coupled those 2 pieces the first time, I think we could've nailed it. But It took us like one time of being wrong to realize, oh, we should have just listened to the people that know how to get people to complete, you know, educational content and couple those 2 pieces together to get to the right solution.

Yeah, yeah. So, so more than one source of information. Customer doesn't always know best. Maybe talk to some people who've seen the customer in action in a similar environment.

Absolutely. These expert interviews can be— can save you like a ton of time. Because they've seen it. They've seen a lot. I mean, I would definitely recommend this when you're launching a new thing or launching a new company. They're like, go get— this is what a venture capitalist would do. You know, you're gonna talk to 12 experts and you're gonna like— it's a hack to like bootstrap your knowledge really quickly.

Yeah. Yeah. So again, it's about this being patient, right? Spending more time with the problem. and you're listening to a lot of experts, you don't have to take their advice. I mean, sometimes the experts are wrong, right? Something your professors might have said, online content isn't as good as real-life content, so this is never going to work.

So one example of exactly that where they were wrong was they said, oh, it needs, quote, my involvement in the course. I'm the professor and I'm not the watchmaker putting my watch out in the world for anyone else to tell time with. Like, I have to be actively involved or else people aren't gonna understand the concepts well enough. And, you know, there's no doubt in my mind that if we were doing like one-on-one with an expert, you know, like a professor who's an expert in their field, I would learn really well from them. But it's just unfeasible. It, it won't work. Like you can't scale that. So, and it wasn't true that in the Coursera model where you're getting thousands or tens of thousands of learners at a time in these courses that very few were actually having any live interaction either through video or in a forum or anything with a professor or any faculty member associated with that course. So it just was not impactful at all, but they thought it was a very impactful piece. So that was, and that was one we were pretty confident that that was not the case. And that turned out right. So absolutely, judgment is a massive component of this because there are those times when you have to be non-consensus. And that's a very important thing because if you only go for consensus ideas, you're just gonna water it down to the point where it's like not actually super interesting.

Yeah.

It's like, where is what you're doing differentiated enough in the world that everyone else hasn't already thought of it and like exploited all the benefits from it? Right.

So, there's also an element. I mean, I imagine at some point, a long, long time ago, you were an individual contributor, but a lot of your work over the last several years has been either as a manager, as a leader, a product leader, or I think at Reforge, as an instructor, an educator, a coach, an advisor. In those roles, You do sometimes have to take a strong point of view and make the call. And I would guess that one of the things that you're going to say about that is that if you can come up with a small experiment to see if you're right rather than betting the farm on it, that also gives you— you have to make the call, but if the call has smaller consequences or you can figure out a way to shrink those consequences, that's also going to help you.

Yeah, I think it— I can give an example. It's a non-subscription related example, but it is a consumer-oriented example on this, and I think it'll illustrate it well, which is at Opendoor, we launched a buyer-oriented product where we—

Can you explain briefly what Opendoor is?

Yeah. So I worked at Opendoor. Opendoor is an online real estate company. We started by helping homeowners sell their home more quickly. And the way that we did that was they would come to us, type in their address, and we'd give them an instant offer. And it wasn't a Zestimate, which was an estimate of what their home was worth. It was literally an offer on their home. And then we would close in as little as 10 days. So it was trying to give the certainty of like an e-commerce type of experience to a very Manual process of selling your home, and it's very uncertain thing selling your home. You got to play the market. You don't know how long it's going to take. So having the certainty of an open door offer became very, very popular. That's how open doors scaled to some success. And with that, once you have a seller, most majority of sellers are selling because they want to buy another home. So then it was like natural for us to kind of get into helping them buy their next home. We use that one piece of helping sellers to move into an adjacent part of the job to be done for them, which is actually moving and getting into their next home. And it was in that that we had acquired a company called Open Listings who had a very nicely done product, helped them search, browse homes, and kind of had a Redfin model where it was a discount brokerage. So they would help you buy a home, And they would take a lower commission than like what a normal agent would. And they tried to give you a little bit more DIY tools to go through it on your own, which appealed to a subset of users, but not mass scale. So we had a, we had a foundation. And when I joined the company, we had that foundation and on the buyer side, and we were trying to figure out what is the right problem for us to solve for buyers. And in this one, we went after— we identified a number of problems, right? So I can just enumerate a few of these. One is finding a home as a buyer is kind of hard and complex. That is totally true, but it's kind of already solved. Zillow, Redfin, and others have created amazing apps that everyone should go use to find a home. And it would take us hundreds of engineers over many years to like recreate that experience fully. So it wasn't—

So that's a third thing to do with understanding the problem is, is this a big problem and are there any solutions already?

Yes, absolutely. Sorry, I got totally sidetracked for a second. Pause for a moment on this. What was the— what led me into this story?

Oh, I think you were talking about Oh, now I don't remember.

You asked me a question that I launched into this story on, and it wasn't related to the thing that you just mentioned, which I agree is a good concept to talk about. Oh, it was conviction. It was starting small.

Oh, right, right, right, right, right. I'm sorry. Yes.

So I'll come back to that concept in a second. Let me just set— so keeping going on this, like setting up the problem, the first one was finding a home. But that problem was already solved, which is an additional element, is like, how underserved is this problem in the market? So let's pin that. We can come back to that in a minute. The second problem that we identified was you need some expert guidance. So if I'm a buyer in the market, this— I might not be buying in a market that I really know. I need someone who can say, well, the school districts here are good, you know, this is a really nice neighborhood. I've sold homes here to people, they're happy, et cetera. That's a real problem that people have. This is a giant purchase. The average home price is hundreds of thousands of dollars and you don't want to spend that willy-nilly. But there's like 3 million real estate agents in the world and they probably are your neighbor, cousin, relative, some way you know them. And they're going to be way better positioned to give you that expert advice around this large-scale purchase than a faceless company would. And then, so then that was like, okay, it's probably not the right one for us. Third problem on this was winning the home. So once you find the home, you know it's the right one, you have to then put in an offer that is going to win that home. And regardless of whether you're in a competitive market or not, it's nerve-wracking for a buyer when they're putting in an offer that they think they might not win the home. Because, you know, even if it doesn't have 10 offers, it might have 2, and you want to be the one that they select. And we thought, ah, there is a problem that we think we can solve here because we already do this on the seller side. We use our home, we use our money and our certainty around buying a home to get sellers to sell to us. So we thought, what if we adapted that idea and backed buyers' offers with our cash, effectively turning them into a cash buyer. And we'd seen a ton of research that existed out there that showed cash buyers can be up to like 2 times as likely to win a home. So we got really excited about this, uh, but that was one solution. The problem though was how do you help them win a home? We had another solution that we were, uh, piloting and kind of thinking through the details of as well, which is around what if we split the equity of the home with them? So in other words, like they put $20,000 down, we put $20,000 down, and we were part owner of that home with them. That helps their— that either like lowers their monthly bill or helps their money go a little further. So it's another flavor of helping them win a home that we felt we were well positioned to go after. We kind of like parallel tracked 2 of these concepts on that one problem. And we, and to the point of starting small, we just like built a PDF that described this the best that we could for customers. I mean, it wasn't even, we didn't even build a website. We just put it in a PDF, tried to describe it as best as we could, and did like 100 user testing, you know, videos of this on each of these concepts.

User testing. You used the company user testing.

Yeah. So we just like created the created the collateral, put it out there, and then they— people go through and narrate their way through. Like, they could look— it looked— the PDF looked like it was like a webpage, you know, and they just kind of navigate their way through and tell us what they were thinking. We had prompts for them. And through that, you know, you're able to get like pretty mass-scale qualitative research and get a really good sense of stuff. And that was one. And then the other is like, these are complicated financial products. So we had to like find partners and get this off the ground. And as we went through both of those, Us being an equity partner with them was both really hard for customers to understand. So that solution, they were like, wait, what happens? And what happens when I sell the home? It just led to like 5,000 questions. And the backend of us pulling this off was not straightforward. There were a bunch of complications to it versus we'll just back you with our cash if your equity financing falls through for any reason. step in and buy it for you, was like, oh, cool. That makes sense. That gives me a superpower. So there was the sniff test, that you could get that really quickly through the interviews. And then, so that was like, that's one step of starting small. Next step was, all right, maybe we put the equity co-investment piece on ice a little bit for now. We don't throw it away completely, but we just say, Pause there a little bit. We might keep things going, but we're going to put most of our effort on this project and this innovation around backing their offer with our cash. And we said, let's try to launch it and let's try to get 30 people to sign up for this. And it was super manual. We'd get someone to come in as a buyer. We would then call them, hey, it's Opendoor here. We got this new offer. Here's what it looks like. Would you like to try it? Yes, no, maybe, whatever. And then we'd get 10 of those. We pulled them off, they worked, and we said like, okay, now let's go to 50. And then at some point it got to the point where it was like, I knew that in order for us to really go big on this, we needed to just flip the switch and say all of our offers, because we were like tracking percent of offers that people want backed by our cash versus not backed by our cash. It became almost a confusing customer experience. Like Is this what you stand for, or is this not what you stand for? Is this an option, and how many options do you have for it? And at some point, it was just like, okay, this is— we've done— we've started small, we've built over time. My conviction in this whole thing has grown. I'm not 100% certain that this is definitely, you know, gonna work at scale, but I'm like pretty high certainty. So as an exec, I had to say like, we're going all in. I want all of our offers backed by Opendoor Cash. So team, reorient everything around this concept, and the old concept is no longer the winning one, and we're not going with it anymore. You know, this is it. So that's how I really thought about going from like idea and inception to small little qualitative research project. And you can honestly do lots of interviews with usertesting.com. And then launch it. Just call people, hey, would you use this? And then go a little bit bigger, a little bit bigger. And then you finally— you're never going to get enough data that says like, this is absolutely the right thing to do. You should do it, you know, like with 100% certainty. So at some point you just have to make the call. And I made the call and we just went all in on it.

Yeah, that's such a beautiful example. And I also wanted to call out something that you said at the very beginning of this story, which is That you went down this path because you found an adjacent job to be done. You continued on that customer's journey with them and said, what's the next thing I can do for them? And I think that's really important because you have this customer you already know and you're trying to build a forever promise. You're trying to solve more and more of the problem for them over time and be with them on the journey. You spent so much to acquire them in the first place. Let's do more for them. And then the way that you talked about sort of Starting small, experimenting, answering some questions, mitigating risk. And then at some point as a leader, right, you say, you know what, this is where I'm comfortable jumping in. This is where, well, let's pour the concrete. Let's, let's, you know, do this with rebar. Let's, let's make it permanent. So really, really good story.

Yeah. And that's exactly right. And I think the frequency of use of the products are interesting. Like with Opendoor, it might be every decade. You use it. So we kind of needed to maximize the adjacencies that we could, you know, capitalize on from a business perspective immediately. If we spent whatever dollars on acquisition, we want to get that customer selling to us, but then we can get them to buy with us, do title with us, finance with us. All of those pieces are going to be, and if we could make that a seamless experience for them and like. really differentiate for them. It's like both good for them and good for us because we don't have the advantage of going and getting them to subscribe to us or, you know, buy again with us in like a day or a month or a week. It's like it's one shot 10 years later, whereas Coursera might be like an every 6 months to a year product that they're engaging with and it's more intense. You can get that subscribe, they might subscribe for a year and then they're like, okay, done, my needs are good for now. And then they might come back 3 years later and subscribe for a year. Whereas Netflix is like, they're subscribing, and if they don't watch it on a daily basis, they're going to churn. So the business problems are very different there. And I think that's an excellent point.

Yeah, yeah. It's interesting. I love that you have the 3 examples. Thank you for working at 3 good and different places. It makes for a much more interesting and fun interview. I have a whole bunch more questions. And I'm going to have to have you back on the show, but I would love to do a speed round if you're open to it. All right. First subscription you ever had.

By the way, did you want me to talk about the underserved, overserved, or we just got to do that a different time?

Let's just do it. I mean, I didn't want to— I was worried about running out of time. Let's do it. Hold on here.

Let's try to— I'll try to do that quickly. And if we wanted to elaborate on it, we could do that another time. Do you want me to just go or do you want to set it up?

How do I set it up?

Some markets are— One of the things you put a pin in was this concept of like, not every problem is the right one for you to solve or something like that.

Right. So I want to circle back to something that you said when you were sharing that excellent Opendoor example, that not every problem is the right problem to solve. How do you know if it's not the right problem to solve? And what are kind of the key categories of bad problem to solve?

Yeah, no, this is an excellent question and actually really hard and easy one to screw up for sure. One framework that I've been introduced to that I found very helpful in this is like, after you've identified the problems, A next step to do for that is to determine whether that problem is overserved in the market or underserved. So for instance, when you go back to the Opendoor example, if you look at finding a home, that is a problem. And, you know, seeing all the homes that are available in my neighborhood at my price range with how many bathrooms I want and like in the school district I want, all that, that is like a foundational problem. If it didn't exist already, it would be like a big problem. But It is very much overserved. There's Realtor.com has a great app, Redfin has a great app, Zillow has a great app, everyone has a great app for this. So there's some table stakes elements that we obviously need to do if we're trying to build a buyer experience, but it is not the area where we should double down and innovate on. And making that clear to the team is really hard because we as builders want to make everything Great. It should be top-notch. And as an exec, to say, actually, make that good enough, is a weird message to send a team. But I think it's an important message to send a team because we also have to realize we have scarce resources and we can't make everything as good as it possibly can. We have to, we have to be good enough so we don't get fired for that thing. We can't have people firing us because we're not sufficient enough on the— job to be done of helping them find it, but that can't be where we're innovating and trying to get people to really hire us. So that's like that overserved, underserved is really important to think through. And what we found was this notion of backing your offer with our cash and making you a cash buyer was completely underserved. It was like, if you weren't rich or if you didn't have a rich family member, then you did not have access to the capital that you needed. To be able to remove the contingencies of financing. And we also knew that if you could though, because there are rich people that have rich family members or have money themselves, and they win at double the rate. So it was like, oh, that's the goal. And really that's what sellers want is a cash offer. That's why Opendoor is so popular because we give them a cash offer. There's no contingencies on it. It's not going to fall through. So we kind of knew all those things. And when we looked at it, we're like, there's some startups doing this, but there isn't like an incumbent who already exists in the space that makes this irrelevant for us to try to go double down on. So that's how we use that concept. And it was really, really powerful for us.

Yeah, that's great. I sometimes think of it as when you're thinking of a feature, you know, there are features that are— that drive acquisition, right? We're gonna give you— we're gonna make it possible for you to give a cash offer. That's I think there are probably people who said we weren't interested in Opendoor and now we are. And there are features that if you don't have them, people will either not engage with you or they will leave you. And there are features that deepen the relationship with you. And if it's not one of those things, then maybe you don't do it.

Right?

But it's hard because you're like, but I thought— in fact, I thought where you were going to go with this with your team is, but we can. Like, we can make it better, right? There's so often, I feel like so many products that they put so much effort into making something better, but the other product is just fine and it has market share and it's not a very considered category. You know, like laundry detergent, right? Like, once you choose your laundry detergent, it doesn't matter how good the one next to it is. You're like, this one's good enough and it works and I know how to use it in my washer and I know how it works on my clothes. So, you know, understanding what to say no to. as a product leader is just as important. And I think in the world of subscriptions in particular, people have a tendency to just keep layering in more stuff just because they can. And a lot of the stuff isn't that great, or it's not really needed, or it's confusing, or it becomes somebody's job to keep that maintained, which means that they can't work on the next feature that's going to drive acquisition, or the next feature that's going to keep people from canceling. Very hard to kill your darlings.

Oh, 100%. And we used to talk of this and use a concept at Netflix called scraping barnacles. So it's almost like you think of it as you're building the ship and the ship's trying to move as quickly as possible. And some of the things that you're doing are going to become barnacles.

Mm-hmm.

And there, it's really hard to go scrape that barnacle because it's our natural inertia is to add new things.

Yeah.

Not to remove old things, but removing old things can be really important because it helps you go faster. And to your point, it's like you've got scarce resources, you've gotta keep a subscriber, you've gotta be really zeroed in on what their problems are and like solving them on an ongoing basis. And if you don't, because you're instead focused on like re— redesigning a feature that actually doesn't matter, then it's— you're, you're gonna fall behind because someone else is gonna figure that out. So 100%.

Yeah, I love that scraping barnacles. And there's always some customer who loves the barnacles, who's like, these are beautiful, they add charm to the boat, I love boats with barnacles.

Typically that customer is also a board member, and then it becomes really hard to go scrape that barnacle. I mean, we had that issue at Netflix where the, the queue or the list of movies— and, and that came back at some point, but— or like profiles where in the DVD world having these profiles, and it became kind of too much, but then it came back. So some of these concepts are like interesting in that they work for a period of time and then they maybe don't, but then there's a reason to revisit them. And so they're not a forever. None of it is forever. Like, you might end up adding it in in a different way and a reimagining of it that makes more sense.

Yeah. Yeah. Okay. This is great. I have a million gems. I've learned a lot. I want to close out with a speed round if you're up for it.

Yep, let's do it.

First subscription you ever had?

Probably Netflix DVD.

Your favorite subscription today?

YouTube TV. I'll give you a different one. I think it's a terrific product. I was not a big cable bundle TV watcher, but they've reimagined the user interface in ways that I just think are delightful. If you watch sports, they give you stats summaries. You can like watch the recap of the game in like 3 minutes. It's— they've done a terrific job on some of their like core user experience innovations that have just made that invaluable.

YouTube TV. Something you have learned in your new current roles, either as a teacher or as an investor, that you did not know back when you were just running product?

I think I didn't value the power of frameworks, you know, as much when I was, when I was running product or as an individual product manager. I just thought like, okay, I'm gonna go reinvent everything from whole cloth. But I've learned that there is real power in frameworks because it gives— it's a, it's a tool, not a rule. It gives you a starting point that you can adapt from. And I've just learned how important that is to have a helpful starting point to adapt from. And so long as you can remember that it's a tool, not a rule, it's a, it's a thing that's helping you accomplish something, not a rule that you need to, you know, blindly follow. They're so valuable.

Besides you and me, one LinkedIn thought leader you follow?

Oh, uh, I think Elena Verna does a wonderful job of, uh, on the growth topic. She's done a ton of B2B SaaS scaling. She's helped a bunch of companies and she's funny. So that's an added benefit.

Yeah, she's great. So, um, Subscription Stories past guest Elena Verna, we'll put it in the show notes. And, um, your choice, best or worst product experience you had this week?

So I'm, uh, I'll go with the worst, which is I'm, I'm, uh, coaching Little League for my son. He's a 12-year-old and baseball, Little League baseball. And there's a bunch of logistics you have to coordinate. There's all these apps to like communicate practice times with parents. My daughter does soccer and they use a whole different app. And there's like ViGa, TeamSnack, GameChanger. All these different apps are like confusing and Hard to use, but as an administrator, I went in thinking I was like super organized and created the team, put everyone in it, put our first like 5 practices in there so people could start using it. And then the league came through and they created their own version of my, my team, put everyone in there and all the games and practices in there. So then I had to go— I couldn't merge these 2. I couldn't delete the one I created. Amazingly, I couldn't just delete it. I had to do some hack where I put void and then removed everyone manually from the one. It was just like this kind of— I know I probably got in an edge case, but it was a very difficult edge case to be in. It was a bad experience.

And especially as a proactive team administrator.

Yeah, I was like trying to do the right thing and it like totally screwed me over.

Yeah, that's, you know, the lesson there is do less. Okay, great. Tom Willerer, thank you so much for being a guest on Subscription Stories. It was a Pleasure to have you.

This was a delight. Thanks so much. I appreciate it.