How to grow a subscription business | Yuriy Timen (Grammarly, Canva, Airtable)

The only thing that's worse than a channel or a tactic that you tried not working, the only thing that's worse than that is when you didn't give it the appropriate shot, right? And you prematurely or erroneously concluded that it doesn't work. And it's remarkable how often you find that to be the case when I talk to companies. Oh, YouTube? We tried it, it doesn't work. I'm like, okay, can I see what you've tried? And then you look at it and you're like, oh, this thing was not designed to even have a shot at working from the get-go.

Yuriy Timen is a full-time advisor to companies looking to figure out their growth strategy, and he's worked with companies like Canva, Airtable, Otter, Whimsical, Hims, Flow Health, and a dozen others. I know a number of founders who have worked with Yuriy, and they all tell me that he transformed how they think about their growth. Before becoming an advisor, he spent 9 years at Grammarly, where he led growth and marketing and helped turn it into the household name that it is today. In our chat, we get incredibly tactical about all of the ways that you can grow your product, including when and how to invest in virality, SEO, and paid growth, what's changing across each of those channels, and the most common failure modes for B2C startups. This is the most tactical and actionable conversation I have had yet on how to grow your product, particularly a subscription product, and I'm really excited for you to hear it. With that, I bring you Yuriy Timen. Hey Ashley, head of marketing at Flatfile. How many B2B SaaS companies would you estimate need to import CSV files from their customers?

At least 40%.

And how many of them screw that up? And what happens when they do?

Well, based on our data, about a third of people will consider switching to another company after just one bad experience during onboarding. So if your CSV importer doesn't work right, which is super common considering customer files are chock-full of unexpected data and formatting, they'll leave.

I am 0% surprised to hear that. I've consistently seen that improving onboarding is one of the highest leverage opportunities for both signup conversion and increasing long-term retention. Getting people to your aha moment more quickly and reliably is so incredibly important.

Totally. It's incredible to see how our customers like Square, Spotify, and Zuora are able to grow their businesses on top of Flatfile. It's because flawless data onboarding acts like a catalyst to get them and their customers where they need to go faster.

If you'd like to learn more or get started, check out Flatfile. At flatfile.com/lenny. This episode is brought to you by Modern Treasury. Modern Treasury is a next-generation operating system for moving and tracking money. They're modernizing the developer tools and financial processes for companies managing complex payment flows. Think digital wallets, fiat crypto on-ramps, ridesharing marketplaces, instant lending, and more. They work with high-growth companies like Gusto, Pipe, ClassPass, and Marketta. Modern Treasury's robust APIs allow engineering to build payment flows right into your product, while finance can monitor and approve everything through a sleek and modern web dashboard. Enabling real-time payments, automatic reconciliation, continuous accounting, and compliance solutions, Modern Treasury's platform is used to reconcile over $3 billion per month. They're one of the hottest young fintech startups on the market today, having raised funding from top firms like Benchmark, Altimeter, SVB Capital, Salesforce Ventures, and Y Combinator. Check them out at moderntreasury.com. Yuriy, welcome to the podcast.

Thanks for having me, man. This is great.

It's even better for me.

All right, all right.

So I'm going to give a quick bio. Let me know if I missed anything really important. You were head of growth at Grammarly. You spent 9 years there kind of doing all the things that helped turn that company into the killer product that it is today. You left that, I think, a couple years ago. Now you're advising companies mostly full-time, I think mostly on growth strategy, and I think mostly consumer startups. Is that about right?

A couple of super critical corrections. Number one, it was only 8 and a half years.

Okay. Usually people round those up. I'm impressed that you, uh, you get accurate.

I figured 8 and a half is, um, long enough. So I, I mean, you know, I, I, I'm not sure I want to Roundup, I know, but I'm kidding, obviously. Yeah, I mean, that's largely it. I mean, Grammarly was a hell of a run and trying to take a step back from that and that stepping back has kind of taken on a life of its own vis-à-vis advising.

How many companies have you worked with at this point, advised, and what are some examples, just like companies people would know?

It's now been about, I guess, 2 years and 3 months. Since, you know, my last day at Grammarly in an operating capacity, I've probably worked with maybe 15 companies in the last, you know, 2 and a little bit of years. Obviously not all at once, right? It's usually 4 to 5 at any given point in time. But some of the ones that I've been really, that I've really lucked out with in terms of, I mean, in terms of getting aligned with, you know, Companies like Canva, Airtable, Hims& Hers in the personal care space. There is otter.ai. Who else? Flo Health, the world's most downloaded period tracker.

I use that for my wife. It's handy.

Good, good. Yeah. Yeah, I was trying to get my wife to try it out, but I've been unsuccessful.

You're failing in your approach.

She was like, are you trying to push me into having a third kid? I was like, no, no, I swear this is just, it's just product testing.

Clever. So I've had Casey Winters on this podcast and Elena Verna. It's kind of like the 3 of you that it feels like have worked with the most companies as advisors. And I don't know if there's some kind of contest y'all have or anything, but do you think about that at all? Is there anyone else out there that you think is in the running?

Okay. I mean, first of all, just being mentioned in the same breath as those 2 is an accolade in and of itself. I mean, I look up to both of them. They've gone first. Also, I credit a lot of my getting started to both of them because they've been very generous with their time when I was just kind of considering Advising, especially Casey. If they listen to this, huge shout out to both of them, but Casey especially, he's such a mensch when it comes to just being generous with his time. So no, there is no competition, but had there been one, I suspect I'd be in lead right now because I've done it in a shorter period of time. I'm much newer to advising than both of those. But no, I have a ton of admiration and respect for both of them. They're phenomenal at what they do, and I learned a ton from them.

I love that. Acceleration is fastest. Wow, sweet. So we're going to talk a lot about consumer growth strategies and your experience working with companies and a bunch of insights on things you've learned from working with companies. Before we get there, just one quick question on your advising. I'm curious, how many companies do you work with at once normally?

Yeah, so I've played around With different quantities. So a couple of things. So you mentioned, you alluded to earlier that I advise full-time. What I'll say is that mostly the only thing that I do right now professionally is advising, but it's not quite full-time. I hard cap my week at about 3 to 3.5 days a week worth of work, which is a personal choice. And so that is a hard constraint that I'm working with. And within that constraint, I also feel like for me to do my best work and the work that I also enjoy the most and find the most fulfilling, 4 to 5 companies is probably the max. If I try to go beyond that, the overhead that it creates in terms of the cost of context switching just becomes overwhelming. And I feel like I'm not showing up as best as I can with each individual company.

As an early plug or anti-plug, depending on how you answer this, are you looking for more companies to work with right now? Or are you just like, don't even try, I am so at capacity right

now? I'm so at capacity right now. I've also just been very fortunate to always be at capacity. But I think for every 4 to 5 companies that I'm working with, Think of it as concentric circles, right? There are another maybe 10 to a dozen companies that we're actively exploring if we want to work together in the future. And then there is another concentric circles of maybe 30+ companies that I'm just friends with. So I'll take the plug. I'm always up for meeting awesome founders working on important problems.

Cool. While we're on the plug, I guess, how do people find you online? What's your Twitter handle?

I mean, honestly, probably through Lenny's podcast. That's one. But, um, you know, honestly, LinkedIn is really the only place I'm, I'm pretty low-key otherwise.

Okay, great. That was a lot of meta stuff. So let's get into some meat stuff here. So you talk to a lot of consumer startups, you help them figure out how to grow, how to evolve their product. Something I'm always curious about, and I'd love your thoughts on, is when you look at a consumer startup, I imagine there's a few archetypes of how they grow. And I'm curious if that's a mental model you use when you're like, oh, I see Company X, they're probably going to grow this way and here's what they should focus on. How do you see that?

Great question. I think there are a couple of ways to answer that. My sweet spot is subscription companies, and it's not just consumer, right? I do work with a lot of B2B companies. It's just that most of them, what they all have in common is they lean into consumerized type of growth loops and growth motions, right? So they're very kind of self-serve in nature or have meaningful self-serve engines. So if I think about subscription companies, I think there are probably a couple of buckets that I see them falling into, right? If you were able to nail your unit economics and you have really strong consumer LTVs, think Grammarly, think Canva, the single-player LTVs for those companies are very, very high. They're kind of like average S&P 500 company. LTVs for B2B companies.

What's like a number there just for folks to have a little context?

I'm not at liberty to speak to those, but we're talking like in the hundreds of dollars, right? Whereas some other, like most consumer subscription companies that are like $5 to $7 a month, their LTVs typically cap out at like $50 to $60, right? And so If you have really healthy LTVs, and that usually means that you're attracting a prosumer buyer, so they may be single player, but they're using it for work, right? And so maybe they're expensing it or just the perceived value is so much higher that they're willing to bear that $120, $130 a year subscription. If I'm seeing things like that and I'm seeing that you're converting 5+ percent of your free users to a paid subscriber, Then there is a big opportunity to play paid, right? And lean into kind of paid growth loops and paid acquisition loops. There is another archetype, which is, you know, if there are network effects, for instance, you don't find it as much with kind of like, you know, single-player consumer subscription companies, but obviously, you know, social media consumer companies, there may be a strong referral angle, viral loop angle. If the utility increases, the utility of the product increases, the more users are using it. Another archetype I see are companies that can lean into SEO very heavily, especially if there is like a long-tail programmatic angle. Take Canva, for instance, right? Their biggest initial growth loop, and I think this is public knowledge, was their long-tail SEO strategy where, you know, any kind of design project that you could think of, You know, you would search for, you know, designing, it's kind of like 2 categories of keywords, make keywords and template keywords, right? So if you're searching for a template of any kind, a wedding invitation, yada, yada, yada, they had incredibly strong SEO and they were just capitalizing on all that long-tail traffic. Not every product is going to lend itself to that, but I always look for that early on because that can become, that can just, you can build an incredible moat. With that kind of strategy.

That makes sense. There's kind of like these 3 engines that you can tap into. And I imagine the preference would be word of mouth virality. And then if that isn't going to work, SEO, and if that isn't going to work, paid. Maybe just to kind of simplify it for listeners, what are kind of signals you can go after virality and invest in that and think that that could work? Because every founder would be like, yes, virality. That's how I'm going to grow. Yeah.

Yeah.

So,

well, yeah, I mean, look, honestly, the first thing you look for is that, is there inherent product network effects? It's something that it's either there or it isn't from inception, from my experience. I think it's very difficult to manufacture. I mean, you know this better than I do. It's very hard to manufacture product network effects if they aren't there from the get-go, right? So, like Airbnb from your days, Obviously, marketplace, very strong product network effect dynamics. You think of collaboration tools, Airtable, monday.com, Whimsical, whom we both know, very strong inherent product network effects. Contrast that with a company like Grammarly. It just wasn't there. It's not an inherently multiplayer task, constructive communication. And so you can try to engineer that, but from my experience, it is an uphill battle. So if you have inherent product network effects, that's when I think layering on referral loops and viral loops, right? You think about like what Dropbox has done around file sharing, like that's an iconic example, then it's really powerful. I think that there is another case where referral and viral loops can work even when there aren't inherent network effects. If you have a really beloved product, beloved brand, there's a company out of Australia that I had the opportunity to invest in called Lyca. They do fresh dog food subscriptions and incredibly beloved brand, a premium product. And so they're able to lean into kind of a give one, get one referrals, even though there isn't inherent product network effects, they're still able to kind of generate meaningful results off of an incentivized referral program.

When you talk about network effects, what does that mean to you? How would you kind of define that briefly?

Yeah. Yeah. To me, I mean, honestly, I define it in a, I think probably a pretty quintessential way, which is for every individual user, the utility that they derive from the product increases the more users there are on the platform. The expanded version of that is, you know, in the case of marketplaces, it may not be the more users broadly speaking, but the more users in the markets that you care about, right? In the case of collaboration tools, it's not the more users in abstract terms, it's the more users within your team, the more users within your company, right? That correlates with your Kind of the rise in your utility curve.

Awesome. So if you have network effects, AKA if the product becomes more useful with more people, or there's amazing word of mouth already, or there's collaboration, probably a good sign that you could lean into virality. Yeah, maybe referrals. What about SEO?

Oh, that's a good one. It's a very, it's a very timely question because I'm actually in a process of, we're helping a couple of, a couple of of my companies figure out if it's the right time to invest in SEO. So I've been sort of at the forefront of taking like exploratory meetings with agencies and SEO consultants and things like that. I mean, I would say the first thing to figure, I mean, there are a couple of pillars, right? Because obviously we all know that SEO has a different a different return horizon than say paid acquisition, right? It's longer out. It's maybe 6 months is the earliest you can see results. And even then it's going to be a small trickle that compounds over time if you're successful, right? Or you may spend 3 to 6 months leaning into an SEO strategy and then realize that it's not going to back out. Typically, at least historically, a company, you know, probably is at like Series B before it starts feeling like it has the luxury of making these kind of medium to long-term investments. But I think that's shifting right now, but that's maybe a topic for later or even for another pod. But a lot of the strategies that I think were reserved for like Series B are trickling down to Series A companies because they have to diversify away from paid, but maybe more on that later. So I think, you know, with SEO, it's like the first pillar I would say Is, do you have a unique angle? When you take a look at the SEO landscape today, you look at editorial landscape, which is typically like how-to searches, and who are the players there, and what kind of information is being offered? Do you have something unique to contribute to that conversation? Another thing that's, you know, if I had to do like an audit checklist, another thing is like, do you have a unique programmatic angle, right? Like for instance, like Canva did that with templates. You know, who else does programmatic? You know, Zillow, Redfin, like obviously all the real estate, right? That's like really strong.

Zapier.

Zapier, right. So do you have a programmatic angle? And then understanding the competitive landscape. Or the other one is, do you have a unique data angle? So for instance, a company I work with called Monarch Money, which is in the personal finance management space, Think of it as like a new and improved version of Mint. There is a lot of users are connecting accounts and you kind of have a sense for spending patterns and things like that. Clearly there is unique data. And so it's a question of can you turn it into some kind of valuable organic search experience? I won't go into too much detail in terms of what we're thinking of there, But that's another checkbox. If you can check 2 of 3 of those boxes, right, as like a back-of-the-envelope framework, you may be in good shape. And then it's a question of like, how can you lower the cost of experimentation SEO as much as possible? I think as a rule of thumb, like if you can timebox it to 3 months, like what can I do that at the end of 3 months, I know Like, is this likely to work or not?

Awesome. Couple follow-up questions.

Absolutely.

Uh, one is SEO feels like this dark art where you need some SEO wizard to come help you through this.

Yeah.

Uh, do you suggest companies find somebody or work with an agency or something else? Like, what's your general feeling on agency versus some other route?

I think SEO is pretty specialized skillset. There are some basic principles that always hold, right? Like best content wins, right? And don't do, don't do like shady backlinking, right? And make sure that your on-page SEO is good and your pages are easily crawlable. But, you know, I feel like everybody knows that and where the winners are determined are between the lines. I don't know, is that a sports analogy? Maybe. Maybe

between the lines. I don't know what that comes from.

I don't know. But anyways, what I mean is that there is a lot, a lot of more nuanced SEO developments and angles where I think is where the opportunity really lies to differentiate yourself. And that requires keeping up with the latest algorithm changes. It's very hard to do that unless you are specializing in the art, right? Or the black magic of SEO. And so that's why I think getting an outside resource, at least for like an audit, is really helpful. Now, whether it's a boutique agency or, you know, a solo consultant, I think that's more circumstantial. But I found like, you know, at least with the companies that I've worked with, if we wanted to quickly vet the SEO opportunity, like I can do it in a very kind of amateur, at an amateur level, right? Just like plug things into like SimilarWeb. And trying to figure out if the opportunity is there, but you can get these relatively inexpensive audits done from companies that you can then choose, do I hire them to help with my SEO or not? But I think that audit is usually a very good use of time because they have templates. So what they can turn around, you know, for $5,000 to $10,000 would take you many, many human hours to try to pull together yourself.

Awesome. Are there agencies that you Want to name that people can go check out, or would you prefer just to keep it from having favorites?

I'll give one plug.

Great.

I think one of the most innovative, disciplined, first principles SEO thinkers that I've met is Ethan Smith from Graphite. It's not for everyone. It's a pretty high-end SEO shop. So I wouldn't send the Series A company there. But Ethan also produces a lot of resources, and what they've been focusing on at Graphite lately has been actually automating a lot of their work and turning it into SaaS. So I don't know how far along they are, but you could probably already get, you know, into some of their betas on some of the tools that they're offering.

Sweet. I'm gonna try to get Ethan on this podcast. Yeah, yeah. I've seen his stuff and it's awesome.

Yeah, he's a, he's a math scientist. When it comes to SEO.

Yeah. We need, we need those. We need mad scientists on the show.

Right.

Okay. So we've talked about virality, talked about SEO, paid. I imagine that's pretty straightforward. If your LTVs are high enough and you can pay back ads on those, then that's where you go. I imagine everyone can try it. It doesn't work for everyone. What if, yeah, anything you want to add there?

I mean, there's a lot, there's a lot to add. I mean, I don't know how deep you want to go down the paid rabbit hole because it's changing. It's probably the most affected growth bucket in light of, you know, the market turbulence, you know, the venture sentiment shifting. I've seen paint acquisition strategies and budgets bear the brunt of that fallout. And so the question is, you know, where do you want to go there?

That's, yeah, that's a really good topic. I was saving that for later, but let's chat about it right now. And I imagine part of this is Apple's tracking changes too. So I guess my big question is like, is paid still lucrative and a good path for many companies? Is like 50% of the time less effective? How do you, how do you see that shifting recently? And, and how should people think about paid in the consumer subscription startup?

Well, I think in the short term, um, let's break it down into phases. I think in the short term. Paid acquisition and just paid media dollars are contracting, and we're seeing it already, right? With Meta's advertising revenue, Snap's advertising revenue, right? There's clearly a global contraction happening to paid media budgets. A big part of it is because all of a sudden the definition of efficient acquisition and good payback windows is shifting. Right? So if before for a consumer subscription company, you know, 12-month payback was decent, now it's like you better pay back your paid media in 6 months or less. That's the sentiment. So, you know, the obvious reaction is like anything that's north of 6 months or well north of 6 months, we're cutting that. And so there's that. Then there is just less tolerance for ambiguity and attribution, right? When it's like, when the sentiment is like, let's grow at any, you know, grow at all costs. If you can't attribute things perfectly, that's okay. Now it's like, You know, especially with venture-backed companies, you have to have, you know, 2+ years of runway, manage your burn a lot more diligently now. And so whatever you can't attribute sales to, like, that shit's got to go. I don't know if we can curse on the pod or not. I'm fully available. Well, I've been holding back for the last 30 minutes. No, I'm kidding.

Let loose.

All right.

Not kid-friendly, but nobody's cursed yet, so this could be

the first. Okay. All right. All right.

Play loud.

All right. But anyways, yeah, so I think there is a short-term contraction. However, that opens up an opportunity for smart kind of attribution investments. So you're seeing an emergence of some interesting attribution-related and attribution incrementality-related products, a couple that I've personally started exploring and looking into. And then you just see a lot more heads of growth, heads of user acquisition, thinking about attribution, building their attribution stacks. And so I think that once we settle into some kind of new normal, which is going to be a combination of just better attribution stack on average for companies combined with just the level of acceptance that attribution will never be as good as it maybe once was, we're going to probably get, you know, hit, like come out of that and you'll see paid budgets start making their way back. But even right now during contraction, there are going to be some winners. The companies that have strong cash positions, have strong unit economics, strong payback periods already, right? Grammarly, Canva, to name 2 that I know personally, a couple of others or many others probably, they're going to be winners because all of a sudden, if previously they were competing with companies who were nowhere as efficient as them, but for whatever reason had the green light to keep spending, right? Now all of those are going to pull back their budgets. And so those that have been disciplined have the instrumentation to track things better than average. They're going to benefit from decreased competition on ad platforms, decreasing CPMs, et cetera. So they're going to be winners for sure.

Wow. I haven't heard this perspective. It's so interesting that the fact that it's gotten harder is creating new opportunities for companies to do it better and more intelligently. You said you mentioned a couple tools, products that you found to be potentially helpful in this. Is there anything you could mention there?

Yeah. Yeah. I mentioned a couple that I've kind of connected with in the last couple of months. So, uh, first of all, media mix modeling is making a comeback. Which is something that kind of got popularized in the Mad Men kind of advertising era of the '50s, right? Pre-digital. And that's how people— that was basically the methodology. I can't speak to the specifics there. The science is a little bit— I'm out of depth there. But it was basically a way to use some data to determine a budget allocation across channels, right? At the time, it was probably you know, newspapers and billboards, et cetera. It was leveraging data to some extent. You were probably doing it maybe on a quarterly basis, and then you would only update it every quarter. There was no way with media mix modeling, there was no way to adjust budget like in quarter, right? Because you weren't getting the data feedback loop that frequently. But media mix modeling is now making a comeback because there are so many offline channels that are part of folks' channel portfolio today. And then plus a lot of the online channels are becoming less trackable, right? Meta, for instance, right? With the iOS 14 shift. And so media mix modeling is making a comeback. And the company that's leading the charge of bringing the media mix modeling methodology of like the traditional advertising era and ushering it into the digital world is a company called Recast.

Recast.

Recast, yeah. So I've heard really good things. I haven't tried them with any of my companies yet, but there are a couple that I'm That are on the horizon, hopefully.

Just to double-click there for a moment, is that still useful if you're not doing TV and other forms of advertising? I think it's still—

yeah, I think it's useful if you're spending a considerable amount. What's considerable? Let's say north of $100,000 a month on paid media. And if you have some level of channel complexity, so you're not just on Google or on Facebook, but maybe you're on 3+, channels, then I think it still makes sense. The other ones in the incrementality space may have very different methodologies, you know, actually, because at the end of the day, this may be obvious to folks, but maybe some will find value. Click-based attribution, right? Or the digital attribution we were all fawning over, cookie-based and click-based and URL parameter-based attribution, it never demonstrated a causal relationship between our media spend and business results. It was only good for correlative insights, right? And the only way to determine causality is through like real controlled experiments, randomized controlled experiments through incrementality testing, which is typically really hard to do cleanly. And also companies have always been, often been wary about doing it because you have to like turn off a channel potentially in a key demo and you're like, yeah, like the benefit is the learning of whether it's actually incremental, but the cost are the sales that I will lose today. But the only way to really know how effective your paid media is, is through ongoing incrementality testing. So there are 2 companies that are addressing that, or 2 that I'm excited about. One is Measured, Can be found at measured.com. Amazing domain name.

Amazing domain name. Go with that.

And then the other one is Incremental, but Incremental, no vowels except the last A between the T and the L.

Excellent. Great job.

So many free plugs today.

Yeah. I love it. It's great. This is what people need, right? They're just like, okay, what do I actually do? And so, The more it's clear what to actually try and how to solve these problems, the more people can actually make change. I had a couple of questions here that I wanted to follow up on. One is founders might be listening to this and they're like, amazing. Okay, we're going to grow. There's 3 ways to grow. Let's do it all. Let's get someone on SEO. Let's get Jane on paid. Let's get Fred on virality. There you go. Yeah. In your experience, is it smart to focus on one and then expand down the road or try them all, see which one works best? How do you advise companies to think about these options?

I would say focus paired with rapid iterations, right? With limited resources, naturally, you have to practice some form of essentialism and ruthless prioritization. But at the same time, the clock is always ticking, right? You have burn. There is a finite number of tries that you have at finding what works, right? What's going to help you unlock the next level of growth, right? Get to the next funding round, right? Extend your runway. And so I think either one taken to an extreme focus or trying multiple things is not a good thing. And just in case it's not obvious, right? If you focus on one thing and it ends up being the wrong thing, you've wasted really valuable time. And now you have so much less time left to find something that does work. Spreading yourself very thin, oftentimes in the early stage companies, it's one person who's in charge of all of growth, but they also have some other kind of responsibilities like maybe ops and customer success. If you get them to try like 5 different things, they may not try them fully, any one individually fully enough, right? Because I like to say the only thing that's worse than a channel or a tactic that you tried not working, the only thing that's worse than that is when you didn't give it the appropriate shot, right? And you prematurely or erroneously concluded That it doesn't work. And it's remarkable how often you find that to be the case when I talk to companies. Oh, YouTube? We tried it. It doesn't work. I'm like, okay, can I see what you've tried? And then you look at it and you're like, oh, this thing was not designed to even have a shot at working from the get-go. So to answer your question, I think it's focus with some guardrails so that you know exactly when it's time to move on to the next thing.

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Love the question. It's very thought-provoking. I think with some tactics and some channels, you can fairly objectively create some test guardrails where it's like, if it's YouTube, we know kind of like minimum number of impressions that you got to get. You know, try 2 to 3 creative angles. Here's the click-through rate range that you're looking for. Like, you know, if you get within these ranges on these KPIs, keep going. If you don't, abandon. I think it's important to also know that abandonment doesn't mean we will never revisit it again, right? It just means that because every time you're evaluating, right, the concept of sunk cost, So you have these periodic, I think, periods of reevaluation where it's like, okay, did we try enough? What is— and this is more art than science, frankly. It's like, what's the incremental lift for us as a team to try to experiment with the next phase of this channel or this tactic? And what is the opportunity cost of that? What are the other high-profile things that we could be trying? I know, you know, you were right and say this is probably too hard to answer in this format, but I would break things down maybe into 2 types. Like there are some channels or tactics where you can objectively figure out like some guardrails for when, you know, it's showing promise or not because you can pull benchmarks on like good click-through rates and things like that, right? Then there are other tactics where you just have to exercise more judgment. Outside of benchmarks.

Yeah. Yeah. That was, that was actually really valuable and a very challenging question to try to summarize quickly. So thank you. One more quick question along these lines. So you talked about these 3 broad ways companies grow. Oftentimes a couple of them work. Something I've seen, and I'm curious if you agree, usually one is like 80% of your growth and then you layer on a couple more to optimize. Is that what you see?

Yes. I think companies that we know and admire and reference in case studies or in podcasts such as this one, from the outside looking in, you oftentimes assume that it's a highly diversified growth engine. I have to say it's often not the case. Definitely the 80/20 applies. There's usually some kind of strategy that's working Overwhelmingly well, and there is a scramble internally to minimize reliance on that one thing and on the discover/unlock the next step function, the next growth horizon, right? In the case of Grammarly, it was performance marketing, kind of overreliance on performance marketing. During part of the company's lifecycle. And so it was like, okay, this thing is working, it's efficient, so you don't want to stop pouring fire on it, but you're also thinking months and years ahead, what kind of risk does it open you up to? And so there is a scramble to find, and Grammarly's been successful there. With Canva, it was the SEO angle, right? So for them, that was working really well, which is more defensible than paid. Right? That's sort of like long-tail programmatic SEO angle. But look, you're always susceptible to Google algorithm updates, right? And so how do you de-risk yourself from that? But to your point, yes. And I think that surprising thing to people probably is that it's also the case with some later stage companies. It's not just early stage companies that are kind of like one-trick ponies. Sometimes it's later stage companies as well.

What this makes me think about is there's kind of these 3 phases to growth. There's the kickstart phase where you're just doing a bunch of stuff, trying to get things moving. Then there's that you discover your first main growth engine, and then there's layer on additional engines because you want to diversify.

Yep. And one interesting— what I believe is an interesting period, and a lot of it is gut feel, right? And I try to direct companies like I encounter sometimes early-stage companies when one thing is working well, And they're already worried about overreliance and they're starting to talk about diversification. And I come in oftentimes and I see it showing up in their OKRs. I come in and I'm like, no, no, too early. Like, I'm glad that you're such a forward thinker. Put all of your energy, like, sure, this one tactic is accounting for say 80+% of your new user acquisition, but your user acquisition is still small. So like, don't get distracted with diversification. We'll get there. Lean more into this, hit these growth rates, like stand this up, build this into a real strategic advantage, this thing that's working. So I actually have to talk them out of focusing on diversification too early. Contrast that with some later stage companies for whom that— who are at scale, I don't know, $50+ million ARR, 90+% reliant on a single acquisition channel, which is just mired with risk, and diversification is a blind spot for them. And then with those, I have to be like, hey y'all, here's a risk that you're carrying, right? Let's start carving out bandwidth resources to try to go and explore these other channels and tactics.

That's such an important point. It reminds me, Casey has this hilarious line that he uses that the money's always in the banana stand, or there's always more money in the banana stand from Arrested Development that basically Your growth is probably going to come from the same place it's already come from and that you shouldn't take that for granted and you should put most of your efforts into continuing to optimize that versus being distracted by, oh, let's do SEO now.

I see that argument for sure.

So you mentioned this point about how later stage growth strategies are starting to move earlier into growth strategy planning. I'd love to hear more on that.

Yeah. Let me, let me expand on that. In the world that we lived in in the last 18 months, Or let's say up until say 3 to 5 months ago, right? We were living in a world where funding was abundant and plentiful. Startups were conditioned to think that they can raise twice a year, right? Valuations were quintupling within a year, right? Like you raise in January and then you raise in like November and your valuation 5x. And so Companies were coming off of these like ridiculous Series As of like, you know, $15 to $25 million As, and they were like, we gotta grow as quickly as possible. What can we activate to give us immediate return? And the answer is almost always paid. That's what's gonna give you, especially if you're thinking you're gonna, you wanna go back to raising, you know, less than 12 months later. That forces you to focus on very kind of short-term tactics, short payoff tactics. And so things like SEO, there was no room to think about that for early stage companies because like payoff is going to come like, you know, maybe in like 12 months in terms of meaningful payoff. We care about getting to the next round and maximizing our valuation between now and then. SEO is for the grown-up companies, right? When we're that, we can think about it. And they were getting this reinforcement from everywhere, from peers, from VCs. It's like, it's growth, growth, growth, right? Growth at any cost. I think what happened now, and we'll see where things stabilize because I think we're still in the midst of a little bit of chaos. What's happening now is The same VCs are saying, okay, it's now survival. You have to extend your runway, minimize burn, hibernate if you have to. And all of a sudden growth, whether explicitly or via inference, becomes kind of a secondary objective, especially for all these companies that are far from being cash flow positive, right? They have to figure out how to stay alive and not have to go back to the market and be sort of a victim Shitty terms. And so I feel this is me extrapolating because venture capitalists didn't actually tell me this, but I'm extrapolating that growth is a secondary objective now. It's really focusing on sustainability, unit economics, extending your runway, control of your destiny, getting to default alive, right? And all of a sudden it's like, okay, plus paid is a lot less attractive now. Can't afford to be acquiring. users at like LTV cap 1 to 1, right? Like that's now a no-no. And so SEO is now becoming more attractive because you're like, once you got your burn under control and you're thinking, okay, we saved all this money by reducing our paid budget or cutting it entirely, like how do we put some of those resources back to work? And all of a sudden SEO starts looking a lot more lucrative because it's almost like you took the urgency of like grow at any cost in the next 6 months. You took that out of the equation. So now it's like we're in a position where we're going to, you know, we don't have to go back to raising, you know, 12, you know, 18, 24 months. We have, you know, 18 to 24 months worth of runway. And now companies are starting to think more in terms of, you know, building more sort of sustainable and defensible growth initiatives.

Fascinating. And as much as people may want to do SEO, like we talked about earlier, it doesn't mean they will be able to pull it off, right? Because there's these things that have to be true for your type of company.

Yes.

Yeah. Going back to a point you made earlier about paid being a really interesting opportunity right now because it's become harder, would you say generally you're kind of like pro try paid, go paid in this time? Because I'm finding a lot of startups are like, oh, we can't do paid anymore. We're trying all these other approaches to grow. Is that like alpha right now? Start thinking about paid in a creative way and maybe this is going to be a huge advantage.

So there are 2 reasons to do paid. I mean, I'm oversimplifying, but I think people will hopefully appreciate the oversimplification. Number one, because it actually like drives returns at efficient unit economics, whatever that may mean for your company, your business, your industry. The other way to do it is because it's a very quick way to Get learnings on messaging, on positioning, on designs, on features you're thinking of launching, et cetera, right? It's hard to get faster learnings at scale, right? Than like A/B testing headlines, Google search or whatever. I think the problem that I find is when a company can't tell me which camp they're in, right? Or when they try to say that they're in both, but really it's like, okay, you're funneling $100K a month. It's like super inefficient and they're not even like running experiments to actually get the learnings. I can assess a company, like even if I don't know the industry as well, based on like just seeing their funnel performance, right? Their conversion rates, their retention curves, their LTVs, understanding their churn. I could say whether they stand a chance at making paid work as a former strategy. Right? So not just a learning mechanism, not just a kind of a feedback engine, but actually a profitable at delivering acquisition channel or strategy. And if I see that they're not there, right? Because the funnel doesn't convert well, the users don't retain, the LTVs are too low, then I say, hey, it's not time for paid. Maybe carve out a little bit of budget if you want to quickly test positioning and things like that. But it's just too soon. But if instead I encounter a company that has really healthy conversion rates, strong LTVs, I do a little bit of competitor research and I can see where the opportunities are, which channels are less saturated than others, then I may say, hey, it's worth a go. And also just seeing the bigger picture of their financial health. How much runway do you have, right? What is your monthly burn look like?

Right. Because paid is like, cash going out the door and it will return hopefully at some point, might be 6 months, might be a year. And so that's a real constraint. You mentioned onboarding and funnel conversion. 2 questions there. One, do you have kind of a heuristic of like, here's good for conversion rates? Is there something that you think about there that you could share or is it very case dependent?

I think it's case dependent, but I, you know, it is, it's not even case dependent, it's category dependent, right? So it's not that Every company is its own case, but it's like, we gotta know about what buckets we're talking about, right? I will say that, let's say if we talk about prosumer premium SaaS, à la Grammarly, à la Canva, Whimsical, InVideo, things like that. Yeah, I can probably, I can confidently say that like a healthy website visit to a free user, a free account creation conversion rate, it's probably like in that 20 to 35% range.

From landing on the site to signing up?

From landing on the site to like a free user at scale. Earlier stage, if you have really strong product market fit with some kind of small audience segment, that conversion rate can be 40 to 50%. But as you go broader, it'll probably asymptote at like 25, 30%. What about like a conversion, you know, from a, if you're a freemium, from like a free user to a premium account or a paying account? I think anything under 5% is not gonna work long-term, regardless of how big your top of funnel is. Like you may get to some point, but like for you to remain an independent company, Continuously growing, you know, pre-IPO, like I don't think it's going to happen. It's got to be north of 5%, ideally like north of 7%.

Wow. Super handy. On the onboarding point, what's your thoughts on investing in onboarding and that part of the flow? Like how often is that a fruitful area of investment?

Almost always. A lot of my work is in that sort of prosumer space. So the products tend to be more complex, right? Airtable, Whimsical, Canva, InVideo, right? There's like, they're very robust products. And so it's very easy to get lost in their editors, right? And I think what all of those companies are trying to do for their respective verticals and use cases is they're trying to democratize access to, you know, things that previously you have to rely on professionals for, right? Maybe, you know, in the case of Airtable, it's your engineers, right? In the case of Canva, it is, you know, professional graphic designers. In the case of InVideo, it's professional video editors. So they're trying to democratize access, but they're also trying to make the products robust enough to be comparable to a professional-grade quality. And it's a very difficult place to play in, right? It's like, how do you make it simple enough where a non-professional can use it, but robust enough where they go and say, oh yeah, this is as good as If I would've hired a professional, fill in the blank. And that's where onboarding, sorry for the long-winded answer, that's where onboarding is really, really important because there's such a huge difference between landing someone on that initial editor page, be it Airtable, Canva, having them left to their own devices versus getting as much information or as much relevant information upfront. And then customizing that landing experience for them so that if they're there to do X and we know XYZ about them, we're able to guide them and not expose them to the robustness of the product all at once. So the short answer is almost all the time onboarding is a big opportunity.

Awesome. That's what I was expecting to hear. To give folks some context, what's kind of an order of magnitude that you've seen improvement on onboarding and maybe impact on a company improving onboarding?

Earlier stage companies where, you know, you still haven't really approached the local maximum and you haven't experimented with a ton of things. I mean, you can 2 to 4x activation rates easily through onboarding. I think later stage companies, like, you know, maybe Series B and beyond, I think you can still probably get to 20 to 30% lift on activations. It depends on how many low-hanging fruit are left to tackle.

That makes sense. Yeah. TL;DR, onboarding, there's always money in the onboarding banana stand. On that kind of same idea, do you have a general feeling of like investments in this stuff often pays off and helps you grow and is often higher ROI? And investments in bucket B are rarely successful. What would those 2 buckets be?

So thinking of investments broadly, right? Not just monetarily.

Yeah, yeah. Time and resources.

Yeah. I mean, I would say that getting to know your customer always pays off. So it's, you know, user interviews and getting to know your market, right? Your customers and your prospects. Always pays off. Customer research insights, surveying, interviewing panels, incredibly useful. And I found it to be very, especially in early stages, the amount of clarity and momentum that it can create inside of a seed, Series A, up to Series B company. When you first do some proper research push, the way it can galvanize the team, And give them focus and clarity and purpose is remarkable. So that always pays off. What doesn't pay off? I mean, I think overreliance on paid, it comes to bite you in the rear end. I think when I think about tracking and attribution, I think it's a question of like the right level of investment at the right stage. Rarely do companies get it right. They usually fall into one of two buckets. Where they underinvest in attribution and they're now, you know, their budgets are high. They have a broad channel portfolio and they have a hard time figuring out what's working, what isn't. And they just get into this inertia. It's like, well, overall the company's been growing and it's been growing roughly over the same time that we've been increasing our spend. We're scared to break it. So we're just going to keep spending, right? And so, or companies that read horror stories about other companies overspending, they sometimes try to invest in attribution too much, believe it or not, where they're trying to get everything perfect and scientifically pure. But what they don't realize is that the payoff may not always be there. And so How do I fit this into your question of— I think attribution tracking, attribution incrementality is definitely a worthwhile investment arena, but it could both be a good or a bad thing depending on the level. So you got to make sure the level of investment is appropriate for your stage and where you stand today.

Awesome. You're such a good interviewee that you come back to the question.

No practice, I promise.

That was great. Okay, one last question before we get to our very exciting lightning round. I'd love to get your thoughts on advertising on TikTok and YouTube, and broadly, is there any other tactics, avenues that you think are kind of underutilized or emerging that folks should be thinking about?

So TikTok, like, definitely one thing I'll say about TikTok is I'm seeing it come up more and more as a channel that works well and sometimes even the most efficient channel. most efficient digital channel for some brands. But I think that the thing about TikTok that oftentimes I was surprised about is you often hear, oh, TikTok, that's for the 15 to 22-year-olds, right? I'm done with my gens, Gen Z, right? And oh, my audience is different, so I'm just gonna ignore the channel. TikTok has so many users. And it's still so relatively unsaturated with advertisers that like your audience is on there. Like you'd be surprised. Like, you know, I've worked with brands that, you know, their core demo is like 40+, married, you know, making $200K+ in household annual income. And you wouldn't think that that demo is on TikTok and it is. That's one point about TikTok. Other channels, I mean, I think out-of-home is still not getting enough love. Podcasts, okay? Yep, yep. Sponsor this one.

There we go. You heard it from Yuriy.

Direct mail. What has happened? They've gotten better with attribution because before, a lot of those channels were written off. As sort of like, look, attribution is just too hard on there and attribution is so good and reliable on digital, right? So that gap, that canyon that existed in attribution capabilities of online and offline deterred a lot of people from offline. Today, offline has gotten better at attribution and at positioning themselves as being able to do attribution, but also online attribution has deteriorated. So all of a sudden that argument kind of slimmed out a little bit and I'm seeing offline get a lot more traction and podcasts especially are actually very, very performant for a lot of brands. Yeah, those are the couple of things that come to mind.

Those are great. Happy to hear the podcast piece. Excellent. And then I actually, I'm an investor in a startup that did a big at-home campaign. And they just told me that it was like a 10-to-1 positive ROI on the deals that they got out of it. So I've been seeing that too. And that's such a good point that the measurement and attribution online has come down where it maybe makes more sense to try stuff like that. Amazing. All right. Are you ready for our very exciting lightning round? I'm going to ask you 5 questions, I think, and then just, yeah, let's go through it quick.

Let's do it.

Let's do it. Okay. What are 2 or 3 books that you recommend most to other people?

Ooh, that's something that I think is very prone to recency bias, right? It's like, what are some of the books you've read recently that you've enjoyed? But I would say there are a couple of books that stuck with me over the years. I think on the business side, or like on the business side, productivity side, it's a book called Essentialism. I forget the author's name. I think his last name is McKeown or something. And it's basically the book about cutting out the noise and finding a singular focus and doing that really well. It's a book that I, that was a game changer for me at Grammarly, being sort of new in my career, having really aggressive goals, not being scared to say no, taking on a lot, just feeling, thinking like, well, I'm only working 12 hours a day. There's 12 more left. I could just, you know, Like, I can do it. And then when you end up stepping into a leadership role, which happened for me, I mean, it happened prior to Grammarly, but really I was able to kind of grow into that role at Grammarly. That book was incredible and I used it a lot. I pretty much got copies for everybody on the team, like 40+ people. And so that is a book I swear by. I read a lot outside of like work and business, so I don't know if it's appropriate, but I'll say that Viktor Frankl's A Man's Search for Meaning is just a remarkable memoir on perseverance. And I think the biggest takeaway is you can't control what's happening around you, but you can control your reaction to it. And then I'd say a book that I read recently, because I was very affected by the Russian invasion of Ukraine. I'm originally from Ukraine. believe you are as well. So it hit very close to home and there've been a lot of references drawn between like President Zelensky and his response in this war and Winston Churchill's response in 1941 when, you know, Hitler started marching through Europe. And so I read a book called, I think, The Splendid and the Vile by Erik Larson.

Yeah, I read, I read that. I read that recently.

Did you also read it since the invasion?

No, it was before that, but I totally get that now.

Reading it right now, because I've been following the conflict very closely, but for people who haven't followed the conflict or maybe have only followed the Russian, the war kind of in a cursory way, you can put what's happening into historical context remarkably well. So I feel like that book accomplishes 2 things. Number one, it's like you learn something about not so distant history that maybe you didn't know, which was about Great Britain's and Winston Churchill's kind of courageous response in the face of Hitler's invasion of Europe, but you also can draw so many parallels to what's happening today. And hopefully, hopefully that helps us understand what's at stake. Not to end on too grandiose of a note.

We'll go less grandiose quickly, but I will add one thing that stood out in that book that is also true in the Ukraine is How during the firebombing of the, of, of Britain, people are just like going out every day, going to clubs, still having a— still living their life.

And same thing even today is, and not just Kyiv, but the, but it, you know, it's, it's very lively.

I love that. Okay. Yeah. We'll move on to less,

yeah,

less serious stuff maybe. Uh, what a transition to, what's your favorite other podcast?

Honestly, there's only one other podcast that I listen to right now. Because I've just been so consumed. Like, I listen to a lot of like live streams and read a lot about the conflict, which has taken me— which has taken up so much of my like headspace that's not work-related. But I would say that the All In pod, I feel like it's like a cool— it's a cool way for me to just catch up on everything that's going on through their unique filter. That's probably the only one.

Cool. Yeah, I learned a lot. I learned a lot from that one. There's so much drama on that show. Okay, great. Favorite recent movie or TV show? Anything stand out?

So that's another thing. I've been like, since February, right? I've watched nothing. My Netflix queue just keeps growing because they keep emailing me saying, this new season is out. I'm like, oh yeah, I used to like that show. Let me add it to the queue. I mean, recently I had some downtime. The kids were with grandma, so I watched the movie Hustle with Adam Sandler.

Love that. So good.

Yeah, it was good. It's very light. It's not like a movie that's going to make you think a lot, but it was like just good old entertainment. Yeah,

I like that. I like that summary. Yeah, it was so delightful. Maybe one more question. Who else in the industry do you most respect as a thought leader? Maybe someone people may not know, or if anyone else comes to mind.

Yeah, that's a very good question. So I would say, first off, I do believe that Some of the brightest minds, honestly, in any craft are people that you never hear of because it takes a certain personality, energy, and probably a lot of other circumstances, right? To invest more, invest in your personal brand, right? And also it's very hard to do that while still staying relevant as a practitioner. I mean, if I think about myself 2 years ago before starting advising, I was just kind of living in my Grammarly cave and I felt like I was probably at the top of my craft, but I didn't have time to pick my head up or maybe not even just time, but I didn't know where to start to pick my head up and do something like this. I would say some people that I, I mean, I mentioned Ethan in terms of SEO, SEO and just organic growth loops and content as a growth engine. He is, you know, best in class. Who else? Okay, so Mark Fisk, he shows up in the Reforge chats a lot. He was leading growth and marketing at Credit Karma for a while, and right now he's an investor, I think, at HRG Capital, but he is a really, really strong thought leader on all things performance marketing attribution, you know, and just kind of paid acquisition at large. Those are 2 people that I make sure I— and there are others, of course, but those are 2 who I make sure I stay in touch with at least on a quarterly basis because any casual catch-up just yields so many nuggets.

Amazing. Where can folks find you online if they want to reach out, learn more, and how can listeners be useful to you?

Honestly, I don't have a very strong online presence. I would say LinkedIn is probably the only place where I keep things. recent. So folks can find me there. They can also find me inside of Lenny's newsletter. I do make an appearance there once in a while and on this pod.

Sure.

How can folks be helpful to me? Honestly, promote the shit out of Lenny's newsletter and Lenny's pod. And if you're building awesome things, come talk to me. I always carve out some amount of time in my life Just, you know, for non-commercial things, right? Just to have conversations with founders and spend 30 minutes with them on a phone expecting nothing in return and maybe, you know, save them some time from making some of the mistakes that I've made and help direct them on a more optimal path. So it's kind of, it's about it.

Amazing. Yuriy, you are awesome. Thank you so much for making the time to do this. I learned a ton. I can't wait to get this episode out. There's just so much Dude, this was good.

I feel like my nervousness was unfounded. This was super organic. You are just as welcoming as you are outside of the pod. So yeah, thanks for having me.

Thanks, Yuriy. Thank you so much for listening. If you found this valuable, you can subscribe to the show on Apple Podcasts, Spotify, or your favorite podcast app. Also, Please consider giving us a rating or leaving a review, as that really helps other listeners find the podcast. You can find all past episodes or learn more about the show at lennyspodcast.com. See you in the next episode.