8 Principles for Sustainable Growth — Sean Ellis & Ethan Garr, Breakout Growth

[00:00:00] **David:** Hello, I’m your host, David Barnard, and joining me today are Sean Ellis and Ethan Garr, co-hosts of The Breakout Growth Podcast. Sean has worked on growth at some of the fastest growing companies in the world, like Dropbox, Lookout, and Eventbrite. He not only coined the term “growth hacking,” but literally wrote the book on it. Today Sean helps companies around the globe accelerate customer and revenue growth through workshops, keynote presentations, and select advising roles. Ethan got his start in subscription apps working on product at TelTech, which was acquired by IAC in 2018. He co-invented and led the company’s flagship app, RoboKiller, and helped grow TelTech’s other top communications apps, including TrapCall and TapeACall. Ethan now helps companies improve their growth trajectories through workshops, coaching, and as a trusted advisor. On the podcast I talk with Sean and Ethan about the importance of a North Star Metric, optimizing for speed to value, and why product/market fit needs to be dialed in over time. Hey, Sean and Ethan, thanks so much for being on the podcast. I want to kick things off and hear the story of how the two of you met and started podcasting together. You seem a bit like the odd couple to be kicking off a podcast together. So, I’m really curious. [00:01:37] **Ethan:** Thanks for having us on. We’re really excited to be on the Sub Club podcast. We’re both fans, and we have the Breakout Growth Podcast. Sean and I actually met more than 20 years ago at Uproar.com where I believe Sean’s title was VP of marketing. I had been working for the company’s PR firm and got poached by the company. This was during the dawn of the .com era, so it was a little bit of a crazy time. I went through three or four roles in rapid succession. If I remember correctly, I was basically telling Sean that it was time for me to move on because I’d sort of run out of people to work for. He said, I think I have a great opportunity for you. And, it turned out to be just that, because Sean really introduced me to this idea of this Tesla and approach where experimentation drives growth. So at the time, we were doing a lot of paid marketing, and the specific role was around, Testing creative, which at the time was these 4 68 by 60 banners. So we had a lot of fun with that. we can, we have some great stories from that, but, yeah, and I think Sean, I really very quickly realized that we had, sort of a shared passion and curiosity around growth and, So even after uproar.com, Sean went in some different directions. I went in some different directions, both entrepreneurial and both, really trying to understand and learn growth, but we always stayed in touch and, you know, formed a really nice friendship along the way. I think, I mean, I guess Sean, we’ll have to confirm that, mostly cause we both sale, so it gives us something to talk about. but then as I was moving on from, tell tech and robotics, Sean had started this podcast, the Breakout Growth podcast. And I think I was his first recording, not his first guest. But I was giving him some thoughts in the background and helping him with a few things. We wrote some growth studies together. and eventually it just led to us a shot. I think Sean just got tired. I broke him down and he said, okay, fine. You can, you can be my cohost. but it’s been really great. And. Yeah, I think, especially like, you know, with sub club, you guys focus more on subscriptions, obviously, and, and mobile apps. we’re focused more with our podcast on learning from the world’s fastest growing companies, and trying to understand how they operationalize growth, how they build growth. But there’s a lot of things that are connected between those. So it was really cool to be invited on, to talk to you today. [00:04:01] **David:** Yeah. And that’s actually where I wanted to kick things off. So, so either you, you probably have a little more subscription apps, specific experience having worked at tell telltale which may throw killer and then got acquired by IAC. And then, you know, you kind of were in IAC for a bit, And then Sean, you’ve just worked with so many amazing company, including subscription app companies. But on your Breakout Growth website, you have this really great, downloadable PDF about the principles of sustainable growth. And it’s really cool. How so many of the principles of growth really do apply fairly universally, but then I’d love to kind of walk through these principles of sustainable growth. It may be with just a little more bent towards, our audience of subscription apps. So, let’s go through each of those and I’d love to just kind of hear some high level thoughts on like, what those mean to you. And then, then maybe I’ll pester you with questions on, on how maybe it more even directly applies or doesn’t apply to, to subscription apps. So, so the first one the list is dial in the must have experience. Sean, what, what does that mean to you? What is, what is dialing in the most have experienced? Why is that a principle for, for growth? [00:05:11] **Sean:** Yeah. So essentially, you know, I, I think it’s pretty well accepted these days, at least in the startup world that, without product market fit, you really can’t drive sustainable growth. And what that really means is that, essentially if people try your product and they don’t keep using your product, Eventually, you’re going to be losing people faster than you’re bringing people in. And so, so that’s really retention at the core of this, but then, then it’s really what drives retention. And the thing that drives retention is that when someone does try your product, they say. Wow. I really need this. And, and it’s, it’s a must have, for me, it solves a really critical need that I have. And so that, that ultimately becomes the foundation of growth, whether you’re talking about a, you know, subscription business, or really any type of business, if, if it doesn’t perform the job that. Hired to do, then people aren’t going to, they’re not going to keep using it. And, and so obviously there’s some, there’s some products that are, not necessarily long-term use cases, but, for, for long-term use case products that’s best represented in retention. And so, what the must have is really about is getting into the qual qualitative. What, what type of experience, does, does the product need to deliver to the right people who have the right need in order to make it a must have? And so that’s that can be a super long process of, of dialing that in. And, and, a lot of companies never get that. Right. And as a result go out of business, but that’s that we, we definitely thought that was the, the most critical of all of the principles. So that’s why we started with that. [00:06:58] **David:** Yeah. I mean, and Ethan, if you want to chime in, and I’m just curious for both of you though, like what does that dialing in process look like? So, you know, I’m assuming this must have experience. I think a lot of apps get built where. They think it’s a must have, or it’s a must have for them, but it’s not necessarily a product market. And, and you know, a lot of folks try the, if they build it, if I build it, they will come approach of like, they, you know, come up with their own problem, but it’s not a real problem in the market. So it’s not truly a must have. So how do you go from, I think this is a must have to like actually kind of like proving out the market and understanding what that real, that [00:07:40] **Sean:** Let me, let me take that one just, yeah, just because that’s, I’ve, I’ve basically, I put out a process for that, that now is pretty widely used. And, the idea just as you said, I think it’s a must have, I think a lot of people kind of get, get into that mode. So the only way to know if it’s a must have is, is to get it in the hands of, of potential customers and, and ultimately ask them. How they would feel if they, if, if they could no longer use it, if you, if you stopped, if you cut them off from the product. Would they even care if they wouldn’t care then, then your product’s not a must have. And even if they say I’d be somewhat disappointed and your product is still a nice to have. And so the way that I’ve honed into on that over, you know, more than a decade now is with a single question where I asked that, how would you feel if you could no longer use this product? And I give them the choice. Very disappointed, somewhat disappointed, not disappointed. And, those who answer very disappointed are giving me that signal, that, that they, they consider the product and must have. And then, so how, how do you actually dial it in? You learn everything you can about those people. What problem were they solving? How are they solving it before? What, what is their profile? You know? And so you can, you can really filter survey results to, you know, if you have. Yeah, the, the, the most basic of filters might be, let me just see what the men say. Let me just see what the women say. And, you know, if it’s, product that’s, that’s more of a feminine needs product, then it’s gonna not be really important for most men. And it’s going to be probably really critical for women or, or vice versa. And so, but, but obviously there’s a lot of different ways you can, you can segment the data. And, and so what you’re really trying to do is find. White hot group of must have need there and, and then build a growth engine to acquire more of those people and bring them into the right experience. So, Ethan, is there anything you would add on, on top of what I discovered there? [00:09:50] **Ethan:** Well, just, you know, I think with that question, I think what, Sean actually, led a workshop for us at Deltek years ago. And we actually really understood, started to understand that question in the context of other questions and how to. Use that to operationalize our, our, our growth. So we would actually ask that question as a part of a survey every week, while we were growing robo killer with every change we were trying to look at that and really understand the dynamics of what was driving value for end users, how they were, because I think, you know, another thing that Sean and I’ve talked about extensively, Companies fail because they don’t find product market fit all the time, but they also failed to grow because they don’t understand their product market fit. So I think using that as a tool, as opposed to just. You know, when we talk about these as principles, what Sean I was wanting to do is try to make them actionable. And I think that survey, and I think Sean, you, you put that up and I want to make sure I get the URL, right. But I think it’s PMF survey.com where you actually have that sample survey. It’s really a good tool that that teams can use, in mobile and subscription business. I think it’s great, but I think really any business to understand where they are on sort of that product market. Kind of continuum. Cause I don’t think it’s a gate that you get to and stop. I think it’s a gate that you pass through and continue to dial in over time. [00:11:10] **David:** Yeah. So, and then, at Celltech when you were kind of operationalizing this with. Would you like prototype a new feature and then have folks use it for a little bit, or would you kind of roll out like fully fleshed features and then ask those questions? Would you, you, would you do this in beta? Would you do it in production? Like what was the like operational, dialing in process look like for, for a subscription app [00:11:37] **Ethan:** Well with robo killer, like, you know, we co-invest, we invented robo killer and then grew it from zero to what it became, you know, in eventual the acquisite eventually the acquisition by IC. So I think we were moving so fast that, it was a little bit of a combination of both. some of the things we just hadn’t finished yet, I think as we were building it out and we were learning along the way, one of our, you know, our core features, our answer bots was sort of. Response to like, well, what do we do here? What do we do next? and turned out to be a life-changing for us, the answer to that. But, but I don’t think, I don’t think there’s a clear cut answer for that for every business. I think it’s going to depend on your sort of where you are with our other products, such as tape call and trap call, which were more, seasoned at the time. And they, you know, they had a following an audience. I think it was a little bit more systematic in that approach. [00:12:28] **David:** Yeah, that’s really interesting. it’s, it’s, early on in the, in trying to find product market fit, it is really tough to find that balance of like, you know, would this feature be, and with this app, even with this idea, you know, kind of be more valuable once it’s fully fleshed out or, you know, what, what psychedelia of. MVP do I need to build, to actually get a real answer from, from users as to whether or not it really is, and must [00:12:59] **Sean:** Yeah. I know Ethan’s got a, it looked like you were about to jump in, but let me just kind of say one piece and then, I’ll do, do it short. But I think, I think there’s this belief that, you know, if I, if I put more stuff in it, it’s going to be more valuable to people. And so a lot of times someone feels like, oh my vision. Has to be kind of fleshed out before I can really get that feedback on, on the must have. And, you know, one of the things I, I, I learned from, I have a course called, go practice that IO where we’re really talk a lot about this, how, how to get to product market fit. And my co-creator on the course is a former data scientist from Facebook, but has a lot of early stage startup experience as well. And. He, he essentially shared a quote that I think is a really like profound one that I wish I understood earlier, in my quest for product market fit, is, is that it’s, it’s really hard to iterate something that’s already complex. It’s much easier to iterate something. That’s that’s simple. And, and, and, and the fact that in most cases, product market fit requires iteration. So the more that it has jammed into. The harder you’re going to be able to do, to find that line. So it’s not to say that complex products can’t be successful, but complex products that are, that start as simple products that solve a really basic need and an elegant and good way. Once you have achieved, that must have status on that, on that narrow set of functionality. Then you can start to say, okay, now how do I work toward my vision, where I make this more defensible about building in that richness and, and, you know, work with that feedback loop of, of customers to build something that’s, that’s really tight around that core benefit. So I don’t know Ethan, if what you were going to say, sort of supports that assertion, or maybe, maybe it takes it a different [00:14:56] **Ethan:** No. I agree. I think you’re talking about what job are you trying to accomplish? What’s the job to be done for that product and really focusing on that. And I agree with that. I think I was just going back to, tell tech one of the challenges and I think this is. It’s very hard to just look at, you know, with a broad brush at all apps. But because we were a telecom, we were using telecom systems systems that were external to our product, can be very hard to make an MVP of a product where, you know, to test those things. So sometimes you have to get really creative in how you ask questions of potential users, but ultimately you have to make some big. But I do think, if the big bets start with, what is our product market fit, why do users love what we do? And what do they actually get value out of instead of just jumping to sort of those tactical solutions, you’re much more likely to find features that matter. cause certainly, I’m guilty of building things that no one wants it. [00:15:51] **David:** Oh, we’ve all been [00:15:52] **Sean:** Yeah, I just, I want to actually add one more thing too, that I think is kind of interesting here that I would say, my time at Dropbox, right out of the gate, we had pretty strong product market fit. But what I realized pretty quickly was that the customers who love the product the most were using. In all the ways it could be used. So there they’re synchronizing their data across devices. They’re sharing files to people who don’t even have Dropbox. They’re, they’re setting up collaborative folders with other people with boxes. There’s just a lot of different things you could do with the product. And so that. Nissle thought is okay for new people, I’m gonna, I’m going to promote all of these things you can do with the product and, and really get them to that. That must have experience of being able to do all of these things. But, but I found that actually, that didn’t work very well because. That complexity, scared people. they could see themselves having one need, but they couldn’t near necessarily visualize the need for all of those things. So what we had to do is figure out what was the right narrow use case that we could, you know, and, and functionality that supported, that use case that we could onboard people into. Once we converted them on that use case. Then spoonfeed the rest of the product to them kind of one at a time until they, until they have that full experience within the product. But even once we converted them on a single use case, like a file share. So if somebody shared a file with them, that’s what they looked at the product as. And so once we converted them to the file sharing use case, Then, you know, you can, you can actually set up a full collaborative folder. So what’s, what’s the next, most contextually relevant thing to that first use case. And then eventually, you know, you can actually just use this for yourself to synchronize your data across all of your devices. And, and then we knew once we got people doing all of those things, when we asked that question, how would you feel if you could no longer use Dropbox, if they’re using everything, it was. They got up to like 80% of the people saying they’d be very disappointed without the product, but any one of those things, typically it was, you know, between 30 and 40%. And so, but the fact is that if you can get to around 40%, that’s, that’s the benchmark that I’ve seen, that it becomes good enough that you can generally build a, a good, sustainable business on it. [00:18:21] **David:** Yeah, and I was going to ask this later, but since we’re going to deep into product market fit, we talked previously. in our prep call about how understanding your product market fit is the key to operationalizing it. and so you’re kind of like dancing around that a little bit, just then kind of talking about, you know, layering on the different features and not overwhelming people, but there’s also this idea that you can, you can have. Product market fit, but kind of not fully understand it. So what, what do you mean by that? And then how do, how do you, cause if you ask this question and people say, you know, okay, you know, I love your product. I may be terribly disappointed if it, if it goes away. but that might still not tell you why they care. So then how do you dig deeper into those aspects of product market fit? To really understand what it is that people care about. And I love Ethan, you brought up the jobs to be done framework. I love that job to be done, thinking of like, you know, what are they hiring your product to do? And how do you get that out of your, your users? How do you really understand that from them? [00:19:26] **Sean:** Yeah. If I could zoom out a little bit on, on that question and then come back into it, but kind of giving, giving that full life cycle. So I think, I think it’s not just about, okay. You get to product market fit, you’ll understand it. And then you operationalize growth. I actually think there’s. Sort of more of a more time in between that most startups skip and, and Ethan kind of alluded to this that, getting to product market fit is the challenge that causes a lot of companies that go out of business and then not understanding their product market fit is another big issue. I think most of the ones that don’t understand their product market fits still. I still have some level of success. They just, they just fall well short of what their potential is, but if they truly understand it, they get, they can build a great growth engine. And so really before you get to the operationalizing of growth, you have to build that initial. Growth flywheel. And I think that’s a, that’s a pretty different skill set than the operational side. And so it, that, that flywheel starts with really understanding who needs it. Why do they need it? What’s the experience that makes them realize they need it. so that that’s usually the first thing that I’m doing when I’m starting on a new businesses is really just that the deep insights around that product market fit. And, and it’s a lot, a lot about just like who and how, and then, and then trying to build a flywheel. Of growth about what’s the initial check has it, you get it, remember in the beginning, you just, you don’t have a single channel that’s even working. And so operationalizing and kind of building out dashboards and other things, you, you sort of have nothing to manage yet at that point. And so, really figuring out what is that first channel. And so before you figure out the channel, you have to figure out who am I reaching? And so, who, and then why do they need it? And then what are the various channels that are. Could could tap into to reach them. And so it’s kinda my channel hypothesis at that point, and then going through the testing of those channels, but you also have to think if I’m going to, if I’m going to use this channel to reach them, what does my business model have to look like? Like, so if, if, if I think I can grow this product virally, then I’m probably not going to have an ultra premium product because. That the cost is going to is going to really slow down that viral loop. But if I have to, if I have to pay a lot on the customer acquisition side, let’s say I’m going to focus mostly on Google ad words. And it’s a pretty competitive set of keywords. I might need a pretty high price to. To serve, you know, to, to essentially reach those people and, and pay to convert them as customers. And so you’re, you’re not just experimenting with the channels. You’re experimenting with the business model. That’s compatible with those channels. You’re experimenting with the, with the onboarding flows. So at, at log me in. We kind of had everything working, right. We have the right business model. We had the right right channel to get people, but we couldn’t make it work in any kind of scalable way until we dialed in that first user experience and really iterated to get new users to a great experience quickly in the product. And then once we, that was the final piece that essentially said. Now, this whole thing works and we could, we could start to build a really scalable engine that, that ultimately created a multi-billion dollar business, but yeah. Anyway, so you get, you need to get a lot of pieces right first. And so I think that. All of the product market, fit insights, sit at the, at the foundation of getting those pieces. Right. And, and then, and then once you, once you have an initial proven channel that scales now starts to look like a real business where, where you can start to operationalize growth, [00:23:15] **David:** Yeah. And then, I mean, Ethan, if you want to chime in, I mean, I’m curious too, from your perspective, like, you know, when you were doing those quick iterations on robo killer and other products at Caltech, were there questions that you would follow up on? To understand, to better understand, you know, what that job to be done was what, you know, so you’re, you know, when you would send out a survey saying, you know, how disappointed would you be if this went away, did you follow up with specific, a specific series of questions to understand why and how, and, and, you know, tease out some of that, that understanding of your product market fit. [00:23:51] **Ethan:** Yeah, for sure. I mean, what we wanted to do was really understand, add different kinds of users with different use cases, how they were finding value with the product. So certainly looking at, the survey question in, not just in, in a, in a vacuum, like to me, that’s sort of like, if you just look at like NPS score, right. It doesn’t really tell you what to do. Right. whereas I, I, OVO is really. Shaun’s, product market fit question. because I think when you contextualize it with other questions, it does become very actionable. So who are the must have users, that, you know, who said they’d be very disappointed. And then what features do they engage with? what features did they like? What don’t they like? if you could break it down, You know, segment those, those users and those audiences, you had a better ability to understand how to make, how to improve the product to meet their needs. So, yeah, absolutely. It was a, it’s a process of using that question, contextually with other questions. and I also think, As you zoom out and you start to actually talk to people in the wild, it’s not just about the survey. It’s about trying to understand, you know, we know certain things from the survey is now that we’re talking to other human beings, really trying to understand, are they, do they fit? Which categories do they fit in? How would they describe the product? What are the challenges they face with the product and how do they kind of fit into that system? So, I think, especially with apps, I think it’s really easy to not talk to your users. And I was guilty of this. I would, I would, you know, I stand in front of my team and be like, we need to talk to more users, but I had no plan for it at times. And like, yeah. I, you know, if I could go back in time and, and do things over, that’s one of the areas where, You know, I would have put more effort to try to really come up with a plan for speaking to individuals as individuals really engaging the community. you know, we keep hearing Sean, I keep hearing on our podcasts a lot about community led growth. And I’m not sure every businesses, you know, there’s a community to be built or a community is really a channel for it as a growth channel. But I think community engaging your community is always important if you want to get more learning. So. [00:26:01] **Sean:** Yeah, I think just one, one way to be deliberate about that. I had a VC who kinda kind of annoyed me in the beginning of log me in. he kept, because he just, every time I talked to him, he’d say, when was the last time you talked to a customer? And it was like, you know, eventually, you know, I think first answer I gave him was sort of a smart ass. You know, I don’t really care what customers say. I care what they do. And I study the data and I’m very deep in the data and he’s like, that’s nice. When was the last time you talked to a customer? And so he’s, and so, you know, initially I did it just to appease him, but he would just randomly show up in our office and I just wanted to be able to always give him the answers. Well today, in fact. And so, so a couple things, one, I, I started to find, I ran much better experiments when I actually talked to customers a lot. Like I just had so much more context into what they were doing, but the other piece is, and this comes back to the plan side that Ethan was just saying, because. I kept thinking he might stop in today. And I want to be able to answer today, just being deliberate in saying every single day have at least one customer conversation, is super powerful to, to stay plugged in and not just think of people as a bunch of numbers. [00:27:15] **David:** Wow that, and that’s hard to do. I think that’s why a lot of companies don’t do it. It’s a, it’s, it’s just easier to building your silo. It’s easier to look at the data and, you know, getting on the phone every day with a customer is, is transformational, but it’s, it’s hard. [00:27:29] **Sean:** Yeah. And it’s also which, which customers do you talk to? And that’s where I think the survey super powerful in helping to uncover the ones who say I’d be very disappointed without the, without the product. But once you, once you’ve uncovered a list of those, like that’s a really rich group of people to have conversations with. [00:27:48] **David:** Yeah, absolutely. And then I love how the next step on the principles of sustainable growth is to quantify improvements within north star metric. So it’s not that you don’t look at data. It’s not that you don’t collect data it’s that you contextualize it after starting. The must have experience and really talking with your users. So, so I, I think a lot of people get overwhelmed myself included of like what metrics to track, you know, what really should my north star metric be. So I’d love to have you kind of simplify that for me to, you know, and then, you know, then if you want to talk even more specific to some of your north star metrics with subscription apps. But yeah, Sean, This north star metric and, and how to contextualize the data and look for the right data to be actually paying attention to. [00:28:37] **Sean:** Yeah. So I totally agree. Like it’s, it’s super easy to just get a wall of numbers where, where it gets overwhelming. And so I think the beauty of a north star metric is that it’s, it’s one metric that rules all other metrics, but it’s not. It’s not, shouldn’t be confused with the concept of the one metric that matters. And sometimes people kind of conflate the two, a lot of metrics matter in the business, but the beauty of a north star metric is that it, it reflects what you’re trying to do with the north star metric is reflect how much aggregate value are. Am I actually delivering to my customers? So you, once you understand what the must have experience is with the. How many units of that experience am I delivering? And so you might say like why that instead of just revenue, like revenue is, is where it all hangs off of. But if you, if you just focus on revenue and, and value is not moving at the same pace as revenue, then eventually revenue is going to crash and you’re going to be disappointed. But if you can focus on how do I keep growing that footprint of value and have revenue. a function of that value, then, then revenue’s going to be much more sustainable. And so figuring it out then becomes it becomes a challenge. But, the way that I tend to do it is, I go through an explanation. I give some examples of companies. So like, like Facebook being a daily active users. Slack is also a daily active users. So it’s not just a, a, B to C metric. And then, you know, Uber would be weekly rides. And so once people hear a few examples, they start to, they start to kind of understand the concept better. And then, and then I have, I essentially in a workshop, get everyone to come up with their own ideas for the north star metric. And what I tell them is. You can debate it for six months and then you don’t get the power of the north star metric. And it’s probably not going to be any better than if we spend 30 minutes or an hour on this. And at the end of the hour, we’re going to commit to something. And if we, you know, in a few months need to change it. So be it, we change it, but like let’s, let’s commit to something. And so, but it really starts with what is the value that people get from the product and how do I make sure that the metric, so you have to be able to track the metric. One thing. So, so a lot of metrics like, oh, That would be a perfect measure. So it’s a particularly in marketplace types, businesses where they may not be actually tracking the transaction. They’re more of just matching people up. I’ve seen people have a, have a hard time kind of coming up with a metric that, that really works well there. But if you can, if you like in the case of, of, Uber that we talked about every time there is a ride delivered on Uber, somebody gets value. The writer got where they needed to go. And a driver made some money taking them there. And so if I just track how many rides I’m delivering in aggregate across the system in, in, on a weekly basis. So that kind of normalizes for differences on different days of the week. And I know that’s going up every single week. Then my footprint of value is growing a lot. And a lot of times people get kind of caught up in, but if it’s a drive to Las Vegas versus a drive to the grocery store around the corner, like you’re not properly representing that. And I think it comes back to what Ethan was saying in the jobs to be done. The job is to get where you need to go. And so every time you help someone achieve their goal, you’re not just providing value, but you’re also building a habit around. We are the product that helps you achieve that goal. And so long-term one ride to Las Vegas might be more money for the business, but. If I could have a hundred rides that add up to the same cost as that one ride, that’s way more valuable because a hundred rides created a, a habit of now whenever I need to get somewhere, Uber’s comes to mind first as, as the way I get there. [00:32:47] **David:** Yeah, that’s such a fantastic example. Yeah. And then I was going to ask Ethan, any specific examples related to, to your work at Deltech or just industry, you know, subscription apps, specific kind of north star metrics you think [00:33:00] **Ethan:** Yeah. Just going back to what Sean said. I think one of the key things is just keeping it simple. I always say like, if I’m trying to train a company on, growth and we’re talking about north star metric, I’m like, if it’s an algorithm and it comes out to 0.6, one. It’s not going to like it’s too complicated. Right. you know, in the telecom business, a lot of times like calls handled often would be a good metric, but you know, that doesn’t work for every business and you could have two companies competing in the same space with two different north star metrics, because it’s really about the shared understanding amongst the team. And I think. and we learned this with Sean through his workshop and, you know, something I really believe in like, it’s that shared understanding of the north star metric. That’s important. It’s everybody looking at, you know, it, it really breaks down silos when everyone’s looking across the organization and say what really matters to end users? What, how has, how do we quantify. Right. Because ultimately if what you’re doing, isn’t impacting value for end users. You got to ask yourself, why are we doing it? So, you know, I think it’s a, it’s an incredibly powerful tool, but I think, it’s easy to complicate. Sean, I often hear companies say, we ask them what their north star metric. And they say, well, we have a bunch of them. And I’m like, oh, there’s only one north star in the sky. there, there are cases where it makes sense to have more than one, but I think. People right away, go down to some of the KPIs thinking those are north star metrics. And again, what, you know, if, if people get anything from this conversation, it’s not saying you only need one metric. It’s saying a north star metric helps align teams, get everyone pointed in the same direction around value. but there are many other metrics that will matter that ladder up to that. And I think one of the key things I look at when coming up with the north star metric, I try to walk through like, Retention referral acquisition activation. And I try to ask myself how would anything in this growth engine impact that north star metric? Because if I can’t really tie, like how more people coming into the app or more people staying longer or telling their friends about it would impact that metric. It’s probably not the right metric for me, but, but I do think keeping it simple and understanding that you may have to adapt, evolve it over time as you know, keys, to being successful with the Northeast. [00:35:13] **David:** Yeah. And then the next thing on your, principles is diagram your value delivery engine. And I imagine that exercise, actually might even help you better understand. That what really should be your north star metric and just better help you understand your business. So what do you mean Sean, by, by diagramming your value delivery engine? Like what, how, how do you do that? [00:35:37] **Sean:** So Ethan actually just touched on it right there. It’s it’s really thinking about, if you start with your north star metric and you just start to think, what are, what are the different ways we could move this? And traditionally people just think, okay, we were more effective on customer acquisition and that’s going to move the north star map. We get, we get more people in the door and that’s going to move it. But if, if the majority of the people you get in the door, Never actually experienced the product, then they, then they contribute nothing to that north star metrics. So they got no value. So then it becomes okay. Activation, how do, how do I actually get them to experience that value? The first time is, is a big part of that engine. So, so. With the, with the recognition that if it takes them, you know, months and months to get to that first experience of value, most people are going to give up on that before, before they ever experience it. And so speed to value as part of that, that, that kind of equation there. But. But there’s a lot of ways to move. I can get my existing users to bring in additional users. So my referral engine on the business, even revenue loop to some degree, while revenue may not grow the north star metric directly, it funds the programs that grow the metrics. So it’s kind of, it’s more of a depending. Variable on, on acquisition, for example, or even activation, if I’ve got an incentive to drive activation or referral, having more money that’s generated from my customers is going to help that. And then engagement is obviously a huge one as well. If I, if I can get people to experience the product more often for, for longer times each time they experienced. That’s going to, you know, one person can contribute a lot more to the north star metric, but I think that the real key here is just as Ethan was saying earlier, it’s not just quantifying value. And knowing that revenue sustainability is going to be tied to value delivery sustainability, but it’s also, now you start to get toward that operationalizing of growth, where one of the biggest detriments to growth that I see in a business is that silo, that just happen naturally as you grow, you get more specialized skills. I’ve seen a sales culture be stronger than the company culture or, you know, customer support culture, be stronger and have almost no communication or context with other groups. And, and then, and then I have my metric that’s important, which might be. engagement on customers if I’m say on the customer support side, and then I get upset when the, when the marketing team brings in lower engaged customers, even though maybe those lower engaged customers are hugely profitable for us and help to move the north star metric in aggregate, but just on average, they don’t help as much. This other groups metrics. So if everyone can zoom out and say, okay, this is the metric I’m focused on, but the most important metric is the north star metric. And so if I’m, if I’m having a strong conversation with another group that maybe hurts my metric, the tiebreaker is, but does this help the north star metric? And it really starts. And then what’s kind of cool with that. Is that. You have this like common metric that starts to matter, but you also have, you know, the north star metric tends to map a lot more to the mission and vision of the business as well. And so I think another problem with, with the siloed world is that people like. Context on the big picture and their jobs starts to suck if they, if they don’t have context on the big picture. And so if you can reinforce mission and how the north star metric is progress against that mission, and this is my role in moving the north star metric and helping us progress against that mission. This is a lot more meaning in, in everyday work for people as well. [00:39:33] **Ethan:** Yeah, I would echo that night. Where, you know, just, it can be eye-opening just to look at your growth engine as this diagram and start looking at how these pieces interact with each other and how they do eventually move the north star metric. And I do think that, you know, I mean, a good old example was when we were@uproar.com. Drew this, this banner ad and Sean will get a kick out of it. Cause we were, I was trying to beat our existing mix of banner ads every week. And I finally was bored. I couldn’t think of anything really one day. And I can’t put my finger on a piece of paper. I drew an outline around it and I came up with the pull, my finger banner and right away, like we were like [00:40:12] **Sean:** Without with a little audio symbol on there that you’re going to hear something. If you pull the finger. [00:40:18] **Ethan:** I’m not real proud of it, but it was funny. but, but yeah, like when. When we came up with that at first, when we saw the, you know, people were just clicking on it, like crazy. And I got so excited about it later on when we started to realize that it wasn’t really reflective of the value of recreating and it didn’t, you know, it didn’t have the, I mean, it, it had such a high click rate that it, it made up for it. But the conversion rate wasn’t very, it wasn’t really that good. And I think it was sort of one of those eye-opening experiences where you start to realize. all of these things work together. If you don’t understand your product market fit and how to deal with. then the best growth engine in the world is probably not going to be super useful. Having that north star metric to tie, tie it all together. I mean, I think if I could’ve seen like, okay, well I can bring these types of people in. They’re not necessarily our regular users. What, you know, what games in our, portfolio might appeal to them. But yeah, I was pretty [00:41:14] **Sean:** Th the one thing just to, just to build off that real fast. Cause I think that’s a really important, so we didn’t call it a north star metric back then. Like, I don’t think that that term, I even became familiar with it until like within the last 10 years. But what we did know was that value was represented in the amount of time people spent playing games on the site and because we optimized everything for that. So we took that high click-through rate on that banner that, created and then ultimately said, what is the cost per unit of engagement in our product? And then that one actually did make a pretty good cut, even though the average engagement of those people was lower. but when you actually zoom out in that, look at that business, we had the highest average engagement of any company on the planet. At a time when most people were, you know, the considered sophisticated to go beyond CPM tracking to CPC tracking, we were, we were literally down to every dollar spent here, how many hours of engagement or minutes of engagement where we creating per dollar spent in our campaigns. And so that required really sophisticated tracking, but I think it got it, got everybody in the company on the same page and, And gave Ethan and I a really good foundation to then carry over into our, you know, more, more business type software. So my, my next gig from there was, was, logged me in and Ethan’s next software company was tell tech where, where we both operated in that, in that idea that it goes beyond just customer acquisition to, to really engaged, happy customers are a big part of the success in the, the businesses that we worked on. [00:42:57] **Ethan:** It also had some good entertainment value for Sean and I, that has gone on for 20 something years. [00:43:03] **David:** Nice. I’m looking at the clock and looking at the list. We’re not even going to get through the eight principles of sustainable growth today. [00:43:13] **Sean:** The good news is I did actually, I did actually touch on number five right there, which was aligned [00:43:17] **David:** Yeah, [00:43:18] **Sean:** The shared mission. [00:43:19] **David:** Exactly. And so I’ll go through the other two. There’s one, there’s one that I do want to get to just for a few minutes, as we, as we, kind of speed around the last few minutes here, but, you know, listeners, you can download this PDF on their site. We’ll have a link in the, it’s Breakout Growth.net. Right. and so the other ones are experiment to accelerate learning, which we we’ve kind of covered. And we’ve talked a lot about on the podcast about experimentation. I would actually love to get your take on experimentation, but we’ll have to save that for another time. align teams with a shared mission, optimize for speed to value, build brand through experiences. And the last one, which I really loved that you put this on there. Is place principles before profits? I think a lot of, a lot of folks who say. Take a principled approach and, it leads to businesses that not only can you not be proud of, but in the subscription space, at least a high churn, like if you burn your users, you’re going to lose them. And you, you know, you need to respect your users and take a principled approach to business. But then the one that I wanted to speed around real quick, as we wrap up is optimized for speed to value. I think this is such an important thing that that just gets to. So many times when people are trying to copy these long onboarding flows or, you know, think they need to do this and that. Yeah. What is optimized speed to value look like. [00:44:38] **Sean:** I’ve touched on it a bit. So Ethan, why don’t you build on, on what I’ve I’ve already touched on. [00:44:42] **Ethan:** Yeah, I think, Sean was saying, when you look at your value delivery engine, obviously getting more people to those aha moments rapidly, and meaningfully, is going to be really important. And if you can look for ways to take, take out friction between those points, I think it’s going to improve your odds of turning people into white hot fans who love what you do and want to stay engaged. But I think with. You have to also understand that it’s also speed to value doesn’t necessarily just mean get them to from point a to point D without anything in between. In fact, if you look at Headspace Headspace or calm, or, Newman was the, the one we interviewed on our podcast, they had like 21, maybe 40 something steps in their. [00:45:31] **Sean:** Actually 60 [00:45:32] **Ethan:** 60 steps in their onboarding process now. But I think if you look at how they did those steps, each step gets you as the user feeling like you’re making an investment and the more you invest here, the better your results are going to be. And the more valuable this will be for you. not every business is like that. I mean, with robo [00:45:53] **Sean:** Let me, let me actually just jump in on noon. Cause I want to reference that because I think it’s a really critical point here. So I, I coached nuMe in the early days of that business. And, I, I was sorta surprised where they, where they went with that, but they very much tested their way into, into that. And, and the, The big question is sort of like, at what point are you convinced on a weight loss app? So, so obviously they’re they position themselves as broader health, but I think weight loss is the job to be done that most people go there for. And so if you get them to the point really quickly where they’ve signed up and put their credit card in, that seems good. But, but ultimately like trying to figure out what is that aha moment for them? Is it, is it. After you’ve lost five pounds, is it, you know, like, and so ultimately what we, what we talked a lot about at that time was the, point of which someone really being converted to where they become a long-term retained customer is when they truly believe they will lose the weight with nuMe and. What they’re doing with the 60 steps is that they’re essentially reinforcing the process by which you lose the weight. And I lost a lot of weight with noon, so I’m like, I’ve kind of experienced it on both ends. And when I went through the. Process it starts says, are you, are you, do you want to lose it fast? Do you want to lose it slow? What are you willing to do? Tell us more about yourself. And so each step you’re, you’re investing more into the app with information, and it’s essentially saying, oh, if you want to hit that weight target, initially we think. Yeah, you’re not going to hit it. So we, it would take ourselves. Now we’re in April. You’re not gonna hit it until September. And you know, like September is pretty good, but enter a bit more information would give you a more accurate assessment. And then based on you, you’re pretty unique. It looks like you actually could hit it even in July. And so you get these like aha fun moments as you’re going through it. And I watched my wife fill it out as well, and actually watched her get excited. She got. positive feedback as she went through through the onboarding process. And so I think in that case, they know that that aha moment for them is really hard to get you to the point where you truly believe you’re going to lose the weight. And so it, 60 steps make sense for them. so it’s really like speed to the. To the really delivering on the value proposition in a, in a credible way is what we’re trying to do here. But it’s, doesn’t always mean, fewer steps. [00:48:21] **David:** We could, we could talk an hour on this. but I think one of the things that a lot of people miss, who is the subtleties in what’s actually creating value, we kind of talked about this with product market fit. But when you think about that arm boarding, it’s like part of the value that’s being created. There is the excitement and the. The feeling that you’re going to be successful in doing this. And so the, so it’s valuable to have that success feeling because then that helps you ultimately get to the final value of actually losing the way and building that momentum and the positivity and everything else. And so like in like with my weather app, I think about this all the time. Like weather forecasts are not accurate. Like what what’s the real job to be done. And honestly, there’s entertainment is, is a value of, of a weather app. And like, there’s a, there’s a lot of value. Created incidentally, that understanding that does help you better get people to those aha moments. I wish we had an hour and talk about it, but Ethan real quick said, well, we’ll speed. Run this, [00:49:19] **Ethan:** You know, it really is you, can’t just, that’s why it’s so important, not to just jump into the tactics. Right. Because you know, just putting a countdown timer on your onboarding, which you know, like, because someone else did it, isn’t the answer to your, to your onboarding. Issues. Right. You have to really think about it individually. You have to, as Sean said, it’s about experimenting into it, as opposed to, you know, you have to pick a direction and start from there. but being rigidly tied to, we have to have as few steps from point a to point B or as many steps from point a to point B probably not the right approach. It’s probably a good idea to start with a direct. Come up with the why behind that. Why is that going to work for us and then experiment with different ways to understand if that is actually the right way to get people to that value. [00:50:03] **David:** Awesome. Well with that, I think is a great place to wrap up. so the Breakout Growth podcast we’ll have links in the show notes. and then are the two of you, currently taking clients? I know you both have consulting [00:50:18] **Sean:** Yeah. So I’m shifting to doing more intensive single company, like tune the flywheel, right? When they reached product market fit, being able to, to, to get them to the point where they can operationalize growth and Ethan’s Ethan, you can fill in the gaps, but you, you know, it tends to, tends to be working with. More accompanies. He’s really great on, on operationalizing growth and, and helping companies stay on a strong growth curve. And so it makes us super complimentary because most of the work that I’m doing, I’m getting equity in the businesses. And, and so being able to make sure that longterm, they can manage that growth and accelerate that growth well is, is critical. And so, Ethan and I both overlap a lot in the things that we do, but we, we also specialize. So any, anything else you want to do in terms of specifics of what you cover? [00:51:11] **Ethan:** No, I think you’ve pretty much covered it. I do tend to lean towards mobile and subscription apps quite a bit. But yeah, I have room for maybe a few more clients, but I’m being careful. [00:51:22] **Sean:** He’s stretched pretty thin right now. For me, it’s feast or famine because I am going deep into company. I’m actually evaluating a few different opportunities at this moment. But yeah, looking for longer term, three or four month, kind of engagements. Whereas Ethan can go... [00:51:39] **David:** Yeah. Yeah. [00:51:40] **Sean:** A lot longer, but lighter engagements. [00:51:42] **Ethan:** Yeah. [00:51:43] **David:** Awesome. We’ll put links in the show notes to reach out to y’all, to the podcast, and everything else. Any last thoughts as we wrap up? [00:51:50] **Sean:** No, this has been fun. We’re both big fans of your podcast, so we’re going to keep listening. It will be exciting to actually hear ourselves on it for a change. [00:52:02] **Ethan:** Yeah, for sure. We’ve actually had I think one or two guests in common. We had Ron Schneidermann of AllTrails. I loved the interview you guys did with him. I think it was neat to have sort of a different angle on that. I think our podcasts are complimentary in that respect, but a super big fan of both your podcast and RevenueCat, as a whole. So, yeah. Thanks for having us. Really appreciate it. [00:52:21] **David:** Yeah, thank you so much.