5-Bit Friday’s (#12): Snackable insights, frameworks, and ideas from the best in tech
How to build a $100M+ business, Why most execution problems are strategy problems, How (and why) to run pre-mortems , How senior PMs think differently, and How to go get your next job in tech
Hi, I’m Jaryd. 👋 I write in-depth analyses on the growth of popular companies, including their early strategies, current tactics, and actionable business-building lessons we can learn from them.
Plus, every Friday I bring you summarized insights, frameworks, and ideas from the best entrepreneurs, writers, investors, product/growth experts, and operators.
Happy Friday, friends! 🍻
Welcome to the 249 new folks who’ve joined HTG this week, and to everyone, welcome to our 12th edition of 5-Bit Friday’s — the weekly roundup of what the best people in tech are thinking to take you into the weekend.
Let’s get to it…⛏️
Here’s what we’ve got this week:
What’s needed to build a $100M+ business? Hint: You need 4 types of fit
I came across a great framework the other day by Brian Balfour, where he outlines a model that he’s figured out is indicative of a company that can achieve substantial and sustainable growth.
I’ll let him introduce it:
I’ve been lucky to have been part of building, advising, or investing in 40+ tech companies in the past 10 years. Some $100M+ wins. Some, complete losses. Most end up in the middle.
One of my main observations is that there are certain companies where growth seems to come easily, like guiding a boulder down hill. These companies grow despite having organizational chaos, not executing the “best” growth practices, and missing low hanging fruit. I refer to these companies as Smooth Sailers - a little effort for lots of speed.
In other companies, growth feels much harder. It feels like pushing a boulder up hill. Despite executing the best growth practices, picking the low hanging fruit, and having a great team, they struggle to grow. I refer to these companies as Tugboats - a lot of effort for little speed.
So, what’s the difference between these two types of companies, and how do you make sure you’re building a Smooth Sailer?
First, as Brian argues well — it’s not just (1) great product, (2) product/market fit, or (3) growth hacking. Rather, the difference between the $100M+ companies, and those that struggle are the ones that are able to make four pieces in a puzzle fit:
As his model shows, there are four essential fits: Market Product Fit, Product Channel Fit, Channel Model Fit, Model Market Fit. He adds:
There are three extremely important points I want to hammer home:
You need to find four fits to grow to $100M+ company in a venture-backed time frame.
Each of these fits influence each other, so you can’t think about them in isolation.
The fits are always evolving/changing/breaking. When that happens, you can’t simply change one element, you have to revisit and potentially change them all.
He expands on each fit across a series of posts…let me summarize for you:
The central idea here is the market should always be thought about first. People often build a solution in search of a problem, whereas it’s the problem and market definition that need to always come first. You can’t screw with a hammer.
Products are built to fit with channels. Channels do not mold to products. Simply, this is because you don’t get to define the rules of the channel — “the channel defines the rule of the channel.” PCF is when your product is designed to work well with a specific distribution channel, meaning you can’t think about product and channel as silos. Takeaway? It’s better to prioritize and tackle one or two at a time in pursuit of your power channel. Here is a step by step on how to test and prioritize your growth channels
Simply, your business model should determine your channels. Depending on (1) how much money you make from customers and (2) how much it costs you to acquire them — that will be pretty prescriptive of what channels make sense. So, you can't think about your model and your channel in silos. If you’re making changes to your model (pricing, how you charge, etc.), you also need to revisit your channel to make sure you still have CMF.
Market dynamics need to determine your business model. Factors like how many total customers there are, propensity to pay, buying process, etc, will all impact how you charge for your product. If you have 500 companies total, $100 bucks a month isn’t going to cut it. The back of the napkin math here is: $price x #customers x % You Think You Can Capture = $100M/year revenue
Most execution problems are strategy problems
Most Execution problems are really Strategy problems, Interpersonal problems, or Culture problems.
Good leaders execute well because they see this. They fix the root problem.
Bad leaders struggle because they have a habit of sticking Execution band-aids on very deep wounds.
In an older episode of Lenny’s Podcast, Lenny sat down with Shreyas Doshi and amongst other things, unpacked his idea that the root cause of most execution problems is strategy.
Or better said, strategic alignment.
Of course there are some problems that are truly execution problems (i.e a skills' gap), but in most cases, delivery issues are due to some level of misalignment. This could be around resources, priorities, blockers, who’s responsible for what, etc.
But over his career serving at companies like Google, Stripe, Twitter, Yahoo, and Stripe — Shreyas observed this misalignment is actually rooted is a bigger picture issue:
I started realizing that what looked like an execution problem, this misalignment that is causing execution issues, wasn't usually an execution problem.
Instead, it was a strategy problem in some cases, because the reason we are misaligned is we’re either pursuing different strategies or what is more often the case, we don't know what the strategy is.
So if, we don't know what the strategy is — we craft some OKRs based on what makes sense. The OKRs are not very well aligned. We don't have a sense of priorities, and we also don't have a sense of what we do when reality changes.
This is all stuff that a clear strategy that is well communicated to the team can fix.
But, how do you know if an execution problem is actually a real execution issue or something larger, like strategic alignment?
To simplify his answer, a sure fire way of identifying an execution problem is when you put on a bandaid and the bandaid falls off. If you’re constantly solving the same problem over and over again…it’s probably a strategy, interpersonal, or cultural issue.
Enjoying this post? Subscribe to How They Grow more like it, as well in-depth analyses on the growth journeys of popular companies.
How to run pre-mortems, and why you need to
Wander — the vertically integrated short-term rental startup (think AirBnB x Blackrock)— is one of the coolest companies on my radar right now. 2 weeks ago Jacob Jolibois from Making Product Sense sat down with the founder of Wander (John Andrew Entwistle) and went deep on their business model, as well as the brass tacks behind how Wander builds product.
It’s a fantastic conversation— and one of the things that stood out to me was this idea of a pre-mortem.
In short, before starting the company, John Andrew put a ton of thought into an 80-page document. His goal was to figure out how Wander could fail, and then try to come up with solutions for that before even starting.
In other words…a pre-mortem is a technique to help you do what’s right for your customers, your company, and your team, by foreshadowing and mitigating the most blatant (and obscure) would-be blunders.
Here’s an excerpt from John Andrew (JA):
You're dedicating yourself at minimum to an 8-year journey to even find out if you failed. Most likely. When you realize that you really want to make sure you're correct on your next idea in your next company, and you find that it's well worth the three months to try and think about the future, think 30 moves ahead, try and kill the idea on paper versus finding out in year four that there was some cataclysmically wrong hypothesis about the market evolution or something along those lines.
The process is relatively straight forward:
You list out all questions you can think of. Some of these will be clear questions, but some could be “fuzzy”, for example:
What's the go-to-market strategy?
What does that go-to-market strategy cost?
Why do influencers wanna promote this?
What's my exit strategy?
What is the multiple at IPO that this company is going to have?
And how does that work backwards to a series A?
You then go an answer all of those questions. “The idea is that you're forcing yourself to think about it and write an answer for each one, and then you organize it into sections, and then it basically turns into something that's relatively readable.”
JA spent about 3 months on this document before starting the company — clearly going very deep. And before committing years of your life to a startup idea, this level of detail is 100% worth it.
But this exercise is also extremely valuable for product development.
Projects fail at a spectacular rate. One reason is that too many people are reluctant to speak up about their reservations during the all-important planning phase. By making it safe for dissenters who are knowledgeable about the undertaking and worried about its weaknesses to speak up, you can improve a project’s chances of success.
Except, when building general product, 3 months isn’t a practical time to run a pre-mortem with your team. So I did some digging to see how that process could be made shorter.
Create a shared Google Doc
Give your team context (I imagine this product has failed, think of all the reasons why)
Ask the team to list out their concerns about the project in 3 different categories:
Tiger: “A threat that will hurt us if we don’t do anything about it”
Paper tiger: “An ostensible threat that you are not worried about (but others might be)”
Elephant: “The thing that you’re concerned no one is talking about”
People go around seconding up to 5 concerns
People go around (in a meeting) sharing their thoughts
As the facilitator, you wrap the meeting up by summarizing the top themes that have emerged from the pre-mortem and sharing what people can expect next.
And after the meeting, you put together the pre-mortem action plan.
Visualized, this is what the process looks like:
And this is what a hypothetical action plan could look like:
I’ve never done a pre-mortem, but with this framework in hand I definitely plan on trying this.
How senior product managers think differently, and how to level up your product thinking
Debbie Widjaja (Product Leader, ex Meta) wrote a great article on how to to advance your product thinking. Its focus is on how to become a better PM, but her advice also applies to leveling up your thinking as a builder.
Her key point here is that anyone can think like a senior PM regardless of their title — and just because one has the senior PM title, doesn’t mean they truly deserve it.
She put together a fantastic visual that shows the different ways you can “do product”, depending on how clear you are about the problem and the solution.
Essentially: Execution up to → Critical Thinking up to → Sourcing Strategic Opportunities.
And to become an excellent product thinking, you have to know how and when to shift between levels of clarity, as well as what tools to use in each situation.
And to help define each of those axis…
How do you know whether a problem is clear? Some indicators of a clear problem:
You can articulate the impact on the business and the users,
You understand the root cause of the problem well,
You have decided that this problem, and not other problems, should be addressed now.
And you can say that a solution is clear if:
You’re confident that this solution can solve the problem,
You’ve considered an array of solutions, and this one wins in terms of cost/benefit,
Your team knows how to deliver the solution.
In Debbie’s essay, she goes into the tools to use at each level.👇
How to go get your next job in tech
Layoffs… already over 60K people in the US have lost a job just in January.
In last week’s 5-Bit, we looked at how to find your zone of genius, and why it’s a useful tool when looking for another job. Today, I want to share a post by Ian McAllister (Sr Director of Product at Uber, ex Amazon and AirBnB) that gets into some more tactics on how to actively go and get your next job in hard times.
If you’re in the job market…I hope this helps. And if you’re not, pass it along to anyone you know who is. 🙏
This method he outlines is designed to help you land the best possible job in the shortest timeframe. Below is an excerpt from this newsletter — all his words, with some extractions for brevity.
Ian, take it away…
Craft Your Highlight Reel
For tech jobs, your highlight reel should be:
Elevator Pitch. Three (maximum) crisp sentences that describe your overall tech experience. The sentences quickly identify your job function and level, the industries you have experience in, and what separates you from others (in a good way).
Proof Points. About 6-8 bullet points listing your most impressive professional accomplishments. Brag (but don’t lie) about the work you’ve done that will be the most significant and relevant to hiring managers, and that you’re proudest of.
This highlight reel is going to be the teaser that enables your network to work for you, and that gets a hiring manager to glance at your résumé or consider talking to you.
Identify Your Target Companies
During good times when you have a comfortable job and companies are aggressively hiring, you can reach out to one target company at a time. In bad times or when you’re out of a job, you need to build a large upper funnel of target companies (30). Create a list of all the companies you’d consider working for and then go ahead and add the tier 2 companies that you should also probably consider but wouldn’t choose in favor of a tier 1 company.
Grab and copy my Job Search Target Companies Template to organize this info on the Companies sheet.
For each target company:
Review your LinkedIn contacts and list the current employees and former employees, along with their titles.
List the 2nd degree contacts in your network who have the best (i.e. most senior or relevant) connections currently at the company.
Scan Job Postings - But Don’t Apply Directly!
For each company:
Go through the company’s jobs site and list open roles (if any) at the company that you think you’re qualified for and would be worth pursuing.
Rank the jobs for each company, so you can easily spot the 1-3 jobs that are the best fits.
MOST IMPORTANTLY: Do not, under any circumstances, apply directly for these jobs directly through the jobs site unless you’ve tried and failed to get traction through your network (see below).
Use Your Network
It’s go time! For each target company (whether you found open roles or not):
Identify your most senior/best employee contact and pick your best contact method (corporate email address > personal email address > LinkedIn message > Twitter DM or Messenger PM).
Contact them to communicate you’re interested in pursuing a role at their company and list the 1-3 roles you think are the best fit. Ask them if they’d be willing to connect you to the hiring managers and/or refer you for the roles.
If you didn’t find any open roles at the company, ask them to forward your info to hiring managers who might have open roles in the future.
Include your highlight reel and attach your résumé.
If you don’t hear back from your primary contact, try your secondary contact and keep working your way down the list. If you leverage an alumni connection or a 2nd degree connection not at the company, tell them the name of the current employee in their network you’d like them to connect you to.
Why not apply directly first or also? When you apply directly, you’ll be lumped in with all the other applications that will eventually get reviewed by a junior sourcer. You’re not using your network to your advantage. If an employee at the company finds out that you’ve already applied, then they will conclude you are already in the system and won’t likely take any other action to help you. They’ll also be ineligible to get any type of referral bonus if you get hired, so you’re giving up a potentially powerful incentive for them to help.
Thoroughly Prep for Your Interview
[Prepare] to communicate how your past experience is relevant and valuable to the company by:
Researching your target company’s core values or leadership principles.
Identifying the best case studies from your past experience that best demonstrate each core value.
Prepping talking points for each of your career case studies.
Prepping for specific questions about each company core value, including the cast study and question-specific talking points you want to cover in your answer.
If you follow this interview prep method, you’ll be more prepared. You’ll also feel more prepared and less anxious when interview day comes. Even if you don’t get asked the exact questions you prepped for, this method enables you to recall and communicate a great answer quickly and crisply.
Excellent advice — and if you’re a PM, check out Ian McAllisters newsletter for more like it.
That’s all for this week. If you enjoyed it, please share it with a friend or two!
And keep an eye on your inbox next week Wednesday for a special deep dive, where I’ve teamed up with another writer you may well know… 👀
Enjoy the weekend, and I’ll see you next time.
— Jaryd ✌️
+ Other interesting things if you have time 🧠
[Listen/or read] Four Thousand Weeks: Time Management for Mortals - Pomp’s notes.