🌱 5-Bit Fridays: Solve boring problems, the gamification of everything, growth ideas, tactics to improve retention, and paradoxical lessons on product management
👋Welcome to this week’s edition of 5-Bit Fridays. Your weekly roundup of 5 snackable—and actionable—insights from the best-in-tech, bringing you concrete advice on how to build and grow a product.
Happy Friday, friends 🍻
In case you missed it. Elizabeth Holmes (founder of Theranos) moved into her new Texas home on Tuesday. The rent is free (we pay for it), but it’s an 11-year lease. It’s called Prison, and for the Steve Jobs knockoff wearing black turtle necks, Orange is definitely her new black.
In more productive news, NVIDIA (NVDA 0.00%↑) continues to rip it. On Tuesday, they briefly crossed into the 4-comma club ($1T market cap), which only 6 companies have been a part of.
As Turner Novak wrote: “By elevating Nvidia to such hallowed corporate ground, investors are sending a clear message: AI will generate untold riches, and Nvidia, which produces computer chips that power most cutting-edge AI programs, will capture much of the value created.”
Lastly, in case you missed Wednesday’s deep dive, below is a link. I had a lot of great feedback about this one, so if you have time (AKA 40 minutes), be sure to give it a read. 👇
Digging into the generative AI platform race, and sharing insights and strategies on how AI-native startups can get big—stay big—and win amidst the AI hype cycle.
How To Improve Retention: Growth tactics to prevent voluntary cancels
12, often paradoxical, lessons on product management
Small ask: If you learn something new today, consider liking this post or giving it a share. I’d be incredibly grateful, as it helps more people like you discover my writing.
(#1)Want to win? Solve a boring problem
On Wednesday, we spoke all about the AI hype cycle. This massive explosion of both AI-native startups and incumbents tacking on an AI product to catch the wave. As I said, there’s very little doubt in my mind most will join the startup graveyard. Chasing shiny objects and focusing on enabling technologies rather than on unique insights into big problems, is how you end up here.
In our Jasper analysis, we looked at how AI-native startups can win.
But, in this first bit today, let’s turn our heads and look at how, amidst this flurry, there are other opportunities to win big. Simply, while everyone's running left, you go right.
“You know what I think is cool? Boring problems and boring solutions.”
Ben’s a founding Partner at Highline Beta, and he writes about building and investing in startups. Here’s how he explains why boring can be sexy.
While everyone is chasing the next ChatGPT-inspired AI bot, I prefer to explore less popular niches and problems that aren’t considered “exciting.” Painful, yes. Exciting? Shrugs. Depends how you look at it.
You need to solve the problem in a way that’s differentiated from competition, ideally in an under-served market that’s not awash with options. This is where AI startups fall flat. There are so many AI startups or tools already (with hundreds of new ones launching daily) that it’s impossible to tell them apart. It’s unlikely that any were built with meaningful user insights that would suggest they will win over others.And most are going after obvious problems; i.e. accessing data in a CRM, automating operational tasks, auto-generating content, etc. Many of these use cases are already overwhelmed with options.
One of the questions I like to ask founders when they’re pitching me is this, “What do you know about this problem or market that others don’t?”
I ask this question because I’m trying to figure out if the founders have done any meaningful research into the space/opportunity or if they’ve simply jumped on the bandwagon. If it’s the latter I’m less interested—because everyone is doing that. The bandwagon is full, people! Where’s the unique insight? Where’s the ‘huh…I didn’t think about it that way’ tidbit that could become part of your startup’s foundation?
I’ve tried building startups in giant, broken markets that seem ripe for disruption (i.e. the recruitment space) and got my ass handed to me. I didn’t understand the market deeply enough. I won’t make that mistake again.
So—to twist Ben Horowitz’s catchy phrase a bit—that lays out The Hard Thing About Exciting Things: the ease of getting caught up in the hype and brushing over business-building fundamentals.
What about boring things?
Why boring problems
As Ben describes:
Boring problems are often, in fact, not boring
There’s a huge pain point, but finding it is hard (which is good)
No one else is paying attention (again, this is good)
Often the business model is easier to understand and faster to achieve (think: more B2B SaaS than B2C)
The markets are often enormous (think insurance, healthcare, and real estate)
Boring solutions are A-OK.
Tech is only useful in the context of building a company if it’s solving a real problem. You can build all kinds of state-of-the-art tech on the back of the latest white paper, but if it doesn’t help customers, does it matter?
Boring solutions are usually easier to get to market and validate. The feasibility risk is lessened, and adoption should be higher.
The big boring industries are often so outdated that the solutions needed aren’t that complex or sophisticated.
You can sprinkle a bit of “magic” into a boring solution and blow people’s minds. This is the perfect use case for AI—use it in a small way to simplify boring stuff and users will be amazed, especially if incumbent solutions are legacy.
To make the boring…not boring…you can use The Innovation Stack which suggests that rather than creating one massive innovation, you can stack a bunch of smaller innovations to both build a moat and add differentiated value.
Okay, you’ve got my attention. Now what?
Finding boring problems
To find boring problems worth solving, you’ll need to be prepared to really go digging with a fat pick of curiosity. ⛏️
I find the best founders are a curious bunch, always trying to figure out what’s around the corner. They hear someone complain about something and their first reaction is, “Interesting, I wonder why that’s a problem?” They naturally ask a ton of questions—”Why? Why? Why? Why? Why?”
Founders are like 3-year old children, insatiably curious, incredibly determined, but easily distracted. And even when they get an answer (founders and children), they’re usually unsatisfied with it, and dig further. Ultimately if a founder dismisses what the market is telling them and ploughs ahead blindly, they’ll likely fail, but the best founders don’t give up after the first rebuttal. They ask questions, and scratch away at things trying to understand what’s going on.
If you’re a domain expert somewhere, that’s a great place to start. Your own experience is a goldmine that allows you to navigate problem spaces with a great advantage. Consider Paul Graham's famous essay, and look out for schlepps people might be blind to.
Otherwise, if you’re charting into a vertical or industry where you don’t have experience, teaming up with an insider who knows a market/customer very well and working with partners (that have valuable assets to use like know-how, distribution, data, etc.) can help you uncover all kinds of obvious or superficial problems that are a huge pain (AKA, opportunities that otherwise you’d never know existed).
A word of caution: Don’t ignore the power of “good enough”
This excerpt of advice from Ben is spot on. And in the context of looking for hard, boring, problems, it’s especially true. Tl;Dr: Don’t be fooled into thinking you can just “disrupt” solutions because they give off legacy vibes…
It can be easy to look at an old-school market and think, “Geez, all these solutions are so dated and lame. We can build something brand new, with the latest tech and lots of great features, and we’ll definitely win.”
Please don’t do this.
So many startups try and compete on building a “better” solution. Maybe it’s a better user interface and/or experience. Maybe they’re leveraging more advanced technology. They see clunky, old software and think, “I can do better than that.” They often lose.
The solution may be better, but is it so much better that it causes a switch from what’s already being used? Do you even know how to make it that much better?
The better solution doesn’t always win.
“Good enough” is an incredibly powerful force.
I’ve heard this a million times, “What we’re doing is slow, painful and clunky, but it’s what we’ve done for a long time. It works. I’ve tried a bunch of other solutions, but we always go back to how we’ve done things.”
Changing people’s behaviour is very tough.
People will accept a large amount of nonsense with their existing solutions before feeling compelled to change. In a B2B context this is worse (than B2C) because the buyer (who may not be user) doesn’t always feel the pain. They may hear complaints from employees dealing with Web 1.0 enterprise software, but does it really matter? Ripping out old systems to put new ones in is a massive pain in the ass, and often a sizeable investment (even if your pitch is, ‘We’re less expensive!’ — the switching cost is significant, re-training everyone, etc. and you shouldn’t do that any way, it diminishes the value you create; competing on price isn’t a good move.)
Do not be dismissive of entrenched incumbents. Their “good enough” solutions are there for a reason. The bar to replace them is going to be very high, even if you think switching to your “better” solution is an obvious choice.
The big takeaway: “Boring” is all about perspective, and because these problems are often overlooked in favor of the shinier ones, this creates a nice opportunity that’s less crowded and has more room to focus on the fundamentals that matter.
For more of Ben’s work, be sure to follow his newsletter,
If we don’t think something is “the best”, we scroll/swipe/click onwards.
Not the funniest video? Not the best-rated restaurant? Website loading time taking too long? Bye.
That creates a predicament. And constraining this sad statistic to the context of our work lives — products have ~8 seconds to prove that they’re not boring and worth our attention.
Fail to do that—especially at the top of the funnel, during the early consideration phase—, and we’ll just move on to the next one that has nailed the first mile better. Simply, because we subconsciously think, “Why settle and waste precious time when there’s literally a world of choices?”.
thinking about a significant trend: The Gamification Of Everything.
Rex is one of my favorite writers on Substack, and he spends a lot of his time talking about major shifts in technology and human behavior, how they intersect, and how they’ll change how we live.
The average American touches their phone 2,617 per day and unlocks it 150 times. TikTok popularized short-form video, bite-sized pieces of content that we flip through endlessly; if a video fails to capture our attention in the first few seconds, we swipe to the next. Many young people can’t sit through an hour-long TV show without being on their phones. As the joke goes, “I’m going to take a break from working on my medium-sized screen to go watch my big screen while I scroll my tiny screen.”
As more content vies for our attention, everything will become gamified. I view this as a long-gestating shift that we’re in the middle of. Time and money are scarce resources, and companies are in a battle to capture both. The result will be gamified experiences that aim to engage and retain users.
In 2010, Chris Dixon wrote a piece that famously declared, “The next big thing will start out looking like a toy.” He was right. YouTube was dismissed as “cat videos” before it swelled to 2.7B monthly active users. TikTok was dismissed as a lipsyncing app before vacuuming up nearly two hours of its daily active users’ time each day.
The next iteration of Dixon’s statement could be, “The next big thing will feel like a game.” And it will be true across every sector. As digital content becomes more infinite, consumer experiences feel asymptotically more game-like:
We see this in products today: key features like leaderboards and streaks are built around gamification principles. Strava uses leaderboards to encourage its users to work out; Duolingo uses streaks (popularized by Snapchat to gamify socialization) to encourage users to complete language-learning exercises every day. Even driving an Uber or Lyft can feel like a game: Uber uses “quests” to nudge drivers to work longer hours, and Lyft offers “streak bonuses” for drivers who accept back-to-back rides.
Simply, to win that first mile and keep our eyes glued, more companies will turn to mechanics from one of the stickiest products that exist, games. While that can make things more exciting (see Duolingo analysis), Rex very accurately warns that the over-gamification of things “in a capitalistic quest for profit” has a dark side. And it’s not too hard to imagine how.
To read Rex’s other two trends, hit the links below:
wrote a great grocery list of ideas to inspire a team’s thinking around increasing top-of-funnel, monetization, conversion, retention, and team velocity.
I loved how straight and to the point it was. Easy to scan through, and each one serves as a springboard for a conversation.
So, if you’re looking for some concrete growth ideas to spark the imagination, below I’ve taken two excerpts from Lenny’s post. Get your team together—or just have a personal noodling session—and run through these ideas with the mindset of “How might we…?”
recently wrote an excellent series of posts that goes deep into how to better keep subscribers and lengthen customer lifetime value. Simply, because the more you elevate “the decay curve” the more you’ll drive long-term revenue growth.
Reid is, safe to say, definitely a subscription expert. He currently drives growth at Substack and has previously helped grow other subscription products like Hulu, Crunchyroll, and HBO Max (or, Max as it goes by these days).
Picking one post from that series today—reducing voluntary cancellations—let’s see what Reid has to say about lowering churn and ensuring your paying subscribers keep paying you.
It takes different tactics to reduce voluntary and involuntary cancels. To set expectations, it’s challenging to have a meaningful impact on reducing voluntary or involuntary cancels. But the value can be massive: in both cases, by keeping a paid subscriber from canceling, we’re saving a longer-term cash flow, not just one additional renewal.
Further, improvements to retention usually have a compounding effect. By reducing involuntary cancels, you strengthen your payment infrastructure and improve the rate of successfully charging future renewals (and, in some cases, initial payments). Even better, reducing voluntary cancels usually means improving your product and delivering more value to your subscribers, making your product more compelling to existing subscribers, but also prospective subscribers — a key lever to sparking new subscriber growth.
Reid’s advice on reducing voluntary cancels
Reducing the rate at which people choose to cancel mostly boils down to how much value subscribers get from your product relative to what they’re paying. There are two large problem spaces to consider when reducing voluntary cancels.
At one end of the spectrum, there are harder-to-do, less-measurable tactics that focus on delivering more value to a subscriber before they even consider canceling. Delivering more value doesn’t always mean doing more stuff. Sometimes, it’s about helping subscribers discover value, or guiding them toward habits that help them consistently get value from your product.
On the other end of the spectrum, there are various growth tactics that help chip away at voluntary cancels right before a subscriber chooses to cancel or their subscription expires. These tactics bend the product slightly toward better-retaining subscribers, especially those who are on the fence about canceling.
To summarize: If you want to decrease cancellations, try:
Preventing churn in the cancel flow by:
Allowing customers to switch to free, and reminding them of what they’ll lose
Introducing a special offer in the cancel flow (i.e 25% off), which can help sway folks on the fence about canceling
Allowing subscribers to downgrade to a lower-priced subscription tier before canceling
Allowing people to pause subscriptions
Using notifications to prevent churn
When a paid plan is coming to an end/renewal, be sure to let folks know it’s about to expire and remind them of the value they’re about to lose. “It’s valuable to send these notifications — which usually work well as cohesive messages across emails/SMS, in-app/in-product messages, and push notifications — for non-recurring products (e.g., gift cards or gift subscriptions) that are about to expire, as well as free trials and paid subscriptions that are set to cancel and are about to end.”
Encouraging annual plans. Why?
It brings you more cash upfront (allowing for capital to be invested in product/growth)
Annual plans have better retention and CLV
They have lower transaction fees than monthly
It’s a better deal for the customer (usually a 17% discount to annualized monthly plans)
And a last cautionary bit of advice from his experience: don’t push any of these tactics too hard. It hurts the experience, and if someone wants to cancel, it should still be easy and not feel like a guilt trip.
If you like growth, great writing, and fresh croissants, then drop your email below. 🥐 FYI, Reid’s newsletter is one of my most well-received recommendations:
This one is mainly for the PMs and product-centric founders.
In 2017, Dave Wascha gave a great talk where he consolidated his 20 years of product management experience into a 25-minute talk, of course, focusing on his biggest learnings.
Here’s the bullet list of his advice. Or, 25 minutes into 2.5 minutes 😎
Listen to Customers… An obvious one, but Dave posits it’s surprising how little we actually do listen to our customers — finding that PMs run interviews less than they think and are often detached from regular touch points. Our job as PMs is to deeply and consistently understand customers’ problems, but you can’t do that without listening to them often.
…but don’t Listen to Customers. While we should listen to customers about their problems — we shouldn’t listen to them about the solutions. That’s our job. Plus, remember what Sarah Tavel said about listening to power users: be careful of local maxima issues.
Watch the Competition… Keeping a pulse on what other companies are doing can be a great source of information and market insights that helps us better understand our customer’s problems. Every time a competitor ships a new product or feature it’s a free user test for us to understand how the customers respond.
…but don’t Watch the Competition. Stop worrying too much about what the competition is doing. It’s easy to get overly excited by new technologies or features. Likewise, it’s easy to simply follow the competition into building something shiny and new, even though it might not be the best solution to a customer problem.
Be a Thief. Don’t actually steal anything, but don’t be afraid to take ideas from others and build on them. The PM's job is not to come up with all the best ideas, rather, it’s to make sure we’re implementing the best one for customers.
Get Paid. When taking new features and products to market, we often forget to ask the most fundamental question — is this valuable enough for a customer to pay for it?
Stop Worrying about Getting Paid. Focusing just on getting paid can lead to a risk-averse culture of small incremental improvements that don’t focus on the customer experience. Sometimes engaging your customers and scaling requires things that have no clear ROI.
Speed Up. Every time you put off a decision you are destroying value. Cost of Delay is an incredibly important concept. After all, there are many reasons why we put off decisions but it’s our job to remove obstacles and ensure that decisions are made as fast as possible.
Say No. We have lots of competing priorities and stakeholders, but our job is not to make people happy — it’s to solve our customers’ problems. “If sales come to you and ask for a feature for just one customer, you should say no. If the CEO comes to you with a crazy new idea from his cousin, you should say no.”
Don’t be a Visionary. Products don’t need visionaries – they need product managers who are obsessed with solving customer problems and who put in the hard work to grind it out and solve those problems.
Don’t Confuse Yourself with Your Customer. It’s far too easy to look at your products from your own perspective, but you’ll probably be wrong. Only by striving to really understand your customers will you be able to solve their problems.
Be Dumb. When you’re starting out you’re unencumbered by experience and knowledge, and that’s not always a bad thing. Companies and product teams drift away from their core mission over time and the best PMs have the ability to be dumb: to look at things from a customer’s perspective and to bring the focus back to the core JTBD.
To watch his full talk where he provides a lot more color, check it out.
🌱 And now, byte on this if you have time 🧠
This bonus byte isn’t like the usual ones.
About 3 weeks ago, I stumbled on a new publication that I think you’ll really enjoy. It’s called
. Every Monday, Elle writes essays thinking through a better capitalism, democracy, technology, and humanity.
Then on Fridays, she writes utopian fiction…it’s wonderful.
Elle writes because she’s “nostalgic for the Enlightenment—when all our writers were thinkers.” As she wrote:
Literary salons popped up all over the place. So did leagues and social clubs. People wanted to think. And they came up with ideas like democracy and capitalism and socialism and humanism. They were philosophers, literary thinkers, and they spread these ideas far and wide with pamphlets delivered to every door.
Now all of our writers are doomers. It’s not about thinking up the solutions, it’s about reporting on the problems. Even our fiction is dystopian. Our science fiction writers can only imagine a future plagued by AI apocalypse, government surveillance, computer chips in our brains, and space colonies that take us away from the polluted world we created.
If even our best literary minds cannot imagine a better future, how are we supposed to create it?
That’s why I’ve created The Elysian—a utopian garden where we can study philosophy and debate politics and rethink capitalism and enjoy contemplative leisure and be part of a new enlightenment. It’s a place where we can think through a more beautiful future through essays and literature and discourse.
Otherwise, that’s a wrap on this week’s 5-Bit Fridays, closing out edition number…
As always, thank you for reading and giving me some of your time today.
If you learned something new, or just enjoyed the read, the best way to support this newsletter is to give this post a like, share, or a restack — it helps other folks on Substack discover my writing.
Well thank you so much for the shout out!!!! 🤩
Thanks for sharing my post! I appreciate it!