5-Bit Friday’s (#3): Weekly snacks from the startup/tech universe
On the breakdown of Twitter, the FTX collapse, how to ask for more money, what makes a 1% PM, and Sequoia's method of market sizing for startups + other takeaways!
Hi, I’m Jaryd. 👋 Every other week, I pick one company/startup you probably know, and go deep on their go-to-market strategy, how they acquired early customers, and what their current growth engine looks like.
+ every Friday — I bring you 5 short-form insights from the startup/tech universe. (this!)
If you haven’t subscribed yet, join the other folks interested in growing a company by subscribing here:
Happy Friday, friends! 🍻
I hope you’ve all had a good week so far — it’s been a turbulent one in the tech world to say the least. If you’ve been affected by these rough layoffs, then there’s some stuff in here that I hope comes in handy. Plus, you should definitely checkout Lenny’s Jobs.
First order or business, if you missed last weeks deep dive, don’t forget to check our analysis on Etsy, bringing you 20-30 hours of research on:👇
How Etsy Grows: Lessons on kickstarting and growing a marketplace from Etsy’s $14b handmade empire.
Okay! Here’s what we’ve got this week:
The breakdown of Twitter is already happening — an inside look from an engineer
What distinguishes the Top 1% of product managers from the Top 10%?
[The ask] If you learn anything of find any of these bits interesting…considering subscribing, hitting the little heart button, or sharing with a friend 💟
Let’s get into it!
1. The breakdown of Twitter is already happening — an inside look from an engineer
On November 4, just hours after half of Twitter’s workforce was given the cold boot, an engineer began to see small signs that something was wrong. And they first saw it through retweets.
A few users who pressed the retweet button saw the years roll back to 2009. Manual retweets, as they were called, were back. The return of the manual retweet wasn’t Elon Musk’s latest attempt to appease users. Instead, it was the first public crack in the edifice of Twitter’s code base — a blip on the seismometer that warns of a bigger earthquake to come.
A massive tech platform like Twitter is built upon very many interdependent parts. “The larger catastrophic failures are a little more titillating, but the biggest risk is the smaller things starting to degrade,” says Ben Krueger, a site reliability engineer who has more than two decades of experience in the tech industry. “These are very big, very complicated systems.” Krueger says one 2017 presentation from Twitter staff includes a statistic suggesting that more than half the back-end infrastructure was dedicated to storing data.
While many of Musk’s detractors may hope the platform goes through the equivalent of thermonuclear destruction, the collapse of something like Twitter happens gradually. For those who know, gradual breakdowns are a sign of concern that a larger crash could be imminent. And that’s what’s happening now.
— Chris Stokel-Walker, MIT Technology Review
Breakdowns come from compounding small things. Whether it’s those momentary breaks in retweets, glitchy follower counts, or replies that refuse to load — small bugs are appearing and being added to a backlog with far fewer people to handle them.
Even Twitter’s rules went offline under the load of millions of worried eyeballs.
In short, it’s becoming unreliable already.
And that’s because a huge percentage of the people who kept the site reliable are now helping each other find work on LinkedIn. Institutional knowledge has been lost, and the remaining people that are there are being pulled into building the whims of the chief Twit.
That engineer doesn’t see a route out of the issue—other than reversing the layoffs (which the company has reportedly already attempted to roll back somewhat). “If we’re going to be pushing at a breakneck pace, then things will break,” he says. “There’s no way around that. We’re accumulating technical debt much faster than before—almost as fast as we’re accumulating financial debt.”
As issues pile up and the backlog of maintenance tasks and fixes grows longer and longer — “Things will be broken. Things will be broken more often. Things will be broken for longer periods of time. Things will be broken in more severe ways,” he says. “Everything will compound until, eventually, it’s not usable.”
And, if you’re wondering what might be coming to replace Twitter, there’s been a lot of noise about Mastodon 👀
⛏️ Source + dig deeper: MIT Technology Review
2. Why the FTX collapse is a big deal
This is the first time I’ve written about anything crypto and I know it’s out of character for me, but I think this weeks news is so significant that it’s worth talking about.
I’ll keep it short.
If you’re unfamiliar, FTX
is was one of the worlds biggest exchanges for crypto currency. A few days ago, it was second only to Binance in terms of market cap.
The short story — they have run into major liquidity problems are currently tanking.
This is really bad for two reasons:
a) People have a lot of wealth tied up in FTX, and because crypto is unregulated — none of it is insured.
Simply put, this means that a lot of people, like Tom Brady, who have money on FTX or have invested in the FTX token are at serious risk of losing their money.
b) The crypto winter could be about to get a whole lot worse
Crypto has been taking a huge hit this year — and investors likely thought the worst was behind them after the spring crash and spectacular collapse of Terra.
Now, FTX is a big boy in the crypto world. They have huge big name investors, a humble and philanthropic CEO, and people trust them. And when there’s a casualty of a hero like this in battle — morale takes a beating.
FTX’s collapse might cause investors to withdraw from other exchanges too – if one of the largest players in the industry can fail, smaller exchanges aren’t safe either.
The crypto market may plunge into a much deeper and longer winter. Trust is hard to win and even harder to regain.
I think this was worth bringing up because this will likely have ripple affects across the entire crypto landscape, Web3, and probably other areas of startup funding and investment too.
⛏️ Source + dig deeper: Tech in Asia, Why the FTX collapse is a big deal
Now, sticking to the money theme here, but shifting gears back to our more regular programming.
3. How to negotiate for better comp
Some people like negotiating. Some people (like me) hate it — and I think there are far more people in this camp.
Unfortunately for us, when it comes to getting a new job — we have to play the negotiating game. Everyone else is, and we’re expected to.
I came across this brilliant 10-step playbook for how to negotiate better comp a while back and I’ve shared it with several people during their job hunts. I’ve always been thanked.
So, given all the layoffs going on right now, I thought this would be a timely share. Hopefully this is just helpful info to you and not immediately applicable. But if you know anyone who’s on the hunt for a new job right now — give this a share.
The 10 commandments of salary negotiation
The largest salary increase I’ve helped get was for a female FAANG executive: I helped her get $5.4M more on her offer. Through the process, it struck me that even though she was a senior leader everyone admired (you’d 100% know of her if I told you her name), she had very little knowledge of how to negotiate. Don’t get me wrong — she knew how to ask and be assertive, but she was much less comfortable “playing the game.”
And she’s not alone.
Regardless of how senior or junior you are, most tech folks struggle with negotiation. Partially this is because compensation is set up to be intentionally misleading. Partially it’s because sticking up for yourself is nerve-racking AF.
— Niya Dragova via Lenny’s Newsletter
Here’s Niya’s playbook:
1. Negotiation starts earlier than you think.
2. Mine for intel during interviews.
3. Don’t give in to the pressure.
4. At FAANG, your recruiter may have no say at all.
5. Read between the lines.
6. At a startup, the playbook is different
7. Your job is to win hearts and minds
8. OK, now get some good data
9. Comparing offers
10. Time to make an ask
To learn more, follow the link below. Bookmark it, share it, use it!
⛏️ Source + dig deeper: Lenny’s Newsletter, The 10 commandments of salary negotiation
4. What distinguishes the Top 1% of product managers from the Top 10%?
According to Ian McAllister — a product leader with a long and impressive resume — there are 9 key characteristics of product managers. He believes that the top 10% of PMs excel at a few of these things. The top 1% excel at most or all of them.
Here they are:
Think big - A 1% PM's thinking won't be constrained by the resources available to them today or today's market environment. They'll describe large disruptive opportunities, and develop concrete plans for how to take advantage of them.
Communicate - A 1% PM can make a case that is impossible to refute or ignore. They'll use data appropriately, when available, but they'll also tap into other biases, beliefs, and triggers that can convince the powers that be to part with headcount, money, or other resources and then get out of the way.
Simplify - A 1% PM knows how to get 80% of the value out of any feature or project with 20% of the effort. They do so repeatedly, launching more and achieving compounding effects for the product or business.
Prioritize - A 1% PM knows how to sequence projects. They balance quick wins vs. platform investments appropriately. They balance offense and defense projects appropriately. Offense projects are ones that grow the business. Defense projects are ones that protect and remove drag on the business (operations, reducing technical debt, fixing bugs, etc.).
Forecast and measure - A 1% PM is able to forecast the approximate benefit of a project, and can do so efficiently by applying past experience and leveraging comparable benchmarks. They also measure benefit once projects are launched, and factor those learnings into their future prioritization and forecasts.
Execute - A 1% PM grinds it out. They do whatever is necessary to ship. They recognize no specific bounds to the scope of their role. As necessary, they recruit, they produce buttons, they do bizdev, they escalate, they tussle with internal counsel.
Understand technical trade-offs - A 1% PM does not need to have a CS degree. They do need to be able to roughly understand the technical complexity of the features they put on the backlog, without any costing input from devs. They should partner with devs to make the right technical trade-offs (i.e. compromise).
Understand good design - A 1% PM doesn't have to be a designer, but they should appreciate great design and be able to distinguish it from good design. They should also be able to articulate the difference to their design counterparts, or at least articulate directions to pursue to go from good to great.
Write effective copy - A 1% PM should be able to write concise copy that gets the job done. They should understand that each additional word they write dilutes the value of the previous ones. They should spend time and energy trying to find the perfect words for key copy (button labels, nav, calls-to-action, etc.), not just words that will suffice.
Words of wisdom for us product people out here. 🙏
⛏️ Source + dig deeper: Quora
5. The Market Curve
According to Mike Vernal from Sequoia Capital, most founders misrepresent the size of the market.
Because they don’t know how to quantify it, and simply “google their company’s category plus the words market size (e.g., ‘video software market size’)”.
The market you choose to serve is one of the most important factors for an early-stage startup — and knowing how big it is is key.
And the simplest and most reliable way to size a market (as per Sequoia) is with this simple formula:
Market Size = (# of Customers) × (Revenue/Customer)
So, the two questions are:
(1) How many potential customers are there, and (2) what might each customer be worth to you.
Thinking about the number of customers and the revenue per customer is a tremendously clarifying way to think about a single company. It also provides a useful framework for unifying seemingly disparate categories: The Market Curve
Where you are on that curve should give you a pretty good idea around what your sales strategy and business model should be.
Top left: Sales-led
Middle: Product-led + Sales-assisted
Further right: Product-led
If you are going to show a market size number (which you certainly should), you should have thoughtful answers to these two questions: how many customers? and how much will they pay?
And don’t just thumb-suck those numbers (like I have guilty done before) — think about it from a bottoms-up perspective.
That’s how you get a thoughtful answer to “how big is your market”
⛏️ Source + dig deeper: Sequoia Capital Publication, The Market Curve
And as a bonus this week…
+ Takeaways on How Superhuman Grows
Miss the popular deep dive on Superhuman? I got you…catch up on the full thing 👇
Strapped for time…here are the key takeaways:
🙀 Don’t be scared of Google. In fact, a space with huge incumbents and no startups is a great market to explore. There’s clearly opportunity, and if you look into trends and customer pain points close enough, you can find your wedge into a competitive space — often taking a position that established players can’t.
💡 To find an idea, start with either Market, Experience, or Problem. There are three main ways to find a startup idea to work on: (1) Start with a market that interests you. (2) Look for areas where you think there should be a better experience than the status quo, (3) Start with a problem you’ve experienced firsthand or have a unique insight into.
🚩 Start with a clear, specific articulation of the problem. "Email sucks now" may have been accurate, but it wouldn't have helped anyone land on a solution. When you deeply understand the problem, you are more likely to create the right solution. Rahul's original pitch was literally a screenshot of Gmail's interface where he pointed out all of the little things that added up to make the product experience worse. From that strong foundation, Rahul then spent time applying his singular viewpoint to designing an email experience that he would want to use — the classic founding story of solving your own problem.
🥧 Quantify the size of the opportunity (in a creative way). 3 billion hours a day in email is such a powerful way to inspire people to get behind your idea. Figure out how big your market is in, pitch it in a creative way, and try find an analogy to stick it in peoples mind.
😍 Find an idea you can’t stop thinking about. “If you can’t stay away from an idea, it’s a good sign you should work on it”.
🤌 To get early customers, lean into the cultural zeitgeist. There are several different ways to get your first 100, 1K, or even 5K customers. One way is inserting yourself into a current conversation or trend, and leaning into that to peak interest and get press.
💸 Your G2M monetization strategy starts with (narrow) positioning. To get to your price point, you first need to know who your target audience is and how you are positioning your product. The more specific you can be, the more relevant your price and messaging will be when you go-to-market.
💲 Round up your pricing if you’re a premium product. “Our initial pricing was $29 per user per month. Then I had a few conversations with some pricing experts who pointed out that if we're truly owning the premium experience category, then ending your price with a nine probably isn't the best thing to do. So, we pretty quickly rounded up to $30 per month.”, Rahul Vohra.
🐌 Launching isn’t for everyone. If you’re entering a new market and there’s a first-mover advantage (land grab users, branding, network effect, greenfield effect) — get a version out ASAP, even if you’re embarrassed. But if you’re going into a space like Superhuman did, a gradual ramp up of users via onboarding might be a better move. As Shishir Mehrotra, founder and CEO of Coda said, “A startup should only launch for one of three reasons: number one, either you need more users or customers to sell to. Number two, you need more capital to spend. Or number three, you need more candidates to hire.”
👫 Onboarding is essential, and it creates good friction. Superhuman’s approach isn’t the most scalable and won’t work for everyone — but the benefits of onboarding are clear. So find a way to bring it to your product.
🔥 Waitlists are a great way to build hype and drive organic interest. Scarcity is a powerful tool that can help you enter a market, or even launch a feature. It gives you control over your growth rate (allowing you to fix issues and make a product great) before opening up to to many people before you’re ready.
❤️ Be obsessed with finding product-market-fit, and making that a core metric. Making something people want and love is probably the most important signal that you will be able to grow sustainably. You have to find PMF as a top priority — so use the 5-step framework to keep iterating and measuring until you get there.
🎯 Segment to find your high-expectation-customers (HXC), and don’t fret about the rest. Not all customers are equal, and trying to be everything for everyone is a huge distraction. Find the people who need your product’s value the most, narrow in on them, and leverage their feedback to build your base of qualified customers.
➰ Find your growth loop — it’s your most sustainable engine for growth. There are various different types of growth loops — Superhuman uses a viral loop. Find your engine, and bring all teams together around it as your framework to drive growth.
Lastly, here are some other fun things I came across this week if you’ve got time:
And that wraps up our third edition of 5-Bit Friday! I hope these bits of information were interesting, and that you all have a great weekend.
I’ll see you on Wednesday for our next deep dive. (Hint: We’re looking at the e-commerce platform!) If you’re not a subscriber already…join the other curious folks interested in growing a business to get bi-weekly deep dives and weekly updates like this sent to your inbox for free👇
— Jaryd ✌️