🌱 5-Bit Fridays: Optimizing your pricing page, when to dig a moat, when to not take a promotion, valuing your startup equity, and scaling magical experiences
👋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 🍻
Instead of starting today off with some silly jokes and banter, I’m opting for a serious recommendation.
, which in many ways is similar to our How They Grow deep dives, except focused on people, like the big cheese, Dwayne “The Rock” Johnson. Polina practices what she dubs people-based learning, and after speaking with hundreds of experts across all sorts of domains, she’s distilled the biggest lessons down into a super practical book. And it was a hard book to read, simply, because I kept turning away to write stuff down. My personal favorite quote is this one: “Stop looking at the scoreboard; play the next play.”
I loved it, and if you read this newsletter, there’s a good shot you will too. Check it out on Amazon below (I have no affiliation or kickback at all).
How to scale a magical experience: Lessons from Airbnb’s Brian Chesky
When to dig a moat
Don’t just blindly run after promotions
How to value your startup equity offer (free startup equity calculator included)
Small ask: If you learn something new today, consider ❤️’ing this post or giving it a share. I’d be incredibly grateful, as it helps more people like you discover my writing.
(#1) How to optimize your pricing page
According to Kyle Poyar, the expert on product-led growth and SaaS—your pricing page is the 2nd most important page on your website.
Many people considering your product use it as a go-to resource for learning about a product and deciding whether to try it. If your pricing page is optimized—from the presentation layer to the communication layer, as well as how you actually package your different tiers—this will drive signups and move more people through your top-of-funnel, even if you raise prices.
It’s easy to see why it’s such an important page, because how much does it cost? is always one of the last-touch questions people have while they’re in the consideration phase. So, after they’ve figured out the product solves their problem and they want what you’re selling, pricing becomes an incredibly important surface area responsible for closing the deal.
And on that note, what does Kyle suggest about optimizing it?
Reinforce your value prop, over and over again: “Prospects are still learning about your product. Help them understand how it solves their pain.”
Stop worrying about “pricing hacks”: “There are thousands of articles about $9 vs $9.99 or putting the most expensive package on the left vs right. You should focus on the foundation before you get into growth hacking.”
Don’t overwhelm prospects: “You want to get folks into the product (or on a call with a rep) as quickly as possible and not spending their time reading through 8pt font on the page.”
Emphasize benefits, not features: “Your product team probably built a detailed matrix on what features go in what tier. Don’t dump that on the pricing page. Tell a story about what the customer can do with the feature.”
Each plan needs a clear purpose: “Everyone should know who each plan is for, what it does, and how it helps you make money.”
Put lingering fears to rest: “In their early days — before the brand became what it is today — Slack smartly put buyers’ fears to rest with their “Wall of Love,” a rotating compilation of tweets from their users emphasizing how much they love the product, which shows up right under their pricing. And below that they showcase that they have thousands of happy customers, including world-leading consumer and B2B brands.”
Nudge users with behavioral psych: Consider things like anchoring (AKA having a more expensive package to make your cheaper “Popular” one look better). For more, read 7 RESEARCH-BACKED STRATEGIES THAT CONVERT.
And as a rule of thumb, Kyle advises keeping the pricing page helpful, rather than sales-y, and keeping things simple while providing prospects with all the necessary information in a value-first way.
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(#2) How to scale a magical experience: Lessons from Airbnb’s Brian Chesky
In an Oldie but a Goldieepisode of Reid Hoffman’s podcast, Masters of Scale, Reid chats with Airbnb founder, Brian Chesky, about how he grew Airbnb. Or, more specifically, about how Brian and his team did a bunch of exceptionally user-centric, and hands-on, work to get them to product-market fit in the early days.
Today, with over 150M users and valued at $93B, Brian still attributes a ton of Airbnb’s colossal success to the cliche—doing things that didn’t scale.
So, to save you from listening to the full thing, here are 3 lessons and a standout quote from Brian from each: 💡
Pay passionate attention to your user
It’s really hard to get even 10 people to love anything, but it’s not hard if you spend a ton of time with them. If I want to make something amazing, I just spend time with you…. Early on, Joe Gebbia and I literally commuted to New York from Mountain View [to visit our Airbnb hosts in person]. We literally would knock on the doors of all of our hosts. We had their addresses and we say, “Knock knock. Hello. Hey, this is Brian, Joe, we’re founders and we just want to meet you.”
We’d find out ‘Hey, I don’t feel comfortable with the guest. I don’t know who they are.’ Well, what if we had profiles? ‘Great!’ Well what do you want in your profile? ‘Well, I want a photo.’ Great. What else? ‘I want to know where they work, where they went to school.’ OK.
So you add that stuff. And then you literally start designing touchpoint by touchpoint. The creation of the peer review system, customer support, all these things came from [not just meeting our users], but actually living with them. And I used to joke that when you bought an iPhone, Steve Jobs didn’t come sleep on your couch. But I did.
Takeaway: You’re unlikely to be sleeping on your user's couch, but the principle holds: get as close as possible to their problem and experience in order to create empathy around pain points, motivations, and areas of friction.
Design an 11-star experience
If you want to build something that’s truly viral you have to create a total mindf**k experience that you tell everyone about. If I say, ‘What can I do to make this [product] better?’ you’ll say something small. If I were to say, ‘Reid, what would it take for me to design something that you would literally tell every single person you’ve ever encountered?’ You start to ask these questions and it really helps you think through the problem.
We basically took one part of our product and we extrapolated: what would a 5-star experience be? Then we went crazy. A 5-star experience is: You knock on the door, they open the door, they let you in. Great. That’s not a big deal. You’re not going to tell every friend about it. You might say, ‘I used Airbnb. It worked.’ So we thought, ‘What would a 6-star experience be?’
A 6-star experience: You knock on the door, and the host opens and shows you around. On the table would be a welcome gift. It would be a bottle of wine, maybe some candy. You’d open the fridge. There’s water. You go to the bathroom, there are toiletries. The whole thing is great. That’s a 6-star experience. You’d say, ‘Wow I love this more than a hotel. I’m definitely going to use Airbnb again. It worked. Better than I expected.’
What’s a 7-star experience? You knock on the door. The host opens. Get in. ‘Welcome. Here’s my full kitchen. I know you like surfing. There’s a surfboard waiting for you. I’ve booked lessons for you. It’s going to be an amazing experience. By the way here’s my car. You can use my car. And I also want to surprise you. There’s this best restaurant in the city of San Francisco. I got you a table there.’ And you’re like, ‘Whoa. This is way beyond.’
The point of the process is that maybe 9, 10, 11 are not feasible. But if you go through the crazy exercise, there’s some sweet spot between “They showed up and they opened the door” and “I went to space.” That’s the sweet spot. You have to almost design the extreme to come backwards. Suddenly, doesn’t knowing my preferences and having a surfboard in the house seem not crazy and reasonable? It’s actually kind of crazy logistically, but this is the kind of stuff that creates great experience.”
As you might know, Brian and the team actually worked with Disney to storyboard Airbnb’s magical guest experience. 🪄
Takeaway: It’s worth going through the exercise to brainstorm what the most incredible (yet unrealistic) experience would look like. Then pull yourself back. AKA, shoot for the stars, and you might reach the moon.
Take advantage of the time before you scale
I tell a lot of entrepreneurs who don’t have traction, I miss those times. Yes, it’s exciting to have traction, to have a company that has huge scale. But the biggest leaps you ever get are when you’re small. Another way of saying it is: Your product changes less the bigger you get because there are more customers, more blowback, more systems, more legacy.
The most innovative leaps you’ll ever make, especially if you’re a network, are going to be when you’re really, really small. You can change the product entirely in a week. Try doing that at LinkedIn or Airbnb today. That would be a huge disaster. So I think taking advantage of that subscale — designing the perfect experience, asking yourself what you can do — is amazing.”
We’ve covered these in some flavor at least once per deep dive because every successful company we’ve analyzed has them. If they didn’t, they’d struggle to protect all the value they’ve created for themselves and have venture-backed raiders looting their castles and stealing users away from them.
Moats are their layer of defense.
But, just like actual moats that surround real castles…they don’t just go around digging themselves.
And while we’ve spoken a lot about what they are in a startup context and how they work to protect a business's wealth, we’ve never really asked the question…when should you start digging one?
from Not Boring recently did in his aptly titled essay, When to Dig a Moat:
There’s a belief in tech that if you have the most talented team, the best product, and the fastest growth – that if you just Make Something People Want – you don’t need to worry about moats.
That’s precisely wrong.
Companies that have the best products, most talented people, and fastest growth are precisely the ones for which moats are most important.
They’re the ones who might get lucky enough to have something to lose. They’re the ones that bigger, better-resourced or smaller, faster companies will one day compete with. And the faster they become successful, the faster they’ll face meaningful competition.
Success accelerates the need for moats. As soon as success seems obvious, startups lose their training wheels moat – uncertainty – and should have at least the foundations of more permanent moats in place. […]
The more obvious your idea is and the easier it is to build, the faster you need to dig moats. Conversely, the less obvious your idea is and the harder it is to build, the longer you have to dig moats.
Whether you should spend all of your time on product or spend some of it on strategy, even at an early stage, is a function of how much uncertainty exists in your business.
Jerry Neumann calls out two kinds of uncertainty: Novelty Uncertainty (~technical risk) and Complexity Uncertainty (~market risk). Novelty Uncertainty is the kind faced by a lot of deep tech companies: uncertainty over whether you can actually build what you say you’re going to build. Complexity Uncertainty assumes that you can build it, but questions whether there will ever be a big and profitable market for it.
New startups have a limited window of time during which they’re protected by the cover of uncertainty to dig moats, and if they don’t dig them by the time others catch on, their excess profit will be competed away and they’ll struggle to achieve a good outcome.
Dumbing it down to a formula, you get something like this:
Depth of Moat Needed = How Obviously Good Your Idea Is - How Hard it is to Build
I love how Packy hits the nail on the head here: moats won’t get you product-market fit, but as soon as you have PMF and have proven you’re doing something that (1) works and (2) is valuable, you should be able to protect it from the erosive forces of competition. This moat digging could start at the point where eventual success is obvious to you but to very few others. As he says: “The ultimate goal of a venture-backed startup is to go public or get acquired for roughly $1 billion or more, not to get marked up by other VCs. That can take a long time, typically seven to ten years. Even if the startup lights a fire before competitors realize what it’s doing, it needs to protect and fan that fire for many years before a successful exit. For companies at which everything is going right, moats can be the difference between IPO and cautionary tale.”
To leave you with a parting thought—because increased uncertainty provides more time to build defensibility, there’s a handy inverse to remember here: the easier it is for you to raise money, the more immediately you need moats.
To dig deeper here, here’s some further reading: 🤓
If you're aiming for rapid career growth, don't just blindly run after promotions. Instead, perceive each year as an opportunity to unlock an increased number of career options, potentially encompassing new industries, higher titles, a larger impact, improved responsibilities, and higher pay, etc.
Sometimes, it's indeed about clinching that promotion, but at other times, it might involve taking on a new project, adopting a different role in an initiative, or strategically transitioning to a different industry or department.
Therefore, when considering a new job or reassessing your current one, consistently ask yourself: which option will open up the most new doors? This approach will ensure you're in the best position to make the most beneficial choice for your career.
Interesting comment that add more color
This is good advice but hard to know in advance — what are some markers of high new door vs low new door opportunities?
Q: This is good advice but hard to know in advance — what are some markers of high new door vs low new door opportunities?
Elena: I think it’s easier to recognize markers of ‘it’s the same thing I’ve done before and doing it for another year does not open up new doors’. Stay away from that.
And if you are considering (now, or in the future) joining another company over a potential promotion, you’ll definitely want to read this last one 👇
(#5) How to value your startup equity offer (free startup equity calculator included)
Understanding your base salary in an offer is easy. You know exactly what it’s worth.
Startup equity is a different beast though. Many folks see something like 5,000 units, sign their offers, and just move along. But, do you know how much it’s worth now, what it could be worth, or in what scenarios you’d actually see money in your bank from it?
Many people at startups don’t, despite that often being the biggest asset they have. And often, that’s because offer letters don’t give you all the information you need to calculate how much your shares could be worth.
Just like you wouldn’t invest in artwork or real estate without (hopefully) at least a basic understanding of how those assets work, you really want to make sure you understand the basics of equity (like what vesting, cliffs, and strike price mean) so you can evaluate your equity offer.
As Jenna Lee for Carta (the authority on startup equity) advises, before taking the job, make sure you ask these three important equity questions so you can do some key calculations:
What percentage of the company’s equity am I getting? Make sure the company includes all outstanding shares (including preferred stock, restricted stock, etc.) when calculating this percentage—not just what’s left in the option pool
How do you decide how many options each employee gets? Make sure the company has an established method for figuring out how many options to offer instead of coming up with a number willy-nilly. Bonus points if they continually reevaluate their process to make sure it’s fair
Do you offer employee liquidity and/or refresh grants? In other words, will you be able to sell shares before an exit like an IPO? If the company intends to remain private for a while, ask if they will hold tender offers (opportunities for shareholders to sell shares of equity). Note: approach this topic delicately. You don’t want to come across as money-hungry, but it’s fair to want to know whether your shares will actually amount to anything.
Use this free startup equity calculator 🧮
If you have equity already and are unsure what it’s worth-or for the next time you get an offer—open up this free calculator Carta put together to understand the offer better.
Last preferred price (the last price per share for preferred stock)
The strike price (the price per share to exercise your options)
Post-money valuation (the company’s valuation after the last round of funding)
Hypothetical exit value (the value the company could exit at). You can just play around with different scenarios.
Number of options in your grant (the total number of options offered to you)
Whatever’s not in your offer letter, just ask the company (besides hypothetical exit value).
🌱 And now, byte on this if you have time 🧠
Back in the day, the grandfather of AI, Alan Turing, invented The Turing Test to help us establish if an AI could match the wits of a human. But you don’t need me to tell you how much has changed since then. We have new types of AIs capable of very different things.
And for that reason, it seems obvious that we need different types of tests. But, I’d never really thought about it much before I read this post. 👇
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.
Or, if you’re a writer on Substack, enjoy my work, and think your own audience would find value in my various series (How They Grow, Why They Died, 5-Bit Fridays, The HTG Show), I’d love it if you would consider adding HTG to your recommendations.
I hope you all have a wonderful weekend, and I’ll see you on Wednesday for our next deep dive…👀
Until then. — Jaryd✌️
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Wow thank you so much Jaryd!!! It means a lot that you loved the book 😭🙏