🌱 5-Bit Fridays: Greedflation, The Annual Strategy Planning Trap, learning vs impact, why experiments fail, and more.
#50
👋 Welcome to this week’s edition of 5-Bit Fridays. Your weekly roundup of 5 snackable—and actionable—insights from the best operators, bringing you concrete advice on how to build and grow a product.
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Happy Friday, friends 🍻
I hope everyone who celebrates in the US had a wonderful Thanksgiving! Among many many things, I am incredibly thankful and grateful for all of you. You guys tuning in each week and making this newsletter possible is so rewarding. So, thank you so much. 🙏
In case you missed it this week:
Sam Altman is now returning to OpenAI after just a week ago getting the boot. This has been quite the saga, and OpenAI employees reportedly celebrated his return with a smoke machine-filled party that triggered the fire alarm and 2 fire trucks. Here’s an excerpt from The Atlantic—food for thought:
“As my colleague Karen Hao and I reported over the weekend, the central tension coursing through OpenAI in the past year was whether the company should commercialize, raise money, and grow to further its ambitions of building an artificial general intelligence—a technology so powerful that it could outperform humans in most tasks—or whether it ought to focus its efforts on the safety of its potentially dangerous innovations. Altman represented the former faction, and his aggressive business decisions appear to have been a key factor in his dismissal.”
CZ, the once highly regarded leader of the worlds biggest crypto exchange, Binance, pled guilt to fraud and faces fail time. Plus, Binance must pay a $4B fine. Honestly, WTF is up with all these crypto CEOs just being crooks? CZ (Binance), SBF (FTX), Kwon Do-hyung (Luna)…
TIME's annual “Best Inventions” list came out, highlighing ingenious solutions to modern problems. While the innovations span a range of fields, they share a focus on sustainability, efficiency and pushing boundaries. The coverage brins us an optimistic look at tech’s potential to build a better future.
China's share of the global economy is falling by the most since Mao Zedong, and the historic turn could 'reorder the world'. With China's share of world GDP on pace to shrink 1.4 percentage points over two years, China's rise as an economic superpower may be reversing.
The Pentagon is moving toward letting AI weapons autonomously decide to kill humans. If you’ve watched BlackMirror, you know there’s such a thing as lethal autonomous weapons that can select targets using AI. In real life, these being developed by countries including the US, China, and Israel. And the US is arguing against new laws aimed to regulate AI-controlled killer drones.
Onto today’s post…
Here’s what we’ve got this week:
Why turkey, eggs and air travel just got cheaper
The Annual Strategy Planning Trap: How to stop fighting over budget and start focusing on category dominance
Customer success is broken. Here’s how to fix it.
Learning vs. Impact
Why do experiments fail?
Annoyingly, all my post gets cropped in email. Hit the button below to read the full thing.
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(#1) Why turkey, eggs and air travel just got cheaper
With our bellies still stuffed with turkey, let’s kick today off on theme.
Being with family over a lovely Thanksgiving lunch/dinner is priceless. But, what’s not, is how much the holiday costs. And, believe it or not, this year that price is lower than last year’s record highs.
Key quote 💎
There’s been a lot more attention and acceptance of the greedflation problem in the past year, and the persistent pushback from Larry Summers and other orthodox economists has lost some currency. That increased scrutiny makes it harder to use inflation as a pretext for price increases. While we’re talkin’ turkey, the Justice Department is enforcing against illegal coordination and price fixing by Agri Stats, which operates a data exchange among processors of 90% of domestic turkey sales. Litigation means that this coordination has likely stopped, at least for now, meaning firms can’t maintain high turkey prices through price-fixing anymore. Thus, prices are coming down.
It’s likely that price-fixing is more pervasive than we think. I’ve heard rumors of similar data exchanges among car dealers and rental car companies, and it’s unlikely that large corporations with sophisticated pricing models are leaving money on the table in other industries, either.
— Lee Hepner, via BIG by Matt Stoller
Insight 💡
For the past two years, mounting evidence has suggested that companies have used inflation as cover for coordinating price increases across the economy. In other words, the oligopolies have conspired to artificially suppress the supply of things like eggs and inflate the cost of them for major food retailers.
A 2022 study by the Federal Reserve Bank of Boston found that increased concentration across the US economy since 2005 had caused a 25% increase in pass-through costs to consumers, amplifying the inflationary pressure from supply-chain disruptions.
Airfares—another sector known to be hit with artificial price hikes—are down too. With Uncle Sam breaking the American Airlines-JetBlue Northeast Alliance in an antitrust suit, the rest of the industry has no choice but to compete over routes via lower prices and more service.
Overall, this year’s decrease is the price of turkey, eggs, and airfares is a good sign that not just that inflation is cooling, but that givernement efforts to crack down on corporate profiteering, or “greedflation,” are starting to work. AKA, anti-monopoly policies seem to be working in industries that have notoriously taken advantages of concentrated supply and greedy CEOs.
Take action 🛠️
As operators, remember to always embrace transparency and ethical pricing strategies. This comes in many flavors, but one thing you can do right now is to use transparent pricing as a competitive advantage to build and maintain trust in your market, distinguishing your product as ethical and consumer-friendly in an increasingly scrutinized market.
Don’t bury your pricing page, don’t use dark patterns around things like cancelling memberships, and don’t hide fees from people. Clarity always wins.
Ask yourself, “What’s one thing I could do to improve the transparency of my products pricing?”
Read the full post by Lee Hepner
(#2) The Annual Strategy Planning Trap: How to stop fighting over budget and start focusing on category dominance
It’s that time of the year. Annual planning is in full swing.
The long Zoom calls. The IRL conference room sessions. The schmoozing of leadership as year end bonuses come around, the rallying for resources, budgeting, endless use of the word ROI, and all the long memos and dense power point presentations.
But, there’s trap to watch out for.
Key quote 💎
Instead of grappling over budget, you can break free by asking one question:
How do we design and dominate a giant category that matters?
This question highlights the difference between companies stuck in the Annual Strategy Planning Trap and those who emerge as Category Queens. Those caught in the trap base their plans on the past and shackle themselves to outdated thinking, which perpetuates a cycle of mediocrity. The Category Queens, however, look to the future and embrace a category-first mindset that positions them as market leaders.
— via Category Pirates 🏴☠️
And a bonus one from the same post that really hits home…
Strategy isn’t about “better” vs” worse.” It’s not about competition. Strategy is about finding ways to be different (which is not the same as, “We do this one feature ‘better’ than our competitors, and that’s what makes us different.”).
The smartest entrepreneurs and VCs in Silicon Valley understand this statement.
They understand they're not in a demand capture game. They’re not in a race to the bottom. They know they have to be the company that sets the agenda and drives the way people think about the problem and the solution. That’s because they know what's at stake (two-thirds of the category economics).
But people who don’t understand category strategy say things like:
"Okay, let's get our SEO going so we can get the maximum amount of traffic to our website. This will drive leads, which will drive people to our funnel, which will drive revenue."
Sure, there's some level of smartness to those tactics. But it’s not a strategy. It’s a game of jump ball for keywords on Google—and you’re paying (a lot) to play.
Insight 💡
When we do annual planning, it’s easy to get caught up in a cycle of short-term thinking. The reactive decision-making to past performance or executive whims, and just tons of internal politics that losing sight on customer problems and value becomes a serious problem.
Often, this is because people’s goals center around approval, their promotion, or thinking individualistically about just getting more money for their own team. This is the “Annual Strategy Planning Trap” in action—a theater of absurdity where the fight for resources blocks the pursuit of category domination.
Be very wary of the level of internal competition within a company—this drives teams into the trap. “When we fight over scarcity, bad things happen. When we create abundance, legendary things happen.”
The name of the game is to be a category leader. And if you want to win it, planning needs to be about how to make investments in what makes the most sense for tomorrow. If thinking is responsive and internal, you’re in the trap. If you’re proactively thinking about external factors—your market, customers, the macro—then you’re a category-thinker. And neglecting category-first thinking is a company's biggest mistake in annual strategy planning.
Be careful of obsessing over external competition too. It’s often a distraction that pulls people away from the big picture and leads to endless optimizations, rabbit hole escapades, and generally is jus a a path toward mediocrity.
When thinking about the future, your goal should not be to “Be the winner” or “Be the best”. Those lines of thinking equate to thinking about competition and just improving, respectively. The real aspiration should be to “Be different”—that’s how you design new categories. “Be different” companies solve a problem and articulate a point of view that’s radically different. AKA, avoid The “Better” Trap — it leads you into a never-ending competition.
Take action 🛠️
You have to quit focusing on a fight for budget and other internal battles, and make sure category thinking dominates most of the conversation. The cheat code is this: when you’re not talking enough about your market or customers, you’re probably slipping (or in) the trap.
Be mindful of short-term tunnel vision. If something is positioned as “a quick win”, it’s likely not a category defining move.
Watch out for internal politics. You should always aim to have an opinion about what is best for the customers and the business, and make your case. Don’t remove things from the roadmap or deprioritize them because you know one (important) person will be against it.
Think in loops, not funnels: If your strategy plan revolves around pushing customers through a marketing funnel, good luck adapting to the new consumer-first market.
As the Pirates say:
The greatest strategy minds in the world don't think internally. They take an external view by asking:
Who's our Superconsumer?
What real problems does she have that she may know of or may not even know of?
How do we become the company that owns the problem for her and, therefore, becomes the solution?
Read the full post by the Category Pirates
(#3) Customer success is broken. Here’s how to fix it.
In the late 2010s, customer success (CS) gained a lot of traction as an emerging category in the world of B2B and enterprise, and many companies created big CS teams made up of customer success managers (CSMs), renewals, support, and services.
But along came tougher macro climates, and with it, more scrutiny on budget, cutbacks, and confusion about what unique outcomes CS should drive in the first place.
Others have pointed out that CS is broken, and many companies—including Red Hat, Salesforce, and Twilio—are scrutinizing or eliminating their CS departments because they aren’t delivering measurable and distinct results.
So, is CS broken, and if so, how should it be fixed?
Key quote 💎
Cutting CS isn’t necessarily the answer. Once you’ve reached a certain level of growth—typically around $100M ARR—you’ll generate much more revenue from your post-sales org than from landing net-new logos. If you configure your CS org correctly, you’ll unlock the easy momentum of that post-sales org and continue to grow more quickly and efficiently.
— Mark Regan, Joe Morrissey, and Abbas Haider Ali via a16z blog
Insight 💡
To tell if you have a broken CS team, look to see if they are operating as a remedial team that fixes problems coming from other departments. CS teams often inadvertently take on roles meant for account executives, support, or services teams, diluting their effectiveness.
To “fix” CS, you need to keep the team laser-focused on customer health as a leading indicator for the revenue and product orgs. In practice, that means ensuring that customers are on track to find all the value and promised business impact that was sold to them presale.
Your CS team should be the only team that can provide you with a data-driven perspective on the overall health of your accounts. If they’re hooked and unlikely to churn, good to renew, or set up to expand—CS should have the answers.
A well-structured CS team should address each layer of the customer's needs hierarchy, improving systems and processes to support these needs. If you can’t connect your CSMs’ activities to a layer in this hierarchy, then they shouldn’t do it.
Take action 🛠️
Identifying when your CS org is broken and refocusing it on driving the right outcomes is a critical first step in bringing new life to your post sales org—and unlocking significant and efficient growth for your sales-motion and company.
So, considering implementing and operationalizing a structured customer success framework that aligns with customer needs and business outcomes. This involves:
Defining clear roles, and ensuring CS roles are distinct from sales, support, and services to prevent any confusion, and mostly, inefficiencies that come from doing other peoples jobs.
Using data-driven decision making, like a customer health scorecard, to measure and improve customer health.
Monetizing CS functions to enhance value and customer engagement.
Adjusting the size of your CS team to optimize efficiency and maintain healthy margins.
Read the full post by a16z
(#4) Learning vs. Impact
When you start in a new role, during onboarding you are mostly learning and having little actual impact. And down the line, once you’ve ramped up and are settled, you’re having a lot of impact, but are learning a lot less.
This is the paradox of “Learning versus Impact.” You typically have the most impact in your career when you are learning the least, and you tend to learn the most when you are least effective.
Key quote 💎
When you get comfortable in your job, it’s easy to get complacent. You know what’s required, you can deliver results, and you slip into cruise control without even realizing it. But there’s something to be said for being forced out of your comfort zone. Challenges lead to growth, even at the expense of comfort and ease. This push creates opportunities to change things up and find new ways of doing things.
Marriages are the same way. As humans, we like novelty, and we tend to be more invested in what’s new. Changing out spouses is clearly out of the question, so what if you could find a way to grow together? The excitement of learning something new while still in your current relationship can reignite feelings of freshness, mimicking the initial rush of emotions of falling in love (ref). In fact, doing something new, unusual, or exciting has been found to increase marital satisfaction (ref, ref).
The same strategy can also apply to a job. Although some people take stagnation as a sign to find a new role, this may not always be the only option. Often, a good first step is to look for ways to stretch yourself. This can bring excitement back into your day-to-day and help you get out of the rut. Even if you do end up leaving, you’ll have had a chance to develop new skills and explore new areas of growth.
— Deb Lie via Perspectives
Insight 💡
Here are a few ways to bring learning back into your role when you are having maximum impact:
The first approach is to add learning to impact when you’re seasoned and comfortable in a current role.
Lean into a challenge. Find something you don’t do—maybe that’s puling your own data—but that is doable and relevant, and then pick that one thing as a skill to develop. The goal is to get out of your comfort zone.
Step back, evaluate your processes, and innovate. Sometimes when we’ve been somewhere for a while we think we’ve done as much as we can. But, there are always inefficiencies internally, or big opportunities externally. That presents an opportunity for process/operational innovations, or opportunities for new market expansion.
Go create something new. Growth opportunities don’t always have to be directly related to your daily work. Consider a side hustle, like start a Substack newsletter.
The second approach is to add impact to your learning during the onboarding period when starting a new role.
Actively go find a problem to fix. Find one issue that you can fix, address, or help with that takes a week or less, and do it. This will teach you about the culture and what it takes to untangle an issue, as well as demonstrate your bias to action.
Pick something up from the backlog. There will always be issues lying around waiting to be picked up. Look for the bottlenecks, find something that you know well enough to do, and help to clear the decks.
Help someone out. Sometimes, having an impact can be as simple as asking a manager or teammate how you can help them. Maybe that’s cleaning up documentation, taking notes in a meeting, pulling some data, etc. This helps you learn the ropes, build relationships, and add value to the team.
Take action 🛠️
It can be easy to slip into the impact or learning zone, while neglecting the other. But, usually there are always ways to bring out both in your work, whether you’re experienced or brand new. If you feel yourself stagnating and approaching the death-loop of burnout, look for new ways to challenge yourself.
If you’re still learning, look for ways to use the skills you have already. In doing so, you can get the best of both worlds, no matter where you are in your career.
Simply, force yourself out of your comfort zone into something. Think about one challenge you can take on, and commit 5-10% of your time in that challenge zone.
Learning x Impact = Mega growth
(#5) Why do experiments fail?
After running over 100 experiments a Miro, Eugene Segal generously shared his experiences so we can all learn from his mistakes and set ourselves up for experimentation success.
Key quote 💎
(Growth team) A twelve-month experimentation roadmap is not a thing!
Detailed long-term roadmaps contradict Growth DNA. Three months of experiments portfolio planning should be your roof-shot time horizon.
— Eugene Segal via The Growth Loop
Insight 💡
Here are 10 reasons (out of Eugene’s 30) why experiments often fail:
Your target metric represents a complex action. Often what you’re trying to achieve is nuanced and can’t be presented as just one thing. So, break it down so you can monitor it more accurately and move the outcome you truly want.
Your target metric is lagging. Some outcomes can take a while to measure—like retention. So, bake in proxy metrics or leading indicators. This allows your to see results sooner, thus learn quicker and make iterations.
Your experiments cannibalize other KPIs. When one thing goes up, often there can be unintended consequences across the system. Maybe your test drives conversions, but hurts churn. These could be metrics on your own team, or even the target metrics of other teams.
Your success is perceived only as impact on the target metric. Success = High value and actionable learnings, whether the hypotheses were proved or disproved.
You are running only 'quick win' experiments. These are find to do, but if you just keep looking for tiny gains you’re going to be heading towards a local-maximum. Always mix your experiments with big bets that will be step functions.
You are running big bets backed by low-confidence hypotheses. You need to sequence the tests, and run small experiments to validate your bigger hypotheses.
You are spread on too many opportunities and jumping around. You need to focus on a few things, and iterate on them. Post-analysis and iteration are key to a strong experimentation culture.
You experiment everything. This one kills me. Not everything should be an experiment, and experimentation culture doesn't obsolete logic and sense.
You slack on post-analysis. Sitting down with the team and going over results is probably the most important part of experimentation. The quality of post-analysis determines the teams' success
You’re not monitor experiments. Don't just leave them alone to run in the background. Monitor to you can be on top of implementation bugs, tests that are hurting metrics in a meaningful way, and generally just save time.
Take action 🛠️
Always focus on iterative experimentation and learning. As you lead your team, emphasize the importance of breaking down complex target metrics into manageable components and focusing on iterative experimentation. Each iteration is learning loop. Encourage your team to mix quick wins with more significant strategic bets and to prioritize based on impact, confidence, and cost.
And always always make space for that post-experiment analysis.
A rule of thumb that’s always served me me…always know what's next. You should be ready to answer what you plan to do next per each different future outcome of an experiment. If it goes up, then what? If it goes down, then what? And all folks on the experimentation team (Analytics, product, Engineering, Design) should be aligned on that.
Read the full post by Eugene Segal
And with our main 5 bits for the week done...
Meme of the week 👀
Guess that product 🧩
Shoutout to Işık H. Kara for guessing last weeks riddle…it was the Amazon Fire Phone.
Here’s this weeks puzzle. Can you guess what product or company this is?
An innovation in hand--taking the world by storm. But not the fruit to be.
To guess, just reply to this email, or email me (hermannjaryd@gmail.com). Everyone who gets it right will get a shoutout next week. p.s these will get harder each week.
🌱 And now, byte on one of these 🧠
And that’s everything for this week, folks.
If you learned anything new, the best way to support me and this newsletter is to give this post a like below or a share. Or, if you really want to go the extra mile, I’d be incredibly grateful if you considered upgrading.
Thanks so much for reading. I hope you have an awesome weekend.
Until next time.
— Jaryd✌️
Love your newsletter, full of great stuff but I can’t help but notice there’s often typos and spelling mistakes! Please check before posting 😅
Arrrr, appreciate the shout out and helping us get as many people out of the Annual Strategy Planning Trap as possible.