đ Welcome to this weekâs edition of 5-Bit Fridays. Your weekly roundup of 5 snackableâand actionableâsummaries from the best operators and experts, bringing you concrete advice on how to build and grow a product.
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Happy Friday, friends đ»
Besides some shoulder pain, itâs been a great week over here at my deskâŠ
I launched (well, published) the new landing page for How They Grow. For the curious, you can check it out here. The newsletter is still on Substack so nothing is changing there, but I have plans to layer in other things within the HTG brand, so a website helps with that.
Also, a random and personal update, but Julia and I got the 1 minute teaser for our wedding video earlier this week. Weâve watched it so many times, and it truly captures the happiest day of our life. If youâd like to see it,you can watch here.
Iâm very excited about an upcoming topic for From The Garden, and Iâd love your opinion for it.If youâd like to contribute a thought (for a quote / shoutout), you can check out the prompt about the Vision Pro and spatial computing here.
Lastly, Iâm helping out my friend Christo, who has a great productâFuel To Flyâthat helps with B2B email outreach and sales. Iâve seen the product in action, and they use a very cool blend of data, automation, and human-touch to help founders/operators discover where your product is most valued, how your best market works, and then break into new segments that resonate. If your GTM has a sales component, youâre in the B2B space, and want to learn more, just reply to this email and I can make an intro.
p.s This isnât an ad, and a lot of my friends have startups that I donât give a mention to here. But, I think this is a great growth and GTM tool though, which is why Iâm giving it a mention today.
Okay, housekeeping out the way. đ
In case you missed it this week:
I wrote about M&A, specifically, what separates a good acquisition from a bad acquisition. (It got the nod from Lenny even!) This was one of my personal favorite pieces to write. (Read it â )
If youâre not a paid subscriber yet, hereâs what youâve missed so far:
In the post above, we wrapped up by talking about some dream acquisitions. Rex Woodbury said heâd like to see anything where Disney gets into gaming. Quite literally a few hours later, word broke that Disney had invested $1.5B into Epic Games to build an âentertainment universeâ with Fortnite. Flipping wild timing. (Learn more â )
Adam Neumann is also trying to buy back WeWork. Come now. (Learn more â )
Not quite news this week, but it was news to meâapparently NASA have plans to launch naked pictures of humans into space in the hope of attracting aliens. Iâm about to fork out taxes so NASA can send nudes to space? Cost of science I guess. (Learn more â )
Uber (finally) turned a profit, earning $1.1 billion in 2023. A big win for CEO Dara Khosrowshahi. Itâs the first time in Uberâs 15-year history that they finished a year in the green. (Learn more â )
Today at a glance:
The power of investor updates
The biggest untapped opportunity
Finding your companyâs next growth opportunity
Are your standards too low?
Eigenquestions: The art of framing problems
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Most VCs only hear from 10-50% of their portfolio companies on a regular basis.
This is a major arbitrage opportunity for founders. These updates can help you stay top of mind with investors and secure help with fundraising, hiring, closing customers, strategy, etcâ all in just an hour or less.
As Laurel Hess wrote in her LinkedIn Post, âIt boggles my mind how many founders don't do regular company updates to stakeholders (and potential investors!). So many people I know treat this as a chore - when it can be the highlight of your month (like it is mine!).â
Taking the time to review your business with your stakeholders is actually a really great opportunity for growth. If you view it that way, there is a ton of potential to unlock.
Tyler Denk does them exceptionally well..
Key quote
We raised our $12.5M Series A from Lightspeed Venture Partners in just 6 days.
How?
I added one of their partners to our investor updates after meeting him for the first time. When I reached out about exploring a Series A a few months later, he was already up to date and had full context on everything about the business.
Whenever I meet potential investors who express interest in beehiiv, I always just add them to my monthly update list. Itâs 0 marginal work to keep them up-to-date, and the upside speaks for itself.
Iâm also sure to keep every single investor who passed on us on the list as well.
So whatâs included in the investor updates?
Theyâve evolved over the years, but in their current formâŠ
Introduction â typically shouting out some milestone or personal life updates
The TL;DR â MoM growth metrics and capital activity
Primary updates â a deep-dive and status update on our product roadmap, some revenue analysis, growth initiatives, new hires, and more
Asks â where I make a few direct asks of the recipients
Product updates â recapping what we launched in the prior month
Accomplishments & wins â typically just one big win or shoutout to an individual, team, or initiative
Failures & learnings â key takeaways from something that either didnât work or could be improved
Upcoming priorities â what are the top priorities for the upcoming month
And I donât want to pat myself on the back, but theyâre pretty fucking good.
Sending consistent and reliable investor updatesâor build in progress reportsâhas a ton of benefits:
Accountability: You canât manage what you canât measure, and sending these out consistently creates accountability for you and the team. If a regularly reported KPI is down, youâll do whatever you can to figure out why before the next update.
Communication. Youâll always have a ton going on at any given time. And the update is a forcing function to get all of your thoughts organized and onto paper.
Alignment. Itâs easy for your team to get lost in the day-to-day and lose sight of the overall progression of the business. These kind of updates go out to your team too, showcasing how everyoneâs work and initiatives fit together in the big picture.
Network. Each person on your update list has their own network. And when you have an ask (intros, etc), thereâs a good chance youâll get some good answers/help. They have a vested interest in helping out.
Top of mind. Your update email is free marketing that reminds people about you and what the team is up to. This can manifest in new users, partnerships, advertisers, investors, or employees.
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If youâre a founder, send a monthly investor update⊠even if you donât have any investors.
If youâre an operator, consider how you might be able to send similar types of reports out to your team.
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Many companies are filled with talented people who love to solve problems, yet, as John Cutler points out, we're only scratching the surface regarding harnessing their potential.
This is why one of the biggest sources of waste in a company is idling and untapped skilled pragmatists.Â
And where there is waste (people are a companies biggest expense), there is opportunity waiting to be unlocked.
Key quote
Skilled pragmatists are too smart to wade into conflicts or political maneuvering. They work within the system. They are under-challenged and bored at work but are resourceful enough to scratch those itches in other ways. They aren't lazyâdoing the bare minimum and stoppingâbut they also don't go "above and beyond" because they are inherently skeptical that it is worth it. They are very reliable, but to the point where they are conveniently (to them) invisible. Occasionally, they show flashes of brilliance to remind people they've got the chops, but not so often that it throws them into the lion's den.
Importantly, these employees resist managerial efforts to "engage and challenge" them. They don't need to be engagedâthey are fairly balanced. And they'd love to be challenged if working within the existing system wasn't so difficult. "I have my projects outside of work to be challenged; thank you very much." So, the normal playbook doesn't work. It feels condescending and paternalistic.
Skilled pragmatists are not pushovers or under performers. Rather, they are folks navigating the weird socio-technical systems we call "Companies." They are people who want to be challenged but aren't being challenged.
If companies can lean into tapping into this pool of potential, they stand to gain hugely. This involves seeking and hearing the softer opinions in a room, and not diminishing contributions from the less extroverted because they are less visible and showy.
That being said, given the reportedly high-volume of skilled pragmatists sitting in companies (Iâd take the 75% with a grain of salt given I donât know how John got that number), there must be a good chunk of us (I think Iâm one of them) reading this. So hereâs some advice from that POVâŠ
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Recognize your value. Understand that your approach to work, although less visible and showy, has significant value. Youâre not the loudest voice in the room or the one looking for constant recognition, but your contributions matter. Donât succumb to the shadow of imposter syndrome.
Lean into your skills. Look for ways to use your skills within the existing system. If you feel under-challenged, think about how you could make incremental improvements or find different solutions to problems within your sphere of influence.
Find opportunities for growth. You canât just rely on your employer and 9-5 to give you challenges and opportunities for growth. What ways could you push yourself outside of work? Maybe thatâs a personal project, or just committing to learn something new.
Consider your career path. Everyone should do this on some recurring basis, but itâs good to reflect on your long-term career trajectory and whether where you are now is giving you the opportunities for growth (and fulfillment) that you want. Now might be a hard time to do it, but generally, don't be afraid to explore other opportunities if you feel youâre being underutilized.
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A growth model, to put it bluntly, is a spreadsheet (like this).
It really just takes in all your acquisition inputs (where people come from), and row by row shows you how folks from each input channel make their way through your product. BasicallyâŠ
Funnel (conversion rate variables)
Product (engagement within the product)
Financials (the monetization variables)
Growth Channels (performance of your primary loops)
While intimidating to many (because data can be), and often left for dedicated growth leaders or PMs, thereâs a ton of value in being any type of operator that understand how to âmodelâ the drivers of product growth.
Luckily, growth practitioner Ruslan Nazarenko has what we calls âThe Simple Growth ModelââŠ.
Key quote
[The growth model] is an excellent and precise tool that can be used within the Growth team, butâŠ
Itâs impossibly hard to sell it to anyone outside of the Growth team!
All of the charts, numbers, coefficients, and formulas lead to a very complex system. So complex that I failed in getting everyone on the same page to implement that model. I was forced to come up with a simpler version. One that works as an alignment tool and can be easily used with your peers from other teams.Â
Here were my new requirements:
It needs to be less complex
It should be easily explained in fewer than 5 minutes
Iâm fine with 80% accuracy
It needs to be easy to navigate so people can play around with itÂ
I call this the âSimple Growth Model.â While at Vimeo I used this new, simple growth model to navigate through the challenges of product-led growth (PLG). We launched PLG shortly before I joined the company but when I arrived it wasnât achieving the expected results and soon our growth became stagnant.Â
And that PLG motion from Vimeo? We quadrupled the user base in 6 months by leveraging our growth model to focus on the right places.
Even a simple growth model can help you find and assess where the problems and opportunities exist in your business. And simple is good because people will buy into it as a tool.
A growth model, while taking upfront and ongoing effort, is a great way to communicate to leadership, translate OKRs and roadmap initiatives into impact sizing/estimating, and being able to âmodelâ out different strategies by the numbers.
I saw this image (below) on LI earlier this week, and I think it ties in beautifully: your growth model will help you find effective levers to pull in your business. Itâs adata-drive opportunity map. Some opportunities will be cool, but the cool ones are often overrated. As Aakash Gupta said earlier this week, the best (not seen as cool) lever is often just toggling and testing your pricing.
truth
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First, Iâd learn more about growth models (resources linked below)
Then, Iâd start with a super simple one. Use it as a sandbox for yourself to learn. As you get more comfy with the numbers, you can layer in some more complexityâŠbut not too complex.
Once you have a model, go through the exercise of seeing if it reveals any ideas.
And to spot initiatives, start with what Ruslan calls âthe 1% exerciseâ. Using your spreadsheet, try to improve every number by 1% relatively, and look for what yields the biggest improvement overtime.
Is it entrances? Is it retention? Is it activation?
Then, based on (1) what moves the needle most, and (2) effort, pick a focus area and list out what you can do in your roadmap.
Within the Growth model, people might wonder why you expect certain numbers to increase or decrease. I like to list all the initiatives per month in a separate row on the Inputs tab for clarity.
Setting a high bar as an operator is a superpower.
Some teams are always innovating, challenging assumptions, embracing conflicts, and pushing the limits of their creativity.
Aiming for excellentâthe highest possible quality in whatever initiativeâis important because there are are only so many levers you can pull. So many chances you get.
So, do you want to churn though them in a half-assed way?
No, of course not. But not every team knows where they fall on the quality spectrum, as Wes Kao points in a great post.
Key quote
[There is always] a team that doesnât even realize they have low standards:
This team makes a half-assed attempt, then claims, âThis channel (THE ENTIRE CHANNEL) doesnât work.â
This team uses lazy excuses like âthereâs a speed vs quality trade-off!â when they are not remotely close to moving fast enough or shipping work thatâs high quality enough to breach that boundary.
This team leaves money on the table, every week, and with every project, because they make dozens of mediocre micro-decisions when executing.
They default to knee-jerk reactions like âif we set bigger goals, we need to hire more peopleâ instead of realizing that a lean team of the right people can be just as effective.
They cite popular aphorisms like âperfect is the enemy of goodâ to justify subpar work, instead of admitting thereâs room to improve their execution.
They do okay work, at an okay speed, but feel like theyâre sprinting and producing A+ work. When you challenge them, they are insulted.
There is a disconnect: They think they are producing high-quality work, but objectively, itâs simply passable. And therein lies the problem:
There are common excuses to raising the bar, all rooted in defensiveness and lack of self awareness. Teams, or individuals, may say things like:
âItâs good enough.â
âThereâs a trade-off between speed and quality.â
âItâs optimizing past the point of diminishing returns.â
âItâs too much workâ
âDone is better than perfect.â
âItâs not worth the ROI to make it better.
Of course all of those can be true. You have to use some judgement around it, and sniff out if whether itâs just an excuse to be lazy.
Quality has a ripple effect though across the company. When the bar lifts in one area, people follow. But when things slide and people can get away with doing less, thatâs where the tide will retreat to.
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As a founder, leader, or PM, your teamâs standards will be as high as your expectations are. So, really think about what yours are (both from what you deliver personally, and from what you expect of others). Then ask, what would raising them look like? Try not to be defensiveâembrace humility and intellectual honesty. If you do, your push to the next level brings with it a ton of leverageâpeople respond to new standards of whatâs accepted and whatâs celebrated, and small changes can have a compounding cultural impact.
A great place to start is just to give higher levels of actionable feedback, threaded in pushing for a bit better vs just saying âLooks good to me!â. Detailed feedback drives a culture of high standards.
Values and behavioral norms are simply not transmitted easily by talk or memo, but are conveyed very effectively by doing and doing visibly
â Andy Grove, co-founder and ex-CEO of Intel
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In short, Shishir (co-founder/CEO at Coda, and ex-YouTube) talks about the essential skill of properly framing what it is youâre trying to decide.
And at the heart of that is what he calls eigenquestions (coined from the German word eigen, meaning true value/characterization) â where you sometimes need to find the right question to be asking.
Key quote
Framing is the process of breaking down a problem into a set of choices, trade offs, and options that enable a team to make a call and move forward.
When done well, framing can steer the company, product, and team through tricky situations. When done poorly, we can feel stuck, frustrated, and like we're debating for an unnecessarily long period of time or are zeroed in on the minutiae of a decision.
A few benefits of good framing are:
Common language: Framing enables a shared, well understood sense of the problem. Even on its own, establishing a common language can facilitate better conversations and move teams forward.
Question prioritization (AKA finding the "eigenquestion"): One of the critical disciplines of framing is to "find the right question." Too often debates start with "solutions," before we determine if we're asking the right questions, in the right order. We'll discuss the term "eigenquestion" in a bit, but good framing of problems often requires rotating perspective. As we saw in the YouTube example, changing the question may be the best course for illuminating a path forward.
Options enumeration: Great decisions start with a clear set of options, as hard problems are rarely as simple as a "yes/no" on a single option. The book Decisive is a good resource full of data and stories of how teams that consider options make better decisions.
Inclusion: For most people, their ability to participate in a debate starts with feeling heard. Good frames give a spine to the variety of options and opinions suggested by others. Once they are all in place, people can let go of their initial opinion, and objectively discuss the alternatives.
Faster decisions that stick: A common complaint of structured decision making is that it can be time consumingăŒwhy bother constructing alternatives if one of them is already obvious? To be clear, this toolkit should not be used on every decision. On the flipside, when faced with a difficult decision, I prefer to evaluate the process based on a different type of speed. The worst decisions in these cases are ones that are arrived at quickly, but are just as quickly reversed, and thus the apparent speed turns into an illusion. Good framing helps produce "decisions that stick."
One technique to reframe the dilemmaâwhich anyone can doâis to step back and ask: âAre we asking the right question here?âand, âWhat is the most discerning question we should ask?â.
Most things will have many questions. But just like how the 5 Whys technique peels back valid reasons behind an issue to find the root cause of the problem, the same thing applies to your line of questioning for a decision.
This is where the eigenquestion comes inâthe root question. Once found, it usually helps answer all the subset of questions.
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If you want to develop this muscle of finding the most pressing and important question to ask, try practicing with questions as you encounter them. For example, with these below prompts, what are the 1/2 questions you must ask?
Youâre a newsletter writer and you want to increase the number of paid subscribers, what do you do?Let me know your answer! ;)
Youâre building a platform for gaming and you want to decide whether to make it open source or not, what do you do?
Youâre helping determine the go-to-market for a new teleportation device, what do you do?
In each, start by jotting down a list of questions and considerations. Then prioritize them by, if answered first, which would provide answers for most of the other questions?
And with our main 5bits for the week done...
Chart of the week đ
Generative AI has the potential to create value for companies and generate wealth for workers. The technology could also widen racial economic gaps. For example, by 2045, gen AI could boost household wealth in the United States by nearly $500 billion. But, because Black Americans capture only about 38 cents of every dollar of new household wealth, thereâs a scenario where gen AI could increase the wealth gap between Black and White households by $43 billion annually.
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Amazing issue as always, and congrats on the nod from Lenny!