🌱5-Bit Fridays: Why people buy your product, what pineapple pizza can teach us, reaccelerating growth in tough times, 5-anti lessons from Elon, & 20 AI tools for productivity
👋Welcome to this week’s edition of 5-Bit Fridays. Your weekly roundup of 5 snackable—and actionable—takeaways from the best-in-tech to help us become better builders. Catch up on our other editions here, or our main deep dives here.
Happy Friday, friends 🍻
If you missed this week’s company analysis, we looked atHow Bumble Grows:A masterclass in building a consumer product, with concrete lessons on finding a hook, reaching & acquiring customers, and making sure you keep them.
This was a super fun one to write. Not only does Bumble have an epic growth story, but we also unpack The Business of Dating and even take a peak into what the future of dating apps might look like with AI. Don’t miss it. 👇
If you enjoy today’s roundup and learn anything new, feel free to show your support by hitting the heart button, subscribing, and if any Bit in particular strikes you — maybe even giving it a share. Thank you! 🙏
Join thousands of others learning how to build and grow a product.
Why people buy your product
This could well-be in the wheelhouse of one of the most important questions PMs, founders, and marketers need to know.
Having a user base and seeing it trend up and to the right is wonderful, but if it’s happening for underlying reasons you don’t fully understand…this is like having a golden goose on your farm that you’re never able to catch. If that analogy makes any sense?
Knowing the problem you solve for people—AKA your product’s Job To Be Done—is an important part of this question. It helps you understand in what context people have a problem, what they’re expecting, and what their motivation is to solve it.
But, it’s only part of the puzzle in understanding why people buy your product.This is because most problem statements, be those user stories or JTBD, tend to lean towards being very functional.
In a deliberately simple example: JTDB: When I am redecorating my room, I want to be able to get a nail into the wall, so I can hang a picture.
So, a company goes out, creates a hammer, and sells it to people pitching that it’s great for hanging shit around their house. They’ve built the perfect product guided by their JTDB and people are buying it. No issues. But, what is it about hanging pictures that really matters to someone?
When we moved into our apartment and I got myself a mini Milwaukee set, I got all the functional value in the world. But, I also felt empowered, like I didn’t need a TaskRabbit, and the world of DIY was mine for the taking. I touted it, proudly lent it out when friends were tasked with hanging stuff, and felt like I was part of a community of people who fixed their own things. I even (regrettably) tried my hand at plumbing. 👷
Much more lies beneath the surface of why people choose to be paid subscribers to your product, and why they remain loyal.
Identifying your core audience — those most likely to buy your product;
Focusing on how to add new customers that are like your core audience (and better budget any efforts aimed at chasing more peripheral audiences);
Concentrating on how to deliver more value to your core audience;
Deciding which extra benefits to give paid subscribers (or even higher-priced, super-fan subscription tiers).
So, what are the reasons?
Reid points to this chart of the “elements of value” from an HBR article.
This pyramid stems from Maslow’s hierarchy of needs:
Maslow argued that human actions arise from an innate desire to fulfill needs ranging from the very basic (security, warmth, food, rest) to the complex (self-esteem, altruism).
Similarly, the elements of value pyramid [has] the most powerful forms of value at the top. To deliver on those higher-order elements, a company must provide at least some functional elements required by a particular product category. But many combinations of elements exist in successful products and services today.
As Reid says, “Providing some ‘functional’ value is table stakes, but getting to higher-order value can unlock superb retention, a higher willingness to pay, and revenue growth.” And reflecting on his experience working on Crunchyroll (an Anime streaming platform), he crystallizes this perfectly:
For Crunchyroll, we always lagged behind larger streaming services on the functional stuff: discovery and personalization were inferior, the site and apps were a bit dated, and key parts of the product (e.g., video player, subscribe flows and payments, search and navigation) were passable at best. But we did quite well on some of the higher-order elements of value (e.g., badge value, nostalgia, affiliation/belonging, self-actualization).
Rather than hopelessly competing on functional aspects, we instead focused on strengthening our bond with fans through various efforts:
(my personal favorite publication). He started out with content that informs (function) and shifted to higher-order values like belonging to a community and self-actualization. I’m a paid subscriber, and would be even if none of his content was paywalled.
If you don’t know what higher order values your product instills, the next step is to run an audience survey, speak to paying customers (and those users on the fence), and use your findings to think of some new ideas on how to deliver more value to your audience.
For more like this, checkout Growth Croissant for Reid’s experience-driven guidebook to growing consumer subscription businesses.
And rolling with this elements of value framework, one way to create an emotional connection is with a crazy idea that does something adventurous.
What pineapple pizza can teach us about building product
The #1 reason why products fail is they lack traction. They don’t strike a chord with anyone. They make no lasting impression.
If more products were more like pineapple pizza, more would have traction. Pineapple pizza is wild, controversial yet loved by a vocal niche.
The first people who put pineapple on pizza were pretty adventurous.
When I think of Pineapple, I think about Hawaii. Not Naples, Chicago, or New York — the pizza towns. When I think of Pineapple, I think of a sweet and sour tropical fruit, not mozzarella, tomato sauce or mushrooms — the pizza staples.
If you ask 100 people on the street if they like pineapple on pizza, you’ll get an even amount of yes and no. Some people love it, some people hate it.
It’s super simple, very sticky, and drives home an important takeaway: doing something different that stands out is better than just making the same-ole better. People are so over the same things being thrown at them again and again wrapped in different branding. As Greg probes, “Can you create a product that seems too crazy to work? What’s a product that blends two topics that go together in a way we haven’t seen before? Can these products achieve the goal your community is trying to accomplish?”
And it’s not just a powerful way to think about the product you’re building, but also how to bring it to the world. How can your design, marketing and content strategy be bolder, more unique, and something people will talk about? More pineapple, less Margherita.
Different is better than better.
Reaccelerate: Finding new engines of growth in your business
Des Traynon, co-founder and Chief Strategy Officer at Intercom, recently gave a talk on how businesses should think about weathering the current economic climate, and also, how operators can actually find growth in it.
The high-level advice: find the parts of your business that are strong and invest in them. In other words, put more wood behind fewer arrows.
To get more tactical, here are my favorite excerpts from his talk: 🛠️
First, find out what’s working
Your first job in doing this is to work out what is actually working. What is the strong part of your business? What’s working well? The reason you have to do this is that we all get a bit experimental during good times. We try shit that probably won’t work, and that’s fine. We build stuff and see who comes to buy it. We don’t necessarily think about the LTV/CAC, the CAC payback, or any of those measures. We just, generally speaking, widen the aperture and say, “Let’s try some stuff.”
And then, during bad times, we have to go and do the opposite. It is much more back to basics. What’s actually going to work? Where are the sure shots? How do we defend the existing business before we try and do anything else?
You’ve likely heard some garden variety of “When you stop growing you start dying”, from the writer William S. Burroughs. Applying that to what Des is saying; if you add shit to a good business, you get a shit business. This is the asymmetry of mediocrity. So, you need to go find the performers, double down on them, and spend less time (or cut out) the things that are not growing and adding complexity. Which Des dishes out some advice on:
This means looking vertical by vertical, with big customers or small customers: where do they come from? What product lines do they use? Do they sign up through your sales team or online? What features do they use? Which team in the company signs up? You have to slice and dice your business to find the healthy parts. And asking all these questions will help you see, “Where are the parts of our business that we can reliably and sustainably invest in?”
Your best customers are the ones that you can sustainably acquire, that use your product deeply, not thinly, and that get differentiated value, stuff they can’t get anywhere else. If one of these three things is not true, you struggle. If you can’t get them, it’s hard to grow. If they don’t use your product a lot, it’s hard to grow. If they’re getting the same value they get anywhere else, you’re going to turn into a commodity product. And that’s the challenge you have here.
It’s about making your product perfect for your bullseye customer. And as Des says, once you have it:
DO
Ensure every function blank sheets their roadmaps and only takes inputs from target customers.
Adapt your entire customer funnel (sales, services, support, etc.) to ensure a world-class experience for them.
Ensure all your metrics/dashboards track the success of this type of customer.
Kill all activities that don’t support the strategy, even and especially the “harmless” ones.
DON’T
Post-rationalise your roadmaps, e.g. “let’s finish off this project because it’ll probably help them too”.
Let numerous exceptions and edge cases keep the old initiatives alive.
Celebrate successes that have nothing to do with your new refined plan.
Continue decisions/meetings/org charts that were predicated on the old plan.
What a goldmine of insight. 👏
Now you can get to growing your business in one of four ways:
Source: Intercom
You might be thinking…but won’t doing these things just risk circling back to what we just aimed to reduce?
Yup.
They are hard, they are expensive, and they will necessarily involve adding complexity. Your job as founders is to make sure that the complexity is really profitable, not just another unhealthy lump of revenue. So, to put it another way, don’t do this until you actually have a healthy base. Otherwise, you’re just piling shit on top of more shit, and it won’t work out.
He leaves us with four takeaways: 🍕
Friction is exponential, not linear.Adding more choices makes your business more complex.
Being everything for somebody, generally speaking, is better than being something for everybody.
You want as much cash as possible from as little code as possible.You don’t want a massive product if you can avoid it. It’s expensive to build, maintain, support.
Be aware of the asymmetry of mediocrity.A lot of you, when you’re tempted to grow your business, will be tempted to add things that aren’t great to it.
creates some of my favorite product/growth content on LinkedIn.
I thoroughly enjoyed a recent post of his on how Elon has given us PMs a nice reminder on how not to do our job.👇
1. Prioritize by user likes
Elon tweeted for feature suggestions and said he would prioritize by most likes and least work. This is also a common product strategy: build what the users ask for.
The problem is that users don’t know what’s best for the business. In the Venn diagram of business and user value, the best product features sit at the intersection.
Users don’t know what those features are. You have to invent on their behalf. Start with a deep understanding of their needs, layer on what’s only recently possible, then ship.
2. Pursue exec pet projects
The Twitter blue premium subscription has 300K payers. That’s just $29M yearly revenue in a multi-billion dollar business. It’s meaningless.
And it would have been completely predictable if they analytically sized the project and did user testing. But instead of doing rigorous sizing or user testing to validate, Elon just went with his pet project.
This is a common tendency of junior PMs as well: please the VP. It’s a mistake. The extra cycles to do dig into features with data & user research are worth the squeeze.
3. Set aspirational dates to ship
Elon chronically sets dates that the team misses by weeks or months (or years in the case of Tesla). For instance, the team rushed to ship Twitter Blue to hit his deadline.
But the rollout was a disaster, and they had to roll it back. People were impersonating companies and swinging stock prices. The final product didn’t come out ‘till months later.
Setting crazy dates stresses teams out and results in botched launches. Realistic timelines allow teams to ship quality features and maintain their sanity.
4. Ignore the revenue driver
The NYT reported Twitter advertising revenue is down from $5B/year to $3B. That’s an enormous 40% dip.
Elon ignored the core business of advertising. He fired the sales staff that maintained and grew relationships. Then, he offended many advertisers - prompting them to leave the platform.
That was exactly the wrong strategy. Great product work would have improved and nurtured the ad business first. A 1% improvement on 5 billion could have generated $50M - more than Twitter Blue.
5. Launch without experiments
Elon changed the default feed people look at from the algorithmic ‘for you’ feed to the ‘following’ feed. But the ‘following’ feed is full of retweets and doesn’t encourage discovery of new authors.
It could be a worse experience. But, because Elon didn’t ship the change as an experiment, he’ll never know.
Doing things blindly is worse than doing nothing at all. Shipping major changes that could easily get to stat sig in a few days to everyone is just lazy product work. Prefer the scientific method.
Zain Kahn, The AI Guy, recently put together a neat list of AI tools on LinkedIn. So, I thought I’d share it.
After poking around, Promptpal is one of my favorites. As AI gets better and better, more of what we do is going to boil down to knowing how to ask the right questions. This could become a great repo for exactly that.
If you’re interested in staying in the loop with the rapid progress of AI and how we can use it best — like new tools, tutorials, and news, checkout Zain’s newsletter, Superhuman, for daily updates. ⚡
And that’s it for this week! As always, thank you so much for reading and being part of How They Grow. If you’re new, consider subscribing and joining thousands of other PMs, founders, marketers, and operators.
Have a wonderful weekend, and I’ll see you next time. — Jaryd ✌️
