13: How To Set Goals For Your Startup (And The Power Of Focus)
13: How To Set Goals For Your Startup (And The Power Of Focus)
Speaker 1: Today on Seeking Wisdom, we're going to talk about setting goals for your startup and the power of focus.
David Cancel: The power focus. And we're going to give you a quick update on a little change that we are going to be making to Seeking Wisdom. The future of Seeking Wisdom.
Speaker 1: The future is here. Nice.
David Cancel: First I just want to start off with a little update. We started Seeking Wisdom a couple of months ago, and we've been doing it weekly, not sure how it would go, where it would live, but just something that we wanted to do. And the response has been awesome. We wouldn't still be doing it if it wasn't. So shout out to all the people that have been writing reviews and tweeting, saying they liked everything from the intro music to the topics. We appreciate that.
Speaker 1: I got to tell you that the intro music still has my head nodding, which is amazing.
David Cancel: Yeah. Once it stops, then we'll switch it up. We'll switch it up.
Speaker 1: Yeah. It's definitely impressive to see this thing snowball. it's been the snowball that just keeps on giving. So we're investing, we're doubling down.
David Cancel: Yeah. We're doubling down. And one of the things that we want to do is we're actually going to wrap, Seeking Wisdom into Drift. And so we've kind of had it separate, I don't know where we'll live in the short term, but longer term, we're going to actually make it part of our site at Drift. Our culture is all about learning and sharing the things that we're learning. So we want to make Seeking Wisdom a big part of that. And so in addition, one of the things that we're going to start doing, on top of all the stuff that we talk about every week from reading, to learning, to growing, we want to add a little more tactical stuff in here. We've been getting a bunch of questions from people who want to know more tactically, like what are you guys doing at Drift? And so we're going to try to bring that to you on Seeking Wisdom. And today will be the first really tactical one we're going to dive into. So let's get to it. Speaking of tactical, we kind of did something here this quarter at Drift that had a huge change on our culture and company.
Speaker 1: Yeah. It's all about focus. It's again, one of the simple things, but not easy to do. We all know that we have to focus and when you think your focus, you have to focus more and more and more. And we learned that in the last quarter here.
David Cancel: Yeah. I want you to talk about this. Basically we had been months building stuff, talking to customers, doing marketing, doing sales, closing a couple of deals here and there. But things weren't moving as fast as we wanted. And so you made this decision of we're going to set a really clear goal for Q2 and the single goal for the entire team from sales to marketing to product was new signups for Drift.
Speaker 1: Yeah. So we had clear goals before, but we had goals plural, and being a small team, we had everyone different parts of the team focused on different parts of the funnel. If you look at the R funnel, as David Clore would say. We were all looking at different parts of it, whether it was acquisition at the top of the funnel, activation, bringing people back in the funnel, conversion, retention, usage. We were looking at basically too many parts of the funnel. And what I did was kind of zoom out and say, let's get everyone focused on just one part of the funnel. And the one part of the funnel that we know that needs to be true to hit the goals that we want to hit is at the top of the funnel, we need a certain amount of people coming in and signing up and starting to use the product.
David Cancel: Yeah. We set this goal of sign- ups, but I wanted to ask you about this, because this one goes like basically against everything that is popular today and in something that we talk about, and it's one of the reasons why we're building Drift as a product is that... But you're not focused on retention. You can't grow without retention. Growth without retention isn't growth. You're just filling this bucket that's leaking. And then we made the basically opposite decision to only focus on top of the funnel.
Speaker 1: Yeah. And why is that? And that's because we need a base to start with and you need to remember, and we needed to remember that all of this comes in stages. And so the first stage is about getting traction and getting up and running, and getting the machine starting to work. And then as time goes on, and as you hit different revenue points and different points of growth, then you start to focus on different stages of the funnel, but you can start at the end without having anything in the beginning. If that makes sense.
David Cancel: I think one of the really underrated things was, so we'll talk about why it worked and the impact on the team. But I think the immediate impact it had was it simplified our funnel. And I think a lot of people make that mistake of they have so many dashboards and Excel sheets and all these docs.
Speaker 1: And we did.
David Cancel: Yeah, we did. I actually, I remember I sent in a slide for like our company meeting and it had marketing update and it was like blog traffic growth, website traffic growth, Twitter follower growth, new leads, new email subscribers. And I remember you sent it back to me, you just X'd out the entire thing. And you said, this quarter I just want to see a website traffic and signups. That's one point in the funnel.
Speaker 1: Mm- hmm( affirmative). And so we did that for the entire team, whether you were in product and engineering design, marketing, what have you. Everyone on the team just focused on one number, which was how many new signups to Drift where we have in each day.
David Cancel: Was that like hard for you to do?
Speaker 1: Really fricking hard.
David Cancel: But you basically saying, when you set a goal for a quarter, you're basically saying we're delaying revenue for another quarter. And that's not even to say that Q3, you're just going to turn it back on, right?
Speaker 1: Yeah. Potentially. It's really hard, because in past companies and I've always been maniacally focused on revenue. And that was kind of in the old, and you've written about this, in the old kind of MQL playbook. And so we've been focused on what we call the PQL playbook, which is the product qualified leads versus marketing qualified leads. What that nets out to is focused on getting people using the product, signed up and using the product actively versus just getting people to sign up lead forms and having salespeople follow up with them. And so with this shift, we had to shift our own playbooks and really focus on getting people in the product then activated and using versus just focusing on signups and lead forms.
David Cancel: Yeah. I actually asked, one of our advisors, friends, Mike Volpi. We talk about him a couple of times when it comes to marketing, talking to him about like the mistakes that startups make when it comes to marketing. And he said, the number one thing that he saw across the board was that they focus too much on the bottom of the funnel.
Speaker 1: Yep. Too early, focusing on closing the sales, which you can close sales by doing superhuman things. What you want to avoid is doing too many superhuman things early on, and that's not the same as what we've talked about in the past, which is doing things that don't scale. Totally different thing. By superhuman I mean, like doing things that are kind of unnatural and basically in the product world ending up doing a lot of custom work or building a lot of features that only a small group of customers, or maybe even one customer is going to use just because you're chasing early revenue. And of course we have this luxury at Drift because we have a lot of money. We've raised a lot of money. We're well capitalized. So we have an advantage that many don't, if you're a bootstrapping company, it's going to be hard for you to do this, but we got to lean into our strengths.
David Cancel: But even so, there's probably got to be some balance, like verse whale hunting and spending six months, like building some custom work for somebody, and then the deal doesn't end up closing.
Speaker 1: Yeah, and I've done that in the past. And so what I've known for the last several companies and definitely with Drift is that I didn't want to start an enterprise software company again, or I shouldn't say enterprise software. I don't want to do enterprise sales from the get- go again. And I did that in my first few startups, first couple of startups. And we got a lot of revenue really fast, but it was a painful sales process. It was six month, 12 month sales process and more painful than the sales process is the renewal process. Because as you start to grow and you start to hit that hockey stick of revenue, so much of your revenues coming from upsells and renewals, and you have to sell those all over again, especially in the enterprise sales context where a lot of people who your buyer may have left the company. And so you have to start from the beginning, resell and upgrade at the same time. And when those deals start to become multi- million dollar deals, a lot of sleepless nights.
David Cancel: Yeah. And you have to spend so much time on the marketing side, just thinking about marketing ops, which is like a huge headache, just to think about it.
Speaker 1: Such a huge thing. So I never wanted to do that again, and I want to go the other way, which we think is how the world is going, because we think buyers are changing. And so that old enterprise sales model that I used 15 years ago still works and still is valid for a subset of software companies. But we think more and more, the buyers are changing and our expectations are changing. And we feel like people want to use software and people are in control of information, not salespeople. And so they just want to get into the product and understand what it can do.
David Cancel: Yeah. And I mean, you've said this, you don't care if nobody viewed one of our blog posts, but we hit all of our signup numbers.
Speaker 1: Who cares.
David Cancel: So. one metric. Also, what's funny is that without focusing on paid customers, we've had way more people raise their hand to pay-
Speaker 1: And pay.
David Cancel: For Drift. It's just insane.
Speaker 1: Insane. Yeah.
David Cancel: Our conversion rate to paid has actually increased dramatically since we started to only focus on signups. And so, great benefit. And how do you think it's changed your job?
Speaker 1: It's changed my job because there's no bullshit kind of vanity metrics. Like traffic is still important because, but traffic, it forces me to look at how traffic to our blog, for example, moves the needle on traffic to our website. The number one thing that I look at now is not necessarily just blog traffic, but if I go look at our homepage traffic, how much of a percentage of our homepage was traffic, was driven from our blog. And then figure out, oh, let's do more of this or less of that.
David Cancel: Do you think your job is easier now or harder now?
Speaker 1: Oh yeah. It's way easier. The first couple months were like were hard and confusing because you got to get emails and you got to get leads. But I don't know how we close leads and do we have demos, and do we have webinars or weekly demos? Or do we just like pass them off to sales? Now the funnel is so crystal clear it's we get people to our website and once they're on a website, we try to get them to sign up for Drift.
David Cancel: Yep. And if they don't use the product, there are no lead forms. So we are not talking to them.
Speaker 1: Yeah. One of the interesting things that I think we're starting to see is somebody asks us the other day said, do you guys have outbound sales? And I said, no, but then talked to Kevin about it, who, doing sales for us. We actually kind of do have outbound, but it's outbound that's different. Outbound here means once you're in the product and we realize you've done X, Y, and Z, that's when you get a sales touch.
David Cancel: Yes.
Speaker 1: And I think that's where we're starting to see more. Anyway, that's a whole different topic for different day. Want to talk about, this one goal. Let's talk about the impact that it had on the team.
David Cancel: Yeah. I think we had been going down this path since December anyway, because one of the things that we did as a team was to read the book, The One Thing by Gary Keller. Great book, I recommend that everyone on the team has a copy here at Drift. And it really just a reminder, it's an easy book to read, but it's just a reminder of the power of focus on one big rock to move us forward. We all had been thinking that and quoting that book and talking about that book internally. And I think it was a natural progression into getting us all focused on one goal. And it really changed how everyone works.
Speaker 1: From everything, priority for everything. When you have this whole... So our goal was signups. This is how every conversation would go before. Hey, I think we should do it integration with X. Or we should build Y feature. Yeah. That sounds like a good idea. Okay. Let's scope it out and let's think about it. Now with signups as the goal, everyone's question after that is, but does that lead to new sign- ups.
David Cancel: Yep.
Speaker 1: Is that going to help us hit our goal? And that, I think every team here was forced to think about stuff that way.
David Cancel: Yeah. And I think the other thing it did is as we all identified the one metric that we were focused on as that metric started to climb and we started to, Dave would share each week how we were doing according to goal, introduced this momentum and this snowball effect and gave people oxygen. And so they were getting pumped about the stuff that they were doing because they saw the effect it was having on sign- ups.
Speaker 1: Yeah. Let's go in on that for a sec. Because I know this is something that you're like every company you've preached and getting the whole product team especially really close to customers. The thing that was crazy for me to see was we went from this state of like our engineers and designers kind of thought like things were going well, but it really just be based on sales and marketing and be like, yeah, we had a good webinar this week with 50 demo attendees.
David Cancel: Yeah. They were kind of a step away. And what we always preach is, or we try to live towards is first party feedback. That's what we try to talk to the, especially engineering and product about. And most engineering teams are operating on second or third or fourth hand feedback. And you want to get as much firsthand feedback as possible and moving to sign- up started to get the team there. Because before we were looking at a lot of metrics, they weren't really sure. And they were spending a lot of time talking to customers and hearing from customers. But we didn't, because we didn't have a single metric, we didn't know how to say no to things, even though a customer might be bringing it up or a set of customers. We didn't know if that was something that would benefit new customers.
Speaker 1: And so as you mentioned usage being like oxygen. I think that had a couple of different formats. One of them is our entire team here does support. Everybody has support shifts. And the amazing thing was basically like within two, three days of making that shift to focusing on signups, the amount of inbound leads that we had, inbound conversations was insane. And when you're the designer that design the onboarding flow and it's your support shift, and somebody writes in during that support shift saying like, hey, how do I get Slack installed? That's just a complete game changer.
David Cancel: Totally, because now it gives you focus on maybe the onboarding that you were working on for that product. And even today, I was looking at someone wrote in and they were talking to Matt, who's our PM. And he also, he's the guy in all the videos. If you look at all the videos we do, he's amazing at doing those. And the first thing that they said when he told them their name was like, oh, is this Matt from the videos? Yeah.
Speaker 1: Yeah. So we launched this, we had a pretty big launch on Product Hunt. It was super successful for us. And it was crazy. That day, our inbox was just blowing up the entire day. And to connect the dots of the people that built the products to the people that sell and market the product are all now dealing with people that are writing in using this product. I think our company changed in a week.
David Cancel: Yeah. Overnight. Yeah. It was like an overnight shift, because everyone was getting that first party feedback and getting that oxygen and seeing the effect of what they were doing.
Speaker 1: And now all this stuff that we're doing next is based on real learnings. Not assumptions. We're actually able to look at how people are using Drift. And so we may have sacrificed revenue for today, but looking back at this quarter. We crushed our goal first of all, which makes it easier to look back and reflect on this.
David Cancel: Yeah, yeah. Actually looking back, I think we won't sacrifice revenue because as we said, having this focus actually led to more people converting from a revenue standpoint than we predicted.
Speaker 1: Let's give some people some advice. What do you think would have... Why did this work for us and what would make it not work for your company? If you're listening and you're like, I want to set, I want my team. The first thing is, have one clear goal.
David Cancel: Yeah. I think that part is totally transferable to anybody in any company out there. Our goal may not be transferable. Where we will focus on signups, even though that meant taking our eye off of revenue generating activities. In the end, I think it netted out and it was great. But I think for some other companies who don't have the resources that we do, that might not work out, but this idea of the one thing and having one goal that the entire company is focused on and that goal being aligned with customers. Totally everyone can do that.
Speaker 1: Yeah, okay, maybe you're listening and a churn is insane. Should you keep blogging to get more traffic and running Facebook ads to get more traffic and building features for new marketing partners? Or should you focus the entire company on churn?
David Cancel: Yeah. I think if you're at a substantial revenue number, I think you should probably focus your entire company on churn. And we did that back in the day for probably a couple of years at HubSpot and really turned the company around by doing that.
Speaker 1: But the biggest thing is signups worked for us because of where we're at.
David Cancel: Exactly because of our stage and we're super early stage. And so it was perfect for us. How do you think this focus on this one thing is going to change what you do in six months?
Speaker 1: Man. That's a good question. I think it depends on the goal. I think as we continue to grow. Let's just say like, we set a next goal of, okay, now we're doing good on signups. We want to get people active, say that's our next goal. I don't think that means that I would stop focusing on getting new signups. Because you still have to do things to bring those in. I think it's just more like, okay, if our company goal is activation, how can I as a marketer, what are the areas that I could be helpful? Maybe I could help write emails that'll help get people activated. Because that's something that we're good at. Or how can I help identify opportunities to get more people activated? I think it doesn't work if you just keep juggling and you stop juggling one, if I just stop focusing on sign- ups and we focus on activation, that's great. Now we're going to have to come back the next quarter. Do you think that's going to be a problem? Do you keep juggling these different goals or is it both?
David Cancel: Yeah, the answer is always both. No, I don't think it will be a problem. I think what'll happen is that the product team's goal, product team and maybe success teams, goals-
Speaker 1: Is activation.
David Cancel: Yeah. It will be activations and in the future will be retention, and usage and some of these things. And that'll make sense at that point. But marketing will focus on signups and probably activation and some of the other metrics. I think they're all overlapping, we're going to have to focus on all parts of the funnel once we hit the different stages. The key is at what stage do you focus on what goals and making sure that those two are aligned.
Speaker 1: Yeah. Last thing I want to say on this is, this is something that seems so obvious. You say it all the time, simple, not easy. And it takes really being in the weeds on this type of thing. I remember hearing the goal of signups. I'm like, cool, this is great. And then Elias, our CTO and co- founder was like, if our goal is signups, then why does the form on our website have six freaking crosstalk. And I didn't think of that until you look at it with that lens. I was like, ah. Because that's how we get signups. You fill out the form and we want all these roles and he's like, no.
David Cancel: Get rid of that.
Speaker 1: Kill them all. What's like the least amount of information you need possible to get, how can we remove friction from the whole process.
David Cancel: Exactly. And that's how we went down to just email as the only thing you needed to get started with Drift.
Speaker 1: Yeah. Because we thought of it like, okay, we could either not get people in because the form is too long or get people in and then figure out their role later. Role is not going to mean-
David Cancel: It's not crucial for us. What we want is feedback on the process and feedback on the product. And we don't need to know someone's role. We don't need to qualify someone before they can use our product just like you don't need to be qualified to go buy a MacBook Air. You can just go buy it.
Speaker 1: All right. Two things I didn't prep you on, but I'm going to ask you about, anyway.
David Cancel: Go.
Speaker 1: First one, you've been Snapchatting this book that you've been reading all the time, Jason Lemkin's new book.
David Cancel: Oh yeah. From Impossible to Inevitable.
Speaker 1: Why are you loving that book so much?
David Cancel: It's all about timing. We were talking about this on the way to grab a coffee today. And we were saying that sometimes, and this is why I also reread books a lot, depending on the stage that you're at and listen to things over and over, you'll pick up different lessons from the something you may have read, or you may have heard in the past, and you were talking about what-
Speaker 1: Yeah. This weekend I re- listened to, there's a great podcast series. If you need to take a break from this one called How to Start a ... You can do both. It's called How to Start a Startup. It's from Sam Altman in YC. And they basically had 20 amazing people come in and just give lectures to Stanford. And they posted all his podcasts episodes. And Facebook's VP of growth is this amazing guy, Alex Schultz, I think his name is. He gave a talk about just growth and how Facebook thinks about growth. And I first listened to it a year and a half ago, two years ago when it came out and it was all about how growth without retention, isn't growth and the importance of retention, and focusing on your power users, and getting them retained.
David Cancel: Guess what?
Speaker 1: I thought that, that-
David Cancel: You ain't Facebook.
Speaker 1: Yeah. First of all, you ain't Facebook, right?
David Cancel: That's right.
Speaker 1: But I thought that, I took that as gospel until being here and I was like shit, we don't have anybody to retain.
David Cancel: We got to grow first, let's get Facebook levels and then retain.
Speaker 1: You're reading this book and it's kind of bringing back...
David Cancel: Yeah. I'm reading this book From Impossible to Inevitable, Jason Lemkin and Aaron who wrote Predictive Revenue or Predictable Revenue.
Speaker 1: Yeah, Aaron Ross.
David Cancel: Yeah Aaron Ross. And so, great book. I don't think there's necessarily anything new that I'm learning in there. But I think for most people who haven't done five startups, who maybe you'd learn a lot of new things. It's worth reading, but it's just at the perfect time. Kind of like a reminder of some of the fundamentals that you already know all in one well- written narrative. I'm enjoying it. A lot of highlights coming out, a lot of Snapchats that I'm sending to Dave of highlighted sections. And most of it we know already, but it's good to reinforce the learnings.
Speaker 1: And the people can get your Snapchats too. That's not a secret thing.
David Cancel: Oh, yeah. Get on my Snapchat. I was Snapchatting, I ran into a store and I was looking at a book, which is one of Austin Kleon's books. It's a book called Show My Work and Steal Like an Artist is his other book, great book. And it's visually awesome. And I just started Snapchatting like 10 pages out of there, which I thought were great and sharing them.
Speaker 1: That's awesome.
David Cancel: So get on Snapchat, D Cancel.
Speaker 1: D cancel. All right. Other thing, you're traveling to speak at Lead Pages this week.
David Cancel: That's right. I'm going out to Minnesota.
Speaker 1: What are you going to talk about?
David Cancel: What am I going to talk about? Stopping the bullshit.
Speaker 1: What does that mean?
David Cancel: I won't use that title. I'll use a different title. But basically what we're going to talk about is how to get your product team and engineering team focused on what we've learned over and over. Focus on the customer. Focus on getting outside of our heads. And it's kind of like, that's the meta lesson of Seeking Wisdom, trying to get out of our head. The more you think like one of us, the more you are like an engineer, the more likely you are to be lost in your head and not want to pull the trigger. So I'm going to talk to some people about not over architecting things, not thinking too much about things and actually getting out there with customers and solving real problems.
Speaker 1: And this is like a successful company that has grown and just growing pains. you ebb and flow and you lose touch of what's important.
David Cancel: Yeah. Great company in Minnesota. A 150 some odd people startup and raised I think$ 38 million. Doing fantastic as a company and has really expanded and grown in the last year. And pretty much going through some of the early stuff that we went to through at HubSpot when we reorganized product and engineering and getting people really focused on the real problem, which is delivering value to customers.
Speaker 1: Cool. That's a good spot to end it this week.
David Cancel: See ya.
Speaker 1: See ya.