Equity, User Churn, & Messaging

Full Transcript Below:

Matt Mroczek: What’s one product, process, or hack that’s made you a better founder, entrepreneur, CEO or CTO?

Matt Lo: Oh wow that’s that’s pretty tough.

Automating the most tedious tasks I have through coding it myself. I’ll give an example. I had this really hard problem — We have our marketing routines that we have to do every day. So for example mine is like I go on Quora promote ChipBot or at least give valuable answers. Social media work and engagement is tedious work like I’ll be honest as a founder I don’t really like doing that work. I like providing value but.

I love working on ChipBot and the product.

So to mitigate that I created like a task creator and I know you did with Zapier but it just creates all these tedious tasks and saying here’s why here’s the deadline here’s how long it takes. Here’s what you need to do exactly with all the notes here’s where you can give it if you want.

So when I need to do it I don’t have to really think about like all right what’s the long term strategy?

What’s my intent?

What’s the emotional appeal?

What’s the value?

Just already putting the ticket – I just grind it through and you know drink some coffee put some put on some music and get it done. By then my routines are done and it’s 11:00 a.m. and I can work on cool things now.

Matt Lo: What’s the biggest difference between a consultancy and building a product for you since you run you run both?

Matt Mroczek: When you’re a consultant. You want to make money. And you only tackle problems that you know you can solve and make money on or you can then make money on solving that problem in a long term process.

The difference on a startup is you have constraints where you don’t as a consultant; as a consultant, you’re billing people non-stop so you’re always making money as the business owner – Your constraints our time, money, it’s everything. And it’s pressure to get it solved right.

Matt Lo: Do you see a big difference? Is someone better as a consultant or a startup or they’re just like two different paths?

Matt Mroczek: It’s two different paths. As a startup as a consultant good enough from the client’s standards is enough to get you the business or to get paid.

As the founder good enough means that you’re never really getting to that next level. And great is what is where you make money. That’s how you identify a path to make money.

Matt Lo: Bring value to customers.

Matt Mroczek: Yeah.

Matt Mroczek: I’ve got a question for you. So a couple of your blogs you say marketing is an odd game. 20 percent of the time it works 80 percent it doesn’t; or somewhere in that range. How do you mitigate risk around that? Or how are you comfortable knowing that even if you’re smart 80 percent of the time it’s not going to work when you’re working?

Matt Lo: Yeah.

So first it’s a little bit of an art and a science. You have the art part is this irrational belief that it will work. Like if know you’re on a vision to solve like a really hard problem and people aren’t getting it – Then you keep trying and you tried different ways.

And I think in order to try different ways you can be creative. The science part is measuring very important indicators. So looking for like what comes of blogging I always look for a share, a comment, or if the person reached out over email like that means like this blog moved people

And you look for those early indicators before you say like OK I can keep reinvesting time into this. So if I say like 20 percent of the time it works, what I need to do is produce five blogs and always improving each one not just the same always improving determinate.

Like is this really worth it?

Matt Lo: Why is equity so hard for entrepreneurs?

Matt Mroczek: What part of equity?

Matt Lo: Say you bring on a co-founder or your employee number one and there’s always like this butterfly in the stomach kind of feeling of like oh we got to talk about equity now. Things are going to get really awkward really fast. Why why is that so hard?

Matt Mroczek: I think two parts or for a few reasons, but I think one is the fear that the media has put on us like you read stories or you see like the social network effect or whatever the movie is where somebody gets hosed out of a ton of deals because it wasn’t in writing or it’s not proved out or somebody took advantage.

I think that’s the first piece I think the second is it’s like any relationship once you start to get serious. There are questions that need to be asked and you need to make sure both people are on it. The way I approach equity a lot is it’s no different than any other relationship. If I don’t like you and I’m not going to get along with you that’s like the baseline of respect and trust. The next piece is, ‘Do I feel like we’re aligned and where we’re going from there.’

Matt Mroczek: When your first customer leaves should you be upset or what goes through your head?

Matt Lo: I think that is invaluable data. That’s the first time you spent a lot of effort acquiring that customer and now you get new data about why they are leaving.

What they are doing is adding more experiments to your product. Where’s the churn factor? And you can start looking like at if this user churned, maybe there’s a chance other users could churn and that could spark a new experiment let’s run a survey all the pain points as users have maybe a couple other pain points that you heard through the grapevine. Run it against all your customers. You can find new holes and then hopefully address it.

Matt Mroczek: Is that usually a challenge of product offering or the wrong customer or timing?

Matt Lo: I think maybe that could be really anything like I give an example. Maybe you run an ad that talks about something really important, it’s a really important service for you and after you use it though you realize ‘huh?’ is just really for me like I was sold on this like all in one solution.

And it turns out like maybe I didn’t really need this I just need to do more research in the marketplace to say how these services are existing cheaper why do I need to use this.

That’s one key example where you know it’s not a product issue at all it’s it’s your idea.

Matt Mroczek: What’s the relationship between like expectations and churn? Like how do those lineup especially if you’re coming through from an ad?

Matt Lo: I mean they’re just different things like churn is a lagging indicator. So you’re not going to know. The impact of that ad until. You’ve got enough churn from that source and enough time in between the acquisition and the actual. Do you believe

Matt Lo: Do you believe that 90 percent of startups that fail should fail?

Matt Mroczek: I think that number should be better and I think it’s because they don’t understand.

I think startups fail because there’s a lack of understanding of what goes into making a startup successful and if there was more clarity on what needs to be done to hit success. I think not that fewer people would start them but fewer people would understand the challenges that are ahead of them and how they’re either going to solve them or discredit a bad idea and get rid of it right away.

Matt Lo: Can you unpack that. So if I have a guy who has an idea start wants to our company for the first time and I said give a 90 percent chance of failure. How do you relay an answer to that?

Matt Mroczek: What I would encourage them to do is figure out a way not within the first six months of first year the first whatever maybe figure out a way to validate this today. I think where a lot of people missed the mark early on is

Matt Mroczek: Understanding the relationship of signal and noise? What does it mean and why should I care as an entrepreneur?

Matt Lo: Because you want to be able to position your product where most of the time your target audience is buying based on that message.

Matt Mroczek: I just launched the company everybody is telling me I should be doing this or changing that…

Matt Lo: Are those people your customers?

Matt Mroczek: I don’t know. Some are. Some could be.

Matt Lo: So you filter that down for some are and you filter down by some could be good. You filter that down with whatever metrics you have that identifies a brand persona.
Once you identify that then you figure out OK what moves those people to say I’m a customer? What moves against it?

That’s how you measure signal to noise and that’s not done overnight. It’s done over after a series of digital campaigns. After a series of cold selling; after a series of pitching to investors; after a series of going through churn; it’s not something you solve only in marketing it’s like a business problem.

Matt Mroczek: A lot of problems with startups is I don’t have enough data to make the right decision… How do you get more data or how do you respond to that?

Matt Lo: Anyone who asks that isn’t working hard enough to get the data. So I’ll give an example. You want to find out. Messaging cold cell.

Matt Mroczek: Yeah.

Matt Lo: You want to figure out a target audience and personas? Cold sell. That’s how we start ChipBot.

How else would you wanna start? With ads?

Well that’s a lot of money to drain because honestly, you won’t know if you’re mentioning works until you have all the other right other ingredients

Matt Mroczek: You need that immediate reaction of like if it’s if it’s resonating or not

Matt Lo: I can cold sell to my LinkedIn network on any idea and get a good just after a week whether you know what’s the right messaging and positioning to land that sell.