All Things Growth in a COVID World | Mike Duboe, Dan Hockenmaier, and Dave Weinstein on Venture Stories

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Key Takeaways

  • Keep any metric that you try to optimize for needs in check by a secondary metric
    • Common secondary metrics: customer quality, retention, and satisfaction to make sure the customer experience doesn’t decrease
  • We’re in a unique economy right now
    • If your business has grown like crazy since the quarantine, it will probably regress to the mean in the near future   
  • Since the pandemic:
    • CAC (customer-acquisition-costs) have gone up
    • CPM (cost-per-mille) have gone down
    • LTV (lifetime value) of a customer for the next 6-12 months is anyone’s guess
    • You can’t use recent data to predict future customer behavior as there are too many new variables
      • Talk to your customers and follow your intuition
  • Monetization can sometimes slow down growth but it’s necessary to generate revenue and keep the business alive
    • You need to ask yourself where and when you want to add that monetization friction

Intro

A Changing Economy

  • When setting goals, start with a north star metric and create a set of inputs that lead up to your north star metric  
  • Keep any metric that you try to optimize for needs in check by a secondary metric
  • Common secondary metrics: customer quality, retention, and satisfaction to make sure the customer experience doesn’t decrease
  • We’re in a unique economy right now
    • If your business has grown like crazy since the quarantine, it will probably regress to the mean in the near future
  • If you’re going to invest in a business right now, you have to ask yourself: Is the growth durable or is it temporary?
  • Since the pandemic, the grocery business has been on the rise but restaurants have faced a steep decline
    • Many supply chains, such as restaurant food supply chains, are shifting their strategies and serving different customers because they’re trying to keep their business alive
  • The next generation of restaurants will be more forward-thinking and more willing to adopt new technologies
    • This pandemic has trained consumers to shop in a new way
  • The most incredible entrepreneurs during these times have been flexible and adapted to the needs of their customers
  • There are between 10,000-20,000 food distributors in the US serving over 1 million restaurants

Changes Since The Pandemic

  • Since the pandemic:
    • CAC (customer-acquisition-costs) have gone up
    • CPM (cost-per-mille) have gone down
    • LTV (lifetime-value) of a customer for the next 6-12 months is anyone’s guess
    • You can’t use recent data to predict future customer behavior as there are too many new variables
      • Talk to your customers and follow your intuition
  • You can’t conduct that many experiments right now because you can’t use past data and future events may influence your variables
    • For now, focus on optimization over experimentation
  • Many marketplaces have lost their moat because of COVID
    • Uber drivers aren’t driving as much
    • Airbnb property owners are looking for other ways to monetize
      • Pieces of these marketplaces are up for grabs for new companies
  • In the next couple of quarters, it will become clear which businesses are essential and which aren’t
  • Food, pets, and home goods businesses are all up during these times while apparel and accessories are down 
  • You have to understand the demand side of the marketplace because they are the decision-maker
  • Companies have cut a huge amount of workers which means there’s a ton of talent up for grabs
    •  In general, it’s going to be easier to hire great people in the next few months
  • Companies are being more open to flexible arrangements and working from home
    • Companies have also become more comfortable with virtual interviews and are screening candidates with exercises that mimic work instead of resumes 

Additional Notes

  • Company resources across the board are being restrained so companies are figuring out what’s important to work on and what can wait
    • You want to make sure you’re saying no to things that don’t matter
      • If you can afford, keep your ad campaigns running
        • The CPM has dropped and you can use ad results to keep a feel for the market
  • When it comes to growth metrics, you want to look for milestones
    • For example: Facebook found that if a user found 10 friends within 10 days, they would end up being a long-term user 
      • Although the milestone was helpful, the key to making someone a long-term Facebook user was having a rich Newsfeed
  • Even in low data environments, there are usually signals that will tell you which users are good and which are bad
  • Monetization can sometimes slow down growth but it’s necessary to generate revenue and keep the business alive
    • You need to ask yourself where and when you want to add that monetization friction
      • Don’t try to monetize your customers the first time they find value in your product. You want customers to find value from your product several times before asking them to pay you. 
  • As a business owner, you need to cut costs, retain key employees, and maintain trust with your customers

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Notes By Alex Wiec

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