The Power of Paywalls

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Saulo Marti (Marketing Director at Olist, previously 8fit, Hibooks, Blinkist) talks with Esther Shatz (VP Product Marketing & Consultancy at Storemaven) about setting up the right KPIs, deciding on channels, what a successful testing structure looks like and the power of paywalls.

Source:
The Power of Paywalls
(no direct link to watch/listen)
(direct link to watch/listen)
Type:
Podcast
Publication date:
April 28, 2021
Added to the Vault on:
May 8, 2021
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💎 #
1

Analyze the 3 key components of growth and decide what you want/can do:
- Resources that you have (money, people, etc.)
- Speed of growth you need (sometimes you don’t care too much about efficiency and more about outpacing competition)
- Efficiency

07:05
💎 #
2

You’re never going to be able to do everything at once: spend less, grow more, grow faster. It’s just not going to happen.

07:53
💎 #
3

The network you want to test is where your target audience is, so find your ICP (Ideal Customer Profile). Where do they live? What do they use? What are they doing? For most early stage consumer subscription apps, the most ROAS-friendly channel is probably Instagram (or Google depending on the company): what are the chances to crack something nobody else has?

10:56
💎 #
4

Stick to the basics, learn the fundamentals of your messaging and the creative direction that works for you. Test on one of the main channels first, then you can test/scale on other channels.

11:37
💎 #
5

Make sure that everyone understands what a hypothesis document is and what it looks like. Whatever test you run has to be able to be described in a hypothesis document: what test you want to run, why you want to run it, how do you run it exactly, the variables tested, how you’ll measure success or failure, what’s the outcome and what are the next steps if it’s positive or negative.

13:16
💎 #
6

If you don’t know what to do after a positive experiment, don’t even run the test. This kills a lot of tests. Example: testing a creative with a green vs. blue background, then what’s the next step...Everything green? Testing a creative with someone looking left vs. right, then what’s the next step...Everyone looking to the right? It doesn’t scale.

14:29
💎 #
7

Don’t complain that your product team doesn’t want to test or prioritize something. Make sure you explain the outcome of the test and how it could impact the company’s north star metric. If you did that already, then this needs to be discussed/figured out at a higher level.

18:45
💎 #
8

Keep in mind Darius Contractor’s psych’d framework to increase funnel conversion: you attribute + and - “psych” points to every step in the journey. For products where the value is not immediately there (Blinkist, Audible, even Netflix), getting people to start a free trial helps them engage and gives them a chance to like the product.

28:40
💎 #
9

Having hard paywalls as early on in the process as possible helps you take advantage of the highest psych point possible. Asking people to pay is what most frustrates them, and if you do it too late (long onboarding, etc.) you’re missing out and not capitalizing on impulse.

30:13
💎 #
10

People blame the apps for their lack of commitment: language, fitness, etc. (anything that requires discipline). This is why you need to generate as much commitment as possible early on, and nothing works better than putting in your credit card.

31:38
The "gems" from this resource are only available to premium members.
  • Unlock access to gems from over 155 mobile growth resources
  • Define your preferred categories and receive new relevant gems directly in your inbox
  • Discuss key insights (and any other mobile growth topic) in the members-only community.
Upgrade Your Plan
💎 #
1

Analyze the 3 key components of growth and decide what you want/can do:
- Resources that you have (money, people, etc.)
- Speed of growth you need (sometimes you don’t care too much about efficiency and more about outpacing competition)
- Efficiency

07:05
💎 #
2

You’re never going to be able to do everything at once: spend less, grow more, grow faster. It’s just not going to happen.

07:53
💎 #
3

The network you want to test is where your target audience is, so find your ICP (Ideal Customer Profile). Where do they live? What do they use? What are they doing? For most early stage consumer subscription apps, the most ROAS-friendly channel is probably Instagram (or Google depending on the company): what are the chances to crack something nobody else has?

10:56
💎 #
4

Stick to the basics, learn the fundamentals of your messaging and the creative direction that works for you. Test on one of the main channels first, then you can test/scale on other channels.

11:37
💎 #
5

Make sure that everyone understands what a hypothesis document is and what it looks like. Whatever test you run has to be able to be described in a hypothesis document: what test you want to run, why you want to run it, how do you run it exactly, the variables tested, how you’ll measure success or failure, what’s the outcome and what are the next steps if it’s positive or negative.

13:16
💎 #
6

If you don’t know what to do after a positive experiment, don’t even run the test. This kills a lot of tests. Example: testing a creative with a green vs. blue background, then what’s the next step...Everything green? Testing a creative with someone looking left vs. right, then what’s the next step...Everyone looking to the right? It doesn’t scale.

14:29
💎 #
7

Don’t complain that your product team doesn’t want to test or prioritize something. Make sure you explain the outcome of the test and how it could impact the company’s north star metric. If you did that already, then this needs to be discussed/figured out at a higher level.

18:45
💎 #
8

Keep in mind Darius Contractor’s psych’d framework to increase funnel conversion: you attribute + and - “psych” points to every step in the journey. For products where the value is not immediately there (Blinkist, Audible, even Netflix), getting people to start a free trial helps them engage and gives them a chance to like the product.

28:40
💎 #
9

Having hard paywalls as early on in the process as possible helps you take advantage of the highest psych point possible. Asking people to pay is what most frustrates them, and if you do it too late (long onboarding, etc.) you’re missing out and not capitalizing on impulse.

30:13
💎 #
10

People blame the apps for their lack of commitment: language, fitness, etc. (anything that requires discipline). This is why you need to generate as much commitment as possible early on, and nothing works better than putting in your credit card.

31:38
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💎 #
1

Analyze the 3 key components of growth and decide what you want/can do:
- Resources that you have (money, people, etc.)
- Speed of growth you need (sometimes you don’t care too much about efficiency and more about outpacing competition)
- Efficiency

07:05
💎 #
2

You’re never going to be able to do everything at once: spend less, grow more, grow faster. It’s just not going to happen.

07:53
💎 #
3

The network you want to test is where your target audience is, so find your ICP (Ideal Customer Profile). Where do they live? What do they use? What are they doing? For most early stage consumer subscription apps, the most ROAS-friendly channel is probably Instagram (or Google depending on the company): what are the chances to crack something nobody else has?

10:56
💎 #
4

Stick to the basics, learn the fundamentals of your messaging and the creative direction that works for you. Test on one of the main channels first, then you can test/scale on other channels.

11:37
💎 #
5

Make sure that everyone understands what a hypothesis document is and what it looks like. Whatever test you run has to be able to be described in a hypothesis document: what test you want to run, why you want to run it, how do you run it exactly, the variables tested, how you’ll measure success or failure, what’s the outcome and what are the next steps if it’s positive or negative.

13:16
💎 #
6

If you don’t know what to do after a positive experiment, don’t even run the test. This kills a lot of tests. Example: testing a creative with a green vs. blue background, then what’s the next step...Everything green? Testing a creative with someone looking left vs. right, then what’s the next step...Everyone looking to the right? It doesn’t scale.

14:29
💎 #
7

Don’t complain that your product team doesn’t want to test or prioritize something. Make sure you explain the outcome of the test and how it could impact the company’s north star metric. If you did that already, then this needs to be discussed/figured out at a higher level.

18:45
💎 #
8

Keep in mind Darius Contractor’s psych’d framework to increase funnel conversion: you attribute + and - “psych” points to every step in the journey. For products where the value is not immediately there (Blinkist, Audible, even Netflix), getting people to start a free trial helps them engage and gives them a chance to like the product.

28:40
💎 #
9

Having hard paywalls as early on in the process as possible helps you take advantage of the highest psych point possible. Asking people to pay is what most frustrates them, and if you do it too late (long onboarding, etc.) you’re missing out and not capitalizing on impulse.

30:13
💎 #
10

People blame the apps for their lack of commitment: language, fitness, etc. (anything that requires discipline). This is why you need to generate as much commitment as possible early on, and nothing works better than putting in your credit card.

31:38
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Become a member to:
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  • Discuss key insights (and any other mobile growth topic) in the member-only community.
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Background in ecommerce, then went into growth. Worked at Blinkist, Hibooks, 8fit.

KPIs across companies?

Set your KPIs not only to your (realistic) SMART goals, but also to the stage at which your company is as well as B2C vs. B2B

[💎@07:05] Analyze the 3 key components of growth and decide what you want/can do:

  • Resources that you have (money, people, etc.)
  • Speed of growth you need (sometimes you don’t care too much about efficiency and more about outpacing competition)
  • Efficiency

[💎@07:53] You’re never going to be able to do everything at once: spend less, grow more, grow faster. It’s just not going to happen.

Growth hacks might work if you’re a product-led growth company. Companies that truly grow organically can do it because of how great the product is, or virality and hitting a critical mass (e.g Clubhouse).

How to assign a budget without knowing ROI?

If you don’t have an infinite budget, how do you test new channels (programmatic, Quora, etc.)?

[💎@10:56] The network you want to test is where your target audience is, so find your ICP (Ideal Customer Profile). Where do they live? What do they use? What are they doing? For most early stage consumer subscription apps, the most ROAS-friendly channel is probably Instagram (or Google depending on the company): what are the chances to crack something nobody else has?

[💎@11:37] Stick to the basics, learn the fundamentals of your messaging and the creative direction that works for you. Test on one of the main channels first, then you can test/scale on other channels.

How do you put in a successful testing structure without getting lost?

Saulo uses a framework and pitches it to all companies he advises. Maybe not the best, but it is the simplest.

[💎@13:16] Make sure that everyone understands what a hypothesis document is and what it looks like. Whatever test you run has to be able to be described in a hypothesis document: what test you want to run, why you want to run it, how do you run it exactly, the variables tested, how you’ll measure success or failure, what’s the outcome and what are the next steps if it’s positive or negative

[💎@14:29] If you don’t know what to do after a positive experiment, don’t even run the test. This kills a lot of tests. Example: testing a creative with a green vs. blue background, then what’s the next step...Everything green? Testing a creative with someone looking left vs. right, then what’s the next step...Everyone looking to the right? It doesn’t scale.

Not everyone should be data-driven, but everyone should be data-informed. There are some things that you do not need to test: for example you know that if you remove the paywall and don’t charge for a subscription, you’re going to get more conversions. But the next step would then be “how do you hit your revenue/ROAS goals?” or “how do you upgrade those free users down the line?”.  You don’t need to run that initial test of charging/not charging and lose time.

How to balance priorities between growth and product/brand teams?

Saulo was fortunate that he would usually have good control on what he could do. But sometimes you do have some conflict.

[💎@18:45] Don’t complain that your product team doesn’t want to test or prioritize something. Make sure you explain the outcome of the test and how it could impact the company’s north star metric. If you did that already, then this needs to be discussed/figured out at a higher level.

“A lot of growth people fail because they fail to explain why it’s important to run a test”

If you don’t have a growth mindset across all departments, you shouldn’t have a growth department. It’s your job to instill that in the other teams. A lot of the time the Chief Growth Officer’s job is to make people understand why it’s important to seek growth in alternate routes through testing, being data-informed, etc.

Real-life process of how a test looks like

Example: 

  • Launched a new product with new features, but there was no sign-up flow: registering via email was possible but not required, and they had a 35% sign-up rate. 
  • Saulo didn’t like that they couldn’t retarget users, couldn’t upsell them, etc. and wanted to test forcing email registration at app launch.
  • Product team was reluctant because the product was very sophisticated, things already saved on the device, etc.
  • Saulo brought the data that in their most relevant country, people keep their device for 18 months. This means an 18 month retention maximum. Plus, how do you retarget them without email?
  • They ran the test with 50% seeing email registration at the start, with success defined as conversion/sale post sign-up. Sign-up rate jumped to 85%, which meant losing only 15% but these were most likely the ones deleting the app anyway. This became the normal journey, and they started showing product value upfront.
  • Then came the question of putting the paywall with the free trial upfront, which was the next test: it 2.5x the conversion rate.

The power of paywalls

With a paywall you’re forcing a user to make a commitment to actually use the product through a free trial and engage with it. This means more people stick around.

[💎@28:40] Keep in mind Darius Contractor’s psych’d framework to increase funnel conversion: you attribute + and - “psych” points to every step in the journey. For products where the value is not immediately there (Blinkist, Audible, even Netflix), getting people to start a free trial helps them engage and gives them a chance to like the product.

[💎@30:13] Having hard paywalls as early on in the process as possible helps you take advantage of the highest psych point possible. Asking people to pay is what most frustrates them, and if you do it too late (long onboarding, etc.) you’re missing out and not capitalizing on impulse.

“If you didn’t have a paywall early on in fitness apps, no one would pay for it”

[💎@31:38] People blame the apps for their lack of commitment: language, fitness, etc. (anything that requires discipline). This is why you need to generate as much commitment as possible early on, and nothing works better than putting in your credit card.

You still need to work on the product of course, but putting the paywall early capitalizes on the impulse.

Misc

Exceptions are apps like Spotify: if you’re a heavy user, there is pretty much nothing other apps can throw at you to make you leave. All your playlists are in there, etc. 

Talks about Netflix, Disney, etc. and growth/retention play based on the shows they launch or acquire.

You need to think about features that are either retention-driven or acquisition-driven. Example: recipes in 8fit are retention-driven, and that’s not what people sign up for (they want to lose wait). But they help keep some users around.

One tip to someone starting in Growth: learn to ask questions.

Favorite resource: Reforge but it’s expensive. He loves Reid Hoffman’s podcast: Masters of Scale



The notes from this resource are only available to premium members.
↘ At this point, you know what to do ↙
Upgrade Your Plan

Background in ecommerce, then went into growth. Worked at Blinkist, Hibooks, 8fit.

KPIs across companies?

Set your KPIs not only to your (realistic) SMART goals, but also to the stage at which your company is as well as B2C vs. B2B

[💎@07:05] Analyze the 3 key components of growth and decide what you want/can do:

  • Resources that you have (money, people, etc.)
  • Speed of growth you need (sometimes you don’t care too much about efficiency and more about outpacing competition)
  • Efficiency

[💎@07:53] You’re never going to be able to do everything at once: spend less, grow more, grow faster. It’s just not going to happen.

Growth hacks might work if you’re a product-led growth company. Companies that truly grow organically can do it because of how great the product is, or virality and hitting a critical mass (e.g Clubhouse).

How to assign a budget without knowing ROI?

If you don’t have an infinite budget, how do you test new channels (programmatic, Quora, etc.)?

[💎@10:56] The network you want to test is where your target audience is, so find your ICP (Ideal Customer Profile). Where do they live? What do they use? What are they doing? For most early stage consumer subscription apps, the most ROAS-friendly channel is probably Instagram (or Google depending on the company): what are the chances to crack something nobody else has?

[💎@11:37] Stick to the basics, learn the fundamentals of your messaging and the creative direction that works for you. Test on one of the main channels first, then you can test/scale on other channels.

How do you put in a successful testing structure without getting lost?

Saulo uses a framework and pitches it to all companies he advises. Maybe not the best, but it is the simplest.

[💎@13:16] Make sure that everyone understands what a hypothesis document is and what it looks like. Whatever test you run has to be able to be described in a hypothesis document: what test you want to run, why you want to run it, how do you run it exactly, the variables tested, how you’ll measure success or failure, what’s the outcome and what are the next steps if it’s positive or negative

[💎@14:29] If you don’t know what to do after a positive experiment, don’t even run the test. This kills a lot of tests. Example: testing a creative with a green vs. blue background, then what’s the next step...Everything green? Testing a creative with someone looking left vs. right, then what’s the next step...Everyone looking to the right? It doesn’t scale.

Not everyone should be data-driven, but everyone should be data-informed. There are some things that you do not need to test: for example you know that if you remove the paywall and don’t charge for a subscription, you’re going to get more conversions. But the next step would then be “how do you hit your revenue/ROAS goals?” or “how do you upgrade those free users down the line?”.  You don’t need to run that initial test of charging/not charging and lose time.

How to balance priorities between growth and product/brand teams?

Saulo was fortunate that he would usually have good control on what he could do. But sometimes you do have some conflict.

[💎@18:45] Don’t complain that your product team doesn’t want to test or prioritize something. Make sure you explain the outcome of the test and how it could impact the company’s north star metric. If you did that already, then this needs to be discussed/figured out at a higher level.

“A lot of growth people fail because they fail to explain why it’s important to run a test”

If you don’t have a growth mindset across all departments, you shouldn’t have a growth department. It’s your job to instill that in the other teams. A lot of the time the Chief Growth Officer’s job is to make people understand why it’s important to seek growth in alternate routes through testing, being data-informed, etc.

Real-life process of how a test looks like

Example: 

  • Launched a new product with new features, but there was no sign-up flow: registering via email was possible but not required, and they had a 35% sign-up rate. 
  • Saulo didn’t like that they couldn’t retarget users, couldn’t upsell them, etc. and wanted to test forcing email registration at app launch.
  • Product team was reluctant because the product was very sophisticated, things already saved on the device, etc.
  • Saulo brought the data that in their most relevant country, people keep their device for 18 months. This means an 18 month retention maximum. Plus, how do you retarget them without email?
  • They ran the test with 50% seeing email registration at the start, with success defined as conversion/sale post sign-up. Sign-up rate jumped to 85%, which meant losing only 15% but these were most likely the ones deleting the app anyway. This became the normal journey, and they started showing product value upfront.
  • Then came the question of putting the paywall with the free trial upfront, which was the next test: it 2.5x the conversion rate.

The power of paywalls

With a paywall you’re forcing a user to make a commitment to actually use the product through a free trial and engage with it. This means more people stick around.

[💎@28:40] Keep in mind Darius Contractor’s psych’d framework to increase funnel conversion: you attribute + and - “psych” points to every step in the journey. For products where the value is not immediately there (Blinkist, Audible, even Netflix), getting people to start a free trial helps them engage and gives them a chance to like the product.

[💎@30:13] Having hard paywalls as early on in the process as possible helps you take advantage of the highest psych point possible. Asking people to pay is what most frustrates them, and if you do it too late (long onboarding, etc.) you’re missing out and not capitalizing on impulse.

“If you didn’t have a paywall early on in fitness apps, no one would pay for it”

[💎@31:38] People blame the apps for their lack of commitment: language, fitness, etc. (anything that requires discipline). This is why you need to generate as much commitment as possible early on, and nothing works better than putting in your credit card.

You still need to work on the product of course, but putting the paywall early capitalizes on the impulse.

Misc

Exceptions are apps like Spotify: if you’re a heavy user, there is pretty much nothing other apps can throw at you to make you leave. All your playlists are in there, etc. 

Talks about Netflix, Disney, etc. and growth/retention play based on the shows they launch or acquire.

You need to think about features that are either retention-driven or acquisition-driven. Example: recipes in 8fit are retention-driven, and that’s not what people sign up for (they want to lose wait). But they help keep some users around.

One tip to someone starting in Growth: learn to ask questions.

Favorite resource: Reforge but it’s expensive. He loves Reid Hoffman’s podcast: Masters of Scale



The notes from this resource are only available to premium members.

The detailed notes taken for a resource are an easy way to see the gems in context to get a better understanding. They also include any relevant visuals from the source.
↘ At this point, you know what to do ↙
Request Access

Background in ecommerce, then went into growth. Worked at Blinkist, Hibooks, 8fit.

KPIs across companies?

Set your KPIs not only to your (realistic) SMART goals, but also to the stage at which your company is as well as B2C vs. B2B

[💎@07:05] Analyze the 3 key components of growth and decide what you want/can do:

  • Resources that you have (money, people, etc.)
  • Speed of growth you need (sometimes you don’t care too much about efficiency and more about outpacing competition)
  • Efficiency

[💎@07:53] You’re never going to be able to do everything at once: spend less, grow more, grow faster. It’s just not going to happen.

Growth hacks might work if you’re a product-led growth company. Companies that truly grow organically can do it because of how great the product is, or virality and hitting a critical mass (e.g Clubhouse).

How to assign a budget without knowing ROI?

If you don’t have an infinite budget, how do you test new channels (programmatic, Quora, etc.)?

[💎@10:56] The network you want to test is where your target audience is, so find your ICP (Ideal Customer Profile). Where do they live? What do they use? What are they doing? For most early stage consumer subscription apps, the most ROAS-friendly channel is probably Instagram (or Google depending on the company): what are the chances to crack something nobody else has?

[💎@11:37] Stick to the basics, learn the fundamentals of your messaging and the creative direction that works for you. Test on one of the main channels first, then you can test/scale on other channels.

How do you put in a successful testing structure without getting lost?

Saulo uses a framework and pitches it to all companies he advises. Maybe not the best, but it is the simplest.

[💎@13:16] Make sure that everyone understands what a hypothesis document is and what it looks like. Whatever test you run has to be able to be described in a hypothesis document: what test you want to run, why you want to run it, how do you run it exactly, the variables tested, how you’ll measure success or failure, what’s the outcome and what are the next steps if it’s positive or negative

[💎@14:29] If you don’t know what to do after a positive experiment, don’t even run the test. This kills a lot of tests. Example: testing a creative with a green vs. blue background, then what’s the next step...Everything green? Testing a creative with someone looking left vs. right, then what’s the next step...Everyone looking to the right? It doesn’t scale.

Not everyone should be data-driven, but everyone should be data-informed. There are some things that you do not need to test: for example you know that if you remove the paywall and don’t charge for a subscription, you’re going to get more conversions. But the next step would then be “how do you hit your revenue/ROAS goals?” or “how do you upgrade those free users down the line?”.  You don’t need to run that initial test of charging/not charging and lose time.

How to balance priorities between growth and product/brand teams?

Saulo was fortunate that he would usually have good control on what he could do. But sometimes you do have some conflict.

[💎@18:45] Don’t complain that your product team doesn’t want to test or prioritize something. Make sure you explain the outcome of the test and how it could impact the company’s north star metric. If you did that already, then this needs to be discussed/figured out at a higher level.

“A lot of growth people fail because they fail to explain why it’s important to run a test”

If you don’t have a growth mindset across all departments, you shouldn’t have a growth department. It’s your job to instill that in the other teams. A lot of the time the Chief Growth Officer’s job is to make people understand why it’s important to seek growth in alternate routes through testing, being data-informed, etc.

Real-life process of how a test looks like

Example: 

  • Launched a new product with new features, but there was no sign-up flow: registering via email was possible but not required, and they had a 35% sign-up rate. 
  • Saulo didn’t like that they couldn’t retarget users, couldn’t upsell them, etc. and wanted to test forcing email registration at app launch.
  • Product team was reluctant because the product was very sophisticated, things already saved on the device, etc.
  • Saulo brought the data that in their most relevant country, people keep their device for 18 months. This means an 18 month retention maximum. Plus, how do you retarget them without email?
  • They ran the test with 50% seeing email registration at the start, with success defined as conversion/sale post sign-up. Sign-up rate jumped to 85%, which meant losing only 15% but these were most likely the ones deleting the app anyway. This became the normal journey, and they started showing product value upfront.
  • Then came the question of putting the paywall with the free trial upfront, which was the next test: it 2.5x the conversion rate.

The power of paywalls

With a paywall you’re forcing a user to make a commitment to actually use the product through a free trial and engage with it. This means more people stick around.

[💎@28:40] Keep in mind Darius Contractor’s psych’d framework to increase funnel conversion: you attribute + and - “psych” points to every step in the journey. For products where the value is not immediately there (Blinkist, Audible, even Netflix), getting people to start a free trial helps them engage and gives them a chance to like the product.

[💎@30:13] Having hard paywalls as early on in the process as possible helps you take advantage of the highest psych point possible. Asking people to pay is what most frustrates them, and if you do it too late (long onboarding, etc.) you’re missing out and not capitalizing on impulse.

“If you didn’t have a paywall early on in fitness apps, no one would pay for it”

[💎@31:38] People blame the apps for their lack of commitment: language, fitness, etc. (anything that requires discipline). This is why you need to generate as much commitment as possible early on, and nothing works better than putting in your credit card.

You still need to work on the product of course, but putting the paywall early capitalizes on the impulse.

Misc

Exceptions are apps like Spotify: if you’re a heavy user, there is pretty much nothing other apps can throw at you to make you leave. All your playlists are in there, etc. 

Talks about Netflix, Disney, etc. and growth/retention play based on the shows they launch or acquire.

You need to think about features that are either retention-driven or acquisition-driven. Example: recipes in 8fit are retention-driven, and that’s not what people sign up for (they want to lose wait). But they help keep some users around.

One tip to someone starting in Growth: learn to ask questions.

Favorite resource: Reforge but it’s expensive. He loves Reid Hoffman’s podcast: Masters of Scale