Matt Lerner: How to Hire Growth Leaders and Teams and Why in a World of AI | E1159

Intro (0s)

• There are only a few channels to discover new things: salespeople, partners, Google search, content, inbound/paid ads, or influencers.
• The best growth hires at PayPal had no prior marketing or product experience.

Journey Into the World of Growth (47s)

• Matt Lerner's career began in Silicon Valley, where he took on various jobs before joining the growth team at PayPal in 2004.
• During his almost 11 years at PayPal, he gained extensive knowledge and experience in growth.
• After leaving PayPal, he became a venture capitalist (VC), which allowed him to observe numerous startups and their growth strategies.
• He noticed that many teams wasted money and talent by making preventable mistakes.
• This, combined with his disinterest in fundraising, led him to leave VC and start his own business helping startups avoid common growth mistakes and find high-impact growth levers.

Lessons from PayPal (1m56s)

• At PayPal, Lerner realized that in a big company, getting the right answer is only a small part of the problem.
• 90% of PayPal's growth came from only 10% of their efforts.
• Startups don't have the luxury of spending money on things that don't drive growth.
• Investors often make the mistake of thinking that growth is about following playbooks and best practices.
• In reality, growth is more about figuring out what works for your specific business.
• The hardest part of growth is realizing that you need to figure things out and not rely on what worked for others.
• The hardest thing about figuring out growth is that people often come in with preconceived notions and don't realize they need to figure things out.
• Startups often make the mistake of overinvesting in things that don't drive growth.

What is Growth, What is It Not (5m24s)

• Growth is the ability to find customers, help them understand the value of a product or service, and get them to use and love it.
• Growth is different from traditional job functions like marketing, product, or sales in three ways:
  • There is no playbook for growth.
  • The product being sold is often new and not yet in demand.
  • Growth cuts across disciplines and requires collaboration and relationship-building.
• The argument that growth is both an art and a science:
  • When growth is purely science-driven, it can lead to over-optimization and a lack of customer resonance.
  • When growth is purely art-driven, it can lack the effectiveness and scalability of a scientific approach.
• The trick is to blend art and science effectively and get artists and scientific people to work together.

User Experience vs Conversion Tension (8m13s)

• Introducing friction into the funnel can lead to better conversions and higher quality leads.
• Longer onboarding flows can build intent and qualify customers.
• Each question in a long flow helps to understand the customer's needs and builds trust.
• In the beginning, focus on finding the big levers that work rather than optimizing small details.
• Once you have a few levers working, you can start devoting resources to optimization.
• Always keep some resources allocated to finding the next big lever.
• Science (data-driven approach) is more reliable in delivering business results compared to art (creativity) alone.
• Art without science is rare and exceptional.

Data vs. Intuition in Growth Leadership (12m11s)

• The best growth leaders understand that intuition is based on knowledge.
• To have good intuition, one must understand the growth system in their business, including the customer's context and the growth model.

Starting Your Growth Model (13m17s)

• To map your growth model, start with your North Star metric.
• The North Star metric should increment when you deliver value to customers and encompass the entire funnel.
• Stress test the North Star metric to ensure it doesn't create perverse incentives.

Picking a Northstar Metric (13m53s)

• Choosing revenue or profits as the primary metric can be misleading as it doesn't always indicate customer value.
• A better approach is to focus on metrics that measure customer value and engagement, such as weekly active users or specific user behaviors that indicate product-market fit.
• The North Star metric may need to be adjusted if the company discovers a fundamentally different way to deliver value to customers or if it launches a new business line with a different value proposition.
• To align teams around the North Star metric, leaders should use questions to facilitate productive discussions and ensure everyone understands how their role contributes to achieving the company's goals.
• Common preventable mistakes observed by venture investors include:
  • Overthinkers: Those who spend excessive time debating and analyzing, often with a background in large organizations or consulting.
  • Underthinkers: Individuals who have a bias for action and build multiple products without a clear focus, leading to increased complexity.
  • Hire and delegate types: Founders who hire experts for various functions without a clear product-market fit or strategy, resulting in misaligned efforts and resource wastage.
• Startups should focus on mastering one or one and a half things exceptionally well rather than spreading resources thinly across multiple areas.
• According to HubSpot's Kit Bodar, reaching $50 million in annual recurring revenue (ARR) requires mastering one channel, while reaching $100 million ARR requires two channels.

Early Channel Strategy & the Risks of Over-Diversification (21m50s)

• Paid advertising below $100 million AR can be useful for quick validation but shouldn't be the main focus of early growth.
• Overthinking channel diversification can be inefficient as most successful businesses end up using a combination of channels.
• There are only six main channels to consider: salespeople, partners, ads, search, content, and influencers.
• For B2C businesses, the list of viable channels is even shorter.
• Experimentation and refinement are key to making a channel or combination of channels work, rather than trying a checklist of different ideas.
• Content creation, such as podcasts, requires a long-term commitment and doesn't always have immediate proof of success.
• Many channels take a long time to show results and require a leap of faith and belief in their potential.
• A locksmith moment refers to a sudden breakthrough or realization that unlocks a solution to a problem.
• It often involves connecting seemingly unrelated pieces of information or experiences.
• Locksmith moments can be triggered by diverse inputs, such as reading, conversations, or personal experiences.
• They can lead to new ideas, innovations, or solutions to complex problems.
• Entrepreneurs should be open to diverse inputs and experiences to increase the chances of having locksmith moments.

What is the “Locksmith Moment” (25m51s)

• The "Locksmith Moment" is when a startup finds the exact moment of highest need and inserts themselves there.
• Successful startups find ways to create demand from nothing.

Effective Messaging for Horizontal Products (27m15s)

• Different people have different needs and different things resonate with them.
• To find effective messaging for a horizontal product, start by finding initial use cases and interviewing customers to understand their problems and goals.
• Use a jobs-to-be-done interview technique to get to the core of what customers are trying to achieve.
• Create headlines that complete the sentence "Now you can [achieve your goal]."
• Test different headlines and ad designs quickly and cheaply to see what gets customers to click.

How to Hire & Manage Growth Teams (29m17s)

• For small startups, the founder should initially take on the role of head of growth. The first hires for growth should be generalists who can quickly learn and execute tasks.
• When searching for candidates, consider people with diverse backgrounds and experiences, including scientists who understand data and causation.
• The interview process should focus on identifying candidates who can think critically and solve problems, rather than relying solely on experience or credentials.
• Regular growth meetings are essential to review progress, assess impact, and make data-driven decisions.
• To foster a productive team environment, hold weekly meetings where team members share learnings and insights from experiments, customer conversations, and data analysis.
• When onboarding new growth hires, help them become information sponges and guide them in prioritizing their work by identifying the most impactful tasks.
• Encourage new growth hires to leverage quick wins, but eventually shift focus to executing the fundamentals.
• Assess a growth hire's potential within a week to determine if the role is a good fit.
• Approach a new growth role with humility and curiosity, seeking to understand the company's unique culture and challenges.

Growth Experiment Failures: Convictions vs. Reality (45m24s)

• Matt Lerner was initially dismissive of the idea of posting on LinkedIn to build his list.
• Despite his skepticism, he started posting and eventually gained significant traction.
• The success of his LinkedIn posts surprised him, as he found that more emotional and human-interest content performed better than intellectual content.
• Matt Lerner emphasizes the importance of humility in content creation.
• He observes that posts with emotional appeal and human stories tend to perform better than purely intellectual content.
• A growth loop is any positive feedback loop in a business that can sustain itself without constant intervention.
• Examples include referral loops, financial loops, and network effect loops.
• Startups should identify and double down on growth loops to accelerate growth.
• In early-stage startups, the entire company should be involved in growth efforts.
• As a company grows, a cross-functional and diverse growth team becomes necessary.
• Growth team members should have strong social skills to collaborate effectively with other departments.

Quick Fire-Round (49m5s)

• The most challenging aspect of writing a book is the extensive thinking required, unlike short-form writing.
• When hiring for growth, it's crucial to avoid being swayed by impressive CVs. Instead, focus on finding and developing talented individuals with potential, as true growth professionals are rare and expensive.
• Many successful growth professionals started in roles such as SEO, content marketing, or engineering and quickly learned and grew.
• With the rise of AI, the standard for creative work has increased, as AI models now outperform most humans in design and copywriting.
• While AI can automate tasks like cold outbound, it may lead to commoditization and saturation of the channel.
• AI can analyze large amounts of customer conversation data, providing valuable insights into customer needs.
• The current era is technologically exciting, comparable to the rise of mobile apps and companies like Airbnb and Uber in 2009.
• Network effects remain a dominant growth tactic, with influencers being a relatively new addition to this strategy.
• The democratization of influencers and programmatic advertising has transformed growth marketing.
• Despite these changes, the fundamentals of growth marketing, such as having the right message, design, and testing, remain the same.
• Entrepreneurs often make the mistake of prematurely moving into optimization mode without first validating their product with the market.
• Europe produces exceptional talent, but many individuals leave for more startup-friendly environments due to factors like regulations, funding, labor pools, and tax rates.
• Companies should consider implementing long, intricate onboarding flows, like those seen on sites like Calm or Notion, to engage customers and build intent without the need for a salesperson.