Merci Grace has been a founder, an investor (at Lightspeed Ventures), head of product and growth (at Slack), and is now a founder again (Panobi). She’s also one of the co-founders of Women in Product, and Fast Company named her one of the Most Creative People in 2017.
Thank you to our wonderful sponsors for making this episode possible:
• Dovetail: https://dovetailapp.com/lenny
• Mixpanel: https://mixpanel.com/startups
• Whimsical: https://whimsical.com/lenny
In this episode, we cover:
[3:41] Merci’s path to Head of Product and Growth at Slack
[4:42] What Merci learned from being a VC that helps her be a better founder
[6:50] How to tell a compelling story
[9:43] What most people don’t know about Slack
[10:27] Why Slack hasn’t created a consumer/social product
[15:14] How Slack innovated the PLG motion
[17:14] Slack’s early growth strategy
[19:57] Slack’s activation point
[22:10] Why it’s important to find connectors within a company
[26:40] Lessons from optimizing Slack’s onboarding flow
[32:12] Most common mistakes in going PLG
[35:56] Signs you can go PLG
[38:10] PLG vs. bottom-up
[40:23] Importance of day-zero value in your tool
[42:17] When to bring in your first salesperson
[44:47] How to hire amazing people
[50:21] Storytelling and Slack’s culture
[51:04] How and when to build a growth team
[52:08] How to build a more diverse team
Where to find Merci:
• Panobi: https://panobi.com/
• LinkedIn: https://www.linkedin.com/in/merci/
• Twitter: https://twitter.com/merci
• Website: https://mercigrace.co/
• Women in Product: https://www.womenpm.org/
Get full access to Lenny's Newsletter at www.lennysnewsletter.com/subscribe
Merci Grace has been a founder, an investor, head of growth at Slack, and now a founder again. She's also one of the co-founders of Women in Product, which, if you listen to this podcast, you know I'm a huge fan of. In our conversation we cover what she's learned from her time helping Slack build a product team and figure out growth, how Slack innovated the concept of product-led growth and scale it to become one of the biggest B2B companies in the world, the most common mistakes companies make when going product-led, signs you can and should go product-led, when to hire your first head of growth and what to look for, a bunch of advice on hiring, something Merci is incredibly good at, and so much more. I hope that you enjoy this episode with Merci Grace.
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Merci, thank you so much for joining me. I've always been such a fan of yours from afar through your writing and your Twitter. We've interacted a bit on Twitter. We've never really had a deep conversation. And so I'm really excited. And so, welcome.
Merci Grace (03:18):
Thank you. Excited to be here.
I'm excited to chat. You have this incredible background. You're a founder, you're a game designer, you're head of product, head of growth at Slack. Then you became a VC. Now you're a founder again. Such an impressive and unusual journey. I'm curious how you got into product initially, and then just how did you work your way up to head of product and the head of growth at Slack?
Merci Grace (03:42):
Yeah, I got into product accidentally. I was first a game designer and actually started a venture-backed game studio right after college when I had absolutely no idea what I was doing. I got my first term sheet as a founder before I knew what venture capital was. Purely accidental. And it's funny because my career arc went founder, game designer, product management, VC, CEO of your own startup, something that people try to do on purpose now, and I was not trying to do it on purpose at all. I was just following my curiosity and my love of how thinking works and how people make decisions. And so that really went from games, to product management, to venture, and then back into product.
Having been in VC now, having your own startup, what did you learn in that time that maybe surprised you now being a founder that, "Oh, wow. That was useful to learn and experience"?
Merci Grace (04:42):
Oh, yeah. So many things. I think one of the things that is quite obvious from the get-go, when you have had a few months under your belt, you've been seeing a bunch of pitches, and seeing the one-on-one pitches and then seeing the partner meeting pitches, is how different really great CEOs and startup leaders are at storytelling, at coming up with a pithy answer, at owning the room. The fundamentals of their businesses might not even look a lot better, but when you're in that room, you feel so differently about it. So I think how much really the founder matters.
Merci Grace (05:21):
And then the other thing, and this is my surprising thing about venture that I tell people that I didn't expect to learn, which is, especially on Twitter and even in the media and the press, some merger happens or doesn't happen, some deal happens or doesn't happen, and there's a lot of armchair quarterbacking where people are sort of filling in, "Oh, that happened because this fundamental shift in the market for X, Y, Z, because this research division and blah, blah, blah," a lot of things that seem really objective and really rational, but deals happen or don't happen typically because of interpersonal dynamics and sometimes even just personality clashes or petty holdouts from years before. And so I think how personal it is and how it's not always necessarily about the fundamentals of business. It's oftentimes because people just can see you as a founder, or CEO, or can see you running something like this. And so it's very subjective, more subjective than I thought it would be.
It's interesting. In both examples it comes back to the founder and how they present and how they behave. On the first point, presenting storytelling, being someone that VCs respect and want to invest in, is there anything that you have learned how to get better at that sort of thing, or is it just do it for a while and you'll get better? Is there something that folks can do to get stronger at that?
Merci Grace (06:54):
Yeah. When you have the opportunity to tell the story, when you have a pitch, when you're writing a blog post, when you're speaking at a conference, really, it's your stage. You get to manage the narrative and to say things in a certain way, position things in a certain way. And so that's where writing is really important. So even for a pitch or a conference talk or something like that, always start with an outline, always get really clear about, what's the arc of the story that you're telling?
Merci Grace (07:25):
And honestly, looking at things like movies and TV shows, every pitch should start in the middle of the action, like a thriller or like a drama, like Mission Impossible movies always start with Tom cruise doing some crazy shit in the middle of the job right before the job that the actual movie is about because it gets your attention. And so I think that's one of the things that people often try to fit whatever the template they think is. And often in business, it ends up being, "Oh, what's this more staid, boring way to say this?" And in truth, great storytellers are not boring and they don't seem businessy.
I love that very tactical piece of advice. Start with the action and the climax and work backwards from that, almost. Are there any examples of that that you recall of a founder doing that or a story that does that, just to make it even more concrete?
Merci Grace (08:21):
That is how great pitches always go. So oftentimes, and this is just every sort of mediocre pitch, mediocre pitch deck that you see will start with, "Oh, here's the market," or something like that, right? Which is like, this isn't a presentation about the market. This is a presentation about you. And so if you are going to say that you're the only founder that could start this company, or you have this really unique insight, start there. Even though it feels like you haven't built up to it yet, or anything like that, you don't have to, you'll backfill all of that later. But getting their attention so that they close the tab, they put down their phone, that's the most important thing. You can still lose them later in the narrative, but getting attention, just going to market and getting attention for a startup is the kind of P0 for any of those interactions.
I love that. So start with the insight. That's a really good piece of advice. I could see a lot of decks improve having done that. And I know a lot of VCs look for, "what is the unique insight this founder has?" And so that's a really good idea to start with that and blow people's minds a little bit.
Merci Grace (09:31):
Speaking of amazing founders, I want to segue a bit and to talk about Slack and your experience there with Stewart. What's something about Slack that maybe most people don't know?
Merci Grace (09:44):
Oh, yeah. It's funny, especially now, many years later, but Slack internally in 2015 kind of timeframe, it wasn't totally clear to people that the social aspect of Slack wasn't something that was important or meaningful to Slack internally. And so people would email us or talk to us at parties about, "Hey, have you seen Discord? They're coming for you." I'm like, "It's similar. It's not going after the same market." And people would actually join the company with some very concrete ideas or expectations about the social use case for Slack. And so, one of the best things, honestly, that the early founding team at Slack did and were able to give to those of us who followed them was the understanding that this is a tool for work. And that made thousands of small decisions instant and obvious.
Merci Grace (10:47):
There was this internal campaign that was very irritating to me at the time from people saying, "We absolutely need to allow people to block each other on Slack." All these people who are using open source communities, all these different sort of use cases for it. And I went on a bit of a rant, I would call it in... I think it was our culture channel, which was just its own sort of total shit show, but this channel where people would this meta thinking about Slack, and there was this consistent question about blocking. And so I went on quite a little tirade about how blocking is a tool. And so, yes, if someone is, you feel, harassing you and you would like to block them in the immediate moment, it will make you feel better. It'll make you feel a little more safe.
Merci Grace (11:41):
But businesses have an HR function and they should absolutely know. You're first of all sort of brushing it under the rug and letting this person go off and treat other people in this negative manner. And then the sort of counterpoint that I also provided is that blocking isn't always used by people to protect themselves. It could be used by people who don't like you at work to exclude you from important meetings or discussions. Your performance drops off. You eventually get put on a PIP or you have issues continuing to perform your job at work because people singled you out and multiple people blocked you and excluded you from the conversation. And I think that argument eventually made headway with people, but the fact that it was such an open conversation at the company really helped me see that it wasn't obvious to everyone that Slack was a work tool because it feels so social and it feels so fun.
I love that reversal and coming back to why this might hurt you versus why you may think you really need this feature. What this makes me think about is I actually use Slack for social feature in a big way. My newsletter subscribers, there's about seven, 8,000 people in a Slack.
Merci Grace (13:01):
And it's the use case that you don't believe Slack should have done. I'm curious, and no hard feelings, do you feel like they will focus on this in the future? Or should they, maybe in the future? I'm guessing there's just not a lot of money to be made there. And so I could see why that's not a focus, but do you think that'll change?
Merci Grace (13:21):
Yeah, it's interesting. So you are participating in this creator economy that wasn't around at the same level in 2015. The kinds of communities that were happening on Slack would be a Burning Man community, an open source community that was massive and everyone had a weird Linux set up, and so it was usually time-consuming for our support team to help get people's machines working and things like that. So I don't know, because what you have is a little bit of a prosumer use case, right, where people have a personal but also very much a professional community with you as well. And I think that Discord is moving more in that direction. It's a little bit more of a natural step for them to take, I think. And it's funny, because for me, Slack doesn't exist anymore in the way that it did even a few years ago. It's not an independent company anymore. And so I think the question would be whether it aligns with the long-term interests of Salesforce.
Yep, that makes sense. We don't have to get into it too deep here, but I really like Slack for my use case because my subscribers are generally already in Slack. They're at work. Discord is just such a noisy thing and such a new product for people to use. People often love to hate on Slack because it's this big old thing and they're using it for work, but it's actually amazing for my use case, and so I'm going to keep using it. And Discord-
Merci Grace (14:44):
I know I still have the Women in Product community on Slack as well for that same reason and because it's professional and adjacent and it is tied into your professional identity as a person, but also, yeah, you're already on it. So reengaging your community is more a question of an app channel or a mention than it is having to reengage using an email campaign or something like that in order to get someone's attention.
Going in a slightly different direction and into growth, correct me if I'm wrong but Slack was one of the early innovators in this whole product-led growth movement. Is that accurate?
Merci Grace (15:21):
Okay, cool. So what I'm curious to hear is what was it like early on helping figure out how to grow this thing that became this behemoth massively successful company and figuring out this idea of product-led growth? And then I'll ask a couple questions as we chat through this.
Merci Grace (15:37):
Yeah. So early on, I mean, I definitely got the job that I got at Slack because I had been a game designer. And Stewart Butterfield, the CEO and founder, and I knew each other from our shared time having both run, it turned out, very unsuccessful gaming committees, and being people, I think, who have the same weird taste in indie games and things like that. And so he knew, and this was part of our discussion, that I would bring a familiar sensibility to the role I was hired to, which wasn't called growth at first, it was new user experience. So it was the onboarding experience, signing up, getting started. And that's really where we started with it, was coming at it from not trying to do a specific number or anything like that but a belief that this is a great product and we had product market fit, that was pretty obvious at the time, and so how do we help clear away the fog of war and let people see the map that is, "Here's Slack, and here's where everything is, and here's how you can get started using it"?
That is so interesting that so much of that was rooted in game design. I had no idea. That's so interesting that you both had that experience. It definitely shows in the experience. So at that point I imagine product growth was not a thing. It was just, "How do we grow this thing?"
Merci Grace (17:04):
What did you learn from that experience of just how to grow a thing like Slack that is user first and the way that a lot of companies are trying to grow these days?
Merci Grace (17:13):
Yeah. I think one of the best things that we did is that we really started with curiosity first, and we weren't like, "Okay, here are all of our baseline metrics. We already know what's important. Let's just do this." Because April Underwood, former CPO at Slack, had this great line that she would say internally, which is, "No one has built Slack before." I really loved that as this kind of mental starting place where it's like, there isn't going to be this cookie cutter thing. And it was funny too, in the experience of building out onboarding and running all these experiments at Slack, to see people copy things from the product that we knew were not working.
Merci Grace (17:59):
And so I think when I first joined early 2015, we had an onboarding experience that had these little circles that would animate. It was very light, too light. There were too many of them. I remember my first few weeks doing customer support in Zendesk, and I would get screenshots from people reporting some unrelated bug and notice this person has been a user for six months and I can see they still have these little throbbers all over the place. Okay, this is not working. People don't understand that they're supposed to click on them. I think Discord has a similar design, but they use the little World of Warcraft style exclamation point, which I'm sure is much more effective. But it was hilarious and also kind of sad to watch people trying to replicate things in our product that actually weren't even working for us, but they had no insight into that.
I had the same exact experience at Airbnb. People just sit there, copy everything Airbnb's doing and have no idea. There's so many failed experiments that haven't been unlaunched, and we're just trying to figure things out.
Merci Grace (19:04):
Yeah, exactly. Yeah. We're all trying to learn. I think it is very dangerous to say this specific metric is a North Star for every business. I think one of the most surprising things, and of course when something's true it becomes obvious and not at all surprising, but we had thought of Slack as a sync but also async kind of a platform, but then over the course of a bunch of experimentation and user research saw that a bunch of the things that moved the needle for us were about getting people into their new Slack team at the same time. So, Jules Walter, PM on the GRIF team, did some experiments around push notifications on mobile, just getting people in. It's still live in the product today because it was, it turns out, massively successful. It really matters that someone is there to greet you when you join.
Did you have a rule of thumb how many people needed to be in a Slack for it to start to take off?
Merci Grace (20:02):
We had a activation metric that we got to through some initial regression analysis, and then we tested the hypotheses that we developed from that regression analysis and made it into the product. And so for us it was three people, real human beings, not bots, and 50 messages, real messages, not people, because that was our real messages, not bot messages. Three people ended up being the lowest number at which things do start to break. So having a one-on-one conversation is a lot easier, having one-on-one text message or email, any other thing is going to be more straightforward. There's almost nothing, and especially when we were comparing ourselves so actively and successfully at the time to email, there is nothing broken about a 35 message one-on-one email conversation. It's totally fine. It's a series of letters back and forth. As soon as you add one more person to that, it gets a lot messier.
I forgot about that initial vision of Slack, trying to replace email.
Merci Grace (21:13):
That's not even something we talk about anymore. Interesting.
Merci Grace (21:14):
We never talk about it. Yeah. And now it's funny. I'll see some of the media that gets created or the television commercials and I'm like, "What is..." Balls moving around and little grooves and stuff. And I'm like, "I'm not sure what they're supposed to be comparing themselves to. Maybe just themselves."
Right. I think Slack is Slack now, and you don't need to replace email. I think they found a niche.
Merci Grace (21:40):
That also reminds me, I actually tried using Slack with my wife. It was just me and my wife in Slack. We tried to use that as our main communication hub, and it was a little much. We moved away.
Merci Grace (21:50):
Yeah, it is. It's funny how it's just a little too much architecture, a little, yeah, too big of a house for two people, kind of.
That's right. Yeah. But it was fun. We had channels for events and love. We had a love channel. Anyway.
Merci Grace (22:05):
So you mentioned this push notification feature being really effective. Is there anything else that just stands out to you as, these are just lessons I've learned in how to grow a product that's kind of prosumer product-led bottom-uppy, things that stick with you that you bring to future products?
Merci Grace (22:22):
Oh, yeah. One of the big ones in that regard is the understanding that there are people who are just more social, right? I'm sure you're this kind of person. You're a connector and you know a lot of people, you love introducing them, bringing them together. We are who we are, fundamentally. And so within any population, including a user base, there will be people who are more likely to invite other people to the product or to bring people around into it, especially if it's something like a collaboration product. And so I thought it was much easier to get those people to share the product with bigger groups of folks than it would be to get someone who's just not like that, who never is the host, who doesn't invite people to stuff. It's a lot easier to get someone to send more invites than it is to get someone who's a little shy to even send one.
So what that makes me think about is just pick the right persona, an ICP. A person, especially for a social oriented product, will invite people into the product. Is that how you think about it?
Merci Grace (23:27):
Yeah, exactly. It's knowing the persona and then it's also doing things like making sure that someone has multiple opportunities to invite, even though it's a counterintuitive thing. Across many types of products I have seen user interviews where people are going through an onboarding experience, and they come to the invite screen and they say, "Oh, I would never invite someone. I haven't seen the inside of this product. I wouldn't do this," et cetera. That is advice to not listen to. You need to have invites early and often so that you catch people who want to share it, are social people. And then for the people who would never participate in that, they can ignore it or skip it. But that doesn't mean that it shouldn't be all over the entire product.
And it's optional at that point, right? It's just like, if you want to invite, invite, but you don't have to.
Merci Grace (24:23):
Yeah, yeah. I'm never a dark pattern person. I think it was Marco Polo, the async video chat app, did a bunch of dark pattern stuff, I remember, maybe three or four years ago where they would auto-select a ton of people and send them a text message that looked like it was from you. It was really awful. So I'm definitely not a dark pattern growth at any cost kind of a person, but it is like have the invites there for the people who will want to and the people who, even though they sound pretty offended in their tone of voice when they talk about, it's not enough for them to not engage with your product.
I find the same pattern effective with credit cards for a subscription app and B2C subscription. Just like, "This is a trial. You can enter your credit card now if you want, or you could do later." I find that drives a lot of growth in revenue because a lot of people are just like, "Yeah, I'm ready. Yeah. Let's just do it."
Merci Grace (25:15):
Yeah, exactly. I think people often, and this is probably even a larger statement about human beings, but we're so focused on ourselves, right? I think that's one thing that parents tell middle schoolers is, "I know you feel really awkward right now, but so does everyone else. No one's thinking about you. They're just thinking about themselves and how they come off." And then we'll do that to our own detriment in business where you'll set up something like a timed trial and say, "Okay. Well, I want to start getting revenue as soon as possible. So we'll just let people have this for a week." But the truth is for every week that you continue to let people use it, you get incrementally more people who do convert because their timing on buying your product has nothing to do with your schedule or how quickly you want revenue and everything to do with, where in the quarter is it for them? Do they have a new project that they can use to try out your product?
I love that advice. Just step out of yourself and recognize people have different motivations and are in different stages of the journey and may just be ready to go. And if you give them a chance it may actually work out really well. I wanted to chat a bit about onboarding. You mentioned that you initially started working on onboarding and that kind of turned into this growth team. I find onboarding often ends up being one of the biggest levers for retention, obviously for activation, and then just broadly growth. Is there anything that you've learned over time of just how to think about onboarding and how to optimize onboarding, how to approach onboarding as a growth team and maybe just as a startup?
Merci Grace (26:49):
Yeah. My thoughts and feelings about onboarding really go back to my experience designing games where I would design the game from the onboarding experience. So there wasn't a sense of, okay, here's exactly the game and all of the game dynamics. But how you introduce something, how you frame something matters a lot. How will someone discover this? And so if you can think about even an online product that you're working on from that first introduction, "What will it be like for someone to come in here? What will I be asking them to integrate with? Will I be asking them to upload something, to invite someone else? What are the steps between the user and the full value of your app?" is something that's very useful to think about literally from the first days that you're designing the product.
Merci Grace (27:46):
Unfortunately, many people think about onboarding at the last minute and it ends up being the final piece of product work, or, and this may be a little bit controversial of an opinion, but I'm not a fan of the plug and play frameworks for onboarding for that reason. I've seen them advertised actually using, "Here's how to replicate Slack's onboarding in using our tool," and things like that. And I'm like, "Oh God, don't do that because what worked for Slack won't necessarily work for you." And it certainly won't be native and feel deeply tied into the product experience, which it absolutely should be.
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Merci Grace (29:25):
Yeah. The ones that I really find a lot of delight in tend to be ones that are deeply intertwined with the product. So throughout the course of using the product you learn you get onboarded to the value of it. Probably the clearest tools in which you can see this dynamic are things like to-do lists, where there will be an item on the to-do list that says, "Click the square next to this to mark this task as complete." And now you've just completed your first task and it's really in there, and it doesn't feel like this fake kind of veneer on top of it. I really like something that is not pasted on top of the experience but something that uses the product to teach someone else how to use the product.
You're telling me there's no easy plug and play silver bullet solutions? God damn it.
Merci Grace (30:18):
Yeah, I'm sorry. It turns out it's just hard work. The other thing that people don't do enough is stay in touch with the real human experience of what onboarding is for your product. So it's very easy, especially if you work at a company that has a high volume of signups every day, to just always look at the conversion number and that anonymized pile of people winding their way through your actually made up benchmarks for them. It is messier and way more awkward to have to talk to human beings, but absolutely necessary. You want to hear the tone of voice. You want to see the expression on their face. So once a month, ideally, you should just have some sort of a schedule for yourself where if you're at a larger company and you have a user researcher who can recruit people for you, that's great, but if not, just go find people who either fit the demographic for your user or even are your user and have them sign up for an account and walking through it. And it is embarrassing, but very educational.
That's awesome advice. It makes me think about Teresa Torres and her framework around continuous discovery habits, where she has this whole framework of setting up count leads, where people could just book you and you automatically talk to a customer every week. And we're going to have her on a different episode, maybe before this, maybe after this. I'm not sure how it's all going to play out. But yeah, that's a great reminder to invest in actually talking to customers. And that's a good segue. I wanted to come back to the whole idea of product-led growth, especially because it's so popular and hot and everyone wants to be product-led these days because it's cheaper and grows quickly and there are big sales teams. So first question is what have you found in looking at companies, talking to companies, advising companies, what are the most common mistakes would you say startups make when they think about figuring out product-led growth?
Merci Grace (32:13):
Oh, yeah. So one of the most common things that I see folks do when they haven't had much experience really simplifying onboarding down or something like that is they'll often have an idea of, "Okay, here are the seven things that you have to know about our product." And one of those is usually some power user feature that an executive really likes or something. They'll have this idea that they want to have a carousel that meets you when you open up the product and it takes you through all of these informational panes. And what's funny is that then if you were to talk to those same people in a usability study for some other product, they'd be like, "Oh, yeah. No. Click. I'm not going to read that."
Merci Grace (32:58):
But again, that's that sort of, we have this expectation of our users that they're going to give a shit, that they're going to read the text, that they're going to be at the level of investment in our product that we are, which is just categorically false. You have to understand that people have really limited attention and no one cares about your product the way that you do. And so it can feel like you're dumbing it down or oversimplifying. And if you don't feel that way about your onboarding, about the growth work that you're doing, it's probably too complex.
Do you find that if you have a carousel, something's gone wrong? Or are there times when a carousel and a little guide makes sense?
Merci Grace (33:41):
If the carousel is in a product where that's the modality of the product, so I could see a carousel, honestly, working for something like Tinder, where that's basically what the product is, right, you're swiping through it, sure, you can use a carousel for that, right? But only because it matches the user experience of the core product. But most apps that use carousels at the beginning, it is actually this pane that's built to be dismissed quickly.
Interesting. So what should people do when they're just like, "Oh, you're going to create this whole introduction carousel"? Is your advice simplified such that you don't really need that, broadly?
Merci Grace (34:26):
If you haven't been able to talk someone out of it, you can always show them. So I'm a huge fan of learning without shipping and building paper prototypes or building prototype in Figma, or ProtoPie, or something like that, and just do a bake off and prove the point, not with you saying, "Hey, CEO, you're wrong about X, Y, Z. We shouldn't have this three image carousel." Just come up with some different alternatives, like tool tips that are embedded in product, things that are obvious next steps that you can guide people to within a sort of constrained user experience, and then you'll just be able to actually compare whether people understood it, experience A, or whether more people understood experience B. And it can be shockingly clear.
Awesome. Yeah. I think in that you can probably tell people aren't going to want to sit through a carousel and check every step. They're just like, "Leave me alone. I'm going to figure it out."
Merci Grace (35:26):
Yeah. Or even ask someone, "Oh, what was the last carousel that you remember?"
"That you finished?"
Merci Grace (35:34):
Yeah. Just like, "What was the last one?"
Merci Grace (35:37):
"Oh, that's right. I always close them."
I love that. Coming back to product-led growth and figuring out how to do that well, what are signs that your product and just general business can be product-led versus like, "Okay, we're going to try it. It's probably not going to work out. We're probably going to have to hire salespeople quickly"?
Merci Grace (35:56):
Ideally, that's something that you've thought about pretty deeply before you even started to code the product, because whether you thought about it consciously or not, you have already decided whether it is going to be product-led or sales-led. If it is the type of a solution that you need buy-in from the head of HR to use because you need to integrate with systems that have a lot of PII in them and no IC has the keys to that system at any size of a company, boom, you know have a sales-led motion. That is what it is.
Merci Grace (36:32):
And so I think just having that sort of objective distance to your own product is always a fruitful kind of place to begin. If you have a product that even if it's for a specific function but anyone at any seniority level in that function could pick it up to use it, so DevTools are probably the most successful product-led growth companies that we don't talk about being product-led, but that's totally how they grow. A junior engineer or a really senior engineer can pick up some dev tool and play around with it and start using it, decide to take it into work or not.
Merci Grace (37:09):
So anything that you can pick up without needing to have the keys to Dad's Porsche in order to test out can be product-led. More and more I'm also seeing companies that have a enterprise sales motion to capture the customer at the point of adoption, but then they want to use product-led growth frameworks or tools to expand their usage to either drive up retention or to actually expand the number of seats and the number of departments that are using that tool. And that's actually a very good use for all of the same sort of frameworks and user experience concepts.
We're throwing out a lot of these terms, and I realize it might be helpful just to try to set a little context. I don't know if you have a clean definition of these things, but how do you define product-led versus bottom-up versus sales-driven, I think is pretty obvious, but how do you define these terms and think about them?
Merci Grace (38:10):
Yeah. For product-led, I think about it being something that anyone can get value out of your tool immediately and that the tool doesn't need to be augmented by a conversation, or a webinar, or anything like that with someone else in order for them to get to a certain threshold of value. Often you learn a lot as a business from doing a white-glove onboarding for certain personas, and they didn't need you to do that, but you wanted to do it. So, that's still really product-led.
Merci Grace (38:46):
And then it's funny, bottoms-up is often used in exactly the same way, but I would think of bottoms-up as being not just product-led but also something that can be adopted by anyone at any level within the organization. So there's tools for people managers, like a range, and a bunch of other ones, whereas a manager is running their one-on-ones, getting feedback from their team, et cetera, using this tool. That's a product-led tool often, but that's not really bottoms-up, because in order to grow that tool, you need to do a very good job of finding where managers are in businesses, targeting them, retargeting, and doing things to specifically reach out to someone in that particular function. Whereas, bottoms-up should be literally anyone at a 500 person company could start using this.
Got it. That's really helpful. I imagine the Venn diagram overlap of product-led and bottom-up is very overlapped. But in theory, you could have a sales-driven bottom-up strategy or a product-led top-down strategy. Is that right?
Merci Grace (39:57):
Very cool. Okay. So we've talked through the context and just definitions of these things, when a company can be product-led. It sounds like the main thing you look for is can an individual adopt this product at a company? That's like a sign that this can be product-led.
Merci Grace (40:14):
Is there anything else that you think is important that if these things don't exist, you should probably not try to be product-led?
Merci Grace (40:23):
Yeah. The other one that I don't hear people talk about very often is whether there's really day zero value in the tool. This is something that came up for me a lot when I was looking at a lot of these sort of video apps. So both the Presence app, where you're replicating a kind of office experience, or pre-pandemic, now I think this use case is a little more obvious, but pre-pandemic, getting on video chat with someone. And what it does is creates an automatic transcript of your meeting.
Merci Grace (40:55):
There isn't necessarily a lot of day zero value from doing one meeting on a tool like that, but often the pitch would be, "Hey, in six months or three months, you'll be glad that you recorded the transcripts for all of these interviews that you did because of X, Y, Z reason." That is not something that is valuable if they've been using it for months. It is not something that can be product-led because there's product-led in one direction, there's product-led back out in that same direction. And that can be the frustrating part about product-led growth is that the easier you make it to come in, also the easier it can be to leave.
Got it. So you're finding that it's really important for people that adopt it to stick around. And basically, finding value immediately is a way to increase retention and keep people around. And you're finding that if people don't stick around, it's not really going to work. And you need people there, salespeople, basically, keeping them on the product and using it.
Merci Grace (41:55):
Very cool. Eventually most companies end up hiring a salesperson. I was doing some research on this, and I found 100% of product-led growth companies hire a salesperson and a massive sales team eventually, like 100%. Do you have any thoughts, insights, experience on when it might make sense to bring in that first salesperson?
Merci Grace (42:13):
Yeah. So founders are always selling. So even from the time that you have your very first alpha customers. And it's funny, because I often reference actually the post that you did about how to find your first fast B2B customers.
Merci Grace (42:29):
Yeah, I know, and here we are again. It's all in that initial network, right? So the founder is always the first salesperson. So in that way it is often the case that one of the first three or four people who work in a company is actually a salesperson. But the point at which you should start to hire someone else to do that is when you, as the founder, absolutely cannot meet the demand even though you're getting up really early and staying up really late and building your investing deck on the weekend instead so you can continue to meet with customers.
Merci Grace (43:01):
And then the other time to do that, apart from just being maxed out, is when you are moving in to and usually up to a customer that both wants and expects to meet with a salesperson. That was what we went through at Slack, was moving from that engineer-driven SMB motion to then getting adopted at companies that really wanted to have a conversation with someone before they continue to spend a lot of money on their product. I think that's one of the things that maybe younger founders or people who haven't worked at enterprise companies before can discount is the customer preference. And then actually there's a whole set of customers that literally have to talk to someone before they can buy anything or just really want to.
I've never heard of it put that way where the customer is looking to talk to a salesperson and pull the sales team out of you. Interesting.
Merci Grace (43:58):
Yeah. And those are, of course, the salespeople's favorite person to talk to. It's like anyone, it's like you want to talk to someone who actually wants to talk to you.
I like that. So the advice is high-level. Wait until you just can't do sales as a founder and/or wait for the fact that the companies you're selling to are just expecting a salesperson or a sales team to support them.
Merci Grace (44:21):
Awesome. So that reminds me of another topic I wanted to make sure we chatted about, which is hiring. We were tweeting a bit about this, about the team that you built at Slack and how epic that alumni class is. We're going to have Fareed on here, who worked for you for a while. And so I wanted to get your insights on just, what do you look for when you're hiring people? How do you find/select/keep amazing talents on a team when you're building a company like Slack?
Merci Grace (44:46):
Yeah, I think a lot of it is the approach is not an exam that I'm proctoring, right, when I'm hiring a role. I'm not sitting in an ivory tower in the seat of judgment. What I'm trying to do is to make sure that whoever I offer the role to wants to take it and will thrive at the company, that they're the right kind of person for the role, especially in product where someone who's a super successful PM at Lyst is not necessarily going to be a super successful PM at Slack, or at Airbnb, or at Pinterest, even though if you think about that class or that cohort of companies, we would've all applied to each other's companies. In fact, I think I actually got rejected by Airbnb on three different occasions throughout the course of-
Merci Grace (45:40):
... different years. Because I love travel and it's a great company. But I think there was just something about, I probably would not have been successful in the same way I was at Slack if I had had one of those roles. So I think understanding that it is a two-way street, and when a hiring manager has that vibe, they're going to end up, I think, hiring people who are just positioned to thrive at that company, because you're not saying, "Oh, here's someone that I can get and I can pop them into this power structure that means something to me." It's finding someone like Fareed and saying, "Okay, I could see you having a long and really successful career at this company because of your curiosity, because you're a great communicator, because anyone who's ever worked with you would immediately work with you again." And those are things that I think if you're like, "Let's do this whiteboarding exercise and I'm going to talk down to you," you never end up finding out about someone.
Got it. So a lot of it is particular to the company, understanding the culture, how they work and finding that fit for person, like person, company, product market fit.
Merci Grace (46:46):
Are there any universal things that you look for that maybe other people may not look for, things that you've learned of just like, "Oh, I'm going to make sure these habits/traits/behaviors exist?"
Merci Grace (46:58):
Yeah. I always ask people to do, for an ICPM... World's different if you're hiring a director or a VP. For a standard PM role, I always make people do work. I think we've gone back and forth on Twitter about this. And it's funny, it's definitely something that it's just in the last, I don't know, five or six years, I feel like people are really pushing back on doing what they I think unfairly characterize as free work for a company. I treated this out, but I mean, if you don't want to even do three hours of free work for a company, you probably don't want to work at that company. It's this weird, if you need to be paid for every second of effort that you're putting in, I mean, you probably shouldn't be near a startup in that case because, I hate to break it to you, but the startup that you're at might not be successful and then you will have done all of this work for "nothing."
Merci Grace (47:57):
And so I really use that as a way to see into how someone thinks, the quality of the solutions that they bring, how they communicate. There's just so much bundled up in giving someone an actual problem, ideally to pick, not one that's assigned to them, but, "Here's three different problems." Because you learn a lot about someone from every choice that they make. I think that's probably my most controversial hiring topic, but I've found a very direct relationship between the people who just really kicked ass on this, went on to be very successful and lead organizations at Slack.
And you're specifically referring to the project that they do, right, on their own time?
Merci Grace (48:35):
What did you look for in their results of their project?
Merci Grace (48:40):
The quality of the solution. Something like Slack is not a deeply technical product, but I was a little bit surprised to see a number of smart people who'd worked at good companies who decided that, "Okay, it's magic wand time." And now assuming that, for instance, Slack bot was a state machine that had a bunch of contacts and would have this almost NLP-driven conversation with you. So that was a big red flag to me, for someone just not... And it's funny because I'm not like an engineer and I wouldn't even think of myself as a "technical PM." But PMs have to know basics of how the tools work and what would work in the tool. So, that's a big one.
Merci Grace (49:34):
Whether someone was able to tell a compelling story was huge, especially at Slack, which was a very product-driven company, a very narrative-driven company. If you were going to present data, it needed to be within a very specific context. And it wasn't a company where the number always won. It was a company where the story always won. And so if someone did a great job of structuring a narrative, they had technically possible but also creative solutions and they picked one for good reasons, they would know how to measure it and how to build something like that, they were just going to be much better than someone who didn't hit literally every single one of those things at a high-level.
I like your point about Slack being story-driven and how people with a great story often win. Is that a part of the Slack culture and how Slack works?
Merci Grace (50:31):
I think it's still probably that way. It was a huge part of the culture when I was there, when it was the initial founding team and an independent company as well. So who knows what will be successful for them within Salesforce? I think it's quite literally a different company now.
Whoever has the best CRM wins. That's really the point.
Merci Grace (50:54):
Yeah, exactly. The good leads.
Yeah. So we've been talking about hiring, and I want to come back to the growth element. So you built the growth team at Slack. How did you think about building out a growth team? And I'm also curious, just when should a company bring in a first head of growth?
Merci Grace (51:13):
Yeah, yeah. It is time to start working on growth when you feel like you have product market fit. It doesn't have to be totally perfect because you absolutely use a growth team to really accelerate and improve your product market fit. That is a part of the value of the growth team. But you do need to feel like, "Okay, once we..." Even if it's do a white-glove onboarding with people, if I spend 20 minutes with you and I show you my tool and I explain how it works, wow, you really get it. You want to pay me money for it. You're still using it six months later, you're ready for a GRIF team. You don't have to have all of your ducks in a row. You don't have to have everything instrumented.
Merci Grace (51:59):
And then what I often tell people is that, "Your first PM to touch growth or just engineer or PMM to work on, it should be someone who has a lot of trust at the company and who really loves and understands your customer." Because a lot of the growth stuff is pretty straightforward. It's a funnel, right? There's a lot of fantastic classes like Reforge. There's a lot of writing on the internet about how to do it. But to a certain extent, everyone is inventing the specific things that work really well for their customer and their product.
So you co-founded Women in Product, which is an organization as an outsider I've been incredibly impressed with, and I'm trying as often as possible to collaborate with the community. There's all these local chapters, and everyone I've ever met that's in the community has been incredible. And so I'm curious as a product leader, as a founder looking to bring in more women and have a more diverse product management org, or just org in general, what are one to two things that folks can do? The obvious answer, I imagine, is hire more women. Is there other advice you could share with folks that are trying to have a more diverse company and product team?
Merci Grace (53:08):
Yeah, it's funny, I don't think it's always hiring more women because not all women are friends to other women, and they may in fact relish their position as the only girl. I think on Reddit it's like the, "I'm not like the other girl's name," or whatever. You could easily get someone in like that and she can actually actively turn off other women.
Merci Grace (53:31):
One of the interesting things that I've seen about hiring women is that women do tend to be less aggressive and risk seeking than men do. I really didn't want that to be true, and I think I'm an outlier in being a multiple time founder and things like that. I have a risk profile that I have been bummed to see is not something that's widely shared by other women. And so I think part of it is that you, if you're just looking at passive inbound or through referrals or things like that, you're just going to end up with fewer women in your pipeline and you are going to close women, I think, at a lower conversion rate than you close men, especially if you're an earlier or riskier business.
Merci Grace (54:21):
And so in order to offset that, you just need to go interview a lot of women and not blame it on the pipeline. You need to actually go seek them out and find them. And then once you do, it can be this really self-reinforcing mechanism. The way that a lot of diversity initiatives that companies work is that it's one thing to have a team of all white men, but if you have two African American people in your first 20 people, you could have a lot more diversity and not even amongst just that one group. Women want to work with other women, but men of all races I think look at an organization, but let's say it's all white people, but there's a few women, they may look at it as just a more diverse, more friendly place and be less intimidated to be, for instance, the first person of color who works there.
That makes me think about Slack. Early on, it was one of the most diverse teams that I'd seen. Is that relatively accurate?
Merci Grace (55:22):
Yeah. We spent a lot of time on that pipeline, making sure that there were a lot of people who got interviewed. And it was never like an excuse as to not find someone. Then that kind of inertia that can make you end up with a company of 50 white men because they referred their friends, the people who they naturally feel comfortable with and things like that, that can also work in your favor if early on you just hire more women and you hire more people of color. They'll feel more comfortable because they're not the only one, and then they'll refer their friends as well.
So especially important when you're just starting out to put a lot of time into this. It sounds like that's the core of this is prioritize it, put in the time, especially early on, because that'll create this flywheel.
Merci Grace (56:12):
Yeah. It's funny, I've often been the only woman on a team at a startup or literally at the startup entirely. And there is a huge difference, I've found, between being the only woman and being one of even two women. The tone really changes. People then are like, "Oh, now we have women coworkers." It's not just Merci who also plays D&D and curses at the office or whatever. It is women as this more general class. And so they start to honestly be more respectful and kinder to each other and treat each other better too. And so I think that's like the other thing. It's not like it's better for anyone to be in a homogenous group. I think it's actually better for everyone to be in a more diverse group because the sort of baseline for how you treat each other goes up.
Speaking of founders and startups, you're working on something now. For people maybe interested in working with you or maybe even potential customers, is there anything that you want to share about what you're working on, where it's going, anything there?
Merci Grace (57:20):
Yeah. So we're really early, and I'm not exactly sure when this podcast is coming out, but if you go to panobi.com, it's P-A-N-O-B-I .com, there is either a real landing page there, or today there is just a Google form for you to fill out that will ask you a few questions about product-led growth, which is the area that we're building in. And if you're someone who is curious about product-led growth, if you're head of growth at a company, if you're a CEO, or a founder, or an investor who's interested in finding out more, picking up maybe even a tool to help you be successful at it, go to panobi.com, and you can also just DM me on Twitter.
Speaking of that, where can folks find you online? How do they reach out? And then also just how can the audience be useful to you?
Merci Grace (58:11):
Oh, that's nice. So you can find me online. On Twitter, I think, is probably my best sort of public inbox. My DMs are open. I do respond to them, especially if it's something direct that I can be helpful with. If you are a woman in product management, go to womeninproduct.com and you can apply to join our community. We've been going since 2015, and there's many people who are in it as well. And then, yeah, if you're interested in growth more generally go to panobi.com.
Amazing. Merci, thank you so much for joining me. I had a ton of fun. I learned a ton, and thank you.
Merci Grace (58:46):
Likewise, Lenny. Thank you.
That was awesome. Thank you for listening. If you enjoyed the chat, don't forget to subscribe to the podcast. You can also learn more at lennyspodcast.com. I'll see you in the next episode.