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Confession of a Recovering MRR-obsessed Startup
   

Confession of a Recovering MRR-obsessed Startup

I’ve got news to share with you: I used to be MRR-obsessed.

That was how Proof started, but I’m recovering, I’m reforming my old ways, and now we are working daily to be more and more customer obsessed.

I want to share with you some of my insights in that process, why we’re making that sift and how you can follow and join the fellow network of customer-obsessed companies.

This is a quote that I came across by Bernadette Jiwa and I’ve been thinking: is this true?

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“Whoever gets closest to the customer wins.”Bernadette Jiva

When I started my journey in startups, I didn’t care about customers.

I cared about Monthly Recurring Revenue (MRR), or more simply, I cared about our revenue growth. My thought process was if the MRR keeps growing, it means that we’re doing a good job with the customers. Or If the MRR keeps growing, we’ll have more money to serve our customers.

But as Proof has grown — we grew very, very quickly in MRR — it got to a point where we were thinking every single day, how do we keep growing the MRR?

We took our eye off the prize because the MRR started initially growing because we had built something that our customers loved. As we eventually shifted focus into an MRR-obsessed company, our eyes shifted off of the customer and our growth started to slow. There was a lag for this to catch up — but eventually, our shift from customers to MRR started to affect us.

We were just building products and features that were good for us, but were not necessarily good for the customer. And at that point, I realized that was not going to work for the long term. If we’re trying to build a 50-year or 100-year company, obsessing over MRR is the wrong way to do it. The real winner is whoever gets closest to the customer.

That’s been a lesson I’ve been learning over and over. In particular, I’ve studied technology companies, particularly the last 30 years of software, and I’ve realized it’s no longer enough to just have good technology.

In the 80s or 90s, if you could just even get a product out the door that had any sort of technological advantage, that was good enough. You could do well and build a business off of that.

That’s no longer the case. Today, everybody can create a good product.

We have so many competitors that come out of the woodwork every single week coming after Proof. They build a very similar product to ours, basically copying us (sometimes directly ripping off our product).

And a lot of times it’s a one, two, or three-person team that can ship an MVP out the door. To win, you have to go further than have good technology and a good product.

You have to have a product that has an order of magnitude better than your competitors and that starts with getting really freakishly close to the customer. As we’ve been on this journey, we’ve tried to install different habits and rituals and ideas into our company that help us be more and more customer obsessed. I just want to share a few of those ideas with you here today.

Maybe you can apply some of them in your company. Maybe it’ll just get you thinking about how can you be more customer-obsessed because I truly think that’s the only companies that are going to be around for the long haul here.

How we’re building customer-obsession into our DNA

1. The Proof post

When you come to the Proof office, the first thing you’re going to see right when you walk in is this wooden post that has a blue button on top and above it is a computer monitor that says “Proof has recommitted to its customers X number of times.” Every time we hit that blue button, that number goes up by one.

The Post

I saw this concept first used in college football. Clemson and Notre Dame do it, as do a bunch of other teams. Before the team walks onto the field, they hit a rock, a sign, or some object. By doing so, they recommit and refocus as a group before they walk onto the field. Then they play their game and do their work to whatever values that the school holds. When I saw that, I thought we needed that at Proof.

Before my employees walk in the door, I want them to recommit that what they were are going to do today is going to be good for the customer. Last I checked, we had hit that thing and recommitted about 1500 times.

2. Changing the way we talk to and about customers

Another way we’re focusing on customers is by changing the way we communicate.

I will admit that about three or four years ago, we didn’t really talk very well about our customers with our other business.

We would complain about how much work they were, how they were dumb, and why they were not getting it.

We always thought it was the customer’s fault and so we would just kind of talk badly. That’s been a shift because no longer is that tolerated around here.

We have started talking so much better about our customers and when someone gets frustrated from a customer’s request or says, “Oh, you know this guy can’t figure it out. He’s dumb,” everybody will jump in and say, “Hey, we don’t talk about our customers like that, the only reason that we exist and really the customer decides what we do day in and day out. They’re the boss and we live to serve them and to serve the market.”

So really how we shift our tone and talk about the customers has been a huge win.

3. Dr. Cornelius Growth

Until a few months ago, we didn’t have any personas and it made it incredibly hard to understand our customers. During product development, we’d get off track and eventually, our outlook became: whoever was willing to give us money was the ideal customer persona that we’re going after.

And that was really broad and unhelpful. While it’s hard to build new features, it’s even harder to have any particular to do so when you don’t have a particular person in mind.

So recently for a Hackathon, a couple of us put together the project of creating a Dr. Growth persona. He’s essentially this mad scientist of mid-market SaaS, the Head of Growth or Head of Marketing at a SaaS company that’s between a hundred and a thousand employees. He looks like a mad scientist, he’s got this white lab coat.

We printed off this huge poster of him. We did a bunch of market research, defining out everything that we could about the buyer, and making him real.

Now, we implemented that persona a couple of months ago, and it’s been amazing to see the effects. The team has started bringing Dr. Growth into everyday conversations:

When we’re talking about the product, we’ll ask:

What integration should we build next?
What does Dr. Growth need?
What does Dr. Growth want?

Or when a new customer signs up, I’ll go “Hey, this one is a Dr. Growth. Let’s call them right now.”

It’s been this really cool thing. We have a picture, a name, and we carried this poster around. Dr. Growth sits next to us at the lunch table. We put him in different places around the office and it’s just been really amazing to see how impactful this visualization has been for helping us have an actual picture of who we are building software for.

4. Customer highlights and office visits

At our weekly All Hands meeting, we bring the whole company together and during the meeting we save time to highlight one customer. We review specifics about that customer’s business, how they have been using the product, what they’ve been doing inside the app, and the wins they’ve had with Proof.

As an extension of that, we are bringing customers into the office almost every week. We’re trying to bring them here and we’ll watch them use the product, get to know them, have them over for happy hours. That has been really fun.

We also have been more active about going to customer offices or hopping getting on Zoom calls. It’s all part of a mission to get us closer to the customer.

5. Customer power hours

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“It started by accident... we forced everyone to do customer support, including all the engineers. And then kind of had a discovery which all makes sense now, that when the engineers and the product people were closer to the customer and they worked with those customers every day, and they heard their pain, the more likely they were to create solutions for the customer.”David Cancel, Drift

And finally, I heard David Cancel, Founder of Drift, talking about how he has everyone in their company do customer support. We’ve been having this problem here recently. As Proof has grown, our new employees have not really known who our customers.

So recently, we created pods of five or six people that one day a week, sit down and do two hours of customer support.

I’ve been watching these engineers who are building products, finally, get in and talk to the customer for the first time. They finally see how the product is being used. It’s like light bulbs are going off in their head as they realize, “Here’s how they’re using this, here’s where they’re getting stuck, here’s what they’re trying to accomplish.”

It goes from just building code to creating a customer-obsessed product.

That’s been one of the coolest things that we’ve done recently at Proof and there was a little resistance at first when I brought it up. People were like, “Why? Isn’t their customer support people for that?

It’s been tempting, I’ve had people say, “Why don’t you just send your customer support, abroad?” That kind of thing.

But with Proof, this is such an important feedback loop for us to learn from the customers. Really, customer support is not so much about getting them set up, it’s more about us learning, how can we delight them more? How can we obsess over them more?

How can we build something that they love and that’s an order of magnitude better than the competition or better than what they’re already doing out there?

Those are my quick tips. We are still early in this process of making this shift, but we are trying to build a customer obsessed company. I’d invite you to join me on that journey as well!