You roll down the windows and wear a helmet when you take your car to the track. This does not make me less terrified of a fiery death.
The American Autocross champion was sitting in my passenger seat screaming at me to not let my foot off the pedal until I bounced off the RPM limiter. She was properly intense. I didn’t know what I was doing, but it’s fun to power through curves in a high-speed tenuously-controlled skid in my Mini Cooper S (plus Cooperworks).
The proper driving strategy for Autocross is bizarre. It is possibly the worst-case scenario for wear and tear on a car. The strategy solves for the spaghetti-like pattern of the track, which is composed mostly of turns and banks, so that the winner is the one who can best negotiate a complex path, rather than which car is fastest on a straight-away.
(The actual track I was on)
Driving strategy hinges on this constraint: a car can accelerate quickest when it is not turning. “Accelerate” means getting faster or getting slower. Mashing the accelerator pedal or brake pedal while turning, results in a spin-out.
So, you do this strange thing where you aim the car at a particular point near the first section of the turn and accelerate as much as possible in a straight line, as if you’re going to fly off the course. As you near that point, you break with just as much vigor. Still without turning the wheel. Then you turn and (more slowly) accelerate at just the right pace such that you’re gently skidding, but still in control. Until you can see the next point on the next turn that you full-accelerate straight towards.
What point should you pick? That depends on the curve, but drivers will find what they believe to be optimal points, and will often put small orange cones there as visual guide, especially during practice runs.
While this results in a unnatural, jerky, discontinuous motion, it is also the fastest way through the course.
Intuitively, it seems like there would be some smooth, efficient, graceful path, but that’s the slower way. And the goal is speed, not grace. (Of course, there’s a certain grace in speed, but not for the passenger being thrown about the cabin.)
Companies in the scaling phase feel like this too.
In most ways you are moving faster than ever, particularly when you’re moving in a straight line. For example, a new incremental product will launch to your existing customer base, with immediate impact in the millions of dollars — something a small company will take years to accumulate.
But in other ways it is jerky, unnatural course-corrections. Teams reform with new people and new missions. Things that worked for seven years suddenly don’t work, and “tiger teams” assemble to fix it, while new people wonder why it was ever built this way in the first place and older people laugh knowing that in two years, future-new people will be saying the same thing about what the now-new people are building.
We all know that startups should make decisions quickly. Fast decisions leads to rapid action, which accelerates the loop of production and feedback, which is how you outpace and out-learn a competitor, even one that already has a lead.
But some decisions should not be made in haste, like a key executive hire, or how to price, or whether to raise money, or whether to invest millions of dollars in a new product line.
How do you know when your current decision should be made slowly: contemplative, collaborative, deliberate, data-driven, even agonizing?
I’ve made the following scorecard to figure out whether it’s wise to go slow:
Can’t undo. This is the classic one-/two-way door delineation. If you can’t easily undo the decision, it’s worth investing more effort into analyzing the likelihood of the upsides and risks.
Huge effort. Some things take less time to implement than to estimate or to debate. Remember that it might take two engineers a week to implement something, but a few debates and some research might itself involve an entire engineering and product for a week as well. This is one reason why small teams without process can produce results faster than larger teams with process. If the effort to implement the decision is smaller than the effort to make a decision, just knock it out. But if you’re deciding on a path that could take six months to measure results from, taking time up front to research is wise.
No compelling event. If the status quo isn’t that bad, there might not be a reason why a decision should be made quickly. Without time-pressure, it’s more justifiable to spend more time on the decision. Conversely, time-pressure means the more time you spend deciding, the less time you have for implementation and unanticipated problems, so you’re adding risk by dragging out the decision.
Not accustomed to making these kinds of decisions. Online marketing teams are accustomed to throwing creative things at the wall, with new technology and platforms, because that’s the day-to-day reality of their job. Because they’re good at it, they don’t waste time hang-wringing over whether or not to try an advertising campaign on the latest social media platform; they just do it. Conversely, most organizations have no experience with major decisions like pricing changes or acquisitions, and most founders have no idea how to hire a great executive, or how to decide whether to invest millions of dollars in a new product line as opposed to “just throwing something out there and iterating” as was the correct path at the start of the company. When the organization has never made this type of decision before, the decision is at great risk, and being more deliberate with research, data, debate, or even outside advice, is wise.
Don’t know how to evaluate the options. Even after generating the choices, does the team understand how best to analyze them? If the company’s strategy is clear and detailed, if relevant data is at hand, if it’s clear what your goals are, if the deciding team has confidence, then the decision could be easy and fast; if these things are absent, perhaps more deliberation is needed to clarify those things.
Can’t measure incremental success. After the decision is made and implementation begins, can you objectively tell whether things are going well? If yes, it is easy to course-correct, or even change the decision, in the presence of reality. But if progress will be invisible or subjective, such that you will sink person-years of time into the implementation before knowing how things are going, it’s worth spending more effort ahead of time gaining confidence in the path you’ve selected.
Imperfect information. Buying a house is nerve-racking, mostly because it is likely the most expensive and difficult-to-undo purchase of your life, but also because you know so little about the goods. What does the seller know but isn’t telling you? What will you not discover until you’ve moved in, or a year later? Often it is impossible to get the data or research you need to make an objective decision. When this is the case, it is sometimes wise to spend extra time gathering whatever information you can, maybe investing in reports or experts (which is what you do with a house). Or you could look at it the opposite way: If it’s impossible to get objective data informing the decision, then don’t spend lots of time debating subjective points; just make the decision from experience and even gut-check, because we just said that’s all you have to go on anyway.
Decision requires multiple teams who haven’t worked together before. At WP Engine we’re extremely collaborative across teams. The benefit is that we work together for a common goal, taking care of the needs of support, sales, marketing, engineering, product, and even finance, rather than solving for one department’s goals at the expense of another. But this also can make decisions more difficult, because finding a good solution is complex, often requiring compromise or creativity which requires time to be realized. This effect is amplified if the teams (or team members) haven’t worked together before, and thus have less rapport, common language, and common experience. In that case, give the decision more time to breathe and develop, because really you’re giving people the time to build relationships and discover great solutions, and that in itself is a benefit to them and your organizational intelligence, which is a long-term benefit worth investing in.
Actually this isn’t a scorecard, because important decisions aren’t a Cosmo Quiz. Don’t use this as a rubric; don’t score it 1-5 and add it up with a spreadsheet.
Rather, this is a framework for thinking through what needs to be done. Honestly answer these questions, and by the time you’re through, you’ll have a good sense of whether a light touch, quick decision is fine (which should be the default answer!), or whether you’ve justified taking more time.
And, depending on which pieces are problematic, you’ll have a guide for what needs to be done next.
For example, if “Can’t undo” is a big problem, can you rethink the solution so that it can be undone, maybe by investing more time, or creating a disaster recovery plan of action, or splitting up the decision so that part of is is undoable?
Or for example, if “No compelling event” is a problem, maybe the best answer is to “not decide,” i.e. don’t spend time on this right now, since you don’t have to. Some people will be disappointed in the lack of a decision, but it’s better to honestly state that “we can’t figure out the answer right now” than to make a rash decision that does more harm than good, or to invest time in a decision that doesn’t need to be made, at the expense of work that does need to be done.
I hope this helps you make the right decisions, in the right way.
As a result, repositioning can allow you to charge many times more than you think. Here’s how.
You’ve created a marketing tool called DoubleDown that doubles the cost-efficiency of AdWords campaigns. You heard that right folks — as a marketer, you can generate the same impact, the same number of conversions, the same quality of sales leads, but with half your current ad-spend. Wonderful! Who doesn’t want higher ROI.
What can you charge for this tool? Clearly you can’t charge as much as the money the customer is saving on AdWords, otherwise the net result is no savings at all. Let’s say you can charge 25% of the savings and still find many willing customers.
Here’s what your sales pitch looks like to a specific customer who spends $40,000 per month on AdWords:
Great deal! The VP of Demand Gen will be able to boast to the CMO that she saved the company $15,000/mo even after paying for DoubleDown, and you’re raking in a cool $5,000/mo. Everyone’s happy!
Now let’s see why you can actually charge eight times as much money for the same product.
Marketers have a single paramount goal: Growth. Even indirect marketing like brand, events, and PR have the long-term goal of supporting growth. In the case of DoubleDown’s customers it’s direct: Growth through lead-generation through AdWords.
Growth is much more valuable than cost. To see why, consider the following two scenarios:
CMO reports to the CEO: I was able to reduce costs 20% this year. The CEO is happy. The CEO’s follow-up question is: How will we use those savings to grow faster?
CMO reports to the CEO: I was able to increase growth by 20% this year, but it also cost us 20% more to achieve. The CEO pumps her fists amongst peels of joyous laughter. The value of the company increases non-linearly. The additional revenue growth more than pays for the additional marketing cost that generated it. The CEO’s follow-up question is: How can we ensure this happens again next year?
It’s always 10x more valuable for a business to grow faster than it is for the business to save money.
This insight points us to an alternate pitch for DoubleDown. It’s not about spending less for the same amount of growth, it’s about spending more to create more growth.
In particular, using our example of the customer who currently spends $40,000/mo, suppose that customer is generating 200 quality sales leads per month from that spend. The sales pitch changes as follows:
You’re paying $200/lead right now, yielding 200 leads per month. Using DoubleDown, you can double the number of leads you’re generating, still at a cost of $200/lead:
The key is this: The customer is willing to spend $40,000 to generate 200 leads, and therefore is happy to spend $80,000 to generate 400 leads. It doesn’t matter how much of that $80,000 is going to AdWords versus going to DoubleDown. The key is not to “save money on AdWords,” but rather to “generate more growth at a similar unit cost.”
In the “saves money” pitch, the value was $20,000, and the customer needed to keep 75% of that value-creation. Whereas in the “generate growth” pitch, the value is $40,000, and the customer is happy to pay 100% of that value-creation to a vendor. Both the amount of value created, and the percentage of value the customer is willing to pay, is a multiple higher for the “growth” pitch versus the “save money” pitch.
So the next time you want to formulate your product as a way to “save time” or “save money” or “be more efficient” …. DON’T!
Instead, figure out how your product creates value in the way your customer already measures value, and position your product as a way to accomplish that.
Late last year we passed $100M in annual recurring revenue. We’re less than 8 years old so you can do the math on growth rates and figure out that we’re on an elite trajectory. That revenue is in on 75,000 customers, earned through the hard work of 500 employees across six offices on three continents. Every day, 5% of the entire online world visits a customer running on the WP Engine Digital Experience Platform.
This week we closed $250M in financing from Silver Lake, the premier technology private equity firm. The majority of the funds pay back our early investors who believed in us enough to trust us with their money. Of course a nice chunk is primary capital, i.e. for the company balance sheet, to invest in growth initiatives, security and quality, and advancing our existing strategic priorities through acceleration and de-risking.
We have never been in a stronger position. We have never had the caliber of teams we do today, as evidenced by our award-winning 70+ NPS customer service, our historic-low cancellation rates, our security and uptime, our product and engineering initiatives, our global brand leadership, our customer acquisition through both marketing and sales, our hiring and employee experience teams, our finance, legal, and governance teams, our executive leadership, and perhaps most important of all, the strength of our culture which embodies excellence, service, transparency and inclusiveness. We remain steadfast in our commitment to continuing to increase all of the above.
And now, with Silver Lake’s investment and support, we can accelerate our growth investing even more into our strategic roadmap, and placing some new bets on ideas we’ve had but haven’t been able to find the space to explore.
I’ve always said nothing beats the high of getting that first customer to sign up. It’s the heroin-hit that hooks the entrepreneur. (The next sale isn’t quite as sweet.)
That’s still an accurate portrayal, but there are other moments that are even more thrilling. This moment in WP Engine’s saga is one of those.
Thank you to all our customers, who vote for us every month with their pocketbooks, but even more importantly, entrusting us with their brand and online success, which we treat as vitally as we do our own.
And a special thank you to Heather Brunner, our CEO for the past four and a half years. Long-time readers of this (11-year old!!) blog might automatically assume that all this success is due to my prescience and wisdom, but the truth is that although I’ll certainly take the credit for the initial construction and lift-off of the rocket, setting up an impressive and rare trajectory, the reason we are in the position we are today, with all the attributes listed above, is due to Heather’s leadership, strength, vision, and execution. Period, full-stop. And everyone else at WP Engine would tell you the same thing.
So to everyone at WP Engine, let me repeat the message from one year ago: