Scale up your startup with the GOAT of Growth, Matt Lerner

Strategy & Tragedy: CEO Stories with Steph Melodia is the best business podcast for curious entrepreneurs featured in the UK's Top 20 charts for business shows.

Hosted by Stephanie Melodia, Strategy & Tragedy features candid interviews with entrepreneurs who have scaled - and failed - their businesses - sharing their lessons in entrepreneurship along the way. From Nick Telson-Sillett who achieved financial freedom after selling DesignMyNight (on The Wildest Exit Day in History™) to Emmie Faust, the founder of Female Founders Rise, who opened up about her breakdown on the road to discovering her mission in supporting female founders.

This is one of the best podcasts to listen to if you're looking for educational and inspirational content on Spotify, Apple, Google, Amazon, YouTube or watch the clips on Instagram, LinkedIn, TikTok, or YouTube Shorts

In this episode, Stephanie Melodia interviews Matt Lerner, the former growth lead for PayPal, now author of the bestselling book, Growth Levers, and Founder of SYSTM, an online programme that helps startups find their growth levers.

Want to find your big growth levers? Find out more here: https://www.systm.co/

Watch on YouTube via the link below or keep reading for the transcript:

SM: There's so much stuff I wanna get stuck into. But first of all, why shouldn't startups save time? What's wrong with saving time?

ML: I didn't say that saving time is bad. I just said save time is not your value proposition. It's not a great headline.

SM: For context of the listeners, Matt Lerner I can't I can't call you Matt. Matt Lerner had a viral LinkedIn post, which went pretty wild all on this subject. It got people pretty riled up. And, honestly, I love it.

I really want you to talk about this because I have come across so many startups who think that that is their core value proposition. So take it away. What's wrong with it?

ML: Alright. And this isn't, like, this isn't just my opinion, and I don't like it, and I'm like a snobby copywriter.

It just doesn't work very well. It doesn't bring customers. So when you're explaining on your website or in your ads or whatever what your product does, people have an idea in their heads of a goal they're trying to achieve, and they're trying to figure out if you're that thing. And it's true, we all wanna save time. But when we're searching and googling and going online to find solutions, we're not thinking about our problem at that level.

Very few people no one ever googles, how do I save time? Instead, they'll have a specific task in mind like Calendly. You know, schedule meetings in a few clicks. So instead, it's better to talk about the specific outcome that your customer is hoping to achieve and then give them a realistic but impressive time frame. I worked with a company called Popsa, and their winning strapline description was create photo books in five minutes.

And so that's not just saving time, but it's eliminating a pretty unpleasant task because you you don't really wanna, like, you don't wanna save time if you're watching a good movie, then you're happy to spend time. So it's it's almost more about the unpleasant task. But I think my advice, if someone thinks that their their tagline or their their homepage headline should say save time, is to think about what's the specific thing that your customer is trying to achieve, and how do you enable them to achieve that in a way that makes it special, easier, faster, or better, and just be as specific as you can. That's exactly the magic word. That was my key takeaway from that is the specificity of it.

SM: It's just too general. It's just too vague, and it's not compelling as a result. So what is that copywriting hack to help people move beyond to save time?

ML: So, normally, I tell people that a good headline, completes the sentence that starts now you can. So if you look at your homepage now and just put the words now you can in front of your headline Would it make sense?

If it says now you can, software for the future of HR, that means you're talking about yourself, not your customer's outcome.. Nobody wakes up and says, you know, I wish I could find software for the future of HR because my software for the president of HR is creating a lot of churn in my company. I love that so much.

SM: It reminds me of another fantastic one I did, funny enough, with a fellow American in the world of marketing called Anthony Pierri. It was actually one of the top five, interviews of 2024. He's amazing. And so he talks a lot about this as well. So if you haven't listened to that one, queue it up after this after this. So great hack there with saving time.

ML: So use that test, go back on your website, and add Now You Can before it, see if it makes sense. You also mentioned I think another top mistake is talking about yourself, the future of HR.

SM: So how can startups look at it from the perspective of the customer, the what's in it for me?

ML: Well, I think it's back to that idea of a now you can test. Your head your customers are wondering what your product will enable them to do. And as quickly as you can tell them that, the better. And the more closely you can match exactly what it is that they have in their head that they want to do, the better.

I mean, I've seen really successful headline now you can headlines from, you know, create custom landing pages, no coding required, build an ad server in just weeks. I don't know. Somebody must wanna do that because the company's making a lot of money. Become the most interesting person in the room, host dinners that guests will talk about for years. So figure out the thing that your customer wants to do and just talk about that outcome.

SM: Yeah. Love that. Now, we need to get into the famous household brand name, PayPal. And I think it's really easy for our listeners, for any other, you know, early stage startups to look at a brand like PayPal and think the grass is greener, such a big household brand name. But of course, it wasn't that easy. You didn't just happen upon this overnight success. I'd love for you to tell my listeners about the moment where PayPal's growth reached a plateau that you couldn't quite figure out. There was a bit of this head scratching moment where you're growing and growing, but you reached this plateau. What happened there, and what was the 90:10 discovery that that led to?

ML: Yeah. It's really nice when you have product market fit. But, we launched a new product. So PayPal was sort of classically these buttons you'd put on your site and on eBay, and we launched this new product that was like, credit card processing APIs. So people could just sort of like Stripe, you could pass programmatically some card details and give you an authorization or a decline and transfer the money. And we launched I was in charge of launching it, and I got lots and lots of people to sign up and pay us $30 a month.

And after a few weeks, we looked and we noticed lots of people signed up, but nobody was actually using it. And, of course, we knew that was not sustainable, so we started working on it and, just fixing simple things, sending out documentation, giving them a support phone number, improving the onboarding flow, and that helped. And the number the con you know, the activation rate is it where it went up from 10% to 1520%. And then there were harder things, like, we needed to release, APIs that work with different web server platforms and integrate with different shopping cart and ecommerce platforms. And so we kept doing things, and we eventually got it up 35% activation rate.

And then we just hit a wall, and we kept testing things and trying these, and nothing was working. And then I did what I should have done all along, which is I I went back and listened to customers. So I flew out to our call center in Omaha, Nebraska, and we just started calling people who had signed up and not yet processed even a $1 transaction. And the second or third time person we called, I remember she answered, nice lady, and she said, no. PayPal is great.

It's up on my site. Thank you very much. All good. And we so I noticed you haven't had any transactions yet. And she said, well, I don't have any customers yet.

I said, okay. Fair enough. How long has your website been live? And she said, three months. And I realized the problem right there.

She didn't really have a business. And I realized some of some of our customers just were never gonna have customers of their own. And that got me thinking, maybe we don't need to activate all of our customers. So what's the kind of theoretical addressable limit? So I emailed, a guy named Igor, who worked in our analytics department, a brilliant guy.

And I just asked him, like, Igor, you know, eighty twenty rule. What percentage of our revenue comes from our top 10% most valuable sign ups? And Igor's he replied right away in email, and he said, 102%. And, I mean, Igor has a PhD in aeronautical engineering from Stanford. This wasn't a math error.

It was a test. And I eventually figured out that our least valuable customers were fraudsters, and then we're actually losing some money out of the kinda bottom of the system. But if you net it all out, we were our top 10% of customers were still generating about 98% of our revenue. So we didn't need to activate 35 or 40% of our customers. We just needed to activate the right ones.

So Igor and his team built a propensity model so that when people sign up for a new account, we would score them on their likelihood to someday be a valuable customer. And anyone who seemed like they could be a top 10% most valuable customer, we just called them and helped them out, give make sure they had the tech support they needed, got through any compliance hurdles, etcetera. So we ran that for a while, and we had a a test group and a control group. So we randomized it fifty fifty. And after about six months, we found the people who we were calling in the test group were worth about 40% more than the people in the control group, which is, you know, if you're doing an AB test, 40% is a nice lift.

But if you're doing an AB test and you're signing up 10,000 new customers a week and each one of those customers is worth thousands of dollars a year, then 40% is an insanely large amount of money. I mean, millions of dollars a week in annual recurring revenue. And it was all because we weren't listening to our customers, and we were thinking about the problem in the wrong way. And, I mean, so that was I call that a growth lever, you know, in the sense that it's a small action that can has a have a huge impact on a business instead of all the work and effort we were doing that wasn't working because we were asking the wrong question. And, you know, PayPal had a number of those levers that they discovered before I got there in early days.

And I guess I realized that every successful startup finds some of those. I mean, it's kind of mathematically, you have to. Like, if you have a startup with five or 10 or 50 people and a couple million dollars and you're trying to beat the financial services industry, the hospitality industry, you're not gonna outspend them. You're not gonna outwork them. You're gonna have to outthink them, and you're gonna have to find small actions that that have a big impact.

So that's my, like, that's my shtick. That's what the book's about. That's that's sort of become my obsession. So asking the right question to the right person is what I'm synthesizing from this. What can early stage startups do if they don't have an Igor with a degree in aeronautical engineering from Stanford?

Like, are there any other sort of quicker, dirtier ways, so to speak, that they could go about finding who to ask, where to go, what to do. Yeah. Absolutely. So we work with earlier stage startups all the time, and we walk them through a three step process. So the first step is you can and we'll you have I'm sure you will talk more about this, but you can sort of map your growth model, and you can just figure out mathematically where in your business can you focus for the greatest impact.

So your growth model is just, kind of a a structured diagram of how do prospects enter your business, where do they go on your website, how do they do for your sign up flows, do they start using your product, do they keep using it, do they love it, do they pay you. And if you gotta map that out and put in all the numbers and the ratios, and you don't need Igor anymore, there's tools like Mixpanel that'll give you the stuff right out of the box, Then you'll find a rate limiting step. You'll find a bottleneck in there. And that that narrowest point, if you focus your resources on that bottleneck, the entire system grows faster. But if you focus your resources anywhere else in the system, it's gonna be wasteful and inefficient.

And so the first thing I'd say to companies is figure out if you're trying to grow, what's the bottleneck constraining your growth, and make sure you're focusing all of your attention there. What that leads to is the idea of forcing questions.

SM: You come up with such great forcing questions. Can you define what that actually means and give some examples of a forcing question? Yeah.

ML: I love questions because I mean, they're so powerful but simple. I mean, if I tell you a fact, you may or may not listen or remember. But what happens if I ask you a question? You have to think about it. You have to engage. You force people to think. Which, as a manager of people and as a parent, I realize it's not always easy to get people to think. And, even in my career earlier, I spent a year just my goal, my personal development goal for the year was to ask better questions. So some of the questions I ask. So starting with this premise that if your startup will be successful, 90% of your growth is gonna come from 10% of the stuff you do.

And that stuff, you probably don't know it. It's probably in your customer's head, but not yours. So some of the questions I'll ask a team or I'll encourage leaders to ask their team. The first one is just which work should we do? Because you can't do but maybe 5% of all the things you wanna do, and choosing the right work is critical.

And so it's worth really spending time upfront to have a good discussion and bring data and figure out which work you should do. And then even when you decide what work to do, everybody ends up getting distracted and working on pet projects and learning reading a blog and wanting to do some random thing. And so my sort of cadence with people for weekly and monthly check ins is what's the most important work and how's that going? I don't wanna hear about the hundred things you did. Oh, we all agreed this is the number one priority.

I wanna hear about that. And if people know that's the question they're gonna be asked, it helps them focus. Another great question is what customer said that? Because when people start brainstorming and you have ideas, you get all these random I read a blog, and they said that, you know, you should copy the Clay's new flow or, like, whatever the coolest latest startup thing is, and people just wanna do random stuff. But the best growth ideas, well, like the story I told you, they're usually rooted in some special insight where you learn something about your customers that no one else has figured out.

And so I always try to bring that ideation process back to the customers. Fantastic. I love how already you've given such piles of wisdom and so much gold dust so far. And the best thing about this is the the structure, the clarity. Already within the first few minutes you've shared frameworks, processes, and as you know it may sound simple but startups are lacking it so desperately.

SM: So I wanna double down this a little bit because the keyword is prioritize. Prioritization. Startups don't die, they drown. And I would argue, right, it's one of the biggest It's a good quote. Right? It's one of the biggest truisms. They don't die, they drown. And I would argue that of all the business departments, the marketing is the one that is perhaps the most overloaded, overwhelmed. I'm obviously a bit biased with that. How else can founders, teams so if we're talking about very early stage businesses where the founder might still be wearing multiple hats, they don't come from a marketing background, or they're just starting to kinda make their first hires, so we're talking to, like, marketing department of one. Beyond these forcing questions, do you have any other kind of tips or tricks to help get that focus?

ML: So let's start because often when you get smart people doing things that seem irrational, it's because they're working from a different set of assumptions. So let's work backwards and figure out how do we get in the situation in the first place where you have a team of 10 people trying to do 400 things. Because it happens all the time, and no one thinks it makes any sense. So, typically, people work from an assumption that a start up is a small version of a big company.

So you get something, you get some traction, you raise some VC money, and then you're like, okay. And you this is like good leadership. You say, I'm a humble founder. I've done all these things myself, but I'm really not an expert in any of them. And so they start bringing in experts.

You hire a head head of sales. You'll hire a head of marketing. You'll hire a head of product. You'll hire a head of compliance. You'll hire a head of finance, all these experts to come in.

And these people, you know, have spent their lives. They got where they were by being really good at doing whatever their job title says. And so your head of sales is gonna come in and give you a sales strategy, and your head of finance is gonna give you a finance strategy, and your head of customer service will give you a customer service strategy. So you're gonna end up having, you know, 12 strategies that are all pulling in slightly different directions. Because if you don't tell them otherwise, everyone's gonna come in by default and define their goals in terms of their job titles rather than in terms of your business.

So you're gonna get 12 different strategies that require 10 times more resource than you have. You're gonna end up having to try to pick which one is best when you don't actually know. And in any case, you can't really fund any of them to any serious extent. So I'd say kind of push that all aside. What you wanna do is get people to come in and abandon and forget what they think their job is and come in with a set of skills, but then redefine their job in terms of your company's goals.

So the way I have companies do that is to start with this idea of a North Star metric. And your North Star metric is first of all, it's not revenue. In a mature business, revenue can be a North Star metric, but in the beginning, you're just still trying to figure out even how to get customers. So your North Star you can't have revenue without customers, but if you have customers, you know, then revenue is relatively flat. Byproducts of having customers.

Right? Sometimes. I mean, some startups get, you know, overfunded and never bother to think about monetization, but most of the time. So forget revenue for a moment, but just ask yourself, if customers absolutely loved our product, how would they naturally behave? And how many people are behaving like that?

And then make that number go up. So for a SaaS business, you know, your North Star metric might be weekly active users, or it might be kind of number of transactions completed or number of queries. For consumer apps, it's often weekly or daily active users. Or, like, with Spotify, it's, like, minutes of listening. And in a marketplace or ecommerce, it's usually some kind of transaction like Uber, it's rides per week.

So you have this number that increments whenever you get customers, and then you just sort of pencil sketch out a flow diagram backwards of what's gonna make that number go up, fill in that data, and identify your your kind of rate limiting step. But the important thing is to go to people and say your job is not whatever you think it is. It's to make this number go up. So if you hire a head of compliance, they're gonna come in and they're gonna think our job is a my job is a % compliance, and they're gonna treat your customers horribly because compliance people don't write very good emails. I don't know if you knew that.

But if you tell them your job is to help us get as many weekly active users as possible while remaining compliant, they're gonna think about their job in a completely different way. So by establishing this North Star, you get everyone to sort of rethink their work. And then you just wanna ask them, so, okay, given this is our North Star, you tell me, employee, new head of sales, new head of product, new head of engineering, how does your work impact our North Star metric? And given that is your goal, which work can you do that will have the greatest impact? And they're all gonna disagree with each other, but you no longer need to arbitrate these disagreements.

Do I like the sales strategy better or the product strategy better? You can just say to them, okay. Product team thinks this, engineering team thinks this, the sales team thinks this. Go in a room, put your heads together, and figure out and come back to me and tell me which of these is gonna have the biggest impact on our North Star. And the benefit is how it unites those different departments.

Right? I mean, you already said all these separate strategies, but also, you know, sales versus marketing is a common area of tension, but it helps everyone to kind of pull their weight in the same direction. It's astounding. I mean, startup will have 20 employees, and they're already building silos in their organization. Yeah.

Like, if you talk to someone who works for a big company, they just complain all day long that it's silos, and you can't get anything done. Like I wonder what number from a, I guess, a a psych a psychology perspective when people start to group together. It's like we're in a party. Right? There's a certain number where cliques will start forming.

And so the same in any organization wherever people come together, what that number is when they start to kind of break down and fragment. And I think that's another pain in the scale up journey, but we'll get to that. Do you know a guy named Dan Priestley? Yeah. So Dan says that that number is 12.

Yeah. And that teams can self organize up to 12 people. And after that, things get ropey until you get kinda to about 50, and you've actually got, like, middle management and processes. Yeah. Yeah.

I love that you knew the specific number. I'm not at all surprised that you knew the specific number of that. That was Dan Dan's brilliant. I've learned so much from him. And like a true leader as well, always crediting the other person.

I love that. So, something that I read that you wrote was monetization is easy. Value is hard. What do you mean by that? Yeah.

So we started to talk about that in the North Star metric. I think people who work in mature businesses, like, whatever, a chain of car washes, a coworking space, you already know how you get customers and make money, and so you can set all your annual goals around revenue. But in an early start up, until you figure out how you're gonna make money, you really need to focus on getting customer engagement. And so to put it very simple make the point. Getting from if you have a million monthly active users in any app, in any software, in any anything, it's fairly straightforward to figure out how to monetize that.

But if you have zero monthly active users, figuring out how to get a million monthly active users is incredibly hard. So solve the problem of how to get active customers Mhmm. And unlock get get the privilege of having to figure out how to monetize them. But I think when companies focus on revenue too early, there's just so many ways a company could make revenue. Again, there'll be a sales strategy and a product strategy and a marketing strategy, and there's just too many degrees of freedom.

But the way a company grows is by delivering value to customers, first and foremost. So figure out who your customer is and how you're gonna deliver value to them. And once you're doing that, monetization, again, is is not a given, but it's a fairly straightforward problem. This reminds me of the whole growth at all costs aggressive growth model from, of course, your birth or not. I don't know if you were born there, but from your world of Silicon Valley.

Yeah. Exactly. Which we're now in the era beyond that. And now it's kind of, you know, fallen out of fashion. It's the whole intensification of big tech.

What do you say to that? Right? Because that was I I totally get your point with monetization is easy, value is hard. They I feel like I could be wrong and could be right with drawing that parallel between that growth model that they had, where it was kinda growth at all costs. We just need to get market share.

We'll figure out how to monetize and drive profitability when we cross that bridge. Is that an unfair comparison? Or what's your take on that? Well, I think the tools I'm giving out, again, they're they're kind of agnostic. What I'm talking about is how to get a system to work better.

And I use that personally to grow a lifestyle business. You can use that, to gain support for a nonprofit cause, to build a medium sized company, to build a b corp. I mean, you can use it for for all sorts of things. I think it's incumbent on the leader to have their kind of emotional bearings of what is the change they're trying to see in the world, what is it that they're trying to achieve in the world. But whatever it is, you want people to focus on the most impactful tasks to achieve those goals.

Yeah. Okay. Makes sense. You talk about team JFDI and DTFU. You're talking about teams and growth.

What do those acronyms stand for? So this, this was TransferWise's first org chart. So their first employee and first head of growth was a guy named Nilan Pires. I don't know if you know Nilan. He's still there.

He's, I think, the chief product and growth officer now. But, basically, in the early days, you know, they everyone, again, until 12 employees, everyone kinda self organizes, and you're all sitting around at a co working space. And then after that, you start to hire people and you need different teams. And what they figured out is half the things in growing a fintech business are have to be perfect. You can't lose people's money.

You can't get hacked. You can't be out of compliance. And the other half of the things really need to be fast and loose. You know, some of their early marketing campaigns strip your banker. They put people in their underwear on the steps of the Bank of England and then called all the newspapers.

Like, you know, that's risky. That's bold. And they figured out that the kind of people who are good at these two different tasks are fundamentally different kinds of people. So their first org chart was team, just fucking do it, and team, don't fuck this up. And so they could just sort of at least sort of segment the people because if you try to get those personalities to work together, they'll kill each other.

So Yeah. So that was their first org chart. But I think the lesson I draw from that is even if it's not your org chart because, you know, that's only gonna scale so far, it's worth for any given project you're doing, it's worth having a conversation about what is the expected level of quality versus speed on this project? Is this a JFDI or is this a DFTU kind of project? Because otherwise, most good people, conscientious people, their default is gonna be to try to do it perfectly.

And not everything needs to be done perfectly all the time, and sometimes it's better to take risks. And does that apply to different stages of the growth journey? Certainly, earlier stage companies have less to lose, and and they can be bolder. But in my opinion, I think companies need to be taking risks and experimenting and learning at every stage. And I think what allows startups like, corporate should win, but startups do.

Right? And I think what allows startups to win is people in big companies being afraid to take some risks and worrying too much about all the things that could potentially go wrong. Yeah. It can become a killer to the growth, can't it? Yeah.

So going on those kind of different stages of growth, zero to one is arguably the hardest. And whatever one means, right, whether it's a million turnover, whether it's just finding product market fit, it's a very different ballgame when you then go kind of one to five, five to ten, ten to 50. What advice could you give for the top growth levers at those different stages in a growth journey? Quick one. This is future Steph coming to you from Beyond.

If you're enjoying this episode, then you can probably guess what I want you to do. Please do me one tiny favor that costs you nothing and takes a second of your time. Hit that subscribe button. It really helps to support this show, and I'm really grateful for you listening. Let's get back into it.

What advice could you give for the top growth levers at those different stages in a growth journey? Yeah. So from zero to one, all about finding product market fit and then sort of be on there. Sure. So, yeah, as you said, zero to one is about finding product market fit, but let me define that and make it a little more concrete.

I think a product market fit is like a river or some body of water, and there are these invisible currents out there. There's there's this group of people who are struggling to do something. And until they find your app, you know, there's no way for them to do it. And so you have an app that enables people to do or whatever piece of your product that enables people to do things. And eventually, you find maybe a really big groundswell of people who are actually trying to do that thing, and then you get growth.

And often, when you start, it's almost never obvious. Like, we look at these businesses, they seem obvious in hindsight. But when you start, it's never obvious. So Uber was founded by, as you know, Travis Kalanick and Gerd Kemp. Each of these guys separately had sold companies for tens of millions of dollars previously.

They were rich, and they were annoyed because when they get to the airport, they can't so there isn't a limousine waiting for them. And the original idea of Uber was I wanna be able to just conjure up a limousine whenever I need it, and their first fleet was these s class Benzes. And their original pitch deck said this someday could be a billion dollar business. Best case scenario. Well, it's a $10,000,000,000 business because it turns out it's not just stinking rich people.

Most of us would be happy with just a Toyota Prius or, like, an electric scooter. Right? So they had no idea what they were backing into, but they found this huge pent up demand for transportation. Same thing. The first PayPal product was long, long before my time, was a product that would let you beam money from one Palm Pilot to another.

Of course, that never went anywhere because there were no PalmPilots and there was no Wi Fi. There was none of these things in 1996. So then they went back and they made a list of, like, okay. We can send money from one person to another. What are all the possible use cases?

And they made a list of 50 use cases and started investigating them. And then one of the, one of the employees, I think it might have been David Sacks, just started looking through the transaction logs. And when you send money, you put comments in there. And he noticed a lot of these comments are starting to mention eBay. And so he went and said, people are using this website eBay with PayPal.

And said, well, how many of them? And they said he said about 40. And they looked at eBay, and they were like, this is garbage. This is like a garage sale of broken used things. This isn't this isn't our business.

So the next day, David came back and he said, I looked at the numbers again, and it's a small number of people, but the number is doubling every week. And, so that was the end of that conversation. They went all in on eBay, and that ended up being product market fit for them. But they had no idea when they started PayPal. Such an interesting insight.

I didn't know that. What comes to mind is another startup tourism, which is you're better off being a good market in a great market than a great company in a bad market. Yeah. And, basically, to speak to the importance here of what you're saying of being able to adapt, iterate, pivot because you need to follow that river as you say. Those currents that aren't always visible.

In my experience, I think that one of the biggest challenges for entrepreneurs is is to be able to pivot. And I think it's a really difficult dichotomy, actually, between being so passionate and in love with your idea. And and with that comes the tenacity, the determination, the clarity of vision, all of these nonnegotiables in entrepreneurship. And it's kind of at odds with being kind of flexible with it. Right?

It's I guess on the surface, it's like, well, if you love something so much, it's that kind of where do you draw the line between being persistent and just keep knocking it knocking these doors down versus actually taking on board these these points of reference, these these insights, and actually go with that. So given from my perspective, that's definitely kind of a top mistake that I think entrepreneurs make. I don't think that they pivot enough. I don't think they're flexible enough. I think they fall too in love with their with their first idea.

Yeah. Given that you've mentored, you've worked with many more startups than I have, what are some of the other common mistakes that you think they make? I mean, I think that's a a really good point. First of all, it's just it's falling in love with your idea. I mean, I think at the earliest stages, success, if it correlates with anything, it just correlates with the pace and quality of learning and the amount of customer interactions you're having where you're trying things out and getting feedback and learning learning more about the market.

We've talked about some of the other mistakes. I think setting revenue as your primary target in an early stage, can be deadly. This idea of just, like, coming and hiring experts who are domain experts who are gonna come in and and do it for you. Also, I mean, for some roles, it might work, but for product, for marketing, for engineering, for sales, there's so much nuance to any one company's successful strategy that you really kind of need to figure it out yourself first before you bring somebody in, and expect them to be able to run with it. Even to just know who you're gonna hire, how you're gonna screen them, give them kind of a playbook that already works.

So, I mean, it's not what about the mistake that Monzo made on that? It's one of the case studies I came across with their marketing hire. Okay. It is I mean, years and years ago, and, obviously, no shade to them. We've all we've all made mistakes and learned the hard way.

But I read that they fell into that trap as well of hiring this very senior marketeer, and they came from an excellent pedigree with all these well known household brand names on their CV. And of course, when they landed, this is always going back, since his early days of Monzo as well, they would it just wasn't a fit. And so it didn't last very long, and who they ended up actually promoting was a lowly intern who was already within the team anyway. And I believe that person worked their way up to become the new the new CMO of Monzo. So that's a good one.

I see that happening all the time. What's it that's also reminded me is your top post of 2024 was four bad ideas that sound good. Have we really touched on this, or are there any more that we haven't covered? Four bad ideas that sound good. Yeah.

So my the four bad ideas that I pointed out in that post and I just sort of thought about, like, what a company just waste money on. And the first one is consistency. And it's hard to argue with that. You'll hire a CMO. We need to be consistent.

Our emails don't look like our web pages, the flows, and blah blah blah blah blah. And, like, well, yeah, I mean, if you work for Louis Vuitton, you know, or Apple and your brand is all about being gorgeous and looking a certain way, yeah, but Amazon's pages aren't consistent. Google's interface isn't consistent. They seem to be making a bit of money in spite of that. So, like, it's not you know, consistency isn't this magic bullet.

Like, your startup's not growing, and now we make everything consistent, and it will grow. It's slightly wrong Pantone color. Yeah. That solves it. That's gonna be the regular resource intensive to go through and change all the copy and design.

So one that really bugs me is just be consistent. Another one is this brand building. And I'm gonna upset some people. So let me just define what I'm talking about here. Brands are critical, but I think the term brand gets misused often to become synonymous with thing expensive things we think we should do that we probably won't be able to measure any impact probably because there is no impact.

And I think what companies what they're really trying to do at an early stage when they think about brand building is winning people's trust. And if you say, how can we win people's trust? The best answer is usually not an expensive ad campaign and new logos and, and, and. It's usually some really targeted tactical stuff, like understanding what it is they're worried about and addressing those concerns. Like, Airbnb does this beautifully.

So think about Airbnb, great, you know, brand company. They're getting you to sleep in a stranger's house. Like, when you think about that, it's actually kinda creepy, porting on gross. And if you told me that would be, like, a multibillion dollar company, I'd be like, Or even Uber getting into stranger's cars. Exactly.

And so if you go through an Airbnb listing, everything on there is anxiety reduction. The first thing on the page is the host. They're five stars in little badges and the number of reviews, tons of high def glossy pictures of the flat. Every bullet point is is not clean. It's enhanced clean and, you know, close to good Wi Fi.

It's like all the things you might worry about. And even under, like, you know, the payment bit, it says, you know, you can cancel. There are no hidden fees. Like, everything on that page is about reducing anxiety. But but that only works because they understand at each stage of the flow exactly what little worry or question or fear is gonna happen.

To resolve. And that reminds me also again, we're talking about these kind of top, tech unicorns, but coming back to Uber Yeah. With the tracking the little car, the icon, when you've all when you've placed that order. And it's the it's the anxiety. You don't care if they're on Burner Street or Great Cavendish or whatever.

You know As long as they're coming. You know that they're coming. That's the thing. And you can track. And it doesn't even matter how far away they are.

Right? If they're five, ten minutes, it's just that that peace of mind. This is where Rory Sutherland has an excellent argument for rebranding marketing. What's your take on that? Like, he thinks it should be either behavioral economics or consumer psychology, which a, is more accurate, and b, would help us to command more respect within organizations.

I think he has an excellent point. I mean, I always sat in a marketing p and l when I was at PayPal, but most of the most impactful things I did had no marketing at all. Like, the story about Igor, that was a customer service treatment and data science. I mean, I'd you know, I had a person on a marketing team help me do it, but but it wasn't marketing. And, again, most of these companies and most of their growth doesn't come from marketing, but as I said, it comes from teams working together, people with different skills.

You absolutely need people who understand data, who understand customers, who can run experiments, who can design user interfaces, who can write copy, who can run ads. So you need all of those skills, but they they really need to work together. They need to be informed by data and a deep understanding of the customers, and they need to run experiments and get smarter. And I guess before asking you about whether marketing needs a rebrand, is actually, are we all even on the same page with the the definition of marketing? Because what you just described there with customer service blended with data science, to me that's like that kind of equals marketing in my mind.

But of course I've spoken to so many other people who just think like marketing is like everyone's got their own definition. Some people think it's social media, it's making stuff go viral, it's performance, it's digital and everything else. So do you think that there's a problem there as well that we just don't all have a clear definition of what it is? Yeah. I think if you ask 10 people, you'll get Yeah.

For marketing or for brand. And I don't think that would happen with any other department of the business. To greater or lesser extent. Yeah. I mean, everyone kind of knows what an engineer is.

There are there would probably be a debate about what an engineer's role, where it starts and ends. But so I when I see people hiring CMOs here, it's usually a person who works in an agency, works for a big brand, and buys ads and spends money. I have a friend who's a CMO on the West Coast, and he has an advanced scientific degree from Caltech. And he runs experiments and plays with data all day. And that's what CMO means in a West Coast tech startup.

Yeah. And agree. Like, there's just yeah. There's there's way too many definitions. How do you define marketing?

How does Matt Lerner define marketing? Honestly, Steph, I'm not sure that I do. I really think about growth and go to market, and I try to bring the different skill sets of the company together. And when people ask me who should lead our growth team, I tell them the best leader because it's the hardest, most important job. And I've seen that person come from data science.

I've seen that person come from copywriting. I've seen that person come from design. I love that. And you're making me think of just kind of the irrelevance of that of the definition. Right?

I mean, you need a budget. You need a head cut. You need a a p and l, but don't get lost in this sort of a priori idea of what is marketing. Figure out what makes sense for your company. Yeah.

I love love that. Just a whole different mindset with it. Love that approach. So you've shared with us, as I mentioned before, like, frameworks, structures, processes, so so much practical useful stuff on this podcast. They're fairly, like, I wanna say, like, evergreen.

Right? Like, they're they're versatile. They'll apply to different businesses across different sectors, and whenever you're listening to this, this will help you. We're also sat here beginning of 2025. I don't quite know when this is gonna air exactly.

What are you what are your takes on what's kind of what's gonna be hot in 2025? Beyond sort of these evergreen best practice, are there any other sort of time bound trends that you have on your radar? Sure. I have a few. I mean, obviously, AI is changing everything, and it's changing it by the day.

And I see that in my work. I see that with every team I'm working with and in every role. So that's it's still a bit of a moving target, but it seems like the teams who understand their customer outcomes and make the best use of AI seem to be having the most success. Can you give any examples of the practical use cases of AI beyond the buzzword? Yeah.

Sure. I mean, I see it used a lot as a collaborator for copy, as a collaborator for engineering. I know some technical cofounders, really bright ones who used to have a team of engineers, and now they work solo. And they just use agents and co pilots to do most of the work for them because then they're really only constrained by their their own thinking. Mhmm.

Yeah. And then just automating all kinds of processes in the organization. The quality of research, you can now get AI to do research that would have cost tens or hundreds of thousands and taken a a consulting firm Mhmm. To help you understand a market. What tools do you use for that?

So the Google actually, Gemini's newest version has this kind of deep research function that that can do that quite well. Mhmm. You're still only, you know, constrained by the the quality of the questions you ask and what you end up doing with the data. Right. So in that sense, like, and here's my little spiel, the fundamentals don't change.

You still need to understand your customers and their outcomes. And, you know, ChatGPT understands the average of the Internet. So you need to prompt it with enough context and a deep enough understanding to get relevant answers in your case. And then you need to have the taste and judgment to know that what it's giving you back isn't perfect. You know, just like if you make pretty pictures with Dolly or Midjourney and that looks great, then you notice this lady has seven fingers and the car is hovering and whatever.

Like, you still need to know, like and it's easy to spot in a picture, but you need to know this isn't exactly what I need, and you need to be able to give the feedback to make it better. Yeah. I think a lot of the hot air and excitement around AI has led some of us to forget that it's a tool and that it isn't a replacement. To your point, if it's a copilot or it's a tool in your armory, and like any other tool, it's knowing how to utilize it properly. So AI was that I should have expected that to be the answer of of twenty twenty five.

Anything else you wanna add to that before I move on? Any kind of, like, what should what should entrepreneurs have on their entrepreneurs and marketing leaders have on their radar for 2025? Yeah. If there isn't, it's fine. There's this simple tactical thing that I can't believe more people are not doing.

So in b two b I don't know about you. I get about a gazillion cold emails and cold LinkedIn outreaches a day. And the thing is they don't have to be cold. If you have a good sense of who your customer is in B 2 B and you can use tools and come up with a list of those people on LinkedIn, you can start showing them your ads and your logo and your brand and helpful resources for a month or two before you DM them, before you call them. Yeah.

And then they'll be like, oh, I've seen your logo. I've heard of you guys. And it completely changes the the response rates, the conversion rates of those campaigns. Yeah. I can't let you leave this room without getting your perspective on UK versus US.

Do you ask everyone that question? I actually ask a lot of people. I'm kind of obsessed with it at the moment. But, of course Okay. UK versus US.

American. You're now living and working in London. What's your take on the two markets? You've you've lived and operated in both places. What's your perspective?

I mean, let's talk about what Silicon Valley is. There have been these times in history where a handful of extraordinary people have kind of ended up in the same ZIP code and done things together, like the fifth century BC in Athens. You know, you had Socrates and Plato and then Alexander the Great and, you know, Renaissance Italy, you know, Leonardo da Vinci and Michelangelo and Botticelli and all those folks in Florence together, early twentieth century Paris, you know, same kind of thing with Picasso and Hemingway and all those people. And I feel like and I was in Silicon Valley from 1996 to 02/2012. Wow.

Heyday. And I feel like heyday. Was the same thing. Kind of thing. Paint a picture for us.

What was that like? Like, early naughties in Silicon Valley. I saw I'll tell you two kind of I'll paint two bits of this picture for you. One of them, it was kind of weird. We we called it the luck truck.

But you'd have a friend who, like, suddenly their company that they work for would IPO, and they'd be rich. And, like, my first job, I I think I got laid off after about six months. The second job, I got laid off after about nine months, and there was this guy who'd gotten laid off from the same companies as me. And he went and joined a pre IPO company. And then, like, one day, I went to his house, and, like, he had a Ferrari and a Harley Davidson and a drum kit and 40 pairs of Nikes and, like, you know, it was he hadn't bothered to move out of his little apartment in Mountain View yet, but, like, so it's just weird when suddenly some and I was like, oh, I should think more carefully about which companies I joined.

Yeah. So part of it, that was weird. But, I mean, the thing that's really different and is these the ambition and the intensity. So first of all, these are incredibly bright, talented people, but I don't think London lacks bright, talented people. But the level of ambition I was working for a start up, and the founder worked insanely hard.

And he was there all night every night and every day Is this in London Valley? Weekends. Oh, no. This is early in my career in in the Valley. Okay.

At early you know, on the weekends at his house and everything, at some point, I found out he had a massive trust fund. He never had to work a day in his life. Wow. He's super motivated. I have another friend, who founded a company called Udemy Mhmm.

Which you may have heard of. And they're they're publicly traded, and, and he left Udemy kind of early on. And, like but he never has to work. He started a food delivery company. He raised venture capital money.

He grew it to 200,000,000 valuation, then ended up going out of business. And now he started another company, venture backed business, and he's growing that. And, like, you know, he never needs to work, but he's driven by much bigger insanely big goals and ambitions. And I feel like most people on earth would get 10 or 20 or 50,000,000 on the bank, and they'd, you know, go spend time with their kids and go on speaking tours and or do whatever, like, rich people do. Yeah.

And, and, you know, like, they're good with that. And I think that's the other huge difference in The Valley. In The Valley or between, like, entrepreneurs? Well, I'm comparing entrepreneurs in The Valley with entrepreneurs in The UK. Okay.

I'm not gonna ask you. So what do you think that level of ambition is down to in the year? Like, what is it about The US that like, what are the conditions that help these people to think bigger, to aim higher? Well, I don't think I mean, The US enables it in a sense. Like, you know, culturally, you know, they admire people.

They, you know, they just elected a president who got famous by being really good at business and real estate and had a TV show about it. Right? Like, Elon Musk is a hero in America. So I think they they respect and admire people who are successful, but a lot of these people aren't actually American. Right?

Like, most of them actually are immigrants. So I don't think there's anything sort of in the water. I think America is I I think most Americans are not like this. It's a self fulfilling prophecy where that that's the hotspot and that's where they're gathering.

SM: Historical parallels there, whether it was the Renaissance era in Italy or the philosophers in in Greece. It's they could have it's just that gathering point, isn't there? Scott Galloway, I'm obsessed with. I apologise to my listeners because I fangirl over him all the time. But, what comes to mind is he says one of the best financial strategies is to get as close as possible to the money.

And so there's a parallel here as well. Right? Whatever it doesn't need to be financial, but whether it's entrepreneurial success or whatever that goal is for you is is get as close as possible to it, move to it. Matt, what an honor and privilege. Genuinely an honor and a privilege to have this quality time with you. I'm so grateful to be sat across. I've enjoyed every minute of it.

My closing question, my ultimate question, what's one tragedy that's taught you an unforgettable lesson?

ML: I'm happy to say I haven't had a lot of tragedy in my life, and I haven't had any tragedy in my business life. I don't know if there is even such a thing as a business tragedy. But I can tell you about the worst day of my life and the worst time of my life and how it's made me who I am. So it was I don't remember which day, but it was a Saturday in October nineteen ninety four. It was probably I think it was cold and sunny and, no, 1993.

I was at college, and I decided, it was a weekend. I had some free time. I decided to call my parents. And my mom answered the phone and said, hey, mom. It's me.

And there was silence on the other end of the phone. And she said, honey, it's Matt. And my father picked up the phone. My mother couldn't speak. My dad told me she'd been to the doctor that week with pneumonia.

They took a chest X-ray, and they found, a bunch of tumors in her lungs. And I was I was 21 years old. I wasn't ready to find out that my mother was dying. She wasn't ready either. So she ended up living about another six months, and I would go back home as much as I could during that time and and try to spend time with her.

And I remember one time sitting with her by her bed, and and she started crying. And she said, I just realized I'm I'm not gonna see the millennium. When I was a little girl, I imagined, you know, I'd be 59 years old and I would, '19 1999, and I would see it become the year 2,000 and I'm not. And I I I always struggle to understand people's emotions and what's behind them and what's what they're thinking, but I asked my therapist about this at at the time. Of course, I was in therapy.

And I said, why was my mom crying so much about that? And and my therapist said, Matt, I think your mom realized there were a lot of things she wasn't gonna get to see. So how that's affected me is I'm extremely intentional about how I spend my time. I don't waste a minute of my life. I don't do things I don't want to do.

I don't wait to do things when I'm older or when I have more time. And I spent a lot of time thinking about how I wanna spend my life, and I make sure I'm doing those things.

SM: Matt, so sorry to hear that. And I kinda hate having this traditional closing question because it always hurts. I get some rough stories, and I actually I don't wanna I don't wanna leave my listeners on on that note. But I think it is, you know, again, the framing of that is is the lessons that have been taken from that. And we do often get so many different answers. Some of them are that deep and personal and and life related. And I think that what you've taken away from that, the positive with we've got we we do have limited time. And if that's if that's those are the forcing questions. These are the way to focus what you're doing with it, so be it. Matt, thank you so much for coming on the show. It's been absolutely amazing. I'm really grateful for your time.

It's been wonderful, and I really hope the listeners have learned something new and taken lots of value from this. So extremely grateful to you, Matt.

ML: Thank you. My pleasure.

Strategy & Tragedy: CEO Stories with Steph Melodia is the best podcast for curious entrepreneurs and ambitious founders. Learn from those a few steps ahead of you in these candid interviews of the highs and lows of scaling and failing business.

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