A commemorative compilation of the fascinating conversations and insights from three of our most popular episodes.
Intercom was created out of an epiphany in a small Dublin coffee shop because we realized that the impersonal, transactional way of doing business online just wasn’t cutting it for customers anymore. Ever since the beginning, our mission has been to make internet business personal, and the podcast has played a big role in that.
What started as a series of interviews by co-founder Des Traynor soon bloomed into hundreds of episodes where we explore how businesses are driving growth through customer relationships and how to build successful products at scale. Along the way, we’ve interviewed trailblazers, business leaders, makers and doers to share their experience and insights on all things startup strategy, product management, design, marketing, customer experience, and much, much more.
This month, we have passed the three million download mark for the podcast, and to celebrate this milestone, we’ve dived into the archive to bring you highlights from three of our most popular episodes:
- Rachel Hepworth, at the time the head of growth marketing at Slack, talks about starting a growth marketing team at a startup that had long relied on word of mouth for its growth;
- Andrew Chen, general partner at Andreessen Horowitz, chats about the changing landscape of customer acquisition, his “Law of Shitty Clickthroughs” and its effect on growth channels, and what we can learn from Dropbox and Uber;
- Intercom co-founder and Chief Strategy Officer Des Traynor and Chief Product Officer Paul Adams talk about our product principles.
On today’s show, we’re going to hear a little bit from each of them.
If you enjoy our discussion, check out more episodes of our podcast. You can follow on iTunes, Spotify, YouTube or grab the RSS feed in your player of choice. What follows is a lightly edited transcript of the episode.
Into the archives
Liam Geraghty: From the very start, Intercom’s mission has always been to make internet business personal, so it’s not surprising that we’ve been podcasting for a long time; since 2012, in fact. Back then, our very first episode was hosted by Intercom co-founder Des Traynor.
Des Traynor: Hi, this is Des from Intercom. I’m recording the first in what I expect to be a series of interesting interviews.
“To celebrate this three million milestone, I’ve dipped into the archive to pull out three of our most popular episodes”
Liam Geraghty: Just like we’ve helped tens of thousands of businesses of all types and sizes grow faster through better customer relationships, on the podcast, we’ve practiced what we preach through talking to people because we love conversation. Hundreds of trailblazers have joined us on the show over the years to share their experiences and insights on everything from product management, design, marketing, and a whole lot more, all for the benefit of you, the listener.
This month, we have passed the three million download mark for the show. That just blows my mind. So to celebrate this three million milestone, I’ve dipped into the archive to pull out three of our most popular episodes. On today’s show, we’re going to hear a little bit from each of them. Coming up, you’ll hear Des Traynor and Intercom’s chief product officer Paul Adams chat about the principles we use to guide us as we build products and how they have evolved.
Paul Adams: Let’s not do this again and then have a retro to learn the same thing we’ve already learned five times. Let’s actually try and write it down. And we stumbled upon principles, I think, as the best way to do that.
Liam Geraghty: That’s one of our most downloaded episodes, so if you haven’t heard it, you do not want to miss that. We’ll also hear Andrew Chen, general partner at Andreessen Horowitz, talking about the changing landscape of customer acquisition.
Andrew Chen: You know, when I look at some of the high-profile cases that didn’t work, there are a couple things that I think work in concert to make them more difficult.
Rachel Hepworth: Introducing growth marketing to Slack
Liam Geraghty: But first, how do you bring growth marketing to a high-growth company? That was the question posed to Rachel Hepworth. Rachel now leads the marketing team at Notion, but back then, in 2018, Rachel was head of growth marketing at Slack. Historically, Slack relied heavily on virality for its growth. They had occasional advertising here and there. Adam Risman, a former host of the podcast, asked Rachel what made that point when Rachel joined Slack in 2016 the right time to invest in growth marketing? Because until then, at least publicly, it hadn’t really been talked about as something that Slack was going to actively pursue. Here’s Rachel.
Rachel Hepworth: In 2014 and 2015, Slack had this incredible growth, but it was growth off a small base, based on very early adopters. For Slack, that was clearly the engineering and dev communities, who love new tools. They love new ways of working and were happy to bring Slack into their functional teams and say, “Let’s experiment with this new way of working.” And it was very successful.
“We had to figure out how to tell them what the value is and serve them the solution rather than saying, ‘Slack is here. All you have to do is enter your email to get started'”
As Slack expands into a larger enterprise product, you have to start appealing to groups of people and types of roles and industries that aren’t in that early adopter group. Things like media companies, finance companies, retail companies, sales functions, marketing functions, and customer support. How do you attract these different types of people and build the value for Slack going wall to wall inside of a large company versus a startup of 10 people or being siloed in the engineering department of a larger company? That involves a lot more education, outreach, and nurturing for people whose DNA is not to try new things and scrappily figure out the best way to make it work.
We had to figure out how to tell them what the value is and serve them the solution rather than saying, “Slack is here. All you have to do is enter your email to get started. We’re pretty sure you’ll be successful from there,” which is the way we’d been operating in the past.
Adam Risman: I imagine there was a lot of low-hanging fruit sitting there for you when you walked in the door, which means prioritizing must have been one hell of a challenge. Where did you start? What was your mindset?
Rachel Hepworth: We knew we were going to start with performance marketing, and that’s partly because the team had dipped their toes in it, it had shown signs of success, and it’s something that our CEO Stewart Butterfield is particularly interested in because of its scalability. Slack has obviously raised a lot of money, so we weren’t hampered by budgets as long as the ROI was there.
“The great thing about performance marketing is the ROI is really obvious, so you can justify increased spend and headcount based on the performance, and that’s what we’ve done”
The first thing we did was build out a pretty robust performance marketing team. What’s key about this team is that it’s very sophisticated compared to most. We use a multi-touch attribution system. There’s no first click or last click. We track everything and give credit for impressions, clicks, actual conversions, etc. We spent a lot of time and effort setting up that foundational system, making sure that our data was really good.
A lot of folks outsource performance marketing to agencies or use a simpler attribution system, which is fine and correct if your budget is smaller. But for the amount of money Slack is spending, we needed to bring it in-house. That was really heavy lifting, but the performance marketing team is now driving a fairly hefty chunk of team creation, and it’s been very successful. We spent most of 2017 building it out.
In 2018, we’re going to focus on the more typical demand gen functions. We have a lot of people going to slack.com, and it’s very simple to start a team. But for those who aren’t inclined to jump into those waters and try to convince their coworkers that there’s a new way to work, we need to do a little bit more in terms of holding their hand, showing them the value, and giving them more information. Not just having a home page with an email entry field, “click here to get started,” which is what we’ve been relying on up until now.
“When you have a product that is strong on the organic and word of mouth side of things, driving additional demand through marketing programs is actually quite hard”
A bigger acquisition funnel
Adam Risman: What were some of the aha moments you experienced in those early days when you were trying to find a product/channel fit?
Rachel Hepworth: When you have a product that is strong on the organic and word of mouth side of things, driving additional demand through marketing programs is actually quite hard because you’re trying to build off of a fairly strong base. Slack has this incredible organic word of mouth, but how do we supercharge that and make it easier for people to talk about Slack and incentivize them to start Slack teams? Product can do a huge amount there.
Slack recently released a new product feature called shared channels, where you can work with another company, an external organization, inside your own Slack instance. Each Slack team is sharing a channel, and you don’t have to go and switch to email when you’re working with people outside of your company.
Adam Risman: Say you bring in an agency for a project, you can work with them that way.
Rachel Hepworth: Exactly. The agency use case is a key one. If you have a brand or advertising campaign and you’re working with an external agency, how do you not need to change the workflows that you do internally for that external partnership? You just bring them into a shared Slack channel and continue working that way. That has potentially huge virality effects and builds a moat around Slack. That’s where the product and growth marketing teams will meet. The product enables you to share a channel, but how do we make sure people know about it? How do we create really great invites and email flows? When that other company gets an invite to a shared channel, how do they understand what it means? If they are not already a Slack user, how do we enable them to start a Slack team and accept that shared channel request? It’s a lot about building those flows.
“The biggest thing I can do for Slack is to hire people who know a lot more than I do and give them free rein to do their best work”
Adam Risman: You mentioned the team started with performance marketing. Walk me through how you built it out from there. Was that more of a proactive approach, or did things start to bend as you were scaling your operations, and you had to respond to that?
Rachel Hepworth: We knew we wanted to build the team because we’d already done enough in 2016, mostly before I joined, to know there was value there. I am not an expert in performance marketing. That is a function where people go really deep, and they have a lot of very, very specific knowledge, particularly when you’re spending a lot of money. The first thing I did was hire somebody who knew a lot more about performance marketing than I did, and I was honest about the fact that I’m really good at asking questions to learn and test assumptions, but that doesn’t mean I can talk about the intricate details of setting up a really great search or display campaign. And so we hired somebody who had a lot of experience and could recommend ways to build the team.
The great thing about performance marketing is the ROI is really obvious, so you can justify increased spend and headcount based on the performance, and that’s what we’ve done. We had this team of three with really hefty budgets and goals, and they’ve been successful enough that the team is now expanding and taking on new responsibilities based on the success that they’ve had. One of my great philosophies with growth, because it spans so many areas, is that I only know enough to be dangerous in many of these areas, and the biggest thing I can do for Slack is to hire people who know a lot more than I do and give them free rein to do their best work.
Liam Geraghty: That was Adam Risman talking to the former head of growth marketing at Slack, Rachel Hepworth. Rachel now leads marketing at Notion. You can hear or read the full interview on the Intercom blog.
Andrew Chen: Hyper-growth on the road
Liam Geraghty: Andrew Chen is a general partner at Andreessen Horowitz. Andrew’s name kept popping up when we asked guests who in growth do you think we have the most to learn from? So we knew we just had to have him on. In 2015, Andrew joined Uber to lead their rider growth product teams. At that time, the company and the user base were already extremely large. So we wanted to know, when you have a market that’s so big, where do you start? With established systems already in place, how do you prioritize all the different problems you could have solved? Here’s Andrew.
Andrew Chen: When you look inside any of these hyper-growth companies, what you find – and this is a good signal – is they’ve grown so fast organically they actually haven’t needed to go super deep on the data, churn models, or all the nuances. The first step for anybody coming into one of these teams is to focus on understanding what the hell is going on. The second piece is to identify some of the key opportunities you want to execute. Then, you want to measure, iterate and execute that loop as fast as you can.
“A lot of this is trying to understand the places where folks are falling off… Do you need their full address up front, or can you defer that and get them excited about the opportunity before you try to pull them through?”
On the drivers’ side, a couple obvious things needed help. First, anyone who tried to sign up quickly found that it was a long process. You have to give a lot of information, give a copy of your driver’s license, and get a background check. In some places, like in Europe, you have to get licensed. And so, it can actually take several months to become an Uber driver. This high-consideration, high-intent signup funnel is similar to the problems FinTech companies might face, or a B2B company facing a long, complicated API integration.
A lot of this is really trying to understand the places where folks are falling off. What’s the order of operations in terms of how much you need to ask people? Do you need to ask them for their email? Is a phone number okay? Do you need their full address up front, or can you defer that and get them excited about the opportunity before you try to pull them through?
Adam Risman: When you transitioned to the demand side and concentrated on growing riders, was that a different muscle for you? How did that compare and contrast to the drivers’ side?
Andrew Chen: Drivers are almost like small businesses. They’re very motivated by earnings. They have a long, complicated funnel to get to the end. One example that really works on the supply side is referrals: drivers referring other drivers. Because drivers are in it for earnings, referrals are awesome, and they actually select drivers that are even better. The riders’ side is usually much simpler because you just put in your phone number and install the app.
Adam Risman: You want them to have that aha moment: the car shows up, they get in, and it’s seamless.
Andrew Chen: Exactly. You still need a credit card in many cases, but in other parts of the world, Uber goes with cash, so that lowers the friction even more. We’re talking about a different order of magnitude in terms of the complexity of the funnel, right?
The other thing is that the channels become different. I was just talking about how referrals work so well for drivers because they’re trying to earn more. Think of it this way: if you have a rider who’s in it to get a discount, what kind of rider are they going to be? Probably one who doesn’t spend as much money. So, referrals actually bring slightly lower quality riders. You find a bunch of nuances in there that are very interesting.
One of the obvious observations about Uber these days is that the drivers’ side has more churn than the riders’ side. The riders start by taking rides to the airport and think, “Oh, this is pretty cool. I should take it when I’m out and about.”
“This is one of the reasons why B2B SaaS companies have a recurring revenue model… That regularity and that habit formation mean you have better lifetime value”
Adam Risman: And those levers like fixed rates that you lock people into for a week or two or things like that just become more habit forming.
Andrew Chen: Exactly. There’s more of a habit, whereas the drivers are always comparing their earnings with Uber to other opportunities like picking up a part-time job within the services industry.
Chasing free customer acquisition
Adam Risman: We’ve seen a lot of high-profile startups (particularly in the e-commerce space) raise hundreds of millions of dollars and go all-in on acquisition. Then, they end up crashing back to earth because they don’t have strong retention. Why do we keep seeing this, and what’s the big lesson there?
Andrew Chen: I think this is one of the reasons why B2B SaaS companies have a recurring revenue model. A transactional marketplace like Uber, where riders can actually use it every day for commuting, is very nice. That regularity and that habit formation mean you have better lifetime value. It also means that engagement can power organic acquisition because you naturally tell your friends about it.
“How many folks have discovered Intercom because they saw the little window on the bottom right and thought, ‘I want that too’? You get all this free acquisition”
Going back to the Dropbox example, or looking at Slack, a natural network forms where every user has the opportunity to acquire one of their coworkers. DocuSign, where folks who are collaborating within a workflow, involves other people from across companies. That’s going to be even more viral than something that only exists within a company. How many folks have discovered Intercom because they saw the little window on the bottom right and thought, “I want that too”? You get all this free acquisition.
When I look at some of the high-profile cases where it didn’t work, I see a couple things that work in concert to make it more difficult. First, you have an acquisition model that is a single channel. Maybe that’s Facebook ads, maybe that’s Google ads, maybe it’s SEO – but you don’t have any natural virality.
The second, especially when we’re talking about e-commerce, buying something like a mattress or a car is something that only happens very infrequently. Because of that, you end up in this acquisition treadmill where you’ve got to run really, really fast while this whole thing is going. If you’re on a single point of failure on your acquisition channel, there’s an arbitrage for a period of time, and if you hit it at exactly the right moment, you can build a pretty decent company. But eventually, you should just plan on losing it. This is another reason why a lot of gaming companies are hard to fund from a venture perspective – there’s built-in natural churn. Dating apps are also like this. You have that combined with the need to buy the traffic because it’s very hard in a dating app to say, “Oh, you should download this too.” That doesn’t make sense.
This is the kind of thing to watch out for, especially if you’re building something in FinTech or healthcare. These are all things you have to be very careful with and make sure you understand how those dynamics are going to play out long-term.
Liam Geraghty: Andrew Chan there. Andrew has been on the show twice. You can continue listening to that conversation or a more recent chat he had with Des Traynor last year. Both episodes are linked in the show notes.
Intercom on Product: The principles behind what we build
Liam Geraghty: Now we come to the final part of today’s special 3 million downloads episode. We end with the voice the show started with all those years ago, Intercom co-founder Des Traynor, who is joined now by Chief Product Officer Paul Adams, to talk about our product principles. We use product principles a lot at Intercom to guide us in terms of how we build, what we build, and how we make decisions. And this conversation really struck a chord with listeners. Here’s Des.
Des Traynor: Let’s start at the top. What the hell do we mean when we say a principle?
Paul Adams: That’s a good place to start. A principle is a fundamental truth or proposition that serves as the foundation for behavior that gets you the results you want.
“Any business anywhere wants to repeat its successes and avoid repeating its mistakes. Principles are the best way we’ve found in which to codify all the mistakes.”
Des Traynor: That reads like it’s straight out of Webster’s. Can you give me something more there?
Paul Adams: Principles are about predictable behavior in the future. We’re big into principles, as you know, and the reason is that they are a way of encoding your mistakes and successes. Any business anywhere wants to repeat its successes and avoid repeating its mistakes. This is easy to say but hard to do. And principles are the best way we’ve found in which to codify all the mistakes.
Des Traynor: Codifying mistakes sounds like we’re going to guarantee that we lock them in – can you expand on that a bit? Let’s say we found that three projects went off course. Is there a principle to be found in that? Or is it like, “Hey, if this is a consistent pattern, then we need to make sure no one ever repeats it, and we’ll have a principle about the positive behavior we want.” Is that what you mean?
Paul Adams: Basically, yeah. Maybe it’s useful to share some examples instead of talking about this in the abstract. Our goal, like any product and engineering team, is to ship great software that customers love, value use, etc. Don’t ship things that they don’t need, don’t take too long doing it, and don’t go off track. And there’s a whole load of anti-patterns in how you would want to run a project – projects being canceled or a big epic re-steer in the middle. Over the years, we reflected a lot, doing kind of retrospectives as common practice.
Des Traynor: Like, “What was good about this? What was bad about that?”
Paul Adams: Exactly. We write it all down at the end of any project – these things worked well; this didn’t. Over the course of years of doing this, patterns repeated and we said, “Okay, let’s not do this again and have a retro to learn the same thing we’ve already learned five times. Let’s actually try and write it down.” And we kind of stumbled upon principles as the best way to do that.
“We believe that any solution we ship is only ever as good as the problem understanding. The better you understand the problem, the better thing you’ll design”
Des Traynor: Let’s talk through a couple of principles, and then we’ll go back to the what, why, how, etc. What are the principles for how we build products?
Paul Adams: We have three top-level product principles. We actually have a bit of a system.
Liam Geraghty: The R&D team has actually added a fourth principle since this was recorded. We’re constantly evolving and re-evaluating our principles. Anyway, back to Paul.
Paul Adams: They’re the things we care about the most. Then, we have five design principles specific to the design team and the discipline of design, and five engineering principles specific to the discipline of engineering.
Des Traynor: So, we have 13 in effect, but in practice, any individual only has to observe eight, right? Everyone inherits the top three, and then if you’re an engineer, you’ve got five engineering principles on top.
Paul Adams: That’s right. 13 sounds like a lot, but you hope that any team in the company is familiar with all the principles. I mean, you don’t have to remember and recite 13 principles. But in practice, this is about predictable behavior. In practice, you should see people enacting these principles. For example, one of our product principles is to start with the problem. This principle came from us realizing that, oftentimes, we weren’t starting with a problem – we were starting with some cool idea or some fictionalized hypothetical customer. The reason this principle exists is because we believe that any solution we ship is only ever as good as the problem understanding. The better you understand the problem, the better thing you’ll design.
Des Traynor: It’s that line – “a problem well stated is a problem half solved.”
Paul Adams: Exactly. We spend a ton of time on problem definition. Problem prioritization, first of all – is this an important problem? Do we understand this problem? When we understand the problem a bit better, we can restack it against the other problems that we have a good understanding of.
In the past, when we didn’t have these principles, we would have a design or product review in a project and start asking questions like, “Have we shown this to customers? What did they say? Did they react well to it? Can they articulate what problem this is solving for them? Is it solving a real problem or is it hypothesized? Can they give us specific examples of how this would actually change how they work?”
And oftentimes, what you find is that the understanding of the customer problem we’re trying to solve is really ambiguous and vague and loose. And as a result, the project is ambiguous and vague and loose and gets pulled in all different directions. What you end up with is just people disagreeing with each other, very opinion-driven rather than evidence-driven, as opposed to a project where we spent a ton of time upfront understanding the problem. And then, downstream from that, when you come into a design or product review, instead of asking these types of questions, you just get richer, better answers because we actually spent the time to understand a problem upfront.
Des Traynor: Our other high-level principles are “Think big, start small” and “Ship to learn.” Rather than walk through both of those, I think one important point we should stop and reflect on is that most of the time, when I see companies decide that they want to build out some principles, they end up basically saying stuff that is just generally true. Like…
Paul Adams: Ship good software.
“I’ve often talked to people about principles in other companies, and they tend to be truisms. You’d never disagree with that”
Des Traynor: “Ship good software,” “design matters,” or “focus on the user.” And what they don’t do, in my opinion, is come up with a principle that’s pointy enough such that there is an equal and opposite counter-principle. That’s an acid test we’ve always had for our principles. If we take, say, “think big, start small” or “ship to learn,” what’s the opposite principle? And when would that be good?
Paul Adams: This is actually a really important point because, as you said, I’ve often talked to people about principles in other companies, and they tend to be truisms. You’d never disagree with that. So, “think big, start small” is a great example where the basics of this principle are kind of self-explanatory. And these principles are in order, so it’s “Start with the problem,” then “Think big, start small,” then “Ship to learn.”
You’ve started with the problem, you have a deep understanding of the problem, and the next stage is, “Okay, think big. What’s that big dream? The vision? What’s the concept design for this?” Think big and don’t be limited by any kind of constraints. And then, start small – take that bigger vision or dream, break it down into the smallest pieces, and keep scoping back, back, back, back, back, until you have the smallest coherent solution. That’s how we want people to work. The feedback we get within this principle is “How small is small?” We push for very, very small. The opposite of this principle is also valid, which will be “Think small, start big.” That is a valid principle too.
Des Traynor: What would that look like?
Paul Adams: For “Think small, start big,” I imagine a company working on infrastructure, for example. Imagine an electricity or a renewable energy company. There is definitely an innovation in that space. Tesla comes to mind, for example. But if you are taking on something with significant infrastructural costs, you obviously need to start big. There’s no version of a road infrastructure that doesn’t mean building loads of roads. There is “Start big,” and then, depending on how much innovation matters, you can think small.
Des Traynor: With the latter, the small is proportionate to the big. So it might be feasible to say, “Think small, start big,” which is actually saying, “Find a small next step. Ship all of it, and you’re done.” Envision the whole system and find the first viable piece to ship that, but have one eye on the rest.
Paul Adams: Yeah, the smallest coherent solution. The way we do this is by building a little table. The table has in it all the components of the solution and three columns: “essentials”, “differentiators”, and “not now.” This idea of “not now” is really powerful because saying no is critical to any kind of product strategy and product execution. If you have a column that says “no,” that’s pretty hard for people to be comfortable with. Whereas “not now“ is more like, “Okay, maybe later.”
“Great leadership hinges on some sense of predictability. If you’re consistent in how you apply your logic, you make it much easier to work alongside you”
You start by putting every single thing into “not now,” and then painfully drag them over here. It should be excruciatingly painful to pull things into the “essentials” or the “differentiators,” which then become the thing we go build.
Des Traynor: The biggest value you get as an organization by having stated principles – and for us, that means they’re printed on the walls, they’re referred to in every document defining a product scope – is the predictability. The predictability of the leadership team, of you, of me. Great leadership hinges on some sense of predictability. If you’re consistent in how you apply your logic, you make it much easier to work alongside you because if you walk into a product critique, people can probably guess what the first words out of your mouth will be. And that really helps.
Liam Geraghty: That was Des Traynor and Paul Adams. You can catch them on their very own podcast, Intercom on Product. The link, you guessed it, is in the show notes. The conversations you’ve heard today are only a sprinkling of the insight contained within our show’s archives. You’ll find everyone from HubSpot CEO Yamini Rangan to Calm CTO Will Larson. Not to mention we have new episodes every week. So after 3 million downloads, thanks for listening.