Bottoms-Up vs Top-Down: The SaaS Model Showdown
CEO & Founder
Today on the show, we have Dennis Mortensen, CEO and Founder of LaunchBrightly. In this episode, Dennis shares his profound insights on two pivotal strategies in the SaaS industry: Bottoms-Up vs Top-Down models.
Drawing from his vast experience transitioning from x.ai to LaunchBrightly, Dennis discusses the unique challenges and benefits of each approach. We delve into how these models impact customer acquisition, pricing strategies, and overall business growth.
Dennis also highlights the crucial role of data-driven decision-making in understanding and reducing churn, as well as the importance of customer support in both Bottoms-Up and Top-Down models.
As usual, I’m excited to hear what you think of this episode, and if you have any feedback, I would love to hear from you. You can email me directly on Andrew@churn.fm. Don’t forget to follow us on Twitter.
Is ReadingShoe Dog
[00:00:00] Dennis Mortensen: It's very unstructured and many times difficult to instrument. So it's not even that it's high volume, low volume. It's high volume, good data, low volume and even the low volume is poor data, Although the emotional commentary from the individuals kind of act as your SDRs and AEs and CS kind of person they're out for, where you kind of have to decipher it and apply some sort of value to it.
[00:00:25] VO: How do you build a habit-forming product? Do you need to invest… We saw these different… You don't just gun for revenue in the door.
[00:00:32] Andrew Michael: This is churn.fm, the podcast for subscription economy pros. Each week we hear how the world's fastest growing companies are tackling churn and using retention to fuel their growth.
[00:00:45] VO: How do you build a habit forming product? We crossed over that magic threshold to negative churn. You need to invest in customer success. It always comes down to retention and engagement. Completely bootstrap, profitable and growing.
[00:00:58] Andrew Michael: Strategies, tactics and ideas brought together to help your business thrive in the subscription economy. I'm your host, Andrew Michael, and here's today's episode.
[00:01:08] Andrew Michael: Hey, Dennis, welcome to the show.
[00:01:10] Dennis Mortesen: Thanks much for having me.
[00:01:11] Andrew Michael: It's great to have you. For the listeners; Dennis is the CEO and founder of LaunchBrightly, enabling customer support teams to remove the unnecessary burden of manually updating product imagery in your help center. Prior to LaunchBrightly, Dennis was the CEO and co-founder of x.ai, which is acquired by Bizzabo in 2021. My first question for you today, Dennis, is what motivated you to get started again with LaunchBrightly after spending over eight years building x.ai?
[00:01:40] Dennis Mortensen: It's a good question. If I'm brutally honest, I did sell my wife on the idea that x.ai would be the last venture and saying I haven't done anything but startups since we got together 26, 27 years ago. So doing that for a quarter of a cent free, make a few monies along the way, seemed good, fair, honest, call it the day, hang out with us. Whatever you would say, it's just difficult to get to the end of something which you really enjoy, just say, well, I guess that's that. What is it that I'm supposed to do then? It can't be nothing, it must be something.
[00:02:26] Dennis Mortensen: There's this I'm not going to go on a rant here, but there's this idea from some entrepreneurs or probably most people outside of the sphere that you and me are living that suggest, once you reach an exit or two or made a few moneys, had a little bit of success whatever the definition is you're supposed to go to the other side of the table. Become some angel investor or be a partner at some VC firm, which is just confusing to me because they're two very different jobs.
[00:02:55] Dennis Mortensen: They might exist in the same universe, but they're two different jobs and there's no relationship, I have that loss or idea. If anything I'll try to kind of shy away from it. To come back and then answer your question, I do think entrepreneurship should be a lifelong career, not a single item on a bucket list for where. I would like to try it for two or three years. The most likely outcome is that you done the default setting for the startup and then I can cross it off. I dislike that whole idea of doing startups, but somehow it's all my wife, family, surroundings on doing yet another venture and I'll probably just continue to be very in. One day at the office, I'll just kill over and then what a big good life.
[00:03:44] Andrew Michael; When you say you sold your wife and your kids, in my mind I'm thinking, okay, you've got a pretty penny for them now and you can just focus on the business, but what you're saying is you sold them on the idea of starting a new business. Yeah, I think I don't know. I feel personally that to some degree, entrepreneurs are addicts and I'm also interested in maybe starting a show on this very topic and in some ways, our addiction manifests itself in positive ways and in other times it can manifest itself in really negative ways that can impact us and others around us. But yeah, how do you see it?
[00:04:17] Dennis Mortensen: I think, if you love the ability to enjoy in the journey and I fully kind of appreciate the idea of this type of human beings being addicts, it's a little dramatic, but I see where you're coming from. Perhaps just an excitement to go do something new or crash something out of nothing into something, and that excitement sure might just rhyme with what other people are getting sucked into and caught asleep. And I find the journey super romantic. Many people hate the whole zero to one as in no money, no customers, no product, no prospects, no hope. We're going to die very soon.
[00:05:04] Dennis Mortensen: In that part, I just really like, as in it's just me and a Diet Coke and a laptop and tomorrow perhaps a few hundred lines of cold and the day after perhaps a co-founder and the day after perhaps a couple of employees. And in a few months, perhaps something that resembles a beta customer. And perhaps in a few months after that something that could resemble a mini contract and a few monies coming in. But I really just personally enjoy the journey as if it's not a penalty or some kind of bucket of pain, which I need to swallow so I can get to what I really like. That could be some sort of outcome or buy what I think I need no, just like playing it for the love of the sport, and then sure you love the sport. Sometimes you get a trophy.
[00:05:56] Andrew Michael: Yeah, that resonates completely with me as well. I think it's that zero to one phase, like taking a problem and being able to come and meet it with a good solution in the market and figuring that out, because it's not very easy, like you said, like 9 out of 10 startups die and it's that challenge just to get it to that end post and being able to see like success at the end of the day. But it's that figuring it out. It's like going from nothing, like you say, like in seeing things manifest from your mind onto a screen or onto a physical product.
[00:06:25] Dennis Mortensen : It's awesome, right. And the funny thing here is, if you think about it, take any investor. Doesn't matter the size of the fund, we'll just kind of make it up. They have $100 million that needs to invest in over 40 years. There are certain states might invest in some 20 or companies a year. The funnel will look like a thousand at the top. A lot of flimflam shouldn't even be at the top. It'll disappear. And all the way down the funnel to some point, 20 get a check out of those 20. It doesn't matter what the real distribution is.
[00:06:59] Dennis Mortensen: Let's say 16 go, it's up, two or three go sideways, one or two might pay for the fund in total and that's it. If that's the funnel and you and me go out with the belief that we can do one startup, that is kind of suggesting that I'm some sort of a savant that can just jump into the end, suggesting that whatever they pick and then trying to pick the best of the best. They're not giving idiots checks, they're trying to give it to people who look somewhere plausible and being able to make some fall of return. So you might almost never able to do things in parallel, so you have to give them in serial.
[00:07:40] Dennis Mortensen: So you and me are not running the four-year fund. You and me, as entrepreneurs, are running the 50-year fund. So we can't really do what 20... We can pass through eight, 10 ventures over 50 years. I don't know, we're six. And really you should just assume most of them wouldn't work. If some of them do great, you should kind of pay for the rest and that's just gonna life-long setting where you bathe into entrepreneurship and hopefully you get a little bit better from one startup to the next. But it's the 50-year fund.
[00:08:11] Andrew Michael: Yeah, I like the way of looking at it like that and I hope your wife knows that you're in for another four after this one.
[00:08:16] Dennis Mortensen: You sell one at a time.
[00:08:18] Andrew Michael: One at a time, nice. So today we chat a little bit before the show, we thought it would be interesting to talk about. I think you have a very unique perspective coming from two different business models, if we have it as that, or different types of clients. So you've worked in a business like x.ai where it's really very bottoms up low average selling price for the product. You onboard one or two users, slowly but surely more of those users onboard in an account and eventually maybe someone from procurement comes and says, hey, Dennis, let's bring this all together, let's get a contract going.
[00:08:50] Andrew Michael: And you've worked in the other end of the scale where you are selling software, large prices, high ASP, contracts in place from day one, really working with the customer success organization and trying to deliver value there through various initiatives. So I'm keen to talk about the differences today that you've seen in these two different paths and perhaps some of the similarities that we see.
[00:09:14] Andrew Michael: So for businesses that are thinking, okay, who they're serving if they're serving a low ASP these are some of the things that you seem to be effective versus a high SP and trying to understand clearly what the difference should be and why they shouldn't adopt one approach if they have one or the other?
[00:09:28] Dennis Mortensen: Yeah, it's a good question and it's obviously a potent map for where we can't explore all of the items on that map, we can pick out a few and we shouldn't suggest that it's exhaustive. As in that is the defining difference between the two particular avenues which you can take. And by the way, many times it is really a choice and not the particular product that dictates whether you go bottoms up or top down. As in soon picked, probably still to a large degree a bottoms up, even though their average contract value now is much, much higher than when they started.
[00:10:07] Dennis Mortensen: They figured out how they can turn these into real enterprise contracts. But it's really how you imagine you can best capture your market. And sometimes there's just not really a single player mode or a idea of a free initiative could be that unborn is extremely complex and Andrew cut just signed up on Thursday night and kind of get started on his own. All things really in organizational change over many, many months, for that we can only do top down. Many times is not really the product. Now I'll pick a few here.
[00:10:40] Dennis Mortesnen: One thing that I certainly noticed, disclaimer, anybody taking notes here, anything which I say is just opinion, things that I believe does make them true, but things I really believe you can take it for what it is. But one thing I certainly noticed was that when we did bottoms up I've done five ventures prior to a large break. Four of them or three of them were straight top down. Why did I the whole thing? Six, seven, eight, nine, ten, but sales cycles from initial kind of high and low to pen on paper. And I've done one true kind of bottoms up and one in the kind of in the middle. We can talk about that as well. That was the one venture that didn't work out. Perhaps we shouldn't done middle.
[00:11:26] Dennis Mortensen: But the one thing I certainly noticed was that there is a ton of real experimentation going on when you're doing bottoms up, simply because you have high volume. So the AB or multivariate types of tests that you can run on your funnel, which is having high velocity, just allows you to do things that you can't really do. For look at our venture before x.ai, when we got acquired we had 130 contracts all in all, very proud, very successful. It was all good for 130. Well, there was a morning at x.ai. I said let's roll through the system kind of all the time, so we couldn't really do the same type of experimentation and it's super emitting.
[00:12:16] Dennis Mortensen: So if you're doing bottoms up, you certainly need to build some part of your organization that are tuned to the idea that every week, if you're not running half a dozen some experiments, you're probably not doing it right or generally robbing yourself from an opportunity to highly optimize churn retention. Anything else which you really really care about. That is very visible. And perhaps, I guess, I think what happens is that people know it but even though they know it, they don't build the team to take advances of it, as in if you don't have the right software in place to run these experiments, or have the right kind of data infrastructure put in place to run these experiments, or have the right analyst put in place to try to extract insight from these, or have the right organizational willingness to change things and change the offer, which can look a little chaotic, and many people end up just really disliking it. I think they're just not a good fit. Not really anything to say about the skill set.
[00:13:22] Dennis Mortensen: They like the idea of cementing things and putting one brick in place at a time and keeping it for the longest period of time where you should be able and willing to put in place 19 bricks over the next two or three weeks. Rip up 17, old push to production that we're now revoking. I said, those experiments didn't yield the results we hoped for. Perhaps some of them were kind of negative. That's why we could drill in on that one, because it find it very kind of interesting and how you build those particular teams to run these.
[00:13:54] Dennis Mortensen: On the other end, you do optimization in different places. The way we certainly did it was that we became very good at describing each of the steps in our sales funnel and forever to figure out whether we had the right number of steps in our funnel. And you'll have somewhere between half a dozen to short of a full dozen number of steps in your sales funnel and you'll have a sales cycle anywhere between... If it's four figures two or three months sell cycle six figures, perhaps it's more like six, seven, eight, nine, 10, 11 months, depending on the type of kind of vertical you're selling into and by being really good at each of the steps.
[00:14:44] Dennis Mortensen: As an understanding, I'm planning to sell you a 140K contract, Andrew, and we've had some conversation. I need to know exactly where you're at with my funnel so I can optimize on activities that bring people from one step to the next, and I wouldn't call it experiments, I would probably more call it optimization, because that's simply not. Again, as I said before, room to run experiments. I couldn't do seven different experiments on 11 leads. But what I could do is say, hey, to roll from this initial step to the next, say I have some step for where we have a trial period where you're beta testing some particular features that we believe are selling indicators or increase the probability of moving to the next step again.
[00:15:34] Dennis Mortesen: Well, to do that, I had two or three kinds of things I do. I might be able to optimize. I might have a wild idea of planning something new. If you do something new, we used to do interviewing to figure out whether the new idea was even worth assuming, simply because we didn't have that many we could try it on. So we did a lot of interviewing, tried to figure it out. If I do this set of activities, is that something was I might want to be willing to shift to and start this kind of optimization of where you tune it ever so slightly, like, okay, I tuned it just a different way. I did my scripts at this step or I moved the SDR a little bit further up. I moved the AM a little bit earlier. The AM kind of did this kind of activity. I tuned the script, but it was much more optimization in that regard. And then, once it was a blue moon, the courage I would almost call it to introduce a new idea. But far and few apart-
[00:16:42] Andrew Michael: You don't want to break what's right.
[00:16:43] Dennis Mortensen: Ripping something out for where people are going through the funnel. It does look like this. I certainly want to squeeze it out a little bit, but it was very dangerous to do that. They are also interconnected, as I'm sure you would agree. It's not like step two and step seven. So distinct that I could do things so differently that there's no relationship to what I did in step two to what I'm doing in step seven. But I can't just go bananas on a completely new idea on step seven. There's a whole path of build up to this point in time.
[00:17:17] Andrew Michael: So you create that journey. So the first thing obviously you sort of say is like the volume then is completely different. So when you're dealing with bottoms up, you just have way more leads, way more signups to deal with versus on the other end, you really need to be a lot more strategic in thinking about what are going to be the moves that are going to move the needle and less room to experiment and make.
[00:17:38] Dennis Mortensen: Yeah and there's almost a double whammy here, which is that in a bottoms up, a lot of what you do is but the fact that it's high volume, self-serve, meaning that it's implemented as softly. As in there's not a handshake, it is a online funnel for where every action you take, I can implement and analyze. When you do top down, a lot of it is very unstructured custom emails, even though they might be scripted, but I certainly want them to fit into the particular scenario, your particular situation, your particular budget, your unique setting, your title. Wherever I arrived in the organization it's very unstructured and many times difficult to implement.
[00:18:25] Dennis Mortensen: So it's not even that it's high volume, low volume. It's high volume, good data, low volume and even the low volume is poor data. Or very emotional commentary from the individuals, kind of after your SDRs and AEs and CS kind of person, to the alpha way. You kind of have to decipher it and apply some sort of value to it. So it makes it not just high volume but even a quality of data.
[00:18:50] Andrew Michael: Yeah. And you said as well, sort of the reason for picking one of the models or whatever. So going high touch approach is like one of the cases just being when your product's too complicated to allow somebody to self serve or to have a product led approach from that side.
[00:19:04] Andrew Michael: What are some of the other reasons you see it and I think like I've also been guilty of this in the past of choosing a model just because of the skill set that I personally had and didn't feel that I understood. So you alluded to like you need to have the right team for the different types, but what are some of the other reasons and you would choose one over the other?
[00:19:21] Dennis Mortensen: Surely many reasons. I would pick single player mode as a strong bullet in that list where if your product does not allow for a single player mode, it becomes much harder not impossible, but much harder to the bottom job for where any kind of self serve like thing you should be able to sign up for soon tomorrow and have a single player mode where you're just happy with this particular video conference experience on your own. If you saw her also have to persuade three or four people to sign up for Trello at the same time. That's the best example of another one.
[00:20:03] Andrew Michael: Trello you can sort of use.
[00:20:06] Dennis Mortensen: I think whether-
[00:20:08] Andrew Michael: Let's say like a Jira.
[00:20:09] Dennis Mortesen: Jira I think would be a better example of perhaps for that. Sure, you could sign up for Jira yourself and you could have some kind of good stories for yourself, but it doesn't really make much sense. So you should have some single player mode for your product. That's the one part.
[00:20:27] Dennis Mortensen: I think the other strong bullet, if you do have single player mode, is that the other morning should be very compressed, as in that time to success or however you want to define that needs to be very compressed. So many pieces of software will have a long kind of initial touch time period. From that to success it just requires you to do a lot of things. Sometimes it could be days, weeks, months for enterprise software before you start to see some value.
[00:21:01] Dennis Mortensen: If that is very long, self-serve, single player mode becomes very hard as well. You almost need to have that kind of customer success team whatever capacity you've designed it to come in to help kind of onboard people. It doesn't mean you can't use technologies, processes, but this becomes very hard. There's also perhaps not exhausted, but lastly a price point. So in a bottoms up, I think we figured this, everybody figured this out, but there's certainly an inflection point for where it should be one or two things. Either a price point solo that you will just take a hit on your personal credit card if there's not a free edition. If people can't take that hit, and or if it goes above, most companies will have anything below a certain kind of price point.
[00:21:52] Dennis Mortensen: You can just write off a sandwich with a customer X, Y and Z and you can't cross into territory where you need to justify a buy. So you probably need to be below that so that, yeah, yeah, I'm testing out this software, I think we can do our kind of scheduling for social activity using so, and so. I pay kind of 20 bucks for it a month. I use the corporate credit card and let you know whether it's a good idea or not. You need to kind of be below that. If not, now you're into a cool move territory and that's really nothing wrong with that. But now you're kind of in a different kind of sphere, place where people need to be, need to have the skills and tools and arguments to persuade their boss, and that's top-down territory.
[00:22:40] Andrew Michael: Yeah, I think it's. Chris of Yanster's got a good post on this. He's like the five ways, or whatever it is, to build a hundred million dollar company and the different price points being one of those biggest factors of understanding, like the different models you can run and the risks, and generally the very low end or the very high end of the businesses that are surviving and the ones that on that messy middle, which like the four figure range, are the ones that tend to be a lot more difficult to grow and scale because of the challenges.
[00:23:05] Dennis Mortensen : Again, at the side note, we tested every single price point between two and twenty dollars. We did all sorts of testing above twenty all the way up to sixty five at last volume, because we could, that kind of very interesting. I'll tell you a few pointers here, just for the fun of it for this particular product. So we did a prior venture.
[00:23:30] Andrew Michael: What was the product?
[00:23:31] Dennis Mortensen: We did a skippling agent. So imagine Calendly, just a different take for the audience who don't know about x.ai. And the funny thing for this particular product, and it kind of falls into this bucket where you can buy Dropbox, Slang, x.ai, Calendly and many other things in the eight and twelve, fifteen dollar kind of territory. We found that any number below five, funny enough, worked against us as in, not better as in. We just allowed ourselves to test and you would assume, well, it should be better to sell something at four versus eight. It was not. We can talk about why that is.
[00:24:15] Dennis Mortensen: Then every price point from five all the way up to nine, not really any difference. It varied the curve very quickly, kind of flannies out, and you might as well sell it at nine. Again, the other one was fourteen, but the curve was not super. There's enough kind of step in that curve, not very dramatic. You can probably dial it up, and we did for a different edition with a few extra features all the way up to forty. Now, that kind of nineteen to twenty. That was dramatic.
[00:24:48] Dennis Mortensen: When you go from nineteen to twenty, I'm not saying you're having a conversion. But for us, it almost did one dollar, and again you just enter a new territory. What was funny though, there was almost no difference between twenty one all the way up to thirty nine. So didn't matter, twenty one, twenty seven, thirty five, thirty nine all the same price. In this particular segment, in this particular moment in the time. So we actually ran with a thirty nine dollar price point for the longest period of time.
[00:25:23] Dennis Mortensen: Now then we did further testing all the way up. Of course that's a very big step once we entered forty, but all the way between forty and sixty four was pretty much the same. Once you enter that kind of sixty five upwards, you're entering the kind of sales force type contract. It's probably a hundred dollars as per seed and people just got a different taste of what you were selling. It was very realistic. Like tens of thousands of people that we test on this. We ended up on eight, twelve and fifteen in the end, a short of fifteen.
[00:26:00] Andrew Michael: Super interesting and like having the luxury and the amount of users to be able to experiment with that and it sounds like the twenty mark, the forty mark and then again somewhere the sixty mark, like the twenties, sort of what's the tip, the scales and conversion rates and changes. But then again like raising the price is significantly like a thirty five versus a fourteen is you can get away with half the conversion rate. It's just all about thinking. The other side in the concern would be like the viral factor and then how that impacts growth in the long term.
[00:26:29] Dennis Mortensen : But also, so often, was a true general intention, is obviously a close related cousin, sometimes the exact same thing, just a different sign in front of the number that you are presenting. What was interesting, though, again in this particular segment but it's true for many products, for where you have potential for dramatic needs of outcomes. Let me paint a very kind of dramatic needs of outcome for a product. Say, you have a self-driving car and you hit it yesterday. That's not a software quiz, that's just a very dramatic negative outcome that is very difficult to survive from, no pun intended.
[00:27:09] Dennis Mortensen: Now, in our universe, things were very brilliant. Again, when we did a bunch up at x.ai. There's no meeting almost set, there's no version of I almost turned up for these meetings with you, Andrew, either here or I'm not. So even though on all these place points, we could test conversion rates. You then make the assumption I make no changes on the remainder of my kind of third ecosystem. They should stay intact, obviously. So that means that your willingness to forgive a meeting not set is just not as high at a higher price point. So, while I might do all my calculations, excel myself to the kind of eighth degree to confirm, 19, even though a converting list is a much better deal.
[00:27:54] Dennis Mortensen: You know some total for us on conversion. What happens to all those meetings? And like any piece of software, there'll be a glitz. What does that cost me the other end, if the willingness to give is at a different scale? There was not immediately kind of visible to us that hey, with this price, I'm not just optimizing my conversion, I'm changing another set of emotions down the line was not as visible and that's been a very interesting. That's actually not going to go all geek on.
[00:28:25] Andrew Michael: It's like the willingness to forgive, like you have the willingness to pay, but then you'll have the willingness to forgive on the other end.
[00:28:33] Dennis Mortensen: Churn happens because of many things is really a low price point. It sometimes ends up being a single moment in time, even though it really isn't. It's often the accumulation of disappointment over time but a low price point. That could be something for where this I just like so much that I do an immediate job. But if you really loved it, you could probably survive that Microsoft did and people could look this up, or I could share the papers, this research from years back which was emitting for what we did in particular.
[00:29:09] Dennis Mortensen: Which is that that whole willingness to forgive is very different between machine agents and human agents, meaning that if you screw something up and didn't turn up for this meeting, they, Andrew, I could probably assemble some set of emotions where I would forgive you. Like life, life happens and your two lines of excuse seems possible. So I'll turn it up next week again.
[00:29:35] Dennis Mortensen: Now, if a machine agent did the exact same mistake, exact same set of excuses, usually have the same ability and willingness to forgive. That's just not the case. So we had this kind of burden of having to not do as good as humans but do better than humans and when we did a mistake, not have that ability to be forgiven. It was just very hard for me to kind of swallow in that particular environment where we deal with machine agents.
[00:30:06] Andrew Michael: Yeah, it's very, very interesting and sort of seeing how the price point also impacts that level of forgiveness as well, and it's not immediately visible, so you don't really understand that and you see that in the long tail over time. Now I think it goes as well to sort of this idea in terms of like churn and retention is really an exchange of the value on both ends and it depends like what you're paying. So if you're extracting value and you're paying a large amount but you're getting a large amount of value out of it, you're happy and you can put together like a four by four matrix, depending on the thing.
[00:30:37] Andrew Michael: You can see where churn risk is. But one thing you don't really factor in is as the price increases, so does that willingness to forgive on the mistakes that are made as well, and you expect a much higher service and you expect different expectations come with price.
[00:30:50] Dennis Mortensen: And this is what and I'm just stating the obvious now. Some people might not fully appreciate, which is that when you sell top down which is again very different to this particular setting, you can put a lot of empathy points in the bank by doing awesome.
[00:31:09] Dennis Mortensen: Coming in many forms could be all the way from your account manager to your customer success team to level one, two, three. Can I support people to your documentation and support articles and so on and so forth. But that whole experience is just the easiest way to put some money in the bank so that when something happens that you didn't plan for, you can withdraw from that. That account will go to zero.
[00:31:36] Dennis Mortensen: But you could actually put a lot of money in the bank on that. And I'm just always raffle as a customer myself, as an enterprise customer myself, where I'm paying for some pieces of software, and it's $10,000. If not in the six figures, why would you not? I said I'm not talking about constantly affairs. I said, sure, amazon is all good and nice, you buy me a box out at the US Open and I love you for it for a little while. But really, what I love is the 10-minute response time on that email to that account manager. On some issue we have some easy to instance like that.
[00:32:14] Dennis Mortensen: I remember that I tell my friends that the team will think twice about when Google calls and say, hey, perhaps we should talk about shifting to a different cloud. You know what? Those are things that I remember. And they're not cheap. They're not the most costly thing you can invest in. I'm just getting baffled. So I've always tried to over invest and then over. It comes back to my new venture. I'm all about making support better. Super nice, but I'm trying to make better screenshots. The slice I'm working on is just so thin, but it's just one parameter out of many, many dozens of parameters and doing better support.
[00:32:55] Andrew Michael: Interesting and you're going bottoms up or top down with BrightLaunch project.
[00:33:00] Dennis Mortensen: I am initially going top down, but I'm building it so that Alice can allow herself to run a few tests on whether there is a bottom up opportunity here. So one thing which we didn't talk about is either the virality or the network effects that might come attached to your particular product. So we had at x.ai both. So we had very strong virality, which is that for every time you used our product you invited a set of guests, meaning those guests got exposed to our product, and that meant by far the vast majority of new signups to our product was guests in prior meetings of existing customers.
[00:33:46] Dennis Mortensen: So if we could just keep those customers, see them do more meetings, they would invite more guests who would then ultimately enter the funnel at the top and that whole flywheel would work very well. We also had some network effects, the whole idea of your product being better if there's more people using it, for where we increase the likelihood of you meeting another customer.
[00:34:05] Dennis Mortensen: So we could do this kind of skeptic in Nevada. No negotiation needed. We could do an internal negotiation. I say, hey, Andrew, let's set up 20 minutes on Zoom last week of December, with [Laney] being optional as I click send, it's just scheduled. So we had both at LaunchBrightly. I think we might be able to engineer some virality. Very simple to say.
[00:34:29] Dennis Mortensen: I can pick something from our prior universe. Say, Calendly, you can sign up for a free account. That free account will have a little bit of a hey, powered by Calendly kind of there's in the upper right hand corner. That's the exchange. Seems fair. So I'm generating product features. That ends up in health articles. So we had software product.
[00:34:47] Dennis Mortesen: You have 200 support articles. You probably have 500 kinds of images in those articles. Who creates those images? Some support individuals, perhaps a technical writer? They do it manually. I can do that automatically. I could probably give you the tool for free. If I can insert a little warning, hey, it just needs to be watermark with this it's not enough where you can use it, but okay, enough for some people to notice.
[00:35:10] Dennis Mortensen: And then I have this kind of reality. So there's certainly the possible designs where we could do a bottom stuff. I haven't tested it yet. We are starting top down, speaking to people in pain, selling kind of real contracts on 12 or 24 months like very, very standard and testing that kind of sales, one. But I do have fantasies of running that.
[00:35:36] Andrew Michael: You saw it, you saw the x.ai and you want it back. Nice, I feel like we could continue talking forever on these topics and I really enjoyed this conversation, but I see we're running up on time. I have a question for you: what's one thing that you know today about channel retention that you wish you knew when you got started with your career?
[00:35:56] Dennis Mortensen: Well, that's a good question. Perhaps do you know is one of those questions where I'll hang up here and I'll think of something better. I'm always going to call you back and say, hey, I have a better response to this. But I do think the one on churn would be that there's two types of data that you should spend probably an equal amount of time on.
[00:36:15] Dennis Mortensen: There's the data-centric, where quantitative data would you extract from however you introduce your environment, which you should look at, try to understand your churn environment. It doesn't matter what tooling that you use, but you do that in aggregate and you'll be able to find all sorts of little pockets where the data will tell you something was very hard to find otherwise, but if you only do that, it feels that, which I only did.
[00:36:42] Dennis Mortensen: I'm a computer scientist. I've only did for my first kind of few ventures. The whole thing was very kind of quadrant. And you were missing perhaps one part of the picture. If you're not willing, able and eager to just go and read some of those kinds of support tickets or some of those churn reasons and try to figure out what is it that the customer is trying to tell me is very kind of qualitative. You can't measure user-design element, but you might be able to read enough messages. Super kind of unstructured to get a real feel for why is it that we're losing 8% over whatever kind of time period, but where the data will surely kind of give you opportunities to show things, but kind of getting that feel I don't think I did that enough myself.
[00:37:28] Dennis Mortensen: I didn't read enough, I didn't sit. I said I do this all the time, like every week I'll do tickets. I think anybody who doesn't run an organization where you don't do tickets yourself, you're blind to some degree, so that I personally didn't do enough. So, unless anything new here, I'm just gonna bang in the drum off. Please do both, because I certainly did that to both.
[00:37:49] Andrew Michael: Yeah, at the show we used to talk about the what's and the why, so bringing them both to you, then the data, you see what's happening and do we speak in discussion to understand why is super important. Well, Dennis, it's been absolutely pleasure talking today about the different approaches to building a business, from bottoms up and then top down, getting to hear a little bit about why you would choose one over the other and some of the key fundamental differences and the challenges they come with them.
[00:38:13] Andrew Michael: Is there any final thoughts you want to leave the listeners with today before we wrap up? Everything we've discussed will be in the show notes for them so they can pick up on that, but you have anything else to show us today?
[00:38:23] Dennis Mortensen: Two notes one, if you have no tooling, little insight, ten weeks out of college and the whole thing is kind of overwhelming. Just love your customers as in, just really love them as in care for them. You'll stumble around, you'll make some mistakes, but they can feel if you actually care for them. And that care is very hard to think. I said most enterprise companies Don't fucking care about their customers than just numbers in the spreadsheet.
[00:38:53] Dennis Mortensen: But you, your new venture, if you really care, that is being felt so you can forget about, you know, this episode and for the other episodes, just mature the fact that you actually do care. That will take you very far, in my opinion. That's the one part. The other part. I am still an entrepreneur. You should go check out, launchbrightly.com, because well, and seven months into it I have no money, no prospects, little hope. And you can have it. Look at it, they'll be wonderful. So they want it.
[00:39:24] Andrew Michael: I love that. I love that. Yes, I definitely, as you mentioned, will be in the show notes. You can check that out later as well, and it is launchbrightly.com, so you can check that out there. But, Dennis, thanks so much. It's been an absolute pleasure chatting today. And wish your best of luck now going forward. Cheers.
[00:39:37] Dennis Mortensen: Thanks so much.
[00:39:39] Andrew Michael: Cheers.
[00:39:42] Andrew Michael: and that's a wrap for the show today with me, Andrew Michael. I really hope you enjoyed it and you were able to pull out something valuable for your business. To keep up to date with churn.fm and be notified about new episodes, blog posts and more, subscribe to our mailing list by visiting churn.fm. Also, don't forget to subscribe to our show on iTunes, google Play or wherever you listen to your podcasts. If you have any feedback, good or bad, I would love to hear from you and you can provide your blunt, direct feedback by sending it to email@example.com. Lastly, but most importantly, if you enjoyed this episode, please share it and leave a review, as it really helps get the word out and grow the community. Thanks again for listening. See you again next week.
A new episode every week
We’ll send you one episode every Wednesday from a subscription economy pro with insights to help you grow.
My name is Andrew Michael and I started CHURN.FM, as I was tired of hearing stories about some magical silver bullet that solved churn for company X.
In this podcast, you will hear from founders and subscription economy pros working in product, marketing, customer success, support, and operations roles across different stages of company growth, who are taking a systematic approach to increase retention and engagement within their organizations.