[00:00:00] Harrison Rose: If there's one takeaway or something, like the question I think people sometimes miss on their surveys, that's the real gold dust. It's like asking the companies, especially those you recently acquired, what was true at the point in time you started evaluating or thinking about solutions like ours? Because it's that change within the company that we want to be able to see in data. Because if we can spot that signal, like in the data in advance of them actually going to market and evaluating solutions. These are the highest fit, most likely to buy customers that you possibly could.

[00:00:00] 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.

[00:00:54] 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 bootstrapped, profitable and growing.

[00:01:08] 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.

[00:01:19] Andrew Michael: Hey, Harrison, welcome to the show.

[00:01:22] Harrison Rose: Hey, thanks for having me, man.

[00:01:24] Andrew Michael: It's great to have you. For the listeners, Harrison is the CEO and Co-founder of GoodFit, helping companies contact the right customers at the right time with the right message. Prior to GoodFit, Harrison founded Paddle straight out of college. And that has grown to become the revenue delivery platform that helps B2B SaaS increase global conversions, reduce churn, stay compliant and scale up fast.

[00:01:44] Andrew Michael: Harrison was also a previous guest on the show where… when he was still at Paddle, so I'm excited to learn a little bit more about his experience since then. And actually my first question for you today, Harrison is, what's it been like starting up again?

[00:01:58] Harrison Rose: Intense. A journey that I didn't quite anticipate, to be completely honest with you. I stepped back from Paddle a couple of January's ago. Business was thriving. We were in the process of closing the most recent round of funding where we were named unicorn as well as acquired ProfitWell, which was super, super exciting. I helped them with the DD. I helped evaluate the business opportunity. But for me, it just like… it kind of felt like I'd seen that story before, which is an absolutely amazing privilege and luxury to have had.

[00:02:27] Harrison Rose: I have been running the business my entire adult life. It becomes your whole identity, your friendships, everything really. So it was just kind of keen to take a step back, but didn't manage that for too long and I've ended up founding another business. Yeah, I can tell you that story. It depends where you want me to go, man.

[00:02:45] Andrew Michael: Yeah. I think maybe the first question I have is like, what was that detachment like? Because like you said, I mean, you literally, like your whole adult life was spent building, Paddle. And then all of a sudden, like you're on the outside now and how did you deal with that initially?

[00:02:57] Harrison Rose: Yeah, it was really strange and really difficult. Everyone will tell you it's difficult, but I think it's not really something you've ever experienced before. To begin with, that's just, like the shell shock. Waking up, I ended up over Christmas. It was a bit of a soft landing as a result of that. I also had six months where I started to wind down responsibility. But nonetheless, like the initial shell shock is like, oh my God, I don't have six hours worth of, or eight hours, whatever it is, worth of Zoom calls today. What do I do with my time?

[00:03:26] Harrison Rose: But after, initial shell shock, which everybody gets over, it was okay. Paddle is an established business, right? Like, I left it with 300 staff, 3,000 customers, a very high quality executive leadership team and senior leadership team. One of the things that the investors asked when I said I was taking back is, like, what's gone wrong? You must have fallen out with some member of the exec team or the COO or the now president or whatever or Christian, my co-founder. And I was like, absolutely not.

[00:03:54] Harrison Rose: If that was the case, I'd have never been able to step back. If I was worried about it, I'd still be there. It was the quality of the people that I'd left behind that gave me the luxury to be able to think about stepping back to be completely honest with you. So that was good. I think the hardest thing was we also were going through quite a big acquisition of ProfitWell. That was a good few hundred people spread across a number of different locations. It meant that the culture, the company probably evolved for the better but evolved really, really quickly.

[00:04:24] Harrison Rose: And watching that change was odd. Like just really weird. You build companies based on your values and in your image and you try to create an environment or a playground where people can thrive and have a great time. And everybody does that in their own different way. So that was the weirdest thing. Actually just watching the culture evolve and I use evolve really on purpose, because I'm sure it was necessary but that was the weirdest thing.

[00:04:52] Andrew Michael: Interesting. Yeah. I've heard this quite a few different times. And I think like when acquisitions like this happen, they can either go extremely well or extremely bad and it's like getting that right mix of adapting cultures normally ends up being like the biggest friction within companies from people I've spoken to at least. Nice, but yeah, you mentioned as well, like starting again, before chatting was like a little bit of an unusual way about it. So I'm keen to hear like, why, what was unusual about it and what made you start something again like off the Paddle?

[00:05:22] Harrison Rose: Yeah, I’d probably go… yeah, exactly. Why am I putting myself through this again? It actually goes back to the Paddle base. My co-founder at GoodFit worked for me at Paddle as the head of RevOps. So I'll go all the way back there because that's kind of the founding story of the business.

[00:05:41] Harrison Rose: Like it started with a personal need, like as you said, GoodFit basically supplies data to sales and marketing teams. We call it identifying the right customers at the right time with the right message. But at a very basic level, we supply data to sales and marketing teams in order to go to market. And that was born out of a personal need. When we started Paddle, nobody knew who we were. We operated under a completely different business model to that which everyone expected and no one had ever heard of it called Merchant of Record.

[00:06:06] Harrison Rose: We had some really strict qualification criteria. We could only sell to software companies and software companies with a checkout, and like, shock horror or spoiler alert, the majority of the market in software, which is hard enough to get down to anyway, don't have a checkout. They sell offline, through sales teams, et cetera. So it was just really hard for us to find companies to sell to. And every dollar that we spent on any business that wasn't a software company and with a checkout was just like burning cash.

[00:06:32] Harrison Rose: If we were running ads at software companies that didn't have a checkout, it literally was just wasted money because they couldn't use the product. That's changing a bit over time, but it was the case for a really long time. Every email we sent, like buying an SDR to one of those companies, dollars down the drain. So to try and solve that, I spent a really lot of time and eventually money on research and understanding our addressable market and who we could sell to.

[00:06:55] Harrison Rose: I'm talking now, probably four or five years into the business. We ended up with a team of 10 more. We called it Lead Development Reps, representatives in the business, and their sole job was to do research into the accounts and contacts we could sell to. One of these LDRs that I hired was a guy called [Alexander Berry], who we hired straight out of university. He's very proud of his law degree. He tries to tell us he's a lawyer at every possible opportunity that he can. He got into the business really confident.

[00:07:21] Harrison Rose: First of all, he told me that the jump from lead development rep, this team of like 8 to 10 people I had in London, my idea was they jump into being sales development reps eventually. The sales development reps, being customer-facing, like outbound email sellers, not just internal kind of research. First of all, he told me that wasn't working. I don't know how he got permission to pull the numbers from Salesforce or whatever or just qualitatively maybe he knew. He was like, that's not working. And then he was like, also, every single one of these LDRs hates their job. They're just researching stuff all day long. They're lethargic. There's errors. They don't like it.

[00:07:50] Harrison Rose: After he told me that, there was a hackathon about three or four days later. And he had basically been teaching himself to code in the background. His dad was a programmer, which I think helped. And in this hackathon, he just basically built a way to programmatically gather like 80% of the data we've been gathering manually through eight people constantly for quite a high expense. And it was at this moment. I was like, you should probably come with me. Like you're a very talented individual who's thinking in slightly different ways.

[00:08:16] Harrison Rose: Long story short, he ended up running RevOps. We started to use and gather data in some really interesting ways. And the investors that we work with and companies that we're friends with in portfolios, et cetera, will basically come and do this for us. And we're offering and saying, we'll give you tens of thousands of pounds to replicate this for our business. At which point, the investors, myself, you can't hold him on back. I was so sad to lose my head at RevOps. He was my most trusted person in the business, probably.

[00:08:45] Harrison Rose: And he went off, started the journey on his own. I advised him for a year or so, step back from Paddle, wasn't so good at doing nothing. And then when your best mate comes and says, do you want to come join me on this thing, you kind of helped create, they give me a hand. It's pretty difficult to say no. I accepted on some very specific conditions, but that's basically how I got here by hook or by crook.

[00:09:09] Andrew Michael: Very interesting. I love that as well though, like how this sort of spoiled out of something in a pain point that you had directly at Paddle. I think this is obviously some of the most successful stories you hear. I, and more than often inevitable in this case, where you spot the problem internally, you solve it and then others feel the pain and want the product. So I think it's amazing as well, like from your perspective, understanding that and like letting him go to go out and not letting him go cause obviously he was going to do it either way, but actually support.

[00:09:41] Andrew Michael: Nice. Yeah. So I mean, I'd actually be keen to dive into this topic a little bit deeper then as well. Because I think when we think about the context of churn and retention, one of the biggest reasons as well, and I was actually looking at this the other day, is really like probably about 30 to 35% of every episode I've ever recorded on the podcast, which is over 250 now, we ended up talking about some way or another who our ideal customer profile is and how to identify that. And I think this sounds like it's a lot of your bread and butter now with what you're doing at GoodFit.

[00:10:11] Andrew Michael: So I'm keen to hear a little bit about like, what was the original process that you sort of developed internally at Paddle to go and figure this out and how you went about identifying who these customers were. And obviously you had some very specific constraints in your case where they needed to have a checkout, they needed to be software businesses. So that already sort of eliminated most of the market. How do you typically see this process working with your current customers and the way you see the market today at GoodFit?

[00:10:38] Harrison Rose: Yeah, that's awesome. And it's also awesome to think about it from the perspective of retention and NRR or NDR and not only just acquisition because I think that's sometimes a mistake people make and only our most sophisticated customers even now are good fit actually go that far. So I'll get there in this explanation. I think there's a few things to think about when trying to identify the ideal customer profile.

[00:11:00] Harrison Rose: First of all, you need to think about, what is your qualification criteria? Like what needs to be true for you to physically be able to support someone and that could be due to product limitations, it could be due to legal limitations, that could be size. You just can't serve someone who's only going to pay you X. You'll have some hard limitations on who you can and can't support, right?.

[00:11:20] Harrison Rose: Often, these are the things that your SDR is qualifying in and out on or that on the form on your website to just send someone away if they're not a good fit. It's the hard qualification reasons. So Paddle, that was a software company with a checkout. They were basically our limitations. There was also a bunch of legal stuff around the types of products we could support or not.

[00:11:37] Harrison Rose: Basically, it will be different for different businesses. First of all, establish what they are. Use that to understand how many accounts are on your market, who you can sell to, whatever. The real trick though is, normally that market, that addressable market you can sell to is quite big. And you normally have a limited number of BDRs or like ad spend or whatever it is to actually play with. So the next thing you want to do is try and prioritize the companies that look like the very best fit for your product as possible, those that are most likely to buy, right?

[00:12:04] Andrew Michael: Before we get there, before we get there, let me just backtrack. You sort of identified the addressable market, but you skipped over a step as well, like how do you actually go about identifying how big this market is? What are sort of the data sources that you're looking at and trying to use to identify this addressable market that you're going after?

[00:12:22] Harrison Rose: It's a really great question. It depends, right, on the business. And again, I can give you a bit of a glimpse behind the curtain with Goodfit because it's the type of thing that we do for people. Like people rarely actually know what the size of their addressable market is. Like these MVCs ask us a lot about it now too, at GoodFit. The founder just thinks that you're meant to put the biggest number you possibly can in the board deck and no one believes it, in which case it's just a waste of time, genuinely. It just isn't helpful.

[00:12:45] Harrison Rose: Maybe they're thinking, the context of, total addressable market, but really what you execute against is what, sometimes people call the service board addressable market. Total is kind of bullshit. I can tell you the size of the software industry. I'm not doing anything with it. It's also the least validated number. I've pulled it off some Gartner report. It means nothing. It's huge.

[00:13:03] Harrison Rose: Like maybe it validates to the VC, this could be a billion dollar opportunity. I don't think it really gives them that much confidence having known them and done a bit of investing myself. Then you go and lay it down. This is, serviceable bit that I'm always most interested in because that's your path to revenue, right? To customers and whatever stage you're at. And you might want to strategically grow over time, but that's a different conversation. Now, how you size it and what data you should use, it's going to depend on what that qualification criteria is, right?

[00:13:31] Harrison Rose: Part of the challenge was, it was software and actually filtering for companies that were software companies is really hard because they all list themselves out of different industries, different categories, et cetera. We actually started to use natural language processing or AI to look at the way software companies describe themselves on their homepage. We trained this amazing model, which basically looked at a bunch of accurately labeled software companies, how they describe themselves and a bunch of ones that weren't. We threw website domains at this model.

[00:14:00] Harrison Rose: It looked to basically how they describe themselves, spout or probability as to whether they're a software company or not. Like that's how we found out whether a company was a software company. We fed it tons and tons and tons of domain from LinkedIn. That's a very specific use case, right? That helps you solve software. You can actually apply the same principles to e-commerce because people don't list themselves as e-commerce and Fintech. There's other ways to do that though. ChatGPT is also offering some alternative ways to do classification. But again, let's not get too nerdy or get me out of my depth. I've got smarter people working with me at GoodFit than I have.

[00:14:30] Harrison Rose: A completely opposite example is like we work with a bunch of Employer of Records. We've got a real niche in that market. The size of their market is they basically help people, if people aren't familiar with Employer of Records, hire people outside of the locations that they have registered entities or offices. Their addressable market is every single company that's hiring someone outside of an office location. It's very different. Your sources for that data are very different. I'd probably use things like LinkedIn.

[00:14:59] Harrison Rose: A core level to understand, get me a list of companies of a certain size and where their headquarters are, where they have offices like LinkedIn, we'll tell you that information. It also tells you the location of the employees. And then you want to add in hiring data to see what's the diff between the locations that they have of current employees and offices and where they're hiring. So what I'm saying is the data sources are going to differ depending on what that qualification criteria is.

[00:15:22] Andrew Michael: Yeah, for sure. And you gave a few other examples. You said, like FinTech and e-commerce. I think there's sites like BuiltWith, for example, is a great one, to sort of get an estimate, specifically like looking at all the sites that have e-commerce platforms. So that's a great way to understand, are they in ecommerce business or not. And even though you're not going to get the total addressable market, at least you're going to get some sense of who is the addressable.

[00:15:44] Harrison Rose: 100%. Yeah, that is a great starting point to use tech. You get some false positives and false negatives, but as a starting point, 100%.

[00:15:51] Andrew Michael: Great. So we've sized up the markets. Then now we're trying to identify who's the ideal fit within this market. What does that look like?

[00:15:59] Harrison Rose: Yeah, and then for anyone trying to work on the ICP, I think you kind of need to have a handle on, at least hypothesis of what your value propositions are. Like why do people actually buy our product? I'm assuming at this point, you probably have some customers and you can probably try to deeply understand them and interview them. What's happening in their business when they evaluate your product, what value are they getting out of it? Why are they using it?

[00:16:18] Harrison Rose: You need to deeply understand your customer and have an idea of what value you're delivering. Once you understand what that is, it's all about reverse engineering. What needs to be true for a company in order to recognize that same value? We have a really easy example at Paddle that normally gets people's minds going. Paddle does payments, checkouts, tax, all this stuff for procuring billing for software companies. You help them sell their products basically. But due to the model that we have and I won't bore you with why we're really good at helping people sell globally.

[00:16:49] Harrison Rose: Actually, we let them support a bunch of payment methods, currencies, taxes. We had all the complexity around selling globally. So if I were like, okay, I'm really good at helping people sell globally. How would I identify people who needed to sell globally? It's the question that I needed to ask, right? Because these are the people that I prioritize. And then we started to prioritize people based on the number of currencies they supported, the number of languages they had on their site, how much international traffic they were getting.

[00:17:14] Harrison Rose: You can even do a diff then. It's like if they're getting 20% of their traffic from China, but don't support Chinese Yuan or Alipay, not only am I going to prioritize that customer because they look like they have a need, but I also know I'm going to tell them. You can start to reverse engineer the value propositions into profiles or audiences and you'll prioritize the companies that look the best fit for you based on those value propositions. You might even be able to bucket them up and deliver the messaging specific to the value proposition you think is most relevant to them.

[00:17:40] Harrison Rose: Now to your churn point where it gets really interesting is people often prioritize based on who, I mean, some people do this really well, some people do it badly. Normally, who they're easiest to acquire. Like who will be best at winning? The best companies I've seen have started to look at that, a slightly longer time period. Again, you might be limited by your data. Like who has the best NRR overall? Who has the best LTV? Not just at the point of acquisition. Or they might score assisting customers different to net new. But if you start to think over a longer time frame, you might do a better job at this.

[00:18:13] Harrison Rose: I spoke to a really, really big company that had to significantly change who they were targeting. They were really good at winning them, but they all churned. And like only in looking at the funnel over the entire customer life cycle, did they realize they needed to change who they were targeting in the first instance, because the churn was just rubbish for the particular profile of companies they were targeting or prioritizing.

[00:18:30] Andrew Michael: Yeah. I think there's a few different things in that. So I think the first one on sort of who they're targeting, this is like a common practice. I see a little common mistake in sales teams generally, and maybe you can echo this is that sales incentives are generally aligned to close deals and not focused on long-term retention. And some of the best sales teams I've spoken to on the show really have this understanding that we need to be making sure who we're selling into and they have their commission split between first sale and then retention to make sure that there's some responsibility and ownership on the sales rep to know who they're selling into and not to sell deals that aren't good fits. Excuse the pun. That was the one thing that came to mind as well.

[00:19:08] Andrew Michael: The other thing that came to mind now while you were talking is actually, and previous into the Rahul Vohra, which is something that I loved that he put in a previous episode where he had this sort of like the traditional product market fit survey is like, how would you feel if you could no longer use our product or service? But then he matched that as well then with another follow-up question is like, what is the primary use case for our product or service? And it aligns to what you were saying previously as well. So like if somebody mentioned like, managing global payments is the main reason I go. And that's the, what you believe to be your primary use case for your product

[00:19:42] Andrew Michael: Then you have a really good understanding of who you should be prioritizing your feedback against and how you can improve that product for that use case and for those people. So I think generally when people think about ICP, they'll think about it mostly on a firmographic and demographic perspective, but really it's important to understand what are the use cases and the jobs to be done first and then take a look back.

[00:20:00] Harrison Rose: There's normally something uniquely true about the customers you're servicing, not just they're a software company that has over $10 million in revenue because that could be the ICP of anyone. Like it's just, there's normally something deeper than that. You're completely right.

[00:20:16] Andrew Michael: Yeah, it needs to be an Excel of, like qualitative and quantitative understanding of the customer to form the thing. And I just want to parenthesis this as well, because I mentioned the beginning, like I've been going through all of the episodes of Churn.FM and one of the main reasons is actually we're busy putting together a course on this topic on how to identify your ideal customer profile. And it really goes into like, both components of what is the qualitative data that we need and what is the quantitative data putting things together.

[00:20:41] Harrison Rose: It's probably worth touching on. One idea that I had at GoodFit that we've actually shelved is that people really needed help doing their correlation analysis on what's true about the customers we're winning or we have the highest LTV on in order to inform who they should go and sell to next. People sometimes struggle with that. We have the expertise and the tooling internally to run really good correlation analysis, but also on quite a broad set of parameters, right? We have a huge amount of data.

[00:21:07] Harrison Rose: Interestingly, whenever we presented it to anyone, they were like, that's fine. But actually, who we're selling to is changing because of some change in product development or some other external factor. So you're completely right to add in both the quantitative and the qualitative. Again, to give you a working example, panels like performance selling into independent Mac software developers is phenomenal. The final performance is mental. If you only look at it quantitatively, the numbers would just tell you, just sell to this group of people all the time.

[00:21:35] Harrison Rose: But we also know that they are limited in number, that they're not like recurring customers, their revenues are a little bit more spiky, which causes issues with the business, their business itself would be valued or perceived differently by investors if we had SaaS companies. There's a lot of other factors, right? So you're absolutely right to add in more than just a quantitative analysis into who it is you should be targeting.

[00:21:55] Andrew Michael: I think generally, like, something is all with Paddle, then the acquisition of ProfitWell with [price intelligence] on the back. I think like for me, there's four different areas. It's like, it's good to take a look at. And it's like generally like a panel study is a great way to understand like how does the market perceive your product and who values it the most, understanding willingness to pay and likelihood to buy thing is a great like external perspective to see where the market's moving and looking at like long-term retained customers, as you mentioned, understanding like what is the make-down and breakup of this cohorts and that tells you like who sticks around.

[00:22:26] Andrew Michael: And then looking as well as recently acquired customers. So who's marketing speaking to today that's working and then looking at cohort conversion rates, because to your last point as well, like you may be like acquiring a lot of a certain type of user, but the conversion rates are really low just because your marketing is not speaking to the right people as well at the same time. So it is very important to get, like a very broad perspective on this when you start to define it.

[00:22:47] Harrison Rose: Yeah. And if there's one takeaway or something like the question, I think people sometimes up… miss on their surveys, that's the real gold dust. It's like asking the companies, especially those you recently acquired, like what was true at the point in time you started evaluating or thinking about solutions like ours? Because it's that change within the company that we want to be able to see in data. Because if we can spot that signal, like in the data in advance of them actually going to market and evaluating solutions, these are the highest fit, most likely to buy customers that you possibly could.

[00:23:22] Harrison Rose: In the example I gave at Paddle, maybe their international traffic spot goes from north to 20%. In the employer of record example, maybe they open their first role that's remote. I don't know. And then if you're like, oh, actually I suppose all these customers, and when they open their first remote role, that's when they start thinking about, employer of records. It's like, oh God, we just need to go and track everyone who's opening a remote role, then outreach to those ones. And then your total amount of spend is better, your conversion rate is better, your sales cycle is shorter. That's when you see all the real step change impact of some of this stuff.

[00:23:51] Andrew Michael: Yeah, definitely. I love that. And because I think that's one of the things recently I was like evaluating, starting something new. And one of the reasons I didn't go ahead with it was because I found it was incredibly difficult to understand the moment in time when that's like the solution became evident or the problem became evident. And I think in those cases, when it's hard to predict, it becomes hard to sell and comes hard to market. And then the only real play is trying to be top of mind from a content perspective. But I evaluated the market at that time that we weren't going to be able to compete with all the existing solutions from a content perspective. So.

[00:24:25] Harrison Rose: It's so cool. Like people, I think, don't spend enough time on this stuff. Like I'm so passionate about it. Like I think I do a bit of work with a bunch of investors, but people, they often ask me like, what's the most common mistake you've seen people make, particularly at the early stage, at a serious age stage. And I'm like, people are trying to scale without a deep, deep understanding of who they're selling to and why they're buying and like people massively over index on things like messaging. And not enough on like, are we even delivering this messaging to the right people, that is just a great way to just waste loads of money, to be honest with you. So yeah, super refreshing to hear. Awesome.

[00:24:57] Andrew Michael: Nice. So at GoodFit now, I'm keen to understand a little bit about your process then when it came to sort of evaluating and maybe you can talk us through what we've pretty much discussed, but in the context of GoodFit. So how did you go about, like, addressing, I understand your addressable market, then defining your ICP and how are you using that information today in your outreach?

[00:25:16] Harrison Rose: Yeah, it's amazing how easy it is not to practice what you preach to be fair. Like at Paddle, we had to build this like, account-based funnel machine and use data to do it really, really well because nobody knew who we were, all of this other stuff. At GoodFit, like we've been able to rely on, like inbound funnel, however you want to call it, organic inbound funnel, I don't know, to get us pretty down far, like above a million dollars of revenue. Just basically through, network, people wanting to speak to us to know that we know about this type of stuff and existing customer referral. So we actually haven't done an awful lot to accelerate that.

[00:25:52] Harrison Rose: Literally in the past couple of weeks, we've started to do our bound for the first time and done all the things that you've talked about, size the market, gathered a bunch of data on them, prioritized and based on some data, but it's pretty new for us. But it feels horrible not actually flexing that muscle that you talk about all the time. So it's pretty new. We've been exclusively reliant on referrals and network, which is still going very strong. We just want to accelerate things a little bit more.

[00:26:16] Harrison Rose: I've certainly thought more though on the churn side of things and how to learn an awful lot there. At Paddle, we, for those that don't know, we had a transactional revenue model. So we took a cut of every sale the software company made, but there was no ongoing SaaS fee or anything like that. It made it super, super difficult to acquire customers because they're ripping out their entire payments infrastructure and replacing it with us, that it meant that we were really, really sticky. And as that software company grew, we grew.

[00:26:47] Harrison Rose: So during good times of software, we're talking net revenue retention of 120%, 130% plus, best in class. We also just didn't lose customers. I think when we chatted, you asked me, about, what does churn look like? And I was like, we've churned five customers. Of note, it depends what we chatted, but that was one of the party lines for a while. I'm now in an environment in data whereby the benchmark is like, this is like the highest Churn SaaS environment you can be in. Like you can look at  Zoom info’s, public data or whatever. And like data is viewed as a commodity, not as a tool. And like that is just such a different environment to be in and a bunch of new lessons to learn, which has been pretty cool.

[00:27:24] Andrew Michael: Yeah. It's very interesting. Like, because it really as well, like Paddle is almost like a platform playing itself, like it's something, it's part of your infrastructure. It's very hard to rip out. Whereas just like a data layer on top of your infrastructure is like, is not. And I think this is something as well, I mentioned this on ShowCode a few times, like David Darmanin, the CEO of Hotjar, he mentioned to me at some point, he's like, when you think about starting a business, it's important to understand where you sit on the budget scale.

[00:27:51] Andrew Michael: And when times get tough, are you the first to go out the door, are you the last to go out the door? And how do you make yourself that last point? And it is definitely two opposite ends of the scale. Not to say there's not opportunity in the one versus the other, but when we think about retention being a big driver for growth, it's important to understand that. So what's been the biggest difference that you've noticed?

[00:28:10] Harrison Rose: Well, yeah, you've basically talked to it, right? Being the slightly mad, arrogant, ignorant founder type, I'm like, yeah, I can solve that in data. Like, this is fine. I think the reason that the churn is so high in the data ceiling is exactly what you've described. Like most people that we compete with sell data, the same set of data to like the SDR or the AE level. They're not the budget holder, but that's who it's for. That's the user of it. It means that the people who buy it don't feel its quality, it's lack of quality. They don't feel the pain if it's not there. They're not having to go do the research to find people's email address. But also just like how it's assessed, it's just really, really bad.

[00:28:58] Harrison Rose: Like people just swap tools every year because the SDRs or AEs complain about the tool they're currently using because no tool is ever going to be perfect. But like actual objective quality of assessment, this stuff isn't great. A lot of them are trying. They do things like email bounce rates or like content data and stuff. But like it's just not really a thing. But the biggest issue is that they're seen as a commodity, that they're seen as a tool that the reps need in order to go and sell basically and not commodity speak can be swapped in and swapped out and we should pick whichever tool is the cheapest price with a minimum level of performance.

[00:29:28] Harrison Rose: But the real trick is exactly what you said. It's like you actually want to be perceived not as a commodity, but as critical infrastructure in the way in which a software company, or sorry, a company runs basically, right? And so a good thing we've quite purposely tried to target a different individual within the organization or set of individuals in the organization, those that hold budget enabling them because they want to protect their budget for their needs and things of that nature.

[00:29:55] Harrison Rose: It's actually positioning yourself as a tool that is required in order for people to go to market otherwise that they can't direct it out and the budget holder actually, as opposed to a high-churn role. If your champions are high-churn users who don't want to stay in role quite explicitly and want to move elsewhere, I think it just makes your job a hell of a lot harder because you're constantly re-educating and finding champions all the time. And so I think the lessons that you shared there are super applicable to our industry for sure.

[00:30:21] Andrew Michael: Nice. What's one thing new that you've learned since leaving Paddle, whether it be like starting up again or specifically related to churn and retention?

[00:30:31] Harrison Rose: So much, man. Like going from a company of hundreds of people to, again, it's just super, super interesting. Like you learned so much. I, quite purposely, I talked about there being some conditions, which needed to be true in order for me to go and do this again. A lot of them were actually to create an environment that was new so that there was scope for learning, like it's quite an important value of mine.

[00:30:54] Harrison Rose: We've been trying to run it remotely, which is new for us. Very new challenges. We're trying to do it bootstrapped, which is very, very different. Like, Paddle's raised $300 million plus. So there's a lot of learnings in that. Maybe to expand on those, I'm going to do some churn ones. I think one of the hardest ones has been the people that I've hired have all come out of the VC-backed hypergrowth kind of environment and largely, operating in quite healthy market conditions.

[00:31:21] Harrison Rose: When you're a bootstrapped company not operating in those market conditions, you still want to win. It's absolutely my goal to grow faster than every single person we're competing with. And I think that we can and do largely. But you do operate in a different way. And also your ambitions are also a part of that too. We don't want to be a billion-dollar company as of right now. We have very much aligned in the sound that we're trying to hit in terms of revenue and customers. And then we're going to evaluate what happens next.

[00:31:48] Harrison Rose: All of that stuff influences how you choose to spend money, what you choose to resource, what good looks like. Even the speed of change when you're trying to go at 300% a year versus 100% a year is different. And actually unlearning how to run a burning cash 300% a year company to a profitable 100% a year company is really weird. And like self-recognizing which mode you're in and then operating responsibly and effectively has been really interesting and odd. But cool. Maybe I'll pause there before we do the [churn]. I'm not sure if there's anything on that.

[0:32:23] Andrew Michael: No, no, it's very, very interesting. And like, it resonates quite a bit with me as well. Previously I was at Hotjar. So obviously like bootstrapped from the start and like, there's definitely a different way and approach about, like, thinking about growth and thinking about growing responsibly from that perspective. And I've seen this role then after that, like working with people that came from like these hyper growth backgrounds. And they sort of struggle to adapt in the environment.

[00:32:52] Andrew Michael: And like their first go-to was like, let's get more heads through the door instead of like, let's figure out a way to get this done with what we have. And I think that's like a big mindset shift that needs to happen if you're going to make things like this work in a bootstrapped environment. So it resonates a lot with what you're saying now. It's like the challenges I've seen it, play out.

[00:33:09] Harrison Rose: I think even like, trends within the industry are making that more and more acceptable and a skill that's appreciated, which is cool. But I actually was just trying to achieve a staff or founders associate, we were trying to close. I told her I'd give her a shout out on this because she didn't give me a yes when I just gave her an offer and I said she might ruin the podcast, but hopefully that goes successfully. I told her one of the beauties or things that you'll learn working in a bootstrapped organization like ours is like, you genuinely get no...

[00:33:41] Harrison Rose: You can't sit on the fence. Like where you might be able to resource the two projects, see which one goes well and kill it in the VC backed environment. You have to sweat every single decision in the bootstrapped environment because you don't have that luxury. You can't just hire both people or ask for some more money or have the resources to do two things, see what works and then adjust. You get really, really, really good at some of that critical decision making, I think. It's pretty cool, but new for sure.

[00:34:09] Andrew Michael: No, no. For sure. You need to be absolutely critical when it comes to your decision making, and I think it strengthens, I think, your skill set in this area as well, quite a lot in working in an environment where there's a higher tolerance for risk and an easier way out if things don't work out as well.

[00:34:27] Harrison Rose: Yeah. I think people are more around it seeing both, for sure. On the learnings, on the churn side, again, we have a very different revenue model. We're a traditional SaaS company. There's loads of changes there. I think the biggest things that I've looked at that are good friends now by Paddle, I would tell us is the things I've seen really most impact retention at GoodFit are, well, one of the biggest challenges I had when I actually joined the business was the speed at which we were delivering people their data when they bought it from us, which just takes too long.

[00:35:02] Harrison Rose: People want the thing that you're offering right now. It's taking us weeks to actually deliver them the data set they needed. By that time, they've had to find alternatives as to how they're operating because they've been waiting, which is a very dangerous position to be in. So speed of like, I guess it's like a times of value thing, but speed of like access to products or speed of delivery is super important.

[00:35:21] Harrison Rose: And the other thing that I've seen is around adoption. We do sell quite purposefully into a strategic stakeholder and we then need to work hard to ensure that person is enabled to drive change and adoption of the data throughout the business. We've gone for quite a sales led approach directly into the stakeholders. If you don't nail the speed of the time to value to some degree, and then adoption and utilization of the tool. Like I'm just preaching to the choir. Like we all know this stuff's important.

[00:35:54] Harrison Rose: But like, probably like, oh my gosh, have I seen it at GoodFit? And then we are still in a relatively high volume change of stakeholder world. Like VP sales average 10 years, like 12 months. They're one of our key buyers, which is awesome because they buy us everywhere they go. So we get lots of new customers. But then with every single time they leave, we're trying to re-onboard and resell the person that they're in. This has worked quite well for us because people do like what it is that we do, but it's a unique challenge I've never had to experience before.

[00:36:23] Andrew Michael: Yeah. It's actually reminds me of another episode. Like recently I was asked what is one of my favorite episodes of the show. And I’d said, like, think quite hard. And one of those was actually Guillaume Cabane, “G.” If you're familiar with him

[00:36:35] Harrison Rose: A good friend, yeah. He's awesome.

[00:36:35] Andrew Michael: Yeah. They call him, mad scientist for a reason. And like one of the things that they discovered, I think was at Segment, one of the companies Segment or Drift, might have been Drift, was that customer champions, churning was a big issue. And he sort of said, like, if you look in most 10 years in companies, like 36 months in San Francisco, it's more like 18 to 24 months. So if you sell into somebody who's in their first year, you probably only have 12 months left of that champion at that company. So you need to be thinking about provisions of how you can grow more champions in the account and so forth.

[00:37:06] Andrew Michael: But he said then on the flip side, there's a big opportunity. That person's not just going to go, start growing potatoes when they leave the company, they're going to go somewhere else and they're going to join that new company and nobody wants to say no to the new guy or a new girl. So they have the budgets to [plea] to make this thing. So his play was basically like when they leave the company, just send them a gift and they're sending like Bose headset at the time saying like, congrats on the new gig, like we're here when you need us.

[00:37:35] Andrew Michael: That's sort of like your thing. Yeah. His thing is like, it's a $300 headsets or $400 headsets, but like the cost per acquisition ended up being one of the highest ROI campaigns because they had their champion they knew and as you said, you're starting to see the fruits of that as well already at GoodFits, which is a great time.

[00:37:48] Harrison Rose: To the extent it's one of our most predictable top of funnel drivers, we actually can estimate how many movers there's going to be, we called them content movers within the customers that we currently have, and then we forecast the number of opportunities we're going to get per quarter based on people that will leave and join another one. It works like 100%. That's cool though. We're not sending out any headphones. As I said, we're bootstrapped. Like I'm lucky to have some myself.

[00:38:15] Andrew Michael: I think the beauty of, like the venture backside, you have these where you can start sending out these lavish gifts.

[00:38:22] Harrison Rose: Stickers. We did temporary tattoos at Christmas, which was a bit different. Maybe we can send those out. Again, they're like two bucks, I think, a tattoo.

[00:38:30] Andrew Michael: Because Drift is sending headsets, we're sending stickers. We hope you enjoy.

[00:38:34] Harrison Rose: Yeah, exactly.

[00:38:35] Andrew Michael: Nice. Very cool, Harrison. It's been amazing catching up and just hearing a little bit about the journey now at GoodFit. Is there any other final thoughts you want to leave the listeners with before we wrap up?

[00:38:45] Harrison Rose: No, I mean, I normally have a habit of sharing too much too quickly. I will at some point just learn how to slow down my speech. I've got a Polish partner now who's got good lessons being learned there. But not really. I think churn still is probably the biggest thing that's likely to kill your business again. Having the solved speed of data at GoodFit, the very next thing that I worked on was retention. It was literally the first thing that I did once our core value proposition as a product was solved. So yeah, don't underestimate the impact it's having on your business. Maybe that's the takeaway.

[00:39:21] Harrison Rose: The thing that we did was we did some forecasting or scenario planning, and it was like, what does the business look like over the next four years based on some changing variables, one being retention, one being expansion, one being the net new customers we went to quarter, one being ACV, we did a bunch of scenario planning. Do that. You will see how important things like retention are.

[00:39:41] Harrison Rose: Do recognize there's probably an upper bound and a lower bound as to how good or bad it's going to get, but then use that scenario planning to determine which of those levels you think is your most high leverage to actually pull and then use that to determine where you're focusing. For a while, for us that was nailing retention. I'm really happy to say that that's really, really strong right now. We're looking at that new hence the investment in things like outbound I just discussed. But yeah is the thing, man. So you're preaching to the choir.

[00:40:04] Andrew Michael: Amazing. Well, thank you so much for joining and I wish you best of luck now going forward.

[00:40:10] Harrison Rose: Awesome, mate. Thanks for having me again. Talk to you soon.

[00:40:13] Andrew Michael: Cheers.

[00:40:15] 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 Andrew@Churn.FM. 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.

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