[00:00:47] Andrew Michael:  Hey Basel, welcome to the show. 

[00:01:35] Basel Fakhoury: Thank you happy to be here. 

[00:01:37] Andrew Michael: It's great to have you for the listeners bezel as a CEO and co-founder of user interviews, the fastest way to recruit research participants for product testing and UX research prior to use interferes, bezel started his career out in media and moved on to being an analyst before diving into entrepreneurship.

So my first question for you is what drove you to use the research and why research, participant recruiting specifically? [00:02:00] 

[00:02:00] Basel Fakhoury: Yeah. We took the scenic route here. So me and my co-founders actually started a different business. It was a terrible idea. It was a mobile app for hotel services. And we didn't actually talk to any users before we came up with the idea.

So because of that, we weren't solving a user pain point and we grinded away on that for a year. Eventually we stuck our heads up and realized, Hey, we should talk to customers because they're not getting the traction we wanted. When we started doing that, we found that there was really a core value problem with that initial product.

So we were trying to figure out another idea to build, and we got really addicted to user research or talking to customers or potential customers. And then we had the aha moment of, oh, this itself is something we're passionate about. There doesn't seem to be a good solution. Let's see if we can build a business around.

[00:02:46] Andrew Michael: I liked that you mentioned as the senior group turn around, but like from most entrepreneurs, I think you end up speaking to, is that it's, it pretty much feels like that's the way that's the path. It's never normally like what the idea you start out is what you [00:03:00] end up doing. And there's a lovely there's no such thing as shortcuts because otherwise they would just be called the way like why would anybody logically take their thing? But yeah, it's interesting just hearing that from your perspective. So I'm going in trying to figure out pain points. Like you realize the care, like this was a pain trying to recruit and find participants.

Maybe give us the origin stories there as well. Like how did you say, okay, you had that high moment, this is a pain point. Like where do you start from there? 

[00:03:26] Basel Fakhoury: Yeah, at this phase, between when we found out that initial idea wasn't going to work and we didn't have a company, we were testing out a bunch of different ideas.

And every time we would come up with an idea, we would run some experiment and we would do user research. So we had ideas, like one was like Airbnb for storage. Like fraud detection for people on Craigslist. So we had all of these ideas. We were always doing user research. When we came up with almost the meta idea, the company for user research, we did user research on user research.

And then we basically found that all of these user researchers are not all of them, but a lot of [00:04:00] user researchers were posting on Craigslist to find participants for research studies. That was the best tool. So initially before we even had it. We would just go respond to those Craigslist pests.

So there'd be a post that says, Hey, I'm looking for people to do a focus group or to do a user research study with us and we'll pay them X dollars. So I would respond me and my co-founders we'd respond to that post and say, Hey, we'll find these people for you. If you pay us, we were very cheap back then because we didn't have a product.

But we, and then they would say, yeah, of course, like we hate doing this. This is our least favorite part of our day. I'm a product manager, I'm a designer and I'm spending all day posting on Craigslist and doing all of these logistics. So we were able to get clients pretty quickly, even before we had once again, a website, a product or anything.

And then we started, building the website, building up an audience, automating all the different workflows around that. As we scaled up. 

[00:04:50] Andrew Michael: Very nice. However, I've to take the unbundling of Craigslist again, let's say I'm sure there's somewhere like this map of all the businesses that have been born out of like unbundling [00:05:00] projects.

It's just unbelievable. How one sort of site is given room to so many different ideas and businesses and seen as like a way as well, an entry. I think you mentioned Airbnb as well. I was recently reading this story. I think Airbnb as well, started pretty much that way as well. Calling Craigslist and using as a way to, to get early tracking.

[00:05:17] Basel Fakhoury: Yeah. We saw to like stereotypes for coming up with the business. One was on Craigslist and the other was, if you see people in a company hacking together a solution, like that's probably a good sign. And we saw that people were. They'd use Craig's list and they'd have an Excel where they were managing everything.

And then they'd use some sort of calendar tool to schedule and some sort of mail merge, and they'd go get their gift cards from visa or Amazon. And we were like, you're using six tools and Craigslist for this task. There's probably room there for someone to integrate them and just make it a 

[00:05:46] Andrew Michael: better tool.

Very cool. I want to talk a little bit about the tests first and just to understand like your methodology and how you were nothing. It's always interesting how you validate, because I think this can save you a lot of pain in the long run when [00:06:00] it comes to churn and retention is really figuring out that early stage, how you go about validating spread really quickly.

And you mentioned you came up with a couple of ideas. It was Airbnb for storage. If I'm remember correctly. And then like for detection Craigslist, like how did you. Invalidating these ideas, like how are you doing this initial research? Before. 

[00:06:19] Basel Fakhoury: Yeah. So I think the Airbnb for storage is a cool one or a fun one to talk about.

So that the idea there as a claim is basically those people with basements addicts, all the space and there's people looking for public storage, which is a huge market. And we thought, Hey, maybe instead of going to a storage center, you could say, I'll pay my neighbor 50 bucks to store my bike, or I'll put my boxes in this attic.

So sharing economy trend, but for storage. And that market has a supply and a demand side, right? The supply side are the people with the extra space, the demand, or the people that want to store stuff in that extra space. So we did an experiment for the supply side that actually came back positive.

So our experiment was. We would basically go on the [00:07:00] Airbnb message. Everybody we could and say, Hey, we're coming up with a startup. We want a store. I think we said, like a bike for $50, something like that. Would you be willing to do this? And we got 10% of people responded and said, oh yeah, we'd love to do that.

So if 10% of Airbnb supplies respond. Off the get-go you're like, that's a pretty good signal that there's supply there. And we basically did that until Airbnb kicked us off, that was the quantity we got to. So we felt actually pretty confident about the supply through that experiment.

For the demand side, we did more user research. We talked to a bunch of people that basically had used storage before and we tried to figure out, Hey, how did you choose? Just choose the provider that. And basically we found that it came down to three things. Everyone was choosing based on price based on convenience.

So like how close was it to you? And then based on security And we had an aha moment that we didn't think we could win because convenience is going to be a toss up. Like it might be closer to you if it's someone in your neighborhood, but it's not going to be open 24 hours are going to need to coordinate with them.

So we weren't sure we could [00:08:00] beat in convenience. We thought it would be pretty tough to say it was going to be more secure in someone's house then. In a public storage facility we just did. I think we could win there and then pricing. We might've been able to win on, but the pricing was already low.

And at this point we were coming out of a failed startup. So we didn't want to go to another one unless we had really high conviction. Yeah. And just based on that user research we didn't have conviction, so that's why we decided not to go for 

[00:08:24] Andrew Michael: nice. And it makes sense. Cause at the surface it does sound like an interesting concept and idea, but now that you lay out so I can see those in my mind.

The other thing I was also thinking in the sense, would actually trust my stuff at some other random person's house. But obviously not in the markets at the moment it's for this another great person to speak to Cool. So this was like the methodology then trying to figure out and understand is their supplies, their demand.

Like you can see similarities now in the marketplace as well, I think that you creating, but. Let's talk about some of the ways I think where user research can be helped at the very early stage as well. In [00:09:00] some of the ways you've seen, like maybe yourself use it effectively or customers. As also we talked about the example of idea exploration, just really try and understand the case, their market share.

Is there a need how are you seeing, like your customers typically use the platform? What are some of the projects that they're working on a day to day? 

[00:09:17] Basel Fakhoury: Yeah, definitely. And I would say initially when we started it, we thought the market would be more startups and more in that idea generation phase.

As we built it, we found that this is actually. Using every part of the product life cycle. And therefore like the customers that use it the most often and use it regularly are actually larger companies. So enterprises like it lasts and Microsoft, Spotify Colgate large companies like that.

And they use it really across the product life cycle. At the very beginning you just have an idea, right? So you're doing the type of research I just described for that Airbnb and storage idea. You're doing very generative research, or you're saying, how do you solve this pain point now?

What matters to you? You're not even telling them what you're building. If you do decide you want to take the next step, then you might have different prototypes and you want to say, [00:10:00] Hey, which of these makes more sense? Which would you expect solves the solution we're solving for better. What's more intuitive.

And then you might build something and you want to do a usability testing to figure out, Hey, go sign up. What do you expect these buttons to do? Does this workflow make sense for you? And then once the products like. I think this is the most interesting part. We find that customers really want to be in constant conversation with their users to figure out, Hey, who else on your team would you have value about around this?

What are the other tools you're using? Or, Hey, I want to talk to people that don't use us that chose a competitor. Why would you, why did you choose this competitor? Did you look at us? What's the difference? At the end of the day, I think of user research is a very broad type of information gathering and I think it's.

Very similar to your product analytics team. You can use it to answer all sorts of questions, but it's just a different tool. For qualitative insights. 

[00:10:48] Andrew Michael: Yeah, I love it, which is all bringing in the product analytics side and looking for insights. And this is one of the big things that I truly believe is that it's super important to have both the Watson, the Y.

[00:11:00] And I think coming from like hitting up business intelligence at Hotjar. One of the things I noticed and found really strange. There was in the early days of the company, it was all about qualitative research. Like almost no analytics existed or was like a focus. And I think it makes total sense in the sense that most of the time, the data you have at that point is not going to give you a neuro liquid signals and it can really lead you off in the wrong.

But you're really gathering the value from having those like 5, 10, 15, 20 conversations with customers. But then over time, you're going to sophistication. You have the numbers, but I think the magic happens when you have both working together where you get the what's with the why and you able to have like analytics working with user research.

How are you seeing are you seeing any of your customers or yourselves in turn, you like managing this process effectively and. Yeah. 

[00:11:46] Basel Fakhoury: This process being managing like analytics, but combining the qual and Quan. Yeah. Yeah. What's time to see. This is a very nascent trend. But one of my predictions on the space is that we're going to start having insights [00:12:00] teams, like broad insights teams that do merge quantum qual.

Cause they're both doing the same thing at the end of the day. Different people in the company have questions to make better decisions. And there are different tools used to get the insights you need to make those decisions. So sometimes it's quality, sometimes it's quants. And I think they should be married pretty closely.

I think, let's think about an AB test, right? That the quad side is gonna run the AB test. It's going to let you know which one is better. But the qual side might let you know what is actually a and what is B, right? What choices are you going to put in front of them? And also let you know, okay.

Test be one, but why? Then we can go talk to people and understand, and that extra layer of insights I think is really what differentiates the top companies and the really top decision 

[00:12:40] Andrew Michael: makers and then the standing. Yep. And I totally agree with you as well. I think this is an area that's coming to existence now more and more of the really good companies understand the value of combining both sides.

And I almost haven't really bullish and hoping to see that more and more companies adopt sort of product insights model. Bringing together both teams to be able to inform decisions for the [00:13:00] company and give insights. So let's talk a little bit about use interviews yourself specifically then the company now, how old is it?

Five, six years old. Yeah, about five years. About five years. And through the time, I'm pretty sure as well. You've had your fair share of challenges when it comes to general attention. I don't think there's any company that sort of skips the steps and the graduating, what was maybe like a fundamental shift you saw in your training and retention?

Was this something that you can pinpoint yourself? Like when we changed this or when we did this, we saw a drastic change or a good time. 

[00:13:33] Basel Fakhoury: Yeah, definitely. So we've had a lot of success with changing our pricing model. So actually initially we weren't even subscription. We were old transactional revenue, so people would come pay for projects.

And when you're a, that type of company, it's actually very difficult to even have a good grasp of churn. It's really hard to figure out what is the definition of turn? How do what counts as turn? What's the timeframe you're looking at? We made a pretty big decision in 2019 to try to move to subscription.

And we found that our user base or were they open to [00:14:00] that? And especially with larger companies, sometimes it made it even easier for them. So now we're almost 70% subscription revenue. We still have the transactional offering. So the first thing is, get the get your monetization strategy in a way that you can actually measure it.

And then the second, so once we're in subscribe the second major change we made is we were initially a seat based pricing model. But then we switched to our pricing scaling up based on the number of sessions people do, or the number of contacts they upload into the user interviews platform.

And we did a pretty big research project to figure out what is the value metric. When people think about user interviews, how do they think about value? And those two metrics lines. Very well with what our customers thought. So when your pricing model is tied to value, then people feel like they are, they're paying the right amount.

Especially with us seat based, then it makes sense because we had many different personas. So we had, a product manager versus a user researcher. We'll do a very different amount of research. So it didn't really make sense to charge the product manager at the same amount, but when you're tying it just to the [00:15:00] value they're getting, then people are very comfortable with that.

So that was huge. Yeah, 

[00:15:05] Andrew Michael: thanks. A lot of sense. And let's dive into this in a little bit of detail, because I think it is a very interesting topic and a hundred percent as well, like aligning the pricing model with the value metric that you deliver is an excellent way of framing the pro-rata.

It also opens up opportunities for expansion effectively. So the more your pro customer uses the product, the more successful they are, the more successful you are. I think it's beautiful. So the, how did you go about. Doing this research. So you mentioned like there was you trying to figure out, okay, how should we price?

What should the model look like? Talk us through the steps that you took. 

[00:15:38] Basel Fakhoury: Yeah. I'll give a shout out to my VP of marketing, Aaron, who took the lead on a lot of this research, but we did a major survey, both to existing customers, previous customers. We did a lot of qualitative research.

The survey had the. A list of kind of like standard questions on really just being upfront and saying, how happy would you be if, or how disappointed would you be if your [00:16:00] interviews wasn't there anymore? What is your value metric? Which of these price points like to you seems under priced regularly priced over priced.

We took a big upfront approach with that survey. And then the qualitative research, like the more in-depth interviews really helped us understand. The mind frames and the difference between different segments. Yeah. Sorry, once we did that research then like you mentioned, that really opened us up for expansion also.

And when you think about network, You have two choices, you can really focus on gross Turner. You can focus on expansion. And we initially made the decision to put a lot of effort into expansion because the benefits of expansion compound in a way that can make it really overwhelmed gross turn in a positive sense.

So that was like another big focus and another thing to this pricing. A lot of students. 

[00:16:44] Andrew Michael: Yeah. So you mentioned the interviews, you did them with like current and past customers. Did you use panels at all for this. 

[00:16:52] Basel Fakhoury: Yeah. So we would w we dog food, our own product all the time. So it we have one product called research hub, which manages your [00:17:00] internal panel.

So it allows you to upload your own users and to basically like a CRM for research, and then automates the workflow of reaching out to them. We use research hub when we're talking to our own users our recruit product, lets you recruit other users. And we use that also to find user researchers and product managers to do this research with.

[00:17:17] Andrew Michael: Yeah. Cause I think when it comes to like pricing and packaging research, there's an inherent bias in your current customer base. And understand asking questions like pricing sensitivity, like what would you expect to pay it? It's super biased in my opinion, when it comes to this, because they've got already got a baseline, they have an expectation.

But speaking to panel for something like this, I think is really valuable because what you're really looking for is what is the market value? Your product tech, somebody who's not a customer who's potentially evaluating something like your product or service to them, what is it worth? What would they be paying for?

And I think like for this like process intelligently has some great frameworks in place as well. I assume these all worked with them at Hotjar for their PR their pricing and packaging we did then [00:18:00] I don't think they do much on the internal customer side of things, but I think you need to have everything to get a full picture, to have an understanding, but this is one use case, I think for the panel side of things, it is really powerful in getting a sense of like how the market sees the product.

[00:18:15] Basel Fakhoury: Definitely. Yeah. W we relied on the price intelligently content a lot to help come up with a strategy. So we think they have great content. And I agree. I think when talking to existing users it's value, there'll be pretty honest around what the value metric is. So is it seats or sessions or contexts?

But the actual, like number that there is definitely an inherent bias there. Just need to keep that in the back of your mind. But this was also a great example of marrying the analytics and qual, because, we did a lot of segmenting of our users. Who's using us this much, which are our biggest customers.

And how do we think about the different segments? We needed that analytics to then be an input into what research. 

[00:18:50] Andrew Michael: Yeah, for sure. I think this is a another good point. As you mentioned with combining the qualitative and quantitative data point, there's a few great examples. I think, where this really makes [00:19:00] a big impact too, when it comes to research. But so you mentioned something else as well, though, that you decided to go focus on expansion revenue and obviously changing to this pricing model helped you unlocked opportunity for that.

What does that mean? Like how did you go about focusing on expansion? What was like the game plan? How did you expand the counts? 

[00:19:19] Basel Fakhoury: Yeah. So the general insight there is that expansion compounds in a way contraction doesn't. So let's say you have one company that just says 0% churn across the whole board.

And then you have another company that, a day one, you just split the revenue randomly 50% 50. And the first half expands 1% a month. And the second half contracts 1% a month, that second company will end up a lot bigger than the first company. So the benefits of having any segments expanding are very strong and they, once again, they compound and they grow over time.

So because of that, we wanted to make sure that we had a strong expansion motion. Really once again, we did a lot of segmentation. We figured out, okay, this part of the market, these types of customers have the highest [00:20:00] potential for expansion. And then we did a lot of stuff around. We split up our sales team and had people's focus specifically on expansion that became a high-level company, OKR.

And we were able to be successful with that. 

[00:20:09] Andrew Michael: And so what it sounds like in the end, it makes perfect sense as well, in the sense that specific segments are going to be better and more ripe for expansion. And typically you see this, if you split your business like between SMB and mid-market and enterprise, you would see expansion coming from mid market enterprise implement.

The churn being dragged on by SMBs. I'm assuming this is the case and your side as well, then from there, like you mentioned, sales would split their efforts. So instead of going off to like new business, you started splitting that up and see, okay, how can we expand and grow the existing business occurred?

Do you see like any timeframes that things are working? Like, how did you understand when was right for the sales team to go back to their customer? How did you set that up? How did you automate parts of it? 

[00:20:53] Basel Fakhoury: Yeah. A lot of this really comes back to the pricing change rate data.

It was now based on session. So we were able to see just, oh, [00:21:00] people are pacing ahead of the sessions that they bought. We're seeing an acceleration in sessions. So we knew they were getting value from us. And we, it was, they've always been very easy conversations where we're saying, Hey, you expect it to use this much.

You're using this many sessions. Maybe your seeing grew maybe just the product so much better than you expected. You want to do more research? That's the story I like to tell. And because of that, it's always a easy conversation. And people are usually aligned. And once again, this really strongly comes back to the, having the right pricing model, because if it was based on seats, for instance, and they're like, oh, this designer John joined for one session.

Like we really need to pay for a whole seat for this. We don't want to add that friction and be fighting. Our clients. 

[00:21:40] Andrew Michael: Yeah. And then ended up seeing like churn for the wrong reasons. And I think sits, it's a weird one because in some models that makes sense. But in other models, like you really restrict the virality of the product, the number of people that have access to use.

And I definitely like finding more on what is the value that they had because not the number of people sitting in the product, it's [00:22:00] more what are they getting out of that product? That's the value. And if you can charge for that, it's think, yeah. The best way forward. Let's imagine a hypothetical scenario now and you join a new company and general attention is not doing great at this company.

And this year it comes to you and says that as well. Like you really need to turn things around. You're in charge. We have 90 days, so it's a short time window. But there's one caveat that you're not going to choose something that's you've done in the past. So you just need to like top of your mind something you've seen, that's worked.

Pick one strategy and try to reduce, churn out a company. What would it be? What would you run with the no user research. 

[00:22:36] Basel Fakhoury: Okay. He could do anything. I think probably, depending on how you measure turn, I think that a lot of companies. Underweight the value of trying to reactivate people.

And I think like running campaigns around people who have paid for you before and then turn and trying to get them back in. If you measure, once again, it depends how you measure turn, but if that counts as kind of reactivation or expansion I think there hasn't been as much effort.

There's not as much content around. [00:23:00] Doing that and that's a good way to get the QuickBase. Cause some of those people will come back, that at least at some point they had a need for your 

[00:23:07] Andrew Michael: product. Yeah. Interesting. What's one thing that you noted about tryna retention that you wish you knew when you got started with your career?

[00:23:14] Basel Fakhoury: The there's a pricing thing. There's also just how like insidious turn is and how much it should be a focus from day one. I think a lot of it and maybe, this is just the way it has to be, but when you first start a company, it's just like acquisition.

And you don't really think about engagement. You don't think about, or most founders, especially first time founders, you get addicted to like the new logos. Oh, I just got this logo and, you keep the logos up on your website, even if they haven't used you in six months. You just want to keep saying you have these new logos.

And I think if I was going to start a company again, I think I might even go slower on the acquisition and focus on, the initial customers, just making sure the engagement was super, super high. And then focusing on scaling. 

[00:23:53] Andrew Michael: Yeah, I definitely agree with you. This is one of those things and.

I'm also not sure I'm splits on if it's [00:24:00] like a necessary evil in the beginning, like you, because in one aspect, if you just really focusing on acquisition, you're maximizing the learning you have from a larger pool of people and it has its benefits, but on the other side, like not focusing early enough you normally get this oh shit moments in the company when people realize.

They do a little bit of math since if we continue on our current trajectory, are we going to hit a ceiling at some point? And that's not the ceiling we'd hoped for the business. So earlier you get started on it, it also compounds over time and to actually accelerate the way you can grow. So it's a bit of a.

It's still a catch 22, it in my mind and this one. Nice. There's also like a Siri coming up Nazi end of the show. Is there any like sort of final thoughts you want to leave the listeners with? Is anything special they should be aware of, like on your path or anything they should keep up to speed with?

[00:24:48] Basel Fakhoury: No, I think maybe last thought on churn that I think. Valuable is to think through when does the turn happen? Cause I think a lot of companies, a lot of the churn and we're like, this might happen in the first month at first couple months. I think if that's [00:25:00] okay, like if, you have a ton of turn in the first three months, but then after that you're highly retentive.

I think that is okay. Because you think of those first three months is still part of the acquisition and part of the life cycle of the sales cycle. And then, so really getting to a point where it's retentive, even if it's a little bit later is fine. I think customers should just have, or I think people should just have the the knowledge of how their kind of like customer journeys are to know that 

[00:25:25] Andrew Michael: it is an interesting, it's an interesting point.

That is actually because you reminded me of another sort of thing was taught from, we were speaking to the time and. It also depends like when your product has different use cases and different personas, like you can see big differences in the retention rates. And so Typeform was an interesting one where they had two groups of users, like one who had just coming to create a form one-off and that's what they needed to do that given time.

So it's sauna for the service, but then ended up churning like a month or two months later because they had done the job. Like the job to be done was create one server and they did it and they got it. Maybe I could see some draw, some parallels in your case, like they come [00:26:00] for one specific. They sign up for a couple of months and they're churn because they, that project's finished.

Actually, our show is very similar to this as well thinking back but then like you do have obviously the segment of users that are really like the ones who coming in the longterm and that's typically sometimes, or how you can see but this, you understand, like from user interviews, from diving, like the data will tell you when.

You're saying like a 60% of whatever drop-off month to but knowing why that is I think that's where you need to dive into the weeds and speak to customers, understand that pusher. And it is as some of it is acceptably because it's it pause fuel on the fire to grow faster, to get more of those that are going to keep you going longer and staying off to the three months.

Yeah, exactly. Nice. And how can the listeners keep up to speed with your work and 

[00:26:44] Basel Fakhoury: Yeah, definitely. We we have a lot of content. We have an active blog. So if you get a user interviews.com and we have a lot of resources on how to do user research for different questions, how to set up these research teams, what tools to use.

I'd recommend just going to user interviews.com. If you have any questions about [00:27:00] qualitative insights or user research in any way. 

[00:27:02] Andrew Michael: Very cool. Yeah, we'll definitely add those all to the show notes as well, and a vessel. Thanks so much for joining Terry. It's been a pleasure seeing the show and I wish.

Awesome. Thanks, 

[00:27:11] Basel Fakhoury: Andrew. 

[00:27:11] Andrew Michael: Thanks. Cheers. 

And that's a wrap for the show today with me, Andrew, Michael, I really hope you enjoyed it. And you're 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.

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