Identifying your company's leverage with SmartAsset's Brian Bourque
Identifying your company's leverage with SmartAsset's Brian Bourque
Brian Bourque:
I remember my first year. We were working on Christmas day trying to get this thing out, and in retrospect, it generated like no revenue. It should have been obvious to us that it wasn't going to generate any revenue.
Peep Laja:
I'm Peep Laja. I don't do fluff. I don't do filler. I don't do emojis. What I do is study winners in B2B SaaS because I want to know how much is strategy? How much is luck? And how do they win? This week, Brian Bourque, SVP of Marketing at SmartAsset, where they've grown a lead generation business from $0 to $100 million in revenue, primarily through paid acquisition marketing and SEO. Brian has a ton of experience leading profitable paid acquisition teams in quantitative direct response marketing businesses. He's an advocate of using behavioral psychology, tech, data and creativity to find exciting new approaches to business. In this episode, Brian breaks down six important lessons he's learned throughout his career. We discuss why tactics aren't strategy, why the internet is bigger than you think, and for lesson one, why scale is realizing where leverage lies in each part of your company. Let's get into it.
Brian Bourque:
I think right now one of my favorites is like, what is it that drives scale? Because when you think about it, the tactics that small companies do are generally the same tactics that big companies do. The big companies generally just do them a hell of a lot better. Or they build kind of systems around those to allow them to scale. Identifying your highest points of leverage is key. At any point a company could be doing anything to try and grow, right? And everybody knows, "Okay, these are all the growth tactics that are out there at my disposal." Startups or if you're a DTC company, you're going to think, "All right, I'm going to go to Facebook and run some ads", or "I'm going to go to TikTok and run some ads." But where's the point of leverage there? The universe of your advertising is not a single channel, and so you have to figure out what channel gives me the most leverage?
And generally people choose those two because they're well-understood. You get the leverage of an algorithm that works very effectively, especially on Facebook. It's kind of like a well-trodden path, but let's say you also do television advertising. You may be like, "It doesn't make any sense for me to be advertising on Facebook because television is 10 x the scale". Or whatever it might be. But then you have to find the approach on television that would actually work. And so it's going to be a very different thing on Facebook. And so they're both potentially massive opportunities, but assessing the work involved to take advantage of that point of leverage is kind of half the battle.
Peep Laja:
How do you do that?
Brian Bourque:
You have to do some initial tests to understand. You do research, you do tests, you see what the competitors are doing. I think learning from your competitors... At the end of the day, you're taking a bunch of inputs and you're trying to make a probability weighted bet that my time is best spent in this way. So let's say if were a SEO, you would do a ton of keyword research and you would say, "Okay, this is what I think the universe of my niche is." And so from there you can try to extrapolate, "Well, if we scale the hell out of this thing, our ceiling is going to be around here." And then you say, "All right, well to do that, we're going to need back links, we're going to need content, we're going to need technical components." And so there has to be a cost in labor and money to that.
And then you say, "Okay." You combine all these factors and then ultimately you're going to say, "This is high leverage, but it's incredible amount of work. This is a similar amount of leverage or maybe slightly less even, but it's super easy to execute, so let's do that." Well, what's been awesome for me to experience is, scale isn't just like spending more Ad money on different platforms. It's making your product better. It's getting better insights from your data science team. It's improving the technology that you use. It's improving the systems and the way that people behave at their jobs.
And so, you could do your marketing entirely the same, but let's say you reduce your load time of your website by 90%. You're going to see a material benefit for that. And so user experience could be the biggest point of leverage since everybody goes through that touchpoint. Or perhaps there's some technical component that if you solve that. These days, there's a lot of algorithmic driven businesses. So we have a recommendation engine that matches people with financial advisors. And so if we can do that 10 x more effectively than somebody else, that is a massive point of leverage. A way that we can effectively deliver a better experience for our users. So at the end of the day, leverage exists in every part of the company. It's just understanding how that works and fits into your overall machine.
Peep Laja:
People use the word scaling too much. Often I don't even know what they mean. Scaling the marketing team, scaling an agency. So are we talking about making big, bigger or just growth? I really like Brian's definition of scaling. It's identifying where leverage lies in each part of the company. It's about doing testing, finding your pain points, and doubling down on what works best.
If you were to tell your five years younger self something about scaling, advice, what would you tell yourself?
Brian Bourque:
I think I lack the vision to understand. A tactic is like a crumb within a strategy. And a strategy is an option among many strategies. And instead of just rushing headfirst into the next shiny object or what sounds good or what your boss thinks is good, take the time to actually think about what are the few dials that if we get control of them or actually going to move the business.
When you're the only guy at a startup doing marketing, nobody's there to teach you the big picture. And so I think one of the lessons for me is it's just like compounded. It's just made me so much more effective to have the impact that we need to have while also not running around like an idiot with my head cut off trying to do a million things that really aren't going to make a difference. I remember my first year we were working on Christmas Day trying to get this thing out, and in retrospect, it generated no revenue. It should have been obvious to us that it wasn't going to generate any revenue, but we had this frantic sense of commitment, but a lack of perspective, I think.
Peep Laja:
Well, it's easy to say in hindsight that of course we should have known that this is not going to work, but how can you know upfront whether something is going to work or how well is it going to work?
Brian Bourque:
Again, I think it comes back to probability weighted modeling around outcomes. And if we had been realistic about this particular situation, I think it was evident that the amount of traffic that we were expecting this effort to receive would've resulted in a disappointing outcome. And that's not always the case. That's really one of luxuries of having funding is that there is a good bit of trial and error to it. And you aren't always going to know what the payoff is. Ironically, what is now our primary business, this two-sided marketplace for financial advisors, this started as a lark. It was a side project that our CEO gave to one of our junior product managers and they were like, "Hey, go spend some time researching this. What might an MVP look like? And let's see if anything comes from it." So those are the kind of explorations that you always got to be doing, and you got to be able to have the patience and the money to let those either peter out or show their value.
Peep Laja:
How to quickly spot an amateur. They're quick to offer solutions and default to tactics instead of asking questions, doing proper research, diagnosing the problems and thinking in terms of processes and systems. Tactics are a part of strategy, but they're not the same thing. We're hardwired for action and hence likely to jump a tactic. "Sales are slow so let's run a promo." Instead of taking time for deep work, strategic thinking. If we rush into fluffy short-term goals, then we'll find ourselves committing to the sin of bad strategy. Here's Richard Rumelt, author of Good Strategy, Bad Strategy: The Difference and Why It Matters, to explain what the differences are.
Richard Rumelt:
Bad strategy is fluff, it's "Here's where we're going to go", without, how are we going to get there. It's not defining the nature of the challenge so that when you put forward a plan, no one can assess whether it's a good plan or bad plan. Because you don't know what it's trying to deal with. You don't know what the difficulty is. Good strategy has a lot of characteristics, a few that I put forward. Primary one, focus energy. Don't disperse it in all different directions. Focus particularly on approximate objective, something critical that can be accomplished in the near future.
Peep Laja:
Another lesson learned that you have is, the value of asking what would have to be true.
Brian Bourque:
One of the big problems that I see in thinking about anything is that we are very beholden to our current perceptions of what is possible, and the constraints that we deal with on a daily basis. And so within a startup you know that the constraints might be bandwidth, they might be money, they might be resources of one kind or another. And so a lot of people default to this view of thinking why things are not possible because, "Oh, we've got these problems or we've got these constraints." And I have never seen that approach really yield... I don't want to say anything, but I would say you're looking for big incremental gains. You're looking for those step-wise improvements. And so I prefer the approach because I'm a creative guy and I think that's why entrepreneurship and building stuff appeals to me because you're kind of like forcing your will on the world and saying, "This stuff does not exist or we're not doing this way yet, but it's possible, so let's figure out how the hell to do it."
And I find that somebody else said, "Building goals from the ground up is kind of arbitrary and limiting." And so if you say, "Hey, we're going to do X", then people do X, but how do you know that they couldn't have done Y? And so I prefer to say, "All right, let's say we're at X, let's get to 10 X." What would have to be true to get to 10 X? Do we need five more people on this team? Do we need to be producing a thousand more articles if it were SEO a month, do we need an ad budget that's like 10 times what our ad budget is?
And then again, what you can do is you can go back to those points of leverage and say, "Okay, well what are the points of leverage that relate to this goal?" And then you could say, "All right, well one is conversion rate." So let's say we get halfway there by doubling our conversion rate. Okay. And then another one might be like, "Okay, we'd have to double the lifetime value of a customer." So already you're closing that gap. Whereas if you're just looking at the things in front of you, you might be like, "Well, we have these shitty ideas and we have these lame constraints." I would much rather go to the CEO and say, "Hey, this is what we want to achieve. It's possible and this is what we need to achieve it."
Peep Laja:
There's a certain archetypal appeal to TV shows for someone who knows what they're doing, tells people what to do to get a result. From restaurant makeovers to fashion makeovers. But real life isn't like that. The right answers in your business and strategy development aren't just handed to you. The journey to achieving X can long and hard. A good place to start is asking yourself, "What would have to be true to achieve X?" It's difficult to agree on what is true now, but easier to come together on what would have to be true for something else to happen. Here's the author, Roger Martin talking about why this concept is important.
Roger Martin:
Doing something that's other than what other people are doing is sort of sticking your neck out. It's harder. So how do we do that in a way that gets everybody in an organization, one willing to consider options that are different? Possibilities as I call them. I like that word better than options. And as a group, come to a mutual point of view where everybody can put their hand on their heart and head and say, "This is what we're going to do." Then I say is, once you are in the mode of that is to imagine possibilities. Why do I call them possibilities? Because I don't want to make the bar too high at this point. I say go broad as you can with anybody in the organization who's got a possibility. You want to take that into account. Because what causes people not to want to make choices and support choices is the choice that they wish we would've made wasn't even contemplated.
After you ask a different question, and this is the most important question in strategy, is not "What is true?" Which is what we spend most of our time arguing about. What would have to be true, drives coherent, and people agreeing on things. People can agree what would have to be true for something to be a good choice. They may not believe it is true, but they can agree on what has to be true.
Peep Laja:
Speaking of possibilities, I'm reminded of the story I heard at a conference. Matt Epstein, VP Marketing at Zenefit was talking how their CEO Parker Conrad asked him to hit an impossible goal. And then the CEO said, "Well, what if it were possible? What would you need?"
Matt Epstein:
So very early on when we were only at a few hundred thousand in revenue, Parker comes in one day, this is the beginning of the year, and he says, "Matt, I want to go from basically nothing to 10 million." And Sam and I were like, "Whoa." That's just for context, that's pretty fast. It's pretty hard to get to your first few million, let alone 10 million. And I was like, "Okay, I think I can do this." And then he comes in literally the next morning and goes, "I changed my mind. I wanted to do 20 million." And I literally flipped my shit. I yelled, I cried, I stamped my feet, I threatened to quit. It was super ugly. And I was like, "This is the stretch goal, right?" He's like, "No, this is the goal." And what that forced me to do, after Parker calmed me down and convinced me not to quit, he said, "Okay, well in a world of which you could hit 20 million, what would that take?"
And I was really grumpy. I was like, "I guess I'd need three SDRs and I need email, I need this, I need that." And all of a sudden he goes, "Great, do that." And now I was like, "Holy shit. Two seconds ago this was an impossible feat. And now all of a sudden I just basically convinced myself that I can do this." What making the stretch goal, the real goal does is, it forces you to literally think in ways you never thought. You will think outside of the box. There's really no other way to do that other than to set a goal for yourself that's nearly impossible.
Peep Laja:
Another point that you talk about is the internet is larger than you think.
Brian Bourque:
I think people get in this tunnel vision of... I mean, I probably surf the same 10 sites a day, and most people I think are like that. And digital marketers are very siloed. It's like you come up with a specialization, it's like you're either on search or you're on social. And the nuances of each platform really kind of create that, because you have to spend a lot of time to understand all these nuances. When the reality is like these are just different contracts, different pricing models, and different means of acquiring access to people. And I mean, there's billions of websites and a lot of them have advertising, and they're not all Facebook, they're not all Google, and many of them are trying to increase their revenue. So it doesn't make sense to go to the long tail and talk to a bunch of no traffic mom-and-pop websites. But there are a lot of other forms of traffic that have been aggregated in some degree that are not really thought of first, I would say.
Peep Laja:
Do you have an example or story of when you used one of these lesser-known channels?
Brian Bourque:
One of our initial products before the Lead Gen platform came around was that we embedded financial tools for third-party publishers. And so our business development team built this amazing network of financial publishers that wanted to improve their monetization. And so we provided tools that did that. And so that created a footprint of relationships where you could then go to them and say, "Hey, we have this other way of monetizing, which is through our lead generation platform. Are you open to testing that?" And so having direct relationships with large publishers, one, there are other spaces. One that I think is really interesting is newsletters. Most major web publishers have newsletters. And this is, you have companies like LiveIntent that have tried to build ad networks around it. When you work directly with publishers, you can often customize the units in a way that is going to be more effective than these type of programmatic units. So those are two examples I would give.
Peep Laja:
Another lesson learned you have is, that at scale, everyone is a competitor.
Brian Bourque:
And what that means is if you want scale, you have to go to these mass market media channels. So, it's being on the front page of the New York Times or yahoo.com or some web portal that gets millions of eyeballs a month, but they're very undifferentiated users and you're competing with brands who aren't trying to get an explicit return on their dollar. And so if they're willing to pay more money than you, then you're not going to get the scale on those platforms. But you want to reach the max audience you can to sell as much of your product or service as you can. And so you have to be able to monetize sufficiently, make as much money per a thousand impressions as theoretically a brand is willing to pay so that you can kind of capture a share of that.
There's really two components to this. So everyone is your competitor in the sense that when you're a media buyer, a platform is industry agnostic. The New York Times doesn't care if you're selling widget A or widget B, as long as you can afford to pay their rates. And you can't afford to pay their rates if the other advertisers are monetizing a lot more effectively than you are. And then the other component of this is, that you're just competing for attention with everybody. Let's say you are thinking about how to market your podcasts, your competition is not just other podcasts. It's like, what do people spend their time doing? It's watching movies or listening to audiobooks or other things like that. And so I think that's the more interesting component. It's about finding what makes you worth somebody's time or attention.
Peep Laja:
So would your advice be to create more pattern interrupt? What should we do?
Brian Bourque:
Well, I think that's part of it. Like what we've seen work is, there has to be an element of novelty to get people's attention. If you have novelty without value, then you're just going to waste your money. Something that I've observed, and especially within financial services, it's one of those industries that because it's highly regulated, things tend to look very similar. And so people don't do a great job of differentiating themselves, disrupting those patterns.
Peep Laja:
Ultimately, everyone's going to copy each other. They're going to copy your product, your marketing tactics, your messaging. I was talking to Mutiny's Jaleh Rezaei about this on a previous episode of How to Win, and she said...
Jelah Rezaei:
Really, the only winning strategy is speed and how fast you are innovating and staying ahead of the game. Faster always wins.
Peep Laja:
You need to be constantly innovating. Both product R&D and marketing R&D, and building the next version. The more successful you are, the more people are going to copy what you have put out there. What stands out, gets picked. While others are deploying predictable, obvious, seen-it-a-thousand-times marketing, you should go for pattern interrupt. New innovative marketing ideas that are different, have a better chance of getting attention and tend to work better. Obviously, you won't know in advance what will work so you need to run experiments. Once you find a thing, double down on it, do more of it, exploit it while it works.
At the same time, keep your experimentation engine humming. So by the time your thing gets copied and adopted by others, you are already milking your next thing. While most still take weeks and months to react and ship, winners do non-stop experimentation and get feedback in days. They iterate and get to things that work so much faster. Every new idea will eventually get stale. You need to discard your winners, kill your darlings, and out-innovate yourself on a regular basis.
Sameness is everywhere. And also one thing that you have learned over the years is, "Don't follow the sheep." What do you mean by that?
Brian Bourque:
I'm always a little bit skeptical of mainstream thinking. It reminds me of Warren Buffett saying, where like, "Be greedy when people are fearful and be fearful when people are greedy." Like the prices on Twitter have dropped dramatically for media buyers and they're offering pretty substantial financial incentives for people to spend more money. And so as a performance advertiser, like that to me is an opportunity. And I think people need to be a little bit more skeptical of the narratives that are guiding their decisions.
Peep Laja:
The sea of sameness is pervasive, but attractive to executives wanting to play it safe. Experiments in behavior of psychology have shown that when similar alternatives compete against each other, they all become less attractive. While if one option stands apart from the rest, even if the difference is not particularly meaningful, that option becomes more attractive. Most email marketing or task management tools could say, "Why not try us next", on their homepage? And it would probably not perform any worse than what they have there today. If you play in a mature category, you need to lead with your differentiated value. When they zig, you zag. Here's Marty Neumeier, author of Zag, explaining what this means.
Marty Neumeier:
We learn how to do things, human beings by looking at what other people do. And we say, "Oh, that's cool, I'll do that. I can do that." And we copy and we end up learning how to do it that way. We never do anything new by doing that, right? We learn what other people learn, but we don't ever go into new territory. So if you don't do anything new, you can't really own a business area or a strategic area. All you can do is compete with somebody else who was already there. You can't be a leader by following the leader. You just can't. You have to be the leader. And the leader is somebody who takes you someplace new. So when everybody goes one way, you have to go the other way. Even if you don't know how, you're going to have to figure it out. And those are the companies and the products that create new wealth, new value by doing something that no one's done before.
Peep Laja:
So what are Brian's top three winning lessons? One, you need to understand what is scaling and what it isn't.
Brian Bourque:
Scale isn't just spending more or Ad money on different platforms.
Peep Laja:
Two, that strategy is more than just tactics.
Brian Bourque:
Instead of just rushing headfirst into the next shiny object or what sounds good or what your boss thinks is good, take the time to actually think, what are the few dials that if we get control of them, are actually going to move the business?
Peep Laja:
And three, when they zig, you zag.
Brian Bourque:
There has to be an element of novelty to get people's attention.
Peep Laja:
One last takeaway from Brian.
Brian Bourque:
One of the big problems that I see in thinking about anything is that we are very beholden to our current perceptions of what is possible and the constraints that we deal with on a daily basis.
Peep Laja:
That's How you Win. I'm Peep Laja. For more tips on how to win, follow me on LinkedIn or Twitter. Thanks for listening.
