Madhavan Ramanujam: evaluation

Transcript context

…Awesome. Zooming out a little bit, something that I love about your book is you structured it around these axioms. You have a bunch of these really clever axioms that get stuck in your head and help you think about pricing. Can you share some of your favorites, maybe two or three referred axioms from the book? You talked about Sierra being in your park founders. I don't know if that's Clay, but here's a shout-out for Clay. So Clay actually read the entire book and gave me feedback, Scaling Innovation, the similar copy that he actually had. I called it Scaling Innovation Axioms throughout the book. And the whole point of the axioms was that at the end of the day, if you can just take all the axioms, put it in a printout next to your desk is the summary of the book. And it's like PT statements that you'll just remember what to do. So he came up with this idea that, "Hey, rather than calling them just generic scaling innovation axioms, you need to brand each and every axiom." And I thought that was a brilliant idea. So I went about coming up with a unique... He even contributed to some of the names. We came up with some unique names for each axiom. And here's the other fun fact. Probably I'm geeking out too much. But when I counted the number of axioms, there were 42 axioms. And I didn't try to make this up. And if you're a Hitchhiker's fan, then you know that's the answer to everything. But jokes apart, let me unpack a few axioms. One of my first favorite axioms, what I call is the 20-80 axiom. Especially in tech companies, 20% of what you build drives 80% of the willingness to pay. But the irony is that the 20% is the easiest thing to build often. So what founders do is they take this 20%, build it, put it out in the market almost for free, and then they're chasing their tails to build 80% stuff that's only driving 20% willingness to pay. So if you have not been thoughtful about that, you've given the farm away unintentionally. So truly understanding what drives willingness to pay in your product is critical. And I think people call it the MVP. I think we should change the definition of MVP. It shouldn't be minimum viable product, it should be the most valuable product. And be thoughtful about what are you actually giving out as your early products I think is key. That's the 20-80 axiom. Probably my second one is the price paralysis axioms. So what that means is your reluctance to do a price increase is often internal and emotional and it's not external and logical. This goes back to the same prayer session to actually do a price increase. If you're holding hands, you have a terrible business. So it's mostly internal and emotional, and how do you be thoughtful about price increases become important. Probably my third favorite one is stopping churn before it happens, so stopping churn axiom. So to stop churn, you need to attract customers who won't leave. That sounds counterintuitive, but that's the best way to actually stop churn. What does this actually mean? Most companies will try to stop churn when someone actually says, "I want to go." It is too late, and you're being reactive. At the most, you'll throw some offers. They will stay for another six months, and they will leave. They've already made that determination. , "I want to go." It is too late, and you're being reactive. At the most, you'll throw some offers. They will stay for another six months, and they will leave. They've already made that determination. The way to stop churn is to start acquiring customers who won't leave. And that is the most important thing. So if you look back at your data and say, "Who are the types of customers who actually tend to stay longer? What are their characteristics? How can I focus my acquisition dollars in getting more of those?" then you stop churn before it happens. And that's the key.…

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