Lenny Rachitsky: preference

Transcript context

…So Monetizing Innovation, we actually wrote it eight years ago. Time Flies. And the core thesis of that book was, how do you build products that are not just cool but are products that people need, value, and are actually willing to pay for? And I think that took a life of its own. And over the years, we kept getting another question from entrepreneurs that, "Hey, we built a great product, we know there is willingness to pay, but how do we build a great business? How do we scale this?" And the brutal truth is that even if you have a great product, you might actually not figure out a way to grow fast and grow profitably. So we wrote Scaling Innovation in an effort to actually solve that puzzle. So you can think of this as a sequel to Monetizing Innovation. And Monetizing Innovation. Talked about how to build great products. Scaling Innovation talks about how to build a great business. And writing a book is... There needs to be a purpose for this. For me, the reason for writing books is about giving a bit back based on what I know to founders. And book writing is hard. Writing a good book is even harder. And just like Monetizing Innovation, Scaling Innovation is not marketing fluff. It actually has real actionable stuff packed in that you can go on Monday morning and start implementing. And we wrote this book to give back a bit of what we know and to help companies scale and architect towards profitable growth. I love people like you that do the work for, I don't know, decades at this point, learn from real life experiences over and over and over, and then just share all this stuff with people. This is the most... the highest ROI way to learn, is letting you do all this work to learn all these things and then you share all your answers with us. So that's why I love these books. If you had to boil down the thesis of this book into just a simple thought so that we can just start to plant this in founders's heads, what would that be? So if I have to boil down the core thesis of the book, it is basically that if you want to build an enduring business, you need to be able to architect towards profitable growth. What that means is you need to be able to master two engines: market share and wallet share. It sounds simple on the surface, but it's actually quite complex. Because if you unpack that, for gaining market share and wallet share, you need to be good at acquisition, monetization, and retention, as in get customers, make an initial money on them, but also make money on an ongoing basis and have your customers actually refer more customers. Many companies, actually, what they do is they focus on a single engine strategy. So they focus on one of those two topics and pretty much exclude the other one. That leads to all kinds of situations. You see companies saying, "I'll grow at all costs and postpone monetization." You see some who would say, "I'm going to monetize earlier on," but they might miss out on acquisition opportunities. Or yet others who are so focused on a small set of loyal customer base that they're neither monetizing nor are they actually acquiring. So the good founders need to be able to dominate both market share and wallet share. It is not a choice. You need to get better at both. But this does not mean that you're putting equal effort on market share and wallet share at all given points in time, but it means you're putting equal attention on both those topics and being thoughtful about the trade-offs and saying, "How can I actually look at these two topics together so that I'm architecting towards profitable growth?" That's the core thesis of the book. We actually showcase nine strategies that actually allow companies to architect towards profitable growth. And every chapter ends with how this particular strategy circumvents a single-engine problem and helps you focus on market share and wallet share at the same time. And there's also CEO questions and leadership questions that people should reflect on when they architect towards profitable growth and are they on the right track? I mean, think about this ways. If you're flying a aircraft, you don't want to flight on one engine. Why do you actually want to do that for your business?…

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