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  • Sequencing Outbound -> Freemium -> Community to Reach $3.2B, The Real Purpose of a Strategy - Tactician: #0093

Sequencing Outbound -> Freemium -> Community to Reach $3.2B, The Real Purpose of a Strategy - Tactician: #0093

"So, you start with outbound, right?

You're reaching out to people who don't even know they need you.

It's like going on a date and saying, 'You haven't met me yet, but you're going to love me.'

Then you hit them with the freemium, where it's like, 'Here, have some cake for free... Now, want the recipe? That'll cost you.'

And finally, there's the community where everyone's eating cake, and you're a billionaire.

It's a piece of cake. Literally!"

05/04/24

Sequencing Outbound -> Freemium -> Community to Reach $3.2B

Why Read:

  • The Retool growth story provides valuable insights for founders on finding product-market fit, scaling sales, adopting product-led growth, and leveraging community partnerships.

Featuring:

  • Shounak Banerjee, Founder at MarketCurve

Link: 

Key Concepts and Tactics:

  1. Identifying the problem and founding Retool:

    1. Point: David Hsu founded Retool after experiencing the pain of building internal tools for startups firsthand.

      1. "David Hsu founded Retool 6 months after graduating from Oxford University in the UK with a degree in philosophy & computer science. Back in his Uni days, he had started Cashew - a Venmo for the UK market and faced firsthand the problem of building & scaling internal tools for KYC, fraud management etc. He realized that every engineer had to build an admin dashboard but hated doing it. This became the inspiration for David to start Retool."

  2. Building the MVP and finding early traction:

    1. Point: Retool focused finding the right market fit through extensive outreach and iteration.

      1. "Hsu 'infiltrated' several LinkedIn groups for FileMaker developers and did extensive outreach. He sent out a few hundred cold emails, received three replies back and got one person on a call. That developer pretty much said that Retool is a horrible idea and wouldn't ever consider using anything other than FileMaker."

      2. "One day, Hsu sent a cold outbound email to a startup called Rappi, positioning Retool as a platform that helps companies build internal tools faster. Within 15 minutes, Rappi's CTO replied asking to get on a call - that was the first sign that the messaging & positioning was hitting the right person."

  3. Streamlining outbound sales and reaching $2 million ARR:

    1. Point: Retool scaled its outbound efforts by identifying the right companies and personas to target.

      1. "They scoured Crunchbase pro to identify 10,000 companies that fit the description of the companies they wanted to introduce Retool to. They filtered companies that had raised money in the past 6 months. They used Upwork to hire freelancers to gather verified contact details for these 4 people at the 10,000 companies: (a) Head of Engineering (b) VP of Engineering ((c) CTO and (d) Head of Ops."

      2. "David used PersistIQ, a sales automation tool in order to reach out to the 40,000. After A/B testing the email copy & messaging, they finally found the subject line and messaging that worked and hit their inboxes."

      3. "At a conversion rate of 8%, 2400 people said they were interested to learn more and they became early adopters. They even signed an enterprise customer pilot worth $1.5M right before YC Demo day. At this stage, they hadn't made a single hire outside the founding team yet."

      4. "Their approach to pricing was pretty simple as well. For the customers David would just quote progressively higher prices (like $2k a month) and see what they would say. If they said no, David dropped pricing a bit back down. This approach worked great because the customer felt like they got a great deal, David got a customer and also discovered that $2K was probably too high for this particular customer. He rinsed and repeated this process over and over again. And he made sure to never quote pricing via email because they might go away and David could not have any idea what the reaction was."

  4. Scaling via product-led growth and freemium pricing:

    1. Point: Retool shifted to a freemium model to make the product more accessible and optimize for usage.

      1. "During this time, Retool also shifted its pricing to a freemium model triggering its PLG efforts. The goal was to make Retool as open and accessible as possible, and optimize for usage rather than revenue. The idea was to attract a big pool of users who are using Retool's products regularly (North Star metric: # of active customers) who would eventually become paying customers 3-5 years later."

      2. "They tested different experiment iterations like giving a certain number of app building blocks for free versus allowing a certain number of users for free. Retool tested these experiments in Canada and India and monitored the data. They set up a feedback loop with customers of the free plans in order to determine if they were seeing enough value in the free product."

      3. "All of this research led Retool to launch a modified third version. The new free plan includes a more generous set of features, an unlimited number of applications, and unlimited collaboration – but a cap of up to 5 users for free. This allowed Retool to show the true value–and full capabilities–of the product, not just a sampling."

      4. "Retool's earlier outbound sales system became a lot more sophisticated. Account execs work primarily within five sales channels: (a) Inbound leads that come directly to the sales team (b) Outbound leads that come from account execs or business development reps ((c) Conversions from the self-service motion (d) Expansion of existing customers (e) Self-Serve Conversion + Expansion. The entire sales team is optimized around a single metric - Net Dollar Retention (NDR)."

  5. Driving growth through community, and partnerships:

    1. Point: Retool leveraged multiple channels to drive growth, including sophisticated sales, community building, and startup partnerships.

      1. "Retool officially launched their Retool community to the public in May 2021 until and has been growing since. Retool's discourse forum is the hangout place for developers to get tactical help. Devs can ask for suggestions, get fixes, request feature updates, and show what they have been working on."

      2. "They also have an exclusive Slack group for Retool power users who have been part of the community for a while & have made significant contributions. These power users get early access to beta features, get to show their best work, and collaborate with the best developers on the channel."

      3. "They also offer free Retool credits (upto $200k) to startups. They've partnered with HubSpot, Segment, DigitalOcean, and Brex to offer discounts for their software as well when they use it with Retool."

      4. "They have built a library of templates to get people to the aha moment and increase user adoption. This helps with viral growth loops similar to how Sending, Webflow and Typeform did it."

The Real Purpose of a Strategy

  • Why Read:

    • Essential insights for startup founders on creating effective strategies that align team efforts, drive better decision-making, and ultimately improve customer experiences.

  • Featuring:

    • Ami Vora, CPO at Faire

  • Link: 

  • Key Concepts and Tactics:

    • The Attraction to Strategy Work:

      • "“What I really want is to work on…is strategy,” I’ve heard from colleagues on every team I’ve been on. And it’s no surprise — big strategy projects can sometimes seem like the most exciting and high-profile projects in a tech company. They call to mind visionaries who change the world by thinking about big-picture problems."

    • The Pitfall of Underutilized Strategies:

      • "But if they’re not set up well from the beginning, some of these grand strategies end up being underutilized — or, worse, a waste of time. Because creating a strategy doesn’t directly change anything for our customers. Customers don’t care about our strategies — they care about their experience with the product in their hands."

    • The Real Purpose of a Strategy:

      • "So for a strategy to be useful, it actually has to change our behavior as a team to create better customer outcomes. That means that to be effective, a strategy should help every person on the team make better decisions day-to-day."

    • Key Elements of an Effective Strategy:

      • "It should remind everyone of: What we believe changes about the world in the future, so everyone understands why our vision needs to change to match it; Our overall goals and direction for the future, so everyone can independently make decisions that fit into that future; How each team fits into what we’re building overall, so every person feels ownership and accountability for their piece; What this team isn’t focusing on, so people can deprioritize things; Why we’re building what we’re building, so everyone is connected to the excitement and motivation of building a great product for our customers."

    • Questions to Establish a Strong Strategy Foundation:

      • "To make sure we’re ready to build a complete strategy, I’ve found it’s helpful to set up the strategy deliverable by asking specific questions up front, like: How can we build enough conviction in this strategy that we’re willing to ask our team to act differently because of it? How can we be specific enough about what we do and don’t need to do, so anyone on the team will know how to change their day-to-day behavior to match the strategy?"

    • The Keystone of Strategy's Success:

      • "But I’ve found the keystone of a strategy’s success is making sure that it translates into day-to-day execution guidance that everyone on the team can take with them — because that’s what turns into better products for our customers."

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