How to approach GTM with an engineering lens — Rich Rao’s advice from Google & Meta
Episode 73

How to approach GTM with an engineering lens — Rich Rao’s advice from Google & Meta

Our guest is Rich Rao, the VP of the Small Business Group at Meta, where he manages the global revenue and operations for properties including Facebook, Instagram and WhatsApp.

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Our guest is Rich Rao, the VP of the Small Business Group at Meta, where he manages the global revenue and operations for properties including Facebook, Instagram and WhatsApp. He also spent 10 years at Google, where he held a bunch of different go-to-market roles at the company, eventually becoming the GM for the Devices and Education verticals.

In today’s conversation, Rich shares how his engineering background influences his approach to GTM, from his architecture method to the concept of refactoring. We also wind back the clock to his earliest days at Google on the team that was building and selling Gmail for your domain. There are a ton of early startup mental models that Rich shares from this period in the company’s history, including why they ended up ditching free trials and his biggest pricing lessons.

You can email us questions directly at [email protected] or follow us on Twitter @ and

Brett Berson: Well, thanks so much for joining us excited for the conversation.

so I thought one interesting place to start is when you go all the way back to your sort of college background, you actually came up in, um, in engineering. And I was curious how, you know, given the last 15 or so years of your career, you've dedicated to different facets of ops and go to market.

H how does sort of that more technical background influence the way that you think about these topics?

Rich Rao: Yeah, I, I never, uh, thought about it in this way, but when I started my career, um, I was a software developer and I had studied electoral engineering as an undergraduate. I didn't realize it but many years later, a lot of the lessons that I was learning and it was, wasn't just the skill sets around problem solving or analytics, but the actual concepts of how to engineer a system came back to help me when I was building out, go to market.

And, you know, I remember, you know, one of my first jobs was to build out, um, some of the first e-commerce systems for businesses, and this was going back a long time, dating myself, but, um, graduated in 97 and was building. You know, essentially at that point it was windows applications that ran locally on a client machine.

And I basically learned how to go about doing it. You would build out a front end, you would build out the business logic, some amount of data and repository. You may replicate that data to a central place, but off you went. And then I built the first e-commerce system and I tried to use that same architecture and I completely broke everything and I built beautiful business logic and a B beautiful front end.

But I didn't think about the back end and the core architecture of how to write multi threaded code or how to do load balancing or the cost of doing a round trip to the server. Um, and so the application completely broke and it wasn't until many years later that I was thinking about, you know, I was build and go to market.

And I started to see, I was making. Some of those same mistakes and that I was building components, but I wasn't thinking about the architecture and that's just, you know, one example of how that engineering, you know, experience really helped me. But I think there's a lot of factors, for example, uh, building a product roadmap, you know, oftentimes every company does that.

You build a product, you have a roadmap, but most companies don't have a roadmap for go to market. Well, why is that? Shouldn't we have one, uh, refactoring is this other concept, you know, there's, uh, you know, a purpose to, you know, how you build your code and over time you increment it over time. And in some cases it's actually better to hit the pause button on incrementally, you know, improving your code base, and actually re-look at it from the inside out.

And so I think some of those concepts, I didn't realize it at the time, but I was building and learning those things as I was an engineer. And it's really come back to help me on go to market.

Brett Berson: Just to pick up one of the threads rich on this idea of a go to market roadmap. Can you share in a little bit more detail kind of what that looks like for you and, and how you've used it as a tool?

Rich Rao: I like to think of it as, uh, a roadmap is fundamentally different than just a goaling system. I think oftentimes in go to market, what I've seen and experienced is that you have. You know, a goal and maybe it's revenue, maybe it's usage, maybe it's something else at the top line. And then, you know, you have KPIs under, underneath that, that support achieving the goal.

And then oftentimes you have teams who are then, you know, working on some subsection of those goals and they kind of ladder up and all is finding good. I think a roadmap sort of, to me, takes it to the next level. And I think in the same way that you build a product, you look at a roadmap and say, here's what I'm going to produce.

And then everyone is working on that together in some mechanism where you all own a piece of it. And I think what a roadmap on the good to market does is it forces you to say, what are you going to deliver beyond the revenue? What are the work streams? What are the programs? What are the initiatives? And then it creates working models for people to come together.

And so on the product side, you may have an engineer and a, you know, uh, a UX person, a design person, a QA person, you have a. You have a product manager who's leading that. Well, similarly on the go to market, you can have sales, you can have marketing, you can have an ops person, and they're all working together against one of the deliverables on a roadmap.

And then the other part about a roadmap that I like is this idea of having every six months or maybe it's, maybe it's every three months, but I, I like to use a roadmap that works every six months. It gives you enough time to actually, you know, I have bigger enough ideas that you can execute and see results, uh, during that period.

And you know, every six months you're producing something new. And so you can see how you're advancing your go to market, just like you've advanced your product. You should be able to see advancement on your, go to market in that same way.

Brett Berson: Can you share an example from the last few years to kind of bring to life what it looks like in practice?

Rich Rao: Yeah, I think a, a good example of it is, you know, in, in my time at Meta we've, we've used this principle of creating a roadmap. And, um, one of the, um, major programs that we have is one where we, we help advertisers optimize their accounts. And in particular, we find a lot of, you know, companies who are, um, eCommerce there, there's some sort of eCommerce type advertiser where they're trying to drive their business online and we help them optimize their ads.

What we've done is essentially roadmap the improvements that we want to help our clients with. And it may start with some of the basics around getting started with advertising. And then, you know, once you get some of. Uh, core measurement and, you know, campaign optimization set up, then you're ready for the next level.

And so what we've done is essentially identified and done a lot of understand work or data science work, to look at the heterogeneity of our clients and identify what would be the solutions that would make sense for these various, you know, subgroups of clients. Um, and we have this expression that we wanna meet clients, where they are, and the, the only way you're gonna be able to do that when you've got, you know, over 10 million advertisers is, is if you do it programmatically.

And that's where I think a roadmap really comes in in that you've gotta decide, which are the groups, which are the clusters that you wanna focus in on, what are the different products you want to try and help them with. And then how can you measure the results of your efforts to see if you are actually helping and it's helping them and they're actually doing more and more business with you.

So the roadmap, I, I think the concept of it is, um, It's helpful to help you organize your efforts, but it's also equally as important such that you are reporting out on the learnings from it. I think one of the, you know, common misperceptions is that on a roadmap, you want everything to work or you want 70% of it to, um, to, you know, of your goals to be reached.

But I think of it as that, the learnings themselves are equally as valuable because it's a long game that you're playing. And so one of the major steps in any sort of roadmap item is to essentially, you know, do a full, write up and have it be AB as objective as possible as to, you know, what went well, the issues, the challenges, the whys behind it, and the additional, you know, questions that made me looked at in a future, you know, roadmap item.

Um, and then, you know, at the end of the half, every team will, will then look at that, you know, what they've delivered and then we will. Prioritize what makes the roadmap for next quarter? So in, in this particular example, you know, we're ne we'll never be done because there's always a next set of products and next set of optimizations.

But, um, it allows us to look backwards as well and see the progress we've made and, and push ourselves as to the velocity of the changes that we wanna make going forward.

Brett Berson: So in this example of a part of the roadmap focused on, um, improvements or optimizations for your end customers, can you give an example if I were just like looking at a doc that explains a piece of the roadmap, like what it actually would look like?

Rich Rao: Yeah, the, I think a good example, um, that we can talk about right now is, is creative and creative is a, is a topic that I've written about, um, in a few places. And it's this idea that we've seen, you know, creativity just hit, you know, a really sharp point of acceleration. And if you think about, you know, going back to even advertising at a basic level, it was.

You know, tech space and then we got to television and, you know, radio, even before that and then television and then online. And I think we're generally seeing creativity as one of the key competitive advantages when it comes to, you know, how a company will market themselves. And so part of a roadmap item would be an example, would be, we wanna help our clients with creativity.

We wanna help fuel their creativity. We wanna unlock it. And there may be various ways that we can do that. We can help them with providing really good, you know, in product support so that they can, you know, um, you know, take their current stock image and really make it into something that brings their business to life.

Uh, we can do tutorials and training online to so that, you know, people wanna learn how to do this. It's not just get it done, but they also wanna, you know, see pro develop new skills and, um, and produce something that they're really proud. And we can also for, for some clients, they want it just to be done.

They wanna work with an agency or they want some sort of third party automated tool. And so we'll actually develop in, in, in a lot of ways, all of those different ways that we can help clients and then we'll test it. We'll actually run a measured, you know, ABC task to identify what the impact was and, um, and know what worked and probably in the end, you know, um, we're gonna take bits and pieces from all those different ideas.

And then, then we will actually for the next roadmap, uh, we'll identify what makes the, the cut and, you know, and ideally we'd be pushing the envelope on the innovation even further, given the results that we saw.

 So let's zoom out a bit. How would you describe the pieces or, or the parts of go to market architecture or infrastructure?

Rich Rao: Yeah. So I, I think the it's important to understand the pieces. And then as I mentioned before, the architecture think about how it all works together and, and, you know, it's confusing because there's a lot of bud buzzwords that are out there and we've seen a lot over the last decade. There's product led growth.

There's using a data driven approach. Everyone wants to do high scale customer centricity, but, you know, I started to, as I was getting in to go to market, I started to think about like, well, what's the right tool for the job. And how do I think about, is there a sort of unifying theory that could help bring together these various pieces and actually produce some sort of amplification effect and.

The solution that, that I sort of came upon is, and I've seen it work in multiple businesses, is this idea of having an integrated multichannel system. And this is this idea that there's many ways there's multiple channels in which you can go to market. There's the product. You can do it with one to one human capital.

There's various types of marketing. You can do it with partners and in a proper what I'm calling an integrated multichannel system. Each of these channels provides differential and distinct value and significant value, and then works in concert with the rest of the system, such that it makes the system better with a contribution that's truly distinct and discernible.

And so let's start. Where it usually begins, which is the product. And, you know, a lot of companies are using their product to kind of sell the product and you go through it and you get it set up and, you know, self-service is really good, but it goes beyond. And I think if you think about what is the core value or, or differential value that the product brings to the system of going to market it's at while it has near infinite scale, and it's typically the fastest path for our customer.

Um, but there's an issue with it, which is it's really difficult to do kind of two way and recursive and iterative back and forth with a customer or a client who may be confused. It's also really difficult to do customization. And so at the, at, if you imagine there's a flywheel. With this integrated multichannel system and the product is at the core of it.

It's like at, at the 12 o'clock position. If you can imagine that on the flywheel, but then the next piece is where you have one to one interaction. And this is where you can do the distinct value is that you can do this sort of two-way recursive inquiry. You can uncover the issues. You can see the actual, uh, challenges that people have.

You can understand intention, you can identify the corner cases and it's typically your fastest path to resolve it. And you know, so in the case, I'll give you an example. When I was working at Google, we were building this business. It was, you know, early days it was called Gmail for domain. It was Google apps and it's called Google workspace, but it took effort and time and it was a challenge to set up and get it deployed.

And there was a, a rollout process. There was change management. And so, you know, one to one interaction is really, really important for figuring those things out. And as you figure it out, you can ma then identify what should be different. And then your product, you know, can use that information to get better and to scale.

And so human, I, I put like the one to one human pieces say like on this flywheel that we're sort of virtually drawing here. It's like a, at a two o'clock position, but it doesn't end there. And I think that's when you get into more of the scale type channels. So it's product it's one to one. And then you go to the next part of the flywheel, which would be personalized, scaled outreach, or marketing.

And that personalized part is really, really important here. And the goal for this part of the system. And this part of your go to market design is you wanna automate what works and maybe, maybe you found something in that one to one. So in the case of Google apps, we found out the deployment, you know, here are the method methods to do it.

Well, maybe you're not ready to put it quite in the product yet. Right. Because if you don't get it exactly right. Um, and, and if you can't get the instructions, right, it won't work, but maybe you can test that with personalized marketing. So you can take what you're doing. One to one, identify groups of people who could benefit and then apply measurement and data science techniques, uh, to actually see what the end results are through instruction itself.

And the benefit of this is that, you know, you don't have humans adding additional variables to the experiment. , you don't have these unobserved, you know, variables that are happening. Um, and so you get highly objective and deterministic results. And, um, and, and again, it's a, it's a broader reach than one to one.

An example, just, you know, picking another one from, from meta is this idea of campaign optimization. So as, as I, we talked about a large part of what we do is we help our clients optimize their campaigns, but we are seeing this pattern over and over again through one to one, which was that, you know, people would oftentimes get their, uh, targeting.

It would either be too restrictive or too wide and we could help them get a better performance by making that change. And we started to see like, well, why don't we, if we can identify and advance and advise. Why don't we do that and then send them, you know, an in, in product notification or send them an email, um, or send them a message and then they can accept it or they can deny it and they can still be in control.

Um, so that's a way to automate some of what's happening one to one. Um, and then the next part of the flag will, if we kind of zoom ahead, maybe I don't know where we are, but like seven o'clock on the flywheel. Uh, once you've tested with personalized marketing, now you time now it's time to go broad, you're ready to go with broad reach.

And then you get into broad self-service platforms. Like your website, help centers. You can do webinars on demand, content and high volume. And this is the place where you wanna have the most robust answers where you want everyone to read it and know about it when it comes to your product or how to use your product.

And an, an example, um, that I'll I'll share from meta is that, you know, we. When I talked about optimizing campaigns, we figured out there's, you know, there's a lot of different ways to do it. There's probably hundreds of different ways, but there are five things that are probably the most critical for category of advertisers.

And so then we can produce the content on that. We can embed experts in a webinar. We can, uh, we can write our website such that, uh, you want to come back to it over and over again, and we can update the content. And again, we have brought, it's a much broader reach than say personalized, you know, campaigns that go to people.

And, but, so it's got the upside of really being able to affect a broad market, but there is a downside and that does require maintenance. And I think oftentimes I've made the mistake and I've seen others make that as well of you produce content. And the more you produce, the more you have to maintain as well.

Um, and so you've gotta do that. Otherwise it signals to the market and to your customers that, Hey, maybe your world and maybe your product really isn't that dynamic. Um, and then the last piece of the flywheel, um, so maybe at like 10 o'clock is partners and, you know, to date, everything that we've talked about so far is really around your product in a direct channel of service, but you know, partners in many types of businesses, I definitely saw this at Google.

I've seen it at meta that partners extend your reach to places that are not well served or not served at all in some cases. And you know, what I saw from Google is that they, what the partners really did is they help remodel, you know, the business itself. When you move to cloud computing, all of a sudden, like it's a completely different paradigm and your business use cases and business workflows change.

So it's a strategic function. The customer gets value. The partner gets value cuz they're, you know, that that's a high price. Uh, that's a valuable service that they can then price accordingly. um, but then it also liberates you and your product team to do what it does well, which is really produce a product that's easy, simple, powerful, and, um, allows you to build for a broad base of customers and do it really quickly, which is important when you're in a, in a competitive market.

Um, and that brings us back to the top part of the flywheel. So in a well functioning system, you kind of have all of those channels. Maybe there's more, maybe there's a little bit less, but they're all working together.

Brett Berson: That's a really great. Set of ideas and framing to, to sort of go a click deeper on it. What are the tools or processes or systems to actually make this work or make the flywheel turn? Um, and maybe one way to get it would be like, if you were to go join another company and build this from scratch, like what's the, the how behind this.

Rich Rao: Yeah. So it, it, it doesn't, I kind of described a system that's, um, sounds relatively sophisticated and, and may sound a bit daunting to go say, okay, let's go build this all of a sudden, but, you know, I think in the early days, it's, you know, you don't have to get it all from the beginning. I think, you know, I can kind of share with you some of the early days of what it was like working on.

Google apps. And that'll, that'll show you that it's not, it's not about building that end system from the very beginning. It's really about having it in your mind and then working towards it. And, you know, the early days of, of working on Google apps, like it had no semblance of, of scale or the system that we're talking about now, it was a different era.

It was, you know, going back, it was 2007, this was the early days of cloud computing. And, you know, we were selling, you know, Gmail for your domain and, you know, our role at that point, my job was really two parts. And in, so in one part it was being a part of evangelist, you know, and because you know that in that era cloud computing for business, wasn't a certainty.

You know, our biggest competitor said it wasn't a thing. I think it was, you know, might have been Larry Ellison who said he called it gibberish. in reference to cloud computing. And now we weren't too worried about what other people were saying about it, but it's useful to know what we were up against. Um, Now, thankfully, you know, Nicholas Carr wrote this book and it was called the big switch and it professed this movement that would be cloud computing.

And he told this compelling analogy, uh, between cloud computing and electricity and how electricity as we now know, it became commonly available in a low cost utility. It wasn't always like that. And the story went that. You know, electricity used to be produced very locally for, you know, manufacturing plant or some local homes, but it was very costly to distribute.

And then he tells the story that all that change with the advent of alternating current, that allowed for this low lost distribution of power over long distances. And now, and next, this similar phenomenon was about to unfold with the internet and that the internet was equivalent equivalent of alternating current that would allow for this massive centralized computing to be distributed to anywhere in the world and Google would be at the forefront of it

And so we go around and preach this message and, you know, get people excited. And Dave Gerard was a master of it. So we watched him and then we kind of created this golden pitch. And so we go out evangelizing and then we go back to our desks and then we would do the second part of our job, which you know, was not a very glorious job, but is basically answering tickets in the queue that were submitted, you know, online and people were asking basic questions about how to use your product.

Like. I understand, I need to switch my DNS records. Uh, how do I do that? And what exactly are these DNS records in question? And so it was really a humble beginning, you know, on the business side, but, you know, I remember trying to build out the go to market and I was kind of pulling inspiration from a few different places because there wasn't like a great example of trying to build this system or build a system for scale in the market.

And, you know, I pulled a lot of inspiration from at that point. I was working as part of Cheryl Sandberg's or bill who was building out the online sales engine for, for ads of Google. Um, and then I had a background in enterprise software and Salesforce was the preeminent SAS model. Now they were doing things in a very high cost and high touch way, but they were, you know, were able to look at some of the ways that they were working and, and pull from some of those learnings.

Um, and then Google had this aspiration of like always building out, you know, these billion user applications and doing things at the scale of the internet. So we had this, you know, ambition to try and do something that rival at, in the go to market. Um, but the early days we're just building out some of the core components and that's where I think every company starts.

It's like, what do you, what is the MVP on the go to market to get customers and to drive revenue? And, you know, in that, in those days, it was building an online website, BA uh, payments and billing, um, you know, which, you know, at Google and there was an system built for ads, but it didn't work for subscriptions.

We had to figure out how to port that. Um, this concept of an online trial, which we should talk more about at some point in this conversation, it was useful at the beginning, came back to hurt us in some ways later on, um, a CRM system analytics and then an inside sales machine. And I remember the first days of that, we were essentially, we, we didn't even measure our sales, but in the first quarter we did, it was around $50,000 per person per sales rep per quarter.

And I remember thinking, how is Google possibly going to pay for this? why would they invest in this business versus ads? And you know, what, what, what we did know at the time, but what I learned is that we were able to quickly multiply that we're able to five X, that until we get to, you know, a million dollars as the goal.

And once we had that, we said, okay, we have, we have the start of a business here. And, you know, I think in a lot of ways, that's where businesses start and that's, those are the first steps.

Brett Berson: When you go back to this experience, kind of building at Google. And I assume this sort of unifying theory of GTM is something that crystallized over the course of the last 10 or 15 years, but maybe when it was much more of a learn by doing or figuring out kind of thing, um, were there big unlocks along the way or aha moments as you went from grinding and scraping it together to seeing some things work and some things that didn't in that journey at Google.

Rich Rao: Yeah, there were, there were those moments along the way, for sure. And I think, um, part of what helped, what helped us was this idea of, you know, refactoring that I mentioned before of kind of looking at everything that we're doing and building, and then, and then kind of openly. And proactively questioning it in a, in a good way, in a positive way, uh, in a way that doesn't put people on the defensive, but says like, is there something else that we could be doing here?

And an example of which is I, I mentioned that concept of a trial, which, you know, if you go back to what it, what it was saying about the early days, like a trial made sense, you had, you needed to have a way for people to, in a low risk way, come in, try your product. And, and then if they decided that it works for them, that they can keep it.

And if not, you know, no problem. Um, what we saw as we were building out sort of components around this architecture and was really built up around this trial and it was a website, the main call to action was a trial. Yeah, you could contact sales. Yeah. You could get support. Yeah. You could check out different pieces, but it really was focused on like get into the trial.

Everything happens from the trial. We saw that there were some challenges from that. And what, what had happened? We were struggling with a low conversion problem. I mean, we were able to make some advancements, as we made improvements. We saw some increase in the conversion rate, but we really struggled with this idea.

And I think the bigger we got, the more we saw that. Well for everyone who, you know, doesn't go through who goes through the trial and fails, that's a lost opportunity, both not only now, but in the future. And so you don't wanna turn through potential customers in that way. Um, and so a breakthrough happened when we really got deep into understanding intent and we had, and I see, I, I see a lot of companies do this and I've done this myself, but you.

You really obsess and create metrics around outcomes you measure, what happened? You measure the final, you measure the drop off you measure what happened with the experiment. You measure the outcomes. But, you know, I started to ask and we started to look at it and say like, do we really understand the intent of what people are trying to do?

And that's when one of the breakthrough happens and we went back to some of the people who had fallen outta the funnel who went through the trial failed and we went and asked them, well, what happened? You know, and what was your experience? And they told us, well, I struggled with this. I struggle with that.

Like, it's just, I didn't see enough value here. And then we asked another question, which was like, well, what were you trying to do? What attracted you to begin with? And what we've realized was that we didn't fully understand the intent of what people were coming in to do . And one of the things we picked up on was that there was a huge number of people who were coming to actually buy the product.

who didn't need a trial? They knew they wanted it. They had used Gmail. They wanted Gmail for their domain. And they were getting stuck in a trial process from really what they wanted was to make the purchase and then get it set up and off and running. And it turned out when we did some of the analytics on it was that we were turning back more people who had high purchase intent than we were gaining from people who had low purchase intent.

Rich Rao: so you could argue that in many ways we were doing no better with the trial than say, just like a buy now button where you'd get all the people who wanted to buy. And then, you know, yeah. People wouldn't be able to, who had passing interests, wouldn't be able to try it, but maybe they could get in contact with you and contact sales and go from there.

And so it led to a much deeper inspection of what we're doing. And then we started to see all sorts of problems. Like when you. Did go through a trial, there was no help versus if he contacted sale as you'd get this sort of white glove treatment where we'd roll out the red carpet for you. And so we, we started to ask, well, like, why is that?

Why is it that the click of one button, one call to action would give you two very different experiences? And, um, and then that question of, well, what exactly are people trialing? Are they trialing your setup experience or they wanna trial using your product? And Gmail, uh, people understood what that was.

Docs was really growing and getting traction. People were understanding what that was. So it led to a rethink of the entire model. And we actually created almost a, a project to sort of rebuild from the bottoms up. And that included the product flows that included the trial, that included what would happen when you took different action on the page.

If you contacted sales, whether it be help in the trial. And eventually it moved into a, a different paradigm. It may sound like a small shift, but it was more of a. Get started. So is it, we found a way to still de-risk it, if you weren't satisfied with it. Um, but that, that changed, you know, when we got the billing information and when we asked for that in the flow and when we, you know, presented various upsells for different skew along the way, and it helped, you know, get the business to the next level, but it started with that idea of sort of questioning what we were doing.

Did that still make sense? And then really getting intent level information on what customers were trying to do.

Brett Berson: So you've touched on the idea of refactoring, both in this awesome story that you just, you just shared. And, and earlier in the conversation, how is that instantiated in the teams or companies that you've worked at? Is, is there a ritual or process that you follow that increases the chances that you have these kind of breakthroughs that you, you just shared?

Rich Rao: You know, I don't, I don't know if there's, um, any sort of practice to it, but I, I, I do think that it takes, um, a sort of characteristic of curiosity and what I mean by that is, um, we, we will have teams that do understand work and, and it's not just teams. We have everyone who participates in kind of a formal understand phase of any sort of program initiative that we're doing.

And so one of the common, I think, mistakes, I think, you know, I, I, don't a mistake, but one of the practices that I used at Google was we could jump pretty quickly to action. But even in this example here, that was from Google. You saw that really the breakthrough happened when we got really deep into what was happening and why and intent.

And so formally we will at meta do what what's called an understand phase to any. Initiative that we're taking on. We'll do an understand phase we'll then develop a hypothesis we'll then construct some sort of experiment around it. We'll then test it. We'll measure it, we'll report out on it, but it starts with that understand phase.

And I think, you know, there it's the, the, I think the best practice and what's really brought this to life and made this something that's very meaningful is that the output of it is really just to publish what you're seeing and what you're understanding. And then people will ask questions about it and pose further questions.

So it, it creates this sort of community and this culture of doing understand work for the sake of understanding and, you know, oftentimes, um, or I I've seen this where, you know, one, one example of a, a really successful program happened because we tried it multiple times and failed, and people published results of what happened.

And then we went back and read, reread the report, and we saw that there was new information that was coming out that maybe led to a different understanding of what could potentially be happening. And this specific example was, you know, advertiser onboarding. We were seeing that, you know, there were some advertisers who were able to figure out and they really, you know, saw success.

They saw value, they were able to grow. In other cases, they wouldn't quite get the results. Um, and maybe that was a result of our product being, you know, pretty much like a choose your adventure. You figure out what you wanna do. Um, and we had several attempts to, um, help with onboarding, uh, new advertisers and we couldn't really get lift.

We tried multiple things and it wasn't until I think it was a third or fourth time that we tried again. And we went back to the original, you know, experiments that were done. We reread the writeups and we started to realize that, you know what, it wasn't just in each of those previous experiments we were trying to isolate for maybe.

One core hypothesis that, uh, people weren't setting up their budget correctly, or, you know, they needed, you know, guidance as to what would happen or maybe the cost was too high. We had all these hypotheses, but what really unlocked the next successful experiment was that we put it all together and then we started as well.

What if it's not one factor, but it's a lot of these factors coming together. Um, we're able to sort of, before we formed a formal experiment, test it out. And so kind of do some usability work with some of our advertisers before we felt like, okay, we've got something you here. And then eventually, you know, we got the experiment to work, we saw lift, and then we were able to, you know, go about the flywheel and try to build some of the improvements into the product.

But what got it all started was this idea. Looking again at the problem and sitting with the problem. I'll use that phrase. Oftentimes my team will hear me say it, but let's just sit with the problem. sit with the problem long enough, let it come to you a bit, you know, go back and, you know, be a historian and then new ideas emerge.

And then, and then I think the natural inclination people get excited when they've got a new idea or a new angle on something and, and the rest kind of follows

 and in this understand phase, I, is it deliverable like a specific doc or piece of content and is there a format to it or everybody decides how they wanna crystallize the insights that they've gathered in that first phase? Uh,

Rich Rao: I think there's usually some good there's benefit of having creative Liberty in it. I mean, you know, what I've seen work really well is, uh, is a document, um, you know, with the written word can actually explain it with, with, uh, with nuance, with ordering, with a, with a theme or story that goes behind it. Um, you know, occasionally slide deck.

Um, but you know, I, I think what's more important than the specific format is, uh, really the depth of the, of the insights and it, it can take, you know, weeks I've seen understand projects, take six weeks where you're really trying to get to, uh, you know, maybe it's the heart of a very complicated issue that cuts across parts of the organization.

You've gotta do interviews. People as well to get their take and input into it. It's not just something where you go off in a room as a, with a data scientist and a business leader and, and a marketer and go figure out like, okay, this is it. We've solved. It. We've gotten to the understanding of what it is.

Um, but it happens, you know, in participation with a running functioning organization. Um, and so, you know, that's, that's where I've seen the model actually get the most traction is when you, when you enroll, uh, the participation of the organization, you know, then, and a frame that I like to use to encourage that is this idea of a, uh, the latter of inference, um, which is this concept that, you know, oftentimes like the mistake that I've seen and I've made it myself plenty of times is that you jump straight to a conclusion as to, okay, I'm seeing a problem.

Here's what we should go, you know, do about it and really what's happening. And a process that you're going through is that. You wanna start at the, if you imagine there's this ladder, but you wanna start at the bottom of this ladder, like at the top are the actions you're gonna take. And at the bottom is like, you know, not just the data you've selected, but actually the entirety of the universe of data.

And I think when you realize like, yeah, we're not, you know, when you select data, you're actually adding a potential bias to that. You've selected some of the data. And so, you know, the first step in doing like really good understand work is just to say, what is the universe of data that's available to us and then say, okay, here's the set of data that I'm gonna going to select, you know, to get that deeper level of understanding.

And then from that data, here's what I'm seeing from that. Here are the intricacies here's, here's what the oddities, here's the, you know, interpretations of that. And then from that, I'm gonna then draw some, maybe some, I don't wanna say conclusions, but some insights as to what could help. What are the beliefs, what are the hypotheses that could change or influence that situation?

And then lastly, what are the actions? And I think, you know, oftentimes we'll jump into the middle of the ladder and then go try to go straight up when people are self-selecting different sets of data. So I think that's what, um, you know, I've seen is more the, the typical pattern of really good and, and deep understand work is like going, using that ladder of inference, um, bringing people along in that.

And then, you know, as I mentioned, it's a mix of heavy quantitative and qualitative data that leverages, you know, customer insights, partner insights, but also, you know, insights from teams, insights, from sales as to what their challenge with what they're hearing, which sometimes you can't capture that information in a, in a database as to, you know, looking at outcomes.

I mentioned before the value of, um, getting, you know, intelligence as to intent. Well, where is intent stored? Where do you have information on that? But I think if you, if you first start with this idea of like, what's the universe, what data wanna select, then you, then you run a really broad spectrum and identify the various pieces that could go towards it.

And then over time you start to coalesce and you narrow down the data set, you narrow down the set of possibilities you start to get, you know, and maybe, maybe the answer that you thought at the beginning that would emerge has actually emerged, but, but you've gone through the process and you've got, you know, people behind you and you've got more confidence that that's the right path forward as well.

Brett Berson: One of the things that popped to mind as you're explaining some of the things you've figured out, particularly in the earlier phases of bringing a product to market is that I think that there's this common, uh, problem in creating new products where the actual value that you can deliver to a given customer, if they use the thing or do the thing as significant, but there's obviously activation energy to get to that unit of value.

And depending on the customer base, they're often very kind of, uh, skeptical customers or customers that may have another priority at that point in time. And so working at bringing so many different types of products to market, is there anything you figured out about different strategies or techniques.

To get over that hump, maybe other than the most obvious thing that everybody talks about. Well, it's just reduce the friction to get to the unit of value. Um, but anything else that comes to mind?

Rich Rao: Yeah, I think, you know, friction is one of those, uh, often use phrases and there's certainly a lot there, but I think one of the things, especially early on in a, you know, companies sort of lifespan is, to set yourself up for a, you know, friction reducing type cycle or process.

You've got to get to that min viable product and min viable go to market and really a formula for success. And then once you have that, once you have the solution, once you have some of the core components, then you could focus on velocity and through velocity comes scale and, you know, friction is one of the tools.

That's used in that phase, but I think, you know, what I've seen and used is, and, and, and no matter whether it's a very early stage business, like Google apps, where we were started with literally zero revenue, and we were trying to get our first customers and get to millions and then tens of millions or a business to scale of meta is this idea of a lighthouse account program.

a lighthouse account program. And I think it's a, it's, it's not rocket science, but it's a really powerful construct. I've found organizationally internally and with your customers as well. And the way to describe it is a lighthouse account program is basically a, it's a program to identify and select, you know, top exemplary accounts, top, you know, customers who wanna partner with you who want to, you know, help you build the right capabilities and who ultimately.

You know, we're gonna speak on your behalf as well. So if they work, if it works for them, they're gonna, they're gonna shine the light for others to follow so to speak. And so that's why it's called a lighthouse account program. actually just to back up a little bit, like, what do you have to do?

Like who is a good candidate for a lighthouse account program is typically a question when you're gonna form this. And so you have to think very critically about what are the use cases you're trying to solve for. Is there a specific type of product capability or something that you're trying to, you know, make sure really works for a set of customers.

Um, you know, you talked about this idea of like early stage, you have to overcome some amount of, you know, there's a barrier there, it takes time, it takes energy, it takes something. So you have to align on those use cases of, you know, where is there value such that the client such that the customer is going to want to, you know, put forward that effort because there's something very promising there.

um, it's gotta, you know, you wanna have people who understand the vision of what you're trying to do and get excited about it. You wanna have a sponsor who, you know, a person who is essentially on the hook along with you, and they've gotta be willing to accept beta quality. And, you know, one of the frames within this to identify who would be good lighthouse account programs, is this idea of, you know, there's, if you simp overly simplify it, you could basically say there are two types of, of sales.

There's some sort of, um, you know, pain, there's some sort of a way or some sort of too, there's some sort of pain that I'm trying to alleviate. And hence I want that pain to go away and hence, I'm very motivated to do the work to then, you know, get that release of pain or there's some sort of pleasure, something that's like transformational something that's visionary, something that's gonna help compel me forward.

And it could be. Advertising is a great example. That's gonna move my business forward. Maybe it's not a pain point, but I can grow my business if I can get my ads to work really, really well. So you wanna make sure that whoever's, you're working with early in the early days, especially with the lighthouse account program, they are motivated by maybe it's one of those two things.

Um, and so, hence, they're gonna be willing to accept beta quality. They're going to work with you on the most critical use cases. They're gonna give you real honest feedback because they want it to work as much as you do. And then eventually when it does work, they're gonna tell the world. Now, the reason why I think that that's so important when you have that.

If you have that alignment, if you have that partnership, you know, these customers end up being worth their weight and gold, because you're gonna learn so much, you're gonna develop new capabilities. It's gonna be an internal rallying cry for people to really. You know, celebrate when you achieve success.

And then, you know, it's gonna require the whole company it's gonna require, not just your go to market teams, but your product and edge teams, your operations teams, your finance teams, you create this sort of war room environment where you're working every week and every day, you're doing a lot of iterations and, you know, that's a method by which then, and when you get those accounts and things just happen naturally much faster.

And so, you know, I, if there's something new we're trying to get into, you know, at meta or if there's a new business that I'm building, I, I think that's a, that's one of the critical first steps I create that program, get those accounts. And then you can focus on reducing friction and velocity and expansion and, and, and adding capabilities that will help you build a complete product.

Brett Berson: Any thoughts on, on how to appropriately qualify those early customers that could be lighthouse accounts or things that you've learned when you thought someone would be a great lighthouse account and, and ended up not working out that, you know, might illustrate a point for, for listeners.

Rich Rao: Yeah. And I, I think, I think the reality is you're going to get some of it wrong. You're gonna have more accounts in the program who end up not, you know, making it through or fall out for one reason, but you know, spoke a little bit about it. I think the Mo probably the most critical factor is, um, having a person, you know, these, these, these are, you know, especially in the early days, like cases where you're invested at, at a personal level, you know, where, you know the name of the sponsor of the executive, of the key people working on it and almost feels like an extension of your company.

Um, I remember the early days of, of Google apps. The customers, Arizona state university. And that was the first account. And that was the account. And they saw the, the promise and the vision of cloud computing. There was a CIO who was really trying to push the envelope on technology and, you know, understood that user based applications and giving, you know, in those days.

And even today, you know, college students, they wanna use Google. They wanna use Gmail, as they're a school, uh, domain account. Um, but he understood that, Hey, we, we've gotta modernize. We've gotta govern that direction. So I think often time, it it's about, you know, working with someone who has a vision, which you feel like they could be doing the pitch for you.

They could equally evangelize this. In fact, they will oftentimes do it even better than you will. and that's one of the things we saw and, you know, some of the early success for us came in education and, you know, we were evangelizing, but we had these evangelists who were able to sell it and position it and even competitively talk about.

In a way that was way more compelling than, than we were able to. Um, and I think it takes that kind of vision because you go into these programs, not having all the answers, you're not going in saying, Hey, we just need to like overcome this barrier. We have a great product that the world just needs to see.

People just need to understand it and feel it and see it now. No, you don't, that's not what happens you go in with yeah. You believe that when you go in, but then that client, that person, that sponsor that visionary is gonna push you on it and say like, you know what, that's good, but what would be even better is this

Um, and sure enough, those early stage education customers really pushed us on building a complete product on, you know, building accessibility features and, um, and, and, you know, figuring out how to go into international markets. I mean, those. You know, we all had, uh, frameworks for how we thought about the world, but, you know, frankly, your customers are living in that world more than you are.

So, um, I think that's a critical part of it and making sure you're gonna have people who are going to challenge you and who are going to push you and, and frankly, you should get excited about where they wanna go as well. Like, you know, I think we were so excited about the, you know, the CIO of Arizona state and what he wanted to do that really compelled us to, to try and give him what he needed to realize that vision.

Brett Berson: Going back to the idea that, you know, sales can, can orient it around a pain to be alleviated or some pleasure or a future state that somebody might want to get to. When you think about all the different lighthouse account programs that you've set up in early customers that you've worked with are, are each of those personas equally as successful or in the early days is one better than the.

Rich Rao: You know, I think they provide different values and virtues to you as a company. Um, the, the pain buyers are ones who they can provide you with crystal clarity as to what really matters what it is they're trying to solve. What are the core features they really need? What's the min viable case for it to work.

And how much is it worth to them? So in the case of, of Google, it was, you know, we were, we were selling Gmail as an, you know, an enterprise capability for you to run your email. And we were really competing with, at that point on premise email servers. And so the pain that people felt was that they were either the servers, they couldn't keep them up.

So they were just downtime or they would get hit with tons of spam and they couldn't filter out the spam and, and deal with the various threats that were, you know, growing and emerging in the market. And so that was the pain. And so we offered a solution to that. Gmail knows how to handle spam and. You know, the uptime was incredibly high and so that we were able to solve, but then it came down to, well, you know, how much does it cost?

And like, you know, how do I run it and how do I make sure I have control of my data and what are my rights to the data and how do I make sure users are not doing crazy things and so forth. So, you know, you, the pain attracted buyers essentially, but we still had to go through and figure out what are all the objections?

What are the challenges? What's the price point? What's this really worth to them? And for some customers, they, you know, they thought like, no, no, no, I actually have it under control. Or maybe there's another alternative. That's a little bit less expensive. Or, you know, maybe I, I, I, you know, want some additional integration capabilities with this other third party software that I have.

Um, and it didn't work for them, but for. You know, lo for most of our, those customers, it really worked and it worked really well. And so we were able to get velocity, get traction, get customer wins. Um, you know, and then you, and then we use that to build out capability. We use that to build out our customer service.

Okay. Now that we won these customers, how do we support them? they don't have as much control. So we have to figure out how to be there for them, for when they need something and to get the visibility into what was happening. You know, I remember in the early days we didn't really have a status dashboard.

When the service went down, the service would go down, you know, it would happen. It would happen rarely, but when it happened, it was a really big deal because it was no alternative. It was all cloud-based. And, but even more importantly, they didn't know what was happening. They didn't have the status, they couldn't tell their CEO what was going on.

They couldn't report out. They couldn't take activity. That would be, that would help the situation. And so it was a total loss of control. And so we had to figure out ways to, to give them control. So I think that's what, you know, people who have pain, they're looking for a solution, but you're not done just by putting out that, that pain.

There's oftentimes other things that come along with that, especially if it's a paradigm shift and, and really a, you know, category changing or a new category of, of product, the pleasure buyers, those are the ones you have to be. I think particularly, you know, careful with the pain buyers are gonna come to you and tell you, like, here's my pain, please put it out.

Like a physician, the, the, the visionary buyers, the people who are buying towards something is there's a lot of vision that's out there and it's gonna all look and feel very differently. And, you know, I think what's really important there there's, you know, you've gotta scan the landscape and figure out, uh, who it is you wanna align with and what they're trying to do.

You know, I remember in, in the early days, I think the, the suite that we were selling, like Gmail was a, a pain based purchase and, you know, but no one ever says like, I really want great email and next level email, like, yeah, there were some great productivity features and, you know, some unique features at that time around priority inbox and smart filtering and so forth, but really what the, that visionary sale was towards a different collaboration model.

And there, we were competing with people working in isolation and working on, you know, their own independent machines and then some amount of synchronization that was happening. It felt very like pre-internet days. And so we were just creating internet based apps and collaboration, and you know, now we accept it.

That's how we work. That's how we collaborate in general. But at that point it was not really accepted. So you had to find the people who. Weren't going to, you know, work with you because they thought they were gonna get, you know, they couldn't translate that into money necessarily, but they were aiming for a cultural shift within their organization.

They wanted their teams to work differently. They wanted, you know, things to happen much faster they wanted. And they saw that the tool was a mechanism to do that. Um, but it started by, you know, essentially identifying like who are the people who really have that vision. And then, you know, some people fell out of the funnel because, you know, maybe priorities change business shifts, business conditions, happen, leaders change, all of that stuff would happen.

But you know, through that process, if we had 10 to go through the, through the initial stages, you could get, you know, a handful, you can get one handful that come through and then those end up being incredibly powerful and, and sort of this multiplier effect, uh, that ended up happening in the market.

Brett Berson: So something we didn't speak about yet, but I, I I'm, I'm really interested in any frameworks, mistakes, ideas, as it relates to early pricing, you know, maybe it's your first 10 5,000 customers, your first bringing a product to market 

Rich Rao: Yes, tons of lessons here. I'll just try to try to give you a couple of them here, but, um, the first is this idea of anchoring and, you know, when we first came out with the pricing for Google apps, it was pretty simple. It was, um, you know, just $50 a user, a year, us dollar, and then, you know, sort of, um, change per market based upon currency.

And, you know, the great thing about it was, it was very simple, very easy, understand it was low cost relative to the solutions. Um, but that ended up anchoring not only the, you know, price point for us because you're building off of that as you add new capability. Um, but it also does it for the market itself.

And, and maybe that was a good thing. Maybe that's where it needed to go. And maybe we were the company that helped, you know, drive the, the prices towards that level. And. You know, I believe in efficient market theory. So maybe that gave us more impetus for, for innovation, uh, to drive more value and then more revenue.

Um, so maybe that was the right thing, but it definitely anchored the price for the market. And so I think that's one thing you have to think about. Um, the other thing that I would probably do in an early stage company is in retrospect, I would have brought in a behavioral science, uh, or behavioral economics kind of group or consultant or capability sooner.

And the story I uses around we, when we first started, it was a freemium model. So we had a free product and then we had a paid product. And then, you know, we, we tried to differentiate on capability and we did a decent job as we, you know, as we went, we built more capability into the paid product. The, the free product just helped us, you know, get our product out there and people started using it.

And it was a really good thing, but. At some point, we were growing as a big business and, and we knew we could grow faster, but potentially that free product may have been slowing us down as the upgrade path wasn't as strong as we thought it would be. And we had that.

We were debating a lot internally. In fact, it took years of discussion debate before we got to a different place. But what really helped is when we brought in, uh, Dan Arielli, who, for those who don't know him, Dan Arielli is like the forefather of this whole field, uh, study it's called behavioral economics.

And it basically says he, I think he wrote a book called, uh, predictably irrational, um, which he writes that People are not rational. In fact, they're predictably not rational that we are oftentimes influenced by framing of things and. He was looking at our pricing and he was looking at our pricing page and he was asking us, so, okay, what, what is in the free product and what do you get?

And we're like, well, you get Gmail and you get talks and you get drive and you get all these things. And he is like, okay, well, what do you get in the paid product? And we're like, well, you get that. Plus you get support and you get more storage for drive and you get these additional, you know, management capabilities to manage your it et cetera.

And he was asking about those things. And then he, I still remember the quote he said, yeah, your, your, your paid product is not sufficient to differentiate from the free product. And we're like, ah, and the people in the room where we're saying that we're like, aha. Yeah, you see, he's, you know, he's telling us what we thought.

And, and then there were the skeptics in the room. And, but then the way he framed it was really telling and meaningful. And I think instructive, which he says, keep in mind that your $5 product is not $5, more expensive than your paid product. It is infinitely more expensive than your free product. And then he extended it and he said, you could price your product at 1 cent.

And he said, 1 cent is not 1 cent more expensive than, than your free product. It is infinitely more expensive. And it was at that point that we knew that, huh? Okay. That is a completely different way to look at it. And I think we had spent so long and spent so many years in building and we believed in the features we were building that we just couldn't see it that way.

And so, you know, pricing is one of those things that, you know, I've worked with and advised some companies and I've looked at their pricing page. And one of the other lessons around it is around making the step, making it intuitive, such that your pricing is so obvious that you don't have to think about it.

You know, often times I I'll see a calculator on the page or you have a scroll, you know, you have this kind of like various forms of UI that allow you to toggle your pricing based upon users or this or that. And it's like, And it's hard to understand, and that just creates friction and it creates uncertainty.

And so I think giving people, uh, choices early in their process that they can make that they can confirm and then they can get a positive feedback. That, that makes sense is really important. You know? And the, the first step of setting a Google app, we would ask people is what is your domain name? And, you know, businesses would kind of like freeze at the page, cuz they're like, what is the domain name?

What does this mean? What if I choose, do you want a new domain name? And then if they choose one, is it gonna be locked in? And sure enough, they would been locked in. So creating this anxiety around the very first question that we're asking, and I think that that comes up as well when it comes to pricing, um, that it can be confusing.

It can be daunting, it can be complicated. And you know, you're potentially signaling to your customers that, Hey, maybe this isn't for you. Or maybe you gotta take more time on this. Maybe. Maybe, you know, you're gonna have to think harder about this. And I think those are all points that can introduce friction and, and slow down the business.

Brett Berson: On that interesting story that you, you shared about going from a free product to even charging a penny that was kind of surfaced in your work with, with Dan relli. What, what was the, the sort of conclusion of that, that sort of insight or line of thinking.

Rich Rao: Well, I, I think that, you know, we were approaching, I think the main insight then takeaway from this, from that example was that we were approaching it from the inside out. Like we, we had this frame of the world that we should have a breath play with the free product. We should then have a paid product.

That's really good, but really, you know, low cost. So it was super valuable. And then some sort of like super premium skew for people who were wanted these advanced capabilities. And I think that. That construct was right, but then how you go about implementing it with, you know, there were too many skews, essentially there were too many products and, um, and that actually hurt the business.

And I think, you know, what the takeaway for was, I think it was probably the right thing at the very beginning. You know, when we launched the product to have that free product, to have a paid product, that was very simple. But then we started to get, as we worked with in one big cons customers, enterprise level customers, the need for more of what, what I call like the IIes like the reliability extensibility, and even, you know, words that don't rhyme an ill, but that are really important, like security and compliance and, you know, certain industry regulatory, um, you know, certification.

And so that all takes time and effort and money, and that's reflected in your price. So we created, you know, additional capability for that, but we never went back to that breath play and said like, do we, do we still need that? And I think. That that's one of the learnings of you've gotta evolve your product over time.

It's really hard to do again because of the anchoring that I talked about, you create a certain mindset as to how to think about your product. It's hard to raise prices as well. Um, you know, you're adding capability with a lot of SAS models. People get used to that and they want more value over time and you should be producing more value over time.

And so early on, I think, you know, in retrospect, it's really good to define some boundaries as to the essence of each of the products used. Like, what is it that goes in it, um, is sort of a, you know, something that follows. But in essence, we, you know, we were building a basic model for, you know, general business use and then a, you know, one with sophisticated enterprise capabilities.

And I think, you know, that that should have been priced as such for those customers who really valued that because it was gonna take development effort. And, and I think one of the learnings was that it took a lot more development effort. And what we thought it would take. And hence, you know, we probably probably didn't set the price point appropriately to allow us to continue to invest, you know, at that level.

Um, so seeing how the, what the market needs now, but then also doing things in a way that doesn't con restrict you, uh, from evolving in the future and doing it in partnership with your customers as well. I mean, one of the things that I learned was that, you know, I was worried that people would worry about a pricing change if we added this capability or that, but, you know, oftentimes once you've become part of a company's enterprise and part of their platform, you know, they want those additional capabilities.

And if it's, if it was valuable to begin with already, for them to pay you, it's probably gonna be valuable for them. To pay you a little bit more to develop the capabilities. They just want it to make sense. Like at the, I think at the end of the day, the pricing has to be explainable. Like if they can explain your pricing for you and by the way, they will, they're gonna have to explain it to their procurement officer or to the CEO or what have you.

Um, but if they can explain your pricing and also how it likely will change over time, you know, that's, that's a really, that's a really positive sign, I'd say.

Brett Berson: Awesome. Rich. Thank you so much for the time. Really, really enjoyed it.

Rich Rao: I really enjoyed it. My pleasure. Thank you.