227. Martin Karafilis on Startup and Entrepreneurship
SHOWNOTES: In this video you'll learn:- What it takes to be a successful entrepreneur- The mindset needed for long-term success- How to communicate your vision to teams- The biggest mistake startups make- Execution risk and how to avoid it- How to build systems that scale- And lots more0:00 Introducing Martin Karafilis5:00 Biggest Mistakes startups make7:13 How Martin Karafilis implemented the execution risk11:17 The importance of visioning18:43 Communicating vision to your team23:52 Martin talk about the book "Maverick"25:44 Accountability and Trust in the work force26:44 Martin's Best Approach to Building Community33:31 Martin's Approach to Business Development Customer Acquisition36:38 How to communicate with prospective and past customer40:39 Customer Journey Map44:46 Martin's view on Artificial Intelligence46:51 Creating Culture that enables successLinks Mentioned: productiveinsights.com/122productiveinsights.com/210productiveinsights.com/175productiveinsights.com/54productiveinsights.com/84productiveinsights.com/49Transcript: (This transcript has been auto-generated. As artificial intelligence is still in the process of perfecting itself, there may be some errors in the transcription)Ash Roy: Today we're going to talk about entrepreneurship, business growth, and technology, which will help you, our viewer, to build and create a product that solves a problem that your customers are willing to pay for. Martin Karafilis is an accomplished entrepreneur, a speaker, a founder of multiple companies with successful exits under his belt.He also happens to be the CEO of Fishburners, which is where I met him recently. And he also is the entrepreneur in residence at the Australian Graduate School of Management at the University of New South Wales, where I happen to do my MBA. So I'm delighted to welcome Martin to the Productive Insights Podcast.Martin, thanks for being here.Martin Karafilis: Thank you for having me.Ash Roy: It's great to have you, Martin. Do you want to tell us a little bit about your background? And my audience would specifically like to understand a little bit about What entrepreneurial ventures you've been engaged in and what exits you've achieved, what problems those businesses solved and anything else you'd like to share?Martin Karafilis: Yeah, absolutely. So I think I've always been a serial entrepreneur. So multiple different businesses, some have worked, some haven't worked. Uh, I always say the first ever startup that I ever had was playing in a band. I think, you know, you're sort of playing, trying to travel to our no money at all. No sleep, trying to sell merch to be able to sort of, you know, feed your way through and, and, you know, really came down to marketing and getting your music out there and, you know, getting a bit of a brand out there as well.So, you know, through school playing, playing music, I had a small sort of audio hire platform that came from that because I was touring and I was playing a lot of music and I had some gear around. I was like, Hey, you know what? Um, I'm sure that there's other people that would like to use this equipment that's just sitting there doing nothing.I sort of learned a lot of things very fast, and one of the biggest things that I learned was I didn't have the ability to scale that, and I think probably the understanding of how to obtain customers or how to really obtain capital is probably the next step, and I realized that I wasn't able to scale that, so.moved on from that business. I then started a company where I actually created a biodegradable style plastic. Again, not really realizing what I probably stumbled upon because I was sort of doing something that I really loved and something that I wanted to do. And later on was able to sell the IP for that company where I didn't actually realize what the value of that was.And then my last venture was a computer vision AI company, really deep tech company with amazing co founders, amazing team, uh, and amazing customers. And. able to successfully move on from that business and now be CEO of Fishburners, where, you know, I still do investment into startup. I still work and advise multiple startups.I've also gone along the journey of writing a book on, on everything that's happened. So, you know, I, I get to see quite a lot and there was really like no better way to be able to give back to the startup ecosystem than to join the Fishburners team. So. Yeah. For those that don't know about Fishburners, it is Australia's largest and longest standing startup community.Ash Roy:So tell our audience about the book. I'm really interested to know what it's called. Martin Karafilis: So release will, uh, release will come out, uh, very, very soon. Um, so. You know, it's a little bit under wraps until that's all out. But the concept really is about the idea of starting off as an entrepreneur and having everything. Everybody tell you how crazy you are and how hard everything's going to be.Ash Roy:Oh man, I can relate to that. Martin Karafilis: And really sort of starting to operationalize what you do, start to use some frameworks and say, Hey, this is actually very achievable. Start to knock those off and actually say, okay, well, those that are saying that you're crazy, you're actually a genius at the end of it all.Say I think the, uh, the only real thing that separates crazy or genius is execution in the end, and I think there's a lot to do with the frameworks and the help that you have along the way. Ash Roy:I love what you said there, that what separates genius from crazy is execution, and we'll be talking about that more in this conversation.What instrument did you play? Martin Karafilis: guitar. I can play most instruments, but I was a guitarist. Ash Roy:I play the guitar too. And depending on who you ask, I play it well. If you ask my wife, she'll say I can't, but you know, if you watch me in my normal habitat, which is where I'm not today. Right now we're recording at Fishburners, but, and this is the first episode we've recorded outside of the Productive Insights studio, but there's a guitar.There are two guitars in the background when I record from home or from my studio. So, okay, Martin, you've been a CEO of the CEO of Fishburners for, Over a year now, and you've been an entrepreneur in residence at the University of New South Wales, you've seen a lot of startups, and I'm sure you've seen a lot of them fall on their face as it were, and let's face it, it's not easy, right? What is the biggest mistake you find they make, and what's the best way to solve that problem? Martin Karafilis:I think it's easy to sort of talk about biggest mistakes when we start to go down vertical industries where the stage of the startup is at, if we're going to talk about the one biggest mistake that encompasses all stages, all industry verticals is the inability to effectively understand and really react to execution risk.So we did mention execution being the key. Uh, what I would say is that no matter what stage you are in your business, execution risk is always going to be your biggest risk. So when a founder goes into creating a product, goes and looks at a market, tries to understand what the customers want, what they need, what the problem is, when they're going through all of these kinds of scenarios, They have to be pretty open, honest, blunt about how they actually execute on this and what the risks are. Now, this might be something like something as simple as a capital constraint. Okay, well, how do I create a strategy that allows me to reduce the amount of risk that's there? Is it to obtain more customers and create some form of revenue earlier and not invest as much into a future product? Is it, do I have to raise capital and go externally?Maybe it's something as simple as building a team and how do I build that team out? So a good example is founder dependency. So really early on, you're quite dependent on founders, but as you sort of grow and as you want to build equity within your business, you can't have the CEO doing absolutely everything anymore.So how do you actually build that and actually start to reduce execution risk is really important. And I would say that's the number one thing where startups fall down. Ash Roy:So let me ask you this. When you started off back in the day, you were in a band and you were trying to figure all this out. You didn't presumably know what execution risk meant. But you, I'm guessing, implemented it, or for want of a better term, executed on minimizing execution risk. Can you look back on that time and tell us how you did that? And for people who are watching, people who are not very familiar with the term execution risk or, you know, a lot of our audience is not very familiar with the startup world.How would you explain it to them? Martin Karafilis:I would say I wish that I was smart enough to realize it at the time. If I'm completely honest, I think. Uh, and, and I realized this as I was actually writing my book that a lot of the things that I was doing and a lot of the frameworks that I was using probably didn't exist.A lot of that stuff I was doing anyway, I was sort of mapping out, you know, the journey and the strategy and how we sort of really mitigated a lot of those risks. And I realized much later, years down the track, actually, what I was actually doing along the way. So I think there's a lot to sort of. Starting at your end point and starting to work back is probably one of the, one of the biggest and easiest things to sort of say, Hey, how do I take those steps to actually achieve that goal? I think under any circumstance as well is always aiming higher than what, you know, the realistic goal actually is.Right. Uh, so. I think I found that the lower I aimed, the more I was okay with getting pretty mediocre results. So I've always come from a pretty high performance background and it was always about, Hey, looking for the best, being the top, making sure that you're winning. And realistically, when you fall short, you're still falling short ahead of every other competitor.And that was kind of, Something that I realized along the way that, well, if you're mitigating any of those execution risks and you're creating strategies that allow you to overcome them, if you stumble, stumble ahead of the competitors. Ash Roy:You know, I spoke to John McGrath, the founder of McGrath Real Estate, and that was episode 122.If you're watching this, you can go to productiveinsights.com/122, and you can check it out. But that's exactly what he said. He said, shoot for the stars. Or shoot for the moon and land in the stars or whatever the phrase is. But let me play devil's advocate for a minute. That can go horribly wrong.You know, we get a bit of a dopamine hit sometimes when we think, Oh yeah, you know, I'm going to be the biggest and the baddest and the best. And then we don't execute on it. So how do you hedge for that? Martin Karafilis:Yeah, I, I think there's also this as well, there's, there's a big, I've faced this throughout my journey.That it's very hard to celebrate the little wins as you go along as well, because as a leader, you're always thinking so far in the future. So. I'm always thinking when we get a contract or if we, you know, nail a customer that we've been working on or, um, you know, a product gets released that we've been working on for so long in my mind as a leader, that's already done.I'm already sitting there thinking, you know, what's the next step ahead of that? So it's very hard to actually Celebrate those little wins. And I think what that can do is start to maybe humble you a little bit in the sense that you're saying, Okay, well, the job's not done. The moment that you're thinking about this super high thing, and you're starting to live that, that lifestyle, lifestyle, and you're starting to think that, hey, you know, This is, this is what it's going to be.You know, you're happy with just some of those smaller wins. It's going to be harder for you to actually get to that next stage. I think that's something that I sort of, I realized was that every step, every stepping stone where you're like, Hey, this is, People around you are saying this is really good.It's like, in my mind it was always just the case where it's like, this is nothing. This is the tiniest step. So I've still got so much more. So I think that is as important as anything is to make sure that as long as you're sticking to that goal, it's a lot easier to be able to say, Hey, you know, this, this is just one small stepping stone.Ash Roy:So you're holding yourself accountable to a very high standard. Now, I wasn't going to go here, but I want to, because I think the conversation is leading us there. I read and listened to Arnold Schwarzenegger's new book called Be Useful, Seven Steps to Something. Arnold, if you're listening, you know, we'd love to have you on the show.He keeps talking about having a vision and. you know, really seeing it very clearly and almost believing it's already happened. Now we're starting to tread in the area of manifestation, which I am personally very skeptical of. But what would you say about the importance of visioning and seeing it as having happened?before it has happened and then living from that space. A lot of very successful creators and artists talk about this. Will Smith talks about it. Arnold talks about it. Lots of people. What are your thoughts on that? Martin Karafilis:Yeah, I think to be honest, I'm a massive Arnold fan to start off with, and I think there's a lot that we can take away from his career.But. I, I tell you a bit about one of my experiences playing football, playing sport. There was a game that was a very important finals game, uh, where we were down by one point and there was a game play that had to be run to basically get us in front to win the game. And there was. about 60 seconds left on the clock.And that was what we had to do. Every single person on that field knew exactly what we had to do. Every single team member said, this is exactly what A we've trained for, but what B we've actually envisaged. We know what's about to happen and we know what's needed to get there. So I think there's a difference between manifestation and, and hoping that something happens.I certainly agree with that. But what I would say is when you can actively. see yourself achieving something and know how you have to do that. The execution piece is quite easy because it's just like a step by step process. So my background has really been, uh, operations in general. I have a tech background, but I have a business background.So to bring that together and say, how do we optimize our processes? How do we actually create more efficiency? And I think when, when you do this, it becomes second nature. To be able to switch on and be able to do something, most of the time you're under the most amount of stress and pressure that you've ever been in your life. When people say I act really well under pressure, it's because they've already thought or imagined or know what they have to do in that situation. When people talk about I thrive under pressure. That's because they've already they're living that in their mind. They're already living it. They're already saying these are the steps that I have to take to be there.And I think that's the difference when it comes to crunch time. Those that are envisaging that can just play that out just like a playbook. They can say, here's the process. Just do this. Just do that. Uh, and those that don't all of a sudden have to go through the process of like, what do I do now? What do I do now?And then it's very difficult under that situation. Ash Roy:So the big takeaway for me then is to visualize the outcome you want to achieve and have a clear plan in your mind, which you've almost, you can play out play by play. And by the way, there are studies around this that show, uh, neurologists will confirm this, that the act of. Going through a process mentally actually is about 50 percent as effective as doing it in person. You know, they've done studies around pianists playing, you know, uh, the piano in their mind as they're falling asleep or whatever, without a physical piano. And it actually, you know, Activates those, you know, neural systems and those processes, which actually can make you a better piano player or guitarist or whatever.Another point I want to make about this is Guy Kawasaki, who I spoke to in episode 210, that's productiveinsights.com/210, shameless plug. He talked about his journey. at Apple where he was a chief evangelist and he worked with Steve Jobs for eight years and Steve Jobs was incredibly good at visualizing the outcome he wanted to achieve and he already seen it in his mind and he was seen as a taskmaster.But because he had so much passion about realizing this vision that was already real in his head. Now, it wasn't easy working for him, but he did achieve quite a lot. And to this day, the company I would argue is reverberating with his innovative brilliance and so on. Sure, Tim Cook has brought a lot to the table and made it a lot more profitable, but There were 90 days from bankruptcy when he came back to the helm after his exile, so there's a lot to be said for really envisioning stuff and working backwards from the end, yeah? Martin Karafilis:Yeah, I think maybe Steve might have also said the idea, I can't remember who actually said it, but uh, you know, if they wanted to be liked, they'd own an ice cream bit. Ash Roy:Yeah, that's it, yeah. He said something to that effect. Martin Karafilis:I'm not here to make friends, yeah. The reason why it's actually quite difficult is because, and this is entrepreneurship as a whole, is most of the time an entrepreneur will see what nobody else sees. So when they're running through their mind and they're trying to get this out to other people, you can't do it on your own, right? So you have to have teams that are working, uh, you know, you have to have people around you that are actually executing on this with you. So it's very, very difficult to communicate and get out into everybody else's minds what you have in your mind when nobody else can actually see that.That is one of the most difficult things for any entrepreneur or any founder to do. And, um, I think from a communication piece, it's really, if you drive vision, mission, if you can drive your strategic values really, really well, your teams should then start to be able to understand that for themselves and start to implement that themselves.We see probably in the startup world, a lot of founders that just start talking about the product and start talking about the problem. Not really realizing that as a true leader, effectively a good CEO, their job is to drive that strategy, the mission and the strategic pillars and values that the company really holds true and allow staff to be able to create that product in the end.So that was something that these larger companies do very, very well. obviously with a CEO that can effectively communicate and get that idea across to those teams. Ash Roy:Most entrepreneurs I've met, in fact, I can't think of one that doesn't fall into this category, but everyone, every entrepreneur I know tends to have some kind of challenge.They tend to be neurodivergent, they have ADHD, Neil Patel mentioned that to me, Neil Patel has it, but they all tend to have some kind of a challenge and it's not uncommon for them to have challenges around communication. Now, sure, they can train themselves, and a lot of them do, uh, to become great communicators, but communication is so important. When you're trying to build a vision and hold the vision in the context of a team and even more so in a growing team. So I don't know whether you have been diagnosed with any ADHD or whatever, but you're an entrepreneur. Have you had to work extra hard on this and how have you achieved that communication piece?Martin Karafilis:Yeah, I think I would almost certainly say early on, I almost expected it would be mind readers actually in the end, if I, if I look back now, in hindsight, when I would communicate, I would say, we just want to do this. And I think I really had to develop skills. and, and learn how to not only communicate, but also be able to effectively have a two way, uh, discussion.Uh, and I would say more than a discussion is actual execution to, I guess, persuade maybe, uh, you know, people that are working on the product or whatever that might be a good example, something that it kills most business owners in general, founders, entrepreneurs. when you know their staff fail at something and they can see it is in and knowing very well that the founder if you did it yourself you'll probably succeed at it but I always say is for that founder or that manager or someone that's that leader don't go just do that don't go and just do the task and just say this is how it's done it will absolutely eat you up inside but let that person fail and experience the pain so that they can grow and become better and In a lot of senses, you'll already, I've lived this before where I already know the answer and the result to something and I mention it and say, look, this is what I believe is going to happen.And if you think about it as a leader, we'll give some constraints, maybe it's time, maybe it's budget, whatever that might be, something that doesn't overly affect your business operations and you can say, Hey, If they're actually successful, and they prove you wrong, awesome. If they come up with the same response and answer that you gave anyway, they've learned and they've learned the same way you have and they're going to succeed in the next round. So I think Under both circumstances, you can't really lose. I think it's really important to be able to let people within your organization and people who are close to actually experience a little bit of that pain to actually be able to grow. I, I think as a leader, you and someone that's experienced, you forget about how many times you had to do that to get to that stage, particularly as you have a workforce that grows, you will have, you know, Very inexperienced people right through to experienced people. The reality is, for me, my thesis is always to hire people that are smarter and better than you anyway. I, to be honest, I've just been very, very lucky that I've had some amazing people around me. Um, I don't think, uh, personally that, um, Yeah, I'm the driver for a lot of these things. It's about having the right people around them, um, and around the products and the companies that actually make them successful.and the moment that you start to remove some of those dependencies, including myself as a dependency, the better that company is going to be in the long term. Ash Roy:You've touched on some really important points that I want to bring out to our viewers and listeners. The first thing is I think leadership is an attitude and not a designation. I think leadership requires empathy, which you have clearly demonstrated. And what you've said, I've built a team of my own, and I completely agree. It is so hard to let them make mistakes when you can see they're going to make that mistake. But if you try and head it off at the pass, you're stealing the opportunity.The opportunity for them to learn and that then means that you're not building competency core competencies within your business and the systems are not just standard operating procedures, which are important, but they're also people you're not building the systems and processes and the tacit I don't want to rely too much on tacit knowledge, but the tacit knowledge and capabilities for your team.To be able to then not only not make that mistake again, but also understand why they shouldn't make that mistake and then further solve related problems, which you probably will never see as a ceo. So that's a great point. Leadership is. About empathy. It's about hiring smarter people than you, but there's a lot of wisdom and humility involved in hiring smarter people than you.Now, sadly, I've worked with a lot of toxic leaders when I worked in the corporate world, and unfortunately there is a significant amount of this toxicity in leadership, particularly in large corporations where they rule with fear. And a lot of people did say that. Jobs ruled with fear as well. I think sure people were scared of him, but they weren't, they were more scared of letting him down and they were scared of letting down the goals and the values that he set as a standard more than they were scared of him.That's what, that's my understanding of having, after having spoken to Guy and, you know, a few people. So I think that's an important nuanced point that I wanted to bring out about leadership., I saw on your desk the book, Maverick by Ricardo Semler. So I have to confess I haven't read it yet, but I've read the shorts of it.I got ChatGPT to summarize it for me, full disclosure. And he talks about democratization of leadership or business. I'm, not using the right words, but he believes in a very transparent and open ended approach to management. Can you tell us what, What appeals to you about that book? Martin Karafilis:I'm glad you saw it. I actually was given this book from a person that actually sits behind me in the office. Someone that was one of the first people that I met here at Fishburners and have a really good relationship with. And actually I respect his opinions so much when it comes to business and life in general. So I think that when I got this, I valued it very much because I knew it was going to be good.I think, you know, ultimately challenging conventional. You know, business wisdom, uh, it's very important. I think for where we're at now in probably our ecosystem within business in general, with how the world has developed and advanced the opportunities that lie for many different employees. But I think creating a workplace where employee freedom, uh, is paramount is something that really resonates to me.I think if you think about some of the key concepts. Things like an employee setting their own salary, their own work hours and things like that. This, it sounds like such a radical idea, but it really does create trust and accountability. And I think when someone sets their own salary or their own hours, they're accountable to that. They are saying, I believe I can do this in this amount of time and I'm worth this much money. They need to show that they're taking ownership. I feel like that really resonates with me around accountability and trust. Yeah. across the workforce. I think there is to a certain extent an ability for many different people in their own jobs or even in life.Uh, we can all sort of just sit on cruise control, but when we're setting our own standards, we will hold much more accountability than those that are set by somebody else.Ash Roy:I agree. That makes absolute sense to me. Let's talk a little bit about your role. At Fishburn as a CEO, I mean, based on having run a community now for the last five years at Productive Insights, I know that community building is not easy, but it's very important.And Fishburn is, you mentioned the word ecosystem is a beautiful ecosystem. The best I've come across so far for somebody who's trying to think outside the box, who's starting his or her own business. And it's the most welcoming, lovely place to spend your day and to build your dreams. What are your best approaches to building a community?And I'm sure one of your KPIs I would imagine would be increasing tenure. In membership to maximize revenue because, you know, tenure is very important in a membership based business. So what's your strategy to maximizing tenure and building community or, and do you have any other recommendations around membership based businesses?Martin Karafilis:I would say that one of the biggest things for me, I was new to managing a community. Uh, when I came on at Fishburners, I've always been in the tech sector. I've always worked with products that actually have pretty minimal touch points from a people aspect. It's a technology, your software can be consumed pretty easily, pretty fast, purchased online, and there's not much there.So, One thing that I would say is that realistically for a community is just remembering that it's a people based product and at its core, it's always going to be a people based product. So when you start to look at some of your fundamental company pillars, like if you're talking about, you know, what actually means something to you. Fishburners, for example, for me, is the most inclusive entrepreneurship environment, it's the most accessible entrepreneurship environment that you can possibly get. I think that at its core for me is something that I get to drive every single day, that we can hold together. education, events, different forms of collaboration, people that have great ideas just don't have the ability to access these resources and access this information, access and community.At its core, it's a people based product. Everything that we do is for the people. I myself as an entrepreneur, you go through the lowest of lows and in reality, you have no other friends through that time. So most of the time when you're going through and you're starting a company, you don't have any friends throughout that journey.So I've been lucky enough to be a part of communities where you can lean on other people that are in the same situations or have come through those situations or, you know, something as simple as even, you know, People that are in the same situation can actually switch off from it all of a sudden on both sides of it.You can have a beer and relax. You may be able to play basketball or some form of sport and relax. I think making sure that you keep people and community first over profits, monetary value will mean that the product itself will continue to thrive. And in any community, if you can have a product where people are adding their own emphasis or they're helping out each other, the community should really start to push and drive itself and develop itself.I really think of that in the way that my approach is that we provide a lot. Yes. But the members provide even more. And that's what I think about when I think about fish burners, is that Everybody is willing to be another piece that makes that community better. Ash Roy:So this comes back to your points earlier on about leadership. I think, you know, leadership is a lot like parenting. You can't force knowledge onto your children. You have to help them learn. You have to create an environment for them to learn often through their own mistakes. And the community is like building a family. And to me, that's what I feel when I come here.I feel like it's my second home. I feel comfortable. There is fluidity that things are not too rigid, but they're not too, um, boundaryless as well. It feels safe. It feels like home. And I think that's what I've learned is really important in building a community. You have to create the right conditions and you have to allow it to grow much like you raise a plant.I remember James Clear telling me in episode 175, you know, in terms of habits, he said, you wouldn't put a seed in the ground and then scream at it to grow. You know, every day you just have to water it regularly. You have to provide it with the right soil and you have to allow it to grow. And it's very similar to communities.And I think this is one of the problems I have with very metric driven, blitz scaling BS in business. You know, that a lot of businesses are obsessed with making a million dollars yesterday. Why? I think it's very difficult to do that. And even if you did build a unicorn, it usually, in my opinion. It has externalities, which never get noticed or often don't get noticed. It makes sense. If you want to build a good business, you build it incrementally, gradually, and for the right reasons. Tell me about your approach to business development, customer acquisition. How do you approach that as a CEO of Fish Burners? Martin Karafilis:I think this is one of the topics that can get complicated very, very easily.I think. When you're doing an analysis, I am a very data-driven CEO. I let data drive a lot of my decisions. And I think when it comes to our customers, and, and I think this is in general, when I look at and I advise a lot of different startups, is that the data that you are getting back should be driving those decisions because a conversation here or there is very hard to quantify 'em and I, I see startups that say.I had this customer that told me this. So I started developing this product or feature or whatever that might be. I sort of sit back and say, well, does the data say that they're the right persona? Number one. Okay. Well, you know, started right at the start of the journey, create a customer journey map, make sure that you're creating personas and make sure that you're validating those personas and make sure that you're talking to the right people first.Once you sort of start getting through that process and you start to realize that you're talking to the right people. Okay. Well. What do they really want? What do they say could be two very different things because a certain person's opinion may not be their organization or their needs.Is the customer, the user is the, that's a whole nother subject in itself is that maybe we might have a customer. That's not actually the user in the end of you, you might have a beta, beta C product or something like that. So actually understanding that process gets missed very often, really, truly understand who you're speaking to and what you want out of them right at the start will mean that what you get out of the end is actually useful because if you just go and talk to someone in an organization, you may be talking with a large corporate. Talk to one person out there and say, Oh, I'd love this tool. This is what I need. Uh, you go and develop that tool and they go, Oh no, my boss is never going to tick this off. Like it needs to do this, this, and this. It's like, okay, well, you didn't speak to the right person. You didn't get the right feedback.So. That then sort of gets to the next point is to make sure that you're collecting the right data as well after that point and make sure you have the feedback loops, whatever the drivers might be for your business, is it NPS, is it, you know, voice of the customer, any form of like data that you can gain to say, okay, is this working?Is this not working? Maybe run some A B testing, things like that. Your customer realistically will never stay the same or their wants and needs will never stay the same. Hmm. As they grow, as time develops, as the market increases, you have competitors in the space, things are going to change and there'll be opportunities for people to change to a different product or a different company.They will have constraints. The economic environment will change. Maybe they don't want to spend as much money anymore, or maybe, maybe they have heaps more money, whatever that might be, things will change. So make sure you're sort of observing both in and out of the customer circle as well. And the environments that are there.So data first and let that drive a lot of your insights and make sure that you start to analyze that. But the next piece is really being engaged. So even as a CEO, you can't sit in a square box and expect that everything's going to run smoothly. Make sure that you're engaged with those that are paying you money. Make sure you're engaged with those that are going to pay you money and make sure that you're engaged with those that have stopped paying you money. Because I think It's very easy for people to say, Oh, we're obtaining customers and we're, we're doing this and that. How are you keeping those customers?Why are people leaving? Talk to those that have actually left as much as those that are happy and staying. So I think engagement is a really big piece of that. And sometimes I've probably learned this a lot about being in a people based industry as well, that sometimes people just want that personal touch as well. And if you can just add that little bit extra to say, Hey, we're listening and we're helping out. There's a lot of businesses that have terrible, terrible technical products, but get by because they're customer services. Ash Roy:Okay. So Martin, we were talking about business development in a rapidly changing environment.And I want to just mention to our listeners, there's a couple of relevant podcast episodes. One, I forgot to mention this earlier, but. When it comes to community building, if you listen to episode 54, Mackenzie Fogelson talks about the three pillars of community building, which I've found very useful. And if you want to understand how an industry is evolving, there are a couple of useful tools.One is the PEST framework, which sometimes is now called a PESTEL framework, stands for political, economic, social, and technological framework. And you can look at an industry from, you Those four or six angles, if you include the EL bit in the end. So the PEST framework, that's episode 84, ProductiveInsights.com/84. And then Porters by Forces, which is productiveinsights.com/49. It would be a mistake not to talk about artificial intelligence, given that it is changing the landscape faster than anything has changed anything in recent history. In today's environment where we are seeing a tsunami of mediocre content, and people are getting bombarded with information, and attention spans are shrinking faster than anything, and they were already short to start with. How do you communicate With your prospective customers, your past customers, to do that audience research and understand why they left, or why they stay, or why they joined. How do you solve for the customer, if the customer is even hard to get hold of? Martin Karafilis:Yeah, I think this is where there's probably a lot of Around industry trends analysis as well.I actually got told the other day, I was just doing some general sort of industry research and sort of macro environment research. And the person that was next to me said, you know, this isn't work. You're just reading, you know, you're just reading what's out there. I said, a lot of my job is just understanding the environment and what's happening.So there are a lot of circumstances I would say with any innovative products, any innovative company. You have to be quite okay with working in ambiguous environments. Sometimes customers, when you're trying to get feedback or you're trying to have those discussions, sometimes you actually have to draw the lines together yourself.I would say that there. You know, there should be processes within your business to align, I guess, the parallels and to actually sort of deduct those assumptions correctly between what's happening in the macro environment and ecosystem versus what's happening with your direct customers and, and seeing what those trends are as well.So. I think when you're a business leader, you truly need to understand what are your leading and lagging indicators within your business and you'll be able to sort of start to piece this together. So I see this happens quite regularly. If you're looking at just revenue, for example, maybe customers are dropping off, but they're still paying a month or two for their revenue. Or whatever that might be, if you're not measuring the actual active user base, you'll get unstuck. And basically in a couple of months time, you'll go, Oh, our revenue numbers are so down what's happened. And it's three months later, right? So exactly, I think sort of understanding the true sort of leading indicators for your business.And you'll be able to do this. It's very hard when you go to sell to a board or you sell to other people, you know, other stakeholders and shareholders that it's like, Hey, you know, the internal metrics are tracking in the right direction. We'll see a reflection of this in three months time or six months time or 12 months time, depending on what that indicator might be.So. Understand those, draw the parallels and make sure that you have some form of process and, and something that makes sense more than anything other than just sort of saying, Oh, I believe it's this Ash Roy: and just, to clarify for our audience, you know, when we say lead indicators and lag indicators, a good example of that would be a leading indicator in sales would be the number of calls you make.And then the lag indicator, which is usually about three months down the line, is a number of customers you actually acquire. So your activity, that's what they call, you know, making outbound calls. Your sales activity is a lead indicator, which is a pre predictor or precursor, if you like, off your ladder lag indicator, which is sales.And you know, you can usually establish a correlation between the two. I mean, back to what you said earlier on about being data driven, right? I think this is a great opportunity where you can look at the data in terms of, say, drop off rates, say, three months into the membership or six months in. And you can try and say, well, a lot of customers are dropping off at this point. What happens at that point? And that is a great way to go and diagnose problems. And yes, it's a symptom, but you, you know, use the five wise framework, maybe, or, you know, you use the root cause analysis approach and you ask yourself, well, what's causing this? And Solve for the customer that way. Would you agree?That's a good. Martin Karafilis:Yeah, I agree. I think if you can have some form of customer journey map, uh, if you can actually sort of have maybe from a marketing angle, it's a bit more of a funnel type scenario, but I'd say like a customer journey and sort of understand. where those or statistics or the data is actually showing you where the holes are, you'll be able to find it pretty easy.The deeper you get with every single step a customer takes, the better your insights are, but also the better your reactions are going to be. So a good example, uh, that you could use is maybe on the front end is when you start combining your marketing and sales statistics, you might start to say, okay, you know, we ran an ad and only. This many people became customers. Now, a lot of things happen in between that time between running an ad and having a customer come on. Absolutely. So I would say in that process, you could start to break down and say, okay, well, we've run an ad. What's our quick through rate and what's our cost to actually get to a certain amount of customers.And then you will have some form of data that's there. And then you will say, okay. Okay. How many of those become qualified, uh, marketing leads and, and you will have some form of data that's there. And then you'll say, okay, well, how many of those are called from a salesperson or, you know, what kind of sales processes actually occurs there?And then from that have those numbers and start to say, okay, well, then from those, how many have actually converted or, you know, You know, whatever that process might be, you can have an overall, you know, CAC cost and all of that. But it's like, if you start to break down every single piece and where the drop offs are, you'll start to analyze what that looks like.And also like as a business leader, you should realistically be able to look at some of these frameworks and look at some of these numbers and say, Hey, we need to either a higher in this spot, we need to spend more money here or the opposite and say, We've been investing a lot of money in this thing right here, and we're not seeing any return there.Let's stop spending money there and put it where we know it actually works. The deeper that you can get, and right now, most tools can track every piece of the customer journey. So, if you're not tracking that data and you're not understanding how that customer's Moving throughout your, your, your journey, your sales journey, or, you know, even through to the end and churn, if you're not understanding that, then it's very, very, very difficult to actually be able to make the right decisions.Ash Roy: to self full disclosure.I'm a HubSpot solutions provider, but. I love HubSpot. I love their approach to customer journeys. I love their content. I highly recommend checking out the buyer's journey on HubSpot. I also love SparkToro, which was created by a friend of mine, Ryan Fishkin, the founder of Moz. And that's great for audience research.You can Put in things like what websites do my, or does my audience go to? What is my audience talking about? And it gives you a whole lot of text related information. I can show you later if you're not familiar with it, but I absolutely love the tool for audience research. Coming back to my original question, then I think what I'm hearing from you, Martin, is if you want to have conversations with a very distracted customer, then dive into the data, really understand the nuanced elements of their pain points, and they will t
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