👋 Welcome to this week’s edition of 5-Bit Fridays. Your weekly roundup of 5 snackable—and actionable—insights from the best-in-tech, bringing you concrete advice on how to build and grow a product.

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Happy Friday, friends 🍻

In case you missed it this week:

• Elon is planning to collect users’ biometric data on X, as well as data on education and job history. Biometric data for what? 🤷

• OpenAI is on track to generate more than $1 billion in ARR already.

• How many subscriptions do you have that you don’t use? 🙋Well, some companies are making tons from those forgotten subscriptions. In some cases, it’s even raising their revenue by over 200%.

• Since so many of you enjoyed peaking at the salary data last week, here’s some more. 👀 Leaked Google pay data shows how much thousands of employees report making in units like Cloud, engineering, and sales

• And just in case you haven’t taken the screen protector off your new iPhone 14 yet, don’t worry, Apple sent out a save-the-date for their iPhone 15 release: September 12.

Otherwise, let’s get to today’s post.

Here’s what we’ve got this week:

• How to reframe the problem and win

• Product strategy means saying no

• Product-led acquisition channels

• Stuck in a loop? Try the Inversion mental model

• The Gap Analysis: A template to go from insights to actionable strategies

(#1) How to reframe the problem and win

Threads—Meta’s Twitter clone—came in hot as the fastest-growing platform in history (100M users in 5 days).

But, not long after, the beat started to change.

Daily active users were down ~70% and the time people were scrolling plummeted.

So, in the face of a flailing product, Threads made a classic move: They promised more features.

In other words, Zuck and Mosseri’s strategy with Threads is to build a better Twitter. Because the best product wins…right?

Not quite. And the biggest challenge Threads faces is that by being an outright Twitter clone “that’s just better”, they’re always going to be competing over existing demand and for the same pie of daily active users.

Simply, Twitter and Threads are in the exact same category. Meta copied the problem Twitter solved (public conversation) and then they launched a nearly identical solution. An obvious one.

This is a common trap builders fall into. They find a nice market that has an existing problem with an incumbent solution, and they launch a “better, faster, cheaper” version. An obvious one.

If they end up being remotely successful, all that happens is everyone competes for a small sliver of market share, in turn, driving the value and price of the category down.

But, solving an existing problem with an obvious solution is not how you really win.

If you want to create new and different solutions (AKA, categories), you need a different approach.

The Category Pirates have the answer for us. 👇

The different approach: Today’s solutions are tomorrow’s problems

At a glance, it’s all about reframing, where you push your thinking around the existing and obvious problems in our lives in order to create what next non-obvious solutions.

Here’s a perfect example that shows this in action:

That’s how you do it—you reframe the obvious into the non-obvious.

• Start by picking an existing problem you care about

• Then look at the solutions on the market and ask, “What problems do they create? What are people struggling with when using it?” Find the unintended consequences existing solutions cause.

• Map out the pain points, and then prioritize them from the ICP’s point of view.

• With a key pain point in hand, think through a new, re-framed, and different solution. Think big and creative. E.g, Peloton: “What if we bought the spin class to the living room?”

It’s all about reframing, and thinking into the future to design breakthrough, non-obvious, solutions and categories. As the Category Pirates say:

Go deeper: 🧠

• Using the Problem Reframing Method to Build Innovative Solutions

(#2) Product strategy means saying no

At no point in your product’s journey will you be short on ideas for new features.

If things are a bit shaky, as we just touched on with Threads, the common reaction is to add more to the product. And if things are going well, ideas will be flowing in from customers, teammates, and your own excitement and intuition.

It’s easy to say yes because there will always be lots of reasons to. Here are a few arguments Des Traynor, Co-Founder and CSO at Intercom, lays out that often push teams (mistakenly) to say yes to ideas:

• But the data looks good: “We’ve tried this feature with a small group and engagement is off the charts.” I’ve been the one who said this to my manager before, and it was a teachable moment. In short, the problem here is that products are usually complex systems. What increases engagement in one place may really just be cannibalizing it from another.

• But it’ll only take a few minutes: The level of effort alone is a bad reason to build something. As Des says, “Lots of bad ideas can be built quickly. Don’t be seduced." Things have hidden complexities, unexpected carrying costs, and may add unnecessary bloat to your product.

• But this customer is about to quit: Never build for one customer. It sets you down a dangerous path. What works for one may be harmful to the rest.

• But we can just make it optional: A poor rationalization, as Des describes it: “This leads to death by preferences. Making features optional hides the complexity from the default screens in the interface, but it still surfaces everywhere else.”

• But my cousin’s neighbor said!: This is the “appeal to the anecdote”, and it often brushes aside long-standing experience, research, and data. If something stands out in an interview as an amazing and novel insight…don’t rush along to the building block just yet. Anecdotes can be exciting, but dangerous.

• But we’ve nothing else planned: “The devil makes work for idle hands.” Working on an idea just to keep people busy is a bad way to make your product better.

• But 713,000 people want it: “Always beware when someone falls back to raw numbers to justify something. Any product with any amount of traction can make an emotive claim using numbers.” — Des

• But our competitors already have it: It could be a shit idea though. Maybe they’re planning on killing it. It’s a mistake to assume that your competitors are in any way smarter or more tactical than you.

• But if we don’t build it someone else will: That doesn’t mean it should be in your product.

• But the boss really wants it: If the boss is also the product manager, and has the necessary time and insight to make smart holistic decisions, then this is fine. However, if someone is trying to earn brownie points by focusing on pet projects that their manager has a penchant for, this leads to trouble.” — Des

• But this could be ‘the one’: This is a classic “Appeal to the Unknown”. You can speculate that any unbuilt feature could transform your product—but it’s just speculation. When you’re afraid to make hard decisions, you fall back on appealing to the unknown, and therefore building everything.

The point of the above rundown is to show that you will have no shortage of reasons to say yes. Adding things is fun, and saying yes to ideas makes people feel good.

But, as product builders, Des reminds us that we have to be great at saying no. Not “maybe”. Not “later”. But no.

In closing, Des says this, which is so spot on. 👏

Enjoying this post? 🫶

(#3) Product-led acquisition channels

A key element of successful product-led growth is that your product has an intrinsic flywheel, where cohorts of self-service users who sign up naturally invite more users to join. Leading to new cohorts doing the same thing.

This leads to cost-effective scaling for your product, making product-led acquisition (PLA) the best way to acquire new users.

But in practice, what does that actually look like?

In Julian Shapiro’s Startup Handbook, he talks about a few ways that startups can integrate PLA into their product. Namely:

• Encourage users to invite other users.

• Turn your product into a billboard.

• Encourage users to make shareable content.

• Trigger word of mouth.

Let’s talk about the first two today:

Encouraging users to invite other users

People will invite others to join them in a product in one of two ways—naturally, or by creating an artificial incentive (like cash, or points).

The natural way is far more reliable and sustainable, and the true hallmark of product-led growth. For example:

• Zoom: When talking to a lead via Zoom, you’ll ask the lead to install Zoom in order to chat with you. In doing so, you brought Zoom a potential new customer.

• WhatsApp: When you invite a friend into your chat group on WhatsApp, they have to install WhatsApp first.

• PayPal: When you send someone $1,000 via Paypal, they need to sign up to receive the money.

Often people just slap on a referral program and think that’s PLG. But, as Julian notes, these have three problems:

1. Most users don’t care about receiving a small cash reward—especially business users.

2. Cash incentives attract users who are likely to quickly churn

3. Users are uncomfortable spamming their friends about your new product.

I can confidently say these types of artificial invite mechanisms have never worked on me.

And the poor performance of most referral programs teaches us that new users should come for the product’s core value—not for a cash reward—otherwise they’re likely to leave.

The second way your product may have a natural invitation mechanism, just indirectly, is through what Julian calls billboarding.

Turning your product into a billboard

Billboarding is when a user’s use of your product is visible to others around the. Like a virus, triggering one-to-many exposures. For example:

• When your product is physically recognizable: Think AirPods. When you wear them it motivates others to go and buy a pair for themselves. Every AirPods customer is a walking billboard for Apple. In software, think about Intercom’s now ubiquitous floating chat widget pasted across the best SaaS products…a brilliant billboard.

• When the product is something you repeatedly share with others: When you send a Calendly link to someone, the recipient has to interact with Calendly to take action. This exposes them to the value of the product and gives them a chance to sign up for themselves in the process.

• When the product brands itself in your communications: When you send an email from your iPhone, or share a TikTok video, your email signature says “Sent from my iPhone” and our video is watermarked with the TikTok logo. Brilliant billboarding.

To leave you with something tactical, here’s Julian’s advice:

For more of Julia’s epic writing, check out his in-depth guides on various topics.

(#4) Stuck in a loop? Try the Inversion mental model

If you ask the same question, you’ll probably get the same answer.

Perhaps you’re talking about growth, and the question is, “How can we acquire more users?”

Keep asking it that way, and don’t be surprised if your idea damn runs dry and you’re cycling through the same answers.

For the second time today, this is where the power of reframing comes in handy.

Instead, flip the problem around. Ask the inverse question to figure out what you should not be doing.

Rifting off the same question, you could ask “How can we acquire fewer users and turn users away?”

An odd question to ask, but this line of thinking is the Inversion mental model. It’s a rhetorical exercise with the sole goal of breaking repetitive thought loops. By considering what would cause things to go wrong—instead of what would cause them to go right—you get your creative juices flowing and may start to identify areas of your process that driving negative outcomes, giving you problem areas to turn your solution lens towards.

Inversion can be incredibly useful because it plays upon the psychological principle of loss aversion. In general, people prefer avoiding losses to making an equivalent gain. So, when you ask yourself “How can we acquire fewer users and turn users away?” you create a more painful scenario. And to avoid this outcome at all costs, you find new ways of looking at the problem.

Go deeper: 🧠

• The Inversion Mental Model

(#5)The Gap Analysis: A template to go from insights to actionable strategies

A gap analysis is a strategic tool that helps you (1) compare where you are with where you want to go and (2) helps you identify the obstacles along the way.

When you determine what the real challenges are that can prevent you from hitting your ideal future state/goals, it helps you craft an action plan for growth to rally a team around.

As Prof. Richard Rumelt—strategy guru and author of the famous Good Strategy Bad Strategy book—, says: “Strategy is how you overcome the obstacles that stand between where you are and what you want to achieve”.

This makes the gap analysis a super valuable tool for structuring strategic planning. And not just for helping craft product strategy, but also for:

• Benchmarking company results against external criteria such as industry standards

• Running a product gap analysis

• Revealing opportunities for improvement in existing processes

• Understanding why certain KPIs aren’t met

• Discerning the difference between a product or service’s current and potential market size

• Analyzing competitors

Visualized, it looks something like this:

To use this template, get it from Miro for free here.

🌱 And now, byte on this if you have time 🧠

Outside of tech, this post by from BIG (a newsletter on the politics of monopoly power) was one of the more interesting reads this week.

In Government Stupidity Is By Design, Matt argues that unwinding forty years of booby-trapped bureaucracies takes time, but it's happening. And the billionaires are noticing.

Here’s a tease:

Read: Government Stupidity Is By Design

And that’s a wrap, folks. 🫡

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Until next time.— Jaryd✌️

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