Jason Cohen

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But the truth is we don't know what the probability is. We don't know what the probability curves look like. We actually can't use expected value.

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And so the not growing part, what I like to say is maybe the you and if you are not growing, you're dying is you the person as opposed to you the company.

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But what we could do is maximize profit instead of revenue now. We've been maximizing revenue, but maybe we maximize profit instead.

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Just adding one little feature and then hoping we can flog Adwords is not going to work. Even if the feature is great, not going to work.

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But that's not what happens. What happens is it starts with an S-curve and then it starts sagging. Its butt starts sagging down. So, I wrote an article about this called the elephant curve, which is what I named it, right?

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When you have a loss, a percentage loss, you have to have a greater percentage gain just to get back to where you were. In this case, a loss of 20% requires a gain of 25% to get back to where you were.

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there should be no way to get a big company like a public SAS company Unless NR is greater than 100, like otherwise cancellation should just win. And that is in fact the case.

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It's just that it caps this price and this value that is they perceive that you do. Whereas if you deliver more of the value that they already value, it's I don't want to say uncapped completely, but like the cap is maybe an order of magnitude higher than saving.

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the the largest point is pricing is not just the number on the page. It's positioning. It's how their budgets work. It's how it's structured.

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just think about a company with a thousand employees and 400 million in revenue or whatever. And um if they see a product that's, you know, $2 a month or even $100 a month, their thought is like, well, that can't be good enough. They're not mature enough. It's not going to do enough.

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So what usually h what often happens is you raise prices and signups don't change. When I say signups, I mean the like signups per month, you know, the rate at sign or signups go up. This happens all the time.

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if you think about it, it sort of makes sense because the LLM is an averaging machine, right? It's predicting the most likely that's an averaging kind of a thing. And so when what you're looking for is a kind of average, it's usually pretty good. So, summarization, topics, themes. But when you're asking for like what is interesting and not average, it's actually pretty bad at it.

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Um all almost all companies have a whole lot more uh cancellation in the first day, 30 days, 90 days, depends, right? But the first period than the whole rest of the customer's life. And also small changes in the onboarding can have large effects on cancellation.

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Another as a sidebar, I hate the idea of a root cause. Complex systems do not have one root cause. They often have many interlocking things that could be done to detect earlier or to change it or to reduce or and not one root cause.

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And that is never ever ever the reason. How do I know? Because they already looked at your homepage, read all the stuff, saw what you promised, looked at the pricing page, and decided to buy it.

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And I realized it was the first one on the list and I thought, huh, I wonder if people are just picking the first one. So then then we randomized the list so everyone saw a different order of the list and now all the items were picked equally

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What you want to do is say what made you cancel? In other words, what about the product or situation or whatever caused the cancellation? Just phrasing it that way, you get much better results.

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So let's suppose you add 100 customers a month and you have 5% cancellation. So 100 divided by 5% is 2,000. So a company like that will never have more than 2,000 customers.

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Marketing grows only as fast as you can improve marketing. We all know that's quite hard actually. It's linear. It's hard to find new channels that aren't trivial. Like, it's hard. Of course, we're going to do it, but like it it's hard. Whereas, cancellations grow automatically as you grow, right? So, cancellations always overtake marketing for this reason.

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They actually had the budget and bought the stupid thing. Then they went through onboarding and invested their time etc etc. That is a crazy gauntlet that almost no one gets through.

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there's a there's a series of of questions that I ask to to diagnose why is growth slowing in this order because it's one of these things where the first one that's a problem, if you don't fix that, it doesn't matter if you fix one of the ones below.