YouSaid · the spoken record

Naomi Ionita

lines on the record: 57
first: 2023-01-12
most recent: 2023-01-12
sittings or episodes: 1
sources: podcast

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“My pleasure. I look forward to talking to more folks who are building things across workflow automation, data, AI, and the modern growth stack. So thank you. It's always a pleasure.”
2023-01-12 · Lenny's Podcast · How to price your product | Naomi Ionita (Menlo Ventures) · IDENTIFIED FROM THE TRANSCRIPT · source
“A partner in Menlo Ventures, so you can find more about me and the firm at MenloVC.com or Alsan or Twitter. My DMs are open.”
2023-01-12 · Lenny's Podcast · How to price your product | Naomi Ionita (Menlo Ventures) · IDENTIFIED FROM THE TRANSCRIPT · source
“I mean, this one's pretty easy for me. It's my parents. They're from South America originally and lived on three different continents before immigrating to the US for graduate school. It's a pretty cliche American dream, but they came here with nothing, just this idea of building a family and taking advantage of the educational and professional opportunities in America. They progressed through school and building their career in three different languages with no financial support, no entrenched resources or networks to lean on. And I just can't imagine doing that, just the stress or cognitive load of kind of restarting your life in whole new geographies and cultures and languages and just betting on yourself and figuring it all out along the way. So my drive has always been rooted in their story and I'm forever indebted to them.”
2023-01-12 · Lenny's Podcast · How to price your product | Naomi Ionita (Menlo Ventures) · IDENTIFIED FROM THE TRANSCRIPT · source
“I have little kids, so I don't know if this is going to be as interesting for folks, but we like storybox on Netflix. There are these little cartoon characters that answer kids' questions so people sort of call in and ask questions and they do a whole episode on why is the sky blue? How do airplanes fly? How do eyes see? And I inevitably learned something from watching those. So those are very kind of playful and educational shows. I clearly need a new outline.”
2023-01-12 · Lenny's Podcast · How to price your product | Naomi Ionita (Menlo Ventures) · IDENTIFIED FROM THE TRANSCRIPT · source
“My buddy Monavon from Simon Kutcher's wrote a book called Monetizing Innovation. This is a great read. He and others there have done pricing engagements with hundreds of tech companies, so there's a lot of stories and practical tips there. I often gift that one to founders. So I wouldn't do this whole talk without giving a nod to my friend Maudubon and his Bible.”
2023-01-12 · Lenny's Podcast · How to price your product | Naomi Ionita (Menlo Ventures) · IDENTIFIED FROM THE TRANSCRIPT · source
“I think what I described around marketing and sales just because they really touch the dollars. It can be This ROI story around saving time, but also driving revenue. There'll be plenty of really effective examples within things like customer support. I mean, the cost savings potential there is going to be massive. We'll see what happens in engineering with generating code. I think there's a lot of areas where it's going to touch the enterprise. But from a modern growth stack standpoint, I think something that's really revenue generating and can point to attributable ROI on that dimension is going to be pretty relevant to where I'm spending time right now.”
2023-01-12 · Lenny's Podcast · How to price your product | Naomi Ionita (Menlo Ventures) · IDENTIFIED FROM THE TRANSCRIPT · source
“I mean, I wouldn't be doing my job as a VC if I didn't mention generative AI right now. It's really having a moment. So there's a bunch of breakout applications there that sit within the theme of the modern growth stack. When you think of using AI to create images or text or code or audio or video, these capabilities change the way. Teams work. So writing a blog or writing copy for an ad, SDRs doing their work and kind of outbound sales efforts. There's just a lot of these touch points where it's humans kind of tinkering and iterating and laboring over every word. And if the machine, if AI can tell you what's going to be a more performant version of something, that's a very, very hard ROI exercise there. You save time and hopefully you've improved your performance across the various marketing or sales campaign.”
2023-01-12 · Lenny's Podcast · How to price your product | Naomi Ionita (Menlo Ventures) · IDENTIFIED FROM THE TRANSCRIPT · source
“I sometimes want predictability. They want to be able to budget for your tool. And I've lived that. I remember using tools like MixPanel and Segment and even Jira to an extent where I was paying a cheap amount to get going and all of a sudden I realized we had grown quickly and I looked at all of our SaaS fen and I was like blown away by how much more we were paying. So it's the other side of this, you know, I'm advocating for people getting paid and compensated for the value that they're delivering, but there can be a breaking point. And so how do you think about packaging a fixed and variable component so that people can more predictably buy your software?”
2023-01-12 · Lenny's Podcast · How to price your product | Naomi Ionita (Menlo Ventures) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yes, this is a similar answer I had before. I don't think that they're mutually exclusive. And so if you look at all the companies that And different pricing models in SaaS, a small fliver, less than 10%, roughly 5% have just pure natural escalator, kind of usage-based model. The vast majority have a hybrid approach. And so what I mean by that is they're typically some good, better, best subscription model where there's some consumption component across each tier, like some quota limit for your given value metric. So in Slack, there might have been a number of messages sent or Dropbox, number of terabytes of storage, invoice to go might be number of invoices. There's some dimension that's been sort of packaged in with a given pricing plan. And once you reach that limit, it is a trigger to get you to upgrade to the next plan over. Sometimes there's overges that you can pay for. I don't believe that, you know, you should just be seat-based or just be usage-based. I think one challenge with purely usage-based models is that's not always how CFOs want to buy.”
2023-01-12 · Lenny's Podcast · How to price your product | Naomi Ionita (Menlo Ventures) · IDENTIFIED FROM THE TRANSCRIPT · source
“So, for example, I like how Orb marries the billing component with the data infrastructure to actually inform what your pricing and packaging iteration should be and help you forecast and optimize revenue. So there's other players that are doing different components from this journey of the metering piece all the way through to the experimentation piece. And it's been really, really fun to get to know players in that space. And I wish I could have been a buyer of them many moons ago.”
2023-01-12 · Lenny's Podcast · How to price your product | Naomi Ionita (Menlo Ventures) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, I talked a lot about Billy and monetization, so I'd have to talk about that one. I think platforms for managing billing and iterating on your pricing and packaging, this is just such a big need. I think these will transform business models for SaaS in particular. Most companies have been seat-based, like we described. So the historical incumbents like a charge be or Zora really serve that model. And the shift to more usage-based, there's new entrants that are servicing companies and that dimension. And there's also lots of sort of clunky workflows when you think of bridging from engineering to product and growth to finance or rev ops. So there's a lot of just like streamlined workflow that these new tools can offer. Some early breakout players in the world of usage-based billing are Metronome and Orb. There's also more room to handle the full monetization infra layer.”
2023-01-12 · Lenny's Podcast · How to price your product | Naomi Ionita (Menlo Ventures) · IDENTIFIED FROM THE TRANSCRIPT · source
“Exactly like you described. I love these founders that have steep authenticity around the problem because they built it internally and now they're commercializing it for the masses. And so the story of Che and Epo is a good one on that dimension. And there's other players too. I'm also a big fan of amplitude. I've been a buyer of that tool as well. And I love a lot of the team there. So if you do not have a data team or a data warehouse and you still want to leverage being able to do behavioral kind of ad hoc analysis or experimentation, that's a great tool for you as well. So a lot of different ways to solve this problem in the market.”
2023-01-12 · Lenny's Podcast · How to price your product | Naomi Ionita (Menlo Ventures) · IDENTIFIED FROM THE TRANSCRIPT · source
“Or revenue or margins really like board level metrics that you're trying to move, they make that full trip really convenient and understand the impact on those business KPIs directly. So it's a lot of automation around the experimentation results and analysis that used to live off to the side and excel or Jupyter notebooks now is automated away with EPO. I think you're familiar with them.”
2023-01-12 · Lenny's Podcast · How to price your product | Naomi Ionita (Menlo Ventures) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah. Cool. I think another layer in the stack is experimentation. So this is really critical infrastructure, in my opinion, for these cross-functional product data growth teams to A-B-test hypotheses and understand their impact on the business. How do you know if you make a change in the product or your pricing whether you succeeded or failed without having infrastructure like this along the way? Category creators like Optimizely really pave the way. I was an early buyer of Optimizely and they targeted marketing personas and it was just game changing to be able to start to A-B test things and bring hypotheses to life. I'm also biased as an investor, but some of the modern tools here like EPO, which offers experimentation for the modern data staff. So unlike optimizely, which focused on more kind of click-through metrics, EPO ties directly to the metrics in your data warehouse. So tying an experiment result to things like subscription.”
2023-01-12 · Lenny's Podcast · How to price your product | Naomi Ionita (Menlo Ventures) · IDENTIFIED FROM THE TRANSCRIPT · source
“And you have to help companies do more with less now. There's a lot of frozen budgets, and that's a good way to break through. So I love that these companies can do that for the buyer. So, one that's come up a bit and gotten a lot of airtime recently is product led sales, this idea of companies that serve PLG businesses and harness the power of all that product usage data to inform the customer-facing team around which accounts are most upgradable. It's really free money when you shine a light on an account that nobody was paying attention to and some inside sales team can drive a large account expansion. I don't know what better ROI you should get than that. And there's a bunch of companies that are doing this. Endgame happens to be one that I work with. They have customers like Figma, Loom, Callenly. There's other players too. I think Pocus has done a phenomenal job of building content and community to help inform the market around the power of product-led sales. So there's just a lot of goodness about all the players in this space really waking everyone up to this opportunity of.”
2023-01-12 · Lenny's Podcast · How to price your product | Naomi Ionita (Menlo Ventures) · IDENTIFIED FROM THE TRANSCRIPT · source
“Familiar with a few of these as well, especially based on your growth background at Airbnb and tools that you probably told yourself.”
2023-01-12 · Lenny's Podcast · How to price your product | Naomi Ionita (Menlo Ventures) · IDENTIFIED FROM THE TRANSCRIPT · source
“And finally, these products really drive impact. So the idea here is driving hard ROI in the form of cost reduction. So automation means time savings, and oftentimes that can be mapped directly to cost reduction for a company. But they also help product and growth and go-to-market teams better engage and monetize customers. So they're driving hard ROI in the form of revenue impact too. I'm really compelled by companies that can drive hard ROI both across cost savings and revenue generation. And I think that ROI's story is even more compelling now in a softer macroeconomic climate. You just have to be able to continue to retain sales and pricing power. And I think that's derived from a strong ROI story. Like I described. So those are general themes and sort of consistencies across the companies that I get particularly excited about. So happy to talk about a few layers in the stack. And I think you might be familiar.”
2023-01-12 · Lenny's Podcast · How to price your product | Naomi Ionita (Menlo Ventures) · IDENTIFIED FROM THE TRANSCRIPT · source
“So by unlocking data access, the business side can often self serve and be more self sufficient without relying on an engineer or a data scientist to run queries or stitch together data sets for them. Other thing here is lots of growth work is inherently cross functional. So the efforts to drive growth requires new tools and collaborative workflows like we're discussing without purpose-built software. Many teams like mine felt no choice but to build in-house. So we spent sacred hours building and maintaining tooling for experimentation, personalization, billing, monetization. These were resources that could have been reallocated to building proprietary features for the business had we been able to buy something purpose-built.”
2023-01-12 · Lenny's Podcast · How to price your product | Naomi Ionita (Menlo Ventures) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, and I want to reinforce some different themes before I get into some layers of the stack because I think it's important to frame the benefits of the modern growth stack. So one is data. Two is workflow and three is impact. So starting with data, the modern growth stack companies really are powered by these smart integrations and the automation that you get as a result. So with this proliferation of SaaS, it's created this need for more data access and interoperability. We've all felt that pain of siloed data. Modern GrowSAC companies leverage reverse ETL companies like HiTouch or Census to break down these silos and help companies or employees across the company access data and be more productive. So there's a big data theme with modern growth stack companies. The other theme that they unlock is around workflow. Here it's really the enablement of people and process. So rather than employees sitting in their departmental silos”
2023-01-12 · Lenny's Podcast · How to price your product | Naomi Ionita (Menlo Ventures) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, so the modern data stack is basically a collection of cloud native tools to more easily move and manage data. It consists of a fully managed ELT data pipeline, a destination for that data. So cloud-based data warehouse, like a Snowflake or Redshift, a data transformation tool like DBT. And then finally a platform for visualization on top so people can access the data. The play on modern data stack was very intentional. I think of the modern growth stack or my core thesis area right now at Menlo as the evolution of what you do with the data. So these are the workflows that the data enables to drive the business forward for product growth and revenue teams like I used to run. It's the modern replacement for infrastructure that teams like mine built or bought when you're responsible for driving things like activation or monetization or retention. There tends to be a lot of these internal tools that are built because you really powering.”
2023-01-12 · Lenny's Podcast · How to price your product | Naomi Ionita (Menlo Ventures) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah. And I think if you do have a few free users crafting it as more of a sweetheart discount. More of a year one discount, but getting paid over time. I mean, I am a big believer in having some early users being your design partners and really giving you that tight feedback loop to make sure you're building the right products. So it's not that you should really optimize for revenue on day one. I mean, it is a journey, but I just oftentimes see companies just take too long or an evernote's case. I mean, the free version was just too good. So that's just something to consider where to put the paywall and be really, really strategic about that.”
2023-01-12 · Lenny's Podcast · How to price your product | Naomi Ionita (Menlo Ventures) · IDENTIFIED FROM THE TRANSCRIPT · source
“And so this idea of these compounded growth loops that you got by interfacing with so many different parts of the company and making design truly collaborative and in the browser, they were able to just have this exponential curve on monetization once they shifted into more of a team or enterprise-based package. So that's a good example of saying they were willing to trade off on monetizing the individual because they knew that it would be so sticky and would go so wall to wall within a company.”
2023-01-12 · Lenny's Podcast · How to price your product | Naomi Ionita (Menlo Ventures) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, if you know that you have a bridge to move up market, then giving up the long tail of individual users can be very worthwhile. So I think Figma is a great example of that. This was a company I took a while to monetize and even having free usage at the individual level, that was the way to just drive insane community and love for this product. Designers around the world were just fell for this product overnight. But this idea that once they were using it in a more corporate setting, once they were collaborating with more people across the business, they were tripping a wire to pay. And so what happened there was you had this massive top of funnel of individual users, but knowing that design is inherently collaborative, you're interfacing with engineers, you're interfacing with PMs, with marketers, with researchers, with execs, more than half of FIGMA users weren't even designers once it was embedded in the enterprise.”
2023-01-12 · Lenny's Podcast · How to price your product | Naomi Ionita (Menlo Ventures) · IDENTIFIED FROM THE TRANSCRIPT · source
“So, knowing if you succeeded and failed often requires understanding the implications on Chern. Let's say part of your test is like year one discount. You need to understand how to users perform in year two and have a sense of the trade-offs around user growth, retention, or poo. So all of these things are different levers that you want to optimize over time.”
2023-01-12 · Lenny's Podcast · How to price your product | Naomi Ionita (Menlo Ventures) · IDENTIFIED FROM THE TRANSCRIPT · source
“There's a lot there. I'm excited about this new wave of modern tools to actually help you do this and not sink a bunch of engineering time into building something in-house. So that's something we can talk about in a bit. But that investment was very worthwhile. We had huge revenue gains by being able to iterate in a way that was more streamlined. There's some things to watch out for, though. It's hard to test pricing. There's a lot of different variables to isolate. So you've got to make sure you're bringing a consistent test experience to the end product experiment experience, your pricing page, maybe mobile app stores or lifecycle emails that you're sending. One trick you can do is we would segment these tests by geo. So we would do some tests in Canada or Australia before rolling out in the US. That was a nice way to just put some constraints around our experimentation. And the other thing you really have to think about is the long-term nature of pricing experimentation.”
2023-01-12 · Lenny's Podcast · How to price your product | Naomi Ionita (Menlo Ventures) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yes. So we talked a bit about research methods and different surveys you can do to help inform your pricing. And with enterprise, it's all about continuously asking for more. But if you're a PLG company and you have a public-facing pricing page, I'd encourage you to experiment. This is something people shy away from. And frankly, there haven't historically been great tools for companies and sort of infrastructure to be able to do this work. So at Invoice2Go, we invested very heavily in some internal pooling. We had a whole metering and ski management and experimentation system in-house. It was a big growth engineering undertaking. And with that, we tested different value metrics. We tested different quota limits, price points, promotions, you name it. We tracked the consumption of our pay-as-you-go model and loop that back into the product so we can nudge users along the life cycle to get them to convert or upgrade or renew. Once quota limits were reached.”
2023-01-12 · Lenny's Podcast · How to price your product | Naomi Ionita (Menlo Ventures) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, they're all feedback loops, right? So I think there's some incrementality to it. But you've got to understand who these different segments are. And if you don't have enough data points, it's hard to really understand how to continue to optimize.”
2023-01-12 · Lenny's Podcast · How to price your product | Naomi Ionita (Menlo Ventures) · IDENTIFIED FROM THE TRANSCRIPT · source
“Okay, sure. Sounds good. Not a minute of hesitation, not a second of hesitation. And what he learned in that moment was that, one, he was wildly underpriced. It was very clear that he hadn't even thought about what the ceiling was. But the truth was he probably could have pushed it even further, considering there was no hesitation. So what I encourage users to do, especially in these enterprise conversations, is to continue to ask for more, to understand where the upper bound might be, and to understand that it's okay sometimes to lose some deals due to price, something on the order of 20 to 30 percent is reasonable so that you can get a sense for where the limit might be. The vast majority of companies are definitely undercharging, like we discussed. So go out on a limb like Larry at Envoy. And you can see that sometimes you can 2x, 4x, even 10x your price.”
2023-01-12 · Lenny's Podcast · How to price your product | Naomi Ionita (Menlo Ventures) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, so it is, if you visit an office instead of just signing into that piece of paper in the lobby with your name and your email address and what time you checked in, it is a digital kind of iPad-based way of checking in and sharing information with the person you're visiting. And so in talking to Larry and getting a feel for how he, sort of his evolution around pricing, he tells a story that I love. So he was meeting with a big hospitality company. And the conversation was going really well. This prospect was really leaning in and excited about using Envoy. And the conversation shifted to pricing. So in that moment, because Larry was feeling some good vibes, he decided to 10X the price that he was typically charging people. So just in the moment, he decided just go for it, go out on a limb and ask for 10x the typical price. And in that moment, the exec said,”
2023-01-12 · Lenny's Podcast · How to price your product | Naomi Ionita (Menlo Ventures) · IDENTIFIED FROM THE TRANSCRIPT · source
“I have a specific story there with one of our company's envoy. This is a fun one. He was just getting started. This is Envoy the Visitor Registration tool that I'm sure a lot of people have used, especially before COVID.”
2023-01-12 · Lenny's Podcast · How to price your product | Naomi Ionita (Menlo Ventures) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, it comes from doing it holistically. I think it's very rarely as impactful if you dress a new price or just launch a new plan. I really think of it as rebalancing pricing and packaging overall. So it's doing this whole exercise of understanding what people actually want, what their willingness to pay is, and mapping it to that user journey like we talked about from single player mode to multiplayer, you know, that first other person you connect with and have a workflow with, spreading it to your whole teams and ultimately spreading it wall to wall across an organization. It's a longitudinal view of the user lifecycle and thinking about your whole business model holistically.”
2023-01-12 · Lenny's Podcast · How to price your product | Naomi Ionita (Menlo Ventures) · IDENTIFIED FROM THE TRANSCRIPT · source
“And I've seen a lift upwards of 10x on revenue, but it's sometimes hard to parse just the pricing Change because usually it can be coupled with big product changes, a rebrand, a lot of PR, the launch of a nuclean, like a team or an enterprise plan. So it's hard to sometimes understand just the pricing change in isolation, but it really can be pivotal companies.”
2023-01-12 · Lenny's Podcast · How to price your product | Naomi Ionita (Menlo Ventures) · IDENTIFIED FROM THE TRANSCRIPT · source
“I find that most companies regret not doing it sooner. Profit Well is another group that I have friends at and have a lot of respect for them and the content that they've put out. They did a survey once on, I think it was over 500 SaaS companies and they looked at for a 1% improvement on acquisition retention and monetization. How did it impact a company's bottom line? And they found that the impact with an improvement on monetization was 4x, that of acquisition. So this idea of like how can you efficiently improve your business, monetization is really underappreciated as a growth lever. So definitely something people should be thinking about. That's part of my goal of doing this podcast is making sure founders are compensated in a way that they deserve. So let's hope everyone makes a little more money after today.”
2023-01-12 · Lenny's Podcast · How to price your product | Naomi Ionita (Menlo Ventures) · IDENTIFIED FROM THE TRANSCRIPT · source
“Oh, it can be huge. Our friends of OpenVO do a really good job of pumping out content and doing these greatmarking surveys. They did something recently that showed that roughly half of companies that instituted a pricing change saw at least a 25% increase in ARR. So that's a pretty massive step function improvement in your revenue from something that doesn't require massive technological overhaul.”
2023-01-12 · Lenny's Podcast · How to price your product | Naomi Ionita (Menlo Ventures) · IDENTIFIED FROM THE TRANSCRIPT · source
“Great. This is how we learn. We hear it again. If you take those packages that users designated as nice to have and must have. You make that collection of features in the survey, then ask them, what's such a cheap price that you start to question the quality of the product? Ask them, what's a good deal or sounds like the right price for this package? Ask them what's expensive, but they would still pay. So you're starting to get to that, you know, level of discomfort. And then ultimately what's prohibitively expensive? What would people just say, okay, that's it? You've crossed the line of how much I'm willing to pay here. And by plotting those four curves, you start to get a sense of how to inform your pricing. That's a great way to marry the questions around demand and then the questions around willingness to pay.”
2023-01-12 · Lenny's Podcast · How to price your product | Naomi Ionita (Menlo Ventures) · IDENTIFIED FROM THE TRANSCRIPT · source
“Actually, making sure that they're not just saying everything but the kitchen sink, but they're actually getting a good sense for what's most important to them. And then the other side is understanding their willingness to pay. I'd say the easiest on ramps here for companies to start digging into that is to use Van Westendorp's method here. I don't know if you're familiar with that. You're nodding a little bit other than that.”
2023-01-12 · Lenny's Podcast · How to price your product | Naomi Ionita (Menlo Ventures) · IDENTIFIED FROM THE TRANSCRIPT · source
“That we like to use around understanding the relative partization of features. Going back to that laundry list of features and kind of matrices on a pricing page, it's very rare that people convert equally across all of those features or typically one or two that are the main carrots for conversion. So it's good for you to understand the relative rank there and how to reconcile some of your pricing and packaging accordingly. So we would make a list of our features that we had and maybe new things we wanted to build and have people rank them as a must-have, nice to have or not necessary that help us understand the relative privatization. You can also get at it with like a hundred point question where you give users 100 points and say spend them across these different features and more points to give a feature, the more value you're assigning to it. This is to get to like the demand or the features and functionality that you've created. So that's sort of first step one is understanding like what people”
2023-01-12 · Lenny's Podcast · How to price your product | Naomi Ionita (Menlo Ventures) · IDENTIFIED FROM THE TRANSCRIPT · source
“There's a full pricing process here, so I'm happy to walk through it. So, the idea here is understanding who your customers are. Why they pay you? What is it that they want or value? And how much are they willing to pay you? I'd encourage you to put together a pricing committee. This is not a single threaded exercise that lives in one department or another. This very much is a cross-functional exercise. If you are a PLG company like companies I worked at, this was the product growth org that I ran. So it's a combination of PMs and data scientists folks like that to iterate on pricing. If you are an enterprise SaaS business, of course, sales and finance and RevOps play a role. So think about who that committee should be at your company and commit to being that cross-functional team that really owns and iterates on pricing over time. They are responsible for talking to customers. This is like by far and away the most basic thing you can do to just increase those feedback loops and understand how much you can push the envelope on pricing. You do that with surveys, with interviews.”
2023-01-12 · Lenny's Podcast · How to price your product | Naomi Ionita (Menlo Ventures) · IDENTIFIED FROM THE TRANSCRIPT · source
“Third biggest. Yeah, so do not set it and forget it. I see companies do this where they labor over designs and features and they build this perfect product that's delightful to use and then pricing sort of plucked out of thin air and then they don't revisit it. This was Evernote. It was many, many years before we went back and overhauled the pricing. So think about your pricing just like you do your roadmap. So every six to 12 months, there's probably something meaningful that you're launching for users. So treat that as an opportunity to revisit your monetization strategy and making sure you're compensated appropriately.”
2023-01-12 · Lenny's Podcast · How to price your product | Naomi Ionita (Menlo Ventures) · IDENTIFIED FROM THE TRANSCRIPT · source
“ForeverNote. But then we talked to avid users, and these were people that were cross client using it on desktop and mobile, you know, every device they had. They were using it for work and personal. They were leveraging OCR capabilities and the web clipper, and it was truly their second brain. They could not imagine life without it. And these people were floored that they were only paying $45 a year. They told us that they were getting hundreds of dollars of value from Evernip. So here the perceived value for avid users was far outpacing what we were asking from them. And this intuition and research really led to a bifurcated strategy of having different plans for different personas based on what they actually, you know, the value they got from the product and their willingness to pay.”
2023-01-12 · Lenny's Podcast · How to price your product | Naomi Ionita (Menlo Ventures) · IDENTIFIED FROM THE TRANSCRIPT · source
“Team, we started doing surveys. I was really curious to understand why people converted from our free version to our premium subscription. And one of the most popular answers without fail was, well, I just feel guilty. I use it so much, I get so much value from it that I just feel obligated to pay. And like, take that in for a second because if guilt is one of the main reasons why people are paying you, then your free version is too good and you are leaving money on the table. So a single premium tier is often a mistake. And you're going to be leaving money on the table for specific segments. And it's important to drill down and understand who those are. So our additional research helped us understand that brand new users with low perceived value of Evernote looked at it like their Apple Notepad app that was pre-installed on their device. And so they couldn't understand the idea of paying $45 for.”
2023-01-12 · Lenny's Podcast · How to price your product | Naomi Ionita (Menlo Ventures) · IDENTIFIED FROM THE TRANSCRIPT · source
“So SAS was historically built on a seat based model. That's been sort of historical SaaS pricing. And now with the rise of PLG, we've seen more of these usage-based approaches gaining speed. So that's pretty exciting to see. So whether it's number of API calls or messages sent or terabytes of storage used or words written, this usage-based approach really matches price to value over the lifetime of a customer. The other thing that happens when you match price to value is it helps you understand who you're building for. and that lets you target different customer segments. So in doing that, you're able to better serve each segment, but you're also able to maximize revenue for the business. Evernote always had a business model from its beginning. It had $45 a year for an annual subscription. And this set the foundation for the company and tens of millions in revenue, early revenue growth. But the approach was suboptimal. So as a group,”
2023-01-12 · Lenny's Podcast · How to price your product | Naomi Ionita (Menlo Ventures) · IDENTIFIED FROM THE TRANSCRIPT · source
“This is by far the most common issue. And so one framework I like to use here is matching price to value. So when you do that, you create alignment with your user. So this entails picking the right value metric. So this is the unit of value that they derive from using your product. And it creates this natural escalator because as people use it more, you get paid more over time.”
2023-01-12 · Lenny's Podcast · How to price your product | Naomi Ionita (Menlo Ventures) · IDENTIFIED FROM THE TRANSCRIPT · source
“Maybe they're ones where the value is derived from having a certain scale of data in the platform. And so those you shouldn't waste cognitive load for your users to have to even understand or try to appreciate when they're first getting going. Push those into a more advanced pro version of your product and monetize them down the road through an upsell. So big believer in how do you really keep pricing simple? And we've all seen those SaaS pricing pages where there's a laundry list or just like a gnarly matrix of features and functionality. So do what you can to think about that journey for a user and how they're going to continue to increase value with your product over time and how you can map your pricing and packaging against that journey.”
2023-01-12 · Lenny's Podcast · How to price your product | Naomi Ionita (Menlo Ventures) · IDENTIFIED FROM THE TRANSCRIPT · source
“I do believe in that. That was tied to, we had done this experiment at My Last Company, Invoice2Go, where typically on the demand curve, the higher you raise the price, average revenue per user, RPU, the lower the conversion rate. So these things are inversely correlated. And we were able to do this rebalancing of our pricing and packaging so that we actually doubled our upgrade rate from our starter plan to our pro plan while also increasing the price of the pro plan. So to actually get twice as many people to upgrade while paying something like 30% more for that new plan is pretty rare to get the compounding benefits of that. And what we did was thought a lot about what is a day one premium feature? What is a premium feature that you can get value from the very first time you engage with a product? That's different than your day 100 features. Those are the ones that represent more advanced functionality.”
2023-01-12 · Lenny's Podcast · How to price your product | Naomi Ionita (Menlo Ventures) · IDENTIFIED FROM THE TRANSCRIPT · source
“If it gets you to the aha moment, that path to habit formation, that has to be free. That's the core utility of your product. And so the idea is that in that first session or first day, someone's getting to see the delight and saying, oh my God, I'm never going back to the old way. This is how X gets done. If you're looking for some virality or network effect, that's the other thing. Your free users, you might not be getting revenue from, but the idea is that they help you manage CAC. So these are folks that are driving organic growth for you and helping reduce the incremental cost of your next set of users. So that's another part of the math equation to think about in giving up revenue.”
2023-01-12 · Lenny's Podcast · How to price your product | Naomi Ionita (Menlo Ventures) · IDENTIFIED FROM THE TRANSCRIPT · source
“Paywall. How much do you give up for free? And then, how do you price and package a paid version of your product? So Freemum is all about getting that top of funnel excitement, getting people to build habit formation. You're collapsing time to value, you're building habit formation, you're building all these champions to use your product. But the idea is to shepherd them along into a paid version of your product and to, again, not delay the idea of what should your premium features even be? What should that paid plan even look like? Again, going back to the misstep at Evernote, I think there was always a premium plan, but it didn't really bridge into enterprise, so we can talk more about that.”
2023-01-12 · Lenny's Podcast · How to price your product | Naomi Ionita (Menlo Ventures) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, I don't think those are mutually exclusive. So, this isn't to say that I don't like freemium models. Ever know it was the darling of freemium over a decade ago. So I'm still a big believer in that. It's more a question of where you put.”
2023-01-12 · Lenny's Podcast · How to price your product | Naomi Ionita (Menlo Ventures) · IDENTIFIED FROM THE TRANSCRIPT · source
“You inadvertently cheapening your product. People attribute a lower dollar value or a zero dollar value to what you've built. You're missing out on critical feedback loops to understand what people are willing to pay. And you're shooting your future self in the foot because this is the other problem is at some point you're going to start charging and you're going to experience some backlash. So it's nice to get ahead of that. So a few things to think about in a food for thought around delaying and sort of kicking the can down the road from a monetization standpoint.”
2023-01-12 · Lenny's Podcast · How to price your product | Naomi Ionita (Menlo Ventures) · IDENTIFIED FROM THE TRANSCRIPT · source
“That business value is really critical, but the other side of the same coin is being properly compensated for that value as a business. So I understand the vulnerability of being a new startup. You just want people to use your product. And I view that, you know, early kind of free beta user feedback loop as an R&D cost to make sure you're building the best possible product and that they're deriving a lot of value. But I see companies way too long to make that shift from building a product to building a business. And I think that's the true signal aquatic market fit is ultimately having people open up their wallets and pay you. So looking for people to get to that end goal. And so again, these things aren't mutually exclusive. You're going to create business value, but you're going to be compensated for it and prioritize your roadmap over time so that you're building based on what people actually want and are willing to pay you for. So when you don't monetize, I think you're doing yourself a disservice. The things that I see is the pain of leaving money on the table.”
2023-01-12 · Lenny's Podcast · How to price your product | Naomi Ionita (Menlo Ventures) · IDENTIFIED FROM THE TRANSCRIPT · source