Don't Compromise on Hiring

On Saturday I shared a deep dive where I chatted with Jonathan Swanson, the founder of Thumbtack and Athena, about how to become a world-class delegator.

💡 Opportunity: Anti-Subscription Migrator

For the last two decades the common wisdom in software has been to build a subscription payment model. Being able to offer a lower upfront cost to try the service means more people get exposed to using it, and studies have shown subscriptions yield 217% more revenue than one-time payments as a result.

But over the last year or two there’ve been hints that, at least among some customers, the tides are turning. Even with a lower upfront cost, they don’t want to have to be aware of and manage yet another subscription.

37signal’s Jason Fried went so far as to dramatically announce once.com, a forthcoming suite of products his team builds that seem to be clones of SaaS tools, but offered for a one-time fee instead (their first product will be a Slack clone, according to the site).

My own hypothesis is that this is happening because of inflation. When both consumers and companies tighten their budgets, underutilized subscriptions tend to be the first things that get cut.

I’m seeing an increasing amount of founders reacting to this by experimenting with one-time payments for their products. If the LTV math has changed and there’s now a higher-bar to get someone to pay anyway and also a quicker trigger finger on the cancel button, you might as well get users to pay more upfront — or at least that’s the thinking.

So why not build a service that helps identify and migrate companies to one-time payment alternatives?

Your target customer for this would need to be businesses that are already bringing in meaningful cashflow and/or are venture-backed — for anything still in the very early stages, the lower upfront cost of subscriptions still reigns supreme.

You could try out a couple business models to see what works best:

1. Commission → You get paid when you successfully refer a client to a one-time-payment-based business.

2. Service → You get paid a flat fee to audit a company’s stack for subscription services that can be replaced by comparable one-time-payment options. You can upsell an additional fee to advise on or even perform migrations within the client’s stack.

3. SaaS → If you validate the idea successfully you can consider moving on to a one-time-payment SaaS model yourself. You’d need to build AI-powered software to perform the audit and referral (and maybe the actual code migration).

The biggest risks with this business are that the size of the market is very unclear, and finding your target customer may be challenging (i.e. what niche responds best to one-time-payment options and how do you get in front of them?).

🧠 Framework: Kickoff Doc

When I was a product manager at Airbnb I spent a lot of time writing Product Requirements Documents (PRDs), which were often 5-10 pages long and very dense.

The rationale was that clear thinking leads to clear writing which leads to clear building, which is good in theory but in practice just slowed us down from moving fast enough.

There are plenty of good PRD templates out there, but none of them are really optimized for the chaos of building a startup — they’re more for bigger companies.

However Shaan Puri shared a pdf with his “12 big things that I use all the time” — the bland title hides how good the content is. Four of the twelve “things” are frameworks, and one of them is for a “Kickoff Doc” which is basically a PRD for founders:

It sets the direction without requiring you to have it all figured out ahead of time (which, let’s be honest, is never the case). It also doesn’t require you to have some big plan or reason behind what you’re trying to build, it’s optimized for a workflow where you’re moving fast and iterating.

📈 Trend: Homeownership

You might be thinking homeownership is a crazy trend since more people are renting rather than owning their home since at any point since the 1960’s.

But homeownership is changing, and those who are able to do it are seeking each other out online at an increasing rate:

OpenDoor has been successful by removing time and inefficiencies from the process for both buyer and seller, but I believe we’ll see another big company emerge that finds creative ways to make homeownership accessible to a larger group of people.

One of the more interesting models I’ve seen is from Roots, where you can build equity in the home as you rent and then eventually buy the remaining equity out when or if you’re able to and still want to.

💬 Quote: Don’t Compromise on Hiring

If your startup is successful it will eventually be a large company with multiple layers of management.

Every layer hires the layer beneath it, and helps them become successful within the company.

This isn’t earth shattering stuff but I mention it as a reminder that you’re responsible for hiring top talent early. Why? I’ll let David explain:

I’ve seen this same pattern in my career. Whenever I’ve hired someone who’s an A player, they hire other A players because they know what to look for.

Never, ever make an exception to your quality bar on a hiring decision because chances are you’ll end up dealing with a dysfunctional area of the business at your startup grows.

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