3 Takeaways from SaaStr Annual 2016

I’ve spent the last few days pondering my experience at SaaStr Annual. I often find I learn a lot from attempting to coherently convey my thoughts in writing so I thought I’d just share them here.

Before I get started, a note on perspective. I’m a first-time SaaS CEO but I’ve been running Union Metrics for a few years. We’ve bootstrapped ourselves to meaningful revenue, nearly 1,000 subscribers and a team of 22. My best guess is that we were on the right side of the bell curve at SaaStr Annual in terms of our revenue and overall organizational maturity but we’re by no means a unicorn or — god help me — a pre-nicorn. Grain of salt, YMMV and all that.

1) Aaron Ross’ Predictable Revenue approach is the gospel. I’m a skeptic.

It’s become received wisdom that every SaaS company simply must transition to outbound sales for lead generation and that relying on inbound is a sign of immaturity. (Unless you’re Atlassian who plays by Australian rules.) And, predictably, when you’re ready to build a “real” sales team, then you use Aaron’s playbook.

I’ll admit, I’ve been inspired by Aaron’s approach. I bought a copy of Predictable Revenue about 18 months ago and promptly worked with our VP of Sales to set up an SDR-based approach to outbound lead generation. It didn’t work for us at the time for a couple reasons.

The first issue with the SDR approach is that it’s expensive. Tomasz Tunguz described the challenge in his talk on Wednesday when he discussed the costs of hiring one AE. That AE may have an OTE of “only” $150k but she needs leads and those have to come from… somewhere. By the time you’ve added in a couple SDRs and a dollop of marketing, you’ve spent $750k to feed the first AE. (This isn’t including the cost of the VP of Sales you’ll soon need to keep everyone on the same page.) This can amortize out as you scale, except… it doesn’t really. The SDR-based approach is expensive at the beginning before you have enough sales to cover the SDR salaries and it never really yields economies of scale because the number of SDRs is always going to grow with the number of AEs. While this is “predictable” in the sense that you can put money in and (probably) get more money out, it deepens the cash trough that David Skok talks about so you better make damn sure you have the capital to cover it.

The second issue with the SDR approach strikes closer to the heart of the reasoning behind SDRs — generating predictable revenue without having to rely on marketing to generate inbounds. The problem is, SDRs actually require quite a bit of marketing and it’s often of the expensive corporate type, not the crucial demand generation kind you need at a startup. The reason is that it’s much, much easier to be an SDR if you’ve got a brand behind you. If you’re an SDR emailing from Salesforce, New Relic or Marketo, you’re more likely to get a nibble on that 4th email in your 5 touch process than you are if no one has ever heard of your company before. It’s very hard to find, motivate and retain even the hungriest smiling-and-dialing knife salesman when literally no one will return their calls or emails — no matter how much they hack.

The fundamental ideas in Predictable Revenue that you should a) separate the lead generators from the opportunity closers and b) not rely on inbound marketing for all your leads are solid. However, they shouldn’t be gospel for companies of every stage. Early on in the under-capitalized grind (see below), focus on demand generation marketing to build relatively inexpensive, relatively predictable sources of leads that you can nurture. (For what it’s worth, I recommend Hubspot-style free tools approach that Dharmesh Shah talked about vs a pure freemium model — but that’s another post by itself.) Dip your toe into the outbound world by “outbounding the inbound” and immediately reaching out to some of your best inbound leads. If you do that successfully, you’ll likely get to the point where you can afford to give SDRs a try.

2) It’s complicated: The relationship between Sales and Customer Success in SaaS

Thursday had a couple of good sessions that touched on the intricate relationship between Sales and Success including ones from Dan Steinman from Gainsight and Annie Tsai from DoubleDutch. Dan’s talk, in particular, made the point that most of your revenue from a customer in SaaS will likely come after the initial sale; making customer success the long-term arbiter of company success. I generally think that’s true but, well, it’s complicated.

I noticed throughout the conference that several speakers referenced “sales motions” and “retention motions”. While we’ve never used those terms internally at Union Metrics, I might start doing so because it’s a useful way to categorize two very different behaviors. A “sales motion” involves the work necessary to turn a prospect into a paying customer. This includes everything from articulating the value proposition to someone who knows nothing about your product to navigating an organization to asking for the order to helping the prospect through the buying process. It usually requires overcoming objections and tenacious follow up. A “retention motion” is generally going to include everything from answering support questions to customer education to ensuring product adoption. Ok, great. We optimize the sales team for sales motions and the success team for retention motions. So, what’s the problem?

The problem is that these “motions” aren’t mutually exclusive and the required motion is almost always driven by the customer; making it unpredictable. Consider a renewal. Clearly a retention motion, right? That’s literally what retention is for. Well, what if the buyer from last year is gone and you have to convince an entirely new person that they should continue to use the product? What if the customer is interested in an upgrade but needs some convincing? Or, consider a customer running a pilot. You’re still in the process of convincing them to buy so it’s definitely a sales motion, right? Except, the only way you’re going to convince them to stick around long term is with education and helping them on product adoption — two retention motions.

I wish I had some amazing insight to add here. All I can say is that it’s incredibly hard and requires extreme cooperation and trust between Sales and Success. Early on, we put together a set of guidelines to define how Sales and Success would work together. They are:

  • Our primary goal is to grow our business by developing long-term, sustainable relationships with customers.
  • Sales is responsible for generating new revenue.
  • Success is responsible for customer retention and happiness.
  • When in doubt, we will do what’s best for the customer, not what’s convenient for us.

We added to these guidelines by layering on some definitions and rules to clarify some specifics (e.g. upgrade opportunities exceeding $500 MRR should go to sales, while success can close smaller deals) but the approach has served us pretty well. There will be some conflicts and questions and when those occur it’s up to the CEO (me, in our company at least) to referee while trying to keep the best interests of the customer at heart.

3) SaaS companies must grind out significant revenue while under-capitalized (But you can!)

SaaStr Annual came at a particularly interesting time in the public and private markets. We’re not at RIP good times levels but the environment is much harsher than it was just two quarters ago. Mark Suster, Danielle Morrill and Tomasz Tunguz all reiterated this in various ways with copious data points.

Tomasz in particular noted that getting to a Series A now is probably going to require $150k MRR which could take up to 2.5 years of bootstrapping or carefully managing seed funds to achieve. But wait, how is this even possible? What about David Skok’s SaaS cash trough where you have to invest everything up front in CAC only to get paid back months or years later?

First, remember that because of GAAP deferred revenue the P&L trough and the cash trough in SaaS aren’t necessarily the same thing. You can break this association (and perhaps even reverse it) by charging up front as soon as possible. This gets cash in your hands after, say, 60 days even if it only shows up on the P&L in 12 monthly installments. If you’ve got a reasonable track record at all, you’d be surprised how many of your customers will welcome the opportunity to pay annually or quarterly for your product. For larger customers an annual invoice is often preferable to monthly credit card purchases. Be prepared that this might come with some additional paperwork and the occasional service agreement but in the end it’ll be worth it because your customers are essentially loaning you money to continue developing your product. You pay it back by providing the service for the next N months. Remember though, loans come due. Make sure you carefully manage this up front cash and don’t get in a cycle where one or two slow invoicing months leads to a crunch.

Second, don’t leave good money on the table (but do leave the bad money). There are two kinds of revenue in SaaS: MRR and distracting bullshit. If you can do something that increases MRR, do it. Make it easy for customers to upgrade, increase your prices if you can, make your onboarding better so customers don’t churn, ask for annual commits so customers don’t churn, personally hug each and every customer so they don’t churn (see a trend?). As a cash-constrained business it can be appealing to chase after other sources of dollars: professional services, transactional products, etc. Like fatty foods, they taste great now but do bad things to you long term. Avoid them if you can afford it (if you can’t, get the cash and figure it out later… nothing matters without cash). Occasionally professional services can increase MRR, but in general it won’t scale unless you hire more people. Those people then require that you get ever more professional services business to pay their salaries. This cycle is the reason most agency businesses don’t get good multiples. Transactional offerings are sometimes appealing because they can scale reasonably cheaply and have a shorter sales cycle than convincing someone to buy a subscription. However, you’ll find yourself constantly choosing between the transactional and the recurring when allocating resources. Roll whatever you’re doing transactionally into your recurring product and go get that MRR.

Finally, keep your costs under control. For most SaaS businesses, people will be the biggest expense so hire carefully. Try to solve problems with automation or product vs hiring and scaling out teams of people. When we hire new people I like to think in terms of incremental capabilities vs new capabilities. Will this person give me more of something we’re already doing or will this person allow us to do something we simply can’t do as an organization today? It’s much easier to hire for the incremental capabilities. You already have a good idea of the skills you need and you can tell that the people you have today are stretched too thin. It’s much harder and more costly to hire for new capabilities. Often it’s an expensive hire that you don’t really have the skills to evaluate. This came up frequently when discussing VPs of Sales at the conference. The best advice I heard was to make sure you hire someone you want to work with or for. Don’t dismiss cultural issues with someone because you think that’s just the way a person in that role “is supposed to be”. Everyone you hire needs to agree on your company’s fundamental vision and values regardless of their role.

Suffice it to say, when you screw up a hire of either type, fix it fast. It sucks to let someone go (but never forget it sucks more to be let go, so be respectful) but if you don’t act quickly the damage can be lasting.

The good news in all this is that it’s a grind, but the joy of SaaS is you absolutely can generate a real, meaningful business without setting mountains of cash on fire. Once you get over the initial hump and get a handful of paying customers, you can make it work even with minimal capital. Don’t expect hockey sticks on all your charts; aim for a solid up-and-to-the-right trendline. Remember, SaaS compounds so months of linear growth can suddenly start to add up.

Final thought

For me, the best thing about SaaStr Annual was realizing that every SaaS company out there has the same set of challenges we do. We’re all fighting to acquire customers and keep them, to keep our CACs in check and increase our LTVs. I was impressed with how many other CEOs would actually talk metrics and challenges; a refreshing change from the usual Silicon Valley exchange of “we’re killing it”.

This honesty combined with a focus on metrics that are directly tied to revenue serves SaaS well. We might be in for a short-term change in how the markets value SaaS companies but thanks to SaaStr and its community, we’re all focused on doing what’s necessary to generate lasting businesses. I don’t think there’s been a better time to be a SaaS founder.

If you want to talk more about social analytics, SaaS or see some sweet Steph Curry vines, follow @hayesdavis on Twitter.

Next Story — Fear and focus in Austin, Texas
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Fear and focus in Austin, Texas

I’m sitting alone in an apartment just outside Austin. Ten miles away is a giant party — the fleeting bacchanalian epicenter of my chosen corner of the technology world.

It’s hard to imagine a better target for parody than SXSW, the most cool and real conference in tech. Much of it really is deserved. It’s filled with endless promises of disruption, innovation and the next big thing — a million ideas poised to upset the status quo — packaged, sponsored and fueled by money from the largest #brands in the world.

And yet. SXSW has changed the trajectory of my life. In 2008, I recognized a burgeoning world of social media I wasn’t involved in — it led Jenn and me to found Union Metrics. The next year, I met Dean Cruse who became an advisor and is now our VP of Sales & Marketing. Subsequent years found me roaming from party to party with friends, meeting new people and making connections. While the past few years have been more scheduled, that SXSW serendipity has always led to something worthwhile. Even ignoring all that free alcohol, SXSW has been truly been valuable.


There’s a countdown clock on my desktop. It reads 47 days. Forty-seven days until April 28th when medical science tells me it’s approximately time for my daughter to arrive in the world.

The past few months of my life have been the busiest I can remember. And not because we’re picking out onesies. It’s because Jenn and I have been going at an insane pace to get Union Metrics to the next level and it’s really and truly working. I can’t remember a time where I had more clarity on exactly what to do and more drive to go do it. It’s an absolutely amazing feeling.

This is not just a matter of chance. Fifty-three days ago when that countdown clock read 100, I realized that there are two things that matter at this point in my life: the family and the business. Suddenly everything else became extraneous — distractions I must avoid at all costs.

After that, the focus flowed freely. But focus, by its very definition, means doing something at the exclusion of everything else; opportunity cost be damned. This year that means that I’m forgoing the parties and skipping the serendipity to work on a sales deck because we’ve got a quarter to close and my daughter will be here next month.

There will be a time once again when the fear of missing out can and should outweigh the focus I feel today. When that happens, I’ll be ready to meet the challenge — brand-sponsored beer in hand. Until then, I’ve got work to do.

Next Story — Free tools, not free trials
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Free tools, not free trials

Free. You know… as a bird. Whatever, you try captioning tenuous metaphorical photos.

In my last post about SaaS, I talked about generating a predictable stream of inbound MQLs and said we’d been successful using free tools to do this at Union Metrics. While hardly novel, our approach is a bit different from the traditional free trial or freemium models.

There are usually two approaches to free in SaaS: a time-limited free trial that converts to a paid subscription or a free version that works in perpetuity. While the latter is what we typically think of as “freemium”, I actually think of it as just another form of trial (just one with an infinite-ish limit). The goals are the same: do something useful with a low barrier to entry and subsequently convince someone who pays nothing to pay something.

Of course, there’s one caveat. The similarities between these types of free end when your product has a public facing component or requires network effects to succeed. In that case, freemium really is different. Github’s public repositories, Slack’s free teams and even Cloudflare’s free CDN are examples where the freemium model is an incredibly powerful marketing tool. In those cases, it would be ludicrously self-limiting to only offer a timed free trial.

So, if your company is the next Slack (or you actually work at Slack), feel free to leave now; you’re good to go. 👋

If not, read on.

Most of us aren’t offering a product with a public face or particularly powerful network effects; we’re offering a solution to an internal business problem for our customers. Our social analytics product at Union Metrics is a classic example of this type of solution. We’ve tried free trials and freemium a number of times and I’ve come to believe that both are a terrible way to acquire customers for companies like us.

There’s no such thing as a freemium lunch

As long as the free use case is built into your product, it distorts your thinking and your roadmap, making it difficult to concentrate on your paying customers. For every feature, you have to consider how it will be delivered (or not) to what’s likely your largest segment of users — a segment of people paying you $0 that may contain a small fraction of users who actually resemble your paying customers. If you’re offering a perpetually free version, this creates an ever-increasing drag on your decision making.

It goes beyond the product, of course. If you’ve ever done customer support for SaaS, you know there seems to be an inverse relationship between how much a user pays and how much (and with what sense of entitlement) they require support. This is mostly just the law of large numbers at work but remember that unless you require a free trial (why???), each and every one of these users has self-selected into paying you no money. While many of them are simply wonderful folks evaluating your product for their needs, a rather large group of them just kinda like getting free stuff — including support.

Isn’t all this outweighed by the fact that free trials are a cheap way to get inbound leads and overcome pricing objections? No. In most cases, freemium converts terribly — somewhere in the neighborhood of 1–5% and free trials do just as badly. At those rates, how many trials do you need and what LTV do you need to make the math work? (Hint: a lot if you don’t have a big LTV and still kind of a lot if you do…) I once heard about a startup (who shall remain nameless) fielding 4,000 free trials a month and hiring SDRs to engage with all of them. Their conversion rate was terrible and so was their burn rate.

So where do all those people that don’t convert go? Well, most of them leave forever, but some of them… well, they come back and do it all over again (maybe with a different email address). In telecom, one of the oldest tech subscription businesses, they’ve got a nice little phrase for this concept: rotational churn.

Ok, so if we can’t do free trials or freemium to generate leads, are we just left with dialing for dollars?

Free tools to the rescue

Free tools are a better approach for most SaaS businesses. And yes, they’re different from free trials and freemium. A free tool is a narrowly scoped application that appeals to your target market in some way. It operates independently of your primary product but solves or identifies a specific problem and helps prospects understand what your paid products can do for them.

Hubspot has done a great job with this approach. Instead of giving Hubspot away for free, they started Website Grader to highlight the problem that Hubspot was aiming to solve.

We’re selling social analytics at Union Metrics. In our case, we offer a Twitter Snapshot Report and an Instagram Account Checkup. The Snapshot Report helps people get a taste of how a conversation is spreading on Twitter, while the Account Checkup identifies specific insights about how they’re using Instagram. In both cases, our paid product can help them understand reach on Twitter for vastly larger topics and improve their engagement on Instagram.

The real key to free tools is that they’re independent from your primary product. You can change your free tools based on how you choose to position your solution, irrespective of how you choose to implement your solution. That’s an important separation of concerns that keeps free tools within the realm of marketing while your product is about making your paying customers successful.

Because free tools tend to be focused and use-case specific, the surface area for support requests is smaller. And rotational churn isn’t really a concern because free tools don’t need to viewed through the lens of a subscription —a user that drifts in and out periodically using a tool isn’t an issue.

Ok, fine. Got any concrete advice?

Like free trials, free tools aren’t magic. They take plenty of work. Here are some things we’ve learned about how to succeed with free tools:

  • Run focused marketing campaigns.
    The relative simplicity of free tools makes them easy to use as calls to action in marketing campaigns because you can describe the value proposition in as little as a single sentence. Website Grader, for example, simply asks “How strong is your website?” This type of simple value proposition + low friction signup is often much more difficult in a free trial/freemium signup for a full product.
  • Get that email address. 
    If you don’t have an email address, you don’t have an MQL. If you require an email address up front, you’ll likely cut your conversion rate in half. That may be fine but also consider providing some value up front and making it natural to provide the email address later. We’ve taken both approaches. Our Instagram Account Checkup requires an email address up front while our Twitter Snapshot offers the ability to get additional functionality if you create a user account by entering your email address.
  • Don’t just do one and done. 
    Make your tools reward multiple uses. Can users try your tool with different inputs or use it every day to learn something new? If they can, they’ll stay engaged and it makes nurturing easier (see below). This may be one area where Website Grader doesn’t do so well — it seems like the only time you’d need to come back is once you’ve made changes to your site.
  • Build something people can share.
    Your product may not have a public face but your free tools can. In our case, users often share the results of Twitter Snapshots on Twitter.
  • Explain what people get when they pay money.
    This sounds like a no-brainer but it turned out to be tricky for us. The big drawback to free tools is that there’s friction between the experience of using the tool and making the jump to your product. With freemium or a free trial it’s often the case that the user is simply signing up to get “more of the same” or just continue doing what they’re already doing. With free tools, you have to educate your users about what they get when they pay. We’ve found that being super explicit here is important. This page has worked great for us on our Instagram Account Checkup, for example.
  • Nurture.
    You’ve got that MQL; don’t be afraid to email them. Nurture campaigns can help them get the most out of the free tool and further educate them. Just make sure to provide something valuable. Constant “buy buy buy” emails will get you an unsubscribe fast.
  • Segment.
    If your free tool identifies an issue that your product can solve, it’s a good idea to segment your users based on that. For example, I’d be damn sure that Hubspot will reach out differently to someone with a poor grade on a large website than one with a great grade on a small one.

As always your mileage may vary, but we’ve found that offering free tools separate from our primary product have made it possible for us to acquire significant numbers of MQLs without having to distort our product roadmap or expend enormous resources supporting nonpaying users.

If you’re from Slack and you’re still around, why? None of this applies to you. Thanks for reading, though! 👍

I’m the CEO of Union Metrics. If you want to talk more about social analytics, SaaS or see some sweet Steph Curry vines, follow @hayesdavis on Twitter.

Next Story — Does Your App Have More Than One Message Schedule?
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Image from TECHSPOT

Does Your App Have More Than One Message Schedule?

It’s no secret in the Valley that Intercom does great content. Not getting their newsletter? Here’s a handy link to subscribe (one of my absolute favorites!) Wanna understand the madness behind their content methodology? Here’s a great podcast with their managing editor talking about how they do it.

In last week’s newsletter, Intercom highlighted a piece by COO Des Traynor: Does Your App Have a Message Schedule. He listed 5 essential times to schedule some outreach (from Welcoming to Retention & Reactivation). Great points on a tactical level, and some easy implementation steps here, but I feel he overlooked a major consideration.

Who should own customer messaging?
  • At a five person startup, this won’t be an issue—no one person or “team” would have absolute domain. At that stage, anyone could be messaging a customer is already talking to everyone else at the org who could be messaging a customer.
  • At a five thousand person company, this would (hopefully!) be completely solved, with a boatload of process to boot.
  • But somewhere in the middle, this will become an issue and someone will have to solve it.

When it becomes a problem

I saw this crop up at Asana in 2015, as the org was hovering around 150 employees.

Asana runs a fantastic practice every few months called “Roadmap week” where everyone in the company sits in a variety of cross-departmental meetings and plans out the next few months of work.

I was sitting in on a marketing planning meeting when I heard they were going to re-vamp some of the lifecycle messages they send. A Customer Success Manager raised her hand and mentioned that her team was also looking at their automated messaging to customers.

Odd. Both teams were working on automated messaging, neither were taking with the other team about it.

It goes a step further. I had been working on the billing flow and knew that we also had a series of automated messages associated with that, owned by an entirely different team. I brought this up and the three of us took an action item to find a white board later and hash this out.

Three messaging schedules, owned by three different teams. How many does your app have?

It simply won’t occur to your customers that yesterday’s quirky message was from “Asana Marketing”, today’s businesslike missive is from “Asana Billing”, and tomorrow’s warm welcome is from “Asana Customer Success.” From an organizational perspective, the roles of each team are quite distinct, but from the user perspective every message simply comes from “Asana.”


How we fixed it

The solution? We took one vivacious and fun 45-minute meeting to iron out all the inconsistencies in content and timing, landing on a comprehensive schedule that was composed to move together and with the same voice. Going forward, however, these schedules continue to be owned by different teams—this issue will likely pop up in a Roadmap Week meeting down the line.

In retrospect, I would recommend that someone take ownership of messaging schedules across departments. Few teams, however, want to cede their messaging to hands of an outsider.

How many marketers would appreciate someone from product giving a looksie at their work before publishing? How many customer success managers would relish someone in marketing giving them the final OK? How many people in business tech/operations will remember to talk to customer success when they change their automated messaging? And this doesn’t even include in-product messaging!

A better, systemic solution

So how could this be solved as a system? Who should own this within the org? I propose that customer messaging schedules should live with the team that owns user onboarding: the Growth team.

  • They are the team most intimately aware of what it’s like to be a new user. (When’s the last time you signed up for your product?)
  • That team is running experiments on various onboarding experiences and are likely affecting messaging and/or scheduling along with it.
  • They tend to work somewhat interdepartmentally already, and would be pretty well suited to negotiate the political realities of the situation.

This isn’t to say that the growth team should create all the messaging, just that there should be some cohesive oversight in what voices customers here when. Like an orchestra conductor, one team should ensure all customer messaging is in time and in harmony.

Conclusion

Yes, your app should have a message schedule. And yes, if you don’t have one, you should go ahead and make it. But if you do have one, take a second to think about how many you might have and how to reconcile those conflicting user experiences.


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Next Story — This 100-Year-Old To-Do List Hack Still Works Like A Charm
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This 100-Year-Old To-Do List Hack Still Works Like A Charm

The “Ivy Lee Method” is stupidly simple — and that’s partly why it’s so effective.

[Photo: Flickr user Billy Millard]

By James Clear, who writes about self-improvement tips based on proven scientific research at JamesClear.com, where this article first appeared. It is adapted with permission.

By 1918, Charles M. Schwab was one of the richest men in the world.

Schwab (oddly enough, no relation to Charles R. Schwab, founder of the Charles Schwab Corporation) was the president of the Bethlehem Steel Corporation, the largest shipbuilder and the second-largest steel producer in the U.S. at the time. The famous inventor Thomas Edison once referred to Schwab as the “master hustler.” He was constantly seeking an edge over the competition.

Accounts differ as to the date, but according to historian Scott M. Cutlip, it was one day in 1918 that Schwab — in his quest to increase the efficiency of his team and discover better ways to get things done — arranged a meeting with a highly respected productivity consultant named Ivy Lee.

Lee was a successful businessman in his own right and is widely remembered as a pioneer in the field of public relations. As the story goes, Schwab brought Lee into his office and said, “Show me a way to get more things done.”

“Give me 15 minutes with each of your executives,” Lee replied.

“How much will it cost me?” Schwab asked.

“Nothing,” Lee said. “Unless it works. After three months, you can send me a check for whatever you feel it’s worth to you.”



THE IVY LEE METHOD

During his 15 minutes with each executive, Lee explained his simple method for achieving peak productivity:

  1. At the end of each workday, write down the six most important things you need to accomplish tomorrow. Do not write down more than six tasks.
  2. Prioritize those six items in order of their true importance.
  3. When you arrive tomorrow, concentrate only on the first task. Work until the first task is finished before moving on to the second task.
  4. Approach the rest of your list in the same fashion. At the end of the day, move any unfinished items to a new list of six tasks for the following day.
  5. Repeat this process every working day.

The strategy sounded simple, but Schwab and his executive team at Bethlehem Steel gave it a try. After three months, Schwab was so delighted with the progress his company had made that he called Lee into his office and wrote him a check for $25,000.

A $25,000 check written in 1918 is the equivalent of a $400,000 check in 2015.

The Ivy Lee Method of prioritizing your to-do list seems stupidly simple. How could something this simple be worth so much?

What makes it so effective?

ON MANAGING PRIORITIES WELL

Ivy Lee’s productivity method utilizes many of the concepts I have written about previously.

Here’s what makes it so effective:

It’s simple enough to actually work. The primary critique of methods like this one is that they are too basic. They don’t account for all of the complexities and nuances of life. What happens if an emergency pops up? What about using the latest technology to our fullest advantage? In my experience, complexity is often a weakness because it makes it harder to get back on track. Yes, emergencies and unexpected distractions will arise. Ignore them as much as possible, deal with them when you must, and get back to your prioritized to-do list as soon as possible. Use simple rules to guide complex behavior.

It forces you to make tough decisions. I don’t believe there is anything magical about Lee’s number of six important tasks per day. It could just as easily be five tasks per day. However, I do think there is something magical about imposing limits upon yourself. I find that the single best thing to do when you have too many ideas (or when you’re overwhelmed by everything you need to get done) is to prune your ideas and trim away everything that isn’t absolutely necessary. Constraints can make you better. Lee’s method is similar to Warren Buffet’s 25–5 Rule, which requires you to focus on just five critical tasks and ignore everything else. Basically,if you commit to nothing, you’ll be distracted by everything.

It removes the friction of starting. The biggest hurdle to finishing most tasks is starting them. (Getting off the couch can be tough, but once you actually start running, it is much easier to finish your workout.) Lee’s method forces you to decide on your first task the night before you go to work. This strategy has been incredibly useful for me: As a writer, I can waste three or four hours debating what I should write about on a given day. If I decide the night before, however, I can wake up and start writing immediately. It’s simple, but it works. In the beginning, getting started is just as important as succeeding at all.

It requires you to single-task. Modern society loves multitasking. The myth of multitasking is that being busy is synonymous with being better. The exact opposite is true. Having fewer priorities leads to better work. Study world-class experts in nearly any field — athletes, artists, scientists, teachers, CEOs — and you’ll discover one characteristic that runs through all of them: focus. The reason is simple. You can’t be great at one task if you’re constantly dividing your time 10 different ways. Mastery requires focus and consistency.

The bottom line? Do the most important thing first each day. It’s the only productivity trick you need.

Read this story at Fast Company.

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