5 questions to ask when your product stops growing | Jason Cohen (2x unicorn founder)

Episode Overview

• This episode features Jason Cohen (founder of WP Engine) dissecting the mathematical and strategic reasons why company growth stalls and how to overcome "The Growth Ceiling."
• It challenges common startup wisdom, debunking the effectiveness of A/B testing for strategy, the "consistency" rule for content, and the reliability of customer exit surveys.
• The discussion moves from the tactical math of retention (churn vs. acquisition) to high-level strategy, including pricing power, market saturation, and the psychological "why" behind business stagnation.
• Listeners will learn how to diagnose whether their growth issues are due to product failure, channel saturation, or market positioning, and how to apply the "One Foot Anchored" framework to restart growth.

Key Concepts

The "Growth Ceiling" Mathematics Cohen introduces a harsh mathematical reality: cancellations grow automatically with the size of your company (as a percentage of your total base), while customer acquisition typically requires manual, linear effort. This creates a ceiling where churn eventually equals acquisition, halting growth entirely regardless of effort. * The Formula: New Customers Acquired / Churn Rate = Maximum Possible Size.

The Asymmetry of Churn vs. Acquisition Marketing success feels like "running through mud" because acquiring 100 customers this month doesn't guarantee 110 next month. Meanwhile, the "leaking bucket" of churn scales effortlessly. To break the ceiling, you cannot just pour more water (marketing); you must plug the holes (retention) or radically change the bucket size (expansion).

The "Too Expensive" Fallacy When customers churn and cite "price" as the reason, they are almost always lying or choosing the path of least resistance. Since they already survived the pricing page and onboarding to buy the product initially, the price was acceptable. They are leaving because the product failed to deliver the value promised, not because of the cost.

The "Five Whys" of Customer Churn To fix churn, you must ignore the "proximate cause" (e.g., "project ended") and find the root cause. If a project ended, perhaps your software wasn't valuable enough to keep it alive. If they say "too expensive," it may actually be a lack of integration. * The Early Warning System: Churn happens weeks before the cancellation button is clicked. You must detect "at-risk" behaviors (e.g., stops uploading data, logs in less) to intervene while the customer is still active.

Pricing as Positioning & The "Elephant Curve" * Pricing: Raising prices isn't just about margin; it selects a different customer. Low prices attract fragile businesses with high churn. High prices signal enterprise-readiness and attract stable customers. * Saturation: Marketing channels follow an "Elephant Curve"—they rise, plateau, and eventually sag due to saturation and ad fatigue. You cannot "optimize" your way out of a saturated channel; you must innovate or find a new one.

Value Creation Before Value Capture Companies often try to raise prices or upsell to fix revenue issues. Cohen argues you must first create 5x value for the customer before attempting to capture 2x in price. Only when the customer feels they are getting a "steal" at the new price is the strategy sustainable.

Strategic Expansion: "One Foot Anchored" When growth stalls and you must expand into new markets or products, use the "One Foot Anchored" approach. Keep one foot in your area of strength (existing technology, brand, or customer base) while stepping the other foot into risk. This balances the danger of the unknown with the stability of your assets.

The Flaw of A/B Testing Cohen argues that A/B testing is often useless for strategy. It works for optimizing button colors but fails for vision. Furthermore, mathematically, unless you have massive volume, the "base rate fallacy" means false positives often outnumber actual breakthroughs in testing.

Quotes

• At 0:07:48 - "Quality is actually the only thing that matters, and the consistency doesn't matter... the only difference is the more rarely you write, the more awesome it has to be." - Challenges the standard "consistency is key" advice for content marketing.
• At 0:12:26 - "How did they even find out about me? That was hard already... they actually had the budget and bought the stupid thing. And after all of that... they're like, 'No, bye.'... Just on an emotional level you gotta go, 'Wait a minute, that's terrible.'" - Highlighting the tragic waste of resources involved in churn.
• At 0:14:19 - "Cancellations grow faster than marketing... Cancellations overpower the growth of the company and slow it to a halt." - Explaining the fundamental mechanism behind stalled growth.
• At 0:14:51 - "Too expensive... is never, ever, ever the reason... They already looked at your homepage... looked at the pricing page, and that didn't scare them off... decided to buy it... That means 'it'... is not too expensive." - Debunking the most common excuse customers give for churning.
• At 0:19:47 - "The wrong way is to ask 'Why did you cancel?' because this allows them to say something really simple like 'budget'... What you want to do is say, 'What made you cancel?'" - A tactical phrasing shift that forces customers to identify specific triggers.
• At 0:21:39 - "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." - Explaining why simple explanations for business failure are usually insufficient.
• At 0:27:18 - "Almost all companies have a whole lot more cancellation in the first day, 30 days, 90 days... than the whole rest of the customer's life. And also small changes in the onboarding can have large effects on cancellation." - Highlights where companies should focus retention efforts for maximum ROI.
• At 0:35:54 - "There's this funny thing... that the pricing is always too low... Your prices are way too low because you just guessed and you haven't changed them." - A reminder that most startup pricing is arbitrary and likely undervalues the product.
• At 0:41:59 - "It's just what the good customers have in common that are different from what the bad customers have in common." - Refines the standard advice of "finding what good customers do" by adding a differentiation filter.
• At 0:49:12 - "Pricing is not this knob that you can turn separate from the rest of your strategy... You can't just raise prices. These new customers have different demands... Now your other governance stuff matters." - Explains why moving up-market requires a total organizational shift.
• At 0:51:11 - "NRR is saying that a loss of 20% from cancellations is offset by 20% from upgrades. As we just saw, no it's not. That only gets us to 96% actually." - Using investment math to prove why NRR statistics can be misleading.
• At 0:59:39 - "How do we create more value for the customer and then split that with them? ... Only when you generate more value for the customer, you can then decide how to split that with the customer." - A framework for ethical and sustainable price increases.
• At 1:08:26 - "I wrote an article about this called the elephant curve... because it's like this trunk and then, but then it's this butt [sagging down]... It starts with an S curve, and then it starts sagging." - Describing how marketing channels inevitably decay and sag over time.
• At 1:15:28 - "One way or another, you probably want to plant one foot into some strength or asset that you have, move the other foot—which is the risky part—but the idea is that yeah, well we have this big upside so we're taking that bet." - Explaining how to de-risk expansion strategies.
• At 1:22:28 - "Do you need to grow? Or if you're not growing, are you dying? Is that true? And are you therefore dying, and what needs to happen?" - The ultimate diagnostic question when tactical fixes fail.
• At 1:26:39 - "Even if the tool is 95% accurate, when the thing you're looking for is rare—which it is in the case of A/B testing—the false positives happen more often than the actual thing happens." - Explaining the statistical "base rate fallacy" in A/B testing.
• At 1:28:43 - "If there could be one thing where it would help solve kind of all of it, it would be that [customers] really are getting value. Your product actually promises the right thing, and then it actually delivers on that thing." - The foundational truth that overrides most growth hacks.

Takeaways

• Change your exit survey question from "Why did you cancel?" to "What made you cancel?" to uncover specific product failures rather than generic excuses.
• Ignore the "Too Expensive" feedback option in surveys; dig into usage data to see where the product failed to deliver value before the cancellation.
• Focus retention efforts on the first 90 days; fixing onboarding has significantly higher leverage than trying to save long-term customers who are leaving.
• Implement an "Early Warning System" based on usage drops (e.g., fewer logins, no data uploads) to intervene weeks before a customer actually cancels.
• Raise prices to test market positioning; higher prices often attract better, lower-churn enterprise customers rather than just scaring away users.
• When expanding to new markets, keep "one foot anchored" in your existing strengths (tech or audience) to mitigate the risk of the new venture.
• Do not rely on A/B testing for strategic decisions or vision; use it only for optimization when you have massive traffic volume.
• Monitor marketing channels for the "Elephant Curve" (saturation/sagging) and prepare to launch entirely new channels before the current ones decline.
• Look at "Logo Retention" (absolute number of customers) separately from NRR (Net Revenue Retention) to ensure upsells aren't masking a shrinking customer base.
• Prioritize quality over consistency in content marketing; one exceptional piece is worth more than frequent mediocre posts.