We were bleeding customers and needed to fix it. But where were we screwing up?
Highrise launched in 2007 as simple contact management and CRM software for the web. It was created by a company named 37signals. In 2014, 37signals decided they wanted to focus on their core product, Basecamp, but also wanted to get Highrise the resources it deserved. So they announced they were selling or spinning off Highrise and renaming themselves Basecamp.
Immediately rumors spread that Highrise was sunsetting. Even though Basecamp doesn’t sunset their products — old versions of Basecamp still run today — our competitors fueled the news of a shut down. It just wasn’t true.
But those rumors led to Highrise bleeding customers. Week after week, another net loss. The final decision was to spinoff the company instead of sell it, and they brought me in as the CEO on August 14, 2014 and we got to work. We brought in a brand new team, and aggressively improved the product. Every few weeks another email was sent out to customers that a bunch of things had gotten better.
We saw that rate of customer loss immediately start to slow. Each week was better. But then in 2015, things got bad again. What happened?
The Masters golf tournament occurred a few weeks ago.
You don’t need to know anything about golf or even be a fan to recognize what transpired.
Going into it, a young phenom named Jordan Spieth was a favorite to win the tournament. He was runner-up in 2014 and won the Masters in 2015. And he’s been winning other tournaments all year long.
Jordan was leading the pack of competitors by 5 strokes going into the last 9 holes.
But then, he choked.
Some folks consider it the worst meltdown they’ve ever seen in golf. Jordan was on the 12th hole, known as the Golden Bell. It’s the shortest hole on the course. A par 3. But it’s shortness hides its difficulty. The wind is unpredictable. The green is tiny. And there is a creek in front that loves to eat golf balls.
But “everyone” knows you don’t go for the pin, you just aim for the middle of the green and get the damn ball over that creek and front bunker. Nothing fancy.
Don’t take my word for it. Just do a quick search for advice on playing No. 12 and it’s all the same:
I prefer the play the ball over the bunker no matter where the pin is, except if it’s front-left. I never shoot at the right pin placement on purpose.
There are two rules on the 12th hole at Augusta… One, is you never aim at the flag at Augusta on the 12th hole. You always aim in the middle of the bunker, and try to carry the bunker, and take your 20-footer left or right. … That’s what you do there. Never go at that flag.
But Jordan “hit a little cut to the hole” and ended up in the creek. And then he dropped another ball for his penalty shot, and that ended up in the creek too! His next shot finally made it over, but he finished the hole with a quadruple bogey. A 5 stroke lead was now a 3 stroke deficit. He lost the tournament.
But why? What made him choke?
Sian Beilock is a psychology professor at The University of Chicago. She wrote the book on Choking.
Beilock offers interesting insight into what choking is psychologically as well as methods to help us avoid it.
One of the key things to understand about choking is that it’s actually two different phenomenon that we often confuse as just one.
Choking can occur when people think too much about activities that are usually automatic. This is called “paralysis by analysis.” By contrast, people also choke when they are not devoting enough attention to what they are doing and rely on simple or incorrect routines.
Let’s look at Jordan again and you’ll see what Beilock means.
Jordan hit a poor golf shot that is usually automatic for him. Right club; just came up short. But you’ll also see the other type of choke Beilock is describing. Jordan shouldn’t have been shooting for the pin to begin with. That was a poor decision, not a poor golf shot. As Trevino said: Everyone knows the best decision is to aim right for the middle of the green, not the pin. But Jordan made a poor decision.
And Jordan continued to make poor decisions and poor golf shots on this hole. When his penalty shot also ended up in the creek, he hit a poor golf shot, but he shouldn’t have been down by the creek to begin with.
According to Trevino:
Rule No. 2: If you do hit it in the water, you never, ever go down to the creek and drop a ball. You always re-tee it. And the reason for it is because when you go down to drop your ball, you’re dropping it in a wet area with a downslope trying to hit the ball up over a creek.
Beilock goes into the biomechanics of why both of these types of choking transpire. They both take place at the prefrontal cortex of our brain, the part where we spend a lot of time making conscious decisions. When the prefrontal cortex is making decisions when it’s not supposed to be, bad things happen.
Let’s look at Jordan again. Jordan’s making poor golf shots. Things that should be automatic for him aren’t anymore. If you go back here’s what he said about that first shot he made:
“I remember getting over the ball thinking I’m going to go ahead and hit a little cut to the hole.”
That’s a problem. He’s “thinking” over the ball. At this point he shouldn’t be thinking at all. Beilock and her research team found that golfers can actually improve their shot performance if they stop thinking.
Having a golfer count backwards by threes, or even having a golfer sing a song to himself uses up working-memory that might otherwise fuel overthinking and a flubbed performance.
You’ll hear athletes when they do their best mention things like they are in the zone and almost unconscious. “I don’t know how I did it. I just hit the ball and it went good.” Which is what Kimberly Kim said after she won the US Women’s Amateur Golf tournament.
But instead, we hear Jordan’s thinking.
So that explains the poor shots he’s making. But what explains the poor decisions? Beilock also explains:
The ability to perform difficult tasks declines over time — much in the same way that a muscle tires after exercise. In fact, glucose (which is a primary source of energy for the body’s cells, including brain cells) becomes depleted when you continuously exert effort on a difficult thinking and reasoning task. If you don’t take time to recoup your resources, your performance on whatever you do next can suffer.
Which is interesting because a couple days before, Jordan was hit with a “slow play warning”. And a few months before that, he was hit with another one, at the Abu Dhabi HSBC Championship. Nick Faldo commented: “He doesn’t like to be rushed, does he?”
Jordan is slow.
And he’s slow because he spends an inordinate amount of time thinking and worrying about every single golf shot. It’s no wonder that by Sunday, when the pressure’s on, Jordan doesn’t have anything left to make important decisions when they really count.
Perhaps if Jordan kept his cognitive horsepower in reserve for when it matters, and learned to shut down his brain when he’s already made a decision, the tournament would have ended differently.
I can see now how both of these types of poor performance showed up in how we started losing customers at Highrise again in 2015. We called in Noah Lorang, the data scientist at Basecamp, to help us analyze what happened to what seemed like an originally improving situation at Highrise.
What he found was pretty shocking. All the work we had done had indeed been pulling up our retention numbers, but in November 2015, we had deployed a marketing site redesign that altered how people were signing up for our paid plans. In short: people just weren’t signing up for our paid plans as much anymore.
So we tested a change that took just 3 hours and returned our pricing page back to what it resembled pre-our redesign.
Immediately we saw our numbers improve. In a very short time, we had a statistically significant result that showed us we now improved our paid conversion rate by 70%!
Just like that, Highrise was growing again.
Why did I not see this? First, I can see how what should have been an automatic decision wasn’t.
When I first saw the redesign we were planning, I immediately felt like we had bitten off too much. From years of running businesses, I have realized over and over again how important it is to bite off small projects. It’s too risky to do large things, and too hard to measure. So increment everywhere you possibly can.
But the redesign became a huge project. Instead of focusing on improving a single page, we scrapped the entire site and started every single page design with brand new content over again.
Immediately, my gut said: this isn’t right. But my head said well we could see what happens and let our split testing decide. I should have just trusted that gut reaction. I’ve done this enough times to know that wasn’t a smart way to go.
Because… I got the split test wrong. The second way I choked was in my decision making. When we deployed this new marketing site, we put an A/B test in place. We measured how many people converted to accounts. But we measured the wrong thing. We were measuring total accounts Free AND Paid. We neglected to see that fewer paid accounts were converting. That was mistake number one “off the tee”. My second poor decision was not involving Noah from the start. Here was a guy who had a ton of experience with Basecamp and Highrise conversion rates, traffic and previous experiments. I should have spent 5 minutes running this stuff by him and following up when things weren’t improving. But I didn’t.
Why? Well, to be honest, I think my mind was a bit worn. The experience of running Highrise has had my brain in continuous overdrive. I find myself worrying too much. I see a parallel in Jordan. I’ve spent too many cycles on things I can’t control, not reserving enough, or rejuvenating enough, to make better decisions on things I can control.
So what now? Now, I listen to my gut. I try to let that instinctual reaction out, even if it might get changed, at least I don’t bury it in other thoughts. And I try to work on projects that get my head out of worrying about things I can’t control. If I’m worried about March traffic during spring break, well I can’t do much about that. Our typical customer is on vacation. Instead I use this time to work on something I can control. I can get another project done, write another article, open source another thing we’ve done. And honestly, meditation has helped. At night when I find my mind racing, I’ve been practicing some simple meditation techniques you can pick up anywhere. (I highly recommend the Headspace App. Do the SOS drill they have on there to see what I mean. That should help immediately.)
It’s easy to choke when you’re in the moment and the pressure is on, but if you understand what to autopilot and what to reserve brain power for, you’ll overcome a huge part of the battle.
P.S. It would be awesome to meet you on Twitter, or check out all the great new things we’ve added to Highrise and see why people are so excited about our improvements.
great email from @natekontny and the @highrise team. I'm loving the new changes and upgrades. pic.twitter.com/XhpAC5yQGy
— Kris Smith, MBA (@theblacktechie) April 14, 2016
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