Startup Life: Unscripted #43 with Nick Cust, Chief Product Officer at Cake Equity

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Startup Life: Unscripted is a TNG Media newsletter, as part of The Nudge Group, where we feature candid conversations with startup operators about their career journeys and experiences. If you received this email as a forward, you can read all our past interviews and subscribe right here.

Welcome back to Startup Life: Unscripted! In this week’s edition, we’re excited to introduce Nick Cust, the Chief Product Officer at Cake Equity. Nick has an extensive background in building and scaling teams globally and has played a pivotal role in developing growth strategies for various startups.

In our conversation, he talks about the key principles that have guided his efforts in addressing complex challenges and fostering growth within startups. He emphasises the importance of aligning with the company's vision and the necessity of customer interaction to tailor unique market strategies.

Key interview takeaways:

🔧 Adapting Strategies: Nick explains how different markets and company cultures require bespoke growth strategies, highlighting that what works for one may not work for another.

🌍 Global Insights: He shares his approach to understanding and integrating cultural nuances in global markets, which is crucial for scaling businesses internationally.

📊 Data-Driven Decisions: Nick underscores the significance of being hypothesis and data-driven, using customer feedback to inform and refine business strategies.

🔄 Startup vs. Established Companies: He contrasts the rapid, flexible environment of startups with the slower, more bureaucratic nature of established companies, discussing how each influences product development and team dynamics.

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Nick, you've built and scaled teams globally and also helped startups with complex problems and growth strategies. Can you talk about some of the key principles or strategies you follow when dealing with these two important aspects of startup growth?

Hey Hao, thanks, nice to chat to you. I think the first thing that comes up is what’s worked well for one company, does not necessarily correlate with growth in another. New markets, environments or industries, mixed with different personalities and cultures, dictate completely different strategies.

The first principle I would normally focus on is nailing (or deeply understanding) the company vision and what success looks like with the founder/ceo - everything flows from that. There is so much nuance in each market, customer personas, etc., the only true way to work is through speaking to your customers every week, being hypothesis and data driven, determining which techniques work for you through testing with your target customer.

Just doing what everyone else is doing is a recipe for disaster and can result in crucial time lost. Overall startups are generally not pretty work, they are generally glorified in the press, but it’s a grind – and growth in smaller stage companies (generally) is not like ‘you see in the movies’, it mostly ebbs and flows in waves of joy and despair.

One of the big challenges is that your promoted guides are generally well established scale-ups (i.e. Airbnb, Amplitude, Canva) with huge scale and volume. What works for them is not always what will work for you, as often you have very low volume! A good example of this is that Canva might be able to run an experiment for a few hours to get a statistically significant result, you as a scrappy startup however might need 3 years.

In terms of key principles I follow when dealing with startup growth and complex problems are 3 main areas:

1) Getting super tight on the key product and business problems first and spending the necessary time making sure these are in fact the right ones. From there you can build a culture of outcome-based, data driven and transparent 'ego-less' thinkers, who aren’t afraid to be wrong, ship and learn fast and have a thirst for getting to the real answers from data, whether that be quant or qual. Thrashing at solutions to average problems and building feature bloat is a common trap.

2) Customer-centric decision making - it goes without saying, but it’s the easiest echo chamber trap to fall into, biassing yourself to believing your own or teams ideas will just work — there’s no substitute to talking with your customer weekly, to understand them (with that in mind, you might be lucky enough to score a few wins on building to solve for them).

And 3) Invest in cultural understanding for global scaling. Small aspects of your positioning, product or pricing, make big differences as you scale globally, particularly language and cultural norms, getting on the ground and talking to your ICP to learn these will 10x your learning time and results.  

As Chief Product Officer, you're obviously deeply involved in the product development and strategy at Cake. Could you walk us through your approach to product development in a startup environment? What are some key differences compared to a larger, more established company?

I’d say the major aspect that differs in a startup environment is speed and the velocity of learning that is required to grow and seize the opportunity you have at hand.

Startups need less bureaucracy to be successful and the greater the pace of ’80/20’ decisions can help to increase learning and compounding of results. Whereas more established companies often build in layers of people and teams, as team sizes increase, decision making speed slows down, which stagnates innovation or execution and evidently learning velocity.

I’ve seen process kill businesses, that’s why I always favour just enough, to execute without breaking - those obsessed with process, are more suited for running meetings at more established companies and will slow you down. The faster a startup learns and executes well, the better chance they will have on continuing to grow.

The best in the game mandate speaking to customers regularly, but the great ones do it while recognising their own biases. The great startups I’ve seen also focus on the overall health of their teams and encourage (as we do at Cake and dedicate a whole company OKR to it!) people to focus on their holistic health, get outdoors in nature regularly and be creative in their own way.

In terms of results, what I’ve seen working across AU, UK and US is that the great ones care about signal data and tracking the right parts of the business, closely correlated to their growth engine, whereas corporates prioritise reporting, focussed on people promotion not impact. 

In terms of product and engineering in a startup, usually I would start by working closely with the CEO on a framework, something like the North star framework, to get super clear on vision and success metrics and work on the key signals that tell us we're on the right path. Without spending the time on this, you’re likely to be prone to thrashing and changing course regularly, without impact.

From there it’s about alignment and communication with team/s, and all about execution – the best teams I’ve seen have fun, debate often, enjoy working with each other as they challenge each other every day; evidently jamming like a great jazz band.

Reliable data, learning speed and having a team of hungry scalers (both of themselves and their ability to ruthlessly prioritise to get results) also is critical. I’d rather not hire a role unless they can give me 10-20x improvement and lift the whole organisation.

Typically the corporates or ordinary startups hire just to fill slots, the best however, don’t just hire anyone, they get self driven, inquisitive thinkers, intrinsically motivated and driven by results. This is the allure for me, of startups; have the autonomy to execute, learn and make impact in days, not years and really enjoy the journey along the way. 

Your work spans across various industries like SaaS, digital retail, marketplace, health, property, and consumer tech. Could you share some insights into how you've adapted your product approach for each industry? What have been some unique challenges and opportunities in each?

The great aspect of being UX design and product driven is that the thinking process and customer centricity is very changeable across industries. I’ve been lucky enough to work with some super smart people, so engaging with deep thinkers has always helped me to adapt and execute better.

The first thing you must get to understand is the growth engine of your company within the industry, what is the flywheel, how do the loops pick up pace, compound and self drive your growth. Adapting has usually involved spending more time with the customer, understanding them and the data modelling side, to establish the metrics that matter.

I started in SaaS and marketplaces and this is my true love, but I’ve always loved industries with network effects, ability to build a strong brand and align myself around a deep problem(s). SaaS requires more strategic moat based thinking, along with channel, pricing and packaging nuance, at Cake we spend a lot of time on product-led growth, making the customer journey scalable and ‘self-servable’ and helping customers hit their first key actions in minutes.

PLG SaaS and consumer tech apps often share consistency that your time to ‘aha moment’, once a customer is in their ‘window of opportunity’ (see the disciplined entrepreneur) can be as little as 1-15mins, before a potential buyer is gone for good, so the experience needs to hit hard quickly to make that time impactful.

My time in the UK was heavily ecommerce focussed, through the boom at ASOS in Europe and required a lot of customer segmentation development, data science and personalisation and day to day rigour of AB testing. In a marketplace the balance of driving organic supply (1 brings many) and keeping that loop (and people) happy and firing, while further increasing their happiness by increasing conversions on the demand side, have been very hands-on challenges.

One real world problem that shows how each business model changes tactics, is in a marketplace. New supply-side customers want those dopamine hit moments quickly when they sign up or are acquired, particularly through a paid channel, so a lot of time was always spent on how to boost their motivation quickly, reducing churn likelihood, such as boosting their listing prominence in search or giving white glove service to them, until they get those aha moments.

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Throughout your career, you've navigated a variety of industries - from SaaS to health, property and consumer tech. For those just starting out in their career or considering a pivot, what advice would you give about exploring different industries within the tech world?

Most of the commentary earlier will give a signal, but I’d say that some need to unlearn much of what you have learned if pivoting, while others might be free inquisitive thinkers whereby entry to a new industry or change into, won’t be difficult, as you love to break down and solve complex problems.

The main recommendation is to study the growth model of how an industry works, what points of a flywheel will you need to drive to see organic growth and compounding effects and then talk to a potential or actual customer every week, you will be fine.  

Switching gears a bit to your time as an advisor and investor at sidespace.com.au, what did you learn from that experience that you've brought into your role at Cake? Specifically, are there aspects of the investor mindset that have been useful in your role as a product leader?

I’m really interested in incumbent industries that have old school thinking and slow, expensive ways of doing business. At sidespace that’s tackling a lagged industry cutting out many wasteful steps, making it directly quicker and cheaper to lease or purchase property, through a marketplace model.

As they continue to scale and take on the larger slow moving incumbents, learnings there have been very similar to other startups and at Cake. Founders are generally extremely mission driven, but time poor, stressed individuals, flying a plane while building, trying to learn at 10x speed both in terms of their market and customer to execute.

But also all of the jargon and complexity of everything from cap tables, finding investors and communicating with confidence, that often has to be summoned from immense places of deep strength at times.

Sometimes, the game is unfairly biassed and game is controlled by legalese confusion or ego, especially for those who lack a prestigious background or are not male. Deeply understanding this as a passive, active or sweat equity investor at times, has helped a lot with the role at Cake. As an angel investor or advisor you learn where and how to be helpful, more importantly ask great questions to probe thinking.

On the Cake Equity side of things, our mission is to motivate startup teams through equity. We believe it's about the whole startup team winning at Cake. Our core focus is motivating employees, motivated teams are much more likely to impact results.

We look to remove the jargon and de-mystify the complexity that’s been for so long guarded by the legal and accounting world – so that teams can feel like heroes and rally around their cause, empowered by their equity.

We’ve had immense growth globally across the last 2 years in the worst tech market for 20 years and importantly we have done it being trustworthy, humble and hungry and with a creative, healthy lifestyle culture. 

I feel the overall funding and investment side of things will have to continue to evolve. There is no way in my mind in this day and age, why a founder with a solid business should be taking 6-12 months exclusively out of their business, to be perpetually on a roadshow to pitch investors and hustle for money, stepping away for so long from running their business.

The real heroes are the startups grinding out wins every day and building better solutions for their customers’ problems. One click investment and fast turnarounds are crucial, so is the ability to drive smaller more regular opportunities for teams, so that they can regenerate the startup world again solving new problems; as an economic flywheel.

The Australian startup system needs bigger government backing to drive startup success through making equity more attractive, by adjusting red tape to be more proportionate to the company it impacts. At Cake we will continue to help motivate more global teams to be successful.

You've mentioned a passion for supporting diverse and underrepresented startup founders. Could you share some of your learnings or observations about diversity in the startup world? Are there any resources or networks you would recommend to founders from underrepresented backgrounds?

Diversity is frankly pretty broken in the tech space, I believe it was reported somewhere around ~2-5% of startups that are funded are from diverse backgrounds or female, every new update you see in the press is 2-3 of the same type of person being funded and advertised.

The fact that funding rounds are so extensively promoted (or had been prior to the retraction) is telling. It’s important for startup teams to not be caught up in the hype — great builders discovering and solving complex problems, resulting in successful/ profitable businesses remains key.

There are obviously deeper unconscious biases ingrained in society that start from an early age and I’d love to see more being done in primary and secondary schools, but other than to continue to call it out, support diverse people and promote non typical people who may not get the prominence of others, it’s difficult.

We watched a panel of awesome founders in LA earlier this year talk about their journey, only 1 of 10 on the panel was female. You’re telling me in California there aren't 5 great female or more diverse founders.

Personally I just try to offer free help to any underrepresented people who want any help, when asked or if I’m at events. I’d definitely recommend the female founders circle at The Startup Network run by my good friend Vicki or getting behind the team at Indigitek, or Kristen Hunter and team at Grapevine.

Lastly, we'd love to hear your advice for others who are interested in product or leadership roles within startups. What skills, attitudes, or experiences do you think are most important? Do you have any recommended readings, communities, or learning resources that helped you on your journey?

Be inquisitive, ask why a lot, don’t settle for this is the way X company does it so it should work, or the way it's always been done. Be hypothesis and test driven, focussing on developing better questions. Learn to code or develop your SQL / data skills and be good with cutting your own data to form insights.

From a product perspective, I love Cagan’s work and all of his theses on product and development, study network effects, a sprinkle of PLG theory if you’re in saas (but not too much), any quality UX and design conferences as they tend to have more depth of thinking and of course Reforge courses. Also, join the right type of startup, check your ego at the door and get your hands dirty, it’s the best way to learn. 

From the Startup Life team

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