Podcast Summary: 20VC: ElevenLabs Head of Growth on Why You Do Not Need PMs | The 7-Part Launch Playbook That Gets 700K+ Views Per Product | The Truth About CAC, Payback & Performance Marketing in AI with Luke Harries

Introduction

In this episode of The Twenty Minute VC (20VC), host Harry Stebbings sits down with Luke Harries, Head of Growth at ElevenLabs. ElevenLabs is one of the fastest-growing companies in the AI sector, having recently raised $281 million in its latest funding round, valuing the company at $3.3 billion. Luke brings a wealth of experience from previous roles at PostHog and Microsoft, and he is also an active angel investor. The conversation delves deep into growth strategies, product management without traditional PMs, effective launch playbooks, and insights into customer acquisition costs (CAC) and performance marketing in the AI landscape.

Early Connections and Foundational Experiences ([04:15] - [07:09])

Harry begins by exploring Luke's early connections, particularly how he and his co-founder Matty met during a hackathon at Cambridge. Luke shares, “[04:44] we met when we were 19 and we did a hackathon at Cambridge. We rocked. Up is me, Matty, this guy called Filip who organized it...”

Key Takeaways:

• Value of Hackathons: Luke emphasizes the importance of participating in hackathons with smart friends, recounting how winning the Microsoft prize not only provided initial funding but also led to his first job at Microsoft.
• Long-term Relationships: His ongoing relationship with Matty, maintained over seven years through regular catch-ups, highlights the significance of sustained professional connections.

Pivoting Through Crisis: From Hackathons to COVID Testing ([06:25] - [12:01])

Luke recounts his and Richie’s (co-founder) journey before founding ElevenLabs, including their pivot from an AI developer tool to setting up a COVID-19 testing clinic in San Francisco during the pandemic. “[06:25] So we did that detour and then we were like, we do actually want to build a big business.”

Key Takeaways:

• Adaptability: The ability to pivot in response to unforeseen circumstances, such as the COVID-19 pandemic, demonstrated their resilience and problem-solving capabilities.
• Market Timing: Luke reflects on the importance of timing in market success, noting that if they had launched Fela five years earlier or Noah’s Handpick at a different time, it would not have thrived.

Horizontal Product Strategy and Team Structure ([12:37] - [17:08])

Harry challenges Luke on ElevenLabs' unconventional approach of not having traditional Product Managers (PMs). Luke explains their horizontal product offering, starting with a strong API foundation and expanding into various products tailored to different user segments. “[12:37] I 100% agree... we have the best AI audio models...”

Key Takeaways:

• Horizontal Product Offering: Starting with a foundational API allows ElevenLabs to cater to diverse use cases, from developer tools to consumer applications like audiobook creation.
• Shard Teams: Instead of a single growth team, ElevenLabs organizes separate growth teams for different product lines, each with its own dedicated marketers and growth strategies.

Quotes:

• “[14:55] Harry Stebbings: And so all of these sharded teams have their own, own growth elements to them.”
• “[15:00] Luke Harries: So our enterprise marketing team, by the end of this year will be 20 people...”

Growth Team Scaling and Best Practices ([17:06] - [22:17])

Harry and Luke discuss scaling growth teams, with Luke advising startups to begin with a generalist growth marketer before expanding. “[17:13] So video is hugely underrated as a medium for growth.”

Key Takeaways:

• Initial Hiring: Start with a versatile growth marketer who understands the product deeply, followed by growth engineers and specialists as the company scales.
• Importance of Video: Luke highlights the critical role of video in product launches, advocating for motion design to convey core value propositions effectively within the first 30 seconds.

Quotes:

• “[21:52] Luke Harries: Yeah. So most motion designers, they work with you on a specific project for about 5 to 10k...”
• “[22:17] Harry Stebbings: Do you worry that the value of video is going down with the explosion of supply? ...”

Launch Playbook: Strategies for Massive Reach ([23:26] - [35:14])

One of the core segments of the discussion focuses on ElevenLabs' 7-part launch playbook designed to achieve over 700K views per product launch. “[23:26] Harry Stebbings: What are your biggest lessons on how to do launch as well?”

Key Takeaways:

• Tiered Launch Strategy: Categorizing product launches into three tiers—major new products, significant features, and minor updates—helps prioritize resources and attention.
• Consistent Messaging: Developing clear, compelling core messages that highlight the product’s unique value propositions, such as accuracy and feature completeness.
• Multi-Channel Distribution: Leveraging various platforms (X, LinkedIn, Bluesky, Threads, Product Hunt, Reddit, etc.) to maximize reach and engagement.

Quotes:

• “[24:33] Harry Stebbings: How many messages can we have if we want most accurate, fastest and cheapest? Is that too much?”
• “[26:05] Harry Stebbings: And then we actually have an amplify channel in our slack where the entire team's in...”

Optimizing Customer Acquisition Cost (CAC) and Payback Period ([36:45] - [39:30])

Harry probes Luke on the relevance of traditional metrics like LTV in the rapidly evolving AI market. Luke redirects the focus to CAC and payback periods instead of relying solely on LTV. “[36:45] Luke Harries: Yes.”

Key Takeaways:

• CAC to Payback Period: Measuring the efficiency of customer acquisition relative to the time it takes to recoup the investment, adjusting payback periods based on product lines and market aggressiveness.
• Scalable Marketing Channels: Utilizing channels that maintain or reduce CAC over time through improved activation rates and virality.

Quotes:

• “[37:04] Luke Harries: ...the day to day metric and ratio we're really thinking about is CAC to payback period rather than CAC to LTV.”
• “[38:57] Luke Harries: ...when you look at it broadly and as you're adding new channels...”

Counter Positioning and Brand Strategy ([45:26] - [49:28])

Harry and Luke explore the concept of counter positioning, where a company differentiates itself by taking an opposite stance to competitors. “[46:37] Luke Harries: Counter positioning is where you take what someone else's core messaging...”

Key Takeaways:

• Counter Positioning: ElevenLabs leverages its superior AI audio models as a foundational strength, allowing them to diversify products without adhering to traditional ICP constraints.
• Brand Authenticity: Maintaining an authentic brand that resonates with both technical users and enterprises ensures long-term trust and differentiation in the market.

Quotes:

• “[46:37] Luke Harries: ...take the exact opposite and you use that as your strength rather than your weakness.”
• “[47:31] Harry Stebbings: I'm just thinking how we could use counter positioning effectively.”

Evolution of Product Management and AI Integration ([49:45] - [53:24])

A pivotal moment in the discussion centers on ElevenLabs' decision to operate without traditional PMs, instead empowering engineers to own the product roadmap. “[49:45] Luke Harries: And for context, Harry asked me this in front of an audience of about 92.”

Key Takeaways:

• Engineers Owning Product: By having engineers take full responsibility for product development, ElevenLabs fosters a more integrated and agile product development process.
• Merger of Growth and Product Marketing: Combining growth roles with marketing allows for more cohesive and streamlined strategies, preventing the fragmentation often seen with separate teams.

Quotes:

• “[51:27] Luke Harries: We keep the growth teams pretty small...”
• “[52:56] Luke Harries: Yes, I think PMs move to either growth.”

Quick Fire Q&A: Insights and Best Practices ([60:05] - [71:34])

In the rapid-fire segment, Harry poses a series of concise questions to extract actionable insights from Luke.

1. Common Mistake by Early Founders:

   • Luke: Over-investing in paid marketing before achieving product-market fit. “Build an incredible product first and then lean into paid.”

2. Most Underappreciated Growth Channel:

   • Luke: Organic LinkedIn. “The bar is so low, you can get stuff super viral LinkedIn organic.”

3. Advice to Growth Marketers:

   • Luke: Master copywriting, as it forms the foundation of all growth activities.

4. Best Growth Strategy Recently Observed:

   • Luke: Brian Johnson’s authentic and controversial marketing approach, which effectively builds brand and community through strong, consistent messaging.

Quotes:

• “[63:36] Luke Harries: The biggest advice I would give is get great at copywriting.”
• “[70:06] Luke Harries: The best growth strategy I've seen is what Brian Johnson is doing...”

Final Thoughts and Closing ([71:34] - End)

The conversation wraps up with mutual appreciation, highlighting the dynamic insights both Harry and Luke have shared. Luke underscores the importance of authenticity in branding and the strategic integration of AI in growth and product development.

Key Takeaways:

• Authenticity in Branding: Maintaining genuine and consistent communication channels that align with the company’s mission.
• AI as a Growth Enabler: Leveraging AI not just in product features but also in optimizing growth strategies and operational efficiencies.

Final Quote:

• “[71:34] Harry Stebbings: This has been so much fun. Thank you so much for doing this and it's been so good to have you in the studio.”

Conclusion

This episode of The Twenty Minute VC offers a comprehensive exploration of forward-thinking growth strategies within the AI sector, emphasizing the importance of product excellence, strategic marketing, and innovative team structures. Luke Harries’ insights provide invaluable lessons for startups aiming to scale rapidly and sustainably in a competitive landscape.

For more episodes and resources, visit www.20vc.com.