
Red lobster gave away so many free shrimp that they had to file for bankruptcy.

Believe it or not, this isn't a joke.

Red Lobster [literally went bankrupt](https://www.npr.org/2024/05/20/1252426585/red-lobster-bankruptcy) after making their $20 all-you-can-eat shrimp promotion a permanent menu item. Their customers ate them into failure - creating millions of dollars in losses... in shrimp.

So, friends:
<Highlight>if you're working on your business plan, try not to include an all-you-can-eat shrimp promotion in the mix.</Highlight>

That's it. That's the secret to business.

## The numbers matter as much as the product

Okay, look - here's the thing: if you want to have a business that pays the bills, understanding the financial model behind your products is crucial.

I'd bet a whole stack of clams that there was at least one accountant at Red Lobster who was red in the face trying to explain to their leadership that a "giving away free shrimps" business model was going to be a disaster.

Promotions and giveaways can be powerful tools to attract customers, but they need to be carefully planned and executed with a clear understanding of their impact on your business.

There's also a point to be made about the value of giving away _some_ services to early adopters to create hype and brand awareness. Promotions can certainly build buzz and loyalty, but as your product grows, you need to start getting paid to ensure sustainability and growth.

Generosity has its place, but it's essential to balance it with a sound financial strategy.

## Start with the basics: P&L

Many developers (myself included) don't have a background in finance - and that's okay! But it's crucial to understand the basics of your business's financials. Here are a few key terms to get you started:

- **Revenue**: The money you make from selling your product or service.
- **Cost of Goods Sold (COGS)**: The direct costs associated with producing your product or service.
- **Gross Profit**: Revenue minus COGS.
- **Operating Expenses**: The costs of running your business, like salaries, rent, and utilities.
- **Net Profit**: Gross profit minus operating expenses.

In developer terms, getting this right is about inputs and outputs: you're trying to build a machine that takes in more money than it costs to run.

Understanding these numbers will help you make informed decisions about your business and avoid making shellfish decisions that could sink your ship. (I'll stop.)

## Document your expenses

When you're building a product, it's easy to get caught up in the excitement of development and forget about the costs. But documenting your expenses is crucial to understanding your financial health. Keep track of everything you spend, from hosting fees to marketing costs, and make sure you're accounting for them in your financial model.

You don't need to use a fancy tool to do this: a spreadsheet will work just fine. The key is to be diligent about tracking your expenses and updating your financial model regularly.

## Understand your costs

Once you've documented your expenses, it's time to understand your costs. Calculate how much it costs to acquire a customer, including marketing and sales expenses. Then, match these against the price your customers pay. Determine how many months a customer needs to stay for you to break even and eventually make a profit.

Many developers who get into building products don't fully understand this, but it's crucial to go through this rigor. Even with a fast-growing product, overlooking these details can easily bury you in a failing business model.

If the math doesn't add up, it's time to reevaluate some combination of your pricing strategy, marketing efforts, and product features that drive costs up.

Your goal is to build a product that can pay for itself -- and much more, hopefully.

(also, shrimps is bugs. 🦐🦐🦐)

---

## Ya gotta get paid

If you're building a product, you need to get paid for it. It's as simple as that.

- [F*ck you, pay me](https://www.youtube.com/watch?v=jVkLVRt6c1U) is a classic talk from Mike Monteiro about the importance of getting paid for your work. It's a must-watch for anyone who's ever struggled to get clients to pay up.
- If you're an Indiehacker building a SaaS, this post on Indiehackers has lots of great wisdom: [How to price your product](https://www.indiehackers.com/post/how-to-price-your-product-indie-hackers-shouldnt-follow-the-usual-advice-0b994f58f6)
- If you're building a developer product, you may find my recent [interview with the founder of Unkey](https://apisyouwonthate.com/podcast/unkey-globally-distributed-api-key-generation-with-cofounder-james-perkins/) interesting. We talked a bit about building API products with usage-based pricing, and how to make sure you're getting paid for the value you're providing.

---

## I want to hear from you!
If you've got books, videos, podcasts, or articles to recommend for engineers who want to build a better business, send them my way. I'm all ears!



Shrimps is Bugs: Red Lobster ate itself to death

The numbers matter as much as the product


Tiny Improvements recently [passed the 400 reader milestone](https://mikebifulco.com/posts/building-in-public-growth-report-400-readers) - _thank you so much_ to each and every one of you for letting me into your inbox each week. It's a privilege I don't take lightly. Seriously, thank you.

As you might imagine, this has caused me to do a bit of reflecting -- I've been thinking about why I enjoy writing like this, and the things I find rewarding about being a part of the developer and creator community.

## On supporting others

I love the idea of building a community that I want to be a part of, and having the opportunity to support other people in building their dreams. There's something really special about being able to connect with people who are doing interesting things, and I'm grateful to be able to do that.

When I think about the people who I follow and really connect with, a few patterns stand out:

- some have done exceptional things or worked on exceptional projects
- some loudly support exceptional causes
- some just seem like they're incredible people

I have many reasons for being a fan of my friends and colleagues. One thing that has stood out to me lately, too, is how easy it is to amplify someone else's work -- and just how amazing that can make someone feel.

I've been writing for a bunch of years now, and I can remember a good handful of instances where someone shared my work unexpectedly. For example: we recently relaunched [apisyouwonthate.com](https://apisyouwonthate.com), and quietly added a feature that lets subscribers there pay for a membership. Right now, there's little difference between a paid and free membership, apart from "you're supporting us financially, and we love you." Within days of the feature launch, we had our first paying member, who skipped the $1/mo supporter tier and went straight for $5/mo.

I was floored.

<Image
  publicId="newsletters/you-are-far-more-influential-than-you-think/paid-subscriber"
  alt="Our first paid subscriber confirmation email"
  caption="This person will always hold a special place in my heart, and I'm so grateful for their support."
/>

## A call to arms: support your friends

I'm not writing this to ask for money, or to ask you to buy anything from me - if you're reading this, I'm already feeling the love. I'm writing this to ask you to support your friends.

Think about your friends who are working hard to build something. Maybe they're building a product, or a service, or a community. Maybe they're working on a side project, or a personal project, or a passion project.

Whatever it is, take 30 seconds out of your day, and share their _thing_ with your network. Let them know that you're a fan. It's small, it's free to do, and I can't tell you how much it means to the people you're supporting.

Small gestures of support can have enormous butterfly effects, too - I've made a good number of serendipitous connections in the past as a result of someone sharing my work with their network, or from times when I've shared and supported someone else's work.

Go, support your friends! You'll be glad you did, and they'll love you for it.

---

## Some friends whose work I admire

- [**Phil Sturgeon**](https://phil.tech) is the tree-planting madman who I work with on [APIs You Won't Hate](https://apisyouwonthate.com/). He's an exceptionally knowledgeable API developer, and has spent the past few years building his charity, [Protect Earth](https://www.protect.earth/). His organization has cleared land and planted tens of thousands of trees all over the UK - an astonishing accomplishment, and he's just getting started. Go follow Phil, he's a wonderful person.
- [**Rizèl Scarlett**](https://twitter.com/blackgirlbytes) is a developer advocate at GitHub. She's been all over the tech conference circuit for the past few years, where I've been lucky to bump into her from time to time. Rizèl is an amazing people connector - I've met and followed so many wonderful people as a result of her work.
- [**Colby Fayock**](https://twitter.com/colbyfayock) works as Director of DevX Engineering at Cloudinary, and is a really talented designer and developer. He's published countless articles, videos, and tech tutorials on his site, [SpaceJelly.dev](https://spacejelly.dev). Colby is genuinely one of the nicest people I've met, and does a great job of elevating the people around him. I'm always impressed by the work he's doing.
- [**Lazar Nikolov**](https://twitter.com/NikolovLazar) is a developer advocate at Sentry, and has started publishing a great newsletter called [Lazar's Tech Musings](https://nikolovlazar.substack.com/) that I've been enjoying. I stumbled across Lazar's work recently, and I'm really glad I did - our work has a ton in common!

## On building a following

📚 [Fanocracy: Turning Fans into Customers and Customers into Fans](https://amzn.to/3GSxOdO) is a book that is always high on my list of recommendations. I come back to my notes on it regularly, and I think it's a great read for anyone, whether you're actively building a following or not.

I've written a bit about nurturing your network before, and I think it's a topic that is worth occasional revisiting. If you're looking for more reading on the topic, you might enjoy these:

- [Imperfection is part of the brand](https://mikebifulco.com/newsletter/today-is-your-day-to-start), and people will love you for it.
- [Today is your day to start](https://mikebifulco.com/newsletter/today-is-your-day-to-start) building and marketing your product, even if you don't have the faintest idea what that is.

## Some of my recent work

- [Building in public growth report: 400 readers](https://mikebifulco.com/posts/building-in-public-growth-report-400-readers) - As I mentioned above, I recently passed the 400 reader milestone. I'm really grateful for the support and I wanted to share some of the things I've learned along the way.
- [Add custom fonts to Next.js sites with Tailwind using next/font](https://mikebifulco.com/posts/custom-fonts-with-next-font-and-tailwind) is a quick tutorial inspired by a post on Reddit. I've been trying to be helpful on /r/nextjs and /r/reactjs lately -- this post is adapted from a response to a question that I thought was worth sharing more widely.
- 🎙️ An interview I did recently for APIs You Won't Hate (the podcast): [Learnin' about webhooks, with Tom Haconen from Svix](https://apisyouwonthate.com/podcast/learning-about-webhooks-with-tom-haconen-from-svix/). If you're building with webhooks, this is a great episode to check out.


You are far more influential than you think


## You’re building relationships with all of your customers…

…whether you know it or not. Winning your prospects’ hard-earned money is hard. Founders spend hundreds and thousands of hours building products to solve a problem, pouring blood, sweat, tears, and money into product development. Building a product is only part of the equation: you have to earn the trust of your customers by creating a brand and voice that they trust. Landing sales, and keeping happy customers takes time and compassion. Thankfully, Customer Relationship Management (CRM) software exists to help you and your team do a great job of maintaining great relationships with your customers.

**CRM stands for “Customer Relationship Management”,** and CRM software helps you do just that: it provides tooling to track of your interactions and commitments to prospects, customers, and visitors to your app, service, or site. Often this comes in the form of integrations that automate part of the process - keeping track of contact information, logging important events and milestones in the customer journey, and reminding you to follow-up on leads before they go cold.

## What Types of CRMs are there?

Like most things, no CRM is a perfect solution for everyone. They vary in complexity, price, and usability - and perhaps most importantly, each CRM you encounter will have its own ethos, or underlying strategy. Ultimately, it’s up to you to decide which type of CRM fits your product best. As I see it, most CRMs fall into a few basic categories.

### Sales-based CRMs

**Examples: [Close.io](https://close.io), [Salesforce](https://salesforce.com), [Hubspot](https://hubspot.com)**

These are generally best for products whose success is based on a traditional sales process. If you have salespeople who contact prospective customers and manage relationships with them throughout the sales process, these CRMs may be a good fit. They tend to center around closing a sale, guiding you to craft messaging and contact strategies (via email, SMS, or phone call) that rely on high-touch salespeople doing their thing.

### Conversational Marketing CRMs

**Examples: [Intercom](https://intercom.com), [Drift](https://drift.com), [Front](https://front.com)**

You’ve probably bumped into some flavor of conversational Marketing CRM, as they have been wildly popular for the last several years. These usually look like a chat widget living in the bottom corner of a web page or mobile app. They’re highly configurable, and allow you to automate conversational messages to users as they browse your site or app. They can be used to highlight functionality, press visitors to sign up for trials, and complete sales. They rely on your team building conversational messaging that fits your brand, and guiding customers to make decisions. Many also offer real-time chat functionality, where members of your team can message and reply to website visitors through the embedded chat widget.

### Inbox based CRMs

**Examples: [Streak](https://www.streak.com/), [Copper](https://copper.com)**

If your customer support or sales process relies heavily on communication through email, these may be the CRM for you. They use the contents of your inbox to catalog customer relationships, allow your team to keep track of these relationships across inboxes. This typically means that email threads with customers get back-channeled notes and chat functionality. An important caveat with these tools is that they tend to be strongly-tied to the email service your team uses - your options for inbox CRMs will be limited based on whether you use G Suite or Microsoft 365

### Self-maintained CRMs

**Examples: [Monday](https://monday.com), [Airtable CRM templates](https://www.streak.com/), Notion CRM templates ([personal](https://www.notion.so/templates/personal-crm), [sales](https://www.notion.so/templates/sales-crm)), [Roam Research](https://roambrain.com/personal-crm/)**

These tools rely on you doing some of the work. They usually look like miniature table-based databases, and are used to leave notes on customer conversations, track potential and realized revenue, and other relevant metadata about your customer conversations. Some options offer simple automation out of the box, allowing you to plug in to tools like n8n and Zapier to add or update records.

### …something else?

No doubt there are other types of CRMs I’ve missed. **What’s your tool of choice for managing customer relationships? Do you have any tips or tricks to share with other founders and product teams? Did I miss something important, or get something wrong?** Share your thoughts with me on twitter [@irreverentmike](https://twitter.com/irreverentmike).

<small>

_Note: cover photo by [Andrew Neel](https://unsplash.com/@andrewtneel?utm_source=unsplash&utm_medium=referral&utm_content=creditCopyText) on [Unsplash](https://unsplash.com)_

</small>


How do you choose the right CRM for your product?

You’re building relationships with all of your customers…


One of the most famous ad campaigns in history is Yellow Tail wine's "Crazy Rooster" campaign. **It's so famous because it broke two cardinal rules of advertising:**

1. You don't want to be memorable for the wrong reasons.
2. You don't want to offend your customer base.

What made this campaign so effective was that it didn't just break these rules, but completely shattered them by doing the exact opposite of what conventional wisdom would tell you.

They built their entire brand around being offensive. They were known for making crazy claims like, "Yellow Tail tastes like s\*\*t." They put up billboards in airports saying, "If it wasn't for stupid people, we wouldn't have any customers." And they even used slogans like, "The only thing yellow about Yellow Tail is the color of our piss."  These things wouldn't actually make anybody want to buy Yellow Tail wine… Right?

What they found was that people loved it. And when people love something, they tell other people about it. The end result? A $500 million brand in Australia with no marketing spend. Why? Because they focused on the right things.

**Von Restorff Effect: Bonkers Marketing Campaigns Spawn Successful Brands**

<Colophon />

Ok... so _now..._ this is an important place to take a pause.

<Aside type="warning">

Up to this point, every word you read was written by AI. It's also **completely untrue**.

</Aside>

<Colophon />

I've been playing around with the idea of using AI to generate blog posts for my site, mostly out of curiosity. I wanted to see if AI could produce quality writing content, with the hope of comparing analytics for a few AI-generated articles to some that were written entirely on my own.

There are tools available online which let you feed a couple bullet points into a generator and select the type of writing you're looking for (article, email copy, bulleted lists, etc). You pick a few options and hit go, and in moments you've got some fresh new prose to use for whatever you please.

## Validating the "Crazy Rooster" campaign

After reading the generated article stub above, I wanted to find some images of the marketing campaign mentioned in the text, so off to the search engines I went. This, for me, was a truly jaw-dropping moment: There wasn't a single image I could find which mentions or references the "Crazy Rooster" campaign.

I dug deeper. I soon found that not only were there no images from the campaign, but I couldn't find any references to that ad campaign anywhere. Yellow Tail's site, marketing blogs, search engines, all returned _nothing._ I even searched for smaller fragments of text from the article above, and came back with nothing meaningful.

<Image
  publicId="posts/product-marketing-defy-expectations/crazy-rooster"
  alt="Search results for 'yellow tail crazy rooster' on DuckDuckGo showing nothing relevant"
  caption="A web search for the Crazy Rooster campaign"
/>

As far as I can tell, it never happened. It doesn't exist.

**In other words, AI had written a really compelling article which was _completely and utterly fabricated!_**

What I suspect really happened is this: the information I fed to the algorithm that this particular AI used weaved together partial anecdotes from a large number of publicly available external sources, creating a believable, compelling, yet non-existent story about a real brand's marketing strategy.

That is _fucking_ impressive... and kind of terrifying!

Friends, I'm here to tell you: the AI tools that are available right now can author content which is _shockingly_ good -- but **there is a massively important caveat** that we all need to understand about AI-powered writing:

<Aside type="info">

**Remember:** AI is just _guessing_ at the "Intelligence" part of its job (at least for now).

</Aside>

Can you imagine if I had accepted this as truth, and published it without surrounding context? The only reason I discovered this wasn't true was because I took the time to look up corroborating information - but it would be _super_ easy to skip that step, especially if you don't understand some of the fundamentals of AI.

## What is the Von Restorff Effect?

In principle, the Von Restorff Effect is simple: **given a group of similar choices, people tend to remember experiences or products which defy expectations** - the thing which stands out the most tends to be stickiest, and the more _memorable_ the unexpected experience is, the stickier something will be.

For an extremely simple example, let's say I gave you 10 seconds to memorize as many animals from this list as possible:

<div className="grid grid-cols-3 gap-2 sm:grid-cols-4 md:grid-cols-6">
  <Button className="inline-block">Wolf</Button>
  <Button className="inline-block">Beaver</Button>
  <Button className="inline-block">Camel</Button>
  <Button className="inline-block">Snail</Button>
  <Button className="inline-block">Llama</Button>
  <Button className="inline-block">Pig</Button>
  <Button className="inline-block">Mink</Button>
  <Button className="inline-block">Squirrel</Button>
  <Button className="inline-block bg-orange-500">
    <span>Owl</span>
  </Button>
  <Button className="inline-block">Giraffe</Button>
  <Button className="inline-block">Penguin</Button>
  <Button className="inline-block">Eagle</Button>
  <Button className="inline-block">Moth</Button>
  <Button className="inline-block">Sheep</Button>
  <Button className="inline-block">Camel</Button>
  <Button className="inline-block">Panda</Button>
  <Button className="inline-block">Koala</Button>
  <Button className="inline-block">Chameleon</Button>
</div>

I'd put money any arbitrary person remembering _Owl_ over some of the others mentioned in there.

This phenomenon can also be used to make _products_ more sticky by building _experiences_ which defy expectations - in any marketplace with significant competiton, creating a stand-out experience can give your product a massive advantage.

## How this post came to be

For articles on this site, I keep a list of topics that I think I want to write about in a big list. I slowly add to individual topics over time, and once I feel like there's enough information on a given topic to produce a meaningful article, I spend some time organizing thoughts from the note into prose, and then publish.

To generate this article, I grabbed one of the ideas from that list, which was this _Von Restorff effect,_ which is a [very real psychological phenomenon](https://en.wikipedia.org/wiki/Von_Restorff_effect) that caught my attention some time back.

I fed the topic and a few cliff notes into an AI tool to see what it could generate - really it was just, a few bullet points and the thesis statement for the article. I wanted to talk about how the Von Restorff Effect can be used in product marketing, to create something sticky; something that will be memorable.

And so I fed the tool and I clicked `go`. The article above is what came out of it. What I was really really impressed with initially was the _quality_ of the writing. No grammatical changes were needed, there was a beginning, a middle, and an end, and it put together a super compelling story that served the points I was hoping to make.

In short, I was really impressed... and then absolutely stunned when I realized what happened.

## Learning from this experience

So I came away with this experience with two important learnings:

<Aside type="note">

1. Ironically, **this experience was an amazing example of the Von Restorff Effect** for me. I froze in bewilderment the moment I realized what was going on, thoughts racing through my mind like I had reached the end of _Fight Club_ for the first time. It's a moment I won't soon forget.
2. This is a really important lesson in working with AI, and how powerful it is. If you're not aware of the capabilities _and limits_ of the tools you're using, you are entering dangerous territory.

</Aside>

## The Von Restorff Effect and product marketing

The nugget here for people building products is simple: **if you can create an experience that completely defies expectations, your product will be far stickier with your potential customers.**

## A caveat on AI tools

It's worth noting that I have intentionally omitted the names of the AI tool that led me to this experience. For me, this is because I'm struggling with whether or not it's responsible to point my readers to tools which can easily lead you into a false sense of certainty. _With great power,_ as they say...

Given that most of my audience are developers, I think it should suffice to say that I used a product based on [Open AI's GPT-3](https://openai.com/) - an extremely robust AI tool for generating language.

This is a story that I've struggled to tell because of how important I feel like this is.

I can tell you this much: I certainly won't be writing blog posts with AI any time soon, but I will be periodically checking in on this stuff to see how much better it's getting. I think there's an ethical responsibility to understand the limits and capabilities of AI content creation tools.

## AI and Code Generation with GitHub Copilot

If you're a software developer, you may have come across [GitHub Copilot](https://copilot.github.com/) - billed as "Your AI Pair Programmer", it's a freely available tool which will **generate code for you** with little prompting. You can do as little as writing a few comments, and copilot will generate everything from classes to algorithms to complex patterns login flows and cryptography.

<Image
  publicId="posts/product-marketing-defy-expectations/github-copilot"
  alt="Screenshot from a demo on GitHub Copilot's home page"
  caption="Copilot will write code with you.. for you... and alongside you."
/>

You _should_ really spend some time using Copilot if you haven't already. It's pretty amazing to write a few lines of pseudocode in comments and see what it can generate for you. It feels like magic.

### AI-generated code is still risky

But, just like when using AI to generate writing, be warned: GitHub Copilot isn't perfect - it's pulling from a massive amount of public code, and making guesses based on what you tell it to do. It won't necessarily write the world's most performant code, and in some cases it will generate code with serious flaws. Since its early release as a technical preview, there have been all kinds of problems reported with copilot, including one report which gained attention since it appeared that Copilot was generating code that included (other people's) valid API keys:

<Tweet align="center" tweetLink="pkell7/status/1411058236321681414" />

## A cautionary conclusion

As we introduce AI into more parts of our work and our lives, we need to be aware of the _risks_ of using it. As technologists, there's an ethical responsibility to communicate these risks to our non-techncial neighbors in ways that they can understand. It's my hope that this anecdote about trying to generate a blogpost with AI is something that can serve as a warning which you can explain to your aunt Judy, your boss, or the influencers in your feed who may not seem to understand the risks of using AI.

I'd love it if you shared this post with a friend - and if you've got thoughts on other experiments you'd like to see, let me know! Find me at [@irreverentmike](https://twitter.com/irreverentmike) on twitter, or [@mbifulco](https://github.com/mbifulco) on GitHub.

## More reading

- 📖 If you're interested in learning about AI fundamentals, I recommend reading <a href="https://www.amazon.com/gp/product/0465094279/ref=as_li_tl?ie=UTF8&camp=1789&creative=9325&creativeASIN=0465094279&linkCode=as2&tag=irreverentm02-20&linkId=3b9fba7a06bd067249ef768ce946c146" target="_blank" rel="noopener noreferrer">The Master Algorithm, by Pedro Domingos</a> (Amazon affiliate link). It's a great primer on various types of AI.
- 🎨 If you're into design and usability, check out my thoughts on why [you should never center paragraph text](https://mikebifulco.com/posts/dont-center-paragraph-text)


Hey, influencers: be careful with ChatGPT

The Von Restorff Effect and product marketing

AI and Code Generation with GitHub Copilot

#marketing: 4 posts tagged

Shrimps is Bugs: Red Lobster ate itself to death

You are far more influential than you think