1:40 — Anthony’s journey at HP
4:13 — The birth of Instant Ink
6:42 — Additional challenges of being a physical product subscription
10:57 — The metrics used to diagnose problems or anticipate opportunities within the business
13:05 — Addressing and solving Instant Ink’s key consumer issues
18:43 — How Instant Ink caters to its superusers
21:54 — The importance of a company continuing to evolve with the needs of the customers
23:21 — Onboarding to ensure a customer gets the value they are paying for
28:26 — Anthony’s contribution to HP as a whole
30:26 — Advice for fellow intrapreneurs who are leading subscription in businesses that don’t typically do subscriptions
34:37 — Anthony’s lessons learned and business approach during the COVID-19 pandemic
38:20 — Robbie’s Speed Round
Narrator [00:00:04] We all want a business like Netflix or Amazon Prime. Businesses where once a customer engages with them, it becomes automatic and part of their lifestyle from then on. But how do you build that Forever Transaction? Robbie Kellman Baxter has been studying subscription and membership models for nearly 20 years. And in this podcast, she uncovers the secrets and strategies of the Membership Economy. Join us for Subscription Stories: True Tales from the Trenches.
Robbie Baxter [00:00:33] Welcome to the show. It’s your host, Robbie Kellman Baxter, sharing subscription stories with you, and today’s guest is Anthony Napolitano. Anthony has been leading Hewlett-Packard’s Global Instant Ink subscription service. He has full P&L ownership for a business that’s growing 20 percent year over year. He took on this challenge after working in several roles across Hewlett-Packard, including supply chain operations and as general manager of their retail photo business. We’re going to talk about how to run a physical Membership Economy business. We’ll also talk about being a subscription business inside a transactional company. Since we’re recording in June of 2020, we’re also going to talk about how to manage a business in times of great change.
Robbie Baxter [00:01:28] Welcome to the show, Anthony.
Anthony Napolitano [00:01:29] Oh, it’s great to be here. Thank you for having me, Robbie.
Robbie Baxter [00:01:32] How did you come to run Instant Ink? Looking back, would you say it was inevitable? Or are you surprised at where you’ve ended up?
Anthony Napolitano [00:01:40] Well, I’m thrilled to where I ended up. I can’t say it was fully planned and chartered for sure. I think each of us have sometimes at our career we make a specific choice and sometimes luck just kind of falls upon you and you look back at are grateful that it happened. I think most of my career I’ve spent in what we call startup businesses inside of HP. So these are new businesses that we’re trying to grow and create. And it just so happened to be that before I joined Instant Ink, I was in another startup business inside of HP, which is quite a unique experience, is that I was there from day one until we actually shut down the business. So I was in that business for 12 years. And while it didn’t succeed in kind of a commercial sense, I learned a lot from that business. But because I had that experience, Instant Ink at the time was really only a few hundred thousand customers. And so I had this reputation of being able to grow new businesses inside of HP and I was given the opportunity to come into Instant Ink. Now we have over seven million customers worldwide.
Robbie Baxter [00:02:48] How many customers was that?
Anthony Napolitano [00:02:49] Seven million.
Robbie Baxter [00:02:50] Three hundred thousand to seven million.
Anthony Napolitano [00:02:52] That’s right. In the last five plus years.
Robbie Baxter [00:02:55] Wow. Now, it’s interesting to me that you’re you’re really an entrepreneur, and yet you’ve spent most of your career inside a big established company. What has that been like for you?
Anthony Napolitano [00:03:09] It’s been really fantastic. I mean, I joined HP right out of business school, didn’t have much experience coming into HP. And so I thought, let me get a big name, you know, under my belt and then perhaps, you know, move on to other other companies. But here it is 23 years later, and I am still at HP and still really enjoying it because there are so many benefits you get in a large company. Right, in terms of trying new opportunities, we’re international. I’ve been in so many different businesses inside of HP, but around fifteen, sixteen years ago, I really fell in love with this idea of being able to create a legacy. Right, where HP has such a great legacy already. But perhaps I can take one of these businesses and have it become part of the future of the company. And I found that really motivating. And Instant Ink, right, has really turned out to be something that I really believe the company is fully behind. And I believe five or 10 years from now, I’ll be able to say, hey, I was a part of making that happen. And that’s really motivating for me.
Robbie Baxter [00:04:13] Yeah. Let’s talk about Instant Ink. Instant Ink is Hewlett-Packard’s Subscription Ink service for their printers. So you buy an HP printer and then you subscribe to the ink cartridges. Can you explain the logic behind building out that model and kind of how it fits with HP, bigger, bigger promise to their customers?
Anthony Napolitano [00:04:38] Absolutely. Yeah, absolutely. I think it’s a really interesting story and discussion. You know, frankly, I think it really started with trying to solve pain points that our customers have with printing, and they’re really clear with us on what those issues are. One is that the cost of ink is too high. And the other, which is equally as painful, that while people don’t print nearly as much as they used to, when they do print, they need the output. Right. I need a report. I need my child’s homework to be due. And lo and behold, I’m out of ink right at that time. Right.
Robbie Baxter [00:05:13] Yeah. We’ve had that experience at our house.
Anthony Napolitano [00:05:15] Once or twice. Right. Once or twice. So that was really what we saw as the problem that we went to go set out to solve it. We also started looking externally and saw more and more industries moving towards as a service. Yeah, right. Whatever it is as a service, we saw subscription really transforming industries. And so we felt, well, we’re the leader in consumer print. It’s much better for us to be the ones, let’s say, writing the rules of how this should be played in the print business. And we set out to do that. And so we’re able to solve customer problems as well as continue our leadership in this space. We’re the ones doing the disruption versus reacting to it by an outside player.
Robbie Baxter [00:06:01] It’s it’s really interesting. I talk a lot about this concept of a forever promise and how in so many cases the customer doesn’t want the you know, I don’t want a printer. I want to be able to print. Your subscription is not about the services. You know, you talked about as a service, which is, you know, very in vogue, you know, software as a service, product as a service. It’s actually the delivery of the ink, it’s a subscription to a physical product. How does that you know, that’s an operational challenge. And that’s kind of one step beyond most of the subscriptions that people think of. The Spotifys, the streaming content that many of us subscribe to. What kind of additional challenges do you have that, let’s say a Spotify or a Salesforce doesn’t need to deal with?
Anthony Napolitano [00:06:53] Yep, that’s a great question. And even one step further. It’s a physical product that’s not just Time-Based. It’s not based on every 30 days you’re gonna get something or you set the delivery. It’s truly based on your consumption. right. So it sounds very simple, right? It’s even more complex and more of an investment. And frankly, why I think it’s been so successful is that you’re buying the outcome. You’re not buying the consumable to create the outcome. The outcome is your report. It’s your photo. Right. It’s your presentation, etc. So you’re buying the pages. But we have to do a lot to ensure that you get that ink before you run out. That is our promise. And so there’s a whole bunch of security that goes into and knowledge that goes into the printers themselves, to the cartridges themselves, to the connection to the cloud. Then there’s the algorithm that then determines, right, based on your frequency and usage you know, when we need to ship you something. We ship it to you in a box that’s just for you, Robbie. It’s not a box that, you know, anyone could use. That is for you based on your personalized and individual consumption.
Robbie Baxter [00:08:04] But what you’re talking about is kind of a whole order of magnitude more complex, because what’s actually going in the box is unique and the cadence of delivery is also unique. So it creates a lot of challenges on the operations side. And I saw that you have a background in operations, which I thought was really interesting. I don’t see a lot of subscription entrepreneurs with that kind of a background, but it might be like a, you know, super secret super power.
Anthony Napolitano [00:08:31] I don’t know if I ever thought about it like that, but I like to think about it like that for sure. I think it goes back a little bit to what I was mentioning before about, you know, HP. I do have a varied background from finance. I even started in finance and I do have many years in operations. And then the last eight years have been in general management. And I think you need to have a little bit of everything. Right, to truly be effective as a leader of an organization from an end to end perspective. But you said it absolutely right. It is a complexity. Right, for sure. That’s been that has been added. But it’s also been part of our value prop and it’s also been a barrier to entry. Yeah. Because as of today, we’re the only ones in the in the printing space that have a consumer subscription because it is it does take innovation. It does take investment to make it.
Robbie Baxter [00:09:19] It’s funny. A lot of subscription box entrepreneurs and intrapreneurs. So entrepreneur, of course, being somebody working on their own independently to launch something new. Intrapreneur with an “I”, being somebody serving in an entrepreneurial function, but within a larger company the way Anthony does. And I think both groups often underestimate the importance of operations of supply chain of process of how you do the distribution and how important those are to providing the value for the consumer. There’s a lot of emphasis often on, I think, too much emphasis on marketing and on what’s inside the box. You know, the curation as opposed to the full range of sources of value that you can provide to the customer.
Anthony Napolitano [00:10:12] Right. I mean, you can have all the marketing bells and whistles, et cetera. But if you can’t execute on what your promise is, then you either are not going to acquire customers or for sure you’re not going to retain them. And we both know. Right. Both of those things are part of your value proposition. Right. It’s difficult to get people to join. And sometimes it’s even more difficult to get them to stay. Right. And so I really view that operational muscle. So as you talk about a physical product as key to that. And again, that’s one of the main benefits of being an intrapreneur. I love the way that, you know, you said that is I do get access to all of the scale and all of the muscle that HP has to offer. And we do.
Robbie Baxter [00:10:51] I want to ask you about the scale and muscle of of HP. And I also want to ask you about the metrics you use. So I’m going to ask about metrics first and then I want to make sure we talk about your relationship within the larger organization. So in terms of the metrics that you use on your dashboard to know if the if the business is healthy, what are the most important attributes that you’re looking at to kind of diagnose where the problems are or anticipate opportunities for the future?
Anthony Napolitano [00:11:23] That’s such a great question, because I think especially an intrapreneur or even entrepreneur, the metrics change over time. What you’re measuring at you know your early life, right as you’re trying to figure out, do I even have a customer value prop? Is very different from when, you know, you’re now operating at scale. Now, you always have to keep an eye on the value prop and ensure that you’re, you know, you’re curating it. But I think it’s really important that leaders of these organizations are flexible and have the right metrics right in place. And so for us, some of the key metrics that we use is it is a term that we call adoption, which is basically the number of customers that sign up divided by printers sold, for example. So that’s a key metric that we use because it basically tells us out of 100 people that are buying a printer, how many are we inviting in and successfully inviting in to come into the service from an operational perspective? That’s the one I key in on the most. I want to see improvement quarter over quarter and for sure, a year on year. Right. And that’s the one where I say, OK, printer sales could be up or down, but the percentage of people that sign up is my key metric because it’s really talking about are we really speaking to the customer in the right way? That’s really kind of top of mind for me. And then, of course, we look at gross enrollees. Cumulative enrollees are key, key metrics. And then on that, I’d say on the back end. Right. Looking at churn and reasons for churn are really the key metrics that we look at. Beyond the P&L financial metrics, of course.
Robbie Baxter [00:13:05] So if I if I were coming in as a consultant or I were trying to guess what goes on in your business, I would be thinking about if there were problems. Right. I would say, okay, well, if you’re not if you’re not enrolling people, it’s probably either they don’t understand, they don’t know that it exists. They don’t understand what the value is or they don’t believe it’s as good as you say.
Anthony Napolitano [00:13:27] You got it right. It’s one of those three things.
Robbie Baxter [00:13:30] And then. So those would be kind of three things where you could, you know, kind of adjusted where you’d be tracking and you’d be doing different things depending on those three. And then if you want to track engagement and retention, I would be trying to understand why people are leaving. And are they leaving because they think, you know, it didn’t work as it was promised. In other words, it’s an operational problem. You said I was never going to run out of ink, but I’ve run out of ink twice. What’s up with that? You’re not delivering on your promise or you delivered on your promise. But I don’t need it anymore because I’m no longer printing. I’m back at work now and I don’t need my home printer the way I used to or I found a different solution for my printing needs. Or I think that I can get my printing done more cheaply or more efficiently in some other way.
Anthony Napolitano [00:14:18] Yeah. And one of the things we hear from customers and this is a place where, you know, having a relationship directly with customers, you get all the data right. And so we ask people why they leave. And so there’s no mystery. Right. As to why people leave. Shouldn’t be a mystery to anybody. Certainly isn’t to us. And typically what people say is sometimes they say, I don’t see the value. Right. And in our case, what they’re saying is it’s either I’m not printing as much as I used to right, but yet I’m paying. Or the other one, which is a little more challenging to solve for is I’m not getting shipments of ink all the time. Right. because we don’t ship every month. Right. We ship, you know, when you need it. And so how do we educate customers that they are getting value when they’re not physically getting something?
Robbie Baxter [00:15:10] This is a problem that a lot of physical businesses have where they say, you know, we’re charging you every month, but we’re only delivering maybe every quarter. Exactly. So do we charge quarterly? But then it’s a bigger number. You know, do we charge only when we deliver. But then that not only is that a bigger number, but it also might make your customer think of it as a transaction. I pay you. You make a shipment. I pay you. And what you’re saying is, look, if we need to make three shipments in a quarter, we’ll do that. If we need to make one shipment in six months. We’ll do that. But our promise to you is that you’re not going to run out of ink.
Anthony Napolitano [00:15:48] Exactly right. So it’s now what are the touch points that you have in that interim to educate the customer that you’re still seeing value, even though I’m not getting that physical product? You said it exactly right, Robbie. We don’t want to charge you every time we ship you something, because now all we’re doing is automating a transactional process. And that’s not the value, we don’t want you thinking about ink anymore. We want you to think about printing pages. And frankly, we want you to print color beautiful pages because we’re charging the pages as a page right. So you want to print eight by eleven, beautiful full bleed photos. Go for it. And part of the reason we want that is because an inkjet printer, which is what we predominately are selling, the beauty of it is the full photo color. That’s the emotional connection that you have with the printer, is when you see a loved one or a family or a place that you want to go visit again. That’s why we made a page, a page. It doesn’t matter.
Robbie Baxter [00:16:43] And I bet your photo expertise is coming into play here. I talk about this idea of a best member. You’re sort of describing a best member as somebody who fully uses the potential of your printer. So somebody who’s just printing a lot of words and then, you know, like a writer might not be getting as much value as somebody who is maybe an artist or maybe really interested in their family photos and constantly printing, you know, beautiful images. So knowing who your best member is is really helpful, both on acquisition and on engagement and retention, because it gives you some guidance on which features to add as your customers are asking for all kinds of features. You can kind of focus in on these are the features that are going to be most valuable to the kind of people that we’re really optimized to serve best.
Anthony Napolitano [00:17:31] Absolutely right. I mean, then the two things you need to be able to do, what you just described is a laser focus on your customer and what they are telling you and the data. Right. To be able to extract that and do something with it. If you have the mentality that, and everyone says customer first. No. You have to believe that you are solving a problem. And, you and I have talked about this many times right. Any business, let alone subscription, where you can cancel anytime and literally your customers are electing to stay with you on a you know, on a billing cycle. The urgency is through the roof. Right. And so you have to have that mentality of continuing to solve problems. And the data is going to guide you and allow you to be able to do that in a real fundamental way.
Robbie Baxter [00:18:22] It’s funny, I was just thinking about, you know, one of the challenges a lot of companies have when they’re launching a subscription business where they have actual variable costs. Is the worry about how are people going to use this. If this is a buffet? Are they all going to head towards the caviar? And what’s so interesting to me is that your model is based on attracting caviar lovers.
Anthony Napolitano [00:18:43] That’s right. That’s exactly right. The way we design the program and the way the pricing is set is that the more you print, the more you save. Right. I mean, the higher page plans pay less than the lower. So we want to encourage relevancy. We call that print relevancy. That’s the term we use internally to describe customers using their printer. And so that is absolutely a basis of how the program was set up. Black and white in color is the same. The more you print, the more you save. That’s that’s all fundamental in the program. The other interesting and you know, this Robbie, from your experience, is that the world isn’t perfect. People want to know they’re getting a good deal. People want the promise of what the service provides. But by and large, if they feel like they’re getting those things, they’re going to set it and forget it. That’s not a negative thing. That’s a wow, you really fulfill the promise that someone isn’t checking on the billing period, that I really get you know what I paid for. What they tell us is you removed the chore from my life. They’re saying I don’t have to think about ink anymore. We call it convenience. That’s kind of the word that everyone uses. It’s like, how much would you pay for someone to do your laundry? I don’t personally like doing laundry. Maybe you do. I don’t know. But, you know, if you could have three or five bucks a month for someone to take that chore right off of your list.
Robbie Baxter [00:20:02] It’s such a good example, you know. Last year I, I spoke at the AOCS conference, the (American) Oil Chemists Society Conference, and, you know, I hadn’t realized this, but those are the people that make soap and detergents. And that was one of the things we were talking about, was that people who wash clothes don’t want to wash clothes. They want to have clean, beautiful things to wear in their closet. And the way that I do that is by going downstairs to our laundry room and throwing stuff in the washing machine or bringing it to the dry cleaners or whatever I have to do. That’s how I do it now, because I want clean clothes in my closet. But if there were a better, easier way, if there were little fairies that came into my closet and whisked away the stains. That’s what I would like. And so for organizations listening and thinking about this, it’s really valuable to take a step back and say what goal is my customer trying to achieve while they’re using my product? And where do I fall short in helping them achieve it?
Anthony Napolitano [00:21:06] Absolutely right. And the process I am making them go through to achieve that outcome. Right. In terms of yeah I have to now go think about, you know, detergent and going somewhere and getting it. And in my case, it’s ink or, you know. And now I have to go out and think about it. People accept that that’s the way they have to do it. And they cope with that’s the way they have to do it. But organizations shouldn’t accept that that’s the best way to do it. And I think that’s extremely challenging for companies who are built by the success of that traditional business to really have the foresight to realize we have to change for our long term survival. And that’s why I give HP a lot of credit. Right. We’ve built a franchise on people buying ink transactionally. I mean, we’re the best at it. We’ve had it for 30 years. We’re number one in the market and have been forever. But we had the foresight five, six years ago that says, okay, we have to give the customers choice because they’re telling us they want a different way. And so we have been the ones really leading that trend transformation, as we talked about earlier. That’s not always the case.
Robbie Baxter [00:22:17] Do your customers, when when they you know, so I buy my printer. I sign up for Instant Ink. Do I have to be onboarded?
Anthony Napolitano [00:22:25] Yeah, that’s a good question. It’s a really good question. So you we don’t have a lot of, the time that we get people to sign up for the services is typically when they’re setting up their printer. Yeah. That that’s typically, just like if you had a Nest device, you know, at that time they’ll say, create an account, and here’s things that you could buy and subscribe to. So that similar IOT kind of experience is when you’re, you know, setting up the printer. There’s a delicate balance, Robbie, that you know yes, you want to educate the customer, but you don’t want to inundate them. Right. Because they’re trying to set up the printer or set up the IOT device. And so, yeah, offer them something of value. But you really have to be crisp in what you’re offering. And then if you want to find out more, there’s ways to find out more. So we really try to get really clear with customers and the value they’re getting, which is savings and never run out of ink. We know that’s the value prop that resonates. And it has been, you know, for years. There are places to learn more. Right. And then we do the onboarding, as you said. Once you’re enrolled, then we’ll send you, you know, communications. It says, here’s basically all the value that you just bought. You didn’t even realize it.
Robbie Baxter [00:23:31] What I found is that the first thing you described, getting people to sign up is very traditional marketing, kind of 101. But the onboarding, that is somebody is already paying for your service. But the onus is on the organization to make sure they get value. If I drive, if I buy a new car and I roll it off the showroom floor and I never take it out of first gear and I never see what it can do. That’s my problem. I already wrote a big check. Right. But if I sign up for Instant Ink and I only use it for a few pages of black and white print every month. Right. I’m going to cancel. So it’s not enough for you to just get me to sign up. That moment of transaction is only a starting point. You have to think about how to onboard me so that I do the behaviors that are going to get me the most value, because if I’m not getting the value I’m paying for, I’m going to cancel.
Anthony Napolitano [00:24:22] It’s extremely shortsighted, right, to view, you know, people in, let’s say, the wrong plan or not using your service, to think that’s a great customer. Right. Because I’m not spending any money or, you know, that is
Robbie Baxter [00:24:34] The person who doesn’t go to the gym.
Anthony Napolitano [00:24:36] Right. Exactly. Like, great. They don’t go to the gym. OK. Guess what happens right after. You know, March 1st when I have gone to the gym for two weeks, what happens? I probably cancel. Right. So I mean, you’re absolutely right. You will have the best success when 1) you’ve created something that actually has value and 2) customers take advantage of that value. Right. And that’s what we’re saying here. You have to educate them how to take as much of that value now. Now, we’ll say there’s lines that you don’t want to automatically do things for customers. They’ve told us they don’t want us to do that for them. Right. They want to be in control. But you’re saying educate them, right. In terms of what’s available. That the right formula.
Robbie Baxter [00:25:13] Yeah. And then in terms I mean, this is onboarding and this is kind of the principle behind customer success. Educate them about the value that they’re entitled to. It’s not about upselling. It’s about ensuring that they’re doing the things that are that they’re already paying full of it. Absolutely. Which is very counterintuitive, I think, for most organizations to encourage people to use what they’ve already paid for. I want to go back to this question of being in an intapreneur inside a big company that is not only is HP transactional, but they’re used to making pretty big transactions, relatively rarely. Right. I mean, you know, you’re buying I guess you’d call it a durable good. What’s it been like being the subscription guy in a transactional business?
Anthony Napolitano [00:26:04] Yeah, I’d say, well I’m going to change it a little bit. Like what does it take for us to be successful and as successful as we have been? And, you know, I think some of the key success factors to enable it to happen. And I think it really had to start at the top. You need champions, you need folks who are setting, put a stake in the ground and say this is the direction that we need to head. Even though I don’t have all the evidence that it is necessarily, that conviction.
Robbie Baxter [00:26:36] You definitely need a leadership champion.
Anthony Napolitano [00:26:37] Absolutely need it. Need that, you know, champion now. Now for us, what we had to prove to that champion was that we had the value prop. That was the sole focus. The idea was, you know, can I get if I can speak to you one on one. Right. Can I get a high percentage of you to sign up for the service? That was when we did pilots early on. All we were testing was, can we create a service that if you had perfect awareness, which we know is not true in the world, that we could get people to sign up for the service. Once we had that, then it was like, OK, well, let’s figure out now how the business model can work for HP. And that’s really counter, I think, to a lot of times and a lot of ways that I’ve seen programs start is they’re trying to solve a company problem and then they go back into how do I now sell it to the customer? And I think that that’s not the way Instant Ink was created. It was created truly from how do we solve a customer problem? And then now let’s make it work for us. And that’s really what we did. So you ask like how what is it like? I think it’s it’s been really eye-opening for the company because we have this direct to consumer relationship where we are having 12 transactions a year versus as you said, you know, maybe one transaction every three years. And all of the rich data and insights we can bring to the table have really just been part of our success and really the way we’ve been able to continue to garner support. Right. For the program is really with that data and that insight. Then all of our discussions start with customer first.
Robbie Baxter [00:28:26] Are you evaluated just on the basis of the success of your Instant Ink business or is in your metrics or your performance reviews, are you also expected to be contributing to HP as a whole? Or to what extent are you expected to be contributing those insights, your subscription expertize and some other things that I didn’t think about to the organization as a whole strategically?
Anthony Napolitano [00:28:55] Yeah, we. So, you know, how I’m evaluated is, again, predominantly on how my business is doing. But part of the way that we were able to build, let’s say, a coalition for change, I don’t know if that’s the right term. But there’s this groundswell of, you know, momentum was by showing all of the benefits that we’re providing to the corporation that has nothing to do with Instant Ink P&L. Right. And so we have very specific data points in how we’re helping the hardware business, how we are bringing new entrants into print, and how you know customers are printing more photos, you know, when they’re on Instant Ink. All of those things that are that are vital, you know, how we’re bringing the next generation customer into HP because they want access, not ownership. And the business model is critical to bringing those customers. And all of those additional benefits are things that I have and we have brought to the forefront to continue to generate, you know, and that momentum to continue to invest and grow.
Robbie Baxter [00:29:59] So I’d like to ask you for some advice for people like you. And I’m actually thinking I have a particular client right now, that company that I’m working with that is in a very similar position there. They’re a large company. Global leader in their space. They have a product that they sell on a pretty regular cadence already. But they’re thinking about subscription. And of course, my client is the one that’s been tasked to figure it out and make the case. What advice do you have for your fellow intrapreneurs who are sort of subscription leaders in an organization that doesn’t really do subscription?
Anthony Napolitano [00:30:38] Yeah. Yeah, it’s. I’m sure there’s there’s a lot of them. Right.
Robbie Baxter [00:30:43] Especially now. They’re increasing
Anthony Napolitano [00:30:45] And everyone is seeing now all the value of subscription and that’s fine. You know, I would say there’s some fundamental elements that need to be in place for success. One of the things that is difficult in a big business to kind of wrap their heads around is, how the team is even structured. So I’m going to assume that some C-level person has asked this person, hey, I want you to go figure this thing out. Right. I’m going to start with that’s the premise. What I’ve seen fail is when you ask people who are responsible for the bulk of the company’s revenue to take this on as a pet project. Right. And all the people that are working on it are doing it as a 10, 20 percent part of their job. That’s a recipe for disaster, to be totally frank. You’d need a dedicated team. It does not to be an army, right. It needs to be a dedicated team that has enough of the end to end elements and the empowerment to operate outside of the machine.
Robbie Baxter [00:31:49] Outside of the machine. Off and in the corner.
Anthony Napolitano [00:31:53] Exactly right. Exactly right. And, you know, sometimes that’s viewed as really scary, like, oh, you guys are shadow I.T. or shadow this or, you know, you’re creating your own. Well, yes, we are, because we are trying to completely change everything about the way we do business. And you really need a team that 24 by seven, this is all they do. So to me, it starts with with that basic of a foundation. And again, it doesn’t have to be 100. It needs to be absolutely a dedicated team.
Robbie Baxter [00:32:27] So a dedicated team and off in the corner. Outside of the, you know, kind of core shared services.
Anthony Napolitano [00:32:34] And they need sponsorship, though, of those folks that are going to need to participate. Right. As part of it, because if it’s just me in the corner and I have, I am going to have to knock on a few doors. I’m not going to go build my own supply chain, for example. I need to use and leverage, you know, what we have to offer. So there needs to be enough. Yeah, we’re incubating. But I also can call on you when I need you. And that’s where C-level support is really critical. So I’d say those are like structural things wrong. But then beyond that, really, don’t worry about the financial model at all. Right. You need to start with what is the problem that you are trying to solve the customer problem. Right. You are trying to solve and spend your all of your time figuring out how are we going to solve that problem? It’s not just, oh, take what I’m doing and I’ll get you to buy it, you know, more regularly. No, you’ve got to attack it a totally different way. Right. What is that? What are they telling you they don’t like about the way that they’re doing it today and really go about solving that? Once you know what that hypothesis is, then it’s about piloting, iterating, failing, failing often, failing fast, failing without having to make, you know, tens of millions dollars investment. So create your sandlot where you can have those experiments to really guide where you need to go. That could take you a year. It could take you two years. But by the time you now know what your customer value prop is now, you’re ready to talk about, OK, well, how will we how do we price it? How we’re going to make money? How do I scale it?
Robbie Baxter [00:34:16] Now that they want it. Now you can price it because they’re going to say, yes, I’d like that. How much is that? You actually. You’ve earned the right to that conversation.
Anthony Napolitano [00:34:24] Exactly right. Exactly right.
Robbie Baxter [00:34:26] I have a second question for you. We are recording during shelter in place. Things are opening up a little bit. But this has been quite an unprecedented time these last few months. What advice do you have for business owners, especially in entrepreneurial businesses, to be resilient during times like this? What have you learned? Last few months.
Anthony Napolitano [00:34:53] So I know I talk a lot about, you know, customer value prop, you know, etc. But if you didn’t know what your customer value prop was before, you sure do now. Right. Because either it’s been reinforced that while you actually were solving a problem or it’s totally changed because the environment has changed and now you need it now solve another problem or you were solving one and you’re no longer you’re really providing the value that customers need. I think, you know, that ability to have that inner interaction with your customers, have the data and the ways to get that information are true, so true now even more than ever, given how much changed in such a short period of time. The other thing I would say is we are treating this cohort as a very as its own cohort. Right. So we’re looking at them. And if they’re behaving differently, whether they’re printing more or printing less, are they are they staying with us, you know, longer? What are they telling us and really not treating them like everybody else. Now, I can’t tell you what the answer is yet Robbie.
Robbie Baxter [00:35:56] But that’s so important. I didn’t mean to interrupt, but I’m just like that’s like an a-ha for me is that, you know, we talk a lot in this ascription world about, you know, understanding different cohorts, whether that’s, you know, all different people that subscribe and, you know, for the first time in January versus June or they come through this channel versus that channel. There’s a lot of cohort analysis in the world of subscription. And this is really important that somebody who comes in for a different reason in a different time is likely to behave differently. And so it’s important to track that, to not assume that they’re going to behave in the same way as other cohorts. And you don’t want to set expectations that, for example, they’re all going to stay right if you’ve had a spike because they’re all working at home for three months and they’re gonna go back to the office. But you also want to learn that so that the next time that there is some kind of unexpected spike, you have a process for setting expectations and for onboarding these unusual new subscribers.
Anthony Napolitano [00:36:57] And perhaps we even find that there is a new segment that we didn’t even know existed before, which is the exciting thing about all of this, right, is yeah they could act differently, but we could be attracting people that maybe didn’t even own a printer before. Right. Or did and like and for years, said I don’t want this Instant Ink thing. And now we’re saying, Oh, I want to. Okay, well, okay. Well, why was it because you couldn’t go out and now are we showing you the value? You know, except I think it’s fascinating from that perspective.
Robbie Baxter [00:37:25] Yeah. What I’m noticing in a lot of subscription businesses is that they’re gaining new trial because people are being forced to establish new routines because they can’t do what they’ve normally done and they’re forced to endure the friction of learning a new way of doing things, whether that’s buying a printer so I can print at home or having, you know, video conferences instead of regular bookclub at somebody’s house. And when we go back to normal, some of these new tools in our tool kit are going to stick with us. We’re gonna keep them. So if you’re a subscription business right now, I think you want to be thinking really hard about how you’re going to make this new habit a permanent habit for your new subscribers.
Anthony Napolitano [00:38:08] I think that’s absolutely right. You’ve seen it on both sides. Things that we go, well, I’ve tried this and now I will continue doing this or I’ve tried this and now I think, wow, the old way was so much better.
Robbie Baxter [00:38:20] So I want to close out with a speed round for you. So I just want you to answer the question with the first thing that pops into your mind. First subscription you ever had?
Anthony Napolitano [00:38:30] CDs.
Robbie Baxter [00:38:31] CD of the month club?
Anthony Napolitano [00:38:33] Yeah. BMG, the one I can never cancel. Yep.
Robbie Baxter [00:38:36] Your favorite subscription that you have today?
Anthony Napolitano [00:38:39] I guess I’d have to say Netflix.
Robbie Baxter [00:38:41] What do you think is your superpower?
Anthony Napolitano [00:38:43] Thinking quickly.
Robbie Baxter [00:38:44] What do your employees love about working with you and hate about working with you?
Anthony Napolitano [00:38:48] I’m open minded, is a thing they like about me. I empower them. I can be pretty direct.
Robbie Baxter [00:38:54] And what is the one thing that you want people to retain from this conversation?
Anthony Napolitano [00:38:59] I think a growth mindset. I think that, you know, there’s always an opportunity to do something better, whether you’re an entrepreneur, intrapreneur or, you know, if you’re focused on the customer really solving, you know, critical pain points they have. I think that a really critical for success.
Robbie Baxter [00:39:17] Anthony Napolitano, thank you so much for being a guest on Subscription Stories.
Anthony Napolitano [00:39:22] My pleasure. This was a lot of fun, Robbie. Thank you.
Robbie Baxter [00:39:28] Thanks for listening, everyone. This has been Subscription Stories. Today, I was talking with Anthony Napolitano, Vice President and General Manager of Hewlett-Packard’s Instant Ink subscription service, to hear more success stories of entrepreneurs creating their Forever Transaction in this new and exciting Membership Economy, subscribe to my podcast wherever you download your podcasts. Also, if you like what you’re hearing, please give me a rating and review. They mean so much. Thanks for listening and for your support. To learn more about Instant Ink, go to InstantInk.HPConnected.com. I’m Robbie Kellman Baxter.
- Anthony’s LinkedIn: https://www.linkedin.com/in/anthonynapolitano/
- Hewlett-Packard’s Instant Ink: https://instantink.hpconnected.com/us/en/l/
- Robbie’s Book THE FOREVER TRANSACTION: https://robbiekellmanbaxter.com/the-forever-transaction/
Anthony Napolitano specializes in profitably scaling subscription businesses. Anthony joined Hewlett-Packard in 1997 as a financial analyst in the Notebook Computer Division. Over the next 23 years he progressed through various levels of management in the areas of Finance, Global Supply Chain, Procurement, Quality and General Management. For the past five years, he has served as the Vice President, General Manager of HP’s Instant Ink Subscription Service. Anthony earned a BA from Loyola Marymount University and an MBA from the University of Southern California Marshall School of Business.
“We’re number one in the market and have been forever. But we had the foresight five, six years ago that says, okay, we have to give the customers choice because they’re telling us they want a different way. And so we have been the ones really leading that trend transformation.”
—ANTHONY NAPOLITANO, HP INSTANT INK
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