On all the advice you’re getting.
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The Seedcamp Week took off Today. Smart entrepreneurs are getting plenty of advice - quite often from people that didn't have the balls to start their own business. Often from real experts in their respective fields - rock star VCs, deadly marketers and colleagues entrepreneurs. Fresh Founders hear that their prices should be super low, and they should market their product via word of mouth and social networks. And go for scale. Next hour they hear that the price should be super high, sales done direct and service provided with high maintenance. The following day it's about funding. So they hear they should raise a lot, as they're in a competitive space, will need the budget to develop multiple countries and have to accelerate product development. Or they should raise very little, preserve equity, prove their model and then raise a big round with much better valuation. Not to mention all the advice on the product. That it should be changed, address completely different market, stay the same, is killing it.
All of it is not confusing - it's completely contradictory.
What does it really tell a founder. Price is important. Pricing and sales model are very connected issues. It's important how much you raise, you have to strategise it. People are passionate about your product, your market, your clients. All of this advice is just pointing your attention to areas of business you perhaps haven't thought about yet. It's asking: Did you really think about X, Y and Z? The more forcefully the advice is given - the more passion for your product and company the mentor shows - not necessarily that she is right.
So listen between the lines of all the advice you're getting. It's not what they hit that's important - it's the direction they're shooting in.
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Better is the enemy of done
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Author Jim Collins once noted that 'good is the enemy of great' having in mind that companies that 'do well' rarely have the incentive to really innovate and push things to the limit. I however more often have in mind the phrase by Voltaire - The better is the enemy of the good. So often I struggle to make a sales document perfect, to take care of the layout, to explain everything in detail. I'm a perfectionist, with all the burdens of that word, and believe me - the final result is rarely perfect. My point is - in B2B no one really cares about the perfection of the sales pitch - people are too result and value driven to care about the bells and whistles. Even in startup/VC pitching you will get better results with a good product and black-and-white slides than with mediocre product all wrapped up in celofane.
I was really impressed by the marketing style of the guys from Automattic/Wordpress. One email, the offer (including the pricing) in bullet points, no formatting (plain text), no images. It was actually easier to digest, forward around and make comments because of all of this. Such style removes all of the reasons for procrastination, speeds up the work (you can keep offers like that in your 'canned responses' in Gmail) and makes tracking everything easier (no files flying around). But most of all - it is faster to get it done. And sending 10 imperfect offers to prospective partners/clients beats the hell out of sending 2 that are polished - just because of natural conversion, only some of your prospects will be willing and able to purchase/sign at that particular moment. That is why you want to access as many of them as you can. That is why better is the enemy of done.
We are not in a ‘let’s do it cheap’ business
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Are you proud of using open-source software to leverage super smart and savvy community of developers, or do you live by 'We don't pay for nothing' rule? It's a fine line, but more and more I see startup teams falling into the second category. Leanstartup's popularity, lack of financing and the growing appraisal of bootstrapping your business drove many teams to the 'we will use it only if it's free' camp. Don't get me wrong - watching your burn rate while you still don't have your business figured out is all fine. But writing your own url shortener while you can easily integrate some 3rd party provider with analytics, API and all the bells and whistles you may ever need is another matter. Itamar Lesuisse of travel startup Kukunu once told me - 'If I can save one day of my time because I don't have to install and manage the (project management) software, I'm more than happy to pay $25 a month for the service'. All the services you will probably need for your startup will not cost you more than $100 or $200 a month, and together they will probably save you a week of your time. Startups are all about speed and time is your most scarce resource - remember about it the next time you're analyzing whether the $15 you're about to pay for the CRM is really worth it.
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Tips on building a (sales) team from Matt Blumberg
Today I had the luck to attend one of the unique meetings Seedcamp organizes for it's winning teams, and (in my case) alumni. Over breakfast Matt Blumberg, the CEO of ReturnPath shared his tips on successful team-building in a startup environment. My takeout was obviously how to build a successful sales/bizdev team. Here are some points I caught from Matt's brilliant talk:
- Hire the best people (for the job) - in the early days of the startup business development is more about evangelising and closing rather than a classic/numbers sales game. You need people that go out in the field and are ready to spend a lot of time and energy with few results to keep the spirit up.
- Hire in advance - by the time you decide that you need to hire help you probably needed it for a couple months already. Avoid that by setting up end executing a hiring strategy/plan.
- Don't convince people to a startup career, find those that are looking for it. Otherwise you risk getting people that are not ready to 'get their hands dirty' and will expect an organisation that will support them (PAs anyone?)
- Hire in pairs - this was very new to me, but so obvious when you think about it - sales people working in a pair get to learn from each other, compare notes and share motivation. Programmers knew it for quite some time.
- Create transparent and fun environment. Think about yourself as a head of a family or a host of a great party - treating your employees as your best guests.
- Be an enabler - share responsibility and decision power; remove roadblocks; beware of becoming a bottle neck
- Bring tech people to the sales cycle to avoid team separation and communication issues - this is probably one of the most important, and still seriously overlooked points in most startups I know.
Big thanks to Matt for his time and knowledge and Seedcamp's Philipp Moehring for organising this.
ReturnPath is the market leader in email deliverability currently employing 200 people and profitable. Investors include Union Square Ventures, Mobius Venture Capital, Sutter Hill Ventures and Western Technology Investment.
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The length of the bizdev cycle
Doing business development and early stage sales in a startup is often frustrating. Many of your actions like reaching out to potential customers and establishing a constant communication take week. That's why until you find the product/market fit it is wise to stay lean and watch your burn rate very carefully. But it's also very important not to let the slow progress discourage you. Many of the actions you undertake will bring results long after you wrote them off as losses.
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It is very important to schedule your energy, and most of all financing accordingly. The rough rule for a full bizdev cycle (from early customer contact to first closed sales) is 6 months. However, you often will hear about contracts signed after showing a powerpoint presentation. In other stories it takes 1 or 2 years and several pivots before first revenue hits the door. In B2B products, I'm pretty much sure the length of the cycle is strictly correlated with the weight and urgency of the problem you're solving for the client. Sometimes you can have a brilliant product that will save the user millions of dollars annually, but unless someone there really cares about these savings (for instance it's all in a budget of a single department) the progress may be slow, if at all.
Call corporate people
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I don't know how many emails corporate people receive, but judging by their response time and frequency they're probably getting more regular mail then I'm receiving spam. Most of it is of course irrelevant CC and FYI information, but unfortunately my message get's lot in the noise. The other part of day that takes most of those peoples time are meetings - I would say for some of them it must be over 50% of daily activities. That leaves them very little time to do actual work. Answering my email, which usually requires additional action or communicating with a colleague is just not going to fit into it. That's why I call them. They usually can give me a straight answer in five minutes and we can push things forward for instance because I'll do the job their colleague was supposed to deliver. More then that, since they're so rarely at their desk, I'm also probably the only person they managed to talk to that day, which makes me stand out of the crowd of people that try to maintain communication with them.
The hard part is knowing when to call them - the general rule is early mornings and late afternoons, but individual schedules vary. Whenever possible, ask this question when you're exchanging contact details with a person. Make sure to also establish a good relationship with their PAs, as often those angels will get you calls normally impossible to accomplish.
Tips for attending trade shows (as a startup)
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- Don't pay for it. These events usually have two parts - the free trade show, and paid conference. Unless you see that the lineup of speakers can add some invaluable information to your stack (which I doubt it will) it's just not worth shelling out few hundred Euros, Dollars or Pounds just for 'mingling'
- Go there. You can see your competition, meet potential partners and see where the market is going. Most of all, you get the feeling of the climate in the industry. Listen to what people are saying in their conversations, which topics are discussed the most, what buzzwords are most commonly used. This is your best occasion to get industry wide spectrum of points of view - no time reading blogs, publications and reports will make up for listening to your peers and potential clients.
- Setup a base. You don't want to, or can't afford to rent a booth, but you can get yourself into nearest restaurant or bar to around the venue. Arrange with the manager a table that is privately located and reserved for you all day long. Then set up meetings with clients that will be visiting the show anyway. At the fraction of the cost you'll be able to capture their attention for your product demo in a way that no booth will allow.
- Keep your tools handy. I don't mean the business cards or collateral. Get an iPad or other way of demoing your product live. You have to be able to naturally flip any conversation into a product demo. Use a laptop if you have to, but always hold it in your hands and never switch it off.
- Be organized. It's easy to go to a show and return one day later saying that 'there was nothing interesting' or 'it wasn't your target after all'. Have a look at the list of the exhibitors, pick the ones you have to talk to. Set up meeting with other visitors. Figure out which free-seminar speakers you have to listen to and establish a conversation with (that's the only reason why I sit on those things). And summarise the event afterwords - try to capture the trends, the potential leads and lessons learned.
These things usually happen once or twice per year per industry per country. Make sure you squeeze all the value out of time you spend there.
Why European startups need to stop hiring cheap
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I keep hearing this over and over: 'You know, we're a startup, so we can't pay people much'. Usually it means that you're hiring second class players, people that weren't good enough to get into corporate careers or just all-round loosers. Then you come across startups from US, where the marketing guy has an MBA and experience in working across 3 continents, and the VP of Sales even in random conversations challenges your analytical skills by asking questions like 'what is the dominant group of people (companies) in the room at the moment? (while your biggest problem was the type of booze you should get from the free bar). I have a few friends that do it right - hiring top-notch people, even if they're afraid because of paying them twice or three times market average. These people close sales that were dragging for days. They open doors that were locked for months. They deliver. And other European startups? Hire interns, friends of friends or 'someone that was available'. And never get anywhere.
I understand that you might not have enough cash in the bank - so what? Sometimes the best people are looking for a thrill. Sometimes they don't need to be hired full time, or are willing to work on a success fee (because they know that the success will be there). Or maybe they want a piece of the business they're going to help build. Be creative... seduce them... be willing to share your business. Or you shall perish under the feet of your US based twin.
Pivoting this blog
Originally I started writing because I wanted to spill out some of my creative energy, but also as an online resume where people could get to know more about me, or at least the professional side of me. For quite a while I felt that it's not enough - I always found an excuse not to write, and some thoughts got lost in the everyday todo overflow.
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So the new formula for the blog is more of a daily lessons learned in my work as a business developer for startups and other clients. You won't find (a lot of) juicy stories here, more of a notepad of my experience with following the Customer Development methodology. I don't know if I'll be able to write every day, but this is something I'm aiming at, and I hope that I will have more reasons to interact with my few readers.
On the technical side I moved the blog to WordPress.org, added a bunch of social features and plan to experiment with more. Any ideas for increasing engagement with the audience will be appreciated.
Meetup.com – an interesting freemium model.
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Meetup.com over the years became THE place for people to organise all sorts of group activities around a particular topic. Starting from programming language groups through stay-at-home-mums to nudist men - everyone now wants to connect with likeminded individuals and they use Meetup.com for this. It serves a very simple purpose of creating an event calendar, managing the member list and RSVPs and notifying members about new meetings or changes in the current ones. We now have more features like picture galleries or voting for meetup ideas as well as message boards and advanced user profiles. But the basic purpose is: get people organised for a particular date.
Now, the business model. Every meetup organiser pays a monthly subscription, starting at 12USD. There is no free plan, but you get your first 30days free, so you can check how it works for you before being charged. Where is the 'free'mium then? Well, group members don't pay anything. A whole 4 mln of them. Now, as you notice, it's not a typical freemium model. Normally you'd provide the basic service for free and charge for advanced features. Well, meetup works just the same, it's just harder to notice. When you're attending meetups - it's free. If you want to go into 'advanced mode' - which here is organising meetups - you start paying.
There are a lot of businesses that have two groups of 'customers' - like for AdTaily, we have publishers and advertisers - both of which are important for us. Sometimes we manage to convert a publisher into an advertiser, but this is not our focus. For Meetup.com, I guess that's their primary 'lead generation' system for getting new organisers - getting more group members. And this is why I think Meetup.com has an interesting freemium model.