“ You need three things to create a successful start up: to start with, good people, to make something customers actually want, and to spend as little money as possible. Most start-ups that fail do it because they fail at one of these. A start-up that does all three will probably succeed.” “ And what I discovered was that business was no great mystery. It's not something like physics or medicine that requires extensive study. You just try to get people to pay you for stuff “ Paul Graham, Software Engineer, Serial Entrepreneur, Harvard University Speech,“How to Start a Start-Up” essay, March 2005
VC’s Post- Sales Engineering Customers Board Sales Force Founder Company Cash Burn Rate “ Show me the money.” “ All is in place for success” “ Evangelizing does not equal cash.” “ What is the real sales forecast?” Often can’t justify purchase due to: pricing, new/co, no clear ROI, non-compelling buying message, etc. “ We will built it, they will come.” “ Kinks need to be worked out.”
#1 Beware of the “Let’s hire a sales force mentality”.
The 10 Things Are : #1 Beware of the “Let’s hire a sales force” mentality. #2 Be objective about your technology offering. #3 Know your competition and why a customer should write a check to you and not THEM. #4 Know where you are on the “emerging technology curve” within your space. #5 Show and tell how your technology makes the customer MONEY and delivers business value over alternative buying choices. #6 Be prepared to put some skin in the game to win customers. #7 Know when to partner and when to hold. #8 Leverage your existing customers to gain new ones (even if it’s a few!) #9 Simplify your message. #10 Be realistic about what can be done and when.
Ok Wil, I get it, stay focused on your goal! You know THE GOALS GUY owns the phrase FOCUS = focus on a course until successful! The big obstacle is knowing the right people to work with, Everywhere we look there are those marketing people, web management people and so on who are willing to take your money and somehow are not accountable for results. If their ideas or efforts don't produce traffic, or you get traffic and their words don't convert traffic to sales, they are not responsible. How do we keep from wasting time and money on these people? First, you must have way more capital than one could imagine to start your venture. If you even get misguided anywhere along the way, there goes your budget. This is not just the case for very small startup businesses. I have been involved with larger companies who have wasted hundreds of thousands on consultants, advertising companies, audio and video companies, all who promise results and produce none. So, help for startups, help for established business. How do we avoid these???? DianePosted by: Diane D. Sunday at 3:52 PM http://www.gobignetwork.com/wil/2007/5/3/stop-screwing-around-and-focus-will-ya/10145/view.aspx
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“ You don't need $5 million to get started. You can start and launch a Web company with less than $500k these days. The cost of equipment, software and marketing have just plummeted. Less cost means a shorter road to profitability. ... now take all of those factors that absolutely defined 1999 and tell me that since they are gone, what exactly is it about today that looks like 1999? Don' t tell me "because YouTube sold for $1.6 billion." It doesn't matter. There will always be a company that sells for more than you thought it should. The fact is people are building real companies with reasonable amounts of revenue faster and more responsibly than ever. It's anti-1999. (note: all that said, 1999 rocked, and I hope it comes back some day)” Excerpt from: " Wil Schroter's BIGGER Blog - Go BIG Network " Times are Good Again, but it ain't no 1999 , 5/8/07
Notas do Editor
Introduction First, thank you very much for coming. I know your time is precious and I promise that it won’t be wasted. I’m going to keep it simple today. No fancy words, no fancy formulas. My goal is to send you away with one new concept or “aha moment” that you can use as soon as you leave here. If you founded or have a leadership role in an emerging technology company, i.e., bleeding edge, change the world kind of stuff, I’ve got some hard won tips for you to save you some heartache and a lot of time and money. I have worked for start-ups or first-to-market companies for over 20 years. So, because most of my learning was done in the school of hard knocks, I’ve put together some very real deal, practical lessons learned both from the front lines, being in executive management and being in the technology sector for a really long time and at the most exciting times.
Format of the Mini - Seminar Sign in Evaluation forms Program: 1) Introductions--tell us who you are, position and what your company does. 2) 30 minutes delivering 10 Things – some questions will be saved for the end time discussion 3) Q&A and Discussion 4) Evaluation sheets – give to Jennifer Barker at end
I believe in a different paradigm of marketing----marketing must be “married” to sales activity and sales initiatives. Marketing other than that is a waste of time and money. I do not believe in the traditional “marketing” role and set of initiatives that, for small emerging technology companies, simply do not work----they just use up your cash. I don’t believe in spending money just because it’s a marketing activity. It must be tracable and it must have everything to do with the customer. My version of marketing is to do simple practical, grass roots marketing combined with selling to direct customers by being in the right places, saying the right things and focusing on targeted prospects which become customers who will pay for your product or service based on a real customer need. That is what it means to have marketing aligned with sales activity. I see a lot of webcasts on getting marketing aligned with sales---well, if marketing has not been aligned with sales, then what was it aligned with? We will get more into that later. Next slide .
I am going to offer you practical steps that you can take and implement today…..if you just take one thing from this seminar, that’s great. My motto has always been, “If you can’t turn technology into revenue, nobody cares.” This is my paradigm I have for “marketing” which forces the issue of “Show me the money.” I spent most of my career in sales, so I experience selling various categories of technology that were considered cutting edge. Unless I could close a deal and get my commission, I really didn’t care about much else at the time. As a top sales person, I spent a lot of time telling the marketing folks what worked and what didn’t. If you can’t turn an idea into a solution that people are ready to pay money for, then don’t waste your time. I can promise you that all that I say and do will be direct. I’m direct because I care passionately about emerging technologies companies and their success. I have always found the underdog and rushed to the battle lines to sell against the biggest of the biggest competitors.
This is the best essay I have ever read regarding starting a start-up is this one by Paul Graham who validates what we just talked about. Unfortunately, I have been through several cycles with emerging, start up company who thought they were at the starting line, but only discovered that their story, product or competition position had some big holes in them---one of the major violations was not developing their technology so that it becomes a solution that solves a problem. Customers buy what they need based on problems that they are pressed to solve. The most important take away from this slide, I believe is that you make something customers actually want and then get people to pay you for stuff. A company can have great people, but if the product is not fit for a check from a customer, you are in big trouble. I am going to take you through a scenario that I have seen played out a number of times in my career working with and for start-ups…There are stakeholders in every start up. All agree on the topside mission, but their own micro- goals many times do not match up. Let’s take a look at how it plays out. Many of you may recognize this scenario. If you do, then you know. If you don’t, then pay attention closely.
The start-up cycle – common goal but conflicting experiences and expectations from each participating stakeholder of the organization. . In this scenario, the inventor pushes his product to market by hiring a salesforce, corporate staff and advisors. Each have different challenges and goals, but the most important to take note here is that the customer gets lost in the shuffle. All the while cash is being burned at a steady rate and the customers are not clear about a number of compelling talk points about the product and why he/she should buy. The salesforce finds out that they are evangelizing a new technology rather than closing deals. The forecast becomes a list of suspects rather than prospects. The Board is looking for customers. The engineering group is not aligned with the customer or sales force and post sales implementation continues to uncover kinks in the solution. The VC’s are looking for the return on their investment. The simple answer here is that everyone must be in alignment with what the customer needs are first, along with a competitive advantage, then align the organization. What usually happens is that there is a lack of homework in the field prior to launch. Seems simple, but I have been through this cycle holding different positions at different times…and it is all too common.
Here’s what usually happens, and I’ve seen it all. I don’t mean to offend anyone here who has done any of these things, but I only go through this because I have held a few of these stakeholder positions, so I have been there and done that too. Transition: OK< so now that we have discussed what usually happens, let’s start framing our talk today about the 10 Things……and that starts with taking a look at business drivers first.
Any strategy that you implement can only be measured and created by the business drivers you decide are the most important. What I am advocating is that, while there are no shortcuts, there are innovative ways to achieve these business drivers which are common to any technology company…..plus, there is no reason to go to VC’s right out of the gate, secure your millions and then go out and conquer the world. There are new paradigms at work today that take advantage of outsourcing early business development activities, but my most important point here is that you have to be able to know customer and market response in order to manage your market risk and save time and cycles and money. These points are a set up for the 10 Things you need to know to carve your path to these business drivers and not go through the start up cycle that we just talked about .
QUOTE: &quot;You wouldn't want to build a huge sales force before you know your technology,&quot; says Ira Ehrenpreis, general partner at Technology Partners, a Palo Alto (Calif.)-based venture capital firm. &quot;The [venture capitalist's] discipline is in the initial identification in what the elements of risk are, and ensuring that you're capitalizing a company to reach discrete risk mitigation milestones,&quot; Ehrenpreis adds. November, 2005 The second sentence here is a complicated way of saying: “Will the customer pay for your product? Before you are ready for a sales force you have to focus on the fact that customer reaction and feedback to your product and its value is crucial. Without it, you are selling in a vacuum. Once the technology has been developed and deemed to be ready for “prime” time, the temptation is to go out and hire the best sales people and VP of Sales that can be found. Although this is the ultimate goal, to do so right out of the gate is not always necessary. There is a “learning curve” once your company is out there pitching to customers. There are three things that make up your sales learning curve: Make sure you are selling a solution, not just a technology. That means: a) make sure your solution is solving the right problem; b) the competition cannot have an unbeatable competitive advantage and c) customers must be willing to assign budget dollars for that particular solution. Your messaging about your product or technology offered on the web or in sales presentations may not be hitting the right targets and that’s why you can’t get beyond the “first date” with a customer. It’s not about the tomato, it’s about the pizza. Be prepared to build trust and confidence in your company . Your company must be aligned so that the customer is comfortable buying from you. Be prepared to answer the following questions from customers who want to be able to know you will be there next year---Is your company adequately funded? Do you have a track record of delivering on time? How long have you been in business? How long has your competition been in business? How does your pricing compare with your competitors? What is your competitive differentiator? You must be able to justify why you should be considered a player in the marketplace. What makes you different from the incumbent or other competitors? Know how you stack up against the competition. Your technology may need some product development with regard to feature/functionality such as billing, GUI’s, etc. example of CPT An interim sales staff can be deployed before an entire salesforce is hired. Utilize outsourced professionals who that have sold complex technologies throughout their career and know how to position new technologies and get customer feedback without sacrificing a possible opportunity to compete for the business. “Scouts”, if you will, can mean the all the difference between victory and defeat. There is an increasing trend of outsourced sales talent---that happens to be what my company does, and at the time I started it, no one was doing it. Or, at least I couldn’t find anyone. Now there are organizations set up to do strictly selling by very savvy, professional sales talent that have been selling technology for years with a consistent successful track record. Lease before you buy….go into getting customer feedback before hiring full-time people. They have to have set tools ready for them when they come on board…remember the start-up cycle…… Once you have collected some field intelligence and made the necessary adjustments without sacrificing the integrity of your product or solution, you are ready to hire a professional salesforce.
Many inventors are so passionate about their technology and they tend to have be strong on long-term vision. However, they often need help communicating how others would derive business value from their invention. CIO’s have been under crushing pressure over the last couple of years to quantitatively show the bottom line value of their technology projects. Shine that same light on your technology offering. The way to becoming objective about the business value of your offering is to make sure you are looking at your technology solution from the other side of the desk. If you were a decision maker, with lots of choices, pressure from above to reduce costs and increase revenue, pressure from below to increase resources and budget dollars, what other choices would you have besides implementing your technology that would bring the same or similar results? Are their alternative choices? Things that can be done to “get by” without making another decision and education yourself about this cutting edge solution? Would you see if others adopted the technology first and then watch what the real results are? What if you were a decision maker that adopted the last new cutting edge technology which did not deliver what it promised and you got a good thumping from your boss? What would YOU do?
Many emerging technology companies miss the mark when they fail to consider not just their direct competition, but their indirect competition; meaning, what alternative or substitute solutions can a customer buy and deploy that accomplish the same business goal. Again, it’s not about the best algorithm, it’s about the business value end state that matters. Be prepared to emphasize your differentiating elements not only against your direct competitors, but alternatives that virtually or almost do the same thing---as we just discussed. Your buyers have to justify every dollar. Unless you can really show that your solution is crucial and delivers business value, your solution will not be seen as the clear buying choice. Make sure you have evaluating feature/functionality and other intangible aspects of your competitor’s offerings to make crystal clear the difference between you and them…and make sure those differences matter to your prospect. Poll the audience first on this question with me being part of the audience. “I have done this!” And finally, your potential buyer may ask you directly, “Who is your competition?”. Don’t ever make the mistake of answering, “We have no competition.” Believe me, you will look and sound ridiculous. There is always competition for every dollar a customer has to spend. Be good at articulating the problem you solve that your competitor does NOT solve or solves badly.
Let me tell you about an example with VOIP -- VOIP was a phenomenon. The first inclination from that first VOIP gear manufacturer was to sell the technology to the big telecom companies who had installed legacy technologies over a 25 year period. The value was clear….more services, more revenue, cost effective equipment. However, the big boys were not ready to convert to a “new” technology that was “unproven” in the U.S.. A new market had to be found…internet telephony service providers (ITSP’s)-----an emerging band of entrepreneurs who wanted to offer services beyond the U.S. borders and undercut the international telecom services providers. Later known as “international arbitrage.” It worked. The rest is history. Today, every major telecom provider in the U.S. is converting to VOIP and the federal government is ready to invest millions in the technology. But that took 10 years. The company had to pay the bills in the meantime, so flexibility and listening to the marketplace was the key to survival. Analysts are sometimes helpful for telling you how long they think customer adoption will occur. They are clients to people you want as clients, so use them to know what your technology needs to look like to really make a dent in the marketplace. If your potential clients rely heavily on the advice of analysts, then this is a MUST. Many will talk with you during an initial briefing. Talk to a few within relevant spaces at relevant firms. Then take what they say seriously because they are saying the same thing to their customers when consulted about buying choices.
How do you figure out what customers want? Watch them. One of the best places to do this was at trade shows. Trade shows didn't pay as a way of getting new customers, but they were worth it as market research. We didn't just give canned presentations at trade shows. We used to show people how to build real, working stores. Which meant we got to watch as they used our software, and talk to them about what they needed. If you cannot demonstrate a significant, realistic and competitive ROI, then you’ve got to start from ground zero. Intangible benefits may exist, but hard dollar benefits speak louder. Insurance may provide peace of mind, but laws dictate that every driver must buy it. Nice business model, if you can get it. Can you significantly demonstrate and prove that a CIO will gain more functionality at a reduced cost? Even if that is true, does that benefit out run your competition who may be touting the same results? Remember, there has to be more checks on your side of the decision sheet than your competitors. The only way to understand what the questions are---1) put yourself on the other side of the desk 2) collect customer feedback before fishing for bigger fish.
This principal is especially true when your company has absolutely no name recognition and you plan to compete against the “big boys”. Your customer may see your product as a risk, not a benefit. You have to take the risk out, so they can see the benefit. Offer a way for customers to “Try before they buy.” Give something to them for free or at a deferred cost so they can try it. Develop solution “packages” they can choose from so they can try the product in a low-risk environment and then over-deliver on service and value. Demonstrate results on a small scale so they will buy it to get large scale results upon implementation. Provide some examples here: SpeechWorks, IPAXs, VocalTec Speechworks offered a component technology that had to be delivered from another vendor’s HW/SW. So we put a lab trial package together for Verizon which included the SW packaged and delivered with VoiceGEnie which was a delivery platform. IPAX was competing with VocalTec. We had no name recognition and no product track record. So we offered customers trial packages with a O/$10,000 PO order which included a full limited deployment. It was a cost to us, but we had to put some skin in the game to engage the customer. It worked. We won a $3M deal with PriceWaterhouseCoopers. Unfortunately, as we signed the deal the product failed and we lost the deal. Was the product ready? Today, I say, “no”.
Resellers/OEM deals/VARs, etc. If you have a dance partner and they decide to stand against the wall during every dance just to see what happens, you don’t need them. You want a partner that is going to focus on activities that will garner revenue. How do you know they are serious?--- They should be identifying top accounts to go into together. They should be finding ways to promote your company and your product on their website, their tradeshows and in front of their customers. Partners who do these things are assets (making money) . Partners who don’t are liabilities (costing you money) . Don’t get caught up on name-dropping partner acquisitions. Maybe one or two to attract attention, but then you really need partners who will produce. There is one major sign that a partner is serious about selling your product: Make sure there is a compensation component to the partnership. That is, your product should be on their price list and their sales people should be receiving compensation for selling your product. Without the compensation component, it is very unlikely you will see any significant sales or revenue from these types of partnerships. Direct customer revenues also give you the most leverage in the market and with partners. Nurturing partners who don’t produce takes time away from garnering direct revenue-generating customers. Some quick tips: Don’t run out and get a bunch of partners that will entertain your solution but never bring you any revenue Partners will focus on their core competencies first if it means they will lose a deal Any sales team is short-sighted and will sell what is in front of them. Your solution may be out of sight and out of mind if their management does not keep it in front of them and put some compensation dollars behind it. The exception is when your product is truly “value add” and can mean winning a deal or losing it.
If start up companies have been in business long enough to have just a few good customers, they often miss the treasures in their own backyard while seeking more territory elsewhere. Repeat business is the easiest business to get if you have been taking care of your customersEven if you haven’t been taking care of your customers, make amends because there are more opportunities.If you have sold to just one division, then there are other mini-organizations that you need to penetrate. One big company is made up of a lot of “smaller companies” with designated decision makers. Get to the top of the food chain within that customer account. If you product is in just one division, they work to get a commitment from the top decision maker to install your product enterprise-wide. C-Level selling and marketing is your “pass go” card to other departments. Getting a blessing from the top is a ticket to other executives who will be more likely to listen to you. If your existing customers are not growing and have no additional business to give you, something is wrong. You need to find out why! (Surety as an example) Also, referrals are rarely asked for and are the easiest way to increase sales. Ask your happy customer if he knows three people inside or outside of his organization who could use your product and if you can call them and use his name. I grew my business from word of mouth/referrals---within the first year, company met its revenue goals.You can use referrals within an existing customer company…..use a happy dept. head to help you with other divisions in the company, if decision making is decentralized.
I have saved some of the best two points for last here…….this is one of the most important. You must be able to transform your vision into value for the customer. If you cannot state a reason for them to buy that helps them do something better, faster, cheaper, you won’t get past the first date. If you are selling by leading with a technology story, you will lose business before you get started. You’ve got to lead with business value. You have to take the “vision” of your company and your product and transform that vision into value….to the customer’s bottom line, product, staff, company, department, their customers…whatever that may be. Save the acronyms for the third-layer of decision makers. Speak their language. (Give examples here of C-level marketing). In order to establish any connection with anyone, it is important to speak their language. Speaking in Russian to someone from South American will get you nowhere. The same thing goes for talking to potential and existing customers. Know who you are talking to. Know what they value. Know what makes their job easier and how your business can contribute to that. Your solution should make someone’s job easier, reduce cost, increase revenue, satisfy a legal requirement, create operational efficiencies…that is, help accomplish the goals of your clients who may not apply your acronyms to their problem. You have to be the translator.
A treasured advisor of mine and experienced executive once told me, “Things take longer than they take.” I never forgot that. What should take six months could take up to 18 months. What should take 30 days could easily take 120 days. Know that, and your life will be easier. Practiced, serial entrepreneurs know this. But new ones may not. They want to rush out to the world to deliver the best product in the world. It may be, but I think we have just gone through the many “steps” that you must examine before the “rushing” can begin. At this time, on average, technology deals take a minimum of 18-24 months to sell. If you are selling to the government, it take three years or more. If you are offering an emerging technology that fits a need but no one has ever used it in the real world, you’ve got a long haul depending on who you choose as your target market customers---and that is a whole process in and of itself. You must identify your target markets accurately! As to emerging technology companies, we have just discussed how to accelerate your business in very practical, tangible ways without banking a few million dollars to start. Whatever goal you set, add some “longer than it takes” time. Make sure you have the funding to go the distance. Choose your target markets and your marketing methods wisely. Don’t waste valuable ammunition on the wrong opportunities. Ask the hard questions of any prospect---need, budget, who signs and when. Alot of time can be wasted on the wrong target markets. The secret to this is FOCUS---never try to be everything is everyone. Pick one customer segment and drill down into it so that you become well known and become an expert in their business and how your technology solves those problems. Your referral network will grow, your revenue will grow and partners who service that segment will seek you out naturally. You have the vision….it’s just a matter of others seeing the value and writing a check for it.
Bootstrapping marketing programs – a checklist
Discussion and Q&A about……… The 10 Things……. Beware of the “Let’s hire a salesforce” mindset Be objective about your technology offering Know your competition and why a customer should write a check to you instead of THEM Know where you are on the “emerging technology curve” within your space Show and tell how your technology makes the customer MONEY and delivers business value over alternative buying choices Be prepared to put some skin in the game to win customers Know when to partner and know when to hold Leverage your existing customers to gain new ones Simplify your message Be realistic about what can be done and when
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Here are the latest updates for [email_address] &quot; Wil Schroter's BIGGER Blog - Go BIG Network &quot; - 1 new article Times are Good Again, but it ain't no 1999 I'm hearing more and more references to &quot;it's 1999 all over again.&quot; Valuations are up, money is flowing, lame business ideas are coming to market (mostly Internet companies.) Big deals are happening (YouTube, DoubleClick, et al.) Yes, my friends, times are good again. But it ain't no 1999. No one is going public. Sure you're hearing about big deals, but not IPOs. 1999 was all about companies going public, employees getting big stock payouts, and day-traders getting rich on pumping stocks. That was 1999. Today, it ain't happenin'. No one is selling the future. In 1999 idiots like me were running around talking about how big the Internet was going to become. About ten years later, it actually happened. But we were selling 2007 value points back in 1999. No one is selling &quot;this is how big the Internet will be&quot; anymore. No one is pissing through money (as much). Sure, you've got some slightly over-funded companies that are pissing through some venture money (mostly in the Valley where they have too much money anyhow.) But most companies are running just fine on a dozen people with little or no money. Investment Bankers aren't running things. How many companies are even getting to the point where they would need to go public? Very few. Aside from some I-Bankers pulled in to do some M&A deals, these guys are no longer the Burns and Smithers of old. You don't need $5 million to get started. You can start and launch a Web company with less than $500k these days. The cost of equipment, software and marketing have just plummeted. Less cost means a shorter road to profitability. ... now take all of those factors that absolutely defined 1999 and tell me that since they are gone, what exactly is it about today that looks like 1999? Don' t tell me &quot;because YouTube sold for $1.6 billion.&quot; It doesn't matter. There will always be a company that sells for more than you thought it should. The fact is people are building real companies with reasonable amounts of revenue faster and more responsibly than ever. It's anti-1999. (note: all that said, 1999 rocked, and I hope it comes back some day)
Messaging includes things like: Have we identified our target market adequately? Does solution fill a need? Is our product relevant to the marketplace? What is our competitive position? What is our market position? Are we “street ready” to meet a customer face-to-face and answer questions/objections Do we demonstrate any thought leadership in the midst of heavy competition? What is missing to round out our story? Sales & Sales Process includes things like: Qualifying customers – do they are do they not qualify? (based on business plan goals and needs met by product) Developing an elevator pitch Marketing materials reflecting image and clear messaging Development of client presentations Development of sales activity metrics and deliverables Sales process tools: forecasting, customer segmentation, Contracts and contract negotiation with adequate pricing framework Execution include: all actual sales activity to acquire customers Customer acquisition phase is measured by: repeatable sales within target markets identified.
What is going on now in the emerging technology arena? What does it take these days to get company off the ground? Does it take a bunch of VC’s and a bunch of money while you sell your company?