You remember 1999, right? It was the day of the sock puppet and crazy, CRAZY
marketing strategies. By the way, before going too much further, I will confess
that I actually bought pets.com shares back in the hey day. Why? Because
everyone was doing it, and my wife and I thought the commercials was creative
and funny. Granted, my "due diligence" bar was lower back then, but I'd
understand if many of my colleagues would revoke my angel investor license just
But I digress. Today's article is about new ways startups are using to try
and attract attention and -- wait for it -- eyeballs! A software company in
Cambridge, MA is running a "viral marketing contest" whereby they are giving
away a total of $50,000 for bloggers, videographers (basically anyone with
a video camera) and others into the "new, new marketing".
Here's the article:
Brilliant or Just Insane? The HubSpot $50,000 Viral Marketing Contest
Now normally, I'd be having a jolly old time making fun of this startup with
references back to every lame attempt at "marketing" we saw out of dot-com
startups back in 1999. There's just one problem. It's my startup
that's doing the crazy stuff! Yep, that's right, my startup HubSpot, which recently raised $12 million in
venture funding is giving away $50,000 of that in a viral marketing contest.
I figured once people get wind of this, many of my friends, colleagues and
bloggers are going to send me emails saying, "Dharmesh, what the hell?".
Actually, I might get an email from an investor or too as well, because we
haven't run this by them yet. I figured I'd try and pre-emptively answer some
of the inevitable questions.
1. Why do it? Well, it's kind of simple. We've been
having great success with attracting leads (and closing customers) through our
blog and other online channels. Some of our most successful marketing efforts
have been blog articles that went viral on social media sites like digg and
reddit. Last week, we tried to do a rough economic analysis and estimated the
value to us of leads generated from these successful pieces. It
was high. So, there's opportunity here. Plus, we don't like spending
too much money on AdWords. It pains us.
2. Why not just do it ourselves? Well, frankly, because
developing viral content that spreads like wildfire is a tricky business. We
have a team of great folks writing content all the time for our blog (including
me), and sometimes we hit it out of the park. But our guess is that there are
folks much more talented than us that are capable of producing
remarkable content (as Seth Godin would say). We figured it's worth a
shot trying to draw those people out.
3. If it works, it could work big. We're at a stage now
where experimentation is reasonably cheap. Instead of getting stuck in the rut
of turn this dial a bit, flip this switch a bit, and crank out the customers --
we'd like to look for some non-linear growth opportunities.
Oh, and if you're a VC reading this (particularly one of our VCs), we're
doing the same thing in marketing that you do when looking for investments:
Pick projects that have potentially huge impact, even if they are a bit whacky
and high-risk. If we do a dozen of these crazy projects, if just one wins,
we're golden! Champagne and chocolate-covered strawberries for everyone!
So, what are your thoughts? Is this genius or desperation? Would love to
hear your comments.
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A few days ago, my startup HubSpot, launched a new app called Press
Release Grader. It's not our core product, but a free tool for marketers
and PR folks to analyze a press release and provide suggestions.
The launch has gone exceptionally well for us (and by that, I mean,
the uptake in the community is much, much better than we were expecting). Would
put some stats here, but it'd seem a bit like bragging and the focus of this
article is not on press release grader or its specific results, but things I
learned from putting it out there.
Warning: As noted in the title, I have an uncanny knack for the obvious, and
I like to focus on the fundamentals (which is a polite way of saying that you're
unlikely to find any brilliantly insightful lessons here).
7 Uncannily Obvious Lessons From A Product Launch
1. It's Not Too Early To Release: I'm a really, really big
fan of the "release early, release often" mantra. But, even I fell prey to the
"let me just get a bit more done" mind-set. I could have released the product a
few weeks earlier, and I should have done exactly that.
2. Be Ready To Iterate: I intentionally cleared my
schedule of other major distractions so I could focus on the software and
iterate, iterate, iterate. In the days after the release/launch, I iterated
like crazy with multiple production updates a day. Not a day should go buy that
the software doesn't get better for the users. Continue this as long as you can
(maybe even weeks and months).
3. Provide Simple Feedback Mechanism: You don't need
anything fancy. Just a place for users to click a link, type in some feedback
and send it to you. That's it.
4. Respond To Feedback: This goes back to #2. You should
be ready to fix the "obvious" bugs and add the enhancements based on user
feedback (as long as they make sense). The magic of immediate user
responsiveness is underestimated. I've had a couple of noteworthy bloggers
write about Press Release Grader simply because of the rapid response-time.
It's just good, clean living.
5. Track As Much Data As You Can: For a web product, I'd
suggest that at a minimum, you track all the standard web data (this can be done
via a web analytics tool) + any "inputs" that the user is providing.
6. Don't Waste Time Coding Reports: Although you should
track/store as much usage data as you can, don't waste time creating fancy (or
non-fancy) reports just yet. Just capture it. Some simple mechanism to get a
sense of usage is fine, but don't try to build ways to look at all the data
you're tracking. It's a distraction. Focus on what will make the users happy.
You can work on reports later.
7. Watch It Spread, Nudge It Along: You should be
spending half of your time not just on coding, but on promotion. This
includes watching who the product is getting picked up by across the web and
who's writing about it. When people do write about it, thank them and offer to
do something about their ideas and feedback. This works wonders. Even if
you've got the luxury of business people (marketing, PR, etc.), stay involved.
There's no replacement for being "plugged in" to the community.
On point #7, here are places I check to see what's being said: Google (mostly blogs), Twitter, delicious, StumbleUpon and digg. (I have a wee bit of an advantage because I've got some internal tools to help with this stuff).
What lessons have you learned from releasing a product out to the wild? What
will you repeat and what will you change the next time?
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I'm subscribed to a Yahoo! group that occasionally gets a post from
recruiters looking for candidates for startups. Though I don't enjoy these
posts (they're not relevant for me), I understand that recruiters have a place
in the market too and they're just trying to do their jobs.
But, I was really disappointed today from a post I saw from a recruiter that was trying to hire sales candidates for a
startup. It was strikingly ineffective to the degree that if I had not received
the message myself (and didn't know that it was serious), I'd have thought it
was a joke. Trust me, it's not.
Here it is (unmodified) for your amusement and education:
"Hot Start Up – Focused on
delivering an innovative architecture
that enables unique and disruptive technologies to address the severe
inefficiencies in current online marketplaces. Several patents filed for
innovative processes – Lead & financed by a team of well known successful
entrepreneurs who have done it before and are now doing it again. A Great Company with lots of upside. Very serious
about creating and maintaining the type of culture that creates success – Team
Centric – Collaborative – A+ Players with Low Ego. Get in on the ground floor
and join a winning team."
Here are my issues with this particular description (apologies for the
sarcasm and snarkiness). It's not usually my style, but in this instance,
something had to be said, and I think there are good lessons to be learned:
1. Opens with "Hot Start Up". It's good to know this, because I get so many
notices from cold startups or lukewarm startups that I appreciate when someone
helps me immediately recognize a "hot" startup.
2. "Focused on delivering an innovative architecture that enables unique and
disruptive technologies...". This is compared to a scattered approach to
delivering a pedestrian architecture that enables common technologies that help
maintain the status quo.
3. "...to address the severe inefficiencies in current online
marketplaces". Which, of course, is much better than addressing extremely efficient online
4. "A Great Company with lots of upside." I can't tell you how many
startups I come across that describe themselves as being mediocre and having
5. "Very serious about creating and maintaining the type of culture that
creates success." Really beats all those startups that are frivolously
maintaining a culture that prohibits success".
6. "Team Centric - Collaborative - A+ Players with Low Ego". We want to
filter out the candidates that are loners and overly-confident B- players.
7. "Get in on the ground floor and join a winning team". Who would want to
join a startup on the third floor for a team that's clearly going to come out in
All humor and sarcasm aside, here's why I took time on a lazy Sunday
afternoon to write this article: Whatever startup it is that this recruiter is
trying to find candidates for is probably not going to get much value. The
lesson here can be boiled down to one sentence:
When describing your startup, avoid being platitudinal. Be
different. Communicate something meaningful.
Here's my litmus test: When making a claim about your startup, ask yourself
if anyone would ever claim anything different -- or even better, claim the
opposite. If the answer is a clear "no", your description is probably
empty. Examples: Which startups are not innovative? Who's not looking to
disrupt? Who's not creating a culture of success? Who's looking for B-
players? Who's looking to build a third-place team?
Here's my (hypothetical) rewrite of the original description:
Our founders made a bunch of money on their prior startups, which were hugely
successful. We've got enough money to file for patents, have an admin answer
the phone and pay great salaries and commissions to those that join the team.
We're building a financial services product that isn't disruptive, but helps the
CTOs of banks not change their existing systems, and feel better about it.
Turns out, people are willing to pay to not be "disrupted". It doesn't last for
ever, but there's a bunch of money to be made in the meantime. If you're
looking to work in the basement, answer your own phone and change the world,
there are lots of other startups out there. If you want to make real money now
but still tell your friends and family that you're a high-flying risk taker that
just joined a startup, call us. Johnathan, our administrative assistant will
answer the phone.
My version is not as flattering as the original, but at least it says something.
What do you think? Am I being overly harsh here? Do you think the original
would actually work? Would love to hear your thoughts in the
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Before I offend any of you or scare you off, when I say "necessary evil", I'm speaking in a broader sense about things we simply don't like. I am not suggesting that you actually be evil. Google has demonstrated quite well the value of not being evil (or at a minimum, the value of stating that you don't want to be evil).
So, what do I mean when I say startups should try to be the lesser of two evils? This is easiest explained by an example.
Necessary Evil: Taxes.
Most of us hate taxes. It's not just the paying money part, it's the preparing (and the dreading of the preparing) that makes this "evil". But, for most of us, it's something we *have* to do. So, when a company like Intuit comes along and offers TurboTax, it falls into that category of "lesser of two necessary evils". Of course, you don't have to buy tax preparation software. But, you do have to file taxes. Intuit took the necessary evil of having to figure all the stuff out yourself (or hiring someone to do it) and being less evil than the other things you could do.
To re-emphasize this point: I don't think any of us gets up one morning and decides we want to buy tax preparation software. We recognize that there is a necessary evil that needs to be addressed and we pick the lesser of the evils (which varies from person to person).
My point is this: If you're building a startup (particularly a bootstrapped startup), it is much cheaper to try and market something that is necessary (even if it's evil). There are lots of entrepreneurs that go after fun ideas like music sharing, YASG (Yet Another Solitaire Game) and consumer internet type stuff. There's nothing wrong with these ideas. But, I think there are a disproportionately high number of people pursuing these ideas simply because they're so much fun. The number of stories we read regarding these fun ideas is also disproportionately high (we don't ever hear about the thousands of entrepreneurs that were not successful pursuing these ideas so we get a distorted view).
So, if you're a first time entrepreneur and are actually looking to build a nice, profitable, sustainable business (and having a decent chance at doing so), I'd advise looking for a market that has a number of "options" to address some necessary evil -- and strive to be the least evil of them. It's not the only way to start a company, but I'd argue that it's not a bad way, and a reasonably pragmatic way. And, I'm all about pragmatism.
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Broadly speaking, I think there are two types of marketing approaches.
The first is what I'll call "Big Bang". This was very popular in the 1990s, particularly for venture-funded startups. In this approach, the sequence of events goes something like this:
1. Have idea
2. Raise Capital
3. Code like crazy in "super stealth mode"
4. Hire VP of Marketing to plan big launch
5. Hire PR agency to launch
I'm not a big fan of this approach for one simple reason: I don't think it works all that well. As a developer, I think this is a wee bit like trying to write a 200 page specification document, develop the product, and expect to release something that works and makes users happy. It just doesn't work that way.
The second approach, the one I do like, is more like Darwinian evolution. This is where you start as early as possible, experiment as much as possible, as efficiently as possible and respond to feedback as quickly as humanly possible. Keep doing more of what works, and less of what doesn't. In my experience, this works really well.
So, if I were working on a startup (which it turns out, I am), I'd lean towards a strategy that looks more like this:
1. Have idea
2. Bootstrap / Beg / Borrow
3. Tell the World
4. Release product to the unsuspecting
5. Get feedback
6. Iterate, iterate, iterate!
I'd like to spend a little bit of time on the middle parts of the above sequence. What I think really works today is discussing the idea with your potential market as early as possible. Ideally, this should happen before you've written your first line of code. Less ideally, you can wait a week or two. The easiest way to do this is to start a blog. You can use one of the free services out there (just make sure to register your own domain name). This way you get commenting (market feedback) and RSS subscriptions automatically. Then, post like crazy and do everything possible to get feedback.
In parallel, put the most minimal version of the software imaginable out there as soon as you can. If you're not embarrassed of your product and are not scared to death when users start banging on it, you waited too long. Get it out there. Yes, people are going to point and laugh at your product. Yes, they're going to ridicule you for building something that has a laughably small set of features, most of which don't work. It doesn't matter. GET IT OUT THERE!
From there, your marketing and your product should evolve in tandem -- organically. Don't even think about advertising, PR, launches and other marketing stuff. All of these things will simply distract you from the real problem: figuring out what customers want. As many failed startups have learned, marketing a product that nobody really wants is awfully expensive and frustrating. Even the perfect marketing strategy (if there is such a thing) is unlikely to work. On the other hand, even naive, unsophisticated marketing can work wonders when everybody wants the product.
So, don't get lured into believing you need some super-sophisticated marketing strategy with a big launch to create a mega-hit product. You don't. If you don't believe me, think of five startups that you really admire and that you think were big hits. Now, do some quick research and figure out how much time/energy they spent on a big-bang launch to "release" their product to the world. Chances are, the launch came well after the product was already out there and somewhat successful.
What do you think? Have you mastered the art of launching a successful software product? Are you a PR person that is gravely offended at my suggestion that startups shouldn't really plan formal launches? Would love to read your thoughts in the comments.
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We've all heard the cliche "The Customer Is Always Right". Those of us that have actually been in any type of business and had real interactions with customers for more than 2 days have learned that this statement is factually incorrect. The customer is decidedly not always right. The real question then becomes, when (if ever) should you act as if the customer is always right -- even when you know he's not.
My simple mind addresses this with one simple question:
Are you a trusted adviser or a responsive assistant?
My best analog for the trusted adviser is a doctor (or an attorney -- all lawyer jokes aside). If you're doing something really stupid, a trusted adviser should know better and has a sufficiently strong relationship with you to smack you upside the head and tell you you're being stupid. They're the expert, and that's their job. The fact that you're paying them money has little influence on the relationship. They don't think of you as a "customer", and they know you are not always right. On the other hand, a responsive assistant is someone that does what the customer wants because they don't have (or are not perceived to have) any special skills or talents beyond the customer themselves. They're not experts, they're time-savers. There's nothing wrong with either of these types of businesses (and both product companies and service companies can be categorized this way). Problems arise when you think of yourself as one type and act in the other.
I've met many startups that are faced with this dilemma (especially in the early stages). My current startup, HubSpot, is a decent case study. We're in the internet marketing software business. Our target customers are small businesses. The problem that we have at HubSpot frequently (that I think many of you might have as well) is that customers often ask for things that are clearly not in their best interests.
All modesty aside, most startups are experts when it comes to understanding their domain and their product offering. In most cases, our understanding is much higher than that of our customers. I'd like to think that's why customers decide to license our software in the first place. We eat, breathe and live this stuff. As it turns out, customers don't always recognize their own limitations or they don't trust you enough to let you push-back on their requests.
Here are the things that I think influence this dynamic of the trusted adviser (and why so many of us end up sometimes getting treated as assistants instead). Here are some of the questions that go on in customer's minds when they try and decide whether you are a trusted adviser:
How Customers Decide If You're a Trusted Adviser
1 What's in it for you?: Will you benefit somehow by directing me to your line of thinking? For example, by denying my request are you reducing the amount of low-margin business you get from me? Raising your level of profitability is not my problem, it's yours. If you're going to make more money by guiding me in a certain direction, I'm going to be concerned.
2. Do you understand me? Perhaps in most cases, what you're telling me is the "right" thing. But perhaps my business is different in important ways. You may think you're giving me the right advice, but you're really not. Do you really understand me and my business such that you can give me great advice and steer me in the right direction?
3. Are you really an expert? How can I be certain that you really know as much as you claim you do? What if you're simply wrong and an animated logo with cool sound on my home page really will get me more customers?
4. Did the expert make the call? How do I know that this advice is not coming from some junior person that was just hired last week because the "experts" haven't really had a chance to spend much time on my business?
So, my advice to those of you in startup-land that want to be trusted advisers is to focus on the above questions and make sure you understand where the customer is coming from and what you can do about it. Be transparent. Be objective. Be empathetic. Trusted adviser relationships are earned but are well worth it.
What are your thoughts? Have you ever had to tell a customer they were wrong? How did you handle it? Would love to read your comments.
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I was reminded once again
of freemium by a very interesting article from Don Dodge which notes that the
average conversion rate of free
offerings for companies using the freemium model is about 3%. I
was actually quite surprised (in a pleasant way) by this level of conversion.
I've been considering the freemium model for one of the products currently being
built at my startup, HubSpot
The product under
, is a
website grading tool and recommendation engine that helps business people get a
sense of how effective their website is from a marketing perspective, how it
compares to competitor websites and makes recommendations for improving the
site. The tool is currently free. Even in it's current beta state (very little
PR and promotion), it has graded over 28,000 websites and gets over 500 visitors
So, what are the challenges
with releasing a product under the freemium model?
Here are the ones I've come
up with (so far). I'm sure the a few of you will have some of your own. If so,
Challenges Of The
Deciding what to include in the free version and what to offer in the
premium version is non-trivial. The trick is to put enough in the free version
to get traffic and usage -- but not so much that there's not enough incentive
for a certain percentage of people to upgrade.
hardware, bandwidth and infrastructure are cheap (and getting cheaper), they're
still not free. Supporting thousands of free customers costs money and unless
there's enough money coming in from paying customers, there might not be enough
cash coming in to subsidize the free folks.
Support is a problem. Though in theory you can take the position not
to offer any support to the free users, in practice, it's hard to have the
discipline and processes in place to actually do this.
Pricing for the premium version is likely impacted by the fact that
there's a free version. For example, I don't think one could successfully offer
a premium product for $250/month if there's a free version out there. The
premium version would have to be really good and an order of magnitude
better than the free version. This is probably why most freemium products are
less than $50/month.
5. It can
get a bit tricky to use scaling pricing models for a freemium product. For
example, let's say you charge $20/month "per user" (per seat or per whatever).
For many customers, this creates an added barrier to upgrading. If they have 10
users, there's even more incentive to just have all 10 users use the free
version. Or, they could just buy one paid license (for the key features they
need) and keep the other 9 on the free version.
Attrition rates can be unpredictable and potentially higher than
traditionally priced products. For example, if there's not enough "value" in
the premium version, it's possible that even customers that upgraded will
eventually revert back to the free version.
Of course, there are lots
of benefits to the freemium model too -the most important of which is efficient
marketing. It's a greaty way to get early users to use the product and have a
pool of potential people to upgrade.
What are your thoughts?
Have you tried the freemium model? If so, what has your experience been? Are
there other challenges that I missed? Would loveto hear your ideas in the
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Some time ago, I wrote an article titled “Startup Tips for Enterprise Software Pricing
”. If you’re selling software to big companies, it’s likely worth a quick read. When writing the article, I left a note to myself that I should revisit the issue of free trials and pilot projects. I’ll look at pilot projects (for larger deals) next week, but this time, will explore the free trial a bit more. Software Startups And The Free Trial
- Shifting Customer Risk: One of the biggest motivations for offering a free trial to your product is the obvious one. It reduces the risk for the customer to determine if your software meets their needs. The idea is get more prospective customers to try your product, with the hope that this generates more sales. There’s really nothing to argue here. A free trial, in many categories of software is almost a requirement. What you are trying to do is reduce the cost to the customer so that the potential benefit of your product outweighs the total cost of trying out your product. But, it’s not that simple. Simply making a “free trial” (for some period of time) available is not always sufficient to overcome this barrier. We’ll look at reasons why.
- Time To Actual Enjoyment: Often the actual price of your software is only a fraction of the actual cost a customer incurs to try your product. Lets say you are charging $499 for some business application. You give away a free trial of your product (downloadable via the web, of course). However, it takes 4+ hours for them to download, register/activate, learn and play with your product before they can get to see the enjoyment/benefit they were promised. In this case, the customer is spending more (in terms of time) than the cost of your product. Just because you have a free trial doesn’t mean the customer is not taking risk. The free trial is not always “free” from a customer’s perspective.
- Your Cost To Deliver Enjoyment: In order to get customers to enjoy your product, how much of your company/s time/resources will be consumed (on average)? Chances are, to deliver a great “free trial” experience (and increase the odds that more customers buy), you’re going to have to expend resources. Some of the cost is upfront (designing the “trial experience” from end to end) and some of it is after a customer has committed to try (like making support available). Obviously, you should try and drive this cost as low as possible – but be careful that in doing so, you are not decreasing the odds dramatically that more customers will buy. Offering free, human support to your trial customers may cost you money, but not doing so may prevent many customers from actually reaching that point of actual enjoyment.
- Intrusion Risk: In today’s world of malware of all sorts, including both intentional malware (spyware, viruses etc.) and unintentional malware (the product uninstallation doesn’t work and hoses the customer system sometimes) customers are often weary of installing anything. Technical folks don’t worry about this as much (because we have our ways of protecting ourselves and getting ourselves out of a mess if its necessary). But, normal users don’t have this degree of confidence. As such, if they suspect that your free trial may fall into one of the malware categories, there is a “cost” to them for taking that risk. So, you need to make it abundantly clear to them that this is a low risk. Ways to do this are to make them aware that installation (and uninstallation) will only take minutes. That there are actually people working in your company (so if they do have problems, you’ll help them out). Put yourself in the customer’s shoes and think of ways to ease their mind on this risk. (Of course, if you have a product that doesn’t require installing any bits on the customer’s computer, that takes away a lot of this headache).
- Lock-In Risk: Many of the free trials out there are “limited” versions of products. I’ve actually worked with trial versions of products that didn’t allow “saving” a user’s work. What I would do here is to make your trial “full featured”. To really win over the customer, also provide a way to “get their data out” (even after the trial has expired). For example, if you’re providing some email campaign management or other database-centric application (hosted or installed), make it easy for the customers to get their work out of your software (even if they decide not to become a customer). This creates goodwill.
- Price Ambiguity: If you are going to offer a free trial, you really need to make your pricing transparent. Don’t hide behind sales reps and pricing proposals sent to customers after they have tried the software. Potential customers will be worried that if they try your software, if it does actually work and bring value for them, they’re going to fall in love with it and perhaps the price still doesn’t fit. In fact, by being closed about your pricing, many customers will assume (sometimes rightly) that the free trial is just to lure them in, get them to fall in love with the product and then be “sold” when you, the software company have the most leverage. This is the old car dealers trick (“I’m sure we can work out a price that’s just right for you, but why not take this baby for a test drive and first see if you like it.”)
Overall, I’m a big fan of the free trial. It puts a lot
of pressure on you to deliver value since you are assuming a large portion of risk. An incidental benefit of the free trial (other than more customers) is that it will likely make your product experience better
. If your product sucks and nobody can figure out how to enjoy it, the free trial will make that painfully obvious very early in the game. You won’t get many “conversions” to paying customers.
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Editor’s note: This article has been guest authored by Brian Halligan. Brian is the co-founder of my current startup (http://www.hubspot.com). He has significant experience with startups and sales. We’re in the process of kicking off the HubSpot blog in the next several weeks with more regular posts on issues of interest to small businesses with an emphasis on technology trends and sales/marketing. Who Moved My Customers?
By Brian Halligan
I spent the bulk of my career managing sales forces at PTC
and at Groove Networks
company, before it got bought my Microsoft). More recently, through my work as a venture partner at Longworth Ventures
, I have consulted at a series of startups on sales and marketing strategy. It is striking how the state of the art in terms of sales and marketing has changed in the last ten years and how ill-suited the current tools are for helping executives deal with the new reality. Here are some of the changes/issues I see in the modern sales and marketing world. 1. The Internet Levels The Playing Field:
The Internet’s power is in how it “flattens” markets. The internet is really good at connecting the guy who makes left handed monkey wrenches in Atlanta with the left handed plumbers in Zurich. If you need evidence, look no further than Amazon, eBay, and Google who built large companies by connecting makers of niche products/services with consumers of niche products/services in a more efficient manner. Pre-internet, the size of your organization, the number of relationships your salespeople had, and similar metrics were most correlated with success. Bigger was usually better. Post-Internet, the playing field is more even. Even small businesses now can have global reach. Even small businesses can find their most ideal customers – or more accurately stated, can have their ideal customers find them
. The Internet has made it possible for many small businesses to acquire the right customers efficiently and compete with much larger enterprises. 2. Top Of the Funnel Has Changed:
Much has been written about how the Internet has changed how consumers shop. Little has been written about how the Internet has impacted the way businesses shop. Ten years ago when I was at PTC, if a customer wanted to learn about our products and potentially buy them, he engaged one of our sales reps by calling one of our offices. Information was asymmetric. The sales rep held most of the information and the customer had little power. The sales rep selectively released the information to the customer from the top of the proverbial funnel all the way to the bottom of the funnel. Today, if a customer wants to learn about PTC’s products, I suspect the first thing he does is start Googling, looks at PTC’s website, looks at PTC’s competitors websites, participates in discussion boards, subscribes to related industry blogs, etc. I suspect the potential new customer today doesn’t talk to a PTC sales rep until he is halfway down the funnel intellectually and knows almost as much about the product as the sales rep. 3. Codification -- Old Tools & Old Practices:
Most people running sales and marketing organizations in today’s companies learned their trade in the ‘80’s and ‘90’s. The tools used by these people (brochureware website + CRM) are remnants of the 1990s. These tools basically codify the pre-Internet best practices, many of which no longer work. This combination of a staff trained in the pre-internet era using tools architected for the pre-internet era makes evolving sales and marketing practices to leverage today’s business shopping behavior quite difficult. 4. Creating Customers v. Counting Customers
: Despite major initiatives around it, most small businesses do not reap much value from CRM investments. It turns out that the important business problem is no longer about counting
customer relationships in new ways as solved by CRM tools, rather it is about obtaining new customers in new ways. What businesses need to do is enable customers to find
you from the noise, and foster
a relationship with you at the top of the funnel. Today, customers want to manage their relationship with you. This is what some are referring to as Customer Managed Relationships (CMR) as opposed to Customer Relationship Management (CRM). 5. Front and Back Office Not Integrated:
The CRM system used by most small companies is either a complicated spreadsheet or something like Salesforce.com, a hosted version of the product Siebel took to market twenty years ago before the business shopping transformation occurred. [If there’s interest, I can create another entry dedicated to the myriad of CRM issues/opportunities I see – too much to fit in this article]. The typical small business has a third party convert a brochure into a website which is hard to edit (so reflects last year’s strategy), is static (so keyword landing pages can’t be created), has a low pagerank (<5), is not easily discoverable with the relevant keywords through Google, provides un-actionable analytics, etc. Both of these customer systems have problems in and of themselves, but the core problem is that the front-office/website (a.k.a. top of your funnel) and the back-office/crm (a.k.a. bottom of your funnel) are not connected.
Ok, so things are changing in the sales and marketing world and the tools no longer work effectively. So, what’s the answer? How does a forward-thinking smallish business leverage the Internet, evolve towards CMR, and actually grow sales
? I plan to share my thoughts on these topics in the next installment in this series of articles. Until then, would love to hear your thoughts and ideas in the comments section. I’ll take the best and most relevant of these comments and incorporate them into future articles to further the conversation.
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I had the opportunity to attend an event hosted by Y Combinator
today. Basically, the purpose of the meeting was to invite a number of angel investors (and some VCs) to see a presentation by the current portfolio of Y Combinator startups. If you are not familiar with Y Combinator (or Paul Graham, who leads the group), you can Google them and read-up. I’ve written several articles on them and their portfolio companies before. If you got to this article through Reddit, you may know that Reddit is a Y Combinator portfolio company.
Twelve different startups presented, each within 10 minutes so it was a fast paced event.
Disclaimer: This was a private event and I was invited as a potential angel investor (and in part because of my affiliation with Common Angels, a well known angel investor group in the Boston area). As such, I do not plan to reveal any “insider secrets”. Many of the companies presenting have not launched yet. So, I’ll remain focused on more general observations without naming specific companies.
Instead of just dumping my thoughts out in a stream of consciousness style, I thought I’d divide up my thoughts into multiple articles that are more organized. This is the first in the series of such articles (there will likely be one or two more).
Each of the dozen startups that presented today were chosen in large part because they had particularly smart and technically gifted founders. Paul Graham has a nose for this kind of stuff, and for the most part, I was impressed with the level of talent in the startups that presented. So, I offer the notes below not to criticize the presenters – many of whom are deeply technical but have not had to present for a living, but to draw lessons from some of my experience and having made all of the mistakes below, at least a few times. Note also that these are mostly “tactical” tips (and not strategic ones). I think the world often undervalues tactics sometimes (because strategy is so much sexier).
Presentation Tips For The Technically Gifted
- Web Demos Shouldn’t Require The Web: Most of the startups presenting had some type of web offering. All of the startups did some type of demo of their product . A couple of the companies had issues with their demo which were attributed to a “flaky wireless connection”. Having been in this situation countless times before, I will share with you an insider’s secret on web demos: Don’t rely on the web. In my first software company (which generated much of it’s revenue through web-based products), I made it a requirement that anyone that was going to demo our product had to be able to do so “stand-alone”. This was a pain in the ass because it required installing a bunch of software: the legacy system with which we integrated, a database server, a web server and our application (along with a bunch of third-party stuff). All of this had to co-exist peacefully on a single laptop. In fact, it was a right of passage for someone to get all the pieces right and have it working on their machine. But, this exercise was invaluable. Back then, the issue was that many of the sites we visited didn’t have internet connectivity in the conference rooms. Or if they did, it required access to the corporate proxy server and holding your nose just right in order to get a connection. By being “self contained” we avoided all of this risk. Moral of the story: Your web application is too important to trust to the web (when it comes to demos). Don’t get me wrong, if you have the app available on the web, that’s great (but you should always be able to demo everything off of a single laptop). [Note: One upside to using a real-live Internet connection is that it always gives you something to blame. I have a sneaking suspicion that some of the demo issues had nothing to do with the network connection and something to do with the software].
- Write Out A Demo Script (And Try It Out): We programmers get so close to our product that we know all of the features (and potholes) by heart. As such, we are completely capable of “winging it” and showing off the features we want during a demo. Despite this, I still strongly suggest that you write out a simple demo script (which is nothing more than outlining, at a high level, what you are going to show during the demo, in step-by-step form). This exercise is not because you’re going to forget what the steps are, but because you can then do a walk-through prior to the demo. I will bet you a dollar that if you wrote out a demo script right now, and walked through the steps in real life, you will encounter a small surprise. Something you didn’t expect. Moral of the story, write a script and try it out a couple of hours before the presentation. The reason for doing this a couple of hours before is that you then still have time to fix that “one last bug”. I cannot tell you the number of times I’ve come close to wanting to sell my soul for an extra 30 minutes to “fix things” when I realized something was broken before a big demo.
- Control The Variables: Once you your demo ready, you need to minimize the amount of change that occurs in the hours leading up to the demo. This is why I’m so emphatic about #1 (i.e. demoing from a stand-alone laptop). If you demo from a web server, there are weird things that happen in the night. Some from your hosting provider, some from your co-founder (who may not admit it), some from gremlins that change configuration files or install a new build of the application 45 minutes before the demo. In short, try to minimize the number of variables so you can control your environment. If you are demoing off of your laptop, don’t install that fancy new video device driver that lets you pan as if you were on a 8000x6000 screen using mouse gestures and a road map. Wait until after the demo to do that.
- Test With Lower Resolution: If you’re like me, you’re used to running your laptop on a resolution that is likely non-standard (and pretty high). For example, my primary machine runs at 1400x1050 (which happens to be the native resolution of my Thinkpad). Chances are, whatever LCD projector you’re going to demo from will not deal well with your native resolution. The good news is that most projectors will now deal fine with 1024x768 (though I still encounter situations where even that is too much and I have to drop to 800x600). The message here is very simple. Try out your presentation at the lower resolution. My heart goes out to all the presenters today that had to fiddle with their display settings to get their presentation up and running. It’s very painful when you have limited time and a medium-sized audience. It’s not that hard to try it out first and see what happens.
- Stage Space Is Precious: Many of the presenting companies today had all of the team members up “on stage” even though in most cases, they didn’t have a speaking role. I’m fine with one person running the demo and the other talking (though I personally like to do both myself as it makes the demo smoother), but I think it is ineffective to have extraneous people on the stage. Note I’m not suggesting that these people are extraneous all the time – just in this instance. There will come a time when you need to demonstrate to people that someone more than yourself believes in your idea enough to spend their precious time on it. But, in situations like this where time and space is limited, your core mission is to get your point across. If having four people on the stage is necessary to do that, by all means do that – if not, keep it to a minimum. Audiences are easily distracted.
- Play To Your Strengths: Most of the presenters today did a really good job of this. They stuck to the basics and talked about things they knew a fair bit about. This was mostly the product, technology and possible user scenarios. In a few cases, the presenters tried to address the issue of revenue generation and business models. In these cases, it seemed a little weak (which is understandable, for very early stage companies). My advice is: If you haven’t thought through in detail how you might make money, don’t try and fake it. Otherwise it sounds like the “look ma, I know how to say things like business model and revenue generation”. It comes off as empty and indefensible. There’s no need for it in these kinds of situations. Focus on what you know better than everyone else in the room.
- Invite Conversation: At the end of the presentation, *ask for a conversation” (not money, as it’s not appropriate to do that yet),. Something like: “Sorry we don’t have time to tell you more out of respect for the schedule, but we’d love to talk to you in more detail about what we’re doing. Please grab us during the break…” Interestingly, all of the startup companies that presented today did a great job of this.
If you were one of the presenting companies yesterday and happen to be reading this, my hat is off to you. It’s really hard to do a 10 minute presentation. I’d much rather do a 60 minute presentation than a 10 minute one. 10 minutes doesn’t give you a lot of time to build rapport with the audience or otherwise “get into your groove”. The above tips are mostly to help all of you technical folks get the most out of your presentations and demos. I am by no means the expert, but have done enough of these now that I’ve accumulated a few war scars.
How about you? What tips would you add to the above list of technical people doing startup presentations? Would love to add to my collection of things to do and not do.
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