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Posts Tagged ‘advisors’

By Mark Zimmerman

Learn from the stories of crash test dummy start-upsWhen a start-up is looking for advice or models to follow, the obvious place to look is for successful ventures that have a similar business model or similar markets.  Lots can be learned by studying success stories in books like Founders at Work or on the web.  However, I think even more can be learned by an honest and thoughtful post-mortem of a failed start-up.  I know I learned far more struggling than winning. 

Marc Hedlund, co-founder of Wesabe recently wrote a fantastic blog post analyzing why he believes Wesabe lost to Mint.

If you’re not familiar with the story, here’s the Coles Notes version: Wesabe and Mint were both online personal finance sites that sought to displace the industry leader Intuit’s Quicken. Wesabe is now closed.  Mint was acquired by Intuit for $170 million.

In the article, he dispels much of the conventional wisdom about why Wesabe lost to Mint and offers his own explanation:

“Between the worse data aggregation method and the much higher amount of work Wesabe made you do, it was far easier to have a good experience on Mint, and that good experience came far more quickly. Everything I’ve mentioned — not being dependent on a single source provider, preserving users’ privacy, helping users actually make positive change in their financial lives — all of those things are great, rational reasons to pursue what we pursued. But none of them matter if the product is harder to use, since most people simply won’t care enough or get enough benefit from long-term features if a shorter-term alternative is available.”

The post has generated lots of discussion in particular this piece from Eric Reis and has prompted other founders including Ben Yoskovitz of Standout Jobs to share.  A collection of 32 such postmortems is here. Definitely worthwhile reading for any entrepreneur.

Mark advises entrepreneurs in the information technology, communications and entertainment practice at MaRS. He specializes in B2B enterprise software, SaaS business models as well as security and privacy.

The RIC blog is designed as a showcase for entrepreneurs and innovation. Our guest bloggers provide a wealth of information based on their personal experiences. Visit RIC Centre for more information on how RIC can accelerate your ideas to market.

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By Mark Zimmerman

“How do we find a good sales person?” is a question I get asked almost every day here at MaRS. The assumption being that hiring someone experienced, someone with lots of contacts in the segment, who thrives on carrying a quota, who isn’t terrified but rather excited to make a cold call or a pitch, someone in short whose job is revenue will get the company to break-even more quickly. In many cases, this assumption is wrong.

I’ve led sales in two start-up situations. In the first, we quickly found a value proposition that resonated with our chosen customers and a sales process that worked.  It was a fast-growing market and success was about scaling the team and managing activity so that we’d capture an “unfair” share of that growth.  We did.

In the second, we had a great product and some early-adopter customers but we hadn’t found a value proposition that worked for the market segment as a whole. I hired great experienced sales people from the sector; armed them with good tools and sent them out to grow the business. They failed. I failed. All the professional sales methodologies and sales management skills I’d learned since the first time were useless or even counterproductive.  They were skills for optimizing a working process in a company that had found what Marc Andreessen calls “product/market fit“. We hadn’t.  We were trying to execute and refine a process for selling a value proposition that the market didn’t want.

Eventually, we learned. The hard way.

What we learned were the broad strokes of what has been distilled, developed and clarified by Steven Blank, a serial entrepreneur and now professor at Stanford and Haas/Berkley, in his “Customer Development” process. The process has four steps:

Customer Development

  1. Customer Discovery, where a start-up tests its hypothesis about a customer’s problem and their proposed solution.
  2. Customer Validation, where a start-up develops, tests and iterates until it finds a repeatable and scalable sales process.
  3. Customer Creation, where a company’s focus turns from finding demand to creating it in order to scale revenue.
  4. Company Building, where a company transitions from an organization designed for learning and flexibility into a one engineered for execution.

If your start-up has demonstrated product/market fit and has a tested and repeatable sales model, by all means hire an experienced sales pro from an established organization in your target market. They are likely to be just what you need in steps three and four.

But if, like many start-ups, you are still searching for that repeatable sales model then you need someone to focus on steps one and two. Often this will be your job as the founder/CEO. Get out of your office and meet with potential customers: pitch, listen, learn, repeat.  If you aren’t comfortable absolutely can’t do this you need to look for someone who is excited about finding a winning model rather than executing it.  It’s a tough search,  that will often take you out of the ranks of sales professionals into adjacent spaces like business development, product marketing or product management, but it will greatly increase your chances of success.

Mark advises entrepreneurs in the information technology, communications and entertainment practice at MaRS. He specializes in B2B enterprise software, SaaS business models as well as security and privacy.

The RIC blog is designed as a showcase for entrepreneurs and innovation. Our guest bloggers provide a wealth of information based on their personal experiences. Visit RIC Centre for more information on how RIC can accelerate your ideas to market.

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By David Pasieka

There’s lots of information about the investor pitch (see our Entrepreneur’s Toolkit, “Elements of a pitch deck). Building a deck is one thing — delivering the message is quite another.

I recently reconnected with an old colleague, David Doze of Pilot PMR, who has helped shape a number of key messages for my companies. With a little liquid encouragement, I convinced him to help package a program for some my early-stage clients: “Sound Bites for Success.”

In our room of 12 CEO’s, David lamented that “The world does not need more information, more fine print or more arguments – leaders need to take the complex and make it digestible.”

Here, his three guiding principles of messaging:

  1. Relevance – Do you have the right message to “cut through the clutter”?
  2. Reputation – Do you have the credibility to pull it off with conviction?
  3. Reach – How do you get the message out to the audience who has a different view of the world than you?

David suggests the following road map for building these key messages:

Understand your audience and their orientation – This seems obvious but you would be surprised how often it is overlooked. I recently observed a CEO present her story to a very sophisticated prospect in charge of a large corporate empire. Our CEO unfortunately had limited understanding of the organization that they were pitching to. It was too bad as the meeting could have had a more fruitful set of action items had our CEO been better prepared.

Frame your message – A frame provides context and helps ensure that the message gets embedded into memory for future recall. This lasting message helps you stand out in a crowd. I observed an investor pitch last quarter in which the CEO had a half-hour before the decision-maker needed to leave the meeting. The CEO and potential investor had some historical linkage to some common industry leaders. Unfortunately, the session was framed as an introduction of the company to the potential investor. The digression into “who do you know” became a distraction and blurred the main purpose of the meeting. The event timed out without key messages being delivered.

Be authentic and make credible statements – One of the easiest ways to do this is to present claims that are defensible with proof. We observed a company pitch their story to some angels last month. The claims about the product were all-encompassing: it sliced, it diced and made coffee too! The CEO was labeled as a “promoter” who was blowing smoke–the claims were not reasonable. This clearly was not the lasting message our CEO wished to convey.

Make the intangible real – An inventor is clearly proud of the complexity of their technology and its ability to serve many practical applications. I have observed too many presentations where the audience’s eyes glaze over with the level of detail and its applicability to this or that sector. Entrepreneurs need to focus on the highest margin opportunity and simplify what the product or service can actually do in plain and practical language.

Leave a lasting picture – You will want your audience to be talking about your company long after you have left the stage. At our Sound Bite competition we went around the room and asked the question: “What did you remember most?” It was surprising what key messages were clearly lost in the fog.

Make messaging part of your priority for your next presentation. Make sure that your sound bites truly leave a mark.

David Pasieka is the Entrepreneur-in-Residence at the RIC Centre. Learn more here. Visit Our Contributors page for more information about David. Read his blog at www.cedarvue.blogspot.com

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