Real Market vs Expectations Market — Your Investor Pitch

February 25, 2013

This is a modified version of a post from the current Leanlaunch Pad session.

One of the most challenging aspects of business today is that the financial world mostly lives in an “Expectations Market” (investing/gambling) and your success as a startup requires that you immerse yourself in a “Real Market” (servicing customers).

As you progress you will eventually need to develop an investor presentation. You will find that these people speak a completely different language than you. It’s mainly because they are “betting on you”. They are not interested in your work. They may say that you have a winner, and that is in context of …

They are interested in knowing that you are interested in your work and are doing it. They are betting on the likelihood of your ability to solve the problem you are working on.

Practicing Your Story in “Gambler Speak” is Important

So you need to practice talking about your work in these terms. The terms of an investor ( or much easier to understand .. that of a gambler). This is what the UBC Tech Ventures class has done very well. Mike Lyons is a master of mapping the “reality story” to the “expectations market”. His style is the opposite of LLP. That is start with what the “expectations” market wants to hear and do the work required to meet that. We are solving “real peoples” problems and couching that need in the words of the “expectations” market. They both end up in the same place. Each is valid. Each has been going on for a long time.

Some Reading – Roger Martin, Dean of UofT B School

Roger Martin, Dean of UofT’s Business School, has written a great book on this subject called, “Fixing the Game”. I highly recommend that you read the first chapter. It summarizes the world you will soon be dealing with. It’s good to know why people respond differently. You can meet them in kind. Show them why you are a low risk. Why can you do it better than the others. That’s what they want to know. They want low risk returns.

Fixing the Game: First Chapter here: http://reg.accelacomm.com/servlet/Frs.frs?Context=LOGENTRY&Source=source&Source_BC=72&Script=/LP/51327737/reg&


Web Sales – Readings & Links

February 18, 2013

This is a modified version of a post from the current Leanlaunch Pad session. It’s intention is to provide a set of “Introduction to Web Sales” readings.

Web Sales.

On the topic of Selling on the Web the Startup Owner’s Manual « Steve Blank is a great resource. There are a couple things extra that may help. The first is getting in tune with what the “Spirit of Internet Marketing” is, or could be. The second is that funnel development is an ongoing puzzle – there are lots of innovators.

The High Level – What is the Spirit of Internet Marketing

The best place to start is still Seth Godin’s Permission Marketing. The book has the least jargon and get’s to the core of what you’re trying to do. From this base of knowledge you’ll be able to extend to the many more modern takes on the subject.

Funnel Development ( more Customer Development fanatics )

Startup Owners Manual Web/Mobile Selling

  • Appendix C “How To Build a Web Startup: A Simple Overview” provides a very good primer. (page 541–547)
  • The Customer Relationship section (page 126–168 ) describes the Get-Keep-Grow funnel with adequate detail for Customer Discovery.
  • “The Acquire/Activate Customers Plan for Web/Mobile” is page 304–328 describes the Get-Keep-Grow funnel for Customer Validation.
    • The “Managing The Activate Plan” diagram (page 328) is a good summary of what you’re trying to do.

Physical Channel Needs the Web Too.

Physical Channel Products will also need an Online presence – “Online Tools for Physical Channels” page 302–303.


What is Sales? Recommended Readings

February 18, 2013

This is a modified version of a post from the current Leanlaunch Pad session. It’s intention is to provide a set of “Introduction to Sales” readings.

Let’s talks Sales.
I cover the positioning of a Sales department in a company by Steve Blank. The “Spirit of Sales” by Malcolm Gladwell on Ronco founder Ron Popeil. Sales books for Managers and for Sales people. I also add in Geoffrey Moore’s discussion of “innovation styles” available to companies.
enjoy.

Positioning of Sales vs Marketing, Engineering, Finance, Legal, etc

The Sharp End of the Stick « Steve Blank

In an early stage startup, instead of sales being up front, the point departments are likely to be product development and customer development. Later on in this same company’s life, sales will become the pointy end and product development moves to a supporting role. In other companies it may be that manufacturing or finance is the sharp end of the stick. In an IP licensing business, legal and finance are the sharp end of the stick. It varies by company and changes over time. There’s no magic formula but there are always “leading” departments. And all “leading” departments have some type of “consequence-based” feedback loops that make success or failure obvious.

The “Spirit of Selling” — Gladwell covers Ronco

This story is magic. Malcolm Gladwell’s coverage of Ronco founder Ron Popeil in The Pitchman captures the essence of selling products you love. Every product developer, marketer, or sales person needs to read this. In the end you can’t fake product love and knowledge. Ron Popeil knows his products because he lives with his products.

The “shocking point” is that this story is relevant to us all and yet Ronco is the “sleazy” television sales world. Many people simple will not read this and get upset with me for recommending it to them.

Sales Books

ProActive

I asked two extremely knowledgeable Sales people to recommend a sales book for me. From the VP of Sales I got Customer Centric Selling. I liked this recommendation because I had already read and liked Solution Selling by Bosworth. From the best sales person I’ve ever worked with I got ProActive Sales Management by Skip Miller

CCS Customer Centric Selling « Bosworth

I like both books, they’ll both make a difference in your work. It was very interesting the choice that each person made since each book has very similar themes. In the details each book services a different audience. So if you’re a sales guy looking for direct tips and a means for understanding corporate sales management go for ProActive. It’s feet are firmly on the ground of a sales guy. If you are a management type looking to understand sales systems go for CustomerCentric.

Personal Perspective – ProActive Sales Managment

ProActive Selling: Control the Process – Win the Sale: Amazon.ca: William “Skip” Miller: Books

Managing Perspective – Customer Centric Selling

Customer Centric Selling « Bosworth

Innovation Techniques — “Dealing With Darwin”

Geoffrey Moore’s – Dealing With Darwin does an amazing job discussing Innovation Techniques available to companies as they age. This book is recommended for “Intrapreneurial Teams”. For the rest of you it is nice to know. It provides a detailed discussion on why Product Innovation is the innovation style necessary for “young” startups.

Summary Points

  • The book is about managing innovation and overcoming inertia in established enterprises.
  • It’s major thesis is that most companies love to innovate but hate to take risk, the net result being lots of me-too innovations that lack economic impact because they do not have the force to distinctively differentiate their offers.
  • Its primary prescription is to pick a single vector of innovation and march so far down it that your competition either cannot or will not follow.
  • The book describes fourteen innovation vectors all told. Different types are privileged at different points in the category maturity life cycle, so that innovation strategy must adapt to life-cycle dynamics. The overall model is used to help management teams winnow down innovation vector choices to one or two and align the bulk of their investment behind that choice.

Riffing on Consumerization of Technology (@pmarca tech crunch interview )

February 6, 2013

Marc Andreessen On The Future Of Enterprise | TechCrunch is a “beautiful riff” on the Consumerization of Enterprise Software. If you’re in the technology business you’ve known this for a long time. The consumer problems are often “more technically challenging” than the Enterprise/Telco problems. Thus the consumer solutions are often very good at a fraction of the selling price. They are hard to ignore. For example, in networking hardware, audio and video usage in the home makes bandwidth much more important for consumers than enterprises. The enterprise desktop is easy to serve. While the home desktop and media center is hard. A Linksys EA6500 Router is a marvel. This is overkill for a small office and perfect for media centered home. The “new” thing for me is the extent to which this is now true and the myriad of solutions available. Wow!

More Banter

I love listening to Marc Andreesen’s manifesto style. Love ’em or hate ’em. There is a lot to be learned by this technology “State of the Union” post.

It reminds me of my past riffs on the Consumerization of Telecom Semiconductors. CommSemi Nightmares — 802.3 L3+ chips are just “a backplane device” « Iain’s Chips & Tech. I had a good time re-reading the post. It’s not for broad consumption. It’s an acronym deluge. It was for an audience of 5. Once a chip-nerd always a chip-nerd. C’est la vie. At least my intended audience read it.


Synthesizing Your Work ( HowTo: Customer Development & Leanlaunch Pad )

February 6, 2013

* updated Jan 7, 2014 – add “Insight & Inspiration Map” as super-set of Market Adoption Forces Map
* updated Nov 18, 2013 – add Competitive Analysis – Petal Diagram » Steve Blank
* updated Mar 25, 2013 - includes Business Model Canvas as Scorecard examples – Jersey Square video and MammOptics.ppt

—-

I’ve been having many meetings with people early on in their Customer Development Process. A common issue is that the Startup Owners Manual by Steve Blank is very large and figuring out where to start is overwhelming. The second issue is the unsaid, “You don’t really mean I have to develop my own diagrams and models?”. The answer is, “Yes your progress is directly correlated to how well your version of these diagrams and models is!”. Here is a post from the current LLP workshop that I’m running. It may help you prioritize. Enjoy.

Synthesizing Your Work

Here are some thoughts on synthesizing your work/data, gathering insights from your data, and develop new questions/tests to perform.

First it would be good to go back to Chapter 4 and revisit your hypotheses. In doing that you’ll see that there are a lot of diagrams and models that will help you synthesize your work. The practice of evolving these diagrams from “rough sketches” to “working models” is an important part of your work. Telling your story with these supporting diagrams will become a powerful tool for you. The gaps in the diagrams are most useful because these gaps highlight what you need to do next. Continue to focus on the “fit” between “Value Proposition” and “Customer Segments”.

The second point is that we have been focussing on the marketing aspect and you should take a peek at the Selling Concepts. This brings Channels, Customer Relationships, and Revenues more into view.

The third is to read the “Market Type” subsection pages 112–122. There is a big difference in the actions you will need to take in entering Existing, New, and Re-Segmented markets. The key is that no one is entering “existing” market head on – you are either a creating a new segment or a new market. Please look at Market Type- Cost of Entry, Table 4.2, page 115 for an answer to why this is the case.

Fourth. Some of you need to read Intellectual Property ( SOM page 171–174).

Specifically

Go Back to Chapter 4 – Refine and Go Deeper

Customer Discovery Phase One: State Your Business Model Hypotheses

  • Review Chapter 4 with a focus on Value Proposition and Customer Segments.
    • See if you can take your Canvas to another level.
  • Then take a look at Channels, Customer Relationships, and Revenue. The online How to Build a Startup course covers this material with a depth that complements the textbook.

Diagrams, Visualization, Models

The Startup Owners Manual is full of techniques to diagram your work. There are Customer Workflow, Purchasing Decision Flows, Sales Roadmaps, Get-Keep-Grow Funnels, Market Maps, Organization Influence Maps, and more. Here are some that you should take begin getting familiar with and start working on.

Diagram Figure Page Number
- Business Model Canvas Examples
( As Scorecard w/ Iterations )
* MammOptics 9 Canvas Iterations
* Jersey Square Canvas Video
- Customer Workflow (organizational/influence map) 4.4 Page 92
- Customer Archetypes to Drive Strategy 4.5 Page 94
- Day-in-the-Life To Drive Strategy 4.6 Page 95
- Petal Diagram
(Competitive Analysis & Market Segmentation)
Petal Diagram
- Market Type Tradeoffs Table 4.1 Page 114
- Market Map Fig 4.1 Page 119
- “Insight & Inspiration” Map
(super-set of Market Adoption Forces)
Example
- Market Adoption Forces
( Key Players )
MammOptics (Adoption)
- Purchasing Decision Tree MammOptics (Purchasing Tree)
- Customer Workflow
(Before & After)
MammOptics(Customer Workflow)
- Get, Keep, Grow Funnel Figure 4.11 page 126
- Marketing Collateral Plan Figure 9.2 page 301
- Plan of Record Sketch
(whole product timeline)
(includes Marketing Collateral) PoR Sketch.ppt
- Service Journey
(Day in Life of Product )
* Internet H/W
* Medical V0.1
- Organization & Influence Maps “Deeper” Page 345–349
- Test Selling Page 375
- Refine Influence map page 389–395
- Sales Access Strategy Map 10.10 page 389–395
- Sales Roadmap figure 10.11 page 394

Comment on “What is the End Game?”

For me ( physical products and channels) the End Game of “customer development” is to develop a Sales Funnel with supporting Marketing activities, and materials, for your product. This translates into four maps/models: 1) Plan of Record Sketch ( the whole product timeline), 2) Get-Keep-Grow Funnel model, 3) Sales Access Strategy Map, and 4) the Sales Roadmap. If you can “discover” these and make them “operational” then everything else will fall into place. You will have what is called, “Traction” for your product/service. From this point you can “really” develop a solid “bottom-up” Sales Forecast which will provide you with a ton of leverage with investors. To make those models work you’ll need to do a lot detail work first ( iteratively ).

For more colour on the priorities of Sales vs. Marketing vs. Engineering read on. The Sharp End of the Stick « Steve Blank


What About Time in a Startup, or Entrepreneurial, Community? We Get Old and Want Stability

December 19, 2012

knowledge-funnel.png

What about time? One point that surrounds Brad Feld’s Startup communities is the element of time. He says that an entrepreneurial leader needs to commit to a “rolling” 20 years.

Over that period of time it is pretty easy to switch from the “crazy networked entrepreneur” to the “staid hierarchical status quo” ( He calls this the patriarch problem). I think it’s a little deeper than one guy. We are all searching for stability.

On a personal level the Rands In Repose: Stables and Volatiles post speaks to an entrepreneurs journey from “volatile” to “stable”. Most people I passed this along to said, “Great Stuff. It doesn’t talk about the needed renewal. The story where the stable goes back to his/her roots. Where is that article?”

On a higher level Roger Martin’s Knowledge Funnel illustrates this journey. His book The Design of Business does a great job of describing communication between what he calls “validity” and “reliability”.

On another plane psychologist Jon Haidt’s new book Book Review: The Righteous Mind – WSJ.com speaks to the moral values espoused by those who believe more in individuality vs those who believe in institutions. Interesting stuff. This book is a great read. Absolutely mind warping. Buy it for yourself for Christmas. Or go the library and put yourself on the wait list.


Thank You Steve Blank! “Open Source Entrepreneurship” is an amazing milestone

November 27, 2012

Today Steve Blank posted “Open Source Entrepreneurship” which is an update on all the materials available on his website and a challenge for us all to “get out of the building and make something happen!”

This is an amazing resource and I highly recommend that all entrepreneurs dig into it. Today the best place to start is probably the udacity Lean LaunchPad on-line course.

Reminiscing — The Good Old Days — Open Source since before 2007?

I’ve been trying my best to use this material and keep the spirit of “Open Source” alive. I just checked my e-mail archive to see when I received my first “Open Source” slide-deck from Steve. It was in 2007! It’s so amazing how much stuff he’s made available and how open he’s been with it. I’ve tried to keep that intention and openness all the way along. Thanks for setting a great standard.


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