swombat.com

daily articles for founders

Here are 10 quality posts from the Founder's Library:

Creating a great case study  

Some very practical tips, posted by Kristi Hines on the KissMetrics blog:

  1. Write About Someone Your Ideal Customer Can Relate To
  2. Tell the Story from Start to Finish
  3. Provide Easy to Read Formatting
  4. Include Real Numbers
  5. Talk Specific Strategy
  6. Try Different Formats
  7. Appeal to Different Types of Learners
  8. Make Them Easy to Find

Keep bookmarked, and go through the list next time you're putting together a case study page.

How to work as a CEO/COO team  

Sometimes, the best solutions are the simplest.

Joel Gascoigne:

I asked Leo to become COO in November last year. (...) The problem we found, was that it was almost impossible to clearly separate these two processes. If Leo was working with someone to try and set goals and keep to them, he inevitably had to make decisions which affected our direction.

It felt like with the new structure we were suddenly both involved in every decision. The goal of the new role for Leo was to speed things up, but with both of us discussing every decision, things were sometimes grinding to a halt, especially in cases where we didn't immediately agree.

The solution? Split the CEO responsibilities across the two roles, with each doing what they do best!

This may seem really simple in hindsight, but it's the kind of solution that's just not all that obvious when you're first going through it. The article is well worth a read.

Why VCs lie  

Fascinating insight, by Josh Breinlinger, about why VCs rarely mention team issues when they reject a startup with a dysfunctional team:

I decided I'd test the waters a bit. I told some founders that it was because of them. I told some founders it was because of their co-founder. And I've lied and said "you just don't have enough traction yet." Here's what happens...

Read the article for his findings. Josh also offers some advice to founders to help change this dynamic:

  • More direct soliciation of feedback. "Do you have any feedback for me personally?"
  • More two-way feedback. VCs should seek feedback from entrepreneurs too. If you pitch me or know me, please give me feedback!
  • Check egos. It's easy to get defensive... just try hard not to.
Getting feedback on your prototype  

The guys at PaperBuff share this insight and set of tools to achieve it:

One of my favorite pieces of Paul Graham startup wisdom is that the entire point of your early product is to get your users to tell you what you actually should build.

To achieve this, feedback has to be:

  1. Fast: your feedback loop needs to be tight, and the tools need to support that.
  2. Actionable: Measuring page views and the like might give you a nice feeling, but actionable feedback is what you need.
  3. Scalable enough: it doesn't need to scale to thousands of users; if it gives you the right feedback right now with the right amount of effort, that's good enough for now.
  4. Candid: back up what people say with their actions; for example, if people tell you they love your site, but they never come back, the feedback is suspicious.

For these purposes, they propose a few tools which can be useful at that crucial stage:

  • Olark for chatting to your users in real time
  • Mixpanel for real-time event tracking
  • Chartbeat for real-time analytics
  • Clicky for traditional web analytics

Early on in a startup's life, user activity streams can also be essential.

Evolution of a dashboard: beware vanity metrics  

Des Traynor proposes 5 stages of a startup's dashboard's evolution. The right metrics can and should drive your decisions, so a dashboard can be essential to make your decision process quicker and smoother. The five stages are:

  1. One step above "select count(user_id)": when you just need some idea what's going on. Don't overdo it at this stage.
  2. Aggregation: when you want to spot patterns across groups of users. At this stage, it becomes interesting to calculate averages.
  3. Trends: display the averages over time on a graph so that you can more easily spot trends
  4. Insights and actions: mark up the graphs so that you can better attribute causes to changes in trends.
  5. Projections: when you have enough data that you can take guesses as to how changes in your activities will affect future changes.

It's an interesting post, but there is one problem: the focus is too much on vanity metrics. Not a single one of the metrics used in the examples are actionable metrics. Vanity metrics are dangerous for a couple of reasons:

  • They give you a sense of being in control even when you're not.
  • They can lead you to make the wrong decisions. Data is dangerous.

It can be useful to collect these types of metrics anyway, because gut feeling can sometimes uncover connections that data could not, but always be wary of wild guesses as to why something is trending one way or another. Metrics should be directly linked to hypotheses which you're testing, and directly lead to decisions which will increase your sales.

I don't know  

Mark Suster:

She reminded us that in the world we live in we are often expected to be experts. We are expected to know everything and many people rush to conclusions given a limited set of information.

(...)

Learning comes from starting with a point-of-view that says, "I don't know." I said I learned this 15 years ago because that is when I stopped being a consultant.

Mark explains how the "here's an answer/solution" posture can hurt your business and your investments. This is an essential lesson for all founders, particularly since we are frequently thrown into situations where posturing seems to be the right choice (even if it's not), so it's easy to fall into the trap of thinking that it's always the right choice!

Worth reading if only for the Jewish story at the beginning.

Sales comes out of who you genuinely are

Have you seen Glengarry Glen Ross?

It's a pretty awesome movie based on a play by David Mamet. There's a scene in there that has been posted ad nauseam, the Always Be Closing speech where Alec Baldwin puts some serious pressure on the small sales team at some kind of real estate company that's never fully described.

A less well-known feature of that film is the sales pitch and approach followed by that company's star salesperson, Ricky Roma, played by Al Pacino. Ricky is shown spouting ten shades of bullshit in a bar with his "mark", convincing him to buy a product that's clearly not good for him (and very expensive), and then actually lying to his face to try and maintain the sale when his customer realises (after being told by his wife that she'll divorce and ruin him if he doesn't cancel the sale) that he made a really, really bad deal that's about to literally destroy his life and put him in the gutter.

What does Ricky Roma do in this situation? He lies and pretends the contract can be cancelled later, so that he can lock in this "customer" into this sale that will destroy him.

Ricky Roma is a complete asshole and a stain on the reputation of salespeople. David Mamet must not have known a lot of salespeople, to have this view of what a good salesperson is, because that is definitely not how great salespeople work.

Which brings me to real salespeople, the ones who actually make sales in the real world, rather than in fantasy plays. The kind that you need to become yourself, to an extent, in order to be a successful founder.

Win-win-win

Successful salespeople don't pressure or bullshit the prospect into a sale. They are persistent, but they are always focused on achieving a deal where it will benefit all parties.

This means that a great salesperson will never be selling something that they don't believe actually helps the customer. And that has to be the starting point of every conversation with a potential customer. How can I help you? Is there something that I sell or someone that I know that can make your life better?

For the last few months, I immersed myself deeply in the sales process for GrantTree, but over the last few years, I've observed quite a few competent salespeople at work, and been part of many sales, both successful and not, and the conversation, particularly when selling high-value, high-price items, always starts with how to best help the person sitting in front of you (or on the other side of the phone call).

How you can help someone always starts with who you are. I'm a serial entrepreneur, with a blog full of advice for startups, with connections and experience that come from 5, 6 years of doing this, and with a business that sells a product that can help tech startups. So my conversations always start with understanding where the person on the other side is at the moment, and how I can help them. The best situations for me to help most tangibly is if there is a match between the services GrantTree offers and the state their business is in, but if those services won't help them, I would never push them into deals that won't provide a clearly positive outcome for them.

For example, some clients are too small for GrantTree to be able to add much value. It's the nature of government incentives, which are based on how much you spend, that the more you spend, the more you can get back. And the more you can get back, the bigger the difference it makes to use a specialist. I regularly speak to founders whose businesses are too small or early to make the most out of GrantTree's services. In those cases, I try to help them anyway - even without getting anything out of it for GrantTree.

This is how I start. My cofounder, Paulina, approaches clients differently. Her strength includes a very wide network of people who might be great connections for the person she's talking to, so naturally she leverages that, rather than tech startup experience, to help the potential client. But again - the focus is on helping the other person, never on trying to squeeze a deal out of circumstances where we can't make a positive impact on their business.

How will you approach your potential customers? That entirely depends on who you are, what you bring to the table. But it always has to be first focused on helping the other person. Otherwise, you are not a salesperson, you are a scammer looking for a quick buck, like Ricky Roma.

Getting over the money hurdle

With that in mind, as a geek, I used to find it hard to get past the fact that ultimately, I was doing this to make some money. This is probably the greatest hurdle for anyone (even people who eventually become master salespeople): realising that it's ok to make money from a deal.

It sounds trite, cute almost, but it's a real problem. Most people who have not spent a considerable amount of time selling will feel that the whole process is made unwholesome because they are, ultimately, doing it out of self-interest too. Yes, I'm trying to help the other person, but I'm also trying to make some money, so I must be selfish, right?

This comes back to believing in your product. If you don't believe that your product genuinely adds to your customers' lives, genuinely makes things better, genuinely helps, then don't sell it until you do, because then you are selling a scam and you should indeed be ashamed of doing so.

However, if you do believe in your product, then focus on that and the issue will go away. Here are some examples:

Patrick McKenzie wrote about how he started charging a lot more for his services after a conversation with Thomas Ptacek, who pointed out the vast amounts of value he was creating for the client business. Charging more enabled him to focus on providing top quality advice to people who could really make use of it. He's since helped many other companies to multiply their revenues. He wouldn't be able to do that unless he charged a lot for it (he wouldn't have the time to do it properly, with the right amount of focus). Patrick believes in his product (and should). If Patrick tries to sell to a business that would be a good fit, I'm sure he has no doubt in his mind that if the sale goes through, both himself and the client will benefit greatly. Is that a product you can believe in? Absolutely.

George, one of our recent hires at GrantTree used to work for Point-Two, who sell air jackets for horse riders that inflate upon impact. These jackets can save your life. He showed me a video recently of a woman whose horse hesitated before a jump. She went over the obstacle. The horse came tumbling after, on top of her. The 600-kg beast landed squarely on top of her. The air jacket meant that she walked away with a few bruised ribs. That jacket saved her life. Is that a product you can believe in? Absolutely.

GrantTree sells help with getting government funding. For the right clients, we increase the amount of funding obtained substantially, through our knowledge of the rules, as well as reducing the amount of time spent preparing the filings and the risk of doing so. Many of our clients would not file, or would file much smaller claims, if it wasn't for us. We regularly take on clients who have lost all belief in UK government funding, and are very surprised when the funding does go through. Or we take on clients who are already making use of the funding schemes and we substantially increase the amount that they get. Is that a product you can believe in? Absolutely.

Given that these are all products that add very tangible amounts of value to the clients, is it reasonable to make money for them? Absolutely. Making money from his consulting services means that Patrick has been able to go around the world helping well targeted businesses with his knowledge. Making money from the jackets means that Point-two have been able to save lives. Making money from government funding services means that GrantTree has been able to grow and help even more businesses. None of those things would have happened if those businesses did not make money.

So don't feel bad about the fact that you'll get money out of the deal too. If you believe your product genuinely helps your customers, then making money from it is absolutely deserved and reasonable.

Focus on the win-win nature of every deal you make and, over time, the self-accusation of selfishness will fade away.

In conclusion

Mythological salesmen like Ricky Roma, who are really highly skilled scammers, have given the sales profession a bad name. If you want to be a successful founder, sales is one of the many skills you need to learn.

Get over your fear of making good money from selling good services by realising that every sale you make will benefit your customers (if your product is worth selling) far more than it will cost them, and start every sale from the point of view that you are trying to help the other person.

Good luck with it! Sales is damn hard, even without misconceived notions about whether it's ok to make money when selling something.


Creating serendipity by hanging out in the right places  

Here's a two-month old article from Rob Fitzpatrick which just resurfaced on HN and makes great reading to start the year.

I've talked before about doing things that create opportunities - for me, for example, blogging is a great opportunity creator. I meet many people via email that end up becoming real-life contacts. Rob explains that this can apply to any kind of serendipitous event you're trying to make happen:

I found a conference with unusually smart attendees and began hanging around the events and being helpful to the organiser until he started including me in things. Similarly, when I'm single, I work out of cafes instead of my office. If I was single and wanted to date a banker, I would work out of cafes in the financial district.

When I wanted to understand how the earliest stage companies got started, I hung out at universities and got involved with their entrepreneurship programs. When I needed contract work, I started giving talks on how business guys could most effectively manage the time & costs of hiring techies. If I wanted to scale an agency business, I would find a way to hang out every day with struggling freelancers.

In other words, multiply the "deal flow" of possible serendipitous events, and you'll find that even unlikely events become much more likely.

So what are you going to do this year to multiply the opportunities you want?

3 Lessons from launching a product  

No completely new advice in this article, but a very good point about design/usability of your first version:

However, your first design shouldn't matter. You should be solving such a huge need that users and customers will do anything to use your product to solve their needs. When your hair is on fire, the look of the firehose doesn't really matter.

If poor usability or bland visual effects push away early adopters, then you haven't actually solved an important problem (at which time you pivot).

As Sean mentions earlier, though:

Not all advice is created equal (...) If the advice doesn't sit well with you, don't blindly follow it

Not all startups are created equal. Not all startups are solving a hair-on-fire problem. Twitter, which he uses as an example later in the article, certainly did not solve any critical problem initially.

Corrosive Acquihires  

Acquihires are not that much of a problem in London. There are a lot of talented people available for hire, and for a Google or an Amazon, it'll be more productive to poach great software engineers from the financial services world (you probably don't even need to pay them as much as a bank would) than to pay massive premiums by acquiring startups.

Still, interesting to read this analysis by Mark Suster:

You have been at Google, Salesforce.com, Yahoo! for years. You have worked faithfully. Evenings. Weekends. Year in, year out. You have shipped to hard deadlines. You've done the death-march projects. In the trenches. You got the t-shirt. And maybe got called out for valor at a big company gathering. They gave you an extra 2 days of vacation for your hard work.

And that prick sitting in the desk next to you who joined only last week now has $1 million because he built some fancy newsreader that got a lot of press but is going to be shut down anyways.

What kind of message does that send to the party faithful who slave away loyally to hit targets for BigCo?

I'll tell you what is says.

It says if you want to make "real" money - quit.

One of the trickiest things as a business owner is to think through the unintended consequences of incentive schemes that you put in. It sounds like large companies need to do some thinking there too.

more