Strategy

“Building a product that people want” – An Interview with Dragos Ilinca, CMO and Cofounder of UberVU

Dragos Ilinca is the CMO and cofounder of UberVU, a social media intelligence company with bases in London, Bucharest, and the USA. Dragos began our interview by describing the genesis of UberVU as it evolved out of a web-marketing consultancy into a social media posting platform, into a social media monitoring tool, into its current form as a social media dashboard with social media intelligence.

In your opinion, what is the most difficult part of getting a startup off the ground? Is it getting funding, working together as a team, is it actually developing the product, or something else? Or is it everything in combination?

I think it’s everything in combination. It all comes down to building a product that people want because I think everything falls into place from that. Of course in order to build that product, you need a team. We were lucky because we had known each other for a lot of years, we had started other businesses together, but I look around and a lot of people are looking for co-founders and I think that’s really, really hard, finding someone to start a business with. And once you do that, its about just building something that people want—even if it’s a minimal sort of version—because if you do that, raising money shouldn’t be difficult. If you manage to build that product, that kind of means you’ve got a team, and if you’ve got that team and product, raising money should come pretty easily. So in our case, I think it was definitely figuring out what product to build, but I see a lot of entrepreneurs who are starting with building a team, especially in places like London where developers have so many options to choose from. They could work for, you know, the finance industry, or an already-established startup, and if you’re just starting out it’s difficult to get talented people to join you.

Perhaps it’s too early to ask this question, but in terms of your experience working with social media, how do you adapt? How do you know when to stay your course with your vision for developing a product, and how do you know when to pivot? The social media world is constantly changing, so how do you adjust for that?

I don’t think there’s an easy answer to it, but it kind of comes down to traction. If nobody likes your product or buys it, you need to do something about it. If you have a few people who really, really love it, then you need to understand who those people are and why they love it, and if there’s an easy way to reach more of them, that’s your whole market. And if you’re happy with that that’s fine, but if you need a way larger market, you can potentially work with them and figure out what a dumbed-down version of that product is. I think the most difficult thing is actually making the decision. I think deep down you kind of know when things aren’t really going well, and you can stick around for three months, maybe another six months and see: make a plan, and just say we’ve got this deadline and if things don’t pick up we need to do something about it. But I think people deep down kind of know, but they’re just afraid to make a decision. You need to be able to say, “What we’ve done so far, yeah, it’s a lot of effort, but in the end, people aren’t really paying attention to us and aren’t buying the product, so tough luck. We need to start all over again.”

UberVU strikes me as a pretty advanced mechanism, integrating social media and media monitoring. Do you think the days of simplicity in application development are over? In other words, do you think the skill-level required to produce groundbreaking apps will only become higher as times goes on?

Probably. That’s probably true. Because we’re a business tool, so from that point of view, we need a lot of technology to do what we do. But look at something like Instagram, for example: there’s not a lot of technology in there. If you think of technology just in terms of code, you know, other people can build that kind of stuff in a weekend. If you think of technology as also the mechanism by which they’ve been able to build viral coefficients in it so that it spreads and that kind of stuff, then that’s very difficult to replicate by other people. So I think if you’re building consumer apps—if you know what you’re doing—you can still get away with not having a highly technical solution. But even so, if you look at Colour, they’ve got pretty hardcore technology in there, and it’s just a photo app, more or less. So even these things are becoming more and more complex, and I think the reason is that you can do so much more now with the technology and the stuff that would have been impossible to do in real time is now possible, so you can build a lot better experiences for the user; and the second thing is there are so many people looking at the tech space, that if you build something that can be replicated within a week, and you’ve got absolutely nothing else that can make you succeed, then it’s just not worth it, because other people will copy you ASAP. Just look at Groupon as an example. A lot of people think it’s the technology and they built that in a weekend and there are hundreds of clones; but actually the difficult part is the sales behind it, selling to small businesses and being able to scale and that kind of stuff. So if you think about that as sales, not really technology, but technique and strategy, then it’s very difficult to replicate it. In terms of actual code, some people can probably build that in a day. But it’s not that that makes it work.

Since you’re the CMO, I wanted to ask a marketing related question. Since uberVU and so many applications are so heavily grounded in the online world, how important is actual person-to-person interaction in marketing?

I think it’s still important to have the in-person interaction. Not all the time; we started selling online with credit card, so it wasn’t necessary to meet anyone at that point. You could, you know, make the product and the company look more human by having photos of the members of the team on the website, having a video where you present certain stuff, having a blog that’s very human, but now that we’re moving more into the enterprise space and we’re starting to get customers like NBC or the World Bank, for these sort of things it looks like it’s pretty important to meet face to face, and if you cannot do that, at least have a few phone calls. I think the higher price you charge for what you do, the more you need that sort of relationship. And it’s not just because of the person-to-person interaction; usually if you’re charging a lot of money, the solution that you’re selling, you need to really understand the customer’s use case and be able to show them how the product is really going to make an impact. And these solutions are usually pretty complex, so it’s not like a photo sharing app: you take a picture, you share it with your friends, pretty easy to understand. It can be pretty hard to articulate just from a website and understand exactly how that could be used in your organization, and understand how easy it is to use even though it’s got this breadth of features. It’s hard to make the jump from, ok I see this demo video, how could I use it for my specific use case? It’s very difficult to understand that. And people just don’t have the time and don’t want to take the effort, so instead of researching that tool for 30 minutes and not understanding, it’s sometimes more useful to say, ok let’s just have a 30 minute phone call, you’ll tell me about it and I can explain really easily how we can help or how we won’t be able to help and you’ll probably need some other tools.

Posted by Aaron Ralby on April 27, 2012 at 1:45 pm in Demand Generation, Entrepreneur Viewpoint, Entrepreneurship, Market Views, Product Development, Real World Lessons, Strategy | Permalink | Comments (0) | Trackback (0)

         

Insights from a complex negotiation

Most readers of this blog will be interested in getting to the point that a current client finds themselves in, so I thought I’d record the process we are working through to resolve it.

Picture this: you’ve found an enthusiastic sponsor, got them to buy into your proposition ….. you then find they have opened an opportunity bigger than you could have dreamed of (or given them credit for!).  The opportunity is business changing …. it smashes that sales target ….. the world is about to take a serious change for the better!

You’ve dealt with the sponsor and business user all the way through the sales process, everything makes sense …. then you hit (corporate) reality – an unhappy procurement function.  Why are they unhappy?  Your sponsor decided (almost certainly correctly) that if they were involved early on they’d kill the whole thing stone dead – and the business needs your software so they didn’t want it killed off early.

The call is set up, the agenda point is ominous – “commercial discussion”.  That’s where we find ourselves today.  Time for some scenario planning.

Position-based negotiation – a brief segue 

Just like in position-based warfare, you either win or die in your trench.   Positioned-based negotiation is the same – and thus to be avoided unless you have nowhere to run!

Back to the point

What will come up?  In reality there are actually very few things that procurement can say / do.  They either need to tick a due diligence box to say they checked it all out and understand it – or they are going to try and beat you down on price.

As I see it, there are only really three start points you should prepare for:

1. The price is too much
2. They don’t like the pricing structure
3. Justify the whole piece

The price is too much

So let’s start with the first point – the price is too much.  The price is too much?  How is that possible, we spent all that time with the business users who hold the budget working through it and making it the right fit.  How can it suddenly be too much?

In my experience it can be too much because: a) procurement has a corporate target for reducing initially quoted prices e.g. everything down by 10%; b) the budget that the sponsor and business users identified got spent and they weren’t aware of it; or c) procurement isn’t particularly evolved in this corporate and is spectacularly unimaginative when it comes to negotiation!

So how to respond?  Remembering to avoid a position based approach (“it’s the best we can do”), ask a question: “why is it too much?  We have spent time with X and Y, who confirmed the budget was available, so you need to explain this to us”.  It’s a killer – now the procurement person has to explain their rationale for their statement – if they aren’t coming clean, try a couple of other questions: “do you have a corporate target? Has the budget been spent elsewhere?”  This puts you in the driving seat as you are now asking the questions.

We don’t like the pricing structure

This for me is a classic.  I have a tendency to specialise in subscription-based businesses – I like the model, as it lowers the cost for users to adopt and provides the business with on-going revenue to pay its employees and further develop the software.

However, subscription-based software isn’t old hat to everyone – in fact, some people still think that all software is sold on a license / maintenance basis.  This is not good, because you might have to explain the whole rationale of subscription based software to them, and then break the news that they won’t even own it – and some procurement departments hate not having something they can take away (even though in the long term they are totally powerless to develop it in house!)

There are several ways to address this:

1. That’s our business model – take it or leave it (bad position-based start!)
2. The pricing structure is like this because it reflects how we deliver the software – a lot of our costs are in on-going development for your benefit, as well as server space to deliver it across all those different geographies
3. Give them a quick calculation of the license / maintenance cost – hey, if they want to buy it like that then why not!  So your £50k per annum software is now £127k (£115k+£12k) year one and then £12k for the following two years.  Obviously that’s good for my cash flow and bad for yours, Mr Procurement, plus we won’t be able to deliver you with any of the development benefits over the three years because we are going to have to create a separate instance of the software for you on another service, and once that’s in place we won’t be able to tinker with it in case something goes wrong and affects your business
4. Ask them why they don’t like it – then knock off all the responses with the standard SaaS arguments – it won’t make them look good, so hopefully they will stop making stupid points fairly quickly!

Justify it…..all of it

This has to be the worst one …. not because you can’t do it, but because it takes so long to do.  You have confidence in your pricing, otherwise you would not have put it in front of them, and you’ve probably already been through this with the sponsors and business users – so it’s just tedious.

Do get some practice in beforehand though – time spent in preparation is time well spent.  In all likelihood the question that keeps coming up as you go through will be “why is that like that?  And why is that like that?”   As I said before, you have confidence in your pricing …… you are just going to have to spend a long time explaining it.  And there’s always the risk that either “that’s too much” or “I don’t like that” is going to come up – if so, I reference you back up to the previous two sections.

Final Thought

Generally you don’t get to a negotiation unless the customer wants to work with you.  Keep that in mind….and you’ll have a successful outcome – and lastly, the only business worth winning is profitable business!

Posted by David Gates on April 23, 2012 at 12:07 pm in Blog, Entrepreneurship, Pricing, Sales, Strategy, Technology | Permalink | Comments (0) | Trackback (0)

         

“The only guidepoint is reality” – Interview with Andy Hutt of triOpsis

Andy Hutt is founder and CEO of triOpsis, a real-time visual intelligence company designed to provide technology that allows enterprises to use mobile devices to track the status of products and services on the ground.

I can’t promise any words of wisdom at all, but I can promise words.

1) Why did you decide to become an entrepreneur rather than go down a more traditional career path?

Lots of answers to that. As with most things in the world, life is a bit more complex than, I woke up one day and said, “Fantastic! I’m going to do this.” Life evolves to a point and you make some decisions. For me, one of the most important ones, and it is only one of many, is when I looked at a traditional career path, I just saw boredom. My background is in finance; I’m a qualified accountant. Way back when I worked for PwC, I worked in Private Equity Transaction Services at Deloitte, I worked in corporate finance, blah, blah, blah. And the problem was whenever you looked at the career path of any of those, it was frankly just boring. And for me, I didn’t want to spend 30-40 years of my life doing that. At all. So it’s about how to make a change. And any change is very difficult to make.

For me, the obvious one with the skillset I had was to go and set up a business. It was possibly a bit of a random choice in terms of where we went, but you have to use what you have around you. I had no background in software prior to this, I had no background in retail, no background in utilities, never set up a business, all those kinds of things. But you have to make a decision that says, I need to change something. I need a more interesting path in my life, I need to do something which I find more satisfying, more enjoyable, and I have more control of.

2) What new skills and specialisms did you have to develop as you got triOpsis going? How did you develop new skillsets?

One of the skills a potential entrepreneur has to have is risk taking. Risk taking possibly equates to stupidity or arrogance, because if you knew all the risks, you probably wouldn’t do it because you’d assess you’d fail; or you understand the risks, and you’re so arrogant that you think you can succeed anyway.

A lot of people are very risk-averse when it comes to trying different things. I’ve never set up a business before. Ok, fine, how do you do that? You just go and talk to some people, get a bit of guidance, and do it. And a lot of it comes down to just doing it. I’ve never run a technical team before, in terms of coding, never run a PR campaign before, I’ve never been a salesman, I’m going back to when I started the business, and it’s about risk taking, just dive in and do it. And if you work out you haven’t got the skills, learn. So, can I be a salesman? Yes. If you can’t afford a salesperson at first, that’s what you have to do. You can’t say, “I don’t have those skills!” You have to dive in, do it. The key thing is, if you’re prepared to take that initial risk—which is basically whether you’re prepared to show yourself up, whether you’re prepared to effectively fail—you need to learn quickly. Dive in, learn quickly, chuck it at the real world and off you go.

In terms of acquiring new skills, it’s partly about risk taking, it’s partly about confidence, and it’s the ability to learn quickly. A large chunk of my view of the world, when it comes to learning and entrepreneurship, is about surviving enough failures to succeed.

Most of the time, until you’ve made your business, you’re assembling a collection of small failures. If I go back to the first sales pitches I did four years ago, I cringe. I’m like, “My God, did I ever actually pitch something as stupid and vague as that?” But you have a go and you just learn, and that was a failure. You’ve got to collect these failures. And in terms of how you fund the business, ideally with entrepreneurship, you need to get enough funding to survive enough failures to have learned enough to succeed.

People view failure as though there’s only one way to fail, which is, you know, like the Eurozone at the moment: BIG! And actually, entrepreneurship is lots of little failures. “I tried that, it didn’t work. Put that to one side. I’m going to try that, ooh that didn’t work, ooh that does, let’s do more of that.” Ideally it’s not catastrophic. I got a good piece of advice early on, which is, “Never bet the ranch early on any particular given path.” Some people say, “You’ve got to do it the whole hog, just go for it!” And if you did that, put all your money in one strategy, one path, one thing, and it fails where do you go? I’d rather spread the failures, and then try and learn where I passed. “That bit did succeed, I’ll put some more money over there.” With failures you learn. Success doesn’t actually teach you anything, it’s just like, Oh, I got lucky. More of the same.

3) How do you balance breadth across industries and depth within an industry?

It’s a really good question because for me, success only comes if you focus. But it’s actually the point I was making a second ago about failures, because you don’t actually know which market, which product is going to be a success. So what you have to do, and what we did, is we started off in brands and we tried retail, and we’ve ended up in utilities; we ended up in water, and we’re now in gas and electricity. It’s a case of the same learning curve, but the ultimate goal has to be a focus. As a small company, you don’t have the resources to do lots of stuff. Provided you understand that to start with then you may succeed. If people don’t understand that to begin with, if they think they can have a go at everything, they will fail. You can’t. Unless they’ve got a really big bank balance, in which case, good luck to them! So, what you have to say is, ultimately I do have to focus to succeed, but I don’t know where to focus, so it comes back to how do I learn? How do I fail, etc.? And what you try and do is get into a niche where you think, yeah I’ve got something real. And that particular point to me in terms of business is what I was talking about earlier: you have to get that in the real world. You can’t sit in an office and think, right, it’s going to be this. That’s the way for me. You have to take the risk and then actually go and talk to that particular client. And they’ll probably go, “Oh that’s rubbish.” So you go back, you have a think, you listen and then you go back and you try that again. And ultimately it comes down to, sadly, what will this generate in revenue for somebody or will it save them money? You need to understand that as an end point.

The only guide point is reality, and that’s the bit when I was talking about risk taking earlier. A lot of people aren’t prepared to take a risk. And a risk is standing up in front of people and actually potentially looking a bit stupid. And for a lot of people, they’re not prepared to do that. The ultimate arbiter of everything is reality. You can’t sit in an office and make a profit. You have to actually physically go into the real world, get your product into the real world, and get real world feedback. Think of anyone who sits in an office and says, “Yeah, this is the best thing since sliced bread!” For our products, we could say, “Yeah insurance market, hey! We can do all of this stuff!” But actually if you spoke to someone in insurance they may turn around and go, “Err, you can’t do it for these reasons.”

4) What is the lifestyle of an entrepreneur like?

The lifestyle of an entrepreneur? It varies. In the world of big corporates, hard work is when you have lots of work on. For a small business, when you’re an entrepreneur, that’s easy. I’ve got work. The hardest part is when there’s nothing. You know, there aren’t any projects. You haven’t got a team of people, you have to sit and you have to go, I need to do something, I just need to create something from scratch. That’s hard work.

Posted by Aaron Ralby on April 20, 2012 at 5:12 pm in Entrepreneur Viewpoint, Entrepreneurship, Entrepreneurship, Management Tips, Real World Lessons, Sales, Strategy, Technology | Permalink | Comments (0) | Trackback (0)

         

Lessons from History: The Book

In recent years we’ve seen a massive adoption of e-books and a new industry evolving around e-readers and e-book publication. In the span of history, the adoption has been shockingly quick, especially when compared to the adoption of other systems of writing and reading throughout history.The adoption reflects our society’s increased demand for textual consumption and our new ways of perceiving and processing text.

In Roman times, the strong trade connections between what is now Europe and the Mediterranean meant the widespread availability of papyrus through the Roman world. Inexpensive and simple to produce, papyrus allowed for widespread literacy and literary production. In other words, writing could be used for more than ceremonial or culturally significant texts. When stone is the only medium for writing, you probably are not going to write much.

In Roman times, the typical medium for writing was the scroll. The codex — what we now call the “book” — was first developed around the beginning of the Common Era, but it took about 300 years to become widely used and did not replace the scroll completely as the dominant format for five or six hundred years.

After the fall of the Roman Empire, trade broke down, and Europe entered a new era. Papyrus was no longer available, and people needed to find a different medium for writing. The solution was to use calf and sheepskin (parchment and vellum). Skins had to be extensively treated and prepared before they were ready for writing. It was a laborious and expensive process to produce a single page. Books themselves, therefore, had to be carefully planned and executed by professional scribes who had trained on wax tablets. From a modern perspective, writing was a scalability nightmare, so it is truly remarkable how much written material was produced during the middle ages in Europe.

As might be expected, literacy declined and was not widespread during much of the middle ages. But as the High Middle Ages dawned, literacy began to expand once again, and books began to be used for more than religious purposes. The scale of book production became immense, but it still relied on the laborious process of preparing animal skins to use as pages. As the demand for more written material increased, Europe saw several innovations quickly taking hold, notably printing and paper.

The issues faced in adopting these technologies were very much the same in the 15^th century as they are today. Book production was an entrenched art and industry, and disruptive technologies that could supply something cheaper, faster, and better suited to the needs of customers were looked on both as exciting new developments, and as abhorrent degradations of an ancient tradition.

Just as the increased demand for textual production and consumption drove the adoption of printing and paper, an insatiable demand for textual consumption has lead to widespread adoption of new innovations we are witnessing at this very moment.

In the early days of the book, silent reading did not even exist. It was considered a miracle when some monks discovered St. Jerome reading silently in his cell. In those days, each word was to be savored, even committed to memory; now text flows through us like wind among the leaves. Our perception of text has changed, and with it, the media of consumption have evolved. Even though we now often consider “technology” to require electronics, the codex was cutting edge technology in the days of its invention and adoption.

The codex has been in use for about 2000 years. It is one of our greatest traditions and has become an important part of our culture. The speed with which e-books have been adopted is truly phenomenal considering the history of the book. It is the next phase of textual evolution, as we process more and more textual material. From this, I fear for the survival of the codex, which holds a dear place in my heart; rather than its disappearance, I prefer to see its return to its former place as a revered object housing the texts deemed most worthy of retention.

Posted by Aaron Ralby on April 20, 2012 at 1:59 pm in Entrepreneurship, Strategy | Permalink | Comments (0) | Trackback (0)

         

The ‘differentiated’ sales force

As technology advances and the manner in which technology is consumed changes, traditional software sales jobs are fast becoming an anachronism. The selling of largely standardised solutions using a direct sales force has been replaced by an internet-based, self-service, sales-less model in which marketing comes to the fore. Recommendation and virality create and drive demand. The change is marked.

If you are running a direct sales team today then you are in the business of selling higher value solutions with a degree of complexity. The sales force is no longer merely the execution channel; they are a constituent part of the solution’s differentiation. Sales skills alone are not enough; they must offer the prospective customer expertise. This value-add is integral to the sale. Sales consultants must become ‘consultants’ in the true sense of the word. They must have domain expertise and problem-solving skills that are valued by the customer. They must be ahead of their customer’s thinking. They must be able to challenge and educate the client. Value is created though collaboration. While the technology at the core of the solution must remain scalable, the skill in creating a dialogue around the client’s needs and configuring an attractive solution is not. Building this type of differentiated sales force requires know-how and investment.

This type of shift is significantly changing sales management from management of a sales force that can articulate differentiation to one that is in itself part of that differentiation. This is a significant evolution that impacts selection, training and development, and sales practice. Where it is not practical or desirable for all the knowledge required to execute a sale to be contained in one individual, team selling (an anathema to the traditional software sales manager) may emerge from being the exception to being the norm. Incentive and remuneration structures will change to facilitate this. Where developing specialised domain knowledge is a core competence, a ‘hire and fire approach’ (always an excuse for poor management) makes no sense. This world of sales demands the brightest and the best. Those that have both IQ and EQ in abundance.

Posted by Shields Russell on April 16, 2012 at 1:17 pm in Blog, Sales, Strategy, Technology | Permalink | Comments (0) | Trackback (0)

         

Counteracting threats to your business posed by offshore competition

StarBase, founded in 1992, is a London-based performance testing software consultancy with established testing expertise in a wide range of industries. We spoke to Stephen Davis, StarBase founder and MD, about the threats posed by the economic climate and off-shore competition.

What do you think will be the biggest challenge for StarBase in 2012? 

The biggest challenge is uncertainty in the current financial climate. It is uncertainty as to whether the economy is going through a slow gradual recovery or whether it’s just about to crash again. If Europe has big problems then that will obviously affect the UK and global economy and impact ‘confidence’.

There are two forces at play at the moment. The first is the recession, with the imperative to ‘do more for less’, achieve more with less money. The second driver is a return to quality; companies want to get things right where off-shoring hasn’t worked or achieved the financial savings anticipated. Some clients are motivated by both, which can cause a conflicting view: they still want quality, but at lower prices.

That is the challenge for 2012. Without the return to confidence, companies are less prepared to make long term commitments. We used to get involved in two to three year programmes; I don’t think there’s anything more than 12 months now.

How do you compete in this economic climate and faced with offshore competition?

Focusing on clients’ needs and really understanding their requirements. For StarBase, this means positioning ourselves as being people who understand what our clients need and focusing on being a knowledge-based business. This is supported by providing excellence in client management through people and communications.

Targeting higher-value niche areas that we are able to offer a better service better than off-shore providers. Testing covers a whole range of activities – functional, performance and security are the main ones, but there are approximately 20 different types of testing activity. We have decided to focus less on mainstream functional testing because it’s been picked up by off-shore providers. We decided to focus more on the more complex areas of testing such as Performance Testing and Technical Testing. These areas, require excellent technical and interpersonal skills, more domain knowledge and are also challenging.  StarBase can’t compete on day rates with off-shore providers, but by specialising in this way we are able to deliver excellent value.

Focusing on value, not price. We are not focusing on day rates, but rather on the value that we contribute to our clients. Increasingly, people are recognising that on-shore services can provide greater value without necessarily costing more than the off-shore approach. Several times we’ve found that when we’ve been in competition with off-shore providers, we cost less because we complete the project in less time and use fewer people. What we are seeing is that many organisations are beginning to bring critical functions back on-shore, and that’s the market that we’re playing in.

Posted by Jessica Tayenjam on March 30, 2012 at 3:52 pm in Entrepreneur Viewpoint, Management Tips, Market Views, Product Development, Strategy | Permalink | Comments (0) | Trackback (0)

         

Key challenges in sales and marketing for entrepreneurs and growth-stage firms

Permasense corrosion monitoring systems provide engineers, inspectors, planners, and plant managers insight into condition and capability of critical oil and gas assets. Potentially it is a technology with wide appeal. Given this, what are the key challenges in the sales and marketing process? What are the key steps and challenges entrepreneurs face in taking a product like Permasense successfully to market and what would you advise they do to overcome them? We asked the CEO of Permasense, Peter Collins…

Identify the product champion

Identifying the individuals in a company that are ‘own’ the problem your product or service is addressing is the place to start in finding the individual to champion it in your target customer.

For example, in Permasense’s case, this person my be an asset integrity, engineering, corrosion or inspection manager.

Identify all that have to sign off on adoption

If you are selling a system solution, impacting on a number of functions or business processes, you must also win the buy-in of these gatekeepers. For example in Permasense’s case this includes IT, safety, plant operations and frequently others.

Identify the economic buyer

It’s as old as sales itself – no sale without a budget, and it’s so easy to believe you’re close to a sale, when the person who has to sign the cheque hasn’t even been brought into the sales process, let alone convinced.

Posted by Paul Higgins on March 23, 2012 at 11:55 am in Entrepreneur Viewpoint, Entrepreneurship, Management Tips, Real World Lessons, Sales, Strategy | Permalink | Comments (0) | Trackback (0)

         

The balance between capturing new clients and retaining existing clients

Anybody who has ever tried to secure new clients for their business will know that this is a crucial process of growing businesses. It is also commonly known that it is just as important to retain existing customers as securing new ones. In fact, in some cases, it can be more valuable. We asked Tony O’Shaughnessy, a renowned entrepreneur, whether he has any tricks of the trade that he can pass on to entrepreneurs on how to secure new clients, retain existing customers and balance the interest of all concerned parties whilst meeting your own company goals…

Securing new clients

“Firstly, I would suggest that you should take a step back, put a clear-cut structure and plan in place, and work consistently to that.

Secondly, you need to understand exactly what it is that you do that makes people buy from you. Then create a simple message at marketing level that puts exactly that point across to prospective clients.

Thirdly, you must identify the people you should be marketing and selling to. You should really take time to understand that. There is a big difference between people who are ‘interested’ in your product/service and then there are people who would ‘buy’ your product. You must distinguish between the two.

Finally, you must be transparent and honest to your clients. If you are having problems, tell them that you are and what you are doing to fix it.  Be realistic to your clients about what you can achieve.

What made Rapid Innovation Group stand out from the crowd was the fact that you had the answer to: ‘What can you do for me and why nobody else can do it for me?’”

Retaining existing clients

“I believe keeping good relationships with your existing clients should be intrinsic, not only a strategy. Honesty and transparency are not only key for gaining new clients, but are also crucial for retaining existing clients. Essentially, they want to trust you, and these are the ways to attain that. You should not look to blame somebody for any mistakes made, rather you should find a way to fix it. You must be loyal to the relationship between yourself and your clients.

For example, ninety-five per cent of the companies give bigger promises than they can keep. You must position yourself in the remaining five per cent. Do not offer something that you cannot materialise, because that will not be honest.”

Posted by Paul Higgins on March 9, 2012 at 5:34 pm in Entrepreneur Viewpoint, Entrepreneurship, Management Tips, Sales, Strategy | Permalink | Comments (0) | Trackback (0)

         

A Store of (Un)Common Sense: Entrepreneurs as Customers

There is a saying in Old Norse: “Seldom does shame befall the cautious, for there is no greater friend that a man can get than a store of common sense.”

Very true. And very cryptic.

What is common sense? The ironic truth about common sense is that it is not common at all. In fact, it is quite rare. But “common sense” is so obvious and makes so much sense when explained that it seems like it must be a dominant feature of every person’s character. Sadly, this is not the case.

The word in Old Norse we translate as “common sense” more literally means something like “human wisdom.” It has to do with understanding principles rather than possessing specific knowledge. In entrepreneurship, success cannot be won by following a prescribed path. If only it were so simple. Each entrepreneur must find a new path to success or fail along the way. There is no guarantee of success, but failure can be avoided by following a combination of basic principles. No single principle is going to cut it; principles must be followed in combination, otherwise failure is guaranteed. What’s more, there can be no formulaic application of principles. At the end of the day, following principles demands brutal personal honesty.

Too often startups put all their money into one course of action without any certainty that the given course of action will be successful. If instead of looking at entrepreneurs as the ones with something to sell, let’s look at entrepreneurs as consumers and their plans or courses of action as products. By doing so, the ridiculousness of common failures becomes all too apparent.

Entrepreneurs usually think of themselves as the ones with a product or service to sell. With their time, effort, and money, however, entrepreneurs actually buy their own businesses; but are they smart buyers?

Suppose you were looking to purchase a house. You find one that looks exactly like the one you have in mind, so you pull the trigger and buy it for a hefty sum of money. It fits your “ideal” and in your desire to find your dream home, you ignore any signs that contradict your initial impulses.

After you move in, you find that the house is built in a valley that floods every time it rains, causing water damage and mold in the basement; there is no insulation in the walls; and the wonderful open style of the space increases heating costs and does not allow the privacy necessary for the individuals living in the house. What’s more, the house across the street is inhabited by students who have wild parties several nights a week. You failed to do your homework and made a bad purchase. How do you get rid of this house without suffering significant losses or financial ruin?

Any normal person would call you a fool if you went and bought a house in this manner without having an inspection, without asking loads of questions about the construction, the maintenance costs, the neighbors, etc. Yet that is exactly what dozens of startups do all the time.

If entrepreneurs are consumers and their own businesses the products they buy, then these “products” need to be investigated and tested even more rigorously than a tangible and easily understandable object like a house. It seems so obvious, so apparent, that the truth of it is hidden in plain sight. Switching vantage points in this way can be difficult, as it forces one to look more realistically at one’s prospects for success and what challenges lie along that road. RIG’s founder, Shields Russell, often mentions that good entrepreneurs are risk averse. Through intelligent design, testing, and implementation, a good entrepreneur does everything possible to minimize risk. The process is not as “exciting” without the risk but the end result is likely to be much more appealing.

Too bad common sense is not that common.

Posted by Aaron Ralby on February 20, 2012 at 4:58 pm in Entrepreneurship, Strategy | Permalink | Comments (0) | Trackback (0)

         

The differences between traditional enterprise sales and the Yammer approach

New business models and sales approaches rarely receive much attention until a company comes along and really makes it succeed.

Enterprise social networking is a growing area and Yammer has become its poster child. Moreover, it is an interesting case because its non-traditional sales approach outflanked the competition. Now it counts over 80% of the Fortune 500 as customers.

A few years ago I met with well-funded competitors to Yammer in the UK and in France that had developed strong technology to enable the socially-connected enterprise – businesses whose employees could build social networks across department and country boundaries with all the associated productivity and communication benefits. However, the companies I met were trying to sell to major corporates – the more major the better – through a traditional enterprise sales model; and it didn’t work.

By following the traditional enterprise sales model I mean that they hired a sales team, which tried to engineer access and sell directly to a corporate budget-holder, who would then in turn procure the technology and take responsibility for its adoption by the rest of the organisation.

Initially this seemed to be a very effective route to market. Like a lot of enterprise software startups they started by going through their management team’s existing personal networks to gain access to some impressive companies. Some of them became customers, and on the back of this early success the startups raised additional financing to expand the sales team, and to hire marketing and PR professionals in order to support it.

Gaining access to corporate buyers then started getting more and more difficult. In the early days they were able to call on CEOs, who were attracted by the ideas behind bringing social networking into the enterprise. But as the sales team got beyond the few evangelist buyers they were steadily pushed further down the prospect’s organisational chart and budgetary discretion decreased.

As sales targets were missed the sales teams were disbanded and reconstructed several times over. Sales Directors were brought in and given three months to turn things around before being moved on again. As it got harder and harder to get sales signed off management gave permission to do one-month free trials so that prospects could see the tool in use and perhaps develop a business case based on real data. But too often the trials ended without much user adoption and with even less basis for an ROI.

Yammer’s approach, which has been well documented elsewhere, was to ignore the traditional corporate buying centre altogether and just think of the user base as consumers. It was a B2C company selling to corporates (it forced users to register a work email address) and it made adoption easy because the platform was free to users.

By encouraging early users to use and share the platform with their colleagues Yammer was able to grow a large user base and then generate revenues from the corporates that wanted to ‘claim the network’ – and all without having to hire an enormous sales team.

At first glance this approach might suggest a revolution in sales strategy. Why would anyone hire sales teams that have to worry about accessing senior stakeholders and getting hold of budgets when instead you can simply give access to the users and generate revenue thereafter?

I put this table together to show some of the differences between ‘traditional’ and ‘non-traditional’ approaches (click on the table to enlarge it).

In the case of Yammer and enterprise social networking, they were in an area that allowed them to focus on the right-hand column – what I’ve called the ‘non-traditional’ approach. The product was inherently ‘social’ in the sense that using it to its fullest potential required users to involve other people; it was simple (especially to users who already had other social networking accounts like Facebook); it provided standard functionality; and it didn’t require any input from corporate IT to function.

But this is not true in all cases and not every startup should pursue the same strategy. You can’t say that one of these approaches is ‘better’ than the other in general terms.

One of the most important indicators for which one is right for your startup is whether or not you are solving the same problem for many different customers. An ERP software company will try to sell systems that cover all sorts of different issues in a corporate; they require complex integration with existing systems; and so they need talented, consultative sales people to uncover the prospect’s real issues and customise the technology to solve them. On the other hand, mobile app companies do not typically need any customisation.

The other major factor to consider before selecting a sales approach is where you see your sustainable advantage. Technology companies selling to complex organisations like government authorities may have to invest a lot of time talking to procurement officials and IT teams but once those boxes have been ticked they represent a significant advantage over the competition, which has not made the same investment.

Your choice of sales approach has an impact on the whole of your business as a startup. Following the ‘non-traditional’ approach requires a skilled product team that can excel at the user experience and a marketing team that knows how to build brand awareness across a wide user base. The ‘traditional’ approach will impose different constraints on product and marketing, for instance, the technology must be more configurable to different customer demands and marketing must be able to generate real demand for the sales team.

It’s also possible to combine aspects of both approaches, as long as it is well thought-out. Don’t try to gain additional competitive advantage by building a relationship with your customer’s CFO if you can’t point to a strong ROI case; and don’t rely on a user adopting your product quickly if it is too complicated and there isn’t immediate value to them.

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Posted by Paul Higgins on February 15, 2012 at 10:26 am in Blog, Entrepreneurship, Sales, Strategy | Permalink | Comments (1) | Trackback (0)

         

RIG CEO roundtable finds boards of early stage companies rarely give entrepreneurs the support and challenges they need

RIG recently hosted a CEO roundtable dinner to explore what it takes to make a board work.

The discussion revealed that only one of the CEOs had ever had a board that had functioned well and pushed the company forward. Overall the level of dissatisfaction with boards was high.

The main sources of dissatisfaction for the CEOs present were:

• Not having a board that could contribute or challenge them sufficiently on strategic issues‬
• Particularly for first time entrepreneurs, having a board made up mainly of executives/founders, making it difficult to switch out of operational mode into a more strategic mindset‬
• Finding that board meetings had become reporting sessions to professional investors. While the financial rigour of professional investors was valued, it tended to take precedence over strategic discussion and the investors often expected to be treated as first among equals‬

So what kind of capabilities and composition would they like to have (or have had) for their boards?

• At early stage, people with contacts – essentially high-level salespeople or door-openers‬
• Closer to exit, a board that can spot and generate exit opportunities‬
• At all times: people who have done it before – who can challenge and whose experience can be leaned on.

‬There was much lamentation in particular at the lack of sales experience among virtually all the boards – it was felt by all that this is an essential part of the balance that is generally missing.

Above all, there was agreement that a board has to have a clear purpose that fits with the needs of the company at its stage of development. Because the early stage environment is one of change, the composition of the board may need to change more regularly than would be the case for a more mature company.

How then to put together a board that is a good fit?

1. ‪Understand the needs of the company at each stage – this should determine the purpose of the board
2. Select board members accordingly: try to strike a balance between externally facing board capability (sales, marketing, PR) and internally facing (strategy, operations, planning)‬
3. ‪‪Decide what the board and its members should be spending their time on‬
4. ‪Choose performance criteria against which to measure the board and its members
5. ‪Give voice to the founder executives without needing necessarily to have all on them on the board‬
6. Recognise when the company’s needs are changing and see whether the board needs to change and adapt to better serve them

Posted by Simon Jackson on January 30, 2012 at 9:15 pm in Blog, Entrepreneurship, Strategy, Venture Capital | Permalink | Comments (0) | Trackback (0)