Sorry doesn’t win ballgames

Many years ago, when I still had bounce in my legs and ran with the best of them, I played college football. When I was a freshman on the team, one of my friends and teammates told us a story about when, as a high school player, he had been pulled from a game after making a big bonehead mistake that had let the other team score.

In his recounting of this event he told us how, as he trotted off the field, he stopped next to the coach and said he was sorry. The coach then glared angrily at him. Grabbed his facemask and yanked it so his face was inches from his own. Then he said the line that our college team would repeat over and over again on our way to winning two conference championships: “Son, sorry doesn’t win ballgames!”

I was reminded of this line yesterday as a CEO of a startup that I was trying to help kept saying he was sorry. He said he was sorry when he changed the agreed upon terms and conditions in a contract at the last minute. He said he was sorry when the contract was a month late getting to the prospect. He said he was sorry when what could have been his first deal fell through because of all his inattentiveness and lack of preparedness with regard to this contract. And this is when that old college football line popped into my head – “Son, sorry doesn’t win ballgames”. And in this case, I added one more phrase, “or help you or your sales team close deals.”

In the contact game of entrepreneurship and startups, this line is apropos. It is one young startup CEO’s should remember. Why? Because you don’t want to be the one saying you are sorry when things blowup because of your lack of preparedness or inattentiveness. Because saying you are sorry does not win ballgames or in the game of entrepreneurship help you or your team win deals.” Entrepreneurship is a contact game and when you make bonehead mistakes, they will cost you; sometimes more than you can afford.

Customer Discovery = Demand Harvesting = Focusing on the NOW!

In the next 90 days, if you must put money on the table to prove to your investors that your product concept is the real deal, are you in a Demand Harvesting (DH) or Demand Creation (DC) mode? For those that answered DH go to the head of the line. For those that said DC, grab your ass and kiss it good bye.

Demand Harvesting is about finding and selling to companies or people that are already in market, NOW, looking for solutions for a specific problem. Anything else is Demand Creation.

An entrepreneur should never confuse the two. Many do. It is one of the reasons many startups struggle early on.

If you are following the Lean Startup model and are doing customer development, what mode are you in? Harvesting or creating demand? Customer development is a harvesting activity. If this is not the lens through which you are viewing this process, then you will struggle. You will struggle to find REAL customers and build a business. You’ll spend more time and money then you anticipated and be on a fast pace to your first pivot. More problematic, you’ll be pivoting and not know why.

Legendary Demand Harvesters

Two of the 20^th century’s biggest business icons, Henry Ford and Bill Gates, got their start because of their ability to harvest existing demand. Gates did not create the demand for DOS, he harvested it. In his case, IBM was in market looking to buy an operating system and Microsoft found a product that they could sell to them to satisfy this demand.

Henry Ford did not create the demand for the automobile. Demand creation for the modern car (self-powered motor vehicle with an internal combustion engine) started in 1886 when German inventor Karl Benz built the Benz Patent-Motorwagen, 20 years before Ford launched his Model-T. Ford was just harvesting the demand that had built up over these 20 years.

The Misguided Love of the Feature Set

Why is Demand Harvesting so hard for new entrepreneurs? They get myopic and enthralled with their product, its beauty and its unique and specialized feature set. They sell features and technology and the WOW of the new thing. They don’t sell to the need that needs solving NOW. Most importantly, they don’t focus on getting people to pay for their product if it addresses their need. Focusing on selling to a need is hard. Getting someone to part with their money now if you satisfy their need is even harder.

What you see in the startup world is that many entrepreneurs spend an inordinate amount of time with non-buyers. People that show interest in their product but who will never buy. These pseudo buyers will play with the product. They’ll ask for new features. They will show great interest. And they will keep stringing the entrepreneur on but never purchase the product.

So many entrepreneurs lose valuable time and waste precious resources chasing these non-buyers. They hope and believe that as soon as they get that next special feature added into the product the deal will magically fall into place. But it does not.

Startups have neither unlimited time nor money and must focus on harvesting existing demand first and foremost.

Harvesting Demand Takes Discipline

During the customer development and sales model development stages, you have to be brutally honest with yourself about who the real buyer is and who is not! Most entrepreneurs will say that their solution solves a problem. It may. But if people are not demanding a solution like yours NOW, then you are in trouble. This means that you are a long way off from collecting cash.

Another mistake entrepreneurs make when testing a new idea or trying to sell a new product, is that they confuse interest for demand. How do you tell the difference? It’s easy. It is about the four NOW’s.

• What problem is the customer trying to solve NOW?
• Do they need to solve the problem NOW?
• Do they have money available NOW to purchase something that solves this problem?
• If your product solves their problem will they pay you money NOW?

It is ok to walk away from people that don’t need to solve a problem NOW. In fact, you must walk away from them and focus on finding people that do.

Customer development is about addressing the NOW.

Summary

Acquiring new customers requires discipline. Don’t sell features and technology and the wow of the new thing. Sell to the need. Ask the right questions. View your product as a solution to a problem. And don’t waste time with individuals whose problems you cannot solve with the product you have today. Address the four NOW’s and harvest the demand that already exists in the market.

Apply the Compounding Effect

The compounding effect, it’s the process of reaping rewards from a series of actions and reactions. The accumulated effect helps your company gain business and opportunity.

Compounding happens when you associate with a person, event or group of people who by that association keep putting you and your business out in front of others even when you are not there. Therefore, from the day that you launch your company, you should be looking for these compounding opportunities and let them work their magic.

When we launched our SaaS Company, we not only planned the type of product we would develop, but also the first event that we would attend. The event, we knew was a key industry gathering, but then, it was hard to gauge what impact it would have. Today, looking back, I now know that this show was one of those compounding events. Things we set in motion back then have continued to produce opportunities in terms of new customers, partnerships and ideas. Furthermore, I attribute getting through the Gap Stage to the work that we did here. Customers, partnerships, relationships and ideas; this event and other small actions helped generate these and continues to do so. These compounding events are little engines of growth that keep working when you are not.

If we had not attended this event at that time and waited a year when the product was more mature, refined and working, we would have missed the compounding effect that this event has had on our business every year since we attended.

The earlier you plant seeds of opportunity, the sooner you can sow success.

The Gap Stage: Between Market Fit and Scaling or The Blood, Sweat & Tears of Selling Your Ass Off to Get Sustainable Growth

The Gap Stage

The first significant group of customers you sell your product or service to is special. They set you on your way to sustainable growth. I’m not talking about signing up an early adopter or two. I am talking about that first sizable group that you work your ass off trying to and then selling. They become your company’s foundation for growth. They create the forward momentum needed to move your business to the next level. As an entrepreneur, signing up the first 50 or so customers who pay $2000 per year or the first 20 that pay $20,000 is a special stage in the evolution of a startup. It is the Gap Stage. It’s the stage after you determining market fit but before you press the gas pedal down in order to scale the business. It’s the messy stage. It’s a hard but transformative stage. It is here that you really birth your business.

I call it the Gap Stage because there are gaps in your market and customer knowledge and gaps in your product and service capabilities that once filled will make scaling possible. The Gap Stage is where you refine, polish, re-polish, reposition and re-learn what you know about your sales process, the market, the product and target customer through repeated sales and customer engagement.

Obtaining that Special Group of Customers

There is nothing you can do that will help you develop your business and product strategy better than trying, selling and then servicing that first significant group of customers. There’s no other way to deeply understand your customers’ challenges, and get a true sense for their experience with your product then getting into the trenches and trying to sell your product over and over.

Nothing you do during the Gap stage is really scalable. But what you learn during this time will lead to a scalable sustainable sales process. More importantly, if you are not successful here, the concept of scale does not matter.

During this period, you the entrepreneur must be intimately involved with the selling of this group of customers. This is where you refine your earlier learnings and gain the experience and knowledge needed to move the business forward and move beyond a minimum viable product.

How do you secure this set of customers? You give some deals away or discount heavily. You call on your friends, their friends and their friends to find prospects and customers. You cold call prospects and do it again and again and again. You scrape websites for email addresses or hire low-cost labor to just copy them. Then you send out emails again and again and again to potential customers. You go hang out at market specific trade shows to meet prospects and industry influencers. You give talks about your product where they will let you. You follow Facebook groups that cater to your market and call those in the group that bitch and moan about your competitor’s product or complain about a problem that your product or service addresses. You scrap, claw and fight hard for every one of these customers. You try almost anything to find prospects and sign them up.

Going All in With the Customer

Once you start gaining customers and they start using your product, you and your team will put in many, many hours with each one of them learning, coaching and making sure that they have a positive experience and get the desired use out of your product. (Customer success is the bedrock on which everything else is built.)

This stage is a learning process on how to sell, onboard and support customers as well as fix and enhance the product so it fits better the needs of your customers and the broader market. You repeat it over and over again refining the process and product so that selling and onboarding each new customers get smoother, faster and easier.

During this stage

• You’ll find out what your product or service does not have but that your customers need and want.
• You’ll get a clearer understanding of your product’s worth and how to price it.
• You’ll developed a greater understanding of your target market and what segments are best to attack now and approach later.
• You’ll develop a richer and more comprehensive understanding of your target customer and what excites them and what their key hot buttons are.

It is during this stage that you assemble the knowledge and relationships necessary to construct a sales and marketing model that will help you scale your business.

The Take Away

The key premise of this stage is that it is a market first stage. Furthermore, you need to embrace the cold call and love the deal. This is not the scaling stage. This is a foundation building stage. If successful in this stage, you will have the tools to scale. Get the customers, care for the customer, and learn from the customers and repeat!!!!!

Go all in with the customer. Stay customer obsessed and use the feedback to refine and grow your product beyond an MVP as well as improve market fit.  Even if it doesn’t feel “scalable”, do whatever is needed to generate measurable value for the customer. Delighted customers provide you with the foundation to scale. Once you figure out the recipe for making a significant sized group of customers successful on your product and sell them on it, you are ready to address the issue of scale and are on your way to creating a sustainable growing business.

Great Customer Validation Resource – Trade Shows, Conferences & Conventions

It’s January 2nd,  and it’s the start of the meet and greet season as I call it. Starting today and for the next eight weeks, my company will attend 14 state conventions across the US. It’s a time when we get face to face with our customers and prospects and try to sell them product as well as test new product and service ideas.

I have always thought highly of Steve Blank’s Customer Validation model that says that you need to get out into the market to test the viability of new product ideas.  And I can think of no better place to do this and get a lot of advice quickly then at conferences and conventions that cater to your target market.

At these event, within a day or two,  you can generate a lot of feed back about your product and idea. And if you spend time at the bar, after the sessions are over, you can get the real real feed back. Trade shows are an excellent  resource for getting product feedback and should be high on a entrepreneur’s to-do list when developing and testing the viability of a new product.

Entrepreneur Tool #2: Medicine, Vitamin or Laughing Gas

Is it a medicine, a vitamin or laughing gas? How do you convey the value of a feature or product concept to your team or get them to discuss it based on market value? One way is labeling.

As an entrepreneur, there always is another shiny object to chase. With a talented development team at your disposal, you can very easily chase any of these flashy baubles. The secret is for you and your team to stay focused on those few that your target customer needs.

If you discuss your product features or product as whether it is a medicine, a vitamin or laughing gas, it helps your team focus on the value the market will place on it.

Medicine: A feature or set of features with this label should solve a clear and immediate need. The customer takes the medicine; uses the product/feature, and, bang, ailment cured.

Vitamin: A feature or product with this label does not directly address an immediate need. Like most vitamins, the impact is longer term and not all too clear. In other words, it is a nice to have but not necessary in the short-term.

Laughing Gas: A feature or product with this label is a exciting way-out idea. It may have a direct market impact or not, but no one knows.

All products have a mixture of medicines, vitamins and laughing gas. However, in version 1.0 of any new product, make sure your service or product contains mostly medicines. It makes it easier for your prospects to recognize the ailments it cures and easier for you or your sales team to sell your new product.

Entrepreneur Tool #1 – Forcing Functions

Trade shows: It seems we have all attended them or helped organize one or two. Intentionally or not, over the years, I have used them and other such events to launch new businesses and products. As I look at them through the entrepreneur lens, I see that they are more than just marketing exercises. They are forcing functions* that can drive overall company growth.

As an entrepreneur, you should recognize and embrace the power of these forcing functions. Don’t just let them happen or go to waste. In fact, seek them out. Use them to manage the growth of your business and propel it forward.

Think about how people in your company act day in and day out. There is a routine. Everyone thinks they work hard. They are smart and they put in long workdays.  Then reflect on how everyone responds when there is a hard stop, when the company needs to present and demo its latest, greatest product at a major trade show or deliver it to that first customer.

Bang! Things get moving. Everyone moves from running fast to running faster than full speed. Of the millions of things that need to be done, notice how quickly they are narrowed down to a select few. And of these, notice how quickly you and your team zero in on and act on those that really matter. This is the value of a forcing function.  It focuses you and more importantly your whole company on what matters. In addition, it is supported with intense action.

Forcing functions are catalysts for getting things done.

As an entrepreneur, these intense bursts of activity associated with a forcing function are valuable. Plan them. Control them. Moreover, manage them to rally your team and to focus them on what needs to be accomplished as well as to carry out the seemly impossible. Use them to get your team moving faster than full speed. Use them to generate a growth spurt for your business.

There are many types of forcing functions. Good growth forcing functions are ones that break a company out of its well-worn routines and engage it around key growth initiatives or help reshape it completely.

Hence, look for forcing functions that

• Focus you and your team on key results or initiatives
• Push your team out of their well-worn routines
• Stretch them
• Gets you out into the market and produces a market event

* A forcing function is any task, activity or event that forces you to take action and produce a result.