Takeaways
- Startups play a different game than big companies. They need to stay lean and create demand for their product.
- The first and foremost step for startup success is to learn about your customers and find your earlyvangelists.
- Sharpen your skill talking with potential customers and expand your connection with referrals.
- Develop a sales roadmap before scale-up.
Book Notes
My notes are in the form of clipping that summarizes a book in the author’s own words. I have organized the excerpts from the book in a way that I find most digestible. Hope you enjoy it!
All quotes are from the original author.
What’s Your Game
“In big companies, the product spec is market-driven; in startups, the marketing is product-driven.”
Stay Lean
“The further away from a direct sales force your channel is, the more expensive your demand creation activities are.”
“… not build its non-Product Development teams (sales, marketing, business development) until it has proof in hand (a tested sales roadmap and valid purchase orders) that it has a business worth building.”
“It keeps a startup at a low cash-burn rate until the company has validated its business model by finding paying customers. ”
Create Demand
“It’s not intuitively obvious, but the initial product specification comes from the founders’ vision, not the sum of a set of focus groups.”
“For the first product in a startup, your initial purpose in meeting customers is… to find customers for the product you are already building”
“You need to create “demand” for your product. Once you create this demand you need to drive those customers into the sales channel that carries your product”
What’s Your Competition
“When the share of the largest player in a market is around 30 percent or less, there is no single dominant company. You have a shot at entering this market. When one company owns over 80 percent share (think Microsoft), that player is the owner of the market and a monopolist. The only possible move you have is resegmenting this market.”
“Natural tendency of startups is to compare themselves to other startups around them. That’s looking at the wrong problem. In the first few years, other startups do not put each other out of business. While it is true startups compete with each other for funding and technical resources, the difference between winning and losing startups is that winners understand why customers buy. The losers never do.”
“You compete in a new market not by besting other companies with your product features, but by convincing a set of customers your vision is not a hallucination and solves a real problem they have or could be convinced they have.”
Forget About The Chasm
“If you are just starting your company this is the last time you are going to see this curve, at least for the next year. The problems you face occur much earlier than any chasm. In fact, you should be so lucky to be dealing with chasm-crossing activities, for they are a sign of success.”
Who’s Your Customers
“Being a great entrepreneur means finding the path through the fog, confusion and myriad of choices.”
Find Your Earlyvangelists
“Earlyvangelists are a special breed of customer willing to take a risk on your startup’s product or service because they can envision its potential to solve a critical and immediate problem—and they have the budget to purchase it.”
See the customer understanding checklist
Develop an innovators list
“Innovators are the companies, departments in a company, or individuals in your field who are smart, well-respected and usually out in front of a subject.”
- “First, you need to find and meet with the visionaries who are known to “get” new ideas.”
- “Second, your innovators list will give you a great contact list for advisory board members and industry influencers.”
Ask For Referrals
“The best introduction to a prospect, when you can manage it, is through a peer within his or her company.”
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“Get used to being turned down, but always ask, “If you’re too busy, who should I talk to?””
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“You aren’t going to send cold email; the people who gave you the leads are. Forward your email to them and ask them to send it on to the contact they gave you.”
Make it Routine
“Keep calling until you have your schedule booked with three customer visits a day” (See how to start a call) and get deeper
“At this stage, you are less interested in big names and titles or the “exact right” consumers. You are interested in individuals who will give you some of their time and who you think even loosely fit the profile embedded in your customer hypotheses.”
“It’s helpful to keep hit-rate statistics (were any reference stories better than others, were any lead source better, were you more successful calling on managers, directors, vice presidents?)”
Build Your Sales Roadmap
“You cannot learn and discover while you are executing.”
“Building a roadmap to sales success, rather than building a sales organization, is the heart of Customer Validation” (See the sales roadmap checklist)
Checklists
Customer Understanding
- How customers spend their day, spend their money and get their jobs done
- What would make customers change the current way they do things? Price? Features? A new standard?
- How they learn about new products. Who are the visionaries in the press/analyst community they read? That they respect?
- Can these customers be helpful in the future? For the next round of conversations? For an advisory board? As a paying customer? To refer you to others?
Sales Roadmap
- Are we sure we have product/market fit?
- Who influences a sale?
- Who recommends a sale?
- Who is the decision-maker?
- Who is the economic buyer?
- Who is the saboteur?
- Where is the budget for purchasing the type of product you’re selling?
- How many sales calls are needed per sale?
- How long does an average sale take from beginning to end?
- What is the selling strategy?
- Is this a solution sale?
- If so what are “key customer problems”?
- What is the profile of the optimal visionary buyer, the earlyvangelist every startup needs?”
Start a Call
- “Start with an introduction: “Hi this is Bob at NewBankingProduct Inc., and as you remember I was referred to you by [insert helpful reference name here].”
- Now give them a reason to see you: “We are starting a company to solve the long teller line problem, and we are building our new Instanteller software, but I don’t want to sell you anything. I just want twenty minutes of your time to understand how you and your company solve your own teller problem.”
- What’s in it for your contact? “I thought you might give me some insight about this problem, and in exchange I’ll be happy to tell you where the technology in this industry is going.”
- Exhale.”
Getting Deeper
- “If they agree with you about the problems, get them to explain why they think it is important to solve them (there is nothing better than playing validated customer needs back to them)”
- “Do not—I repeat, do not—try to “convince” customers they really have the problems you describe. They are the ones with the checkbooks, and you want them to convince you.”
- “Ask the customers what they think the solutions to the problem are, whether you are missing any, and how they would rank-order the viability of the existing solutions”
- “Another critical piece of information is, who shares these problems?”
- “Casually ask, “How much does this problem cost you (in terms of lost revenue, lost customers, lost time, frustration, etc.) today?”
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