Entrepreneurship, Tips

The right time to launch your product

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In my 14 years of developing and launching products, I have launched early, late and at “just the right time”. Truth is there is no “right time” if you have been working with customers and getting feedback. At that point the launch event tends to be largely a PR & AR (Press, Analysts & Bloggers) communication and outreach effort to create awareness, feel good about the traffic over the next few hours and get back to work.

Thanks to accelerators and the 3-4 month programs, almost every startup “launches” during demo day. To investors at least.

Since they want to launch “to investors” with some good momentum and traction, most startups are doing a soft launch or private beta a few weeks / months before and getting users and customers and some form of usage so they can show that traction to the investors.

I got a question about when to launch yesterday from an entrepreneur in Seattle. He’s been working on a consumer travel app and they have about 200+ active users that have been using the solution for the last 3 months. The beta criteria they kept for themselves (besides removing all the bugs) was active usage once a week by at least 10% of their registered users.

I ended up having a conversation of the pros and cons of launching early versus late. While I am fan of the “launch early and often” approach, I am also very aware of the problems of launching early, especially in a mature market such as the US. It tips of potential competitors who have a chance to be an better fast follower, that executes better given the lessons they can learn from the first mover.

Launch late and you will invariably get lots of people comparing you to the first mover and asking for features (right or wrong) that are already available with the competitor, making your ever so slight difference in the product strategy seem like an afterthought.

The easiest part of the conversation was my experience stated that the “Launch for investors” was the worst thing to do. Even if that’s your goal – to raise awareness so you can raise money, launching to the public the same day you do your demo day makes no sense, unless your product is aimed at investors.

Lets define launch of your company & product as the time you believe the product you are building is ready to be showcased so more people can be made aware of it. Its the equivalent of putting up the “Ready for business” sign outside your new restaurant.

Lets define purpose of the launch to be solely to focus on growing your users, customers and usage. Not to get feedback and tweak your beta product (which you should have done earlier), but to attract more potential users to your product.

There are 3 main strategies I have used to time the launch:

1. Time it around a startup event or conference (like Unpluggd coming up this weekend or Demo, TC Disrupt, etc.), so you can leverage the press, investor and influencer gathering to get most bang for the buck.

2. Launch it around an industry event (such as NRF in Jan for retail apps, or NASSCOM product conclave), which gives your more visibility among potential customers.

3. Launch independent of all dates and create momentum by reaching out to the press separately. This is fairly risky because you cant quite predict what else would happen on that day that might “steal the thunder” giving you less visibility than desired.

Regardless of the date, you still want to launch when your product is ready and your app is truly available to take more customers.

Entrepreneurship, Marketing, SaaS, Sales

How to B2B is morphing into B2A, B2D, B2M

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From the broadly 2 types of companies, those that focus on consumers (B2C) and those that focus on businesses / enterprises (B2B) there is an explosion of new types. While most of the new types are still a subset of B2B or B2C, the increasing sub segmentation of B2B is creating multiple niches among those trying to sell to the “enterprise”.

The problems with B2B are fairly well documented – Long & slow sales cycles, multiple decision makers with largely different agendas (procurement wants it cheap, CIO wants it to fit into their technology stack and end users want it to be usable).

There are a 2 very interesting articles over the weekend from Dave McClure and Christina Cordova  which document the changed landscape in B2C. What I am seeing among our startups in the Accelerator is consistent with what Christina mentions in addition to the initial problem with most mobile consumer startups – which is getting users.

Essentially the marketing mechanisms (ads, PR, email) create a lot more friction to getting users to try / download the mobile app versus the web app.

So you have to primarily use a combination of reviews, recommendations or in-app ads to get users.

What’s happening on the B2B front is even more interesting.

B2B is morphing into B2D (developers), B2A (Architects, as an example) or B2M (Marketers).

Thanks to SaaS and Cloud pay-as-you-go services, the products are inexpensive enough to get enterprise segments without the hassles of going through the entire Purchase order process for many products.

So most B2B companies are targeting a specific user who is also the person to approve, buy and select the product / service that works for them.

The implications are obviously dramatic and ones that change the landscape completely.

In a follow on post I’ll document the ways this changes the marketing and sales techniques.

Entrepreneurship

How do you measure the success of an accelerator?

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Since joining and running the Microsoft Accelerator for the last 2 months, I thought I’d take some time to follow up on what I learned in my first month running an accelerator with a question to understand how to measure success.

There are, in our internal tracking list over 100 incubators and accelerators in India, over 75% of which are run by colleges and educational institutions. Of the 30+ for profit, private accelerators and seed fund / incubators, nearly 25 of them provide space, initial funding and mentorship.

Over the last few months I tried to get a sense for what constitutes success at an accelerator.

The prevailing wisdom seems to be that the only metric accelerators should be measured by is to create companies that are “fundable”. This implies that accelerators and seed fund / incubators should only look to fund teams and companies that have a good chance of getting follow-on funding.

That’s also the #1 metric even the entrepreneurs at our accelerator judge us by. A few weeks ago CNBC did a 11 min video interview of our current batch and the only thing that came from each and every entrepreneur was the amount of money they wanted to raise at the end of the batch.

Update: From a few email’s I got from some of the founders at our accelerator, who said that they were asked by CNBC to only focus on the funding part during their interview.

The problem with this measurement is that it focuses the selection process to be a lot more risk averse and less open to risky and unproven teams. Since many in the industry claim VC’s are becoming more risk averse, who then takes the risk to develop entrepreneurs who are young and inexperienced?

On the other hand, I do understand many accelerators have raised capital and have a fiduciary responsibility to return multiple-fold that money to their investors. Which is why we continue to see copy-cat models which have a standard $10K – $25K in investment and a 6-10% of the company in exchange. The model is based on a spray and pray approach to look for 1-2 “winners” in a batch of  10 companies.

Which leads me to conclude that only funding should not be the metric that you judge accelerators by, but if that’s not the only metric, what else is measurable?

Lets quickly look at what accelerators provide. Space, Mentors, a set of graduates from previous batches, a Demo day, and some amenities (food, etc.) and a demo day to meet investors.

Almost every accelerator has about 20-50 mentors who help the portfolio companies. From a quick glance of their websites, nearly 20 of the 200+ mentors appears on all websites. So none of the accelerators can really claim “we have the best mentors”. In fact most good mentors I know help more than one accelerator.

There is one difference though: Product mentors are rare in India and very few have a person (or set of people) to help you think through building something that’s needed by customers or users.

Space (desks, etc.) offered by most accelerators tends to be largely the same, and while there are some exceptional spaces, most entrepreneurs wont really judge the accelerator by the quality of the space.Same goes for amenities. Although we provide free food for all at the Microsoft accelerator, that’s largely a nice to have.

Previous batch founders and other companies funded before also help a lot, but they tend to be as good or as bad as the selection process setup initially. Furthermore, since many accelerators and seed funds were experimenting their models earlier, many of the previous batches were largely work-in-progress.

So then we are back to the demo day and investor connections.

Which is why we built an early adopter network and system to ensure that entrepreneurs have access to the first few marquee customers that they need (who will pay as well) to ensure they are building something someone needs and is willing to pay for.

Hands-on design, architecture, marketing, PR (making connections with reporters) and sales are other things we are providing to ensure traction before their seed round.

The question is how do you measure the value of these items and more importantly the impact of these on the startup’s future?

Other

Why you should focus less on your Klout score and more on your Karma

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Over the last few months Klout has gained more popularity among Indian entrepreneurs. I have noticed not only more invitations on my facebook account for Klout but also more questions on Klout score optimization. Most entrepreneurs who are not technical (have a sales, business development or operations background) seem to be increasingly interested in increasing their Klout score in the hope that it will improve their chances of gaining customers or meeting investors.  It actually does neither. While Klout has its place in scoring social media engagement, it is fairly narrow in its measure of influence is my opinion.

As an early indicator of future success I always look at developers as the early adopters before Marketing and Sales professionals. I have never found marketers tell or show me something a developer had not shown me a few days, weeks or months ago. That’s not to say they are late adopters, but my feeling is that someone has to have developed it for the marketer to know about it. That someone is a developer. Developers tend to talk to other developers to get feedback and perspective first, which is why the early adopter set for most new and innovative products are developers.

Most developers have been focused on increasing their Hacker News Karma for a few years now and not their Klout score.

I have found that the single biggest source of traffic and converted users for either my blog, or two of the previous web apps that I was developing was Hacker News. More than a post on any of the top media blogs in the US.

So, if I were a marketer or sales person who was a founder, and am looking to get early adopters, meet with potential investors, etc. I would spend more time on HN, than Twitter, Facebook or LinkedIn.

Other

Guest post from Neil Patel: 5 reasons you ought to attend NASSCOM Product Conclave

 

Neil Patel
Neil Patel

 

Neil Patel writes a very popular blog Quick Sprout and he was in India a few weeks ago for the NASSCOM product conclave. He wrote a post about his experience at the NASSCOM product conclave as a guest post for this blog.

A few weeks ago I had the privilege of speaking at NASSCOM Product Conclave in Bangalore, India. And boy what can I say other than it was one of the best conferences I’ve ever been to.

The people were friendly, the audience was very receptive to the advice they were receiving, and everyone was helping each other out so they could increase their odds of succeeding as an entrepreneur.

Here are 5 reasons you ought to attend NASSCOM Product Conclave next year.

1.     Knowledge – even as a speaker, I learned a lot from the attendees. I actually sat down with over 30 companies and gave them feedback on their product and business. At the same time they were teaching me some cool tricks on how I could grow my business. One company shared the results of 11 a/b tests they ran on their pricing page and gave me some ideas on what we should do at KISSmetrics.

2.     Giving back – unlike most events NASSCOM is fully put on by volunteers. Every single person there who helped make the event come together, did it all for free. Because of this the conference had a different vibe from the get go, as everyone there was in the giving mood. Attendees gave back by helping other attendees with their business for free.

3.     Actionable insights – NASSCOM doesn’t just let speakers speak on whatever they want. Instead they make sure they are speaking on advice that is actionable. This means you’ll be able to walk away from a session and have key takeaways on what you need to do for your business.

4.     Comfort – it’s very rare that you feel at home when you’re at a conference. At NASSCOM, not only did I feel at home, but people went above and beyond to make me enjoy the NASSCOM experience. From picking me up from the airport to offering to take me around the city, people were always there to help me out.

5.     Food – don’t you hate it when you go to conferences and all they have to eat is boxed lunches? I know I hate box lunches. Well, you won’t experience that here. They have all types of foods and best of all, everything is freshly made and isn’t boxed. You can pick what you want right when the food comes out from the kitchen.

Hopefully you go to NASSCOM Product Conclave next year as it is one of the best events you’ll ever attended… both as a speaker and attendee.

Learning

I am thankful for…

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My wife, who plays the role of mom, dad, friend, console-er, shoulder-to-cry-on, lead investor and moderator to all my tantrums, antics, and diva-like tendencies.

My oldest daughter, who despite being so much of an overachiever, compared to what I had achieved even 15 years after she’s achieved them, is still humble, personable and thoughtful.

My son, who is quite possibly among the nicest brother I know (than I was for sure), still finds enough time and energy to keep the family laughing all the time.

My twin girls, who despite being on the receiving end of 90+% of my discipline, rigor and hard-work have the tenacity to keep forgiving me and still wake up every morning at 530 am and remind me that they love my hugs.

My mom, who realized her son is not the superstar engineer she always wished for, and rarely finds time to call her and just ask how she’s doing, still finds time frequently to call me after lunch to ask if I have eaten well.

My dad, who has always trusted my gut and instinct more than I have trusted my own and has never questioned a single decision I have made of which a significant number affected him sometimes adversely.

My sister, who puts up with all my constant bragging, covers up for all my short comings and blatant-overstatements-of-the-fact, with “yeah I know, but if he wanted to do that he’s the only guy who could”.

My brother-in-law and nieces who having been forced to state that I am their best friend and uncle still humor me with their constant boosting of my ego.

My friends (all of my facebook, twitter and offline ones are included no exception) who make it easier for me to hang in there for another day.

Happy thanksgiving all.

Other

Who should do the selling in a startup? Or “Is sales a team responsibility”?

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In the early days (<10 customers) of a startup, the founder typically is expected to do most all of the selling to get the early adopters. This helps solve the problem of understanding the customer’s buying process which aids in hiring the right sales person for your startup.

If the startup is founded by several people together, I’d advocate a single person running and managing the entire sales process. While its true that in a startup everyone’s selling and every person is trying to help sales, there should be one person who dreams, sleeps and eats getting customers.

The main reason for having one person for the role is accountability. That person’s sole purpose of being is to get customers and track their progress towards that end. If you are a solo founder, I’d recommend you hiring technical consultants or contract people to develop and architect or build your product, but do the initial sales (or customer development) yourself.

So the question is who is that one person who should be responsible for selling when you have multiple co-founders?

Usually I hear a variation of “My co-founder likes to talk a lot, so he’s taken responsibility for sales”, or “My co-founder is a better developer than I am, so I took responsibility for getting customers”.

For most parts I think that is a sufficient enough filter. If you have an inclination towards selling or are not as good at some other function, you ought to be helping play a critical role and I cannot think of a more critical role than getting early customers.

Even if you are the deemed “sales person” in your startup, you will realize quickly that you need more than 1 person to help you sell.

Sales people are (initially) mistrusted by customers who believe the salesperson’s sole purpose is to a) sell them stuff they dont want to buy and b)lie to overstate the capabilities and value of a product.

So the best situation to be in is to split the roles into 2 – the deal maker and the solution architect. The deal maker is still responsible for the entire process end-to-end. They will have to bring in the solution architect as required to help with the product aspects of the sales process and be responsible for the technical feasibility.

When you are ready to hire your first sales person here are some tips on filtering sales resumes for the right hustlers, process jocks and relationship sales professionals.

Entrepreneurship, Sales

Why you should not outsource your initial sales efforts

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Most technical founders are not comfortable with the sales process or the disciple of selling. They tend to treat it as beneath themselves and “sleazy”. Given that most entrepreneurs I interact with are engineers, I usually walk them through an engineer’s approach towards selling, which tends to mirror the agile development process they are familiar with (more about this in a later post).

Many entrepreneurs do try to sell, and not seeing quick success, come to a conclusion that they should outsource their sales efforts to an “expert”. Usually this is after they have exhausted their initial contacts and get frustrated with the constant rejection that comes with sales, or after they have finished tapping into their entire list of first level contacts who could possibly be a customer. They tend to be more comfortable “convincing” people they know well rather than “selling” to people they dont know at all. Which is why I ask them to “dig their well before they are thirsty“.

Without sales there is no business.

Without sales there are no customers. No customers means what you are building is a side project.

Without sales there is no revenue. No revenue means what you are working on is an unsustainable venture.

I have heard of enough companies who have died because they could not sell, but rarely heard of companies that died because they could not develop or build a solution that was sold.

To me, sales is the headlights to your business. I would never recommend outsourcing your sales function in your startup.

Even large companies I know in other areas besides technology, outsource manufacturing, engineering, finance or customer service, but rarely outsource sales or marketing.

I dont consider selling via channel partners as outsourcing your sales. That usually means you have to “sell” and convince your channel partners.

There are 3 reasons why I dont like sales outsourcing.

1. You dont “own” the customer and dont get direct customer feedback. In the initial days of your startup, its absolutely important to have direct customer connections, feedback and input. Even after you grow larger, customer connections are the biggest source of innovative ideas. Without direct customer access you will get a warped view of the real problems and pain points they have, which results in a sub optimal solution.

2. It is very hard to predict predict consistent closure of deals and commit to financial milestones. When you outsource sales, the outsourced company has the eyes and ears on the ground to understand what moves deals, whose budgets are cut and when deals might happen. That information is critical for you to plan your quarterly projections. Without that information you will also find it hard to understand how to allocate resource towards projects and features the engineering team should be working on.

3. Even if sales is “outsourced” most outsourcing vendors will require your help to constantly tweak your positioning, handle customer objections, change pricing, etc. Even after 5+ years at a large software company with over 500+ in a direct sales function, I found us to be constantly changing messaging and positioning each quarter to keep up with customer trends.

Can some parts of the sales process (like the initial lead generation) be outsourced instead of the entire sale process? Possibly. If you feel that the biggest challenge for you is to get the initial meetings and you get a sense that after your get those appointments you are able to move the sales process forward, then I would suggest you look to getting help from a firm that sets up appointments, or does targeted lead generation.

Angel investing

Why I am investing in 500 Startup’s India fund

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Quick post since I got many emails and calls from folks asking why we (Vinita and I) are not a part of Indian Angel network or Mumbai angels but are LP’s in 500 startups India fund announced today.

We like Dave, Paul, Pankaj and their team. A lot.

We like their hands on approach to helping startups as opposed to just giving money and asking for quarterly reports.

We are thrilled they move fast and help entrepreneurs by making decisions quickly.

That’s it.

We are totally excited to participate in their India fund.

Entrepreneurship, Sales

Why do companies buy anything from B2B startups?

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Yesterday I had a chance to talk with a software entrepreneur who has built a security product that’s primarily sold to mid-sized and larger companies. Over 8 months have gone into the development and he has been able to get fewer than 5 customers for the product. Surprisingly he’s been able to get enough interest from investors who have provided early funding to the tune of several hundreds of thousands of dollars. He has been able to also generate lots of interest from partners but that has not translated into customer sales. Given his developer  background, he was keen to talk about sales and how to generate some initial traction in the market.

Here is what I have learned from all my initial startup selling in the B2B space (i.e. startups selling anything – software, hardware, services, juice bars, etc. to other companies, not consumers).

There are only 2 reasons why companies buy from startups – The person buying has a very good relationship with the entrepreneur, or the person buying has a dying pain that she feels can be solved by the startup’s solution.

That’s it.

This is dramatically different from why they buy from Cisco, Office Depot or any other large company – where politics, budgets, executive management preferences or any other of over 100 factors also come into play.

Lets drill down into both those reasons.

I have personally only been able to sell the first 10 or so first customers for all my software companies through relationships that I built earlier. Which is why I always advocate digging you well before you are thirsty. Most of the software that I have built (B2B) did solve a problem, but I found that it was never an “immensely-horrible, I’ll-die-if-I-dont-fix-it” kinda pain. I avoided those because I did not have as much confidence in my ability to solve that type of problem since the scrutiny & pressure of “must-work-or-you’re-dead or this-better-work-or-you’re-out” causes buggy software.

So I focused on building relationships with key people (that usually took a few months), without me talking much about my product or service. It was purely to help the other person who I wanted to be friends with.

When you build a strong relationship, you will find people are more willing to forgive bugs, try unproven software or even give a no-name startup a chance.

Given my engineering background, I have a “formula” that I believe that will help you understand relationship building.

Relationships = Time + Trust + Mutual interest.

In this case, + is not addition, but an operator. More about this formula in a later post, but the summary is building a relationship takes time (quality not quantity) spent together, building trust by small commitments you deliver on and mutual interests you share with the other person.

The only other reason larger companies buy from small startups is that they are in a huge pain and they believe startup has a unique solution, offering or product to solve that pain in the fastest possible time. I emphasize “they believe” because they are really not sure yet since they have not built a relationship with that individual.

Relationships trump everything in sales. Everything. She who has the relationship wins.

Which is why you are better off getting a referral from one of your customers (who you have a good relationship with presumably) to another potential prospect (who they have a good relationship with).

So before you start you own B2B entrepreneurial venture, build relationships.

The personal blog of Mukund Mohan