Customer Acquisition Tips from Andy Payne Co-Founder of OpenMarket

Entrepreneurs that come through his office have passion and are thoughtful about product, design and team, but not marketing.  In this day and age, when the online marketing channels are so crowded – reaching the customers is the primary challenge (at least as if not more important than the engineering).

Lifetime Value > Cost Per Acquisition

When the lifetime value starts to really exceed the cost per acquisition you have a real business.  For more Andy recommends you check out http://www.forentrepreneurs.com/(from David Skok at Matrix Partners)

Create a Culture of Experimentation

Treat your marketing like an MVP.  Do the minimal amount necessary to test the ROI for a new channel.  Ghetto testing is a big piece to this – just make a landing page for a product idea – and see if you can get pre-registration.  This will give you a feel for the product need before it’s even launched.

Ways to market

• Paid Search/Banner Ads.  Pretty easy to try, but hard to compete because you’re bidding directly against experts (or at least you should assume they are).  Just like playing poker at a casino – be ware.
• Inbound Marketing/SEO. Make content that people will find on Google.  Use Google analytics/webmaster tools to manage and boost your rankings in the organic search results.  First result for “startup equity” on Google is Andy’s Blog
• Viral Marketing. Hard to plan for, but worth a shot.  Make great content (video/picture/post) that hits that human nature that is simple and sharable.  Then, make sure it connects back to your business (tricky!).  You can also create a project that is inherently viral (dropbox). 
• Email Marketing.  Soothes out acquisition process. If you can get them to buy, great.  If not, what can we do that maintains contact?  You start with a opt in (small customer commitment) and enables you to message to lead up to a sale (big customer commitment).  Opt-in is critical. If you get market as a spammer by too many people email providers (gmail/yahoo/hotmail) will start to ban you.

Book Recommendations:

Inbound Marketing – Get Found Using Google Social Media and Blogs

The New Rules of Marketing and PR – David Scott

All in all the advice boils down to – work smart (use hard data/analysis) and work hard (leverage every personal contact you have and send out a lot of personalized emails to get traction).

F-ing up Feedback

Through some really challenging conversations with advisors I’ve gotten the kick in the pants to re-evaluate my management style. The conclusion I came to was the biggest area for growth was in feedback (irony knows no bounds!).  Giving feedback is hard and temporarily uncomfortable, so it’s something I often postponed to big mile stones.

However, through much reading, adjustment, trial and error I’ve settled on three Fs for feedback:

Fast – Give the feedback in the moment.  Immediately after the action everything is fresh in the recipient’s mind.  This is the best time to trigger reflection and growth.

Frank – Be brutally honest.  Any beating around the bush or ‘cushioning’ to save someone’s feelings only obfuscates your messages and robs the recipient of a valuable learning opportunity.  That is not to say you need to humiliate the person with mean or public feedback.  Just deliver an objective statement in private, answer clarifying questions, and leave to let the recipient reflect.

Frequent – Do this often.  My biggest failing was to wait for big milestones. It’s important the feedback is separated from performance/compensation review.  Frequent feedback builds the trust that the information is simply there to help – nothing else.  This will take the pressure off and enable the person to respond positively.  Also frequent feedback cuts up changes into small chunks – making it easier for the recipient to internalize and adopt.

If you’d like to read some more on this topic from a truly great mind – one of the most pithy descriptions of good feedback comes from Ben Horowitz: http://bhorowitz.com/2012/10/17/making-yourself-a-ceo/

So go forth and F up your feedback so you don’t f**k up your team.

No Business Card Challenge

I have a confession to make: I don’t have business cards.  I used to carry them religiously – 3-4 in my wallet at all times – ready with a card for a serendipitous connection.  I’ve given and received hundreds of cards over the years, but can still count on my fingers the number of valuable connections made. Following up ‘later’ just never happens.

When I meet someone interesting today – I simply send them an email on the spot. It takes just a second - type in the email address, fill in the subject and you both have a cue to connect sitting in your inboxes instantly.  This removes the separate task of follow up after an event, ensures that the message isn’t lost in a jacket pocket for eternity, and provides an immediate cue to connect later. 

In a time before iPhones and 4G business cards had a place as the most efficient means of exchanging information.  However, today, when we all carry our computers in our pockets they  just don’t make sense and should be relegated to being a lost vestige of the meeting ritual:

So I ask of all of you to shelve the archaic cardstock artifacts of last generation’s business world and join the mobile generation. Make connections instant and persistent.

Take the No Business Card Challenge!

And now that you have a bunch of business cards you won’t be handing out anymore – Hugh MacLeod has found that they make the perfect cartoon canvases:

Breaking the Silence

In the first of many Harvard Alumni Entrepreneurs events I plan to attend Michael Beer discussed on The Silent Killers to Strategy Execution.  The foundation of the talk was that there are insidious issues that pervade organizations of any type and prevent sustained success.  In order to create an enduring business executives need to continually bring these issues to the surface and face them head on.

• Create trust based relationships.  Start by creating the culture with your employees and it will flow through to your customers and investors. 
• This makes me wonder if quarterly volatility is an indication of a stock’s quality (are people trusting in the people or trading on quarterly results).
• Expose misalignments and make them discussable.  Learning and governance is the structure that should be designed to surface performance and psychological alignment issues.  “Trust can speak to power about leadership and organizational effectiveness”.  This is why many companies hire consultants.  But do you really want to outsource something that should be your core competency?
• People at the top are the biggest champions of the status quo. If you’re currently in change any change is all downside risk.
• Silent Killers
• Unclear strategy values, and conflicting priorities
• Extreme leadership style – top down or laissez faire
• Poor coordination
• Often seen as the hub and spoke systems – relying on one point of management and communications
• Inadequate leadership skills/development
• Closed vertical communication resulting in low trust and problem solving

So, how do we get a productive conversation going?  Honest collective and public conversations.  Have this conversation on a regular basis and explicitly call out discussions for any historically known silent killers in your organizations.  Have an intermediary fitness task force that connects senior leadership team to the broader organization.

Helpful rules for great feedback and bring out the unvarnished truth

• Perception is fact.  Don’t argue about veracity.  If employees are saying it you need to deal with it.
• You can’t ask for sources.
• Management can choose the taskforce – they need to choose people they trust.
• Task force members need to follow up with the organizational members they spoke with to let them know that the message was delivered.
• Feedback session layout – this physical layout offers a sense of communal security (together in the center) with management as observers on the outside. 

The taskforce provides the dialog and open feedback. Surveys don’t surface issues – they measure them.  And, as an added benefit – this will help you to develop talent.

While much of this is from the perspective of larger organizations, however, it is all applicable to startups.  Startups are intensely political and personality driven organizations powered by faith in the mission.  This often clouds management’s ability to collected feedback (despite having a flat organizations).  Consistently having honest collective and public conversations will ensure that you keep learning and continue to grow a healthy organization at any stage.

Learning to Talk

Remember doing that a few decades ago?  Well, as it turns out the fun never ends!  In person communication is the most powerful form of persuasion.  As an entrepreneur – especially as a founder – your voice is the most important asset you bring to a company.  We can always hire for skills.  However, that person who’s passion can power a team or persuade an investor becomes the irreplaceable piece of a company’s DNA. That’s a key difference between a founder and an employee.

Since speaking comes naturally we often will gloss over the practice of this art with a good enough subsistence level of skill.  What an opportunity to miss.  Like any other skill, through deliberate practice the level of competency will grow.  In this vein HBS brought in KNP Consulting to study some videos of past presentations.  Here’s the one I chose:

I was lucky enough to sit down with Matt Kohut who has some pretty incredibly experience training speakers – especially in the engineering space (NASA no less).  Here’s the core lessons he had for me based on the clip:

• Slow Down! Not news to anyone that knows me – but I talk FAST.  This makes the message hard to digest and understand. 
• Cadence is a roadmap.  Modulating the pace and tone of speech provides an audience with subtle cues for the importance attached to each part of the speech.  When you get to the most important point – lower your voice, slow down your delivery, and then stop.  A pause is the most powerful form of punctuation.
• Move deliberately.  When walking around a stage – it’s important to pick a point or a person and walk towards them.  Deliver a message as you walk.  Finish the point and walk away.
• Play with balls.  Most motions on stage should mimic holding a sphere ranging in size from a basketball to a bb.  The deliberate movements conforming to a round shape creates a strong movement with an organic (warm) pattern.
• Reading recommendations:
• The Man Who Lied to a Laptop.  What we can learn about building relationships from Human Computer Interaction
• Honest Signals. How to project authenticity.
• Strong vs. Warm.  The core analytical tool they use to think about a speaker’s effectiveness is how strong or warm you are perceived as.  It’s important to note that people prefer warmth to strength (just in case you’re picking one).  Figure out what your baseline place on the spectrum is and then carefully pick the appropriate place on the spectrum for each situation (talking with your team vs. talking with a VC). 

 

I love the framework and deliberately choosing the mix of strength and warmth that you need to project in any given situation.  The real challenge to continually developing this skill is collecting feedback.  Self-monitoring is extremely difficult since it distracts you from the conversation and will inherently make you less effective. 

The best way I’ve found (both personally and with my clients) is to designate a spotter – an ally in important presentations and meetings who can focus on watching you to provide feedback afterwards.  Any ‘bad behaviors’ go on a list for the spotter to flag in conversation for me (think of it as an early warning system).  The notes from KNP will definitely go on mine!

Revel in Failure

I often hear long discussions about the right time to found.  However, I truly believe the question is if not when to be a founder. The simple fact is startups are never worth it. The price you pay as an entrepreneur in time, energy, and stress is never worth the monetary rewards. A founder has to be motivated by a passion for pursuit. And if you have that passion – the right time to found is right now!

Founders are attracted to the challenge of creating something from nothing. The careers of serial entrepreneurs are marked by a continually escalating set of challenges – this is why we see Jeff Bezos of Amazon launching rockets and Bill Gates trying to eradicate malaria. Both of these founders have successes that will impact the lives of millions for generations. And yet, they are all still on the hunt for the next great pursuit.

A big part of escalating risk is failure. If the motivation is to seek greater challenges with unknown outcomes – failure transforms from a possibility to the inevitable. Love of failure is the hallmark of a serial entrepreneur.

Success just isn’t as interesting. When you’ve won the path forward is often smoother – and more mechanical. It’s just more of the same. And, if you keep consistently succeeding, it’s clear that the challenges you are choosing are too conservative. If you’re not failing you’re not taking on big enough challenges.

Failure is where the excitement is. I love this risk – and live for it. That’s why I’m a founder. I look back on the last three years I’ve spent building companies and I cherish every single experience – the failures even more so than the successes. The moment you know that it’s not working you get to look over the precipice, see all the options below, and leap.

The only reason to do a startup is because there isn’t another option. Founders need to imagine a future – and know they can be happy having taken a shot – without regard to the outcome.

If you’re considering a startup life, do yourself a favor and first ask: can I revel in failure?

Trend Report: Chi-Hua Chien from KPCB

On my usual perusal of TechCrunch I found an unusually straightforward set of insights from an Ask A VC Interview with Kleiner Perkins’ Chi-Hua Chien.   Some key takeaways:

• Mobile first.  While they make life easier for consumers the real shift is what the enable on the supply side.  If you look at companies like Uber, Cherry, and Zaarly – they require that suppliers have mobile POS systems (iphones) that are able to take orders and manage payments for any vendor that is constantly on the move.
• Realtime reporting. Companies like Charity: Water have taken advantage of plummeting hardware costs and improved telecom technology to provide an unprecedented level of realtime reporting.  In the case of Charity: Water  they’ve used this to provide a new level of accontability to their charity operations – so a consumer can understand exactly how much water their specific well is providing – the most concrete measure of impact for your donation.
• Favoring enterprise over consumer.  This is a new trend driven by the fall of the frothy consumer financing market.  Just forget it. The top consumers companies (Facebook, LinkedIn, Twitter) were founded in the dark days of the web (‘04-‘06) when people were fearful from the post ‘00 bust or the explosion of Google.

His closing thought (and my key takeaway):

“If you have a vision, passion, and a very clear problem as an entrepreneur don’t worry about what ventures investors are funding or not funding.  go build a great product in a great market and you’ll get funded.”

Building an Enterprise Netflix Style

A recent TechCrunch Article introduced the Netflix Culture with the quote from Sheryl Sandberg that this was “The Most Important Document Ever to Come Out Of The Valley”.  While overblown (Moore’s law anyone?) the monster 128 page deck does contain some gems:

• The valley of death for big companies comes from scaling up complexity with procedures.  These procedures enable mediocre employees to persist while making the business more inflexible.  This creates a cost effective juggernaut that has no ability to respond to market conditions. 
• I’ve seen this in every single big company I’ve been around.  Netflix makes the big bet that they can survive by having a team of superstars with a high degree of flexibility who fanatically drive down business complexity. 
• Treat you team like a pro sports team. Keep only superstars in specific positions your team needs.  Cut everyone else.
• In the same vein – pay them like superstars.  Everyone should be paid at the top of their market worth and employees should be ‘re-hired’ every year at the appropriate salary.  This is HUGE.  If I stayed an engineer at Microsoft I’d have to get 2-3 promotions to get to the same base as the incoming class of college hires from my alma mater. Ridiculous and common for almost any big company.  This is the leading cause for folks to bounce around the big five tech companies.  What an inefficient process.  
• Give up the complex expense policy.  Make the process transparent (so everyone can see what you spend on), but don’t try and legislate every single spending rule.  Microsoft wouldn’t buy me a GPS ($150), but it would expense one on rental car ($1000/yr).  Go figure.
• “If you want to build a ship, don’t drum up the people to gather wood, divide the work, and give orders.  Instead, teach them to yearn for the vast and endless sea.” –Antoine De Saint-Exupery The Little Prince
• Netflix seeks to create well aligned but loosely coupled teams.  With really high performers, if you can get them behind the mission, and take compensation off the table (by paying ridiculously well), they can dedicate manic focus to doing the right thing.  Make it about the work.

While Netflix is certainly an embattled company with some MASSIVE BLUNDERS in its past (that call to question the whole superstar idea), the dream that this deck outlines is one of the first legitimate templates for building a big business with multi-generational potential.

Cheers to you Mr. Hastings!

Culture (2009) from Reed Hastings