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Posted On January 10th, 2017 by Crowded Ocean

Market traction and market momentum: are they the same?

Successful VC investors are famous for wielding the power of their intuition or gut instinct when assessing a startup founder or her company before making an investment. That little challengesvoice that speaks to the VC investor about a hot opportunity is also informed by due diligence on the market size, team and growth.

A company on the move…

A startup that can demonstrate market momentum is a positive sign for investors. But, market momentum is generally largely qualitative. It’s that quality of a company “on the move” that’s largely unsupported by any graphs on charts but is still an indicator of market opportunity.

Market traction = market adoption

Market traction, on the other hand, is quantitative and it’s based upon real indicators of growth and market adoption.

Angel List co-founder Naval Ravikant describes market traction as “quantitative evidence of market demand.” In other words, do customers want your product? When it comes to an early-stage company, VC investors will take a measure of a company’s traction using private market data that go beyond publicly available info like the track record of the team, market size and financing rounds.

Quantitative evidence of market demand

In the absence of traditional metrics like average deal size and the true cost of customer acquisition, non-traditional measurements like share of voice, website traffic and social media growth and engagement do shape market traction of an early-stage company. Take note, startup founders! A focus on growing social media engagement can favorably affect the perception of your brand, but also of your market traction.

book-cover-largeOf course, quantitative growth and trends do count. Growth in average deal size, for example, is an early meaningful signal of market traction. Showing that you understand the sales cycle of your business and that it is shrinking is another meaningful early signal of market traction.

Bottom line, demonstrating market traction is the way to de-risk the idea of “more” (investment, hiring, partnerships, office expansion, etc.) for your stakeholders and investors. You can always celebrate market momentum, but what matters more is measuring market traction.

 

Posted On January 2nd, 2017 by Crowded Ocean

The Ultimate Startup Guide: Revisiting the MVP

In our upcoming book, The Ultimate Startup Guide, we address a major consideration for many clients: how to develop and release their products. book-cover-largeThe concept of Minimal Viable Product (MVP) and its role in a startup’s early success was popularized in the last few years by tech leaders and authors like Steve Blank and Eric Ries. Adherents of MVP have strong opinions that this is the only way to go to market; others caution more restraint in the process, ironing out more of the product before pushing it out into the fast-moving stream.

Here’s what we had to say:

The decision on what you’re going to sell may be the most important one you make in the early stage of your company. This may seem like a stupid question—or at least one with an obvious answer: ‘the product we’ve been working on all this time.’ Duh.

But wait. It’s extremely rare that what a company is developing is exactly what the market wants—or thinks it wants. So what do you do with the ‘delta’, the difference between the two?

The MVP (Minimal Viable Product): Let’s start with the definition provided by one of its inventors, Eric Ries: “the version of a new product which allows a team to collect the maximum amount of validated learning about customers with the least effort.” Those last two words are what some people seize on, leading them to portray the MVP process as a lazy one: ‘throw shit at the wall and see what sticks.’ But that’s hardly the case: MVP is a structured approach, one that requires a lot of discipline and diligence to be effective. Once you’ve created and released a ‘minimal’ product, you have to then be in constant contact with the market and then constantly iterating the product in line with that feedback. Done right, MVP can be very effective.

ASIDE: A good friend of Crowded Ocean—and of many people featured in this book—is associated with a concept known as the “Sales Ready Product” (SRP) in the same way that Steve Blank and Eric Ries are associated with MVP. The late Don Templeton perfected not just the SRP process but a means of shortening it so that it was at least competitive with, if not superior to, the MVP. In Don’s honor the folks at Sequoia named his process “The Templeton Compression Factor”. The process, executed correctly, could shrink an enterprise-level sale (which normally takes 180 days) to 30-60 days. (To learn more about Don’s Compression Factor and SRP, please see the link at the end of this chapter.)

authors1So which approach—Minimal Viable Product (MVP) or Sales-Ready Product (SRP) is right for you? It depends on your product team and your market. The younger/newer you are as a company, the more forgiving the market—as long as your product group revs the product, quickly and accurately. But we’ve also had established companies who try to practice MVP and their Sales department complains that they’re getting killed out there—that their customers expect something more fully-baked from them. And if your product is (to use a phrase that has been done to death) mission-critical, then SRP is probably the route to go.

We saw this difference of approach play out with our most recent client—a 14 year-old open-source player moving from a professional services model to a product/service focus. Their core constituency in the past has been the open-source community, which expects its product for free and is tolerant of early product flaws. But the new targets—government agencies and enterprises—while appreciating all the benefits of open source, are not as forgiving. For the money we’re talking about here, they’re expecting a more finished product and have little interest in being part of the testing and development process.

Who’s right? If the client can convince their customers that they are now functioning as a startup (with the major shift into the product area) and inviting the customer under the tent, then the MVP approach can work. But if they get pushback, they should pivot quickly to the more traditional SRP approach.

Posted On December 28th, 2016 by Crowded Ocean

Book excerpt: how to launch a startup by Hogan and Broadbent

Our new book, The Ultimate Startup Guide, is launching January 23, 2017. That’s less than a month, people! Check out an excerpt from Chapter 15, “Launch” below. It was originally published in VentureBeat.

Screen Shot 2016-08-12 at 8.04.28 PMEveryone in Silicon Valley has their own theory about how to launch a startup. There’s the “Soft Launch,” the “Rolling Launch,” the “Steady Drumbeat Launch.” You get the idea.

Then there’s the founder who brags that he didn’t spend a dime on marketing and sold his company for a gazillion dollars (that rarity — of which WhatsApp is a great example — is responsible for more company failures than we can count).

But for 98 percent of us — the ones who haven’t caught the market at the perfect time with the perfect product — there is “The Launch.” It’s your coming-out party, the milestone that moves your company officially from stealth or “in the bunker” into the public marketplace with a generally available product. In other words, this is it. Don’t screw it up.

To make the most of that once-in-a-lifetime opportunity requires planning, care, collaboration, and creativity. Even in the era of The Lean Startup, with its iterative approach to tuning your product feature set and product applications based upon active customer feedback, nailing the official debut of your company is a huge deal. It’s possible to survive a botched launch but not likely.

Some startups launch to “legitimize” their business in the eyes of customers and potential investors. Everything that takes place prior to your launch — even if you have a preliminary website — can be regarded as trial and error. Typically, your launch is your announcement to a wide variety of audiences — customers, investors, market analysts, the press, the competition — that you’re serious and open for business. You’ve polished and defined your market message through components like your website, sales content, and PR. Perhaps you’ve even upgraded your office space. All because customers want to do business with a brand they trust, one that they believe has staying power. Same for the next round of investors. Same for employees. Every startup wants to look larger than they are, and an official public debut (including favorable press coverage) can go a long way to achieving those business goals.

There are other reasons to launch. Some startups will tell you that their launch was key in attracting the right talent to build their team in a competitive job market. Others say that, post-launch, they were approached by investors or potential partners who wouldn’t return their calls prior to launch. Bottom line: Your launch is about investing in getting your story out into the marketplace in a powerful, differentiated, memorable, and unified way in order to connect with stakeholders so you can grow your business and scale your company.

The soft launch

In contrast to a one-time, major launch, some companies will choose a soft launch, which is usually phase one of a two-phase launch that involves a greater focus on the company than on the product. It may focus primarily on the founding team, its market space and the funding it has received. It may also involve a limited release of the product but without significant details.

When is a soft launch appropriate? Here are four reasons to go that direction:

1. Recruiting.  Startups, especially in the super-heated and super-competitive job market of Silicon Valley, will often soft launch in order to use the visibility it generates to be able to recruit top talent to build out their team.

2. Competition. A startup may believe a competitor is going to beat it to market. In order to be first – to define the market on its own terms and to set the stage for why its technology is superior – the startup will launch in two phases, with a soft launch intended to blunt the competition and relegate them to second-to-market.

3. Buzz-building. To be the shiny new thing in tech, even in a less sexy, geeky market segment, can be a very valuable, momentum-building period. Social media and press buzz can help a startup accelerate recruiting, fundraising, and customer development.

4. Enterprise-ready. Large enterprises are more sophisticated these days about the value of new technology from young startups. But that doesn’t mean they want to risk a vital portion of their IT operation and budget on a product from a newly minted startup. But, the market validation and favorable coverage by analysts and press of a soft launch can convey a great deal of legitimacy to a young startup that can help it close pivotal deals with early-adopter, brand-name enterprise customers.

The un-launch

Companies like Slack and WhatsApp have famously boasted that they spent next to nothing on marketing, that they never launched, that they just released their new product “into the wild” to gauge public reaction. This strategy is one that has worked well for a very select group of startups. It’s not a “thumb your nose” strategy, where the company is deliberately flaunting established market presence. Instead, it’s an experiment that goes so well that it obviates the need for the traditional launch. So if you want to go that route, take your shot. Just remember that press and analysts do their research, and if you come back to them because there was limited market response to your “un-launch,” they normally won’t cover you, since you’re yesterday’s news.

The serious launch

You need a lot of things lined up in order to launch. Here are the key ones:

Launch leader: The heart of every successful startup launch is the cross-functional team chartered to build the story and tools to put your startup on the map. While marketing is in charge of the launch, it’s an all-hands effort, with the founders and representatives from product, support, and sales joining the marketing team to craft the value and benefits of a new solution that solves a real pain point.

While everyone still has their day job (finalizing product, supporting early customer trials, and staffing critical job functions across the company), the launch will only come off if it is Job One for the entire company. To that end, we recommend creating the position of Launchmeister and telling everyone (founders included) that during launch period everyone (again, founders included) reports to the Launchmeister. Without that commitment you’ll either miss your launch date (which looks bad) or produce a half-ass launch (which looks worse).

We’ve covered who should be involved in the launch. There’s also the matter of who shouldn’t be. When board members, or well-meaning investors (or the founder’s spouse) start chiming in to “help” with such launch items as messaging, materials, or taglines, that’s problematic. In fact, when we see board members dropping into the startup’s offices frequently prior to launch, it’s usually a red flag.

PR: An important goal of any launch is favorable media coverage. Which means investing in PR. You’re going to need PR earlier than you think — and pay more for it than you want. By “earlier than you think,” we mean that, ideally, your PR agency has been in on the positioning and messaging process from the beginning. Ideally, they’ve even been a participant in the process, giving their feedback on what their market — analysts, press, and market influencers — will accept/believe and what won’t play with them.

This is also the point at which you find out how good your agency is. In launching as many startups as we have, we’ve worked with too many PR agencies to count. And the most important thing is to have an active partner in this process.

Product: Unfortunately, almost every launch will hit a snag. If a launch date slips, it’s usually one of three reasons: product issues, customer problems, content delays. Products have a nasty habit of taking erratic paths to completion. In the technology world, the unstated expectation is that products will slip at least twice on their way to market. Plan accordingly.

Customers: The union of product and customer — especially in early days — is a delicate one. On the one hand, early adopters are pioneers, willing to take on an incomplete product so that they can play an active role in its finishing. But early adopters are also notoriously squirrelly, sometimes working without the knowledge or approval of their company. So, we have a rule of thumb: We won’t launch a startup unless/until it has three referenceable customers — people who will take calls from press and analysts and say glowing things about their experience with the product, both in its current state and long-term. There are exceptions, such as the secretive cyber-security market, where getting companies to deliver a public “testimonial” is problematic. (Press, in particular, won’t write about a product without a customer as reference; they’ve been burned too often by company claims about their product that simply aren’t true.) The reason for requiring three is that there’s at least a 50 percent mortality rate of referenceable customers due either to product malfunction or company policy about talking to the press.

Content: In today’s arena of immediately available online information, the adage that “you can never have enough content” is true. It’s true for your website, simply as a means to make it richer (keeping viewers on-site longer, building brand loyalty), but it’s even more true for your sales efforts. These days, unless you’re selling an impulse-buy product, you need to nurture your prospects. It’s estimated that the normal enterprise sale requires 5-7 interactions (or touches) with your prospect. That means, unless you want to approach them empty-handed, with nothing new to justify the contact, you better have 5-7 pieces of content (it could be a white paper, data sheet, a demo video, a copy of your CEO’s latest article, a new blog on topic, etc.) available at launch and beyond. So don’t let your launch be delayed — or incomplete — because of a lack of content.

Demand programs: In the run up to launch, we recommend that your launch team develop at least three months of demand generation programs so that you have some “canned” programs available subsequent to launch that can help turn the increased awareness and interest generated by launch into sales leads. Otherwise, you run the risk of allowing all of the visibility, brand awareness, and site traffic from early adopters that respond at launch to go unleveraged.

Measurement: On the quantitative front, look at the conversions that were planned into the website and whether you are actually seeing the signups, downloads, and registrations you were aiming for. On the qualitative front, it’s about what the sales and customer support/success team are reporting. What are they actually hearing in conversation with customers and prospects, live and on social media? And does it validate or contradict what the data from your website is telling you.

Posted On December 20th, 2016 by Crowded Ocean

Some new, some old: the latest lingo of Silicon Valley

It’s time once again for NEW WORDS and PHRASES bubbling up in Silicon Valley…

Screen Shot 2016-04-26 at 10.47.06 AMGAFA: the rest of the world looks upon the technology giants of the left coast (Google, Apple, Facebook and Amazon) and simply refers to them as GAFA.

TAFT: the acronym for “tell them any frigging thing” was the unscrupulous sales practice at Wyndham Vacation Ownership, the nation’s largest time-share operator.

Rat-fucking: made famous in the Watergate era, ratfucking was the term for dirty tricks instigated by Republican operatives on the campaign to re-elect Richard Nixon. Yes, the term is back.

Screen Shot 2015-05-19 at 9.01.45 AMMechanical pixels: scientists are exploring a new display technology based upon graphene to build flexible, durable, energy efficient screens that are superior to LED screens.

Sexist algorithms: it turns out that there is a gender bias inherent in the data sets, called word embeddings, that are being used to train AI tools like chatbots, translation systems and recommendation engines.

culture, marketingPerfect forward secrecy: a security feature built into the end-to-end encryption of programs like WhatsApp that “future-proofs” your messages from new hacker attacks.

Posted On December 14th, 2016 by Crowded Ocean

Growth hacking without sales integration? Fuggedaboutit

This article by the co-founder of Iterate.ai about the value of rapid experimentation by teams within Amazon got us thinking about how often we see a lack of integration across marketing and sales teams at startups. Perhaps it’s the emphasis on speed and everyone’s love affair with “failing fast” that causes an integrated plan to get left behind. And perhaps that’s because an integrated plan takes time to get input and buy-in from both marketing and sales and seems to conflict with today’s bias for constant revision.

Screen Shot 2015-04-12 at 12.25.42 PMSometimes it’s the sales team that’s out of synch. For example, we will see a sales team that’s prioritized a particular use case or industry segment without telling marketing, which runs the risk of the vital supporting product or customer content not being accessible on the website. Or, it’s the web team (typically a part of marketing) conducting a test of new page layout, calls-to-action, colors, headlines, etc. or the paid advertising team trying out a new offer, content or keyword. But when these tests are led by marketing without communicating to the inside sales team responsible for lead development, missteps and wasted effort are inevitable.

Growth Hacking or Rapid Iteration?

Whether you call it “growth hacking”, or traditional incrementalism, or maybe “rapid iteration” to increase sales, the ingredient that can be costly to omit from startup marketing is integration across the sales and marketing plan. We see this omission very often in early-stage companies when content is being planned or when the “journey” through the website is being mapped out. In the crush of deadlines, no one talks to the head of sales or the inside sales team before finalizing those priorities. In other words, speed trumps integration which can turn into a misfire that translates into lost time and money when you have to stop and correct programs that are not in synch across sales and marketing.

To fix the lack of integration in startup marketing and sales, our advice to startup marketers everywhere is to convene a standing weekly 30 min meeting of sales and marketing as a pillar of your company culture. The meeting includes a review of all marketing programs, content, and metrics along with a review of sales pipeline. This meeting can also become the forum for brainstorming new experiments to answer questions for both the marketing and the sales teams. And it will reinforce that wonderful company value: we’re in this together!

 

Posted On December 6th, 2016 by Crowded Ocean

Building your startup: start with the press release

A VC partner whom we greatly respect, and who shared some valuable lessons that we incorporated into our book (that’s The Ultimate Startup Guide—which we’re shamelessly thinkingstrategpromoting here—due out Jan 23) approached us a while back with an interesting proposal. In conversations with him about past shared clients, we talked about what it takes to get founders’ attention—to really make them commit to what they’re all about and translate that essence into the core positioning of their company. And we all agreed that it was the press release. Powerpoint can be changed, whiteboards are too vague. But seeing your company, product and news and the claims behind them in a legal-looking doc—that seems to get the attention.

Company building by press release

So this VC told us that, for his next company, he wants us to come in and do our regular workshop. But, unlike most of our engagements, where we come in 3-4 months before the company (or product) launch, he wanted to do the workshop at the company’s founding. Then based on what we heard in the workshop, we were to write (with the involvement of the team) the press release for the new company and its product. And then he wanted his team to work to make the claims and promises in the press release a reality.

Screen Shot 2016-08-12 at 8.04.28 PMExpand a tactic of PR firms and web design firms

It turns out that this is a tried-and-true planning practice already employed by many public relations firms and web design firms. PR firms will ask the management team during the message planning phase to identify the key headlines and takeaways for the reader of targeted media that you want to compel to cover your news. This exercise can help focus everyone on simplifying your message and making it consistent while also identifying different approaches or angles to your story.

Web design firms typically have an input session where they will ask the management team to identify the key takeaways of a visitor to your future website. They are looking for words, tone, attitude and treatments. And some of this is the “same stuff” that writing that press release early will help identify and make consistent across your marketing tool set.

Posted On November 29th, 2016 by Crowded Ocean

Why would a startup hire an inside sales rep a year before product availability?

We’ve seen two successful enterprise startup teams hire inside sales reps during their stealth phase, early in the life of the company. moneySo early, in fact, that the hire preceded the general availability of product by more than a year. And the ISR was not even related to a board member or cofounder! So, why hire so early?

Two reasons.

Early traction

First, the ISR helped extend the reach and productivity of the startup team by cold-calling potential early-adopters while using the name and bona fides of the founders and investors. The ISR worked off of a list of friends-and-family targets and helped hunt critical early customers. As the mantra of company building goes, rapidly building the MVP product with fast iteration of core features that are based upon customer testing and feedback is the shortest path to establishing product/market fit. In this model, the ISR served as an indispensible wingman of the founders whose credentials are part of why the lone-survivorstartup was funded in the first place and why an early-adopter customer would take a chance on an unproven product and company.

In reality, the ISR runs an early focus group

Second, because the ISR is on the front lines of pitching the company every day by phone and email to would-be customers, they serve as a test bed or focus group of value propositions, terminology and product names. One of our past startup clients, for example, formed a three-person ISR team who A/B tested email subject lines that they used to set meetings in the year prior to the official beta release of their cloud service. The ISR team tabulated their findings which became useful data for us to consider when we worked to nail down product positioning.

So, consider the value of adding a strong Inside Sales Rep before launch to help extend the influence of the founders, accelerate sales and help test your positioning and messaging.

Posted On November 15th, 2016 by Crowded Ocean

November edition of fascinating new Silicon Valley jargon

USB condom: a device that blocks the risk of hacking or the transfer of computer viruses when a mobile device is plugged into a public USB port for power or recharging.Screen Shot 2015-01-13 at 9.33.38 AM

“Lights out” factories: a factory that is so completely automated it needs no interior illumination.

Fake news problem: this is a problem that Facebook is grappling with in the wake of their inability to filter out false information that’s posted as “news” on their website today.

Posted On November 1st, 2016 by Crowded Ocean

Why slide-ware and demo-ware must match

When we’re going through the positioning phase of our marketing planning with a startup team, there’s a lot of sifting and teasing apart of the core message, including trying to devise a crisp articulation of the secret sauce of the underlying technology.SecretSauce

You’d think that nailing down that secret sauce wouldn’t be too difficult to achieve, especially when the leadership team of the startup is often made up entirely of technical founders. But we find there’s often a disconnect between what the execs say in their Powerpoint deck compared with what the Systems Engineer (SE) are demo’ing to early customers.

In other words, startup marketers need to make it a priority to ensure that the “epiphany” captured in the slide pitch matches what the SE is showcasing in the demo. If the language and “aha” moments in the product demo don’t reinforce what’s in your Powerpoint, that’s a serious and potentially disabling disconnect.Screen Shot 2015-02-26 at 10.16.49 AM

This is often what can happen:

  • There are so many cool attributes of the new system that no one can agree to define “the secret sauce” around a single set of innovations;
  • The team gets hung up on how to describe the value of the solution/product as it is today versus what it will be tomorrow;
  • There are attributes of the system here today, but there is an internal debate over what attributes are going to make it into the next release;
  • Key selling points of the solution that address ease of use or ease of administration are impossible to show because there is an overhaul of the UI in the works or just ahead;
  • The startup counts a handful of C-level execs as customers of record, but that level of testimonial sale is not repeatable until the product evolves

Our takeaway is that our work to re-position a startup isn’t done when there’s a new Powerpoint deck (or website…) One of the key early deliverables that must be aligned with the pitch is the demo. We try to make the PPT deck and the demo align in message, nomenclature and sequence as early as possible. That way, the rest of the marketing deliverables (website, content, sales tools, demand gen) can move into development much more quickly and with fewer hiccups.

 

Posted On October 26th, 2016 by Crowded Ocean

October: 3 new words in Silicon Valley jargon

Three new terms you really need to know and use, nerds…

ideas

Volunteer computing: donate a share of your computer’s unused storage space and compute power to a scientific project (e.g. the search for signs of extraterrestrial life for SETI or research for a cure to Parkinson’s or Alzheimer’s diseases for Stanford University).

Buzzy: when a startup is growing quickly, in the media a lot and watched with envy by other startups with far less momentum, they’re buzzy. A former buzzy startup, Mixpanel, is regrouping to refocus on profitability, according to this recent news article.

Casino effect: there are a set of principles in the design of casinos that keep gamblers gambling. But can that same idea be applied to consumer software design?