Selling to the C-Suite

SELLING TO THE C-SUITE

C-Suite execs are besieged and time-pressured.  Survival depends on a ready no.   But if you go in on their terms, not yours, they’re fair game.  Six tips for getting in the door:

  1. Selling to the C-Suite is a 2-way conversation, where the prospect does 70 percent of the talking.  It’s NOT marketing – one-way communications designed to foster Interest in your service or product.
  2. It’s letting prospect talk themselves into buying your offering, while you direct the conversation with well-chosen questions. It’s NOT a capabilities presentation.
  3. You help people better understand their needs and the urgency to do something about them. It’s about THEIR point of pain, NOT the value of your company or your offering.
  4. You connect with your prospects by being relevant to their interests and concerns. You do NOT use corporate marketing messages about what you are, what you sell or what differentiates you from competitors.
  5. You always start by creating curiosity about a pain point and how to solve it – never by explaining anything.
  6. You come right to the point knowing that brevity matters to your prospect. What’s the problem?  What’s the solution?  You NEVER waste time with idle chitchat – weather, traffic, etc.

A New New Innovation Strategy

Today’s Unicorns – super-successful venture-backed tech companies valued at $1 billion or more – are pioneering a new innovation strategy that has implications for any business.  What they’re doing is reinventing the operating model, the way an enterprise delivers value, and they’re doing this in a way that benefits their customers and their own profitability, to say nothing of their equity value.

PDMA’s awesome diagram lays out the three business model dimensions:  create value, deliver it and capture it. The primary value has to be the benefits your customer derives from the way you satisfy a significant unmet need with the product or service you create – or there won’t be any financial return.  Every business has to be customer-centric, so it’s not surprising that this is the kind of innovation we hear about all the time.  But it’s not the only one possible.

Revenue models have been innovated as well – such as the razor/razorblade model invented more than a century ago by King Gillette, the equipment leasing model introduced by Xerox in 1959 for the first successful plain-paper copier and the freemium model that began with shareware in the 1980s and gained its new name as the result of a 2006 blog post by Fred Wilson, the VC.  .

Innovating the operating model through which an enterprise delivers value is more unusual.  Companies have used electronic computing to scale processes since the late 1930s, and the Unicorns are leveraging technology to the hilt.  In fact, they are software companies – but with a difference.  They don’t sell software.  They use software to manage operations efficiently, conveniently and without human intervention and then they sell what the software does, not the software.

For Uber, this means using phone app technology to connect customers to the system, demand calculation technology to locate the nearest vehicle, predictive technology to manage taxi supply and demand, and an overview of all drivers and all pending requests for quality assurance. Both Uber and Airbnb deliver tangible real world services with no sign of software in the end product delivered to a customer.

In addition to leveraging computer technology, these companies leverage external people even for mission-critical processes.  Uber hires no drivers; Airbnb hires no hotel works.  Instead, they  rely on “staff members on demand.” They also own no resources – no inventory.  The staff members supply the resources.

By eliminating the need to invest in resources and operating activities, the new operating model lets management focus on revenue-related activities, such as marketing, product development and community management.  It also delivers superior value to customers in terms of new choices that offer greater convenience and, at times, lower price.

The value captured by the business?  A revenue model that minimizes fixed costs, enables maximum support for revenue generation and, as a result, gross margin that scales exponentially.  This gives birth to what Cowboy Ventures founder Aileen Lee called Unicorns, the billion-dollar tech startups setting new standards for equity value.

But any size business can benefit from an operating model that leverages computing technology, relies on staff that’s on demand, and/or uses resources supplied by that external staff. Salim Ismail describes some of the specifics in his book The Exponential Organization.  The vision is an enterprise that is “ten times better, faster and cheaper” and whose impact, or output, is disproportionately larger than its peers.  Are you ready and willing to give this a shot?

What Investors Expect in Milestones

By Eleanor Haas

A company’s milestones are turning points in a company’s development that mark stages of growth and wash out a measure of the risk of failure.  Investor criteria for these are excellent metrics for shareholder value.  Investors think about six major milestones for an emerging  B-to-B technology company –  they look for this road map:

  1. Product Market Fit

You know it’s happening when your non- or little-paying beta customers stay with you and tell their colleagues about you. Retention above 90 percent.  High word-of-mouth growth.  It’s proof you’ve met a need – at least for the moment – but you’re far from home free.  You can lose product market fit at any time.  Customers discover alternatives you had overlooked, your performance slips or something new and better pops up – and you’re back to Square 1.

  1. Paying Customers

Once you get, say, five customers to make the leap from free or token payment to paid, you know you’ve started creating value for your business as well as your customers.  You won’t have much market penetration, and that’s your next goal.  If you could get five, you can get 50!  Sell-sell-sell!

  1. Statistical Viability

The next bottom-up goal is sufficient recurring revenue to achieve something like an annual run rate of $1 million – i.e., $83,000 per month.  For this, you’ll need solid pricing and market segment data to achieve a reasonably accurate estimate of market size – plus the marketing, sales, customer support and technology to make it happen.

What’s the return per customer?  How many customers do you need per month?  Per day?  Are there enough customers in your segment for you to land that many?  Do you have a market segment than can support your pricing?  No?  Then, what segment should you target?  What would it take to hit the run rate in a year?

  1. Cash Flow Positive

When:  12-18 months from startup for a technology business

Net income is still negative but your cash balance seems to keep pace with expenses.  This is a major coup – proof of economic viability and an investor requirement for further investment.  It’s a precarious time because the balance shifts dynamically.  You have to keep selling, closing deals making deposits, with just enough of a cash cushion for protection when the balance shifts downward.  Profitability still lies in the future

  1. Capital-Efficient Growth

Once you’re generating $3 million to $6 million in revenue and see that you can sustain positive cash flow, you know you’ve reached capital efficiency.  Investors like this a lot because they can expect you to generate $1 million in recurring revenue for every $1 million they invest.  Of course, your growth still depends on outside capital.

You may well  choose to stay at this stage for a long time – selling equity for cash in order to grow aggressively In a competitive market, you could do this through $100 million in revenue or even more.

  1. Profitable

When: typically, 3-5 years from startup for a growth business

Nirvana!  Net income at long last is positive.  Cash balance keeps growing.  Revenue from existing clients is sufficient to maintain it.  The net income is from new business, and it frees you from needing either investment or loans.  Right on!

 

What Investors Want to Know

Everyone seems to have a different idea about how to introduce a business to investors.  Scientists want to deliver full detail about the science as well as their products   Most others just want to describe their products in some detail.  But what is it investors want?

We asked three investors at a recent meeting about life sciences companies, and they made clear that they’re evaluating investment value – not the product, not the business, the investment potential.  Here’s what they said:

Investor No. 1:

I want to know five things about a new company:

  1. What is the novel invention?  What’s different?
  2. What is the need for this?
  3. What is the rationale why your technology will work for this purpose?
  4. What is the regulatory pathway?
  5. What’s the ask amount and what is the next value inflection point?

Note:  The same investor also asked for the net income/loss figure instead of EBITDA.  “You have no history, no track record, to justify EBITDA” was the explanation.  To this I would add that EBITDA is a measure of profits and hardly appropriate when there are none.

Investor No. 2:

Five minutes is better than twenty minutes.  Two minutes is ideal.  You can raise money in an elevator!  Think of this as being like a resume, which you write to get a meeting.  A one-page executive summary is the most investors will read.  Staff members do the rest.  Get them excited about investing in your company.

Hit things home without talking to doctors – “if you invest, you’ll make a lot of money” – that’s what I want to know.

Get the investor’s interest right away and then keep their interest. You’re talking to guys that have seen hundreds of business plans.

The growth rate needs to increase for the first three years.

How much will they need altogether?  I’m not looking to get my money back right away, and I don’t want them to be always raising money.  I want to triple my money in six to nine months and then another triple in six months.  I want to get in and out at the right price.

Two things matter to me:  the potential to grow big – so I can make 10X to 100X – and management.

I’m in the business to make a killing.

Investor No. 3

  1.  A big market
  2. What’s the basis for their competing –   their differentiation and competitive advantage?
  3. The financials – what’s the inflection point?  How effectively are they controlling expenses?  How can they avoid a down round?
  4. What’s the exit plan?  Who will the strategics be?  Why?  How long will it take?  What will it cost to get there?  What are the comparables?

The Next New New Thing

In 1999 Michael Lewis told the story of “the new new thing” in terms of a single individual, Jim Clark, a “new-capitalist adventurer” in the words of the NY Times reviewer.  It was an exciting story but as we approach 2015, it seems dated, even quaint – dated because the new new things were individual companies – Silicon Graphics, Netscape, myCFO and Healtheon.

Today new new things are explosions of companies that seem to come in waves – waves such as cloud computing, Big Data and now what Shivon Zilis, of Bloomberg Beta, calls machine intelligence.  One wave often drives another, or at least enables it.  Machine Intelligence, perhaps the newest new thing, depends on massive data sets, so Big Data had to come first.

Shivon has done us all a service by scouring the startup world for artificial intelligence, machine learning and data-related technologies and created a landscape that puts them all in context.  Her diagram of the Machine Intelligence Landscape – she’s using “machine intelligence” as a unifying term for machine learning and AI – has five categories, each with multiple subcategories that suggest some of the areas where they will transform the way we work and multiple companies already implementing them (www.shivonzilis.com/machineintelligence):

  • Core Technologies

o   Artificial Intelligence – Deep Learning – Machine Learning – NLP Platforms – Predictive APIs – Image Recognition – Speech Recognition

  • Rethinking Enterprise

o   Sales – Security/Authentication – Fraud Detection – HR/Recruiting – Marketing _ Personal Assistant – Intelligence Tools

  • Rethinking Industries

o   AdTech – Agriculture – Education – Finance – Legal – Manufacturing – Medical – Oil and Gas – Media/Content – Consumer Finance – Philanthropies – Automotive – Diagnostics – Retail

  • Rethinking Humans/HCI (human-computer interaction)

o   Augmented Reality, Gestural Computing, Robotics, Emotional Recognition

  • Supporting Technologies

o   Hardware – Data Prep – Data Collection

Shivon recommends we focus on her core technology category for innovations at the heart of machine intelligence and suggests using the landscape to package some of the technologies into a new new industry application for those of us looking to build a company.  So spot the market opportunities, and you have an amazing map for innovation!  Even Harry Potter didn’t have one of these!

Making Sense of Change

We all live in perpetual information overload and a swirl of new technologies.  Continuous learning is no longer an option.  Learn or be  lost.  Keeping track of it all, fitting pieces together, is a challenge that seems to become increasingly impenetrable.  Now Brian Solis of Altimeter has given us a structure to help us sort through the emerging digital universe.  Thank you, Brian!

Cloud-based social, mobile and real-time technologies are the hub of the Brian Solis Wheel of Disruption.

In the first circle around the three core themes are the following seven emergent technologies and sectors:

  • Big Data
  • Apps
  • Ephemeral (content that disappears in a short time)
  • Geo-location
  • Messaging
  • Gamification
  • 2d Screen

The second circle contains seven more:

  • Wearables
  • Makers
  • Beacons
  • Internet of Things
  • Sharing
  • Virtual AI – AR (Artificial Intelligence & Augmented Reality)
  • Payments

Alongside the wheel are six themes implemented by these technologies::

  • Platforms
  • Alternative Currencies
  • Mass Personalization
  • Crowd Funding/Lending (and I would add, Sourcing)
  • Anonymous/Private web
  • Instant Gratification

Here’s Brian’s marvelous infographic: http://www.briansolis.com/2014/12/digital-transformation-year-review/

My head already feels clearer!  I hope yours will as well!

Innovation within the Enterprise:  GE

 

I heard Steve Liguori tell an amazing story about industrial innovation at GE the other day.  He was speaking at a Work-Bench event about disruptive innovation – something we’ve all heard a lot about.  And he had a new take on the subject in the context of rethinking how to run a big company.  How?  “Learn to beg,” advised Steve.  “Try disrupting your culture.”

The first step is a full-time person – a passionate advocate with consummate skills in marketing, persuasion – calling on key decision-makers, finding the ones with a big problem for GE customers and an open mind about how to solve it. That’s the begging part.

Steve at the time was Executive Director of Global Innovation and New Models at GE.  The problem he found was a seriously overweight jet engine part – the engine bracket – and as there are many of them, their weight has serious implications for fuel use.

Steve must have mastered the art of persuasion during the years when he headed marketing at blue-chip consumer goods companies.  I marvel at the heights to which he’s taken this to have done what he did.  He got GE management to agree to go outside the company to crowd source redesign of the jet engine bracket!

Collaborating with GrabCAD, a Cambridge startup, GE sent a challenge with heavy duty specs for blueprints to GrabCAD’s global community of more than a million engineers.  From this, GE received nearly 700 ideas, picked and tested the top ten thoroughly, and announced the winner – a design that cut the weight by 84 percent – from 4.48 lbs. to 0.72 lbs.  Who did it?    An engineering student in Jakarta with zero aerospace experience!

Imagine trusting GE’s brand for industrial innovation to engineers outside the company!  Imagine finding a solution beyond GE’s ability from a student in Indonesia.  It’s audacious!  It’s brave!  And I suspect crowd sourcing will be increasingly important in the future!

Media Heads Up for 2015: 12 Takeaways

Media visionaries looked to the future at the Gotham Media’s Digital Breakfast at Frankfurt Kurnit Klein & Selz and made some predictions about social, mobile, TV and more for 2015 and beyond. Here are some highlights:

1. Ever-faster change – new things rise higher faster and fall faster.

2. Sensors all around that are passively aware of you. All cell phones have omnipresent computing.

3. Mobile payments. Apple’s entry will determine whether they make a difference. Most are safer than plastic, says John Abell, Senior editor, LinkedIn.

4. Continued migration of devices to mobile – even Facebook and video on mobile. Increasing importance of the second screen, though it’s still primitive. Monitors are losing to individual devices. “When the first screen gets boring, people go to the 2d screen,” reports Paul Berry, RebelMouse Founder and CEO

5. The steady growth of Facebook and mobile pose a challenge of how many pages per person can be sustained on your site.

6. Niche social networks will be big – a space for passionate sharing. (ED: Vertical networks were lumped into discussion of the category.) Niche networks will be combined with the 2d screen in the future – but with more than Twitter’s limited characters, predicts Berry.

7. People talking in a real voice as opposed to the institutional voice of mainstream media so that you hear individuals.

8. Infinite choice in content. “The quality level has been raised,” said Lockhart Steele, Editorial Director of Vox Media. “Now you have to do great stuff to get attention because there’s so much choice. . . The biggest challenge to media is the conversion to mobile. A lot of journalists are still writing in newspaper style.”

9. “Content is still king. It’s entirely defined by great talent,” according to Eric Wattenberg, Co- Head of Alternative Television at CAA.

10.“Traditional ads aren’t working. Only bots click. Millennials don’t even see the ads,” says Berry. At Vox, an in-house creative agency helps advertisers create native advertising. “The agency relationship is broken,” adds Steele. Every company has the opportunity and responsibility to be a media company, continues Berry. You need a product to be worth someone’s obsessing about it. Then put your money behind them. How do you measure social media effectiveness? Do viewers click? Share?

11 “But then we still don’t know how to measure TV,” Abell reminds us. “Yet, I don’t see how anything can supplant anything as unifying as TV.”

12.“The challenge for TV is how to get and keep an audience and grow it. It may be a combination of traditional TV with live elements in other forms of entertainment so that every week you’ll have to tune in and it’ll be fun and exciting to see what happens,” speculates Wattenberg.

Provenance: Gotham Media’s Digital Breakfast at Frankfurt Kurnit Klein & Selz 12.9.14. Alan Sacks, moderator – Counsel, Frankfurt Kurnit Klein I& Selz PC Panelists: John Abell, Sr. Editor, LinkedIn Paul Berry, Founder and CEO, RebelMouse; Lockhart Steele, editorial Director, Vox Media, and Eric Wattenberg, Co-Head of Alternative television, CAA

Better Outcomes, Lower Cost

Rewarding higher value care rather than higher volume of care, a stated objective of the new Affordable Care Act payment models, has already begun to drive innovation. Interestingly, this innovation is in patient and provider behavior rather than medical devices or IT, though it’s certainly dependent on the information and analytics IT enables. The outlook for better outcomes at the lowest possible cost, the desired ACA output, looks really good.

These were my conclusions after a fast-paced high-level discussion by experts brought together by the NYC Health Business Leaders last evening. Geraldine McGinty, MD, MBA, a board-certified radiologist at Weill Cornell Medical College, moderated a four-man panel: Richard Frank, MD, PhD, Chief Medical Officer, Siemens Healthcare; Jack Lewin, MD, President and CEO, Cardiovascular Research Foundation; Farzad Mostashari, MD, CEO, Aledade, and Matt Portch, North America Global Innovative Pharmaceuticals Team Leader, Commercial Effectiveness, Pfizer, Inc.

What new behaviors are needed?

For patients, choosing to take more accountability for their own health, to take more of the risk in care costs and pay more, and to take responsibility for shopping for and selecting their own health plans.

For doctors, to be “unfettered advocates for patients,” to engage and educate patients, and to make more efficient decisions based on improved diagnostic information and procedures and in-depth understanding of their patients.

For Big Pharma, to be willing to change, to develop differentiated products, and to price drugs more on value and share risk with customers.

For all providers, to implement EHRs and track drug performance as key factors in pay for performance (P4P).

A Hundred Million Miracles

It may not yet create a hundred million miracles every day, but the Internet of things is beginning to change the way we live and work. Embedded software connects devices wirelessly to the Internet and from there to other devices, systems and services to make magical things possible.   At last evening’s Hardwired Meetup – organized and moderated by Matt Turck, of FirstMark Capital – five companies spoke of their specific miracles.

Keys and locks become a smartphone app – called an access control system.  A single device small enough to hold in your hand contains software for an entire skyscraper – software that’s continuously updated.  The device itself is designed using agile methodology.  3D printing makes it economically feasible to update the device as often as monthly. It’s so easy to install that customers can do it themselves.  The company is Kisi, and it consists of three men in Brooklyn.

Virtual reality comes to the real estate industry as Floored uses proprietary 3D cameras and software to visualize customizable 3D models of spaces.  These are new marketing tools that replace traditional static floor plans and photos and mediocre videos.  Viewers can walk through the models, add and change furniture and objects, change the lighting and explore both what exists and what might be.

Decorate your home with computer-generated artwork from the Internet or artists, including yourself shown on wall-hung or tabletop framed high definition screens from Electric Objects.  What you see on the panels is controlled by an app on an Android smartphone – with no mouse or keyboard – and you may choose a single visual or a collection.  one goal of the company is to recruit and support a network of artists who create new works as well as to provide distribution for existing works.

Estimote produces beacons and stickers – small wireless sensors – that can be attached to any object and that broadcast what’s where through radio waves to a smartphone with the right software.  The beacons and stickers can be used to build mobile interactions such as proximity marketing, contactless payments and in-venue analytics.  Developers are already building apps in retail, education, healthcare, transportation, hospitality and other sectors.

Dragon Innovation has no products of its own, but its miracle is to bring to life what others invent  It delivers services that enable inventors of miraculous IoT products to produce their products.  It provides certification that products will perform, which can support crowd-funding, and advisory services and project management for manufacturing.

Footnote on crowdfunding:  It’s not a sustainable sales channel but can produce valuable market validation and demonstrate demand provided you prepare your campaign thoughtfully and professionally.  For Electric Object, it attracted more than 2,200 backers and nearly $800,000 for a $25,000 goal!