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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 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?

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!

A Fresh Take on Social Network Models

Fred Wilson’s blog today, AVC, raises a provocative question. How much of the equity value of a social network should properly belong to the members? Fred’s question was triggered by Joe Nocera writing in THE NYT about WHO OWNS THE FUTURE by Jaron Lanier. There are no easy answers to this complex question – and it’s an important one with bearing on how wealth is distributed. Fred starts with a look back at mutual companies. Here’s his blog:

The Mutual Company

I remember a time when I was growing up when many of the savings banks and insurance companies were mutual companies. A mutual company is one where the customers own the company, more or less. It seems like the concept lost favor and many of these banks and insurance mutual companies were “demutualized” in the 80s and 90s. I don’t really profess to understand all the reasons and history behind mutualization and demutualization. I suspect some of you may know a lot more than me about this stuff.

I started thinking about mutual companies after reading Joe Nocera’s column in the New York Times which was based on his read of Jaron Lanier’s “Who Owns the Future?”
Joe asks in the title “Will Digital Networks Ruin Us?” and here is the money quote:
“the value of these new companies comes from us. “Instagram isn’t worth a billion dollars just because those 13 employees are extraordinary,” he writes. “Instead, its value comes from the millions of users who contribute to the network without being paid for it.” He adds, “Networks need a great number of people to participate in them to generate significant value. But when they have them, only a small number of people get paid. This has the net effect of centralizing wealth and limiting overall economic growth.” Thus, in Lanier’s view, is income inequality also partly a consequence of the digital economy.”
At USV we invest in digital networks, so this is a fundamental question that we think about a lot. We would not want to be investing in something that “will ruin us” and we don’t think we are investing in something ruinous. But we do talk about this issue all the time.

I will come back to the mutual company thing in a bit, but first I want to say that Joe and Jaron are leaving out the notion of consumer surplus in their analysis. The newspaper costs money. Twitter is free. In a world where “we” create the newspaper instead of the NY Times, the newspaper can and will be free. That is happening all over the place, because of the efficiency of digital networks, and the result is a large amouNt of consumer surplus that is landing in all of our laps.

But maybe that is not enough. Maybe the creators of these networks ought to mutualize so that their users, who are creating the value, can participate in the upside. We have not seen anyone do this to date. We have talked to a number of startups and networks about the idea. We have not seen any takers yet. But we will continue to have the conversation because this is worth trying and seeing how it would turn out. The result could be a much more sustainable and lasting network. Something for everyone to think about this morning.

Extreme Customer Development

Staying ahead of the curve. That’s the challenge in the Innovation Economy, where knowledge, technology, entrepreneurship and innovation are at the center of the model, driving growth. It’s also the only possible basis for sustainable differentiation in a time of accelerated change – and commoditization. Without it, you’re just another me-too company. With it, you have a chance – if you play the rest of the cards right – to win big.

For start-ups, the No. 1 secret for this, according to Promod Haque, Senior Managing Partner, Norwest Venture Partners, is bringing product marketing and product development together from Day 1. It’s not that difficult to build anything, he said in an interview at a recent TiE event. The right engineer can do it. But does anyone care? Is the market large enough?

Even beyond this, the company needs a top sales person who can give the new business access to, say, 50 customers in three months in an effort to validate the product from the customer perspective –or pivot if, in the end, that’s what you learn is needed from customers.

The No. 2 Haque secret is to network your way to people who understand your industry, get to know them, not just meet them, build relationships, seek real feedback and take it seriously. Many people learn from their own mistakes but the smart ones learn from mistakes others make as well!

So, how does a penniless start-up compensate a strategic marketing person – and that’s what we’re talking about here, not marketing communications? Haque’s suggestion is to find the right consultant, put them on an advisory board and compensate them with options that vest at intervals.

If you’re familiar with Steve Blank’s customer development process, endorsed by Eric Ries as part of his lean start-up approach, you’ll notice striking parallels. Steve’s “4 epiphanies” of customer discovery, customer validation, customer creation and company building fit right in. But here’s the thing. The Haque approach is extreme customer development because it combines marketing and product development at the outset. Not something many engineers will be comfortable with – and some will fail as a result – but probably essential in today’s environment if you want to stay ahead of the curve.

The New Advertising: Frictionless Sharing

By Eleanor Haas

Privacy – “the ability of an individual or group to seclude themselves or information about themselves and thereby reveal themselves selectively,” according to Wikipedia” – has become a marketable commodity for millions of consumers, it seems.  Given the right “value exchange,” these people can cheerfully accept “frictionless sharing” – automated distribution by marketers to their social networks of their personal information and online activities

What’s the right kind of value exchange   That depends on the individual.  It can, for example, be as simple as a sense of self-esteem, coupons or a 4Square badge.

It’s typically all ok to the people involved as long as the process is transparent, and they know who’s doing the distribution and trust them.  Some consumers actually interact with brand pages on social networks, in effect, broadcasting their endorsement of the brand to whomever.

What are the chances of legislation or FTC regulation?  Probably zero.  Technology is growing too fast for legislators or regulators to keep up with it.  Ultimately, the market self-corrects anyhow.  All marketing benefits from frictionless sharing depend on relevant targeting and willing users.

These were my principal takeaways from this morning’s Gotham Media Ventures discussion at Frankfurt Kurnit by Daniel Berkowitz, of 360i; Jordan Franklin, of Clickable; Marc Hayem, of MicroStrategy; Kathy Leake, of Local Response, and Brett Martin of Sonar.  Terri Seligman, of Frankfurt Kurnit, was moderator.

 

A Time for Transformation, not Mere Change

By Eleanor Haas

Once upon a time – about a year ago – traditional publishers fell in love with the colorful screens of mobile devices as a solution to their battle with the popular assumption that information on the Internet wants to be free.  Here at last was a way to once again produce a unique product, charge traditional single copy and subscription prices and restore profit margins. 

Jason Pontin’s describes the rude awakening in “Why Publishers Don’t Like Apps,” Technology Review, 5.7.12.  (http://bit.ly/JgoAAm)   

Today, most tablet machines are Apple, and publishers have to pay Apple to sell their products – which means actually losing sales on individual issues.  Most serious, when they sell through Apple, they lose direct connection with their readers – the lifeblood of magazines and newspapers.

Technical problems also made adapting print publications to apps challenging.  Many publishers ended up with five digital versions of their products to accommodate diverse devices, viewing options and ordinary website HTML pages.  And they found the unbudgeted cost of app development both expensive and time consuming.  Without their own digital readers, they had no audiences to sell to advertisers and so insufficient incremental revenue to offset the app development cost. 

Worst of all, publishers discovered their stories in apps in fact disappointed reader expectations because the stories do not link; they live in walled gardens, closed off from other digital media.

The outcome?  Most mobile device owners read news and features on publisher websites, now coded to adapt to smaller screens or using glorified RSS readers.  “The paid, expensively developed publishers’ app, with its extravagantly produced digital replica, is dead,” pronounces Pontin.

What happened?  Publishers tried to impose old print formats on digital channels – to make an adaptive change, not a transformation.  “I hated every moment of our experiment with apps, because it tried to impose something closed, old, and printlike on something open, new, and digital,” writes Pontin.

One aspect of transformation is to go back to basics – to understand the essence of the product and release it from traditional trappings.  Barnes & Noble made a major change with its superstore bookstores containing pianos, coffee shops and sofas.  Amazon achieved transformation by eliminating the bookstore altogether. Pontin’s solution, like that of Financial Times is to launch an HTML5 version of its website, optimize it for devices, incorporate many applike features and functions and, ultimately, kill the app.  What will the new revenue model be once digital content is free?  That’s yet to come. Innovations evolve.  You don't always get all the answers at once.

As author/futurist Daniel Burrus has said:  “There are two primary uses for technology by business and government. The first is to accomplish more with less―to be more efficient and productive. That's how most people use technology, and it's a good use of it. But the second major use of technology―and it's not that common―is to use it to create new products, services, markets and careers.”  

Learning to accomplish more with less is an important first step – and it's still happening.  But more and more of us now understand enough about technology to create the new, to innovate – that’s transformation, not mere change!

Branding: It’s the Muscle in Marketing

By Eleanor Haas

“In the end there
is no brand until the clients recognize it after it has been marketed.” So said
a dear friend as we debated start-up priorities.  To him, branding appears to be fluff and of
no consequence to a start-up.  But even friends
as smart as this one can be wrong.  In
this case, my friend has confused brand image with the branding process.

He’s
absolutely right that brand image exists solely in customer minds, the result
of repeated experiences with the brand, and marketing is generally key to
building brand awareness, if not brand preference.

But there can
be no effective marketing until you’ve laid the strategic base for it with
branding.

Marketing consists
of techniques and tactics that drive sales.  Branding is the business strategy that grows out of the art of differentiating your
business, your product or service in a compelling way.  It’s the strategic process that gives
direction to marketing and makes differentiation actionable.  Without differentiation you’re just a
commodity with no choice but to sell on price.

“Think Different” epitomizes
the branding strategy that enabled a computer hardware company to turn its
reputation around by differentiating it from dozens of competitors.  Establishing a brand image as an innovator
and supporting that with one innovative product after the other turned Apple’s
business around beginning in 1997.  The
ad slogan would be no more than clever words without the brand strategy behind
it. 

Blue Ribbon
Sports was just another athletic shoe company until it developed the branding
strategy that made it the company we know of as Nike today.  Nike was the Greek goddess of victory, and
that was the image the company used to differentiate its products – first, by
naming its first shoe design Nike, then changing the company name to Nike and,
soon after, beginning to sponsor professional athletes.  Marketing led to the great “Just Do It” ad
slogan in 1988 and the rest is history.

Cadabra, one
of the early online bookstores, designed a strategy of diversification,
choosing to symbolize its vision with the name of the world’s largest river,
Amazon, and then living up to that name to become the country’s largest
retailer.

So, think different – just do
it – become the biggest, the best or both by differentiating your business with
the right brand strategy and then implementing this with effective marketing.

Future Shock “Deja Vu All Over Again”?

By
Eleanor Haas

Being
“in transition” – i.e., jobless – becomes an everyday occurrence and socially acceptable.

Therapy
loses its stigma but is being rapidly overtaken in popularity by reinvention.

Happiness
is increasingly linked to experiences, not having things.

Collaborative
interaction for the good of others, both online and off, is finding a place
alongside, even instead of passive TV viewing or addictive electronic games.

Big
money and fame cause both superathletes and superbankers, first, to lose touch
with reality and then to fail as people and superstars

Environmental
sustainability, a radical, controversial new idea 40 years ago, becomes a basis
for companies to increase sales in an economy where others are in decline.

Starting
a business either to support a lifestyle or to build something with growth
potential becomes commonplace.

Authenticity
– speaking truth in a human voice – becomes a widespread marketing standard,
replacing hype for thousands, perhaps millions of people.

Obesity
becomes a national trend – but so do fitness and yoga.

“Future
Shock” was Alvin Toffler’s phrase for the state of mind of people and societies
in the 1970s as they experienced "too much change in too short a period of
time.” Yogi Berra’s immortal phrase comes to mind because the same thing seems
as true today as it did then.