Today our Batch 9 startups had their first meetings with StartupYard mentors. There are the first of about 6-7 45 minute meetings a day for a month. To put that in perspective, it’s about 80 hours of meetings with over 100 people. A lot to get through.
So how do we prepare startup founders for getting the most out of this crazy rush of ideas and perspectives? Simple: we give them tools, and training on how to use them. Pro tip: start with David Cohen’s Mentorship Manifesto.
The First Best Tool: Positioning
Typically when you ask accelerators what they do to “onboard,” their startups, they’ll talk about having a party, maybe doing team building, or giving an orientation. If it’s an American accelerator, except feel-good soul-searching with optional campfires and singalongs.
That’s not really our thing at StartupYard. Day 1 is about positioning. It’s about how in hell you’re going to manage to explain to 100 people what you do, in a way that a) doesn’t drive you crazy over the course of a month, and b) actually generates useful dialogue and common understanding with the mentors.
“Product positioning,” which we’ve also written about extensively on the blog, is really as much art as science. In short, it’s the art of framing your work in a context that others will immediately understand, accept, and sympathize with. A position statement details the target customer, what their problem is, how you solve their problem, what their alternatives are (your competition), and how you’re different.
We strongly believe that starting mentorship sessions with a positioning statement is key to getting the maximum possible value out of mentors. It sets the ground rules for a conversation at the outset: helping a mentor to understand what your basic assumptions are about the world and what you’re doing, and letting them know what you’re working on, and what you know about the business you’re in.
Positioning and Mentoring as Chess
Mentorship can be thought of as like a game of chess. There are two players, they are equally matched, but one must move first. Both know the rules, but neither understands the thinking or tendencies of another before the game begins. The game is limited to the pieces on the board. Slowly, by making their moves, the two players reveal to each other what is important to them. Every move has an answer, and you don’t stop until one of you is out of moves (or time is up).
Of course, mentorship isn’t a competition, but then in some ways, neither is chess. It’s an exercise in controlled, directed communication. That is what good mentorship is: a focused, stripped down form of conversation that teaches two people about each other.
In this light, mentorship can be seen as a process you can optimize and perfect. You can get better at it over time. Moreover, your planning and preparation for a match matter as much or more than your in-game execution. Going in with a clear strategy, and developing that strategy to control the board. The game is played before you sit down, mentally.
Here are some steps on how to prepare for mentoring:
Step 1: Setting the Board
Some founders rightly value their ability to react in the moment. We can call that natural salesmanship and charisma. It’s a great quality, but the truth is it is often bad in the long run for a startup founder to be too self-confident in conversation. More humble and more prepared founders end up getting more out of mentorship simply because they think more deeply about it.
A mentor that exists in the moment can be very effective because he or she meets many different startups. But a startup founder always has to talk about the same thing. Preparation helps us to avoid being predictable. Worse: failure to set the board properly can put the other person in control of the game.
Don’t Present: Lead a Conversation
Setting the conversational agenda is a vital step, and there are many ways of screwing it up. One of the ways founders fail at setting the agenda is by refusing to lead. Rather than come out and state what they do, and what they want to talk about, they will bite around the edges. They will delay, and distract, rather than getting to the point.
And this happens because of fear: fear of failure, or of looking stupid. That fear leads founders to try and push the focus of the conversation away from themselves. Sometimes they try to start with “literature” such as an executive summary or a pitch deck or video, as a way of easing the pressure on themselves. But this is usually a mistake, because the opening of a conversation is about “setting the board,” and bringing a mentor’s attention to the topic you want to discuss. A pitch deck or a video might be interesting, but it’s also impersonal. It isn’t you. You are a living mind, not a pitch deck.
If the first thing you show someone is a presentation, then more often than not, the whole conversation becomes *about* the presentation, or video, or whatever it is. Rather than engaging with ideas, a mentor reacts to things they are shown: they react to what they see, rather than what they are asked to imagine. This limits the conversation, and usually wastes time and energy.
Like in chess, getting the focus of the other player to the center of the board (and away from your side of the board), is critical to controlling the game. If you start out offering your work to a mentor for a critique, then the rest of the “game” is played on your side of the board. This is how mentoring sessions turn defensive and counterproductive.
Step 2: Following a Strategy
As conversations have many layers, so too does chess. There are tactics, such as using combinations of pieces or positions on the board to accomplish tasks, and there is strategy- the way you pursue your overall goals by using certain tactics instead of others. Just as in a conversation, the tactics you use are superficial: a certain combination of words or a way of speaking. Jokes are a conversational tactic. So is eye contact. But these are not strategy.
Often we confuse tactics for strategy. We talk about the superficial aspects of conversation: how to talk to people, and how to please them. But ingratiating yourself is one thing, and getting what you need from a mentor is something else. Establishing a deeper understanding is about genuinely testing the other person’s mind.
Your strategy is more premeditated, and it requires planning. How will I win this person to my way of thinking? How will I talk to them in a way they will understand and sympathize with? We do not achieve very effective conversations by relying on charm and wit alone – those are only tactical elements. Really good mentoring only happens when the founder plans ahead, thinking carefully about what they want from the mentor, and about how they are likely to get it.
Sit down and ask yourself these questions:
- What is this mentor expecting this to be? How can I confound that expectation to make my impression?
- What does the mentor want out of this?
- Where is the mentor stronger or more capable than me?
- Where are my relative strengths in comparison?
Having a good strategy means gathering intelligence about the mentor you’re talking to, having an outcome for your conversation in mind (the thing you want the mentor to give you or do for you), and understanding what it is the mentor wants from you.
All these questions can be asked before hand, but often are not. Some founders never engage in a clear strategy, and so they simply chat with mentors, never really getting anywhere. They try to be liked, rather than to earn respect and attention. Don’t make that mistake: having a “nice” conversation, and really getting something out of a mentorship session are not the same thing.
Step 3: The Endgame
Chess also has an end. Or rather, it reaches a point at which there is nowhere to go. That is the nature of the game, and to some degree, it is also the nature of a productive mentorship session.
Knowing when you should stop is as important as knowing how to start. When founders begin to repeat themselves, or to delay the end of the interaction, they start losing ground. Just as in chess, “getting to yes,” is about taking your shot when it’s available, and ending the game. Once you have agreed with the mentor on what the next steps are, you’re finished. Checkmate.
Sometimes too, mentors like to talk. I am guilty of that as a mentor, and I rarely end a conversation myself. If the person I’m talking to is very interesting, then I don’t always want to end it. But then that is about what I want as a mentor, not about what the founder needs. Thus, I do notice when founders are unable to break away and close the discussion. If the conversation takes on an air of inevitability, then don’t drag it out. Don’t get repetitive.
By having clear goals in advance, you’ll be more able to decide when and if those goals have been achieved, at which point you can conclude the conversation, and move on to other things.
Is ending your session hard for you? I know how it feels, and there are tactics for that too. You can try to:
- Summarize the conversation and thank the mentor for their time
- Repeat the agreed next steps, and say “I’ll get to it,” and get up to go
- Give the mentor a concrete time or date when they will hear from you again, eg: “expect an email from me by tomorrow evening.”
- Bring a third party into the discussion to break up the discussion, eg: “Cedric, I was just having a great talk with Lloyd.”
- Bring the mentor somewhere else physically, such as to get a cup of coffee
- Check the clock and apologize for using up so much of their time
State the Outcome Clearly
It’s gentlemanly and professional to state clearly what you intend to do next. Even if you’ve not had a very good session with a mentor, make a point of articulating the action you are going to take as a result of the meeting. “I’m going to think about what you said,” or “I’m going to read what you mentioned.” If you want to see the mentor again and they have agreed, then state that clearly: “I will see you in 2 weeks,” or “You can expect my call this week.”
It’s tempting to be vague in this regard, but don’t do it. Come away knowing exactly what comes next. No “so we’ll sees” or “maybe laters.” Just reset the board, and move to the next game.
A version of this post originally appeared on the StartupYard blog in January 2016. As a new group of Startups joins us in the next few weeks for StartupYard Batch 10, we thought we’d dive back into a very important topic for them: How do the smartest startups engage their mentors?
But first: why do some of even the most successful startup founders continue to seek mentorship?
Strong Mentors are Core to a Successful Startup
Founders have to balance mentorship with the day-to-day responsibilities of their companies. But sometimes founders approach mentorship as a kind of “detour” from their normal operations- something they can get through before “getting back to work.”
This is the wrong approach. Having worked with scores of startups myself, as a mentor, investor, and at StartupYard, I can comfortably say that those who engage with mentors most, get the most productive work done. Those who engage least, are generally the most likely to waste precious time.
How can that be? Well, simply put, the first line of defense against the dumbest, most avoidable mistakes, are mentors who have made those mistakes themselves. I’ve seen this happen: a startup decides they’re going to try a certain thing, and it’s going to take X amount of work (often a lot of work). They mention it to a mentor, who forcefully advises that they not do it. The mentor tried it themselves, and failed.
Now this startup has 2 options: proceed knowing how and why the mentor failed, or change direction to avoid the same problems. Either way, an hour-long discussion with a mentor will probably have saved time and money, simply by raising awareness. I have seen 20 minute conversations with mentors save literally months of pain and struggle for startup founders.
Recently, one of our founders reached out to a handful of mentors for information on an investor who was very close to signing on as an Angel. The reaction was swift, and saved the founder from making a very serious mistake. The investor turned out to have a bad reputation, and was a huge risk. As a result, mentors scrambled to suggest alternatives and offer help securing the funds elsewhere. That is what engaged mentors can do for startups.
Engaged Mentors Defeat Wishful Thinking
There’s a tendency, particularly among startups that haven’t had enough challenging interactions with outsiders, to paper-over issues that the founders prefer not to think about. Often there “just isn’t enough data,” to prove or disprove the founders’ theories about the market.
Conveniently, “lack of data,” or “need for further study,” can serve as an excuse for not making decisions. That’s one of the main reasons startups fail – refusing to make a decision before it’s too late.
We like to focus on things we can control, and things we have a hard time working out appear to be outside of that sphere, so we are more likely to ignore them, or hand-wave their importance away.
Founders sometimes long to go back into “builder mode,” and focus solely on executing all the advice they’ve been given. And they do usually still have a lot of building to do. But one common mistake -something we see every single year- is that startups will treat mentors as the source of individual ideas or advice, but not as a wellspring of continuing support and continual challenges.
The truth is that a great mentor will continually put a brake on your worst habits as a company. They will be a steadfast advocate of a certain point of view- hopefully one that differs from your own, and makes you better at answering tough questions. But you have to bring them in.
Treat Your Mentors like Precious Resources
I can’t say how many times great mentors, who have had big impacts on the teams they have worked with, have come to me asking for updates about those teams. These mentors would probably be flattered to hear what an effect they’ve had on their favorite startups, but the startups often won’t tell them. And the mentors, not knowing whether they’ve been listened to, don’t press the issue either.
Mentors need care and feeding. They need love. Like in any relationship, this requires effort on both sides.
But time and again, mentors who are ready to offer support, further contacts, and more, are simply left with the impression that the startup isn’t doing anything, much less anything they recommended or hoped the startup would try.
Mentors who aren’t engaged with a startup’s activities won’t mention them to colleagues and friends. They won’t brag about progress they don’t know about, and they won’t think of the startup the next time they meet someone who would be an interesting contact for the founders.
This isn’t terribly complicated stuff. Many founders fear at first that “spamming” or “networking,” is the act of the desperate and the unloved. If their ideas are brilliant and their products genius, then surely success will simply find them. Or so the thinking goes.
Alas, that’s a powerful Silicon Valley myth. And believe me: it doesn’t apply to you. Engaging mentors is just like engaging customers: even if you’re Steve Jobs or Elon Musk, you still need to be challenged and questioned. You still need support.
As always, there are a few simple best practices to follow.
1. A Mentor Newsletter
Two of StartupYard’s best Alumni, Gjirafa and TeskaLabs, provide regular “Mentor Update” newsletters. These letters can follow a few different formats, but the important things are these: be consistent in format, and update regularly. Ales Teska, TeskaLab’s founder, sends a monthly update to all mentors and advisors.
In the email, he has 4 major sections. Here they are with explanations of the purpose of each:
Here you give a personal account of how things are going. You can mention personal news, or news about the team, offices, team activities, and other minutiae. This is a good place to tell small stories that may be interesting to your mentors, and will help them to feel they know you better. Did a member of the team become a parent? Tell it here. Did you travel to Dubai on business? Give a quick account of the trip.
This is one section which I love about Ales’s emails. I always scroll down to the “ask” section, and read it right away. Here, Ales comes up with a new request for his mentors every single time. It can be something simple like: “we really need a good coffee provider for the office,” to something bigger, like “we are looking for an all-star security-focused salesman with 10 years experience.”
Whatever it is, he engages his mentors to answer the questions they know, by replying directly to the email. This way, he can gauge who is reading the emails, and he can very quickly get great answers to important questions or requests.
Audience engagement happens on many levels. Not everything engages every mentor all the time, and that’s important to keep in mind. A simple question can start an important conversation. You don’t know what a mentor has to offer you until you find the right way to ask for their help.
Here, Ales usually shares any good news he has about the company. This section is invaluable, because it reminds mentors that the company is moving forward, and making gains. A win can be anything positive. You can say that a win was hiring a great new developer, or finally getting the perfect offices. Or it can be an investment or a new client contact. These show mentors that you are working hard, and that you are making progress and experiencing some form of traction.
You’d be surprised how many mentors simply assume that a startup that isn’t talking about any successes, must have already failed. StartupLand in can be like Hollywood that way: if you haven’t seen someone’s name on the billboards lately, it means they’ve washed out.
The fact might be that you’re quietly doing great business, but see what happens when someone asks about you to a mentor who hasn’t heard anything in 6 months. “Those guys? I don’t know… I guess they aren’t doing much, I haven’t heard from them in a while.” There’s no good reason for that conversation to happen that way.
Here Ales shares a consistent set of Key Performance Indicators. In his case, it is about the company’s sales pipeline, but for other companies, it might be slightly different items, such as “time on site,” or “number of daily logins,” or “mentions in media.” Whatever KPIs are most important to your growth as a company, these should be shared proactively with your mentors.
If the news isn’t positive, then explain why. You can also have a little fun with this, and include silly KPIs like: “pizza consumed,” or “bugs found.” This exercise shows mentors that you are moving forward, and gives them a reliable and repeatable overview of what you’re experiencing in any given week.
I heard one mentor complaining not long ago about these types of emails. “The KPIs don’t change that much, it’s always the same thing.” But he was thinking about the startup in question. The fact that the KPIs hadn’t changed might be a bad sign to the mentor, but probably the absence of any contact would be worse. At least in this case, the mentor might care enough to reach out and ask what’s going on.
2. Care and Watering
Mentors aren’t mushrooms. They don’t do well in the dark. Once you’ve identified your most engaged mentors, you need to put in as much effort in growing your relationship as you expect to get back from them.
How can you grow a relationship with a mentor? Start by identifying what the mentor wishes to accomplish in their career, in their life, or in their work with you. Do they want to move up the career path? Do they want to do something good for the human race? Do they just want to feel needed or important?
A person’s motivations for mentorship can work to your advantage. Try and help them achieve their goals, so that they can help you achieve yours.
Does a mentor want his or her boss’s job? Feed them information that will help them get ahead of colleagues and stand out. Mention them in your PR, or on your blog to enhance their visibility.
Does the mentor want to be a humanitarian? Show them the positive effects they’ve had by sending them a letter, or inviting them to a dinner.
Does the founder yearn to be needed? Include his/her name in your newsletter and highlight their importance to your startup. These things are all easy to do, and can be the difference between a mentor choosing to help you, and finding other things to do with their busy schedules.
Last month we announced that OptioAI, a member of StartupYard Batch 8 and StartupYard’s first Georgian startup, had joined TechStars Berlin. Techstars is the world’s largest accelerator network, with over 1000 invested companies, and $3.3bn raised over the past 12 years. OptioAI is through the first month of the program already, and will present at the Berlin DemoDay on April 19th.
OptioAI joined StartupYard with a plan to create a text-based finance management platform for millennials who weren’t seduced by traditional banking (which is to say, most of them). Today their core mission remains the same, and has evolved to become a text-based platform that “makes your money talk to you,” by connecting users with their financial data in a natural way, via voice and chat.
I checked in with Shota Giorgobiani, Co-Founder and CEO at Optio, to find out how the Techstars program is going. Here is what he had to say, this time via email.
Were you surprised to be selected for Techstars right after the StartupYard program?
The funny thing is, applying to TechStars started more as an experiment.
We’d heard how hard was to get to Techstars. Techstars does not officially publish information about the number of applications they get for every batch, but rumors say that only 1-2% of initial applicants get to Techstars and the number of applications per program can be near 1000.
Furthermore, Techstars generally accepts only 1 or 2 early stage company per batch, so it looked almost impossible right from the beginning. Our goal was to understand how the process works and prepare for the future when we would be “ready,” but as always, you never know when you are “ready” and what “readiness” means. So we ended up by being selected for Techstars Berlin, which actually is a great outcome of the “experiment!”
How does the application process work?
The first part of the selection is pretty much standard: you send your application, you are shortlisted and then have a Skype call. If you are in the final round, you are invited to selection day.
Some cities have 2 meetings with startups and some just one, but overall it’s the same as at StartupYard. The main difference is the final selection process: It’s not like a “traditional pitch” competition, or a series of one-to-ones, it’s more a face to face meeting with the whole selection committee.
We had 2 meetings, each for 15 minutes with 2 different groups. The idea of this meeting for Techstars team is to get to know the team. It’s a known fact (and it’s true not only for Techstars) that most of the time, especially early-stage startups are chosen because of the team, not because of the idea or product. And when I mention team, not only the credibility of the team is important (like how many years have you been in the industry), but also if the team can be managed and helped to make better decisions or not.
This was something we really improved on at StartupYard: how to listen and to show that you are taking questions seriously; how to engage with debate and not be defensive.
Also very important is to show what you have. No matter if it’s a working product with 1000+ users or mockups of your idea. You should be excited about what you are doing and you should naturally show this excitement. It’s even good to start your talk with the demo (and most of the time – you are asked to do so).
One last thing: 15 minutes is too short period to cover everything. You may be tempted to use up your time talking about your plans, but you should be able to cover most important topics in 2-3 minutes and move to the Q/A part, where you have a chance to show your competence, passion, vision and also show where Techstars can help you. So you should be prepared and be able to manage your time well.
For us, it was a little challenge, because we naturally tend to speak a lot about our company, and you should really train yourself to do it quickly. At the end of the day, it’s all about the match: a personal match between team and Techstars and clear view of how Techstars can help, if any of these is missing, I think you will not be accepted.
How did StartupYard prepare you for taking on this next step? What has been the biggest challenge at TechStars?
I can talk about that for hours, but to be short and clear: I think, based on our current stage, we had little chance to get to Techstars, if we had not been in StartupYard.
There are clear reasons for that: at StartupYard we learned to describe what we do and who we are quickly and clearly. This is a crucial thing, you should be able to explain in 2-3 mins why are you building the company, what are you building, how this team can achieve the goal and etc. And that’s very hard to do, it takes time and practice. Second is credibility: I think it’s very hard to get into the world’s top accelerator just by sending the application. Sure you can, but for us, at such an early stage and being from Georgia, it feels impossible.
Credibility and your network are so important, aren’t they?
Your network is your key to the world! You have to always be building it up and making it stronger.
For example, our story with Techstars actually started in Prague, in StartupYard, where we meet Techstars Berlin MD, Rob Johnson, and had the opportunity to talk with him and tell what we were doing. Rob was there because of StartupYard, so already you can see the network effect.
Rob suggested we try and apply for the upcoming program. When someone tells you that, listen to them! That’s a shortcut to being noticed among hundreds of applicants, because it comes from within their network. It comes with a degree of trust and confidence.
And believe me, if you are not already generating revenue and growing steadily and are still proving that your product makes sense, such a “shortcut” can be your only chance.
Overall, StartupYard gave us a lot of direct knowledge and experience and maybe even more importantly, wisdom, which helps us every day at Techstars.
For example, after one bloody month of mentorship in Prague, we had a very clear understanding of how the process looks and feels, how to prepare for meetings, what to expect from mentors, etc. Having that experience is invaluable when you get to Techstars and it helps you get the most out of the mentors there.
How has the move to Techstars affected your strategy going forward? What do you hope to get out of it?
The main challenges now are achieving strong product-market fit and finding a sustainable business model.
Have you made big changes in the product?
Yes, we just released an updated version and lots of changes are ahead.
We decided to focus on the simple, yet very valuable functionality of the product, so we narrowed down our long list of the feature set to something, we believe is valuable for our users on a daily basis. Still, we have to do lots of experiments and see how it goes, but we are now more solid in short-term vision and plan.
In short, we want to create a super simple tool/routine for our users, that can help them with daily money management. No long-term savings goals, no 5-year plans of repaying your mortgage – we are focusing on daily money management. Sounds simple, but as usual, the devil is in the details: if you can’t manage your daily spending, there’s no chance to solve your long-term problems., So for now, that’s our main focus and strategy.
One impression some startup founders have about accelerator programs is that they are a “one-off” activity that lasts for just 3 months, at which point a company moves forward to either grow and scale or falter and die.
Thus the constant objection some founders have to attending an accelerator: “It’s going to take too much of my time.” And yet the purpose of a good accelerator is to be a platform for growth, and a means to save time and deliver faster than you could otherwise.
An accelerator’s value has to live largely outside the time-frame In fact, over 7 years of operation, StartupYard has continued to grow its role in the post-acceleration success of our invested companies.
While we’ve always tried our best to take care of companies that have been through our program, these years of experience have continually shown us that our involvement is often as critical after the program as during it. That has led us to greatly expand our post-acceleration activities with alumni.
Here are some of the things a good program should be able to help alumni with:
Fundraising and Prep
An important part of growing a sustainable business is laying the proper groundwork with co-founders, employees, and investors from the beginning. This is an area where young companies fail needlessly. Flexibility and a “move fast and break things” attitude are great until they become roadblocks to growth. When you’re at the stage that you need capital to execute sales and development faster, you’ll need what any serious company does: a plan.
Yet few early-stage companies have access to the experience and resources they need to set up their ownership structure properly, much less to continue to manage that structure in a way that serves existing shareholders, and prepares the company for future investment. Then there is the need to develop a full set of contingency plans based on different levels of investment, with optimistic and pessimistic assumptions considered and accounted for.
Unlike a typical Seed fund or VC, StartupYard works with founders from the pre-incorporation phase if necessary, and can guide the creation of a growth plan that makes sense, and can make the company investible in the future.
Many of the blockers to necessary investment for growing companies are avoidable. They’re things that can be overcome early, or they can become a drag on your success. Few companies make it from incorporation to venture funding without a few nasty surprises along the way. These can be greatly limited by an early-stage partner whose job it is to make sure you’re laying the right foundation.
The Alumni Network
Often forgotten, but very important in our experience, is the role of our alumni network in helping new StartupYard companies gain a foothold. Like the mentor network, our alumni group is composed of people who have experienced every challenge young companies face. Not only that, the alumni have been in the founders’ shoes in the very recent past.
Because our alumni maintain such a close relationship with our team, they can be continually called upon to share their working knowledge of their industries, and make connections for new startups that even our mentors can’t. After all, who knows better how to approach customers with a brand new idea than someone who has just done it themselves?
To a surprising degree, our alumni have also come to constitute a base of early customers and partners for our newer startups. As our network grows to inhabit more industries, the chances that a fresh startup can begin cooperating with an alumni company grows every year. In our last two batches, multiple new startups have signed alumni companies as their first customers. The process also works in reverse: our newer companies have also become customers of our alumni.
The Negotiating Table
One of the biggest hidden advantages of being a StartupYard alum is the leverage it can bring to negotiations with new partners or investors. Of course, name recognition and the social proof a founder gets from attending our program are important, but they extend beyond just getting that first meeting with an investor.
Because the accelerator is a stakeholder, we are able to weigh in on the side of our startups to ensure that they are treated well and fairly by their later investors. Tech investors know, or quickly learn, that their access to deal flow depends on the reputation they’ve earned with us and other programs. Investors who are founder-friendly and straight-shooting are invited back, while those who don’t play fair will find that startups avoid them.
Here our mentor network also improves the position of our startups in negotiations. Being able to receive feedback from other alumni and mentors from the same industry helps founders to approach business deals better armed with the knowledge and context they need to make the best deals. Often too, our management team and mentors are involved in deals as advisors, bringing increased confidence and experience to the negotiating table.
Of all challenges an early to mid-stage tech startup will face, hiring is perhaps the hardest. This is a problem that gets harder as companies grow, rather than easier. Finding and retaining talent is the number one barrier to growth for such companies.
Though StartupYard isn’t a talent agency by any stretch, again, planning is the best defense against this inevitable problem. That’s why we focus from the beginning on helping our startups to make the right early hiring decisions, so that their growth down the line won’t be disrupted unnecessarily by having to make drastic changes to the team in mid-stride.
This planning process includes not only understanding what kind of talent a young startup can afford, but also what types of people founders should hire first. Does a company need a COO or an outside CEO? Does it need a business development specialist, or should it hire a crack product development leader first? These questions are vital to the early success of young companies, and they’re very easy to get wrong.
Business development with our startups is never confined to the brief 3-month window of acceleration. In fact, that’s more like an introductory period. Our startups continually tap our mentor network and corporate partnerships for business development for months and years after leaving the program.
We frequently connect alumni with new members of the network, as well as fielding requests from mentors and partners to connect them with our startups. As our network continues to grow, it becomes a richer resource for alumni and mentors both, often keeping connections going for years after the program. StartupYard’s in-person events and ongoing activities keep an open door between alumni and the broader network, so that early-stage companies that have grown in maturity and abilities can come back to mentors and partners when they’re ready, and mentors can keep up to date on what the companies are doing.
Finally being part of StartupYard also means being part of our press operation. Though we aren’t the darling of the international media that Y-combinator is, our name recognition in Central Europe is high in the tech media, and we can leverage that name and our existing relationships with media outlets to highlight the activities and successes of our alumni.
In media, “relevance” is an important factor in getting any story told. Journalists look for familiar names and common connections to determine whether a startup or a particular story is noteworthy to its audience. Having the name of a well-known investor behind you helps to create that context for journalists and their readers, and makes it much more likely that you will receive coverage.
I’m not a fan of so-called “growth guruism,” or a believer that so called “Growth Hacking,” is what separates successful startups from failures. Solving problems that matter, taking pains to understand your customers and your market deeply, and doing truly unique and challenging things set the best tech startups apart- not the tricks they use, but how they use them.
Still, a growth strategy doesn’t hurt. Netflix wouldn’t be Netflix if it didn’t have clever marketing back when it launched. But it might not be Netflix the global dominant SVOD platform if it hadn’t sent its early-days DVDs to customers by mail in bright, flashy red envelopes, making customers proud to evangelize a sexy new product.
Even absent a full-blown growth strategy, it often surprises me that more founders don’t do relatively simple things that can help them grow much faster, and fine tune their marketing and sales efforts much more quickly.
So that’s what this is, a list of simple growth ideas that most people don’t bother to try, but which may just work for you. As a bonus, I’ll be adding real world examples that you can study on your own more closely.
1. Tame Your Mavens
There are lots of ways to launch a B2C online product. There is no right way, but there are plenty of wrong ways.
Something pretty much every B2C company I’ve worked with has struggled at some point to gain traction for the launch of a new product. It gets a lot easier once you have a following and a track record with loyal customers, but your first product is like your first date. If it starts off badly, things usually don’t get very far.
Bad Version: The “I Hope This Works” Strategy
To ensure your launch will get the traction they need, many startups will “soft-launch” – an intermediate step between a beta version and a market-ready product. A soft-launch may be just a stealth launch with no marketing attached to it. That relies on friends and your personal networks to begin creating buzz about the launch.
It might work, but then it might not. No way to know.
Better Version: The “Connoisseur” Strategy
You can and should think about putting a bit more punch into a soft-launch pitch. Instead of just meekly offering your product, and seeing what happens, identify and close a group of customers who will be ready to use it from Day 1.
Use your customer personas (I hope you’ve done them), to identify a group of people who are in your key demographic, and are influencers in your market, and among your customers. What does an influencer look like? Somebody with a strong social media presence, plenty of mentions in news articles, or a following for a product of their own.
This group is what marketers call the “Mavens.” They are the ones whose social capital is invested in spotting new trends and talking about them. They’re the self appointed taste-makers, and you need them to like you.
Once you have a list, do whatever you can to get these mavens onboard with your launch. Give them free stuff, promise them visibility, praise their god-like skills of discernment. Whatever you have to do to be their best friends, do that.
Ever wonder how those startups with cool ideas end up in the gadget section of the New York Times, or the front page of Wired? That’s a process that starts long before the launch. In fact the launch depends on that process succeeding. Startups with a great PR strategy pre-launch will time their launch around the PR, not the other way around.
Real World Examples:
Netflix targeted avid film buffs on early-internet chatrooms and indy film reviewers in the 1990s before launching their DVD delivery service.
IndieGogo and other crowdfunding platforms turned this strategy into their core businesses: getting product enthusiasts to pledge purchases and hype products in exchange for special access and perks.
2. Be Controversial, Asshole
Startup founders can spend a lot of time (maybe too much time) studying the every move of a Steve Jobs or an Elon Musk. We all learn that you need to act successful in order to be successful.
That’s fine and good, but don’t be fooled: you are not successful yet. Why do we talk about these people now? Because of how diplomatic and strategically minded they are? I think not. The things those entrepreneurs had to do to grow their reputations and businesses would look much different to us if they did and said the same things now.
I’m not telling you to be an asshole. There are plenty of very successful entrepreneurs who aren’t. But I am saying to speak your mind when you can, because later, you won’t get that chance. Consider Mark Zuckerberg ranting in the Harvard Crimson that he was smarter than the entire IT department of the university in 2003. Consider Steve Jobs frankly insulting his future boss John Scully by calling him a sugar-water salesman.
Or just consider any successful entrepreneur who made people question what they really believed about how things should work. Feelings get hurt in that process, and a small company looking for an edge can’t afford to worry too much about hurting people’s feelings, particularly people a lot more powerful than they are.
Real World Examples:
Bitcoin was launched by the anonymous “Satoshi Nakamoto” in 2009 via a controversial white-paper. Regarded by some as revolutionary and prescient, and seen by others as problematic in its economic theories, the paper continues to enforce the Nakamoto brand even years after its author receded into silence.
Google began its campaign to expand beyond its beginnings as a search engine and launch Gmail. The company adopted the motto “Don’t Be Evil,” which at the time was interpreted as a hard swipe at competitors (like Microsoft and Yahoo) that Google was positioning itself against as a new Big Tech player.
3. Have a Gimmick
There are a few kinds of gimmicks. There are physical gimmicks, like a piece of swag or a clever trinket related to the product, and there are software gimmicks, which are a kind of game or a tool your target customers will like. Let’s take this premise in 2 parts.
- The Physical Gimmick
A physical gimmick isn’t going to work for every company, because not everything lends itself to a physical hardware product. Then again, a lot of things really do.
Physical products, even very simple or decorative ones, offer an opportunity for your brand to reach customers in a new way. We are much more likely, as social creatures, to demonstrate new products we’ve brought to our friends and family if it has a physical component. This type of thing is sometimes referred to as “swag,” but a proper gimmick rises above the level of swag to become a part of the product experience.
Consider Google Cardboard – it’s a gimmick that advertises Google’s VR technology. Instead of a t-shirt or a coffee mug, customers get something that is contextual to the product itself. Because the product is also probably rare or unknown, it appeals to the human need for discovery and for “being first.”
How do you turn your product into a physical gimmick? There’s no one answer, but think about the ways in which your product is going to be used. What kind of physical tasks are involved? In what context will it be used? In the office? At home? On the toilet? In the car?
Not long ago one of our startups Beeem, the physical web company that helps retailers or venues broadcast webapps to nearby mobile devices, sent us a gift. They were standard sized “Business Cards,” enabled with Beeem’s beacon technology, that would broadcast a website where our LinkedIn profiles and emails would be accessible.
This is not really the business Beeem is in, but it’s a very clever growth idea. Now, whenever I talk about Beeem at a conference, I can whip out my business card and tell everyone how to get to my special, on-the-spot website from their mobile phones. It makes me seem geeky but cool, and it gets lots of people to try the service at once. Win, Win.
Real World Examples:
Revolut, the recently launched “post-banking” fintech company that offers virtual bank accounts and ultrafast and cheap currency conversion, used a very similar technique to the one I described above. They created blank credit cards, which they then distributed at events for free. Users could “claim” their card by opening an account on Revolut and putting some money on them. Which many, many people promptly did.
Amazon, when launching the Amazon Dash service (which allows customers to order specific items with one click), distributed small “Dash Buttons” to consumers to place in areas of their homes where certain products are used, such as laundry soap or food. Today Amazon has hundreds of these devices available to buy.
- The Software Gimmick
The other avenue for gimmicks is in software, either in a browser or via an app. A great example of a classic gimmick is The Calculator. Such as this Mortgage Calculator from NYT.
A software gimmick is something related to your product in some way, but appeals to your customers on its own, helping you to instill your brand in their minds. There are a number of classic gimmicks:
The Calculator: a tool to help your customers solve a specific problem related to the product (like the price of insurance, or the cost of owning something versus renting it).
The Map: A way for your customer to explore content or learn something with a geographical context. Examples: Airbnb, Kiwi.com
The Puzzle: A game to get your customer thinking about the problems that your product solves for them. Also a way to spread the world about the product. Example: Google Doodles
The Quiz: A questionnaire that gives the customer a feeling of accomplishment (and works well to qualify a customer for follow-up). Examples: commonly used on Facebook
The Secret: This is in the form of an easter-egg or a “lifehack,” that helps your customer accomplish something few other people know about. Examples: In&Out Burger, famous in the US for their “secret menu,” which contains a large list of items that are only available upon request. Google has famously introduced hundreds of easter egg functionalities, which fans share and explore regularly. By the way, if you haven’t already: Do a Barrel Roll.
4. Make it Rain – (Money, That Is)
The quickest route between two points is a straight line. This is as true in finding customers as in anything else.
One of the straightest lines to a customer is the offer of something for nothing. Pay your customers to be your customers.
While it doesn’t work for every startup, it has been proven over and over to work for a great many of them. In a B2C company, even a SaaS company, the classic marketing strategies still work fine. There are a lot of ways of getting people in the door to have a look around.
If you’re old enough, you might remember some of the classic tactics. Sending a potential customer a discount coupon with a specific cash value (only to be used for a purchase with the retailer). Promising every customer a cash rebate for signing up.
The classic rebate deal was essentially a way of giving a customer something for free, while also getting them to commit cash to the endeavor. That’s a classic foot-in-the-door tactic. Many younger entrepreneurs today are less familiar with these old-school techniques because they went out of fashion with the age of online ads. However, they are making a comeback today.
For example, the phenomenon of “pre-purchases,” particularly of products that are not actually constrained by distribution logistics. Yet companies like Apple and Amazon have brought back the practice in a big way, tapping into the same emotional experience that send-away catalogues relied on for a century before they were abolished in favor of websites and apps.
Even supposedly “crowdfunded” products are increasingly really just products in pre-sale. The shift toward a primarily marketing role among leading crowdfunding platforms has been noted for years. With good reason: the tantalizing appeal of something one cannot have is harder and harder to find in today’s online consumer world. Waiting can be a joyful experience, and it can make the product feel special and noteworthy.
Real Life Examples:
Damejidlo, our 2012 alum and now the dominant food delivery platform in Czechia, bought users by offering every new customer about €10 worth of free food. You could get more credits by bringing friends to the platform as well.
Uber and many other ride-hailing apps have also famously paid for customers, offering a free ride to newly registered users. Airbnb has offered similar deals to new customers, as well as hosts.
5. Become a Public Personality
Easier said than done, but it’s still worth a try. Becoming a known public face for your industry, or for the greater problem your company is solving, can open up an ocean of free publicity for what you make.
At StartupYard, for example, we operate on a loose rule that we don’t attend tech conferences unless we are allowed to speak at the event, such as on a panel, or a workshop or keynote. Once at the event, we apply our experience as presenters and coaches to try and be the most memorable and interesting speaker there.
By being controversial, being informative, and being most importantly fresh with our perspective, Cedric Maloux and I are both often identified as standout presenters. People frequently talk to us after speeches, and more importantly, they tell their friends about us. Being out there in public isn’t for everybody, but if you’re doing something that takes advocacy and education for people to understand and value, then you need to be a leader, and speak out.
Here are some things that can really help you transform yourself into a public personality:
Join Reddit channels in your industry, and follow topics on Quora. Take the time to build your reputation as an expert in the field you engage with. This takes time, but it also keeps you informed about what interests people, what’s being talked about, and what most people are missing in the conversation.
Join Competitions (with a goal). Pitching competitions, speaking competitions, even pub quizzes are going to help you build your confidence and assert yourself in front of strangers. Make yourself a goal of first attending a minimum number of competitions every month. When you get better at pitching or speaking, aim to win all the competitions you enter. Approach them as a game, not an opportunity, and try to win. If you win, opportunities will come to you.
Get speaking gigs. This means volunteer yourself to talk in front of groups of people. Be it technical, or business focused, government, corporate, or open source, get yourself on the list of speakers at relevant events and go out and talk about things you know matter. Be controversial. Be informative. And say something people haven’t heard before.
Get a speaking agent: If you’re highly skilled in your area of expertise, it’s quite possible there are people looking for speakers just like you, and even better, are willing to pay you to advertise yourself.
Our next post: How to Create a Killer Talk
StartupYard is currently accepting applications for Batch 9.
We’re looking for startup founders in Crypto, AI, IoT, and AR/VR!
Get started applying to StartupYard Batch 9. Applications close January 31st, 2018.
StartupYard investor, mentor, and CEO of StartupYard alum BudgetBakers, Michal Kratochvil joined the world of startups after a career in corporations as Managing Director of Accenture Consulting in Prague. Michal gives us an idea of how working with startups has changed his view of business in the past few years, and how he became a believer in Acceleration.
Posted by StartupYard on Monday, 15 January 2018
Michal Kratochvil joined StartupYard in late 2015 as an investor, and our 3rd “Executive in Residence,” and has continued in that role ever since. In 2016, he took over as CEO of BudgetBakers, a StartupYard alumni company and personal finance platform that has grown rapidly to hundreds of thousands of active users under his leadership, and now employs about 30 people.
Michal joined us after a distinguished career at Accenture Consulting, where he served as Managing Director for Central Europe for over a decade. His switch to the startup lifestyle was gradual, as he slowly converted from his customary suit and tie, to t-shirts and jeans, also switching from an IBM notebook to a Macbook. Today Michal is deeply involved with StartupYard’s operations, particularly in selection of startups, and helping companies to grow their networks through his impressive personal rolodex.
Michal also studies martial arts, and is a fan of western style horseback riding, participating in rodeo events and exhibitions.Great interview about #startup #acceleration with @BudgetBakers CEO Michal Kratochvil @startupyard in Prague! Click To Tweet
2017 was a good year at StartupYard. Not just financially , but also because we saw a number of our Alumni and recent graduates accomplish amazing things in the past year. Of course, 10 companies raising over €2 million total makes us very happy.
Still, the money is less important to us than what the money says, which is that these companies are doing good things that investors believe in, and that therefore we’ve done our job well.
10 Companies, €2.2 Million
More StartupYard alumni raised funding in 2017 than in any previous year. 10 Alumni and startups in the program raised funds in rounds worth between €35k and €750k. Many of these investments we’ve announced, but others have not been made public yet.
We’re also happy to report that there are additional deals in the pipeline, and we will hopefully be able to announce those very soon. We hope that 2018 will follow 2017 as another record year for fundraising.
How Does StartupYard Help Startups Fundraise?
The Network: Aside from the obvious, which is that we begin by investing in Startups that go through our program, every deal that one of our alumni have closed in the past year has been with the help of the StartupYard network.
Through mentoring, and especially Demo Day and the following Investor Week, our startups meet and get a chance to pitch a huge number of likely investors, including business angels, VCs, and even banks and large corporate investors. In every case in the past year, our startups have been able to raise money because of contacts made during the program. In most cases, the startups raised directly from StartupYard mentors or existing investors.
The Reputation: As with any long-running accelerator program with a decent track record, we have a smart group of investors who will pay close attention to any startup we work with. Being around for many years, and having made many right calls in the past, we are trusted by investors to offer clear, honest and helpful feedback about our alumni.
That doesn’t mean investors do whatever we say. But they do listen.
Our investor network know that we do not shop investments that we don’t believe in ourselves. Credibility in the investment community matters very much. You don’t always have to be right, but you have to be informed, open, and honest. I can safely say that every company I’ve worked with in the past 4 years at StartupYard that deserved an investment, got it. We find a way to make it happen.
The Program: Just as important as having the right network to do your initial fundraising, you have to be an investable company to begin with. One of the things we look for in startups we select is that they are usually almost investible, or we see that with some hard work, they will be investable sooner rather than later.
That naturally incurs a big risk for us, but it also helps define our mission- not to find “the best” most shiney startups out there, but to find the ones with the most real potential. One of the metrics we use to determine our success at picking “go over show,” is how well our startups do after our program at raising smart money (that is, from investors who know what they’re doing).
The Backup: Another quiet but important part of StartupYard’s role with alumni companies is to provide “backup” in negotiations with future investors.
Having an existing investor on your side of the table is an important practical and psychological advantage in investment negotiations. For one thing, an existing, experienced investor helps ensure that new investors behave themselves, and make fair offers on fair terms. Knowing an experienced partner is behind the startup encourages fair play and discourages game playing.
For another, StartupYard has the network and platform to expose bad actors, and to make sure our startups don’t deal with them in the first place. We have the power, in extreme circumstances, to block investments in our most recent alumni. This should be seen not as a blocker for investment, but as a negotiating advantage for startups, who can always fall back on us to block or negotiate terms that are unfavorable to the founder, on their behalf.
As we say, we can be “the bad guy,” with future investors when we are needed to be.
Listening to What an Investment Actually Says
Many founders who apply to StartupYard, and many who join us and go on to raise further investment, begin with some wrong conceptions of what raising investment is all about.
Of course, it’s the money they’re usually thinking about. But this is only part of the picture. If you need money, there are lots of places to look for it. Not all of those places are good, and not all of them are ultimately worth your effort or the risk you take in going there.
I used to joke with our founders that if you got into this business just to make money, you should just sell drugs instead. It’s almost true.
If there is good money and not so good money (clean or dirty, smart or dumb) how do you decide whom to take money from, or whom to ask for it?
Try approaching the question from the opposite tack: not “how do I get this money,” but instead: “what will it say if someone gives me this money?”
It should say that the investor believes in the upside potential of what you’re doing. Any investor in an early stage company should be nowhere near defining the real market value of the investment, because that value hasn’t been fully explored or proven yet.
The investment has to say what the investor can reasonably believe. Here are some things an early stage investment should say about what the investor believes:
- The company will be worth more in the future
- The founders are honorable and trustworthy
- The product is good and there is a market for it
- The founders will work hard, and pivot if necessary
- The founders will eventually sell or realize a profit
- Failure is possible, and ultimately acceptable
Maybe one or two of those points surprise you, but I hope not. We should not expect early investors to be total true-believers in what a startup is doing, but we should be able to answer all these questions before accepting an early investment from someone.
We should also not expect investors to be unemotional, or completely calculating in their early-stage investments. A true opportunist is a dangerous friend to have.
Picking the right investor is not just about sleeping well at night, though that’s part of it. It’s also about making sure that you actually have the clarity of vision and the confidence you will need to do what the investor believes you can do. Convincing someone of something is a lot harder than telling it to yourself.
One of the best ways to get someone to believe all the things I’ve mentioned is to really believe them yourself. The best way to believe those things is to make them true.
Make Yourself Investable
As we’ve seen, becoming an investable company is about more than having a great idea, or the energy and determination to make it happen. It’s also about the network you have, and the choices you make early on.
If you think you have a tech idea with great potential, consider working with an accelerator like StartupYard to grow your immediate network, and turn the idea into a business investors and customers can really trust.
Finding investors, just like finding any business partner, is about knowing what exactly you need, and what to reasonably expect. StartupYard helps you figure those things out.
StartupYard is currently accepting applications for Batch 9.
We’re looking for startup founders in Crypto, AI, IoT, and AR/VR!
Get started applying to StartupYard Batch 9. Applications close January 31st, 2018.
Something jumped out at me from a recent podcast by Y-Combinator with Des Traynor, Founder of Intercom. Asked about the problem he solves, he described how over time, their approach to sales has changed:
“. When you’re trying to pitch them something, they just say “Hey, here’s my two numbers, which one of these are you changing?” And I think when we show up and we’re like, well if you love your users you’re going to stick around, and they’re like sh-sh. Don’t care about any of that. Are you going to make me money or save me money? And we need to get better at answering that question. And we need to have better evidence to answer that question.”
In Startup culture, there is always a lot of talk about “solving problems.” Every product and service has to solve some problem. That’s true as far as it goes, but “solving a problem” for your users is not, in itself, enough to build a business on. You have to also answer some version of this question: how do you make me money, or save me money?
As we accept applications for StartupYard Batch 9, this question will be forefront on our minds when making initial selections.
Lots of problems exist, but not all of them are promising new businesses. How do you know when you’ve nailed down that problem that people are willing to pay money to solve?
You can check out the video podcast here:
A Problem That Isn’t a Problem
The reason we always begin our acceleration program with the classic Positioning Statement, is that expressing the problem you solve is one of the hardest things an early stage startup has to manage.
Often times the “problem” founders pick to talk about is just another way of saying that their customers want their product. Maybe they do, but why?
Over the course of in-depth positioning discussions with dozens of startups, I’ve developed a sort of framework for determining whether a problem is in fact a real problem, and not a “startup problem.” While not universal, this framework is extremely helpful in determining whether you’ve really nailed down the problem you’re solving.
I apply this mental checklist:
- Does the problem have clear financial implications?
- Is the customer aware that this is a problem?
- Does the customer actively search for other solutions?
- Is this problem something your customer would list among their most important concerns?
One of the most typical early positioning problems is that founders will identify things like “a better interface,” or “more efficiency,” or “saves time,” as the key benefits of their solution to a problem.
But by applying this checklist, we can see that benefits like “saving time,” are not always as urgent as they might appear. Does the time have a clear financial cost? Is the customer aware that they can do something faster? Would they actually seek a faster solution on their own? Is this time that they are wasting a concern for them?
You can sell me a way to shower in half the time every morning, but I wouldn’t buy it. It’s only a problem if the time I spend showering is a frustration to me.
Sometimes I ask founders: “Have you ever sat down and googled: “how to do x faster?” Most of the time, they haven’t, because that’s not typically how people behave. Only when something is taking so long, and is so arduous that it has become a clear problem, do people act to find solutions.
A Case Study: Steel Mountain
Getting your positioning, and particularly your problem statement to answer those questions can mean changing deeply how you talk about what you do, and how you see your customers, and who they are.
I’m going to use the case of one of our most recent startups Steel Mountain, the home-network security company that will soon be offering a single device to monitor and protect homes from digital intruders, viruses, and other threats.
Steel Mountain, it must be said, were already in a more than usually advanced stage of development when they joined our program, but I would say this exact roadblock was among their toughest questions early on. They had a compelling product, but they needed to really be able to express the problem that it solves.
The “You Need Us” Problem
After about a month in the program, their positioning looked something like this:
“The privacy and security of homes and small businesses are increasingly at risk from digital threats. Steel Mountain’s Secaura device plugs into your router, providing enterprise grade security across your entire home network. Unlike typical security software, Secaura covers all connected devices instantly, requires no active maintenance, and employs advanced artificial intelligence against known and unknown security threats.”
That is a very straightforward positioning statement, quite typical of a security company. Just one problem: it doesn’t quite pass the checklist I mentioned earlier. Let’s see:
- Does the problem have clear financial implications?
Not really. We are told first of all that there is a threat lurking out there somewhere online. But that threat has no exact proportion, and the target customer (the head of a household or small business), is at pains to estimate how much exactly a digital threat means in terms of lost income, lost business, theft, or other mischief.
- Is the customer aware that this is a problem?
Maybe… although given that this is such a simple solution to a complex problem, it’s rather doubtful that anyone who truly understands the problem doesn’t already have a solution in place. Perhaps there is market awareness of the problem, but we aren’t yet clear from this statement that the target market knows they’re in real danger.
- Does the customer active search for other solutions?
Again, it’s not yet clear whether the target customer actively engages with this problem at all. Some probably do, but the alternatives mentioned, such as security software, serve only a minority of households. Most do not have a sophisticated solution in place. Is the product only for security minded people, or is it for people who can’t deal with complex solutions?
- Is this problem something your customer would list among their most important concerns?
Again, we can speculate that the typical household or small business does not list security among its top concerns. Those that do are probably using more complex solutions. For those who are using no solution, it is seen more as a low-level, constant issue that many people would rather ignore than understand, and most people believe will never have an effect on them either way.
As we can see clearly from this checklist, we haven’t identified an urgent, well-understood need from a well-defined target customer.
Making the Problem a Real Problem
How did Steel Mountain come down to a positioning statement that did involve a clear problem and urgent need for the solution?
First, they took the painful but necessary step of considering that while their expertise and the value of the product as they see it is in security technology, the typical customer in their target market has no way of evaluating such products.
Instead, they went back to these 4 checklist questions and identified a problem that satisfies all of them at once.
The problem they identified was this:
“Parents of families feel great pressure to provide a safe digital environment for their children, and are prone to wasting money and effort on partial security solutions that never completely protect their homes and families.”
For starters, we have narrowed the customer set in this positioning statement to parents. In doing so, we’ve been able to identify a more universal emotional and social problem that the target customer can easily identify with.
So the problem is no longer: “my home is not secure,” but instead: “I am afraid of feeling like a bad parent who can’t protect their family.”
How does it do with the checklist?
- The problem has clear financial implications. Every parent has wasted money on safety equipment that wasn’t really needed. This solution promises to end that guess-and-check approach to digital security.
- The customer is very aware of the problem. Any parent who gives their child a smartphone or a tablet knows the dangers, and tries to consider them.
- Nearly every parent in the target market has or will in the future investigate digital security to protect their children. The solutions are in fact much broader than merely software, as in the earlier positioning statement. Education products, specialty devices, operating systems, and many other solutions are available to address the same concerns. This solution can now be compared to those as a cost effective and complete alternative
- Child safety is a top concern for most families with children. Again, by shifting the problem to one of “parents with children” rather than “owners of homes,” we have also shifted the conversation towards top concerns that parents have, for their children. Now, rather than comparing Secaura to an anti-virus software, we can compare it to other home security essentials: baby monitors, door locks, or fuse-plugs.
This process also helped the founders identify more features of the product that were very attractive for customers. Parental content locks, and “bedtime” settings for individual devices, though the founders had included them as an afterthought, were of prime interest to this new target market.
The reactions the founders got began to change because of this new positioning.
When Steel Mountain’s CEO Will Butler began pitching the company with this strategy, the change in enthusiasm was remarkable. People in his target market started asking: “Can I have one?” And “I’ve always wanted that!” It went from a geek product to something the customer had to have, and should have already owned.
It’s often said that “people don’t buy security.” What’s really meant by that is that people have a hard time seeing the value of something that protects us against a problem we don’t understand. If the product solves a problem we do understand, and even better, one we already have right now, then the customer is much more likely to consider buying it.
Some security companies only manage to sell to customers who have already been victimized by attacks and theft. But others find a way to sell “peace of mind,” instead.
When solutions really find a clear and understood problem and customer, they begin to feel not just strong, but practically inevitable. Why hasn’t someone done this before?
Applying it Yourself
Of course, not every problem has to do with security, or money, or peace of mind. Your customer might not be concerned with saving or making money. The logic of the framework is about the relevance of the problem to a particular customer. Have you picked a customer and a problem that match?
If not, how can you change your thinking about who the customer really is, or what their problem really might be?
Squaring that circle is never easy. As a founder, you’re naturally absorbed in what you’re building, and driven by your own reasons for building it. Opening up and applying that work to problems you haven’t considered is part of a continuous creative process. It involves talking to your target customer and others about what their real feelings and concerns are.
You have to talk to a lot of people. Not just customers, but the people who sell to those customers, and understand them best.
Getting the problem right is a life or death challenge for an early stage company. That’s one of the reasons an accelerator can be such a great choice for a team like Steel Mountain, or many other companies we’ve worked with. The opportunity to shift your thinking and test it with so many mentors and potential customers in such a short time is a rare opportunity for a startup.
StartupYard is currently accepting applications for Batch 9. We’re looking for startup founders in Crypto, AI, IoT, and AR/VR!
Get started applying to StartupYard Batch 9. Applications close January 31st, 2018.