Author Archive: Rich Maloy

January 27, 2016

Sales Primer for Non-Sales Startup Founders

The founder of one of the startups in our Global Entrepreneur Program reached out to me this week. He is ready to start selling his company’s product, but he's never done sales before.

Often, startups consist of a hacker and a hustler—where the tech person is the hacker and the non-tech person is the hustler. In the aforementioned company, there are three hackers. Despite the founder being deeply technical, he is the closest thing they have to a hustler. I'm sure he'll do fine getting in front of customers, but the fact remains that he's never done sales.

So where do you begin as a startup founder if you've never sold before?

Free vs. Paid
His business is B2B, focusing on car dealers. He's worried about facing a few problems, including working with business owners who don’t normally work with startups. He wants to give the product away for free to a few customers to get some momentum, but is worried that after giving it away, he won’t be able to convert them to paying customers.

Getting that first customer is incredibly important, but there needs to be a value exchange. Giving products away for free presents two challenges:

  1. By giving something away, you devalue your product in the eyes of the customer.
  2. The customer has no skin in the game—no incentive to use it or try to make it work.

Occasionally, founders have a very close relationship with a potential customer (e.g., a former manager or a trusted ex-colleague) where they can be assured the product will get used. In those cases, it might be appropriate to give it away, but only for a defined time.

The goal is sales. Paying customers reduce burn and show traction.

Price your product, go to market, and start conversations. Be willing to negotiate to get that first sale. If you do feel strongly about giving it away for free, put milestones and limitations in place for how and when that customer will convert to paid. For example, agree to a three-month free trial that becomes a paid fee in the fourth month. Or tie specific milestones to the payment, such as delivering new product features or achieving objectives for the client.

Build Credibility
When putting a new product in the market, especially one in an industry not enamored with startups and where phrases like “beta access” will net you funny looks, it helps to build credibility. This can be done incrementally. If you don't have customers, start with the conversations you’re having: “We’re currently in conversations with over a dozen companies.”

If you get asked about customers, don’t lie. Don’t even fudge it. I recommend being honest, and framing it by saying, “We’re deciding who we want to work with first. We want to find the right customer who is willing to work closely with us at the early stage. It’s the opportunity to have a deep impact on the future of the product. We're building this for you, after all.”

When you have interest and are in negotiations, you can then mention to other prospective customers that you’re in negotiations with several companies. Be respectful of the companies you’re in negotiations with; I wouldn't recommend mentioning names unless you have explicit permission to do so.

As you gain customers, get their permission to put them on your website. Get quotes from them about the product, and put those on your site and marketing materials. You can even put these in your sales contracts.

Following this method, you can build credibility in the market, show outside interest in your product, and maintain an ethical standing.

Get to No
A common phrase when I was first learning to sell was, “get to the ‘no’.” It has a double meaning: expect that someone is going to say “no” so be ready for it, and keep asking until you get a “no.” For example, if “Are you interested in my product?" gets you a “yes,” then ask, “Would you like to sign up today?”

When you get to no, the next step is to uncover why they said no. At this point, you’re not selling; you’re just trying to understand why the person you’re talking to is saying no. It could be they don't have the decision-making authority, they don't have the budget, they need to see more, or the product is missing something important. The point is, you don’t know, and your goal here is to get to the next step in their process. And you don’t know what that is unless you ask.

Interested in learning more? Dharmesh Shah, co-founder and CTO of Hubspot and creator of the community OnStartups, authored a post with 10 Ideas For Those Critical Early Startup Sales that is well worth reading.

As a founder, you’re the most passionate person about your business and therefore the most qualified to get out and sell. You don't have to be “salesy” to sell; you just need to get out and start conversations.

-Rich

December 9, 2015

Startups should embrace both diversity and inclusion

During the NewCo Boulder festival, web development agency Quick Left gave a talk about diversity and inclusion in the workplace. The panelists shared stories of their experiences around diversity—good and bad—and gave advice on what can be done to make workplaces more inclusive. It was one of the best talks I heard all year.

After much discussion, both philosophical and tactical, an audience member expressed concern about counter-discrimination. Would the time come when he would be overlooked for a job because he was not a diversity candidate?

This is not the first time this has been brought up in diversity discussions, and he was expressing what many (perhaps too many) straight white males think when diversity is discussed. To the credit of Gerry Valentine, one of the panelists, he did not chastise the audience member, and instead commended him for his bravery. The man who asked the question gave voice to a common concern that is often thought, but rarely brought up. The panelists at NewCo Boulder handled it very well, pointing out that no one wants a job just based on their gender, skin color, sexual preference, or anything other than their ability to execute on the job. And, collectively, we want to create a world where everyone has the opportunity to compete for jobs on equal ground.

I was truly moved by the entire session, but found myself upset that even at the close of 2015 we are still answering questions about counter-discrimination. When Gerry commended the question for its bravery, I first wondered if he was being glib. But knowing Gerry, I was certain he was serious about his comment. Upon further reflection, I realized what's interesting about this "pale and male" pushback is that it comes from a place of fear. A fear of discrimination is at the root of the question when someone asks, "As a white male, am I going to get passed over for a job because this company wants to hire for diversity?"

Following Gerry's example, it's OK to acknowledge that fear. It’s OK to point out that white men don’t want to live in a world where they are discriminated against, even subtly. While that is a valid fear, for the straight white male candidate, it is only a fear of a potential future. If they can imagine potential discrimination, can they acknowledge that the reality of our world today: anyone who isn’t a straight white male does experience this as real fear. Imagine walking into a job interview having to first overcome the things about you that you cannot control (gender, skin color, sexual orientation, physical handicap, economic background, country of origin, etc.) just to get to a level playing field with the other candidates. If you don't want this for yourself, you certainly wouldn't want it for anyone else.

In startups, we love to talk about unfair advantage, but when it comes to hiring, the only unfair advantages should be skills and experience. What the movement for inclusion and diversity is about—and what we should be striving for—is a world where we all compete equally. If it is a brave thing to express your fear publicly, it is braver still to acknowledge the reality of the situation and work to rectify it.

One of the things I love about the startup community is that once we identify a problem, we move forward to solve it in as many ways possible. The path to inclusion in the workplace doesn't have to be a pendulum that oscillates between two extremes—discrimination and counter-discrimination—before settling down in the middle. Pendulums are a relic of the industrial era. In the digital era, we can choose our target, set our standards, and move forward as a community to achieve them. As you build your startup, build inclusion in your workplace from day one.

-Rich

October 21, 2015

The Dumbest Thing I’ve Ever Said

Last week, I attended the LAUNCH Scale conference and had the pleasure of attending the VIP dinner the night before the event began. We hosted the top 10 startups from the IBM SmartCamp worldwide competition for the dinner and throughout the events. Famed Internet entrepreneur Jason Calacanis joined us for the dinner and gave a quick pep talk to the teams. He mentioned that people come up to him and lament that they wished they’d gotten into the "Internet thing" earlier—and that he's been hearing this since 1999. His story reminded me of a similar personal experience.

In the fall semester of 1995, I was a junior at St. Bonaventure University, working in the computer lab. One day after helping a cute girl I had a crush on, she said to me, “You’re so good with computers, why aren’t you a computer science major?” Swelling with pride, I tried to sound impressive and intelligent as I definitively stated, “Windows 95 just came out, and pretty much everything that can be built with computers has been built.”

Yep. Windows 95. The pinnacle of software achievement.

It is easily the dumbest thing I've ever said—and perhaps up there as one of the dumbest things anyone has said. Ever.

But I hear corollaries to this fairly often, both in and outside the startup world. "There's no room for innovation there," or "You can't make money there," or "That sector is awful, don't bother." I'm guilty of a few of those statements myself—yet businesses find a way. We live in an age of unprecedented innovation. Just because one person didn't have the key to unlock it doesn't mean the door is closed.

Catch yourself before you fall into this loop of thinking. It might mean being the "Uber of X" or starting a business that's far ahead of its time. Think it's crazy to say everything that can be built has been built? I think it's just as crazy to say, "It's too late to get into ___ market."

For example, when markets grow in size, they also grow in complexity. The first mover in the space defines the market, catches the innovators and early adopters, and builds the bridge over the chasm to the early and late majority. (For more on this, read Crossing the Chasm by Geoffrey Moore.) When a market begins to service the majority, the needs of many are not being met, which leaves room for new entrants to build a business that addresses the segments dissatisfied with the current offerings or needing specialized versions.

The LAUNCH Scale event showcased dozens of startups and the innovation out there in the world always amazes me. I'd recommend it to any startup that has built something great, and now needs to scale. Still haven't built something yourself? Think you missed the opportunity to build and create? In 1995, I didn't think about how things would change in five, 10, even 20 years. Now it's 2015 and the startup world has been growing faster than any sector in history.

Think everything that could be built has been built? Think again. Want to build something? Do it. Build something. What are you waiting for? Go make a difference in the world.

-Rich

August 25, 2015

Free Resources for Your Startup

Building and running a startup is both difficult and expensive. From salary to servers to services, the demands on your budget are constant and come from all directions. On the Catalyst team we know this firsthand—our program was created as a way for startups to access SoftLayer's robust platform before they have revenue or funding.

After moving to Boulder, Colorado in 2012, the first startup I joined was a member of the Catalyst program. Without Catalyst, our organization would have been paying out of pocket for the bare metal servers we needed. Instead, that money was freed up for other essentials (like food to keep us alive).

Infrastructure isn't the only area in which startups can leverage free offerings. Since joining the Catalyst team one year ago, I've tracked and collected other free resources for startups. I compiled my research into a presentation that I've given at a few events. The presentation is available on SlideBean (a free online presentation platform, what else?) and is constantly being updated. Some highlights are below:

Big Company Programs
The Catalyst program is a model on how big companies can meaningfully engage with startups, and we're not the only ones doing it.

  • SVB: Silicon Valley Bank offers a program called Accelerator. Perks including free checking and financial mentorship. While saving on business checking won't make a big dent in your cash flow, the financial mentorship is top notch. The SVB team consists of experts in banking who can offer advice on fundraising, financial instruments, and cash management.
  • SendGrid: Email deliverability is crucial for your company, so start with the best in the business. The free plan includes 10,000 emails per month, up from 200 emails per day when I first started giving this talk. Go to the pricing page and scroll down to the bottom for the free plan. (Full disclosure: SendGrid is a former partner.)
  • NASDAQ Exact Equity: I was recently at a VC conference, where I had two separate conversations about investors’ frustrations with disorganized or downright undocumented cap tables. The NASDAQ Exact Equity freemium tool will not only help you wrangle your cap table, but it will also signal success to the investor by showing that you’re thorough and organized.

Startup Freebies
I'm not going to cover the basics, such as Evernote, Trello, Asana, Pivotal Tracker, Launch Rock, Bootstrap, Google Drive, etc. You probably already know about these programs. Instead, I’ll share a few great ones you may not know about.

  • Docracy: If you need any sort of legal document, Docracy should be your first stop. The legal documents were prepared by lawyers and are available for free. The choices range from SaaS Terms & Conditions to founder agreements.
  • HTML5 UP: Need a quick, easy, and responsive template for your site? When WordPress is too much of a hassle for a splash page, head over to HTML5 UP for dozens of choices of free templates.
  • UI Kit: As you're moving from the free HTML5 UP template toward being able to build out your site with the free Bootstrap toolkit, save yourself coding time and get the UI Kit for free design elements such as lightbox, slider, accordions, and more.
  • SlideBean: I love SlideBean. While searching for "free PowerPoint templates," I discovered that all the templates were hideous. Then I stumbled across SlideBean and fell in love with it. It makes putting together a presentation quick and easy, and keeps it from looking like you traveled to 1999 to get your template.

Collections
Below are my favorite collections of resources for any freebies that I haven’t already covered.

  • Product Hunt List: The founder of CrazyEgg and KISSmetics has an exhaustive list of free and freemium products for your startup.
  • Freebie.supply: Over 400 resources are grouped by category. I especially love the design resources.
  • Startup Stash: Not all of the free deals, mostly in the form of percentage discounts. But if you're going to pay for something, check F6S first for a discount.

And finally, the best piece of advice when trying to save money can be found in my last post: A Grandmother’s Advice for Startups: You never know ‘til you ask.

Have a free resource that you absolutely love that’s missing from my list? Email me at rmaloy@softlayer.com or tweet me @stoneybaby and let me know!

-Rich

April 17, 2015

A Grandmother’s Advice for Startups: You Never Know ‘til You Ask

Today my grandmother turns 95. She's in amazing shape for someone who's nearly a century old. She drives herself around, does her own grocery shopping, and still goes to the beauty parlor every other week to get her hair set.

Growing up less than a mile from her and my granddad, we spent a lot of time with them over the years. Of all of the support, comfort, and wisdom they imparted to me over that time, one piece of advice from my grandmother has stood the test of time. No matter where I was in the world, or what I was doing, it has been relevant and helpful. That advice is:

You never know ‘til you ask.

Simple and powerful, it has guided me throughout my life. Here are some ways you can put this to work for you.

Ask for the Introduction 

Whether you're fundraising, hiring, selling, or just looking for feedback, you need to expand your network to reach the right people. The best way to do this is through strategic introductions. In the Catalyst program, making connections is part of our offering to companies. Introductions are such a regular part of my work in the startup community. In my experience, people want to help other people, so as long as you're not taking advantage of it, ask for introductions. You're likely to get a nice warm introduction, which can lead to a meeting. 

Ask for the Meeting 

Now that you have that introduction, ask for a meeting with a purpose in mind. Even if you don't have an introduction, many people in the startup world are approachable with a cold email. 

Guy Kawasaki, former chief evangelist for Apple, and author of 13 books including The Art of the Start 2.0, wrote a fantastic post, "The Effective Emailer," on how to craft that all-important message with your ask.

Another great take on the email ask is from venture capitalist Brad Feld, "If You Want a Response, Ask Specific Questions." This post offers advice on how not to approach someone. The title of the post says it all, if you want a response, ask a specific question.

Ask for the Sale 

Many startup founders don't have sales experience and so often miss this incredibly simple, yet incredibly important part of sales: asking for the sale. Even in mass-market B2C businesses, you'll be surprised how easy and effective it is to ask people to sign up. Your first sales will be high-touch and likely require a big time investment from your team. But all of that work will go to waste if you don't say, "Will you sign up to be our customer?" And if the answer is a no, then ask, "What are the next steps for working with you?" 

Empower Yourself 

It's empowering to ask for something that you want. This is the heart of my grandmother's advice. She is and has always been an empowered woman. I believe a big part of that came from not being afraid to ask for what she wanted. As long as you're polite and respectful in your approach, step up and ask. 

The opposite of this is to meekly watch the world go by. If you do not ask, it will sweep you away on other people's directions. This is the path to failure as an entrepreneur.

The way to empower yourself in this world starts with asking for what you want. Whether it's something as simple as asking for a special order at a restaurant or as big as asking for an investment, make that ask. After all, you'll never know unless you ask.

-Rich

March 20, 2015

Startups: Always Be Hiring

In late 2014, I was at a Denver job fair promoting an event I was organizing, NewCo Boulder. All the usual suspects of the Colorado tech community were there; companies ranging in size from 50 to 500 employees. It's a challenge to stand out from the crowd when vying for the best talent in this competitive job market, so the companies had pop-up banners, posters, swag of every kind on the table, and swarms of teams clad in company t-shirts to talk to everyone who walked by.

Nestled amid the dizzying display of logos was MediaNest, a three-person, pre-funding startup in the Catalyst program, at the time they were in the Boomtown Boulder fall 2014 cohort. What the heck was a scrappy startup doing among the top Colorado tech companies? In a word: hiring.

MediaNest was there to hire for three roles: front end developer, back end developer, and sales representative. They were there to double the size of their team ... when they had the money. In the war for talent, they started early and were doing it right.

I've often heard VCs (venture capitalists) and highly successful startup CEOs say the primary roles for a startup CEO are to always keep money in the bank and butts in seats. Both take tremendous time and energy, and they go hand-in-hand. It takes months to close a funding round, and similarly, it takes months to fill roles with the right people. If you're just getting started with hiring once that money is in the bank, you're starting from a deficit, burning capital, and straining resources while you get the recruiting gears going.

The number one resource for startup hiring is personal networks. Start with your friends and acquaintances and let everyone know you're looking to fill specific roles, even as you're out raising the capital to pay them. As the round gets closer to closing, intensify your efforts and expand your reach.

But what happens if you find someone perfect before you’re ready to hire them? Julien Khaleghy, CEO of MediaNest, says, "It's a tricky question. We will tend to be generous on the equity portion and conservative on the salary portion. If a comfortable salary is a requirement for the person, we will lock them for our next round of funding."

MediaNest wasn’t funded when I saw them in Denver, and they weren’t ready to make offers, so why attend a job fair? Khaleghy adds, based on his experience as CEO, "It's actually a good thing to show a letter of intent to hire someone when you are raising money."

At that job fair in Denver, MediaNest, with its simple table and two of the co-founders present, was just as busy that day as the companies with a full complement of staff giving away every piece of imaginable swag. I recommend following their example and getting ahead of the hiring game.

As long as you're successful, you'll never stop hiring. So start today.

-Rich

February 25, 2015

To Raise Capital You Need a Startup Roadshow

In the world of big finance, before a company IPOs, the CEO along with an investment banker(s) go on a global roadshow to pitch their business to potential investors, including hedge funds, major investment funds, and other portfolio managers. The purpose is simple: Drum up sales of the forthcoming stock issue. In the startup world, there are no big investment banks scheduling meetings. However, there are opportunities to do a roadshow for your startup, which is even more important than the IPO.

There were 275 IPOs in 2014, the largest number since 2000. By contrast, there are around 500,000 new businesses founded in the U.S. each year (not all of which are tech startups), approximately 225,000 angel investors in the U.S., and as of a year ago, there were 874 venture capital firms [read more]. In big finance, a few companies compete for the attention of a small, accessible group of investors. In the startup world, a large number of companies must seek capital from a huge pool of often-hard-to-find, geographically dispersed investors. Because of this, a roadshow is even more important for startups than it is for IPOs.

The SoftLayer Catalyst team works with startups in communities as big as San Francisco’s Silicon Valley to as small as Cedar Rapids, Iowa. The number one thing entrepreneurs outside of the major financing hubs ask about is how to access capital. My response is always the same: Your job isn't to bring more capital to your local community; it's to build a great company. You know where the capital is, so build something worth investing in, and then do a roadshow.

Practice Locally

Thankfully, as the startup world grows & matures, the number of outlets for pitching increases every month. There are opportunities in most cities to stand up and pitch your idea to your peers or investors. Start by getting out in front of your local community as often as possible. In the Boulder/Denver community, there are a few companies that I see pitch all the time, and those companies have fantastic pitches because they are constantly practicing, getting feedback, and refining.

Look for meetups that focus on pitching such as 1 Million Cups and House of Genius, or simply do a search for startup pitch meetup in your city. During startup weeks or similar events, search and sign up for pitch practices and competitions. If your co-working space is like SoftLayer partner Galvanize, they might have a big member pitch competition or a peer-to-peer practice event. Participate in as many local and regional pitch competitions as you can find. As long as the competitions don't take a piece of equity or require a significant payment to participate—either of which should be very carefully evaluated beforehand—sign up, and compete. This constant exposure to your local market will help spread the word about your company, provide feedback on your pitch, and maybe even score some prizes!

For more advice on your pitch, read my previous post, Advice from the Catalyst Team: Pitching Like George Lucas.

Maximizing Your Startup Roadshow

Now that you've refined your pitch and practiced in front of as many local audiences as possible, it's time to start planning your roadshow. Traveling on a limited budget means you must plan a highly focused trip with a specific goal in mind. Maybe you're traveling from New York City to Philadelphia for a competition, or from Portland to San Francisco for an investor meeting; no matter the reason, it's imperative to maximize your trip. A good roadshow involves getting the absolute most out of your travel budget, and this means booking meetings with potential investors or customers.

For example, while attending StartSLC, I visited with a friend from Colorado, Ryan Angilly from Ramen. Angilly traveled to Salt Lake City to participate in the pitch competition, but he made the most out of his trip by filling his calendar with investor meetings throughout the week. Before his trip, he reached out to his contacts in the startup community in Utah and asked for introductions. After following through with the contacts, he met with investors he would have otherwise never met.

Start by either allocating a budget for travel or identifying the most important pitch competitions in your region or industry. Once you have your trip scheduled, immediately start looking for connections within your network. It's far more effective to say, "I'll be in town the 12th to the 14th; what does your schedule look like?" than a non-specific request such as, “When are you available?” Look for connections with ties to your local community as they are more likely to be helpful and make intros on your behalf. And ask around locally about who has ties to your destination. Get your meetings lined up, and get ready for a whirlwind of pitches on your first ever startup roadshow.

I'll leave you with this final point: In 2014, venture capital firms raised nearly $33 billion, a 62 percent increase over 2013 levels. They'll spend the next few years investing that money in startups. The money is out there, and you need to do a roadshow to find it.

-Rich

December 4, 2014

Advice from the Catalyst Team: Pitching Like George Lucas

SoftLayer’s Catalyst team hears startup pitches constantly.

We support more than 50 accelerator programs in the Global Accelerator Network, the TechStars programs, five hundred startups, and more. We hold office hours, offer pitch practice, and attend demo days—in short, we hear a lot of pitches.

Condensing the essence of how you’re changing the world into a five minute sales pitch, while still including other key elements like the business model, traction, early wins, team, and “the ask” is incredibly difficult. There’s a lot of ground to cover and very little time to do it, especially when you consider that likely half of your audience is focused on their phones.

A pitch must be concise, informative, and attention grabbing. The worst thing you can do is pitch like George Lucas’ dialogue in the Star Wars  prequel trilogy movies—clumsy and over-explaining.

  • Yoda: Always two there are, no more, no less, a master and an apprentice.
  • Mace Windu: But which was destroyed, the master or the apprentice?

This particular quote is the epitome of terrible dialogue because it communicates the same thing multiple times; the second line is superfluous. I don’t need Mace Windu to re-explain to me exactly what Yoda just said. I have ears. I’m paying attention. Imagine how much more powerful that scene would be with just the first statement.

Most of us have a natural tendency to over-explain a point, but by doing this, we insult the intelligence of our audience. Plus, over-explaining eats up precious time and causes the crowd to disengage. I can’t think of a worse combination.

If you find yourself saying any of these phrases, cut them immediately:

Let me show you . . .
I’d like to tell you . . .
I’m going to . . .
I think . . .
For example . . .
As I said before . . .

Simply put, don’t tell me you’re going to tell me something. Just tell me.

George Lucas did write some great lines of dialogue. Watch the Dagobah scenes in Empire Strikes Back. Yoda’s lines are pure brilliance. The message is simple and powerful, which makes it one of the most memorable lines in cinema.

“Do or do not. There is no try.”

During a pitch, you’re not writing a screenplay, so you don’t want to leave your audience guessing, but you still need to explain the problem, the solution, and why you’re the best at solving it. Don’t leave your audience confused from a lack of information, but don’t insult their intelligence by telling them you’re going to tell them something. Just tell it. Or better yet, show it.

You want your pitch to be like a Lightsaber: an elegant weapon for a more civilized age.

-Rich

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