Interview with Kelly Masood, President, Intilop, Inc.
Situation: An emerging company is gaining traction as it moves from early adopters to mainstream. They need to continue to develop new technologies, while bringing down the cost of existing products. This is a delicate balancing act for a small company. How do you grow without losing control?
Advice from Kelly Masood:
It’s important to maintain momentum and continuous improvement. From a practical standpoint, we do this by applying common sense to our technical discipline. Common sense, here, is a relative term. It isn’t really taught in school at any level, but is gained through experience. This is the true expertise of the CEO.
The delicate part of the balancing act is the mix between developing new technologies and building an effective business model. An effective business model is built on innovative and cost effective products and sustainable profitability. Since new technologies go through development stages, it is important to create break points where you transition from development to productization to marketing and sales. Continuous improvement in existing products based upon customer feedback and new product ideas for future developments are crucial aspects of a successful business model.
If you want to minimize outside funding and investment you have to watch cash flow and development expenses. Revenue from existing products is the key. When you don’t have resources, you become resourceful. If the team is dedicated to producing innovative and good products that make business sense, they figure out how to accomplish it without cutting corners.
To mature your team over time you must keep them motivated, occupied and adequately compensated today while inspiring them to make it big in the future.
You maintain interest through the pursuit of new technology and the learning associated with it. Engineers like to see their designs work and turned into a product that creates value, is used and is appreciated.
Keeping the team occupied and challenged starts with choosing the right talent in the first place and then getting them to focus on building great products.
Compensating them with a fair salary means locally competitive rates, sweetened with stock options to provide great upside potential.
For us, retaining great employees is about enabling them to innovate products that will find broad market acceptance.
Key Words: Early Adopter, Mainstream, Develop, Cost, Continuous, Improvement, Common Sense, Business Model, Cash Flow, Expense, Price, Retain, Employees, Off-shoring
Interview with Luosheng Peng, CEO & President, GageIn
Situation: A fast-growing company is working to engage new users on their platform. They are leveraging ease of use, demonstrated ROI, and fit within an existing ecosystem as their levers to attract and engage new users. What have you found effective to attract and engage new users in a new platform or service?
Advice from Luosheng Peng:
The most important factors to attract new users are ease of use and a demonstrable ROI. It is important to address a complex value proposition simply and easily.
You must know, ahead of time, the single most important value for your target user. Your examples must be clearly tied to your target user’s most important need.
Quick, simple, visual and verbal illustrations are effective. For example, we used short and fun videos like Tracker the dog to explain our products.
You must demonstrate a clear ROI and increased productivity. Your ROI must be real if you want to gain users attention – particularly if you want to gain viral levels of attention.
In business intelligence, finding information is not a problem. The challenge is finding the right information, filling the gaps in information from standard sources, and delivering it at the right time. We spent a great deal of development time getting this part of our product right.
To improve understanding of your ROI, engage early adopters and get their feedback on your current features and how to improve your platform. Early adopters are more analytical and passionate than other users. They want to be acknowledged so be responsive to them.
Offer a freemium model so that new users can try you out and test your value proposition. If they like what they experience, offer a low cost limited premium model with incrementally scaled pricing for additional features or functionality.
Manage your ecosystem. Building a new ecosystem takes a lot of effort and expense. Most small ventures will want to compliment or fit into an existing ecosystem.
Existing ecosystems may already be crowded. Small companies have to be able to break through the crowd and be seen. We completed major integrations with Yammer’s Enterprise Social Network and Salesforce.com’s CRM. Your platform will have the most success if you address a gap or unmet need within the existing ecosystem.
Situation: Even with a better mousetrap, an early stage tech company can’t afford a large sales force to cold call enterprise prospects. How do you build an affordable, scalable sales model – one which lets you quickly identify potential customers, and sell to them with a predictable rate of success?
Advice from Scott Dietzen:
From our experience, there are three steps to the process:
Form and quickly test hypotheses about your early adopters, and be prepared to iterate. “Friends and family” customers typically provide this test bed;
Look for ways for candidate customers could self qualify, and then strive to make that easily repeatable; and
Once have honed your messaging, leverage PR, viral marketing, social media, and other inexpensive means get your value proposition in front of more customers.
The chain of events between hypothesis, private experimentation and public launch is crucial:
Before launch, you want to have many confidential conversations about your value proposition with early prospects, and hopefully get many customers to privately try out your product. What do they love about the product? What changes will make it even more valuable? Listen and learn. At Pure Storage, we spent a year and a half in customer testing before we came out of stealth.
Most companies work too hard on the product and too little on the go to market plan. It’s better to do these in tandem. At Pure Storage we thought our messaging would skew toward performance, but learned that the fact that we saved customers 10X on their power and space budgets was equally important to them.
By having referencable customers in place before launch, you are better able to declare and defend first mover status and their validation is crucial to a successful launch.
A great way to accelerate growth on a start-up budget is to let customers self qualify for free:
At WebLogic, we offered developers a free download evaluation version of our software. A developer could choose to use WebLogic for free, and then go to their manager only after they had a WebLogic solution up and running. This made it far easier for management to make a buy decision, and took off so fast that it was hard for our sales force to keep up with the inbound license key requests!
At Pure Storage, we give away a software tool that storage administrators can point at an existing storage workload. The tool allows them to evaluate the savings from our data reduction algorithms, and hence how much their companies could save in cost and power by converting from mechanical disk storage to Pure solid-state flash. Enabling the customer to generate their own ROI story is an easier, more economical path to winning a happy customer, and the end user insider becomes a hero for delivering value to his/her organization.
Key Words: Technology, Solution, Model, Sales, Marketing, Customer, Identification, Hypothesis, Early Adopter, Social Media, Scalability, Pre-launch, Stealth
Situation: A company has established market leadership in an emerging market. When you innovate in a niche, focusing on early adopters, eventually you run out of early adopters. The challenge is broadening the appeal to a larger mainstream customer base. How do you cross the chasm from early adopter to mainstream?
The challenge is both messaging and cultural.
In messaging, you must support the new norm. This means convincing the customer that if they are not with you, they’re being left behind. You need to demonstrate that your established, proven solution is the new norm.
The cultural challenge is maintaining a culture of innovation and attracting the right talent while becoming a mainstream company. An attraction to new talent is that you are cutting edge – changing the world. This aura is critical to a start-up. You must maintain this innovative culture as you become the market leader.
How do you overcome these challenges?
Finding people who’ve been there and done that increases the odds in your favor. We hired a marketer who had helped take SuccessFactors through the same transition.
Hire for excitement, energy and enthusiasm. Quickly remove new hires that turn out not to fit.
Maintain a freedom to fail atmosphere. You need people who will take risks, but who will also step back and quickly change direction when the risk isn’t productive.
Decision-making speed is a great advantage of small companies.
Create an organization that celebrates innovation.
We have “Hack Days” when employees are free to work on projects of their choice. A new product that brings business audience targeting to social media came from a Hack Day project.
Keep everyone informed. We have company-wide daily stand-ups. Individual updates are quick – 30-45 seconds. This fosters open communication and awareness, and surfaces issues before they become problems.
Weekly, we send out full disclosure emails including key financial metrics, successes and failures.
Monthly we have executive-only stand-ups. These are longer, but updates are quick and focus on progress to goals, as well as next month’s goals.
Situation: The dynamics of an early-stage business require balance between focus and opportunity. The challenge is in the balancing act. When do you focus on the plan, and when do you adjust?
Advice from Phil Bookman:
Never allow your friends to become statistics. We call our customers our friends. Our most loyal and vocal friends were our early adopters and got us where we are today. They remain important participants in the conversation and are always in our focus.
Along the same lines, when using social media to communicate to your audience, remember that this is a face-to-face conversation. This is a key point of focus.
Remove as much friction from online interactions as you can. Make it as easy as possible for people visiting your web site to buy. This requires both live interactions with users and attention to detail. If a question keeps coming up, answer it; put the answer right up front on your web site where it cannot be missed.
We’ve made hundreds of tweaks, each tiny. Each has removed a point of friction. As the company grows it is easy to lose sight of these details. Never lose sight of details.
Much of what we face in business is transitory. It is important to stay nimble so that you don’t get stuck fighting the last skirmish. For example, in 2009, we found that a subscription service was difficult for institutional users like purchasing departments in schools to understand. It isn’t now.
You must be careful not to chase bright shiny objects – opportunities that take you outside your principal market competence. Would you try to modify a hammer to put in screws?
Our principal product TapToTalk is a communication device for kids with verbal challenges. Some have suggested that it could also be a teaching device. Possibly in the future there will be room in our plan for a teaching device, but we will address this as its own market and application when we are large enough to diversify.
Situation: A new start-up has developed a SaaS application focused on helping sales people and small businesses leverage LinkedIn and other social media for prospecting. The Company’s customers build Private Shared Networks which can be used by sales people to accelerate the Pipeline. Their concern is that historically sales people have not adopted sales productivity and prospecting solutions. What have you done to attract and accelerate trial and acceptance when addressing a resistant audience?
Advice from Pradeep Bakshi:
Keep it simple and make the application very intuitive and easy to use.
Do not try to change behavior; make it easier for sales people to do things they already like to do.
Create an instant “I get it” experience.
Bias the interface toward instant gratification. This is critical to generating viral marketing.
Make it easy to tell others what you’ve found – similar to a “Like” button to share a YouTube video.
There are 15 million sales people in the US.
You won’t get everyone, but you want to get the “believers” and avoid the “haters”.
You must quickly find segments of the market who are likely early adopters. For us, the early adopters are in the SMB segment (startups, 25-200 emp.) and the service provider industry.
Select channels which are open to your messaging and solution.
LinkedIn Groups are becoming an excellent way to network with like-minded people who can spread the word.
Look to past contacts to whom you have provided value and who value you. They are more likely to get your value proposition and introduce you to others.
Allow customers to collaborate with referral sources: potential business partners and collaborators who aim at the same audience that you will serve; and lead sharing partners. These individuals can help you find customers who will value your solution.