The United Kingdom has voted to leave the EU. (Sorry I used the B word in a previous column but I can’t bring myself to type it again.) As I write this on the afternoon of Friday 24 June I find the future looks more unknown to me than at any time in my adult life. I really don’t know what this will mean.
I have been clear all along that I supported the Remain option. I am disappointed with the result but there are two things I know for certain.
First, I repeat what I said in my article Why Startups Should Ignore the EU Debate. Regardless of what happens next we have innovation, passion and the human spirit on our side. A far more powerful set of levers than any Government action or political decision. The main focus for any and every business is to keep building. Stick to your strategy. Grow your market. Develop your teams.
It will not be easy. In the immediate aftermath I have heard remain supporters talking about tragedy or disaster. One large company JP Morgan is also talking already about moving staff away from the UK. Another IAG has issued a coded profit warning. This is all wrong. It shows people as bad losers and it misses the point. Everything that happens in future is a choice as well. Only leaving has been decided. Nothing else.
A democratic decision has been made. We now need to work to make the best outcome from this result for the whole country. And beyond.
Any startup, any SaaS company, any business in fact needs to keep a calm head. Words like turmoil, chaos and confusion will be bandied around. Don’t get sucked into the negative. Even if the doom mongers are right it will not help. So a few things to bear in mind.
Expect the unexpected
So many things may change. The mechanics, legal ramifications and logistics of leaving the EU have not been explored. Both campaigns have simplified the issues, ignored major questions and misled the electorate.
Some of the more obvious impacts of this are already starting. David Cameron has signalled his resignation. Jeremy Corbyn’s leadership is under challenge. Nicola Sturgeon talks of another referendum on Scottish independence. Sinn Fein are also calling for a vote on the unification of Ireland.
The ripples are also spreading. Debate about leaving will be intensified in other parts of the EU. The UK referendum is already on the agenda for the upcoming election in Spain.
Get your head around the possibility of change. In almost any area of Government, politics or economics. New leaders will emerge and some major public figures will fade from view. Different values and ideas will be discussed. Some good, some bad. Expect the unexpected.
Its not just about trade
Most of the economic ‘debate’ has been about trade agreements. Note not trade. Trade is driven by businesses. For thousands of years human beings have been finding ways to trade. And overcoming barriers unimaginable today. International trade agreements only affect this at the margins. With the advent of the WTO there are also global limits to this impact.
So reaching trade agreements is not the economic priority in the new world. I suspect this question will fade rather quickly. Some sort of interim arrangement will be made to fudge over the immediate period after the UK leaves the EU. The rest will be left to the sort of trade talks that only geeks like me even know are happening.
That does not mean economics are not important. The debate will centre on big areas like welfare, health and education. For businesses there may also be change in other critical areas. Corporate and international tax policies. Public funding for business through bodies such as Scottish Enterprise and Innovate UK. Finance and co-operation in science and research. All may be subject to radical change.
Anger, disappointment and the blame game
I have just listened to Alastair Campbell on TV. Looking tired and drawn he mused about the bizarre situation we now find. Donald Trump is the voice of the dispossessed in the US. Boris Johnson may emerge as the spokesman for the disaffected in the UK.
The tone and texture of life in the UK will also be affected by the discontent that runs deep in many parts of the world. Since 2008 so called populist movements and causes have adumbrated this change. Signs range from the Arab Spring. To the election of right wing Governments in Poland and Hungary. And the emergence of left wing parties in Italy, Spain and Greece.
Many of those who voted Leave on 23 June did so in a mood of anger. Protest against our established leaders and institutions of Government. Those hopes for change will be disappointed. For example, there will be no change in the management or control of immigration in the next couple of years. We could even see a rush of people trying to get into the UK before things change.
The remainers who are grumbling now will soon fall silent. There will be anger and blame. Most of it will come from the same constituencies. The unemployed. The white male working class. Those in areas blighted by industrial decline. Poor pensioners. All the people who feel the country has abandoned them.
A battle is lost but the fight goes on
I fear I the above seems negative. That is not my intention. I just want to set the scene. Negative facts, emotions and choices will dominate for a long time to come. Please don’t let this drag you down.
Voting to leave does not mean that the leave campaigners are now running the country. Both campaigns were in any case motley and ill matched groupings. Who agreed on little else other than remaining in or leaving the EU.
And the winners are right in one important fundamental. The people of the UK are in charge of their own destiny. This is not changed by leaving the EU. We can all can vote, campaign and work for the vision of the country we want to see.
So no matter how passionate you were about remain, you now have the opportunity to shape the UK in your image. Help build a better society. And really stick it to the nasty elements that lurked close to the surface of the leave campaign.
For me the best way to respond to the Leave vote is not to wail and moan about a terrible decision. It is to work to build a better future. Put the UK at the forefront of human rights. Stand up for liberty, democracy and the rule of law everywhere. Lead the international effort to resolve crises and civil wars. Help our economy harness new technologies as a force for good. Build a more sustainable future for our young people to inherit.
This is a bit of a random collection of thoughts and reactions. In the long road to a better world, a battle has been lost. Prepare yourself for the fight to go on.
I received an invitation to an event a couple of weeks ago. When I read the speaker’s name I felt a slight shiver. It reminded me of a game we used to play over a beer after work. A group of us used to challenge each other to recall our worst hiring mistakes. The name I had just read was always high up that list. And every name on the list resulted from someone who had forgotten the basic lesson. In hiring, maybe means no.
Best I don’t disclose that name. Or worse the reasons it featured in those discussions. But it did get me thinking about the whole recruitment challenge. After funding and making sales, it is the question I get asked most often by SaaS founders and leaders.
And so it should. In almost any business the biggest factor that impacts on performance is the quality of the team. In a startup the existing team will be small. So every error in recruitment will be amplified. Of course the benefit of adding one more great person will also be that much greater.
The great leaders I have worked with over the years understood this. We all ended up crying into our beer. But those chats served an important purpose. Learning from each other and trying to improve. So I thought it would be fun to share the most important lessons (or at least those I can remember!)
Mistake 1. Allowing track record to trump talent
In my corporate days HR professionals were often part of the hiring process. Many of these were very smart people. But they shared one common blind spot. HR people have an ingrained belief in track record. Making decisions on hiring, bonuses, promotion based on evidence of past performance.
It sounds simple and unarguable. Yet it is not how people work. Every hire is a decision about the future. A small (or large) investment in your future dreams and hopes for the business. So the things that matter are potential and ability to learn. Angus Woodman, the CTO of Crew wrote a post Why we hire noobs on exactly this point.
Past performance matters. If only as evidence of integrity - is the story on the CV in front of you backed up by the facts. But it is only a guide. Be data influenced, not data driven on hiring.
Mistake 2. Believing sales people are rain makers
And be careful of that data when it relates to sales. Sales numbers are the easiest thing in the world to fake. I realise some people will be horrified/ outraged by this assertion. Yet it is true. It applies to whole companies as well as individuals. Sometimes people don’t even know they are doing it.
This will also be scary for some. Hiring sales people is one of the toughest calls in a startup. If you can’t rely on the numbers, how do you choose? Imagine the potential recruit alone in front of your best customers. When that feels wrong, the answer is no.
It is a tough decision. But take my word for it. Hiring based on sales numbers alone is always a mistake. Always.
Mistake 3. Failing to take up references
The oldest and most obvious mistake in the book. Yet it still happens. Even in the biggest companies the basic process steps get missed. Time and again we would find surprises. People who just couldn’t do what they had been hired for. More than half the time the issue was avoidable. All that was needed was a basic reference check.
You have a lot on your plate in a startup. And some corners have to be cut. Not this one.
Mistake 4. Falling for the illusion of psychometrics
Psychometric testing has grown in popularity. The attraction is simple. All those tests appear to turn gut feel and emotion into hard data. What could be better?
Except that clarity is deceptive. I have seen a whole bunch of different approaches over the years. At one time we used to run a two day testing based assessment centre for big promotions. Quite often the data aligned with the judgement of colleagues and peers.
But when it was wrong it was spectacular. One year our top candidate scored the absolute bottom marks not he assessment. The best scores came from someone we had to fire 3 months later.
We also used simple psychometrics in screening for recruitment. This looked OK for a while. Until we took a high level look at the data. One thing stuck out. Candidates who did not have English as a first language had the worst scores. We were killing diversity by screening out too many international prospects.
Psychometrics are a bit like horoscopes. When you dig in there is something for everyone in the conclusions. The data-like appearance is a delusion and it can be a distraction. Given the time and money available, it is not a worthwhile investment for a startup.
Mistake 5. Filling up the next level in the depth chart
There is no substitute for judgement when hiring. In the end of the day it is a people decision so it can’t be reduced to a spreadsheet or a checklist. But there is one common tendency to watch. If you ask people what their recruitment priority is, the answer is always a No 2.
It is human nature. The person you need is whoever will take the most pressure away from you. In an early stage business this tendency is acute. There is so much that matters. So confidence is essential before you delegate. And for the first couple of hires you may be making the right decision.
The problem is that hiring is cumulative. Once you reach 20 plus people the depth chart should show a range of experience. By the time you hit 100 all the levels need to be balanced. Yet if you keep hiring the top priority, the junior staffers will never arrive.
The economics of your business depend on leverage. Your long term sustainability relies on a constant flow of talent. Both aspects need a team with depth as well as breadth.
Mistake 6. Relying only on social fit and missing diversity
Once you start making human judgements, conscious and unconscious bias play a big part. Nowhere does this have more impact than around fit. The most natural thing in the world is to pick people that will fit in well with the culture and style of your team. It is a short step from this to selecting on how much you enjoy the company of like-minded individuals.
And before you know it you are baking in complacency and narrowing your thinking. Great teams are not just about social factors. Range of skills. Leadership and teamwork. Specialisms and strengths. Even creative conflict. All play a part in building a team for long term success.
I benefited from this for a long time before I learned to recognise it. In my early years at work I found myself working with a wide variety of new people. I became close friends with men and women that I would never have spoken to at school or university. Diversity of roles, of thinking, of cultural and social background all played a part. I learned faster and I learned more. My education went far beyond the acquisition of technical skills and experience.
So look for people that fit into your team. And broaden the thinking and experience at the same time. The best analogy is a jigsaw puzzle. The pieces are all different shapes, sizes and colours. They need to join together to make a greater whole.
Building a great team - maybe means no
All those tears and beers arise because I have made all these mistakes and had to live with the consequences. You will make some too. When in doubt remember 3 words that sum up the right approach to hiring. Maybe means no.
For any business listening to customers and learning how to deliver value is vital. In a startup with a limited legacy of market knowledge this is doubly important. Every face to face contact with customers can be a source of understanding. Even when a customer objects there is something to learn.
In B2B SaaS sales and customer success talk to your customers daily. These teams need to generate revenues. But each conversation should also work two ways. Its a bit like making sure your golf grip is right. Your hands are the only part of your body in direct contact with the golf club. So the grip is the best opportunity to get it right from the start. Any discussion with a customer is an opportunity to listen and learn.
So when a sales person meets customer that does not want to buy there are two options. Overcome those objections and drive the sale. Or listen, probe deeper and learn valuable lessons. This is your prime direct connection with your customers. I prefer to see it as a two way conversation.
Steli Efti published 10 Objection Handling Techniques last week. In the post he articulates great strategies to surmount B2B sales obstacles - the overcome approach. I thought it would be fun to take the other tack. What can you learn from listening to those same 10 customer barriers:
1. Your product/ service is too expensive
Steli is quite right that you need to find out more. The simple explanation is that your customer does not see the value in your product. He may also be telling you that your competition are cheaper or better value. Or they may not have enough in the budget to pay your price. Bear in mind that customer budgets don’t just need to cover your SaaS subscription. Implementation and change costs need to come out of the same pot.
2. We'll buy if you add these features
This is both the most informative and the most dangerous feedback you can receive. The buyer is telling you what needs to change to convince them of the value on offer. This could be the exact thing you need to hit the product/ market fit sweet spot. Or it might be an expensive customisation that is only relevant to one customer. It is also possible that the features may not add anything. Some bells and whistles could just be what your contact needs to win the argument inside his own organisation.
The key is to find out why those features are important. What value will they add for this customer? Does this sound as if it applies to a wider market?
3. Your solution isn't a priority right now
First and foremost you have to show respect for this objection. You are talking to someone who has other problems. Maybe they don’t see all the benefits your solution offers. More likely those other challenges really matter more. Try to find out what is the top priority. Could be you product will help. Or at least you will have a clear idea whether this customer is worth pursuing further down the line.
4. You've got a great product but we're going to go with the [industry] standard
Go away, you have lost out on this deal. Frustrating for a startup because you need to find people who will take a risk on your business. But the customer has communicated a clear decision here. It won’t change unless you find something new.
It is almost certain you will meet this challenge again so how can you tackle it? Find out where the customer sees the risk. Often the established competitor will cover a wider spectrum. So your SaaS may be a brilliant but partial fix. The alternative is that your company doesn’t meet the resilience test for this customer. In either of these situations, finding partners may be the solution. Systems implementers and consulting firms can provide both the strength and breadth you require.
5. Just e-mail me more information and I'll get back to you
I have to disagree with Steli on this one. When you hear this, you are being told there is no interest. Don’t hang up yet? If you are talking to me, every second you stay on the phone is making me angry. You are wasting my time and worse you are not listening to me. No matter what happens in future, I am not going to want to buy. And I am also not willing to help you by sharing the reasons for my lack of interest.
Thank the customer politely. And send that follow up e-mail. It costs nothing and shows you are professional. You can even mention in it that you would like some feedback. But write this one off. There is no sale to be made and nothing to learn.
6. I don't have time to talk right now
Check if you can schedule a better time and get out of there. It does not matter how little time you take up. Your contact does not want to talk and you need to respect that. If they offer a convenient time, chances are you will be able to have a constructive follow up conversation. Push too hard and the door will be slammed shut. Remember you are building a relationship in B2B sales.
Be professional and you will also have a learning opportunity. When you do have that sales discussion, find out why the previous time was not convenient. You could uncover other business issues or problems that fit with your solution.
7. I can't make a commitment until I meet with [other decision-makers]
Bite back your disappointment. this could be gold dust. Your contact is about to reveal some invaluable information about the organisation. With a little sensible dialogue you can answer all sorts of questions. How decisions are made? Who they consult with and respect? Who are the blockers or the people most affected by change? Even where to go for the next sale if land and expand is your strategy. Pin your ears back and listen.
I am with Steli that getting an invite to these conversation is great. Again, even a refusal tells you something about how the organisation operates. So well worth asking.
The big downside here is time. Every big corporate customer takes their own time. If your cash reserves are not going to hold out that long then you have a problem. The ideal option is to survive through. And remember you have to stick it out until they pay. Not just until they place an order. But if you have no option, now can be a good time to approach a larger partner. At least you have something of value to offer in negotiation.
8. We'll buy soon
Hard to interpret. Could be a variant of 3. That is, they have more important things to worry about. Or a version of 7 where there are other interested parties. Might just be a pure admin hold up - process takes time.
It can also be a polite and absolute no. Finding out more is important but be gentle. The customer is not holding the door open. They are hoping the commitment will get you off their back. So you can’t assume they want to talk. Try to tease out the reasons but beware of the pushy sales impression here.
9. The gatekeeper
Gatekeepers are one of the great myths of the corporate world. I have met only one person in 30 years who was a genuine gatekeeper. In every other case you are dealing with someone who is resistant to the change. Your customer has to change to realise the benefits of your product. This means there are losers as well as winners. Most often the gatekeeper is one of the losers. Or they have a solution which deals with the same problem but suits their agenda better.
The point is so-called gatekeepers are blocking you. Only you. They are not just professional naysayers sent to beat up sales people. Here is where great interviewing skills come into play. Because this conversation can also be a mine of valuable insight. Why do they object? Who are the losers and why? How does your SaaS impact the wider customer? All this can be helpful. But not easy to dig out the answers. Get back to The Mom Test and think through your approach.
10. No, No and No
At any stage of the cycle this means No until proven otherwise. Assuming it is just a temporary setback is wrong. You may be able to change the customer’s mind if this is an early stage discussion. But you will not succeed if you don’t hear the negative.
Feedback that backs up a no can be useful in all sorts of directions. The more blunt the refusal, the greater the chance to open up an immediate channel. A route to finding out the reasons. If you have a way of combatting the objections this can be an opening. if not, again you will have learned some lessons. Don’t take no for an answer will not help your reputation or your brand.
B2B SaaS - Learning or selling?
You can learn a lot from the ideas in Steli’s article. Judging when to step back and listen versus the right time to push through objections is a skill in itself. One the best sales people have mastered.
Just remember that B2B SaaS is about a long term relationship. Where you add value to customers over time - that’s why they call it lifetime value. Every contact is an element of that relationship. From the first marketing message, though sales to service and customer success. And quality, sustainable trusted relationships take time to build. Look to make sure your sales conversations contribute to that process every time.
You may not sell as much the short term. But the quality and sustainability of customers will be better. And the value of your product will keep growing in the long term.
Mattermark recently published an excellent post “A more perfect union” by Nic Brisbourne. It sets out the reasons why startups should be worried about the coming EU referendum in the UK. In case you are not aware, the UK will vote on 23 June on whether to leave the EU or remain.
Leaving has acquired an ugly nickname - Brexit. On both sides the campaign has been marred by rhetoric - sorry strike that out - puerile posturing (better but still flattering) of the most abject nature. The whole thing just makes me angry. So this column departs from my usual calm analysis of business issues.
Let me be clear, I agree with Nic’s conclusion 100%. The UK should remain in the EU. His article is also distinguished by being rational and relevant. Two things that cannot be said often in this campaign. I am generally a believer in being a part of the political process. But if you are running a startup you should vote remain and pay no more attention to it. Feel free to ignore the rest of this article!
The problem is that the arguments on both sides are false. Based on misleading and dangerous premises. Exaggerated beyond belief. And nasty, parochial and small minded to boot. Followers of the US Presidential primaries may have a sense of deja vu at this point.
I don’t have the time or the patience to go through this stuff in detail. So I will just summarise why the economics of the debate are so wrong.
The lump fallacy
There is a concept in economics called the lump of labour fallacy. In essence its a version of a zero sum game. One which assumes the workforce is a static entity rather than a dynamic system. Much of the debate centres on what I will shorten to the Lump Fallacy. It treats everything as a static and immutable lump.
To be specific, UK public services are viewed as a lump. Finance, tax, health, education, agriculture. The lot. Once you start from this the conclusions reached are just rubbish.
For example the NHS is treated as it has a fixed level of resource. Therefore it is struggling to cope. Because the British public has inconveniently allowed its health needs to grow. Add one person to the population and that becomes an extra strain. To be avoided at all costs. (See how immigration scares mingle with these sham economics).
The truth is that UK economic growth today depends on an increasing population. Our productivity is flat or falling. And our population growth arises either from direct migration or from the children of recent migrants. So immigration is driving the increase in tax receipts. Which in turn is the means by which the resources available to the NHS are increased.
On top of this, by increasing the working age population we also change the demographics. And many of the new arrivals also fill vital jobs in health and social care. In truth immigration is saving the NHS. Not imposing an additional burden.
The trade agreement fallacy
The other dimension of the economic debate is just as dangerous. There is much talk of trade consequences and trade agreements. Nic refers to this at length in his article. Other elements of Government economic policy are also given over prominent positions.
All the squabbling is founded on a false premise. That the actions and influence of Government are the primary determinants of trade.
This is also rubbish. Trade goes on everywhere. With or without agreements. There was an explosion of noise when President Obama entered the debate. It obscured the fact that neither the EU nor the UK have ever had a free trade deal with the US. Yet I still seem to be able to buy an iPhone, watch an American movie and the rest.
Of course this is because there is a large section of the remain campaign don’t believe in free trade anyway. They are just using this as an economic fig leaf. Once the campaign is over attention will turn to the proposed TTIP agreement between the EU and the US. Expect many In campaigners to be among the most vocal opponents of this deal.
Focus and frustration
Anyone in a startup, no matter how early stage, has a much more powerful set of levers in their hands. Innovation, passion and the dedication of the human spirit are the true drivers of the economy. Founders, investors and advisors in the startup ecosystem are dedicated to harnessing this power.
Government sits at the margins. The real economic outcome of leaving or remaining in the EU is impossible to predict. And of minor consequence. Not even worth a discussion.
I will be voting Remain because I believe in working together. Co-operation and team work beats striking adversarial attitudes every day. You should vote as you choose. My only advice is to ignore the debate. Your time is valuable and you have far better things to do. Like focus on building a great business.
Kenny Fraser is the Director of Sunstone Communication and a personal investor in startups.