TL:DR You need to find someone that gets value from your product and persuade them to buy it. Without this there is no business. Apologies if this sounds patronising but please don't ignore the bleeding obvious.
I have listened to three pitches this week and had feedback on one more. These are actual quotes:
From the feedback. The entrepreneur "was struggling to articulate a commercial strategy.”
During one of the pitches. Me: “Have you thought who will actually use your product.” Entrepreneur (after a bit of flannel): “That’s useful feedback, I should go away and think about that.”
From another pitch. “We know (XXXX) is the largest market but we haven’t included this in any of our plans or numbers.”
And the last pitch. “Our initial target market is proving slow to respond. So we have found an adjacent market which is smaller but faster moving. This has enabled us to get some sales and prove the concept.”
Guess which entrepreneur was most likely to secure investment? And guess which one does not need funding right now?
To save you trying to find the trick in this question, the answer in both cases is the bleeding obvious. The last quoted.
Its the customer stupid
Its a bit of a struggle to write anything else in this article. The point is so clear that making it feels patronising, unnecessary and dull. You need to know who the customer is for your business.
At the very early stage, I can live with a plan that says “I don’t know who the customer is but here is how I am going to find out.” Provided that finding out is the number one priority on your schedule.
There must be a clear customer focus. This means:
The Chairman's View
I apologise to the 100% of readers who feel they know all this stuff. All of the entrepreneurs above have received some form of funding. Either public or private or both. All of them have been coached in their pitches by experienced investment managers. One of them was also coached a little by me. Somehow the message is getting lost.
You need to find someone that gets value from your product and persuade them to buy it. Without this there is no business. Without answering this question, everything else in your pitch is a waste of time. Everything else you do is a waste of both time and money.
Please don’t ignore the bleeding obvious.
Friday 20 April 7.30pm. Back from a long run in my most tranquil place. The red, gold and black Rosemarkie beach. My brain speed is still a hundred miles an hour. Thoughts forming and then breaking into splinters every second. I am still coming down from the adrenaline rush of EIE18. If you are reading this and spoke to me Thursday night or Friday morning - apologies. Chat was indiscriminate, overflowing stream of words and ideas.
This is an unusual feeling for me nowadays. One of the depressing aspects of experience (ie old age) is that not much feels new or thrilling. Too often I think I have seen it all before. So its a tribute to the tiny but brilliant team at Informatics Ventures. Ronnie, Steve, Danny and Jane pulled off an event and an experience with quite an impact.
As a result, what follows is a bit random. It my first attempt at reflection based on the few fragments of my own thought process I could catch. I have tried to translate them into English but not to impose any structure.
More than a day
As a company you live the EIE idea of more than a day. The scale of support and learning the team put together is incredible. Not everything works for everyone. But I bet each person that pitched came off stage reflecting on a few key things.
I guess if there’s a theme to this post its that personal experience. We tend to judge the event by its whole impact. But each individual entrepreneur benefits and grows in their own way. Trees not forest if you like.
A minute in time and a cold beer
I have done a lot of pitching and presenting. I am really comfortable speaking to bigger audiences on much more complex topics. I thought I had reached the stage of my life when rehearsing was not only unnecessary. It actually took away from my performance.
Having a fixed time of one minute changes that. You need to rehearse and practice. You need to simplify and clarify. You need to hook your audience. You will feel the pressure.
(Feedback note: Whoever you are, when you step off that stage you are ready for a cold beer.)
Values not details
Attention to detail is often evidence of professionalism and excellence. True excellence comes from values. The EIE team don’t have the capacity to get every single detail right. Yet the event is still world class. Detail alone is not enough, its values that count.
Maryanne Johnston is the personal pitch coach. I was in a proper grumpy old man mood the day I worked with MJ. (Apologies again Maryanne). She didn’t let it bother her, gave me the attention and coaching I needed and got the results (I hope!) The quality and confidence of the people on stage was a tribute to her coaching.
EIE has jumped about a bit during its 10 years. The ’18 staging was held in the McEwan Hall. After refurbishment, it looks beautiful. The combination of stunning architecture, history and connection to Edinburgh Uni is perfect. I hope they are able to keep it there.
EIO - O for Opportunity - Money isn't everything
I have never been a big fan of the last word in the acronym - Exploit?! The purpose of the event is to connect companies with investors. That’s cool. I spent the day listening and talking on behalf of a company. I took away a whole lot more than connections to potential investors. How about a name change?
Resources, sponsors and telling the story
I have already mentioned a couple of times, the EIE team is small. Each and every one of them does a great job. And the whole event is a perfect illustration of a forgotten principle. The best innovation comes when resources are most constrained.
Once you have a great product though, opportunities - that word again - open up. I am grateful to all the sponsors. But this thing is so good. We could be pulling in the really big names. Why not Google or Goldman Sachs or GE?
To do that we need to tell a story. And it needs to be different from the Scottish norm. Too often I hear about what Scotland needs from the rest of the world. EIE is something which would be a great opportunity for anyone. So let’s make it about what we can give not what we can get.
Nearly forgot - Triscribe
I was there pitching Triscribe. We are building analytics based on electronic prescribing data from NHS hospitals. Our software tackles problems like prescription errors and antibiotic usage. Its part of a global digital health movement. Data has the potential to bring more benefits than any amount of new drugs over the next 10 years.
I walked away more convinced than ever that Triscribe can do great things. I hope plenty of other entrepreneurs did the same.
NOT The Chairman's View
I applied for EIE18 to help Triscribe. But it was also a chance to put myself in other's shoes. The footwear of the entrepreneurs and founders I am lucky to spend most of my working time with.
Its been a profound learning experience about myself. That will make me a little bit better in all the roles I play. A perfect highland morning on the incomparable links at Royal Dornoch has cleared my mind a bit. Enough to write this post. Time will help me absorb it more.
My thanks again to everyone who makes it possible.
Tech entrepreneurs love data. That makes sense but in a startup there is no reliable source of data. Every decision is made with a hundred unknowns. Instead of seeking false assurance in benchmarks and the like, keep it simple and flexible. Remember that everything is an experiment.
I spent a couple of hours on Thursday last listening to two early stage entrepreneurs. It was in a virtual board format run by Edinburgh Innovations. One company had leapt forward since I last saw them by winning their first big overseas contract. The other had slowed down as a free competitor emerged in a key market area. I could come back in two months and the roles might be reversed again.
On the train home I chatted with a good friend and experienced entrepreneur who is working on a new business idea. His challenges were the same as the newbies we had seen earlier. Is there a market for this product? How should he price it? What features are needed for an MVP?
His solution was natural and right. Get out and experiment with potential customers. The idea of a startup experiment crystallised in Eric Ries famous book The Lean Startup. Its a strong concept and has found many uses. Yet it only begins to describe the experimental nature of a new business with a new product aimed at solving a new problem. In this world everything is an experiment.
Product and Market
The experiment idea is built around testing for product market fit. For most startups product and market are the twin obsessions. That is as it should be. There is no other way of validating your idea. You must build some sort of product and find some people willing to pay for it.
The hard part is judging the outcome of these experiments. Have you found a real market or just a few early adopters? Which features do you need to expand you customer base? Will big companies pay more for your product?
In every case you are making choices based on limited data. But those decisions are life and death for your business. Its easy to forget all the other unknowns that affect your chances of success.
The biggest distraction from your focus is not uncertainty about product or market. Its money. How much runway do you have? When will your next round close? Which investors do you want to work with? How fast will sales turn into cash flow? Can you meet the payroll next month? Is it worth pursuing that large but slow enterprise customer?
None of this feels much like an experiment. Don’t be deceived:
Investors will tell you they invest in teams above all. Getting to MVP, raising money, growing all depend on finding and building a team. Chances are everyone in that team is an experiment of sorts.
Many founders have never run a business before. A fair number have never built or sold a product either. Even an experienced entrepreneur may be new to the market. And as the business grows, the role of CEO is quite different from that of entrepreneur.
Everyone you hire brings some of the same edge. Its one of the reasons why early stage companies are keen on “proven” performers in areas like sales. Trouble is no-one is proven in this situation. You don’t know the exact job definition. You don’t know who you are selling to, what you are building or the answers to a thousand other questions.
That’s why I prize the ability to listen, learn and grow above having a CV that ticks all the boxes.
Between solid evidence and pure guesswork
So at every moment you have a series of experiments running in product, market, money and people. They all interact with each other in multiple ways. No matter how well you design your starting hypotheses, you are not going to know for sure what is working and what is not.
Some things can be so messy they feel like a complete guess. That’s not a comfortable feeling so you bury yourself in all sorts of data. And find that there is no clear evidence. How do you make decisions in that environment?
What not to do
One temptation is to reach for benchmarks. Google is a great management consultant as well as a top doctor. A quick search seems to tell you what is expected of a startup SaaS business.
I am not a fan of benchmarking. To be specific, I hate using benchmarks to set targets. Its negative and counter productive.
Don’t get me wrong. If you can find a proper, comparable data source (not easy!) then comparing your outcomes to that source can be useful. But only as a way to ask the right questions. As soon as it becomes something to aim at, you are damaging your business.
The Chairman's View
There is no data led, evidence based solution to big strategic choices. This is true however big and established your business. Roger L Martin explains this in the Big Lie of Strategic Planning. If that is too academic for you watch this 3 minute video about Honda instead.
In an early stage SaaS or any startup every choice is a big one so everything becomes an experiment. You are in the world of emergent strategy. This is fancy language for making decisions based on three things:
A startup is not a comfortable or safe environment. You have to stay focused and flexible. There is no formula. Build a strategy based on conscious choice. Keep it simple but never believe it is perfect or even right. Be prepared to change in response to new learning from all those experiments.
Making predictions is almost as popular as making resolutions in January. Most forecasts tend to be static not dynamic. Thinking about the second order impacts can be revealing. Some of the events likely to happen in 2018 will mean long term change. In Scotland and other small markets this is what matters.
This struck me in force when reading Tom Tunguz predictions for the software market. Tom is one of the smarter guys in this area and his posts often make me think. So I am picking his ideas because they are better thought through than most not because I agree or disagree.
Tom made seven predictions. Here are my thoughts on the second order effects that might follow if his logic holds:
The tax holiday for repatriation creates one of the most active M&A environments of the past ten years
This makes sense from a US perspective. But that cash is being sent back to the US from other places, mainly Europe and Asia. In Europe, US investment dollars have helped. Both the volume and the risk appetite of startup investing have benefited. A reduction in this impetus could be one of the hidden effects of “America First."
The SaaS fundraising market remains ebullient through 2018 as vibrant M&A and an open IPO window trigger substantial liquidity for shareholders
I am with Tom that SaaS funding will continue to be strong. Despite some concerns raised by Clement Vouillon of Point Nine Capital. We may see that the corporate venturer share of this rises as VCs seek higher returns elsewhere.
Events already reinforce the IPO window point. Spotify and Dropbox have taken steps in that direction. I am not so sure. IPOs provide a liquidity event. As Travis Kalanick shows, this is great for founders. What about the VCs and institutions? Once you cash in, what do you with the money. Almost no other asset class looks attractive - see this article from the Wall Street Journal.
So maybe the pressure to exit is not so strong. Suppose SaaS and Technology investment continues to rise. Without a big increase in exits. Then the size of early stage investment as an asset class will go up faster than ever. That creates its own pressures and could lead to more of a flight from seed investing.
Machine learning fades as a buzzword
No doubt this is true. ML will go the way of mobile, VR and many other investing “trends.” Among knowledgeable investors this makes little difference. In many places early stage money comes from two sources. Angels with no tech experience or Government “schemes” in various forms. These sources can be naive.
The risk is that money gets diverted into “hot” sectors. And misses businesses with real potential. I live in Scotland and we need the technology sector to thrive. Its an uncertain business. Making decisions based on PR and buzz not fundamentals turns it into an outright lottery.
Blockchain in the enterprise takes the reign as the buzzword for 2018
The second order effect here is the logical extension of the previous point. I expect to see a lot of fantasy business plans for Blockchain related startups this year. This will be damaging. Blockchain has a future but in the main as an enabler rather than the raison d’être for a business.
Successful blockchains at scale will depend on global network effects. This is very hard for a company from a small market to achieve. Here we need to think about more targeted opportunities. B2B niches or public sector applications where the technology can do some good.
The classic open source strategy of the last fifteen years is abandoned because of the competitive threats from infrastructure-as-a-service (IaaS vendors)
I also agree with this prediction and it scares me. The same naive investing approach above places great store on defined intellectual property. This is false security. Open source is a great boon for innovators with limited access to cash. Placing walls around technology will make life much harder. Smaller or poorer markets will suffer most.
Everyone will lose in the end. Realising the potential of technology means developing applications that deliver real benefits to businesses and consumers. It may be harder to make money without protection. That is the reality of capitalism. Open Source is a bit like free trade. Introduce barriers at your peril.
GDPR becomes an important consideration in most SaaS companies
On a more optimistic note, this could be the start of something great. The right attitude to privacy and security changes the whole business culture. (See Estonia again). Perhaps founders will think more about real sustainable value in future. And less about the sales pitch.
The industry pendulum switches from fragmentation to consolidation in products as well as companies
Another credible prediction. This may offer a good exit for founders across the globe so positive in that sense. In the short term, it may also make life difficult for early stage companies. When size is the prize, startups don’t look so attractive. In time though, such consolidation is a damper on innovation. That will create new opportunities in the future.
The Chairman's View
Tom has produced the shortest and sharpest set of predictions I have seen for 2018. I am not as smart as he is so this article is a bit longer. Most likely neither of us is right but taking time to think about the future makes sense. By nature, entrepreneurs look forward all the time. Don’t limit your horizons to one year or restrict your thinking to the immediate next steps.
"Leadership and learning are indispensable to each other."
John F Kennedy, Undelivered remarks for the Dallas Trade Mart, 22 November 1963
The UK Government is trying to tackle a problem that has no solution. No not Brexit, productivity. Hiding behind royal engagements and outrageous tweets over the past few weeks have been a couple of huge announcements. The Chancellor’s budget speech and our new Industrial Strategy. Both focused on the question of productivity.
UK productivity has been sluggish to terrible for as long as I can remember. The latest official data tells us UK productivity per hour is 15% less than the G7 average. And growing at a slower rate.
Government does not have the answers
The Chancellor calls these sort of numbers “economicky.” In my mind they are the essence of life. They are also the main reason I am so passionate about the tech sector.
Successive governments have shown that policy biases and ill judged, small scale subsidies are not the solution. Its not about shiny new ideas - Grand Challenges in the words of the industrial strategy. Government needs to focus on infrastructure, regulation and education. Leave productivity to entrepreneurs and consumers.
Technology is an integral part of the productivity solution. At the leading edge this means research in advanced areas like AI. Medium term these are essential but in the short term they will have little impact. By definition cutting edge ideas apply only to a small segment of businesses. That results in a limited impact on productivity.
The right agenda for B2B SaaS
The big prize will come from established businesses making better use of technologies that are already proven. Luckily, this is also what B2B SaaS needs to happen to drive the next wave of growth.
At a high level its simple. Either:
In both cases your customer’s productivity improves. If everyone does this then the productivity of the whole economy improves.
You may oversee that ittle in the UK budget or the industrial strategy will help achieve this goal. Correct. Don’t waste too much time looking for examples elsewhere either.
This will only happen if entrepreneurs and leaders make it happen.
Everyone I know in a SaaS company is working to make this happen. And every business is different facing its own challenges and opportunities. You need to find the right way for your company.
5 principles to help your SaaS and your customer
You will not go far wrong by following these 5 principles:
The Chairman's view
If this is too much, remember the first item on the list. Help your customers deliver business change. Without this, you will not have a sustainable or scaleable business. And your SaaS product will make no difference in the world.
Its like a meta variation of the old saying: execution, execution, execution. Government will not solve the productivity puzzle. We will. So let’s get on with it. Wherever you live, your country needs you!
When we visited Estonia we heard from a young Mexican working for a company based in Tallinn. He lived in the city but travelled on business across the world. He was able to gather all the information required, enter it into his tax return and submit online in less than one minute.
It would not be easy to replicate Estonia’s digital government on a national scale. But this level of speed and efficiency should be an achievable benchmark for financial information within a business. The conversations I have and the things I see every day tell me that is not how things are today.
7 Lessons about the challenges of financial information
Startups and growing businesses need better financial information. My financial information survey was the first step in a plan to tackle that problem. Nothing in the survey has changed that view. Now I am able to refine it to a small number of specific statements about what needs to change.
Here they are!
1. Revenue forecasting is the hardest thing. Neither past performance nor external market views help much.
2. Cash flows and funding needs are the biggest worry.
3. Founders and entrepreneurs want a system to help make decisions and plans. It should be:
5. Lack of visibility about cash flow is the biggest worry. Lack of skilled resources to focus on finance is also a concern.
6. Your numbers should help you understand your business. Achieving this means to integrating data from multiple sources, not just financial numbers.
7. Founders and entrepreneurs what data to help understand how their business is doing. It should be:
Painting by numbers
Learning from potential customers is an exercise in humility. This survey asked some broad and fundamental questions. As you might expect, this has led to identifying some much sharper questions. Not to any definite answers.
The responses came from a wide range of perspectives. Many different countries, roles in the ecosystem and levels of experience were represented. This means you have taken me further forward than I could possibly have hoped.
A full analysis of the survey responses is available to download in this slide deck.
The Chairman's View
I started out on this project because startups need better financial information. Next step for me is to figure out how best to answer the challenges posed by the generous response to the survey.
The job of “finance” is to make the numbers into a voice the entrepreneur can listen to and learn from. All the admin, accounting and compliance should just happen. Real time, right first time, invisible. Low cost. I know the job to be done and my aim is to find or build the tools to do it.
The many who offered to help will be hearing from me shortly. Thank you in advance for your further assistance.
Click here to download the full survey results and analysis.
Strategic marketers always aim to deliver a lion’s share of the online market, but, much like the jungles and grasslands ruled by the lion, the online market is loaded with competitors vying for the same consumer prey. In order to thrive in this kind of environment, strategic marketing must possess a combination of strength, intelligence, and timing.
A lion hunting for survival surely recognizes that it is involved in a zero-sum game with the incredibly high stakes of life and death. While strategic marketers are not subjected to a literal life-or-death scenario, the stakes are indeed so significant that it requires one to adopt the mindset of the king of the jungle.
Why is a Strategic Marketer king of the online jungle?
The strongest lions understand when it is best to take a calculated risk, when to be patient, and when to be aggressive. The same must be true of strategic marketers looking to differentiate their brand from a host of competitors, which is why the most effective strategic marketers are rightly characterized as the kings of the online jungle. In order for strategic marketers to become more effective and efficient as hunters, it is absolutely critical to develop a deep understanding of their figurative prey, the consumer.
Consumer prey: Attacking with respect and knowledge
In his book Born to Run, Christopher McDougall discussed the relationship between the lion and gazelle by writing, “Every morning in Africa, a gazelle wakes up. It knows it must outrun the fastest lion or it will be killed. Every morning in Africa, a lion wakes up. It knows it must run faster than the slowest gazelle, or it will starve. It doesn't matter whether you're the lion or a gazelle -- when the sun comes up, you'd better be running.”
As the lion wakes up each morning to hunt the gazelle, it is not only aware of the task at hand; it is also aware of every one of its past successes and failures. A strategic marketer must also be aware of how important it is, to paraphrase McDougall, to be up and running the moment the sun comes up. Running without a purpose, however, is hardly likely to yield the desired outcome.
In order to engage in purposeful, effective marketing, the strategic marketer must apply the lessons learned from previous experiences while also tirelessly pursuing the attention of consumers. The most effective strategic marketers seek the attention of consumers through strategies that show respect for, and demonstrate an understanding of, the specific consumers within a particular target audience.
Navigating and conquering the online consumer hunting grounds
It is only with a healthy dose of respect and knowledge that a strategic marketer is able to navigate and conquer the online consumer hunting grounds in the same way a lion is able to navigate and conquer the hunting grounds of the jungle and the grasslands. In the world of strategic marketing, the stakes are so high that merely surviving is not quite enough; strategic marketers must adopt a carnivorous mindset that allows them to ascend to the throne of the online jungle.
Reed Gusmus is the director of marketing at QASymphony, where he is responsible for utilizing his exceptional B2B digital marketing expertise to develop marketing plans capable of generating new customer acquisition while also stimulating ample revenue generation.
I have spent quite a bit of time over the last few weeks writing a business plan. Its a bit of a retro experience for me. These days I spend much more time reviewing and advising rather than doing.
Apart from a long overdue return to real work, this has been a reminder of some key challenges. The business plan I am working on is for a funding pitch. Why else would you bother?
This is reality for most entrepreneurs. At some point you have to do one.
Framing your sales pitch
In preparing for battle, I have always found that plans are useless but planning is indispensable.
Regulars will know this is one of my favourite quotes. The meaning is clear when you are fund raising. The purpose of both planning and plan is to support a sales pitch. Selling shares in your company to investors. (Please never “giving equity away”.)
Because its a pitch, your business plan is much more than a technical description of how you aim to grow your company. This is about presentation and storytelling. And its about a clear message. Not a range of scenarios for debate and discussion.
Most often the value from planning is helping evaluate options before making a decision. In an investment pitch, that value is thinking through the best story to tell your audience.
How happy is the ending?
Your first dilemma is aggression v realism in the numbers.
People and narrative sell the business but investors buy the numbers. As a struggling entrepreneur, fighting for your first few sales, can you really see $100 million revenue in 3 or even 5 years?
Yet that is what investors want to hear. The easy option is to offer exponential growth. Creating the forecast is remarkably easy. With no track record, your projections can be anything you like.
Then the dilemma hits you. Will anyone believe it? How do you convince investors that the dream is doable?
How credible are the characters?
That brings you to the next dilemma. For the numbers to be believable, there are at least three other articles of faith. Team, market and product.
In each case, you need to sell investors a combination of proven reality and potential.
What are the limits of the genre?
At the risk of extending the literary metaphor, your business plan sits in a well understood genre of fiction. Investors have a set of expectations and plenty of experience looking at this stuff. And this is the true dilemma at the heart of everything.
Raising startup investment is a game with well established rules. They vary a bit between individual Angels, syndicates like those which operate here in Scotland, VCs and other market players. But the rules exist and they can be hard for entrepreneurs to learn.
Once you uncover the rule book, the temptation is to play it to the letter. And you will not be short of well meaning advisors who recommend just this approach.
Yet it won’t work.
The hardest rule to abide by is simple - surprise me. Every investor wants to see something unique. A passion or a solution or a hook of some kind that makes your business stand out.
Stray too far from the playing field (sorry drifted into a different metaphor) and people will think you are crazy. Stick within the white lines without deviation and the same audience sees you as boring.
The Chairman's View
There is the ultimate unanswerable question. How do you stand out from the crowd? Emphasise the unique genius of your business proposition while playing to the prejudices and preferences of your target investors.
No answers to this one.
But one big piece of advice. Make sure this is where you focus when developing your business plan.
Do the basics and use your thinking time to wrestle with the last dilemma.
Until recently, I worked for one of the leading professional services firms in the world. The organisation had fantastic depth of human talent. And an unrivalled client base amongst the leading companies across the globe. We all made a ton of money.
Yet as leaders we could never escape the feeling that something was missing. Every client engagement was different. A team of smart people would think through a complex business problem and use their experience and a bit of innovation to develop a specific solution.
If only, we could capture the essentials and repeat the same solution over and over. What a business model that would make!
Alchemy - Turning service gold into product margin
For years we struggled to turn gold plated, world leading services into products. Every leader was adamant this was the way forward. I well remember one senior partner literally thumping the table in a 3 Michelin Star London restaurant. Barking “Repeatable solutions” at us in his most stentorian tone.
The SaaS struggle to dismantle every product
Contrast this with the startup world today. SaaS is the business model of choice for software.
By definition, it takes a product (software) and turns it into a service. And technology enables this mindset to spread far wider than just software. As one of the leading thinkers in the industry, Ben Thompson of Stratechery, put it recently, we are now in a world of “everything as a service.”
It looks like the leaders in services are desperate to become product businesses. While those who make a living from products are striving just as hard to turn those into services.
What is going on here? No doubt part of the answer is “grass is always greener” mentality. On a more positive angle, both attitudes show a bit of an innovation mindset which can only be a good thing for customers. But in the end, I don’t think we will see an outright exchange of business models. Services will win.
As customer we love to be treated to excellent service. Delivering services is more painful for most people. As technology overcomes that particular barrier, expect to see a service mentality take over (almost) everywhere.
If you are building a product or running a product company, remember selling and delivering services needs a different approach to success.
The Trump/ UK Government approach to big international has been bugging me for some time now. The approach is to treat everything like a business deal. This is plain wrong. Nothing illustrates this better than the posturing and contradictions that have accompanied the start of Brexit process this week.
It feels like the best we can hope for is the least bad outcome. On both sides of the Atlantic. It also occurs to me that there are some important lessons here for any B2B company, SaaS or otherwise. Because the Trump “art of the deal” and the May “business like approach” are not only bad politics. They represent a terrible way to do business as well.
Sometimes the study of what not to do can hold valuable lessons. In that spirit, what can B2B SaaS learn from the mistakes our leaders are determined to make?
Respect not bullying
Top of the list is the way you treat potential customers and business partners. The TB approach (I am going to shorten Trump/ Brexit to TB to keep things simple) is a combination of overt or closet threats and bluster about how strong “we” are in comparison to “them.”
The threats of course are empty. Or at least implementing them would damage us more than the other party. Think through the implications of the UK reducing security co-operation with Europe for example. This is a pretty easy point for a business. How could it be of any help to go around threatening stuff that damages your own business?
Showing the other side you are strong sounds more attractive. Yet this is an illusion. It too carries an implied threat. I am stronger than you therefore I can bully you if I want. This is not a great message to send to anyone you do business with. Customer, partner, supplier or team. Plus, is that really the kind of business you want to run?
You need to start by respecting the people you aim to do business with. Treat everyone as an equal. This is the only basis for a sustainable business relationship. Period.
What does the other side want?
Once you apply this basic principle, it leads straight to the next lesson. TB either ignores or dismisses the things that are most important to the other party. Anyone living in the UK sees this in the starkest terms every day.
The whole Government, opposition and media agenda is obsessed with UK/ EU trade. Its actually quite bizarre. Writing a piece about an international trade agreement in a tabloid newspaper would have been journalistic suicide 18 months ago. Now not a day goes by without ill informed comment along the lines of “the EU needs us more than we need them.”
Yet our European allies have two principal concerns. Maintaining the guarantee of peace on the continent. Which was the overriding objective of the Treaty of Rome. And respecting the commitments and partnerships that every EU member state has entered into in good faith.
The two sides have different agendas and objectives. How good are the chances of deal? In business, you have two options. If there is no common ground, then don’t try to do business with each other. Simple.
On the other hand if you believe there is value from a business relationship, then make sure you have a clear understanding of the objectives on the other side. This will obviously inform the negotiations. You should also make it a clear test of any deal. If you can’t see how the other party benefits, then it is a bad deal.
What do you want?
It strikes me as I think this through that this conceals another important lesson. TB also appear not to know their own objectives. Never mind the other side. The forthcoming US/ China summit makes this clear. China has a clear target to preserve and enhance bilateral trade. Without allowing the US to interfere in its own sovereignty. Could you state the US aim in such clear terms?
There is a high chance the Xi Jinping will run rings round the supposed master dealmaker. So it may seem obvious but make sure you are clear on your own business goals in any deal.
No brainer is a self fulfilling prophecy
With mutual respect, clear objectives and value for each side, the core of a good deal is in place. The rest is about people, tactics and time. The mindset you need here is load, aim fire rather than load, fire, aim. In other words listen and understand before each move. Some simple examples:
If you don’t believe the last one will work, watch the summit next week. Look out for Chinese investment in US infrastructure projects in amongst the trade arguments.
Its easy to be seduced by the benefits of your own SaaS. The worst symptom is when you find yourself telling the customer that buying is a “no brainer.” There is only one person with no brains in that conversation.
The Chairman's View
If you can bear to watch, the TB processes unfolding offer plenty of lessons for selling B2B SaaS to the enterprise. Despite the professed business expertise of those involved, a good rule of thumb is to study the political reports and then do the opposite.
Much of what I have written above seems obvious when you think about it. Yet it can be hard in the heat of the deal. So try to remember two other things, listen to people.
That sounds like one thing but it is two. Listen and people. Listen and be especially careful to hear the bad news as well as the good (all too easy when observing TB in action!) Don’t deceive yourself. Sometimes the other side are telling you No. Understand it and get over it.
And the other side is always people. Understanding the organisation is important of course. But that breaks down into a lot of individuals. Respect each of those people. Understand their personal agenda. Find benefits for each individual where you can. It takes time but it works.
Kenny Fraser is the Director of Sunstone Communication and a personal investor in startups.