LET'S DO THIS!
I've been getting some questions recently from people that have reached out to me for advice and I wanted to pay it forward to the community. I've advised a ton of businesses from idea, to seed, to raising money and exiting.
My focus is on business strategy, sales, and marketing. All around building repeatable processes and streamlining operations.
This is what I advise my clients to do right now -
General thoughts about B2B and B2C
If you're B2B you're looking at either ongoing services or software and in some cases a little of both.
If you're B2C you should be looking at consumable products, things people buy multiple times, with high LTV (lifetime value) customers or a product with a subscription element. NO OTHER EXCEPTIONS HERE.
If you're selling into either businesses or consumers today, it's all about perceived value, which means there is some wiggle room depending on who you're selling to, BUT the following really should be held as foundational:
These are pretty much the only reasons people buy things for B2B:
The most high growth businesses usually knock out at least two of the above. Really high growth companies hit four or more.
Uber is an example of hitting just about all of them:
Overall management advice because it’s more important than people think
Managing is tough, just because someone was a great employee doesn’t make them a great manager and just because someone is an executive doesn’t make them a great communicator.
Respect that everyone has different ways of communicating.
Two lessons I’ve learned from working with a ton of senior leadership.
Internally, break down everything into little goals, constantly ask yourself "What's my goal?" when it relates to calls, emails, outreach, posting, hiring, meetings, etc.
Make that shit your mantra then distill it down to the simplest form it can be.
You should always strive for clear and concise communication throughout all interactions. If you disagree with a request or find it not in the best interest, agree anyway first, then raise questions about it. Remember, we’re all in this together and our goal as a company is to help everyone clearly articulate “What’s my goal?” at a micro level to encourage good communication.
Record all your processes from day one - process is what sets apart winners and losers, always be looking to improve your processes because down the line you're going to be looking to automate these - having records of your approach and what worked and didn't will be invaluable while growing, scaling, or building systems to streamline your approach.
There is a tool for everything, that doesn’t mean you should use every tool. Find what works for your team and what has the highest level of adoption, create good habits around using the tools that provide you the best organization.
Pep talk done let’s get down to business
When you're starting out the only things that matter are:
Business strategy, partnerships, product, and marketing strategy.
IN THAT ORDER
Some of you will argue a team should be included, but I’m of the belief that if you nail all the above correctly, the people you have running it don’t matter as much. It’s more a matter of consistency and process than the people are executing.
Today most smart businesses follow the same path:
Let’s go over them one by one. (this post only covers number 1 - let me know in the comments if you want me to write up 2 through 5)
REVENUE AND MONETIZATION - Will they pay? Do they have money?
The following three questions can help you quickly weed out your ideas:
This is your best shot at success. Even a reduction in costs isn't as sexy all the time. Just compare your support budget to your marketing budget and these things become clear.
Story time relevant to number 2 above - cost center v revenue generator
We were using a series of three tools to automate a series of tasks we all hated. The three tools cost us around $1500 a month, the tools that did all the automation that we added, less than $200. We had to use the other tool either way but for $200 we were able to automate 80% of our work. To us we would have paid 10x for those solutions. The gap was we didn’t have any other good options to accomplish what we needed.
I thought about building out a system and a product to fit this space, knowing the amount of savings this provided, but I ran into a problem - People weren't used to paying that amount for what we could provide, the part of the business was viewed as a cost center, and the data play is something that hadn't been used in that way before. Great idea, needed, proven out, but not marketable.
You always want to be part of revenue creation - people are willing to pay more just about every time.
Even really good ideas sometimes aren’t worth pursuing if the market conditions can’t support them.
If you hit all the above three then we can move on to the best steps for getting this up and running.
The steps for validating an idea
Know the industry you're entering.
Please, for the love of everything, only start a company if you have intimate domain experience. Put differently, if someone was looking for someone to present even at a local level around what you're building would you be able to speak articulately about it where people would respect your opinion because of past work you've done?
If the answer is Yes, pat yourself on the back.
If it is no, stop, don’t pass go, you’re stuck with two options -
Those that don’t know, partner. We’ll get to more of this in the second step, I’ve seen this work with companies where some groups lacked complete domain expertise. These were 3x CEOs and founders with healthy exits. This is harder to do, but works if you're smart about it.
So what happens when a founder doesn’t have domain level experience especially in the early going, problems with go to market and validation, sometimes a general lack of understanding of business principles and market conditions. The result 99.9% of the time is that without domain expertise, founders end up misjudging the market massively and fail to provide the appropriate value.
They often find themselves playing catch up and not in a good way, this is something that is easy to avoid, but hard to admit to oneself.
I’m a huge proponent of learning an industry on the fly, but I feel like the better decision when possible is to get paid by someone else while you’re learning.
But what about getting advisors and consultants to help me bridge the gap?
I’ve seen this one in person, I’ve been part of this one, people don’t listen all the time. In some of the companies I’ve done work for, I’ve laid out what steps they should take, and watched as they fought back based on calculations that lacked all possible basis of being remotely possible losing millions of dollars in the process. The lack of domain expertise kills you when it comes to decision making if you’re not open to listening. But as an advisor, your job isn’t to make decisions for the teams, it’s to provide guidance and engage in conversations to bring issues to light and help people focus on goals.
I've literally called business results months in advance in single meetings with executives only to watch things play out exactly how I predicted - usually negatively.
Competitor Research (this is just an overview - this is it's own post and a half)
The basics
This shouldn’t deter you, it just means you need to be smarter.
Existing Providers
Know the entire landscape for the type of product that you are creating. Know all the sort of competitors, talk to people and see what they are using, ask questions on Reddit and in other forums, understand who people know in the market.
Then go to G2 and capterra and every other place that people talk about those products, scrape all the reviews with pros and cons - on some websites the reviewers even have linkedin links - go to their profiles learn about the companies they work for, the roles they have etc.
There is so much data out there, work smart from the start.
This is literally a post in it’s own or a chapter of a book. (if you’re reading this and you want me to break this down I can in another form).
Correlate what your competitors do well, what they lack, and everything else in between.
If you look up CRM you’ll see more than 250 listed probably more than 300 now, not including all the new ones like airtable and others that have popped up recently that aren’t direct traditional CRMs but just as useful.
That’s a lot of space junk to get through.
But there’s an easy way to get through it.
NICHE YOUR SHIT DOWN
The biggest problem that most companies have is being able to properly niche down to the most ideal customer profile first, then work to expand the market after the fact.
Remember that perceived value comment from way above.
So how do you find yourself in the best possible chance of creating something that you can do well with?
Build something that people are paying for, generates revenue for the business, and includes a data play as icing on the cake that improves processes and decision making.
This will never work in broad terms, you need to be specific.
One of the most common missteps people have is saying, their product is for everyone or every business. This is a red flag, don’t do this. Focus on doing one thing better than everyone else, look for data that supports a 10x uptick. This is basically required if you want someone to give your product a try as moving things over from an existing system are annoying.
Your product needs to be very narrow, when you think you’ve gone narrow, you need to go more narrow.
Example:
We’re a helpdesk product.
v.
We’re a helpdesk product for eCommerce companies.
v.
We’re a helpdesk product for eCommerce companies using Shopify.
v.
We’re a helpdesk product for eCommerce companies using Shopify and Shipstation.
v.
We’re a helpdesk product for eCommerce companies using Shopify and Shipstation that have less than 100 skus.
v.
We’re a helpdesk product for eCommerce companies using Shopify and Shipstation that have less than 100 skus and do less than $10 million in annual revenue.
v.
We’re a helpdesk product for eCommerce companies using Shopify and Shipstation that have less than 100 skus and do less than $10 million in annual revenue with support teams less than 5 people.
v.
We’re a helpdesk product for eCommerce companies using Shopify and Shipstation that have less than 100 skus and do less than $10 million in annual revenue with support teams less than 5 people who are looking to automate their processes.
v.
We’re a helpdesk product for eCommerce companies using Shopify and Shipstation that have less than 100 skus and do less than $10 million in annual revenue with support teams less than 5 people who are looking to automate their processes who are currently using Zendesk.
Just keep going deeper.
There are perks to going deeper -
The deeper you go usually the less competition you have - the more specific and tailored the easier the sales pitch is because you spend time creating things to help with workflows that relate to how they are working. When you know these workflows it's easier to have meaningful conversations.
I’ve harped on the idea of process the entire time. And I’m going to continue to do it. Build things to simplify processes and watch people sign up and pay you to solve their problems.
The ideal solution is turnkey that works with all the workflows people have or simplifies them with the amount of tools out there find the ones that you want to be part of the process with and integrate deeply.
Earmarked Budget
Is the budget expanding, will it be expanded if you can tie results back to your product?
This is actually really important because it comes to the ability to grow an account once you are in the account. Some businesses are better than others.
If you’re a support desk product like above, and you reduce the amount of work people need to do, you’re reducing seats, if you can’t add features and other elements to increase the revenue per account or the size of the support team you’ve actually tapped out. This is the argument behind being a revenue generation company rather than a cost center. When it comes to a cost center it’s a race to the bottom and kills expansion, it forces you to always be acquiring new customers to increase revenue.
This should be plenty to digest as you're thinking of ideas to pursue.
Let me know your thoughts in the comments, hope this helps people out.
I've got to stop here, we hit question 1 of 5 and we've barely scratched the surface.
Part 2 is now live HERE
Part 2.5 is now live HERE
Part 3 is now live HERE
Part 4 is now live HERE
I've been getting some questions recently from people that have reached out to me for advice and I wanted to pay it forward to the community. I've advised a ton of businesses from idea, to seed, to raising money and exiting.
My focus is on business strategy, sales, and marketing. All around building repeatable processes and streamlining operations.
This is what I advise my clients to do right now -
General thoughts about B2B and B2C
If you're B2B you're looking at either ongoing services or software and in some cases a little of both.
If you're B2C you should be looking at consumable products, things people buy multiple times, with high LTV (lifetime value) customers or a product with a subscription element. NO OTHER EXCEPTIONS HERE.
If you're selling into either businesses or consumers today, it's all about perceived value, which means there is some wiggle room depending on who you're selling to, BUT the following really should be held as foundational:
These are pretty much the only reasons people buy things for B2B:
- It saves them time (reduces friction or replaces a time consuming task)
- Makes/saves them money (creates revenue/ adds value that lets them win business)
- Adoption is simple for their workforce (is easy to incorporate into an existing workflow and anyone can use it/cost of switching in relearning)
- Adds transparency and allows for bigger insights (provides data)
- B2C additional one - provides them joy or enhances their life
The most high growth businesses usually knock out at least two of the above. Really high growth companies hit four or more.
Uber is an example of hitting just about all of them:
- No need to call a cab company and hope they show up, know where they are
- Saves them money, no more guessing on price and subsidized rides
- Just download an app on your existing phone and add your cc number
- Tells me where my ride is, how long until they come to me, and how much it will cost
- Gives me an easy way to get a ride when parking is tough or drinking is involved because of their reliability
Overall management advice because it’s more important than people think
Managing is tough, just because someone was a great employee doesn’t make them a great manager and just because someone is an executive doesn’t make them a great communicator.
Respect that everyone has different ways of communicating.
Two lessons I’ve learned from working with a ton of senior leadership.
Internally, break down everything into little goals, constantly ask yourself "What's my goal?" when it relates to calls, emails, outreach, posting, hiring, meetings, etc.
Make that shit your mantra then distill it down to the simplest form it can be.
You should always strive for clear and concise communication throughout all interactions. If you disagree with a request or find it not in the best interest, agree anyway first, then raise questions about it. Remember, we’re all in this together and our goal as a company is to help everyone clearly articulate “What’s my goal?” at a micro level to encourage good communication.
Record all your processes from day one - process is what sets apart winners and losers, always be looking to improve your processes because down the line you're going to be looking to automate these - having records of your approach and what worked and didn't will be invaluable while growing, scaling, or building systems to streamline your approach.
There is a tool for everything, that doesn’t mean you should use every tool. Find what works for your team and what has the highest level of adoption, create good habits around using the tools that provide you the best organization.
Pep talk done let’s get down to business
When you're starting out the only things that matter are:
Business strategy, partnerships, product, and marketing strategy.
IN THAT ORDER
Some of you will argue a team should be included, but I’m of the belief that if you nail all the above correctly, the people you have running it don’t matter as much. It’s more a matter of consistency and process than the people are executing.
Today most smart businesses follow the same path:
- Start with your revenue and monetization plan (are you targeting a sector that has money and can/will pay)
- Align yourself with others in your space (cheapest way to get traction/credibility)
- Work on road mapping your product to align with what complements your partnerships (cheapest distribution)
- Work on building a marketing strategy that can help expose and align your brand while strengthening its recognition with your partners (will this make us both look good)
- Build customer advocates along the way, tell their stories (lead with examples)
Let’s go over them one by one. (this post only covers number 1 - let me know in the comments if you want me to write up 2 through 5)
REVENUE AND MONETIZATION - Will they pay? Do they have money?
The following three questions can help you quickly weed out your ideas:
- Is what you’re building something that people are used to paying for?
- Is the part of the business you’re looking at a cost center or a revenue generator?
- Is what you’re providing a race to the bottom or increasingly a data play?
This is your best shot at success. Even a reduction in costs isn't as sexy all the time. Just compare your support budget to your marketing budget and these things become clear.
Story time relevant to number 2 above - cost center v revenue generator
We were using a series of three tools to automate a series of tasks we all hated. The three tools cost us around $1500 a month, the tools that did all the automation that we added, less than $200. We had to use the other tool either way but for $200 we were able to automate 80% of our work. To us we would have paid 10x for those solutions. The gap was we didn’t have any other good options to accomplish what we needed.
I thought about building out a system and a product to fit this space, knowing the amount of savings this provided, but I ran into a problem - People weren't used to paying that amount for what we could provide, the part of the business was viewed as a cost center, and the data play is something that hadn't been used in that way before. Great idea, needed, proven out, but not marketable.
You always want to be part of revenue creation - people are willing to pay more just about every time.
Even really good ideas sometimes aren’t worth pursuing if the market conditions can’t support them.
If you hit all the above three then we can move on to the best steps for getting this up and running.
The steps for validating an idea
- Market knowledge
- Competitor research
- Niche
- Earmarked budget
Know the industry you're entering.
Please, for the love of everything, only start a company if you have intimate domain experience. Put differently, if someone was looking for someone to present even at a local level around what you're building would you be able to speak articulately about it where people would respect your opinion because of past work you've done?
If the answer is Yes, pat yourself on the back.
If it is no, stop, don’t pass go, you’re stuck with two options -
- Recruit someone to work with you that has enough domain knowledge for the both of you, or
- Go get some experience in the field, then come back to your plan
Those that don’t know, partner. We’ll get to more of this in the second step, I’ve seen this work with companies where some groups lacked complete domain expertise. These were 3x CEOs and founders with healthy exits. This is harder to do, but works if you're smart about it.
So what happens when a founder doesn’t have domain level experience especially in the early going, problems with go to market and validation, sometimes a general lack of understanding of business principles and market conditions. The result 99.9% of the time is that without domain expertise, founders end up misjudging the market massively and fail to provide the appropriate value.
They often find themselves playing catch up and not in a good way, this is something that is easy to avoid, but hard to admit to oneself.
I’m a huge proponent of learning an industry on the fly, but I feel like the better decision when possible is to get paid by someone else while you’re learning.
But what about getting advisors and consultants to help me bridge the gap?
I’ve seen this one in person, I’ve been part of this one, people don’t listen all the time. In some of the companies I’ve done work for, I’ve laid out what steps they should take, and watched as they fought back based on calculations that lacked all possible basis of being remotely possible losing millions of dollars in the process. The lack of domain expertise kills you when it comes to decision making if you’re not open to listening. But as an advisor, your job isn’t to make decisions for the teams, it’s to provide guidance and engage in conversations to bring issues to light and help people focus on goals.
I've literally called business results months in advance in single meetings with executives only to watch things play out exactly how I predicted - usually negatively.
Competitor Research (this is just an overview - this is it's own post and a half)
The basics
- Selling to someone that is using an existing solution is easier than enticing someone on a new concept or idea - cheaper too
- If there's competitor there are easy ways to build entire spreadsheets of their client list
- Look for industries within those client lists to build case studies around
- Remember you're in the game of creating content - be a resource for your community
- Qualify potential customers by using their opinions in your content marketing
- Use existing platforms for distribution where possible (integrations anyone?)
This shouldn’t deter you, it just means you need to be smarter.
Existing Providers
Know the entire landscape for the type of product that you are creating. Know all the sort of competitors, talk to people and see what they are using, ask questions on Reddit and in other forums, understand who people know in the market.
Then go to G2 and capterra and every other place that people talk about those products, scrape all the reviews with pros and cons - on some websites the reviewers even have linkedin links - go to their profiles learn about the companies they work for, the roles they have etc.
There is so much data out there, work smart from the start.
This is literally a post in it’s own or a chapter of a book. (if you’re reading this and you want me to break this down I can in another form).
Correlate what your competitors do well, what they lack, and everything else in between.
If you look up CRM you’ll see more than 250 listed probably more than 300 now, not including all the new ones like airtable and others that have popped up recently that aren’t direct traditional CRMs but just as useful.
That’s a lot of space junk to get through.
But there’s an easy way to get through it.
NICHE YOUR SHIT DOWN
The biggest problem that most companies have is being able to properly niche down to the most ideal customer profile first, then work to expand the market after the fact.
Remember that perceived value comment from way above.
So how do you find yourself in the best possible chance of creating something that you can do well with?
Build something that people are paying for, generates revenue for the business, and includes a data play as icing on the cake that improves processes and decision making.
This will never work in broad terms, you need to be specific.
One of the most common missteps people have is saying, their product is for everyone or every business. This is a red flag, don’t do this. Focus on doing one thing better than everyone else, look for data that supports a 10x uptick. This is basically required if you want someone to give your product a try as moving things over from an existing system are annoying.
Your product needs to be very narrow, when you think you’ve gone narrow, you need to go more narrow.
Example:
We’re a helpdesk product.
v.
We’re a helpdesk product for eCommerce companies.
v.
We’re a helpdesk product for eCommerce companies using Shopify.
v.
We’re a helpdesk product for eCommerce companies using Shopify and Shipstation.
v.
We’re a helpdesk product for eCommerce companies using Shopify and Shipstation that have less than 100 skus.
v.
We’re a helpdesk product for eCommerce companies using Shopify and Shipstation that have less than 100 skus and do less than $10 million in annual revenue.
v.
We’re a helpdesk product for eCommerce companies using Shopify and Shipstation that have less than 100 skus and do less than $10 million in annual revenue with support teams less than 5 people.
v.
We’re a helpdesk product for eCommerce companies using Shopify and Shipstation that have less than 100 skus and do less than $10 million in annual revenue with support teams less than 5 people who are looking to automate their processes.
v.
We’re a helpdesk product for eCommerce companies using Shopify and Shipstation that have less than 100 skus and do less than $10 million in annual revenue with support teams less than 5 people who are looking to automate their processes who are currently using Zendesk.
Just keep going deeper.
There are perks to going deeper -
The deeper you go usually the less competition you have - the more specific and tailored the easier the sales pitch is because you spend time creating things to help with workflows that relate to how they are working. When you know these workflows it's easier to have meaningful conversations.
I’ve harped on the idea of process the entire time. And I’m going to continue to do it. Build things to simplify processes and watch people sign up and pay you to solve their problems.
The ideal solution is turnkey that works with all the workflows people have or simplifies them with the amount of tools out there find the ones that you want to be part of the process with and integrate deeply.
Earmarked Budget
Is the budget expanding, will it be expanded if you can tie results back to your product?
This is actually really important because it comes to the ability to grow an account once you are in the account. Some businesses are better than others.
If you’re a support desk product like above, and you reduce the amount of work people need to do, you’re reducing seats, if you can’t add features and other elements to increase the revenue per account or the size of the support team you’ve actually tapped out. This is the argument behind being a revenue generation company rather than a cost center. When it comes to a cost center it’s a race to the bottom and kills expansion, it forces you to always be acquiring new customers to increase revenue.
This should be plenty to digest as you're thinking of ideas to pursue.
Let me know your thoughts in the comments, hope this helps people out.
I've got to stop here, we hit question 1 of 5 and we've barely scratched the surface.
Part 2 is now live HERE
Part 2.5 is now live HERE
Part 3 is now live HERE
Part 4 is now live HERE
