Venture capital firms and market development

17 Aug

Amassive Nod to Aaron Ross and Marylou Tyler @ predictablerevenue.com for the basis of this post.

I was chatting with a  couple of venture capital (VC) guys from 2 different firms recently and something dawned on us – Most VC firms are not well equipped to deal with the disruptive changes ongoing in the technology field today. Especially when it comes to marketing and sales execution.

We agreed the firms have great portfolios of companies and great relationship with founders. However, there is a new role that needs to start showing up in VC firms or can (should) be part of their stable of services. As well as a EIR (Entrepreneur in residence) VC firms need to have a on the ground day to day person getting their hands dirty across all the portfolio companies when required.

Here is one major area how thinking about startups, not just from the founders, executive level management perspective but how a bottoms up approach can help grow a company in the critical early stages. In the areas of sales and marketing. Also known as Growth.

One of the major problems at technology startups today is the lack of understanding of how much sales and marketing principles have changed. “If I need to double revenue growth, I need to double my sales force to drive it” or “I need to generate 1,000 leads to generate one sale. Therefore 2,000 leads will generate two sales.”

This doesn’t make sense and management teams, VC firms are confusing correlation and causality. A vendor who believes in this may as well claim, “Christmas trees cause Christmas.”

The majority of VCs and technology startup management teams are still under the influence of the 1990’s, 2000’s mind set. Sales and marketing has changed so much it’s amazing (especially in the IT industry).

The problem today: Not generating enough qualified pipeline and sales to hit and exceed estimated revenue targets.

Here are the two major root assumptions executives, founders and VC firms have that cause the majority of the problem:

I need to double my revenue, therefore I need to double my sales team & salespeople can find new business on their own.

No they won’t. They may find some but not enough to grow 30%, 40% 50% etc. Even if they do, they become too busy dealing with those deals that they fall behind (Aaron Ross of Predictable revenue calls this “lumping”. Having salespeople forced to cold, call, qualify, run the cycle, close and manage.)

Here’s why:

  1. Salespeople are not great at prospecting. (Sometimes it has taken 10, 20, 30 attempts to break into a company and qualify a brand new opportunity. Salespeople usually stop after 4 – 5 times).
  2. Salespeople typically do not like to prospect and do the upfront work to drive demand (salespeople want to sell not drive demand).
  3. Even if a salesperson does do some prospecting, as soon as they generate some pipeline, they become too busy to prospect. It’s not sustainable. This is why ramp up times are so much longer than anticipated.

Salespeople do not cause customer acquisition growth, they fulfill it.

It’s a huge shift in thinking and VC firms will be well served to develop more internal expertise and not just rely on executive management relationships. Of course a company needs more salespeople if they are getting bigger, but this is not the main cause of new customer growth.

Marketing, awareness, demand generation and engagement cause new customer acquisition and sales fulfill that demand generated by marketing.

There aren’t any quick fixes. However, there are ways to solve this. I have outlined (in brief) a few ideas below for you to consider (These are especially Important for companies with a high volume sales model).

  • Trial-and-error in awareness, demand generation (requires patience, experimentation, money) MUST be a true combination of sales and marketing team working together. I jokingly call this SMARKETING but it works.
  • Use CRM religiously and track, track, track.
  • Patience in building great word-of-mouth (the highest value lead generation source, but hardest to influence).
  • Create a well-supported demand generation (inbound and outbound) practice +sales development team with resources, This is by far the most predictable source of pipeline, but it takes time and focus (ties in to point # 1). BEST indicator of pipeline generation in the short term. We did this at a previous company and took the business from $1 Million a quarter to $ 6 Million.
  • PR & Social media outreach on a consistent basis
    Find the right online and offline network ( social and personal)
  • Target social networks that are relevant
  • Listen
  • Engage
  • Track results

How much (qualified) pipeline does your company need to generate on a monthly basis? Most startups don’t know this.

P.S: Massive assumption of this post is your product works and it solves a problem/want/need/desire.

P.S.S: Eric Ries says in the Lean Startup “New Customers come from the actions of past customers” but guess what how do you get those customers in the first place.” Next post I will outline some specific ways to generate opportunities from nothing.

About these ads

Personal Branding? I am a human being not a product or brand.

11 Jul

Image

b2b You do Social but we do personal. Big difference.

10 Jul

A large amount of IT vendors are now really adopting social as part of their approach. The only trouble is the IT buyer has been in this “phase” for the last several years. Vendors just did not believe it. While the social revolution took place the buyer has moved into the personal not social world. Most companies will catch up around 2017 – 2020 ish. :)Image 

The Social network crash of 2014

10 Jul

Image

Kenny Madden work currently valued at a record $92.9 m

9 May

Kenny Madden work currently valued at a record $92.9 m  By William Myers – Deville

 Image

“After the Trade show” by Kenny Madden was painted in 2012 and has recently been valued at $92.9 million (£54.9m) – the highest price ever valued by a piece of contemporary art today by a living artist.

 The 2012 painting will hopefully go under the hammer in either New York or London. ( Christie’s, Sotheby’s and several auction house are believed to be contacting the artist to try and get their mits on that big commission check.)

 Last week a version of Edvard Munch’s The Scream set a new world record after selling at auction for $119.9m (£74m).Prior to this announcement, the most paid for an original Kenny Madden  was via a private sale for $50. (£35).

 Francis Bacon’s Triptych held the previous record for a piece of post-war art, having sold for $86.3m (£53.4m) in 2008.Among the new records set include the $36.5m (£22.6m) paid for Yves Klein’s FC1, a piece created with water, two models and a blowtorch shortly before the French artist’s 1962 death.

 Jackson Pollock’s Number 28, 1951, one of the artist’s seminal drip paintings, fetched $23m (£14.2m), while an untitled 1980 work by Willem de Kooning went for $14.1m (£8.7m).

Another high-profile contemporary art auction takes place on Wednesday, when Roy Lichtenstein’s Sleeping Girl goes under the hammer at Sotheby’s in New York.

The estimated value for the 1964 “Pop Art” piece has been put between $30m (£18.5m) and $40m (£24.7m).

 Madden refused to comment for this article. However given the recent prices being paid for contemporary  art by a living artist, rumor has it he is identifying a number of properties in the Austin TX, USA and London England areas.

 

its about Me! – What 2 Million IT buyers Have to Say to The Brands Advertising to Them

25 Apr

“Its about Me! – What 2 Million IT buyers Have to Say to The Brands Advertising to Them”. By Kenny Madden

Quick definition of Advertising: Advertising is a form of communication used to encourage or persuade an audience (viewers, readers or listeners) to continue or take some new action. Most commonly, the desired result is to drive behavior with respect to a commercial offering.

Over the last 3 years I have had the opportunity to see all the good and bad of IT technology advertising.

My opinion is irrelevant so let me pass you off to the thoughts and comments from some of the 2 Million IT Technology buyers I asked How, What, Where and Why Advertising can work but fails so often:

· We are a fairly technical bunch of buyers but the words Technology advertisers use in some of their advertising just does not make sense to me.

· You got 7 seconds maximum, I can’t spend that time trying to work out the meaning of ” leading cloud augmented reality services with geo -spatial calibration across multiple heterogeneous environs.” Here’s what me the IT buyer is thinking: “Why should I care”?

· Most ads we see are about a product or about the company that makes those products. The best ads I see are about the IT buyer and how the product can help them.

· We buyers expect 3 questions to be answered in 10-15 seconds: 1) Who are you? 2) What do you do? 3) Why do I care?

· When you break down the job role of every IT Professional at every level of their career the lowest common denominator is that we are problem solvers. I want advertisers to tell me what problem(s) they help solve. If I have that problem I am very interested, if not the ads aren’t relevant to me today but maybe in the future.

· Professional, polished, super slick ads look like marketing brochures or clever advertising just doesn’t do it for me.

· Write an ad that does not sound like an ad. Good advertising is direct and gives me a snippet of what to expect from that company, product and/or business.

· If you use buzzwords in your marketing I’m going to tune you out or turn you off and remove you from my list of potential vendors.

· I get bombarded with so many different messages from vendors in a day that is already significantly interrupted by users and colleagues. I do not have the time to look at everything. Relationship is the bottom line for me. There are so many vendors, and most of them I’ve never heard of.

· The most meaningful advertising for me is the recommendations of people I trust, be they coworkers (in IT), or peers. When I hear from someone else on their experience. If they had an excellent experience with a given product then I’m going to take a second look.

There is a common thread in all of these comments — The IT buyer is effectively saying: Tell me something that has me in it! Can you save me time? Save me money? Help me in my daily job? Answer a question/problem for me?

As Roy H. Williams said in his amazing book “The wizard of Ads” – The Risk of insult is the price of clarity.

Traditional lead generation model

19 Apr

Image

Follow

Get every new post delivered to your Inbox.

%d bloggers like this: