Category Archives: Tips

How to showcase the “problem you are trying to solve” in your overview deck #startups

This is a series of posts with a focus on your overview deck to investors, presenting your market opportunity, the team and traction your startup has had so far.

Customers, investors and partners want different levels of depth from your problem statement.

Investors want to understand the fundamental underlying trends of the market in the context of the problem you are trying to solve.

Customers want to understand the “day in the life” pain points that you help address.

Partners want to understand the contours of the problem in terms of the challenges that customers face.

You have to articulate the problem extremely well to get a buy in from all of the above audiences. Doing that solves more than 1/2 the challenges you have with getting buy in. The reason is because all of them believe that the person who articulates the problem best is the one who has likely the best solution.

Since you know the problem so well, you have thought about the solution as much is the assumption they make.

The best way to showcase the problem slide is to outline the trend that you are seeing in the industry first.

For e.g. Cloud computing is rapidly taking over enterprise deployments of new applications. Or, there is a dramatic rise in number of developers also performing the role of operations and this trend will continue until 2020. Or, there is a new role in companies which are progressively seeking to differentiate with great customer insight and the person in charge of it is called the Customer Experience Officer.

Now, it is important that you dont show that in the slide, but also provide your view of the impact that the trend has on your problem.

The reason this is important is that most every investor, and many early adopter customers will have access to these trends and will likely know about these trends already. For many of your late adopters, this might be news, but investors tend to be on top of trends for most parts, with some exceptions, especially if the are not deep in a specific category or industry.

So rather than say the generic statement, cloud is changing everything I’d offer a view on the way it is changing that affects the portion of the problem you are solving.

For e.g. Cloud deployments are increasing by 150% every year and that rise has caused a 220% increase in number of new Developer Operations roles, and these roles dont have the tools to be successful since the developer tools are available only to debug code issues, and the operations tools are focused on monitoring production instead of trouble shooting.

There are 3 tips I have learned to use when you share the overall trend part of your problem.

a) The trend needs to be something most people can relate to easily

b) the trend is best explained by using percentage numbers to showcase the growth (trend is your friend) and

c) the trend needs to have a disruptive nature to it, if you are playing in market with large incumbents.

The pain point part (2nd slide likely) is best explained when you have a day in the life of the person who is the user. What do they go through on a daily basis which causes them angst. What do they have to go though, which prevents them from being successful or causes them to waste time, or causes them to be inefficient in their job, or costs them more money than doing it with your proposed solution.

Any or all of these day in the life scenarios is usually explained best when you showcase what your user has to endure and how with your solution these go away. So in some ways, your user pain point should directly correlate to the solution you are trying offer that will solve these problems.

For example, the PR associate at a mid to small agency spends 3-5 hours going over google news and putting news articles into word, curating the influencers into an Excel spreadsheet and finally putting a report together that will share the key media coverage in a PowerPoint slide. This associate spends 3-4 hours every week doing this and we can do these things for them in less than 15 min.

There are 3 important tips I have see that work best to showcase your user pain:

1. The persona of your user and the “day in their life” has to focus on the top 3 pain points they have, daily. If your pain points are not the things that are high on their priority list, they will likely dismiss your solution as “nice to have”.

2. The best pain points expressed are in 3 specific things, not more. If you have one, then you will find your presentations to customers to be hit or miss, so you are better off, having 3 so the total surface area of the customer’s pain points are well covered.

3. The more “real” your pain point and the more they go through it daily, the better are your chances of getting customers to buy into the fact that you can empathize with them. The best way to test this is to ask questions of them to seek engagement. For e.g. “Raise your hand if you find yourself struggling to quickly understand which emails are important and which ones are not, after a quick 15 second glance on your email client”.

Let me know if these tips work.

Why you need 3 presentations (with increasing depth) to land investment post your seed round

The 3 step process to raising money post your seed has

a) an overview step – usually at a demo day (3-5 min presentation) or via a warm introduction followed by

b) a first meeting (30 – 60 min) where your pitch deck showcases your company and business and finally

c) a follow on second meeting (60-90 min) with partners at the firm where you outline your operating plan

Your overview presentations’ goal is to pique interest in 5-7 slides and generate enough excitement to warrant a follow on meeting

The pitch deck’s purpose in 12-15 slides is to give enough visibility into your business to help potential investors understand it.

The operating plan’s purpose in 15-25 slides is to share the details of how you plan to invest the raised capital to get to the milestones that will make your company succeed.

Over the next few days I will take each slide deck and share some of my experiences with examples.

Let us first take the overview deck. This is typically given at your demo day or when you have 3-5 minutes alone to pitch, instead of 30 minutes (when you will need your pitch deck)

Your should cover 5-7 key areas and here is what I recommend:

1. Your single line positioning, company name, founder’s email and angel.co profile address.

E.g.

1. Get Magic Now – Text this number to get what you want with no hassles

2. Seed.co – Modern business banking without branches

3. Get Meadow – Buy medical marijuana for delivery today.

The positioning is different from your tag line, which focuses more on being memorable and different about how you do something as opposed to what you do.

Here is how I think about positioning: Try to address in one word who your customer is, another word for what you do for them and third word for how you do it differently

2. The problem you solve (and focus on the customer specifically) – be as specific as possible, and show how customers are currently solving that problem. Here are some tips on presenting your problem slide.

3. Your solution & how is it different – use screen shots to show your product if you wish

4. Size of your market – total and addressable market size is preferred. Here are some tips on presenting your market slide.

5. Traction – be as specific as possible either in terms of users, revenue, or other metric you are tracking. # of meetings with customers or discussions with prospects is not traction. Here are some tips on presenting the traction slide.

6. Team – answer why you are uniquely positioned to execute this opportunity

7. Call to action – Dont say we invite you to talk to us. Ask for folks to download, or ask them to tweet for early access, etc.

Over the next few days I will outline each of these slides with examples.

How to be a more innovative startup by changing just 2 words in your meetings daily

Most every startup wants to be innovative. That’s the essence of being in a startup. To be innovative, most entrepreneurs realize they have to get their culture right. An innovative culture fosters and innovative workplace which builds an innovative company.

So, now the question is how do you build an innovative culture?

To build an innovative culture, I believe you have to encourage experimentation. Lots of it. Most people learn only by experimenting, not by sitting in classrooms and being taught. While it is important to sit and learn the first principles, most everything else needs to be learned by doing. You will have to let people try lots of things and learn what works for your company, your industry, your market and your customers.

The trouble with experimentation is that it breeds failure. Lots of failure. If everyone of your experiments were successful, then you are not taking enough risk, which means the company wont be as innovative. In fact, the leading indicator for innovation in most companies is the number of failures they have. Which means they are taking more, but managed risk. A good metric to measure, is the # of experiments your startup conducts in a unit of time and what the failure rate is.

The best way to do this is to practice the art of disciplined experimentation. Which is why I am a fan of the phrase “My discipline will beat your intellect“.

So, if you do conduct a lot of experiments, you will fail. How do you understand, organize and learn from your failure?

Most companies conduct an audit of their experiments, the hypothesis, the initial learning and the final results. That’s where the the biggest problem is to be found.

Most managers and executives are trained to ask the question –

“Who to blame”?

That’s the question that most meetings post experiments start with? What happened? Why did it happen? Who is to blame?

I propose a small change instead, which will get your people less defensive, more open to taking risks and experimenting.

The right question to ask is –

“What to blame”?

Focusing on the process, steps, methodology and systems brings out the best answers to the question “how do we get better”?

Surprisingly you learn more about people, their strengths, limitations, weaknesses and biases if you focus on the process that was broken instead of assuming that the people messed it up.

For most founding entrepreneur CEO’s this is one approach that works best to foster a culture of innovation and risk taking.

Do you have a manager who has followed this principle? I’d love to understand what you have learned from them. Drop me a note on Twitter. (I do respond to all @ replies BTW).

What to do the day after the launch of your company or announcing new features

There is always a sense of euphoria after a “launch” of any sort. Especially if you have been working on your product / service for many months and are not particularly sure how it will be received. Then you get a chance to go “public” with your features / product or company. It tends to be exhilarating, but brings its own set of things to do after the launch.

There are 3 major buckets of items that you will encounter the day after the launch.

They fall into the “do now”, “do later” and “do never” bucket.

First the “Do Now” bucket. I would put thanking people that supported you on the top of the list. Send personal emails to the reporter, initial users, advisors and mentors with a list of links (combine all coverage instead of sending multiple messages) that indicate the coverage your received for the launch. Even if all you did was launch it on HN, it helps to take a screen shot, or even provide a link to the comments. If you have a team, I’d highly recommend you collate all the links, and put them into a document to share and discuss when you meet. It helps to set context to something you have all been working on. Even if the feedback on the launch is negative or “meh”, I’d still recommend you put it together.

I’d also immediately put together a spreadsheet with the major items of feedback and perspectives, and put them into feature requests, comments, questions and general feedback. Some of them you can action and others likely not. Either ways, it is quicker and more helpful to capture all the feedback just after the launch rather than go back and revisit it later.

Finally I’d spend quite a bit of time providing customer support – helping answer user questions, addressing their issues (without coding new features immediately) and also documenting the bugs they encounter – maybe you might want to even fix the blockers or P zeros (priority zeros).

Second, for your “Do later” bucket. I’d write a blog post to collect your thoughts, and write about your experience overall – what were the highlights when you got your start, what the low lights were, what your journey was and how you made critical decisions. In that blog post I’d also add the links to the launch coverage.

I would also spend some time after day 1 on your traffic analytics – where did you users come from, where they spent time and finally what they did. These will help you prioritize the key elements of your go forward plan and help you target the right press or channels going forward.

This is also a good time (do later, not immediately) to check all your social channels – Quora, FB, Twitter etc. to capture your feedback. I dont put these in the do now bucket, because while you might get some feedback that needs immediate attention, they tend to be a big drain and time sink. You will end up responding to some of the feedback, but most of the response from your side will be emotional – either happy, because your launch was well received, or sad because you were panned.

Finally the “Do never” bucket. You will get a lot of email from potential recruiters – who have “a rock star ninja” who wants to join your team and mentioned your company by name, or potential partners who “want to set up time over coffee to talk about potential ways to partner” or other principals and associates at investment firms who “followed” your launch or were tracking you on angel list or tried your product and would like to setup some time to learn more.

These waste the most amount of your time. I’d highly recommend you push them all out by a few weeks and use it as a technique to buy some time and gauge their interest after 3-4 weeks. While I have learned that there’s some truth to the “strike when the iron’s hot”, these are rarely hot irons, but more “flat coal”.

I’d love your feedback. What’s been on your do now, do later and do never bucket after launch?

Vision, Execution and Communication, what makes entrepreneurial founders, great CEO’s

It is often said that the most important things a startup founder and CEO needs to focus on is setting the vision and communicating it effectively, hiring the right people and making sure there’s enough money in the bank.

In the early stages though, the vision is less clear for a company for many founders. What’s more clear (to most entrepreneurs) I assume is the problem they are trying to solve. Or, in many cases the solution they are trying to build.

If you over index on good or excellent execution but have not a clear, well thought out vision, the market, investors and employees will give you time and room to develop. Case in point, it was not always clear what Twitter’s vision was to most people (and probably is still not clear).

So, if you have a great, compelling vision for the future of how the industry (like Marc Benioff did with Salesforce.com), then it does make it easier to grow, fund and scale the company, but if you dont, I wont sweat it.

There are many forms of communication, but the 3 I am focusing on are public speaking, written communication and articulation in a personal setting.

Not surprisingly, if you are afraid of public speaking (which apparently is the 2nd most feared thing for most people after death), the market does give you some leeway. There are many entrepreneurs and senior executives who I know, personally, who are poor public speakers and are not at all charismatic. That usually does not seem to stunt their progress though.

If you are not great at written communication, (which can easily be fixed BTW, with practice), the world is not going to end. It does help, but you only have to keep in mind that over 80% of successful founders in the unicorn list have trouble writing something meaningful even with the 140 character limit that Twitter proposes.

If however you can’t articulate the problem you are trying to solve in 1-1 situations or answer the difficult questions about why your company exists, what it does and how it will solve a problem, then potential co-founders, employees, investors and customers will not give you much leeway.

There are certain situations when even poor articulation (which I have seen multiple times when folks come to pitch their product to us) is something we accept and assume we can help with.

That situation is when someone has executed very well. Whether it is building a compelling product, getting early customers, growing user base or raising funding rounds, doing beats telling 95% of the time.

From time to time, we (potential employees, customers or investors) get enamored by a good story, articulated by a charismatic, passionate and visionary founder, and it may happen more than in exceptions than the rule.

The thing is though, you can’t argue with execution at the partner meeting or at the customer review or when you are talking to your friends about a company you want to join.

Either they did what they did or did not – either they got users and growth or not. They have customers or they dont. They have a product that users like or they dont.

They executed or they did not.

Which is why, even if you being told you dont have a great vision or that you are poor at telling your story or you have bad communication skills, take heart.

If you out-execute and show the proof in the pudding, by numbers, metrics and growth, the market and the participants will let you get away with your “weaknesses” or perceived faults in vision or communication.

Counter Intuitive: To have a successful customer development process startups should qualify out prospects

There are many counter intuitive things that happen during a startup’s life. Many have been out there already – a) initially do things that dont scale b) focus on culture more than skills when recruiting, etc.

When I was in sales early on, I used to get this advice from my manager all the time – the objective initially was to qualify out customers.

That seemed rather bizarre. The whole objective of customer discovery is to find the right customers for your product. Or did we all get it wrong?

Turns out before customer discovery, there is actually a problem discovery step.

Before you find the customers for the problem you are trying to solve, you are trying to find out if the problem really exists.

There are many contours of the problem, and one of the best people I have seen articulate this is Manu Kumar of K9 ventures – he talks about Frequency, Density and Pain

To find a problem worth solving these 3 criteria are important.

So when you do find a problem, your next step is to find the contours of the problem along these dimensions. Are potential customers having this problem, how much of a pain it is and how often is this a problem?

Now the hard part of customer development and qualifying potential problems is that we all have cognitive biases which makes us want to fall in love with our idea. Instead, the best way is to try and find ways that you should not do this (idea) versus something else.

This is why I maintain a to-dont list. (pdf) Apply that to your problem discovery process.

The entire goal of customer development (after problem discovery) is to ensure that you only get those customers who have the 3 qualifying criteria of frequency, pain and density.

You will find initially that to make the problem “solvable”, you will need to focus on one feature or one part of the problem which is the “most painful”. Your potential customers are willing to sacrifice scale, failure, lack of bells and whistles, etc.  because it solves the one piece of the problem which is the most excruciating.

Deciding which is the most excruciating part of the problem is hard and tricky. You will get many head fakes from many of the people you talk to who could be potential customers.

If you are an introvert and don’t like talking to new people (which is most of us), then your initial customer development list is relegated to colleagues, friends, family and acquaintances.

Most of them don’t like to disappoint you, so even if your product is not solving the problem or not solving the real problem they will likely say things to ensure you are not discouraged. Which leads to you thinking that you are actually solving a real problem.

Which comes back to customer discovery and the goal of meeting every potential customer – it should be to qualify them out as a potential early user. The problem you are trying to solve may not be as relevant, as painful, as intense or as immediate as others.

You want to qualify them out. Early, often, quickly and constantly.

That’s very counter intuitive.

A data driven approach to dispelling the myth that planning for #entrepreneurs is “old” school

There is an ongoing meme that keeps popping up ever so often among tech entrepreneurs and gurus. That the “business plan” is dead and there is actually no sense in planning at all.

After all they say “Hands-on Entrepreneurial Action is all that is required to create a Business”.

I have enough curiosity to keep finding out which of these truisms are valid and which are not. Fortunately I also have a position that allows me to try these experiments given that I run an accelerator program.

TLDR: This is absolutely false. Poor or any planning is better than no plan at all for over 80% of startups. In fact, the earlier the stage of the startup, the more is the value of that planning.

Here is the data:

Over the last 3 years, I had the opportunity to identify, select, coach and help 87 entrepreneurs for over 4 months each. I spent about 1.3 hours per week with each entrepreneurial team. In the last 3 years, and in 6 cohorts, there have been a total of 4834 applications we have received and reviewed. Of these my team and I have talked to about 450+ (about 10%) and have met with (for atleast 15-30 min) about 250 of these entrepreneurial teams. A total of 87 of them made it into our accelerator and that’s the sample size. Of these, 89% were from India, and 11% from the US.

There are between 10-12 sprints we run at each of our 4 month acceleration programs. Customer development, technology, product management, design, go-to-market, sales, partnerships, and others. One of the sprints we also run is called the “Operating plan” sprint. I instituted this after the first cohort, when I learned that most investors did not care so much about the “demo day pitch” as much as what the company was going to do with their investment for the next 12-18 months.

So, I put together an operating plan template. Think of this as your blueprint for execution. It would spell out what you were going to do to hire, sell, develop, fund and grow your startup. I put together a template as well to help the companies think through the plan.

It stems from your top level goal first, which depending on your stage could be – get product shipped, get customers to use it, increase usage, drive sales, increase revenue, etc. The only constraint I put was to ensure that you had one goal only. Not 3 or 5, just one.

Then you want to tie in various parts of your company to achieve that one goal.

If you had to hire engineers to build product, then that needed to be spelled out. If that then requires funding, you need to spell that out as well and so on.

So each operating plan will end up having 7-9 sub “plans” for product, development, hiring, sales, marketing, funding, etc.

This planning cycle begins in the 3rd month of our program and lasts 2-3 weeks for the entrepreneurs. During this time, many entrepreneurs are busy trying to get funding and meet investors, which means they tend to have little time for “all this other planning stuff”.

Which makes for a perfect experiment with a control group and a treatment group.

In the last 5 cohorts, I have asked and then politely urged all the entrepreneurs to participate actively in the operating plan sprint. But 50% of the cohort would get another 30 min pep talk from me on its importance.

I’d urge them over a lunch or coffee the importance of doing the plan.

I would not discourage the others from doing it, but the other group I did not spend the 30 minutes with on taking the operating plan seriously. Some of them took it seriously without my urging and cajoling and most ignored it.

Now that I have the data for 3 years, I can confidently tell you that just the act of putting together an operating plan – however poor it is, increases your chances of funding and raises valuation.

I went back to the data to look for my own biases and see if the ones that I urged were “somehow better suited to raise funding and be successful regardless of my urging” anyway, and I think I have no way to really check that at all, but I am confident that the sampling error, if any, was minimal.

Of the companies that I did the extra selling to, 69% of them raised funding within 6 months of the accelerator, compared to 31% who did not.

Even the companies that took the operating plan seriously and put what I consider a poor plan, beat the ones that did not take the operating plan seriously at all by a margin of 20 basis points.

I totally understand that funding is a weak (and only one) measure of achievement (and not of success), but I also realize that it is the metric most entrepreneurs judge an accelerator by.

So, the bottom-line is this.

If you want to achieve any form of success, creating an operating (or business) plan, even if it is poor, is better than not having one at all.