Keeping up with the Unicorns – one of the key drivers of entrepreneurs stress in the last 2 years

There’s not a day that goes by without an entrepreneur reaching out to me fairly stressed – about investors, raising a round, getting customers or hiring people. I have written before about the 3 biggest causes of stress for entrepreneurs.

I highlighted that the #1 was one of “expectations” – from peers, employees, family, etc.

At that time another issue that folks raised was one of “work-life” balance as an entrepreneur. I tend to gloss over – primarily because I believe that if you wanted the balance and it was important to you, there would be other things you’d be doing.

In the last year, thought I am noticing that “Keeping up with the Unicorns” is becoming a bigger source of stress than anything else.

I could easily dismiss this as well – there will always be startups better than you, and there will be startups worse than you, so focus on your work alone.

That, though, is a big disservice.

It is hard not to “compare” yourself to others, because the “market” for funding and financing is what you are going up against.

When you approach an investor, they have limited time and maybe limited energy to spend on due diligence, understanding and working on your company.

They evaluate this against working on another company that’s not necessarily your “direct or indirect” competitor, but another deal they can do.

Which means, you are going up against consumer Internet companies, Marketplaces, eCommerce companies, even if you are a SaaS company.

That’s the job #1.

You are trying to make your opportunity the most attractive for the investor to spend time and effort on.

So that means you are really “competing” against other startups, not only your competitors.

Which is what causes you to “Keep up with the Unicorns”.

Meaning, if you want to get investor attention – which will go to their perception of the biggest and best opportunities, then you have to “compare yourself to others” in the funding market.

That’s the cause of stress.

I don’t really have a great answer to how not to stress about it, except, it is not worth stressing about.

I’d like to say focus on good execution and telling a great story.

That’s pithy though.

The trick I have seen the best entrepreneurs do is to be very selective on the investors they choose to pitch to – based on their background, their knowledge of the space and their ability to add a lot of value.

That means more homework on your part to find, source, identify, engage and then active the right investors.

That’s the best way to relive stress – much better preparation.

Crowdfunding Market – a primer for entrepreneurs

There are over 1300 CrowdFunding websites in the world, and they have helped raise $17 Billion in 2015. Of this $11 Billion was in Debt (Lending) and the rest was Equity.

For those that don’t follow this market – Crowd Funding is when you get individuals to lend / loan / invest money in other individuals / companies / projects.

I believe this market will be a key driver of global change in the next decade and beyond. In the last few years, it has already had a great impact in the market and I suspect it will continue to do so.

Even if you don’t invest in startups, projects of small opportunities, you might have heard of Kickstarter, Indegogo, Kiva, Angel List or Donors Choose.

Crowdfunding allows normal individuals to back projects they care about, issues they consider close to their heart, buy products they have a connection with.

Kickstarter alone for e.g. has helped raise over $2 Billion in funds for almost 100K projects over 6 years.

For entrepreneurs in technology startups, there are many options including AngelList, GoFundMe and Fundable.

While it is hard to pinpoint the exact number of people participating in crowd funding campaigns, it can be safely said to be in the range of 15 to about 20 Million worldwide.

North America dominates funding raised and funders with over $9 Billion committed and raised, followed by lending in Asia and then Europe by $3 Billion each. Africa and others, round up the remaining.

Businesses and Entrepreneurs raised the most money at about $6 Billion, social causes followed by film and arts.

Typically crowd funding makes up <0.1% of any person’s investments and is not a part of their “asset allocation” in any way according to research by Massolution.

While there is no software entrepreneur’s guide to the crowd funding market that’s great, which I could recommend, I’d highly encourage you to review this Inc Magazine overview.

Over the next few days I was going to spend more time sharing what I have learned talking to a lot of people in this market, understanding the entrepreneur, crowd funding sites and investor perspectives.

I’d love to understand your questions – if there are specific questions, please mention them in the comments below and I’ll make sure to address them.

Why bad news travels faster than good news

I have been reading many brain and chemical composition related articles recently during the evenings. One of them that intrigued me was –

“Why does bad news travel faster and wider than good news”.

The Columbia Journalism Review is one of the foremost when it comes to researching this particular sub area of brain function. Pew research did an extensive research paper on this as well.

“When an event is flagged as negative by the brain, it’s stored differently and more carefully by the hippocampus.  He likens the brain to Velcro for negative experiences and Teflon for positive or neutral ones.” Rick Hanson

Take a look at all the recent news about “Unicorns fading away”. The number of articles about “Culling of the herd” – not worth linking to, or The Web Summit (Conference in Dublin) controversy.

The number of shares on either article was 3X (Three Times) that of the articles that were positive to neutral about the same topic by the same publication.

What does that say about us as individuals?

I am neither a researcher nor a psychologist, so I cannot evaluate this objectively.

I do know that I read both the pieces negative and positive about Web Summit and came away immediately questioning the pieces that were overly positive, and also questioning the ones overly negative as well.

It has also been proven to be the same with good acts and bad acts.

It takes 5 positive actions to overcome one negative action.

The net of it is, for entrepreneurs, that you will get 5 times as likely “No’s” – at the very least – as many “Yes’s”.

That’s being overly simplistic. For most entrepreneur’s I know that number may vary from 10 to 100.

What is then the best way to counter this?

Developing compassion and practicing mindfulness counters the natural negative bias of the brain.

That’s my thought for the week.

The #1 research driven methodology to growth hacking for startups

If you are into Growth Hacking – finding technology and engineering ways to grow your users via marketing techniques that involve building tools, product features, API’s etc., then you know there are multiple techniques to achieve progress,

I was at the Angel Pad demo day #9, the day before yesterday, and I learned from 3 of 13 founders the #1 technique they use to grow. Actually they all use it apparently, but I only spoke with 3.

To give you some context, the 13 companies from the program have generated over $2 million in revenues, many growing over 20% monthly. 50% were B2B, and only 1 company was older than 18 months. So, a fairly young set of startups.

The #1 technique they all adopted was “Instrumenting and Measuring their app” from day 1.

Imagine that.

I believe this to be true from my personal experience as well. Just getting on the weighing machine daily forces me to make healthy choices about my food, diet and exercise.

Growth Hacking
Growth Hacking: Credit:

The mere act of monitoring something – or measuring something makes you want to improve it – at some time.

That may be easier said than done for most companies.

There is always a push and pull between feature requests from customers and adding telemetry to your application.

Which is why the #1 tip I got from the research after talking to a few of the Angel Pad founders was –

For every 3 features they add, they put the effort to track 1 new metric on their internal dashboard.

That 3:1 ratio seemed like a good rule of thumb – I am sure your own experience will vary based on the nuances of your market, your customers and your product.

Most of the companies had an internal dashboard to track their metrics in real time.

Founders I spoke with checked their metrics often – from the obsessed – “every few minutes to an hour” to the more likely “many times a day” to the more sustainable “daily”.

The dashboard was sometimes displayed at the office in the middle of the bullpen, or their kitchen area or in other cases, a conference room, and most meetings began with a quick review of metrics.

Since metrics were always available, most entrepreneurs did not spend time debating numbers, or looking for them or pulling together a “spreadsheet”, but deciding what the numbers meant, why they went one way or another and figuring out what their course of action should be.

I found that to be revealing and enlightening.

What 2 of them told me, was that it was also great for their internal culture and orientation towards success.

It also requires maturity from the teams – both in recognizing when things are not going well and at the same time, realizing that sometimes, even taking action results in not the necessary result that you are hoping to achieve.

I would highly recommend this one technique to get you started and use the 3:1 or any other number to measure, instrument and track your users, usage and metrics.

How will startups in the Sales SaaS market behave differently than Marketing SaaS?

Yesterday I had a chance to speak at the Sales Hacker hosted conference #SalesStack15. There were about 1000 people at the conference, featuring sales people (sales development representatives, mangers and leaders) and vendors in the Sales SaaS space.

The Sales SaaS market is relatively new and interesting. While Marketing Automation SaaS (or MarTech as it has been called) has had its run from 2005 to 2015 – over 2000 companies now exist in the space and it is an over $10 Billion overall market, the Sales space is small.

About 200 to 500 companies are helping companies and Sales organizations manage their customer journey from discovery to engagement and onboarding of software, while all along trying to makes sales representatives more productive.

At a high level, if you look at LinkedIn about 20+ million people consider themselves to be in “Marketing” Roles and a similar number in “Sales” as well.

The difference is that Marketing has larger budgets to spend and manage, whereas Sales teams are larger (more people usually), but smaller out of pocket spend – meaning their program budgets are smaller.

#SalesStack15 Credit- Nancy Nardin
#SalesStack15 Credit- Nancy Nardin

There are 3 major trends ongoing in the Sales world overall.

  1. It is moving from a “software is sold” world to a “software services are purchased world”. What that means is that previously pricing, information, control was equally with the sales person and the buyer. Now buyers are in control and expect to be educated, informed and even helped to make the right decisions on what they want to buy. They discover products via word of mouth, referrals from social media or search online, way before a sales person even knows that they are looking to solve a problem.
  2. Transparency in pricing, information, knowledge from the previous trend is now causing sales people’s roles to change – from being a hard charging closer to a subtle “facilitator”. They have so much more information at the same time about the buyer available online – via social media, blogs, etc. so they can tailor their pitch to be unique and different not generic.
  3. Thanks to subscription revenues and “try before you buy”, “Freemium model” etc. it is much more easy for early stage companies to get a base of early adopters who can be “warm leads” as opposed to “cold calling” and also to ensure that sales people keep a customer happy and engaged – by usage of the software, and renewal as opposed to “sell it once and forget it”.

All these trends have lead to dramatic changes in the tools and products needed by Sales people. While Sales Force Automation systems are still the “Database of record” for the Sales Manager and Sales Leader to track opportunities, pipeline and forecasting, the key element that’s becoming more important is “Individual Sales Representative Productivity”.

Some of the Sales reps are taking things into their own hands with “BYOA” – Bring Your Own Apps and employing tools to be more productive.

Others are finding tools that their colleagues are using and still others are wandering through the maze only to find that their Email + an Excel spreadsheet is sufficing.

That’s the opportunity in the Sales SaaS market.

The Marketing Automation market enable over 10 IPO’s and a few winners – HubSpot, Eloqua, Pardot, Radian6, etc. – some were acquired – all in under 10 years for hundreds of millions of dollars.

That’s going to happen in Sales SaaS as well.

The question is which of the 100+ companies presenting yesterday will make the “winners circle” 5-7 years from now and what categories within Sales Stack will win.

That I will think about more and share over the next few days.

Many thanks to Max, my friend for having me there and my fellow panelists – Keenan, Richard and Nancy.

Google Tensor Flow: I think this will be pretty awesome with some caveats

Google announced that it will open source (Apache 2 license) a single machine (CPU with multiple GPU’s permitted) of its Machine learning software.

The software already underpins its Photos, image recognition, speech recognition in Android, Chrome, and Gmail responses, Google Translate, among other applications.

For the few that want to learn, it is available now.

This will dramatically change neural networks and intelligence overall I believe.

Until now, this was available via Azure ML from Microsoft and AWS Amazon Machine Learning, but they are both not open source.

With this new software, Google allows any software developer who wants to use Python or C++ as interfaces to train the network on their own data.

The typical use cases I see are when developers want to “try” things in their own machine and “tinker” at first.

The applications to use Tensor flow are pretty extensive.

Many SaaS companies wanting to do predictive Churn analysis can now do this internally, as can eCommerce companies to build recommendation engines as well.

If you are a developer I’d highly recommend you download the PIP and install it on a Linux distribution on your local machine. Or if you have a Mac, Homebrew and install.

Divisional ascendancy applied to Facebook – how to disrupt the social network

Divisional ascendancy is the official term (more polished) for “divide and conquer”. In politics, sociology and economics, this term applies to breaking up larger concentrations of power into little pieces and tackling them individually.

When a startup is trying to “disrupt” a large market or has a big competitor, the best approach is to break up that larger company’s products, strategy, marketing muscle or sales approach down into its component parts.

Then you want to either:

a) pick on the part that the larger company is the weakest at or

b) pick the part that the larger company is ignoring or

c) pick the part that has the most margins (profit) or

d) pick the part that the larger company thinks is “safe” from threats.

Of course, it goes without saying that if you do this only in the context of the competition (the larger company) and not your customers (or the market in general) – you will fail.

Most larger companies are really a bunch of smaller organizations. That’s the first observation. Very rarely is the culture of larger companies so strong, coherent and consistent that it permeates everything they do and every organization that exists – which is why you see most of the “old guard” in technology unable to innovate, dominate and tackle new markets.

As an example, take a company with multiple products, and multiple channels.

While channel conflict is obvious -when the “partner” team wants to get business to the channel vs. the direct sales team wants to take that business for themselves, product conflict is less so.

Product conflict is when the company plays both the coach (platform) and the player (application) roles.

Take the example of Facebook – they’d like to be a platform, so the developer evangelism team goes out to recruit partners to build apps. Some of those apps become so big and large that they can become bigger than the company itself. When the platform teams notice that, they understand they are “leaving money on the table” for others to monetize.

Strategic or otherwise, they will end up building the app to compete with the partners.

This is a crucial point, that startups can exploit.

Sometimes (when the culture of the company is fairly weak) the two sides (platform and apps) tend to disagree and if there is no strong alignment, or clear answer if it is better to be either, then things go on for a while without clarity from the company. Which allows startups to pick up mindshare and hopefully market share.

In a particular observation about Facebook, I notice how on my mobile it has become an “Instagram” – very heavy on pictures / photo / video heavy and very text / links light.

They are ignoring text in favor of images is my guess, which makes sense for them. If you were to build a pure text, link sharing app for mobile among “friends”, which they are ignoring, I suspect you can disrupt their mojo.

The channel conflict happens more often. In many cases the Business Development team ends up helping partners to sell and fulfill on their “platform”. Left unchecked, they might end up undermining the direct sales team from winning deals directly.

This is quite possibly the best way to disrupt a large B2B company.

Historically, divisionally ascendancy has been the downfall of a few larger software companies – more companies die because of either losing focus on their customer or changing technology under pining or market demand.

The way startups can use this is to convert the battle against a larger company into smaller pieces.

The thing I have noticed, in B2B software companies among the ones I have seen, is that the easiest is to pick the areas the companies are weakest at (which makes sense) and hardest to pick are the areas where the larger company makes the most margin – hence has the most incentive to protect.

The most counterintuitive thing I have noticed is that where companies make the most margin is also where they tend to be the weakest.

The way it works is that your product is so disruptive that they will do anything to protect that margin, including giving away a part of their product free for a certain period – to prevent you from gaining any market share.

So, pick the one they are ignoring and then work your way from there. To do this, you will need to figure out a way to monetize the “ignored” part – where in lies the challenge.

The personal blog of Mukund Mohan


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