5 Killer Skills for Non technical Founders

The 5 most important skills you need to master if you are a non-technical (developer) startup cofounder

Over the last few years, I have met and connected with over 55% of founders who are non-technical (actually most are technical, but they are not developers). The standard advice I would give them was their role was to acquire users (or customers):

A plan to acquire, nurture and grow users (customers) with as little money as possible.

After spending time thinking about this over the last few days, I think there is more than just user acquisition that non-technical founders can help the startup with. There are 7 skills (in no ordered priority) that I think will help the company tremendously.

5 Killer Skills for Non technical Founders

5 Killer Skills for Non technical Founders

1. User acquisition and customer development. Getting early traction is critical and in most cases more important than most other things at your startup. While it is becoming easier to build and create apps and websites, getting early users who can give you feedback on the product and become fans and champions is hard. Understanding user behavior and motivations, spending time learning about how they would use the product is critical.

2. Generating shareable content (writing great headlines, producing videos, podcasting, etc.). While content is king, the more important skill is writing killer headlines. You need good content, but without great headlines, great content is useless. Getting awareness for your startup or product without the money early on to spend on advertising, is crucial to early traction and building your brand.

3. Learning about techniques to generate awareness (building connections with Press, Bloggers and Influencers) among customers and users. Besides generating content, figuring out ways to get more of your customers to share the product with new customers (increasing the virality coefficient) is a key skill. The best way to generate awareness among potential customers is to get existing customers to say good things about the product. The next step is getting them to share their experiences with others.

4. Cultivating and managing relationships with a strong potential investor pool. Generating enough inbound inquiries because you built a great product and got good press and coverage around it is one of the top things you need to be skilled at doing. Ensuring that you have a good product is half the battle. The next step is to get customers. To help you scale, would then require an early set of investors. Building investor relationships, targeting the right early stage funding sources is a crucial skill.

5. Signing up beta customers, creating activity flows and user models, building the wireframes. Even if you are not technical, you can build wireframes using standard tools to share the concept with users during your customer development phase. If all you have are PowerPoint skills, use them. If you understand the domain and can build the customer use scenarios, I’d build those.

There are some other “tactical” items that fall into the purview of the non-developer cofounder including the skills to negotiate contracts, get as many “free” services as possible, apply to many freely available programs such as accelerators, pitch showcases, etc., but those are secondary.

Over the next few days I will outline each of these in detail so I can help non-technical cofounders.

If you are considering a startup blog, focus on “more” insights, not a “better” narrative

Over the last 4 months as many of you have noticed I have been writing a blog post daily. That’s resulted in 120+ blog posts and a few insights on what I learned by blogging daily.

There are many things I have learned about the writing process and very little about building a strong readership base. The number one thing that’s changed over the last few years is that most people seem to care about the number of unique new things (insights) they have access to and reducing the amount of time spent gaining those insights.

I guess that’s not “new” news or insightful, but it is the explanation for the success of tweetstorms.

Made popular by Marc Andreessen, who had a blog a few years ago and quite possibly figured out this inadvertently or by design.

Here is what I mean by concentrate on more but smaller pieces of insights vs. One big insight but with a great narrative.

Thanks to the mobile phone (largely screen size) and twitter, there is so little time for people to read long form articles that the number of long form pieces being read (and also the number of books) is reducing dramatically.

At the same time, people prefer to read 10 individual, standalone sentences that are 140 characters or less than read one big paragraph with 10 lines or 1400 characters.

Giving a lot of context, adding many superfluous words is what a lot of writers do. The readers, though seem to have no more time or patience for it.

The implications for those wanting to make money writing a book (non fiction) or a blog are pretty big.

Here are some examples of things that work.

1. Lists – take any article you are planning to write and make it a list with some visuals. That works.

2. Instead of long paragraphs, with 5-7 sentences and over 70-100 words, focus on writing 1 sentence.

3. Video or Podcast: Focus on getting your content in an audio or video format with a 5 min solution instead of writing. The time to read an entire 750 word blog post might be 5-6 minutes and it may be the same amount of time to read 20 tweets, but readers seem to prefer the latter.

The other thing that works is attention grabbing content shock.

The real disruption from the cloud is yet to come for Indian IT services companies

About 60% of revenue for software vendors (for businesses) is custom and 40% ($135 Billion, 2014) of it is packaged. Over the last 10 years, the trend has shifted from custom  to packaged (Saas). With the rise of cloud deployment the time to install, upgrade and customize software has reduced dramatically as well. Finally with cloud deployments, the number of people needed to manage servers, patch and upgrade systems has dramatically gone down.

These 3 main factors are the reasons why there is a lesser need for software developers, system administrators and systems integrators.

The WSJ has a piece on Indian Outsourcing firms changing direction thanks to cloud. The piece talks about how larger customers of Indian outsourcing firms are no longer signing up for large contracts to outsource their work.

The Indian outsourcing market has grown over the last 20 years from less than $1 Billion to over $120 Billion in 2014. There were 5 major drivers of this work as large IT organizations moved their back office work to India.

1. Support and maintenance of existing custom software. – 30% of revenues

2. Customization, deployment and installation of package software (SAP, Oracle, Siebel, etc.) – 25%

3. Remote managed services – managing, hosting, upgrading and patching systems – 20%

4. Business process outsourcing such as legal, administrative, and finance and accounting – 15%

5. Call center services and customer support – 10%.

In the next 10 years, there are expected to be over 10,000 SaaS companies catering to needs of most all sub segments of the market and niche user spaces.

Thanks to SaaS, the need for custom software is going down.

The rise of cloud-deployed SaaS also means fewer companies need as many people to upgrade or “deploy” packaged software. Customization is still needed, but much less so.

The rise of IaaS (Infrastructure as a Service) means the need for remote managed services is also reducing.

Many of the call center processes are being automated with machine learning, Artificial intelligence and data science. Which means that the need for call center services is reducing but that’s also because the customer experience was poor compared to having folks in the US support customers locally.

What does this mean for Indian IT outsourcing? Will they evolve or perish?

The large companies will try to morph and grow (many are struggling to do so), into full service providers with a focus on consulting (which needs fewer, but higher-end resources), data science and cloud managed hosting services.

Many of the resources will need to be retrained and redeployed.

The real disruption in IT outsourcing to India over the next 10 years is coming. The challenge that’s being faced by these companies is to figure out how to disrupt the larger systems integration firms that are migrating to consulting and complete IT outsourcing as opposed to software development, maintenance and monitoring.

5 strategic items to consider before you get acqui-hired #napkinStage

In the last 3 years at Microsoft Ventures, 7 teams have been “acqui-hired”. 2 were from India, 5 in the US. I had a chance to be up close and see the action, the challenges, the frustration, the joy and the sigh of relief that the entrepreneurs face with these deals.

Acqui-hires fall into 2 buckets – those that save face and those that are incrementally progressive.

While many of the acqui-hires seem like a face-saving opportunity for the founders, they are pretty traumatic for the employees and almost always a poor deal for the angel investors, with exceptions.

The incrementally-progressive ones land the early employees great jobs in the new entity, provide a small return for the investors and allow the founders to get a small win under their belt.

I think about acqui-hires with the focus on the 3 main constituents – the early employees, the advisers and investors and finally the founders.

 

Acquihire Model and Strategy

Acquihire Model and Strategy

You could debate who comes first and who should be considered later, so this is only one model for thinking about this.

1. Return on Risk (ROR) for early employees. Most of your employees (if you hired great folks who were already in other great companies) have taken some form of risk to come and join your startup. Assuming that many left opportunities that were considered less risky than yours, I suspect they would expect a sufficient return on the risk taken. Most good employees, will get an offer from your acquirer, which, I think is the main reason why they are acquiring your company in the first place. The best way to give them a return on risk is to help them “true up” on their salaries they forwent.

2. Return on Time (ROT) for the first few hires. In most acqui-hires, I have seen that the acquiring company does not value the product / service that has been built, but instead likes the team. Building a new team who work well together takes time and energy, which is why they chose to acquire a team instead. A good way to help your early employees a return on their time spent (and you as well to hire, recruit and build the team) is typically via a “sign on bonus” for the entire team.

3. Return on Investment (ROI) for your early investors: If you take money, it should your responsibility to return it if you make some money. While many founders feel that angel investors fully know the risk they undertake when they invest in startups, the responsibility to return money does not go away when things dont work out. What I have found is that most founders will end up going back to being founders again and if you leave a trail of destruction or burn bridges when you do your first startup, it will get much harder to raise money for the next one. If you can help investors get as much money back or return their invested capital, then you will go a long way in terms of building credibility for your next venture.

4. Return on Equity (ROE) for advisers. Early advisers dont invest money, but typically their time. While you might feel less responsible towards them since “they did not lose money”, they did give you time, some connections, advice and mentorship, I think you should try and get some for of return for their Sweat Equity. I have seen one or two founders, taking a portion of their “earn out” to buy out the adviser shares that have been vested. You dont have to do this, but it does help.

5. Return on Opportunity (ROO) for founders. While most founders are relieved just with any exit (given that many acqui-hires were to save certain closure) I do think that founder return is important. If you do get an opportunity to get a good package of stock options and sign on bonus from your acquiring company, I’d highly recommend you negotiate for that.

I have found that in 4 of the 7 deals that happened, the acquiring company would have gladly paid an extra $100K – $250K just so the various parties involved would be “made whole”. In many cases the founders just did not ask since they were desperate to get the deal done.

My only suggestion to you as a founder is to ask if you can. If there is a good alignment with the acquiring company and they wish to keep all the employees for a longer time, they would gladly negotiate some more money to help make the deal more attractive to all parties.

The reason for the $100K to $250K number is simple. If your team is 3-5 people, the cost of hiring a team alone will be covered at those numbers. So, in most cases, it will be a win-win for the company.

#napkinStage customer service at startups is becoming the sales team

While sales people are becoming marketers at #napkinStage companies and marketers are becoming more data driven product managers, customer service managers are becoming the best sales people.

Changing Role of the SaaS Customer Service Professional

Changing Role of the SaaS Customer Service Professional

When you move from a market, sell, support model of software sales to a market, analyze and sell model of SaaS products, it becomes clear that the best things SaaS companies do is:

1. Build a good product segmented by users. (Product, Engineering)

2. Ensure that their target audience know about their products. (Marketing)

3. Educate potential customers about the product to help them “try” the product. (Sales)

4. Build conversion to paid customer within the product. (Product, Marketing)

5. Help increase engagement (more product usage) and reduce churn i.e. losing customers. (Customer Service)

The role of the customer service teams is increasingly becoming one of reducing churn, since that kills most SaaS business model’s financials.

It is so hard to acquire new customers at scale and cost, so when you have a good, paying customer the objective should be to help them use the product effectively and get the most value so they get the ROI and are extremely happy.

There are 3 important functions that belonged to sales – reducing customer churn, engaging users, and upselling, now belong to customer service.

Previously, about 10 years ago, most customer service professionals were measured by how quickly they resolved customer support calls, how few the escalations were and how long they were on the call.

These are now dramatically changed. Proactive customer outreach and predicting churn – to reach out to customers before they cancel is now the norm for most customer support teams.

Most SaaS products I know are also build an integration with other products such as #slack or other chat solutions to help customer service professionals resolve questions and support the customer within the product.

Many years ago I’d remember our customer service VP would measure and incent reps on how quickly they got customers off the phone.

No longer.

Now, the longer you keep the customer engaged and talking, the likely you are to uncover more opportunities to up sell and cross sell other products.

Customer service is more a sales function now, than a support function.

#NapingStage marketing people at startups are becoming more product managers than brand builders

Yesterday we talked about the changing nature of the sales person’s role at the #napkinStage of a startup. While many people still prefer the “closer” to the pipeline builder, I think if you have a great product that customers can try, use and then buy you dont need to “close”. Customers will “buy” or “close” themselves. Enterprise and SMB software use to be “sold” not “bought” – that’s now changed. Only if you have a poor quality product or an expensive one, do you need to “force” people to buy.

Today I am going to talk about the role of Marketing folks in the #NapkinStage of a startup. While many startups may not hire a marketing person early, I think the role of the “marketer” is being performed by someone who is responsible for “getting traction”.

10 years ago, the Marketing person at a startup was focused on building analyst relations, attending and participating at events and building a “brand”. They spent a lot of time with agencies building the right creatives, making sure they had good “brochures”, giveaways and promotional content.

Changing Role of the SaaS Marketing Professional

Changing Role of the SaaS Marketing Professional

The marketing person’s role is now more like an early stage product manager – I call them opportunity managers than product managers actually.

If you have a good product, then it sells itself in a 15 min demo (or a 3 min video). Yesterday, one of our companies (Beagel) told me about how they have a 70% conversion to paid customers in less than 30 min, so this is not a rarity.

The role if marketing manager is now focused a lot more on metrics like Customer LifeTime Value (LTV), CAC (Customer Acquisition Costs) and CTR (Click Through Rate), then results of “Brand surveys”, or “generated leads” and analyst reviews. They are becoming more data driven.

Attending events, writing whitepapers and delivering webinars is being replaced by creative copy writing – SEO, engaging on social media (Twitter, etc.).

With this change it is becoming obvious that most marketing is now focused on measurable outcomes associated with revenues, business and product than purely brand.

Surprisingly, even at larger companies (such as Microsoft), I am finding that most Marketing folks are coming to learn about these techniques of “Lean marketing” from the startups at our accelerator.

Tomorrow I will talk about the changing role of the #NapkinStage development team and how they are becoming more Customer service organizations than product engineering.

Most early sales people at startups are becoming more marketers than closers

Over the last 6-7 months I have been helping #napkinStage companies hire their first few sales people to grow from the founders selling the product to growing a sustainable team to help sell.

The most important thing I have noticed is that most of the sales people are learning the science and art of marketing – building an email list, engaging on social media, writing short opinion pieces on trends, etc.

The primary reason is that most of the sales folks at startups have to build their funnel first, and most of them have few relationships or existing customers to get referral customers from.

10 years ago, or even 20 years ago, most of the techniques sales people used to fill their funnel was “cold calling” or “smile and dial”. There were few emails as well, but largely attending events to network and cold calling were the prevalent strategies.

Now targeted emails have replaced cold calling. Initial connection on social media – Twitter, LinkedIn have replaced connecting at an event. Writing a blog post or participating on a podcast have replaced sending PDF files of marketing collateral.

The role of the sales person as a closer is becoming less relevant now, and their role as a facilitator is becoming more important. The effective sales professionals I know are learning the art and science of coordinating a concerted campaign to get access to individuals within an account who can help become champions at a prospect.

Changing Role of the SaaS Sales Professional

Changing Role of the SaaS Sales Professional

Sales people are becoming more “industry experts” and learning about events prospects should be attending, having an opinion on current trends and curating content that they believe will be useful for their prospects.

That used to be the role of the marketing person.

In tomorrow’s post I will examine the changed role of the marketing person. Their roles are moving from more being more art and creative to science and data driven.