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Transcript of Entrepreneurial Sales
Professor Chuck Eesley
1. Debrief: Gordon Eubanks/David Cummins
2. IMVU Case discussion
3. Guest Speakers - Konstantin Guerickie, Scott Reynolds
4. Time for group work
Lunch: Catherine Swanson, Alex Fryer, Eric Case (mentor), Akshay Rustagi, Rick Ramirez
Key driver of global economic growth Different type of process than starting a small businessAdvancements can be either … Revolutionary (“brave new world”) Evolutionary/Incremental (“faster, better, cheaper”)
Major Differences Between Internet and Biomedical Opportunities
1.) What is the customer development and lean startup approach?
2.) How is it applied in different sectors?
3.) How is it different from traditional methodologies and what are the risks/downsides?
Electronic Brainstorming and Group Size. R. Brent Gallupe, Alan R. Dennis, William H. Cooper, Joseph S. Valacich, Lana M. Bastianutti, Jay F. Nunamaker, Jr. Source: The Academy of Management Journal, Vol. 35, No. 2 (Jun., 1992), pp. 350-369
Spencer Tall, Konstantin Guericke, Scott Reynolds
Managing Director, Allegis Capital
General Partner & Co-Founder, APV Technology Partners
Co-Founder Asia Pacific Ventures
14 Years Venture Capital Experience
Former Operating Executive (Asia and US)
serves on the boards of Allegiance, EMN8, IMVU, Solera Networks and Symplified.
investments include E.piphany (EPNY), Web TV (acquired by MSFT), and One Touch Systems (acquired by Hughes Satellite).
Mr. Tall was a co-founder and General Partner with APV Technology Partners for three funds over 10 years.
Prior to APV, Mr. Tall, fluent in Japanese, oversaw U.S. sales operations for Marubun Corporation, a Japan-based billion dollar components trading company.
Bachelor of Science degree in Political Science and Japanese from BYU.
a social architect with a passion for exploring the intersection of psychology, sociology and computing.
My functional experience spans product management, marketing, sales, international and business development. Most of my industry experience is in consumer Internet-based communication services and social networking, but my background also includes on-demand business software (SaaS), graphics and rich media.
My technical concentrations at Stanford were in artificial intelligence and reasoning under uncertainty. I grew up in a small town in northern Germany. I have studied, lived and worked in Japan and traveled extensively in South-East Asia.
My proudest professional accomplishment so far is co-founding LinkedIn, but I also believe you learn at least as much from startups that didn't work out as well.
Managing Director and Director of Product Management at Bloom Energy
GE Solar, Medsite
UC Berkeley, MBA; Hamilton College, BA, Government, Economics
IMVU Case Slides
Venture performance = product development + customer development + team building + luck
How do we know what product to build and what customer to target?
Venture performance = learning rate + product development + customer development + team + luck
Unknown competitive dynamics
Known competitive dynamics
Entrepreneurship = discovery process
Entrepreneurship is a search/learning process
Startup Transition Large Co.
Search for a business
Execute Known Business Model
Business model canvas/diagram
Where is the risk?
How do we go about reducing it?
Where should you begin?
Think about your own venture...
Which aspect of your business model is the most unknown? The most novel or risky? The most important to get right?
In Startups, the steps of:
1) Realizing you had a failed experiment or false hypothesis
2) Trying again with a new hypothesis
... is known as the
Traditional Product Development Model
How do you do background research?
Facts are outside of your building!
Talk to customers
Talk to industry veterans (mentors)
Talk to potential partners
How do you design experiments?
Consider the ordering
Lowest cost, quickest way to verify/falsify the hypothesis
Could be to build the website and show it to people
Could be to buy Google adwords
Could be to ask for money
Why is this so difficult?
What happens when the hypothesis fails?
Requires being both flexible and rigid
Optimistic and paranoid
KEITH M. HMIELESKI & ROBERT A. BARON. 2009. ENTREPRENEURS’ OPTIMISM AND NEW VENTURE PERFORMANCE: A SOCIAL COGNITIVE PERSPECTIVE. Academy of Management Journal.
That customer didn't get it!
Find a different one!
Something was wrong in our hypothesis
But we didn't fail, we learned something!
Sales is a Search
In some ways, listening to customers is obvious advice, but...
"If I had asked people what they wanted, they would have said faster horses." - attributed to Henry Ford
Radical new products (i.e., the computer)
Several notions mixed up together:
Lean / raise minimal funding
Don't spend frivolously
But slow down . . .
Traction – by Steve Browne
Goal is a replicable, scalable process before founders delegate sales
The three qualifying questions expanded in the chapter on qualifying will help you to target your market:
Why buy anything?
Why buy our product?
Why buy now?
Registrations (Customers who completed the registration process during the month)
Activations (Customers who had activity 3 to 10 days after they registered. Measures only customers that registered during that month)
Retained 30+ Days
Retained 30+/ Total Actives %
Retained 90+ Days
Retained 90+/Total Actives %
Paying Customers (How many customers made $ purchases that month)
Paying/(Activations + Retained 30+)
Months of cash left
Cost Per Acquisition Paid
Cost Per Acquisition Net
Viral Acquisition Ratio
Total Unique Visitors
Total Page Views
While good concepts and engineering are essential, very little happens in the world without the concurrence of other people, and the first essential is getting them to hear you, understand you, and then agree with you.
What is in YOUR mind matters little, if it does not reach and penetrate THEIR minds.
--David Morgenthaler, Founder of Morgenthaler Ventures
1. Convinces the “target person” to schedule a longer meeting with you
2. Enables the “target person” to convince others to become interested
3. Resonates; Demonstrates sincerity
4. Communicates a sense of value, empathy, and urgency.
5. Quantifies the value proposition clearly.
Combines thorough Sales and Market Research
Requires no more than 1-2 minutes (starting with the problem you solve).
“All I need to do is make the presentation and give the demo.
The product is awesome; it’ll blow them away.
As soon as I get in the door and explain the technology, they’ll buy.”
“When you can measure what you are speaking about and express it in
numbers, you know something about it; When you can not measure it…
your knowledge is meager and unsatisfactory.” -Lord Kelvin
Quantify the benefits: to understand customers’ economic benefit, you
need to get in their heads and model the effect on their business of
using your product.
Bear in mind that the forces of evil which fight against innovation
are rampant, devious, and well-organized.
To justify the risk of change, and of being a small company, you must
be at least 5X faster, 5X better, and 5X cheaper than the known
Understand how they are currently solving the problem.
Understand how their work processes will change by using your product.
Calculate the change. It must deliver payback.
Your USER may be different from your paying CUSTOMER (Search ads)
A definition of “Sales”:
Understanding Customer Needs -- and Matching Products to Those Needs.
Identifying/Quantifying Current Pain
Customers/investors want a relationship with you and your company.
Customers will feel they have a relationship with you only when they believe that you understand their needs, their situation, their vision, their constraints, their corporate goals, and their career goals.
Sales/Lead Generation Experiments
Lets take a look at Ksplice again and this time think about
the differences between their presentation and what I'd like to see
from your OAP and OEP presentations...
What should they have done differently?
Creating Customer Interview Templates
Activity: Interviewing partner (demo it)
Find a partner, interview to discover their ultimate vacation experience.
Examples, lessons learned?
Prototype product (paper)
Fill in business model canvas.