He has posted the full transcript on his blog at “Sean Murphy on the First Dozen Enterprise Customers” here are two questions to give you a flavor:

yegg: What is your role exactly, i.e. when do you typically get involved and what are your typical responsibilities?

skmurphy: So, we get called in a variety of places. Sometimes folks that are trying to come together will contact us and we’ll help them with formation. We’ll refer them to attorneys, accountants, naming experts… Often they are underway: they’ve made a couple of sales but they didn’t realize why they were successful or what they are not doing. Sometimes they are just pretty close to giving up and they are trying to figure out should they go on or not.

It’s normally early market issues: they typically have fewer than six paying customers. We have worked with some larger firms that are doing new product introduction where they have a well-established product but they’ve “lost the recipe” for introducing a new product. And we’ve worked in a couple of turnaround situations where a new CEO has come in who is trying to figure out how to take with the technology in hand and find a market for it.

In most cases our model is the “sell what you have.”

yegg: OK, so let’s walk through an example. How do you help a team get that first customer?

skmurphy: Most of the time it’s going to be somebody that either they know or that knows somebody they know, or somebody that we know or knows somebody that we know. For the most part our clients are going into a market that they understand with technology that they have developed. We help them make a list of every project they’ve worked on and everyone they’ve worked with. They reach out and say, “Here is what we are doing, do you know somebody we should talk to that makes sense? ”

People who’ve developed expertise by working in a field for a while are typically able to get an initial meeting–cup of coffee or lunch, these kinds of things. Sometimes we encourage them to shift to a different market because we find out that the technology has more applicability and offers more value there.

Let me try and zoom in just a little bit more: one of the first things we help them with is to put together what we call a lunch pitch. This is a single piece of paper that has five to ten bullets and a perhaps a visual that helps them focus the conversation making sure they understand the prospect’s problem. The early conversations are all about exploring the prospect’s problem and pain points.

• Watch your cash.
• Pick founders carefully.
• Guard your time.
• Decide with data.
• Accept imperfect data.
• Protect your health.
• Build a brand.

See also “Dharmesh Shah’s Pithy Thoughts for Startup Co-Founders”

Ed Weissman added these seven when it was picked up on Hacker News

• Find a customer.
• Satisfy their needs.
• Get their money.
• Use their feedback.
• Improve your software.
• Hit your deadlines.
• Never give up.

See also “Ed Weissman on B2B Opportunities” and Part 2

Here are seven I extracted and boiled down from the Cluetrain Manifesto

• Markets are conversations.
• Markets are human.
• Networked markets self-organize.
• De-cloak, get personal.
• Talk with customers.
• Listen to customers.
• Share community concerns.

My contributions, none of which are original.  I like all of the above as well, these are meant to address additional areas:

• Go ugly early.
• Relationships not transactions.
• Amplify positive deviance.
• Appreciate your prospects.
• Cultivate and coordinate.
• Nurture your community.
• Understand learning curve.

No good links for learning curve.  I need to blog about learning curve effects, both in customer sites and their importance in considering competitive posture.  See also Self-Mastery, Expertise, Connections, and Perseverance.

• Define your hypotheses
• Leave the BatCave
• Test your hypotheses
• Form Advisory Board
• Understand Root Cause

In one demo of our flagship product to a major semiconductor vendor there were two of us technical support folks giving the demo, a sales person, and one of the founders–and architect of the product–facing off against four engineering managers who were trying to decide whether to start a formal evaluation. This was their second demo and we were getting into it much more deeply.

I can’t remember what the exact remark was, perhaps something about how a feature had been poorly implemented and  should have been done a different way. My temptation was to ask  “how would that help you on your designs” but the founder stood up and went into a short but animated speech about all of the really good reasons why the feature had been implemented that way. The demo proceeded somewhat uneventfully from that point with the lead manager from the prospect saying something to the effect of “You have given us a lot to think about, give us a chance to discuss this and get back to you.”

I was not sophisticated (or yet cynical enough) to understand that they would not be calling back. I was talking about it afterward with the other support person and I still remember his critique

“Tim reacted like that guy was calling his baby ugly didn’t he? He shut down their interest in working with us.”

And it’s a phrase I have recycled many times about defensive instead of appreciative reactions to customer suggestions or criticism during a demo or a presentation.

Here are four other posts that elaborate in different ways on the challenge of listening to prospect’s criticism.

• “Getting Early Feedback“
• “Best Way to Get Feedback from Early Customers is a Conversation“
• “Focus on Your Prospect’s Pain, Not The Brilliance Of Your Product Idea“
• “In the Beginning…The Founders are the Business.“

Dharmesh Shah offers a great perspective in “4 Quick Tips on Raising Startup Funding Without A Plan Or A PowerPoint”

Accept That Your Baby Is Ugly: Just like most parents think they have beautiful babies, most entrepreneurs think they have beautiful startups. In reality, just about all startups are ugly in the early days. Don’t spend time trying to explain to others why your startup baby is beautiful. It’s not. Instead, spend energy explaining why your baby is going to grow up into something that’s beautiful. Describe how you’re going to tackle the problem of building the product, finding customers, dealing with support, etc.

I did this with the DreamSimplicity folks last month. It’s a chart I have been drawing in various customer meetings for the last several years or so and they thought it would make for a good short video. The challenge was lighting the whiteboard appropriately.  I think it came out well.

I welcome any feedback or suggestions for other topics. I will post a transcript next week.

I want to talk to you today about some of the challenges you may be facing with technology adoption.  With getting users to try and adopt your technology.  So in this chalk talk, I want to talk about how you get customers to try out your technology and use it.

Let’s assume that this is your prospect’s status quo.  And this way is the way they want to go.  This is more profitability.  This is more productivity.  General goodness.  With your solution,  you should be able to move them to a higher level of performance, higher level of profitability.  This difference is the benefit you’re promising.

So the question you’re really trying to figure out is, based on an analysis of where they are, is this where they’d like to be?  The most likely answer, optimistically, is yes.  In fact, “How do we get there? How do I get this into production?  How long it take?  What’s involved?”

So, one transition curve might look something like this.  Where they have to invest time, people time, focus, dollars.  And that takes away from their current status quo.  But that investment transforms the way they’re working to allow them to get to this higher level of performance.

However, when they look at this chart, when they hear this story from you, they make a couple of adjustments in terms of how they calculate this.  First of all, they assume that the costs are actually going to be higher, usually a little worse than you’re talking about.  Secondly, they assume that the benefits are not going to be as high.  So when they do a cost benefit calculation, they may come in at half or a third of what you’re promising them.  Your temptation is to attack this by adding more features, by doing more for them, by essentially promising them a higher level of benefit.  Say, “Well, what if we could do this for you?”  Right?

The problem with that is that your transition now looks like this.   There’s actually more cost involved. A bigger problem with this is that the time to get back to status quo has now been lengthened.  And as long they’re below this line they’ve made themselves worse off.  They put themselves at risk.  They put their careers at risk in larger companies.  This is a proxy for the amount of risk in decision to work with you.  And so what you’ve done is, you may not have substantially affected the cost benefit ratio but, you clearly added to the risk.  If Plan A was not acceptable, this new plan is probably less acceptable.

So let’s take another approach.  Let’s look at a different way to solve this problem.

So here’s our old friend, the prospect’s status quo.  They’re still trying to go up.  Still trying to get to this benefit that you promised them.  And here was the plan that you proposed.  Instead, break it up into phases.  Now, we’ve got smaller amount of cost.  They can look at this first transition and maybe this is just what you can do for them in two hours.   Maybe you can come in, take some data that’s readily available, and demonstrate a benefit.  Now they can judge the total curve by what you are able to do in a smaller amount of time.  Maybe this is a pilot project, maybe this is more than two hours, but this is not a bad approach.

Now, all they’ve got to bet is a small amount of risk.  See if they get somewhere near where you promised them.  If that works, they’ll likely take step two and step three.   So you’ve got an easy way to get them to move up and, they are more likely to take the first step.  Once they take the first step, if what you’ve told them is true, they’re more likely to move up.  So think about breaking up transition plans into three to five phases.

So we’ve talked a little bit today about how do you look at the technology adoption problem.   This is where we spend most of our time with clients.  We help them find early customers and early revenue.

This has been Sean Murphy from SKMurphy.  Thank you very much.

+ + +

“I don’t watch metrics on a daily basis because I don’t make metrics-based decisions on a daily basis”
Patrick Mackenzie

From “Back Office Exposed: Bingo Card Creator” an interview with Patrick Mackenzie

Q: Can you share the key metrics you watch on a daily basis? Why are they important to you?

A: I have published a variety of stats but I don’t watch metrics on a daily basis because I don’t make metrics-based decisions on a daily basis, and absent making decisions watching metrics is only as productive as playing WoW.

+ + +

“I used to think I had ambition…but now I’m not so sure. It may have been only discontent. They’re easily confused.”
Rachel Field

+ + +

“Late to bed, and late to rise, makes a man sick, poor, and stupid.”
Goodman Ace

+ + +

“No man is rich whose expenditure exceeds his means; and no one is poor whose income exceeds his outgoings.”
Thomas Chandler Haliburton

+ + +

“The point of forecasting is not to attempt illusory certainty, but to identify the full range of possible outcomes.”
Paul Saffo

From his blog entry for July 26, 2008:  “Strong Opinions, Weakly Held” I offered additional commentary in “Paul Saffo: Forecasting is Strong Opinions, Weakly Held” I am a big fan of Paul Saffo and have blogged about him in these posts:

• Paul Saffo: “Best Strategy is Ready Fire Steer”
• What Happens When 70 EDA Blogs Become 500 in 2011
• Another Perspective on Paul Saffo’s Talk Aug 28
• Paul Saffo on Forecasting Innovation in Silicon Valley
• Paul Saffo at Churchill Club Breakfast Tue Aug 28

+ + +

“The trouble with our times is that the future is not what it used to be.”
Paul Valery

I used this post in a postscript to “Strong Opinions, Weakly Held” I thought that it neatly summarized the

“entrepreneur’s perpetual challenge: we have to let go of our nostalgia for our imagined (or anticipated) future and deal with the real options that we have created or are otherwise available to us.”

+ + +

“The only real training for leadership is leadership.”
Anthony Jay

+ + +

“No man ever steps in the same river twice, for it’s not the same river and he’s not the same man.”
Heraclitus

+ + +

“It is good to have an end to journey toward; but it is the journey that matters, in the end.”
Ursula K. LeGuin

+ + +

“I heartily accept the motto, ‘That government is best which governs least’; and I should like to see it acted up to more rapidly and systematically.”
Henry David Thoreau “On Civil Disobedience“

The Mightyverse blog offers this overview of the service:

Mightyverse is for people interested in language. We are building a database of words, phrases, and sentences translated from one language to another, including jokes, slang, lyrics, localisms, technical terms — anything you can imagine expressing.

Earlier Sarah was one of the co-founders of CoSA, The Company of Science & Art. The founders consulted part-time using their own software libraries to bootstrap a product business. This led to the creation of After Effects (acquired by Aldus, and subsequently Adobe).

When:  9am to 10:30am Where: Boudin Bakery, Embarcadero 4

• Cost: No Charge
• When: Thursday, September 23, 2010 12:00 PM – 12:45 PM PDT
• Register: https://www2.gotomeeting.com/register/151449787

I will outline some important ways to monitor information about your business and industry on the web. The web has become the primary medium of business communication and information gathering: it is imperative that you learn to monitor new developments and relevant events for your job or business. We will explore a range of tools and time saving tips to keep abreast within your industry of clients, competitors, and relevant developments. This session will explore:

• Popular Feed Readers
• How they can help you stay current
• Limitations and Shortcomings
• Demo of the tools including
  • Google Alerts
  • Google Reader
  • Netvibes
  • Infominder
  • Eqentia

Some related blog posts:

• Theresa Shafer’s “Survey of Personalized News Aggregators“
• SKMurphy’s EDA Knowledge Portal Announcement
• Dorai Thodla on “Information and Intelligence“

This is a great overview by Dorai, I like his his five phase model for intelligence gathering and will address the first two–discovery and tracking–in my presentation:

There are about five stages in this process. This is a spiral model where you continuously enhance/refine every step based on what you learn from other steps.

1. Discovery – Discovering Relevant sources of Information
2. Tracking – Continuously monitoring these sources and discovering more in the process.
3. Filtering – Filtering the noise and gaining the information most relevant to your business
4. Extracting – Transforming information from free form into some kind of useful structure to distribute internally.
5. Sharing – Sharing information at different levels of granularity, refining it and deriving actionable intelligence.

1. James Shonk’s “Working in Teams” is  a great place to start (and available used for a penny plus shipping on Amazon).
2. Michael Lopp’s “Rands in Repose” blog category devoted to management is also useful, in particular his post “How to Run a Meeting“

Shonk offers a great model for effective teamwork:

1. Goals: what are we here to accomplish?
2. Roles: who is going to play each position on the team?
3. Process: how are we going to work together, what are the rules for interacting?
4. Relationship: how do we feel about each other?

While poor morale or interpersonal conflict can often be a harbinger for deeper problems, it’s much more effective to make sure that everyone is clear on the answers to the  following two questions before analyzing particular processes or interactions:

1. Are the goals for the team/group clear and agreed to?
2. Are the roles that each attendee will play in contributing to them clear and agreed to?

One key metric for a team is interdependence: if you don’t need a member of the team to accomplish the key goals, shrink the size of the meeting and see if that improves focus and traction.

Lopp offers another perspective on meetings in a product development environment that complements Shonk.  He suggests that every successful meeting needs:

• an agenda
• a referee to keep the team making progress.

We take part in a number of working meetings with founders where it can sometimes seem that more heat than light is shed on a topic. Most of the founders we work with are engineers or scientists and they typically chose those careers because their underlying personalities are more comfortable interacting with things and ideas than people. There can be a temptation to try a new technology or software tool to address meetings that have become dysfunctional

A better place to start is to make sure that the goals are both energizing and challenging for your team.  And that each member has a key role to play.  That being said we have found that using a wiki page for a common agenda and minutes/action-items works much better than e-mail for teams up to a dozen or so and creating a parallel chat session if you are on a conference call allows  members to add quick comments, suggest related URLS, raise their hand to speak, and capture shared notes contemporaneously (which not only adds value but demonstrate that they are actively listening).

We will outline some  important tips and considerations when choosing a partner, sub-contractor, or alliances members that will help grow your business. We will explore a range of working relationships including employees, contractors, alliances, partners and co-owners. We will look these relationship roles and tips for structuring these deals.

This session will explore:

• Difference between employees, contractors, alliances, partners and co-owners
• Defining the relationship roles
• When to decide to partner
• What partners need from you
• How to pitch to a partner

About the Presenters

• Theresa Shafer is a hardware engineer and a mom, with a do-it/done methodology.
• Sean Murphy has taken an entrepreneurial approach to life since he could drive. They have served as an advisor to dozens of startups, helping them explore new options and bring their businesses to new levels. SKMurphy, Inc., focuses on early customers and early revenue for software startups, helping engineers to understand business development. Their clients have offerings in electronic design automation, artificial intelligence, web-enabled collaboration, proteomics, text analytics, legal services automation, and medical services workflow.

Location
Los Gatos Lodge, 50 Los Gatos-Saratoga Road, Los Gatos, CA 95032; 408-354-3300
(Off of Hwy 880 at the Hwy 9 exit)

Cost (includes meeting, meal, beverage, dessert)

• WIC Members: $23 preregistration, $28 at the door
• Non-WIC Members: $33 preregistration, $38 at the door
• Price includes meeting, meal, beverage, and dessert

Register: https://www.kintera.org/AutoGen/Register/ECReg.asp?ievent=338196
(Note: advanced on-line reservation  closes Thursday, September 9, 2010, 12 Noon)

@dorait Sean: Startups are trying to solve 3 equations with three unknowns – http://bit.ly/dq7Sqd

Here is the relevant excerpt from the transcript:

FLOYD TUCKER:  [...] Can you tell me a little bit about the early customer stage?

SEAN MURPHY: We just spend a lot of time on this.  It’s a very different sales style than you’ll see later on.  It’s a conversational sales style.  It’s much more about understanding the problem.

You’re trying to solve three equations, three unknowns:

1. Are you talking to the right people?
2. Do you have the right features?
3. Do those features translate into benefits that are going to be useful to them?

Here are three strategies that founders often use to answer these three interrelated questions, the likely results that ensue, and how we help them make key adjustments to get early customers and early revenue.

Current Strategy: Demo the product to anyone who will sit still. And by demo I mean explain how the product works.

• Likely Result: On a statistical basis you may ultimately encounter a visionary customer who can intuit the benefits and determine that it’s worth the risk to work with you. One symptom we often see for this is that we ask a team how they have found their customers and they say that the customers have found them.
• Our Fix: This is also why we are huge fans of Peter Cohan’s “Great Demo” methodology (see Great Demo Workshop Sept-15 2010) because he addresses the need to talk to the right target about a problem they are interested in solving in a way that they understand by stressing a few key features.

Current Strategy: Talk to a number of  target customers, compile a large wish list of features, return to BatCave and start work on a one year roadmap.

• Likely Result: The one year roadmap  takes much longer than anticipated. But the founders don’t leave the BatCave until they are within two weeks to two months  of running out of money.
• Our Fix: Trim the feature set to a minimum set that firms will pay for. Possibly offer consulting mixed with product licensing to enable engagement with an immature product to address cash flow issues. Get out of the BatCave for further conversations to discover and validate potential customers an ongoing basis.

Current Strategy: Talk to a number of target customers  about a challenge they face (e.g. saving money, increasing productivity, reducing certain kinds of errors).

• Likely Result: When the prospect agrees that they have the need be unable to explain specific features that can actually achieve it, or be unable to explain how the particular person you are talking to would be accomplished in particular for the person you are talking to. This is the GEICO “Would you like to save money on your car insurance?” pitch without the ability to offer a quote specific to their car, driving record, and other relevant particulars.
• Our Fix: Focus very specifically on what your product capabilities mean for who you should talk to and how it will make a measurable difference in a problem or challenge they are willing to spend money to address. Adjust your target and connect the dots very quickly and specifically to the benefit. This is component of compelling demos is also covered in Peter’s workshop.