swombat.com

More about pricing books

2013-05-22T14:15:07Z

Sacha Greif comments on a series of guest posts, starting with his own earlier effort:

All three are great reads and well recommended for thoughts and experiments about pricing. Different books, different desired outcomes, different approaches, all analysed in some level of detail. Worth poking through over a break for ideas about how to test and refine pricing.

The articles focus on pricing ebooks (and additional materials), but the ideas and methods apply to other products too.

✶

Four pricing principles

2013-05-22T08:15:07Z

Excellent points by Des Traynor:

Charge earlier than you're comfortable

Charge more than you're comfortable

Justify (or kill) your lowest plan

Plan on changing prices

Each of those deserves highlighting, but Des already does a good job of discussing them in the article, so I'll just comment on the last one.

Pricing is a very tricky thing to get right the first time. Yet, in a world where we are willing to A/B test so many things, we are strangely reticent towards changing our pricing around dramatically. Yet the stories of startups that changed their pricing schemes (not just their prices, but also the structure of the way they charge) and multiplied their earnings abound.

Learning how much your product should cost to maximise profits should be very high on your list of hypotheses. Therefore, start testing prices early, rather than late. This will also help ensure that you fit your product to the right market.

✶

Sometimes, failure is your best option

2013-05-21T14:15:07Z

Brad Feld:

I strongly believe that there are times you should call it quits on a business. Not everything works. And — even after trying incredibly hard, and for a long period of time — failure is sometimes the best option. An entrepreneur shouldn’t view their entrepreneur arc as being linked to a single company, and having a lifetime perspective around entrepreneurship helps put the notion of failure into perspective.

Entrepreneurship is a career (and a safe one at that). But that doesn't mean that every startup you start has to succeed for you to be successful.

Quite the contrary. Both of my first two startups failed. My third company is now successful, highly profitable with 11 employees and growing, and so I am generally considered a successful entrepreneur now.

The only constant about declaring that your startup has failed seems to be that everyone wishes they'd done it six months earlier. It's easy to know when you're succeeding, it's much harder to know when to quit and try something different.

✶

Corrosive Acquihires

2013-05-14T14:15:08Z

Acquihires are not that much of a problem in London. There are a lot of talented people available for hire, and for a Google or an Amazon, it'll be more productive to poach great software engineers from the financial services world (you probably don't even need to pay them as much as a bank would) than to pay massive premiums by acquiring startups.

Still, interesting to read this analysis by Mark Suster:

You have been at Google, Salesforce.com, Yahoo! for years. You have worked faithfully. Evenings. Weekends. Year in, year out. You have shipped to hard deadlines. You’ve done the death-march projects. In the trenches. You got the t-shirt. And maybe got called out for valor at a big company gathering. They gave you an extra 2 days of vacation for your hard work.

And that prick sitting in the desk next to you who joined only last week now has $1 million because he built some fancy newsreader that got a lot of press but is going to be shut down anyways.

What kind of message does that send to the party faithful who slave away loyally to hit targets for BigCo?

I’ll tell you what is says.

It says if you want to make “real” money - quit.

One of the trickiest things as a business owner is to think through the unintended consequences of incentive schemes that you put in. It sounds like large companies need to do some thinking there too.

✶

Stop looking for a cofounder

2013-05-14T06:15:07Z

Dave Lerner:

Even without a co-founder, you can acquire skills and employ powerful tools to get to a minimum viable product all by your lonesome. In fact, it’s so easy and accessible, there really is no excuse not to. Imagine how powerful this is. You can generate a massive amount of value before even thinking about having to dilute your equity. Ironically, this is actually the best way to find co-founders, early employees and investors — just get a real business up and running by yourself!

I think "I just need a cofounder to get started" ranks up there with "I just need $100k to get started" in the list of invalid excuses and pretexts for delays.

Get started. You're most likely going to fail for a while, and eventually start succeeding. Some of those ventures will be with a cofounder, and others will be alone. If you can't implement an idea by yourself, and you don't know that person well enough yet, and you can't afford to hire that person, then the idea you're thinking of is out of your idea reach. Pick another idea.

✶

Taking the leap

2013-03-15T11:57:04Z

I'm a pretty stern opponent of the idea that entrepreneurship is like jumping out of a plane. As an image, it has all sorts of incorrect implications (you only have one shot, you'll die if you fail, it's really scary, it can end in something horrible and violent, it's for thrill-seekers, etc) which mislead new entrepreneurs badly. For example, many will stake everything on that one startup and not realise that entrepreneurship is a career, and that it will probably take them years to get the hang of it.

That said, when you're sitting in your comfortable office chair in the office of a large corporation, earning a comfortable salary, working with comfortable, if slightly boring, colleagues, doing a job that comfortably stretches you a tiny little bit at a time, "taking the leap" does seem absolutely terrifying. It does feel like you're about to throw away your parachute and jump out of a plane.

I know, because I was there - six years ago, in 2007, and it was incredibly scary - though also very exciting, to be fair. I managed to concoct a deal that made it financially less daunting to me, although that deal was certainly a factor in the rapid death of my first startup, and a strain on my second, but psychologically it was still terrifying.

There's no way around it, I think. Either you take that jump before you even know what job security is (i.e. the "straight out of uni" approach, which has its own downsides), or you face this gaping, bottomless chasm and... jump.

You might get lucky. Your first startup might take off like a rocket, or at least like the Wright brothers' flying contraptions, and so you might come to the conclusion that it wasn't really worth being scared of in the first place. But that's pretty unlikely. Much more likely, you will face several years of failing, of barely keeping your head above the water financially, of every once in a while being sat down by your friends and family who will look at you with kindness and concern and ask in a reassuring but worried voice, "so, when are you getting a real job again?"

That being said, I believe there are several important things you can do to make those few years easier, and shorter. So, here's my advice to people who are about to leap into the chasm, or have just done so.

1. Cut (personal) costs to the minimum

Ultimately, your survival as an entrepreneur (not as a "startup" - you're a person, not a corporate entity) will depend on your personal runway. One day, you might find yourself facing rent and food costs with absolutely no money in the bank. You want to push back that day as far as possible, or even avoid it happening at all. The way to do that is to cut your costs.

How far should you cut down? Well, that will entirely depend on your personal circumstances, but chances are it's lower than you think. When I first left Accenture, I could barely live on £2,500 a month, net. By the time my involvement with Woobius ended and I started GrantTree, my personal, monthly costs were below £1,200 a month - that's living in central London, aged 29. Half of that was rent and bills, and the rest went on groceries, travel costs, and the odd beer. Mercifully, most startup events have free beer and sometimes pizza. Yay!

What you want to cut, in particular, are big, monthly costs. Have a car? Get rid of it. Big flat/house? Move into a single room in a shared flat or house. Daily Costa Coffee? Out. Anything that's regular and big or adds up should go.

You'll surprise yourself how low these costs can go.

The one thing you shouldn't do is move away from a startup hub (like London) to the middle of nowhere. Personal connections are hugely important in this new world you're entering. You must be at the centre of things.

2. Do not take funding

This is a controversial one, but here's a reality of being an entrepreneur: your job is to make money. As a new entrepreneur, your job is to learn to make money. Anything that delays that learning is really bad.

If you have a year's worth of funding in the bank, you won't feel that much pressure to either cut personal costs or make some money now. If you have just your personal savings and a business bank account that contains a big fat round £0, the pressure to make some cash flow is your daily companion, morning, day and night. This pressure is good - it's what makes you learn to spot opportunities for making money.

In addition, it means that any money you make is your money. You will probably choose to reinvest a lot of it in your learning and/or your business, but it's yours. No investors to report to. Did you just make £1,000? It's yours to spend. Don't forget about taxes though!

For most new entrepreneurs, investment is a cushion that delays their learning. If you're thinking of raising investment to cover your personal costs, don't - instead, learn to make money. It's really not that hard. Many people far less clever than you have figured it out. You can too.

3. Connect with mentors and peers and listen to them

The mistakes that killed or maimed Vocalix and Woobius, my previous two startups, were not very original. They were awfully predictable. In fact, I recall sitting with my cofounder in a great meeting with William Reeve, cofounder of ScreenSelect (which later acquired Lovefilm and took its name) and angel investor, a super-smart guy who explained to us in detail why Woobius didn't work as a business model.

Did we listen? Sure. Did it worry us? Of course! We felt very deflated when we walked out of that meeting. Did we rebuild our reality distortion field within minutes of walking out and go merrily on our way, ignoring all that good advice, and hitting the wall he described? You betcha!

It's not enough to get good advice, you also have to listen to it.

The problem is, of course, how to tell which piece of advice is good, and which is bad. The solution to that is to know the context of the advice-giver, and consider that along with the advice. If you're building something that involves selling to businesses and someone who's been doing that for years gives you advice, that advice is golden, for example.

Most startups fail for boring and predictable reasons. Very few fail for reasons that were really specific to them. To avoid being one of those generic flops, surround yourself with mentors who have actual startup experience, and with peers who share your issues and concerns. Talk to them, and listen to them. Get rid of your startup gung-ho attitude, and actually share your problems. Their informed advice is worth a lot more than that elusive intro to an investor or potential customer.

4. Don't tie yourself to one idea

In the business model workshops I've given over the last few years, I make one point particularly often: there are many ways to implement your idea, and most of them are wrong. Your job as an entrepreneur is to figure out the right one.

Beyond that, though, you need to pick an idea space where there might be something worth doing. Too many startups declare that they're going to "revolutionise email" or some other random unattainable goal, and then fail hard because they picked a space that is incredibly difficult to crack profitably. Don't force yourself into that corner prematurely. Play with multiple ideas, in multiple markets, until you find a market that seems to stick, that seems to be both interesting and relevant to you, and profitable.

"I quit my day job yesterday. I'm starting a business to solve the problems of email tomorrow." is not something you want to either hear, or be saying.

5. Don't make plans or set deadlines

You may think it's sensible to "give it six months" and then go back to the corporate grind. It's not. If you've given it six months it will probably take you three years.

While I don't recommend taking risks that mean that you won't be able to pick yourself up and try again after your first startup bites the dust (such as mortgaging the house to pay for the startup), there is something to be said for burning the boats.

Don't look back. Your way forward is forward. If you do need to get a day job again, get it in a startup, not in a large company. Make sure enough people on the startup scene know you or know of you so that it won't be a problem. If you do need a job again before you finally make it as an entrepreneur, it should not be a job you have to interview for.

In conclusion

This is a pretty long article - and that's not counting all the articles it links to. If I'd read and applied all this advice back when I took the leap, it would have saved me a lot of pain.

If you've just quit your job, or are about to - do yourself a favour and save yourself all that pain.

You'll still be terrified of the leap. Nothing will change that except the feeling that actually, things aren't as bad as you had expected. But believe me - if you apply the advice in this article, your real chance of success will be vastly improved.

Good luck!

✶

Ultimate guide to dropshipping

2013-03-15T09:57:21Z

What it says on the tin. Dropshipping is one of the many ways you can build a modern business in 2013, but like many other tools it is not so straightforward as it might seem.

This guide to dropshipping, by Mark Hayes of Shopify, is probably a good starting point if you're thinking of starting this kind of business.

✶

Zombie Startups

2013-03-13T20:15:08Z

Danielle Morill:

My greatest fear as a startup founder isn’t to fail, it is to become a zombie startup. Kind of like in the 6th Sense when Bruce Willis doesn’t realize he is dead and tries to have a nice dinner with his wife, there are startups out there who are still “operating” but might as well not be.

(...)

The first thing you need to do is acknowledge the reality of your situation. From there, figuring out what to do next is a lot harder and a very personal and contextual decision, but you should embrace it with vigor. Don’t waste single moment of your life, or the time of those on your team, to begin plotting the next step.

Danielle also points out that if your startup has failed, hard, don't shy away from calling it a failure and moving on.

Remember: impatience kills startups, but patience kills human beings.

✶

Shutting down blaster.fm

2013-02-26T07:15:09Z

Continuing the topic of moving on from failed startups, Josh Sharp writes about his blaster.fm project and why he's shutting it down:

Choosing to let it go wasn’t easy. “Why can’t you just let it sit there and keep running?” I have been asked several times. But even though it doesn’t require active maintenance, it still exerts a mental toll. It weighs on me, the site-that-could’ve-been. The site that missed its opportunity to get big.

Yep. Moving on is good.

There's also a comment to be made about Josh's approach to building blaster.fm. Reading his article, I noticed a lot of "I built this" and "I built that", but not a whole lot of "I went and talked to people" or "I saw this opportunity to make some money". Perhaps that did happen and is just missing from the write-up.

However, on the assumption that it's not just a writing omission, this approach of building things and waiting for people to find them is perfectly fine for a side project, a hobby that may randomly pick up and become interesting, but ultimately it means that the project was fundamentally a lottery ticket. In this case, a lottery ticket that didn't win (the prize was acquisition by last.fm, it seems). One hopes that most of the enjoyment was derived in the building of the site and the learning that came with that.

In the long run, it's hard to get motivated about a project that sucks a lot of time and gives very little back. I believe in working on side-projects, but in my opinion, if you're going to do that, then you should probably err towards side projects that have at least some vague commercial potential beyond "a big company will want to buy it". I'm sure Josh would feel differently about blaster.fm if it was making even just a meagre $2k a month.

✶

Email-first startups

2013-02-25T20:15:08Z

Ryan Hoover:

Email-first enables startups to:

Validate ideas quickly [...]

Fake it ‘til you make it [...]

Force focus [...]

Create habits [...]

Be ubiquitous [...]

Transfer to other mediums [...]

Very good points. Ryan goes on to point out several examples of email-first startups.

For what it's worth, GrantTree is currently paying £2k a month for a startup that still has no web page. They do have a daily email that is well worth the money, though. Do I care that they don't have a website? Nope. Would I pay any more if they did? Nope.

✶

B2B SaaS growth techniques

2013-02-25T07:15:07Z

Solid article by Lars Lofgren about five key techniques to get more users for a B2B SaaS app. The five techniques listed are:

Integrations with other products that target businesses
Work emails: leveraging the fact that many of your users have colleagues
Embeds: enabling businesses to embed their content into their site
Powered by: tagging your product when it's being used
Free stuff: giving away something valuable (e.g. a thorough guide) to encourage referrals

Each technique is described with examples and best practices. Even an experienced B2B entrepreneur will probably learn a thing or two from reading this article.

✶

What should you do if an experienced mentor tells you it's a bad idea?

2013-02-24T20:15:08Z

Steve Blank:

And here’s the conundrum – given a wise mentor (or VC) with years of experience telling you it’s a bad idea – what should you as the founder do?

One thing I always tell founders at the beginning of all my talks is that they should always be aware of the background of the person giving them advice, because that will taint the advice. However, if the advisor does indeed have just the right background so that their advice is highly relevant, what to do?

The other part of what I tell founders is that ultimately, it's their company, their life, their decision. One of the things that makes startups hard is that you can't fall back and blame someone else. You made that call. You're the one who screwed up (if you did).

So what to do then? Steve Blank suggests asking yourself three questions:

Are you passionate enough to still believe?

Can you explain after why getting out of the building and hearing all the negative news you still want to persevere?

Will it change the world enough to make it worth the trials, travails and pain in getting there?

... and then if the answers are positive, ignoring the experienced mentor and going for it anyway.

Asking yourself these questions may well be worthwhile, but in my opinion, if someone with experience and insight tells you that your startup is doomed, what you should do is much less dramatic: discuss why (in detail) with the advisor, to get a good map of how they expect your startup to fail. Then work hard to minimise those risks, which are probably very real.

Under no circumstances should you simply ignore the advice and "follow your passion". Most likely, the advisor's risk map is way better than yours. So use it to minimise risks.

As I often repeat, what you want is a plan that still has risks, but where the potential downside of those risks is minimised and the upside is maximised.

For example, if an advisor tells you "don't market this product to these large companies, they really won't give a shit about it," the right reaction is not to go and do it anyway "because you believe in your dream". Instead, figure out a way to test whether those large companies do give a shit, before spending lots of money on marketing to them.

Advice, good or bad, should never result in you relinquishing your responsibility to think for yourself.

✶

If you ever feel alone in this...

2013-02-24T15:15:08Z

I have never suffered from depression. I used to feel pretty miserable as a kid (which perhaps is comparable) due to generalised bullying, but there was never a chemical imbalance side to it.

However, particularly in view of recent suicides in the tech scene, it is great to see people with that sort of experience stepping up and offering a helping hand. Darius Monsef:

I haven't thought about killing myself in 20 years, but I've been there. So if you're ever so depressed and stressed out, and you think you're alone. You're not. I've been there. It can get better and i'll bear that burden with you. Send me an email with the subject, “I feel alone in this” and you'll be the next email I write or the call I make.

Beyond that call to action, the whole article is worth reading for a reiteration of something I've discussed in several of my talks:

A person who is $50k in debt has a very hard life. They have no budget for luxuries or means to try and improve their life. They eat the cheapest foods and aren't able to travel. A person with $0 debt, but $0 savings has a quality of life worlds different. They may not have luxuries, but they have way more comfort and abilities to improve their life. Somebody with $50k in the bank is again dramatically better off than somebody with $0… And the quality of life dramatically increases again when you have something like $500k in the bank. That person is able to enjoy high quality foods, travel, live in luxurious comfort and use their capital to try and make their and those close to them lives better. A person with $5M does enjoy a higher quality of life, but not as dramatically better… they might fly in chartered planes vs first class, or drive a $120k car instead of a $70k car, but overall their quality of life is similar. And the increase in quality of life dramatically tapers off as you get to somewhere like $50M. I've personally experienced most of these levels of wealth, and while I haven't yet experienced the very top levels I've spoken to friends that are there and generally they agree.

I've never been $50k in debt (I think my max was about £12k), but I am now slowly but surely climbing up on the other side, and I couldn't agree more. From a personal standpoint, money is a hygiene factor. How much soap can you use?

There's only one good reason to accumulate more money than that, and it's that it can be traded for influence to make things happen. Bill Gates is giving us a great example of what you can do when you have mind-boggling amounts of money, that you can't do with just a few millions. But that's a different goal than wanting to make billions for yourself, which, in my opinion, is both incredibly unlikely and not particularly worth the effort.

There are many more points (and a great slide) in the article. Go read it.

✶

What could go wrong?

2013-02-24T11:15:56Z

Leo Widrich:

“What could go wrong?”, is the one line that brought us to where we are today. It is the one sentence that helped us to outsmart any enemy, as we could pre-empt their attacks, built caves with better protection and make sure our children and theirs will make it through many summers.

(...)

On behalf of “Yes!” and on behalf of daring, it is my sincere belief that thinking “What could go wrong?” can’t bring us any good (anymore).

Instead, I think it is of the highest importance to learn (and learning this I think we must, as none of us are born with it) to start asking ourselves and everyone else “What could go right today?”. And then, go do that right thing.

While the sentiment of this article is right, I have to pick a nit about this "discarding 'what could go wrong?'" business.

"What could go wrong?" is still incredibly useful, because it is a risk exploration question. Successful entrepreneurs don't ignore risk, they minimise and embrace it. To do that, they need to be very aware of the risks - i.e. of what could go wrong.

We can never be aware of all the risks (and that is a risk, or meta-risk, in itself). However, we can make a decent effort to think about the risks and come up with ways to mitigate or minimise them so that "what could go wrong?" is no longer unknown and unlimited.

Smart entrepreneurs knowingly take risks with small potential downsides and large potential upsides. For example, in starting Buffer, Leo took the risk that it might not work and waste some of his time (unlimited downside), minimised that into "it might not work but we'll focus on proving that it works as quickly as possible" (small downside), and therefore reaped the large upside of a successful, rapidly growing startup.

Ignoring risks would have meant building Buffer with no validation to a full-featured version 1 before launching it, and then perhaps finding out that nobody wants it.

✶

Transparency in startups

2013-02-22T12:51:56Z

Cristina Cordova:

In startups, employees expect a level of transparency that doesn’t exist at large companies.

(...)

Transparency should exist to protect from fear, unite everyone toward a common goal and keep each piece of the puzzle operating efficiently together.

There's another very important reason for transparency in a startup: culture.

Your internal culture also ends up impacting how you treat customers. If you're secretive and distrustful, or, god forbid, you lie to your employees, you can bet your bottom dollar that that's exactly how your employees end up treating your customers.

In some industries, having a great, positive, transparent, trustful culture is a competitive advantage. For example, GrantTree competes with a lot of accountants and other R&D Tax Credits practitioners who are typically very accountant-like, closed up, secretive. In this industry, having GrantTree's culture is a great competitive advantage, because it comes through on our site, in our communications, in our attitudes, in the way we talk to clients and in the way clients talk about us.

In others, e.g. most startups, such a culture is not simply an advantage: it's a cost of entry, both in terms of attracting good people and in terms of your reputation with customers. If you're a closed up, secretive, boring company competing with startups, that will be a competitive disadvantage, and may be a killer depending on your customer base.

Finally, culture is also what makes your startup a nice place to work - both for you and for your employees. If your culture is closed and secretive, it may not be good enough to retain even you!

✶

The truth about a failing startup

2013-02-21T19:10:39Z

There's a pastebin text that went to the top of HN recently that is worthy of comment. I'll reproduce it below in case it gets removed from pastebin (not exactly the most reliable storage location):

Somehow, I managed to create an app that some people seemed to like. With some odd stroke of luck, an investor in the U.S saw the app, and saw something in me. He gave me a shot. Invested in me and my company.

Fast forward a couple of years, and that company still exists, but it’s on it’s last legs. It’s dying. I’ve failed. I haven’t been able to innovate, I guess I lost my touch. The money will run out within a couple of months, and the debts won’t be able to be paid. It will all collapse.

I think the investors lost faith a few months ago. They don’t contact me. They don’t even follow me on Twitter anymore and if they do contact and I reply, they don’t respond with answers to my questions.

It’s pretty shitty to be living in a state of impending doom. You know in a month or two, your entire life will crumble apart. You’ve tried everything but nothing works. Doom is coming. And you have to live with it. It’s a constant state of ever worsening depression.

When family asks how things are going, like all entrepreneurs, I respond with “Great!”. I don’t know how to tell them that I have failed.

The investors money is just about gone. My own money is non-existent.

I see articles on Hacker News about depression and entrepreneurs. Most of them are so far from reality. They don’t capture the sense of impending doom, the sense of failure. The don’t capture the loneliness, where you have nobody you can turn to.

If I can leave with one piece of advice to young founders. Please think really hard about taking other peoples money. If I had failed using my own money, I could live with it. But having a team of investors believe in you, only to let them down is an incredibly difficult thing to deal with. Try and finance your product yourself for as long as you can. At least until you can realise if your idea is decent (which takes a long time to figure out).

I commented on the HN post. I feel it's worth repeating that comment here and adding to it.

The idea that the (unhappy) end of a startup is depressing and filled with doom is pernicious, because it's partially true. Yes, it is a pretty difficult time, or at least it is until you finally admit to yourself that this venture has failed, and start the process on moving on.

Once you've done that, something surprising (at least the first time) happens:

You will feel an immense sense of freedom and lightness.

It's pretty obvious why: a weight is being lifted from your shoulder. Where your path was a narrow funnel leading to one specific destination, you will now have the infinity of all possible and reachable paths ahead of you. Before, you couldn't think of anything other than worrying about the startup - now you can do anything you want.

The end of a start feels very dramatic before it happens, but once it's done, you will feel a whole lot better. This is truly liberating.

One side-effect of this is that experienced founders tend to be much more willing to draw a line and call it a day. "Ok, this one isn't working. Let's figure out the next one."

Moving on cleanly and swiftly when it's time to move on (rather than 6 or 12 or 18 months later, after much, much more pain) is one of the skills that you learn from failing at your startup, that you do not learn from succeeding.

✶

Three tiers of startup incubators and accelerators

2013-02-18T11:34:55Z

retracted

✶

Due diligence on incubators

2013-02-18T11:34:18Z

Nice little bit of research by John Valentine:

Of 199 companies funded by TechStars, less than 10% were reported as "failed." Considering over 75% of startups fail, it looks like TechStars has effectively bucked the trend.

Except, of course, that as John's research shows, many of those supposedly active startups are actually pretty much dead:

AccelGolf - The guys who founded the company hustled until July, 2011, when they closed up shop and went off to conquer new horizons like Pistol Lake, TaskRabbot, Centzy, and Raizlabs. Their last Facebook post was in June 2011. Their app is no longer in the app store.

This seems like an ideal bit of journalism for one of the serious tech startup writers to do, though it won't please the incubators in the cross-hairs. How do the "X% of our startups are still alive" claims stack up against reality?

If even a relatively reputable incubator like TechStars happily ignores reality to come up with juicy stats, what do the others do?

✶

Sales comes out of who you genuinely are

2012-11-30T10:36:00Z

Have you seen Glengarry Glen Ross?

It's a pretty awesome movie based on a play by David Mamet. There's a scene in there that has been posted ad nauseam, the Always Be Closing speech where Alec Baldwin puts some serious pressure on the small sales team at some kind of real estate company that's never fully described.

A less well-known feature of that film is the sales pitch and approach followed by that company's star salesperson, Ricky Roma, played by Al Pacino. Ricky is shown spouting ten shades of bullshit in a bar with his "mark", convincing him to buy a product that's clearly not good for him (and very expensive), and then actually lying to his face to try and maintain the sale when his customer realises (after being told by his wife that she'll divorce and ruin him if he doesn't cancel the sale) that he made a really, really bad deal that's about to literally destroy his life and put him in the gutter.

What does Ricky Roma do in this situation? He lies and pretends the contract can be cancelled later, so that he can lock in this "customer" into this sale that will destroy him.

Ricky Roma is a complete asshole and a stain on the reputation of salespeople. David Mamet must not have known a lot of salespeople, to have this view of what a good salesperson is, because that is definitely not how great salespeople work.

Which brings me to real salespeople, the ones who actually make sales in the real world, rather than in fantasy plays. The kind that you need to become yourself, to an extent, in order to be a successful founder.

Win-win-win

Successful salespeople don't pressure or bullshit the prospect into a sale. They are persistent, but they are always focused on achieving a deal where it will benefit all parties.

This means that a great salesperson will never be selling something that they don't believe actually helps the customer. And that has to be the starting point of every conversation with a potential customer. How can I help you? Is there something that I sell or someone that I know that can make your life better?

For the last few months, I immersed myself deeply in the sales process for GrantTree, but over the last few years, I've observed quite a few competent salespeople at work, and been part of many sales, both successful and not, and the conversation, particularly when selling high-value, high-price items, always starts with how to best help the person sitting in front of you (or on the other side of the phone call).

How you can help someone always starts with who you are. I'm a serial entrepreneur, with a blog full of advice for startups, with connections and experience that come from 5, 6 years of doing this, and with a business that sells a product that can help tech startups. So my conversations always start with understanding where the person on the other side is at the moment, and how I can help them. The best situations for me to help most tangibly is if there is a match between the services GrantTree offers and the state their business is in, but if those services won't help them, I would never push them into deals that won't provide a clearly positive outcome for them.

For example, some clients are too small for GrantTree to be able to add much value. It's the nature of government incentives, which are based on how much you spend, that the more you spend, the more you can get back. And the more you can get back, the bigger the difference it makes to use a specialist. I regularly speak to founders whose businesses are too small or early to make the most out of GrantTree's services. In those cases, I try to help them anyway - even without getting anything out of it for GrantTree.

This is how I start. My cofounder, Paulina, approaches clients differently. Her strength includes a very wide network of people who might be great connections for the person she's talking to, so naturally she leverages that, rather than tech startup experience, to help the potential client. But again - the focus is on helping the other person, never on trying to squeeze a deal out of circumstances where we can't make a positive impact on their business.

How will you approach your potential customers? That entirely depends on who you are, what you bring to the table. But it always has to be first focused on helping the other person. Otherwise, you are not a salesperson, you are a scammer looking for a quick buck, like Ricky Roma.

Getting over the money hurdle

With that in mind, as a geek, I used to find it hard to get past the fact that ultimately, I was doing this to make some money. This is probably the greatest hurdle for anyone (even people who eventually become master salespeople): realising that it's ok to make money from a deal.

It sounds trite, cute almost, but it's a real problem. Most people who have not spent a considerable amount of time selling will feel that the whole process is made unwholesome because they are, ultimately, doing it out of self-interest too. Yes, I'm trying to help the other person, but I'm also trying to make some money, so I must be selfish, right?

This comes back to believing in your product. If you don't believe that your product genuinely adds to your customers' lives, genuinely makes things better, genuinely helps, then don't sell it until you do, because then you are selling a scam and you should indeed be ashamed of doing so.

However, if you do believe in your product, then focus on that and the issue will go away. Here are some examples:

Patrick McKenzie wrote about how he started charging a lot more for his services after a conversation with Thomas Ptacek, who pointed out the vast amounts of value he was creating for the client business. Charging more enabled him to focus on providing top quality advice to people who could really make use of it. He's since helped many other companies to multiply their revenues. He wouldn't be able to do that unless he charged a lot for it (he wouldn't have the time to do it properly, with the right amount of focus). Patrick believes in his product (and should). If Patrick tries to sell to a business that would be a good fit, I'm sure he has no doubt in his mind that if the sale goes through, both himself and the client will benefit greatly. Is that a product you can believe in? Absolutely.

George, one of our recent hires at GrantTree used to work for Point-Two, who sell air jackets for horse riders that inflate upon impact. These jackets can save your life. He showed me a video recently of a woman whose horse hesitated before a jump. She went over the obstacle. The horse came tumbling after, on top of her. The 600-kg beast landed squarely on top of her. The air jacket meant that she walked away with a few bruised ribs. That jacket saved her life. Is that a product you can believe in? Absolutely.

GrantTree sells help with getting government funding. For the right clients, we increase the amount of funding obtained substantially, through our knowledge of the rules, as well as reducing the amount of time spent preparing the filings and the risk of doing so. Many of our clients would not file, or would file much smaller claims, if it wasn't for us. We regularly take on clients who have lost all belief in UK government funding, and are very surprised when the funding does go through. Or we take on clients who are already making use of the funding schemes and we substantially increase the amount that they get. Is that a product you can believe in? Absolutely.

Given that these are all products that add very tangible amounts of value to the clients, is it reasonable to make money for them? Absolutely. Making money from his consulting services means that Patrick has been able to go around the world helping well targeted businesses with his knowledge. Making money from the jackets means that Point-two have been able to save lives. Making money from government funding services means that GrantTree has been able to grow and help even more businesses. None of those things would have happened if those businesses did not make money.

So don't feel bad about the fact that you'll get money out of the deal too. If you believe your product genuinely helps your customers, then making money from it is absolutely deserved and reasonable.

Focus on the win-win nature of every deal you make and, over time, the self-accusation of selfishness will fade away.

In conclusion

Mythological salesmen like Ricky Roma, who are really highly skilled scammers, have given the sales profession a bad name. If you want to be a successful founder, sales is one of the many skills you need to learn.

Get over your fear of making good money from selling good services by realising that every sale you make will benefit your customers (if your product is worth selling) far more than it will cost them, and start every sale from the point of view that you are trying to help the other person.

Good luck with it! Sales is damn hard, even without misconceived notions about whether it's ok to make money when selling something.

✶

More about side projects and creativity

2012-11-13T15:32:03Z

Andrew Peek responds to my post on side projects with an excellent point:

We don’t generate creativity by sheer force. We experience it by stepping back. The reason you feel creative when you start a new job, is because the problem set is new – and so the job behaves like a side project in those first few months. The same is true of stepping into someone else’s writing – you perceive the writer’s grind from a distance, allowing your insight to flow freely and easily – sometimes producing an “of course!” reaction (in the writer) typical of someone who was trying, with all their will, to uncover that same insight.

Side projects exist to refresh the mind. They’re our version of a ‘Shut Down’ command.

Lately, I am more busy than I've ever been in my life before (feels great, before you ask). GrantTree is buzzing in all sorts of ways which mean that I am happily working every evening I can claw in. Once upon a time, I might have come back home and relaxed in front of the TV. For the last couple of months, I've felt so driven than I just don't feel motivated to do nothing (hah).

But you do need to do something else to remain productive. For me, it's going to the gym (which takes a chunk of time but is absolutely worthwhile from many different perspectives), going to 3-hour acting classes every Tuesday evening, reading Lord of the Rings to my fiancée, spending dedicated time in a café with my iPad and Origami case and writing fiction, or even giving talks to or mentoring startups!

Those things, which have little or nothing to do with GrantTree's main activity, keep me sane and grounded and enable me to be creative in my daily work.

So yes, this is an extremely valid purpose for side projects: to maintain sanity and creativity in a busy life.

When you have no time for side projects is probably the point in your life where you need them most.

✶