With that insight in mind, I made some changes. Rather than talking, I listened. Rather than hoping for the sale, I planned for it. Rather than playing a game with the odds against me, I started changing the game, so the odds were at least even. In time, I was winning more deals than I was losing. Along the way, I accumulated a set of concepts and best practices for startup sales. Let’s walk through this list, with my favorite one at the end.

NOTE: This blog is an excerpt from The Founder’s User Manual: Practical Strategies for the Startup Leader

You Sell Pain Relief

You may think you sell products and services, but that is not what people buy. They buy pain relief. All your sales messaging must focus on this simple idea. Talk about the problems (pain points) your customers experience and how you resolve them. (I talk a lot about this in my upcoming book, Credibility Sales.)

Something Free Has No Value

Avoid giving away your company’s expertise, products, or time. Bundling free items into a paid package of products is okay. You can also do free trials. However, all of these must end with the customer paying for your products.

Furthermore, customers who demand free items do not value you. Anybody who tells you they will provide you with “exposure” in exchange for products or services is trying to cheat you.

The goal of sales is to bring in revenue. Giving away stuff is the opposite of sales.

Desperation is Repulsive

Desperation repulses good prospects and attracts bad ones. Suppress all signs of desperation, even if you really are desperate. Effective salespeople remain positive and enthusiastic during the darkest of times.

Never Waste a Loss

Salespeople are experts at inventing excuses for why a deal was lost. Avoid speculation and get the facts. Ask prospects why they chose a different product. Most people will tell you.

Understanding why you failed is more important to success than success itself.

Measure Results, Not Activity

In sales, results are all that matter. If a salesperson calls a thousand people, but sells nothing, that effort is meaningless. Monitor activity, but only measure results.

You want to track activity for analysis purposes to determine what level of effort is necessary to achieve the results you want. However, a salesperson’s incentives should never be based exclusively on activity (effort). Incentivize results.

Salespeople will constantly try to convince you that their activity is valiant and worthy of praise. Do not praise or reward people who are unable to deliver results. Instead, have them reflect on their efforts and find ways to change and improve. Activity (effort) that does not lead to results is meaningless busywork.

Salespeople who do not produce results are not merely useless, they also drag down the company. Sales is not a job for timid people. Do not retain salespeople who are not producing results.

You Cannot Sell in the Dark

No part of sales should be hidden, secret, or known only to a few people. Your processes, practices, metrics, and results must all be open, transparent, and public. Never allow your sales team to function “behind closed doors.”

Specifically, all sales goals and accomplishments must be made public. This creates pressure to perform. Weak salespeople will often complain that making sales attainment metrics public is “demotivating.” Low sales numbers should motivate salespeople to work harder. If it demotivates them, then maybe sales is not the ideal profession for them.

Hope is for the Holidays

In sales, hope is dangerous.

Salespeople would routinely tell me how they “hoped to hear from the prospect,” or similar excuses. You cannot run a business on hope. When a person is hoping, they are delegating success to fate. This allows them to dodge responsibility. Require people to have plans, not hopes. Do not even allow people to use the word hope.

No Badmouthing

Nothing telegraphs to the world your desperation, immaturity as a leader, and lack of strategy more clearly than allowing anybody in your company to badmouth competitors. As my CEO coach once said to me, “Are you in the ‘anti-them business’ or the ‘pro-you business?’”

Always be in the pro-you business.

Get to “No” Quickly

Dragging out a sales cycle for months wastes time and resources. Stress-test your prospects early in the sales process to ensure they have the budget and authority to make a sale.

Call the Bluff

One way you can get to “no” quickly is to do the opposite of what your prospect expects and call their bluff. I used this technique regularly. It is counterintuitive but astonishingly effective.

When a prospect raises an objection about your product, rather than countering their objection, agree with them. Tell them they are right and that maybe it is not a good fit. This will either cause the prospect to back down from their objection, which is good, or end the discussion.

For example:

Prospect: We require a vendor that is open 24 hours a day.

Seller: Okay. Our company is not there yet. I guess we are not a good fit for you.

Prospect: Well, that is not a deal breaker. Can you provide a dedicated support person?

Seller: Yes.

Calling the bluff (which is also called Negative Reverse Selling technique) forces the prospect to reconsider their position. If they want to work with you, they will back down from their objection. This makes the prospect convince themselves you are a good vendor.

Moreover, it encourages the prospect to negotiate and discuss other options with you. This gives you deeper insight into what the prospect really wants.

Calling someone’s bluff is difficult to do. You must resist the desire to counter objections. Moreover, you must be willing to walk away if the prospect agrees.

Calling the Bluff has multiple applications. You can also use it with a prospect who keeps putting you off or rescheduling meetings. Tell them it is obvious they are not ready for a meeting and to contact you when they are ready. This changes the dynamic and gives control to the prospect.

The Early Bird Gets the Sale

Once you have a possible prospect, get a proposal (price quote, etc.). in front of them quickly (within 24-48 hours). Without a proposal, you have nothing to sell. Moreover, invest in proposal designs and layouts that are concise and attractive.

Moving quickly shows a prospect that they are important, and you are reliable.

The Time is Now

Do not wait to contact a prospect. Do not wait to send out a quote. Do not wait. Do it now, so you can move on to the next task. Momentum begets results. Keep moving and do it now.

If It is Not in Salesforce, It Did Not Happen

Regardless of which CRM tool you use, require salespeople to enter their contacts and sales notes. I had salespeople constantly try to convince me of the important meetings or conversations they had. I would check Salesforce (the CRM we used) and they had not entered anything. I would say, “sorry, it did not happen.” Naturally, this infuriated them. I would remind them that, without documenting their engagements, I had no way to determine that they were real.

This underscores the importance of the next item on this list.

No Verbal Agreements

Never allow your employees, customers, or partners to use your own memory against you. Talk is cheap. Documentation is forever. Require all agreements, regardless of size or complexity, to be in writing.

Do Not Negotiate Against Yourself

When a customer pushes back on some aspect of a deal, resist the urge to immediately engage and negotiate. Ask the prospect for a counterproposal. Otherwise, you are negotiating against yourself.

Also, do not be afraid to walk away. This may compel the prospect to re-engage and become more agreeable to your proposal.

Ask for the Sale

Ask for payment as well. Salespeople should never feel awkward about asking a prospect to buy and pay. Closing the deal and getting paid is the entire point of sales. Salespeople who are uncomfortable asking for money should not be in the sales profession.

No Signature, No Deal

I had prospects swear up and down they were going to buy, but they could not sign a quote. I fell for this a few times and got screwed each time when the customer would not pay.

Get them to sign that is dotted. Otherwise, walk away. Without a signature, you have nothing.

Sell the Brighter Future

Focus on how your products and services will help the customer. Everybody wants to buy a brighter future.

Sell Your Way Out

When money is tight and things look bad, there is only one way out of the hole: sell your way out. Stop whining, blaming, and avoiding reality. Get out there and book meetings, do demos, and push for sales. I once turned my company from being $1M in the hole, to $750K cash positive in about 90 days. It absolutely sucked and I had to work 15 hour days, but what choice did I have? There is a limit to what you can cut, but no limit to how much you can sell.

Change the Conditions of the Test

As a startup, the odds are against you in almost every way. Your competitors have every advantage: money, time, talent, brand recognition, etc. If you look and sound exactly like your competitors, buyers have no reason to select you. They are better off sticking with an established brand. Moreover, you cannot claim to be an innovative, disruptive startup when you look like everybody else.

The only way you can start winning this game is to Change the Conditions of the Test and even up the odds. That means intentionally sounding, looking, and feeling different from your competitors. Different is good. Different closes deals. Different is your only way to stop playing your competitor’s game and make them play your game.

However, a word of warning, many of the people around you, especially investors, board members, and employees, will fight you on this. Prove them wrong.

Conclusion

You know what it takes to do startup sales? It is not made of brass. It is intelligence, discipline, and resolve. Follow these fundamentals to get your sales team on target.

Always be closing.

Need help with sales? How about a sales comp plan? Zenaciti does that. Contact us today to discuss how we can help. Also, did I miss anything in this blog? Your feedback and insights are valuable. 

The post Fundamentals of Startup Sales appeared first on Zenaciti.

I spent over 25 years analyzing, writing, and optimizing comp plans. Along the way, I picked up a lot of best practices. Let’s explore these and how you can write an effective sales comp plan. 

NOTE: this blog uses the word incentive to refer generically to both commissions and/or bonuses.

Comp Plan Types

There are many different kinds of sales jobs and therefore different incentive structures. The most common comp plans include:  

• Salary + Commission: salesperson is paid a base salary and earns commissions on each deal. Most account executives have this kind of plan.
• Commission-only: salesperson is paid only commissions, no salary. These may include a draw on future commissions.
• Salary + Bonus: salesperson is paid a base salary and earns bonuses on meeting specific sales goals. Sales engineers and customer success roles often have this kind of plan.
• Territory / Team Volume: salesperson is paid a base salary plus commissions based on the performance of an entire team or territory. Most sales managers have this kind of plan.

While these plans may have different ways to compute incentives, they share a common set of components. Let’s take a look at those elements and how they build a reliable incentive structure.  

Comp Plan Elements

There are five critical elements to a comp plan:

1. Opportunity Types
2. Incentive Basis
3. Incentive Rate
4. Accelerators
5. Payout Process

Let’s examine each of these and why they are important. 

1. Opportunity Type

Not all customers are the same. Some deals are more difficult to close, and some customers are more desirable. Opportunity Types provide a way to differentiate, categorize, and scale incentives appropriately to the desirability and complexity of each customer type.

For example, let’s say your company wants to break into the healthcare industry. Using opportunity types, you can create a category named “Target Accounts.” Then provide each salesperson with a list of healthcare companies. Any deal a salesperson closes with an account on the list receives an increased incentive payment. This encourages the sales team to focus their efforts on these target accounts, thus driving the business you want.

Ideally, your plan should have three to five opportunity types. Too many types and your plan will become convoluted and difficult to enforce.

Here is a suggested structure:

Type	Incentive	Description
Standard	5%	An opportunity that was given to the salesperson. This includes in-bound leads, existing customers, renewals, and referrals from partners.
Organic	10%	An opportunity the salesperson generated independently without help from marketing, partners, or other employees.
Target	15%	An opportunity closed from a customer listed on the salesperson’s Target List.

The definition of each type is important. If there is confusion about what constitutes each type, this may lead to arguments and disillusioned salespeople.

2. Incentive Basis

This is the starting value to compute an incentive payment. For many companies, this is the gross profit (GP) on a deal. For example, a salesperson closes a deal classified as organic for $50,000 and it has $15,000 in costs. The incentive basis (GP) would be $35,000.  Based on the opportunity types listed in the previous section, the commission would be 10% of $35,000 or $3,500.

The key to incentive basis is an ultra-clear definition. A good comp plan never creates ambiguous incentive calculations. Therefore, when you write your plan, make sure to precisely explain how you compute incentive basis. If direct costs are included, but not indirect ones, then you need to describe what constitutes a direct cost. Always provide examples, to ensure there are no misunderstandings.

3. Incentive Rate

This is how much the salesperson earns on a sale. Typically, this is expressed as a percentage of the incentive basis value and scaled to each opportunity type. Percentages are always preferable as they scale up and down based on the size of the deal. Fixed commission payments are only effective when you want to reward specific, non-income-generating accomplishments, such as setting up meetings.

Be careful with incentive rates. They need to be high enough to motivate results, but not so high they hurt your overall profitability.  Moreover, you may need to alter the rates based on margin. Low margin sales will naturally create smaller incentives. This may discourage salespeople from selling low-margin items.

4. Accelerators

Accelerators reward salespeople with additional compensation when they exceed quota.  For example, if a salesperson hit 125% of quota for a quarter, their incentive rate could go up 1%, increasing all their incentive payments.

Here is a suggested quarterly accelerator schedule:

Accelerators can have a huge impact on a salesperson’s income and motivation. However, if the accelerators are too aggressive, they might hurt profitability.

Work with your finance manager or bookkeeper to run financial models on different accelerator structures based on historical values. You may need to implement flat-rate accelerators or limit the total amount that can be paid.

5. Payout Process

For sales incentives to work effectively, salespeople must be able to quickly and reliably compute their incentive payments. Documenting the exact process the company follows to pay incentives reassures salespeople they will get paid.

Documenting the process also creates consistency and a check-and-balance process. Here are suggested steps for a payout process:

1. Sales manager submits incentive payout request to Controller (bookkeeper, CFO, finance team member, etc.) This request details each deal closed as well as the expected incentive payment.
2. Controller reviews and validates the requests are correct and eligible to be paid. Controller works with sales manger to make any corrections or adjustments.
3. Controller obtains approval to pay incentives from CEO (COO, etc.)
4. Controller returns payout request to Sales Manager indicating which incentives are approved to be paid in the next payroll cycle.
5. Sales Manager communicates this approval to appropriate salesperson.
6. Controller processes incentive payments in payroll

Additional Guidelines

Ultra Precise Language

Among all the challenges of developing a comp plan, the most insidious is the words themselves. The language of a comp plan must be simultaneously extremely precise and easy to read. One confusing word or ambiguous definition could land you in court with an angry employee demanding more compensation than you intended.

Consider these two examples:

BAD: Account executives (AE) earn 10% commission on gross profit for all consulting sales.

BETTER: Account executives are eligible to earn 10% incentive based on the gross profit of deals the AE was assigned and closed.

The first item is too vague and lacks key qualifiers. An employee could interpret this as they earn 10% on all sales, regardless of whether they closed the deal or not.

The second item uses some important qualifiers. For example, rather than “earning” a commission, the salesperson is merely “eligible.” This gives you more room to control what is or is not a legitimate commission. Moreover, the word “commission” is replaced with “incentive.” Commission is a loaded word with a specific, legal meaning. Incentive is more generic, giving you more freedom to define what an incentive is (or is not).

If you are not familiar with writing a comp plan, hire an expert (like me) or use well-vetted template. Furthermore, have your legal counsel review the plan to ensure it is defensible in court or arbitration.

Different Plans for Different Roles

One comp plan does not fit all. Depending on the sales roles you have, you will likely need as many as five different plans. For example, the most common roles are:

1. Business Development Representatives (BDR): work on in-bound leads, set appoints, and so forth.
2. Hunters / Account Executives: actively work to drive new business.
3. Farmers / Account Managers: manage existing customers
4. Subject Matter Experts / Sales Engineers: provide subject matter expertise to close deals
5. Managers: oversee the team, set quotas, etc.

Each of these jobs is different and likewise must be compensated differently. For example, closing new business is more difficult than managing existing customers. Use the same plan template, but alter the Opportunity Types, Basis, and Rates to match the relevant effort for each role.

Reward Results, Not Effort

I spent countless sales meetings listening to struggling salespeople complaining about the effort they were pouring into sales. While I empathized with their struggle, effort without results is meaningless.

Comp plans must focus on rewarding the results of hard work, not the work itself. Moreover, do not reward “almost” results. Accelerators or bonuses should only kick in when quota is exceeded.

Everything Must Be Public

Finally, the entire sales process, comp plan, and quota attainment must be open and public to the entire company. This ensures that everybody in the company can trust the sales process and see overall performance. This also ensures the sales team is accountable to their quota.

Final Thoughts

An effective comp plan can supercharge your sales efforts and attract top talent. Most importantly, it rewards both the company and the salespeople. This is an important part of being a salesperson – the ability to make a lot of money when you are successful. 

Skilled salespeople, armed with a good product, effective sales tools, and a generous well-defined comp plan equals a successful company.

Always be closing!

Need help with your comp plan? Zenaciti offers comp plan analysis, development, and optimization services. Contact us to setup an introductory discussion. 

The post How to Write an Effective Sales Compensation Plan appeared first on Zenaciti.

Way back in 2011, I was wandering through a trade show, numb from the identical sales pitches.  Then I saw a booth advertising the “Next Generation Firewall.”  What the heck was that? As a cybersecurity geek, I had to find out more.

I trotted over to the booth, which was hopping with excitement and activity.  I listened to a passionate and absorbing presentation from the company’s founder.  This was the coolest thing to come along in cybersecurity in years.  The company was a startup, named Palo Alto Networks (PAN).  PAN is one of the largest cybersecurity companies in the world today.

While PAN’s technologies did not live up to the hype, their messaging was spectacular.  The concept of a “next generation” security technology was catnip to buyers desperate for something that could stop attacks.  This messaging was so effective, buyers were rushing to buy their products, infuriating PAN’s larger, more established competitors.

The Wall of Buyer Skepticism

When companies (especially startups) bring a new product (or service) to market, they face an imposing set of disadvantages. A lack of people, money, reputation, and customers all conspire to keep paying customers away.  However, the most insidious obstacle is Buyer Skepticism.  As a startup, you are nobody.  Prospective buyers have no reason to trust you.  Why take a chance on a startup when there are larger, more established providers?

Consequently, any startup GTM strategy must address how the company will overcome buyer skepticism.  This was exactly the conundrum PAN faced in their early days.  Their solution was to sneak right past the wall, exploiting one of the most potent human weaknesses: curiosity.

Evaluating a Product

When buyers evaluate a company and its products, they will consider a wide variety of factors.  However, we can simplify these factors into four categories (which conveniently begin with the letter “c”):

• Credibility: Is the company trustworthy? Does it have references?  Do the people at the company sound and look like they know what they are doing?
• Capability: Does the company’s products work? Do they integrate with other technologies?  Do they relieve pain?  Can the company prove that?
• Capacity: Is the company able to deliver what they say? Do they have the people, relationships, and network to function?
• Cost: Are the prices and terms reasonable? Does the company have the financial resources to delivery capability and capacity.

When a company succeeds in all four areas, they usually make the sale.

Most startups and founders focus their energy on building capability and capacity, which makes sense.  Without a product or service everything else is moot.

However, once the product is working and the company is ready to sign up customers, it is critical to start building credibility.

Established competitors already have credibility.  This is why buyers feel more comfortable buying a mediocre product from a trusted brand versus an innovative product from an untrusted company.  Credibility allows a company to pass over the Wall of Skepticism.

Using Curiosity to Build Credibility

Building credibility is exceptionally difficult, unless a startup can overcome Buyer Skepticism.  This is where curiosity becomes your superweapon.

1. Define a strong vision for your products and services
2. Pique curiosity with enticing words and ideas
3. Reassure the prospect with expertise and empathy
4. Close the deal

Let’s step through this strategy.

Define a Vision

Why?  This is the ultimate question all startups must answer about themselves and their products.

• Why you?
• Why your product?
• Why are you better than what is already out there?
• Why not your better funded, more established competitors?
• Why now?
• Why are you doing this?

As the marketing guru Simon Sinek says, “people don’t buy what you do, they buy why you do it.”  To make buyers curious, you must know why you are interesting.

Consider Disney’s vision statement: “to make people happy.”  That is a simple, strong answer to why: “Why does Disney exist? To make people happy.”  Although, considering the last Star Wars movie, their success in meeting that vision is debatable.

Exploring these why questions helps a startup understand why they are unique.

Action Plan for Building Vision

1. Get your key team members or advisors together
2. Find compelling, concise answers to those questions asked earlier
3. Document those answers
4. Ensure everybody in the company can repeat those answers with conviction

Be careful with your answers.  Keep them concise and focused on customers, not yourself or your investors.

Pique Curiosity

Modern buyers are overloaded with options, sales pitches, and marketing content.  After a while, all the marketing content sounds the same.

Curiosity is both a strength and weakness.  While curiosity can make people seek out answers to vexing problems, it can also make them lower their defenses.  This is why hackers use enticing emails to convince people to click on malware.  Curiosity makes people click.

Startups can exploit curiosity to sneak into a buyer’s mind and past the Wall of Skepticism.  The buyer must see or hear a word, phrase, artwork, or design that instantly makes them think, “What is that?” or “I want to know more about that!”

To accomplish this, a startup must sound intentionally different and unique.  PAN used the phrase “next-generation,” Nike invented the phrase “Just Do It,” and Apple was “Think Different.”  All of these were unique phrases that made people want to know more about the brand.  You do not want to reveal your entire vision, merely tease it.

Action Plan to Create Curiosity

1. What is a word, phrase, or idea you can use that makes people curious?
2. Do those words reflect the company’s vision?
3. How can you deliver those concepts effectively?

Be careful that your words do not create confusion.  Using obscure, obscene, or outlandish phrases may seem funny, but they may repel buyers.

Demonstrate Credibility

Once a curious buyer approaches, you must quickly demonstrate credibility.  This means rapidly accomplishing two things:

• Show you understand the customer’s pain
• Show that you can alleviate that pain

Only a person with extensive domain expertise can do this.  Consequently, startups must place intelligent, experienced people “upfront” to engage with potential buyers early in the sales process.  These “pre-sales” experts must be able to start and maintain engaging conversations with prospective buyers.  Mostly, they must be able to reassure the customer they are capable and credible.

Pre-sales experts are the single most important component of any go-to-market strategy.  It is a perfect role for a founder, which is exactly what PAN did back in 2011.  They deployed their founder Nir Zuk into the booth to talk directly with prospective buyers.  Zuk is a brilliant and passionate engineer, who can instantly create credibility.  Zuk continues to play a key role in evangelizing PANs products to this day.

Curiosity followed with credibility supercharges your GTM efforts.

Action Plan for Intelligence Upfront

1. Ensure the first meeting with all potential customers includes a subject matter expert
2. Ensure these experts:
   1. Communicate the company’s messaging and vision
   2. Show the customer they understand their pain
   3. Demonstrate their ability to alleviate that pain

For more information about building rapport with customers, see How to Get Sales Prospects to Discuss Pain.

Close the Deal

Once the Wall of Skepticism is down and credibility is established, it is all downhill from there.  The final stage is to pivot to a product pitch, reassure the buyer you can solve their problems, and close the deal.

In this final phase, be careful not to destroy the credibility you built.  You want to sound confident, not desperate.  Desperation is repulsive to buyers.  Allow the buyer to drive the product demonstration.  Let them explore the capabilities.  Show confidence in your products, even if they are not perfect.

Once this stage is complete, you should be sending a quote or proposal to the customer, ready to close the deal.

Conclusion

Buyer skepticism is a massive impediment for startups entering the market.  Spending millions on far-reaching marketing campaigns to reach potential buyers may feel like the right thing to do, however it rarely works.  Most buyers are not going to take a small startup seriously, regardless of how many emails you send them.

Conversely, unique, targeted messaging is relatively inexpensive to produce and disseminate and, if done correctly, can be significantly more effective.  This will attract curious buyers, which is exactly what a startup wants.  Curious buyers are open to hearing an innovative, disruptive new approach.  Skeptical buyers are not.

Palo Alto Networks was not the first company to use these GTM strategies.  Many successful companies have employed these techniques.  Curiosity is potent.  If you can make prospective buyers curious and then build credibility, you may see the same explosive growth.

What do you think?  Share your feedback: andrew.plato@zenaciti.com.  If you are looking to develop a creative GTM strategy, let’s chat.  Zenaciti can help.

The post Overcome Buyer Skepticism with a Smart Go-to-Market Strategy appeared first on Zenaciti.

In the early 1980s, computers and their ads were dull, beige experiences populated with dorks in sweater vests.   Apple presented a stark contrast between their vision for computers and that of the computer titans of the time (namely IBM). In a single ad, with a single message (“Think Different”) Apple changed the entire computer market.

Of course, Apple would go on to fire their founder and almost destroy the company, but that is a different story with a different leadership lesson.

However, in 1984 Apple innately understood an important rule of running a startup: do not play your competitor’s game, make them play your game.

Nobody Gets Fired for Buying IBM

When you run a startup, you are always at a disadvantage.  Startups lack the people, money, time, and name recognition that larger, wealthier companies have.  Large companies will always use their dominant position to squash smaller startups.  Any competition with larger, entrenched players is inherently unbalanced and unfair.

Moreover, buyers are also biased to select products and services from larger companies.  Smaller startups are riskier, for the same reason stated above, limited resources.  In the early 1980s, IBM dominated the computer business.  Customers believed it was safer to buy from IBM.  Thus their largeness only helped them to become larger, and therefore overshadow any competitor.

Apple was a small(ish) computer company at that time.  They had a respectable reputation among computer nerds.  Their products were more advanced than IBM and the various PC clones, but they were also more expensive.  IBM owned the market.  Apple was playing a game that only IBM could win.

Enter the 1984 ad.  Suddenly, Apple is the coolest thing around.  Everybody wants one.  Where other computer companies struggled, Apple saw an opportunity.  There was an untapped potential that IBM was not addressing.  Computer buyers wanted to be special, unique, and … different.

Apple’s ad provided the market an exceptionally clear choice: we are cool, they are not.  Contrast is supremely appealing to buyers.  When the choices between options are clear, buyers can associate their identity to the product.  Buyers are not merely computer owners, they become Apple computer owners, which is different, special, and unique.

Apple changed the game.  Incidentally, Apple did the same thing in 2007 with the iPhone.  Which is why the rectangle in your hand looks the way it does.

The lesson here for startup sales and marketing teams is this: do not do what everybody else is doing.  That is a surefire way to disappear into the noise of a marketplace.  You must stand out from the crowd.  Even a poorly organized marketing effort that is unique and attracts attention is better than a well-crafted one that is the same as everybody else.  Be different. Intentionally different.

So, how do you do this?

Cultivating Creativity

For starters, you need creative people and an environment that inspires them.  That is easier said than done.  Creative people are unpredictable, weird, and sometimes terrifying (just hang around any art school for a few minutes, if you need this point proven.)  Anything that is truly unique is inherently scary, because it has no predecessor to prove it works.  This makes it easy for critics to dismiss creative ideas as stupid, dangerous, or destined to fail.

Creativity can be uncomfortable.  Investors, particularly the kind that are convinced they know everything, may aggressively challenge creative messages.  Some investors have this malformed methodology where they invest millions of dollars into a disruptive, creative company, only to then squash all disruptive and creative ideas.  They suffocate their own investments.

Likewise, employees may freak out when presented creative messages.  This is also a fear reaction.  When people achieve a level of comfort in a job, they will fight hard to maintain that comfort.  This means rejecting anything that threatens to disrupt that comfort, like a strange, new idea.

As a leader (founder) you must not only sell your creative ideas to customers, but also reassure the people around you (employees, investors, partners, etc.) that it will work.  You will not know if it works until it does (or does not.)  When people ask for data or proof that your crazy idea will work, you can only point to other instances, such as Apples 1984 advertisement, where a disruptive, creative idea did work.

Unfortunately, not all disruptive, creative ideas work.  The history of marketing is littered with creative ideas that cratered soon after launch.  One that pops into my mind was the LifeLock ads from 2007 where the CEO dared people to steal his identity.  It was definitely different.  It also laid down a challenge for hackers to prove him wrong, which they did…quickly.

Creative Guardrails

So how do you cultivate a creative space without falling into a creative crater?  Guardrails.  Lifelock’s idea failed because it compelled people to do something wrong.  The Lifelock team needed some basic guardrails around their messaging.

This is a funny contradiction about innovation and creativity: to encourage innovation you need to be open minded, but not so open minded you do something insane.  Guardrails place reasonable constraints around messaging to ensure it stays in a productive and practical space.

What do these guardrails look like?  They are unique for each company, however here are some generic ones you can consider:

Example Guardrails

• Do not ask the audience to do anything illegal, immoral, unethical, or disgusting. Lifelock needed to follow this guardrail.
• Do not associate your product with something repulsive, cruel, or oppressive. Apple’s ad did the exact opposite. It associated their product with freedom, beauty, and self-expression.
• Avoid the taboo topics: sexuality, religion, politics.  These topics are too emotionally charged to be wielded effectively these days.
• Do not insult people’s characteristics. It is not funny or clever to insult immigrants, disabled people, or redheads for example.
• Do not trivialize things that cause(ed) people pain, suffering, or misery. For example, slavery is never funny.  Do not ever use it, no matter how cute or sensitive you think you are.
• Tantalize, do not arouse. You do not want your audience feeling uncomfortable, embarrassed, or awkward.  You want them to be curious, inspired, and/or excited.
• Do not use copyrighted content. You can hint at it.  The best way to do this is to use similar words or designs.

Guardrails only can go so far.  And every time you create one, you may find yourself quickly breaking it.  The goal of any disruptive message is to want to make people know more about you.  Whatever images, phrases, or concepts you have, they should all leave your audience asking: “I want to know more about them, they look interesting.”

Conclusion

Thinking differently is vital if you want to stand out from the crowd.  Whatever your competitors are doing, you must be intentionally and overtly different than them.  Otherwise, there is nothing special about you and therefore no reason to select you over a more well-established brand.

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Rockstars are those hotshot employees that founders and investors crave. They are the unicorn CRO, CMO, or Product Managers that promise big ideas, big connections, and big sales to the company.

“Do I need to hire rockstars at this point?” pondered my founder friend.

“Fuck no!” I exclaimed with usual tact. “They are way more trouble than they are ever worth,” I continued. This kicked off a lively discussion (with fewer f-bombs.)

Rockstars are distractions. They feed egos not growth. What startups need are experts.

Rockstars vs. Experts

When you are in that tenuous early phase of a startup, you need people who are agile, creative, and can execute effectively against less-than-ideal plans. You want experience. However, many of the people who sell themselves as experienced startup rockstars, are merely frauds cashing in on a single success years (or decades) ago.

What startups need are experts who have experience sans the attitude.

How do you differentiate rockstars from experts?

• Rockstars are always telling stories about their amazing accomplishments of the past as a method to impress you. Conversely, experts use the past as an example of when they learned something.
• Rockstars routinely drop names of all the big shots they know. They will become especially name-droppy when under stress. Experts are more interested in ideas and goals, than personalities.
• Rockstars show minimal interest in the company’s plans or vision. Experts want to discuss the plans and goals all the time. They want to make sure they are meeting expectations.
• Rockstars demand a big compensation package and a lofty title. Experts want fair pay and a reasonable title that reflects their role, duties, and authority.
• Rockstars believe they are exempt from the company’s hiring practices, policies, or procedures. They expect “short cuts” on the way to getting an offer. Experts may not like all the procedures, but respect them as a necessary part of running a business.
• Rockstars tell you they know everything and have “been there done that.” Experts are quick to tell you what they do not know and want to learn.
• Rockstars ignore the founder when it suits them. Experts challenge the founder when it makes sense.
• Rockstars are overqualified. Experts are slightly underqualified.

Rockstars are not necessarily arrogant, self-absorbed jerks. They are usually quite personable and likable. They are after all, selling you on themselves. Difficult to do that if you are unlikable. Likewise, experts are not all humble, self-aware monks. They often have coarse personalities. The difference is how these two candidates approach their role. Rockstars coast on their previous success, experts want to build new success.

Rockstars Feed the Ego

Why are startups so enamored with rockstars?

When a startup is in its early stages, it is desperate for credibility. This is especially true in the early funding rounds. The founder(s) and investor(s) want to validate that the company, its products, and its market are all viable. They are desperate to get the company on the map and make a name for themselves (so they can all exit with big paydays.)

The responsible way to do this is to focus on building a great product, creating loyal customers, and cultivating valued partners. Those are all “heads-down” activities that take time. They are not sexy. They are the nuts and bolts grind of everyday.

Rockstars promise a shortcut. They are the Billy McFarland’s of Startup world. They make promises of great successes using their huge network and vast experiences, in exchange for a giant comp package. Foolish founders and weak investors fall for this, as they are desperate to validate the business. As such, the rockstars feed the egos and make everybody feel important.

Of course, the same thing always happens. These rockstars waste time and money, dancing and waving their hands, constantly telling everybody of what a genius they are. Eventually the walls close in and they jump ship, to the next startup desperate for credibility.

People do not magically give a company credibility. Those people must be able to execute the company’s mission. If they cannot do that, then it does not matter who they know or what successes they had in the past.

What About All Those Startup Rockstars?

They did not start as rockstars. The people who become real rockstars, started out as experts. They applied themselves, stuck to a vision, and generated success iteratively. Also, most rockstars had tremendous help on their path to fame. You do not build the next ChatGPT alone in your garage. It takes the contributions of numerous people, united around a set of common goals.

Think Past Your Ego

The rockstar issue is one of the many issues you will face as a founder where you must think past your own ego. The ego-centric thing to do is to hire rockstars, as they will make you feel good about your company. The intelligent thing to do is to hire people who will challenge you and bring creativity to the company. These people may not always make you feel comfortable, but they are much more likely to execute against the company’s vision and mission.

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It was quite a turnaround. Honestly, it was not that difficult.

Turning around a failing customer relationship is one of the more rewarding things you can do as a founder. It is also relatively easy, if you have a growth mindset and can handle some pain.

Let’s look at how you can turn the most spittle flecked, rage monster into a champion for your company.

For Sale: Pain Relief

While your company may sell products and/or services, that is not what customers purchase. Customers buy pain relief. They have pain(s), your products and/or services will make the pain(s) go away.

Customer pain comes in many different flavors, such as inefficiency, inconsistency, human errors, excessive costs, or a barrier to progress. In 2011, my customer needed better security scanning to pass audits and win business. The lack of security monitoring was a barrier to opportunity. Opportunity barriers are especially painful to companies. Companies spend millions (billions?) a year to remove these barriers since they limit revenue and growth. For example, the entire cloud computing industry is one giant virtualized ibuprofen that makes deploying applications easier.

This customer hired my company for pain relief. We were doing the opposite, causing pain. The customer did not care about our internal problems, inexperience, or the consultant’s incompetence.

Consequently, to make the situation right, I needed to make a commitment.

Growth Commitment

The consultant assigned to the project got overwhelmed. Rather than ask for help, he blamed the customer, the firewall manufacturer, the sales team, and so forth. More specifically, he approached the project with a fixed mindset. He believed that since he was unable to do the work, it was therefore impossible, and the company should never have sold the customer the service in the first place.

I fired the consultant and took on the project myself. I approached the issue with a growth mindset: there was a solution, I merely did not know it, yet.

I did lot of reading and tinkering. After a few long nights, I figured it out. While it was difficult, it was absolutely possible. When the firewall operated as expected, I had a great sense of accomplishment. The customer was delighted. The pain was gone.

If you want to turn around a relationship, you must commit to relieve the pain. Otherwise, what use are you? Incidentally, this same concept applies to friends, neighbors, spouses and most relationships. If you want rewarding relationships, you need to commit.

Your Value is Your Commitment

In my recent blog, Should You Fake It Until You Make It, I discussed the importance of commitment when building a business. Customers judge their vendors based on their ability to uphold commitments. Likewise, people judge you on your ability to meet commitments. If you can make and keep commitments, you are going places. If you blame others, make excuses, and play the victim, you are going nowhere.

Furthermore, you cannot push your problems on to your customers. If your team lacks the skills, they need to acquire them, quickly. If your product cannot do what it says, then you need to fix it, now. If your salespeople overpromised, then you need to overdeliver. Once the deal is signed, you cannot back out of that commitment. You also do not get to re-write the story to suit your inability to handle learning.

As a founder, you must stomp out toxic, blame-culture at the first signs. When your people are blaming others rather than solving problems, the company is on a bad path. Furthermore, you must uphold and nurture a growth mindset. For more information, read Carol Dweck’s book Mindset or FS Blog has a good summary.

Focus on Pain

Lastly, your entire company, must focus on how you are reducing or eliminating customer pain, not causing it. I have sat in countless meetings (in my own even) where people blathered endlessly about all their grandiose ideas, telling one pointless story after another, never once addressing how they are going to reduce a customer’s pain. You are either reducing pain or increasing it. Be on the left side of that equation.

The simple formula to turn around irate customers:

• Listen to the customer and their pain
• Ensure every aspect of your business understands customer pain: sales, marketing, messaging, pricing, delivery, customer success, support, etc. Nobody gets to avoid or ignore the customer’s pain.
• Require a growth mindset. Stomp out blame.
• Make and meet commitments.

It really is that simple.

What do you think? I love feedback, even the negative kind. Email me at andrew.plato@zenaciti.com with your thoughts, suggestions, or insults.

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Technically Savvy Buyers can be anybody, with any title, and from any background. That the quiet, nerdy person in the back of the room with pink hair and tattoos might be the real decision maker, even if they do not have the title. Their technical expertise makes them hugely influential. That is the person you need to convince if you want to close the deal.

One way you can tell you are working with a Technically Savvy Buyer is they ask a lot of specific, pointed questions. Answer them honestly. They can see through marketing fluffery.

Recently, I was advising a cloud security startup on their go-to-market strategy. I will share with you the advice I shared with them regarding selling to this prickly batch of buyers.

Things Technically Savvy Buyers Care About

• Why are you in business
• What specific problems does your product/service solve
• How it does it solve those problems (with details)
• Why is your product/service unique or special
• Who else has been successful using it
• What are the risks or potential ways things could go wrong

Things Technically Savvy Buyers Do Not Care About

• Who is on your board or an executive
• Who invested in the company and why
• The awards you have won, especially vanity awards
• How many “influencers” you know
• What you accomplished ten years ago at a different company
• Numbers or statistics you made up that lack evidence
• Any mention of the word “Musk”

Mediocre salespeople sell products.  Good salespeople sell themselves.  Great salespeople sell ideas.

What are you selling? Talk about big ideas, how you solve them. Do not sell your products.  Rather sell an idea that your product helps achieve.  Technically savvy buyers want to have engaging conversations about tech.  They do not want to hear about what you did in the 1990’s at some dot.com.

While you may need to simplify your products for a broad audience, be on the look out for technically savvy buyers. They are more influential than you may think.

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These are all reasonable explanations, yet they ignore the most obvious one: outlandish valuations. Is a startup with $5M in revenue worth a billion?

No…and to think otherwise is outright delusional insanity. However, I do not fully understand the absurd valuation math of Silicon Valley. It seems that if an investor believes a valuation is true, then it is.

Keep in mind, this is the place that minted valuation absurdities like Theranos, Webvan, and (here is an oldie but a goodie) Cue Cat. Yes, that Cue Cat. In fairness, for every Cue Cat that Silicon Valley funded, there are dozens of genuinely innovative companies that contribute to the forward progress of humanity.

Whether it is absurd valuations or the lack of baby formula, a reset for startups seems inevitable. So, what kind of evasive maneuvers can startups take to weather the coming dark times?

Vision

To paraphrase the great philosopher Freewheelin’ Franklin: vision will get you through times of no customers better than customers will get you through times of no vision.

Vision is a description of the future. A well-defined, well-articulated bright future inspires hope. Hope that the company will successfully navigate through the darkness. Hope that rewards are attainable. Hope that all the struggle, toil, and stress will be worth it and have meaning.

To paraphrase Jyn Erso, startups are built on hope.

To promote a brighter future, startup leaders must emphatically promote the company’s vision. To do that, answer four questions:

1. Why does the company exist?
2. What problem(s) does the company solve?
3. What are the values of the company and its people?
4. How can people find meaning and relate to those values?
5. Where is the company going?

Do not make your vision about money — ever. Money is a weak motivator. Moreover, nobody cares about making money for the investors or founders. Vision must be about something people can genuinely care about. Money must be the result of staying true to the company’s vision, values, and mission.

Vision gives people purpose. Without purpose, employees invariably ask themselves “why am I here?” It does not matter how smart you are, or how many big shots you know, or how much money you have in the bank, without purpose people have no reason to stick with the company.

Vision will get you through the downturn. However, words alone will not solve everything. There are some other ways to stay on target.

Automate

One of the many ways we sap meaning from people is to put them into roles with repetitive, boring work. Automate repetitive tasks and promote the people into more meaningful work.

The mere act of shifting people’s focus from performing a repetitive task to automating that task, provides a more satisfying job. Moreover, one a task is automated, your products and services become more reliable, scalable, and valuable.

Put that Coffee Down

Maybe you need Alec Baldwin to yell this at you: Always Be Closing. You need to sell, sell, and sell some more. To do this, you must arm your sales team with the resources they need to effortlessly demonstrate your company’s value.

For example, all salespersons must be able to expertly demo your products at a moment’s notice. If you sell services, you must have a library of sample output (reports, content, etc.) that demonstrate your capabilities and expertise. Demos and samples are effective ways to communicate your company’s competitive advantages.

In my experience, the only way out of a hole, is to sell your way out. There are only so many cuts you can make to staff or spending before the company becomes ruined. Investing in sales and marketing is the ticket out of the dark times.

However, before you charge ahead, be clear with your sales and marketing teams that results are the only metric that truly matters. Effort is expected, but results are what they are measured on.

Product Improvements

You know the next valuation is going to be low(er). So why not actually improve your app and have something more valuable? Downturns are an excellent time to clean up all the crap in your app that is holding you back. Quit dickering around with every dumb customer feature request and go back and fix the big stuff.

Emerge from the darkness with products and services that are more valuable, and therefore can command reasonable valuations.

Repackage

When times are tight, buyers go bargain hunting. They expect every app, service agreement, and subscription to go farther, offer more, and solve more problems. If you are a special little unicorn app that only works in a narrowly defined set of requirements, then it is time to repackage yourself and broaden your appeal.

Build packages that solve entire business problems all in one. Moreover, reprice everything into monthly subscriptions, usage-based billing, or extended terms to make payment easier on customers.

Partner Up

Rather than be a lone sinking ship, partner up with other sinking ships. This also can help with repackaging. If you can bring partners to the table that fill gaps in your offerings, then you have more to offer.

However, before you sign up a bunch of partners, make sure you understand how each partner makes money. Each partner must be able to see how they can benefit, otherwise it is not a real partership.

However, be honest with your scale. A $5M startup is not going to have the market reach of a titan like Cisco or Microsoft. If you partner with a bigger player, then you need to accept the inherent unequalness of the partnership.

Be Brutally Honest

Unfortunately, tough times mean doing more with less people, resources, and time. Layoffs, cutbacks, and delays always feel bad.

Do not sugar coat the unwelcome news. This only makes you look foolish and desperate. Also do not make it about you. Be honest about the changes. Show remorse but show resolve as well.

The intent is to show you care about people, but you are committed to staying the course and seeing the bad times through. This is why vision is so desperately important in bad times. Layoffs and lost deals are the ideal time to double down on the company vision, values, and mission. It pulls everybody back together and recenters them on why the company exists.

Conclusion

Do not give up. Downturns are inevitable. Yet, nothing bad lasts forever. Startups can survive (even thrive) in bad times. Moreover, as the Wired article points out, troubled times can mint stronger companies. The key to coming out of this storm is keeping your eyes on the prize.

To quote one of the greatest philosophers I knew: perseverance furthers.

The post Surviving the Startup Crash appeared first on Zenaciti.

“At least I did not kill my startup like that!” one founder exclaimed.

This set off a discussion about all the ways startups collapse. Stories of failed startups are uncommon. However, for every sensational fail like Theranos, there are many more that simply fade into irrelevance. After a lengthy discussion, we came up with ten things that can kill a startup, as well how leaders can commute a startup death sentence.

1. No Sales

You can have the greatest idea in the world, but if nobody pays money for it, you might as well throw it away. Startups that cannot sell are startups that cannot survive.

Solution: Always be closing. Sales must be the top priority for everybody, especially the CEO.

2. Angry Customers

While customers of startups often know they are taking a risk, that tolerance has limits. Unhappy customers spread bad news quickly. When every sale is important, angering customers with poor support, unfulfilled promises, or unfixed bugs can be devastating.

Solution: Dedicate a person (or team) to customer success. Have a mechanism to capture and respond to customer feedback.

3. Irresponsible Cash Burn

Most startups burn cash. Not all cash burning is good. Burning cash to hire (the right) people or procure necessary supplies is good. Burning cash on ludicrous parties, lavish offices, or expensive vendors not only shows a lack of leadership, but it also shows a lack of control.

Solution: Aggressively scrutinize spending. Implement spending controls to prevent any executive (including the CEO) from spending more than a set amount.

4. Lack of Product (Management)

This may seem obvious, but plenty of startups get funded based on innovative ideas, and then faceplant when they confront the reality of product development. Even releasing flawed products, that are fixed later, is better than releasing nothing.

Solution: Hire a product manager, set goals, and meet them. Do not allow perfection to become the enemy of good (or even mediocre) product.

5. Internal Strife

It is profoundly difficult to build a product, bring it to market, and convince customers to buy it. It is impossible to do those things if the people in the company are going in different directions. Unifying everybody around a common set of goals and values is mandatory for success. Equally important is getting rid of the people will not get on board.

Solutions: Provide leadership coaching for executives. Require unity to a strategic plan a condition for executives to remain employed.

6. Financial Shenanigans

Most founders find budgets, sales forecasts, and unit economics boring because…well they are boring. However, they are also supremely important to running a company effectively. When leaders begin messing around with the finances, to either hide failure or reassure jumpy investors, there is nowhere to go but down.

Solution: Empower finance team to report independently to the board. Perform annual, independent financial audit.

7. Outmaneuvered

When an innovative product emerges, competition is inevitable. Startups that become stuck on early success and fail to keep pace with their competitors can get outmaneuvered and rendered irrelevant. Moreover, if a large competitor (like Microsoft) enters the market, they can outspend smaller players resulting in the same result.

Solution: Pay attention to the competition and meet those product development goals.

8. Failing to Plan

While it may be a cliché, failing to plan is a plan to fail is an accurate statement. It is easy to become distracted with everyday struggles and problems. Moreover, it is equally easy to dismiss planning as overly formal, especially in fast-moving DevOps companies that promote a “fail fast” mentality. The purpose of a business plan goes beyond formality. Plans set boundaries and keep the company focused. Moreover, they prevent any one person (or team) from redirecting the company into some other product or effort.

Solution: Document an annual strategic plan. Get buy-in from the team. Enforce it. Stick to it.

9. Arrogance

When money floods in, some leaders transform into lunatics. This can lead to spectacular flameouts, such as WeWork. When arrogant leaders fancy themselves as prophets, the company is on a one-way trip to an early grave.

Solution: Do not enable craziness. A healthy dose of skepticism and reason can quickly defuse a lunatic.

10. Lost Vision

Among all the things we discussed, the most insidious killer of all startups is one of the most difficult to detect: a loss of vision. Vision is what a startup hopes to achieve and become. It is the intangible why of a company that Simon Sinek references. Large companies with an established customer-base and entrenched internal power structure can stagger along for decades with no vision. Startups cannot. The company’s momentum, enthusiasm, and focus all depend on the vision. Many startups lose vision when the founders exit, or the products fail to gain traction in the market. Immature leaders will dismiss talk of vision and core values as “touchy feely” nonsense.

It is vitally important for startup leaders to cultivate, communicate, and command a clear vision, mission, and core values. Many of the other items on this list can trace their origin back to the loss of vision within the company.

Solution: Document the company’s vision, mission, and core values. Refer to them regularly.

Conclusion

Startups are fragile things. Unlike big companies, which can weather mistakes, startups have less of a safety net. The primary advice this group of founders had was simple: stay on target. Startups routinely get lost and distracted along the path to success. Whether you lead a startup or work at one, stick to a plan.

Moreover, money is seldom why a startup fails. Rather, its leadership (or the lack thereof) that causes the chain of events that lead to lost money, lost deals, and lost opportunities.

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