The Art of the Start 2.0
Overall Rating 7 /10
Idea: How to startup a business and pitch to investors
Tagline: Guidebook to starting companies and pitching
Rereadability: 5/10 - Very useful to re-read when starting or pitching or running a startup - outside of this scope do not re-read
Time to Read Synopsis :
To Be Tested
There are very few people who don't become more interesting when they stop talking.
"Implementation is hard-and where the money is."
"UNDERPROMISE AND OVERDELIVER"
Everyone is wrestling with some things, but most people don’t talk about them—some people don’t like to probe you about your weaknesses because they think it’s unkind or awkward. And it’s often difficult for us to see and accept our own weaknesses. So when you are really in synch with others about what you’re wrestling with, that is a great step forward, because this feedback is probably true.
THEREFORE, WHAT?* This question arises when you spot or predict a trend and wonder about its consequences. It works like this: "Everyone will have a smartphone with a camera and Internet access. Therefore, what? "They will be able to take pictures and share them. Therefore, what? "We should create an app that lets people upload their photos, rate the photos of others, and post comments. And, voila, there's Instagram.
ISN'T THIS INTERESTING? Intellectual curiosity and accidental discovery power this method. Spencer Silver was trying to make glue but created a substance that barely holds paper together. This oddity led to Post-it Notes. Ray Kroc was an appliance salesman who noticed that a small restaurant in the middle of nowhere ordered eight mixers. He visited the restaurant out of curiosity, and it impressed him with its success. He pitched the idea of similar restaurants to Dick and Mac McDonald, and the rest is history.
IS THERE A BETTER WAY? Frustration with the current state of the art is the hallmark of this path. Ferdinand Porsche once said, "In the beginning I looked around and, not finding the automobile of my dreams, decided to build it myself. * Steve Wozniak built the Apple I because he believed there was a better way to access computers than having to work for the government, a university, or a large company. Larry Page and Sergey Brin thought measuring inbound links was a better way to prioritize search results and started Google.
WHY DOESN'T OUR COMPANY DO THIS? Frustration with your current employer is the catalyzing force in this case. You're familiar with the customers in a market and their needs. You tell your management that the company should create a product because customers need it, but management doesn't listen to you. Finally, you give up and do it yourself. IT'S POSSIBLE, SO WHY DON'T WE MAKE IT? Markets for big innovations are seldom proven in advance, so a what-the-hell attitude characterizes this path. For example, back in the 1970s a portable phone was incomprehensible to most people when Motorola invented it. At the time, phones were linked to places, not people. However, Martin Cooper and the engineers at Motorola went ahead and made it, and the rest is history. Don't let anyone tell you that the "If we build it, they will come theory doesn't work. "The genesis of great companies is answering simple questions that change the world, not the desire to become rich.”
The first follower is what transforms the lone nut into a leader.
The key desirable similarities are: VISION. Although this has become an overused word uttered by wannabe visionaries, in the context of soul mates, it means that founders share a similar intuition for how the startup and market will evolve. For example, if one founder believes that computers will remain a business tool for large organizations, and the other believes the future is small, cheap, and easy-to-use personal computers for everyone, they aren't a good match. SIZE. Not everyone wants to build an empire. Not everyone wants a lifestyle business. There aren't right and wrong expectations; there are only expectations that match or don't match. This doesn't mean founders can know what they want at the start, but it's nice if they're at least on the same page. COMMITMENT. Founders should share the same level of commitment. Does the startup, family, or a balanced life come first? It's hard to make a startup work when the founders have different priorities. One founder wanting to work for two years and flipping the startup for a quick sale and the other wanting to create a company that will endure for decades will create problems. Ideally, founders agree that they're in it for at least ten years.
The differences that are desirable include: EXPERTISE. At a minimum, a startup needs at least one person to make the product (Steve Wozniak) and one person to sell it (Steve Jobs). Founders need to complement each other to build a great organization. ORIENTATION. Some people like to sweat the details. Others like to ignore the details and worry about the big issues. A successful startup needs both types of founders to succeed. PERSPECTIVE. The more perspectives, the merrier. These can include young versus old, rich versus poor, male versus female, urban versus country, engineering versus sales, techie versus touchy, Muslim versus Christian, and straight versus gay.
ASSUME THE BEST, BUT PLAN FOR THE WORST. Founding teams blow up all the time. Your startup may be the exception, but just in case, make everyone (including yourself) vest his stock over time to prevent people who leave in less than four years from owning large amounts of equity.
Weave a MATT (Milestones, Assumptions, Tests, Tasks) A mat is "a heavy woven net of rope or wire cable placed over a blasting site to keep debris from scattering", according to the American Heritage Dictionary of the English Language. Preventing scattering is what's necessary for startups because entrepreneurs need to do many things at once. To stay in control, you need to weave a MATT, which stands for milestones, assumptions, tests, and tasks.*
--> MILESTONES. Accomplishing a large number of goals is a necessary objective for every startup. However, some goals stand above the others because they mark significant progress along the road to success.
The five most important milestones are:
1) Working prototype
2) Initial capital
3) Field-testable version
4) Paying customer
5) Cash-flow breakeven
There are other factors that affect the survival of the organization, but none are as important as these milestones. Their timing will drive the timing of just about everything else, so you should spend 80 percent of your effort on them.
--> ASSUMPTIONS. This is a list of the typical major assumptions that you might make about your business:
Sales calls per salesperson
Cost of customer acquisition
Conversion rate of prospects to customers
Length of sales cycle
Return on investment for the customer
Technical support calls per unit shipped
Payment cycle for receivables and payables
Discussing and documenting these assumptions at an early stage is important because they are a reality check on the viability of a startup. For example, assuming that the length of the sales cycle is four weeks and finding out that it's a year will cause cash-flow problems.
--> TESTS. You can come up with a solid list of assumptions, but everything is theoretical until you start testing them:
Does the customer-acquisition cost permit profitable operation?
Will people use your product? Can you afford to support them?
Can the product withstand real-world use?
--> TASKS. Finally, there are tasks that are necessary to reach milestones and test assumptions. Any activities that don't contribute to achieving them are not crucial and are low priority.
Essential tasks include:
Setting up accounting and payroll systems
Filing legal documents
The point of the list of tasks is to understand and appreciate the totality of what your startup has to accomplish and prevent important items from slipping through the cracks in the early, often euphoric, days. Once you have your MATT, the next steps are to communicate it to the entire company, make revisions, begin implementation, and monitor results. Of all things, your MATT is not something to create and never refer to again. It is the epitome of a document to put to work and to alter.
1. What kind of corporation should we form?
Answer you're looking for: "C corporation, assuming the goal is to create the next Google.
2. In what state should we incorporate?
Answer you're looking for: "Delaware.
3. Do our investors have to be accredited investors?
Answer you're looking for: "Yes. Answer that should scare you: "No.
4. Should two founders split the company right down the middle?
Answer you're looking for: "No, you should allocate 25 percent to future employees and 35 percent to the first two rounds of investments. That leaves 40 percent for the founders to split among themselves.
5. Should we sell common or preferred stock to investors?
Answer you're looking for: "Preferred.
6. Should all employees, including founders, go through a vesting process? Answer you're looking for: "Yes, everyone should vest because you don't want a founder to leave with a significant percentage of the company after a few months.
7. Should we pay consultants with stock options?
Answer you're looking for: "No, stock options are for long-term employees, not short-term consultants. If you can't afford consultants, do the work yourself.
8. Can we get a bank loan to start our business?
Answer you're looking for: "No, assuming it's a tech business. Tech businesses don't have liquid assets to use as collateral.
9. Should we use an investment bank, broker, or finder to raise seed capital?
Answer you're looking for: "No, angel and venture capital investors view early-stage entrepreneurs who use a banker, broker, or finder as clueless.
10. What do we need our revenue projections to look like in five years to attract investors?
Answer you're looking for: "No investor will believe them anyway, but they should be as good as the closest comparable successful company that has already gone public. Also, you don't want money from investors who do believe your projections, because they are clueless.
11. How long should our business plan be?
Answer you're looking for: "You shouldn't write a business plan. You should get customers.
12. Is there someone else you would also recommend who could be a good adviser?
Answer you're looking for: "Sure, my expertise is narrow, but let me come up with a list of other possibilities. Answer you're not looking for: "No, you don't need anyone else; I know everything you need to know.
13. Do you think we need a real CEO?
Answer you're looking for: "Maybe, someday. But probably not right now. What you really need right now is a great product.
14. Should we use a headhunter to recruit people?
Answer you're looking for: "No, at this stage, you don't have the money and can't afford to spend what little you have on headhunting fees.
15. What should we tell investors when they ask us for the valuation of the company?
Answer you're looking for: "Find out what three or four investors think is fair, and then get more market traction to push it up. Wrong answers: "Price it high and negotiate down, "Price it low and negotiate up.
16. What do you think the KPIs are for our business?
Answer you're looking for: dependent on your sector and type of business.
Answer you're not looking for: "What's a KPI?
17. How do I build buzz?
Answer you're looking for: "Build something great and use social media.
18. How big should our advertising budget be?
Answer you're looking for: "Zero dollars-use social media instead.
Again, these questions are relevant to U.S. companies with Google-esque ambitions, but the same kinds of questions apply in other circumstances. Run away from anyone who wants to advise you who can't answer most of these questions.
The best brands never start out with the intent of building a great brand. They focus on building a great-and profitable-product or service and an organization that can sustain it.
Pick a Good Name
A good name for a startup and a product is like pornography: hard to define, but you know it when you see it.
If you want a good example of what not to do, look at the names of Japanese products. For example, if your goal was to confuse your customers, you could not do a better job than naming your cameras the Nikon D4S, Df, D3x, D810, D7000, and D5100.
Here's how to pick a good name:
CHECK OTHER USAGE. Two websites are your best friends in the naming process: the U.S. Patent and Trademark Office and the Network Solutions WHOIS database. The former helps you determine if your name is already used. The latter helps you figure out if domain names are available. A third website to check is the Twitter Advanced Search page to see if the Twitter name is available. You should also perform these searches on Facebook, Google+, Pinterest, Instagram, and LinkedIn.
PICK A NAME WITH "VERB POTENTIAL. In a perfect world your name enters the mainstream vernacular and becomes a verb. For example, people "google words instead of "searching for them on the Internet. Names that work as verbs are short (no more than two or three syllables) and simple. I look forward to the day when people "canva a graphic instead of "design it.
EXERCISE See if the names you're considering work in this sentence: "__________ it.
RUN IT PAST PEOPLE FROM OTHER COUNTRIES. Use online translation sites to check the meaning of your names in other languages. Even better, once you're sure you have the domain, ask your social media followers what the name means in their language. You're more likely to catch slang and negative connotations by using human assets in this manner. PICK A WORD THAT
BEGINS WITH A LETTER EARLY IN THE ALPHABET. Someday your organization or product name will appear in an alphabetical list. When this happens, it's better to appear early in the list than later. Imagine, for example, the conference directory for an event with a thousand exhibitors. Where would you like your listing?
AVOID WORDS THAT BEGIN WITH NUMBERS OR X AND Z. Numbers are a bad idea for names because people won't know whether to use numerals (123) or to spell out the number (One Two Three). X and Z yield names that are difficult to spell even after hearing them, and they are late in the alphabet.
PICK A NAME THAT SOUNDS DIFFERENT. A name should not sound like anything else. For example: consider Clarins, Claritin, and Claria. Which name refers to online marketing versus cosmetics and antihistamines? Even if you did remember, it's likely that you would associate all three words with one category.
AVOID MULTIPLE-WORD NAMES UNLESS THE FIRST WORD HAS VERB POTENTIAL OR THE ACRONYM SPELLS OUT SOMETHING CLEVER. For example, "Google Technology Corporation would have been fine. The name Hawaiian Islands Ministries, a para-church organization that trains pastors and ministers, becomes "HIM -a clever homonym with "hymn and a play on "Him -that is, God.
CAPITALIZE THE FIRST LETTER. I made a mistake when naming a company I cofounded called garage.com. Lowercasing the g made it difficult to pick out the name in blocks of text. The visual cue that the word was a proper noun wasn't there-you'd think that someone named guy (sic) would know this.
I've never seen a startup die because it couldn't scale fast enough. I've seen hundreds of startups die because people simply refused to embrace their product.
TAKE THE OPPOSITE TEST. Most companies use the same terms to describe their product. It's as if they all believe that their customers have never heard a product described as "high quality, "robust, "easy to use, "fast, or "safe. To see what I mean, apply the Opposite Test: Do you describe your offering in a way that is opposite to that of your competition? If you do, then you're saying something different. If you don't, then your positioning is useless.
EXERCISE STEP 1: Write a one-paragraph description of your customer's experience when she's using your product.
STEP 2: Call up a customer and have her write a one-paragraph description of using your product.
STEP 3: Compare the two descriptions.
Cross the Chasm - In Crossing the Chasm, Geoffrey Moore explains a new-product adoption life cycle that includes five different kinds of psychographic profiles: innovators, early adopters, early majority, late majority, and laggards. Crossing the chasm requires sucking up, because innovators and early adopters are often bloggers, journalists, and other "experts. They expect you to curry favors.
This is how to suck up:
BE REALISTIC. It's much easier to help entrepreneurs if they have a great product. People want to be affiliated with products that are innovative, hip, and cool. The amount of sucking up you have to do is inversely related to product quality.
SHOW EMPATHY. Who can resist a play on emotion? "Please help us..... We're just a little startup trying to make a go of it. Actually, I'll tell you who can resist this: buttheads who aren't worth sucking up to. The empathy approach usually works on me.
EMPHASIZE UTILITY. The best suck-ups are mutually beneficial. You are not only getting something; you are also giving something. Or, if you're not in a position to give something right away, you promise to do so in the future.
PAY IT FORWARD. According to social-psychology expert Robert Cialdini, if someone does something for you, you're obligated to do something in return. Therefore, one strategy is to do things indiscriminately for people and rack up points on the karmic scoreboard for later.
GO EASY ON THE FLATTERY. You might think that this is the most important element in a suck-up, but most of the people you're sucking up to are frequently flattered (deservedly or not). Therefore, flattery isn't always effective. One sentence at the beginning of an e-mail is enough: "I learned a lot by reading The Art of the Start. Then focus on good reasons why the person should help you.
PERSONAL STORIES. Epic is not necessary; illustrative is enough. For example, "My father owned a Cadillac, and he drove it 150,000 miles without major problems versus "This car will last you a long time. Or, "I gave my teenage son an Android phone, and he told me he liked it better than his iPhone versus "Android phones are good. Or, "My girlfriend wanted to sell her Pez dispensers online versus "I wanted to create a perfect market. (This is the story that Pierre Omidyar uses to explain the genesis of eBay.)
GREAT ASPIRATIONS. The hero wants to make the world a better place and knows that there must be a better way. Working nights and weekends and always believing in what he's doing, he creates a better gizmo that people love. To his surprise and delight, lots of people like what he creates. Example: Apple cofounder Steve Wozniak wanted to make it possible for everyone to use computers.
DAVID VERSUS GOLIATH. Goliath has a head start, incredible resources, and a cast of thousands. There's no way that David can succeed against behemoth Goliath. But young David whips out his technological breakthrough-a slingshot-and succeeds despite the wisdom of the masses that there's no way he could. Examples: Southwest Airlines taking on the big airlines, Etsy taking on eBay, and Pinterest taking on Facebook.
PROFILES IN COURAGE. Our hero suffers under major injustice. Despite these woes, he perseveres and accomplishes great things. When you learn what he has done, your reaction is "There's no way that I could have done that. Example: Charlie Wedemeyer, the high school football coach with ALS, and Oskar and Emilie Schindler, the couple who protected Jews during World War II.
A positive example of providing a safe, easy first step is how a solar-panel company called Sungevity provides estimates. Whereas the first step for working with most home improvement companies is setting up an appointment, Sungevity asks for your address and then uses a satellite photo to make an estimate of the size, power, and cost of solar panels for your house.
Doctors conduct postmortems to figure out why people died. They do this to solve a crime, prevent the death of others, and satisfy curiosity. However, once somebody dies, it's too late to help him.
His idea is to get your team together and pretend that your product has failed. That's right: failed, cratered, imploded, or "went aloha oe, as we say in Hawaii. You ask the team to come up with all the reasons why the failure occurred. Then each member has to state one reason until every reason is on a list. The next step is to figure out ways to prevent every reason from occurring.
EXERCISE Write a list of at least ten factors that could kill your launch. How many can you eliminate?
Incubators focus on providing office space and shared services. Accelerators focus on mentorship, training, and helping you make connections to customers, partners, and sources of capital.
How do we launch a product if we don't have a lot of money? A: Two words: social media. It's the best thing that ever happened to inexpensive launches.
Establish a Culture of Execution Do not pray for an easy life; pray for the strength to endure a difficult one. -Bruce Lee
As the leader of the organization, you are responsible for results, and results are the product of a culture of execution. This means that everyone delivers on their promises unless there are unforeseen circumstances. Not everyone will succeed in doing so, but the corporate expectation is ultimately achieving goals, not missing them. Here's how to establish this culture:
SET AND COMMUNICATE GOALS. The simple act of setting goals and communicating them increases the likelihood that your startup will achieve them. It gets everyone on the same page and provides a day-to-day guide for what employees need to do. This applies to every task: finalizing specifications, building a prototype, signing up early customers, shipping, collecting, recruiting, finishing marketing materials.... The list is long.
MEASURE PROGRESS. Goals only work if you measure progress in achieving them. As the old saying goes, "What gets measured gets done. This also means you'd better pick the right goals to begin with, or the wrong things will get done. In a startup, you should measure and report results every week. As your startup matures and uncertainties in your technology, market, and people decline, you can shift to a monthly schedule.
ESTABLISH A SINGLE POINT OF ACCOUNTABILITY. If it takes more than ten seconds to figure out who is responsible for achieving a goal, something is wrong. Good people accept accountability. Great people ask for it. For the good of your entire organization, establish it. A person who knows he is being measured and held accountable is highly motivated to succeed.
BE PART OF THE SOLUTION. As a leader, you're either part of the solution or part of the problem. This means that you're either establishing a culture of execution or you are establishing a culture of undisciplined, unjustified optimism. Your job is to "be the adult, set the example, and deliver what you promise too.
REWARD THE ACHIEVERS. The people you reward in a startup are the ones who deliver. You can use options, money, public praise, days off, or free lunches-it doesn't matter. What does matter is that you recognize achievers, not the people who are along for the ride.
FOLLOW THROUGH UNTIL AN ISSUE IS SOLVED OR NO LONGER RELEVANT. We all like to work on the newest, hottest stuff. It's human nature. Who wouldn't rather be involved with the next breakthrough product instead of fixing the current one? Don't stop paying attention to a project because it gets boring. Fixing bugs is tedium to you, but it's not to the customer who recently bought your product.
1. What is our top priority?
2. When will we ship?
3. When will we run out of money if we don't ship?
4. How much does it cost to acquire a customer?
5. What is our true, fully loaded cost of operations?
6. Whom do we compete with?
7. What can our competition do that we can't?
8. Who are our nonperforming employees?
9. What can we beg, borrow, or lease that we are buying?
10. How good am I as a leader?
Nay Sayer Morpheus - If you don't have one, you need to get one. Morpheus should have at least ten years of operating experience and a background in finance, operations, or accounting. This position requires knowledge of the real-world operation of an organization. The role isn't "naysayer but "realist. A background as a consultant, auditor, banker, journalist, or analyst is a bad idea because advising and analyzing are easy, but implementing is hard. The single best question to determine if a person's background is adequate is "Have you ever fired or laid off someone? If the answer is no, keep looking. This person is the yang to the CEO's yin.
A research-and-development Morpheus to tell you that what you're creating is flawed An operations Morpheus to tell you that your systems can't handle the volume of business A finance Morpheus to tell you that you're spending too much (or too little) money An ethics Morpheus to tell you that you're inculcating the wrong values
From 1587 to 1983 the Catholic Church appointed certain individuals to argue against the canonization (sainthood) of a particular candidate. The advocatus diaboli or devil's advocate role was created as a way to find faults in candidates to ensure saintly saints. When the practice ended in 1983, after the election of Pope John Paul II in 1978, an explosion in canonization occurred. Specifically the church canonized five hundred people during the reign of John Paul II; it had canonized only ninety-eight people during the reign of all of John Paul II's twentieth-century predecessors.
Hire Better Than Yourself Steve Jobs had a saying that A players hire A players, B players hire C players, and C players hire D players. Using his logic, it doesn't take long to get to Z players, and then you wind up with what's called the Bozo Explosion.
Many entrepreneurs don't realize this, but startups need three kinds of A+ players depending on the stage of the organization: Kamikazes who are willing to work eighty hours a week to launch. Implementers who come in after the kamikazes and create infrastructure. Operators who are happy to run an ongoing system.
Is everyone you hired better at his or her function than you?
1) I will not back down from stressing the desirability of hiring A and A+ players, but I realize that a startup may not always be able to woo such people. Then what? The answer is not to pray for funding so that you can hire proven players. This will take too long, and management usually precedes funding, as opposed to catalyzing it. The answer is that you hire minimum viable people (MVPs!) who can do the job that needs doing. The concept is the same as Eric Ries's "MVP (minimum viable product). If you wait until you have the perfect product or person, it may be too late. So you hire minimum viable people, and much like improving your minimum viable product, you improve your minimum viable employee.
I have a flawed and incomplete understanding of what it feels like to work for me. "I strive to be confident enough to convince people that I am in charge, but humble enough to realize that I am often going to be wrong.
2. My success-and that of my people-depends largely on being the master of obvious and mundane things, not on magical, obscure, or breakthrough ideas or methods.
3. Having ambitious and well-defined goals is important, but it is useless to think about them much. My job is to focus on the small wins that enable my people to make a little progress every day.
4. One of the most important, and most difficult, parts of my job is to strike the delicate balance between being too assertive and not assertive enough.
5. My job is to serve as a human shield, to protect my people from external intrusions, distractions, and idiocy of every stripe-and to avoid imposing my own idiocy on them as well.
6. I strive to be confident enough to convince people that I am in charge, but humble enough to realize that I am often going to be wrong.
7. I aim to fight as if I am right, and listen as if I am wrong-and to teach my people to do the same thing.
8. One of the best tests of my leadership-and my organization-is "What happens after people make a mistake?
9. Innovation is crucial to every team and organization. So my job is to encourage my people to generate and test all kinds of new ideas. But it is also my job to help them kill off all the bad ideas we generate, and most of the good ideas too.
10. Bad is stronger than good. It is more important to eliminate the negative than to accentuate the positive.
11. How I do things is as important as what I do.
12. Because I wield power over others, I am at great risk of acting like an insensitive jerk-and not realizing it. This checklist will also help you select the right quadrant in the only two-by-two matrix you need to know as a leader: Incompetent Competent Not asshole Third most desirable Most desirable Asshole Least desirable Second most desirable EXERCISE If you asked your employees to place you into one of these quadrants, which one would it be?
The last leadership tip is to encourage you to incorporate the following four phrases into your conversations with employees, customers, investors, and partners. The better the leader, the more she doesn't hesitate to use these phrases: "I don't know. "Thank you. "Do what you think is right. "It's my fault.
SAVE TREES. Less paper is better than more paper. It is a mistake to bury your board in documentation, because these are busy folks. Make your accounting and financial reports about five pages long. They should include a profit-and-loss statement, cash-flow projections, your balance sheet, and a list of accomplishments and problems.
SAVE TIME. The ideal length and frequency of board meetings is two to three hours once per month. You need to have your act together to make this work: reports prepared in advance, follow-up items from previous meetings locked and loaded, and a meeting-not socializing-mentality. If you want to socialize, check in with Foursquare some other time.
PROVIDE USEFUL METRICS. Accounting and financial reports aren't sufficient. Nonfinancial metrics-such as the number of customers, number of installations, or number of visitors to your site-are equally important. This information should add no more than three to four pages to your reports.
Bootstrapping a startup is more possible today than at any other time in history for these kinds of reasons: Development tools are open source or free. Infrastructure is cheap because of cloud-based services. "Middle-layer cloud-based apps make development easier and faster. Employees can work virtually, or you can hire freelancers, so you need less office space. The most potent form of marketing is also the cheapest: social media.
Entrepreneurs can bootstrap almost any business-especially if they have no choice in the matter. A bootstrappable business model has the following characteristics:
Low up-front capital requirements
Short (under a month) sales cycles
Short (under a month) payment terms
Marketable through social media and word of mouth
"Bootstrapping involves managing for cash flow, not profitability. These requirements point to products and target markets with these characteristics:
People already know, or it becomes immediately obvious to them, that they need your product.
You don't have to educate your potential customers about their pain.
Your product is "auto-persuasive. * That is, once people recognize their pain and how you cure it, they can persuade themselves to buy what you're offering.
A megatrend tsunami of a market is breaking down barriers for you. The Internet was an example of this. (Realize, however, that every wave eventually runs out of energy, so you must have a real business by the time that happens.) You can piggyback on a successful product that already has a large installed base, thus reducing your risk.
Experience is the name everyone gives to their mistakes. -Oscar Wilde
If you're bootstrapping, forget about recruiting well-known industry veterans and building a dream team. Focus instead on affordability-that is, inexperienced young people with bushels of talent, energy, and curiosity.
Dr. George Dantzig, Stanford professor of operations research. While a doctoral student at UC Berkeley, he arrived late for a statistics class, and there were two problems written on the board, which he assumed were homework assignments. They were, in fact two unproven statistical theorems. Not knowing this, Dantzig took them home and solved them. According to Dantzig, when he asked his professor about a thesis topic, the professor told him to "wrap the two problems in a binder and he would accept them as [his] thesis.
EXERCISE Go on the Internet and investigate the backgrounds of these entrepreneurs when they started their companies. How many had the "right background to start their company? Bill Gates, Microsoft Michael Dell, Dell Pierre Omidayar, eBay Jerry Yang, Yahoo! Anita Roddick, The Body Shop
Start as a Service Business
One of the advantages of a service business is that cash starts flowing within weeks. The classic example of this form of bootstrapping is a software company. The fairy tale goes like this: Some programmers get together to provide services to a niche market. They operate as consultants-getting down and dirty with the client. Billing is on an hourly basis and payable within thirty days. In the course of providing this service, they develop a software tool for the client. As they add clients, they continue to enhance the tool. Soon, they realize that there are many companies that can use the tool. They use the consulting fees from clients to fund further development of the tool. At this point, the consulting practice has grown and provides a steady base of cash. They complete development of the tool and try to sell it to nonclients. Sales take off. The company stops doing consulting because there's little leverage in consulting. The company goes public, or Google acquires it. The early employees buy Teslas and wineries. Fairy tales usually don't come true.
Another version of this story, slightly grimmer, goes like this: A couple of guys have an idea for a software startup. They are going to put Oracle, Microsoft, or Symantec out of business. They start creating the product. Maybe they raise venture capital. Maybe they raise angel capital. Maybe they just starve. For the first time in the history of mankind, development takes longer than the entrepreneurs expected. Also, customers aren't willing to buy a product from two guys in a garage. The startup is running out of money. To get some cash, the guys decide that they should do some consulting. They take their partially finished product and pound the pavement looking for any business they can find. They rationalize this decision as a positive step because it helps them develop a product that customers need. Lo and behold, customers do need their product. The developers complete it and start selling it. Sales take off, and they stop doing consulting because there's no leverage in consulting. The startup goes public, or Google acquires it. The early employees buy Teslas and wineries.
Getting customers to pay for your research and development is only a temporary strategy for a product-based company. In the long run a service business is fundamentally different from a product business. The former is all about labor and billable hours or projects. The latter is all about research and development, shipping, and spreading costs over thousands of downloads from servers.
Outsourcing strategic functions such as research and development, marketing, and sales is riskier because they are core to your startup.
Focus on Function, Not Form To spend money wisely, focus on the function you need, not the form it takes. For example, a big-name firm (form) is not always necessary for proper legal, accounting, PR, marketing, or recruiting (function).
Area Form - Legal Offices around the world for a Fortune 500 clientele and box seats at sporting events
Function -Understanding your legal liabilities, protecting your assets, and facilitating deals
Form - Accounting Big Six status with former clients in jail and walnut walls in conference rooms
Function - Controlling costs and ensuring fiscally sound operation
Form - PR Good-looking account reps who majored in Asian art history and who tell you that you're a great speaker are at the $100,000 press event they planned
Function - Creating and proselytizing effective positioning and establishing close contacts with the press and bloggers
Form - Marketing A wall full of awards for television commercials and print ads with employees who do nothing but buy media
Function - Understanding and reaching your customer and getting current customers to attract future customers
Form - Recruiting Established reputation for placing the CEOs of publicly traded companies that own private jets
Function - Hiring great employees who will trade options for salary
Here are some examples of successful crowdfunding-"successful in the sense that the entrepreneurs raised money: Pebble watch. Total raise: $10 million. ElevationDock. Total raise: $1.4 million. Veronica Mars movie. Total raise: $5.7 million. These examples are outliers. Crowdfunding is effective for funding to the tune of $50,000â€“$250,000, an amount that is often too little for a venture capital firm to invest.
Here are the key tips for succeeding in crowdfunding. There are more tips in the Kickstarter Creator Handbook, the handbook's further reading section, and Indiegogo.
CREATE A VIDEO. An enchanting, enticing, and energizing less-than-two-minutes video is the most important component of your project. Make it great, because it's going to make or break your project.
TELL A PERSONAL STORY. Your video, e-mails, and social media posts should tell a story. The best kind of story is a personal one. For example, how you undertook the project because you had an unmet need, such as a better way to fix flat bike tires (see the patchnride project on Indiegogo).
USE E-MAIL AND SOCIAL MEDIA. Unless you're Arianna Huffington and can get on The Ellen DeGeneres Show, you're going to wage a guerrilla-marketing campaign to make your project a success. This means using your database of e-mail contacts and your social media accounts to get the word out.
ROCK THE REWARDS. The second most important component of your project is the rewards, mementos, or kickers that you offer. The most obvious are discounts, acknowledgments, autographed copies, and physical gifts such as tote bags and T-shirts. You can push the edge by personally delivering or installing your product. Again, you're asking people to pay for something that doesn't exist, so you need to compensate them for taking this risk.
SHOW A BUDGET. A powerful way to convince prospective supporters is to provide a budget to show how you'll spend their money. This will foster confidence that you know what you're doing and that you're likely to complete and ship the project.
Crowdfunding - 25k-100k 90 Days Dilution - Not applicable Consumer Gadgets, Gizmos and Artistic or Craft Projects Fun
Angel -250k- 500k 180 Days Dilution - 20% For Softward and Web services Due Diligence -Moderate Tolerable
Venture capital - 1-5 M 270 Days Dilution - 25-35% For Biotech, Hardward softward ecc Due Diligence - High Miserable
Get an Intro
Getting an introduction by sources that venture capitalists respect is essential, such as:
CURRENT INVESTORS. One of the most valuable services a current investor can provide is to help find additional investors. This is part of the game, so don't hesitate to ask for help. Most investors will at least listen to the recommendations of people who already have a stake in a company.
LAWYERS AND ACCOUNTANTS. When you pick lawyers or accountants, look for connections as well as competence. Ask them if they will introduce you to sources of capital. Lots of firms can do the work, so find one that can both do the work and make introductions.
OTHER ENTREPRENEURS. A call or e-mail from an entrepreneur to his investors saying "This is a hot startup-you should talk to them is powerful. Go to the investor's website to figure out which companies he's invested in-you may know someone at one of them. If not, get to know someone-execs at these companies are easier to get to than their investors. For those who are starting not-for-profits, look at the organizations that the target foundations have funded.
PROFESSORS. Investors are impressed by the suggestions of professors. In Silicon Valley, for example, a call or an e-mail from a Stanford engineering professor will get the attention of most venture capitalists and angel investors. I hope you did well in school!
Know Your Audience
The foundation of a great meeting with potential investors is the research that you do beforehand.
First, learn what's important to your audience. You can get this information from the partner that is bringing you into the meeting by getting answers to the following questions:
What are the three most important things you would like to learn about our organization?
What attracted you to our idea and convinced you to give us an opportunity to meet?
Are there any special issues, questions, or land mines I should be prepared for in the meeting?
Second, visit the venture capital firm's website, use Google searches, read reports, and talk to industry buddies to gather more information. This is the kind of information you want to learn about the firm: ORGANIZATION BACKGROUND. How did the firm start? Who were the original partners? What are its most successful investments? PARTNERS. Who works there? What organizations did they work for in their previous positions? Where did they go to school? CURRENT PORTFOLIO. What companies are currently in its portfolio? What were its big successes in the past? Are there conflicts or synergies with your startup? In particular, LinkedIn is a great resource to prepare for the meeting. Here's how to use it: Find out who the firm has invested in by visiting the portfolio section of its website. Plug the names of those companies into LinkedIn to find people in your network who have worked for any of them. Reach out to these people.
It's your job to show how you are superior to the competition, not that it doesn't exist. Use a chart like the one below to explain what you and your competition can and cannot do:
Company I We can do, it can't do I We can't do, it can do
SEED = SIZZLE. This is the first outside money that you raise. The order of magnitude is $100,000 - $250,000. Sources include friends and family as well as angels. At this point, you're selling on dreams, fantasies, and delusions-in other words, this round is about sizzle.
SERIES A = STEAK. In this round, venture capitalists enter the picture. Their bet on you amounts to $1- 3 million dollars. You can't depend on sizzle anymore because big money is at stake (no pun intended). Now your product has to be generating revenue-in other words, this round is about steak, not sizzle. (I got the concept of applying the sizzle and steak metaphor to financing from Ben Narasin of TriplePoint Ventures.)
SERIES B = STEROIDS. The steak was good. Customers are buying it and eating it. Now the company needs an injection of steroids to get to the magical $100 million a year revenue rate. You're going to use this money to scale your business. Luckily, no urine tests are required for entrepreneurs.
SERIES C = SYCOPHANTS. If you make it to this round, you probably don't need money anymore. This additional series is just in case the capitalist system collapses or Google/Apple/Amazon decides to enter your business. At this point, investors are buying-you're not selling-so they are sucking up to you in order to jump on a winner.
What is a reasonable salary that a CEO should set himself up with that will not scare an investor away? A: This is hard to answer in absolute numbers. Circa 2014, for technology startups, the answer is probably $125,000 per year. An answer that can better stand the test of time is this: the CEO should not be paid more than four times the lowest-paid full-time employee.
"Implementation is hard-and where the money is."
The Art of Pitching
Set the Stage
When the meeting starts, you should set the stage for the rest of the pitch.
The thing to ask is, "How much of your time do I have? This question shows that you respect the value of the audience's time by not running over your limit. It also makes the audience commit to a minimum allotment of time. "If you set the stage so that everyone has the same expectations, you're way ahead of the game.
Then you ask, "What are the three most important pieces of information that I can provide? You may find out that they already know or believe in something that you were going to try to communicate, so you can skip that. And you may find out that you can't skip something that you thought was understood.
Finally, you ask, "May I quickly go through my presentation and handle questions at the end? You're trying to make the audience commit to not interrupting you so that your pitch can flow better. You should have gotten this information before the meeting from your sponsor, but getting these answers should take about five minutes, and if you set the stage so that everyone has the same expectations, you're way ahead of the game.
By no later than the sixth minute of your presentation, you should be explaining what your startup does. (Remember that the first five minutes are to get answers to the three questions mentioned above.) Once the audience has learned what you do, they can listen to the rest of your pitch with calm and focused minds. Don't go crazy with statements along the lines of "patent-pending, curve-jumping, enterprise-class, scalable, revolutionary, first-mover advantage, paradigm-shifting, customer-focused solutions. Use three- to five-word statements like these instead: "We sell software. "We sell hardware. "We teach underprivileged kids. "We prevent child abuse.
EXERCISE Set a timer to one minute. Explain what your startup does to some friends until time runs out. Ask them to write down what your startup does. Collect the answers and compare them to what you think you said
Pareto's Principle is that 80 percent of the effects come from 20 percent of the causes. Metcalfe's Law is that the value of a network is proportional to the square of the number of users. The 10/20/30 Rule of Presentations is that you should use ten slides in twenty minutes with a minimum of thirty-point text. It's the most important rule you can learn about pitching, and it will help prevent a MÃ©niÃ¨re's epidemic.
Ten Slides - The purpose of a pitch is to stimulate interest, not to cover every aspect of your startup and bludgeon your audience into submission. Your objective is to generate enough interest to get a second meeting. Thus, the recommended number of slides for a pitch is ten. This impossibly low number forces you to concentrate on the absolute essentials.
Title - Problem and Opportunity - Value Proposition - Underlying Magic - Business Model - Go-to-Market Plan - Competitive Analysis - Management Team - Financial Projections and key Metrics- Current Status,Accomplishments to date, Timeline and Use of Funds. Pitch in 20 minutes and with 30 point font.
In order to achieve familiarity with your pitch you need to reherse it. Twenty-five repetitions are what it takes for most people to reach this point. All these pitches don't have to be to your intended audiences-your cofounders, employees, relatives, friends, and even your dog are fine auditors. Forget rising to the occasion without practice. Steve Jobs practices his product introductions for hours, and you're not Steve Jobs. If you're lousy in practice, you're lousy in the pitch, so get going-because if there's anything worse than getting MÃ©niÃ¨re's, it's causing it. EXERCISE Videotape yourself giving your pitch. If you can watch it without being embarrassed, you're ready to go.
Twenty Minutes Most appointments are made for an hour; however, you should be able to give your pitch in twenty minutes.
One way to improve your forecasts is to build them from the bottom up instead of from the top down. First, let's review the wrong way: taking a huge number at the top and multiplying it by an easy-to-achieve market share. Let's apply this method to selling dog food: According to the Humane Society there are 85 million owned dogs in America. Each dog eats two cans of dog food per day. The total market, therefore, is 170 million cans per day. Let's assume, conservatively, that you can achieve 1 percent market share or 1.7 million cans per day. Let's also assume that each can costs one dollar. This means your company will have $1.7 million in revenue per day-again being conservative. This is a mere $620 million in annual revenue. Now let's examine the right way, which is to start from the bottom at zero dollars and estimate how many customers you can reach and close: Using every SEO trick, partnership, and social media technique, you can get 50,000 visitors to your site per month. One percent or 500 will buy all sixty cans needed for the month, so monthly revenue is 500 people x 60 cans x $1/can = $30,000. You may get more visitors and improve your percentage of closed sales, but this is a realistic baseline: $30,000 per month or $360,000 per year. Three hundred and sixty thousand dollars is a long way from $620 million. Maybe $360,000 is too pessimistic, but your actual results will be a lot closer to $360,000 than $620 million.
There are very few people who don't become more interesting when they stop talking.
Shutting up, taking notes, and listening for ways to improve are good things to do in a pitch because even the smallest actions can create a big impression.
Also, at the end of the meeting, summarize what you heard and play it back in order to make sure you got the correct information. Then follow through, within a day, on all the promises that you made during the pitch-for example, providing additional information.
GET TO IT. Explain what your product does in the first thirty seconds. Explain the problem or pain that it addresses in the second thirty seconds. You're going to win or lose in the first minute or so. Remember: F18 not 747.
TELL A STORY. Provide a logical reason for your interest in your product, service, and sector. Stories such as "My girlfriend wanted to sell her collectible toys online have launched a thousand checks.
1. "Our projection is conservative. Your projection is conservative, but you claim you'll be doing $100 million by year three. In fact, the company is going to be the fastest-growing company in the history of mankind. The truth is, you have no clue what your sales will be, and I fantasize about the day an entrepreneur tells me, "Our projection is a number we're picking out of the air. We're trying to make them high enough to interest you, but low enough so that we don't look like idiots. We really will have no clue until we ship the product and see how it's accepted. At least that entrepreneur is honest.
Reynolds, Garr. Presentation Zen: Simple Ideas on Presentation Design and Delivery. New York: New Riders, 2008.
Ignore the Irrelevant
There is a shortage of great employees in the world. Therefore, it's stupid (and in many places illegal) to make recruiting decisions based on irrelevant considerations.
The art of building a team requires looking beyond race, creed, color, sexual orientation, and religion. I'd even add formal education and work experience to this list. Instead, focus on these three factors:
1. Can the candidate do what you need?
2. Does the candidate believe in what you're doing?
3. Is the candidate likeable and trustworthy?
Find the candidate who has major strengths (even though he has major weaknesses). The first line of reasoning is flawed because everyone has major weaknesses-it's just a matter of finding out what they are. Performing well in one area is tough enough; trying to find people who can do everything is Mission: Impossible. The second line of reasoning is the way to go. A team of people with major and diverse strengths is what you want in the early days when head count is low and there's little room for redundancy. High achievers tend to have major weaknesses. People without major weaknesses tend to be mediocre. EXERCISE Think back to your first few jobs. True or false? __ I was perfectly qualified. __ I am holding candidates up to standards higher than the person who hired me used.
For the latter, startups are not about Ping-Pong, free food, fun parties, and a quick path to wealth. A realistic description is that startups take four to five years of long hours at low pay with incredible highs and depressing lows with the constant fear of running out of money. And this is if things go well.
ASK ABOUT SPECIFIC JOB SITUATIONS. Fit and chemistry are important but so is competence. Start with determining if the person can do the job before you decide you like her.
For example, for a vice president of marketing position, these are good questions:
How did you manage a product introduction?
How did you determine the feature set of a new product?
How did you convince engineering to implement these features?
How did you select your PR firm?
How did you select your advertising firm?
How did you handle a crisis such as a faulty product?
STICK TO THE SCRIPT. Minimize spontaneous questions. You want to get a sample of candidates who answered the same questions in order to accurately compare them.
CONDUCT INITIAL INTERVIEWS BY PHONE. One way to create a level playing field for candidates is to conduct initial interviews by phone. This reduces the effect of factors such as physical attributes, dress, and race.
DON'T GET TOO TOUCHY-FEELY.
A half-decent candidate can bluff through questions such as "Why do you want to work for this startup?
More pointed questions are better:
"What are the accomplishments you're most proud of?
"What were your biggest failures?
"What was your most gratifying learning experience?
Again, worry about competence first.
MATCH THE PERSON AND THE POSITION. Beware of the false positive: hiring a likeable person who is incompetent. And beware of the false negative: rejecting a less likeable person who is competent. For example, the best engineers aren't necessarily charismatic, and people who are charismatic aren't necessarily the best engineers.
TAKE NOTES. Take notes during the interview to remember what each candidate said. Don't depend on your memory, because the passing of time and your subjective reactions will make it hard to accurately and fairly assess candidates.
CHECK REFERENCES EARLY. Many organizations check the references of candidates they've already decided to hire. This is a setup for a self-fulfilling prophecy because at that point you want to hear comments that affirm your decision. Big mistake. You should use reference checking as a means to decide whether the candidate is good, and not as a confirmation of a choice that you've already made. (More tips on reference checking are at the end of this chapter.)
USE LINKEDIN. Candidates will provide references who will say good things about them (although you may be surprised), but you can use LinkedIn to find people who worked for companies at the same time. This can provide more of a 360-degree view of the candidate.
Apply the Shopping-Mall Test There's one more test to apply to candidates, the Shopping Mall Test. Its genesis is that I was at the Stanford Shopping Center when I caught sight of a Macintosh software developer, but he had not yet seen me. I made an abrupt turn in order to avoid having to talk to him because he was a pain in the ass.
This experience led me to conceive the Shopping Mall Test. "Life is too short to work with people you don't like-especially in a startup. This is how it works. Suppose you are at a shopping mall. You see a candidate before he notices you. At that point, you can do one of three things: 1. Scoot over and say hello. 2. Figure that if you bump into him, fine. If not, that's okay too. 3. Get in your car and go to another shopping center. No matter what your intuition and a double check of your intuition tells you, I'm telling you to only hire people that you'd hustle over to and engage in a conversation. If you find yourself picking option 2 or 3, don't make the hire. Life is too short to work with people you don't like-especially in a startup. (By the way, if you pick option 2 or 3 for someone already employed at your startup, either fix the situation or get rid of the person.)
Define an Initial Review Period Despite your best efforts, your recruiting process (or your intuition) is sometimes wrong and a new hire does not perform to your expectations. For me, one of the hardest tasks is to admit this mistake and correct it. However, if there's one thing that's harder than firing someone you don't want it's laying off people you do want. If you don't make a course correction or terminate people who aren't working out, you increase the probability of having to lay off people who are working out if your startup fails. To make this process easier on both the organization and the employee (because it's also the right thing for the employee to stop working for the wrong organization), you should establish an initial review period with incremental milestones. The more concrete the performance objectives, the better. For example, objectives for a salesperson might include: Completion of product training Completion of sales training Participation in five sales calls This period needs to be longer than that of the hiring afterglow but shorter than the time it takes for the predominant feeling to become, Why did we hire this person? In short, ninety days. Establish an understanding that after ninety days, there will be a joint review in which both sides discuss what's going right, what's going wrong, and how to improve performance. Some issues will be your fault!
You can't build a reputation on what you're going to do. -Henry Ford Reference checking is a crucial part of recruiting a great team.
In order to get a complete picture of a candidate, you should speak with at least two subordinates, two peers, two superiors, and two customers. Investors or board members of his current company are also interesting references.
These are suggested questions:
How do you know this person?
How long have you known him?
What are your general impressions of him?
How would you rank him against others in similar positions?
What contributions has he made to the organization?
How do others in the organization view him?
What are his specific skills?
What is he best/worst at?
What are his communication and management styles?
In what areas does he need improvement?
Is he capable of functioning effectively in a small organization?
How would you comment on his work ethic?
Would you hire / work for / work with him again?
Should I speak with anyone else about him?
Always tell it like it is. Lower their expectations. You'll encounter three types of responses to your candor: Some candidates need only an honest assessment of any problems. Chances are, they just want to know what they're getting into, and you won't scare them off. Other candidates want the challenge. For them, problems are opportunities. You should tell this type, "People like you are going to make us successful. Can you step up and be a hero? You will scare off the third kind of candidate. This person wasn't well suited to a startup, so you've done yourself a favor.
Should I provide a salary range early in the recruitment process? A: No. If you're asked, respond by saying, "We will pay what it takes to get a great candidate. Then ask, "What is your current salary level so we know where to start? This will teach them to ask tough questions.
What is a reasonable enticement and compensation for a member of my board of directors? A: The range is usually 0.25 to 0.5 percent, but for an absolute superstar, I'd go as high as 1 percent of the company. If it takes more than this to get the candidate, move on. The person is more interested in making money than in making meaning.
What do you do when you have to fire the partner who conceived the business, brought you in to help run it, trusts you, and is now in over his head? A: You take him aside and have a private conversation explaining the situation. You offer the person some choices about how to take a smaller role, but you are clear that such a move is necessary. A smaller role can mean taking a different position or serving only on the board of directors or board of advisers. Try to preserve the person's dignity. In most cases, there will be a blowup. Expect that. It might take years to heal your relationship, but that's how it goes.
Evangelism comes from the Greek word that means, approximately, "to proclaim the good news. I was Apple's second software evangelist, and I proclaimed the good news that Macintosh could make people more creative and productive.
Evangelism is not mucked up with desires to kill competitors and make fortunes. Customers don't care if you want to destroy the competition. They want to know what benefits they derive from using your product. Also, evangelism is about what you do for your customers-not about what you want to become. At Apple, and subsequently as an entrepreneur, I learned that when people believe in your product, they will help you succeed through credible, continuous, and cost-effective proselytization. This chapter explains both how to use evangelism and how to recruit evangelists.
DEEP. A deep product has lots of features because you've anticipated what people need as they come up the power curve. INTELLIGENT. An intelligent product reflects your insights on how to ease people's pain or increase their pleasure. COMPLETE. A complete product embodies everything a customer needs, such as support, documentation, and enhancements. EMPOWERING. An empowering product makes people better. Great stuff doesn't fight you-it becomes one with you. ELEGANT. An elegant product is not just functional; it's also well designed so that people can use it easily and quickly.
Get High and to the Right Another way to understand and position an evangelistic product is get it high and to the right:
VALUABLE BUT NOT UNDIFFERENTIATED. These products fulfill a need, but they work the same way as existing products. You can sell a lot of them, but your margin is always under pressure because people can buy similar products from other companies. DIFFERENTIATED BUT NOT VALUABLE. These products are stupid. They serve a market that doesn't exist, or they provide functionality that no one wants. UNDIFFERENTIATED AND NOT VALUABLE. These are the worst products of all. There is no demand for what they do, and multiple companies are making a similar product. DIFFERENTIATED AND VALUABLE. This is the Holy Grail of evangelism. When you provide a valuable product that no one else can, evangelism is easy. This is the corner of the chart where meaning, margin, and money are made.
TARGET THE YOUNG. No matter who buys your product, targeting young people forces you to build a human brand. I have no data to back this up, but it seems that lots of old people are buying products that were targeted to the young. For example, there are many baldheads driving Toyota Scions and MINI Coopers. MAKE FUN OF YOURSELF. Most companies are incapable of making fun of themselves. It's an attitude that they view as suicidal: "People won't take us seriously if we don't take ourselves seriously. Or, they are so caught up in their self-image that appearing to lack total control scares them. As the saying goes, "To err is human, so don't be afraid to err and make fun of your startup. HAVE FUN TOO. The market capitalization of a particular company, circa 2014, is approximately $400 billion. In order to celebrate anniversaries and holidays as well as the lives of interesting people, the company alters its logo for the day. How fun and human is that? Another, even better example, Richard Branson once lost a bet to Tony Fernandes, the owner of AirAsia. Because he lost, Branson had to shave his legs, apply lipstick, dress up as a flight attendant, and work on an AirAsia flight. Have you seen the CEO of United in a skirt? Do you even know who the CEO of United is? FEATURE YOUR CUSTOMERS. Organizations that feature their customers in marketing materials exude humanness. Is there a better example than GoPro? The customer videos that it features on its website and YouTube channel make it seem as if anyone can shoot a great video with a GoPro camera. HELP THE UNDERSERVED AND UNDERPRIVILEGED. Corporate philanthropy efforts are a double win: not only are you fulfilling a moral obligation to society, but you are also increasing brand awareness. Actually, it's a triple win because corporate philanthropy programs are also an important tool for the recruitment and retention of employees. EXERCISE Go to the websites of your favorite companies and try to find information about how to apply for grants and volunteer for the company.
To his dog, every man is Napoleon; hence the constant popularity of dogs.
World-class schmoozers adopt Rezac's outward, what-can-I-do-for-you attitude. It is the key to building extensive, long-lasting connections. Upon this foundation, here's how to get more people to know you: GET OUT. Schmoozing is a contact sport. You can't do it from the office, so force yourself to attend trade shows, conventions, seminars, conferences, and cocktail receptions. For all the wonderfulness of Skype and Google Hangouts, pressing flesh is still the best platform for schmoozing. ASK GOOD QUESTIONS; THEN SHUT UP. Good schmoozers don't dominate conversations. They initiate with interesting questions and then listen. No one is more fascinating than a good listener. MAKE IT EASY TO GET IN TOUCH. This is ironic, but many people who want to be or are great schmoozers often make it hard to contact them. For example, they don't print their cell number on their business cards, or they don't include contact information in the signature area of their e-mails. FOLLOW UP. Follow up within twenty-four hours of meeting someone. Send an e-mail. Give her a call. Send her a copy of your new book. Few people ever follow up, so the ones who do can distinguish themselves as worth knowing. UNVEIL YOUR PASSIONS. If you can talk only about your job, you're a boring person. Good schmoozers are passionate about multiple and diverse interests. A benefit of these passions is that they provide additional ways to connect to people. I'm not saying you should take up a hobby because it will be good for business. For example, I'd rather be poor than play golf. However, I've made many business connections through hockey-and I've made many hockey connections through business. GIVE FAVORS. There's a karmic scoreboard in the sky (more about this in chapter 13, "The Art of Being a Mensch ). This scoreboard tracks what you do for people. If you want to be a world-class schmoozer, ensure that you're hugely positive on that scoreboard. Learn How to Use E-mail I have made this [letter] longer because I have not had the time to make it shorter. -Blaise Pascal
OPTIMIZE YOUR SUBJECT LINE. If people don't recognize your name on an e-mail message, the next thing they look at is the subject line. Think of it as an executive summary of your message. If it doesn't entice people to read your e-mail, then you've failed before you even started. Subject lines that work on me are: "Enjoyed your book, "Enjoyed your speech, and "Referred to you by [someone I know or have heard of]. TIME IT FOR TUESDAY. Stephen Brand, a professor of entrepreneurship at Olin College of Engineering, promotes an interesting concept that Tuesday mornings are the best time to send e-mails. This is because by Tuesday people have worked through their backlog from the weekend but have not yet received the deluge of the rest of the week. RESEND UNANSWERED E-MAILS. Another Stephen Brand idea is to resend unanswered e-mail to the recipient with a brief note saying, "Did you have a chance to read this? He believes that when a person receives the same e-mail twice, it jars (or guilts) the recipient into action. ANSWER WITHIN FORTY-EIGHT HOURS. As I said before, responsiveness is a big factor in cementing a contact. You need to answer while the topic of the e-mail is fresh. Messages that are below the first screen of a person's inbox are often forgotten. DON'T USE ALL CAPS. All-caps text is more difficult to read, and it is considered SHOUTING. If nothing else, it's a sure sign that you're clueless about e-mail, and cluelessness is not conducive to successful schmoozing. QUOTE BACK. Select the question or section of the e-mail that you're responding to and quote it back in order to refresh the sender's mind. People get dozens of messages per day, so a simple "Yes, I agree is useless. KEEP IT SHORT AND SIMPLE. Cut the crap and get to it. The ideal length for e-mail is five sentences. If you can't say what you have to say in five sentences, you don't have much to say. USE PLAIN TEXT, NOT HTML. I assume that HTML e-mails are spam and give them no more than a glance. If you have something significant to say, you don't need bold, outline, shadow, red text, and graphics to say it. DON'T ATTACH FILES OVER FIVE MEGABYTES UNLESS YOU HAVE PERMISSION. Imagine that your recipient is sitting in a hotel room using a slow connection and you've sent a ten-megabyte PowerPoint file. Do you think you'll get a positive reaction? Also, many people assume attachments from strangers are viruses. BLIND CARBON COPY (BCC) LARGE GROUPS. When you send an e-mail to more than two people, it should be a BCC to prevent inadvertent responses to everyone and to prevent revealing e-mail addresses to the other recipients. REDUCE CARBON COPIES (CC). When I get a CC, I assume that other people are taking care of the issue. Either a person needs to get the e-mail or not. A CC is in a dubious middle ground. The most common purposes of a CC are to cover one's butt ("But you were CC'd! ) or to implicitly threaten ("I CC'd your boss, so you better do what I ask ). INCLUDE A GOOD SIGNATURE. A signature is the information that your e-mail software includes at the end of every outgoing message. A good signature provides your name, organization, postal address, phone number, e-mail address, and website. This is useful for copying and pasting into a calendar or database. God forbid someone should want to make more contact with you, and they have to hunt down the information. WAIT WHEN YOU HATE. Although you should answer e-mail in under forty-eight hours, there is one case where you should wait longer: when you're angry, offended, or argumentative. E-mails written when you're in these moods tend only to exacerbate problems.
Let's move on from using evangelism to recruiting evangelists. The starting point is to ask your customers for assistance. Tell them you want to achieve critical mass and you need their help to spread the word. This is a sign of intelligence, not weakness. If your product is outstandingly contagious, you may not even have to ask for help-customers may have already started evangelizing it. That's what happened with Macintosh. But if you do ask, you can get help much faster and in larger amounts.
RESPOND TO THEIR REQUESTS. You should revise your product to reflect the wishes of your evangelists for two reasons: First, they know what it takes to make your product better. Second, it demonstrates that you are listening to them, which fosters even greater loyalty and enthusiasm. GIVE THEM STUFF. You would be amazed at the power of a free T-shirt, coffee mug, pen, or notepad. (At one point, Apple had a $2-million-per-year T-shirt expense.) Evangelists love these goodies. It makes them feel as if they're part of the team and special. This is money well spent, but never give away anything that costs more than twenty-five dollars, which is where the line between a gift and a bribe gets blurry. HIRE SOMEONE WHOSE SOLE PURPOSE IS TO FOSTER A COMMUNITY. An internal champion who looks after the needs of the community will both evangelize evangelists and lead the fight for the necessary resources. As you achieve success, build a department around this person to institutionalize community support. CREATE A BUDGET FOR SUPPORTING THEM. You won't need much, and the intent is not for you to buy evangelists, but you'll still need a budget for travel, entertainment, meetings, and the stuff mentioned above. INTEGRATE EVANGELISTS INTO YOUR SALES, MARKETING, AND ONLINE EFFORTS. The existence of evangelists is a proxy for quality and coolness-"The product is so successful that people have formed user groups for it. Thus, you should publicize this both to help you close sales and to provide an additional resource to your customers. HOST THE COMMUNITY'S EFFORTS. This means letting members use your building to hold meetings, as well as providing digital assistance, such as a section of your website, hosting webinars, and hosting chats. HOLD A CONFERENCE. No one loves electronic communication more than I do, but face-to-face meetings are important for evangelism. At these conferences, evangelists can meet one another as well as interact with your employees. CONTINUE FELLOWSHIP. The model for effective evangelism is the relationship between a good parent and child. Your kids will always be your kids-they never leave the nest. Evangelists are the same-they need frequent and perpetual lovin'.
No hables al menos que puedas mejorar el silencio. (Don't speak unless you can improve on the silence.)
--> HAVE SOMETHING INTERESTING TO SAY. This is 80 percent of the battle. It's much easier to give a great speech if you have something to communicate. End of discussion. If you don't have anything to say, decline the speech. If you don't want to decline, then do some research and get something interesting to say. --> REMOVE THE SALES PITCH. The purpose of most keynotes is to entertain and inform the audience. It is seldom intended to provide an opportunity to pitch your product. The worst speech you can give is one that people interpret as a sales pitch. --> CUSTOMIZE. The technique that has helped me the most in public speaking is customizing the first three to five minutes of every speech. This demonstrates that you've done your homework and have made an effort to craft a speech that is a valuable and special experience. I do this in two ways: First, I try to find a personal link to the audience. For example, when I spoke for Acura, I showed pictures of the two Acuras and two Hondas that I own. When I spoke for S. C. Johnson, I showed them pictures of its household cleaners in my cabinets. Second, when I travel to a foreign country, I typically get to the location the day before and sightsee. Then I show my pictures of the sites that I visited and express my appreciation for local culture-here's an example of a picture I used when I spoke in Istanbul. --> FOCUS ON ENTERTAINING. Many speech coaches will disagree with this, but they don't speak fifty times a year like I do. My theory is that the goal of a speech is to entertain. If people are entertained, you can also slip in a few nuggets of information. But if your speech is dull, no amount of information will make it great. --> OVERDRESS. My father, who was a politician in Hawaii, was a good speaker. When I started speaking, he gave me a piece of advice: never dress beneath the level of the audience. For example, if they're wearing suits, you wear a suit. To underdress is to communicate this message: "I'm smarter/richer/more powerful than you. I can insult you and not take you seriously, and there's nothing you can do about it. This is hardly the way to get an audience to like you. --> DON'T DENIGRATE THE COMPETITION. Don't criticize your competition in a speech, because it indicates that you are taking undue advantage of the privilege of the audience's attention. You are not doing the audience a favor. The audience is doing you a favor, so do not lower yourself by using it as an opportunity to slander your competition. --> TELL STORIES. The best way to relax when giving a speech is to tell stories. Stories about your youth. Stories about your kids. Stories about your customers. Stories about things that you read about. When you tell a story, you lose yourself in the storytelling. You're not "making a speech anymore. You're making conversation. Good speakers are good storytellers; great speakers tell stories that support their message. --> PRECIRCULATE WITH THE AUDIENCE. True or false: the audience wants your speech to go well. The answer is "true. Audiences don't want to see you fail-why would people want to waste their time listening to you fail? The way to heighten your audience's concern for your success is to circulate with the audience before the speech. Talk to people. Let them make contact with you. Especially the ones in the first few rows; then, when you're on stage, you'll see these friendly faces. Your confidence will soar. You will relax. And you will be great. --> SPEAK AT THE START OF AN EVENT. If you have the choice, speak at the beginning of an event. The audience is fresher then, so they're more apt to listen to you, laugh at your jokes, and follow along with your stories. On the third day of a three-day conference, the audience is tired, smaller, and thinking about going home. It's hard enough to give a great speech-why increase the challenge by having to lift the audience out of the doldrums? --> ASK FOR A SMALL ROOM. If you have a choice, use the smallest room possible. If you're in a large room, ask that it be set classroom style-that is, with tables and chairs-instead of theatre style. A packed room is a more emotional room. It is better to have two hundred people in a two-hundred-person room than five hundred people in a thousand-person room. --> PRACTICE AND SPEAK ALL THE TIME. This is obvious but nonetheless relevant. You need to give a speech at least twenty times in order to get good at it. You can give it nineteen times to your dog if you like, but it takes practice and repetition. As Jascha Heifetz said, "If I don't practice one day, I know it. If I don't practice two days, my critics know it. If I don't practice three days, everyone knows it. I hope it takes you less than twenty years to get to this point. Part of the reason it took me so long is that no one explained the art of giving a speech to me, and I was too dumb to do the research. Now my goal is to get a standing ovation every time I speak.
Perfect Your Profiles Social media platforms provide a profile page to describe your company. These are vital because people use them to make a snap judgment about the quality of your business. Here's how to optimize these one-page rÃ©sumÃ©s for your business: --> OPTIMIZE FOR FIVE SECONDS. People do not study profiles. They spend a few seconds looking at them and then make a snap decision. If this were online dating, think Tinder (swipe right for yes, swipe left for no), not eHarmony (complete a Relationship Questionnaire). --> TELL YOUR STORY WITH PICTURES. A profile contains two graphic elements to tell your story. The first is an avatar, a small round or square picture. For personal accounts, it's your face. For corporate accounts, it's your logo. A second, larger photo is called a "cover (Facebook, Google+, and LinkedIn) or a "header (Twitter). This should be a picture that communicates your startup's identity. These companies have excellent avatars and covers/headers: Cadbury Audi Nike Platforms change the optimal dimensions for cover/header photos all the time, so be sure to monitor the standards. You can consult a blog post called "Quick Tips for Great Social Media Graphics whenever you want to check the optimal sizes. Also, Canva, the company where I'm chief evangelist, has created hundreds of cover and header designs for Google+, Facebook, Twitter, and Pinterest. You can check them out at Canva.com. --> CRAFT A MANTRA. Most platforms enable you to add a tagline to your profile. Make this your mantra: two to four words that explain why your startup exists. (Refer to chapter 1, "The Art of Starting Up, for more information about mantras.) Here are three theoretical mantras for companies that would work well as taglines: Nike: "Authentic athletic performance FedEx: "Peace of mind Google: "Democratizing information --> PROVIDE ALL THE INFO. Your avatar, tagline, and cover/album/header photo determine people's initial impressions of your company. Then, if you've attracted their interest, people will read the rest of the info in your company's profile, so provide as much information as you can. Again, think of the profile as a rÃ©sumÃ©. --> GET A VANITY URL. You can get a vanity URL for your Google+, Facebook, and LinkedIn account. It means that people will see this kind of link: https://plus.google.com/+canva/posts. If you don't get a vanity URL, people will see this kind of link, which is much harder to remember, copy, and share: https://plus.google.com/+112374836634096795698/posts. Google+, Facebook, and LinkedIn all explain how to do this. As is the case with domain names, many vanity URLs are no longer available, but almost anything is better than twenty-one random numbers. Also, coming up with a vanity URL is a good test of your cleverness. --> GO ANONYMOUS. When you're happy with your company's profile, view it in an "incognito window. This is a browser window that enables you to see the profile the way other people do. To get an incognito window in Chrome, launch "New Incognito Window from the File menu. There's a way to do this for every browser. Search Google for "anonymous plus your browser name to find out how. Pass the Reshare Test The Reshare Test is the most important concept of social media marketing. It's nice when people "like and "+1 your posts. It's swell when people add comments. These actions are akin to tipping a waiter or waitress. However, resharing your posts is the ultimate compliment because it means that people are risking their reputations on what you've shared. This is akin to telling your friends to eat at a restaurant. Resharing is caring! So the most important test of anything you do in social media is: WILL PEOPLE RESHARE YOUR POSTS?
The biggest daily challenge of social media is finding content to share. This is called "feeding the Content Monster. There are two ways to do this: content creation and content curation. Content creation involves writing long posts, taking pictures, or making videos. It's difficult to create more than two pieces of content per week on a sustained basis, and two pieces are not enough for social media because of the intense competition for attention. Unfortunately, helping you master content creation is outside the scope of this book. "Most companies define too narrowly what they believe will be relevant and interesting to their followers. Content curation involves finding other people's good stuff, summarizing it, and sharing it. Curation is a win-win-win: you need content to share, blogs and websites want more traffic, and people want filters to reduce the flow of information. These techniques can help you curate content to feed the Content Monster: PIGGYBACK ON CURATION AND AGGREGATION SERVICES. I cofounded a website called Alltop to help me curate content. It is an aggregation of RSS feeds ranging from A (adoption) to Z (zoology), organized into more than a thousand topics. For example, there's food, photography, Macintosh, travel, and adoption. SHARE WHAT'S ALREADY HOT. You could say this is cheating, and you'd be right, but there's nothing wrong with content that's already hot. No matter how many people have already seen something, everyone has not seen it yet. I've shared YouTube videos that are several years old with great success. Check out the "Explore area of Google+ for good stories. USE LISTS, CIRCLES, COMMUNITIES, AND GROUPS. People and brands that share a common interest comprise "lists (Twitter and Facebook), "circles (Google+), "communities (Google+), and "groups (Facebook and LinkedIn). These groupings are a great way to find good content. SHARE USER-GENERATED CONTENT. You should share photos that people create of your product. This practice is good for everyone: you get social proof when people take a photo of your product, and the photographers receive warm-and-fuzzy acknowledgment and attention.
Use an Editorial Calendar I'm not a believer in calendaring because I subscribe to the "spray and pray approach to social media (that is, throw out a lot of stuff and hope something works). However, if you desire a more organized approach, several tools can help you manage an editorial calendar: EXCEL. You can use this old standby product to store draft posts according to the date of publication. GOOGLE DOCS. The strength of Google Docs for social media calendaring is that you can collaborate with team members in real time, and everyone can access the calendar from many devices. This eliminates the need for back-and-forth e-mail and reduces the likelihood of changes getting lost.
A scrupulous writer, in every sentence that he writes, will ask himself at least four questions, thus: 1. What am I trying to say? 2. What words will express it? 3. What image or idiom will make it clearer? 4. Is this image fresh enough to have an effect? -George Orwell
After you've created or curated material, it's time to share it through your company's social media accounts. Here are the basics of sharing that are generally accepted as best practices. (In the next section I provide ideas that are not generally accepted.) --> BE BRIEF. Brevity beats verbosity in social media. You're competing with millions of posts every day. People make snap judgments and move right along if you don't capture their interest at a glance. My experience is that the sweet spot for posts of curated content is two or three sentences on Google+ and Facebook and 100 characters on Twitter. The sweet spot for content that you create, such as blog posts, is 500 to 1,000 words. --> BE VISUAL. Every post-literally every post-should contain eye candy in the form of a picture, graphic, or video. According to a study from Skyword, "On average, total views increased by 94 percent if a published article contained a relevant photograph or infographic when compared to articles without an image in the same category. --> BE EARLY. The best time for me to share posts is mornings Pacific time because that's when most of my audience is awake and on the computer. Try some experiments to see if mornings are good for your posts too. In the next section, you'll learn about automating posts, so scheduling is easy to do. --> BE THANKFUL. Every post with curated content should link to its source. Here's what these links accomplish: Enables readers to learn more from the source Sends traffic to the source as an act of gratitude Increases your visibility and popularity with bloggers and websites When you find content because of someone else's post, use this protocol: compose and share a post with a link to the source and then add a "hat tip or "h/t to the person who brought it to your attention. --> BE BULLETED. If your post on Google+, Facebook, and LinkedIn is longer than four paragraphs, use a bulleted or numbered list. This makes it easier for people to read because the information is organized into smaller chunks and reduces the TLDR effect (too long; didn't read). Maybe I'm the only person in the world who does this, but when there's paragraph after paragraph of text, I tune out. If I want to read a novel, I'll buy a Kindle e-book. On the other hand, when there's a bulleted or numbered list, I am much more likely to read the post. --> BE SLY. Posts that are titled "How to.... , "Top Ten.... , and "The Ultimate.... are difficult to ignore. Something about these words says (at least to me), "This is going to be practical and useful. The folks at Twelveskip compiled a list of more than a hundred great titles, so be sly and use it. My favorites from this list are: "How to Rock.... "Quick Guide:.... "A Complete Guide to.... "Questions You Should Ask Before.... "Rules for.... "Essential Steps to.... "Most Popular Ways to.... "Tips for Busy.... "Tactics to.... "What No One Tells You About.... --> BE FOUND. Hashtags are a beautiful thing. They connect posts from people all over the world and add structure to an unstructured ecosystem. When you add a hashtag to a post, you are telling people that the post is relevant to a shared topic. For example, the #socialmediatips hashtag on Google+ connects posts that are about social media. Twitter, Instagram, Facebook, Tumblr, and Google+ all support hashtags, so this is a common and well-accepted practice. Consider adding two or three hashtags to your posts. However, if you use more than that, you look like an #idiot who's trying to #gamethesystem. Also, don't use hashtags on Pinterest because people hate them there-perhaps because hashtags interfere with the minimal-text sensibilities of Pinterest posts.
--> BE ANALYTICAL. You can improve the relevance of your content by analyzing the characteristics of people who follow you. For example, Facebook's analytics are a rich resource to find out who your fans are, and this is a great place to start for planning future content for Facebook. LikeAlyzer is useful to check your Facebook pages and to tweak the content, types of posts, and when you're sharing. For Twitter, you can use a service such as SocialBro to get reports on who follows you, to find new people to follow, and to determine how your content is doing. You can also get similar reports in Sprout Social and Hootsuite.
BUFFER. This schedules posts for Google+ pages, Facebook pages and profiles, LinkedIn, and Twitter. It enables you to add posts at a specific time or to put them in a queue. Team management and analytics are available in the "Buffer for Business plan. Buffer suggests stories to share, and it's the prettiest of the services. DO SHARE. If you don't have a Google+ page, this is the only product that enables you to schedule posts on a personal profile. It is a Chrome extension and requires that Chrome be running in order to work. Do Share is great but limited by that requirement; for example, if you're traveling and your computer isn't running, Do Share won't share your posts. Your company's account is probably a page, not a profile, so Do Share may not apply to your needs.
Don't take anything personally. Nothing others do is because of you. What others say and do is a projection of their own reality, their own dream. When you are immune to the opinions and actions of others, you won't be the victim of needless suffering. -Don Miguel Ruiz
The whole problem with the world is that fools and fanatics are always so certain of themselves, but wiser people so full of doubts. -Bertrand Russell
Pretend that every single person you meet has a sign around his or her neck that says, "Make me feel important. Not only will you succeed in sales, you will succeed in life. -Mary Kay Ash
We're a small company, so should we use a corporate account or personal account? A: You should use a corporate account because on Google+ and Facebook, corporate accounts have more features than personal ones. Also, with employee turnover, you won't want to deal with the trauma of deciding who owns the account.
Should we curate the posts of our employees? A: I assume that there is a corporate account for the business, and you're referring to people's personal accounts. Generally, what employees do on their own time and with their own accounts is not your business. It becomes your business, though, when people position themselves as employees/representatives of your business and do
A rainmaker is a Native American medicine man who uses rituals and incantations to make it rain. In business a rainmaker is a person who generates large quantities of sales. Like medicine men, good salespeople have created rituals and incantations to make it rain. This chapter explains the art of rainmaking. "Sometimes when it pours, it rains. Two factors make rainmaking difficult for startups: First, entrepreneurs do not know who will buy their product and what it will be used for. Second, the products of startups are sold, not bought, because few people want to take a chance on a new product from a small, young company.
See the Gorilla
Daniel J. Simons, a professor at the University of Illinois, and Christopher F. Chabris, a professor at Harvard University, ran an experiment with huge rainmaking implications. They asked students to watch a video of two teams of players throwing basketballs. The students' task was to count how many passes one team made to its teammates. Thirty-five seconds into the video, an actor dressed as a gorilla entered the room, thumped his chest, and remained in the video for another nine seconds. When asked, 50 percent of the students did not notice the gorilla!* Apparently, they were focused on the assigned task of counting passes and were blind to an unrelated event. The same phenomenon occurs in startups: everyone becomes so focused on a product's intended customers and uses that they fail to see flowers blossoming in unexpected ways. The lesson is to let a hundred flowers blossom and recognize the unexpected ones-the gorilla markets in your midst, so to speak.
EXERCISE What can you educate your customers about that can also help your business?
Jesus himself did not try to convert the two thieves on the cross; he waited until one of them turned to him. -Dietrich Bonhoeffer
My experience is that sales prospects who are willing to buy your product will often tell you what it will take to close a deal. All you have to do is shut up and listen. This sounds easy, but it's not because people who don't understand rainmaking are clueless (more on this shortly). The process is simple: (a) create a comfortable environment by obtaining permission to ask questions, (b) ask questions, (c) listen to the answers, (d) take notes, (e) explain how your product can fill their needs-if it does.
Many salespeople fail at this process, however, for the following reasons: They are not prepared to ask good questions. It takes research to understand prospects and how your product might benefit them. Furthermore, salespeople are afraid that asking questions will make it look as if they don't already know the answer.
Fortunately, a great way for a startup to attract customers is to enable them to test-drive the product. By doing so, you are saying: "We think you're smart. (This already sets you apart from most organizations.) "We won't try to bludgeon you into becoming a customer. (Again setting you apart) "Please test-drive our product. "Then you decide on your own. Or ask us if you have any questions. Test-driving is different for every business. Here are some notable examples: H. J. Heinz gave away samples of his pickles at the 1893 Chicago World's Fair. His booth was stuck in a low-traffic location, so he hired kids to pass out tickets that promised a free souvenir for visiting his booth to taste a pickle.* Apple allowed people to test-drive a Macintosh for a weekend during the 1980s. The current policy of accepting returns or exchanges of Apple products with no questions asked is effectively a fourteen-day test-drive. Salesforce.com enables people to use its software for a thirty-day period at no charge. The beauty of this test-drive is that once you have this kind of information about a company's product, you're less likely to switch because of the data entry you've already done.
ENCOURAGE EVERYONE TO MAKE IT RAIN. Someday you may reach the point where your engineers and inventors can toss a new product over the cubicle wall and salespeople will pick it up and sell it. But that day isn't here yet. "It's easy to know where you've been-it's harder and more valuable to know where you're going.
SET GOALS FOR ACCOUNTS. These goals include when you expect them to decide and how much each sale will yield on a weekly, monthly, and quarterly basis. Good rainmakers are of a different breed: they need goals, and they need to be measured. You don't tell them to "go out there and do the best you can.
TRACK LEADING INDICATORS. Everyone has trailing indicators, such as the previous month's and quarter's sales. Leading indicators, such as the number of new product ideas, cold calls, or sales leads, are important too. It's easy to know where you've been-it's harder and more valuable to know where you're going.
RECOGNIZE AND REWARD ACHIEVEMENTS. Don't allow rainmakers to submit low forecasts so that they can easily beat them. Certainly don't recognize and reward intentions-intentions are easy; rainmaking is hard. But do recognize and reward achievements. If you don't manage the rainmaking process, you'll start with "Our projections are conservative and six months later, you'll be saying, "Our sales are coming in slower than expected. There is nothing sadder
Alliance, n.: In international politics, the union of two thieves who have their hands so deeply in each other's pockets that they cannot separately plunder a third. -Ambrose Bierce
The better method is to agree on business terms before you bring in the lawyers. Then find a lawyer who wants to do deals, not prevent them, to create a legal framework. Having found the right lawyer, you need to establish the right perspective, which is, "This is what I want to do. Now keep me out of jail. This is the antithesis of asking, "Can I do this?
Winning isn't everything, but the will to prepare to win is everything. -Vince Lombardi
Researchers told subjects that they were going to play Monopoly. The researchers provided $4,000, $200, or zero dollars in Monopoly money. As they left the lab, a confederate dropped a bag of pencils, and the experimenters measured how many pencils the subjects picked up for the confederate. The subjects who received $4,000 were the least helpful, the ones given no money were the most helpful, and the $200 subjects were in the middle. "If you started a great company, you won't need to use money, and bringing money into the picture may undermine your efforts. Researchers gave subjects eight quarters for unscrambling phrases into sentences. Some phrases dealt with money, and some didn't. At the conclusion of the experiment, subjects were asked for a donation to a student fund. The subjects who unscrambled phrases mentioning money donated less than those who unscrambled phrases that had nothing to do with money. Researchers placed subjects in a room with a computer in three states: no screensaver, a screensaver showing money, or a screensaver showing fish. The researchers asked the subjects to set up two chairs for them to meet with other subjects. The ones who had seen the money screensaver set up chairs farther apart than the ones who had a blank screen or a fish screensaver.
GIVE EARLY. Do favors before you need favors back. It's obvious and less powerful when there's a clear link between what you're doing and what you want back-that's called a transaction. You want to do a favor.
GIVE WITH JOY. The purest form of giving is to those who seemingly cannot help you (for example, Columbia immediately after the Civil War) and without the expectation of return. Ironically, giving in this manner often results in the greatest reciprocation.
GIVE OFTEN AND GENEROUSLY. "As you sow, so shall you reap. If you give a lot, you get a lot. If you give high-quality favors, you get high-quality favors. Put aside the sales mantra of "always be closing and think "always be giving.
GIVE UNEXPECTEDLY. Richard Branson, the chairman of the Virgin Group, and I once spoke at the same conference in Moscow. He asked me if I ever flew on Virgin. I told him that I didn't, and at that point, he got on his knees and gave me a shoeshine with his coat. I've flown on Virgin America ever since. Years later I reciprocated too.
TELL PEOPLE HOW THEY CAN PAY YOU BACK. Don't hesitate to ask for a favor in return when you need it. This is a good practice because it relieves pressure on the recipient-you're providing a way for him to repay the debt. This enables the recipient to ask for and receive more favors, and your relationship can deepen. I learned these lessons from Robert Cialdini, the author of Influence: The Psychology of Persuasion, and it be would hypocritical and ironic if I did not tell you to read this awesome book if you want to be a successful entrepreneur.
COMMIT IN CONCRETE WAYS. When not-for-profits raise money, they try to get people to commit to a specific dollar-amount donation. This is much more effective than letting them off with "Sure, I'll give something. A written commitment is even stronger, so don't underestimate the power of a pledge!
COMMUNICATE THE COMMITMENT TO OTHERS. When people let others know that they've made a commitment, they tend to complete that commitment. Not doing so makes them feel inconsistent with respect to qualities such as honesty and perseverance.
Social proof is a powerful way to make your product endure.
These are the key components necessary to make it work:
GREAT PRODUCT. This is a recurring theme of this book. Social proof doesn't work for crap-indeed, social proof can (and should) kill crap.
FEAR OF MISSING OUT (FOMO). An element of fear of missing out is helpful. If I don't buy an iPod, I'll be missing out on a great music experience. People don't want to be on the outside looking in when it comes to cool phenomena.
INVOLUNTARY BEHAVIOR. The choice of earbud colors ran the spectrum from white to white. It was involuntary. You should try to make providing social proof a default-for example, e-mail from Apple phones contains the text "sent from my iPhone. People can remove this text but few do.
CRITICAL MASS. There are several indices of social proof: experts (Marques Brownlee), influencers (William Shatner), users (Yelp), and crowds ("over one billion served ). So consider what kind of social proof registers most powerfully in your niche and use all the available tools. (Read "Social Proof Is the New Marketing by Aileen Lee.)
EXERCISE: How can you invoke social proof of your product?
UNDERPROMISE AND OVERDELIVER.
If you get to a Disney park a few minutes before it officially opens, the employees let you in instead of making you wait. Disney's official age policy is that children over three years old must pay for admission, but they never ask how old your small children are. There are signs that tell you how much longer it will take you to get to the ride, but the times are overestimated to make you feel that the wait wasn't so bad. Disney says it does not offer rain checks in the event of bad weather, but if you ask, they give them to you. Disney has policy and Disney has implementation. Implementation supersedes policy and delights the customer. Underpromise and overdeliver for great support.
This chapter explains how to achieve menschhood. This is the state when the people who matter recognize you as someone who is ethical, graceful, and admirable. It is the highest form of praise and the pinnacle of a career.
EXERCISE This is the last exercise of the book. Pretend it's the end of your life. What are the three things you want people to remember about you? 1. 2. 3.
Books are good enough in their own way, but they are a mighty bloodless substitute for living. -Robert Louis Stevenson
In the microscope phase, there's a cry for levelheaded thinking, returning to fundamentals, and focusing on short-term financial results. Experts magnify details, line items, and expenditures, and then demand forecasts, market research, and competitive analysis. In the telescope phase, entrepreneurs bring the future closer. They dream up the next big thing, change the world, and make late adopters eat their dust. Money is wasted, but some crazy ideas stick, and the world moves forward.
Lewis Pugh is the first person to swim across the North Pole-one kilometer to be exact. He did this in order to build awareness for climate change; one would have thought that the North Pole, of all places, would be frozen. After a few minutes in water that's minus 1.7 degrees C / 29 degrees F degrees cold, you'd be toast-not in the warm-and-toasty sense but in the comatoast (sic) sense. His swim lasted eighteen minutes, and he was in a Speedo, not a wetsuit. He used a mental trick to achieve this task: placing a national flag of every member of his team every one hundred meters to break down a one-kilometer swim into ten more achievable segments. The second-to-the-last flag was Australian because, as a Brit, he wasn't going give up at the eleventh hour in front of Australia-Commonwealth rivalries being what they are. In the dark, daunting, and depressing days (believe me, there will be some), remember Lewis's story and break the impossible into ten possibles. A billion-dollar business is ten one-hundred-million-dollar segments. A million-dollar business is ten one-hundred-thousand-dollar segments. Apple sells Macintoshes, iPhones, iPads, and iPods, but it started with a few hundred Apple Is.