by tomnora | May 5, 2012 | Angel Investor, Business Development, CEO Succession, early stage, founder, Launch, Revenue Growth, Scalability, startup, startup CEO, Tom Nora, venture
The current massive movement of new startups is an awesome moment in our time. The power of the individual is unprecedented.
But one of the problems with the new would be all-functions entrepreneur is lack of training in some of the key areas of entrepreneurship – SALES skills. The technology has changed, but the art of selling and closing sales has not. Humans make decisions by being convinced by other humans, even if the convincing is implemented by automation, data mining, and semantics. Respect the human sales skills.
In most of the pitches I get from early stagers these days, they start talking and demoing and don’t know when to quit. They keep “selling” me. This one one of the most fundamental mistakes of selling. It’s much better to say as little as possible, then shut up and listen as much as possible. Pretend you’re interviewing the other person and you want them to talk. You’ll be amazed.
When I hear a pitch, I want to ask questions, probe, dig deeper into specific subjects. If someone talks too much I often forget or lose interest in my original questions. I also feel like they must be a bit desperate. The other night someone was trying to show me a demo of their mobile app in a loud bar. Since we couldn’t hear the audio, they were trying to scream the features to me. Very sad demo.
So don’t talk so much, listen more, you’ll close more sales. @tomnora
The Art of Sales by Alec Baldwin :
http://j.mp/ILFWw3
by tomnora | Mar 26, 2012 | CEO Succession, early stage, founder, Launch, Scalability, startup, startup CEO, Tom Nora, venture
“Even in the quietest moments, I wish I knew what I had to do” – Supertramp
[This is about the loneliness of the CEO in a startup. A real startup, that has employees and funding and a going operation.]
It’s late on a Sunday night and you’re sitting alone preparing for the week ahead. It will include travel, employee issues, hiring, firing, product design, cash burn, a new facility, the next funding round and some client and partner visits. You have a great team for your little startup, in management and elsewhere. You have a few “startup whisperers” who advise you from afar, your parents are very supportive. Your spouse shows incredible patience and listens to your war stories every day. It’s not that you don’t love this, you do.
But in the end it’s all down to you. No matter how many people surround you, no matter who great your ecosystem is, being the CEO of a going startup is often a lonely job. By definition, in the final step of making many decisions is you alone making them.
- Others depend on you to do this.
- You have more information than anyone else in the company.
- You get more blame and more accolades for results.
- The outside world looks to you first, wants to talk to you.
- No one is equal to you inside the company you need to maintain your leadership.
So it really is you alone.
How do you improve this situation? Draw from all these resources around you, especially external ones.
- Pick one or 2 board members to get closer to, (pick the right ones).
- Don’t ask for advise or what to do, that will confuse you and they contradict each other over time.
- Find an old college or high school friend who’s disconnected from the business. Or a favorite teacher or professor.
- Pay attention when outside mentors magically appear in your circle; I’ve met some of the best advisors at meetups and coffee shops.
- Read voraciously, not just business or CEO books, but history, biographies. etc.
- Try to mentor a potential replacement even if you’re not looking for that; you’ll learn a lot.
- Use external consultants – management, executive, legal, recruiters to discuss ideas. Mark Zuckerberg hired an executive coach so he could learn to be a leader. The Google founders surrounded themselves with a dozen moentors and advisors.
I’ve found in my CEO positions that optimizing this thinking process can make the difference between success and failure, usually does. Please reach out to me if you want to discuss any of this with me. I’m @tomnora on twitter.
by tomnora | Mar 7, 2012 | Angel Investor, Business Development, early stage, Launch, photography, Revenue Growth, Scalability, Tom Nora, venture
Shout Out to Seth Levine – Seth Levine’s VC Adventure – “I’m getting sick of the bull$%!^”
Seth Levine, a successful VC with the Foundry Group, wrote a great blog entry about all the hype going on currently in the startup world. Worth the read. His focus is on people bragging about how amazing they and their startup are when they usually have close to n o t h i n g, which goes against the karma good business and screw it up for those really trying to build strong long lasting companies. If more people like Seth step up with their qualified voice, they could help save us from or lessen the big crash coming.
I’ve been harping about this a lot (too much?) for over a year:
http://j.mp/yyqNQc
http://wp.me/pKMex-1m
http://wp.me/pKMex-2e
Currently Los Angeles is in what could be a startup renaissance or an apocalypse, dependent on how long the hype goes on. Based on Seth’s article, I realize it must be happening everywhere. The signal to noise ratio continues to degrade, but it’s actually moving into the next phase. Investor groups are cutting out the management, bus dev, sales, and marketing professionals, trying to get raw, young engineering teams that have never negotiated a term sheet to give away their IP rights and equity for next to nothing.
Some of these projects will produce amazing companies. But most participants (young developers) will raise their hopes, fail and get spit back out into the cruel world within 2-3 months(!) and become a jaded unemployed 25 year old. Or realize down the road that they gave away a lot for a little. Many investors now advertise that want only developers, they will cover all business/marketing/etc. needs. Don’t put real business people on the actual team. To reuse an overused term – Wait what? They offer them zero to a few thousand dollars and office space. I call it harvesting youth.
Recently there was a developer only coding party where, in a few hours, you form a team, think of an idea, then design, develop, deploy a website. The compensation? All the alcohol you could drink and In-N-Out burgers. Now don’t get me wrong, I love In-N-Out burgers, some of the best in the world. My favorite is the Double Double animal style (see photo). But the sad thing here is that after that party many of the participants think they have a startup.
The word startup used to be about very unique technologies being deployed in very unique ways, creating new markets and capabilities in the world. Having knowledge and experience had value and a balanced team was required. Balance, humility, hard work. Facebook and Google had plenty of business people deeply involved. In fact, Mark Zuckerberg is a great salesman, and a pretty mediocre programmer. Now almost anything is a “startup”, and almost everyone is “doing” a startup. And bragging about it before it happens. We’re spreading resources over way too many businesses, knowing most have no change. I know it’s a risk game, I’ve been in it 25 years, but there should be some intelligence invested in the outset. One VC recently told me that his investors don’t care if he does no due diligence, as long as he “brings them another Facebook”.
Real startup successes are measured by growth, revenue, shareholder value, making something from nothing, ROI, longevity. Not just this weeks buzz or a $25,000 seed round. They devised with strategy, ingenuity, an ecosystem. Long term employment, new jobs.
The good news is that this hype period will end, probably soon. Then the remaining companies will be much easier to watch and enhance and benefit from. @tomnora
by tomnora | Feb 16, 2012 | Angel Investor, Business Development, CEO Succession, early stage, founder, Launch, Scalability, startup CEO
http://j.mp/y7qE0u
by tomnora | Feb 10, 2012 | Business Development, early stage, Launch, Revenue Growth, startup
Big Revenues vs. little revenues – a strategy question that startups often struggle with. Should we focus on a business model that supports small payments, subscriptions, etc., or look for major large chunks of money from partnerships or strategic investors? There are strong arguments for both types of incoming dollars for a startup, but the correct answer is have both coming in simultaneously; it will balance your cash flow get you through valleys and help you avoid raising expensive equity capital. And will get you more respect all around.
Almost every company with long term success has used this dual revenue plan, throughout history.
little revenues
Many easy-to-set-up payment systems and business models on the Internet have recently popularized little revenues – micro-payments, price per transaction, low cost, SaaS, freemium, monthly payments. Easy to use systems like PayPal, Square, and several other new online cash acceptance systems are hen there are the thousands of derivative companies that are thriving from commissions from larger companies – Google ads, Facebook ads, and the all encompassing affiliate market industry.
I went to an affiliate marketing meetup recently (kind of by accident) and was knocked out of my chair by the size and sophistication of this world. The speaker (Shoemoney) told a great rags to riches story of making tens of millions from affiliate marketing tricks, getting ~$1 to 50 per referral. That’s a machine, maybe one that only produces for a bit, but still and semi-automatic mechanism for short term scalable revenue. He’s been at it for 10 years, so I guess he’s got the long term figured out, too.
Little revenue systems have vastly lowered the barriers to entry to starting a business, no longer must you have bricks and mortar, a merchant account, office equipment or even a staff to do business. It hasn’t decreased the need for innovation, salesmanship or marketing prowess. Many 2.0/3.0 startups are learning this the hard way.
Big Revenues
As a product company, very large injections of cash are always a nice add on to any business as long as they don’t disrupt your business strategy, kill margins or cause you to customize your offering too much. I was with a startup once where we sold our software products for average $500 each generating about $1 million per year, running as fast as we could. I was lucky enough to close 2 large contracts for $900K each within a month, and while we were negotiating a funding round. They were volume sales of standard product so caused no disruption to our processes. Those 2 deals changed our company forever, put us on the map for long term.
In the Shoemoney example above, the ultimate in trickle revenue, he has actually had several Big Revenue transactions, selling entire websites or business models, or taking on expert consultant gigs, all these for high six figure injections to compliment his $20 per click businesses.
In the auto industry, most large companies augment their car unit sales with $ multi-million R&D contracts – Ford, Cadillac, and Porsche get over 20% in extra revenues doing this.
Back to early stage startups. No matter how early, the most sophisticated startups are looking for these Big Revenues from the beginning. They bring on the expertise required to make this happen. It’s often called OEM, white labeling, or strategic partnership, but it’s big chunks of money when you need them most.
I recently met with a respectable high growth early stage startup – increasing revenues, retained all of their equity so far, thousands of customers, even made the Inc 500 recently. But they totally depend on one revenue model for 100% of their revenue, and it’s breaking down. They desperately need the Big Revenue injections before it’s too late.
If you’ve built something compelling enough, there are always larger companies that will welcome you to take their money. Current vs future revenue is very dynamic, two different businesses can leverage each other when their needs compliment each other. Connect or contact me on twitter: @tomnora
