Category: biz

Startup Opportunism – Watch Out For The Double-Edged Sword

TL;DR – Opportunities present themselves quite often, sometimes ones that sound very appealing and “sexy”, however, a smart entrepreneur needs to carefully review the risk/reward before entertaining one: Size of the prize, potential defocus, chances of success, long-term effect (negative/positive and net effect), etc.

*preamble – don’t confuse experimentalism with opportunism. Those are two different things. I reckon experimentation is KEY to success (and fun).

Opportunism probably also, but here’s what I have to say about it:

 

I’ve been an entrepreneur for a good 7-8 years now. Not always a successful one, not even “a successful” one yet, some would say.

But one thing that I learned was that many ideas sound great in theory, however, they tend to take your eyes off of the prize more often than not.

As a Newyorker (those of you who ever lived in New York would immediately recognize the reference), my most immediate association with an opportunistic startup entrepreneur is a mouse: trying to find the thinnest sliver or crack in the wall to come in and cause mayhem. Not even sure what that mayhem is, and what dangers await for “trespassers”, but we’re almost instinctively drawn to it, perhaps because we need to succeed very quickly, in an almost abnormal way.

So many competitions, accelerator programs, launch pads, showcases, incubators, partners that have an agenda, crazy clients that are waving the cleavage of a busty cheque.

All are temptations, possibly great ideas, but also – potential distractions, sometimes detrimental.

 

I wrote a piece about why startup founders/leaders need to establish a presence in their target market before they even have a product, as early as they can conceive it.

This might not be a plan, but it’s at the very least the foundation of a strategy – first, be there, then plan, then execute and course correct as you go.

But sometimes, you have all of those different opportunities: “we like your company, how about you join our program for 8 weeks? we’re great because x,y,z and you’ll likely get a,b,c” or “we think you have a great offering, perhaps we can partner and you can build something for us for free so we can try and resell or whatever”.

I’m not saying you should say no to these opportunities. I’m assuming if you’re past seed funding, you ought to have some type of plan and strategy.

Opportunism is very important as a part of our dynamic mindset – we can’t afford to ignore those that are indeed potentially huge breakthroughs, and it’s not unheard of.

Personally I almost never say no to an opportunity right off the bat. I listen, if I’m curious I’ll study it, and then I follow the protocol below, to make a decision:

  • Try getting the best estimation of the size of the prize. Ballparks are also helpful.
  • Assess the gap between what is in your wheelhouse currently (or in progress), and how far off is this opportunity, if we chose to take on it., efforts wise. This refers to every single aspect of your business: on tech, staff (skills/knowhow), product, support, etc.
  • What does failure mean? is this a hail mary, or can you allow yourself to experiment and not die (figuratively)
  • What other benefits do you get from this? big name signed? reputation? brand recognition? the more the better, of course
  • Ask around. Do you know people who tried or experienced this or anything similar? personal experience is super helpful.
  • And finally – trust your gut, as well. Sometimes after having quantified and contemplated, an opportunity can also be a personal bet. You feel it inside you. If you do, I say go for it. If we can’t trust our entrepreneurial instincts, after having factored in everything “rational”, then we’re in the wrong game. If you have partners, try to agree and achieve consensus, it would make the choice much easier and less regrettable – also, when everyone is fully engaged, it makes it much easier to succeed.

Strategy and opportunity are like Ying and Yang: seemingly opposing forces that have to co-exist to create harmony and balance.

We have to embrace and exercise both all the time – but we also need to be very mindful of ramifications of breaking that balance.

 

Don’t be a mouse. Think hard before you decide to enter the “apartment”, and if you decide to do so, GOOD LUCK!

 

P.S. the photo represents me experimenting in flying out to meet a potential partner. It didn’t go through.

 

Hello, my name is Inigo Montoya – You look like a client, prepare to buy

TL;DR – Using cold calling and emailing could be a viable strategy for lead generation, however, there are many potential issues that need to be taken into advisement, and ultimately – might not be a winning strategy in some domains.

*Featured photo credit: Youtube

In lead generation, cold calling/emailing is a perfectly viable instrument, however, there are some things we must remember, as we institutionalize this as a primary tool for our B2B company. When cold calling/emailing is on the less robust side, I refer to it as pulling an “Inigo Montoya”. You’re dropping-in on somebody unannounced with a vengeance, while they have no idea what you want from them and who you are. Yes, I am aware that Inigo ended up killing Count Rugen, therefore accomplishing his mission… So the outcome is actually somewhat misaligned with my analogy (and between us those Hollywood folks are getting away with Inigo getting a dagger in the stomach and not caring so at the very least he was cutting it close…)

Anyway, here are some ideas about how to avoid turning your sales reps into intruders:

  • The more senior our target is, the less likely they would be to pick up the phone or even take a second look at what you’re offering via email. That is because they get constantly bombarded with cold calls and emails.
  • If you’re using an inside sales rep (i.e. you don’t have single-person end-to-end sales) and they’re doing outbound calls, make sure they know what the hell they’re talking about. There’s no greater turnoff than speaking to a human parrot.
  • Local vs. Foreign – Even in today’s digital, global village, often you’d encounter potential discrimination against non-locals, specifically in some markets, even the U.S. (probably outside NY and CA) in many cases. It may suck, and it may be troubling, but it’s the truth. And, sadly enough, nobody can force those potential clients to take your call or even read your email to make up for your “funny “accent and/or name. Not to mention some people’s inadequate language skills, which are even worse than “just an accent”.
  • Don’t flood with information. Lead with a reason to read/answer, explain your reason for calling quickly and understandably, and provide necessary follow-up docs if possible. It really takes no more than 1-2 sentences to pique someone’s interest, so they can willingly read more.
  • Trust as a key factor – some industries are much more relationship-based and reputation-based than others. Mostly in situations where trust is a major component of the transaction, due to higher stakes involved in using this product/service.
  • A larger check size (anything north of $10K is a good rule of thumb for thinking about “bigger checks”, and anything over a few hundreds of $ for a pure inbound online transaction). This is applicable to financial services, security/cyber, and even marketing tools.
  • A ‘bottom-up’ approach – Since it’s mostly very difficult to get decision makers to respond, more often than not, our Inigo would reach out to lower ranks, and so much like any other typical system, would be treated accordingly, as those likely do not drive agendas and P&L’s. Sometimes it’s a good thing: you may get a shot at skipping procurement & co for pilot deals, and you could go grassroots on them. It is, however, a longer, sometimes less rewarding process, especially in cases where your competitor had the ability to go top-down.
  • Elegance! above all, make sure whoever your cold caller is, they represent you and your company in a way that makes you feel like you would have listened to that person. The outreach needs to be well crafted (don’t be cheesy!), and in many cases there are also “additional interactions”,  in which that person needs to be eloquent, well spoken, and informative.

*Most/all the above might not apply if you have an insanely (and objectively) kick-ass offering with minimal barriers to “learn more”, in which case all rules of thumb are probably irrelevant, because you may go viral as well.

Personally, I cannot discard this technique, as I have found it to be useful in the past, but – as companies grow and scale up, and even before they do, they need to make sure they put a lot of emphasis on making their best effort in preventing a complete “Inigo Montoya” situation. Meaning, if someone representing my company dropped-in on you and mentioned he was calling on behalf of the company so-and-so, it’s my obligation as a business leader to make sure that person has at least heard something (positive) about so-and-so. So if he is a potential client, he’s better prepared to buy 🙂

 

Israeli entrepreneurs: your edge as Israelis is distinct but limited, so go to your market!

For my upcoming non-recipe related posts I’ll start with TL;DR for those of you with ADHD: Being Israeli gives you an important advantage in some markets, but you absolutely have to be physically present in your target market no matter how early on you are with your venture. (the featured image is taken from my personal experience in taking myself up on my own advice below).

 

Before I became a parent, it always sounded borderline condescending whenever somebody would go “yeah, I guess you’ll only understand once you become a parent” on me. What’s there to understand Mr. OohLookAtMeI’maParent (read with a sneering tone)? Well, I really can’t explain it, but there is. You can be an uncle, a babysitter, a close friend who babysits, you’re still completely oblivious about what parenthood means. And I’m not talking about changing diapers or waking up in the middle of the night. I’m talking about this sense of responsibility, of assuring the survival and growth of your creation, of setting an example, and many more feelings that I cannot convey with words.

From a business standpoint, your startup is like your baby. You gave birth to it, you devote a substantial portion of your time to it (probably more than your actual babies, ironically), and your goal is to make it grow and succeed. Speaking as an Israeli, I used to hear successful businesspeople around me talking about how important it is to be physically present in your primary market (because it’s almost never Israel). Then again, people always get so excited about the “Israel-factor” in other countries that are much bigger and economically impactful than Israel. And I know many entrepreneurs who share my old way of thinking, saying “hey, I might go there eventually, but not until I’m properly funded”. in my opinion, that is a common and crucial misconception, of which I have been a prisoner myself until recently.

And here comes the part where the baby analogy kicks in: Similarly to not being able to fathom parenthood until actually doing it, I could never explain to someone how essential the founder’s presence in the target market is, even from the day of inception of his/her venture. It doesn’t have much to do with your nationality, your ideas or your character, it’s about being there. Every minute spent outside your market is an unquantifiable loss and a bigger risk that you most probably inadvertently incur, especially in early stages, when the company needs you and your skills the most.

Being an Israeli (with proper target market language skills) is a huge upside, because you stand out by definition, merely because you’re an Israeli. This is true especially in NYC, L.A, Silicon Valley and in many places in China, as well as other huge markets (not so much U.K. for example, in my experience). Even more so if you’re an elite unit army veteran. Funnily enough, it puts you in line with all those fancy ivy-league college/university graduates, sometimes no matter which school you went to in Israel (assuming you did…). Israelis are known to be feisty, scrappy, resourceful and bright. Yes, it might be a stereotype, but I guess you can’t argue with statistics, with Tel Aviv being 2nd place worldwide in number of startup companies per SQM, second only to Silicon Valley.

This is all nice and well. BUT, that’s as far as your unfair advantage and your perceived merits go. From there on, you need to behave and think locally, not remotely. Not too many things you do in Israel from a commercial and product perspective validate them elsewhere and the scale is just getting farther and farther. You’re starting a business, and assuming it’s a pro-profit business, and assuming you don’t have sufficient funds at home, you want to start talking to target clients in your primary market, not on day 1, but on day -100. Get them involved in the process, have them try your alpha, get them to sign up to your beta. Talk to potential channel partners (if applicable), start creating a brand name for yourself with the local venture capital scene. DON’T WASTE THAT PRECIOUS TIME. Don’t lose momentum and erode yourself by flying in and out for 10 days every 2 weeks.

Yes, a lot is at stake for you, and sometimes you have a family, and you might not have a proper Visa yet. Find a goddamn solution, take a bet and get it done. You’d be amazed at how deeply it influences your execution abilities, your company’s fundability (i.e. being fundable) and ultimately, its route to success.

Startups are much about taking risks and leaps of faith (in yourself and your product or service). Don’t work harder than you have to, don’t invest more hours than you can absorb or money that risks putting your family on the street. Don’t give up spending any possible free time with your closest family. But GO-TO-YOUR-GODDAMN-MARKET, asap.

Your new startup idea is probably lacking the right starting point

If I had a dime for every startup idea I’ve heard, I’d probably have at least $100. Not too Shabby, can buy myself a nice steak dinner at Peter Luger’s plus change!

There may be one thing though, that connects most of those ideas: they fail to understand the most fundamental (and probably most important) building block in a successful startup. Let me explain:

  • The default, almost intuitive predisposition when coming up with startup ideas, comes from a fault, a need or a problem you’re aware of or have encountered.
    Let’s say you’re waiting in an endless line to get serviced. you’re thinking: OMG, there has to be an app that monitors the lines and alerts when lines are shorter (and also predicts and such and such). So you see a “need” and you immediately start designing the app in your mind: how it will look like, what it would save you, and so on. BUT, you don’t even stop and think: who is going to pay for my app? the consumers? hmm… getting consumers to provide credit card details (or equivalent) is very tricky and normally entails micro-payments. so, maybe businesses? but what would their incentive be? how difficult would it be to penetrate? enterprise sales could be too long and resource consuming.
  • Another common disposition is being exposed to a very cool technology, or realizing that you might have a good technological solution to a problem/issue currently being neglected due to utilizing inferior default technologies. For example, you see that traffic lights are problematic and might create unnecessary congestions, so you come up with your own crazy ideas as to how you can improve and optimize it, based on some awesome video analysis + big data. Again, great, but how do you monetize?

I had a very cool idea once to create predictive driving times, i.e. to be able to know when I should leave the place I’ll be in, so I could reach the place I wanted to drive to on time. An example: let’s say it’s 9am and I’m at home. I need to be somewhere within 30 minutes driving distance at 4pm. If I wait till 3:30pm, I might discover that there’s heavy traffic (that could have been theoretically anticipated) and I should have planned ahead better. sometimes experience dictates those decisions, and sometimes I need a broader source to help me. I had potential access to a huge database of traffic statistics and road maps, and also a professor who’s expertise is in transportation optimization. Alas,  I also had 2 “minor” problems:

  1. It would take a long time to write & calibrate the algorithms, plus, optimize driving times, and there are companies FAR GREATER than my potential startup, who already own and analyze this data: Google, Waze (which was an independent company back then), and surprisingly, many more
  2. What’s even worse: how could I make anybody pay for this important yet very basic piece of information?

Guess what, 4 years later Google implemented that quite easily and it is now a tiny, yet very cool part of their travel planner on Google maps. They’re not even monetizing on it directly, rather than adding a seemingly negligible feature that makes Google maps richer.

Even tho sometimes very successful startups have started off with one of those dispositions, the crowded tech world we live in dictates that we, as entrepreneurs, should strive to increase our odds of being funded and eventually, being successful (i.e. making tons of $$$).

 

I reckon that the first thing you need to do, before putting a down payment on your future yacht, is to imagine a viable business model and a go-to-market strategy.

If you can imagine the personas / entities to which you can sell your product, the ways you can sell it and the ballpark costs they would agree to pay (again, all very roughly of course), then you have an excellent starting point, and from there on, you can move forward to tackle the rest of the challenges.

So, after taking part in several ventures and presenting to tons of investors (I’m embarrassed to say how many as it might pull the rug under this post’s credibility, so let’s just say A LOT), here is my ranking of what you need to consider when actually pursuing a new venture, and spending your time, money and hopes on it:

  1. Biz model / GTM – Never say “that’s ok we have a very cool product/idea, the customers will come or we’ll figure it out later”. The first thing you need to know is who your customer is, why he should buy your product, and for how much. of course, you also need to estimate the market size (tip: never think your market size is 100’s of Billions) and would help if you had an idea of how you could reach out and make them buy whatever it is you’re selling. Selling to consumers or businesses is a critical junction for your enterprise, and you need to make sure that your customer will actually be willing to pay for what you’re offering. having said that, be aware that arbitrary / unpredictable use of your solution is also a party pooper, that’s why investors love subscribable (apparently it’s not a word..) and/or addictive offerings.
  2. Black-box technology – almost as important. Investors want to know your offering is very hard to reverse-engineer or replicate. Often times when you’re small, large companies are able to quickly implement your product (sometimes faster than you…) and sell them to the critical mass, thus canceling any selling point you have. Having a solid technology will not only help you retain your relative advantage, but would also make you much more appealing for acquisitions.
  3. An actual pain – If there are people to whom you can sell, it probably means that there’s a pain, but not always. proving that there’s a real pain (and the more painful it is = the likelihood to succeed is higher) is crucial because it mitigates the risk of selling solely on merit.
  4. A (cool) viable solution/product – Yes. it needs to be cool, no matter what people tell you. Visuals and aesthetics are proven likability enhancers. But, more importantly, your product (based on your tech, of course) needs to show that it can actually meet the need or solve the problem.

There’s one “floating” category: the team. all investors say “We invest in impressive entrepreneurs” and such. it’s true, but to me, it has to go without saying. If you’re not talented or interesting, you have nothing to look for in entrepreneurship. The team is the most un-quantifiable metric there is, because it’s so subjective and basic, it’s on the verge of being a cliche (excluding outliars of course, e.g. serial exit-makers, or vice versa, complete idiots).

In conclusion, always start by imagining HOW, TO WHOM, AND FOR HOW MUCH you sell your product/service. if you can imagine this, you have a promising starting point.

 

 

New-Age Corporate Innovation – Disruption or Disturbance?

Back in the old days (i.e. a few years ago), being an entrepreneur was “simple”. You had a wonderful new startup idea. You made all the right moves: gathered an impressive team, crafted a nifty go-to-market plan, crunched all the right numbers in the Excel and even created a prototype.
The problem: You had no money.

Solution? (after having exhausted your triple-F circle) you started chasing angel investors and venture capitals. And then, you went on to grow a beautiful company, or, crashed and burned.
Success was never guaranteed, but you were 100% hands-on, held responsible, improvised, discovered the boundaries of your resourcefulness and always knew what the abyss looked like and where it was in comparison with your present location.
The trajectory was simple to imagine: You have a startup, a company for every purpose and intent, and you get money (or not) to help support your growth (or survival) efforts.

But then, a funny thing happened: incubators, accelerators, activators and basically anything that ends with “ators” have emerged like new outrageous Kardashian sisters photos (i.e. very often), offering young companies with bulk tours to the startup galaxy. In my view, this is nothing short of a complete disruption of that trajectory I was talking about.

The promise was to nurture and mentor entrepreneurs, so they get symbolic funding, combined with on-the-fly training and support, thus adding a new layer of assurance and a better chance for more people to become entrepreneurs.
Above all that, the real game-changer, which I haven’t yet decided if for better or worse, was the enterprise play in this newly formed production line of innovation. Long story short: “Innovation” is perceived as a highly cost-effective resource / growth catalyst, alas, home-grown innovation is virtually impossible in large corporations.

Solution? Enterprises started opening their own quasi-VC and thus allowing for feisty & hungry entrepreneurs with a minimax approach to do that innovation magic with minimal resources and a hug and a shared workspace.

Looking at it at face value, it can and should be fantastic news for startups, especially those manned by inexperienced founders that can greatly benefit from cozy hand-holding and the easy enterprise Rolodex access.

But, there are some clear warning signs that I would like to put up:

  • Usually, substantial equity is given away, under the premise “adhering to a giant = shortcut to glory”. This isn’t always the case, and I don’t believe in shortcuts. Those who don’t need them have probably already reached their destination. Don’t give away so much of your company in bulk just for the sake of that premise.
  • Giants are (very) slow to act. they barely notice you and they take forever to make a difference for you. Between their commercial, operations, product, legal and IT people, you may want to be sure you’re not betting on the slowest (even if most famous) horse.
  • It very quickly turns into a production line that serves its internal protocol rather than its purpose. Take accelerators as an example: most if not all of them, probably without any premeditation or intent, have set the goal to be “demo day”, that special day when you suit up, put your A-game on and squeeze every single breathe of air to exploit those glorious 8 minutes you are so graciously given, to present to investors and managers with an extremely high standard of stimulation. Demo day isn’t supposed to be a goal, it’s supposed to be an experience or a means to an end, but for those accelerated startups, it’s their graduation ceremony, no less.
  • After a while, those connections are exhausted, and then intros, demos and pitches are treated with less enthusiasm and attention.

On top of all of the above, the most alarming sign I’ve noticed was the “honey-trap effect”: companies understand that they can prolong their seed stage (i.e. don’t worry about aggressive commercialization, revenue and growth), by buying more time before they need to face the real world, and finding themselves taking part in 2, 3, sometimes even 4 batches in different incubators/accelerators/bridges in a row. No need to worry as long as we live at Mommy&Daddy’s attic, right?

In conclusion, I feel that this newly formed eco-system of seed-stage startup funding CAN be helpful, but only if one knows when to spread wings and leave the nest, because it’s sometimes too convenient.