In today’s episode of The Startup Chat, Steli and Hiten talk about optimizing your funnel no matter what type of funnel it is. When it comes to acquiring new customers online, your funnels are a crucial part of the process. Therefore, optimization is essential if you want to increase conversions and sales. In this week’s episode of The Startup Chat Steli and Hiten talk about what a funnel is, how to optimize it to increase conversions and sales and much more. Time Stamped Show Notes: 00:32 What is a funnel. 02:09 How a funnel works. 02:38 Why every business has a funnel. 04:00 Why you should measure every step of your funnel. 05:01 How most founders look at their funnels. 06:07 How to analyze a funnel. 07:21 One thing that isn’t measured enough. 07:40 Why time is one of the key components in improving a funnel an entire business. 11:02 Why it’s important to figure out what percentage of people are signing up and dropping out. 3 Key Points: No matter what stage of business you are, you do have a funnel. Measure every step of your funnel. You need to know all the steps and numbers in a funnel to really understand what’s going on.   [0:00:00] Steli Efti: Hey everybody, this is Steli Efti.   [0:00:03] Hiten Shah: And this is Hiten Shah, and today on the Start-Up Chat we’re going to talk about optimizing your funnel, no matter what kind of funnel it is. So, Steli what the f*ck is a funnel?   [0:00:14] Steli Efti: Oh, that’s a really good question. Well, a funnel is a mental representation or a model of how to think about a customer journey with you. Or any kind of journey with you, like anytime you’re trying to take a business relationship from nothing to a conversion of something you could visualize that or create a model of it that looks like a funnel. Like something that is big at the top and that goes kind of narrow down, and at the end there is just a few things that will pop out. So as a simple example, the easiest example to talk about is probably a customer funnel. At the top of it you think about all the prospects that you are advertising to, sending cold e-mails to, e-mailing, cold calling, whatever the hell you’re prospecting at the top of the funnel, and marketing at the top of the funnel. And then some of these people and prospects will take the next step in the relationship and actually talk to you and entertain the idea and try things out, and consumer information from you, give you more information. That’s probably the qualifying part of the journey and then some of those people that are interested and qualified and conversing with you will take the next step to actually try out the product so they are not trial users and some of these trial users will go down all the way down to them making a purchasing decision and becoming a customer. And if we took every step as a step in the funnel, it typically starts with a very big number and the number goes smaller and smaller and smaller, every single step until somebody is converted to being a customer of yours.   [0:01:55] Hiten Shah: Great, that’s great. And the funnels work for mobile apps, the funnels work for sales, funnels work for a SAAS product, it doesn’t matter. We’re talking about just the step by step process people take to get from point A to point Z. Whatever your point Z is, usually a purchase.   [0:02:12] Steli Efti: Yeah, and you could apply the same thing for fundraising, right? But we’re going to talk about specifically for customers since that’s our kind of bread and butter and most of our listener’s interests. Alright, so I’m going to throw out my first tip or my first thought, and we can go back and forth on this. First of all what I want to say is: no matter where your business is or where your start-up is, no matter how early it is or how late. No matter how good or how bad things are going, you do have a funnel. I’ve heard people tell me: “Steli we don’t really have a sales funnel, or a customer funnel.” Like, no you do. Your funnel might just be zero, zero, zero, zero, zero. Right? It might just be zero prospects, leads to zero qualified prospects, leads to zero customers, but you have a funnel, right? You do have one, you might not be aware of it. You might have not designed it purposefully, but you have one. And most people don’t have the zero, zero, zero on most companies or founders, or many of them, they just have a bad one, or one they haven’t worked on as mindfully, so they think because they have not worked on a funnel; it doesn’t it exist. It does. And that’s my first piece of advice or thing I want to throw out there is: you have one, so sit down and or stand up, go to a white board, or take a piece of paper and write down what your funnel looks like today, and visualize it. So you know what the health and the state of health is of your business.   [0:03:34] Hiten Shah: Yeah, I love that. I think even a fundraising funnel, if your fundraising, you’re starting with meetings and then there’s a bunch of steps. Like, the second meeting, the partner meeting, and then eventually the terms sheet and then the close, right? What I, my tip here is, even things that are offline, like a fundraising like that? Measure it. Measure every step of it, even the small ones if you can, or if you can think through it. What I see a lot is people are just not measuring the steps of the funnel. They’re like: “Okay, I got an intro, and then I got to a partner meeting, and then I got a terms sheet.” Well there’s all these steps in between, and if you’re really in a fundraising process, it’s actually valuable to get a little more granular than that. The same thing applies to a sales process, and being able to measure not just every step, but every call. Or everything that happens in between and adding those steps in, because sometimes in a funnel there are pieces of that, that you have no visibility on in the beginning. And then when you realize where your sort of improvement opportunities are, where the drop offs are and things like that, you start needing to measure sort of the things that are in between.   [0:04:48] Steli Efti: Yeah, what I’ve realized talking to many, many founders is that usually I encounter one of two scenarios: Either the founders only measure the end result. The conversion, so you talk to them and you go, “How’s fundraising going?” And they go, “Well we had 3 term sheets, or we had one term sheet so far. We had two partner meetings so far,”. Whatever the last step in their conversion is, that’s the one number that they know, but they don’t know every step that came before. They don’t have real context on how fundraising is going overall, and I don’t know just knowing that number because I don’t know if they had one conversation that led to one term sheet. Or if they had a 1,000 conversations that led to one term sheet. Those are different situations. The same thing is true in sales, a lot of times it’s just like, “Oh yeah, well our team is closing about three new customers a month.” Okay, well what are all the steps that come before that? “Well, I don’t know we do lots of calls, lots of this lots of that.” So either they only look at the last number, the conversion, or they look at the first number and the last number. So they’ll say, “We pinged 100 investors and we got one term sheet from one investor.” Or “We made 100 cold calls and we closed one deal Steli, how do we get more deals closed?” And I always say, “I don’t f*cking know.” I need to know a little bit more about your funnel to know what to do to improve it, and where the leaks are and where the opportunities are. Again, if you do 100 calls, and you only reach one person and you close one person, there’s nothing I can do for you in terms of teaching you how to close better. You’re already 100% close rate. Your sucks, right? You’re calling 99 numbers you shouldn’t call, or you call at the wrong time, or there’s things that can be optimized in terms of why aren’t you reaching more people. But its not a ‘Why aren’t you closing more people’, because you close everybody you could close. You need to know all the steps in the funnel, the numbers, to really understand what’s going on. Where to fix things, or where things are broken. My understanding there’s three scenarios: One is people don’t measure anything, and then the other two scenarios is they either just measure the end or the beginning and the end, and they forget the middle of the journey. Which usually is where all the insights are, and where all the opportunity is, in terms of making improvements.   [0:07:06] Hiten Shah: Love that, so my tip is more about sort of measurement, and one thing I don’t see people measure in the to get from one step to another, can be a critical component to measuring a funnel that is just often not done. And the value of measuring the time is to help you understand how long does it actually take, and how can we speed up the time? Because improvement isn’t just about making more people do the thing, it’s also about how fast they do it.   [0:07:40] Steli Efti: That’s beautiful. So velocity, time is actually one of the main key components in improving all the metrics in your funnel and improving your entire business in a crazy way. Think about it, this is so obvious but still underutilized. It doesn’t matter how many deals you close in a vacuum. If you close 100 deals but it takes you a year to do so, and then close 100 deals a day. Are those two very different businesses? Although, we talk about the same result, right? Those are incredibly different businesses, and the metrics and the business model is completely different. So one big thing to work on, in terms of improving the funnel is to improve, and shorten the time it takes to go from one step to another. So I love that you brought that up, and I’ll throw, I’ll double click on this by throwing one very simple trick, and there’s many, many more. But one simple trick in terms of shortening the cycle, is just to cut down the wastefulness of time that you have. So instead of doing one-hour demos, or two-hour demos, do it in 15 or 30 minutes. Instead of taking three steps: an introductory call, a check-up call, a demo call, and a Q&A Call. Ask yourself: Do you really need 4 steps, or is one of those steps unnecessary? Could you merge some of them? Or make even all four steps just one step. Where do you have too much time and too little urgency? And the other thing is using the power of right the f*ck now. Many, many times people will waste time. Especially sales people, when they have somebody’s full attention and energy they will waste it. I’ll give you one simple example: you have a prospect on the phone, you talk to them, you qualify them. Both agree you want to have another meeting, and then you say, “Let’s hang up and I will send you an e-mail to schedule a follow-up call.” That drives me crazy. That is the dumbest thing ever. So you hang up, and then two hours later you need to remember to send them an e-mail to schedule a time. Then a day later they check that e-mail, and then they check their calendar and they’ll reply to you, ‘Sorry I can’t make that time but here is an alternative that would work for me.’ Then it takes you another day to get back to them that, that doesn’t work. Now you wasted a whole week scheduling when you already had them on the phone. When you have them on the phone and they say ‘yes, let’s have another meeting’, and you agree you need another meeting, just say: “Hey do you have your calendar in front of you? Yes you do? I do too. Let’s find a time right now. Can you do next Tuesday this time? No. Can you do next Wednesday that time? No. What time works for you? Thursday that time? Cool. I sent you a calendar invite can you quickly accept and RSVP.” Boom, beautiful we have the next steps laid out, there’s a bit of homework but we know next Thursday at 3 PM we’re talking. Now there’s no more homework, no more time. You’re not going to waste a whole week to schedule something that’s probably going to be scheduled for a week after. Now that took you two weeks of time to go from this call to the next call, it took you just three days or four days. Find places where you’re wasting time and cut that out. That can be a huge benefit. What other things can we do to optimize metrics in our funnel? Let’s maybe take another one or two and then wrap this up.   [0:10:58] Hiten Shah: Yeah, another one I really like to do, is I like to take a funnel and usually people look at the conversion rate between each step. And I actually like to literally do math and figure out how much for each step, how many people- what percentage of are continuing and what percentage of people are dropping. By actually looking at the numbers, it makes it much clearer where your opportunity actually is.   [0:11:23] Steli Efti: I love that. Alright, let me throw one last one on my end. In terms of optimizing your funnel; look for complexity and try to eliminate as much as possible of it. A lot of times when there is a lot of complexity involved going from one step to the next, it slows things down and it drops the conversion of things dramatically. And I’ll give one simple example: having a sales team that discounts things heavily or having an open policy when it comes to negotiating contracts or negotiating pricing with every single customer. The moment you give a sales team the power to offer any kind of creative pricing based on what they think the customer wants, needs, or demands, you’ve introduced a world of complexity in your funnel. Right now, the sales person, it’s based on their emotions, it’s based on how aggressive the customer is negotiating, it’s based on how good or bad the quota is going, what the price is going to be. Often times it makes these decisions much more complicated, the sales person doesn’t know, “Should I give in here or not?” There’s no framework, there’s no rules or guidelines, there’s no playbook on what we do and how we do it. Every individual does whatever they do, and so it will increase the complexity for the sales person to make all these decisions on their own. But it also will make your business model incredibly complex, because now every single customer is a completely different pricing. So it’s going to make it a nightmare for you to really understand how much is a customer worth? Because this customer gets three months free, and then full price. But that customer gets no free time, but 20% price discount now but after six months we go back up for 30 because then the fundraising is over- When you do these crazy things, that happen all the time especially in start-ups, in terms of your discounting you introduce a world of complexity in your funnel and in your business and it can make things incredibly messy. So make sure to look for complexity, make sure to look for friction in your funnel and eliminate it as much as possible. The smoother the steps are, the more stream line the steps are that a customer has to take to go from one point to the next, or your sales team or your marketing team to guide a customer from one step to the next, the more powerful your funnel is going to be. The more successful your business is going to be.   [0:13:48] Hiten Shah: Couldn’t agree more, remove friction.   [0:13:51] Steli Efti: Alright, that’s it from us, hope that has given you guys a few ideas on how to tackle your funnel, how to improve your funnel and ultimately improve your business. We’ll heal all of you very soon.   [0:14:05] Hiten Shah: Later. [0:14:05] The post 349: Encore Episode – How to Optimize Your Sales Funnel appeared first on The Startup Chat with Steli & Hiten.

Today on The Startup Chat, Steli and Hiten talk about ideas, side projects, and businesses. Steli and Hiten have been in business a long time. It is fair to say that they’ve had a long history of failed side projects, and each failed business idea has taught them valuable business lessons and motivated them to continue trying. In this week’s episode, Steli and Hiten share some business ideas they’ve tried in the past that failed and talk about why they failed. Time Stamped Show Notes: 00:00 About today’s topic 00:33 Hiten talks about one of his failed side projects. 01:35 The reason why this topic was chosen. 01:55 A ridiculous ideas Steli tried in the past 03:26 A ridiculous idea Hiten tried in the past 04:17 Another of Steli’s idea that failed. 07:47 An embarrassing idea of Hiten that failed. 08:38 Steli shares another failed idea of his. 10:18 Hiten shares another of his failed ideas. 3 Key Points: Just because you’ve succeeded in the past doesn’t mean you’ll succeed in future I think stackcounter.com existed so mystackcounter.com didn’t need to exist. The one thing we never asked ourselves was how to get customers for this. [0:00:00] Steli Efti: Hey everybody, this is Steli Efti.   [0:00:03] Hiten Shah: And this is Hiten Shah and today on The Startup Chat we’re going to talk about ideas, side projects, maybe even businesses to some extent depending on what we get into going back and forth on ones that failed. I’m going to talk about one of my failed ones which was … I think we experienced and talked about a little bit on the show which was I tried to make some shirts and I tried to sell them.   [0:00:24] Steli Efti: Oh, yeah. Yeah.   [0:00:25] Hiten Shah: Yeah, and I messed up big time. And it was about unicorns and something about unicorns dying and somewhere in my closet I have a pile of those shirts somewhere or some box somewhere in the garage, I don’t remember. It had a unicorn and a sad unicorn and it said something like, “Unicorns die too” or something like that. First of all, my grammar on the copy of the shirt was way off. Second of all, nobody wants those kind of shirts. I think it’s because they’re very negative not positive. I don’t even know why I did it. I think I just wanted to try something, something completely different and it failed. I still have the shirts so it obviously failed. I was trying to sell them.   [0:01:05] Steli Efti: Yeah, I remember that. I remember you with a shirt on my balcony recording a Startup Chat episode.   [0:01:12] Hiten Shah: That’s right.   [0:01:13] Steli Efti: Yeah, the reason why we wanted to do this episode is just again, a lot of times you see people that seem successful and are running companies that work well but that doesn’t mean that they didn’t have a lot of failure and it doesn’t mean that just because you’ve had success in the past every project and every company you work on or every idea, it’s going to succeed in the future. That’s not how it works, right? So just shedding a light on that. All right, so I’m going to start with the smaller more ridiculous ideas and then maybe we’ll work up to some more side projects or real startup things that I worked on that failed. But something ridiculous that I just thought of as you were talking about the T-shirt was that one winter maybe seven years or so ago we tried to sell Christmas trees. It was even during a time we were running ElasticSales and one of our teammates in November was like, “You know what? What would be really cool is to have a really nice website that’s really modern where people in the Bay Area can order a Christmas tree.” I don’t even remember, he had some kind of unique angle and we started just laughing about the ridiculousness of trying to sell Christmas trees. But then when we searched for all of the places, like all the websites were super updated from 1992 or something. He was like, “Yeah, we could get this upvoted on Hacker News and make it sort of funny. Maybe it will have some startup theme. Startup theme names for all the different trees.” I think the whole idea spun out of control. He actually together with me, I did a little bit of the copy and he put together the website. We posted it on Hacker News and I think we sold 13 or 14 Christmas trees.   [0:02:48] Hiten Shah: Cool.   [0:02:51] Steli Efti: You know, I don’t even know how we got the Christmas trees to those people but that was it. I think the goal that we had set was to sell like 100 or 200 of these trees and it didn’t quite work out as successful as that. It was just a weird, funny thing to do and definitely one of the weirder projects that I ever worked on.   [0:03:12] Hiten Shah: That’s really cool. Mine, before we built Crazy Egg and then eventually KISSmetrics we built a product called Mystatcounter.com and it was just a stat counter for websites. It was very similar to a product that still exists today called StatCounter.com and I think StatCounter.com existed so Mystatcounter.com didn’t need to exist. That was the basic reason why it didn’t work.   [0:03:42] Steli Efti: All right, so next thing that didn’t work out, this was a bigger project but something that almost nobody that knows me … Only my inner circle of friends know that this ever existed. There was a project that I was working on at the same time that I started working on this charity thing that ultimately ended up becoming ElasticSales and Close that was called Viva TV. It was basically QVC for the web, right? So what we did … It was during the heyday of Groupon and I was looking at all these Groupon clones making a shit ton of money and I came up with this idea of saying, “You know what? This online shopping, like a live show that shows products could work really well with this concept of having something heavily discounted for a very short period of time.” If we stream something online, we would have a lot more analytics than they have on TV. The reason why shopping TV is such a big thing is that they know how many calls they get and they know how many people tune in so based on that they have dynamic programming. They might show a certain product for much longer than they had originally intended because it’s much more popular so they can just adjust their programming based on data. I was like, “Well, online you have a shit ton more data than what they can have just by pure calls. This could be a really big thing.” So for, I don’t know, a period of three or four months we actually, I would source products by just cold call, just doing online research and calling different vendors and different brands and negotiating deals with them. We found a studio in LA that we could rent by the hour. We found a host, and she was actually pretty amazing, in LA by putting a Craigslist post up and people had to go record a YouTube video or something like that of them presenting some random product that we came up with for like five minutes or something. Then we picked a few of them, interviewed them and picked a host. What we would do is once I had enough products that I could present in the show, drive to LA from San Francisco with a friend of mine, rent that studio, get that host lady to come. We would set up a big monitor and I would use Skype to produce her basically during the live show. We would start livestreaming. We had a website where you could livestream video, people could live chat and the product would update, like a product purchase box would update on the right. We would purchase the audience live and in real time over Facebook ads. So we would run Facebook ads while the show was going on. People would click and they would land on the livestream of the show.   [0:06:26] Hiten Shah: Cool.   [0:06:28] Steli Efti: The crazy thing is the main audience was female and most of the product … our best selling product was a belt, like a really cool kind of hippie belt that Julia Roberts was wearing in Eat, Pray, Love. That was a month before the movie came out. It was a really expensive, $100 belt. I think we sold 10,000 worth of those belts.   [0:06:50] Hiten Shah: Cool.   [0:06:51] Steli Efti: But ultimately, ultimately because we couldn’t program the show regularly, right? Sometimes it would take a week, sometimes take three weeks and because we had to purchase the audience live and get them randomly whenever we were doing the show it was kind of a break even. We lost a little bit of money on it, but we could never really build momentum. It was a lot of fucking work in this small operation of me being San Francisco calling vendors all day long trying to get the programming together and then just driving up for a weekend and shooting the show in the middle of the week in LA and then driving back. So trying to bootstrap that thing was just a lot of work although it was very fun at the end of the day. Ultimately, another idea was taking off that I was working on so I just abandoned that. But when I tell people that I was running an online shopping show for women for three or four months they’re usually surprised.   [0:07:40] Hiten Shah: That is a pretty good one. I’m going to talk about an embarrassing one. So we had a podcast advertising network we tried to start on the side when we were running a consulting business back in the day. It was called Fruitcast. The idea was that we would partner with podcasters. I think it was like 2007, 2006, 2008, something around that range. It was not where podcasting is today 10 years later basically. We tried to build a podcast advertising network. We even launched it on TechCrunch. Micheal Errington said that we were charging more than radio.   [0:08:21] Steli Efti: Okay.   [0:08:21] Hiten Shah: And we didn’t know that. We didn’t know that.   [0:08:23] Steli Efti: Of course.   [0:08:24] Hiten Shah: So that’s why it’s failed. That’s why it failed.   [0:08:26] Steli Efti: Oh, man. I never heard that one. So that’s awesome.   [0:08:29] Hiten Shah: Yeah.   [0:08:31] Steli Efti: All right, what’s another … Oh, here’s another good one that nobody knows. This is like, I don’t know, this is maybe 15 years ago. We had started … In Germany we started a online hypnosis paid phone hotline.   [0:08:50] Hiten Shah: Cool.   [0:08:51] Steli Efti: All right? It was called TeleTrance. The idea was that every day you could call this number and you could listen to like a three, four minute little meditative hypnosis trance session that was live recorded that morning to relax, to refresh, to whatever. Live every day would be a different theme and you would have to pay, I don’t know what it was, let’s say two or three bucks call in to listen to that live hypnosis show. We spent a lot of time coming up with a name and brand. We had a really cool website. We spent a lot of time back then, this is 15 years ago in Germany to even figure out how to have a paid phone line and where to rent it and what kind of contracts we had to negotiate. Then we spent a good amount of time for me to record a bunch of these. I was composing the music for the background, recording the hypnosis sessions. The one thing we never asked ourselves is how to get customers for this, right? How are we going to advertise this to anybody? That was a question that was not entertained at all. That was ultimately one of many reasons why that idea failed pretty quickly.   [0:10:03] Hiten Shah: Wow. That’s funny. Let’s see, failure. Let me see if I have another one. A lot of failures we just didn’t pursue enough.   [0:10:14] Steli Efti: Yeah.   [0:10:14] Hiten Shah: So I had one called Serph, S-E-R-P-H. We built a kind of [Techo Ratty] . Techno Ratty let you type in a keyword and you would see all of the blog posts about the keyword.   [0:10:27] Steli Efti: Oh, yeah. Jesus, Techno Ratty, I totally forgot, yes.   [0:10:31] Hiten Shah: That was before Google really was picking up blogs for whatever reason in a big way. So Techo Ratty used to exist to we build something similar except we let you search Flickr and a lot of other services. The way we did that is just by using RSS which was Real Simple Syndication but … Or Really Simply Syndication or something like that. But RSS doesn’t exist much anymore because Google had a big RSS reader and they turned it off. But anyway, a lot of the services would provide RSS feeds for every search. So we could just pull it in and show the top 10 or 20 or 30 results. So we had listings and you just put … You had a box, typed in a keyword and you’d get these listings. They were kind of combined and it was very crude, but it worked. It was nice and looked pretty. It probably could have been a thing. I think we might have launched that as well and had it on TechCrunch or something. It could have been a thing but we just never doubled down on it and spent more energy and effort on it beyond the kind of, if you want to call it that, a MVP or did any research or try to understand why people like it, why they don’t. Some people were using it. It was kind of neat. I think that was just a failure of … I can’t tell you why it failed because we just stopped working on it.   [0:11:46] Steli Efti: I mean, I feel like we could do this for a very long time. I feel like as we go along I remember all these weird things that I tried or didn’t try or thought about or worked on for a little bit. But let’s wrap this up in the spirit of keeping it short.   [0:12:01] Hiten Shah: Yeah.   [0:12:02] Steli Efti: You know, we want to hear your failures. We want to hear your weird side projects you worked on, the things that you tried that didn’t work. I feel like overall we’re sharing too little of that and we’re just too much editing what we share with the world is just the things that really, really work. Also, we always love to hear from you. You can always get in touch with us directly. Steli@Close.io, HNShah@gmail.com. Just reach out to us and share your stories. We’ll always love to hear it. If you work on anything related to selling T-shirts or building a hypnosis hotline or anything on the lines of these ideas and you want to share that and brainstorm around odd learnings or anything like that just let us know.   [0:12:43] Hiten Shah: Later. [0:12:44] The post 348: Weird Side Projects We’ve Worked on That Failed and What We Learned appeared first on The Startup Chat with Steli & Hiten.

In today’s episode of The Startup Chat, Steli and Hiten talk about reaching $1 million in revenue in your startup. Reaching $1 million in revenue for your startup is a number that a lot of entrepreneurs aspire to reach and can seem magical for some. However, reaching this milestone is not easy and sometimes, founders who do, often take it for granted. In this week’s episode, Steli and Hiten share their thoughts on what it takes to reach a million dollars in annual recurring revenue, strategies to help you reach that milestone and much more. Time Stamped Show Notes: 00:00 About today’s topic. 00:40 Why this topic was chosen. 02:32 Hiten’s point of view on reaching $1 million ARR. 03:26 Why it’s easier to reach  $1 million ARR. 05:38 The MRR of $1 million in ARR. 06:42 Why you need to be charging a lot of money in order to make your math work if you sell to enterprise. 07:04 Why, due to the time it takes to acquire one, it makes no sense to go after large enterprise customers and charge less than you need to. 09:04 The kinds of sales and marketing strategies that are needed to get to SMB. 11:04 General channels for acquiring customers for low-end SMBs. 12:20 Steli’s final thoughts. 3 Key Points: You need to figure out how to drive enough value so that people will pay a certain amount for your product. Sales is designed to get to those customers. If you do the math, it takes a lot of time to acquire an enterprise level customer   [0:00:00] Steli Efti: Everybody this is Steli Efti.   [0:00:03] Speaker 2: And this is Hiten Shah.   [0:00:04] Steli Efti: And in today’s episode, we’re going to talk about how to get to one million in revenue with your business today. And the reason I wanted top talk about this today is twofold. One, one million is just still a magical number, a number I think a lot of people aspire towards when it comes to maybe their personal finances. But especially when it comes to their business, kind of a big milestone. So I find that there’s this incredible hunger out there for people to learn how to cross that milestone, or how to accomplish that. But the other reason that I wanted to talk right now about this is because recently … I’ve heard this a few times before over the last few months but it never really clicked. Until I heard it recently, where a friend of mine and I were discussing the traction of a new SaaS company. And the company was sharing their revenue numbers. And they had basically surpassed the one million in ARR, Annual Recurring Revenue within nine months or so. And I was like, “That’s actually pretty decent, pretty good.” And then my friend said, “Yeah, but you know it’s easier than ever before to cross the one million ARR number. Companies do this faster and faster. So this isn’t that impressive.” And I agreed with him. And we continued the conversation. And afterwards, I had a moment where I thought, “How crazy is it that we’re talking about reaching a million becoming easier and easier. And we’re talking about it as a negative thing.” As if it’s like, “One million isn’t so special anymore because everybody can do it,” versus, talking about it from a perspective of, “Isn’t it amazing the you can start a company and reach a million much faster than you used to? And it’s mush easier.” Which means a lot more people around the world, especially the people that are listening to this podcast that are not necessarily fully dedicated to doing the venture back thing. People that want to run their own companies, self funded, customer funded, and build them and run them the way they want to. It could be incredibly encouraging that it’s easier than ever before to reach a million. So either way you want to slice it, I wanted to talk to you about this today. And I’m dying to get your first response on what I just said.   [0:02:17] Speaker 2: Yup. So a million ARR, and that’s recurring revenue, right?   [0:02:24] Steli Efti: Right.   [0:02:24] Speaker 2: So we’re focused on … Let’s just focus on … Keep it simple. Focus on subscription businesses. Because there’s a lot of them, and those are easier than ever to start. Okay, so that’s about right around 833 customers a month, or total customers at 100 bucks.   [0:02:44] Steli Efti: At 100 bucks, yes.   [0:02:46] Speaker 2: Right.   [0:02:46] Steli Efti: Right.   [0:02:47] Speaker 2: So then that’s more like 1,700 customers at 50 bucks a month. That’s more like 3,400 customers at 25 bucks a month. Right?   [0:02:59] Steli Efti: Yeah.   [0:03:00] Speaker 2: So here’s the thing. You’re just trying to figure out how many customers is it going to take me at the price point I currently have to get to that many customers? And that’s it. And I think that the reason it’s easier than ever, and how amazing that is, as you put it, is because there is way more propensity of people to use SaaS software products and pay a subscription fee than ever. There’s also a lot more of them out there, which you could say is good or bad, depending on what perspective you want to take. But at the end of the day what I see founders not doing that are struggling to get there is doing the math. And then being honest with themselves about their ability to reach it. So if you want to get there in 12 months, you need to figure out how you’re going to get there in 12 months in terms of number of customers at a certain price point. Because it’s very unlikely that you’re going to change your price point in those 12 months. You might change it, but you’re probably not going to change it so drastically that it’s not in some range. So then you’re thinking, working backwards from there, you’re thinking about, “Okay, if I want to keep under a 1,000 customers and get to that number, I need a product that people will pay 100 bucks a month for. And I need to figure out how to drive enough value that people are willing to pay 100 bucks a month. And create a product where opportunity are willing to pay 100 bucks a moth.” And I think, like I said, we think about product, we think about marketing, we think about sales. But we don’t necessarily think about how do we get to to a number like that based on the number of customers. This is one of the reasons I like sales because sales has a lot of tangibility around getting to a number like that. And a lot of control over it. And sales is designed to get those customers. That’s the whole idea of that department, that area. Same with growth in some ways. Where growth helps you get there. Or of you don’t have salespeople [inaudible] what the lever is. Lots of optimizations and testing of marketing channels, and things like that help you get there. So to me, Steli, like most things, let’s make this a simple problem. And I like the sentiment of, “Hey, let’s make it positive.” But let’s even take that out of it and just say, “Limit it to basics.” Basics are number of customers at a certain price point to get to that million ARR. A million ARR is about 83,333K, or sorry, 83,333 dollars a month in recurring revenue. And then break it down from there.   [0:05:29] Steli Efti: So I love that. This is actually not that complicated as most things aren’t in life and in business. It’s like sometimes we as humans, we might over-complicate things. So if you just break it down by a number of customers times the amount of money they have to pay us per month, this becomes very simple math. Let’s actually go through this exercise really quickly and look at small, medium, and big. I’ll start with big because it’s going to be probably the easiest to break down. So if we say the market we’re going after is very, very large companies. Hence, if we think about the first year, let’s say. Let’s say that to make this simple, within a year we’re going to reach the million in ARR. And we know we have very large customers, it’s clear that if we do the math, it takes a lot of time to acquire a massive enterprise level customer. Right?   [0:06:21] Speaker 2: Correct.   [0:06:22] Steli Efti: So in most cases it might take 12 to 18 months. So if we know it’ll take us probably a year, year and a half to acquire a customer, then we need … It immediately points to we need to be charging a ton of money in order to make this math work. If we want to reach a million in a year, then we might need just one enterprise customer at 80K a month. Or we might need 10 enterprise level customers at 8K a month. But it makes no sense to try to go after large customers, enterprise level customers, and be making 500, 600, or 700 bucks a month with them. Because it takes so much time to acquire them, we need to be making a ton of money. It just makes them simple in terms of the pricing of revenue you need to generate per customer. But then also, in reverse, you need to ask yourself, “What do I need to do if it takes me a year to get to a large customer to get there?” So it kind of breaks down, or simplifies the tactics. We’re going to have to do a lot of cold outreach, a lot of good networking. We’re going to have to meet with people multiple times, have many calls. And really follow up and follow through and work on these relationships for a really long period of time until they materialize to something like a paying customer. Does that make sense?   [0:07:39] Speaker 2: Yup, it does. And I think that’s a very legit way to think about enterprise and larger deals. For sure.   [0:07:44] Steli Efti: So boom. Now let’s cut into the mid-market. The place where it’s not going to … The SMB market is one where you … Hopefully it doesn’t take you a year, two years to acquire more massive customer that pays you 80K a month. Those are customers that might be able to pay you 400, 500, 600 a month. And you can acquire a lot more of them. But you can’t quite acquire as many of them as if you were in the end-consumer space where you can conceivable acquire thousands, even tens of thousands a day. Right?   [0:08:17] Speaker 2: That’s right.   [0:08:17] Steli Efti: Its faster than enterprise, it’s slower than professional. So what do we do there? Let say we’re not going to be making 80K a month per customer, in the most crass sense. We might be making 500 to a K if we’re looking at mid-market range. What does that open up in terms of the tactics or the route to get there? What are the channels that are mostly available, mostly successful to use today to acquire these customers at that price? But all this assumes that we are product market fit, and that we know who our customer is. And that deliver real value to them. We’ve covered these episodes on these topics before. But assuming we have all that, what kind of growth, sales, acquisition tactics or channels are most easily available for us in the mid-market to get to the number of customers we need at that price point?   [0:09:06] Speaker 2: Yeah, that’s a good question. I think at that price point you are doing outbound sales. You are cold outreach and things like that. While I think in the previous one, the enterprise, you’re probably focusing much more on relationships and things like that. And in this one, you can go outbound with a cold email and get these mid-market companies, mainly because the ability to do that today’s easy. And the buying cycle is a few months, at most, usually. Sometimes as quick as 30 days. So yeah, it’s cold outreach, it’s trials. Like a product that has a trial. And a price point, roughly like 500 bucks a month, right?   [0:09:49] Steli Efti: Yeah, at 500 bucks, you need to acquire 160 customers, roughly, right?   [0:09:53] Speaker 2: There you go, there you go.   [0:09:54] Steli Efti: If it’s 1000 bucks, it’s 80 customers. So eighty-ish. Let’s say it’s 500 bucks, that’s 160 customers to acquire those. Those still will need, as you said, significant effort. So it’s still going to be outbound. But it’s not going to be as much lunch, dinner, events, playing golf together. It’s not going to be massive pilots. It’s going to be a shortened version of an enterprise deal. We’re still going to have to do outreach to find these customers. It’s still going to take a lot of follow up and follow through. And some real investment to acquire them. But hopefully the cycle there is more in the 3 to 6 months, than in the 12 to 18 months, to make the math work for you. So the final step, let’s break this down to the small part of the SMB. The small businesses or the professional market. Now we’re at the point where we’re making 50 bucks or 100 bucks. Maybe it’s just 25 to 50 bucks and we’re to talking about 1,000, 700 to … Let’s say around the 2,000 customers that we need. Around 50 to 80 bucks a customer, something along those lines. What are the general channels that we’re going after? Because now we need to acquire customers really fast because we’re making fairly low money per customer per month. So we can only spend very little money per month to acquire a customer.   [0:11:17] Speaker 2: That’s right. So generally there, your ability to drive traffic. Your ability to have a product that spreads itself, high word of mouth. SEO sometimes, if you have trops on that you can get results pretty quickly. So it’s really a traffic game more than anything else. Getting trafficked to a website is the number one way. The number two way would be you could still go outbound, you’d just have to be very efficient about it. And your sales cycle better be really quick and not require a lot of touch. So that’s usually what you do on the low- end SMB. There have been companies that have been successful doing outbound with SMB more recently because of all the technology and stuff available. But at the end of the day, my take is the best ways to do that are products that grow themselves, and marketing channels, referral programs, things like that that really help you get a number in the 800 marker range.   [0:12:07] Steli Efti: Beautiful. All right. We’re going to wrap this episode up. I want to keep these episodes super tight and super technical. One thing that I want to end the episode with on is that if you’re listening to this, and you have a business that is generating revenue but it’s far away from a million, but a million sounds like an exciting target to hit for you, take some of the things that we shared with you today. But also, if you just type in into Google, “One million in ARR. How we got to one million in ARR. Sharing how company X got to one million in ARR. At this point, tens if not hundreds of blog posts and articles where companies that surpass one million ARR wrote an article about how they got there. There are more, and more, and more knowledge shared around this topic. Make sure to consume some of that. And just ask yourself, find a business that’s similar in terms of what customer base they’re going after. Small, tiny, or medium sized, or large enterprise. Just learn more about what channels they used and what tactics to get to surpass that million milestone. And just see what fits naturally to your customer base, and how your customer likes to buy. And just do it. But it’s important to believe that you can. And it’s important to be excited about it. At least, I think it can’t hurt. All right, that’s it I think for us for this episode. We’ll here you very soon.   [0:13:31] Speaker 2: Later. [0:13:32] The post 347: How to Get to $1MM in Revenue with Your Business Today appeared first on The Startup Chat with Steli & Hiten.

In today’s episode of The Startup Chat, Steli and Hiten talk about inner dialogue. Inner dialogue, also known as talking to yourself or inner talk, is something a lot of us do. On many occasions, the inner dialogue is negative and strengthens any negative attitude or behavior. On the flip side, inner dialogue can also be a positive thing, one that you can use to your advantage as an entrepreneur. Tune in to this week’s episode to hear Steli and Hiten thoughts on what inner dialogue is, what conversations you’re having with yourself, how it impacts you and much more. Time Stamped Show Notes: 00:31 About today’s topic. 01:20 Why inner dialogue is technical. 01:50 How inner dialogue is very common. 02:13 The reason why most of us are not aware that we do this. 02:59 What happens once you’re aware that you’re self-talking. 03:11 How Steli became self aware of his inner dialogues. 03:37 Hiten first realization of inner dialogue. 04:18 How reflecting is a form of self-talk. 05:25 How Hiten self-talk has evolved. 06:15 An advanced level of self talk. 3 Key Points: Inner dialogue is a version of thinking but is not the same as thought. A lot of people are not aware that they talk to themselves. I think I was aware of self talk because I was alone with myself.   [0:00:00] Steli Efti: All right.   [0:00:01] Hiten Shah: Inner dialogue. All right, let’s go.   [0:00:04] Steli Efti: That’s the episode for today, everybody. We’re going to do a little bit of an unusual intro. You heard it. He already said it, inner dialogue, so let’s talk about it.   [0:00:13] Hiten Shah: You caught one of my rambles. That’s great.   [0:00:15] Steli Efti: Yes. I love when I do that.   [0:00:19] Hiten Shah: Inner dialogue. I was going to call this episode “Talking to Yourself”, so that was going to be what I was going to call it.   [0:00:26] Steli Efti: Shit.   [0:00:26] Hiten Shah: See, so you kind of screwed up, Steli .   [0:00:28] Steli Efti: Dammit. Dammit.   [0:00:29] Hiten Shah: Okay, so talking to yourself. Let’s talk about talking to yourself. Some people call this self talk, some people call this insanity, but we’re going to call it talking to yourself. The real idea is about the inner dialogue: what conversations are you having with yourself, what are you saying to yourself, and how is that impacting you? Is that about right?   [0:00:54] Steli Efti: That is perfectly right. First, as you have done so many times, I love the words that you used to describe the same thing. Inner dialogue is very technical. Talking to yourself is so practical, so real. I love it. I want to start with this. I think for some people what we are talking about might be obvious and they choose to hear more about our thoughts on this, but for some, it might not be so obvious.   [0:01:24] Hiten Shah: Yeah, they probably think we’re crazy.   [0:01:26] Steli Efti: Yeah, what the fuck is that?   [0:01:27] Hiten Shah: We’re crazy people and we talk to ourselves.   [0:01:28] Steli Efti: Yes.   [0:01:28] Hiten Shah: [Stelly] , you talk to yourself, right?   [0:01:30] Steli Efti: I do all the time, and I guarantee-   [0:01:31] Hiten Shah: Do you do it out loud?   [0:01:32] Steli Efti: No.   [0:01:33] Hiten Shah: Okay.   [0:01:33] Steli Efti: No, very rarely. Very rarely.   [0:01:35] Hiten Shah: All right. Me neither. Maybe in the car sometimes.   [0:01:38] Steli Efti: Very rarely, but I can guarantee that everybody that’s listening to this episode, most human beings if not all, are talking to themselves. The reason why we’re not maybe all aware of that is that for a lot of us, when we talk to ourselves, we completely associate that with the concept of thinking. We think we’re thinking when actually it’s a version of thinking. Talking to yourself, inner dialogue, is a version, a flavor, of thought, but it’s not the same as thought. A lot of people are not really self-aware of how they talk to themselves because they think when they talk to themselves, they’re just thinking. They’re not really paying attention to their tonality when they talk to themselves, to the volume, to the things they’re saying to themselves. Once you start really getting awareness of the phenomena of self talk, then you can start paying attention and realizing what your self talk is today. In my case, I don’t know how you did this, but for me it was first realizing it, then paying attention observing it, and then starting to change it and to influence it and not be a victim of whatever self talk I’ve adopted through my environment or through my genetics or whatever, but start to design it, and influence it, stop it, or encourage it, or change it. Were you always aware that you were talking to yourself? That you had self talk? Were you always aware of how you used to talk to yourself? Tell me a little bit about how you think about self talk and how you do it.   [0:03:21] Hiten Shah: I grew up as an only child, so I think I was aware of self talk because I was alone a lot with myself and I got used to it. Awareness was probably there from a young age, being an only child and having nobody really around in my space where if it’s quiet, the only person to talk to is yourself. I think that’s important thing to think about. More recently, I had realizations about, at my best, what I’m doing is actually reflecting, and I think reflecting is a form of self talk, in a way, where after an experience I reflect on it and I’m talking to myself about it: How’d it go, what happened, what could I have done better? “Oh, crap. I really pissed that person off,” or “That was really great. I felt great about saying that,” or I gave someone a compliment, or they gave me a compliment. Just how did that thing go? I think we might have talked about this a long time ago, but I love reflecting after doing something, or having a meeting, or some experience, and I tend to do that in my head through self talk. I think that was my first realization of it, and more recently, I think as I became more into meditation and mindfulness and all that kind of stuff, that whole category, which is pretty broad, actually, and very esoteric, even, in some areas. Like [Stelly] hugging trees and stuff, it’s all related. So, mindfulness exercise, if anyone wants to go hug a tree, not like a tree hugger but literally hug a tree, talk to the tree, all that, we’ll do an episode on that eventually again, because I think we’ve done one on that kind of. Anyway, I realized it back when I was a kid about having the awareness. Then, I evolved into realizing that I can reflect upon things, and then more recently I’ve been sort of studying it through meditation or realizing a concept of metacognition, which is basically the idea of thinking about thinking. It’s kind of what we’re doing here, and what we’re talking about is self talk is a form of thinking, right?   [0:05:31] Steli Efti: Right.   [0:05:32] Hiten Shah: We’re thinking about that type of thinking right now, so you can do that to yourself. Then, there’s another advanced level of that, which would be what someone else is thinking. Somebody I know that I met, he taught me this thing with poker. He’s a professional poker player, and he said, basically, his process of winning is really thinking what they’re thinking you’re thinking they’re thinking you’re thinking and how many layers can you go into that and the depth of that.   [0:06:06] Steli Efti: Wow.   [0:06:06] Hiten Shah: That’s a whole advanced thing that I’m like, oh wow. That’s next level. I think self talk is super critical. I think there’s positive self talk and negative self talk. When you start out understanding self talk and the idea of talking to yourself, I think you probably will notice negative patterns come up, and that’s what we should talk about, I think.   [0:06:31] Steli Efti: Yeah. I think negative habitual self talk. Let’s just zoom in on that, right?   [0:06:36] Hiten Shah: All right. Let’s do it.   [0:06:39] Steli Efti: First of all, I’m going to throw this out there, and for people that want to know more, just shoot us an email, [inaudible] at gmail.com. We can point you to resources, books and stuff, to learn more about it. The basic concept is that when you’re talking to yourself, just like you would when you talk to somebody else, you actually are hearing your own voice, right? You do. When you hear your own voice, everything matters, not just what you say, what the words are, but the tonality in which you say it and the volume, right? If you want to feel something negative really, really strongly, you might be shouting to yourself angrily something really negative, versus when you’re pumping yourself up, you might be speaking in a really passion-motivated voice to yourself at a really high volume, versus when you’re maybe timid or a little insecure, you might be having an inner dialogue. You might be talking to yourself in a voice that’s very, very low in volume, very hard to understand, very unsure of. I think paying attention to tonality, paying attention to words, paying attention to all those things are really important, but then also, paying attention to moments. Let’s reverse engineer this. Ask yourself, “Are there moments in my life, either at time of day, in the morning, in the afternoon, late at night, or in certain situations that are often recurring, where I feel disempowered or really empowered? Where I feel really strong, and positive, and really energetic and creative? Where I feel really depressed and shitty, or angry, or in self doubt?” Are there moments where you don’t perform at your best and it’s happening quite reliably and quite consistently? Then I would encourage you to pay attention. What kind of self talk is happening just before these moments or when these moments occur? Because a lot of times, over many, many years, we create habitual self talk in certain things. They’re anchors, and every time before I go into a board meeting, because my very first board meeting was a catastrophe, every time before I walk in there, I have this really critical, really horrific self talk where I say terrible things to myself. Of course, it completely impacts my experience and my performance. If I just realize or recognize that, then I can stop that and start working on that and changing the things I’m telling myself just before I go into a board meeting. Or it might be something super positive, but I think we all have these habitual self talk situations that we’re completely unaware of that might be massively impacting how we perform.   [0:09:22] Hiten Shah: I really like that, and I like this idea of the habitual self talk. What you’re really looking to do at first is find the patterns in self talk. Ideally, go for the negative patterns because those are the ones that are probably impacting you more than the positive ones in the beginning if you haven’t ever evaluated your self talk. I love the idea, like you said, everyone does it, and the board meeting example’s really good, right? It almost goes back to emotion, too. For example, if you had a horrible board meeting, you get into the board meeting and right away, you’re going in there being like, “Oh, this is stressful. This is going to suck.” Right?   [0:09:57] Steli Efti: Right.   [0:09:58] Hiten Shah: I think that has to do with the emotion that was created, and then now all of a sudden, you have a language for it and you have a conversation with yourself about it every time it happens, and it’s not a great conversation. It’s negative. You’re dreading it. There’s feelings around it. There’s an emotion around it. I think another thing to recognize is prior to the self talk, what are the emotions you feel that you might not be recognizing currently? Usually it’s not the talk that’s the start of something. It’s actually some feeling or some emotion comes before the language.   [0:10:30] Steli Efti: Right.   [0:10:33] Hiten Shah: What are you feeling? Getting into the board meeting example’s great because you probably feel nervous. You feel anxious. You feel like you don’t want to screw it up because you did in the past, and someone got mad at you or whatever. How do you get past that? You start creating positive self talk, right? Let’s say I couldn’t answer any questions that the board members had in the meeting would be a version of negative self talk before you go into the meeting or while you’re even creating the [inaudible] , and the emotions, anxiety, and nervousness, and feeling not good enough. Then, what you can do is you can apply, just getting to some tactics here, you can apply an opposite and say, “I’m actually great. I have answers to every question that they ask, and if I don’t, I’ll tell them I don’t have the answer and I’ll get it for you.”   [0:11:20] Steli Efti: Right.   [0:11:22] Hiten Shah: I might get feedback that I should already know it, but then I’ll say, “Okay, I’ll make sure that I’m up to speed on this all the time from now on. Thanks for the feedback.” It’s kind of like how do you talk to yourself about future situations or [inaudible] situations you’re about to be in in a positive manner, even if there are a lot of emotions around it or you’ve had a bad experience in the past? This is how you get stuff done. This is how you do things that are challenging. This is how you do things that might have scarred you in the past but things that you kind of have to do.   [0:11:53] Steli Efti: Yeah. I love that. I think we all are way more careful of how we talk to others than we are of how we talk to ourselves.   [0:12:05] Hiten Shah: That’s really powerful.   [0:12:06] Steli Efti: We would never say the terrible and horrible things to somebody else and then expect them to perform well the way we do sometimes with ourselves where we talk, we say really weird, terrible, disempowering things. We use terrible words, and then we’re confused why we don’t feel good, and why we don’t perform well, and why we don’t accomplish the things we want. Just be more careful how you talk to yourself. Be kinder to yourself in the way you talk to yourself. Be more mindful of what you say to yourself. I think that’s the really big message of this episode.   [0:12:43] Hiten Shah: There you go. Watch your self talk. Talk to yourself positively, not negatively. Yep.   [0:12:50] Steli Efti: That’s it from us. Let’s all talk to each other a little bit better, and too ourselves, for sure. Bye bye.   [0:12:56] Hiten Shah: Later. [0:12:56] The post 346: How to Talk to Yourself appeared first on The Startup Chat with Steli & Hiten.

On today’s The Startup Chat we discuss cold calling. We’ll tell you what cold calling is, why you should do it, and how to do it effectively. Steli is the rock star of cold calling between the two of us. He’ll tell us how he has made cold calling work for him and his business. Cold calling is a channel that can be effective for your customer base. If you have some worries about cold calling or if you’re wondering if cold calling will work for you, then give this episode a try.   Here are today’s points: What is cold calling? Why should you cold call? The 2 questions to ask yourself about cold calling. How to learn if your competitor cold calls. How to get started. The reasons cold calling can be stressful. How to cope with cold calling anxiety. Steli: Hey, everyone, this is Steli Efti.   Hiten: And this is Hiten Shaw and the Startup Chat and today we’re actually going to talk about cold calling. One reason is, you know, one of us is an expert on this I would say and that happens to be Steli. So I get to ask him a lot of questions about this as he kind of talks about it. So this is almost like a Cold Calling 101, I would say.   Steli: Yeah.   Hiten: I’m sure we will get into some advanced stuff. For context, I’ve had teams where we’ve done a ton of cold calling. My cofounder has a whole bunch of funnels and things like that where there’s a bunch of cold calling, as well as inside sales and things like that going on. Also, you know, one thing I would say before we jump in is, for a SaaS business to scale you have to go outbound, meaning you have to go find a way to email, call prospects, potential customers, people you don’t know yet. This can be for partnership reasons, this can be for sales reasons, and this can be for many other reasons as well. So I’m eager to hear all the cool stuff that you have to share about this topic.   Steli: Yeah, and this has been consistently a topic that listeners have been asking us to talk about. It’s kind of a list of things where people ask us about it and we are experts in but selfishly at times, you know, I’ll admit we’d rather talk about something more fun. We’ll talk about something we DON’T get to talk about every day with each other but this is just one that’s been kind of consistently enough requested that we thought, all right, let’s do one and share as much value as we can on this topic because a lot of founders struggle with this. So I’ll let you ask the questions and I’ll give the best answers I can.   Hiten: Sounds good. So, yeah, cold calling. What is it? Why should we do it?   Steli: Well, cold calling is the act of calling somebody that didn’t expect to hear from you and most of the times it’s also somebody that doesn’t know you or company to service and didn’t consent to, or was aware of, you having his or her contact details. So it’s not calling your friend who didn’t expect the call but it’s calling somebody that doesn’t know you or didn’t know you had their phone number and wasn’t expecting to be contacted by you. The reason you do it is because you’re typically trying to prospect, which means trying to discover or find out if THAT person within the context… that person or that business could be a customer could be a good fit for your product or service that you’re selling and make them aware that your product or service exists and that it could be a solution to one of their problems or a better solution to something that they currently are a customer of and then help them transition from where they are now to becoming a customer of yours.   Hiten: Gotcha. So how do I know whether I should be doing cold calling or not in my business? How do I make that decision? I’m not doing it today. What do I do?   Steli: Yeah, so it’s a tricky question. It’s a good question. So there’s a few things that you could ask yourself. One is are my customers buying today in any way, shape, or form by being cold-called? Is being called or using the phone to buy products a channel that my customers are open to?   Hiten: So are they already getting phone calls?   Steli: Phone calls that result into something productive.   Hiten: Sales?   Steli: Yes.   Hiten: Got it. Okay.   Steli: So that’s one question. The next question is are our competitors – this is where we’re trying to answer the same thing but we’re going about it in two different ways. You could look at your customers or your potential customers and see how do they buy and then you can go to your competitors and figure out how do they sell? So who of our competitors is doing cold calling successfully? Who of our competitors has tried it and not doing it anymore? Is this something that is a standard or successful way of selling in our market based by what our competitors do?   That’s another way of kind of approaching should we even consider this or not because chances are if your customers don’t tend to buy this way and if your competitors don’t tend to sell this way, it does not mean that cold calling should be off the table and can’t be done but the chances that it can be done are dramatically lower. There’s a good reason why it hasn’t happened yet. Right?   Hiten: How do I find this stuff out?   Steli: Well, if you have customers or if you talk to people that are potential customers, you just ask them. Hey, you know, how do you typically buy today or, hey, have any of our competitors ever contacted you? If they already have, let’s say a solution in place they’re using some kind of a marketing tool that we’re trying to sell. We would ask them, oh, you chose this marketing tool? How did you choose this? Did they reach out to your cold or did you sought after them? How did it happen? So you just ask the customer how do you buy? Has anybody ever cold-called you? Did any of our competitors ever cold-call you? Same thing you can do with your competitors. We actually wrote about this – oh, no, we haven’t published this yet.   But I have a blog post that talks about this little hack of like getting in touch with your competitors to learn about how they do business. So you could literally call in your competitor and without lying, you know, you could make the appearance of being a prospect without saying it outright and just go, hey, I looked at your service or looked at your product and I’m pretty curious. How well are you guys doing? Are you really big already? How long have you been in business? Ask some questions that would suggest that you are interested in their credibility and interested in if you can trust the brand of the business.   A lot of times a junior sales rep will be on the phone with you so they will tend to just answer all your questions and as you ask these, you can ask, hey, how do you guys grow today? Is it mostly – do you spend a lot of time on marketing PR? Do you guys do cold calling and cold outreach? How do you grow your customer base? I’m curious to know how you guys are planning to keep growing this business if I’m able to use this product. They will just tell you. They will just tell you what they do. So you just call your competitor to ask outright. That’s the most direct route to that information. But you could probably just do some Google searches and see if they’ve written about this.   You could probably do cold calling and then competitor name or cold calling and then your market or cold calling and your customer segment or something like that. You might stumble over some articles, blog posts, interviews where people talk about this stuff.   Hiten: Yeah, I like. Yeah, okay, so let’s say that you’ve figured that cold calling will work for you and you’re ready to start doing it. What would be the steps that, you know, you would recommend somebody take? Like, for me, just to give you some context, I’d have a lot of anxiety around where do I start? How do I get people’s numbers? What do I say when I get on the phone with them and how do I keep following up? If that makes sense and also like this is an anxiety all founders tend to have especially in the beginning, which is how do I get money out of them in this process with this kind of channel?   Steli: Yeah, so those are all excellent questions. I think that – so let’s take it one step at a time. So I think first it’s about a mindset shift, right. So when you’re cold calling, you’re doing a harsher version of outreach and hustle in marketing than you typically are used to as a founder. With that, that’s typically what creates the anxiety. It’s like, oh, shit, I’m calling somebody. I know it’s a channel that a lot of people don’t enjoy or might be annoyed by. Maybe it’s something I don’t like. I don’t like when people cold call me, so because of all these reasons, you have anxiety because you’re like, well, I’m calling somebody right now. I’m interrupting somebody.   They’re probably going to be annoyed. Usually, the first reaction the people have will not be super positive and inviting and welcoming and that then translates into you approaching this with an attitude that’s set to fail from the get-go. Like, you’re calling with the expectation of failure and then that materializes itself and you’re like everybody hates being cold called. This isn’t working. I hate it. People hate it. A lot of times founders will heavily, like they will have a day where they’re like today I’m going to do cold calls and then they will just suffer through the day and kind of hesitate and postpone and, like, make a call and the person hangs up on them.   Then, oh, my God, they’re suffering. Another hour until they have the curse, so get the next call in. They’ve spent the whole day and made like 20 calls or something and they really didn’t accomplish anything. It’s just a horrible experience. So with those cheerful words and picture painted, I think that you have to have a very matter-of-fact realistic point of view on this. Cold calling is a way that billions of dollars of services have been sold around the world, industries have been built, people are being called. Sometimes they might not like it. Just like they don’t like that there’s a popup ad somewhere that their favorite TV show is interrupted by advertising. We don’t like a lot of things. We find a lot of things inconvenient but that doesn’t really matter. The question that matters ultimately is if you have a service or product that’s good and you have good intentions and you’re trying to truly figure out if your product and service could help the customer, then it doesn’t matter if they’re annoyed. It doesn’t matter if it’s polite or not.   The only thing that matters is, is this going to be a channel that allows you to help some people to buy really great service and to make business work? So you need to approach this with if people shout at me or if people hang up on me, it doesn’t matter. That doesn’t matter. I’d rather have three out of ten people hate me and some of them do business with me than have ten people that never knew I existed. That needs to be the attitude that you need to get to in one way or another to make cold calling work and to get at least rid of some of the anxiety, if that makes sense.   Hiten: Yeah, it makes a lot of sense. I mean, you know, the anxiety is the key. Do you have any actual tips on that because, I don’t know, I don’t cold call enough and when I used to I would still get anxious before every call, so I’d love to understand kind of the tips that you would give people because I would assume you’re not that anxious with it by now.   Steli: Yeah, by now, no. Still if you told me to cold call somebody I might still have like a two or three seconds of anxiety before I get myself into the right frame of mind but, yeah, usually I don’t have a lot of anxiety. I’ve made thousands of cold calls in my life. So there’s a number of things you can do. There’s some things that are very generic, like how do you – you need to put yourself in a good state, right, so how do you do that? For some people it’s listening to Eye of the Tiger, you know, or to a particular song, watch a movie, or watch a YouTube clip.   I know people that are watching some of my talks before they have cold calling sessions because it pumps them up. But, I don’t know, whatever gets you in kind of a competitive high-energy state of mind. Something that makes you go all right, let’s go, you know, and puts you into kind of that high-energy space. For some people it’s reading a book or poem. Whatever it is, there’s things that put you in an energetic, motivated state. If you KNOW what those triggers are, you might want to use them or utilize them. Besides that, there’s some reprogramming that you can do. One easy simple trick that’s super old-school in the sales world is you want to really reprogram away from failure as a negative and see failure as a stepping stone to success. So in this case, you know, I know that when – I used to know that I had to make – this was like 50 years ago – I had to make 100 cold calls to get, you know, three good conversations out of it. I know that I would probably reach, you know, 30 people out of 100, so there would be 27 people that would not want to talk to me in a productive fashion.   They would either hang up on me or yell at me or talk to me a little bit and then figure out it’s not a good fit. So instead of focusing on the success, instead of saying I’m going to do 100 calls and I need to get to these three people that are going to be interested in my service and feeling the pain every time somebody was hanging up on me or screaming at me or not happy about my call, I reprogrammed to focus on every day I need to get 27 rejections. I would, literally, have like a big jar and I would have pennies and I would say, all right, I’m going to throw a penny into this jar every time I get a no or a rejection or somebody hangs up on me on the phone.   By the time this fucking thing is full, I made a ton of money and I really moved the needle in my business or in what I’m doing. So now every time somebody hung up on me I was like, all right, mother fucker, one more penny in the jar. Let’s go, right, and it would create this kind of reprogramming of me feeling like I’m succeeding here. I’m progressing. You can do this with pennies in a jar or more old-school you can just take a piece of paper and make, you know, 27 boxes and go today my job is to get rejected 27 times on the phone. And if I accomplish that, chances are very high that I’m going to get three or four or five really good conversations out of it.   So you focus on that and that takes away some of the negativity of the hang-up because it actually is progress.   Hiten: I like the penny in a jar. It’s so physical.   Steli: Yeah, it is.   Hiten: I would do that. I’d be like, oh, that’s good. I could put pennies in a jar, great. Let’s fill this jar up. Let’s go. Steli: Yeah, and then –   Hiten: Because that means you’re making progress.   Steli: You’re making progress. You know, at some point you become – because you’re getting accustomed to it, you become playful with it. So I literally had somebody that was like yelling at me and I was like, are you about to hang up on me? He was like, yeah, I’m just about to hang up on you. I was like, all right, listen to this. I threw the penny in and it does the cling. I’m like you helped me with my day, dude. Thank you so much. The guy was like, what? What was that? I’m like, well, listen, I have a jar and every time somebody says no to me, I throw a penny in there because I know if this thing fills up I’m going to be successful with this.   For every ten people that say no to me, one person is actually open to the ideas and, ultimately, I get a chance to change their life and make business work for both of us. That not ALWAYS works but there was one –   Hiten: I was about to say I’m sure that works.   Steli: No, and a lot of times people will hang up before you even get to do the whole spiel, right.   Hiten: Yeah.   Steli: But it has worked, right, and more than anything else, on the phone what really translates is the sound of your voice, the way you sound. If you sound like you’re having a good time and you’re authentic and you’re confident and you’re relaxed, even when they yell at you and I’m not speaking about like faking this. If somebody yells at you, you’re like yes, sir, I appreciate the energy. Well, let me tell you the – like, people tune out. They don’t even listen to what you’re saying. They just hear fake salesperson voice and energy. But if you’re having fun with it and they can tell that you’re not flustered by it, it turns people around. It makes people go this person seems to know something I don’t know.   They seem to be awfully confident and comfortable even when I yell at them and that’s not typically the reaction you get. So it can make a big difference. So, yeah, there’s this thing – I had one heckler that I’ll share with you real quick. We had one guy that was so funny, so confident, so outrageous in real life but anytime I would put him on a cold call, he would have a meltdown. All his confidence, all this outrageousness, all his humor, all his bravado was just gone. It was just gone!   Hiten: That’s awesome!   Steli: Melted away. In person he would give me shit. He didn’t give a fuck why – like, I was his boss. He didn’t care. He didn’t care about anybody. He was such a funny dude but, on the phone call, timid, like trembling, like a mess. I could not figure it out. He knew it and he knew all the things and we talked about the pennies and we did all this stuff and I just could not get him to break out of it and then ultimately what we did and what we came up with – I’ve written about this. There’s a blog post that we’re going to link into this episode of this. Ultimately, one day I was like this guy… I don’t know why but he’s so afraid of failure on the phone.   So what we’re going to do is we’re going to have him fail so horrendously and so brutally that the fear will go away. So here’s what I had him do and this was very painful. I had him call people and I would have him purposely be horrible on the phone. Like, I would have him for instance call ten people and stutter, like really, really badly stutter. He would just – I’m telling you, like right in the face sweating, just sweating. You could see him physical pain that he has to stutter now and have people hang up on him because he was like Hi… hi…. Hi… – not even being able to get the “hello” out.   I would have him stay on the hello for like a minute and people would just hang up, right, and I don’t want to be insensitive to people that are stuttering or any of that. This is not very politically correct but this was just helping somebody get through a breakthrough. So he would like stutter badly and have like 10 or 20 people just hang up on him. Then I would go and tell him, all right, so now do your fucking best. Stop stuttering and just do whatever you can and BOOM and just like magic he would be great on the phone. Why? He kind of – he was the worst version that he could be.   He failed in such a horrendous, such a painful way that after that, all the fear was gone and it was like, well, I had like 20 people hang up on my because I couldn’t say hello. What’s the worst that can happen with the next call if I can actually talk now, right, and be eloquent and get a sentence out? So I had him purposely fail, like really, really horribly to take away the fear of failure on the phone.   Hiten: Sounds pretty awesome and I love that. That’s killer. It’s like –   Steli: All right, but just to get some more stuff out there. This is really important stuff because if you don’t know should we cold call or not and if you don’t know how to get over the anxiety, that’s typically the first two steps that prevent most businesses that should be doing it to do it. All those founders that should be experimenting with it to go for it, right. So I think that we really – those are really fundamentally the most important things to clarify and touch on. Once you get over that, I think that there are some resources and we’ll share all that stuff but there are some really fundamental things.   You just need to think through the cold call in very basic terms. The first challenge is I need to reach people, so I need to have their phone numbers and there’s multiple ways to get those and I need to not just have phone numbers but I need to be able to reach a good amount of people, right. If I have 100 phone number – if I make 100 dials and I only reach one person every 100 people I call, chances are very low that this will ever work out. The funnel will never work out. The numbers just don’t pan out. This is the No. 1 thing that may or may not make a difference in cold calling campaign is what is your reach rate? If your reach rate is really high, you’re in a really good place. If it’s very, very low, you might be dead in the water.   Hiten: Can you define reach rate?   Steli: Yes, reach rate means how many dials did it take to connect with a person that I wanted to connect with, to connect with a person on the phone that was the person I intended to talk to.   Hiten: Awesome!   Steli: If you reach rate – I’ll throw that number out as benchmark. If your reach rate is lower than 10 or 15 percent, you’re probably dead in the water. You probably need to fix that before you fix anything else. The most cold calling campaigns will probably be somewhere in the, you know, 15 to 25 percent range, which is – if you’re 10 or 15 percent, it’s not great but it is something. If you can’t be – the higher you are, the better, right. If you can reach 30, 40 or 50 percent of the people you call, it’s money. It’s great. It’s going to change the economics of cold calling dramatically for your business. Not to say that’s the only thing that matters but it’s the first thing that matters. So reach rate is really, really crucial. So you need to worry – okay, how do we reach people? Then when I reach somebody, you just need to have the psychology of that person. You just need to remind yourself and this is the same thing with emails. I tell this – this is such fundamental stuff.  We talk about this all the time. Just think through – when I pick up the phone and there’s a voice on the phone and it’s somebody I don’t know, what is my thought process? At first I think who the hell is this and –   Steli: Who is this? Does this person want to sell me something, and then so I’m like, all right, this is Steli from Close.io and he has, like, sales software? I go, all right, why the hell is he calling me? Right? And then once I know, okay, this is why he’s calling me, I make a judgement call at that point that’s typically this is NOT for me. I’m not interested. Because 90 percent of the time, people will think at that point, yeah, no, no, not for us… not interested. If you go through this step by step and you just understand the psychology of the person that’s being cold called, you can write a script that you can think through a way to cold call them that makes sense, that doesn’t go ten steps ahead of where they are in their mind or that doesn’t address questions that they don’t have.   You go step by step. You know, you say, hey, my name is… this is the name of the company I’m from, and here’s why I’m calling you right now. You didn’t expect my call. Now, let me briefly ask you… is this, in general, interesting to you? No. Cool. I get that. That’s what you would expect in this situation. Here’s why I still called you. I knew that you would probably say no. Here’s why I still called you, x, y, and z. Here’s the reasons. There’s five other competitors of yours that are using our service. There’s a lot of companies in your space that we’re doing x, y and z and see success. I wanted to share some of those numbers to even explore if we could work together.   Whatever it is that you do there but you just think through a call that has empathy, that takes into consideration who am I calling, what is their current mind space, what is their thought process when they talk to me, how can I in a very human way… in a real way, address these concerns that somebody has on the phone versus just trying to boo me through it or ignore it or just, you know, try to get around it. When I call them they will think who the fuck is this? What does this person want? Shit, this person wants to sell me something. I’m not interested. You need to have answers to these questions and you need to expect that energy from people.   If you do that, you’re going to be able to sound good. You’re going to be able to sound a little different than other people and still people will hang up on you, still people will tell you to fuck off. If I cold call a bunch of people for your company today and I’m pretty good at cold calling, people will hang up on me. People will tell me to fuck off. People will not buy from me. It’s impossible to just get everybody to like you but you’re going to get a good number of people to respond to you if your energy is good and if the way you cold call them is sympathetic.     Hiten: I like it. I don’t really have much else to add on my end. I think you really did the 101 on cold calling and, hopefully, after people hear this, if they’re not cold calling, they’re going to start thinking about how they can do that for their business. So do you have any other additional tips to share before we finish the episode?   Steli: No, I think this is fundamentally probably a good setup for people to listen to. If people listen to this and they go I want to get started but I have still some questions, shoot me an email at steli@closeio. We’re going to link up to some resources. If you go to Google and you type in blog.close.io and then cold calling. The first link that will pop up is all the blogs I’ve written and all the videos I’ve made about cold calling. There’s a lot of resources out there for you that are very creative. If you have questions beyond that or if you have questions based on your current struggles, or if you’re already doing it, just reach out to me directly.   One last thing that I’ll share, because you said at the beginning and I think it’s pretty powerful, is the most [inaudible] businesses – if you want to grow, you’re going to have to do some kind of outbound. It doesn’t matter if it’s cold calling or cold emailing. We have an episode. For those that probably will determine for one reason or another that cold calling is not a productive channel for them, check out Episode No. 14. This is an early episode that Hiten and I made about cold emails and how to write cold emails and how to succeed in it. Episode 14 of the Startup Chat, Cold Email… definitely check that episode out as well. If you have more questions, just get in touch with me.   Hiten: Awesome!   Steli: All right, that’s it from us.   [End of Audio] Duration: 21 minutes   The post 345: Encore Episode – Cold Calling 101 for Founders appeared first on The Startup Chat with Steli & Hiten.

In today’s episode of The Startup Chat, Steli and Hiten talk about Karma. Karma is the law of moral causation. In business, relationships are key. It is advisable to treat people the way that you want to be treated as not doing so can lead to missed opportunities and people not wanting to business with you. In this episode, Steli and Hiten share their thoughts on Karma, give examples of how to react when you haven’t been treated fairly and much more. Time Stamped Show Notes: 01:20 About the topic of today’s episode 02:37 Why this topic was chosen. 04:17 The second reason why this topic was chosen. 07:00 Hiten’s relationship with Karma. 07:58 What to do when karma hits. 09:05 About the golden rule. 10:10 Steli agrees with Hiten point of view on this issue. 11:01 An example of a situation that could lead to bad karma. 13:30 When to speak up against bad behavior. 14:58 Why public shaming of a person is a waste of energy. 3 Key Points: Treat people as you want to be treated. Karma’s gonna fuck you over one way or another because you’re building a bad reputation Whatever is going on, good or bad, it’s your karma. [0:00:00] Steli Efti: Hey everybody, this is Steli Efti.   [0:00:03] Hiten Shah: And this is Hiten Shah.   [0:00:04] Steli Efti: And in today’s episode of the Startup Chat, here’s what I wanna talk to you about, Hiten. I wanna talk about karma.   [0:00:13] Hiten Shah: oh.   [0:00:14] Steli Efti: Yeah. Oh.   [0:00:14] Hiten Shah: Okay. I … Okay. Go ahead, go ahead. I’m listening.   [0:00:19] Steli Efti: I was going back and forth if I really wanted to talk to you about this, because I do feel like a lot of what we’ve covered in past episodes, especially in the ones where we talked about personal brand and reputation, those are two that stand out to me. I think there are a lot of degrees … You know, it boils down to the advice that we have to give to people, it’s like “Just be a good fucking human and do to others as you want to be done to, and be helpful, and don’t be an asshole,” and all that. I think that that’s kind of a lot of what we propose to people and preach and teach. And I think that maybe we’re gonna talk a lot about that, but I wanna give you the example of why I wanted to talk about you about this, and see where it goes, right? Because we might go totally different with it. There’s two things that happened in the last three days that made me think about karma. One, I’m a partner in a small firm, I made a little bit of an investment, started doing this this year. And there as one company that I really liked and really wanted to make an investment in, and then the eleventh hour, just before deciding to write a check, I thought “Wait a second, in know some people that might know some people that might know these guys. Let me reach out and do the back channel reference check, and see if I learn anything before I finally pull the trigger.” And one of these people basically, I didn’t know this, but one of these guys that I thought might know somebody that might know somebody, that might know them, no, that guy had invested in them, in one of the founders 10 years ago, in another startup. And he was like “Just call and let’s talk.” And when I called him, basically boiled down to saying “Yeah, this kid is a good entrepreneur, but he’s really unethical, and here’s the four things that he did that fucked me over as an investor, so I won’t do business with this kid anymore.” And that was basically, you know … I had to tell those guys “Hey, I’m pulling out of the deal, I’m not interested.” They asked why, and I said “I can’t really go into too much detail. I really like you, but overall, I asked around and some of the things that I was hearing from people was not that positive. So it is what it is.” And it made me think about this karma thing, and made me think that many investors would have not told them that they heard some bad things. They would’ve just said I’ve changed my mind, and you never know that the reason this deal didn’t happen is that you have a bad reputation, or they fucked somebody and karma’s biting you in the ass. The other thing though, which is the real reason why I wanted to talk to you about this, is that some asshole, I’ll tell you after we’re recording who this is, some asshole dude that’s in our space, that I’ve known for a while and has been annoying me for a while, because he’s just a douche, he did something that’s not correct. He published something about us a while back that’s just not accurate. So I had somebody on my team ping his team and go “Hey, could you guys change these fact or take them off this page? Because it’s just not accurate.” And the team member sent me the interaction with him, and it was like the douchiest chat interaction ever with … That guy basically was like “No, fuck you guys. You would have to prove to me with bank account statements and with this, this and that information that this isn’t accurate. And I have put a lot of effort, time and energy in creating this, and I’m not changing my mind about it.” And then the team member was basically asking me what should I do now? And I was like “Just let it go.” Just let it go, because it’s not important enough, nobody really cares, nobody goes to this page, it hasn’t hurt us. I just saw it randomly and though it’s not accurate, so let’s change it. But just forget about it, it’s not worth the fight or the effort. But internally, I’m like “At some point sooner or later, there’s gonna be a chance where I could either help that guy, or I could fuck that guy over, and I’m gonna fuck that guy over with pleasure.” And I don’t even have a list of people that I wanna do bad things to, right? It’s not even in my nature to be angry at some stranger, but that guy really pissed me off. And his attitude, I was like “Dude, karma is gonna fuck you over one day or another, because you’re building a bad reputation.” So this is my rant on karma, and I think I might even be curious … Or one thing that I’ve been thinking about is the invisible-ness of karma. Like, it’s gonna fuck you over, but you’re probably not gonna even know that it was karma that happened. Some person is not responding to you, and you don’t know that the reason for that is that that person heard something bad about you. It’s that type of a thing, where if you do bad things to people, it creates a reputation, creates a footprint in the universe, and then bad things come back to you. And you’re not even aware of the cause and effect. Anyways, end of my ramble. I’m dying to get your first response and see where this goes.   [0:05:08] Hiten Shah: Yeah. Karma. So I grew up with the concept of karma since I was a kid. It’s part of the religion I grew up in. That’s Jainism, which is an offshoot of Hinduism or Buddhism. It’s right in the middle. So karma’s near and dear to my heart in terms of something I was taught growing up. So when there’s a struggle in my family’s life, my dad would eventually … He would talk about it, think of ways to get through it, or whatever. But at the end of the day he’d just be like “It’s my karma, I gotta deal with it.” So I think that’s the perspective I grew up with with karma, which is whatever is going on, good, bad, It’s your karma, and then you’re here to deal with it. And that sort of was a way to help you feel okay about bad times, or okay if even someone else is doing something to you that you can’t process, or it doesn’t make sense. Or they’re being negative or bad, or like in your situation. The guy just seems like he’s not amicable in any way, and that kinda sucks. And you’re upset. I think it’s his karma, in a way, to be that person. Your karma in a way to deal with that, and then now what do you do? Right? And I think the part of “Now what do you do?” Is what gets really interesting when it comes to karma. So you seem upset. I get it. I actually can probably guess who it is, so that’s cool. But it doesn’t matter. And I’ve had people do similar things to me. But whether it’s that, or even worse. And I actually asked my dad, because he’s a karma expert to me, at least. And I’m like “Okay this guy did this to me, and I think he screwed me over, and it was a business thing, and I just can’t get over it.” That’s usually what happens. He’s like “Just don’t do business with the guy.” I was like “Oh. You’re right.” Like, “You can be friendly with him if you want, because I know you wanna be nice to him. But don’t do business with the guy. He screwed you over.” I was like “Okay.” My dad could take his own advice, by the way, sometimes.   [0:07:49] Steli Efti: Couldn’t we all?   [0:07:53] Hiten Shah: Exactly. And for a while it was the thoughts that you had, which was like “How can I screw the guy over?” And all that. But honestly, this rule, this karma thing, is the same to me as the golden rule. Right? And that rule is basically “Do unto others what you … ” What is it? Like, “Do unto others as you would have them do unto you.” And I think that in a way, that rule is very dangerous. Because if you have a reaction, like you’re having, and then you decide I’m gonna do something about that. I’m gonna control the karma, so to speak. You’re probably creating bad karma for yourself. By doing that, instead of just saying “Oh, all right. Well, he’s gonna get his, but it’s not my job.”   [0:08:46] Steli Efti: Yeah, and you know-   [0:08:47] Hiten Shah: End of story.   [0:08:47] Steli Efti: Yeah. So let’s talk about this, this is really cool shit. I’m glad were talking about this topic. And it’s also funny, just a second before we joined on this call, I didn’t have the name karma for the topic of the episode. I had like … You know, you’re creating a bad reputation or something. And I was like Reputation, we’ve already talked about this.   [0:09:08] Hiten Shah: Right.   [0:09:08] Steli Efti: So the Karma thing was like the last second thing, but it changes the discussion so drastically, which I love.   [0:09:13] Hiten Shah: It really does.   [0:09:14] Steli Efti: Which I love, which I love. All right. So I agree with, I think, your point of view with this. I typically, and in this case even, I don’t think “What can I do right now to show this person?” That’s not something that’s … Like, I got upset with him, and it’s really rare that I get upset or that I get angry at somebody-   [0:09:40] Hiten Shah: I know, yeah.   [0:09:40] Steli Efti: … But he has been annoying me for a long time. This is also probably part of this. From afar, I’ve been annoyed about this person. And so now that I’ve gotten in touch and he interacted in a very douchy way with us, I’m like, you know … Rationally, I went “Lets leave this alone, it doesn’t really matter.” In the future there might be an opportunity where he needs help, and he’s not gonna get it, right? But he might never need help from me, right? I might never interact with this person again. And there’s another good example I wanna bring into this, because I have a question to you about this. There was a guy we’d hired many, many years ago as a designer. We talked about him in some episode in the past. He joined with a signing bonus, he was really expensive, but we were really psyched about the work that he did. And then within the first two weeks we realized that he had lied, the work that he showed us was not really his, and he wasn’t doing work for us. He was remote. And so we let him go, but he was demanding the second part of the signing bonus, and whatever, whatever. I called it “Cost of doing business.” We ended up paying him a bunch of money for him conning us, basically. And that was that. Again, there was a lot of energy, a lot of people in the company upset, we were a small team back then, tiny team. And people wanted to write a blog post about him, and wanted to really publicly shame him and stuff like that. I was like “You know what? This all is taking energy and focus away from our customers. Let’s not do it.” But then there was another guy that hired him, right? And I was surprised that they hired him, and a long time later I saw him at a conference. I was like “Hey, is this designer still working with you?” And he’s like “No. He kinda didn’t do a really good job and we had to part ways.” And for a minute I was conflicted, because I’m happy with just letting it go, being like “I’m not gonna do business with him. We learned our lesson, there’s a lot of things we learned from this on how to prevent it from the future. I don’t want to have this energy in my life, or this person, so let’s not bother shaming him.” But on the flip side, I saw him conning, I think two [inaudible] entrepreneurs that I like, I’m not really good friends with, but I like. And I’m like “You know, maybe I could have stopped that from happening If I didn’t just keep it to myself.” And this person can go on conning founders, because nobody’s speaking up about it. So it could be my … Shaming him publicly could make this whole negativity and fighting with him and everything, make that part of my karma. And I really don’t want that in my life. But there’s another side of me that’s like “Nobody speaks up, and nobody does anything.” It’s also enabling him to a certain degree, because he just goes on and fucks over more and more people, because nobody’s speaking you. Where are the lines there? How do you decide when to speak up or not, or how to … I don’t see this as my role to stop people from getting jobs that I think didn’t do a good job, or anything like that. But I thought about it in the past, especially with this designer guy, thinking maybe I harm the community by not saying anything.   [0:12:39] Hiten Shah: Yeah. So karma’s about accumulation. So do you wanna accumulate more bad karma? Or bad karma, period? Or do you want to keep accumulating good karma? Or good karma, period? So that’s probably a good way to think about this. So to me, this is the way I look at it. And it goes more to what you can do in that situation. So in that situation, I would say that, as a industry or community of startups and tech people, we … I really … And this … Even as a manager, this is a good style, I really resonate with it. Which is where you praise publicly and you criticize privately, as much as you can. It can be hard to do, but it’s very valuable. If you extend that to the situation, or any situation, I think what this investor that you describe did, that started the whole thing, or one of the things that started the whole thing, was right. He criticized the people privately.   [0:13:46] Steli Efti: Right.   [0:13:47] Hiten Shah: I doubt that that person has shamed them publicly. So the way I look at it is, if that designer comes to those two founders that are acquaintances of yours, and you like them and all that, and you wouldn’t want them to get screwed, it was their job to go figure out who you worked with and come talk to you.   [0:14:06] Steli Efti: Yeah.   [0:14:06] Hiten Shah: And they could have easily figured out “Oh, we shouldn’t hire this person.” Right? And you would have been critical of the person. You would have been critical of the person privately. Everyone on your team would be critical of that person privately, if asked. Correct?   [0:14:21] Steli Efti: Correct.   [0:14:21] Hiten Shah: So I think the public shaming and all that is a waste of energy, unless it’s absolutely necessary because you’re looking to create change. So you’re not looking to create any change here. It’s just one dude running around scamming people, right? And it’s some random designer, and there’s a lot of designers out there. I think criticizing privately in one-on-one conversations, or more, is very useful and important. But that requires people to share, and ask, and due diligence, right? So that’s a requirement. And then the privately … I you’re actually praising publicly, some people will know when you don’t praise somebody, right?   [0:15:07] Steli Efti: Yeah.   [0:15:08] Hiten Shah: They’ll just know.   [0:15:09] Steli Efti: Yeah.   [0:15:09] Hiten Shah: And so what happens is, one of the things I’ve learned recently from a very good manager that I’ve hired, is that … What he does, is that even when people are leaving, he makes it a point to really highlight them and their contributions to the business in a positive way. And that’s public. And he’s not lying. He means it. I’ve seen him do it with the folks who he has had a very hard time working with, but eventually they left the company. And before they leave, he writes a very thoughtful set of two to three paragraphs about them and posts it in Slack publicly, and really wishes them well. And I think there’s an attitude about that, that is karmically positive. It’s not that he’s lying about the person or their quality or anything. He’s just literally doing that. So now think about it. If for this person that happens to just bounce, right? You bounce them, right? Had to get rid of them. There’s nothing positive to say, right? But there is something you can say, which is “We thought it would work out.” Right? But in, you know “We were very excited, but in a short period of time we learned that it’s just not a great fit for us in terms of the person’s work style.” Right?   [0:16:28] Steli Efti: Yeah.   [0:16:28] Hiten Shah: And the person might have a better time somewhere else, right? But you might not even write anything about the person, because it’s a very negative experience. But my point is lets be positive publicly. Let’s be positive. Let’s praise people. And when we don’t, people will know what’s going on, and then be critical privately. And so if somebody doesn’t ask you if the last person that that designer worked with was you, and they don’t ask you about that person, that’s not that. I wouldn’t put that on you and say you should have publicly shamed this person. Because then your folks and your brand and you end up being that team, right? Or that brand, that’s willing to do that. And I would say that’s a tactic that I would be only willing to do if I’m really pushed against the wall and trying to cause some change to happen. And usually it wouldn’t be against a person, it’d be against another company.   [0:17:25] Steli Efti: I love that. This is beautiful advice. Nothing else to add to this. We’ll wrap up this episode with your timeless wisdom, and we’ll hear everybody very soon.   [0:17:37] Hiten Shah: Watch your karma.   [0:17:38] Steli Efti: Watch your karma. [0:17:39] The post 344: Startup Karma appeared first on The Startup Chat with Steli & Hiten.

In today’s episode of The Startup Chat, Steli and Hiten talk about knowing who you are as an entrepreneur. As a founder, it’s important to be aware of your strengths and your weaknesses – self-awareness. Not being aware of your weaknesses, can lead to a situation when your team loses respect for you. And this can ultimately lead to the demise of your startup in extreme cases. In this episode, Steli and Hiten share their thoughts what self-awareness is, why it’s important to develop this attribute, understanding who you are and how to build a business that works for you and much more. Time Stamped Show Notes: 00:33 Why this topic was chosen. 02:06 Why you need to do what works for you. 02:57 What kind of founder you need to be. 03:56 Why you should run your business like somebody else. 04:09 Understanding who you are. 04:22 The difference between understanding who you are and what you need to do to be successful. 06:40 Why you should approach sales with some level of self-awareness. 07:28 Why they’re not just one thing that the customer cares about. 07:53 Why you need to understand what your customer wants. 08:10 The importance of understanding who you are. 3 Key Points: Some companies are going to be great at sales and marketing and others are going to be great at a product. There are many ways to create value for your customer. The interface might not matter that much as long as it solves their problem. [0:00:01] Steli Efti: Hey everybody. This is Steli Efti.   [0:00:03] Hiten Shah: And this is Hiten Shah.   [0:00:05] Steli Efti: Today on the Startup Chat, we want to talk about knowing who you are as an entrepreneur. Let me set this up for you, Hiten, and I’m dying to hear what you have to say about this. We’ve talked often about self-awareness, right, and how useful and important that is as a founder, as a human being. How important is this as a criteria for a team? How self-aware is your startup team overall over their strengths, weaknesses? What’s really going on out there? The reason why I wanted to talk about, I don’t know, self-awareness, self-acceptance, knowing what kind of an entrepreneur you want to be or you are, is that I was just doing a podcast interview, and the person that was interviewing me was a SaaS founder. One of his questions really kind of inspired this thought, which was basically … He was basically setting up the question by telling me, “Listen, Steli, as we all know, today in SaaS, you need to be a product-focused company to succeed. You need to be a product-focused CEO and founder to succeed. Today, products need to sell themselves to a certain degree, so you need to build products that kind of grow organically. Look at Slack,” and he brought up a bunch of other examples. “There’s a lot of content, so what do you do every day to become a better and better product manager and product person as a SaaS founder?” I was like, “Nothing.” Basically, my response was that I do agree that the standards for how good your product needs to be today are much higher than they used to be, and I do agree that a lot of amazing product-focused CEOs and founders are generating really incredible companies and creating really incredible companies. But I disagree with the main premise that everybody needs to be a product-first team or product-focused team, especially in SaaS. I brought the example of the biggest SaaS company in the world, which is an amazing marketing and sales company but not that great of a product company, right, Salesforce, and said that in the future, I still believe that there’s many ways to create value in the world and create a brand and to have a reason for existence. I think that some companies have to be great at sales and marketing. Some companies are going to be amazing products. Some companies are going to be incredible in support or whatever else. There’s many ways to create value for your customer, and I don’t think that starting now, every SaaS company needs to be a company that only focuses on product and has no expertise in anything else. That led me to think about the whole debate that’s not as prominent anymore, I feel like, today as it used to be a few years ago, of do you need to raise VC money and IPO, or could you be a lifestyle business and sell fund? Or, what kind of a thing to you need to be in? All this basically comes back, for me, to founders knowing who they truly are, having some level of self-awareness of what their strengths are and what kind of a business they want to build versus looking outwards to what everybody else is saying how you need to be as a founder or CEO, or how you need to be as a SaaS company or as a whatever company. I know that it took me a long time to truly understand who I was and to … Not to understand, to accept who I was and to bank on those strengths and build the type of business that was great for me in the way that I could be great. I see a lot of founders that I think are probably wasting a lot of years trying to be somebody else or doing it like somebody else. So, I wanted to talk about this, and especially from the perspective of talking to younger founders. Or, not young, but maybe less experienced founders and entrepreneurs who are not quite yet sure who they are and what they really want and are looking out at success stories as a footprint on how they need to behave and who they need to become. We’ll talk a little bit about understanding who you are and how to get there quicker in order to build a better business for you.   [0:04:01] Hiten Shah: Okay. When it comes to understanding who you are, is it really about understanding who you are? Or, is it about basically understanding in business, what you need to be doing to be successful? Because I think those might be slightly different things. Salesforce is successful not because they have the best product. It’s because they have a product that every sales team basically needs to use because they started at a time when … One of the reasons … Of course, there’s many reasons Salesforce is successful, but they started at a time when basically appealing to the manager and building the reporting and the things that a manager really needs, a sales manager really needs, is all they had to do. They also started at a time when the whole idea of product wasn’t very important because they were one of the first SaaS companies, and they were really going from legacy Windows-style software from Oracle and Sysco, et cetera. Not even Sysco. I think it was Oracle and a couple others that are now merged together. They didn’t have to do that much. The innovation was the fact that they put it in the cloud. The innovation was the fact that they actually focused on the things that mattered to the organization around getting results, so things that the managed cared about, not necessarily the end user. In that case, that company’s DNA is important to look at. The company’s DNA is very sales heavy, very marketing heaving, considering how Marc Benioff likes to compete in the market, very loud, very noisy, very grandiose. When you look at a business today, a SaaS business, it really depends on what market you’re targeting and whether the customer cares about product or not. I think that for me, I generally wouldn’t want to go in a market where the customer didn’t care, or it didn’t matter. You could argue it always matters, but I’d argue back and say, “No, it doesn’t.” If you’re selling something to mom-and-pop coffee shops, the design and the product experience with that thing probably doesn’t matter as much as the fact that you can reach them, and you can provide really immediate value to a painful problem they have. The interface and how it works and all that might not matter as much as long as it solves their problem. While in other markets, where your competition has set a bar for product at a certain level, it probably matters a lot more. I know you wanted to talk about knowing thyself, which is great. But I think when you’re talking about it with a business lens, the thing I have learned is that it matters a lot more about what’s required to win in your market. Taking that lens is, I think, a lot more important.   [0:07:16] Steli Efti: I agree, but that also … I think that, oftentimes, people think or presuppose that there’s one thing that the customer cares about. Right? That would then mean that every company that’s succeeding today in catering to a certain customer base is doing it the exact same way, which is just not true. Right?   [0:07:40] Hiten Shah: I agree with that. Yeah, it’s not one thing. Yep.   [0:07:42] Steli Efti: It’s not one thing. Right? And how you deliver the thing the customer cares about might differ drastically. Right?   [0:07:50] Hiten Shah: Yep.   [0:07:53] Steli Efti: I don’t know. I mean, obviously, you need to understand who is my customer? What do they need? How do they need it? What do they prioritize? That’s always the starting point, but then the next question is who are we as a team? Who are we as founders, or who am I as an entrepreneur, and how can I uniquely fulfill that need in a way that’s differentiated so it has a place in the market, right, in a way that is different or … I mean, if you can’t find a customer niche that is underserved, and if you compete for a customer that other competitors are competing directly with you for, then the question is not just like, “What is everybody else doing? Let me do the same thing.” That’s not really necessarily a winning strategy unless you know how to do that thing better in some way that’s hard to copy. The question is, “Who are we?” and a lot of times … I don’t know. A lot of times, especially inexperienced entrepreneurs, to me, it seems like they just look at whoever is the most famous entrepreneur of the day, or the hottest unicorn startup, and they just go, “We just need to be that.” Right? “For us to be successful, we just need to be like,” whatever. Fill in the company that’s most written about or most covered right now. When I arrived in the Valley, every founder wanted to be Steve Jobs. Right?   [0:09:16] Hiten Shah: Mm-hmm (affirmative).   [0:09:16] Steli Efti: And you could tell, the way people talked, the way people dressed, the way people presented. Everybody wanted to be Steve Jobs. Today, everybody … I don’t know, maybe … Lots of people want to be Elon Musk, right, because he’s a very famous example of … People want to be whoever the most famous person is, and not everybody can. Right? So, to me, I think … To me, it’s about understanding your customer, but it’s also about understanding yourself. Because if your customer is … Let’s say your customer is … I mean, you want to cater to designers, let’s say, build a product for designers, and you’re not a designer. You’re not even a very visual person, and nobody else in your team is a designer or incredibly visual person. You look at your competitors. Those are filled with super-strong design teams that build beautiful products, and you know that that customer base really enjoys them. Then, you can’t just go, “Well, we need to become really amazing designers because that’s what everybody else is doing in this market.” That’s the moment where you need to ask yourself, “Why do we even want to go after designers? What qualifies us to offer something of value to these people?” Oftentimes, I don’t find that question within startup teams. Nobody’s asking themselves, “Why are we going after this specific customer that needs something we have zero skill, expertise in or any enthusiasm for? We’re now just going to try to pretend or copy this,” or whatever. To me, that is where things break down in a significant way where, if there was more self-awareness, that would stop the conversation right there. The team would have to take a really hard look at why are we going after this customer, and is there a way for us to offer something of value to this customer base? Or, do we need to change who we want to go after?   [0:11:18] Hiten Shah: Yeah, I think you nailed it. I mean, I think it’s really important to marry those two things. Figure out the customer. Then, figure out whether you yourself can actually succeed with that customer, can actually have a reason to serve that customer, and that has a lot to do with you and yourself. I think when it comes to finding yourself, it’s really important to realize what you gravitate towards. Are you gravitating towards the best product, even if it’s the most expensive, in general? Are you gravitating towards a really good sales pitch? Are you gravitating towards a really good marketing message? This is, I think, important in your own life and how you think about things. Another way to look at this, too, is what are you judging when you buy something? What parts of it do you love? What parts of it do you hate you yourself? Because by understanding those things, you can start understanding yourself better and what things are really important to you. For me, I can easily get caught up in a product that has a lot of nit-picks, things where I just hate it because of these small things. For example, cars. I have two cars. I actually have three cars, and I like all of them for different reasons. They’re not only my cars. They’re the family cars, and so we have three. One of them is a car that I would expect to have a much better interior, much, much better than it has. Then, I have another … That’s not the car I drive every day. That’s the car my wife drives. Then, I have another car that I drive every day. Nobody else really drives it in my house because they don’t want to drive it. They have their own cars, I guess. I drive that car. I think the interior is 10 times better, so that car is the one I have. If I ever need to get that other brand where the interior’s not that great, but many people would be like, “Oh, wow. That’s an amazing car,” I can’t do it because I’m just so hung up on the fact that the interior in the car I drive that I drive the most … I drive about an hour or more a day, probably an hour and a half, and I love that car. I can’t live without that car, and a lot of it is because of the way the car drives and the interior. If I had to go drive … When I have to drive my wife’s car, it’s not like I hate it or anything. I just look around. I’m like, “I’m so thankful that I drive my other car every day.” It’s amazing that matters to me. I think most people … Or, not most people, but there are many other people that don’t have that perspective about those two brands and those two cars. They would be like, “Dude, you’re crazy. You should be happy in either one of them.” I’m like, “Yeah, I’m happy. But this one just bugs me because it should be better. It should be better, and it’s not. And the other one’s way better.” Right? I think that that tells you how much the product matters to me and the experience matters to me. I know that about myself. Right? Even like the toothpaste. The toothpaste I use has to taste right and has to come out of the tube right. Right? It has to be a certain brand, by the way, Steli. It has to be this brand.   [0:14:27] Steli Efti: Oh, of course.   [0:14:32] Hiten Shah: Honestly, I never put that on other people. That’s the one thing about me is I’m not going to tell you, “You need to do this,” or, “You need to have that.” I will give you my perspective, but that tells me everything about myself. Right? I do care about the product experience, probably to a fault.   [0:14:50] Steli Efti: I love that. Know thyself. Know thy customer. Yeah, if anybody out there that’s listening to this episode is like, “Oh, shit. Maybe they’re talking about me. Maybe I’ve been pretending to be a type of person or a type of founder that I’m not really,” or, “I have had the feeling that we as a startup team … We’re pretending to be something that’s not really authentic, and it’s not really delivering value to our customer,” or anything of that … If anything resonated, please reach out. We want to hear from you. We want to continue that conversation in a specific way to be helpful if we can. We always love to hear from you, even if it’s just a quick, “Hey,” whatever, “Wishing you a nice day. I loved the episode,” anything that we hear. You can always reach us at steli@close.io and hnshah@gmail.com. By the way, if you have not done it yet, go to iTunes. Give us five stars. Give us a little review. Until next time, we’ll hear you very soon.   [0:15:44] Hiten Shah: Or before that.   [0:15:46] Steli Efti: Or before that. [0:15:47] The post 343: Knowing Who You Really Are as an Entrepreneur appeared first on The Startup Chat with Steli & Hiten.

In today’s episode of The Startup Chat, Steli and Hiten address the whole idea of benefiting from what you’ve done in the past. Sometimes an entrepreneur will do something significant or valuable and then go on to benefit from that thing a couple years down the line. This could be from being invited to speak at conferences or be advisors to startups and so on. In this week’s episode, Steli and Hiten share their thoughts on this idea and what they think should be the right way to go about it. Time Stamped Show Notes: 00:28 About today’s topic 01:16 Steli’s thought on benefiting from cool things you did in the past. 01:38 Why Steli sometimes looks down on some of these people. 02:08 An example of Steli’s previous work benefitting him in Greece 03:13 If it’s cool to live off a solid brand. 03:51 Professions where it’s common to live of past glory. 04:11 Why it may not be a good idea to be judgemental. 04:59 The only time to judge people with a glorious past. 06:00 A pattern Hiten has seen. 06:41 Why it can be difficult to repeat a successful feat. 3 Key Points: If anything, judge them by the value that they’re adding to the audience at that point in time If you got lucky, good for you. If you’ve done something great and it came relatively easy, it’s much harder to do something great again. [0:00:00] Steli Efti: Hey everybody, this is Steli Efti.   [0:00:04] Hiten Shah: And this is Hiten Shah.   [0:00:04] Steli Efti: In today’s episode of The Startup Chat, I want to unpack a topic with you Hiten. I don’t know how to brand this, how to word this but the basic gist of it is the thought that inspired me wanting to talk to you about this is the whole idea of benefiting from old shit that you’ve done. The whole idea is that what I’ve seen a lot of entrepreneurs go through that are well known is that sometimes, what will happen is that an entrepreneur or start-up founder will do something cool or something significant or meaningful or valuable or prominent and then, they will eat off that shit for a really long time. Eating off that shit means that they got famous, or somehow they got a spotlight on them and 5 years, 10 years later when you ask yourself why these people are still invited to, I don’t know, speak at conferences or be advisors for startups or be … Why are they still getting opportunities? It’s because they did something really cool 10 years ago. They haven’t really created any value recently. They’re still eating off their moment of fame and there’s probably people in Hollywood, people in music or business or other areas where this culture is easier to understand. Somebody’s done something really cool a long time ago, they’re still eating off of that. I’ve always looked down on these people to be honest and frankly it’s like, “People still ask for this person’s advice? This person hasn’t done anything relevant three years or helped somebody in some relevant way recently as far as I can tell. Then recently, I was on vacation in Greece and during that vacation, a bunch of people reaching out to me and basically offering me really amazing opportunities. I was like, “Ha, it’s interesting. I’m on vacation. I’m not doing anything and all of this stuff is coming inbound, my way.” Then, because of the type of opportunities they were approaching me with, I don’t know, I had a moment where I was like, “Shit, this still the fruits of the labor of a bunch of really amazing shit that I did a few years ago.” Then, I asked myself, “This year, did I do the best work I’ve ever done? Did create the best content? Did I come up with the best stories, did I create the best products? Did I teach the best things?” In some ways, I have done really awesome work and in other ways, I didn’t feel like it. It started this, you know, dialogue of, “Am I now in this position where I’m slowly but surely just benefiting for cool shit that I did a long time ago and I’m not really creating new ideas and creating new things anymore as much as I used to or not?” I don’t know. I don’t have any aim with this episode but I want to unpack this a little bit of, “Are you still doing the best work you’ve ever done? Are you still creating new legacy and new reputation, new branding or is it cool to do something really awesome and kind of live up that brand for a really long time?” How do you think about that? I just wanted to chat with you about that. Whole topic of creating new valuable things or getting to a point and maintaining and eating off of something cool you’ve done for a long time.   [0:03:18] Hiten Shah: Oh, man. It’s a very complex thing because you’re already lucky if you do something and become some level of famous. You know what I mean? It’s already some level of luck that you became famous but when you talk about that, what comes to mind is actually actors and actresses and how some performances we’ll never forget but they might’ve been 20, 30 years ago. Right?   [0:03:53] Steli Efti: Yeah.   [0:03:53] Hiten Shah: We’ll never forget. I think that’s important to keep in mind when you think about this topic because on one hand I’m like, “Come on, Steli, let’s not be judgmental,” on the other hand, I’m like, “If that person did something awesome many years ago and they’re not doing anything awesome anymore, aren’t they awesome anymore?” I totally get it. I think it has a lot to do with your own point of view. If this person did something so great and they either are retired or can’t come up with anything else, who are we to judge them? I think the judgment should come from or the opinion should come from the quality of what they’re doing now.   [0:04:39] Steli Efti: Right.   [0:04:40] Hiten Shah: If that person did something great 10 years ago and they’re up on stage at a conference, because of that thing they did 10 years ago, I would just judge them by, if anything, judge them by the value they’re adding to the audience that day in that presentation. I judge anybody regardless of what they’ve done in that specific scenario based on what they’re doing today. I think it’s important to see what they’re doing today and if it’s valuable or not. Right?   [0:05:09] Steli Efti: Right.   [0:05:09] Hiten Shah: Is it okay if people write that? Well, it’s a perception that got created so many years ago and not everyone has it in them to keep doing that over and over again. It’s hard work. If you got lucky once and you never knew what hard work was to get there for whatever reason and I’m not judging you for getting lucky, like, “More power to you. That’s not me. But if you got lucky, great. Good for you.” You know what, empathizing with that person, they might know they got lucky. They might know how easy it was for them to get to where they were then and they haven’t been able to do it again because they didn’t take any work. They didn’t take any real work like it does for most other people. You know, the pattern I’ve seen is if you’ve done something great and it came relatively easy, it’s much harder to do something great again because you might not know what it really takes to do something great on average. Sometimes, people don’t know why that great thing happened. If you start a business and within 12 months, you sell it for $50 million, you think that’s great. You did something great. You probably don’t know why it got sold so fast for such a large amount of money and then you might go do it again or try to do it again and you might fail, but then, you’re really known for the first thing you did because the second thing you did failed. Now what? Are you going to something again? Well, you probably made some money with that $50. If you don’t want anymore money, there’s nothing more for you to do in that construct. I think this an interesting one but really, do we need to judge people. That’s what it boils down to and what value are they adding today.   [0:06:59] Steli Efti: I love that. I think the people that I’m most critical off are the ones that I think are using their old successes. They’re overusing that because they figured out that it’s an easy way for them to make money or to get things and they found an audience that’s maybe naïve enough to still be wowed by that. I think when I see laziness and when I don’t see that these people really give now advice or create things today that are so valuable, they’re actually destroying value but they’re still benefiting from that lottery ticket that they won and that they keep finding new audiences of inexperienced, easy to impress people that want to give them more money or give them more attention. I think that that’s the one where I get really judgmental. I think from a self-reflecting perspective, I think I’m really panicked about the idea. I know founders that had that really big success and now, they’ve done three more companies after the really massive success and all three failed and I think that there are awesome people that still try to create value and do things and I think they taught me that, and I’ve taught this to other people, that even people that have had incredible successes doesn’t mean that the next time around is going to be easier or faster. The solution that next time you’re doing it, it’s going to be super easy and quick to be successful. Nothing is guaranteed no matter how much success you had prior and you’re still going to fail. Look at the amount of successful entrepreneurs that started new ventures that failed. It’s a massive amount of them. But I think, this idea of years passing and being … Not doing my best work today, I think that’s, maybe there’s a self-consciousness that I have about that that’s like I never want to have to think that my best work or my best days are attributed to the value that I create are past and I’ll just do the best I can but the best work, I always want to do the best work that I’ve ever done right now and I want more of that to be in my future. I think that I’m self-conscious about it.   [0:09:11] Hiten Shah: But that’s you. That’s you.   [0:09:12] Steli Efti: Yeah, yeah, yeah. That’s me. Yeah.   [0:09:13] Hiten Shah: That’s your bias. Right?   [0:09:14] Steli Efti: Yup. Yeah.   [0:09:15] Hiten Shah: I feel the same way. I think that’s why we’re friends. One of the reasons out of many. But not everyone’s like that. Not everyone is a self improvement junkie. Not everyone wants to develop themselves in that way. Some people are not like that. Some people are just doing the best they can by, I did that great thing many years ago, so now, I’m going to milk it because I got to make money.   [0:09:40] Steli Efti: You know-   [0:09:40] Hiten Shah: Maybe it’s that simple.   [0:09:41] Steli Efti: You know-   [0:09:41] Hiten Shah: Maybe it’s that simple. Personalities are different, people are different and you know, again, I go back to the judgment. Let’s not judge those people. What we can do is we can do better than them, so if you’re in the same place as them, and I actually do this pretty often, if I’m somewhere and I’m giving advice, let’s say, which I do less and less these days, but if I’m somewhere, I’m giving advice or presenting or trying to make an impression on people so that they can do better for themselves, these young startup founders and someone says something that I disagree with before I go on and say it or whatever, I’ll just call it out. I just straight up call it out. Even when I give advice, you might’ve noticed that sometimes, I don’t know, I’ll just call it out. I’ll be like, “Oh, that person, yeah, they’re cool, they’re famous. They said this. I disagree. Here’s why.”   [0:10:36] Steli Efti: Yup.   [0:10:37] Hiten Shah: I just put it out there, right? It’s not to shame them or anything. I’m doing it to express my point of view and make sure that people are not getting bad advice, at least in my opinion and what I consider bad advice. To me, the most bad advice is generic advice. Someone who’s gotten lucky, won the lottery ticket or many years ago did something great. Giving advice from that vantage point is usually very generic advice or very specific advice to their situation but it does not apply to the people they’re speaking to. I just do the best I can to make sure that people know what they need to know and not worry so much about who said what.   [0:11:18] Steli Efti: I love that. All right, let’s wrap this episode up. I still have to mull this but I think, ultimately, the thing that stands out to me after having this conversation, this chat with you about this topic is the being less judgmental about others and just asking myself more, are they creating value right now. With myself, I think I can’t get rid of that. I think that’s a part of not the only thing or not the main thing that drives me forward, but I do think it’s a healthy neurosis that I have, that at times, I’m like, “Am I doing the best work I’ve ever done right now?”   [0:11:50] Hiten Shah: Yeah. Yeah.   [0:11:50] Steli Efti: Most of the times, I actually doubt that. I’m like, “I’m not sure,” then, that gives me a kick in the ass that’s useful.   [0:11:57] Hiten Shah: That’s what’s important. What’s in there that causes you … What’s in that situation that you see that bugs you about yourself. That’s it. You got it. That’s it.   [0:12:08] Steli Efti: Yup. Yeah.   [0:12:09] Hiten Shah: Why you got any kind of judgment is generally about you, not them.   [0:12:12] Steli Efti: Yeah.   [0:12:13] Hiten Shah: You’re basically telling me, “Hiten, I don’t want to be like them.” Cool, Steli, you’re not like them. I promise.   [0:12:22] Steli Efti: I love it. All right. Everybody, this was a little therapy session for all of your ears’ entertainment for free. If you enjoy The Startup Chat as many of you are so kind of letting us know that you do, please go to iTunes, please give us …   [0:12:40] Hiten Shah: It’s five stars. It’s five stars.   [0:12:43] Steli Efti: Five stars and a little bit of a sentence or two on why you enjoy listening to us and how it offered value and we would highly appreciate that, until next time, we’ll meet you soon.   [0:12:56] Hiten Shah: See ya. [0:12:56] The post 342: Coasting on Your Past Accomplishments appeared first on The Startup Chat with Steli & Hiten.

In today’s episode of The Startup Chat, Steli and Hiten talk about team member retention in startups. The success of your startup depends on retaining skilled and talented members of your team. However, it’s very common for founders to take team member for granted, and this can often lead to them leaving your startup, which could destabilize the whole business. Tune in to this week’s episode to hear Steli and Hiten thoughts on why it’s important to retain good team members, the common causes of team members leaving, how to retain them and much more. Time Stamped Show Notes: 00:00 About today’s topic. 00:41 Why this topic was chosen. 01:26 Steli thoughts on how long he’d want a team member to stay. 01:49 Why some employees choose to work for Close. 02:33 Why you need to create opportunities for your employees. 02:43 Why honesty goes a long way when it comes to retaining people. 03:55 Why real trust is such a scarce commodity in today’s world. 04:34 How trust can help retain goop team members. 05:37 How distractions can hinder team member retention. 06:15 Why happiness is a key reason why team members leave. 3 Key Points: Talented people want more opportunities, and if you can’t give them that in your company, they will leave. Honesty goes a super long way when it comes to retaining people. Honesty builds trust. [0:00:00] Steli Efti: Hey, everybody, this is Steli Efti.   [0:00:03] Hiten Shah: And this is Hiten Shah.   [0:00:05] Steli Efti: And in today’s episode of The Start Up-   [0:00:05] Hiten Shah: All right, what is it, Steli?   [0:00:08] Steli Efti: Yeah, well, today we want to talk about team member retention in start ups.   [0:00:13] Hiten Shah: I think we like talking about more than just sales and marketing.   [0:00:15] Steli Efti: We just want to bullshit and chat about business and life and hopefully while we’re doing that, provide a lot of value to people.   [0:00:20] Hiten Shah: The world’s best business podcast.   [0:00:21] Steli Efti: Ooh.   [0:00:23] Hiten Shah: Shit.   [0:00:23] Steli Efti: Oh, shit. We got it.   [0:00:24] Hiten Shah: For people trying to get shit done.   [0:00:26] Steli Efti: Done, yeah. We don’t want to give you feedback that’s bullshit.   [0:00:29] Hiten Shah: We want you to do your best.   [0:00:31] Steli Efti: When I first suggested this, Hiten was like, “Well, you know, maybe you don’t want to be in San Francisco if you want to retain people for more than one or two years.” Because the way I pitched the topic was, what do you have to do? How do you ensure that people work with you and work for your start up for longer than just one or two years and then move to another start up? I interview people.   [0:00:52] Hiten Shah: Yep.   [0:00:53] Steli Efti: Every day I look at people’s resumes and LinkedIn profiles every day. People that work in the start up world that have worked at a lot of start ups, if I look at their timeline it’s always more or less it’s like 18 to 24 months.   [0:01:08] Hiten Shah: One to two years.   [0:01:10] Steli Efti: One to two years before they go to the next one, one to two years before they go to the next one. I think that’s a huge problem. As a start up founder, I want people to come and work with me. I don’t have the foolish expectation that they’re gonna stay with my company forever although I want the relationship to be forever, they don’t have to work with me or for me or with the company forever but I don’t want them to just come to hop to the next thing to hop to the next thing. Employee retention is really huge. It’s one of the reasons why a lot of times people tell us, especially the ones that have a lot of offers on the table, the ones that then decide to go with our offer and our opportunity, oftentimes tell us one of the main reasons was I looked at a bunch of people in the company and I saw that they’ve been with the company for four years, for five years, for six years. I was like, wow, this company must truly be awesome when these super talented people stick around for so long and I saw that passion about the business.   [0:02:02] Hiten Shah: Yeah. That’s great. I’m only laughing because it’s like when our parents were growing up you’d stay at the same company for 30 years.   [0:02:11] Steli Efti: Yeah.   [0:02:11] Hiten Shah: You’d be a lifer period, right? The world’s not like that right now. People have options and they have opportunities. They want the fresh, shiny new thing and if you can’t give them that in your company then they will leave. I mean, jumping into this I think there’s a basic thing which is be honest with them. That’s really important. Honesty goes a super long way when it comes to retaining people. Honesty can be everything from feedback on how they’re working out, how their work is, all the way to when you make a decision that impacts them, be honest about why you’re making it. Almost to a point of brutally honest about why you’re making it. That way people feel like they can trust you. So that honesty builds trust. I see so many people who I talk to talking about their managers, their companies and they just don’t trust them. Somehow, I’m sure these people are trustworthy, you know? But somehow, that trust has eroded and it’s because of lots of reasons. One of the big ones is like they don’t understand why the company’s making certain decisions and they don’t feel like the company is not necessarily being honest, but just not transparent with them about it. Another aspect of it is they’ve been told things that don’t come true. They’ve been made promises basically. Nobody’s trying to do all of that usually, it’s just something where people don’t realize what they’re creating in their environments that make it so people are not retained.   [0:03:50] Steli Efti: Yeah, I think honesty and transparency, trust is such a scarce commodity in today’s world, right? Real trust.   [0:03:57] Hiten Shah: Oh, man.   [0:03:57] Steli Efti: Right? Real trust.   [0:03:58] Hiten Shah: Yeah.   [0:03:59] Steli Efti: That when you have it, it feels so valuable that people really think hard and long about letting that go and going into a new rela- … Think about this. You’re in a relationship that is amazing and where you have complete trust and you feel comfortable and you still experience growth and excitement and there’s still a mission and something to accomplish together. Why would you let that go to go into a random new relationship with all the risks associated with it? Taking the risk only makes sense if you see opportunities you’re not getting currently.   [0:04:34] Hiten Shah: That’s right.   [0:04:35] Steli Efti: And opportunities usually are opportunities for growth or opportunities to feel like your voice is heard and you’re having an impact or the opportunity to be comfortable and be yourself and feel good about it. The opportunity to believe in the thing everybody works on and believing in your manager or the leadership team and what they’re telling you versus constantly thinking that you’re being treated in a distorted way or where they’re hiding the real truths behind closed doors and all that. So trust is so, so scarce that if you can create that high level of trust within your company and people feel that they are trusted and they can trust their co-workers, they can trust management, the founders, that’s so valuable that people want to stick around usually. They don’t want to let that go.   [0:05:20] Hiten Shah: Yeah, why would you? I think that’s big. Another one to me that’s really big is and this is where the San Francisco thing comes in I think, generally there’s a lot of distractions in San Francisco when somebody is in a job physically in San Francisco. I actually am in the San Francisco area and so yeah, my co-founder and I are the only ones in San Francisco or in the area. Everyone else is 30 minutes or an hour or more away or all over the world. The thing I notice about San Francisco the most when I talk to founders who have companies here is that people have more choice and people are ready to go to another company really easily because they don’t have to put up with an environment that they’re just not happy in. Happiness can be as simple as I’m not getting paid enough to be honest. Happiness can be as simple as the product I’m working on is not enjoyable for me and I don’t like this industry. It can be as simple as I don’t like my manager. So there’s a whole bunch of opportunity here, much more physically in terms of here in San Francisco than anywhere else right now. That’s probably likely to be the case for a long time if you’re in tech and thinking about building tech or wanting to work at a tech company of some kind although all companies are probably gonna be tech companies in the future, even a restaurant. But that’s more to the story, maybe not. They all use Square, so … I’m just kidding but a lot of them do. San Francisco is fascinating and I think it’s almost an amplification and a good study of what happens in a company and why people don’t retain. Yes, it’s trust and honesty for sure, but it’s also the idea that … And it really boils down to the idea that there’s a better opportunity for me somewhere else. If you have people who are employed by you who are working on your teams who are team members and your situation, the situation you’ve created for them is not the best for them, it’s your job to identify them and either make it the best or let them go. If it’s not the best for them they’re not able to do their best work. I think at Close what you folks have been able to do is create an environment where people are being able to do their best because it’s the best environment for them. I think for you guys specifically has a lot to do with how you recruit people and how you bring them in and the things you have around your off sites and all that kind of stuff. It’s almost like a tribal sort of culture that you’ve created around people who like to travel. Right? I remember you talking about this and I think those core people that have been there that long there’s like this culture there. Honestly, that’s like not an important factor in the companies that I have and I’ve built. It’s not about that specific one thing and a couple other characteristics. It is fine if you work at my companies and you like to travel. That’s not a problem. We’re not a company that’s gonna facilitate that in a way that you guys do.   [0:08:24] Steli Efti: Yeah, I think it really comes back to understanding what your core culture is and what kind of people you even want to work with yourself. What are the main reasons and motivations that people should have that want to work at our company and what are the main reasons and motivations that we have for doing work and working in this company? I think that when you talk honestly and openly about that it makes a really big difference and a lot of times we’ll see that when I ask candidates in the very early process, if I ask them, “Hey, you’re smart. You’re incredibly talented. There’s tons of opportunity out there. I’m sure you’re looking at a bunch of companies, what are your main criteria? How are you gonna decide which one to choose? Let’s say everybody offers you a job. How do you decide? What are your must haves and nice to haves? How do you boil it down to the one offer that you would take?” Them describing that to me explains a lot of their value system and what’s the most important to them. The people that typically choose us are people that usually start with saying obviously the work I do and the product and the market and this that and the other. The biggest, the most important thing, the number one thing I always look for foundationally is the team, the culture there. Are those people people I enjoy working with? Are those people I trust? Are those people that inspire me? Are those people that are good humans? If I have the feeling that I can trust that and that that’s given then I’ll look at product and salary and opportunity and all these other criteria. People that look at team first and culture first, those are the type of people that usually tend to want to come and work with us. There’s people that have different criteria, different priorities. If your number one priority is always working in the latest tech and the hottest buzzworthiest thing that’s going out there, which is totally cool if that’s what you want, but we’re not gonna be a great place for that for sure. The other thing is also coming back to the communication, honesty. When we talk to people we tell them, we want to build the relationships with everybody who works here that will endure long term. Maybe you’ll work here for a few years. Maybe I’ll come and work for you one day. Maybe we’ll invest in each other’s ventures or in something else, but we are only interested in relationships that are gonna be going on for 10, 20, 30 years or have the potential at least for that. So we want to honestly know, what do you want to accomplish in your life and be a supportive part of that story and that journey. We’ve hired people that told us from day one, in three or four or five years I want to start my own business. That’s totally cool and then we’ll talk about how does this fit into the work that you’re supposed to do here? How can we support you with that transition? Just being honest. So we have people that work here that have side businesses, that run their own little side business and it was totally fine from the … We told them it was fine and it was really fine. We’ve supported them and given them opportunities to grow those side businesses. They’ve told us that other companies had told them the same thing, but they’d had really bad experiences where a company would say a side biz, a side app is totally cool, but then would constantly criticize them for that and kind of shut it down and try to downplay it and try to take away the oxygen for it versus us helping them, supporting them in their long term goals. Just that honesty and thinking long term can make a massive difference in how people feel and think about you. People don’t just disappear in our company and go, “You know, I don’t care about this. There’s a shinier thing over there. I’m gone.” Not that nobody has ever left our company, but we don’t have that high churn and high turnover. I couldn’t imaging building a business where you have this massive amount of turnover because it takes so much time to hire great people and onboard them that the last thing I want to do is lose them. It’s the same thing with customers. We talked about retention a million times and how that’s much more important engagement and retention of users or customers than just pure acquisition. I think about it at the same time and I’m at awe of businesses especially the San Francisco start ups that keep growing and growing and that I hear that are like losing tons of people and have these like revolving doors where people come and six months later they’re gone and eight months later they’re gone and 12 months later they’re gone. I’m like, “How the hell do they … How do these companies work?” I think that to me at least, the type of business that I want to run, employee retention is like the most important thing. I want the people that work with me to be happy, fulfilled, growing and to be doing the best work they’ve ever done.   [0:12:55] Hiten Shah: I couldn’t agree more. There’s no way that I would want to run a company where people are leaving constantly. Because that’s what happens, once you’re a couple years in if people are leaving at the year mark or whatever, they’re just trying to get their equity and their cliff if your company is set up that way and they leave. I couldn’t agree more. I wouldn’t want to create a company, work in a company, or be part of a company where people just don’t feel like they can work there long enough. I think setting expectations early like you mentioned that you do with your team members, it’s really important. One thing that I say that my co-founder kind of always gives me a weird look when I say this to some of the people at meetings like I want to give them their dream job.   [0:13:44] Steli Efti: Ooh.   [0:13:44] Hiten Shah: Right, I said that to somebody who I’ve worked with for a long time in the past and he does some consulting with us but he has a full time job. We’re gonna be with him for awhile tomorrow actually on a Saturday because that’s the best time he can meet for a half day. I told him, “I want to give you your dream job.” The thing is, I’ve given him a job before. I’m not saying I screwed it up because he stayed awhile and everything and it wasn’t like a one or two year thing but I want to give him a better job than that job. I want to give him his dream job. I want him to work with us forever if possible. Unless he wants to go start a company or something. I don’t think he does, but maybe he does now. I don’t know. But his dream job, whatever that looks like, it’s my job to give him that. Honestly, that’s how I feel about every team member on our team. Their dream job. What does that look like? Because if you’re able to provide that to somebody, why would they leave?   [0:14:41] Steli Efti: I love that. That’s so powerful. Let’s end on that note. What would it take to create your dream job at our company? I want to give you your dream job.   [0:14:51] Hiten Shah: There you go.   [0:14:51] Steli Efti: I love that. I love that. That’s it. That’s a wrap. Thank you-   [0:14:55] Hiten Shah: That’s a wrap. That’s what they say.   [0:14:56] Steli Efti: Thank you so much everybody for listening and until next time. We’ll see you soon.   [0:15:01] Hiten Shah: See ya. [0:15:07] The post 341: Employee Retention in Startups appeared first on The Startup Chat with Steli & Hiten.

In today’s episode of The Startup Chat, Steli and Hiten talk about a favorite topic of Hiten – doing business with friends. Doing business with a friend can be a tricky one. If it’s not managed properly, you could end up with ruined relationships or worse, a failed business. In to this week’s episode, Steli and Hiten share their thoughts on what you should do if you want to do business with a friend, how to manage the relationship so that you don’t ruin it and much more. Time Stamped Show Notes: 00:00 About today’s topic. 01:13 Hiten’s reaction when Steli suggested this topic. 02:33 A lesson Steli learned recently. 04:48 How Steli improved his business relationship with his friend. 03:53 Why you need to make time for both business and friendly relationships. 07:33 Why you have to be willing to talk. 07:45 Why friends don’t make good business partners. 08:21 The number one mistake to avoid when you do business with friends. 08:38 Why nothing should be too small to bring up. 10:36 Why discipline is so important when you work with friends. 3 Key Points: Eventually, work took over and it was the only thing we were talking about. Friends don’t make good business partners. When you work with friends, you have to be willing to talk [0:00:00] Steli Efti: Hey everybody this is Steli Efti.   [0:00:04] Hiten Shah: And this is Hiten Shah. Today on The StartUp Chat we’re gonna talk about one of my favorite topics, doing business with friends. So Steli, have you ever done business with a friend?   [0:00:16] Steli Efti: The question is, have I ever done business with somebody who’s not a friend? And the answer to that question is-   [0:00:21] Hiten Shah: Oh wow!   [0:00:22] Steli Efti: It’s been a long time. It has been a long time.   [0:00:25] Hiten Shah: Oh wow! Wow.   [0:00:27] Steli Efti: Yes, yes.   [0:00:27] Hiten Shah: Okay, okay. Alright, it’s like that. Okay well like okay. I do business with friends as well. I’m not sure if I haven’t, yeah I guess I’ve always done business with friends or family which is a whole other thing too. Friends and family, let’s do business with friends and family, let’s tell people what they need to know. What do they need to know Steli, what do they need to know?   [0:00:52] Steli Efti: First, they need to know what’s not recorded, which was your reaction when I suggested this topic which it’s breaking my heart I don’t record everything we say. Usually I just, usually it’s a little bit of background for the long term listeners that might care. Usually we get on these calls, its really every episode is raw recorded first cut, there’s no real edits. We record our first thoughts, the conversation is really raw, the way it happens. I suggest a few topics and 99% of the time Hiten just goes, “Yeah let’s rock and roll.” On this one I said, “You know doing business with friends lesson learned,” and there was a pause and then Hiten said, “Yeah, fuck.” I was like, “Shit, I wish I had this on,” his reaction was so beautiful. And this single word which is why I love the word fuck so much, has so many meanings at once. It was beautiful, it was heartbreak, it was all kinds of things. So I think this is gonna be a rich and beautiful little episode. Here’s the thing, there’s a lot of lessons that we’ve talked about that we might repeat here quickly that are just lessons of life and lessons of how to deal with human relationships that apply in all cases and especially in the ones with doing business with friends. I’ll say one thing and then we’ll spit bong and go back and forth maybe. One lesson that I’ve learned recently that has been a new one, I can go back to the old lessons that I think are fundamental basic common sense stuff that took me a long time to learn-   [0:02:26] Hiten Shah: No no no, let’s talk about the new stuff, the new stuff.   [0:02:28] Steli Efti: But the new stuff, right? So here’s one lesson that I learned recently, which was … Maybe a year ago or so, one of my best friends, a very very good friend of mine that I’ve been working with for over a decade now with on multiple businesses in multiple ways. We got a little bit into a funk. The thing that kind of happened without me realizing it was that, I think our personal relationship and our personal friendship, kind of got sidelined because we didn’t create a singular space for that. And only our professional relationship existed in any interaction we had. Although we always were very casual and we’d make jokes and all that good stuff at the core, but I’m still his boss. That created kind of a weird thing where his behavior towards me changed. I eventually told him this as a joke, but then I realized that there was a big lesson here and we needed both to change. I told him, “You know I’m getting the short end of the stick on both ends in situations where I wish you would … Deal with me as if I were your friend you deal with me as if I were your boss. And in situations where I wish you’d deal with me as if I were your boss you deal with me as if I were your friend.” And he had to laugh real loud on that. And I was like, “We need to figure this out. I wanna just be casual friends with you and have you tell me about your life and tell me about, just be comfortable around me again, independently if things are going good or bad in business. And then in business I want you to maybe not feel so comfortable or so confident that I’m going to, I don’t know, we’re always gonna work together and we always trust each other and no matter what happens things are gonna be fine in the long term.” And then we started really working on this. So now, beyond, like we would now, when we do a business trip we’ll have two days before that we say is friend time. And he came and visited me and just hung out as friends where we didn’t talk about business and we hung out with our families, we went out, we had a good time. Then we’re like, alright and now the business stuff starts, the business part of our little trip. And even since we don’t both live in the same place, we will schedule once a month now a friend call, where we’re not gonna talk about fucking work. We’re just gonna talk about our lives, our families, how things are going because the work kind of just took over everything. And in a little bit, either it didn’t give any, allow any oxygen anymore for us just to be casual friends. And for him to feel comfortable to be, I don’t know, silly and talk about his personal stuff with me anymore. There was a big lesson there that I hadn’t, or a challenge in friendship and business that I hadn’t encountered before and it took 10 years for us to get into this. But we kind of got into a relationship funk of some sorts and how to figure it out. And it took us like a year or so of not being really happy with how our friendship is going, until we really kind of realized what we needed to do.   [0:05:47] Hiten Shah: So you started basically making sure you had time for both modes.   [0:05:51] Steli Efti: Yes. And because-   [0:05:53] Hiten Shah: And that way you were doing less mixing.   [0:05:55] Steli Efti: Yes because both of us are such workaholics and we love talking about work, I think eventually work just took over and it was the only thing we were talking about. So we didn’t have any space in order to talk about our personal lives and just be friends. And I think doing that for really long time, kind of put us in the situation where, I think I was more comfortable probably because of my situation in life. But he I think I felt less and less just comfortable being my friend. Just got stuck in this role of being somebody that works with me or for me, right? I think giving our friendship explicit space just like a date night when you’re married for a really long time, was the thing that we needed.   [0:06:41] Hiten Shah: Yeah. Okay. I really think that this is really just gonna be about one lesson, to be honest Steli. But let me play this out and see what you think.   [0:06:58] Steli Efti: Alright.   [0:07:01] Hiten Shah: I think when you work with friends, you have to do something that you two did. It really balls down to that. It’s the most important thing. It doesn’t matter if the friends your co-founder or you’re managing them or they’re your boss, right? Those are the basic scenarios, right? You have to be willing to talk and communicate and be honestly even more brutally honest than in your other relationships. And the reason for that is, friends don’t make good business partners or even business relationships. The reason for that is, you have feelings for that person outside of the work you’re doing, you actually do. And yeah you can work together and then become friends and I think that’s a little bit different. That’s a little bit different because the … Situation started at work. The situation started, the relationship started because of the work you were doing, not because of just being friends and wanting to be friends with the person first. I really feel like this is the number one mistake. You hear it when people talk about working with friends. This is the reason why people say, don’t work with your friends cause what if you have to fire them.   [0:08:20] Steli Efti: Yeah. I mean at the end of the day … I think we constantly come back to this like timeless principle that you have to communicate and nothing is too small to bring up. Especially when it comes to conflict, the earlier the better, right? Because small conflicts over time become bigger and bigger problems and eventually they become insurmountable. If you have an issue with somebody weekly, something that bugs you about them and that happens over a decade, at some point you’re gonna explode and then it’s gonna be such a big deal. It’s gonna be really hard to deal with and solve, versus if you address it the very first or second time it happens, it’s probably a very small thing. You’re not as emotionally taxed and loaded and so you’re gonna be able to talk rationally and openly and transparently in a way that’s not hurtful. It’s gonna be much easier for the other person to hear you and maybe adjust or explain, add context for both sides to arrange or understand each other better. I think that this situation, this was a thing that at first I didn’t realize, he didn’t realize. Eventually I did realize and I was unhappy about, but I didn’t really know how to fix it. And it took us a while to be able to verbalize what even the problem really is, like what’s really going on here. And since we were able to talk about it, we started to just solve it, right, and things have gotten a lot better. But I’ve had this situation before, I mean maybe … I don’t know if I wanna bring up, this is a whole other episode, how to fire your friends. I mean we did a whole episode on how to let go of people.   [0:10:00] Hiten Shah: We did.   [0:10:01] Steli Efti: And whatever we said there is gonna apply 100% to friends as well and family members. I think since we both had been working, investing, helping and doing business with friends and with family, I think that we both would never advise anybody or tell anybody, “You should never work with friends, or you should never let people you work with become friends.” I don’t think that’s a good principle. I think that … If you wanna work with friends, if you wanna do business with friends, you just gonna have to be even more disciplined and you can’t afford any kind of laziness in the amount of honest, transparent, communication and how much you communicate and how much you invest in the relationship. And how honest both sides are and realistic and self aware on what the dynamic is of the relationship, on what the pros and cons are, and that it could mean that at some point we’re gonna stop doing business together, stop working together. And the friendship is still, hopefully has a chance to operate in a different space with different context and different rules. We could be amazing friends and really not be great co-founders or really not be great coworkers and that should be totally fine. I think as long as people are really honest and upfront and work really hard on those relationships, they should be able to be fine. I’ve worked with many friends now for over a decade. Many of these relationships are closer today than they ever were before and I wouldn’t want it any other way. But I think it comes back to what you said, the basic lesson of, “You have to keep talking.”   [0:11:37] Hiten Shah: Yeah, I mean, yeah. I just go back to that because as you were giving your example, I was thinking through well, I work with my friend right now, she’s my co-founder. I was friends with her at first and … As long as we’re able to figure out how to make friend time, things are pretty good. If we don’t figure that out, then things get really muddy really fast. That friend time is just like, taking away all that responsibility in a way, of the work, right? Making that not a thing and being able to just hang out with someone because you enjoy them, right? Not because you’re working with them which are two different, very vastly different things. I mean you would think that, “Oh I enjoy this person, so I’m working with them.” Actually no. You’re working with them because you want to work with them. You are friends with them because you want to be friends with them. And there is a big strong separation there. And if you get muddy and all you’re talking about is work which is super easy for most of us to do, then you’re not getting that friendship, you’re just not. That can turn into this really boring and almost like you lost something in your life feeling. That’s kind of how it can feel.   [0:12:57] Steli Efti: Yeah that’s the whole idea of like, you’re sacrificing your friendship for the business relationship, but it doesn’t have to be that way. Right?   [0:13:05] Hiten Shah: No.   [0:13:05] Steli Efti: If you’re aware-   [0:13:06] Hiten Shah: It shouldn’t be.   [0:13:07] Steli Efti: If you’re careful about it, it doesn’t have to be that way. But if you don’t pay attention it’s very easy for it to turn that way.   [0:13:15] Hiten Shah: Yeah and even the other way, right? You’re sacrificing … The work-   [0:13:20] Steli Efti: The work.   [0:13:21] Hiten Shah: Because you’re friends. Yeah.   [0:13:23] Steli Efti: Yeah.   [0:13:23] Hiten Shah: That’s horrible too. That means the work doesn’t get done right or you’re not willing to fire somebody or you’re not willing to give feedback, right?   [0:13:29] Steli Efti: Yep. Love it. This is it from us. This is actually a topic, I mean we always love to hear from our listeners and we do hear frequently from all of you guys which is awesome. But this is maybe a particular one where we’d love to hear from you. Tell us about your lessons learned, tell us about your current struggles or your current … Things that you’re particularly proud of when it comes to working with your friends and family or doing business with them. Just shoot us an email and share your stories with us. It really helps us and we really appreciate it. So just ping us at any time,Steli@close.io, hnshah@gmail.com and until next time, we’ll hear you soon.   [0:14:08] Hiten Shah: See ya. [0:14:08] The post 340: Doing Business with Friends – Lessons Learned? appeared first on The Startup Chat with Steli & Hiten.