In today’s episode, Steli and Hiten discuss some approaches to make your personal life healthier. Why? How you’re doing at home affects how you’re doing at work—bottom line. When there is a misalignment of expectations among partners, this can lead to conflict and at worst, a breakdown in a relationship. Therefore, there must be a strong focus on relationships and understanding your partner’s expectations because your life doesn’t get put on hold for business. Tune-in and discover ways to strengthen your personal relationships, so that both your personal and professional life can flourish. Time Stamped Show Notes: 00:03 – Today’s Startup Chat is about dealing with personal issues at your workplace 01:08 – A client of Steli’s is going through personal issues with his marriage which is affecting his work 01:30 – They went on a hiring spree because they had just raised capital; however, things are going downhill since the founder is not able to give his work the due justice 02:43 – Ultimately everyone has to follow their own way – There is no tailored solution that can be applied to every situation 02:54 – Don’t bring home work and don’t bring work home 03:16 – Focusing on your relationship and expectations helps keep personal problems at bay 03:16 – Hiten’s wife has been actively involved in all his businesses so far – his home and work life have been closely intertwined 03:55 – While he pushes like anything from Monday to Friday, Hiten does not take any work commitments on the weekends 04:42 – This arrangement works fine since Hiten loves to go out and meet people, while his wife prefers to stay at home 05:10 – Since both partners have their respective needs met, this leads to a balanced relationship 06:08 – Rather than fussing over your work-life balance, focus on your relationship and expectations – make sure you are meeting each other’s expectations 06:33 – Different people have different coping mechanisms to deal with their relationship struggles – go for a walk, engage a therapist or simply talk it out 07:40 – Having a high level of comfort in your relationship ensures that you can talk things out in a moment of conflict 08:32 – Avoid cultivating a startup mindset that short-term suffering will lead to long-term gain – you can’t pause life while waiting for success 09:44 – Knowing your life partner intimately, and supporting their choices will lead to a life where you are honest with who you are, and what you want with each other 10:15 – A sacrificial mindset is not sustainable and might eventually breakdown your relationship 10:42 – Constantly strive to be better at your work and your relationships; sacrificing a few years of your life in the hope of getting a pot of gold at the end of the rainbow is a delusional concept. This will only harm your relationship 11:40 – A conflict, if not nipped in the bud tends to magnify, and in the worst case even breakdown a relationship. These concepts have been discussed in Episode 067, The Ups and Downs of Cofounder Relationships and Alignment 11:57 – Learning how to deal with conflict is crucial to maintaining any type of relationship 12:22 – People are more negligent in dealing with conflicts in personal life than in professional life 12:31 – Need to iron out any misalignments with your partners regarding where you are, and where you want to go 13:10 – Professional success has no meaning if your personal life is in doldrums; find success in both these spheres of your life to be truly successful as a human being 13:48 – Start a difficult conversation with, “The story I am telling myself…” 14:17 – Can imply that what you think might not be true, and that there might be more information that you need to look at 14:57 – End of today’s episode 3 Key Points: Strive for a balanced relationship—be open and honest about your expectations as well as your partner’s so that you’re in alignment. Avoid cultivating a sacrificial mindset in the hope of getting a pot of gold at the end of the rainbow – this will only harm your relationship. Learn to deal with any and all conflicts with your partner. A conflict, when not nipped in the bud, tends to magnify over time. Steli Efti: Hey everybody this is Steli Efti. Hiten Shah: This is Hiten Shah. Steli Efti: In today’s episode of The Startup Chat I want to talk to you about a  little bit of a touchy difficult subject, which has been some of our favorites in  the past and some of the most impactful ones, which is how to deal with personal issues, family issues within your startup and within your work. The reason why this  comes to mind is that a founder that is not quite, I wouldn’t say is  a friend of mine, but is a founder that has been in touch with me for, I think, over two years now. We’ve talked a number of times. He always  kept me in the loop on his progress with his company by email. I feel  like I know this guy. I feel like I’ve helped him and advised him. I  feel like he had some really good success. He’s going through a tough phase and  he recently sent me a really long and heart-breaking email basically saying that he’s going  through a lot of personal issues within his marriage and that it dramatically impacts him  at work and that it creates this amazing amount of pressure, where he finally felt  like his company’s growing and he’s hiring people and they’re raised money and things have  gone really well and how he feels like he’s making all these mistakes. He’s not  really showing up and he’s calling in sick and things are starting to go bad  in his startup. It creates this downward spiral where the promise he has in his  personal life are affecting his work. Now, the work is becoming more stressful and more  problematic, which compounds his issues personally. He was just asking how to deal with this.  Not that I know, but I think the question, “How do you deal with personal  issues? When somebody is really sick or maybe death in the family?” We’ve talked about  this before. Or in this case, just having marriage challenges. How do you deal with  this within the context of running a startup? I don’t know if we have answers,  but I thought it’d be interesting to explore this difficult topic with you. Hiten Shah: Yeah. I love it. The best piece of advice I’ve heard on this and I  think it goes both ways. It’s the best piece of advice, but it’s not like  … Everyone has to follow their own way, but I think it’s still the best  piece of advice, even though I’m putting that caveat on it before I even say  what it is. I know you’re probably pretty good at doing this. I know I  am, which is don’t bring work home and don’t bring home work. What I mean  by that is I’m not telling you to compartmentalize your life. That’s not the advice.  This is what I mean by, “Hey. It depends on how that feels for you  and what that means.” I’ll get personal for a moment to explain this. For me,  my home life- I’ve known my wife since we were both 15. She’s watched every  single business I’ve started. In most of my businesses for the longest time I worked  with her brother and now I have another business partner too. She also does a  lot of things for our businesses and has forever. Our work and our home is  very intertwined in a way that most people I would say aren’t in today’s world  where there aren’t as many as what many would call family businesses. All of our  things right now that we work on are family owned, so to speak. One way  to think about it for us and for me is I set a structure where,  and my wife did too, where I am committed to being home on Saturday and  Sunday as much as possible. I don’t put anything on my calendar as much as  possible. That means probably 90 to 95% of the time my calendar on the weekends  is empty. Then on the weekdays I tend to be really impacted with meetings and  what most would call work. On Fridays about 60, 70% of the time I’m home  for dinner. Otherwise, no one will probably see me Monday through Thursday unless it’s a  rare Monday through Thursday where I start later in the morning or I’m able to  come home earlier and see the kids to bed. Now, that works for us. One reason is we know who we married. We know who are partners are on both  ends, right? My wife loves being at home. My wife doesn’t like to go out  and hang out with too many people, new people, she doesn’t know, but she knows  that I get a lot out of that and I enjoy doing that. It’s a  very balanced, not balanced life by any means, but it’s a balanced relationship in terms  of she has her needs met, I have mine met. For me, that’s how it  works. We’re both also working on both all of our businesses in different capacities. She’s  working very heavily on one of them and she manages expenses and finance for all  the rest of them. We keep doing more, so there’s always more to do for  her. She’s not someone who can just be a stay-a-home mom, so she works from  home. All of our companies are remote. She is working as much as I am,  even with the kids and all that. We have a little bit of help from  my mother-in-law most of the time. That’s how it works for us. The reason I’m  giving that example is it’s worked for us. It points  out how anyone listening to this is probably like, “You two are weird.” That’s just  not how most people think about things. You’re just like, “That’s absolutely correct.” Anyone else  that has a “You two is weird, too.” If they’re not, then they really haven’t  really figured it out. They’re taking a framework like, “Oh, you need a work life  balance or any of that.” You don’t need any of that. What you need is  your relationships to be healthy so my advice is focus on the relationship. Focus on  people’s expectations and making sure you’re meeting each other’s expectations including if you have kids and other people in your family are meeting their expectations, too. It’s not just about  your spouse or your partner. That’s the same for a co-founder relationship, to be honest.  I just go back to you want to solve the problem, it’s a relationship problem.  You need help, there’s therapists. There’s hypnosis. There’s mediation. There’s couples counseling. There’s going out  on a walk and just talking about life, not work. There’s a lot of these  tactics, and again it has to do with who you are and how you cope  with relationship sort of struggles. Steli Efti: It’s interesting. We’re going on a different track than I originally thought, but I love  this one as well so we might make this a two part episode at some  point. Talk about not so much what are you doing in a moment of crisis. What you’re describing is much more how do you set things up so your family  life and your company life, how can they coexist. How can they be in harmony  by creating expectations, by communicating, by setting up a foundation that’s really solid where expectations  are met, right? Hiten Shah: I started that on purpose though so I still think we’re one topic, and the  topic is about crisis. The reason I say that and I’m glad you’re bringing that  up is you can’t have some sort of way to resolve a conflict unless you  know what the other side looks like. To me, what I’m describing is an iterated  approach which might change in a year or six months or when things change a  little bit though we’re very comfortable, my wife and I having this conversation. You have  to find a way to have that conversation especially in moments of conflict if you  haven’t set this up yet. There is a way to do it. I guess, for  me, I shared that because I want people to feel like there’s a way to  do it. I don’t want them to feel like they need work life balance or  they need all this bullshit I hear with generic advice. This is relationships, and no  two relationships are the same. Steli Efti: Yeah. The other thing is oftentimes you have this sense of sacrifice in startups especially  where it’s this notion of, well, he’s starting his startup now and it’s going to  be really stressful, and we’re all going to have to sacrifice for a few years.  Then this magical, successful – Hiten Shah: Oh, my god. Steli Efti: Life will change, and it’s going to be the way I always dreamed it would  be. It’s like, A, … I love your reaction like, “Oh, my god.” Hiten Shah: Hell no. Steli Efti: Yes. Hiten Shah: Yeah. Steli Efti: There’s this expectation that we are short term suffering to get to some kind of  a long term end goal that’s much nicer. A, that end goal might never occur.  B, you don’t know how long it’s really going to take. C, you can’t just pause life. Of course you can make some decisions today for tomorrow, but you want  to set up a life that’s sustainable. Then what happens the startup is a success  or a failure. What happens afterwards many times your spouse, your wife will want to  start the next thing. Then you’re going through that again. It’s like I go back  to what you said earlier which is we know each other. We know who we  married. We know who we are. I like these things. She likes those things. How  do we make our life compatible, how do we make each other support each other,  how do we design a life together where we’re honest with who we are and  what we want versus this making compromises that are not sustainable or making sacrifices either  internally and quietly or externally and loudly that are not realistic. Like, “Oh, yeah. I’m  going to suffer the next five years for the rest of our life.” Bullshit. The  rest of your life is most likely going to look like the next five years.  Eventually, it’s going to break down. It’s not going to be sustainable. It’s not going  to work out that way. Hiten Shah: Yeah. You’re hitting on a big point. I think people don’t realize there is no  temporary pain for the other side. There’s a constant amount of work you have to  do on your relationships, as well as your work. I think getting delusional about it  and thinking you have to sacrifice for a few years, and then you get this  pot of gold at the end of the rainbow style thinking, I’ve never seen that  really pan out. That means you’re just making your family and yourselves go through kind  of these tough times that you’re making up. Your better approach is to think about how do you have sustainability in what you’re doing on both sides of work and  family life, or making sure you have that sort of outlet where you’re not just  working all the time if that’s not what you want or what you can sustain  with the relationships you have. Steli Efti: Yeah. All right, I feel like this is a good point to wrap this episode  up. I mean, man, family life, personal life, these are very emotionally charged topics. They  are difficult oftentimes because most people don’t communicate honestly. They don’t attack conflict when it’s  small, and it kind of grows over the years to something that’s very difficult to  deal with. We’ve talked about these things in co-founder relationships and conflict resolutions. Those are  two episodes you can look up that we’ve talked about in the past where one-on-one  conflict resolution doesn’t matter if it’s your co-founder, a teammate, or you husband or your  wife. Learning how to deal with conflict, learning how to communicate in conflict is so  crucial to maintaining any type of relationship. These things come up again, and again, and  again as we talk. I find that especially in people’s personal life, they seem even  more negligent than they are in their professional lifes for some reason with communicating honestly,  with attacking conflict, with dealing with misalignment which is another thing we’ve talked about. This  is a . I’ve talked about a startup team being aligned. I think the same  thing applies in personal life, in your family life. Is your family really aligned, is  your partner and you really aligned on where you want to go and what you’re  doing? If there’s misalignment, there’s going to be tension and friction and there’s going to  be conflict eventually. Learning to deal with these things head on and personal life will  obviously dictate the quality of your life overall and with that, I think, will have  a big impact on how you act in your professional life and how well you  can do with your startup. If your personal life is a mess, it’s going to  be … I mean, some people pull it off. I find that if your personal  life is a mess, it doesn’t matter if your startup is a success. Your life  will suck so try to figure out both of these things is going to be  crucial, I think, for long term success of you as a human being. Yeah, I  think- Hiten Shah: I got a- Steli Efti: Oh- Hiten Shah: I got a quick tip I learned recently. Steli Efti: Beautiful. Hiten Shah: I don’t remember where I got it from. It’s some book or some quote or  something and I was like, “Damn, that’s good.” When you’re communicating about how you feel  and it has to do with the other person, one of the best kind of  ways to do that because it’s the most honest truth is when you start by  saying the story I’m telling myself so I think- Steli Efti: Ooh, I like this- Hiten Shah: It’s really powerful. I learned it and I still don’t use it enough, but what  I realized is it’s one of those things you can’t abuse. You cannot abuse it  because all you’re saying is this is what I’m telling myself. That implies it might not be true. That implies there might be more information you don’t have. That implies  so many awesome things that kind of put people’s down, even your own. If I’m  just telling myself a story, that’s cool because that’s not necessarily a reality. When you  really think about it, what is a reality? It’s just whatever’s in your head anyways. The story I’m telling myself about this is and starting off like that I found  to be one of the most effective ways to have difficult conversations. Steli Efti: Beautiful. I love it, so powerful. All right, brother, I think this is it from  us for this episode. We’ll – Hiten Shah: All right. Steli Efti: All right, bye-bye. Hiten Shah: See you, bye. The post 239: How to Balance Marriage and Startups appeared first on The Startup Chat with Steli & Hiten.

In today’s episode, Steli and Hiten discuss the various shortcuts that startups need to avoid at all costs. While tactics like inflating sales figures, copying marketing tactics, discounting and reporting vanity metrics might lead to short-term gains, the long-term effects are disastrous. Taking the path of least resistance is tempting, but does not lead to any value addition. Tune-in to discover why you need to plan for the long-term to create the successful business you desire. Time Stamped Show Notes: 00:03 – Today’s Startup Chat is about deadly shortcuts that should be avoided by startups and founders 00:27 – Startups are tempted to resort to shortcuts in a bid to grow faster, but they often end up stumbling 00:59 – One of the shortcuts that startups take is trying to purchase big leads of potential buyers or leads 01:08 – In a bid to meet their revenue goals, startups end up purchasing low quality email lists 01:52 – Emails have not been updated and nearly 30% of emails bounce—therefore, you end up getting only 70% of emails 02:25 – Your email address will be on the spam list 02:39 – Google might block your email address 02:59 – Open rate and reply rate is really dismal 03:25 – In most cases you will not end up converting even a single customer 04:10 – Another popular shortcut is blindly copying a marketing tactic 04:30 – Customers might not be even using that marketing channel 05:28 – Begging is another shortcut to be avoided at all costs 05:44 – Requesting clients to make a purchase to meet sales target; heavy discounts and option to cancel purchase at a later date are the incentives offered 06:22 – Carrying this too far might lead to fudging numbers 07:05 – You are thinking you are fixing your today’s problems but you have signed your death penalty for tomorrow 07:26 – Goals that a company sets for the next two quarters are going to be based on the fake success of this quarter 07:41 – Your future numbers will be worse because of a high level of churn 08:21 – Discounting: another shortcut that will only cause long-term harm 08:32 – In the short run, you will make a lot of money; over the long run, people start waiting for you to offer a discount 09:03 – Groupon is a classic example of a company which has utilized this shortcut time and again 10:00 – A 5-10% discount offered by ecommerce companies can still be justified somewhat since this is already built into the price 10:19 – Picking vanity metrics to satiate egos and create delusions 10:35 – Some startups tend to report convenient numbers only—numbers that display the complete truth are not displayed at all 11:00 – For instance, tech companies tend to report total number of users. However, metrics such as active users, last 30 day signups, and activity levels are not reported at all 11:52 – Everyone in your startup will have delusions about success 12:35 – While Myspace was focused on accounts created, Facebook was focused on active users 13:20 – Your metrics to a certain degree should make your life uncomfortable, it should push you to work harder 13:55 – Taking the path of least resistance is a big blunder 14:44 – Rather than purchasing a trashy email list, there is a need to put in effort and build your own list using the latest tools and by sending personalized messages 15:10 – Most things that will net you significant gains are through lot of trial and error or deliberately thinking through what you are doing, why are doing it and why it is right for you and your business 16:14 – Do the right thing—don’t go the easy route and always think long-term—shortcuts lead to places where nobody wants to visit in the first place. They don’t really lead to where you want to go or what you want to create! 16:30 – End of today’s episode 3 Key Points: Taking the path of least resistance is disastrous for your business. Think long-term and you will end up going where you want to go. Do not use convenient metrics to report your numbers—this serves no purpose but to satiate your ego and create false delusions of grandeur. Inflating sales revenues is another shortcut that should be avoided at all costs—this leads to a higher churn rate and a temptation to fudge your numbers. Steli Efti: Hey everybody this is Steli Efti. Hiten Shah: And this is Hiten Shah. Steli Efti: And in today’s episode of The Startup Chat we’re gonna talk about bad lead shortcuts  that founders and startups should avoid. So, you know we’ve seen all kinds of shortcuts  that people take, startups take that they think will get them to the goal faster,  better and easier. And we seen how taking these shortcuts can be really deadly and can make you stumble and make your whole startup really go down the drains. So  we are going to highlight a bunch of these that we’ve seen in an effort  to help you avoid these shortcuts. I can share a bunch of them, Hiten you  can share a ton of them and we’ll go back and forth on these. So  let me kick things off, I think, so one of the shortcuts that I see  a lot of startups take is trying to purchase big lists of potential buyers, lead  less. Hiten Shah: Mm-hmm (affirmative) Steli Efti: And the way they do this is, there’s many websites that offer you just like,  you know, industry specific email lists and startups just think “Hey if we just go  there and buy 10,000 of these emails”, they do some math, “And then we send  all of them an email. Let’s say out of the 10,000 you know, I’d say  2,000 open the email. Out of the 2,000 that open the email, I’d say 1,000  respond. Out of the 1,000 that respond, let’s say 500 buy, well shit! If we get 500 customers in the next two or three months we’ll have all this revenue  and things are gonna be exploding and this is gonna be awesome”. So they go  and just spend you know, 10K, maybe a dollar a pop on an email. They  send the bulk email to this like really cold and really raw and usually very  low quality email list and then a number of things happen. Number one, these email  lists are usually very outdated. They’re full of people that you know, once somebody puts  that data in, it stays there forever, they don’t really clean their data bases a  lot. There’s no interest to clean their database in most cases. So, right off the  bat what I see is that around 30% of those emails bounce or just inaccurate  anymore, these people don’t work at these companies anymore, whatever. Right? So you purchase 10,000  but you really just got 7,000 emails that are still accurate. And then you send  a bulk email and 7,000 … By the way you might just get your email  account closed right away or you might get so many flags of being spam from  people, that you know, all of a sudden no email that you send anymore is  being received by anybody because it all goes straight to the spam folder. If your  email is hosted by Google you might just get your email account blocked and not  be able to receive or look at your emails at all. So all kinds of  bad things happen to startup that send mass emails, tens of thousands of emails at  once, that is not a good idea if they are cold. Let’s say even the  people that receive the email, that you got 7,000 to open it, usually … Oh  7,000 people to receive it, usually the open rate is really, really bad on these  super harsh and cold emails. Maybe out of the 7,000 you get you know, 2,000  to open it and then the reply rate is really, really low you know, out  of the 2,000 that open it you might just get you know, 100 to respond  out of which a lot of responses are “Not now”, “Not interested right now, please  take me off your list” or “Yeah, this sounds interesting I’ll look into it”. In  most cases you’re not gonna convert even a single customer out of that, just kind  of like 10,000 cold email you know, one to many approach is not really, specific.  Buying massive email lists and then sending like a one bulk email and dreaming that,  that’s gonna get you a win fall of new customers, is a shortcut that will  get your email banned. Will get you on spam lists, which will hurt your startup  forever. Will get you to lose a ton of money and will get you hated  by people; build a bad reputation and it’s not going to get you a lot  of customers. So, it’s one of those shortcuts that’s easy to avoid but I still  see a lot of startups take. Hiten Shah: Don’t buy email lists. They don’t work. I like that. So, shortcut, I’d say one  of the most common shortcuts in marketing, is when people decide that they read some  blog posts of some marketing tactic, they didn’t really understand it necessarily, although they don’t  know that and they basically decide to copy it. Here’s the mistake and why I  consider it a shortcut. You haven’t really thought through whether your customers are you know,  in that channel, their using that channel or you can even get customers from that  channel or users; and you decide that just ’cause this person, this other person who  blogged about it had success with that marketing tactic growth app or marketing channel, whatever  way you want to look at it; or whatever you read, that you will too.  So you just go ahead and use it, do it and then you fail. And  then you wonder why you failed. It’s ’cause you took a shortcut and you didn’t  take the time to put the lens on your own business and think through “Is  this applicable to my business” or “Am I just copying it blindly”. So a lot  of people copy these tactics and these marketing things blindly. And I feel like that’s  a pretty big shortcut. A very common shortcut I see and they wonder why their marketing is not working. Steli Efti: Love it. Yeah. So, next shortcut that founders take and startups take that will get  them into trouble is, well, the one thing that comes to my mind is, begging.  Right? So what happens, once in a while is that, this happens in sales but  I have seen it in other situations where a startup will want to … A  sales person maybe in a startup will want to hit a certain growth number in  a certain quarter and because they are so behind they start begging their customers. So  they’ll tell customers things like “Hey, I really just need you to, can you do  me just a favor right now? Can you just put in your credit card and  then what I am gonna do is I’m gonna give you a discount or make it in our billing system so that you’re charged in three months and you can  cancel in, by the end of the month if you really don’t want to buy  but I really need to make my quota. So if you just said “Okay” to  put in your credit card information, independently if you buy or not, that would be  a huge help to me”. Right? This is not as uncommon as you would think.  I’ve had a founder friend, I mentioned this in a much older episode, a founder friend of mine text me once and asked me “Hey can you please open a  paid account on our site, I have a board meeting next week and we just  need to hit certain numbers and we’re way behind, so I am trying to get  as many of my friends to put in their credit card and have a paid  account. I’ll pay you the money personally back afterwards”. And I was “Wow”, this is  soul crushing right? And we talked about that. Like how painful it is to hear a founder you know, this is not even just begging, this is actually more in  the lying category of like just faking these numbers in a way that’s desperate. To  hit certain quote en quote milestones that are important to investors or somebody else. Don’t  do this shit! This is so short sided. Your quote en quote thinking you’re fixing  your today problem but what you’re doing, you signed your death penalty for tomorrow. You’re  literally fixing a small problem today in a way that creates a massive problem tomorrow.  Right? You’re creating all these fake accounts. Now what’s gonna happen next? They’re all gonna  cancel, so your churn is gonna be really bad. You’re creating all these fake accounts,  which means what? That the goals that the company is setting for the next few  quotas are gonna be based on the fake success you had this quota. So all  the goals are gonna be crushing on top of it, not just it was unrealistic  to accomplish these numbers, because you are not accomplishing them right now anyways although it  seems you are, you’re also gonna have even worse numbers than you had this month  because of all this churn. It’s just gonna create all these problems, all these issues  for your startup. Don’t beg people to give you money because you want to accomplish  some goal. Doesn’t matter if it’s customers or friends and family. Don’t beg people to  create accounts. Don’t beg people to give you your account. Sales people often times they’re just like “Hey do me a favor, if you know you’re gonna buy anyways just  buy now so my quota looks good, because I need to hit certain numbers”. This  is a common tacit for sales people and it’s one I particularly hate so please  don’t do that. Hiten Shah: Yeah. That’s begging. Okay shortcut. Discounting. Steli Efti: Oo oo. Hiten Shah: So I find time and time again companies wanting to discount their products; whether it’s  a SaaS product, an e commerce product, anything. And there’s one key thing they don’t  realize, in the short run it might make you money, a lot of money actually  because you’re giving your product away for a cheaper price. In the long run what happens is people start waiting for you to have a discount before they’ll buy. Steli Efti: Oo oo. Hiten Shah: And it causes so many problems. Where all of a sudden your brand is associated  and thought of as more of a discount brand. And when I drop the mic  on this one I just bring up one company name. You can probably guess what  it is. Groupon. Steli Efti: Yup. Hiten Shah: And that’s all I gotta say and people are like “Oh yeah. Got it”. ’cause  you know what takes back when you go to Groupon, a discount, a massive discount  of something. And that’s their brand. They can’t branch out of that. And those discounts  aren’t even good for the businesses that they’re brought on and provide the discount. So  I mean think about going to, at least half if not 80% of the Groupons  that I’ve ever done, the service is off because people are just not happy taking  your money at that point. And so that’s an extreme example of what happens when  it’s a discount and what happens to the ecosystem of you know, your customer, yourself,  if you’re a market place, if you’re e commerce like it all adds up. And  I’m not saying like don’t offer a 10 or 20% discount if they give you  an email if you’re running an e commerce sight. I’m talking about the whole discount  sales and all those kind of things. You know? The 20% coupon or 10% or  five percent off for the email, even though I don’t like it, I totally get  why e commerce is doing that. It’s because they built that discount into their margins.  That being said I still think that if you want a brand that people aren’t  waiting for a deal to buy from, don’t ever offer a discount. Steli Efti: Another shortcut that I see startups take that I hate is picking really bad metrics  to report on, or vanity metrics. A lot of times in the early, a startup’s  trying to figure out, “How do we communicate our progress? How do we keep track  of that progress? What are the numbers that are growing?”. They’ll look for the number  that’s the most convenient for their ego, and for communicating success, versus trying to discover  what is the number that is the closest to the truth of what is really  going on. This happens all the time. I talk to startups all the time and  they’re telling me, “We already have three million users and we’re growing by this and  this metric”. I go, “Oh, three million users. How many of those are daily active  users, or monthly active users? How many of them have signed up in the last  30 days, versus have been around for a while? What’s the activity level?”. Without fail,  if I bet money on this I would have made millions just on this bet.  Every time someone’s giving me their massive user massive growth in terms of user traction  numbers, every time, they either don’t know their active numbers, or when they know they’re  like, “Yeah. You know, we kind of changed what we were doing in the early  days. A lot of these accounts were not really active, but we’re currently fixing that.  Da da da”. I’m like, “I’m still waiting for the number. What’s the active?”. Out  of the million users, last month they had 8000 active. I’m like, “Alright, don’t do  this. Don’t do this to yourself. Don’t do this to others. Everybody in your startup  is going to be delusional about how successful you are, because you have the ego  pleasure of telling everybody you have more than a million users. But the truth is,  you have only 8000 users. You had a million accounts opened for whatever reason”. Then  if you dig deeper, it turns out they created some kind of viral fakety fake  thing on Facebook with chat bots, and made people interact with the chat bot and  not realize that now they have an account and they are counted as a user  for that thing. It’s just all a bunch of bullshit, right? Smoke and mirrors to  make them feel good. It makes their team feel good. In some cases, in the  worst cases, it even makes their investors feel good. But they’re doomed to failure, because  it’s the famous, at this point the famous MySpace and Facebook example. Where MySpace was  focused on new accounts created, and Facebook was focused on active users and active accounts.  It made all the difference in what kind of decisions these two companies were making.  For a while it seemed that MySpace was doing a lot better than Facebook, and  growing more, and had more accounts. But Facebook really focused on the user experience. They  knew, “Somebody opening an account and then we never see them again, that’s not worth  anything. We need people to come back everyday. We need people to spend as many  hours of their day on our platform. That’s when we’re going to create all the  value, and that’s when we’re going to be able to really take over the world”,  and that’s what they did. Picking the wrong metrics. Looking at metrics that make you  feel good, make your ego inflate, make you feel excited. Your metrics to a certain  degree should make your life difficult. They should not be convenient. They should be inconvenient. It should push you, and they should be as close to the real reality as  possible. Not just numbers that look as good. Most startups just ask themselves, “What’s the  best numbers we can report?”. That’s the absolutely wrong approach. That’s a shortcut that I  would try to avoid at any cost, and I still see way too many startups  if not most startups commit that shortcut. Hiten Shah: Yeah, that’s a pretty bad one. I’m going to give one final one which we’ve  talked about. Well, final one for me. Maybe you have one more. Which is something  we’ve talked about a lot. A lot a lot. To me it’s a shortcut. We’ve talked about it on multiple podcasts in lots of different ways. It might be even  a theme of the podcast, which is, I think a shortcut is to take the  easy way. The easy way is the way, just like I was referring to. A  lot of these things even in all these shortcuts we’ve mentioned, it’s like you’re taking  the easy way out. You’re doing the easy thing. You’re doing the thing that is  the path of least resistance. But you might not have evaluated whether it’s the right thing for you. A great example is when you buy those email lists and they  don’t work for you. That was the easy way out. You didn’t build the email  list, you bought it. It just didn’t work. This has been consistent. Most people believe  that and have seen that these lists don’t really work. At the very least, go  on LinkedIn yourself. Use appropriate tools. Find people’s emails. Send a personalized message. Tends to  work a lot better. The same with the marketing one where you’re taking the easy  way out if you think that what worked for someone else is going to absolutely  100 percent work for you. To me it’s just a shortcut in general to think  that the easy path is the first thing you try, that it’s just going to  work. That also goes to the fact that I think it’s a shortcut to think  that you do things and they just magically work. Most things that are worth accomplishing  or worth doing or get you significant gains are either through a lot of trial  and error. Or through very deliberately thinking through what you’re doing, why you’re doing it,  why it’s right for you and your business, then actually executing properly on it. Usually  things that work are a combination of both. Of being very deliberate about your audience,  your customer, your product, your business, and using that as your lens to decide whether  certain things are going to work, in marketing, in sales, and almost every other part  of your business. Then doing a ton of trial and error with that framework in  place to figure out what the things that really work are for you. Don’t take  the easy way out. I think that’s the thing we all want to do as  humans. It’s a shortcut. It’s not necessarily going to work for you unless you get  lucky, and luck doesn’t really, you can’t count on luck. Steli Efti: Yeah, amen. I don’t have anything to add to that. I think that’s a beautiful  way to wrap this episode up. Do the right thing. Don’t go the easy route.  Think long term, and really understand that shortcuts often lead to places nobody wanted to  visit in the first place. They don’t really lead to where you want to go,  what you want to create. I think that’s it from us for this episode. We  will hear you very soon. Hiten Shah: Later. The post 238: Deadly Shortcuts Founders Should Avoid appeared first on The Startup Chat with Steli & Hiten.

In today’s episode, Steli and Hiten discuss the topic of how to deal with your disadvantages as a founder. Your differences as a person, whether it be your age or ethnicity, is a characteristic about yourself that could be considered a disadvantage or an advantage—depending on your outlook. Steli and Hiten discuss the power of your MINDSET when it comes to embracing your differences and others’. Tune-in to learn how you can make your differences an advantage for you and why aiming to please everyone is a futile task. Time Stamped Show Notes: 00:27 – Dealing with disadvantages as a founder is a topic that comes up a lot for both Steli and Hiten 00:58 – This is one topic that not all people talk about 01:13 – People may see Steli and Hiten as two successful founders with diverse backgrounds 01:56 – “Everything you think is a disadvantage is actually your advantage” 02:18 – Pitching American investors when English is not your native language is not a disadvantage 02:41 – Being surrounded by a lot of diversity is what will make your uniqueness shine 03:02 – Hiten’s example is Mathilde from Front, who is French 03:28 – Hiten got introduced to Mathilde because he meets foreign founders 04:01 – Use your disadvantages as advantages 04:53 – In South Africa, there’s a great pool of talented people that are 50% lower than the regular cost 05:28 – Being able to have lower costs is a clear advantage 06:09 – A better word to refer to disadvantage is difference 06:35 – “Being different depends entirely on how you play that or how you utilize that” 06:48 – Your level of awareness regarding one’s disadvantages is what matters 07:12 – The losing mentality is what makes you see more wrong in the world and is that’s going to debilitate you in your taking charge 07:46 – Your success in pitching with a foreign accent depends on many factors 08:01 – On the US coast, people care less if you have an accent 08:52 – There are ranges within foreign accents – in-person it might mean less, but if you’re cold-calling with a strong accent, it could be a disadvantage 10:28 – You need to be aware that the kind of accent you have can be interpreted differently by the person listening to you 11:26 – Elon Musk is originally from South Africa 12:24 – Go to the few people who will respond to you more positively 13:12 – Another disadvantage Steli usually comes across is the age issue (too young or too old to be a founder) 13:58 – For founders with an age issue, do the opposite of ‘act your age’ 14:43 – Act as if the other person is not thinking about your age 15:15 – Hiten personally doesn’t bother to ask the ages of people he works with 16:01 – Act appropriately for what you’re doing 17:11 – Steli shares about a woman he read about in an article 10 years ago when he first came to the US 17:21 – It was about the Co-CEO of Pepsi, a woman born and raised in India, who is still wearing traditional Indian clothes to work 18:34 – Attitude and mindset matters a lot 19:05 – Highlight what makes you unique 20:05 – How do you respond to the negativity? 21:25 – A percentage of the time, the negativity is just in your head 21:48 – Don’t ever think people are biased 22:03 – If you feel the bias is real, you have a choice – change yourself in some way 22:52 – The way you handle bias is the way you handle sales objections 23:45 – Disqualify certain objections 24:20 – “Not everybody who has money should be my investor” 24:35 – Know who your target is 24:52 – Trying to convince everybody is NOT the right way 25:37 – “You can’t hide from reality, you can’t run from reality – you need to embrace reality” 27:35 – Prepare for objections and figure out a way to manage them 28:11 – People don’t expect you to respond positively with objections – use this as an advantage 29:28 – We want to hear your opinion on this topic! Email Steli or Hiten 29:59 – End of today’s episode 3 Key Points: You have to be open to the idea that your disadvantage might actually be your unique advantage. Being “different” and its outcomes depends on how you play it. Learn how to handle objections and biases – don’t let these affect you negatively as your goal should NOT be to please everyone. Steli Efti: Hey, everybody. This is Steli Efti. Hiten Shah: This is Hiten Shah. Today, on the Startup Chat, we’re going to talk about how  to deal with your disadvantages as a founder. It’s a topic that actually comes up  a lot, I think, for both you and I, Steli, just because we talk to  lots of founders, and lots of founders that are all different types from different countries,  obviously different genders, and that kind of variation, that variety of founder will give you  a perspective about what they perceive as their disadvantages. I’m sure both of us spend  a lot of time combating them or helping them combat them and come to terms  with them and whatnot. I’m super excited to talk about this. It’s one of those  topics that I actually don’t see a lot of people talk about in a way  that’s actually helpful. Steli Efti: Yeah. I love it. I hope, or one of my theories, at least, on why  the both of us are probably being approached about this particular problem this much is  because we do come from a diverse background, so people might view us as successful  founders and thinking, “Well, Steli, with his funny accent figured it out, maybe he can  help me figure it out as well,” or, whatever else association people have or connection  they make. Maybe we can just pin pong here and bring up examples of disadvantages  that founders have come to us with and what kind of advice we’ve given them,  as I’m assuming that a lot of people will be able to take away actionable  tidbits around that and then we can comment back and forth on these. Hiten Shah: Yeah, sounds great. I’m just going to kick it off first and just start with  something pretty simple, in my mind, that people are probably going to understand by the  end of this but not in the beginning, which is everything you think is a  disadvantage is actually your advantage. It’s not just a mindset, it’s the truth. That’s something  that I feel like people just … People who have the disadvantage, so to speak  … Even the word disadvantage bothers me. I’m sure you can guess that, Steli- Steli Efti: I could. Hiten Shah: People that are different, people that are pitching American investors, and English isn’t their native  language … It’s actually not mine either, except that I learned English very early as  a child, but my first language was actually Gujarati. It’s from India. It’s from the  state of Gujarat. That’s where my parents were from. Being in this country and being  surrounded by a lot of diversity, I think, it’s probably easier than ever to actually  make that uniqueness about yourself shine. Again, that’s where I start with founders when we’re  having these discussions because it’s like, how do you make that uniqueness to your advantage?  I’ll give one quick example, so I met Matild from Front, her company’s called Front,  they do what’s called a shared inbox and help you manage it, and she’s French  and she has a French accent. She came here … Actually, an introduction to me  from a friend of mine who runs a company, and he’s from Belgium, I believe,  I might be totally wrong about which country, it’s been a while, but I got  introduced because I meet foreign founders and advise a bunch of foreign companies as well, foreign meaning they’re not even located here, and I love it. I love it because  that diverse sense of thinking or that different set of thinking than somebody, let’s say,  who went to Stanford, graduated, started their company, raised money from Angels and here, and  was born in America. That’s what most people consider a founder, but that’s changing really  quickly, and has been changing in the last 5 to 10 years. Use these things  as advantages. The reason I bring up Matild is because when you meet her, she  speaks a lot about the advantages of where she came from in France and the  advantages that that’s brought to her company. I don’t need to go into the details  of them, but she’s just literally exuding that when you talk to her. Even the  first time I talked to her she’s lik, “Yeah, I’m from there, our teams there,  here’s why that’s important to us. Here’s where the cultural implications of that for our  company,” and all these things, and it was really awesome. Now most of her team  has moved here … I think all of her team has moved here and everything,  but it was just really refreshing to hear her approach. There’s another company I know  that is actually in South Africa, a couple of them in South Africa, and many  of you might not know this but in South Africa there is a great pool  of talented people, and they are about, I think, 50% of the cost because the  cost of living is lower there. You can literally have doubled the team compared to Silicon Valley for the same price, same cost at a company, and that’s super useful  as an advantage. There’s obviously disadvantages to being there if you’re trying to raise money  from American investors who have … Certain of them have biases towards not funding you  because you’re from a foreign country. But if you’re just able to have lower costs,  that’s a big advantage, and same quality and things like that, and that’s what I’ve  seen in South Africa over and over again in the couple of companies that I’ve  invested in and advised, and also other ones I’ve seen. I wanted to kick it  off with that just because I feel like these aren’t disadvantages. These are your advantages.  You just have to figure out how to frame them that way because they are. Steli Efti: Yeah, I would’ve bet money and won money … When I was thinking about this  topic, and I use the word disadvantage, I knew that both you wouldn’t like that  word and that you would start talking about it. I think that the way to  think about disadvantages or a way to reframe it, and people that have been listening  to the podcast for a long time know how much we care about words, I  think a better word for disadvantage is difference. You’re different. You don’t have a disadvantage,  you’re just being different, different than the norm in whatever area that you are seeing  yourself having a disadvantage. Being different depends entirely how you play that and how you utilize that, can be advantage, can be a disadvantage or cannot matter at all. I  think it really matters how you play that card and what your level of awareness  is on what to do with that. First thinking about this thing as a disadvantage  is basically just means that you probably have lack of confidence, and you’re latching that  on or you’re projecting that lack of confidence onto a specific thing that you think  is the reason why people don’t treat you the way you want to be treated  or why you don’t get the chances that you think you deserve. It’s a losing mentality. It’s a mentality that’s going to make you feel really, really bad, that’s going  to make you seem more and more “wrong in the world” that’s going to make  you feel even worse. It’s really going to be debilitating in your ability to take  charge, take action and accomplish the things you want. The one thing that I hear  a lot is, “Steli, can I successfully sell having a strong foreign accent in the  US?” When I talk to founders about this, or some other people, I always tell  them, “Honestly, it depends.” Let’s play this through, to be fully honest, having an accident  is … The US is a great country, actually, for having a foreign accent compared  to other countries because I find that at least on the coasts, people care less  about you having an accent than in other places around the world where it might  be a much stronger stigma to have of any kind of accent. So, one, it  depends where in the US you are selling. Are you selling to West Coast? East  Coast? Or, are you selling somewhere else? Who’s your type of buyer? If you’re selling  to tech startups in Silicon Valley, you can have any kind of accent around the  world. It really won’t matter that much because people are just used to it and  they don’t categorize you having a foreign accent, even if it’s a strong one, as  you being foreign or you not being successful, or smart, or accomplished, or competent. In  the Valley, it might not matter at all. In other areas in the world, it  might matter a lot. The other thing that we have to honestly talk about is  what kind of foreign accent are we talking about? Because there are ranges, there are  people that have an accent that is so strong that it’s very hard to understand.  In person, this might matter less because your body language, which takes up a lot  of the communication channel capacity, but if you’re cold calling companies, and it’s very, very  hard to understand what you’re saying, this is going to be difficult to do. My  advice would not be just pretend that it’s a strength and just keep cold calling  and nobody understands you, or go and get coaching and learn to get rid of  some of that so you might still keep your accent on a charming level, but  you’re still communicating more clearly to people, which might be a way to do but  might take too much time. But really just realize, “Okay, if people have a difficult  time to connect with me on the phone, do they have similar difficult time to  connect with me in person? Because, if not, maybe that’s the way that I need  to sell.” Or, is it social media, or email? What other channels or what other ways that I can really successfully sell where it doesn’t matter as much, potentially? Also,  what kind of foreign accent matters? Your example is are perfect one because, I don’t  know why this is, but if you have a French accent, typically around the world,  the French accent is seen as fairly charming and even sexy in some parts of the world, but if you have a strong accent from some other parts of the  world, it might even be Eastern Europe, a very strong Eastern European accent to an  American buyer, might just sound a lot harsher and harder and not as sexy and  charming, so what kind of an accent you have might, depending on the ears that  listen to you, being interpreted differently. You just need to me aware of that and  play with that and understand that … This doesn’t was play to accents but to  just broad it up in terms of taking the thing that makes you different from  the norm and actually making it a win is understanding that you are a unique  niche. That means that if you find the people that are similar to you within  the larger market, they’re actually going to respond to you much stronger than the average.  You mentioned South American entrepreneurs- Hiten Shah: South Africa. Steli Efti: South Africa, not South America, yeah. Sorry. If you’re from South Africa- Hiten Shah: Nothing wrong- Steli Efti: Nothing against South America, yeah. Hiten Shah: I just know about South Africa a lot more. Steli Efti: No, reason why South Africa is actually the example I really wanted is because there’s  a very famous and well-known VC, who is … Elon Musk is from South Africa  originally, there’s a bunch other really prominent figures and that are from South Africa, so  if I was from South Africa I would try to understand that there is a  niche of people … It’s not everybody in Silicone Valley but there’s a small subset  of people that are very successful in Silicone Valley that are from my country, which  means that they’re probably much more likely to relate to me and want to help  me because they had to walk a similar path that I have to go down  to accomplish what they’ve accomplished. It doesn’t matter if I’m Greek or South African, it  doesn’t matter if I’m of a certain skin color or gender … Of course, I  go into a large market and I understood because I’m different I’m … Only a  niche of that market will be just like I am, and relate to me one  on one, but that’s actually a good thing in my mind. We always talk about  focusing on your target customer and focusing on your niche and truly understanding who your customer is, that means you want to go to those few people that will respond  to you much more positively than with an average founder or an average person. Yes,  I think having self-awareness in terms of what kind of a difference your difference makes  and then going to the people that might respond really positively and make that disadvantage  an advantage. That’s a common thread that I’ve seen between a lot of people that  are trying to accomplish things that are very tough, maybe in a market where they  are different from the average, and they still win because they’re just aware of that  and they play it right. Another thing that I’ve heard oftentimes, and I know you’re  going to respond particularly well to this, is the “I’m so young,” “I’m so old,”  kind of thing, and we did … I think we did a whole episode, I  need to look it up and link it in the show notes, we did a  whole episode on “Am I too old to be a founder? What’s the right age?  When it is too old? When is it too young?” But that’s something I hear  oftentimes. People will say, “Well, what advice do you give a founder? I’m presenting to  these big, corporate, potential customers, and I’m just 18 years old,” or, “I’m 20, and  they’re not taking me seriously.” What would you say to people that think that they’re  not being taken seriously, they have a disadvantage because they’re way too young or they’re  way too old for that matter? Hiten Shah: Yeah. Age, what you basically want to do, and I this may sound super silly,  but you know how they say act your age to older people, so to speak?  I’d say you do the opposite of that. This is what I mean, the reason  … I’m going to answer this question in odd way just because, honestly, even a  lot of people I work with, I don’t even know their age, meaning I don’t  care. It doesn’t matter to me. The reason I said that it’s a weird way  to answer it is imagine what … My recommendation for anyone who think age is  their issue, whether it’s they’re really older or really young, either way, but I know  you mentioned young, young for their age or young for what they’re doing, whatever that  means now, although I don’t think that exists anymore, but … Okay, is imagine the  other person isn’t thinking about your age, how would you act? Because when I meet  young people I don’t think about their age at all. When I meet older people  who are doing anything, working or starting a company, whatever it is, I don’t think  about their age at all. I’m a little odd though because most people I know,  even people I work with, oftentimes they’re like, “How old is that person?” Or, whatever,  and I’m like, “You know what? I never thought to ask. I don’t care.” I’m  weird sometimes where it’s like, “How many kids do they have?” This and that, I  care on a human level but I don’t really bother to ask unless it just  comes up, and then we talk about it. I know some people are like, “That’s  part of getting to know someone, is knowing their age and how many kids they  have and how many brothers and sisters.” One person I’ve been working since 2005, I  just learned that they have two brothers. I just learned that today, and I’ve been  working with them for like 12 years maybe more, 13 years. It just never came  up. For me, it didn’t matter. For him, it didn’t matter either. To me, age  is one of those things where there is ages, and people look at you and  they try to guess what your age is and they have this bias because you’re  young or you’re old, or whatever, and to me it’s like if you’re the person  who’s on the other end of that, just imagine what you would do just …  Don’t act your age. Act appropriately for what you’re doing, what you’re asking for, what  you’re attempting to get from the other person. That would be my biggest piece of  advice, which is one of the hardest things to do unless you’ve experienced the other  side. Seriously, if you think you have an age problem, email us, tweet at us,  let us know this is something where you need to … I believe the best  way is to not worry about your age just like the other person shouldn’t be  worried about your age or concerned about it. They should be more focused on what  are you trying to accomplish and are you able to do it? Because your age has nothing to do with that. Time and time again, founders have proven that. Look  at Mark Zuckerberg, he was very young when that company was growing very fast in  the early days. I’m sure there were people that were like, “You can’t run this  company,” blah, blah, blah, but it didn’t bother him. It shouldn’t bother you. Steli Efti: I love that example, and I’ll throw one out there. This is random, and I  will be honest and say that I don’t know too much about this particular person,  but I remember the first few weeks when I came to the US 10 years  ago, I remember reading some Forbes article about back in the day, I think it  was the co-CEO of Pepsi, which was not just a woman but a woman from  India, and not just a woman from India but a woman from India that was  born and raised in India, and then much later, I think, came to the US.  Was still wearing very traditional Indian cloths to work. I remember reading about her being  the CEO of PepsiCo and thinking, “This is America is awesome.” In many places around  the world, a very traditional, national company, an iconic, national company, would not … It would be unacceptable to have a foreign person with very foreign culture run an internal,  national, cultural, iconic company, but in the US, in many ways, for all, its flaws.  This country is not perfect just like no other country is, but one of the  beautiful things is that you have these cases where it doesn’t really matter if you’re  doing really great, you can accomplish things even if it seems unlikely a weird …  Even if you’re in an industry that’s dominated by people that look totally different from  you and have a totally different background from you. Let’s point this out because I  think that both of us … Really, the thing that we’re shouting at people is  that attitude matters a lot and your mindset matters a lot, and if you focus  on your disadvantages, on what makes you different, it’s going to shine in the way  you talk. It’s going to project, and people are going to be responding to you in the way you expect them to. If you are either unaware or unapologetic about  what makes you different or if you even embrace and shine and love that about  you … Instead of trying to hide it, you’re actually highlighting what makes you different  and unique, and you’re proud of it and you’re embracing it and you focus on,  what is this about? Am I a great founder? Am I a great CEO? Do  we have a great product? This is really what truly matters at the end of  the day, not how old am I, what’s my accent like. If you focus on  these things, people will also focus on these things. I really want to just take  a few minutes at least and talk about what to do … Let’s say some  people listen to us and say, “Yeah, yeah, yeah. All that sounds great, but you  . You don’t know what it feels like when every time I go to have  a meeting with somebody, it’s so obvious that they’re treating me different, or that they’re  dismissing me, or that they’re not taking me seriously. It’s not me thinking this, I  can clearly prove and see that people are not open to meeting me or when  they meet me, they smirk at me and they don’t take me seriously or they  don’t listen to me.” I can be all positive and all like, “I’m going to  use this as an advantage,” and all that, but how do I respond to all  the negativity that comes my way or all the mistreatment, or whatever, the way that  people respond to me? It’s obvious they do it because of this disadvantage or this  difference. What do you do with all that negativity? How do you not let it  get to you, or how do you pretend that it’s not there? Hiten Shah: Yeah. How do you know it’s there? Steli Efti: Well, let me play the devil’s advocate. Hiten Shah: Please do. Steli Efti: “Every time I try to talk about business, there’s people smirking at me and they  don’t keep eye contact and they tell me to go,” whatever, “back to school or  they try to dissuade me from doing what I want to do and tell me ‘maybe you should work a few years and get more experience.'” Or, maybe they flirt  with me. I’m trying to talk about the business, I’m trying to talk about the  numbers, I’m trying to talk about the substance, and these people just never engage on  that substance with me and they talk about me going back to school or me  gaining more experience because I’m too young or something else? That’s the way I know  that they’re thinking I’m too young. That’s the way I know that they’re only focused  on me as a woman,” or as a man, or as a whatever, “verses me as a founder.” Hiten Shah: This one is a really interesting way to think about it because, one, some percentage  of the time this is just in your head and you’re bringing that to the  table, and so then you’re pretty much perpetuating that thought process in somebody else if  you’re already feeling it even before you get to the meeting. I like to assume  that I’m not going to be hit with any bias until I’m actually hit with  the bias as I’m in a meeting. That would be one thing I would recommend,  which is don’t go in thinking people are bias. I think that’s terrible, terrible way  to live your life. Seriously. Number two, another way I think about it, and I’m  curios what you think about this, is if you really feel that the bias is  coming at you and it’s real, then you have a choice, you can change your  … The best thing you can do is change yourself in some way. One way  would be not have meeting with people who you think are going to be biased  like that, even though I don’t necessarily suggest that because you’re going to have to  deal with this all your life. That’s the thing. You might already have been dealing  with it. This is a side note, but the people I know that are best  at dealing with it, they aren’t the ones that don’t get the bias put in  front of them or have that bias coming from somebody, they’re actually the people that  have gotten it so much that they’ve learned to cope with it. They’ve learned to  deal with it, they’ve learned to have things that they say about it. For me,  and you’re going to really love this, but I’m curios about what you think, the  way you handle it is the same way you handle sales objections. Tell us how  you handle sales objection in this case, if you put that lens on it. That’s  what I’m wondering because, seriously, you’re way better at it than me. For me, when  someone’s bias with me, I know my emotional immediate reaction internally, I can feel it,  and then I actually shut down for a little bit until I process it in  the meeting and then I go after it. Sometimes it takes like the second meeting  or I never meet with the person again because I’m like, “Oh, I really felt  that bias for real, and I didn’t like it. I don’t want that anymore.” But,  I don’t think you’re like that. I think you can offer a lot of great  advice to our listeners around this because the best tactics I’ve seen are very mirrored  by when you get a sales objection, what do you do? Steli Efti: All right, we’ll wrap this episode up with this tip. First, I’ll say that, in  some cases, certain objections actually disqualify us, so I want to make sure that I  know before I go into the interaction, what makes somebody a good fit? What makes  somebody qualified to buy from me? Which, in this case would be, you can translate  this to anything, what makes somebody qualified to be an investor? What makes somebody qualified  to become a customer of my business? What makes somebody qualified to become a partner  or to write a story about my company? I don’t just pretend that everybody in  a position of power, in a certain position, has the qualifications to be my investor  or be … Not everybody who has money should be my investor. If somebody’s an  asshole or somebody’s a person that thinks acts in a way that’s not congruent and  all aligned with how I want to run my business, I don’t want their money.  It’s important to know who’s your target customer, who qualifies and what disqualifies somebody? Just  somebody being difficult or critical, or misjudging you, that does not necessarily disqualify them. Instead  of just going, “Everybody who doesn’t like me, I don’t like them. They’re all assholes.” That’s not helpful, but trying to convince everybody, no matter how much of a misfit  they are because they have money is also not the right way to go, so  this is fundamentally … Decide what’s your line in the sand, who should buy from  you and not? What kind of objections disqualifies somebody from purchasing? Where you just go, “Thank you for being an asshole to me because I’m going to save the next  40 minutes. We’re going to call this meeting early and I’m going to go and  focus my attention on the next person.” It helps me save time. That disadvantage brings  out the worse in somebody else, which makes me learn who they truly are much  faster, which is an advantage to me long-term. Now, I’ll figure out what are the  objections that actually that I need to learn to manage because they come up again  and again and again and they don’t disqualify somebody. Then, my number one piece of  advice is you can’t hide from reality, you can’t run from reality, you have to  embrace reality. If I know that every person … Let’s say every person I meet  say, “Well, Steli, but can you really be Greek and run a sales company?” Or,  Can you really be that young?” Or, “Can you have that strong of an accent?  10 years ago my English was horrible when I arrived in Silicone Valley, so if  every single person I talked yo would’ve told me, “Hey, I’m not sure if your  English is good enough to run the start in Silicone Valley,” I would not start crying and be like, “Oh, everybody’s so unfair. Why don’t they like my accident?” Or,  “Why don’t they like my English?” What I would do is I would prepare for  that objection. I would embrace reality. Reality is people find my accent funny, it makes  them feel uncomfortable about me as being a successful founder, so how do I approach this? I would be proactive about it. I would think about, “Hey, when somebody has  insecurity about my accent being a disqualify from me being a founder, how do I  manage that objection? What is the right response? How can I put them at ease?  How can I make them comfortable and confident? What do I have to say to  make them realize that it doesn’t matter? It won’t matter for my success.” Then, I  would think about an answer. I would prepare that answer, I would write it, and  edit it, and think about it as different versions of a product, and the product  is convincing somebody my accent doesn’t matter, and I would be proactive about it so  when I would meet people … If it happens 9 out of 10 times, I  would not wait for people to bring it up, I would make it part of my pitch. “Hey, one of the things you’ll first notice is that I have a  funny accent.” I might even use a word where my accent is even funnier. “As  an example, let me show you how I say this word,” and I would make  it part of the pitch, make it part of the charm, and then tell them,  “Here’s the three reason why this won’t matter in what I do and here’s all  the facts of success I’ve already had as proof that it won’t matter, so let’s  talk about what truly matters. The things that are really important are X, Y, and  Z, and let’s talk about that.” I would prepare for these objections, I would figure  out a way to manage them, and I would embrace them. I would see that  this is an opportunity because here’s the reality, most people, when you give them an  objection, it crushes them. When somebody gives somebody else an objection, they expect the response  to be fairly negative. When people go, “I think you’re too young,” they don’t expect  you to smile, honestly smile and then go, “I love that you bring this up. I love your honesty. Here’s why I’m not too young.” Boom, boom, boom. “All right,  what else is in objection you have in mind?” People don’t expect you to respond  with that confidence with charm, with a smile, while keeping eye contact. They expect when  they go, “I think you’re a little too young. You should get more experience,” they expect that kind of feedback to crush you, they expect your eyes to go down  and look at the floor and your shoulders to fall and you’d go, “Well, yeah,  but I really think I could do it.” They expect that response because that’s what  you typically get when you give somebody really critical feedback or an objection. Just by  you being prepared for that, just by you embracing it and being able to manage  it and have something prepared to say, will make you stand out. It will make  the other side thing … “Oh, shit, this person seems incredibly confident. Wow, this person  seems to be a winner. Even when I give them critical energy and critical feedback,  and even when I throw an objection, they’re bouncing it back with ease,” which will  make people think that you are going to be a winner and successful because they  know that as a founder, you’re going to have all kinds of problems and balls thrown your way and objections thrown your way, and they see how you demonstrated how  you’re going to deal with it. Prepare for these things, embrace them, and that’s going  to make you stand out. Hiten Shah: Boom. That’s it. Steli Efti: That’s it. Hiten Shah: End of your objections. Steli Efti: All right, well, we want to hear your opinions on this. This topic is super  interesting and very dear and near to our hearts, so if you think you are  different or you have a disadvantage in some way that we haven’t touched on in this episode, if you want to share some examples of how you’ve successfully used these  disadvantages and differences, or how you’re stronger with them, just shoot us an email, @steli,  hnshah@Gmail.com. We want to hear from you, we want to help you, we want to  learn more from the community, so let us know if you have anything to share  there. I think that’s it from us for this episode. We’ll hear you very soon. Hiten Shah: See you. The post 237: Disadvantages as a Founder appeared first on The Startup Chat with Steli & Hiten.

In today’s episode, Steli and Hiten lay out the strategies for developing enterprise level clients. Before entering the enterprise space, remember that these clients require a huge commitment in terms of time, money, talent, and other resources. Product pricing and sales cycle duration are discussed at length in this episode. Find out why targeting enterprise level clients in the initial stages is generally a bad idea, and what your company needs to succeed in this uber-competitive marketplace. Time Stamped Show Notes: 00:33 – Even companies backed by single founders are going upmarket instead of targeting small and medium sized businesses 00:55 – What qualifies an enterprise sale? 00:55 – Enterprise sales concepts apply if you are charging more than $10,000 per year for a product or service 01:04 – An enterprise sales can quickly amount to millions of dollars per year 01:24 – It takes a high amount of time, money, energy, and resources to close an enterprise deal—so build this effort into your pricing 02:05 – Money: Do not make the mistake of lowering your product price 02:05 – Startups tend to make the mistake of lowering their price in a bid to acquire an enterprise level customer 02:36  – Multiple decision makers in an enterprise level organization tend to delay the closing process 03:05 – Low pricing dilutes your brand value – Remember, a low priced product has a higher churn rate 04:02 – Time: Do enterprise level customers have a longer sales cycle? 04:11 – Yes 04:31 – Need to step back and analyze the reason for this  – Often, you are making the mistake of not involving all key decision makers 04:59 – Map the organization chart to zero-in on key decision makers 06:05 – Steli advises using his technique called “Virtual close” which involves asking the client about his estimate to close the deal and then backing it with rigorous follow-up 07:00 –  Prepare a roadmap of your sales cycle to determine if you can shorten it 07:00 – Kickoff your sales cycle by talking to all stakeholders and asking the right questions 07:19 – Doing a pilot is always advisable 07:40 – Deal with the procurement and legal formalities 09:30 – Startups intend to cater to the SME sector and “stumble” into an enterprise level client 11:18 – Need for a solid strategy to target the enterprise sector. Just because an enterprise level client shows interest in your product does not mean you are a good fit 12:19 – Which companies manage to succeed in the enterprise space? 12:19 – Most companies start by targeting the SME sector, build their resources over the years before targeting enterprise level clients 12:46 – Some companies manage to target enterprise level clients in step one itself. These are mostly backed by founders with experience in the enterprise space who have managed to raise a ton of funding 15:00 – Not a good idea to start off by targeting enterprise level clients if you are not backed by the necessary experience and funding 15:12 – Existing business relationships are another way of targeting enterprise level clients 16:40 – Open source companies are an example of marketing effort in enterprise 16:46 – In an enterprise sale, the end user and buyer are different entities 17:02 – Adopt a “Bottom-Up” approach by targeting end users to build your enterprise sales via marketing 17:23 – Solar winds is a great example of a company that gets clients hooked on open source solutions, and then upsells an enterprise level product 17:50 – When targeting enterprise client, marketing, rather than sales, is the fastest way to learn 18:25 – “Ask for advice, you might get money. Because if you ask for money, you might get advice” 18:42 – Seek out people who could be potential buyers, or who know potential buyers within organization for advice 20:39  – Email Steli or Hiten or get in touch with them via Twitter 20:51 – End of today’s episode 3 Key Points: Do not lower your product price in a bid to attract an enterprise level client  – The end result is brand value dilution and nothing else. Do not target enterprise level clients in unless you have extensive enterprise level experience and huge funds backing you up. Ask for advice, you might get money, but if you ask for money, you might get advice—tap people who could be potential buyers (or who know potential buyers) for advice Steli: Hey everybody, this is Steli Efti. Hiten: And this is Hiten Shah. And today on The Startup Chat we’re going to talk  about how to target the enterprise in all ways, sales, marketing, product, et cetera. And  see how far we can get on giving you folks a lot of thoughts on  how to do that. One of the reasons we started this trend … Or, sorry,  one of the reasons we’re talking about this is because there’s a trend that both  of us have seen where even companies with just a single founder are going up  market, and not just going after small, medium businesses, but they’re also going after mid-market  companies and larger companies. And just to throw it out there, Steli, to me, this  is not just about enterprise. It’s just about charging more than $10,000 a year, you  know? Because that’s when you start getting into the areas that all the enterprise sales  type of stuff applies. In true form though, an enterprise sale is in the millions  of dollars a year. If you really want to go for what enterprise really means. Steli: Yeah, it should be like 6, 7 figures is typically what you … Hiten: Yeah. Steli: What you would want. And we can go crazy on this episode, but I want  to jump right in here. Hiten: Yeah. Steli: Which is … Here’s my first tip to people. If you want to target enterprise,  or large organizations as your customers, you want to charge a lot of money for  your product. Because the cost … It’s going to take a very high amount of  time, money, and resources for you to really close a enterprise customer. The demands are  going to be really high, they’re going to moving very slowly, you’re going to need  a lot of energy and effort and senior people on your team to close these  customers. So it’s going to cost you a shit ton of money to acquire a  customer like that, and a lot of time. So it needs to pay a big  enough return to be worth it. And often times in experienced startups that want to  go the enterprise route, they think if they make their product a little cheaper, things  might move faster. Or because they’re lacking confidence they’re thinking, “Well we can’t really charge,  you know, 250,000 for this. We’re just going to charge 10,000 or 5,000, or $1,000  a month or something.” And then they approach this super massive, you know, giant of  a corporation, and they have to go through all these hoops, and they have to  deal with all these delays, and all these decision makers. And it takes them 18  months to close a deal that they thought would only take 2 months. And now,  you know, you’ve spent so much energy, time, and money … You’re making $1,000 a  month? It just makes no sense. So my first tip out there is that, if  you want to go down the enterprise route, you need to make it worth your  while. You need to realize that it’s going to cost a lot more money than  you think to acquire these customers, so you need to price your product accordingly. Hiten: Yeah. I mean, if you charge too little, then no one’s going to care, especially  with a larger sale. And it’s odd, I’ve noticed return’s higher when you … When  they pay you less money in enterprise. Steli: Yeah, in enterprise it’s definitely like these massive organizations … The cheaper your product, the  less of a priority it is. And also, it is looked upon as they’re …  You have to think about the world that they live in. They live in a  world where they spend millions of dollars buying technology, and implementing technology with lots of  consultants, rolling them out over years. So, when something’s like a few hundred dollars or  a thousand bucks, to them, that equals that this probably is not a good tool. This probably is not a company that’s going to be able to service them well.  So they actually … Pricing makes a big part of the branding in terms of  how serious these companies will take you. Hiten: Yeah. So pricing as a signal for the value of your product, and how seriously  they should take it, I think is a big mountain in enterprise. Steli: Yep. Hiten: I mean another one here is, I would say, has to do with sales cycle.  So I see a lot of companies … Especially … I mean, this was more  a problem earlier, like back in the day, but companies get kind of frustrated having  a long sales cycle. Right, and saying, “Oh, it takes 6 months to close the  deal for a enterprise customer, let’s say in the 6, 7 figures region.” And, you know, it kind of makes sense. But every time that I’ve dug into those problems  … You know, it’s a problem when someone says it takes 6 months. Typically, they’re  just doing something wrong in their sales process. And usually it has to do with  the process itself, and the way that they’re setting up the meetings with the enterprise.  For example, they’re not getting all the key decision makers into, you know, conversations within  the first month of starting to talk to them. And I’ve seen acceleration happen pretty  fast, going from 6 months down to 3 or 4. Even less, once you really  figure out, “How should I be selling this enterprise?” How … Are you mapping their  word chart on every call, asking who else needs to be on the next call?  And every call asking, “Are there any other people who should understand this information that  we shared with you today?” And all those kind of questions to search this …  Basically, what’s the decision making process inside of the company? So that’s a big one  that I have to point out, which is … We used to think enterprise, selling  to enterprise takes 6 months and that’s okay. I think now I’m finding more and  more, especially with businesses that are selling enterprise, they can actually make that process much  faster. Steli: Yeah, I think one way … One piece of advice that I give in terms  of understanding what it really will take … The problem for most startups is that,  or most companies that sell to enterprise, is that they get some kind of an  entry point, they have a few conversations, and they don’t ask all the critical question  to truly understand what it will take to close this deal, and close this customer.  So what happens is they come up with a thesis on what it’s going to  take, and then all these “surprises” pop up that delay things and make them take  much longer. So my advice to founders, is that once you talk to an enterprise  line and you realize that it seems like there’s a good fit and they seem  interested, I would always do a technique that I coined, The Virtual Close, which basically  is just asking them, “Hey, it seems like this is very promising and could be  a great fit for both sides. Let me ask you, what would it typically take  for you to purchase our product, become a customer. What are all the things that  we have to do from this point on, all the way to us successfully implementing  our technology in your company and helping you with all your problems?” And the key  part is not just to ask the question, “What will it take for you to  become a customer?” But then to follow up with questions until you reach a virtual  point where they buy. So when they tell you, “Well, you know, we’re going to  have to go back and talk to a bunch of stakeholders, and see what they  think about this.,” most people will just go, “Cool. Sounds good. Let us know what  happens.,” right? Which is obviously not the right step. Instead of doing that you go,  “Aright, so you go back, you talk to stakeholders.” Let’s say that conversation goes well.  First of all, who are all the other stakeholders, right? But let’s say that conversation  goes well. What typically happens next? Well next, we want to get in on another  call and get more stake holders involved and asking questions, blah blah blah. Alright, cool.  Let’s say that call goes well. What happens next? Well, next we want to do  a pilot. Again, most people eventually, they will stop asking questions and go, “Sounds great.  A pilot. Exciting. Alright, let’s try to make it happen.” I would advise you to  keep following up, alright? So I go, “Alright, let’s talk about pilot. How do you  typically do pilots? What KPIs do you set? How long do they take? What would  a successful pilot look like? Let’s say this becomes a successful pilot, what happens next?  Are we in business already?” “Well no, then you have to go through procurement.” “Okay,  and then?” “And then you have to go through legal.” “Alright, and then?” “And then  my grandmother has to read your palm. You know, and look into your future.” “Alright,  and then? Are we in business then? “Yes. Then, you know, after that final step,  we would purchase.” Boom. Now, you have a roadmap of what it’s going to take,  who are the stakeholders, what are all the steps. Now you can realistically assess A,  if you can shorten some of these steps, if you want to take all these  steps, how long all this will take. You can have a real roadmap. And then  you know it’s, “Okay, this is going to take 6 months, or it’s going to  take 9, or whatever it is. And now you can make very … Much better  decisions than what most startups do in the enterprise space, which is … They say,  We talk to a team. The whatever, director or marketing is really excited about this.  And then I ask, “Alright, so what’s the sales process there? How are they going  to buy? What are all the steps?” And they just don’t know, and they just  make shit up. They just go, “Well, I think that, you know … I mean,  they looked into it. I think that they should be ready in a few weeks to buy. I mean, we’re planning on closing them this month.” They have no idea,  you know. And then at the end of the month I check in again and  they’re like, “Yeah, we’re probably going to have to do a pilot but they’re busy  with something else, and the pilot’s going to start in, you know, October. Alright. And  then, you know, they finish the pilot and then, “Oh yeah. Now we have some  slow down in legal because of some contract thing.” And it just … All these  “surprises” come on up, and then the deal that the startup originally thought, “Oh we’re  going to close this in a month.,” it in reality takes them then a year  to close, right? And that’s really a very costly thing, is when you’re not even  knowing why all this takes so long. So I couldn’t agree more with you on  this. Here’s another thing that I want to point out when it comes to enterprise  sales for startups. I don’t know how you see this, but I see a lot  of startups stumble into it. And I think that that’s a really, a very risky  way of doing things. And when I say stumble into enterprise sales, here’s what I  mean. The Startup X starts off with an idea for a product. They imagine the  product being used by businesses very generically around the world. They start by probably marketing  more towards, or thinking that their earliest customers are going to be probably in the  S&B sector. And then they maybe go to a demo day of the incubator, or  the get a little bit of press, or they present at some conference. And randomly, you know, a big enterprise reaches out and shows interest. And says, “Hey, we want  to also buy your product.” And they have that first meeting with that enterprise customer,  and because of the variety of factors, there’s an enterprise potential buyer that’s very excited  about them. Then all of a sudden they go, “Well shit. Let’s just go into  the enterprise space and sell them.” And they … So there was no strategy of  going into that space, there was no experience. They get a little bit of inbound  interest, and they just say yes to that inbound interest without being fully aware of  how you have to play the enterprise game to win. And then it might turn  into this massive detour that often times ends up deadly for these startups. I don’t  know if you’ve seen the same thing, but it’s rare that I see young startups  that are very focused and with strategy, decide to go into the enterprise sector. I  mean, that happens more and more. But what I also see often, is that they  just stumble into it. Something happens, they have a bit of conversation with somebody that  shows interest, and all of a sudden they go, “Oh shit, maybe we should go  into the enterprise market.” And I think that that’s a very dangerous way to go  into that space. You should have a solid strategy. You should know what you are  doing. Just because a few big companies show some interest because you got a prominent  article on some website, doesn’t mean that there’s a product market fit or that your  company should focus on that right now. Hiten: Yeah. I totally agree. I mean, accidentally stumbling into it can be a good thing  if it’s time to double down on it. Or it can be a really bad  thing because you accidentally stumbled on it and don’t know what to do with that  attention that you’re getting. Also, I’ve seen a lot of false positives there too, where  a company gets enterprise interest and they go all in on it, and then they  realize it actually wasn’t … It’s not going to work out for reasons like, their  product doesn’t fit the market when it comes to enterprise, or they can’t improve the  product fast enough, or you know, some … There was a random company that emailed,  or called, whatever, came in, that’s not indicative of other enterprise companies. Or larger companies. Steli: Yeah. So another one maybe … So I think … Or let me ask you  this, Hiten. So most of the startups that I’ve seen be successful in enterprise either  were around for a while and they grew resources and resourcefulness, and traction and branding,  and eventually they kind of just grow. They go up market from small customers to  bigger, to bigger, to bigger, to eventually being at a point where they can service  and succeed at the enterprise level. So very organically, over a long period of time,  grow into the enterprise space. Though startups that I’ve seen successful go into the enterprise  space in step 1 are usually the ones that have a … Have experience in  the enterprise space. So either the executives or founders worked at large enterprise organization, or  did enterprise sales before. Or/And they’ve raised a ton of funding from investors that have  a lot … That are like ex- executives of large corporations that just have a  lot of expertise and know-how. And they hire or build a team that’s very focused  on enterprise. I don’t know of many examples of a startup that was not really  well funded and that didn’t have a background of it’s founders and founding team in  the enterprise space, but was able to sell to the enterprise from the get-go successfully.  Do you have an example of that? Or have you … Does your experience match mine? Hiten: No, it matches yours fully. Steli: So … Hiten: Yeah, and I don’t really have any examples. I mean, yeah, I mean there’s companies  that are open stores that end up adding services/businesses and go enterprise pretty fast. But  yeah, in general, it pretty much maps. Steli: So if out both experience maps there, you can reverse engineer this to an advice,  which is that if you don’t have a ton of resources in terms of funding,  and investors, and advisors, and people around you that have a lot of experience in  this space. And you have the firepower, the money to really invest in this space  and/or you don’t have a ton of experience working at large enterprises or selling to  them for many many years, it’s usually … It’s not a good idea for you  to go down that route. Like self … Starting a self-funded technology company when you  have 0 experience. You’ve never worked for a large corporation, you’ve never sold to a  large corporation. And then that’s going to be your first customer? Often times when people  like that come to me I ask them, “Why? How? Why did you come up  with an idea for a massive organization when you’ve never worked for one or sold  anything to one? Like how intimate can your knowledge really be in that space? 99.9% of the time it’s not a good idea to start there. Maybe you grow into  that, but it’s not a good idea to start with that in mind. It’s going  to be very difficult. All the learnings, all the time it takes … It’s not  an area you can experiment with, like, “Oh, I’ll do some tests in the enterprise  space and then go back to something else.” That shit doesn’t work. Hiten: Yeah, even with outbound emailing. Steli: Yeah, I know. Hiten: Even with outbound emailing, which is the key way to get enterprise sales. Either emailing,  or somebody who already has a relationship with them. It’s not … You don’t have  enough numbers. With small businesses there’s a million of them. Millions of them. Steli: Yep. Hiten: And so sending cold emails works. Even with , sending cold emails, and a little  bit sloppy in the beginning can work. With enterprise, I think the process, you’re right,  it has to be a lot more deliberate. Usually you see either somebody with relationships  targeting enterprise, like they already worked in the industry, or they’re already a sales person  that knows how to kind of work the enterprise like that, and has relationships. Or  you see people enter in who have funding, to be honest. You know, and are  able to build out the tack and the team and, you know, but they also  start out with smaller companies. Even if it’s mid-market and smaller deals. Even if it’s  like later stage startups, before they start moving up into enterprise. I see that commonly,  by the way, Steli. I don’t know what you see, but I see a lot  of companies start a little bit smaller than enterprise, knowing that enterprise is the final  kind of customer assignment that they’re going to go after. Steli: Yeah, and I think that that’s smart. Like that’s a very kind of common strategy.  I think it makes a ton of sense. So let me ask you. I think  that most of the times when you start a new product, and you want to  have large enterprise customers, most of the time it’s a sales-heavy effort at first, and  then it becomes more and more marketing effort as you’re scaling things up. Would you  agree with that, or do you think there’s like early stage things? Like marketing wise,  people should really consider a few things from the day 1 when they want to  go into that space. Hiten: Yeah. Again, I know this is like a broken record right now, but to me,  open source is a good example of the marketing effort in enterprise. The marketing effort  I can think of, is you get the end user. Because you know, in enterprise  there’s buyers and there’s end users. The people that are buying are not usually the  ones using the product. That’s changing a little bit, but it’s still pretty standard. So  the decision maker, the buyer, actually not even the decision maker, that’s a different story.  But there’s a buyer and end user. So the buyer tends to be attracted by  certain management features, administrative features, price, other kinds of things like that, efficiency, while the  end user’s very focused on, “What’s this going to do for my job?” And so  if you can get an end user, kind of bottom-up approach, get them using your  product early, I consider that marketing. Open-source products that target enterprise tend to do that.  I think there’s one called Solar Wind, or Solar Winds. I don’t remember, they’re a  public company. They’re the ones that always come to mind, because they provided a whole  bunch of tools for IT, traditional IT, and then basically had upsell into, kind of  the whole organization and kind of more of an enterprise sale once a lot of  the developers in the company were already using the open-source tool. This is a pretty  standard tactic across the board, around going after enterprise with marketing. So I’d say that’s  1. Outside of that, I don’t know, I like sales when it comes to enterprise,  or even larger deals first, because that’s your fastest way to learn. And that’s really  what you should be optimizing for early on, is “How fast can I learn?” Marketing,  you won’t probably learn as fast as you would with sales. Especially when you’re targeting  enterprise. Steli: Yeah. So here’s my tip to kind of round up this episode. I think my  tip for people that still want … That still feel like the enterprise is a  big, or the right opportunity for them and their startup … One tactic that I  often teach that people put into practice with success, is the, you know, “Ask for  advice, you might get money, because if you ask for money you will get advice.,”  piece. So often times a good strategy in the early days is to just learn  a lot more and potentially start off the prospecting pipeline for your startup in the  enterprise space, is just to pin people that could be potential buyers or that know your potential buyers within the organization. And tell them that you’re building a new technology,  you eventually want to sell to companies like theirs, and you want to get advice  on how to build this technology from them because they are a domain expert, or  they’re a thought leader. So reaching out and saying, “Hey, I’ve admired your work. Your  thought leader, lots of people brought up your name. I want to tell you a  little bit about my new technology and get some advice from you on how to build this business.” Hiten: Yeah. Steli: And then you just share with them what … They’ll leave their guard down because  you … It’s not a sales call. You tell them what you do passionately, and  you get their honest feedback. And then you literally just ask them, “Hey, if you  were my co-founder, if you work with me on this, or if you were the  founder of my company of this, how would you sell this to this business? How  would you sell it to your employer? How would you go to market with this?”  Just use these people’s experience and expertise to learn. A lot of the times if  what you have is truly compelling, these conversations, after they’ve shared some business knowledge with  you, and enterprise knowledge, they … It might turn into, “Hey, you know what? I think that we could be a buyer, and I think I know somebody in the  company that you should talk to.” And then they will be internal references and introductions,  and these conversations often times will turn into real sales conversations. But even when they  don’t, they give you real knowledge of this space and how to think about things  like a large corporation, and how to sell to a large corporation. So I would  really advise this. Step 1 is to meet with as many corporate enterprise executives as possible and get advice from them. And then see how much of that advice can  you turn into practice, but also how many of these relationships can you really nurture  to the point where they turn into potential buyers. Hiten: Yep. Totally agree. Steli: Awesome. Alright, I think that’s it from us for this episode. If you have more  questions on how to do the … How to successfully sell to the enterprise as  a startup, or if you have used cases or advice or strategies you’ve used successfully  … We say this a lot, and we’ll never stop saying it. Hiten: Yep. Steli: We love to hear from you. Hiten: Please. Steli: Send us an email, steli@ , hnshah@gmail.com, or ping us on Twitter, any of the  many other channels that we’re out there on the web. We always love to hear  from you, and we’ll hear you very soon. This is it for this episode. Hiten: Yep. The post 236: How Startups Should Go After Enterprise Customers appeared first on The Startup Chat with Steli & Hiten.

In today’s episode of the Startup Chat, Steli and Hiten discuss the current trend of applying personal growth hacks to business issues. As they’ll highlight, it’s critical to step back and analyze whether there are any fundamental issues with your business model before thinking about the applying any growth hacks. If you don’t, any growth hacks or other incremental solutions you try will only result in failure. Tune in to hear Steli and Hiten discuss when it’s appropriate to applying growth hacks. Time Stamped Show Notes: 00:42 – Details of the software company that sought out Steli for advice 00:42 – Looking for growth hacks to convert free trials to paid customers 01:32 – Cash-flow positive company that has built an open source software tool 02:02 – Looking to make a SAAS offering where people can enjoy a free trial 02:49 – Out of 40,000 unique website visitors, 2,000 create a free trial and less than 10 upgrade to a paid account 03:16 – Product costs just $15 per month 03:40 – Client was considering sending out drip emails and building an onboarding step by step guide to improve conversion 04:15 – Steli advised client against these. A good conversion rate is needed before considering optimization 04:40 – Client is not targeting the right audience yet 05:20 – If the numbers are really bad, it means that there is something fundamentally wrong with the business 05:47 – 1990 people who took up the free trial did not find value in the product 06:35 – Brand is known for selling open source software tools which makes it all the more difficult to convince people to pay up 07:41 – Poor conversion rates indicates a value mismatch 07:58 – Talk to customers and understand their mindset  in order to improve conversion rates 08:15 – An open source brand makes it difficult to control the kind of traffic driven to the website 10:15 – Can really poor conversion rates be improved by better onboarding? 10:50 – Even a poor product will sell well if your product is really unique and addresses a market need 11:20 – Close.io was successful in spite of not having a reporting functionality 12:16 – Founders tend to work on optimization techniques rather than concentrating on product fundamentals 13:05 – Are you setting your business up for success? 13:11 – “There is no growth hack that will save you if you don’t understand why your customers are signing up for your product” 13:30 – Need to build a product that people love, and that has value outside of any growth hack 16:30 – Looking at other successful companies, people often believe that it is the growth hacks like drip emails and a great website which are driving their success. However, it is the product that matters 18:32 – “It is easy to look at parts of your business that are not that great yet and think that is the reason for zero success” 19:36 – Fundamental issues can’t be fixed through incremental solutions 19:50 – The route to fix your business issues is through your customers 20:11 – End of today’s episode 3 Key Points: If you are staring at really poor conversion rates, it is likely that there is a fundamental issue with your business. Do not attempt to fix fundamental issues through incremental solutions such as sending out drip emails or improving your website. Understanding customer mindset is critical if you wish to improve your conversion rates. Steli Efti: Hey everybody, this is Steli Efti Hiten Shah: And this is Hiten Shah. Steli Efti: In today’s episode we wanna talk about situations, as a startup or as a founder,  where growth hacks can’t save you. Here’s why I wanted to talk to you about  this. I was in a phone call recently with a founder and basically he wanted  advice on a number of experiments, and growth hacks that he was planning to run,  in order to improve his conversion numbers from free trials to paid customers. He sent  me a little like overview presentation of his company and in one of the slides  he had a bunch of KPI’s, and just taking a glance at that slide made  me give him advice that I realized I’ve given to many people before, and I  felt like a lot of people need to hear this, so I wanted to discuss  this with you. I’m gonna give you a little bit of context on this company  and this founder, and then the numbers I looked at, and what I told him,  and then I am dying to hear what you have to say about this. Hiten Shah: Perfect. Steli Efti: So, here’s the deal. This is a company that’s been around for a few years.  They are cash-flow positive, they have built a software tool that’s basically open source, and  they’re making most of their money … I mean, all of their money really by  doing really large skill implementations at enterprise companies for that software. Kind of like, customizations  and all kind of stuff for these big companies that want to use their software.  Then for the past two years, two to three years, they wanted to start a  self service part of the business where people … You know, typical SaaS, where people  could just come sign up for a free trial, play around with the product and  then just put in their credit card, and use it. The hope was that, that  business would be a significant part of the business or eventually be much bigger than  the enterprise stuff that they do because it seems like the enterprise stuff they do  is nice, but they can only service one or two of these big customers a  year, and it takes all of the attention, all of the energy to do. They’ve  been trying this SaaS thing for like two years or so, and here’s the slide that I look at right. I look at the slide where he shows me their  numbers and it’s basically close to 40,000 units that come to their website. Out of  those, around 2000 per month create a free trial and out of the 2000 people that create a free trial a month, less than ten upgrade to a paid account,  and out of those who become paying accounts, they have a 5% customer return rate  every month. This is a product that costs the customer … I don’t know, some  obscurely small amount of money, like $25 to $50 a month or something. So, those  were the numbers and then he showed me a very long list. Like, he was  planning the next six months to put in a lot of effort and lot of  energy, and make a really big push to improve his conversion numbers. He had ideas  like, “Let’s start sending drip emails for free trial users. Let’s have a really good  onboarding experience.” So like, kind of one of these onboarding step-by-step guides that he wanted  to build and just a bunch of like … 20 different ideas from things he  wanted to do to take these over 2000 trials that would come in and convert  them at a much better rate than the less than 10. When I looked at  those conversion numbers, I basically told him that my advice was to do none of  these fucking hacks, none of these conversion optimization things ’cause he doesn’t have a conversion  rate that’s good enough to even try to optimize it, and that when something that  looks as bad out of 2000, six pay, and out of the six that pay,  5% of them return every month. Although it’s a product that costs very little money.  My hunch is that, he doesn’t know his audience yet, he doesn’t know his customer  yet. He’s not focused and targeted on that customer base. The traffic he’s getting is  probably all over the place and trying to optimize … Even if he did all  these things and he doubled his conversion rate from six people upgraded to 12, it’s still horrible and it won’t really work, and doubling is really tough to do usually.  So, he’s at one of these points where I’ve seen many entrepreneurs being this, where  they do something that’s not working and their solution is to put in all these  extra energy and effort to do AP testing, growth hacks, and this, and that, and  the other, but what they really should do, in my opinion, is step back and  look at it. If the numbers are so bad, it typically points that something more  fundamental is wrong. Maybe the product market fit is not there, maybe you don’t understand  your customer or your audience, your marketing is totally off. Like, something really fundamental is really is going wrong and you can’t fix it by writing more Drip emails or  something like that. There’s a long discussion that came after that, but I want to  pause here to just get your reaction on this. Hiten Shah: Yeah, I agree with you. To me it starts with math, where it’s like, Okay,  10 people pay, 2000 signed up. There’s 1990 people that didn’t end up getting the  value that they signed up for most likely and so they didn’t convert or they  signed up, and never actually did anything meaningful with the product. Now, because of the  context you shared, I think there’s a big implication and a reason why he might  be having this. You basically said that his product’s been open source and then they  added a self service sort of model. Steli Efti: Yup. Hiten Shah: Right? Steli Efti: Yup. Hiten Shah: Well, so the implication is … Whatever the brand is, everyone … Not everyone, but  the brand is known for the open source product. Open source is essentially free. Steli Efti: Yup. Hiten Shah: You don’t have to pay for the cut of it. You obviously have to pay  for engineers implementing it and all that stuff, but you’re not paying the company anything.  So, the brand is known for something different than what the self service is intended  to do, which is, make people try it and then buy it. Right? Steli Efti: Right. Hiten Shah: This actually points to the fact that they’ve got a great brand if they have  that much traffic, I would say. Right? Maybe they’re doing some stuff that is generating  a lot of traffic that’s irrelevant, that’s a different story and just pushing people to  sign up. Maybe, they got some growth hacks, if you want to call it that.  They got that 5% sign up rate, which actually isn’t like the best either. Steli Efti: Yeah. Hiten Shah: So, there is lot there … I just wanted to make sure everyone has the  context ’cause when you can be contextual like this, it’s actually pretty easy to identify  the real problems. So, I agree with you. A lot of people when it comes to growth hacks would say “Oh you need to make sure you have a great  product” and stuff like that. I think this is even … I would say it  a different way kind of related to what you’re saying, which is like, there’s a  value miss match, somewhere. Right? The company probably doesn’t know what people are signing up  for and then what to deliver to them in order for them to buy. So  this is a, talk to customers, talk to potential customers. Understand what the mindset is  when they’re signing up, is the first thing I would do ’cause there’s so many,  literally 99% of them, that are not signing up. I mean paying, you know? Steli Efti: Yeah, so I couldn’t agree more with you. I think that when I briefly looked  at what their traffic sources were, it was all SEO, it was basically keyword phrases  like, “Open source, XYZ.” I don’t want to give away what they did because if  you type in open source in the category of software, you’ll find them kind of  in the top results. I was just wondering, the type of people that type in  … Let’s say somebody typed into, just take my category, open source CRM, right? The  question is, what kind of people would type in open source CRM? Maybe there’s a  lot of developers that just want to play around with it, maybe it’s students. It’s  not clear. What is the audience that is coming through the search terms and is  the audience really who they built their tool for. When people sign up for trial,  is it because they want to play around with the developers. Do they just want  to get a sense for how the tool looks like before they download the source  code or is it because they’re legitimate companies and teams that would want to use  the software that they’re selling, or the service software that they are offering? So, they  have like very little control over the kind of traffic that would get in. The  open source part of their brand, I think, plays a major role in all of  this. We can even talk about like the … They’re doing both this like enterprise  business, as well as wanting to grow and scale up the SaaS part. This is  in and of itself an interesting situation that I’ve been encountering more and more, where  start ups want to do kind of both things. They want to work with big enterprise clients, while they also want to grow like the self serve part of the  business. They encounter some of the challenges and implications in this, but maybe that is  for a separate episode. I think the core thing that stood out to me, that  sometimes … When the basic numbers look that bad, a lot of times the reaction  I found was after that is like, “Oh yeah, it’s really bad because our onboarding  is really bad. Yeah, we don’t try to do anything to try to convert people  from free trial to paid. We don’t send Drip emails, we don’t call them. If  we only put a little bit more effort this number would be significantly better.” Not  to say that can’t be true, but if the number is so bad organically, that’s  typically a bad sign. Something is not at a healthy place. Right? I bring up  the example often times with , when we launched … I often tell people that  if your product sucks and people still want to buy it, that’s a really good  sign that you might have product market fit, versus trying to think that you have  to have the perfect product for people to buy, because that’s never going to be  the case. That’s kind of the source of excuse for founders to be like, “Yeah,  we’re not doing well, but we’re missing all these critical features”. That’s very rarely true  if you have something unique that has a product market. When we launched didn’t have  reporting. Right? It seems kind of critical for us here to have reporting functionality and  we didn’t. The productivity gains that were kind of one the main value propositions, were  big enough that people would buy and we would grow every single month. Of course  our customers would start eventually complaining that they really wanted a reporting, but they loved  so many things about the product that they bought despite our shortcomings, and then they  would beg us every day to please fix these. That is a very strong sign  that you have something special and you have something that has product market fit, versus  saying, “We launched, nobody’s buying our CRM, but of course we need better reporting. We  don’t have a mobile app and we don’t have real Drip email campaigns to convert people, and we don’t have this, and we don’t have that.” When you start, you’re  not gonna have most shit. There’s going to be a million things you’re not doing,  or you’re not doing well and a lot of founders take these as excuses for  why they’re getting such poor results. That just makes them go down a path with  the build more and more things, and they work on all these optimizations, and improvements.  “Oh, we need a better website. Oh, we need a Blog. Oh, we need drip  emails. Oh, we need better this, better that.” Then like a year or two, or  three into it, still they don’t have anything because they never truly looked at the  fundamental thing that was the issue, Maybe it’s positioning, maybe it’s not getting … In  this case, I think, it’s not understanding who their customer should be on the self  service side. I find that’s a critical mistake that so many founders figure out one  way or another, that I talked to. Hiten Shah: Yeah. I’m a little speechless because we started off talking about this as a growth  hacking and growth hacks. To me it’s absurd because this is not about growth hacking  or growth hacks, it’s really just about, “Are you setting your business up for success?”  What I mean by that is, there’s no growth hack that is going to save  you when you don’t actually understand your customers and why they’re signing up for your  product, and why they might even buy. It feels like people who just go after  the growth hacks and want to like implement all these optimizations, are totally missing the  point. The point is that you’re building a product that people love and that product  needs to have its own value in itself, outside of any growth hacks, and if  you don’t understand the customer, you’re not going to be able to create that product.  To me, I think what people have forgotten because there’s so much talk about these  big conversion optimization and growth hacking, and all of the things, which are actually all  fine and dandy, but what they have forgotten is that even those principles, those tactics,  they’re rooted in learning. They’re rooted in the customer or the user, or the visitor  to a website, and what you know about them, and how to make their experience  better. That’s what this stuff was meant for. Instead, people are just looking at these  blog posts about these tactics, and just all trying to blindly apply them to their  businesses because they think that’s what is going to solve their sort of a business  problem. When really, a business problem is solved by improving part of the business, not  by growth hacking it. So, I don’t know. I’m kind of speechless that we’re still  running into this problem continuously ’cause … I get why. I get that there’s a  lot of founders out there that aren’t business people. There’s a lot of founders out  there that have learned from the internet. The internet has been full of growth hacks  in terms of creating online businesses, at least for the last … However long. But  man, this is just a fundamental business problem. Like, if you had coffee shop, and  a lot of that people came in, let’s say 2000 of them a month, and  only ten people bought. You wouldn’t have a coffee shop any longer. Right? Steli Efti: Yeah. Hiten Shah: So, this is like … Let’s take analogy of the real world and then we  sound absurd in software like, “Oh yeah. Yeah, it’s cool.” Steli Efti: Yeah. Hiten Shah: Not many people are coming in, only ten people are buying. We’re going to like,  manipulate them in order to buy. Steli Efti: Oh no, you don’t know what we’re going to do. Hiten Shah: So, we’re going to make them pay to come in. Steli Efti: You know what is our problem? That our toilets are not really as nice and  upgraded and you know what else? We should have more fliers and we should have  a loyalty … You know what we need for our coffee shop? A loyalty program,  because we need to get people back into the store. Hiten Shah: Yeah, the coffee shop across the street has a loyalty program. That’s why they’re always  packed, right? Steli Efti: Exactly. Hiten Shah: And people are buying. No, it’s actually your coffee. Your coffee sucks dude. Steli Efti: Yeah. Hiten Shah: Yeah. I’m leaving you with that analogy ’cause I think when we start putting it  into that framing, you get away from the growth hacks and you realize that the  real problem is your business, your core business, your product. Right? More than anything else.  Before you grow, you need to figure that out and I know … I thought  this was common wisdom at this point, that you’ve got to have a product that  people care about and that people love before you try to grow it, but I  think that people are just trying to solve these problems in the sort of, “I’m  just going to tactically try to think of all these hacks or implement these hacks  other people have tried,” and then it’s worked for them. The reason these things worked  for them is because their product doesn’t suck. Steli Efti: Yeah, and I think that it’s so easy to look at other companies, and feel  like they have built this huge monster in terms of, their product is really feature  rich, they have really a beautiful optimized website, they have all these different marketing properties.  They do all of this advanced stuff in terms of converting people, from customized messaging,  Drip emails, all that stuff. You look at all that and when you start, you  don’t have any of this shit in version one, hopefully in your MVP. Then when  your numbers are bad I think that a lot of people take the easier route  to just go, “Well of course our current version never sounded good because our website  really sucks and we don’t send Drip emails,” but that’s not really the reason. Drip  emails and all this stuff should help improve something that’s already kind of working. It’s  not going to make something work that isn’t working at all right now. If people  … To make this more extreme. If you had to even make this more extreme.  If you had like 10,000 people sign up for a trial, and zero upgrade to  pay, Drip emails are not gonna save you. Like, it’s not working. Now, if you  have a good conversion and you are not sending Drip emails, and you write a  really good Drip email campaign, it will give it a lift, it will increase it  incrementally, but it will not fundamentally fix your issues. Having a better website, like again,  to bring up as a good example for all the things we did wrong and  we still succeeded with it because we had product market fit. We launched a website  that took us like three hours to put together, just a single landing page, and  for four years we hadn’t changed the fucking website. Right, and it was not a great website, but it was just working well enough because our value proposition, and understanding  of your customer was good enough. So, I feel like a lot of founders just- So, yeah, I bring up as an example often, but when we launched, it took  us two, three hours to put together a single landing page for to launch. For  3 1/2 years, we didn’t change the website at all. It was not that great  of a website, but the reason why it still worked, and converted really well for  us, is that we understood our customer, and we had a really great product, and  product market fit. So really, I think what I want to round up the episode with … I love your real life example. I think this is such a great  thing, framework, that I’ll use now in many situations, where it’s when you have a  difficult problem as a tech company, or a company to be like, “If I ran  a coffee shop or a pizzeria”- Hiten Shah: Yeah, what would happen- Steli Efti: And three out of … How would I look at this? That’s pretty brilliant. But  I think my last parting words here is that often times, I think it’s easy  to look at parts of your product or business that are not that great yet,  and think that’s the reason why you see zero success or why things don’t work  at all. But, that is really rarely the case. A perfect website will improve things  incrementally. Better drip emails will improve things incrementally. Whatever kind of growth hacks to get  more traffic should improve things incrementally. But, the fundamentals need to be there for you  to scale something. When the fundamentals aren’t there, when … Most people that come decide not to buy your coffee or the people that buy your coffee never want to  return to buy another coffee, there’s something fundamentally wrong with your product and you understanding  who you’re serving and what your customers need. And no nicer toilet, or no better  like, lighting of the storefront … None of that stuff will really fundamentally fix things.  So, I think that that’s my main message to people. And it doesn’t really matter  if you’re in the early stages, later stages. We all have situations with something fundamentally  doesn’t work. And we try to fix it by working with incremental things, and tactics  versus taking a few steps back and ask ourselves, “Why isn’t this working? Like, what’s  fundamentally going on here? What’s wrong?” And trying to fix that. And the route to fix these things always, always, always, as we’ve said so many times on this podcast,  is your customers. You don’t understand your customers well enough. You’ve lost touch with your  customers. You don’t have the right insight when it comes to serving your customers. That’s  always the place to go back to really understand what to do next in your  business. Hiten Shah: Completely agree. Steli Efti: Also, from us for this episode. We’ll hear you soon. Hiten Shah: Later. The post 235: When Growth Hacks Can’t Save You appeared first on The Startup Chat with Steli & Hiten.

In today’s episode, Steli and Hiten discuss the various nuances of creating an effective webinar. An effective webinar successfully engages prospects and converts them into customers. Alternatively, webinars can also be used to generate revenue for your business. Tune-in to discover the importance of having engaging and relevant content for the success of your webinar and how you can monetize your webinars. Time Stamped Show Notes: 00:27 –The purpose of a webinars is to convert prospects into customers; once webinars start contributing revenue, they can also be turned into a product 0:57 – Poorly designed webinars are unsuccessful in pushing clients down the sales funnel 2:13 – According to Hiten, a webinar serves three primary purposes: 02:16 – Lead Generation 02:20 – For retaining and helping customers 02:28 – Paid webinars which lead to growth in revenue 02:52 – Steli’s organization is involved in three different types of webinars: 03:01 – The first one is focused on converting users to customers 03:05 – The second type is focused on growing small, early customers to bigger ones 03:18 – Partner webinar with the intent of generating leads and driving people down the marketing funnel 04:03 – Tips and tricks for doing lead-generating webinars 04:14 – Think of the webinar like a blog post and give it a strong description and title which will result in higher sign-ups 05:01 – Concentrate on create engaging content, win over the audience in the first 10 minutes 07:17 – Include a conversion point like an e-book or presentation at the end of the webinar which will let you engage with the prospect 08:36 – “Less you sell something, better the webinar goes” 09:42 – Empathize with the audience to engage them better, instead of hard selling your product straight away 10:32 – Recommended webinar structure: Problem, Education and finally, your offering 11:16 – Some tips and tricks to sustain client interest 11:16 –  Intersperse images within the webinar to increase the entertainment value and to sustain client interest 13:13 – Conducting a poll is a another way to engage prospects 13:58 – Highlight the critical points of a webinar 14:48 – How can you make money from a webinar? 15:29 – Webinars made with the intention of making money are structured as “Workshops” or “Sessions” 16:42 – Select a relevant topic that succeeds in solving the various challenges faced by people 16:58 – Structure it like a class with assigned homework and provide a framework 19:31 – Marketing webinars are effective in making money 19:40 – Get in touch with Hiten or Steli to further discuss this topic 3 Key Points: The purpose of webinars are threefold: lead generation, customer retention and revenue generation. Create a compelling title and ensure you have high quality content to drive customers to your webinar. The first 10 minutes should succeed in holding the interest of your prospect. Structure your webinar like a workshop or a class if you intend to make money off of it. Steli Efti: Hey everybody, this is Steli Efti Hiten Shah: And this is Hiten Shah Steli Efti: And in today’s episode of The Startup Chat, we want to talk about how to  give effective webinars. Webinars that will convert prospects into customers or even how to start  a business giving webinars that generate revenue for you, so you can start growing that  revenue and eventually might take that revenue, that customer base and turn it into a  product, which is something we see a lot today. Webinars is, I think, the big  topic, and the reason I wanted to talk to you about this is because a  lot of companies do webinars. A lot of start-ups give webinars, and many, many, many  of them suck, and they suck for a variety of reasons. Many of them, I  don’t think, are as intentionally designed. A lot of startups just do webinars or people  do webinars because other people and other people and other startups do them, but they  don’t have really a good place in their overall funnel. They have not really thought  well about who to get into their webinar and how to design that webinar in  a way that’s super engaging and will convert to the next step. I know that  with Product Habits, you’ve been offering and have done some webinars series recently, so I  thought that you also will have some kind of recent incites to share. Sound good? Hiten Shah: Yeah, I’ve got lots to say on the topic. We went from doing one webinar  a month at Kissmetrics years ago to doing one a week. These are webinars for  marketing. We also are doing webinars for customers and teaching them things. We’re doing that  and now I’m doing workshops and basically they’re four weeks to eight weeks long. The  first one was four, the next one has been eight. I’m actually at week six  this week, and week seven and eight are coming up and we’re done. Yeah so  super excited to talk about this. I think there’s three different purposes just to break  it out. One would be webinars for getting leads. Two would be webinars for retaining, engaging, helping customers or users that you already have. Three would be webinars that are  for pay, which means people pay you and your delivery mechanism as a webinar. Does  that sound about right in terms of categories? Steli Efti: I think so yeah, absolutely. So let’s go through them one by one maybe and  just highlight some things to avoid and best practices or tips on how to make  them work really well. Hiten Shah: Yeah, first of all do you guys do any webinars right now? Steli Efti: Yes, we do webinars. We do two types of webinars. One is we do two  webinars a week. Those are focused on our customers, so we do one series of  webinars that are kind of like chrome trial users to help them convert to customers,  and then we do a webinar every week for our customers to … You know  … Small, early customers to help them grow and really master the product. So these  are two webinars we do weekly, and then we do a number of partner webinars  where usually what happens is that some other sales company or other company will promote  and announce and set up the webinar and I’ll come in as a guest speaker.  But then we’ll share … I’ll do a big part of the content and then  we use that more as a lead-gen to get people to do trials or give  us their email address and become part of a marketing funnel. So these are the  two types of webinars that we do. Hiten Shah: Awesome … Cool. You want to jump into some best practices at least the marketing  ones, the lead-gen ones? Steli Efti: Yeah, let’s do that. Hiten Shah: Cool. Yeah, go ahead what do you got? Steli Efti: (Laugh) I was just going to say you go first. (Laugh) Hiten Shah: I’m happy to go first. Steli Efti: No, no I’m joking, no I’m going to go first. So how to do lead-gen  webinars. Well, I think that someone … My biggest tip I think is to think  of a webinar very similar to the way you would think about a blog post,  and just understand that you have to give it a really strong title, right? You  can have the best content in the world that you’re going to present in the  webinar. If you don’t capture people’s attention, and if the title and the description of  the webinar is not super strong, people will not sign up and RSVP for it.  They won’t show up, so it doesn’t really matter what you do in the actual  live webinars. You have to spend a lot more time again on the promotion of  the webinar on the way that you pitch it, which is the element of pitch  is just the title of the webinar. So that’s one big tip. Don’t have a  boring title and then amazing content in the webinar. Make sure that the title’s really really strong and engaging, capturing people’s imagination. That’s one. The other thing that I’ll give  is that within the webinar, one of the biggest problems that I peek into that  other companies and other people do, is that they’re boring, right? They are like sixty  minutes of somebody going through slides. Especially painful is the first ten minutes of the  webinar is the worst content usually. First ten minutes of a lot of webinars are  just like “Welcome everybody, and thank-you” and “Let me tell you my background” in the  worst and most boring way possible. “I worked at this company and I worked at  that company, then I got a Bachelors Degree in this university” and whatever else. Then  “Let me tell you about our company. We’ve been founded in 1997”. Its just like  oh my God, I’m dying here, right?. I came into the webinar to learn something.  I came into the webinar to ask questions, to direct. I have to listen to  ten minutes of super irrelevant information. It’s like watching advertisement before being able to watch  the show. The biggest pet peeve I have with webinars is if you want to convert an audience, you’re going to either win them or lose them in the first  few minutes. Just like with a normal video, make the beginning engaging. Ask the audience  a question, easy questions like “Hey, everybody who’s joining us live, just put in the  chat where in the world you’re joining us from.” Right? That alone is such a  simple thing but it can be super fun and engaging. Then interact with people, welcome  them, “Hey Bob, hey Joe. I see, wow, we’ve got two … Three hundred people  already and growing, joining the webinar. This is super exciting. We’ve got people from all  around the world. I see Dublin, I see LA, I see New York. This is  exciting, so here’s what you’re going to learn from this webinar. These top three things,  at the end you’re going to know how to do them, and I’m going to  share these secrets, and we’re going to give you plenty of time to ask questions”,  which is another tip I’ll give. Make sure you have a good portion of Q&A  because that’s what makes the webinar really attractive and fun. Make sure the first five  minutes are engaging, you’ve attracted the audience, it’s fun, high energy, and make sure you  tell them what they’re going to get out of it, and make sure that you  do a webinar that has a good amount of interaction with the audience. My last  tip on this is that, make sure you have a strong call to action or  conversion point, right? Don’t just give them all of this content and then say good-bye.  Offer something that will in turn give you their email or give them some kind  of a promo that if they sign up now for a trial they get some  kind of a benefit, they get a special deal or discount. They get an ebook  or whitepaper for free. Have some kind of call to action at the end of  the webinar where you offer them a good deal, or something compelling. A lot of  times if you have an ebook or whitepaper, or something else that goes even deeper  into the topic that you just discussed in the webinar that’s super compelling, then people  will want to have that. Your templates, even just your presentation, “Hey, send me your  email I’ll give you the slides that I just used in the webinar”. Even if  it’s as simple as that, give people a reason to give you their email or  further engage with you. Have a real conversion point at the end of the webinar.  I think that those are all the things that are so simple to do I  think, but I still see 90% of all the webinar’s that I join and peek  into, they don’t do this stuff. Therefore, they don’t have webinars that I don’t think  are really working that well in order to generate leads for them, and prospects. Hiten Shah: Yeah, I love those tips. I think because you shared a lot of the great  tips that people really miss out on, I’m going to talk a little bit about  structure. Steli Efti: Hmm Hiten Shah: So for a marketing webinar, what I’ve found actually for all of the webinars, what  I’ve found to be a great structure and a great set of principles is remembering  that the less you sell something the better the webinar goes. Speaking less about your  solution until there’s a point where people are really sold on this being right for them. I think it’s really important. What I mean by that is I love to  start with engagement. I think that’s a really great tip that you gave, which is  like get them to engage, get them to put in some things in the chat  because otherwise it is boring and people are just sitting there watching and probably doing  something else. But if you start making them engage in different ways, and entertain them,  say you know, I know Stella you’re great at saying really shocking things. I tend  to be better at just saying funny things, usually about myself. People listening here already  know us well enough around audio at least. You guys know that it’s about personality  and things like that. I think the opener is really important. From there though, what  I see a lot of people do is go straight to what they’re selling or  what their product is, or what service they’re providing, or something like that. What I  actually prefer is really pulling someone in into you empathizing with them by describing the  problem they have, or reminding them of why they’re here today. That kind of stuff  instead of jumping straight into, “Here’s how I’m going to make your life better”, because  you have to set, in my experience, you have to keep the engagement up. They  way you do that is by talking to them about their problem, talking to them  about scenarios they might be in today compared to just telling them how to solve  a problem they have. If they haven’t really bought into the fact that you understand  their problem, giving them a solution doesn’t really help you or them. I really would  emphasize that because I find that a lot of webinars and things I attend don’t  really speak to the problem, and then they don’t really educate people. To me it’s  like problem, education, and then actually whatever you’re offering. That tends to be a pretty  good workflow. I’ve also found that if you can give them something engaging about a  third of the way to half way in, you can keep their attention. For example,  an entertaining gift, or a really bad joke, or a really great joke, or something  that’s really valuable to them, like a really important tip. The reaosn I say that  is sometimes you can even preempt the webinar cadence so that people are waiting for  that, and I think that’s when these things get really good and entertaining. Remember when  you’re doing these webinars, you have peoples attention for a half hour to an hour,  sometimes more. You’re whole job is number one, entertain them. Make this an experience, and  that’s like what even like the most boring thing, like financial software or whatever, you  can make really entertaining if you just take the time and effort to do that.  That’s why you’ll see a lot of presentations I have in the middle of it,  or to break things up I have an image with some statement, or I have  a picture of my kids doing something silly that’s really relevant to the topic, or  relevant to what I’m going to say. Hiten Shah: So what I was saying is that’s why a lot of my presentations will have  a lot of imagery to break things up and a lot of text. Just because  when you’re educating people it’s hard not to have a lot of text and diagrams  and all that. But it’s much more compelling when you can break it out with  imagery as well as like I’ll put pictures of my kids that are relevant or  something really entertaining or some meme. Memes are really good, gifs are really good because  otherwise it’s just a boring presentation. It’s just a boring webinar and nobody wants to  be in something that boring. Steli Efti: Yeah. I love those tips, I love the structure. Really I think that my last  point as we’re moving onto how to make money with webinars, which is a super  interesting topic. I think is that when you give a webinar, you have to be more engaging and more entertaining than if you gave a talk. Because when you give  a talk, yeah people can pull out their phone and look but there’s an audience,  they’re all sharing the experience in the same space and time. But when you do  a webinar, its on my laptop, on my computer, it’s in my browser. There’s a  very high chance that a big portion of the people that attend the webinar, if  you become boring, they’ll just check into the email or open their Twitter or Facebook.  And they’ll be doing other things along the way. My tip there is, of course,  be funny, be engaging, be entertaining, be passionate. Do the things that Heaton said of,  in the middle of it bring up a meme or make a joke, do something  that is capturing the imagination. Or show a picture, a funny picture of you or  your children or something because it will make them want to click back if they’re  not in the webinar and see it. You can ask lots of questions and ask  for feedback. You know, “Hey everybody that has ever …” .You know people ask for  polls sometimes in the middle of the webinar. “Okay let me quickly poll the audience.  Who had any of these three problems that I just asked? Just go in and  answer real quick and I’ll share the results with everybody.” Boom. “57% of everybody in  this webinar had specific problem #1. Nobody had problem #2, that’s interesting. Alright so let’s  double down on #1.” So people can answer, chat, poll in there’s things happening interactively  in the webinar that I might want to peek back. Then my last tip on  this is: If you have something that is incredibly important and crucial in the webinar,  that you’re saying something that stands out, say it. Don’t just assume everybody will get  it. Say the words “And this is the most important thing, I will cover. This  is the most important slide or this is the most important fact that I can  share with you in this webinar.” And then count to 3, and then share it.  Because that will ensure that if people are not paying attention or they’re distracted, that  they will go, “Oh shit, this is the most important thing, let me pay attention  to it.” So you increase your chances that people will pay attention when you really  need them to. You kind of highlight where you want them to give you all  their undivided attention. Obviously, and hopefully you give webinars that are so awesome and kick  ass that they do it from start to end but it is a good practice  to do that. So enough about that, let’s quickly talk about webinars to make money.  Because this is something I have … I’ve charged for webinars before but maybe I’ve  done this once or twice. It was not really for reasons of making money with  it, more for reasons of making sure that people show up. But with Product Habits,  you have done … You’re doing currently a webinar series where you are teaching people.  I’ll let you explain it in detail. But these are … The last webinar series  that people were able to get into had super limited seats and for $2,500 or  something like that, right for a serious amount of money. Tell me, how do you  structure webinars to generate revenue? What’s your framework? What’s your thinking? What’s your experience with  that? Hiten Shah: Yeah so, I would say that if your goal is to do a webinar and  make money on it, it’s not really just a webinar. We call it a workshop  and there’s sessions and the sessions are basically each a webinar. So I did this  a while ago, earlier this year, and it was 4 weeks and it was $500  for a seat at the webinar. And then learned a lot from doing that on  how to teach people and my topic was product development. Specifically, on how to do  product prioritization the right way. So I have frameworks and things that I’ve used over  the years and I was sharing those. And then recently, in the last 8 weeks  or so, I launched another workshop that is actually 8 weeks long and I charged  $1,600 per seat and $3,200 for teams of up to 5 people. We have a  limited amount of seats and again it’s 8 sessions and each of them is done  through Zoom, the video conferencing software. Each of them is basically a webinar, they are  about 90 minutes each. We are taking people through a whole process in the 8 weeks. Like there’s step-by-step, there’s homework, there’s all that kind of stuff. I think the  biggest key there is to make sure that the topic that you’re doing the webinar  on, the workshop on, is very important to people and its one that solves their  biggest challenge in the category you’re going after. That’s what I’ve learned. In terms of the cadence and structure, it’s actually very similar except that it’s a lot more like  a class. So we’re educating people, that’s the key. And giving them homework and giving  them frameworks and having them work through them and build their processes using our framework. Steli Efti: Killer. So how do you price this? How do you … Obviously you don’t start  with nothing, no audience, no reputation, no brand, no nothing and you just put out  a webinar for $10,000 and think you’re going to be making money with it. How  do you … Obviously its good if you’ve already built up an audience, I would  assume it’s actually mandatory almost if or unless you don’t use somebody else’s audience to  do this. But then how did you guys come up with or experiment on pricing  the webinar and any kind of other tips in terms of limiting the amount of  seats, and any of that? I know your webinar is super kind of intense in  terms of what kind of audience you wanted and what kind of knowledge and value  you wanted them to get out of it. But if I wanted to give some webinars and I’m wondering how to price them, what is your advice on that? Hiten Shah: Yeah, you definitely need an audience. I think without an audience you can’t do any  of this. And the truth is, our webinars are more about learning how to teach  people this topic and making our material really good and they are less so about  making money. And so the way we price them isn’t to make money, the way  we price them is to get enough attendees so we can learn. And this time  we tried the team option and it worked out super well actually. A lot of  people signed up for the team option and so we learned a bunch about how  this material works for a team, not just an individual coming in and needing to  take it to their team separately. So for us everything is about learning and it  wasn’t really about making money. That being said, we made money on it. But my  time is worth a lot more than the money we made on this. And so  the whole goal here is to keep learning and then figure out what the best  medium, what the best method is to educate people about product development. And eventually it  won’t be a workshop, it’ll be more like a video course or something like that  if we continue doing it. That’s the general idea. It isn’t … Ours, in this  case, wasn’t to make money. The ones that I think that are the best to  make money, if you’re just talking about a single webinar, it’s actually when you are  doing it for marketing and you’re doing it to sell something else, not the webinar.  Sell a software or something like that. I’ve found those kind of webinars to be  really, really effective once you get good at them. This kind of webinar is more  to learn how to build something else. Steli Efti: Love it, cool. Alright so I think that this is going to be it for  this episode. If you are out there, you’re giving webinars or you’re thinking about it  and you want more tips or you have more questions, you can always get in touch with us [inaudible 00:08:20]@gmail.com, steli@close.io, you can find us on Twitter and many, many  other place online if you just look. So we’re always excited and happy to hear  from you. Until then, we’ll hear you very soon. Hiten Shah: See you. The post 234: How to Use Webinars to Grow Your Startup appeared first on The Startup Chat with Steli & Hiten.

In today’s episode, Steli and Hiten discuss “FOMO” or fear of missing out which is a common experience for a lot of entrepreneurs and founders. This fear tends to crop up, especially in people who are struggling in their businesses rather than people who have thriving businesses. Instead of concentrating on other people’s success, entrepreneurs should focus on their own work and customers. Tune-in to find out how to deal with this fear by engaging in self-introspection and why being comfortable in your own skin is your ultimate defense. Time Stamped Show Notes: 00:27 – Today’s topic is about “FOMO” or “Fear of missing out” 00:45 – Do not get distracted by new, shiny startups on the block, and instead concentrate on your work and customers 02:03 –  Steli shares a personal anecdote about a time when he came across a couple of founders who had made a killing by trading in cryptocurrencies 02:16 – They were very enthusiastic about it and kept talking about it 02:32 – This affected a lot of other people on the boat and they felt as though they were missing out 02:59 – Steli also started feeling bad; he felt he missed out investing in cryptocurrencies 03:13 – “Somebody is always getting richer than you—that is not a tragedy” 03:23 – Avoid making investments without a solid strategy in place; don’t invest for the sole reason of missing out 05:40 – This “fear of missing out” is evident as lot of startups attempt to imitate their more successful counterparts 06:00 – Hiten’s 3 year old daughter recently told her mother, “You do you, I do me” 06:50 – “FOMO” is especially relevant when businesses are buying and selling stuff 08:43 – Loss of passion, discipline and drive are common reasons for having “FOMO”—the other likely reason is undergoing a prolonged business struggle 09:12 – Rationalize your fears before making investment decisions 10:36 – Once you become more comfortable in your skin, the fear of missing out tends to dissipate 12:10 – Steli remembers an experiment carried out on rats to illustrate his point 12:10 – A lonely rat in a cage got addicted to heroin-infused water 12:40 – Once other rats were introduced into the cage, the rats were less likely to try the heroin-infused water since they were busy socializing 12:55 – Parallels can be drawn to humans 13:16 – “If you are totally fulfilled with your life and your business, if you are proud of what you are doing and your business is doing well, you are probably not going to be hit by the fear of missing out” 15:42 – End of today’s episode 3 Key Points: Beware and do not get distracted by the new shiny startup—focus on your customers and your work. Rationalize and assess whether an investment decision is right for you; don’t just jump because you’re blindly following others. Be comfortable in your own skin to avoid falling prey to “FOMO”. Steli Efti: Hey, everybody, this is Steli Efti. Hiten Shah: This is Hiten Shah. Steli Efti: Today what we’re going to talk about is FOMO in startup so fear of missing  out when you’re a founder or you’re a startup. I think we’ve talked about this  hidden in the variety of ways in past episodes but never really directly and with  the focus on. A lot of the advice that we give can be summarized at,  don’t worry about what everybody else is doing, focus on your customer, focus on the  problems they have. Have customer insight and intimacy and that’s always going to lead you  in the right direction and at the end of the day to success. Don’t be  distracted by the shiny fad, by what’s fashionable, by what everybody else is doing, whatever  the recent article you read about this new startup, the unicorn startup that exploded. About  the recent growth hacks, some online marketing guru’s sharing with you. Don’t get distracted by  all these noise, focus on what truly matters, which is your customer. We’ve never talked  about like how powerful fear of missing out is and how it plays and messes  with founders minds and how to use it sometimes maybe even in the marketing to  attract customers. I will tell you one recent situation and why I wanted to talk  about this. I thought about this many times but just recently I was on a  boat and we were sailing and island hopping in the Mediterranean. I was with 10  other founders from all around the world and we had a great time, we had  great discussions and everything. One funny thing that happened was that there were two of  these founders that had made a shit ton of money in the past few months  investing in crypto currencies. Especially in one crypto currency. Just an insane amount of return  and they were very enthusiastic about it obviously. They kept talking about it; they couldn’t  shut up about it. They were very passionate. That passion, that excitement of having made  a ton of money recently with an investment and with something that is even exciting,  you could tell how it was affecting a lot of other people on the boat.  Obviously, a lot of people had already invested a little bit in crypto currencies or  knew about it or thought about investing. You could tell by how just over the  days, more and more people started leaning in and getting that sensation of, “Shit, maybe  I’m missing out on something. Maybe everybody is getting rich with this thing and I’m  just stupid not putting a lot of money in there as well.” I even caught  myself in a moment thinking, “Am I stupid?” I hadn’t invested in this specific crypto  currency. “Am I stupid? Should I do something about this?” Then I remembered this quote.  This is one of my favorite Charlie Munger quotes, which is, somebody is always getting  richer quicker than you, that’s not a tragedy. To me, I was like, okay, do  I really care about this? Am I really knowledgeable about this? If I invested money  on this right now, what will be the core reason I’m doing it? The only  reason why I would be doing it is greed and fear of missing out. Being  afraid that everybody else is on some kind of a train that I’m missing out.  I was like; I’m getting rich in so many different ways, I don’t have to  be part of everything. This is something I’m not that knowledgeable about; I’m not that  passionate about. I don’t have any real strategy or real like insight or principle that  would lead me to invest other than just being a follower, being a sheep, being somebody that’s just afraid that somebody else is getting rich. I was like, fuck this;  I don’t care. Then, I noticed funny enough and the last day a bunch of  guys on the boat, I assumed quietly had decided they would invest. One person was  publicly announcing it and was setting up his account and trying to purchase a large  amount of this crypto currency. The internet was not that good on the boat and  for another number of other random factors, he was not able to invest. Literally, it  was like, fuck this; I’m traveling today, back home tomorrow I will invest. Literally, the  next day, this crypto currency had like a massive crash and the price had crashed.  I don’t know; it was just a funny … Not to say it’s not a  good investment or not going to work out or whatever but it was just a funny display of just human nature and a bunch of founders being like, “Shit, we  should also make a ton of money with this.” Then one person actually trying to  buy a large sum of this and potentially he could’ve lost a lot of money  within a day just because his timing was off. Today, if you look at that  currency up which is a month later, it’s still significantly lower priced than it would’ve  been on that day. We still would’ve lost a lot of money. I don’t know;  it was just a put of display of like even very smart people getting trapped  into this emotion that everybody else has figured something out and they haven’t and then  you want to just jump into it and act. You don’t have any real strategy,  it’s not really the right thing for you to do but you’re just afraid you’re  missing out on something. A lot of startups are doing this with their marketing strategies,  with their sales strategies, with fundraising. My god, all our competitors have raised millions of  dollars; we need to raise millions of dollars. There’s no rhyme or reason to it.  I don’t know, I thought this was a fascinating topic and I just wanted to  talk about fear of missing out and how it affects startups and founders. Hiten Shah: You know what’s funny? I have a daughter; she is three-years-old. One day, she’s talking  to my wife. My daughter’s name is Arya, my wife’s name is Emmy. Arya goes  to Emmy and says, “You do you, I do me.” This is my three-year-old daughter  throwing down a lesson to her mother that got recorded on video that I still  send to people. I just send to people randomly. They’re like, “What?” I’m like, “Yeah,  this is the lesson I have for you today.” I will send to you Steli. Steli Efti: Yeah, send it to me. Hiten Shah: It hasn’t been appropriate until now but seriously; I think she sums up FOMO in  a nutshell right there, right? Steli Efti: Yeah. Hiten Shah: Charlie Munger, super awesome business person and strategist. I don’t believe he has ever started  a business besides Berkshire. Which is interesting when you think of their mental model. I’m  not sure if I’m right about that I’m pretty sure. Steli Efti: I think so. Hiten Shah: He has a perspective. Yeah, something I think about because you want to think about  someone else’s perspective. I think his perspective is a lot more of like looking at  something and kind of evaluating it which is really me but I digress the FOMO.  I think he’s got a very good perspective and FOMO, that was my whole point because he is buying and selling things basically. In their case, they don’t sell really  so they just buy and make more money out of it and buy more because  they made more money. Those folks are super interesting from an investment strategists sort of  standpoint and FOMO is so common when you’re buying and selling compared to when you’re  growing your own business. It’s because you could’ve bought something and all over sudden, a year later, you could’ve bought it. Now it’s worth 10 times what it was, what’s  that, right? Steli Efti: Yeah. Hiten Shah: Same problem with investors like venture capitalist, angel investors, seed investors and same problem with humans. It’s not a problem but I think it goes back to even the grass  is greener. It’s so funny like I was texting with a friend this morning recently  before this call-in. I had to text her and say the grass is greener. We  were actually talking about something completely different; we were actually talking about relationships. That was interesting too. There’s a confluence of a bunch of stuff that kind of gives me  my quick rant on it after years. Which is, I don’t know; there are so  many opportunities in the world today, so many things you could be doing, so many  new things coming up that you should be doing maybe, according to you. Getting over  this FOMO is so important. I will say one statement just to see where we  go with it. The statement I would say is like, you have FOMO because you  have either lost passion, drive, motivation, discipline for whatever you’re doing. You never had it  or you’re struggling but it’s still there. What I will do, when you feel that  FOMO in any way especially if you’re a founder or a business person working in  your own business, think about it. Where is it coming from? Why do you even  feel the need to think about something else that is so unrelated to what you’re  doing? Is it because you think there’s an opportunity to link it to what you’re  doing okay? Is it because there are one of those three things I just mentioned  that’s causing you to think about something else when you should be thinking about your  own business? You know the whole; you do you, I do me kind of comes  to mind. Why are you doing them so to speak or thinking about what they’re  doing? Usually, it has a they in it. It’s like; other people are investing in Bitcoin and crypto currency, shouldn’t I be? Well, maybe but why are you even thinking  about that if you’ve got this whole thing over here and that you’re probably working  on? Maybe it’s not doing well; maybe it’s doing well, maybe you just want to  be distracted. Maybe you’re an investor and you really do to consider it. If you’re  that person then FOMO is what drives you big time. What drives you to analyze  these things and make decisions around investments. That’s kind of I got for you on  which is a bunch of little random lessons around it and things that I think  human beings struggle with constantly. Steli Efti: I love that. That perspective. The way that I always viewed, they way that I  kind of check myself before I wreck myself with all these stuff is that when  I have that emotion, which is not often anymore. It used to be all consuming  and this is maybe also an interesting thing. I feel like as you mature as  a person, as you get more self-aware and more self-accepting, you have less and less  FOMO in life. As you know who you truly are, you’re not confused about that  or you’re not constantly thinking you’re not enough and you should be somebody else. As  you are more okay with who you are, I think it lessens that emotion that  you’re missing out on life or missing out on what everybody else is doing or  orienting your life externally versus internally. When I do have that emotion, which I had  on the boat, which was interesting to me. Where at one point I was like,  am I the idiot? Am I just missing out on a shit ton of money,  easy money right in front of me? As I had that question, that emotion, I always get that feeling of if I get action on this, what is the core  reason for it? The core reason like in my articulation, my mind was core reason  is that somebody else is doing it. I didn’t discover this; I didn’t have any original thinking that led me to the conclusion that I have to invest in this.  I’m just following somebody else based on fear of missing out. I’m not going to  do that. I have done it a number of times in the past in my  life and it’s never working out well. The thing that you described, I didn’t even  think about that. The thing that you described of like if you’re completely happy of  where you are, you probably don’t have FOMO. You’re totally passionate about what you’re doing,  how your company is doing. You’re not looking at other companies and wishing you were  there and you will do what they would do and all of that. I don’t  know if it’s appropriate or not but it reminded me of this rat experiment. You  know the experiments they made with rats on getting them addicted to heroin? Did you  hear about that, did you read that? Hiten Shah: Yeah, I did. Steli Efti: Right. This is a popular thing that was described a lot times where they took  rats and they had like a little bit of water and some water that’s some  heroin in there or something like that in there. The rat will drink a little  bit of water and then would try the water with heroin in it. Then it  would get totally addicted and only drink the heroin water. Once they extended the cage  and they had other rats and they had like a little playing ground and all kinds of things, the social life of the rat. The rat again, will go try  the normal water and try the heroin water and then not take the heroin water  again. The conclusion, the moral of the story is that if a rat has a  healthy social life and is busy and there’s things to do, it will not get  as easily addicted to drugs as a rat that’s lonely and doesn’t have a social  life doesn’t have an active life. You could easily draw the parallels to humans on  this. It kind of reminds of that like if you’re totally fulfilled with your life  and with your business, if you’re proud of what you’re doing, if your business is  doing well, you’re probably not going to be hit by fear of missing out as  much as if you’re running a business that’s not doing well. Which is a really  good point. I know a lot of people that have startups that are struggling and  they’re not succeeding as much as they should. This people are much harder hit on  fear of missing out than founders that have startups that are doing well for obvious  reasons. These founders totally have lots of doubt and stress and constantly thinking others know  something they don’t know. They feel maybe guilty of it; they feel jealous. That state  of mind obviously is much easier to be influenced by having constant fear of missing  out and looking over the fence to the greener grass. Then if you’re kind of  happy with your lawn, happy with your house, happy with your life. Taking stock at  how much fear of missing out is driving you as a reverse engineer method to  ask yourself how happy you are with your life or how happy you are with your business and what you’re doing. It’s kind of an interesting take that I hadn’t  taken before. Hiten Shah: Yeah. I think it’s one of the most valuable ones that I found for myself.  It just really flips the script on this whole FOMO thing in a way it’s  like you focus on yourself on what’s either missing or what’s causing you to think  about something that is not necessarily the best for you. Yeah, I think for me  like that really sums up the strategy of what you do when you’re dealing with  FOMO. It’s like go and get introspective and figure out why the FOMO. All of  us deal with it; it comes on time to time. Usually, it has to do  with what’s missing in your life or what you think is missing right now. Steli Efti: I love it. All right, we’re going to wrap up the episode on this tip.  Hey, if you guys like the startup chat and we know you do. Lots of  people giving us feedback and we always love your feedback. If you have something to say nice or not so nice if you have a struggle that we haven’t addressed  yet, just send us an Email, steli@closeio, hnshah@gmail.com. Always love to hear from you. Do  us a favor if you haven’t yet, go to iTunes and give us a review  and a rating. The more ratings and reviews, the more we pop up when people  search for startup podcast and the bigger the community it gets. We highly appreciate that  and that’s it from us for this episode. Hiten Shah: Later. The post 233: Fear of Missing Out Among Startup Founders appeared first on The Startup Chat with Steli & Hiten.

In today’s episode, Steli and Hiten discuss the hesitation people have in asking for help—in both their personal as well as professional lives. This hesitation can be attributed to one’s ego and sometimes, a belief that asking for help is actually bothering other people. Tune-in to find out how asking for help gives you the opportunity to get your problems off your chest, can help you save valuable time, and forge stronger personal and professional relationships. Time Stamped Show Notes: 00:27 – Today’s episode explores the hesitation that people have in asking for help in their personal and professional lives 00:45 – Hiten has struggled asking for help in his personal life, but is shameless in asking for help when it comes to business 02:03 – The recurring theme is that people hesitate to ask for help from others 03:50 – Businesses that tend to give updates regularly show they are more self-aware of their business 04:34 – Some businesses never ask for help, some always ask for help, and the third category thinks through and asks for help when appropriate 05:12 – Updates can be provided outside the team or within the team 05:33 – Internal updates create transparency, context and help stimulate ideas 05:54 – Updates can be used to highlight issues that need to be resolved immediately 06:29 – Updates are a great way to ask for help, especially for people who have difficulty doing so 06:50 – How do you learn when you need to ask for help? 07:22 – Can you come with the answer via a simple Google search? 07:55 – You ask for help when you know someone can help you 08:13 – Non-contextual questions are difficult to answer 08:49 – Learn to listen to the people who are helping you 09:28 – Become self-aware: reflect on the times in the past where you could have received help, but hesitated to ask for it 09:37 – Avoid asking mindless and thoughtless questions 10:10 – Draw from your past and zero in on the framework for asking for help 13:02 – Ego issues prevent individuals from relying on others 14:50 – Hiten shares that in the past, he did not want to bother people and hence, he avoided asking for their help 15:10 – How do you deal with difficult people in your workplace? 15:31 – Ask people to help you 16:10 – Steli avoided asking for help due to arrogance 16:38 – He was used to solving other people’s problems 17:03 – Steli received feedback and was told he needed to share his problems with his friends and family 17:45 – Talking to someone might not help you solve a problem, but it will help you get it “out of your system” 18:18 – Not asking for help results in a one way, selfish relationship 20:01 – Today’s Tip: “Do whatever you can to ask for help. People actually want to help you” 21:01 – End of today’s episode 3 Key Points: Company updates create a climate of discussing and resolving issues as a team. Beware of your ego—it may hinder you from getting the help that you need. Sharing with others WILL benefit you and people WANT to help—you may not get an answer to your problem, but you’ll receive support just through the act of sharing. Steli: Hey everyone, this is Steli Efti. Hiten: And this is Hiten Shah, and in today’s episode of “The StartUp Chat”,  we’re going to talk about how to ask for help. And I’m going to jump  right in because I would say that until very recently maybe a few years ago,  I don’t think I was very good at asking other people for help. I felt  like I needed to do everything on my own, so I’m dropping that in the beginning, just to kick it off. Steli: Yeah, I’m going to agree with you on this, but funny enough, I think that  … So I think for me, I was not good at asking for help in  personal matters right? I think this is something where we’re actually fairly similar. One of  many reasons why we like each other so much, when it came to my personal  life, family, friends, and that type of a thing, I think till recently, I really  struggled to ask for help. I always dealt with my issues on my own without  talking about them with other people even with friends, family or anybody else. In business,  funny enough, I have never had an issue asking for help and I’ve always been  I think pretty shameless in asking for what I needed, or asking for what I  thought was needed to move something forward, especially when I could sense that I on  my own am progressing too slow on this, so instead of just trying to keep  on that pace, I’ll probably need to go out and ask for help. But the  main reason why I wanted to talk about this, besides us being bad at it  in some scenarios of life, or learning about it, or learning to become better at  it, and we’ll uncover why we’re doing this and how it has affected things. It’s  a recurring theme that I see with people that work on my team, that founders  that I’ve known that are seeking advice from me, it’s like, I see this problem  in many, many start ups where people are being stuck for way too long and  they could just move a lot faster and problems could be solved a lot better  if they just reached out and asked for help, within the company, outside of the  company instead of just banging their heads against the door just trying to look for  … Banging their heads against the wall realizing I’m a little stuck and what I  need is help, and I need to ask for help from others. And so I  think I posted this on Facebook, on Twitter a few days ago, and it got  a fairly big response, I was like, oh this is something that seems to be  … Like asking for help seems to be a challenge for many people, but it  also seems to be the solution to a lot of problems, so the two of  us should probably talk about this. Before we go into the personal part which is  going to be fascinating I think, and we can uncover in the second part, let  me ask you, have you seen asking for help as an issue within the teams  that you’ve been working or within start up teams that you’ve been advising? Have you also seen this is a pattern when things are too slow, or when people get  stuck that if they just learned more for help or earlier for help, things can  get moving much faster, problems could be solved when they’re much smaller? Hiten: Yeah, I’ve noticed that … People are really good … Too good at it, and  they’ll think to themselves, and some people just don’t do it. So I think there’s  a break out of three that I’ve seen. I’ve also seen something really valuable that  I see companies do in that ones that give, at least ones where I’m an  investor and an advisor, or even ones where I have opted in or they’ve asked  me if I want their updates, and I always say yes, because I’m super happy  to help and hear about their business and how they’re doing, the ones that give  updates regularly, like once a month at least tend to be much more self aware  and conscious of what’s going on in their business and when to ask for help.  That’s just been a singular pattern if I were to pick one, that’s very related  to asking questions. Because when they give updates, people have contacts, and they generally ask questions within those updates. Steli: I love that, so let me go back real quick because the connection was working  in and out, you said that there’s people that never ask for help, even if  they could use it, there’s people who ask for help about everything so they just  don’t tend to think about themselves that much, which is also annoying. And where you  want to be is in the golden middle right, where you ask for help at  the appropriate time to the appropriate people. And then you talked about start ups in  general as a whole, the start ups that are good at this are ones that  give regular updates which is a fascinating thing. So let’s just jump into that. So one strategy or tactic especially for the leadership part … But this is … A  founder can give an update to investors and advisors, but somebody within the team can  also give regular updates to the team about progress of something, if that’s not already  part of the way the company is running things, nothing stops you from giving regular  updates to the team about your work or your teams work. And those updates both  create transparency, they create context, and they will be stimulating for people to chime in  and offer help or ideas or suggestions, but also in those updates, I’ve seen this,  I’ve noticed this with a lot of founder updates to advisors and investors, they’ll say  here’s the updates on all the important major KPI’s or things that we’re currently doing.  Here’s the one ask we have, or here’s the biggest problem we’re struggling with, [inaudible  00:06:06] the area where we need help. They’ll actually call it out at the end  of the update, this is the one thing we would want and appreciate help with,  or get feedback on or whatever. So give a bunch of updates and allow anybody  to chime in and offer things on their own, but also have a very specific  ask at times at the end of the update, is that a structure that you’ve  noticed as well? Hiten: Yeah absolutely. Yeah, when the updates are consistent, they have a format, and they have  context and then there’s a question at the end, or a set of them around  the biggest challenges or whatever, that’s definitely a critical key format I’ve seen that works.  Especially if you’re not good at asking questions, it forces you to give people an  update and ask for help. Steli: I love it. When we talk about the individual, maybe within a team asking for  help, we talked about people who do too much, people that do not at all,  these two extremes of the spectrum being bad, of wanting to be in the middle,  how do you do that? When do you know … How do you learn when  to ask for help? Hiten: When you need help, Steli? I’m just messing around. Steli: Let’s keep on that train of thought. Hiten: Okay. How do you know you need help? Steli: How do I know I need help? Hiten: Oh man, after you’ve googled it and didn’t get an answer. Steli: Let me google this for you though [inaudible 00:07:40]- Hiten: Dude, seriously, the amount of times I can just google something for somebody and give  them an answer is ridiculous. That being said, they appreciate it when I google it  for them, and I don’t usually tell them I’m googling it. So I want to  be straight up and honest about it, that being said, it is the number one  thing that I’ve noticed, which is some people can just google it, and they’re asking  a lot of questions that are google-able, by me or them, but they might not  be good at googling, that’s totally fair. That being said, you ask a question when  you know someone can help you is another way to look at it. And what I mean by that is the framework I would use is like, you’re stuck to  a point where you can’t help yourself, you’re stuck to a point where like, whatever  you get from somebody else is going to be valuable to you. So typically I  don’t like the non contextual questions that we’ve talked about this a lot. What I  mean by that is if you just ask me a question of like how should  I do marketing, I can’t really help you. There’s a million ways you can do  it, if you tell me what your problem is, describe it, and then say I  need help figuring out what the best way to move forward is based on my  situation, that’s way more impactful, that’s a better question. So usually it’s when you’re just  stuck and you’re struggling, and you can’t google it, would be my really blunt answer. Steli: I love that, so there’s a number of things in there, and I would encourage  people to listen to prior episodes that we recorded on both how to ask questions,  and also how as a founder to learn to listen, because we need to know  how to ask good questions and how to listen if you want to ask effectively  for help, but I think that … I think that a lot of times …  I think that the best part in terms of learning when to ask for help  is that you need to understand who you are, it comes back to self awareness,  and you just need to answer the question to yourself, when … If I think  about the past, when were the times where I could really have used help and  why didn’t I ask for it? And what’s the best way for me to receive  help? Some people, as you said, some people constantly ask for help and they don’t  receive that good of a help, because they ask too early too often, to the  wrong people. They ask people that have zero context too early, when they have not  enough informational learning themselves, so the type of answers they’re getting are answers they could  have gotten if they googled it, or if they just spent a few minutes themselves  researching or trying to think about something. But all they do is the create frustrations  apparently with the people that they’re asking for help because they’re mindless and thoughtless about  it. So just think about in the past, when were the times when you received  the best help? What was the timing of it? Was it proactive, before you attacked  a really big project that you knew very little of, did you just go okay,  let me get better research and then let me ask these three people that know  me really well, and that I know have experience in this, what kind of mistakes  to avoid, how to put together a plan in a way and proactively make sure  that I don’t waste a ton of time learning and making basic mistakes that other  people can help me avoid. Or was it, am I more the type of person  that the best type of help I’ve received in the past was when I really  pushed hard, I tried on my own, I tackled a thing from all kinds of  angles, and then at the time when I … And usually, that gets me to  a point where I find solutions and I move them forward, but eventually in rare times, I get stuck, and when I get stuck, I’m just spinning my wheels and  days and weeks go by, and I’m not really progressing or finding new solutions, and  it took me two months of being stuck until I asked for help, and sought  outside advice, and maybe okay, I can find some kind of a framework where when  I’m stuck for longer than two weeks, that’s a signal for me to go and  ask for help. So I would give the advice to people that to go back  in time and ask themselves what have been some successful examples of me asking for  help, where it really made a big difference, and what was the framework, the architecture  of when I … The timing, the person, or the circumstances, and how I asked  for help, and how I responded to the help offered, versus the times where I  was not that successful, and then I think the frame … What really makes a  big difference, timing is a big question, is it very early, is it in the  middle, or is at the very end or very late, the person you’re asking for  help, who is this person? How much context do they have on you, on what  you’re doing, what you’ve tried in the past, how much experience do they have in  this particular problem, how long ago did they solve this type of problem? What kind  of relationship do they have with you? And then what type of help are you  asking for? Is it more like, hey let me tell you, here’s what my problem  is, here’s the solutions I’ve tried, here’s the results I’ve gotten, and I’m not sure what to do next, just more advice or is asking for help, are you asking  for more practical help, hey, I can’t do this, can you take a portion of  my work and do it, because I can’t get it done myself, or can you  do all the work, or like, is it more of a … When you ask  for help, is it more getting advice and feedback or are you asking people to  get involved and take weight off your shoulder or take work off your plate? Because  the type of help you are asking is also going to influence when you want to do it, and who you want to do it with. But I feel like  a lot of people, the number one mistake that people make when it comes to  not asking for help, this is the person that I’m focusing on in this episode  on my end, versus the person that asks for too much help, is that they  get stuck in a framework where they want to disappear with a certain project or  problem, and then they want to reappear and show up as a big hero that’s  solved this big problem, they fixed it, they came up … It’s like an ego  driven thing, they just want to figure it all out on their own, and come  and show everybody, or they just hate to be reliant on others, and they hate  to have a feeling of vulnerability, a feeling of helplessness or feeling of relying on  others, so out of these reasons, they’re not asking for help, not because they’re not  the right time but because they’re eager, or their personality doesn’t allow them for …  and I think … It’s always a recipe for disaster, it’s always a recipe for  making mistakes or going down the route that’s way too slow instead of accelerating your  pace. If you’re a human being, you will need help, you will need other people,  if you’re trying to accomplish anything big, you’ll need a team of other people, so  learning to ask for help, learning to ask for help at the right time or  the right people, is just an incredibly important skill that is super undervalued and I  think not talked about enough. So anyways, so those are just some generic thoughts more  on the professional side of things. Before we move onto … I want to do  a little bit of like, peeking into why you and I had an issue asking  for help people, or you specifically Hiten, when did you realize that and have you  made a change and if so, why? And how? Hiten: Yeah, I made a change, I think I just didn’t want to rely on anyone  else, and I thought that if I asked them, I’m bothering them. That was my  general mindset, it wasn’t just, oh I can do it myself, I never really felt  like that, it was more so, I don’t want to bother somebody else, what I  realized and I learned and this actually started with something one of my friends Kate told me, she’s Kate Mats on Twitter, and she’s a good friend of mine, and  we were talking a few years ago, and she was basically saying that … She  was telling me one of her strategies on dealing with difficult people, and that just  means, someone you think doesn’t like you, or you’re not working well together with that  person, and she basically said, ask them to help you. I’m like really? She’s like,  yeah, ask them to help you, and your relationship will very quickly improve as a  result. And I was like no way, and then I started trying that a little  bit, and it started working, and honestly that was the big click for me, that  got me to start changing my mindset around asking people for help, it wasn’t something  you would think of normally, it was more so I wanted to improve my relationships,  and she gave me that tip, and it works extremely well, especially in a work  environment. Steli: Yeah, I love that. So big shout out to her. Hiten: Yeah. Steli: I think that for me on the personal side of things, I think that for  many years … I think that … The reason why I didn’t want to ask  for help was probably a mix of some level of arrogance of thinking I already  know how to solve this problem, I’m just not ready to solve it, so just  talking to somebody else, pretending I’m not sure what to do about this is a  waste of time. And some type of … I think some sense of feeling of  strength, I don’t know, maybe not wanting to be that vulnerable, always assuming the role  of being the person that people come to with their problems, and being so much  in that role that I didn’t know how to step out of that role and  be the person that goes to people to ask for help. There was a time,  I think we talked about this privately once, I’m not sure if we talked about  this on the podcast, but there was a time where I was like, maybe I should … My friends and family would basically give me feedback and tell me you  should also open up more, you never … You always talk about my problems, you  never … We’ve been friends for twenty years, I’ve never heard you share a problem with me, and I heard that again, and again, and again, until I was like,  all right, I’m really just going to start telling people my problems, but I did  it from a … I’m going to prove myself right that this is reallY that  useful, so I would tell them about my problems, people would just offer solutions and  I’d be like, this is not really helping but whatever, I did it. But I’ve  come to realize as I’ve been experimenting with this, with asking for help in my  private life, I’ve come to realize that I don’t necessarily have to ask for help  to get an answer or a solution, but what does help me is to talk  about my problems with somebody I trust and just be able to air it out,  or articulate it, or communicate it, again, not really to solve it or to find  a solution but just to be able to just get it out of my system  in the sense that it’s not just me thinking about this thing, but it’s me  being able to talk to somebody about the thing. And also that my relationships are  better because it’s a two way street, if I always just come to my problems  with you, I always come to you to ask for help and you never ask  me for help, it’s a very one sided relationship, I’m basically robbing the other side  from a chance to be helpful as well, so being … Helping somebody that has  helped you many times, that is actually a very empowering thing that makes me feel  better if I can help you, if you’ve helped me many times, make me feel  better about our relationship being a give and take versus just a selfish relationship that  I have with you. So I’ve noticed that my friendships and certain relationships have gotten  stronger and better, and I’ve noticed that if I come into the conversation in my  private life, not asking for help, not in the sense that … Not necessarily in  the sense of just getting a solution but just being able to articulate a problem  I have, and that oftentimes they will be able to help me, even just by  listening at times, or often times even been just offering a good solution or jumping  in and taking something off my plate, and so I don’t know, I’ve been just  struggling with this, I’ve been for a long time, and for me, the [inaudible 00:20:12]  where I tried to get better, it was the people who were giving me feedback,  that they’ve been friends of mine for many years and that I never open up  in that way, and ask them for help, and I’ve just experimented and I think  in the beginning I did it in a way to prove myself right, so it  was not useful. But I’ve gotten more and more open minded and now I think  I do ask for a lot more help in my personal life as well. Anyways,  do we have a tip at the end of this episode? Hiten: Yeah, just do whatever you can to ask for help. People actually want to help  you, I think that’s what both of us learned in different ways that if you  ask for help, people will actually help you, and it’s not a sign of weakness  or something where you’re not going to get value from it, even if you’re like  Steli and I, and like to solve our own problems, you’ll still have somebody to  talk to, maybe you’ll get there faster on the solution or something like that. So  I would say that just open up and the biggest tip in whatever way, whatever  convinces you to do it. For example, for me, like I said, my friend Kate convinced me just because it was a relationship building thing and it sounds like even  in your case, that whole idea of robbing people, of helping you because you’ve helped  them so much is a pretty interesting concept. Steli: Awesome, I think that’s it, there’s nothing really more to add. Ask yourself, have I  been asking for help, and do I need to improve on this? And then just  open up a little bit more, it can make a huge difference. I think this  it from us for this episode. Hiten: Later. The post 232: How to Ask for Help in Business & Life appeared first on The Startup Chat with Steli & Hiten.

In today’s episode, Steli and Hiten talk about how industrial espionage, or corporate terrorism, is plaguing the industry in a big way. Competitors often resort to employing dirty tactics to extract valuable information, such as one’s product roadmap and/or funding. Steli and Hiten talk about the various steps that you can take to avoid falling prey to such tactics. At the same time, they caution organizations against focusing too much on this issue. If it draws your focus away from your customers and product, then it’s taking too much of your energy and time. Time Stamped Show Notes: 00:05 – Today’s episode is about competitor’s resorting to industrial espionage and ways you can deal with this situation 00:42 – How can you avoid leaking information to your competitors? 01:40 – Steli used to think that it’s better to be laser-focused on your product and NOT on your competitors 01:49 – Steli has realigned his thinking and now feels that understanding your competitors will give you better insight into your customers 02:30 – A competitor may pretend to be VP of innovation of a big company and call up a board member in order to extract information 03:17 – They may attempt to extract information such as the product roadmap or what’s happening with your fundraising 03:35 – A gullible board member could give out a ton of information 04:14 – Hiten says that people play dirty and extract confidential information that will stunt the growth of their competitors 04:43 – Hiten says that companies are often faced with a moral dilemma when competitors resort to dirty tactics 05:03 – There is NO right answer 05:08 – What you do depends on your beliefs regarding what you feel you need to do to stay in the market 05:28 – Executives using questionable tactics has become commonplace 05:48 – Steli talks about the dubious tactics used by Uber against Lyft 06:09 – Where do you draw a line? 06:14 – The legal line is not negotiable, but the ethical line is, unfortunately, quite negotiable 06:47 – Organizations tends to get flustered when a competitor is extracting information 07:00 – Steli questions whether competitors will get a huge edge if they manage to extract information via questionable means 07:34 – Avoid overreacting 07:55 – Some wise defense measures for companies looking to prevent theft of information 08:07 – Mutual NDA signed before a demo call 08:14 – Redirect people to a LinkedIn page to see who is viewing your profile 08:37– People with the same demo and in the same city can join together to exchange strategies 10:16 – Are your competitors doing anything to extract information? 10:51 – What do you do to get some nice competition? 11:22 – How you behave in the marketplace is a demonstration of your values 12:27 – Hiten suggests updating customers if the competitor’s behavior goes overboard 14:15 – Some factors to consider before going public with information about a client resorting to corporate espionage 14:38 – Talking to the competitor’s investors would be another option 17:00 – “Play to win and not just play to play” 18:28 – Do not let your competitor’s tactics shift your focus from your product and your customers 20:05 – Steli’s parting advice is to always think carefully before reacting to a competitor’s strategy 21:04 – End of today’s episode 3 Key Points: Beware, some people don’t mind playing dirty and will extract confidential information if they believe it will stunt your growth. What you do to stay competitive in the market is a reflection of your beliefs and ethics. Think through each reaction carefully before you respond to your competitor’s tactics. Steli Efti: Hey, everybody, this is Steli Efti. Hiten Shah: This is Hiten Shah. Today, on the Startup Chat, we’re going to talk about competitors.  In this context, what we received is we received an email from a gentleman, and  I’m sure Steli has it pulled up, and he was just asking about competitors and  wanted us to do an episode on it. I don’t think we’ve ever really done  a single episode on competitors, I’m guessing this might be one of a few that  we end up doing. In this context, it’s really about competitors and how you avoid  leaking information to them, would be how I describe it, but Steli, maybe you have  more color on where you want to go with it. Steli Efti: Yeah. This gentleman, basically, this founder, he is in a highly competitive market, and basically  was asking us for advice on how to deal with some of the strategies that  their competitors are using to extract more information from them, and at the same time  giving us a window into some of the strategies that they use to “fuck with  their competitors” or to gain information from them. I think both, for you and I,  it was surprising to what lengths these companies go to mess with each other. We’ve  talked about in episode 24 about competitors in a very broad sense, and I think  both of us … I tended to be much more on the side of don’t  worry so much about them, just focus, laser-in on your customers, and we recently talked  about this and you gave me a new perspective on it, which was, yes, your  customers and their problems should always be your number one priorities but your competitors can  be a way to understand your customers better. It can be a way for you  to learn more and gain more insights into your customers. We talked a little bit  about that in a recent episode, but this is going into a completely different direction.  All right, so one of the problems he was describing, and then we can go  through some of the things that he was encountering, we can just react to that.  But as we mentioned before, lots and lots of competitors in the space that they’re  in … A recent trick he was describing as one of the challenges they have, a recent trick that they’ve been hit with, is that people or the competitors would  call in and basically tell them … Or, represent themselves as the VP of innovation  of one of the big three US department stores, that they’re trying to get as  a customer, and then they would be calling their board members. That’s [inaudible 00:02:52] as  well. Usually, you just call the sales people, the sales departments to get some information,  but in this case the competitor … Somebody would call, would represent themselves as the  VP of innovation from one of the big companies that they would want to have  as a customer and actually call a board member, telling them they’re trying to reach  out to the leadership team and learn more about the company before they decide to  make a purchasing decision and they would want just a 10, 15 minute call to  get more information about the roadmap, the product roadmap, where the company is going, fund  raising, all these kind of things. He was telling us that he would pick up  on this as being a competitive strategy and bullshit, but one of the board members  didn’t, and that person, that board member apparently gave them a ton of information that  they weren’t happy about giving. Let’s just pause there because there’s lot more here, but  that’s pretty aggressive. I’ve never heard anything like this before. I don’t know about you. Hiten Shah: I’ve heard all sorts of stories, this is pretty aggressive. I mean, faking that you’re  somebody calling an investor or a board member, and then trying to learn more about  the company … It just feels slimy in a lot of ways because there’s multiple  lies there. Yeah, I’ve heard stuff like that and I’ve seen people do stuff like  that. I think people get dirty, would be what comes to mind for me when  they just think that there’s information they want to get on a competitor and really  believe that that’s important to them. Then, people get dirty stopping competitors from growing in  the market as well. On one hand, I’m like, “Oh, this is bad. You shouldn’t  do that.” On the other hand, I’m like, ” What do you do if a  competitor is doing that and you’re not, and somehow they’re gaining information that helps them  succeed in the market?” This ends up being more moral, ethical, and all this dilemmas,  or you can take a whole different way, in the opposite way, and just say  this is just business. I don’t actually believe there’s a right answer. I think it  has a lot more to do with what do you believe as a business owner  that you think you need to do in order to win in the market? That  point of view, that perspective, is really what shapes what you’re willing to do or  not do. Steli Efti: That’s such a powerful statement. I think recently, funny enough, there’s been a lot of  news about companies acting not ethically, executives of companies doing things that are very questionable,  even in totally different spaces. But even if we go back a few months ago,  there was a lot of just competitive stuff that companies would, which is calling competitors  or … With Uber and Lyft, I think, having certain teams at Uber in certain  cities, pretending they want a ride and then canceling just to create all kinds of  confusion and problems, all kids of what you can call unethical behavior in order to  be a pain in the ass to your competitors or crush your competitors or be  able to advance your business. It’s an interesting question where you draw the line. Now,  a very personal one, to a certain extent … There’s the legal line, and that’s  not negotiable, but then there’s the ethical line, and that’s very much negotiable apparently, depending  on who you are and what company culture you have. One thing that’s interesting with  competitors having information about you is always the question, what is the true consequence of  this? A lot of times I feel like … And I’m not above this, a  lot of times I feel like people tend to just freak out when they find  out that a competitor is messing with information, either signing up for a trial and playing with the product or getting information by calling the sales team, in this case  a board member. But when you step back, I’m not always convinced that whatever information  they acquired is really that consequential in the end of the day. What is changing  now that they know we’re going to build X, Y, Z? Of course, I know  that there’s some company that, especially that are so competitor, where if you know what  they’re building next, that could be a make or break type of a situation, but  I’m not sure if that’s really true for every company. I would go on and  say that I think it’s the exception where this type of information really makes that  big of a difference. The question is, how much do you react to this? Because  reacting can also be a way to take your eye off the ball. If you  overreact … It’s almost like competitive terrorism where you do a little bit of something,  but the overreaction is really the negative consequence. Much more so than the harm you  made by your actions. Let’s just go through some some of the things that this  founder shared with us in terms of their defense measures to deal with this. Here’s  some of the things that they are planning to put in place. Mutual NDA signed  by two parties at the same organization before demo call. They send a link to  how they compare to their competitors but really redirects to a LinkedIn page so it  shows them who’s viewing that profile. He’s saying, “This is amazing rat trap because everyone  wants to see how a competitor represent them.” Competitor IP’s redirect to random websites and LinkedIn profiles. Customers in the same city joins in person for demo to share strategy.  This is a [inaudible 00:08:59] with this validation. This is regardless of having a competitor  or not. This is a good strategy if you have large deals you’re trying to  close, bring a customer with you. That a dope strategy. Then, he says, the wild  goose chase roadmap, a 10 minute call to confuse the hell out of the competitive  team for days. Not exactly sure what this means. I assume it means that you  call the competitor or you give the competitor a false information about your road map,  but I’m not 100% certain. Hiten Shah: I think that’s what it means. Steli Efti: Okay. These are some of the … What is this? This is five bullet points  you shared with … Their defense measures. Even using language like defense measures is interesting  to me. It’s unusual to me, and it shows how competitive that space is that  they’re not just fighting for the customer, they’re fighting each other actively every day with  competitive intelligence and misinformation and all that stuff. What do you think about that? When  you read the email, you were on the … I forward you the original email,  I think. When you look at that, what’s your response? What would be your advice  to this founder of this company in terms of how to deal with their competitors? Hiten Shah: Yeah. I mean, I wonder how justified his actions and his point of view are,  and that’s where I start in thinking, is there a better use of his time  than worrying about what a competitor does or what a competitor is trying to do? The other questions are … Well, there’s a whole, as they say, tit for tat,  so the question is, are they doing anything to extract information about their competitor in  the way that the competitor is or in other ways? Because I would say that  this goes back into game theory, it goes back into just the idea that you’re  either defensive or offensive, or you’re at war. All these analogies to which I, myself,  I think in some markets they’re all applicable, in others there’s a lot of what  they call coop-petition or frenemies, and all those concepts. To me, having experienced really nice  competition, nice meaning they would hide things from us out of respect, not out of  spite. Then, I’ve had other competitors that would go even further than what this gentleman  is describing to get intelligence, or more importantly, sabotage sales deals for us, so I  see both sides of it. My personal opinion of when I … In running a  business is to be more perceived as the nice company. At the same time, I  just feel at the end of day, I feel like this is a demonstration of  the other company’s values, and then you have to decide what you want to do.  Are you having fun with it? In some ways, this founder, I think he’s having  fun with it, to be honest with you. He was telling us he would put  these LinkedIn links and say, “this is the roadmap,” and they’d go to a LinkedIn  page and they would know who saw it because it would go to someone’s profile,  like his profile or whatever. That’s really cool to me in the sense that you  can get some tracking and know exactly who’s viewing it and clicking, which is really  neat because you can just look at who viewed the profile. There’s a lot of  cool stuff like that to me is just more making fun of them or just  making fun out of the situation, I like that. Again, it just comes down to  how low do you want to stoop, if you consider it stooping low? Are the  customers going to understand and respect or disrespect the values that this company is demonstrating?  There’s a lot of small things you can do, if you want customers that don’t  appreciate this stuff, then I think the simplest thing I would do would be in  my sales calls, because this sounds like these are really large six, seven-figure deals potentially  for this business or this market, I’d probably go after it and just basically start  describing to my customers exactly what the competitors are doing and let them make the  decision. “Look, we have a competitor, you probably know their name, here’s what their name  is, and they are doing all these things, and they’re doing them to us, and  I thought you should be aware because it’s likely that you might get caught up  in it. It’s not our doing. It’s their doing. Obviously, as a business, you get  to choose who you do business with. I’m just letting you know this that way,  one, you don’t think we’re doing anything like that or if you have some values  in your own company that would go against what they’re doing, then you would know  exactly who you’re dealing with on both sides.” To me, that would be more of  a transparency strategy where you’re being transparent about what someone else is doing just so  that your customer is aware and the customer gets to make the choice. “But by  all means, if you want to work with them, we’re not going to spite you  or we’re not going to think you did the wrong thing, but we think you should know what’s happening in the market.” Steli Efti: Let me ask you this, because it reminded me of a number of times when  companies get ripped off in terms of [inaudible 00:14:25] design of something else and they  decide to go public with it, so the founder decides to write a letter or  a blog post describing what the competitor did and sharing it with the world, what  do you think about that? When is that a good ideal or a bad idea?  When have you seen this work or not work? A way of reacting to a  competitor messing with you or doing espionage in some ways could just be to go  public with it, do you think that’s a good idea? Hiten Shah: It depends how aggressive it is and how it benefits your company. If you can  see how it benefits you, great. There’s a PR strategy that I would go totally  into communications and PR strategy and thinking about what it does for you short, long,  medium-term, does it really stop them? Does it chain them? But, really, what does it  do for you? Because often times it doesn’t do anything for you. I just had  actually a similar situation recently, very recently, where a company I’m advising, run by a  good friend of mine, was being spammed by another much smaller company, and I happened  to know their investors so I introduced him to their investors once he asked for it. I wasn’t going to do anything until my friend, the founder of the company,  who in this case would be the victim of the situation requested that I make  the intro because it’s not on me to decide what to do. People inside the company were actually debating what you just said, which is, should we shame them? I  told them directly, “I don’t think shaming them is going to accomplish anything for us.”  Instead, what they decided to do was go talk to their investors and just say,  Hey, this is what’s going on and it’s no good because you’re spamming our users, basically. Ironically, I will mention this, it’s a feature I didn’t want added to the  product and recommended that they don’t add it in the way they did because of  many reasons, including this one where it was susceptible to another company spamming, or spam  in general, and they still did it, but that’s okay. The reason I mention that is you can predict things like this, you can predict your vulnerabilities and actually do  something about it. To me, there’s multiple sides of it, there’s something you can predict  someone else is going to do, even prior to understanding their behavior, but there’s other  things where once you have learned their behavior, you should start thinking about not what  you can do as much as what do you think they’re going to do next  and how do you actually prevent that or soften the blow to your business and  your customers based on what they’re going to do? We started doing that really well  at one of my companies where we were really dealing with a competitor that was  doing things that we would never do, and once we got pretty good at knowing  it, we found ways to dissuade them by getting them to focus on other parts  of the market, not our future side or what we were doing, and that was  really helpful. But again, I think to do this well if you’re in an aggressive  market, you have to strategizing. I don’t think there’s a blanket answer. I’ve seen all  kinds of ways work. Steli Efti: Yeah. I think that what’s really important here, and this is going to be part  of my tip, what’s really important is to, A, play to win and not just  play the play. It’s easy to get tricked into playing your competitor’s game, but always being a step behind or doing something that doesn’t work in your company culture, versus  stepping back and really thinking, “Okay, what are they doing and why? What are they  gaining from this? What will they do next? What do we want to decide to  do about this in a way that’s not always a step behind and very reactive  and in a way that is playing to our strengths?” If we think we’re good  bad guys and we can out-bad them in their tactics, “let’s crush them with evilness.”  If we think we’re good guys and then these guy are super aggressive bad guys … Just to over simplify this, we’re not going to win a street fight with  them so we have to go about it in a different way. I think he  sent me a follow-up email asking about us talking about espionage tactics and counter-espionage tactics,  and where to draw the line and what’s legal and ethical and all that, and,  honestly, I think, probably there’s some good ideas that you can put in place in  terms of stopping your competitors to messing with your customers and messing with your employees  and stuff like that, but asking yourself, “how can be proactively now get information from  them just to retaliate?” I’m not sure that’s a good idea or how useful that  really will be. Also, everything has a cost associated to it. If you’re playing with  this and you have some fun, that’s cool, messing with your competitors. That’s fun. But  once it starts to become the focus of your thinking, and now you’re telling your employees, or the sales team, “Stop what you’re doing, our competitors are calling is. When  somebody asks this question, don’t give them information.” Now, you, your board, the executive team,  your sales team, your marketing team, everybody is worrying about the competitor more than about  the customer. In an attempt to protect you from your competitor, you’re not protecting your  business from new customers because you’re not open with them, because you’re always looking for  cues to see if they’re a competitor or a real customer. Don’t let this mess  with your mind. You might want to have some defense mechanism in place, but do  you really want to go on the attack and do you really want to spend  a lot of time espionaging your competitor? For what reason? What is the gain that  you’re getting other than getting “back to them”? I would really ask myself these questions and make sure that I don’t just tricked into playing a game and focusing on  something that really doesn’t help. Not to say that always the good companies win. A  lot of bad companies and dirty tactics and aggressive companies in that past that have  lied and cheated have won, so sometimes the best way to deal with a bully  is to punch them in the face. There’s no niceness around it. I think my  summarized feedback here or tip, is make sure you take a step back and think  clearly and put a good strategy in place before you just react to what they’re doing or overreact to what they’re doing without ever asking yourself if this makes real  sense to your business and if this is really a game you want to play  and you can win. Yeah, that those are my finishing up thoughts on this. Hiten Shah: Yeah, I couldn’t agree more. Steli Efti: All right, this is it from us on this episode. This is a fascinating episode.  If somebody has more interesting cases like this of espionage within startups and competitive terrorism,  if that’s even a term, or whatever, any really interesting stories, any unique cases, just  share them with us. Either send us an email at Steli@close.io and Hnshaw@gmail or tweet  at us and let us know. I’m curious to learn more about this. This was  definitely an interesting email thread and interesting topic to discuss on this episode. I think  is it from us. Hiten Shah: Later. The post 231: Competitive Combativeness appeared first on The Startup Chat with Steli & Hiten.

Do you have a consulting company and are looking at pivoting to a software company? If so, this episode is for you. Steli and Hiten talk about their own experiences building their software companies. They share their own motivation behind creating software and why they achieved success in what they created. Tune in to hear what it takes to build software that is exceptional and why you NEED to please your existing clients in the meantime. Time Stamped Show Notes: 00:18 – Today’s episode is about making that transition from a consulting company to a startup or software company 00:51 – Steli is receiving a lot of emails from people who want to transform their consulting and service business into a software or product business 01:21 – Steli met someone who wanted to pivot from being an online information business to as SaaS business 02:13 – There was an intern at Close.io who built an online product 02:53 – He now has a vibrant community behind him, his customers enjoy the product, and he is making money 03:12 – His number one goal for the next year is to build a software product 03:34 – Steli says he is uncomfortable when the goal is to go from services to software because he thinks this desire to shift may not come from a right place 04:28 – It takes a lot of time to build a brand and it will also take time to build a software product 05:14 – Betting the business on a new thing is risky and there are many potential traps 05:27 – It is more practical to learn or build small software products rather than pivot the whole business without having any experience 06:15 – Hiten did it this way: they had cash flow coming in and they wanted to get out of consulting. They had a general customer segment of marketers and designers and they evaluated which of their products benefited them the most 06:48 – They tried 12 different products before Crazy Egg was launched in 2005 07:33 – Hiten looked for their lead engineer and partner for Crazy Egg 08:01 – It was easier to create a software company back then than it is today because there is enough software out there for every need 09:01 – Hiten did a time and budget-box approach 09:18 – Steli says they did not make the conscious choice to move from services to a product business 09:47 – They knew two things – the 2 co-founders were technical and Steli would be the first sales person they would rent out to 10:38 – They figured things out on the way and organically created great sales software 11:32 – Steli says there was also a lot of luck involved – they had the right team at the right time and he did not advise people to copy what they did 12:09 – Steli says the problem is that other companies rush the process of becoming a software business and put too much weight on it this transition 13:06 – The team can get sloppy with their own business and clients because they become to occupied with building the software product itself 13:51 – Hiten says to make it a resource allocation project; you have to be smart about how you transition 14:10 – Hiten never had a timeline, they just allocated resources to the software because they wanted to learn from it. 15:08 – Hiten’s tip: Keep doing what you are doing to make more money and use that money to fund whatever opportunities you are looking for in software 16:33 – 37 Signals built Base Camp and Ruby on Rails out of their own need   17:43 – They were their own internal customers at first 18:42 – Hiten says the mistake that consulting and service companies make is creating software that is not geared towards their own customers and target market 19:17 – If you have follow up questions, email them at steli@close.io and hnshah@gmail.com 3 Key Points: If you want to transition from consulting to software, do not make it your number one goal; instead, allocate your resources accordingly. Be your own customer—what are your needs and what product can you create to meet that need? Keep doing what you’re already doing to earn the money that can fund the other opportunities that come your way. Steli Efti: Hey everybody, this is Steli Efti. Hiten Shah: And this is Hiten Shah. On today’s episode of The Startup Chat, we’re gonna talk  about something that I would consider sort of a kind of business pivot, a business  switch, that both you and I have done … Steli and I have done, which  is basically going from a consulting company to startup or a software company. I know  something probably inspired this, this is definitely a topic Steli brought up. Steli Efti: Yep. Hiten Shah: And so, Steli, what do you got? Steli Efti: Yeah, so, here’s why I wanted to talk about this. There’s two reasons. One is  how consistently I’m getting emails from people that are considering transforming their consulting business, or  their services business, into a software or product business, and how they see and view  the switch we made from Elastic sales to Close.io as something they would want to  kind of copy or emulate, so they reach out to ask for advice. But also  because recently I was … I mentioned this in a prior episode, I was on  a boat traveling on a bunch of islands with a bunch of founders, and one  of them was talking to me about his desire to move from a online information  business to a SaaS business. I gave him a few pieces of advice that I’ve  observed with a bunch of other people, and I thought that that advice might be  valuable to others. And I was not sure what your take would be on that  advice that I gave. I was like, “Hiten might have a different opinion, a different  take of this,” so anytime that I think that I want to talk to you  about this to see what you could come up with or how you could broaden  my perspective on things. So, I’ll start with that specific founder conversation, and let’s kind  of break that down together and then we might want to go more generic later  on. So, here’s the case study, if you want, so, there’s a young kid, he  was an intern at Close before. I love that kid. I think he’s gonna go  places, he’s gonna do big things. A year ago he started building an online product  with the idea to build it a big audience and then later use that audience  to build a software business on top of it. So, first, create an audience and  then sell a product to that audience. The way that he approaches this is that  he basically came up with like an information product to sell to the audience and  to build that audience. Now, he’s done really, really well in the past few months  and he has a very vibrant community going on. He has a product that people  enjoy and get value from, and he’s making money. He’s making a good chunk of  money. He’s learned a ton. He’s doing some really cool shit, right? He was talking  to me about his goals for next year, and he was telling me how his  number one goal for next year was … He’s like, “Now that the … I  have the audience, I’m making some money, this thing is working, and now, next year,  I need to build a software product and launch it. That’s gonna be the big  pivot that I’m planning to do.” He asked me for my advice on how to  do it and if that’s a good goal and all that, and I always get  scared, well, I get uncomfortable when people … When the goal is to go from  services to software because it seems like that … That is a very significant change.  There’s a number of reasons why I’m very skeptical of that — rattle through these  real quick. Number one: it doesn’t come from the right place in my mind in  the sense that … You have customers, they have problems. If those problems can be  solved better with software, and you have a good idea for a software product, cool.  Go that direction. But, if their problems are solved better with information products, then do  information products. Don’t just decide that you want to do a software product and then  you … I feel like that creates a bias that will make you see opportunities  where there aren’t any. That’s number one. The other thing is that it takes a  lot of time to build an audience, build a brand, to have a machine that’s  working, something that’s working. It took him awhile to get to this place. If he’s  built a law of expertise in the area that he’s in now, it’s gonna take  a good amount of time to build expertise on building software products. If he knows he wants to do that, I think it’s a good idea to start building software  products; maybe even, quote, unquote, “throw-away software products,” so he’s not as attached to them,  and he sees it more as a learning experience than betting his company’s future on  it — on the first one — because I feel like it’s gonna take a  while probably for him to get good at building software products, right? He doesn’t have  experience in it, he doesn’t have a track record in it, and … But now  he has customers. He has users. He’s gonna have to hire people — he has  a business, and betting the business on just switching tomorrow to a software and then  betting that that’s the whole thing, it’s just such a risky proposition to me, and  there’s so many potential traps that he could step into. I’d rather have him say,  “Next year, I’m gonna learn more about software products and I’m gonna build some small ones while I’m still growing my business,” than saying, “I’m gonna transition and pivot my  entire business to a software product, but I have no experience in building software products.”  I could go on and on, but I’ll just stop here because these two are  my top two reasons for why I’m always skeptical when somebody tells me they made  the decision and they have to switch, and they have to switch within a given  timeline. What’s your reaction to this? I’m super curious. Hiten Shah: Yeah, I think there’s two ways to do it, and the funny thing is the  way you did it, at least my perception of it, and the way that I  did it is vastly different. Steli Efti: Yeah. Hiten Shah: Even the way 37signals did it I think is closer to, at least from what  they’ve said before, Basecamp now. But 37signals, and they are a consulting company, they did  it very similar to how I did. So, what we did … I’ll start with  that ’cause then we can talk about what you did. What we did was …  We knew we had cashflow coming in and it was highly profitable, and we also  knew we wanted to get out of consulting. We also knew that we had a general customer segment we really liked — marketers, designers — that whole category back in  the day. We decided to build a bunch of stuff, and we literally, at that  time, were throwing spaghetti at the wall and seeing what stuck using some kind of  calculative bets. One of them was not very calculated, so we lost a million dollars on it, but that’s okay. It is what it is — learned a ton on  that one. So, we did about 12 different products before we found Crazy Egg and  launched it in ’05. That was the one that starting taking off. I can tell  you all the things we did right there, but what we always did is treat  our software projects like yet another client, so we were able to chunk time and  money and resources around it in a way that I don’t see many people doing.  It was one of like a bunch of different customers, and we treated our own  internal product in that way, which is also, I think, what 37signals said they did.  I thought that was brilliant. We did it kind of naturally ’cause we were like,  “Oh … Gotta still make money while we’re building this thing and learning software.” At  that time, my girlfriend and I, we weren’t engineers. I actually went on the Ruby  on Rails site and contacted everybody I knew in order to find the current engineer  … Lead, head engineer and partner that we have at Crazy Egg also built Kissmetrics  for a while and then came back to Crazy Egg, and yeah — We just  had to go on a mission. As you were saying, it takes time to learn  how to build software even if you are an engineer or if you’re not. It  just takes to build the business, customer support, sales, and like … I would say  right now it even takes longer than it used to just because the traction in  the business requires a different kind of effort than back in the day. Back in  the day you could pop something out. If it was unique enough, or useful enough,  people would use it ’cause there just wasn’t that much software. Today, there’s a software  for everything and every little niche. I don’t want to say everything, but mostly, right? Steli Efti: Yeah. Hiten Shah: There’s enough software out there. There’s probably a million x more than when I was  out back then — maybe 10,000 times more, if I want to be nice. So,  that’s how we did it. From my understanding of your process, it seemed like what  you folks did is you had a customer segment, which was sales … People in  sales teams, and you were actually building the software, sort of using it internally, and  that was your sort of customer development, customer research, prototyping, MVP-ing — which was your  own team that you were hiring using it. Maybe the story isn’t that polished, but  I feel like that was more of your approach. I don’t know how you dedicated  time and all that, but that feels a lot different than how we did it,  which was literally try a bunch of stuff, make sure it’s sort of really, really  time boxed … Not time boxed in the way of like, “Oh, we’re gonna flip  to a software company by now,” but more time boxed and budget boxed on, “We’re  gonna spend this much money, release it, see what happens, put our efforts behind it  in a very structured way,” is basically how we did it, but we tried a  lot of things while I think you did one thing and then pivoted. But please  share. Steli Efti: Yeah, that’s absolutely correct. We kind of … We stumbled into this transition. We did  not make the conscious choice at any point that we wanted to leave the services  business and move into a product business — that decision we never made. From day  one, we had decided, okay, we’re gonna build this massive sales force …you know, sales  organization in the cloud, and we’re gonna be renting out all these salespeople to do  all these B2B subs around the world, and we knew two things. One was that  I had two co-founders that were technical, so we had some technical resources that we  wanted to put in use. And then two: we knew that I would be the  first salesperson that we would rent out, and I hated with a passion all the  sales software that existed out there, so it was very easy for us to get  to the conclusion that, “You know what, let’s just build our own sales software,” and the idea was that the software would enable the services business to scale. That was  the whole intention, and it would enable me not to kill myself, right? That was  the whole thinking behind it. There was no really grand vision for the product, there  was no clarity on what better sales software look like. We were fairly thoughtless on  this, to be honest, with very little strategy sprinkled on top of our thoughtlessness. And  so we … I started cold-calling companies, and they all wanted to use the service.  And then we had to hire a bunch of salespeople, and we were just going  along and figuring things out as we moved forward. We just had two engineers building  software in the middle of all these salespeople, and it took nine months or so  of development internally until we finally really arrived at … And organically arrived at a  point of view and a real philosophy on what is good sales software and why  have we built something that’s so different from what everybody else has built. It took  another few months until we had our customers telling us that they wanted to purchase  the software not just the services. So, we kind of just … And then we  started thinking, “Huh, maybe the future of the business is gonna be the software, not  the services business.” We kind of very organically stumbled into this, and it was not  as strategic, and that’s why I tell a lot of people that we might not  be a good example … I’m pretty sure we’re not the greatest example in the  world to try to copy because this condition happened very naturally and there was a  lot of luck involved. We were the … In hindsight, we were the right team  at the right time and a lot of things really worked out really well for  us, but yeah, I would not advise anybody to copy it, and I would never  pretend that there was any real high-level strategy of how to transition. But what I  have seen is I’ve seen a bunch of people that have the services business and  they get, in my own mind, they get too committed on, “I need to be  a software business tomorrow,” and then they forcefully convince themselves that they have a software  idea that’s good, and they don’t validate it as much as they should, and they  don’t have real customer development around it as much as they should, and they don’t  have real development experience or product management experience. Then they put way too many resources  on this product, they bet the future of the company on it, and then they  launch and it doesn’t work out or it doesn’t succeed and then they’re fucked because  they neglected their services business and they bet all their resources and money on their  services business on the software thing, and they didn’t take an incremental approach. They didn’t  take a smart approach. I’ve never heard the strategy they do described, which makes a  ton of sense for me, which was the, “Let’s just treat the software product as  if it was a client,” so I look resources accordingly and smartly. I’ve seen a  lot of other examples where they just bet way too many resources — they start  getting sloppy with their customers, their clients, because the entire team get so passionate about the software product they’re building that the clients now are just a pain in the  ass, or the work they have to do for them is just like an afterthought,  so they start doing shitty work there. They start to over commit on the software  thing and then it doesn’t work out, and they’re in a really bad place. That’s  kind of a trap that I … Maybe along those lines, are there any other  kind of mistakes that you’ve noticed of companies when they try to make that transition  or missteps that services business take or consulting businesses take when they try to transition to a software product business that we could highlight so that, hopefully, people that listen  can avoid these? Hiten Shah: Yeah, I think what founders forget is it’s a resource allocation problem, and it’s something  where you want to be really smart about how you transition. So, setting a deadline  or a timeline on the transition doesn’t work unless you had a set of experiments  with software that you can do for that timeline. I never have a timeline, and  the reason for that is when we were running our companies, our consulting company, we  just knew we wanted to invest and allocate profit towards building software ’cause one: we  knew could learn anything we wanted to, for sure. We knew that we were really  good at bringing in revenue. We also knew that spending the money on software and  subscription businesses is what we wanted to do because that was appealing to us at  the time — still is, honestly, just because of the recurring revenue stream , and  where the world was and is. You have to find what your fundamentals are, and  tell yourself and your team the proper story. I think that is super important. For me, I think … This is a little bit of a theme for me in  terms of the things I think about, but if you step back and just think  about your strategy, even if it’s for a half-day or a couple hours, you’ll come  up with a good way to keep doing what you’re doing so you can bring  in money, and use that money to go fund whatever opportunities you’re looking at in  software. That’s the biggest piece of advice I have, which is many folks just think  that consulting sucks, services businesses suck, they don’t want to do it anymore, but they’re  really good at it. Because most people, if they’re making some money and have even  the opportunity to transition to a software business, there’s something great going on in the  services side, whether it’s companies really excited about working with them, them being able to  close deals — there’s always problems in services businesses, but at the end of the  day that’s usually where there’s a scenario of positivity, a scenario where something’s working, and  you just want the next step, and you really believe the next step is software.  What I actually wish that we would have done is that we would have taken  our customers and started building software that worked for all of them instead of, sort  of, doing the spaghetti model ’cause I don’t think if we were to do it  today the spaghetti model would be what I would do. I would do something closer  to what you did, which is pick an opportunity that was really easy to learn  about, really easy to do customer development about, and ideally something our internal team was  using where we thought and hoped and believed that we could flip it out and  take it out of just us using it, and slowly start letting customers or our  target market start using it even if our target market was other agencies. If you  think about 37signals, they built Basecamp and a bunch of other tools. Basecamp was built  out of a need that they had. Ruby on Rails, which is their opensource programming  language, which you could argue, and it’s not arguable, it’s true, is another product of  theirs that they still commit to and keep building on, was also out of a  need that they saw that a different demographic they had, or really valued, believed in,  which was engineers, right? Steli Efti: Mm-hmm (affirmative). Hiten Shah: And software people. So, that was what Ruby on Rails was created out of, and  Basecamp was mostly created out of the fact that they were an agency — they  didn’t feel like there was a good tool for agencies to manage clients, right, and  manage the work. That ended up being something that they felt like could be extrapolated  to any company, right? But if you still look at Basecamp, because there’s all these  other tools now — Trello, Asana, and the long list — Basecamp is still mostly  used by folks who have agency, client kind of relationships in that model. I’m hypothesizing,  but when you think about anyone that uses Basecamp, they’re mostly those type of folks,  and less folks are using Basecamp to do product management in-house, for example, just ’cause  there’s so many other alternatives. So, that core of what they’ve built, and who they  created it for, still lasted for a longtime, but they were the internal customer first.  So, I kind of like that approach, and I favor it because when you’re the  internal customer and you really believe there’s other customers out there, it’s just much easier  to invest in that software and realize even what value it’s bringing to your own  business, so you end up having this visceral value proposition. I really feel that about  you and what you did because what you did was you’re building a product in  a very crowded market. It’s probably at the top three market online in terms of  software, you would say, right? Steli Efti: Yep. Hiten Shah: Dude, how did you do that, right? That’s another episode, but it’s like, how did  you do that? I have the answer — you were your own customer in the  beginning, and you had customers who were using your product, maybe they didn’t know it,  you know what I mean? Steli Efti: Yep. Hiten Shah: And that’s so cool. So, for me, I am looking at the “grass is greener”  here and saying, “Oh, you should do it that way,” but I’m also looking at  where the world is today. And one mistake I see consulting companies and services businesses  make is they build software not for their customer, not for the demographic they’re already  really good at attracting, not for their current target market ’cause for some reason they  confuse the services they’re doing with not liking their target customer or the market they’re  currently in when it’s actually furthest from the truth. You must be doing it ’cause  there’s something you like about it otherwise you wouldn’t want to keep going to these  client meetings, trust me. So, there’s something there that I would probably plug into if  I’m a consulting company looking to build software. Steli Efti: I love it. I don’t think I have anything to add to it, so we’ll  wrap this episode up on this note — super powerful stuff. If somebody who is  listening here has a services or a consulting business is currently transitioning, has transitioned, or  is thinking about transitioning, and you have some follow-up questions, just make sure to ping us. We always love to hear from you. Just shoot us an email at steli@close.io  and hnshah@gmail.com — I think this is it from us for this episode. We’ll hear  from you very soon. Hiten Shah: Later. The post 230: Transitioning From Services to Software Business appeared first on The Startup Chat with Steli & Hiten.