Sales data augmentation, where information from third-party sources is used to better qualify prospects by sales reps, is invaluable. As you might have guessed, the latest generation of web applications provide even higher quality data with which to make sales teams more effective compared to legacy services. Some of the more popular ways to get additional data on leads include:
- LinkedIn – the number one professional social networking site
- Jigsaw – the number one user generated content site to buy business card information
- ZoomInfo – crawls the web looking for lead information and making it readily accessible
If your sales team isn’t using services like those listed above, they are missing out on effective data. I recommend they start using them.
Mark Suster published the blog post Most Startups Should be Deer Hunters last month. It is, without a doubt, one of the five most important startup blog posts of the year. Every entrepreneur needs to read it.
Here’s the general idea: startups need to focus their energies on deals that are big enough to be worthwhile but not so big that they overwhelm the company. Think of it this way:
- Rabbits – Not much meat and they can be get away quickly
- Deer – Enough meat to be worthwhile and once knocked down, aren’t going to get away
- Elephants – Difficult and expensive to capture, and if you are lucky enough to get one, might be too much for the team to handle
Go read Mark’s post right away.
It’s that time of the year to start planning for 2010. Our process is pretty loose right now and is continually evolving. Here are some of the steps we take:
- Update our One Page Strategic Plan
- Change our financial models using Google Spreadsheets
- Revisit our KPIs and decide what to keep, what to remove, and what to add
- Plan any major initiatives or projects
Personally, I like doing tasks more than I like planning, but I realize the importance.
One of the hardest lessons to learn, and one that isn’t talked about much, is that as an entrepreneur of most types of businesses, your revenues reset each year. What I mean is that you have to sell a certain amount of your products or services the following year just get to the previous year’s revenues, and then some amount more to grow. Resetting revenues make growth difficult in tough economic climates.
This is also one of the reasons why business models with subscriptions, like software as a service or required maintenance and support contracts, are so desirable. Assuming a high retention rate (90%+), each deal sold in a new year represents growth as your revenue base is already the revenue from the previous year, if not higher due to more recurring revenue at the end of the year compared to the beginning of the year.
My advice for entrepreneurs is to look for businesses with a recurring revenue component.
A gentleman reached out to me to get my advice on angel investing in companies that are pre-revenue and/or pre-product, of which I have very little. He’d heard about Shotput Ventures through the Atlanta community. I told him that I didn’t have much experience other than the eight companies Shotput funded this past summer. Of course, I had to give him something, so here’s what I came up with:
- Don’t expect to make money
- It isn’t for the feint of heart
- Whatever you invest, save 3x that for later rounds
- Look for a strong product/market fit
- Make sure there’s a personality fit with the team (e.g. you should want to see them once a month for lunch indefinitely)
- Valuations are a shot in the dark
- There’s intrinsic value in giving back and helping others
I’ll revisit this post in 10 years and have even better advice to give.
Note: This advice is for pre-revenue companies.
In a startup, there are so many moving pieces that change on a daily basis it is easy to spend all your time putting out fires and being reactive to what’s going on in the company. One of the more important things I underestimated is the value of celebrating the small victories. I’m talking about progress-type victories as opposed to serious, signed-on-the-dotted line victories.
It is important to stop everything, get the team together, and do some cheerleading.
As much as technology like IM, Skype, and email make it easy to not do things in person, nothing beats the emotional connection of being face-to-face. I recommend teams get together once a week and celebrate the small victories.
Note: Celebrating the small victories is separate from an accountability-type weekly tactical.
Wow, I just finished reading an interview with John Imlay about his life and storied career. It is packed with great stories and insights that every entrepreneur should read. Here are a few key points from it:
- Employees are the most important thing in a business
- Relationships matter across all fronts
- Software isn’t as differentiated as people think — most products will solve a problem, the key difference comes from how well the people that sell it understand your business
This really is one of the top 10 entrepreneurial articles I’ve read this year. Read it on DocStoc:
An Interview with John Imlay.
Here’s the second and final piece on blogs I read. My goal is to skim 100 posts per day.
Naturally, I’m biased towards technology and startup blogs. I hope this helps!
I mentioned earlier in the week that I read 100 blog posts per day (that’s blog posts and not blogs). The blog posts act like my personal version of a newspaper and give me food for thought on a daily basis that I can bring back to my company. Here are the blogs I subscribe to in my Google Reader:
Well, that’s almost the half of the blogs I read. I’ll add the second half tomorrow.
Note: I didn’t include links to the blogs of our competitors, for obvious reasons.
Software-as-a-Service (SaaS) really is an amazing delivery model for software in that it better aligns interests of vendors and customers compared with installed software that requires a large, up-front fee. In reality, the monthly or annual fees for SaaS make it so that the vendor is financing the customer due to the fact that the customer needs to hang around long enough to become profitable. If you sell a large enterprise installed product and the customer isn’t happy, it can still be profitable (though isn’t good business practice). With SaaS, if you have difficulty on-boarding the customer and making them successful, they can walk away.
A hidden problem with SaaS is the on-boarding and switching costs relative to the cost of the solution don’t usually match up.
Think about it: if you charge $1,000/month for a SaaS product, you need to be able to make customers successful with almost no effort, otherwise you need to have additional implementation fees for thousands of dollars, driving up the pain of switching, increasing the sales cycle, and increasing the non-scalable labor aspect of the business. Many SaaS companies don’t adequately account for the on-boarding costs to their business model as well as how it impacts the amount of time it takes for a customer to become profitable. SaaS is a more capital intensive model for entrepreneurs compared to installed software.
My challenge for entrepreneurs is to incorporate the on-boarding costs into their model and really think about how they can remove the enormous friction that comes with switching over to their system.