Sales Data Augmentation

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.

Startups as Deer Hunters

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.

End of the Year Planning

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.

Resetting Revenues and Growth

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.

Quick Thoughts on Angel Investing

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.

Celebrate the Small Victories

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.

Amazing Interview with John Imlay

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.