Make it simple to buy

Are you unwillingly driving customers away from you by having a complex, ‘inside out’ business model? You should definitely check.

If you do, you should do your utmost to align your business model with how your customers are running their business and make an effort to just slide right in as the perfect solution to whatever pain, they’re experiencing.

The above dawned on me recently when I had a conversation with some great startup people about their business, their business model and their pricing strategy. While everything they said made perfect sense from their point-of-view, I realized something:

Every time their product was presented to a potential customer, the customer essentially had to first understand the startups preferred way of doing business before making an assessment as to whether their way of doing business and the product would make sense to get into their own business.

This seemed strange for a couple of reasons:

First, we know that the market is hugely competitive, and that complexity has the potential to kill any deal, if there is a simple alternative just there for the taking.

Second, we know that closing a sale means reducing the steps and reasons to say ‘No’ to a bare minimum. Whenever you introduce any kind of friction, you’re essentially adding potential opportunities for your future customer to just say ‘No’ to whatever it is, you’re offering.

So what to do instead?

Make an effort to understand your potential customers, how they do business, and what the challenges and pains are that your product could easily help them overcome. And then package your product in such a way that you’re the obvious solution for them to say ‘Yes’ to – every single time it’s presented to them.

There is really no excuse for making buying your product too complicated for customers.

(Photo by Ibrahim Boran on Unsplash)

How to win with corporates

I have always held a strong belief in the outsize value of strategic partnerships. And I must confess it has been a frustrating pain to be part of and watch a lot of good intentions end in absolutely nothing.

I am by no means alone with that experience. In fact I think it’s fair to say that it’s more the rule than the exception that these partnerships between corporates and startups don’t work. The excitement at signing is almost inversely related to the feeling of frustration and banging your head against the wall, once the partnership has to be implemented to start delivering on all the promises.

But it can be done. One startup, I have worked with over the last few months, has managed to get to a winning formula, and I thought I wanted to take this opportunity to share some of my learnings from it in the hope that you might use them to improve your own prospects with getting a great return on your strategic partnerships.

The first thing to consider is whether or not what you’re doing solves a real pain that the corporate has. Yes, we all know that big corporations can struggle with innovation, but that’s not where the real potential lies. Due to the law of big numbers, it makes much more of a dent in the corporate structure, if you can help them sell more or what they are already selling.

In essence that means that if you have something that makes the corporates product better in itself or provides leads for more sales of their existing product by giving their sales people cloud cover to reengage with their customers with something new and exciting, you could have something that is very valuable to a strategic partnership. But you need to have it mapped out beforehand in order to put yourself in the strongest possible position for identifying the right partner and do the hard negotiations.

If you succeed in coming up with a partnership, the hard work truly starts. A lot of startups mistakenly think that it’s all about teaching the corporate to adapt to their more lean and efficient way of doing things, but I honestly don’t think that’s the case. What I see working is in fact more the opposite; that the more you can factor in how they work in your own process and be open, transparent and accountable about it, the easier it will be for the corporate to integrate you and your product in their offering – which is essentially the only recipe for commercial success with a corporate.

Finally, you need to ensure that incentives are aligned. No matter what the corporate might tell you, its a matter of fact that they are ruled by objectives. That also means that key stakeholders bonus plans are tied to objectives, and they will do whatever they can to succeed with those in order to get bonuses and promotions. Nothing else will really be touched. So be damn sure you understand their objectives, their KPIs and bonus targets, and do whatever you can to slot into that in the simplest possible way. Make it super easy for them to engage – the less they have to think about it the better – and you’ll be in a good position to achieve success.

Does all of the above mean that you always need to dance to the corporates tune? Well, if you want to succeed with a strategic partnership centered around marketing and sales with a big corporate, I think the answer is yes. The balance of power isn’t in your favor, and the only thing you get from insisting you’re equals is…nothing. Then it’s much better to just eat humble pie, focus on the end goal of making things work and making a solid profit. And then stick to the formula.

That should enable you to consider frustrations over failed strategic partnerships a thing of the past.

(Photo by krakenimages on Unsplash)

Moving aside

The other day I met a startup founder, who had been struggling getting his business of the ground as a business for the past couple of years. Despite claiming the ambition of millions of users worldwide, he had only reached a couple of thousand within the first couple of years.

While there is always reason to celebrate great knowledgable people for taking the plunge to pursue their passion and their dreams and turn both into a startup, there are also times when you need to step back and take a more sombre look;

This particular startup was in reality nowhere. In order to have any prospects of success, they needed to step back, look at their core assets and find ways to build a revenue stream around those. Not out of curiosity. But out of necessity.

And yet the founder resisted. While claiming to be open to change, he was still very much set around the same set of assumptions that had brought him and his colleagues so little over the past couple of years. When I asked him what in their performance so far he thought mandated to continue approaching things the same way, he didn’t really give an answer, and I totally understand why: There was no real good answer.

The founder was faced with a ton of challenges, but what also become apparent to me is that he was at the center of a lot of them. And that maybe the best prospects of success for him and his startup was for him to find someone with a pair of fresh eyes and the right capabilities in terms of building the business, and then step back to another more product related role for himself.

He sort of agreed. Until he didn’t the next second. And we could have continued that way for ages.

While I completely understand that it can feel totally wrong to think in terms of finding someone better to replace you in a key role – and especially in a startup you founded – I think there are times, where it’s truly the best solution for all parties concerned. If you believe that the most important thing is to build a thriving business, personal considerations should matter less.

For myself I have always believed that building winning teams is about looking at the challenges facing you and then go about trying to recruit someone much better than yourself to help you overcome those challenges and move on to the next level with the business.

For that reason I have always tried to recruit the best and brightest and get someone who could not only challenge me and my thinking but also contribute to some vastly improved results within their areas of expertise. I think it’s wise for founders to think in those terms too.

The last thing anybody needs in any company whether it being a corporate and a startup is someone at the top with the ambition of always being the smartest person in the room, no matter what. Yes, that person might be brilliant and truly the smartest person, but in most instances – and my experience – there are quite a few even smarter people out there, we should instead be looking to recruit, onboard, get to work and start generating successes with.

Having this unbiased view of your own role can help you build the team that builds the great business together with you. If your too stuck on your own ego to realize that, you risk ending up becoming a founder who will look back and reflect on what potentially could have been but never materialized because you failed to make the right decision and move over to provide room for other great people.

(Photo by Greg Shield on Unsplash)

The end of free money

Few things have been such an important catalyst for entrepreneurs and startups over the last 15 years as the availability of basically free money. Not only has it been associated with low costs of borrowing. It has also provided investors with a higher appetite for risk as they have lacked other more ‘safe’ alternatives for placing their abundance of cheap capital. 

But now all of that is changing. Central banks led by the US Federal Reserve are looking to increase interest rates in order to curb rising inflation, and with that entire generations of primarily young people will need to learn and come to terms with what interest rates actually mean and how they impact the financial choices they can make for both themselves and for their businesses.

One of the more interesting parts of this major shift of fortunes (pardon me) is to get a sense of just how much of the economy is essentially built on the premise of access to cheap capital. How many startups and service companies do we have that would struggle or perhaps not even exist, if they didn’t have access to cheap financing? I don’t think anyone really has a clue. 

The rising interest rates create two major challenges and one major opportunity, as I see it:

The first challenge is the viability of various businesses and startups, which is likely going to be put to the test. If free money is no longer an option, does it make sense to keep the same burn to grow user/customer base? That’s just one question. And what will happen once you come to the conclusion that it doesn’t, and you start raising prices, and customers start walking away? Continue ad nauseam. It is a whole new both strategic and operational reality, many of these companies are looking into to. 

Following on as a close second is what the added cost of debt is going to do to founders and executive teams. Especially for the ones who have never experienced higher interest rates before, getting to know them and their impact will likely take some time and require a great deal of painful acceptance. Can that be gained without running the risk of making less thought-through decisions out of sheer panic? We humans seldom make the best decisions, when we feel we have our backs against the wall. 

Overall the declining access to cheap funding is going to be a ‘tour de force’ in the ability to adapt, which my gutfeel is many will struggle with – simply because they don’t have the tools or the experience to deal with it. 

From an investor point of view, it will also be a reckoning but at the same time also an opportunity to once again be less persuaded by the narrative and look more at the business fundamentals when making decisions on where to make investments; i.e. is there any indication of a viable business model in its own right or not? Maybe, in all fairness, it is as much a hope as its a gutfeel, as I have always been an advocate for businesses proving their fundamental viability without it requiring a 5 year plan. But we will see. 

Finally, there is also opportunity in the not so great news. Opportunities to innovate. Because God knows there are going to be a lot of people who will require help and various sorts of tools to navigate safely in the new reality. Those who can solve that and make people and businesses feel better of or safer despite the new realities on the ground, will be able to make it big. 

As the old saying goes, it is a terrible shame to let a good crisis go to waste. So let’s focus our efforts on how we learn to navigate and prosper in a world, where interest rates are once again a thing to be reckoned with. 

(Photo by Jason Leung on Unsplash)

Solve my problem, please

Normally, we’re used to seeing startups looking to solve the problems of their customers.

But lately, I have realized that there is actually quite a lot of startups, who are essentially asking their customers to solve their own problems.

I typically see it in outreach emails asking me to go to a service or a product and do something specific; update something, try out a new feature or something of that nature. And it’s all perfectly fine.

But it also sends a signal that something is off; something is less than ideal. We have encountered a problem or a challenge on our end, and you, our dear customer, should ideally help us fix it.

Essentially, what you’re often communicating in this way is a shortcoming. Something you didn’t get right in the first place, and now you’re looking to compensate or perhaps even fix the issue.

You could of course argue that there is no other way than outreach to tell about new offers, features etc., and to a large extend, you would be right about that.

However, I could also make the argument that if you had a truly sticky product that your customers were so habitually using they knew it inside and out, they would find out these things themselves, and there would be little need to do outreach to already existing customers.

In summary: When your need to do outreach to your customers is on the increase, ask yourself where in your product or service, your core offering may be broken or less than ideal.

That is the problem, you should solve. Yourself.

(Photo by Michal Matlon on Unsplash)

The ‘know all’ fallacy

Some of the most charismatic and persuasive people I have ever met have also been the ones who have been the most convinced that they had it all figured out and knew everything.

Until they didn’t.

I am not suggesting that they all failed. But a good number of them did. Because they thought they ‘knew’, ventured ahead without taking stock of what was going on around them – and ultimately hit a concrete wall.

Besides the pain of that particular experience, the most painful thing was that it could most likely have been avoided by adopting a very different approach.

A learning approach, if you will.

When you adapt a learning approach you are more humble.

You’re able to take more signals in.

You are more aware that you’re not directing the world, the world is directing your opportunities, and you adapt.

Adaption is key here. The world changes and you need to do that too in order to be forward looking.

‘Knowing it all’ is inherently backward looking. And not very useful when things fundamentally change.

When you learn and adapt, you are able to seize new opportunities and with that the odds of success increases.

Which again makes it pretty stupid to insist on being the one ‘knowing it all’, don’t you think?

(Photo by Joao Tzanno on Unsplash)

A challenge of a generation

Aside from climate change one of the most daunting trends facing us in the Western world is the thought that for the first time in generations, there is every chance that our kids are NOT going to be better off than we were compared to our parents and the generations before that.

In the US, which has always been the land of hope, dreams and opportunity, this has long tilted, and it is happening in Europe too (article in Danish) with the Mediterranean countries ‘leading’ the pack; growing economic wealth and prosperity as a function of time is by no means a given anymore.

As if that is not bad enough in itself, we’re at the same time filling our kids and youth with the exact opposite story: Everything is available for you, you choose, and your choices are (almost) free – except the luxury items and experiences you can also get and which you can get due to costs saved in other places and the access to cheap capital.

So in reality you could argue that our youth is living a lie, we helped them create, and that one day they will wake up to a staggering bill. When that happens, and consequences need to be reaped, there is no telling what will happen.

Now, this is not a doom’n’gloom piece even though I admit it looks like one. It is – as most of my other writings – a piece about opportunity for creative visionaries to take stock of the problem, go back and figure out how we’re going to solve one of the biggest generational challenges, we have probably ever faced.

I will admit I don’t have the answers. If I did I would probably be busy trying to set the right things in motion. But what I do know is that the opportunity is there for people with products and services that look to galvanize our youth and limit the future impact of the trajectory we’re seeing.

It could be in terms of new kinds of savings products. It could be about education ensuring an ability to ride the development and be presented with new opportunities. It could be about simple living and making that into ‘cool’ living. The list of opportunities are endless.

And there will be a huge need and market for it, once reality hits. An excellent way for the right people to combine a very strong purpose with a once-in-a-lifetime business opportunity.

(Photo by Priscilla Du Preez on Unsplash)

”iHealth”: Challenge or opportunity?

Rumors have been rife for some time that Apple is working on including sensors for blood pressure, blood sugar and alcohol levels in an upcoming upgrade of the Apple Watch-series.

“iHealth” – for the lack of a better term – seems to be on the horizon. And while nothing is certain at this point – and never is for Apple – the rumors should give Health- and MedTech startups in the consumer space some pause. Because a crux time for monumental decisions may be coming up.

For those focusing on consumer hardware and software the basic question is this: Should we continue on our hardware path, or should we double down on software and let the likes of Apple take care of the hardware part?

The question is a valid one for everybody working in the personal health space, and if the rumors hold true there is no reason to believe Apple is going to stop there. The giant will be innovating full steam ahead and include more and more sensors and features in their wearable devices with battery life most likely being the main hurdle to success.

And why will they double down in this area? Two reasons.

First of all while there is great need for consumer-related Health- and MedTech devices, there is probably not much love lost for any of them, if they went away – from a pure customer experience point-of-view. Very few people get that emotionally attached to more clinical devices, but they do to Apples slick design, and the Cupertino-based company will likely in general hold a huge advantage in moving from consumer towards Health- and MedTech rather than the other way around.

The other reason for Apples focus in this area is one that I have mentioned before: They simply have to to drive shareholder value at their current valuation. A company as big as Apple needs super big new opportunities to grow, and the health sector is one of the only ones left with an opportunity that is big enough to make a difference to shareholders.

What may end up helping some Health- and MedTech companies looking at this enlarged competitive threat is the fact that not every consumer is into Apple. While the companies products and design is popular in many quarters a lot of the less well-off customer segments, who may also very well be overrepresented in the health statistics, simply can’t afford Apple products or don’t see the value to justify the price tag.

In order words there may be room for an Android like ecosystem of products and services that serves specific purposes at an affordable price. But is that juice enough for a Health- or MedTech startup looking to make it big in the consumer space?

That’s a really good question.

(Photo: Pixabay.com)