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)

The complexity trap

One of the great privileges of my job is that I get to meet a lot of different startups and their founder teams and hear about their ideas, and how they have the ambition to take on the world and conquer it.

Among these great people are also seasoned veterans trying to turn great insights into new startups with, based on pure logic, really interesting potential, but who still seem to struggle raising the necessary funding to take off. And when I come across them, I wonder why it is that they struggle, when everything else seems to check out?

Of course there can be an element of timing. They can be too early for the risk profile, an investor has, or they can be doing their work outside the field of interest to the investor. That all makes a ton of sense. But I think there is something much more fundamental at play.

When I look at what make investors tick, it is things that either cater directly to the particular interests or experience of the investor in question or just seems like a super easy sell in the pitch deck; a story which everybody can understand and relate to.

Let’s face it: As investors we look at a lot of different pitch decks, and I think it’s fair to say that it’s easier to remember and get excited about those with a really compelling, easy-to-understand story that seems like something you have heard about before, than it is connecting to a complex pain and an even more complex solution for something, you have little personal relationship with.

Remember, investors are not experts in everything. Some aren’t even experts in anything except investing (which is also an essential skill, to be sure). And they are not particular fond of being put in a position, where they are reminded of all the things that they don’t know.

When that happens, the lack of insight by experience translate directly to a feeling of increased risk, and instead of getting into a complex discussion, it’s just easier and less painless for the investor to say ‘No’ before the discussion move too far.

And it makes a ton of sense too. Because when you look at startups trying to solve complex problems for complex customers, there is a myriad of questions presenting themselves:

How will you position the product towards the customers? How will you engage in the dialogue and show that you can be of value? How will you onboard users? How will you make them stay? How will you facilitate the necessary changes to the way the customer works in day-to-day operations in order to have the full impact of your product (if it’s a B2B related product, of course) etc. etc.

There are just so many complex moving parts that it more than compensates for any great team or idea. Because as an investor you know that a lot of things have to go the right way in order for this startup to be truly successful. And we are generally not looking for cases where a lot of factors align in the right way, before the startups, we invest in, can become successful.

It’s perhaps a bit brutal and to some extend a crying shame. And the obvious risk of it all is of course that brilliant startups founded on the ‘wrong’ complex pain and solution won’t get the funding they need and thus won’t be able to have an impact on the world and ultimately be successful.

But I just think it’s collateral damage to the way that a lot of investing in startups happen; unless you’re lucky and you have that influential person on the investor side, who has insights gained through experience and just knows that the solution has real merit, you as a founder can have a hard time of getting your startup funded.

So, in essence, the best piece of advice, I can give you, if you’re a founder with a less compelling ‘simple’ story to sell is to really spend time on finding investors – angels, VCs – whatever who has the hands-on background and experience that will make them truly see the potential in what you’re doing and sign off to help you achieve your vision.

Because for complex solutions to complex issues you not only need investment – you also need real hands-on help making it happen.

(Photo by Timo Volz 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)

Beware changing models

Can you start out with one type of business model and then transition to a new one without facing huge challenges?

The question is a valid one. And the answer is probably “No” in most cases. And it is worth exploring a bit further, as it’s often a topic that comes up when I meet with founders.

The issue with wanting to change the business model is that what I need and want as a founder and business owner is not necessarily the same as my customer needs and wants.

Let me a simple example from my own life as a customer:

When I order a case of wine from my preferred ‘wine pusher’, I expect it to be an interesting wine from a wine maker, I would otherwise never have heard of and at a reasonable price. Like I am used to.

I do not expect to get an offer for a wine they have produced themselves together with a chef, I have never heard of (even though it probably says something bad about me that I don’t). As I got the other day. And immediately decided to decline.

Why?

Because it broke the fundamental ‘contract’ I have with my regular supplier: You find regular wines from little known places that I can then get a good offer on. That’s the model, I have signed up for. You DON’T try to introduce your own brands into the mix, because that deviates from our ‘contract’.

Could I be more forgiving here and just try it out? Absolutely. And I fully expect that many of their customers do so. Otherwise they probably wouldn’t do it. But I think it goes to show how challenging it can be to make changes to your fundamental value proposition and business model.

I think you need to be very aware of this. Because while it may be tempting to try to change your business model to introduce new revenue streams, cut costs, increase sales, boost your bottom line or whatever, you won’t succeed in it if you’re out of sync with what your customers are expecting.

Don’t ever take even your loyal customers for granted.

(Photo: Pixabay.com)

The real drivers for success

One of the general misconceptions about startups is that too much value is being placed on the idea itself or the work you have already done, and not enough value is placed on what’s needed in order to get to where you want to be with your company in the future.

It is so easy to scoff at a product vision, but the reality of the matter is that when you define a bold and daring vision for your new venture, it becomes more apparent all the things you need to get in place in order to have any chance of getting there.

Let me mention a couple;

In-depth knowledge about the market, market dynamics and the customers, you’re addressing so you know what’s needed from the product(s) in order to get in front of the right future customers and actually convert into sales.

The talent needed to make things happen, so you make sure you have all the right competencies in place, which – if they are just remotely good at what they do – will have plenty of other options on the table than to join your merry crew.

The money needed to make the vision come through and fuel both the roadmap and the growth you have envisaged in order to get to the position, you want to get in.

And these are just to name a few.

The easy thing to do here is to just not care about these things, save them for later – and run into big, big trouble later on.

That happens;

When you build something nobody wants or there is just not a big enough market for. It remains the primary reason startups fail.

You cannot attract the talent you need because they have all chosen to join the other companies where they have a better feeling of what they are aspiring to do and they’re moving more diligently in the right direction.

Investors will turn their backs on you because your basically not fundable for above reasons or for something else.

See the connection here?

The best decision, you can make, is to focus less on past achievements and more on what is needed – not from you yourself necessarily but from everybody else – in order to get to where you want to be in a few years time. And then work towards ensuring that can actually happen.

That is going to make all the difference to your success.

(Photo: Pixabay.com)

Recruit with precision

The more I work with recruiting matters, the more I come to realize the amount of effort and work you need to put in in order to get the best candidates possible. It doesn’t matter whether it is for a job opening or for participation in a case competition – it is all the same.

Advertising near and far will get you something. But it is my experience that there is a high noise-to-signal ratio in that way, and that you can quickly spend a lot of time and effort for very little result.

What seems to work better though is recruiting through precision. Basically getting someone to vouch for you and your serious interests. Going that way unlocks interesting candidates who are not really out there looking but may be interested in a conversation. And it has the potential of unearthing all sorts of different interesting profiles that might be an unconventional fit for something but nevertheless a potential fit given the initial screening. It really seems like the way to go.

(Photo: Pixabay.com)

Find the blind spots

The other day I invited a good acquintance to come and visit us at inQvation and to provide feedback on an idea, we’re toying with. The latter part made sense given that this person has about 30 years of experience within the industry, where our idea potentially offers a new angle on things.

I asked him to talk straight from the gut and tell me what he thought. And his first words resonated deeply: “Ideally speaking this idea is great. Unfortunately, the world – and this industry is not ideal”. And then he went on to provide amazing feedback on potential blind spots and pitfalls based on his wealth of experience, we hadn’t considered at all, and which proves to be critical hypothesis, we need to spend time trying to find a workaround for. Otherwise our idea will tank.

When we said goodbye he apologized for being so candid. But I insisted he shouldn’t and that this was the best feedback we could get at this point in time. Because it showed us some of the potential blind spots we would have essentially zero chance of figuring out on our own. And that is a god sent. Because the blind spots – left unattended – are the ones that could end up killing your idea and/or business.

(Photo: Pixabay.com)

Go talk to a customer

One of the things that continues to amaze me is the power of actually seeking out potential customers for solving a problem and chat to them about their experiences so far in both experiencing the problem and trying to find solutions for it.

It is easy to get an idea all by yourself. But the idea – or better yet; the theme in which your idea resides – gets so much extra power by actually meeting and listening to the real experts: Those experiencing the problem.

The exercise itself is really simple: Figure out who you need to meet, set up some meetings or chats for coffee etc, show up, ask a few questions and LISTEN. I guarantee you will leave much smarter. And you will be able to channel all that insight directly into whatever it is that you’re doing, if you choose to. And yes; you should.

(Photo: Pixabay.com)