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Listened to Eric Ries’ e-Corner Talk – Guess It’s Time to Pivot

A few months ago, Eric Ries gave a talk as part of Stanford’s e-corner series (“e” stands for entrepreneur). I remember listening to the first part of his talk, but for some reason I never finished it. I finally ran across it again, so I decided to listen to the whole thing. I’m glad I did.

He described a whole range of lessons learned from the various startups he’s been part of (in fact his blog is called Lessons Learned). One lesson that I found particularly relevant to me was that all successful startups “pivot”. When a startup introduces a product to a set of potential customers, they usually learn that some of their assumptions about the market were wrong. Customers will let the founders know this by saying things along the lines of “Well this is an interesting product, but what would be really useful would be X”. This feature may only be tangentially relevant to your current product. However, if several people ask for X, there might be something there. A pivot is re-orienting your product so it can do X or building a new product that does X in a viable way. You keep one foot in your current product and “pivot” to place your other foot in the new product. If you make a series of pivots based on customer feedback, you will home in on what your customers will buy.

While this sounds easy, it’s actually very hard, in practice, for an entrepreneur to do. After all, you’ve spent a lot of time thinking about a problem and building a solution to it. When you hear someone say your product is “interesting” and ask for X, your first reaction is to dismiss this idea out of hand. You may be right; you may be wrong. It’s hard to tell. Maybe your product is too far ahead of the market (e.g., WebTV, Newton). Maybe you’ve created a disruptive technology that has to find its niche first (e.g., 2.5″ hard drives in laptops). In any case, when several people ask for X after you’ve shown them your product, perhaps it’s time to listen.

Time for Lakeway to Pivot

For the past few years, we’ve been driving very hard at developing Frontier. It’s a beautiful application that addresses key management problems that, before Frontier, have defied solution. However, for the past two years, whenever I show Frontier to engineering executives, they always seem to ask for X. After listening to Eric’s talk, I’ve thinking more seriously about how X and Frontier could live together. I think I’ve come up with something that could work. I guess it’s time to pivot and see what happens…

P.S. No, I’m not going to tell you what X is 🙂

Why Engineers are Lousy Salespeople

It’s been about 6 months since I moved back to the Bay Area. Since then, I’ve been attending various entrepreneurial meetings and trying to network with people. I’ve noticed that there are two types of people at these meetings. The first type have an idea for a product and “only need” a team to build it. The second type of people are those who’ve built a product and “only need” to sell it (I’m in the second group).

The first group tends to be non-technologists while the second group tends to be people with engineering backgrounds (or at least technical personalities). This leads me to believe that engineers are lousy salespeople. Here are some reasons why:

Emotion sells

According to Jeffrey Gitomer (he’s the guy that writes that little red salesbook), sales are first made emotionally and then justified logically. A good salesperson appeals to your emotions to get you excited about buying a product.

When you think of someone with a technical background, a person like Spock comes to mind. Engineers strike people as either passionless or (after you push them far enough) very angry (just like Spock).

If emotion sells, engineers are clearly at a disadvantage. The only time engineers make sales is if the customer already realizes they need a solution–when the customer is past emotion and justification and is willing to pay for something that works.

Getting Past No

Engineers take things at face value. If an engineer says, “Would you like to try this product?” and the client says “no”. The engineer will say “ok” and then stop talking. Engineers don’t get past no. We assume our clients are rational and that after we’ve presented our case, they make their final, irrevocable decision.

I have an 8 year old son who (I’m pretty sure) won’t be an engineer. He’s never taken “no” for an answer. In the morning he might say “Can I play Doodle Jump?”, and I’ll say “no”. A few minutes later he’ll say, “I haven’t played Doodle Jump for a while. Can I play Doodle Jump?”, and I’ll say “no.” At breakfast he’ll say, “Did you know that one of my favorite games is Doodle Jump?”. This level of discourse goes on throughout the day until I am finally worn down and wearily say “yes”. (Maybe in a few years, he can sell for me 🙂 )

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Engineers Don’t Socialize

I think it’s fair to say that most engineers are introverts. We aren’t energized when we talk to new people. It’s quite the reverse. At the end of every networking event, I am very tired. It’s hard to maintain and keep track of so many conversations. It’s hard to remember who you’ve talked to and what they do.

Unfortunately for us, making connections is how you make sales. By networking, you can build a reputation. You become more visible. You become more trustworthy.

This tends to get easier over time, but I think that’s because you start recognizing people. The conversations start being more about “how are things going?” rather than “so, what do you do?”

Pursuit of Perfection

Engineers don’t like to be wrong. We don’t like to make mistakes. We’re trained to get the right answers (and that there are right answers!). When building medical devices and bridges, this is a great attitude. When dealing with people and potential customers, it’s not.

We need to be willing to accept failure. We need to expect failure. We have to keep trying different things until we find what works. There is no formula or algorithm that can avoid this. As a group, engineers have a hard time tolerating failure. When selling, failure is a big part of life.

The R in R&D

One thing that we should leverage more as engineers trying to sell something is the “research” aspect of our background. Research is all about trying something, understanding why it didn’t work, and then using that information to try something new. This is something engineers can relate to, and I think it’s the best way for us as engineers to figure out how to sell our products. It’s not straightforward or rational, but if we work at it, we should find something that works (I hope!)

We’ve been trying to figure this out. It’s been a slow process. I believe we’ve been doing the right things, so we need to keep finding new things to try. I think we have to give up reading about how to do this and actually talk to someone who’s done this. We need to find someone who can show us the ropes of growing a business and marketing and selling. We don’t need help writing software; we’re great at that :-).

I’ll let you know how it goes. If you have any thoughts or recommendations, feel free to leave a comment. Thanks!

More info on Lakeway Technologies

With development winding down on v2.0, we’re finally able to turn our attention back to our website and our company blog. Our first post is now up, so feel free to take a look if you’d like to know why we started Lakeway Technologies.

We’ll be done with our website redesign shortly. I’ll let you know when you it’s ready. We also have a really nice newsletter in the works that will have lots of tips on managing and leading engineering teams. Stay tuned!

The Positioning Matrix: A Great Marketing Tool

A friend of ours, James McIntyre, is a B2B technical marketer and one of the stars at McClenahan Bruer Communications in Portland. A while back I asked his advice on what I should do in terms of marketing my product. The first thing he said was to put a positioning matrix together. I looked confused; he elaborated.

What is a Positioning Matrix?

A positioning matrix is a document that helps organize your thoughts on how to describe your product (or service) to a particular type of person in a particular market. Whenever you communicate to your market (via a website, e-mail, presentation, sales call, etc.), your positioning matrix can help ensure that your message is consistent and focused.

Parts of a Positioning Matrix

I don’t think there’s a standard form for this, but what we’re using has the following structure:

  • A column for each type of customer/user in your market
  • A Vision Statement row cutting across all users that summarizes the overall product message
  • For each type of customer/user, a positioning statement describing your product
  • Value Statements that answer “What’s in it for me?” for each type of person
  • Differentiators that answer “How is this different from other products?” for each type of person
  • Sound bites that should strike a chord for each type of person in your market
  • A 50 word statement describing the product/service
  • A 100 word statement describing the product/service

Using a Positioning Matrix

To give you a better idea of what a positioning matrix is and how to use it, I’ve posted my company’s matrix here: Lakeway’s Positioning Matrix.

One place where this has already proven valuable was in the redesign of my company’s website. It helped focus our message, especially as we developed the Flash movie on our homepage. If you’re curious, take a look at the movie, compare to our positioning matrix and feel free to let me know what you think.

Composing a Positioning Matrix

It takes a lot of thought, reflection and feedback to draft a meaningful positioning matrix. The company where James McIntyre works offers this as one of their services. If you’re starting out and have funding, I recommend you check them out.

If you’re bootstrapping (as I am), this may not be an option, so roll up your sleeves, block out some time, brew some tea, and start thinking about why your company exists, what it does for your customers, and how it’s different from everything else out there…and make sure you revise it after you start talking to your market!

My Company’s Mantra

A few years ago, when I was just starting my startup, I asked Frank Helle (CEO of Axian) if he had any advice. He said that Guy Kawasaki was in town talking about starting companies, and that I should attend. At the time, I didn’t know who Guy Kawasaki was, and for some reason, I didn’t think google him either (I don’t think I used “google” as a verb at that time).

On the day of his talk, I paid my $20 fee to get in and sat near the front (since you can see the speaker better). Just before he was about to start, I looked around at the audience and was surprised that the whole room was full. As soon as Guy started his talk, I could see why. He was a remarkable speaker and had so much pragmatic advice that I didn’t bother taking notes — I was just going to buy his book Art of the Start. If you’re thinking about starting a company, this is something you should really take a look at.

A mantra is not a vision statement

One of the interesting points he made was having a “mantra” for your company. This isn’t a vision statement or a mission statement (which are usually lifeless and awful). This is the reason your company exists, a short phrase that sums up the ideals and goals of your company. It’s hard to come up with this, so we didn’t have one for quite a while (actually it took us over 2 years to come up with our mantra).

A mantra is not a tagline

One thing a mantra is not is a tagline. We hear taglines all the time: “What can Brown do for you?”, “I’m lovin’ it”, “Just do it”. A tagline is part of a campaign for branding a company. It isn’t the reason a company exists. Nike doesn’t exist to “just do it”. Guy came up with one possible mantra for Nike: “Authentic athletic performance”. This doesn’t have the zing of their tagline, but it is more enduring and provides more guidance.

Although a tagline isn’t a mantra, it still takes time to develop. It took my company about a year before we came up with something that worked (my wife thought of it — she’s very smart). Our tagline is “Get Your Priorities Straight.” It’s a nice tagline. It’s short, it’s accurate, and it’s a little confrontational (something key for the kind of startup we have). However, it’s not a mantra.

Our mantra

Over the past few weeks, I’ve had to describe my company’s product (Frontier), to a number of people in a number of different ways. One day, my company’s mantra just popped into my head: “Reduce workplace stress”. This is really at the core of my company. That’s why I came up with the concept for Frontier. That’s why I took the time to think about it and develop it.

People spend most of their lives at work. A lot of their time at work is spent under stress. Stress is a bad thing that can spill over into every aspect of people’s lives. If we can figure out how to reduce workplace stress in a real way (not just treat the symptoms), we will have done something to improve (and maybe change) the world. That’s something worth spending time on. That’s why I keep going. That’s why my company will succeed…eventually 🙂

Many hats make light work

Many hats…

One of the things about starting a company is that you’ll have to wear a lot of hats. I always had this image of an entrepreneur wearing a bunch of different hats all at once. Kind of like this. They’d be wearing a “Marketing” hat, an “Engineering” hat, a “Finance” hat, a “Sales” hat, etc. I’m sure there are people that can do this — with panache, even — but I’ve personally found that I’m only comfortable wearing one hat at a time. Take consulting and engineering. When I’m a consultant, I talk (and think) about process and organizational change. When I’m an Engineer, I talk and think about zero conf jeos virtual appliances and version control systems. I can switch hats, but it takes a day or two for me to really get into the role.

…make light work

At this point in my startup’s life, we have a v1.0 of our product ready to release and a beta customer that’s been using it for the past 4 months. In order to keep the lights on (i.e., make light work :-)), we’ll have to find at least 3 more customers. That means that I’ll need to take off my “Engineering” hat and put on a “Marketing” or a “Sales” hat — I’ve been struggling with which should be first. Drucker noted that Marketing and Sales are opposites in some sense:

…the aim of marketing is to make selling superfluous. The aim of marketing is to know and understand the customer so well that the product or service fits him and sells itself.

If the product fits the market well, then getting the customer to buy is easy. If the product doesn’t fit the market, then getting the customer to buy is hard — you’ll have to do more selling. This makes sense to me. Since I want our product to sell itself, I’m thinking that I should try the Marketing hat first :-).

Marketing First

When I’ve gone out to demo my product to people, I’d catch their interest but would inevitably lose it again, seemingly at random. I wasn’t sure what was happening. I described the product features in a logical progression that made sense to me, but I wasn’t able to fully engage my audience. I didn’t get it. We have this amazing product that solves some of the toughest and most important problems organizations face, and for some reason I couldn’t get people to see it!

Fortunately, a friend of mine, who works at an innovative marketing firm in downtown Portland, was nice enough to drop by and set me straight. He outlined some useful Marketing concepts:

  • Positioning statements: These are brief statements that describe what your company does. For instance, if you go to a networking event and someone asks what you do, this is what you say.
  • Value statements: This is the benefit of your product to a customer. When they ask “So what?”, this is what you tell them.
  • Differentiators: This is what makes you different (and better) than competitors or competing options.

The key to all of this is that you don’t just have a list of value statements; you have a list of value statements for each type of audience. This became very clear when my friend asked “What is the value an engineer gets from your product?”. I responded, “Oh, they want something that doesn’t get in their way, something that doesn’t have much overhead to use”. Oddly enough, this was the first time I’d ever said that explicitly. I instantly realized that this was why my demos weren’t effective. In describing the product logically, I’d inadvertently emphasized the wrong features at the wrong time to the wrong people. I wasn’t recognizing the perspective and concerns of my audience. Engineers didn’t care about the same features that executives cared about. Why should they? No wonder my demos were hit-or-miss.

Sales Soon

Right now, I have my Marketing hat on. I’m going to keep it on until I have positioning matrices filled out for each of our market segments. Once these are done, I’m going to slap on a Sales hat and find customers to talk to. Unfortunately, I don’t really know what a Sales hat looks like. For some reason, I have this image that’s a cross between Willy Loman and Darrin Stevens. I picked up some books to help me figure this out, but I think I’ll just need to sit down with a salesperson on this one. I’ll have to do this soon because my company doesn’t have much ramp left before we hit the road.

Haberdasher

As I’ve been writing this, the final scene from Spinal Tap (scrub to minute 4) keeps looping in my head:

Nigel: Well, I suppose I could, uh, work in a shop of some kind or…or do uh…freelance…selling of some sort of…uh…product, you know…

Marty: A salesman, you think you —

Nigel: A salesman, like, maybe in a haberdasher, or maybe like um…a chapeau shop, or something…you know, like: “Would you…what size do you wear, sir”, and you answer me.

Marty: Uh…seven and a quarter.

Nigel: “I think we have that…”, you see, something like that I could do.

Marty: Yeah… you think you’d be happy doing something like —

Nigel: “No! We’re all out, do you wear black?”, see, that sort of thing I think I could probably muster up.

Marty: Do you think you’d be happy doing that?

Nigel: Well, I don’t know – wh-wh… what’re the hours?

🙂