10 posts tagged with "startup"

External

1. Understanding Customers: Customer acquisition and demand forecasting
2. Reaching Customers: Marketing and PR

Internal

3. Survival: Cost Structures, Pricing, and Metrics
4. Organizational: People and Culture

Internally

1. Understand Customers: Customer Acquisition and Demand Forecasting
2. Reach Customers: Marketing and PR

Externally

3. Survive: Cost Structure, Pricing, and Performance
4. Thrive: People and Company Culture

What is Customer Relationship Management (CRM)?​

Customer Relationship Management (CRM) software allows you to manage sales leads, convert them into customers, and track data and sales performance. To establish a CRM for your startup, you first need to determine the following:

• The process your customers go through from sales leads to active customers
• How to differentiate among potential customers
• The CRM software you will use

The following article assumes that your startup has a product to sell and sufficient customer activity to track and manage. If you do not yet have a product or customers, please bookmark this article for future reference when you are ready to use CRM software.

Identify Decision Points in Customer Conversion​

Before purchasing any CRM software, you must first create a framework for your customer conversion process. This framework should outline the decision points in the customer lifecycle, from initial contact to lead to deal to active customer, as well as all the smaller decision points in between. To understand how your customers convert, you need to talk to existing customers and identify the different decision points they encountered in deciding to use your product. At this stage, it's best to do this with pen and paper, although software like TechValidate may be helpful.

Customer Conversion Framework​

Most frameworks will include the following elements: Leads, Prospects, Marketing Qualified Leads (MQL), Sales Qualified Leads (SQL), and Opportunities.

Leads​

Leads are known potential customers with whom you may or may not have established a relationship. The collection of leads is sometimes referred to as an outbound database or a prospecting database, typically stored in a CRM or integrated with one.

Prospects​

Prospects are another commonly used term, although in some sales funnels, prospects are defined as being one step closer to becoming customers. When companies distinguish between leads and prospects, they often note that prospects have communicated with sales representatives or responded to them (for example, they may have replied to an inquiry call and scheduled a follow-up conversation).

Marketing Qualified Leads (MQL)​

While leads may not have interacted with your company or product, "Marketing Qualified Leads" refer to leads that have taken certain actions indicating interest in your product. You need to define this behavior; some common examples include long or frequent website visits, filling out online information forms, attending events, downloading or requesting whitepapers, or clicking on ads. Not everyone you engage with is a Marketing Qualified Lead; you need to define what these parameters are based on your product. For example, if you only offer products in the U.S., but someone with an international IP address downloads your whitepaper, this action indicates intent but does not meet the qualification criteria.

Sales Qualified Leads (SQL)​

Sales Qualified Leads are those leads that show a high intent to purchase. They express their willingness to buy your product by requesting live demonstrations, quotes, or conversations with sales representatives.

Opportunities​

Once purchase qualification and intent have been confirmed in the sales process, Sales Qualified Leads become "Opportunities." This is the final stage before becoming an active customer.

Build Your Funnel​

Not every sales cycle or product will follow this exact formula and funnel. While each process has its unique steps, most software, hardware, and services will follow a similar path. When building your CRM, it is your responsibility to map out these decision points and potential outcomes—primarily focusing on what causes a lead not to continue in the process at each step.

Differentiate Among Customers​

A company rarely has a single type of customer. B2C companies target customers based on age, wealth, geography, technological maturity, mobile operating systems, online activities, and countless other attributes. Similarly, B2B companies target customers across size, tenure, geography, industry, technology maturity, online activities, and legal entity types, among others.

Therefore, treating every customer equally in the sales/CRM process is often a mistake. If your product supports self-registration, you may find that some customers prefer to register themselves, while others want support or sales assistance. This is a common form of segmentation among customers. Another common differentiation point is that some customers are transitioning from similar products, while others have never used any competitor's services.

Regardless of the specifics, taking the time to identify relevant differences among your potential customer base before establishing a CRM is crucial to your sales approach.

Choosing CRM Software​

There are many excellent SaaS options available today, particularly for startups. A good approach is to look at the software you are already using or software that someone on your team has used before.

Zendesk and Hubspot​

Typically, startups often use Zendesk for customer service or Hubspot for marketing categorization and campaign management. If your startup falls into this category, both software suites include CRM (Zendesk acquired Base CRM in September 2018). You might consider using these existing software solutions for your CRM as they are convenient and cost-effective. Using them may be free or require only a small monthly user fee.

Salesforce, Pipedrive, and Copper​

If no one on your team has a CRM preference, or if you have not used an embedded CRM software platform, or if you want to purchase a standalone CRM from existing software, popular options include Pipedrive, Salesforce Essentials, and Copper (formerly Prosperworks).

All three are good choices. Some users prefer the "native" integration between Copper and G-Suite (they share similar design principles, such as allowing you to use Copper without leaving Gmail), while others appreciate Pipedrive's simplicity and cost-effectiveness. It is worth noting that a common complaint about Pipedrive is that it may feel more suited for small to medium-sized businesses rather than startups, and its email integration only allows you to associate one email address with a deal. Complaints about Copper include its lack of customization in reporting and its high cost.

Finally, if you are looking for a lightweight, open-source, personal CRM that protects your privacy, I recommend Guanxi.io. Why is there a personal CRM like this? This article explains it.

• Listen to customers

  • Continuously communicate with customers
    • Making friends with customers is the simplest strategy: once they become your friends, you can bother them for feedback frequently. To a certain extent, sending chat messages is easier than emails and meetings.
  • Pick customers you serve
    • Exclude customers who are not painful about the problem you are solving
    • Exclude customers who want features that you haven't made yet

• Fast execution

  • Define just the right scope
    • Usually, satisfy the simplest use case and wait to see what else people want. You will naturally know what to do next.
  • Develop an intuition for problem-solving
    • The product is a combination of art and science. Too data-driven products lack soul and surprise. How to practice intuition? Try to validate ideas without code.
  • Maximize autonomy and promote a culture of prioritization by persuasion. At the same time, allow teams to choose their work based on their emotions, lives, and interests. Use persuasiveness and dynamic adjustment to drive progress.

Metrics Turn Vague Ideas into Great Ideas​

• A rough estimate is sufficient
• Focus on how to evaluate a great product
• Note, do not worry about the overall market size
  • Simply asking "Will it ultimately be large?" is enough

What Should We Measure About the Product?​

• Are users receiving value?
  • Active users
  • Profit
  • Transaction volume
  • Retention

Retention is Important​

The chart below shows the retention rate over time for each annual cohort.

If the cohort retention rate keeps declining without a lower limit, your growth will be like a fire ring in a field that cannot sustain itself because

• Old users will be burned out
• New users will become fewer

You should keep the retention rate above a certain line.

Conversely, if the cohort retention rate increases over time, it indicates that your product is excellent. For example:

1. Whatsapp
2. Uber
3. Facebook

Tom Tunguz: High Retention Means High Valuation

Growth​

If you have high expectations and want to achieve exponential growth, then assess your weekly growth rate. Strive to keep this weekly growth rate steady, and you will experience exponential growth.

Iteration Speed​

• Smaller companies have an advantage in iteration speed
• Metrics are key to guiding the direction of iterations
• Measure the speed of the iterations themselves

How Much Should You Value Metrics?​

1. Not enough emphasis
   • Easy to deceive oneself and hit a wall
2. Very high emphasis
   • Your decisions will be cautious
3. Overemphasis
   • You increase numbers but do not add value

Reality Can Be Painful​

• Metrics can shatter illusions, and sometimes it can be a bit painful
• Most leaders attract subordinates through illusions
• You should
  • Learn from the past
  • Clarify the present
  • Smile at the future

Paul Graham and Robert Morris's first startup around the age of 30, which involved putting art exhibitions online, ultimately turned out to be a bad idea, let alone for those in their 20s.

Why do smart people come up with bad business ideas?

1. Bad ideas are products of intuition.
   1. People often think of what to do based on what they see; however, if you plan to work on something for several years, you should weigh several different ideas beforehand.
   2. The most tragic part is the subsequent IKEA effect: despite being a bad idea, because you invested effort into it, you will grow fond of the idea.
   3. What to do? Getting started quickly is good, but you must recognize that ==spending time does not necessarily improve the situation.== Keep asking yourself: Would anyone be willing to pay for it?
2. Bad ideas prioritize being impressive over making money.
   1. If you want to make money, don’t shy away from dirty work: the dirtier and more laborious the work, the fewer people are willing to do it, leading to a tighter supply-demand relationship; if you take it on, your bargaining power increases.
   2. Since making money is hard, your primary goal should be to make money; otherwise, you won't make any.
3. Bad ideas yield to fear of competition.
   1. Competition may not be as fierce as the media portrays; they often lack technical knowledge and coding skills.
   2. Why do we fear? Understanding programming but not business? In reality, the term "business" is too broad and abstract, obscuring the concrete issues below: selling products, promotions, understanding what customers want, pricing, customer support, billing, etc. Once you tackle these details, you have resolved "business."
4. Bad ideas are too superficial.
   1. Most ideas are hybrids of blogs, calendars, dating sites, and social networks. Meanwhile, there are better, unsolved problems in the distance with high demand, yet no one is addressing them.
   2. Why is it difficult for people to research what customers truly want? The existing education system teaches people how to solve problems but fails to teach them how to ask questions.

Understanding what users want is challenging, as it requires recognizing that you need to invest time and effort into this task. Unsure how to start? The answer lies in Carnegie's classic "How to Win Friends and Influence People" — the answer is empathy, or putting yourself in others' shoes.

Fortunately, the ability to conduct user research can be learned; "smart creators" and "user research" are a perfect match that can unleash endless potential.

In a nutshell: Create products and services that the public loves and enjoys.

Why bookkeeping?​

Everyone has advice about how to manage money. Search Google for "manage money," and you'll get back over 1,690,000,000 links. You'll find tons of life-hacking or self-help articles and books. You'll find professional coaches or courses witch will coach you for a fee. You'll find financial and investment services. Feel free to try what appeals to you and grow your assets through trials and errors.

I think the most important thing to remember is that asking the question of money comes from fear and self-doubt. We all fear change. We all doubt our ability to make more money.

Instead of spending time worrying and doubting, focusing the opposite — your confidence. If you are playing poker and with few chips, you can only make small bets and only win a small amount of money. When you have a lot of chips, you can make big bets and win big. You have more room for taking risks. You can try things which you cannot try when you have fewer chips.

Here is the magic - by understanding more of your financial status, you gain confidence! With more confidence, we can make better judgment and would like to bet the best amount for more significant success, and then win more.

Know your expenses and plan for next spending

Where is the end of the wining-more concern? People often talk about the buzzword of financial freedom. However, talk is cheap, but bookkeeping precisely answers the question.

Four main financial statements for the overview of financial status​

Unfortunately, bookkeeping is not easy in our modern life. We are in a new age of abundance. We have a lot of accounts - cash, bank accounts, payment apps, credit cards, stock or crypto broker accounts, discount cards, … We have assets like houses, cars, gold, jewelry, … To make things even worse, some of us may live across countries and have to deal with different currencies. How could we draw an accurate map of our financial life and navigate through the future uncertainties?

By "accurate map of our financial life," I mean these four primary financial statements:

1. Income Statement: It shows how much revenue we earned over a specific period. This statement is usually considered the most important of the financial statements because it reflects the operating results.
2. Balance Sheets: It answers how much assets, liabilities, and equity of the entity we have. This statement is the second most important because it reports the liquidity and capitalization of our assets.
3. Cash Flow Statements: It reports our inflows and outflows of cash and answers whether we generated cash. We need enough cash on hand to pay expenses and purchase assets.
4. Equity Statement: This is not helpful for your personal accounting. However, for a company, this statement reports how it distributes equity among stakeholders.

With beancount.io, you can quickly generate statements like the above. But wait… How to prepare data for these statements?

Double-entry Bookkeeping for Correctness​

To ensure the accuracy and internalize the error detection into the system, double-entry bookkeeping requires every entry to an account has at-least a corresponding entry to a different account. One transaction involves at least two accounts with two operations - debit (+) and credit (-).

1970-01-01 open Income:BeancountCorp
1970-01-01 open Assets:Cash
1970-01-01 open Expenses:Food
1970-01-01 open Assets:Receivables:Alice
1970-01-01 open Assets:Receivables:Bob
1970-01-01 open Assets:Receivables:Charlie
1970-01-01 open Liabilities:CreditCard

2019-05-31 * "BeancountCorp" "Salary of May 15th to May 31st"
  Income:BeancountCorp               -888 USD
  Assets:Cash                         888 USD

2019-07-12 * "Popeyes chicken sandwiches" "dinner with Alice, Bob, and Charlie"
  Expenses:Food 20 USD
  Assets:Receivables:Alice 20 USD
  Assets:Receivables:Bob 20 USD
  Assets:Receivables:Charlie 20 USD
  Liabilities:CreditCard -80 USD

As you can see in the two examples above, every transaction must fulfill the accounting equation.

Assets = Liabilities + Equity(aka Net Assets)

We used the Beancount syntax by Martin Blais and the web project Fava by Jakob Schnitzer to build this website. And it will alert you if any transaction has any legs not summing to zero.

Now you understand how we enforce the correctness of the ledger. But you may ask what are those "accounts"?

Accounts for money as buckets for water​

Thinking your assets as water running in and out of different buckets and "accounts" are those buckets holding your money. With double-entry bookkeeping, it becomes obvious how money is flowing across different accounts, just like how water is flowing across different buckets.

Beancount.io introduces five kinds of accounts.

1. Income — Its amount is always negative or in debit. This is because you are making money, and then the money is debiting from "Income" account and crediting to your "Assets."
2. Expenses — Its amount is always positive or in credit. This is because you are spending money, and the money is flowing from the "Assets" or "Liabilities" to the "Expenses."
3. Liabilities — Its amount is positive or zero. Your credit card liabilities are a good example, which rises and falls in cycles.
4. Assets — Its amount is positive or zero. Your cash or houses are always worthing some prices.
5. Equity — Your net assets. The system will calculate automatically for you. Equity = Assets - Liabilities and it reflects how wealthy you are.

Now you can open your customized accounts with those keywords above:

1970-01-01 open Assets:Cash
1970-01-01 open Assets:Stock:Robinhood
1970-01-01 open Assets:Crypto:Coinbase
1970-01-01 open Expenses:Transportation:Taxi
1970-01-01 open Equity:OpeningBalance

Commodities: Tracking your investment​

Yes, you can track your investment with beancount.io. For example, we buy 10 Bitcoins at the price of $100 in 2014:

2014-08-08 * "Buy 10 Bitcoin"
  Assets:Trade:Cash -1000.00 USD
  Assets:Trade:Positions  10 BTC {100.00 USD}

And then three years later, you sell them (originally with costs of $100 per unit annotated with `{100.00 USD}`) at the price of **$10,000 per unit** annotated with @ 10,000.00 USD.

2017-12-12 * "Sell 2 Bitcoin"
  Assets:Trade:Positions                   -2 BTC {100.00 USD} @ 10,000.00 USD
  Assets:Trade:Cash                          20,000.00 USD
  Income:Trade:PnL                          -19,800.00 USD

Or the same transaction with @@ 20,000.00 USD means that at the price of $20,000 in total.

2017-12-12 * "Sell 2 Bitcoin"
  Assets:Trade:Positions                   -2 BTC {100.00 USD} @@ 20,000.00 USD
  Assets:Trade:Cash                          20,000.00 USD
  Income:Trade:PnL                          -19,800.00 USD

The sum of all legs of the transaction, including -2 BTC {100.00 USD}, are still, as always, zero.

The costs {100.00 USD} tag is important because you might have bought the same commodity at different costs.

100 BTC {10.00 USD, 2012-08-08}
10 BTC {100.00 USD, 2014-08-08}

If you want to simplify the process, you can set up the account at the beginning with FIFO or LIFO. FIFO stands for first in, first out, while LIFO stands for last in, first out. In the US, IRS uses FIFO to calculate your PnL and tax accordingly.

1970-01-01 open Assets:Trade:Positions "FIFO"

And then when you sell it in shorthand like -2 BTC {}, beancount will apply FIFO strategy automatically and sell the oldest commodity.

Beancount.io​

Beancount.io is such a cloud service for recording your financial transactions in text files, visualize them into financial statements (income statement, balance sheet, trial balance, etc.), and helps you live a better financial life. Sign up now - It's in Promotional Period and Free!

This is an outline of slides for the seed-round fundraising.

• Title and slogan
• Problem
  • Challenge
  • Pain points
  • Market demand-supply analysis / market size, trend / Market geography / market segment / target audience
• Solution
• Why does it work?
• Why us? / Insights / competitive landscape
• Business model
• Future Growth
  • Go-to-market Strategy
  • Traction to Date
  • Roadmap
• Team
• What we need / Ask

Why do startups have to innovate? Why do growth techniques work only once for a given product or service in a given market? Why is there no skill called “business”?

The answer is ==Anna Karenina principle==. Tolstoy opens Anna Karenina by observing: “All happy families are alike; each unhappy family is unhappy in its own way.” Business is the opposite. ==All happy companies are different: each one earns a monopoly by solving a unique problem. All failed companies are the same: they failed to escape competition.==

If a startup does not innovate but copy a product or service from the market leader, and the startup is targeting the same market, then people will not buy it because people are probably customers of the market leader already. Why do people buy the same thing for twice if their needs are fulfilled already?

Why do startups need to innovate? Why do growth techniques only work for specific products or services in a particular market? Why is there no such thing as a "business technology"?

The answer lies in the ==Anna Karenina principle==. Tolstoy observed that "happy families are all alike; every unhappy family is unhappy in its own way," leading to this theory. However, business is the opposite. ==All successful companies are different: each successful company gains a monopoly in a field by solving a specific problem. All failed companies are the same: they did not escape market competition.==

If a startup simply copies the products or services of current industry leaders, lacks innovation, and targets the same market, people will not buy into it, as they may already be customers of the industry leader. If people's needs are already met by existing products, why would they buy the same thing twice?