June 12, 2023
Test Small, Release Big
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There is a reason that when you deploy software, you have alpha and beta testers.
Why?
Cause shit goes sideways when you mass deploy.
We don’t live or operate in a vacuum. So when you are building something new, you need to test with smaller sample sizes in the wild before pushing to entire groups. This helps you avoid pain, confusion, and overall negative user experiences.
Luckily the Central Limit theorem helps us solve this problem!
In short, the distribution of sample means approximates a normal distribution as the sample size gets larger, regardless of the population's distribution. Sample sizes equal to or greater than 30 are often considered sufficient for the CLT to hold.
Simplified, you will essentially have all of the data you need after getting results from 30 (random) people or so.
So, before you release anything out at scale, run some tests. At a minimum, run it past 30 people/customers. This goes for software releases, marketing campaigns, sales pitches/adjustments.
Very important to keep this in mind with everything that you do while building a company!
It takes a lot longer than you think to do anything great.
Especially in software. It’s tough to bring products to life. It's even harder to get a brand going, recognized, trusted, used, and adopted.
It takes time.
It takes energy.
It takes blood, sweat and tears.
But it’s possible… :)
I'm a huge fan of compounding - the 8th wonder of the world. There is nothing more powerful than compounding, assuming you stay out of its way.
Compounding doesn't just apply to your portfolio. It applies to all aspects of your life, particularly business endeavors.
Magic happens when you show up and chop wood, every day.
It's going to start slow. That's how numbers work. But if you stick with it, things start to pick up.
Ankur Nagpal built and sold teachable. Here is a specific look at his journey:
And Ankur isn't the only one.
Here is a breakdown of 24 SaaS companies and their time to a 1B+ valuation:
Average - 11.7 Years w/ a 4B payout.
It takes time.
Jason Lemkin harps on 10M in revenue being a magic number for SaaS.
If you can get to 10M, and you are doubling every year, things get fun, fast.
Here are the numbers…
.2
.5
1
3
6
10
20
40
80
160
= 6 years to get to $10M in Revenue… then 4 more to get to + $160M.
(the counterpoint is also true… If you get 6+ years in, and aren’t even sniffing those numbers, gonna be a tough put.)
This is also where one of my favorite sayings comes from, and the larger theory Gates Law:
“We overestimate what we can do in 10 months, and underestimate what we can do in 10 years ”
— Bill Gates
People live in the now, and focus on short term.
ZOOM OUT.
It's going to take about 10 years to do anything great!
Building businesses is hard, and it’s going to take up an obnoxious amount of your bandwidth. Go all in. Raise $$$ that allows you to be there, all in. Yes, you're going to have to give up ownership. But it will allow you to be all in.
Naval nails it with this thought process:
If you are serious about building a successful company, there is no other way to make it happen other than to become IT. Obsessiveness will be your superpower. The more time you can focus on the business, the better.
So, raise the necessary capital to go all in.
First-time founders think product.
Second-time founders think distribution.
The reality is, you gotta think both, simultaneously!
Here’s the cool part. Distribution can start TODAY.
You can have the best product in the world, if there is no distribution, it doesn't matter.
Start niche (industry-wise). You can boil a pot of water on the stove quickly. It's impossible to boil the ocean.
Focus on an industry you are familiar with:
Use tools and high-leverage platforms to facilitate your distribution:
Build your audience. Write up the specifics of whatever it is that you are in the process of building. Build your company and product in public in public as much as humanly possible.
Add value right away
Build something that people want/will pay for (and are paying for)
Remember, no one cares about your product, they only care about what your product can do for them.
Talk to your audience. Ask them specifically what they are looking for. What would the perfect product look like for them? What sort of resources would make the most sense? What would make their lives easier?
Iterate your product. This is helping you achieve PMF as quickly as humanly possible. Implement. Immediately. You have no idea how powerful quick iterations are with early adopters. They create evangelists for life!
Assume the product that you set out to build WILL change.
We call this a pivot.
This happens all the time. Amazon started off as a bookstore. Angellist started off as a talent collective, now it provides all of the tools necessary for entrepreneurs to build businesses.
Some sort of pivot early on needs to be assumed. You need to stay malleable and embrace the iterative product process.
Take time to Achieve Product Market Fit (PMF). Trust me, there is nothing worse than trying to force a half-baked product into a marketplace. Users are way too smart and have too many other options than to put up with a product that truly isn’t working, is better than their current solution, and adding serious value.
Revenues will be slow early on. That’s OK. Keep iterating. When PMF happens, you’ll know. You’ll feel it.
BUT - make sure you’re using the initial product iteration period strategically… So simultaneously build personal/brand equity and your community/distribution list.
OK, so we understand that the first 12-18 months or so are going to be 'slow', but we are supplementing it with the following activities
Consistency is KING. (Every day, throughout this entire process!)
By knowing, understanding, and having a set plan, we will be able to avoid the classic early stage 'Trough of Sorrow'.
Not only will this do wonders for your mental health, it will engrain a long-term thought process and time horizon into the very foundation of your business. (something that is vital to go the distance)
This will also help you set correct expectations with anyone you are raising money from!
All of this can be done solo, or with a small team (oftentimes outsourced overseas to keep costs low). You can run extremely lean during this phase.
Getting software companies off the ground is the toughest part. Finding initial PMF is going to be a major challenge.
But, after it happens, software orgs are compounding machines. The beauty of software is the endless scalability w/ marginal increases in COGS, infrastructure, you name it.
How to Build a Business in 2023:
This is the way.
Doug Leone led Sequoia for 25 years. These are a couple of key highlights from Invest Like the Best.
Venture is the commodity side!
His GTM strategy (this is completely brilliant!)
The Merchandising Style
1 - Vision
if the vision is wrong, we're all going home, assuming we're some place in a ballpark..
2 - Product
Then it starts with product management. what are we building? To product marketing, how do we position it? How do we tell the story? How do we have the 3 words for describing what we do? How do we have the 30 seconds, 2 minutes? And everybody can do with 10 minutes. Very few people can do the 3 words. And then how do we do the demand gen? How do we do the sales? And wherever that cycle is broken, it looks like a bad salesperson. This guy can't sell.
Actually, the truth of the matter is if you've got product market fit, even shady salespeople can sell. When we first invested in ServiceNow, we had the BT prior to Frank Slootman coming in, in sales, and they were selling like crazy. So that was my lesson. And so for me as a Board member, I have to debug the merchandising cycle.
Product can't sell. Why? There's not enough leads. Oh, well, I know to fix that. Why don't we get some more BDRs. Then you can talk to the BDR guys. Here, you can have 5 BDRs. Well, then they start fessing up. Well, it's not really a BDR head count. It's that the message isn't playing right.
Well, I knew that, but its nice you admit it, let's go back to product marketing. What's the message? Is that the right message? Is that the wrong message? And that's based on the product we're building. This is the product management. And so I work very hard at debugging upstream this merchandising cycle, so we can figure out what the real problems are. And as I think about it, take these rocks out of the river so that dam water can flow as fast as possible.
He can’t do the black magic
Can’t find PMF - THAT IS RESERVED FOR FOUNDERS (and why he gets more involved at later stages.)
Components of great positioning:
Simplicity, crystal clearness, something a mere mortal can understand. If you can describe it and you can understand it you're out to lunch. Singularity of purpose. When I go to the store, I buy a pencil because I want to write. I don't want a pencil because I want to write, I scratch my back with the tip. It doesn't work like that.
Singularity of vertical market early on because you want to be narrow. You have no resources. You've got to be narrow.
Product Drag on the back end will eat you alive:
You also have to understand for each product you sell, how much drag is it on the back of the company. If I sell you pencil, there's no drag in the back of the company. If I sell you a solution that everyone requires 6 months implementation plan, 3 features for each one, then you can go as far as you can because your bottleneck is no longer at the front end.
On sussing out the killer gene:
You look what they've done. Have they taken risks in life early on? Have they put their guts on the line? I tell candidates with children that it's okay if you choose a parallel track life, i.e., when you become a bank, a consultant. And it's okay if you want to take risks. What's not okay is do one and always spend your life thinking you did the other. And the killer gene for me is stay away from the parallel tracks. Just put yourself out there with no net. And usually people that are a little desperate in life, that only have one way to go and that's up or forward, they tend to have the killer gene.
In closing:
Don’t be afraid to inject some misery.
Don’t shy away from Constructive Suffering!
Emotions are deeply ingrained in us as human beings. They are what allow us to procreate. Emotions keep us safe. They keep us alive.
But, they can oftentimes be far more complicated than necessary. Even downright harmful, when not used correctly!
Found myself rewatching Billions here recently, and it’s been great. (Living in lower Manhattan makes it that much more real, lol) For those of you not familiar, highly recommend watching!
This specific scene really hit home. Coincidentally, it was a couple of hours after I had read something that upset me, and caused me to get overly emotional about something that shouldn’t have caused that level of reaction.
Here is the scene:
Here is what he says:
He’s right.
It immediately took me back to a random Twitter thread w/ Shaan Puri a couple of years ago. He had been talking about the ability to simply change the way you were feeling on a dime is the superpower of superpowers.
At that point in time, it was foreign to me. Honestly, when something happens and I fall into the ‘high-speed wobble’ state, my day is over. It’s going to take a night’s sleep for me to reset and move on to the next day…
But that’s a weakness.
We can’t control what happens to us, but we can control how we feel, and more importantly how we react.
Being in total control of how you feel, your emotions, and what you choose to show people, is indeed the ultimate power.
Much easier said than done, however. It’s going to take years of practice, and decades of mastery.
However, it’s absolute truth, the top players out there are constantly cool under pressure. They don’t get too high, or too low. Especially when the stakes are highest (board meetings, etc)
Ways to practice:
Work in that direction.
In fact, few people are.
You have to be a jack of all trades, master of none.
Bo Peabody put this eloquently in his book, Lucky or Smart. The title of chapter 5 is literally this:
He goes further to describe a particular scenario later on in the chapter where 2 of his key players are in a massive fight. They are 2 savant level folks, that are absolutely vital for the startup, and take everything necessary to keep the startup afloat.
So much of management is making sure these folks play nice, and stay together.
Every startup has these problems... If they're successful anyway. You need personalities like this to make the impossible, possible. It's the juice.
Jason Lemkin posted this as well... There is real truth to this:
If it's not the CEO, it's gotta be someone, or at least a few other people damn close to the top.
You serisouly have no idea what 1 good hire does for a company. Especailly a small company. 2 Good hires make that even better/more ridiculous.
You have to be crazy enough not only to think you can see the future, but to have the ability to go out and manufacture it. Out of thin air!
There is no corporate playbook, you're in a knife fight every single god damn day!
Complete action.
You have to be scared to make mistakes and put out information that is completely imperfect. And potentially look like a fool in the short term to capitalize long term!
Default speed for a startup is reverse. If you take your foot off the gas pedal, you're heading backwards!
There is no right or wrong answers. This is something that school teaches us, and is completely bullshit for the real world. There are no 'rules' out here. There are laws that you have to obey, but thats it.
Everything else is maliable. Don't forget that 🙂
An extremely important part of life or sales or whatever you do is finding/treating the root causes of problems, not symptoms of issues.
Think of it this way:
If you pull a muscle while working out, sure, you can ice, heat, and apply icy-hot to the strained fibers of the muscle. But that isn’t going to fix the strain, and that certainly isn’t what caused the pull in the first place. You pulled your muscle because you weren’t adequately warmed up before moving full speed, or because you’re not flexible enough at large.
In order to truly fix, and PREVENT this type of behavior from happening again:
Think about the above concept in all areas of life!
From a sales perspective, someone doesn’t buy something from you right away. You need to figure out exactly why they aren’t buying!
If people aren’t getting along or there is a disagreement, the answer isn’t to simply, get everyone in a circle, hold hands, and sing kumbaya, you need to talk to the other person, or people, and figure out what the true root cause of the issues are.
If you start and end at the surface level, you’re never going to make anyone happy. In fact, the opposite will happen, and people will begin to boil, and get more and more upset, because
An interesting and accurate observation of humanity is the following:
When we approach issues with the root cause mindset - we’re forced to think about, talk to, and ideally jointly come to the same conclusion as the other person. Rather than judge / guess what other people are thinking, you can UNDERSTAND and then KNOW the best way to move forward for all parties involved.
Try to activate a reframing mindset when you’re in the middle of a conflict.
Reframing is your ability to look at a given situation from someone else’s point of view.
Examples:
Reframing will help you get to the root cause of why people are not aligned. As always, it helps to overcommunicate as well :).
Till next time!
Here are key questions to ask when you are interviewing for a new sales job/role:
How big is my book of business?
How many accounts am I managing?
What does the account structure look like?
Existing opps in accounts?
Good starting spot :)
We’re currently living through a tectonic shift in the way the world works. WEB 3.
There is so much to consume here, I’m just going to provide the best resources I've found/been able to consume.
OK, so TLDR
What that means moving forward:
Great question! I don’t know exactly. No ones does.
One thing it means is that these new, Web 3 platforms, will continue to take power from the few, and give them to the many.
I've never seen anything quite like this renaissance.
It's taken so many of the greatest minds (ranging from tech, to finance, to real estate, to digital marketing, to design, to SEO) and COMBINED THEM.
This is the wave that overthrows big tech - it’s the only thing that can compete at the same scale. But it’s not direct competition, Web 3 is playing a different game. It’ll be death by 1000 cuts, rather than a 1 on 1 fight on the street.
Warren Buffet has been quoted saying, "How to you beat Bobby Fischer? You play him at any game but chess."
How do you get in on the action?
Buying BTC is your safest play. Bitcoin is now digital gold.
ETH is also a great bet, my favorite at the moment. Tons of value at the current price point. If BTC is gold, ETH is the internet.
Nat Eliason's DEFI Orientation Course
Always be Closing! Famous words from Alec Baldwin in the classic Glengarry Glen Ross. Also famous words from unsophisticated salespeople.
No one likes being ‘sold’ to. It’s like being in a group text message that you don’t want to be in and can’t get out of.
^The obsolete sales strategy
Our whole CIVILIZATION is now informed. Information is abundant and available at all times. Communication is nonstop. The internet has granted access to more information and access than anyone could have ever imagined.
Salespeople used to have an informational advantage - that was the edge. Sales teams were armed with specific information. They had access to specific information and had a head start to go out and spread the word. It was a numbers game - share new information with enough people, you were bound to get a bite! 1 out of 10, 100, or 1000 times and convert a sale.
Thanks to the internet, now everyone has access to information, that edge has evaporated.
It's harder than ever to bring value to your client base. You need to be more than a master of small talk. We don't have time for it in our lives and that's what your uncle Lou is for anyway, not professional time. :)
The old picture of a salesperson is obsolete and no longer acceptable. How do you get to the next level in the world of sales?
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Be genuinely interested! In B2B sales, your clients are highly invested in whatever they're working on. Think about it, they’re dedicating a significant chunk of their lives to this particular problem. (usually about 40 hours/week) It's their livelihood. It’s amazing what you can learn from a person just by asking them what they’re looking for, sitting back, and letting them talk through it.
This is most important (and coincidentally hardest to remember) when you're new. Being green (new) in the field is a catch 22:
On the negative side
On the positive side:
What you'll learn as you progress through your career is that there are none. Ever. At any stage of your career. Be prepared to look foolish in the short term.
When you begin a new career you’re going to be unsophisticated in whatever marketplace you enter. Sorry top tier B School graduates, your debt and syllabuses are no substitute for specific industry knowledge, verbiage, and network, so be prepared to be a student again, indefinitely (at least in the world of sales).
In life, particularly in sales, being curios is far more valuable than being smart. Curiosity and motivation lead to action, which then produces results. The faster you are able to come to this realization, the quicker you will become a subject matter expert. Trust me.
By asking subject matter experts (your clientele) questions, you are able to hone in on a couple of important factors:
#1 - You get a clear picture of what your client is actually doing. It's amazing how often people have been working with an individual or company for years, but cant' articulate exactly what he/she/the company actually does. This is a bad sign. You do NOT want to be in that position.
#2 - You can figure out the ROOT cause of their current issue. What is the REAL problem or circumstance this person is trying to SOLVE. If you're able to articulate (or have them articulate) this problem when you provide a solution, the next logical step will be using your solution (ie, closing the sale).
Broad open-ended questions help you achieve #2
Open-ended questions are leading questions that force your counterpart to think deeply about a problem set. It is easiest to get people to respond to these questions when they are heavily engaged and already thinking about the topic at hand. Done correctly, you discover problems/solutions that neither party was previously aware of.
Here are a few examples of broad, open-ended questions:
** Nothing that you can answer with a simple yes/no response **
For this particular exercise, get out of the weeds (where the tacticians live) and attempt to get a view of the entire jungle. (this is the vantage point of the entrepreneur, someone thinking long term, not looking for immediate results, and capable of seeing multiple scenarios, different types of players on the board, etc)
This is how you’re able to differentiate yourself from normal salespeople. When you associate yourself with being an individual that focuses on complex, long-term solutions, you’re actually adding value, not simply saving 10%.
You’re now a collaborative growth agent - not a transactional order taker. This is the space you have to operate in to be great.
Action items: (here is how to sell)
1 - Be Curious.
2 - Ask broad open-ended questions.
3 - Work collaboratively and provide solutions to actual ROOT problems.
4 - Always Be LISTENING
As always, follow @itschriskeith on Twitter for more frequent updates.
