The Entrepreneur’s Essentials #14: Selling to the “Cool Kids”
As I mentioned at the beginning of this series/ebook, over the years I’ve noticed that I tend to frequently share certain Lucky7 posts with entrepreneurs we’ve backed, team members at data.world, or other startup investors I know. In totality, these posts are at least as long as most business books. So I’m packaging the best of them up for you here in a new series called The Entrepreneur’s Essentials. This series/ebook will be at least 20 posts long, and I’ll add some commentary on how I’ve personally applied the lesson on my sixth startup, data.world, to bring them “up to date”.
For the fourteenth selection of The Entrepreneur’s Essentials, I’m going with recency bias again. This is a huge recruiting year for data.world as we’ve found our product-market fit in the enterprise. data.world and our modern catalog for data and analysis is a new category of software, much like Bazaarvoice and Coremetrics created new categories before, and the brilliant book Play Bigger helped us find it. I discuss category creation with one of the co-authors of Play Bigger, Christopher Lochhead, in episode #232 of Legends and Losers if you would like to really delve into that (it is a very important topic). We just hired our first in-house recruiter, Lisa Novak, and she is leading our team in this regard. We built an amazing internal recruiting team at Bazaarvoice, and I’m sure Lisa will do the same here. We are lucky to have her on board, and we’ve got a big hill to climb on that front. In The Entrepreneur’s Essentials #10, I cover the most proven way to hire well — it isn’t easy.
As I’ve helped entrepreneurs find their own product-market fit and connected them to potential clients, investors, and Advisory Board members, I’ve spent a lot of time telling them about the “cool kids”. I’ve also, of course, been spending a lot of time talking about this with our rapidly growing sales team at data.world. Cracking the code on product-market fit is “the only thing that matters” according to one of our largest and most helpful investors at data.world, Pat Ryan. He has a series of this name and you can see us discussing the topic on YouTube. The rest of the entrepreneur interviews Pat does are very worthwhile listens also.
So here we go with the fourteenth lesson from The Entrepreneur’s Essentials. This lesson was first shared at Lucky7 on Jan. 16 and 23, 2013. I made very few edits to the original two posts I combined below, mostly in the area of readability and grammar (not in substance of content). This lesson is also covered in a terrific book on entrepreneurship, Naturally Caffeinated (also available on Amazon):
A question I often get asked by entrepreneurs is, “How do I win my first clients?” My answer to this isn’t just how but critically includes who. Allow me to explain, and let’s start with who.
Part I: Who are the “Cool Kids”?
First, you should love the industry that you are trying to sell to, or at least deeply respect it. If you do that, you will naturally study it. As I mentioned in The Entrepreneur’s Essentials #10, everything is romance in the beginning. Until you actually begin marinating in the same industry conferences, newsletters, magazines, etc. that the leaders in your sales prospects attend and read, you won’t know if you are passionate about that industry. If you aren’t, then in my opinion life is too short and you should move on to something that is worthwhile of your energy and will actually fuel it. A U.T. Austin McCombs article captured my philosophy well, and also offers some insight into Bazaarvoice culture. Here is an excerpt from the McCombs article, which unfortunately is no longer online today (hence why I didn’t include the link here):
“If you’re truly passionate about something, you will naturally read and obsess and study it,” says Hurt, BBA ’94. “You’ll spend time at the conferences that people go to about that topic, read all the books about that topic, read the magazine articles, the news articles about that topic. Go seek out the experts. Develop a personal board of advisors about that topic. Be unafraid in asking anybody for help about whatever it is you’re passionate about.”
“Don’t just follow the script of school and exactly what you’re going to learn in classes,” Hurt says. “There could be an aspiring young student at UT who says, ‘I’m going to change the world in biotech’ or ‘I’m going to change the world in nanotech.’ And man, if they feel that way, then they better just start studying it like there’s no tomorrow. And a beautiful thing happens — if you do that for year after year after year, then eventually the student becomes the teacher.
When you do this, you will start to recognize that there are certain people in the industry that are key influencers — these are the “cool kids” of that industry. They will serve on the Boards and Committees of the trade associations. They do this for two reasons:
- They want to be seen as the key innovators in their industry. This is good for their ego and, ultimately, their career. They get promoted or recruited to their next company much faster than the average person in their industry. By ego, I don’t mean anything bad by that — all leaders have it and it is a healthy thing (although the word gets used often in a negative context), as this great book Egonomics describes in detail.
- They love their industry. And they have reached a point in their career where they, as the student, have become the teacher. This is validated by the fact that their peers have elected them to Boards and Committees.
There are also key influencers who do not serve on Boards and Committees. But they are usually frequently quoted in the press or they frequently speak at the industry events. In any case, you want to be associated with the “cool kids”. Everyone wants to be like them. And every industry has them.
Let me pause here and explain my own background a bit because I think it will help make my points more clear. Digital retail spoke to my passion since I was a child. My parents were entrepreneurs from the time I was born, specifically in retail and direct marketing. I programmed since the time I was seven-years old, as I explain in my blog post on why I named this blog — Lucky7 — in honor of my mother. Essentially most of my career has been about transforming retail to the digital age. Three of the five companies (now six with data.world) I’ve started have been in this vein: first, BodyMatrix, which was my online retailer selling sports nutrition products; second, Coremetrics, which was influenced by my experience at BodyMatrix and brought the same analytics I had developed for my own needs to retailers all over the world; and third, Bazaarvoice, which was influenced by my experience at both BodyMatrix and Coremetrics and brought the power of digital word of mouth to change the face of digital retailing forever. As digital retail was such a passion, I naturally studied it and became somewhat of an expert in it. This eventually earned me the recognition of my peers, resulting in me serving on the Board of Directors at Shop.org, the digital-focused subset of the National Retail Federation, which is the largest trade association of retailers. I was elected by my peers — mostly retailers — to the Shop.org Board for three terms over six years. Just last night I attend the Shop.org Board dinner in NYC after NRF’s Big Show as an Emeritus member of the Board. Like always, it was a great reminder of how much I love the industry and also who the key influencers are in it.
The reason I tell you all of this is to make this point. In the digital retail industry, Shop.org is where the “cool kids” hang out. Sure, there are many other events, including eTail and Internet Retailer. But Shop.org is where you go to learn and network. It is a non-profit, unlike eTail or Internet Retailer (today I hear that Shoptalk is the biggest eCommerce conference), and it is where the highest level people in digital retail go as a result. In every industry, people are looking to connect with their peers, to learn, and ultimately not to be completely bombarded by vendors while they are at their industry’s events. As a non-profit, Shop.org does the best job of this in digital retail. In every industry, there is a Shop.org of that industry and you need to marinate in it. If you are genuinely passionate about it, that will shine through and you will immediately be differentiated from the many sales people that attend these events.
At Shop.org yesterday, I was spending time with two companies I’m getting more involved with — both in the “picks and shovels” space of digital retail with very compelling software solutions. One I’ve invested in personally, along with Mike Maples, Jr., Ralph Mack, Julie Allegro, and other prominent angel investors, and I’ve also agreed to be the CEO’s primary mentor. The other, I’m likely to invest in and also serve as the Chairman of the Board. I was having a discussion about initial clients with their respective CEOs. The key industry influencers at Shop.org are serving on the the Board, on the Committees, or speaking at the sessions. These are the clients that they should most want to win. Everyone in that industry follows their moves. And they get their companies the best deals and services as a result.
One of the most important entrepreneurial books I’ve read is Crossing the Chasm by Geoffrey Moore. If you haven’t read it yet, I couldn’t recommend it more highly. In the book, Geoffrey describes the key segments of an industry that you are trying to win: the innovators, early adopters, early majority, late majority, and laggards. I have lived this book — both at Coremetrics and Bazaarvoice. And the cool kids I describe above are almost always in the innovator and early adopter segments. Once you win them — and, most importantly, do a great job of servicing them and making them successful with your solution — they will work hard to help you convince the early majority, late majority, and even laggards to become your clients. It is in their best interests to do so because of the two reasons I cite above about why they want to be known as the “cool kids” in the first place.
So, as you think about winning your first clients, think about who first. Opportunity cost is very real for any stage company, but it is critical for an early-stage one. The key to success with both Coremetrics and Bazaarvoice was winning over the key industry influencers first. Then we would write case studies about our success with them, do webinars with them, ask them to speak at our client summit, help them speak at industry events like Shop.org (especially when Web analytics and online word of mouth was so new it was seen as the next hot thing), help them win industry awards, and ask them to serve as references. They were critical to winning the rest of the market, which largely followed their moves. They helped us cross the chasm.
Now, I’ll cover how you win over what I call the ‘cool kids’ — the people that are the most respected in whatever industry you are trying to win.
Part II: How to sell to the “Cool Kids”
First, you need to realize that not everyone is a naturally born salesperson. It sure makes it easier if you are that type of CEO because it makes it easier to identify people that can sell like you can. But this is rare — Steve Jobs was certainly one of the best examples. I highly recommend you read the book Selling The Wheel to get familiar with the type of salespeople you need to hire at different stages of your company. This book is steeped in the knowledge of how to scale your sales team, written by people that constantly consult in this area (and thank you to Bijoy Goswami, founder of Bootstrap Austin, for the recommendation to read this book eight years ago — make that fourteen years now). If you are just beginning, you need to hire someone like “Cassius the Closer”, who in the fable of the book invented different uses of the wheel for his clients (e.g., Egyptians struggling to build the pyramids) because the entrepreneur/inventor couldn’t figure out how to sell their own creation (this is very common). Salespeople are a very unique breed of people, and I love them for it. They will bring you revenue, delight your clients (the right salespeople care about the ultimate value delivered — not just the sale), and ultimately increase the valuation of your company and your ability to create jobs and realize your entrepreneurial dreams. Respecting them deeply is a must.
Second, on that point of respect you need to create a sales-driven culture. I cannot emphasize this enough. It is another aspect of the mindset I described in The Entrepreneur’s Essentials #3 on the five critical ingredients to build a big company. At Coremetrics, I built more of an engineering-driven culture. As the founder, that was more of my personality at that time, having grown up as a programmer. The engineer assumes that the product “will sell itself”, and this mindset couldn’t be more wrong. Omniture, by contrast, built a sales-driven culture. Omniture turned into the market leader and blew past Coremetrics. Coremetrics had a good outcome by most entrepreneurial standards when it was acquired for nearly $300 million but not nearly as good as Omniture’s, which was acquired for $1.8 billion by Adobe. There is a huge difference between #1 and #2 in a new category. I wasn’t about to make the same mistake at Bazaarvoice, and I’m proud to say that Michael Osborne, our first VP of Sales, and I worked hard to create a sales-driven culture. Brant Barton, my co-founder, also played a major role as did Sam Decker, our founding CMO. It helped that me, Michael, and Brant had all come from Coremetrics and learned that lesson — and it helped that Sam Decker was also a natural born salesperson.
So, how do you create a sales-driven culture? First, you hire truly passionate and convincing sales people. I describe how to do that in my post on recruiting, which is the most important thing you can focus on to build a great culture. And then, second, you emphasize the importance of selling across the company. Sales is an incredibly difficult job where you are constantly facing rejection and you are ultimately winning the revenue that allows all of the other functions to get funded — so sales deserves the ultimate respect. You create traditions where you celebrate new client wins. At Bazaarvoice, we celebrated new client wins with our gong, where we would all gather around and discuss the win. This tradition extended to our clients where we sent them mini-gongs and they celebrated the win with us over the phone or sometimes in person. The bond this created between Bazaarvoice and our clients was truly unique. Another way to emphasize the importance of selling is to recognize the heroes — the largest quota winners — at events, such as an annual sales club or a quarterly off-site. When Bazaarvoice was smaller, we had these off-sites every quarter at the Alamo Drafthouse, where everyone could let down their hair versus the stuffiness of a typical corporate venue. When the sales team beat a major stretch goal, they all dressed up as Elvis and stormed into the Alamo Drafthouse, surprising us all, to celebrate their trip to Vegas. Here is a photo of Michael Osborne that I’ll never forget from that day. The energy was electric. It was a bonding moment for Bazaarvoice almost like no other.
Yet another way to emphasize sales across the company is to create a mythology around it. For us, this was the color green and our SellStrong bands. On the final days of the quarter, everyone at Bazaarvoice dressed in green to emphasize company unity — that we were all in this together and we would win as a team. SellStrong deserves another post and I’ll write that later — it helped define our culture and is worthy of writing about how it evolved.
Third, you need a really great demo. When you start your company, you have no credibility other than your background. Some backgrounds are better than others. When I started Coremetrics, I was relatively unknown even though I had already started three small companies prior. When I started Bazaarvoice, I had a reputation due to my success with Coremetrics and also my status as a member of the Shop.org Board. So at Coremetrics, it was imperative to focus on creating an amazing demo. Coremetrics invented the enterprise-scale Web beacon (or data tags) data collection for Web analytics. Prior to Coremetrics, enterprise solutions like Accrue or Net.Genesis used log files or network packet-sniffers — and these enterprise software solutions were both inaccurate and required a massive investment of implementation time (often as much as 12–18 months). To make the point about how different the Coremetrics approach was as one of the first Software as a Service (SaaS) companies back in 1999, I would show a demo of my eCommerce site, BodyMatrix, and have someone click around, looking at different products and putting some in their shopping cart. I was then able to show a client the real-time view of their data and essentially replay the actions they just took. I would then explain how I could collect this data from tens of thousands of individuals — all in real-time — and build a lifetime profile of all of their customers’ interactions. That lifetime profile would allow you to track the behavior of customers across many sessions and ultimately the data could be used to later personalize email campaigns and on-site campaigns, among other things. This demo blew people away and it was revolutionary for the industry at that point in time. I’m now working with two companies that have revolutionary demos like this and you should see their prospects’ reactions to it. Later on, your credibility comes from the fact that you won the “cool kids” in the space and they are raving about the impact that you are having on their business. But at the beginning, it is all about the demo. So invest in it and make it sizzle.
Fourth, build a great Board of Advisors of people from that industry. You can give your advisors anywhere from 0.05% to 0.25% of equity in your company, depending on who they are, and then turn them into an action network to win your initial clients or enter a new market vertical (I wrote about how to create that action network in The Entrepreneur’s Essentials #1). It is easier to do this than it may sound. The entrepreneurial spirit is very much alive in our country — our founding fathers had it in 1776 — and we are used to helping each other achieve our dreams as we are a country of mostly self-made entrepreneurs. And these advisors will not only help you with introductions to potential clients, they can also be valuable at helping you shape your solution. With your initial clients and advisors, you need to carefully listen to their recommendations. At Coremetrics, our demo blew people away because we actually listened to what their needs were. We built the solution that they wanted. But, importantly, we applied our own lens to not go down ratholes and create one-off functionality. We focused on the needs they had that the majority of the market shared. I followed this same formula throughout Bazaarvoice’s history too.
So there you have it. Both who to win and how to win them. At the holiday party a few months ago, the Bazaarvoice team was kind enough to give me this gong, signed by all of them, and proudly on display at our home. This represents years of SellingStrong together, creating a company that quickly had a billion-dollar outcome in its IPO, and changing the world in the process.
So that is the end of the lesson as I wrote it six years ago on Lucky7. You can see the original posts here and here, and the comments thread below them. How did my co-founders and I apply this lesson at data.world? Well, as you may guess, very well but product-market fit has taken longer to find in this new category. We began data.world with the premise to be the world’s largest collaborative data community, and we’ve actually achieved that now, growing our community faster than GitHub did in their first two years of being live. We wanted our community to guide us into product-market fit, and since our beginning we have been obsessive about community member interviews to observe how they use data.world in their own work. It worked, and we recently won one of the largest financial services companies in the world due to them starting out on our community and then realizing that we could help their firm. Finding what to name our category for enterprise sales — the modern catalog for data and analysis was ultimately what we chose — took some time and a lot of Board discussion (Jason Pressman of Shasta Ventures has been especially masterful in this capacity) and market research, especially with Gartner and Forrester. Reading Play Bigger also played a major role.
On the sales culture front, we are well on our way there with Ryan Cush at the helm as our Chief Revenue Officer. Ryan was exceptional at Bazaarvoice and we’re very lucky to work with him here at data.world. He was both an individual contributor and leader over the years at Bazaarvoice, both in sales and client services — a rare combination. As an individual sales contributor, he made the 300 Club at Bazaarvoice three times (meaning he hit 300% of his quota in a single quarter, an exceptionally hard feat). I’ve found that the best leaders are those that have actually played the role incredibly well themselves. This will be a very exciting year of recruiting as we at least triple the size of data.world’s sales team.
I would really love to hear from you, and I’m sure others reading this would as well. How have you shaped your sales culture, and how did you identify your first clients to create that market spark?
The Entrepreneur’s Essentials #14: Selling to the “Cool Kids” was originally published in Austin Startups on Medium, where people are continuing the conversation by highlighting and responding to this story.