Volume 8   •   Issue 4   •   2010The journal for technology product management and marketing professionals                ...
Executive Briefing                                            The proven way to create effective                          ...
Inside this issue:          Volume 8 Issue 4 • 2010     Creator of the world’s most popular                               ...
1505 Lessons fromstartuppitches                                      By Jason Cohen4   •   The Pragmatic Marketer   •   Vo...
A re you starting a company?Looking to grow? Many foundersturn to venture capital firms, angelinvestors or incubators as a...
Are you making these errors in                    your business (start-up or not)                                        ?...
5 Lessons from 150 Startup PitchesError                                      holdings. Every mp3 player uses              ...
5 Lessons from 150 Startup PitchesError                                       No, wait, I’m sorry, the real question      ...
5 Lessons from 150 Startup PitchesSingle-minded, uncompromising           However it’s not enough for a                To ...
5 Lessons from 150 Startup PitchesBut how does authority convert                   In each case, the founders were        ...
Product Launch Essentials                                            ™           Plan and execute a successful product lau...
5 Lessons from 150 Startup PitchesError                                             “I’m scratching my own itch.          ...
5 Lessons from 150 Startup Pitchesso the earlier you can sort outuncertainty the more time you haveto deal with the conseq...
5 Lessons from 150 Startup PitchesDefining your company                            •	 “We’re just like competitor X,      ...
5 Lessons from 150 Startup Pitches•	 This is the competitive matrix.  Note that each player in this space    LESSON       ...
5 Lessons from 150 Startup PitchesErrorNo significant routeto customersAsk a technical founder about hisstartup, and he’ll...
5 Lessons from 150 Startup Pitchestransparency front. It’s not for               better lead quality, a more efficient    ...
Are your product management and marketing teams                overloaded with tactical activities, spending too much     ...
SeminarsLiving in an Agile World™                                Requirements That Work™ Strategies for product management...
USER EXPERIENCE                                                                                     UXThe Third Objective ...
3                                                                                                             UXConvention...
UX3                       User Experience: The Third Objective                       Observe             Observe     Perso...
User Experience: The Third Objective                                                                                      ...
The Pragmatic Marketer Volume 8 Issue 4
The Pragmatic Marketer Volume 8 Issue 4
The Pragmatic Marketer Volume 8 Issue 4
The Pragmatic Marketer Volume 8 Issue 4
The Pragmatic Marketer Volume 8 Issue 4
The Pragmatic Marketer Volume 8 Issue 4
The Pragmatic Marketer Volume 8 Issue 4
The Pragmatic Marketer Volume 8 Issue 4
The Pragmatic Marketer Volume 8 Issue 4
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  1. 1. Volume 8 • Issue 4 • 2010The journal for technology product management and marketing professionals ® 150 5 Lessons from startup pitches User Experience: The Third Objective Transitioning from Services into Product Management: Seven Tips for Success
  2. 2. Executive Briefing The proven way to create effective product management and marketing teams.• Review key concepts of the Pragmatic Marketing Framework, the worldwide standard for product management and marketing. Business Marketing Positioning Plan Plan• Learn techniques leaders can use to accelerate adoption. Pragmatic Marketing Market Market Buying Customer Pricing Problems Definition Process Acquisition• Designed specifically for senior management. Win/Loss Distribution Buy, Build Buyer Customer Framework Analysis Strategy or Partner Personas Retention Distinctive Product Product User Program Competence Portfolio Profitability Personas Effectiveness STRATEGIC TACTICAL MARKET STRATEGY BUSINESS PLANNING PROGRAMS READINESS SUPPORT Competitive Product Launch Sales Presentations Innovation Requirements Landscape Roadmap Plan Process & Demos eaders ed In L te success of Tunpany CEOs creahy most fail) m w gy co (and Technology Use Thought “Special“ The How te chnolo Assessment Scenarios Leadership Collateral Calls Status Lead Sales Event ott Dashboard Generation Tools Support rman Sc vid Mee Myers & Da g Stull, Phil by Crai Referrals & Channel Channel Get a free e-book at References Training Support © 1993-2010 Pragmatic Marketing PragmaticMarketing.com/secrets PragmaticMarketing.com/seminars Call (800) 816-7861 to conduct this seminar at your office
  3. 3. Inside this issue: Volume 8 Issue 4 • 2010 Creator of the world’s most popular 4 5 Lessons from 150 Startup Pitchesproduct management and marketing seminars By Jason Cohen Obtaining hundreds of thousands or About Pragmatic Marketing® even millions of dollars from investors Since 1993, Pragmatic Marketing has is not as simple as knocking on the conducted product management and door and asking for money. It takes marketing training for 5,000 companies careful planning and a focus on in 23 countries. Our team of industry presenting your request in the best thought-leaders produce blogs, webinars, possible light. Are you making errors podcasts, and publications read by more in your business pitch? than 100,000 every year. The Pragmatic Marketer ™ 8910 E. Raintree Drive Scottsdale, AZ 85260 Pragmatic Marketing, Inc. 20 User Experience: The Third Objective By Larry Marine and Sean Van Tyne Craig Stull / Founder and CEO Conventional wisdom holds that the true Kristyn Benmoussa / Editor-in-Chief measure of your product success is in Graham Joyce / Managing Editor how well it meets your business and ————————————————— marketing objectives. But what about Interested in contributing an article? the third objective—user experience? PragmaticMarketing.com/submit No part of this publication may be reproduced, stored in any retrieval system, or transmitted, in any form or by any means, electronic, mechanical photocopying, recording or otherwise, without the prior written permission of the publisher. Other product and/or company names mentioned in this journal may be trademarks or registered trademarks of 26 Transitioning from Services into Product their respective companies and are the sole property Management: Seven Tips for Success of their respective owners. The Pragmatic Marketer, a Pragmatic Marketing publication, shall not be liable By Steve Tennant regardless of the cause, for any errors, inaccuracies, omissions, or other defects in, or untimeliness or Many product managers transfer into product unauthenticity of, the information contained within this management from the consulting, customer, magazine. Pragmatic Marketing makes no representations, or professional services unit within the same warranties, or guarantees as to the results obtained from the use of this information and shall not be liable for any company. Not all people make this transition third-party claims or losses of any kind, including lost successfully. Use these tips to be on your way profits, and punitive damages. to becoming a successful product manager. The Pragmatic Marketer is a trademark of Pragmatic Marketing, Inc. Printed in the U.S.A. All rights reserved. ISSN 1938-9752 (Print) ISSN 1938-9760 (Online) The Pragmatic Marketer • Volume 8, Issue 4, 2010 • 3
  4. 4. 1505 Lessons fromstartuppitches By Jason Cohen4 • The Pragmatic Marketer • Volume 8, Issue 4, 2010
  5. 5. A re you starting a company?Looking to grow? Many foundersturn to venture capital firms, angelinvestors or incubators as a sourceof funding. But obtaining hundreds of thousands or even millions of dollars is not as simple as knocking on the door and asking for money. It takes careful planning and a focus on presenting your request in the best possible light. One that shows you have a serious proposition deserving of the investor’s time and money. I work at a startup incubator and review hundreds of pitches a year. Most are on paper and video but some are invited to pitch in person. Over the course of these presentations, some interesting patterns emerge: • Everyone makes the same types of errors • The errors are not specific to raising capital but with the business concept or the founder’s attitude • Those who avoided just one of these errors stood out from the crowd The Pragmatic Marketer • Volume 8, Issue 4, 2010 • 5
  6. 6. Are you making these errors in your business (start-up or not) ? Invalid competitive advantages “Superior SEO” and “unique features” are not competitive advantages. Lacking an unfair advantagE You need one killer advantage no one can beat beat (because you might get beaten on everything else!). everything else!). No one said they’d buy it You don’t need statistically significant studies, but it’s studies, but it’s astonishing how many blaze ahead before they’ve before they’ve found even a single person willing to give them money. them money. Incorrect positioning against the competition The two faults here are opposites: Believing that Believing that uniqueness means competition doesn’t exist, or exist, or defining yourself by the competition instead of instead of constructing your own message. No significant route to customers If your marketing strategy is to run A/B tests tests and build RSS subscribers, you’ve already lost. already lost.6 • The Pragmatic Marketer • Volume 8, Issue 4, 2010
  7. 7. 5 Lessons from 150 Startup PitchesError holdings. Every mp3 player uses multiple patents, but that didn’t stop passion? But in this context it’s like saying, “My children are going to beInvalid competitive advantages Apple from winning. more successful because I love them more than you love yours.”Every pitch I see has a section oncompetitive advantages, and nearly We’re better at SEOevery time the claimed competitive and social media We’re cheaperadvantage is not, particularly when 80% of Americans believe they are It’s not bad to be cheaper. Theeveryone else claims the same better-than-average drivers. Can’t be key is you cannot compete solelyadvantage as you! true, right? Well 80% of folks I meet on price because all a competitor tell me they’re better than average has to do is lower their price.The following are not competitive at SEO, Twitter, and “building Established companies can destroyadvantages: communities” (whatever that means). you with the “loss leader” strategy. Remember when Microsoft put Social media and SEO is ever- hundreds of developers on InternetWe have feature “x” changing quicksand. You’re on top Explorer and gave it away forThis is an advantage only until of Google today, gone tomorrow. free, destroying the market forothers copy it, so it’s not a long- Other companies being good—or web browsers?term protection against competition. better—is completely outside yourIndeed, the next company canobserve what works and whatdoesn’t, and then improve on control, so claiming you have a sustainable advantage is poppycock. LESSONyour innovation. So where does that leave us? We have three PhDs/MBAsWe have the most features The landscape of successful You live in the era of a flat world startups is littered with people where millions of people haveIt’s common for older products to lacking post-graduate education. Ifcompete on having more features access to technology, education, you’ve lived in the software world and a powerful sales, marketing,than newer, competing products. you know what they teach you inThe trouble is, customers rarely and communication platform school is often irrelevant, so who (the Internet).want more features, they want the cares what degree you hold? In allright features. As everyone adds the interviews you’ve read aboutfeatures, products reach critical mass You live in the era where the founders’ success, how many credit most powerful programmingwhere all have 80% of the features their MBA program? How manycustomers want, and then having frameworks and tools are free, local even have MBAs? It’s not bad to broadband and high-availability“more” is no longer an interesting have a degree, but neither is it aselling point. servers are cheap, and world-class significant advantage. people are willing to work 60We’re patenting our features hours/week in exchange for free We work hard food and the chance to be part“No one can compete with my blog and we’re passionate of a cool new startup.because it’s copyrighted.” Silly, right? You hear about guys working 30 hours per week (or less), so you There’s too much energy, availability,That’s what it sounds like when figure if you work a “healthy” 70 intelligence and opportunity inclaiming a software patent will hours per week, you’ll win! But the world to hide behind outdatedprotect you from competition. working harder is not, in fact, notions of intellectual property.Except in certain industries (e.g. smarter. And even if you couldfood, drug, medical), I’m unaware work 70 on-task hours perof companies who stave off quality Almost anything can be copied. In week, that’s still blown away by fact, I’d claim that anything of any competitors through patent 10 developers at a well-funded value will be copied. It should be company or even 10 passionate part of your business plan that other open source developers working part-time. And who doesn’t have people will copy you. The Pragmatic Marketer • Volume 8, Issue 4, 2010 • 7
  8. 8. 5 Lessons from 150 Startup PitchesError No, wait, I’m sorry, the real question is: What are you going to do when LESSONLacking an unfair advantage there are four totally free, open- The only real competitive advantage source competitors? is that which cannot be copied andFortunately there’s plenty of cannot be bought.ways to have true advantages No, wait, I forgot, actually thethat competition cannot readily question is: What happens when Like what?overcome. Unfortunately, they’re employee #2 makes off with yourdifficult and rare. And you thought code and roadmap and marketingcreating and running a successful, data and customer list and starts Insider informationuntouchable startup was easy? selling your stuff world-wide at The only way to consistently make one-tenth the price? money on Wall Street is to haveHow would you answer “What if a insider information! Although it’sbig company copies your idea and The good news: There are answers illegal (and people occasionally godevelops the same website as yours to all these questions! to jail for it), those in the know willafter your website goes public?” tell you it’s not uncommon. But, using intimate knowledge of an The bad news: Almost no one industry and the specific pain pointsNot the right question! The one I talk to has good answers, but within an industry is a perfectlyyou should answer is: What are they think they do. And that’s legal unfair advantage.you doing now knowing that a big fatal, because it means they’re notcompany will copy your idea? working towards remedying that situation. Which means when one Here’s a real-world example. Adriana of the above scenarios happens, has been a psychiatrist for 10 years;No, wait, the real question is: What it will be too late. she understands the ins and outsare you going to do when another of that business. During a lull insmart, scrappy startup copies your her practice she got an opportunityidea, and gets $10M in funding, and Anything that can be copied to shift gears completely andis thrice featured on TechCrunch? will be copied, including features, ended up leading software product marketing material, and pricing. development teams. (Turns out that Anything you read on for big-business project management popular blogs is also read it’s more valuable to be a sensible by everyone else. You thinker and counselor than to be don’t have an “edge” just an expert in debugging legacy because you’re passionate, C++ code.) hard-working, or “lean.” Now Adriana has an epiphany: In her opinion, traditional practice-management software for psychiatrists is not very good; she knows both the pain points and the existing software first-hand. But now she has the vision and ability to design her own software. Adriana holds a unique position: Expert in the industry and able to “geek out” with her target customer, yet capable of leading a product team. Even if someone saw Adriana’s product after the fact, it’s almost impossible to find a person—or even assemble a team— with more integrated knowledge. At best, they could copy. Of course by then Adriana has moved on to version two.8 • The Pragmatic Marketer • Volume 8, Issue 4, 2010
  9. 9. 5 Lessons from 150 Startup PitchesSingle-minded, uncompromising However it’s not enough for a To remain un-copyable, your Oneobsession with One Thing feature to merely be unique because Thing needs to be not just centralA “Unique Feature” could be a it’s still easily duplicated. Rather, this to your existence, but also difficultcompetitive advantage in some requires unwavering devotion to the to achieve. Google’s algorithm,circumstances. Some examples One Thing that is (a) hard, and (b) combined with the hardware andof a feature being a company’s you refuse to lose, no matter what. software to implement a search ofprimary advantage are: millions of websites in 0.2 seconds, Google has spent hundreds of is hard to replicate; it took hundreds• Google’s search algorithm was millions of dollars on their search (thousands?) of really smart people just better, therefore they won the algorithm, the single biggest focus at Microsoft and Yahoo years to eyeballs, therefore they were able of the company even today, a catch up. 37signals’ platform—a to monetize. Sure, others are good decade after they decided that was blog with ~140k followers and now, but the advantage lasted their One Thing. They refuse to be a best-selling book—is nearly long enough. beaten by competitors or black-hat impossible to build even with a hackers, whatever it takes. full-time army of insightful writers.• Photodex is a little company you’ve never heard of where 37signals can build simple software Being “hard to do” is still a true I worked in the 90’s. We made and earn three million customers advantage, particularly when you an image browser with thumbnail because they absolutely will not devote your primary energy to it. previews so you didn’t have to compromise on their philosophy open each file individually to see of simplicity, transparency, and Personal authority what it was. Our advantage was owning their own company, and Chris Brogan commands thousands that’s something millions of people of dollars for a single day of speed. Not the best, not the most respect and support. consulting in an industry (social stable, didn’t read the most media marketing) where all the formats, didn’t have the most information you need is already features, just “fastest.” For many online and free. Joel Spolsky users of that product, speed wins. makes millions of dollars from bug tracking software—an industry with hundreds of competitors and little innovation. How can you earn this overwhelming advantage? Unfortunately all this “authority” takes years of expensive effort, and even then success is probably due as much to luck as anything else. So is it worthwhile? Yes, exactly because it takes years of effort and a little luck. Authority cannot be purchased You can’t raise VC money and then “have authority” in a year. A big company cannot just decide they want to be the thought-leader in their field. Even a pack of hyper-intelligent geeks cannot automatically become authorities because it’s not about how well you can code. The Pragmatic Marketer • Volume 8, Issue 4, 2010 • 9
  10. 10. 5 Lessons from 150 Startup PitchesBut how does authority convert In each case, the founders were As a company becomes successfulto revenue? super-smart, had complementary it gains momentum, which means skill sets, worked well together (or it’s going in one direction withHere’s a personal example: I well enough to reach important one philosophy. Like physicalgive talks on peer code review success milestones), and as a team momentum, change becomesat conferences. My competition represented a unique, powerful, and harder to affect.pays thousands of dollars for a (in retrospect) unstoppable force.booth, then spends thousands Of course the world is changing,advertising to attendees begging Of course that’s easy to see in and in particular your customersthem to visit the booth, then retrospect, and retrospect is a are changing. Normally this leavesgives sales pitches at the booth terrible teacher, but the principle room for the next competitor, but ifto passersby who are also being can work for any startup, especially you’re already entrenched you canbombarded by other pitches and when your goals are more modest leverage your existing status, insiderdistracted by the general hubbub. than being the next Google. knowledge, and revenue stream as long as you’re willing to change too.Whereas, because I’m a known Of course a Dream Team doesn’tauthority on code review and guarantee success but it significantly You have more money, you’resoftware development, I get to talk reduces the risk of a startup, and better known, you have existingfor an entire hour to a captive, is difficult for the competition happy customers to help spread theundistracted group of 100 people, to duplicate. word, you have employees to buildself-selected as interested in code new things, and you have morereview. After the talk, many people This is especially true when experience with what customerswant to chat one-on-one. Some head someone on the team is already actually do and need, which meansstraight to the booth to get a demo; successful in their field, e.g. with you should have the best insight.for many I give a private demo of a massively successful blog, or bigthe product on sofas in the hallway. startup success, or a ridiculous Any new competitor would killIt’s not unusual to get several sales Rolodex. Since those are the kinds for just one of these advantages.over the next three months from of competitive advantages that can’t If you’re not using them, how sillypeople who saw me speak. be bought or consistently created, is that? Companies don’t get killed having that person on the team is by competition; they usually findNow add to that the effect of a blog by proxy a killer advantage. creative ways to commit suicide.that tens of thousands of peopleread? And the effect on sales of my Existing customers Imitation might be the sincerest formbook on code review? Everyone you’ve ever sold to of flattery, but it still stings when possesses the most valuable market someone does it to you.Earning authority is expensive and research imaginable, and it’s the onetime-consuming, no doubt. But it’s thing a new competitor absolutely Of course you can still battle it outalso an overwhelming, untouchable will not have. in the marketplace, but you needcompetitive advantage. something that can’t be duplicated, This is kind of a cheat, because something they could never beatThe dream team everyone says “I listen to my you on, then hang your hat on thatThe tech startup world is littered customers,” which (nowadays) is just and don’t look back.with famous killer teams: Gates & as overused as “We’re passionate,”Allen, Steve & Steve, Page & Brin, but it’s true that if you’re activelyFried & Heinemeier Hanson. learning from your customers and you never stop moving, creating, innovating, and learning, that puts you ahead of most companies in the world.10 • The Pragmatic Marketer • Volume 8, Issue 4, 2010
  11. 11. Product Launch Essentials ™ Plan and execute a successful product launchAre your product launch efforts focused on deliverables rather than results?Launching a product is more than following a simple checklist. A successful product launch is theculmination of many, carefully planned steps by a focused, coordinated team. Even good products canfail because of organizational issues, misunderstanding of roles and responsibilities, and a lack of astrategic approach to guide efforts.• Learn a repeatable product launch process to shorten the launch planning cycle, get the resources needed, and know what to expect at every step.• Understand the seven product launch strategies your team can use to maximize sales velocity.• Measure product launch progress with indicators that identify unforeseen issues before they become big problems. Get a free e-book at Daniel s PragmaticMarketing.com/launch id By Dav Download a complete agenda and register at PragmaticMarketing.com/seminars Call (800) 816-7861 to conduct this seminar at your office
  12. 12. 5 Lessons from 150 Startup PitchesError “I’m scratching my own itch. Since I’m my own target “My customers can’t understand mock-ups. I have to build it first.”No one said they’d buy it customer, I already know You shouldn’t need screenshots or what to build.” slides to convince someone in yourOf hundreds of startup pitches I’veheard, almost none had unearthed Oh! I didn’t realize your typical target market that what you’re doingten people willing to say, “If you customer is observant enough to is compelling. If your concept is sobuild this product, I’ll give you $X.” recognize monetizable pain, creative esoteric you can’t describe it in 30 enough to invent products, able to seconds, it’s either too complex or convince others to work for free and you don’t understand it yourself.Meditate on this: Hundreds of invest money and time with you,people ready to quit their day jobs, and passionate enough to quit their Even if I concede that some folksburn up savings, risk personal job to pursue unproven ideas. can’t grok mock-ups, rememberreputation, toil 70 hours per week,absorb as much stress as having a that your first customers will bybaby (believe me, I’ve done both).... By definition, if you’re a startup definition be early-adopters who areall without identifying even ten founder you’re explicitly not OK with alpha software. If you can’tpeople actually willing to pay for your customer. find a few of those and get themwhat they’re peddling. excited about your product, maybe “Scratching your own itch” is just your product isn’t exciting.Short-sighted, no? If you can’t find a start. It’s the spark of inspiration,ten people who say they’ll buy, your not the strategy. It’s the grain of “I’m not good at sales/marketing;company is dead before it starts. sand tickling the oyster, not the I need to build a product so pearl. In fact I challenge you to find compelling it sells itself.” one founder of a real business who The world is filled with decent thinks “I’m the customer” is the only products that make no money! market validation you need. If your goal is a business (not a hobby), building charming, novel “There are millions of potential software isn’t enough. customers, so it doesn’t matter what only ten of them think. You and I know you have the ability I need to just start; later I can to build cool new software. We survey and learn something agree that will be fun and exciting. statistically significant.” But that’s not going to create If there are millions, it’s trivial a business. to find ten. If you can’t find even ten, then either there’s not Writing code is what you love, so millions or those millions aren’t you myopically decide that’s what interested in you. you’ll do. But what you should do is just the opposite: Attack the part Businesses don’t start with millions of the business you’re least sure of, of customers, they start with one, you’re least qualified for. then ten, then a hundred, and then a thousand. But most don’t If you’re still not convinced, think get past ten. of it as project risk management. In a big software project do you If you haven’t gotten ten to tackle the high-risk, ill-defined stuff at least say they’ll buy, where first, or do you postpone that to do you get your hubris to the end? Obviously you address the proclaim that thousands unpredictable stuff first—most of the actually will buy? project risk is due to the unknown,12 • The Pragmatic Marketer • Volume 8, Issue 4, 2010
  13. 13. 5 Lessons from 150 Startup Pitchesso the earlier you can sort outuncertainty the more time you haveto deal with the consequences.I’m making the same argument,except the “high-risk unknown” is“everything that’s not code.” Yourcode will be good enough; it’s theother stuff that will probably sinkyour ship—unable to find customersor unable to convince the targetaudience they should open theirwallets.No sense in postponing it.“My friend/brother/co-worker/dentist thinks it’s a great idea.” Error • “No one is doing it like we are.”Your mother thinks you’re smart Incorrect positioning Of course you’re going to positionand good-looking, but that doesn’t against the competition your company with a uniquemean I do. offering: exclusive features, a After seeing hundreds of startup distinctive culture, a refreshingIt doesn’t matter what non- pitches, I can tell you the two most pricing plan, an innovative salesentrepreneurs think because common errors in positioning a strategy, etc. But uniquenessthey’re not versed in product/ company against competition are, doesn’t imply lack of competition!market fit or squeezing blood strangely, opposites:from evanescent budgets. In fact • “There’s no competition becauseit only barely matters what real this is an industry that hasentrepreneurs think, because they’re • Claiming you have no competition never used software to solvenot expert in your problem domain, • Defining your company’s offering this problem.”they might have outdated notions, and positioning by combining “thethey might be biased against certain I know that sounds like a goodideas and technology, and they best” traits of six competitors. thing, but what this also impliescarry baggage from good and bad This isn’t just a problem when is you’ll have to convince peopleexperiences (due as much to timing pitching—it’s a problem with you to trust software, and that’s aand luck as anything else). defining who your customers are, disadvantage. You’re competing what they want, and your role in the against the status quo.LESSON marketplace. • “There’s no competition Let’s break down the ways these because people haven’t realizedThe only thing that matters it’s a problem.”is that people are willing to fallacies manifest and what yougive you money! can do instead. If they don’t already know they have the pain, the sales process isBusiness “experts” can argue all There is no competition going to be excruciating. There’s aday that it makes no sense to buy Here’s what I hear and think: word for that—evangelism—whichshoes over the Internet, but as long conjures other words: Expensive,as people give Zappos $1 billion • “I have no competitors.” difficult, time-consuming.per year, it doesn’t matter whatexperts say. Either you’re ignorant of direct competition, or you’reWhen ten people say they’ll give not considering alternate solutionsyou money if you build this thing, like “build it yourself.”that’s the only validation that counts. The Pragmatic Marketer • Volume 8, Issue 4, 2010 • 13
  14. 14. 5 Lessons from 150 Startup PitchesDefining your company • “We’re just like competitor X, So how do you look inward toby the competition only we’re Y.” establish your company, contrastingYour company is defined by its own with the competition but not lettingstrengths, values, customers, and In this case you’re betting your the competition dictate your identity?products, not by how it compares future on the fact that Y iswith other companies. You need overwhelmingly compelling to a • We’re targeting the marketa strong position, something large market segment. X segment defined by X, Y, and Z.that would be equally clear and automatically has advantages over We’ve spoken with 20 potentialcompelling even if competitors you (brand, customers, revenue, customers who match at least twodidn’t exist. inside knowledge, a team, of those criteria, and they agree momentum), so Y had better be our product is exactly what theyHere’s some ways this mistake brain-exploding awesome. Oh, need and none of our competitorsmanifests: and it’d better be impossible are doing an acceptable job for X to implement Y—or even addressing their issues.• “We combine the best traits of our one-third of Y—themselves. Talk competitors, letting them show the about putting your fate in others’ • Our company has core value X way to our success.” hands! that we exude everywhere from our SEO to our tech support to I like the idea that you can learn our product. (Example value: • “We’re the same as X, only cheaper.” from the mistakes and successes Simplicity. A simple product with of similar companies, but Being cheaper is a strategy, but few features, low-cost, pain-point “combining the best” misses the it can’t be your only strategy. It’s obvious, not tackling complex point. There are specific tradeoffs too easy for competitors to change problems, focused on making each of those companies are price or offer deals. Typically life easier rather than on saving making; things you see as “not the best customers aren’t price- money.) We own this value best” might in fact be best for their sensitive anyway, so you’re because we’re completely target market. Why are you so actually biting off a less desirable committed; this is the one point sure your notion of “best” will segment of the market. Often this on which we will never result in enough customers who claim is paired with “We’ll do 70% compromise. Our customers know not only agree with you, but are of the features for 50% of the it and value this too, which is why so convinced they’re willing to price,” but supplying less for less it doesn’t matter what features, switch to you? is not inspirational. prices, or advertisement our competitors have.• The rubric. A chart with one row for each “feature” and one column for each of six “competitors.” There’s checks and X’s everywhere, except of course a glowing, highlighted column representing your company which just happens to be full of checks. Do you really expect someone to believe this?14 • The Pragmatic Marketer • Volume 8, Issue 4, 2010
  15. 15. 5 Lessons from 150 Startup Pitches• This is the competitive matrix. Note that each player in this space LESSON • Our target customer has traditionally solved this pain is targeting a different market If you’re tempted to argue that themselves or just lived with the segment, as is clear from feature you’re the exception, here’s how pain rather than paying for relief. selection, pricing, and advertising/ to elucidate the advantages you’re A combination of newly-available messaging. We, too, are targeting seeing, but in a way that actually technology and modern mindset a niche; as you can see our makes sense as a business strategy: makes this the right time for a offering is consistent with owning new software play. that niche, and doesn’t overlap • We’ve carved out a niche specific enough that no one is actively • It’s true this industry hasn’t yet significantly with competitors. It would be difficult for any of them targeting. There are similar seen a software solution, but that’s to “switch” into our niche, because competitors A, B, and C, but not because they hate computers, as you can see they’d have to they’re not targeting this niche but rather that it hasn’t been change the product, pricing, and because of X, and would be possible to address that market their company’s persona; that’s a hard for them to switch into this with software. Now it is because risk we’re willing to take. niche because of Y. In fact, it’s (pick one): quite possible that we’d end up − We’ve built an improbable team• We’re going after competitor X. partnering with or being bought We know they already have a that spans geeks and industry by A, B, or C because our idea is insiders. ton of advantages over us— similar but out of their reach. well-known, well understood, and − New hardware/networks have a deep feature list. However they • We’ve identified a market too just appeared which makes this haven’t done anything new in small for the large, established possible. three years and we have evidence players to address, but big enough their customer base is not happy. to build a company. Because the − New attitudes enables new Not only that, they’re famous for 800-pound gorilla is inefficient at workflows (e.g. ubiquity of annoying attributes A, B, and C building new software, it can’t go Facebook even among (Examples: buggy, slow, confusing, after a market unless there’s a traditional technophobes). expensive, bad tech support). We billion dollars at stake. We think − This industry is commoditized see huge opportunity in their there’s a solid business to be so giving a player the slightest wake of destruction, vacuuming made in this hundred-million- edge is a big deal. up their customers with our dollar market. However, where overwhelming advantage. They the giant can’t afford to build this − This industry is just now can’t do this themselves because from scratch, if we show good starting to show tangible signs they’re too big to turn the ship, growth and profits we would of embracing technology. and anyway the past three years be an obvious acquisition target for them. − We have three lead customers have shown they’re not able to change. signed up as alpha testers; • We’ve created technology so if we make them successful the different from the incumbents that case studies will be all the we’re changing the conversation evangelism we’ll need. about how people solve this pain. Though it’s different, your solution is very easy to describe and use (e.g. the way Netflix changed movie watching at home). The Pragmatic Marketer • Volume 8, Issue 4, 2010 • 15
  16. 16. 5 Lessons from 150 Startup PitchesErrorNo significant routeto customersAsk a technical founder about hisstartup, and he’ll proudly describehis stunning software—simple,compelling, useful, fun. Then he’lldescribe his cutting-edge platform—cloud-based, scalable, distributedversion control, continuous The obvious problem is every new buttons. Buttons are good—butintegration, one-click-deploy. startup on Earth says exactly these they don’t make your productMaybe you’ll even get a things. Nowadays the “strategy” intrinsically viral.wobbly demo. above sounds like: Which is OK—not all products need“Great,” I always exclaim, sharing “We’ll have a website so people to be viral! But if it’s not viral youthe thrill of modern software can read about us.” still need a killer method of findingdevelopment, “so how will people customers, and if it is supposed tofind out about this brilliant product?” “We’ll have an email address so be viral it better be encoded in the people can communicate with us DNA of the application, not boltedCue silence… Then a smile breaks without picking up the phone.” on as an afterthought.across the founder’s face: Yes, you’re going to do those things, Frightening honesty “We’re going to A/B-test AdWords but since millions of other people Balsamiq Mockups is a popular campaigns until we discover are doing that too, you’re still wire-framing tool. What sets our hook.” invisible. No visibility = fail. them apart isn’t prescient feature selection or bug-free releases, it’s LESSON “We’re going to A/B-test our their startling transparency. Revenue landing pages until the right figures are published even when message appears.” they were still pathetic. The founder So what can you do to rise above pledged loudly and eagerly to give the cacophony that is the Internet? away lots of free copies to non- “We’re better than everyone else at SEO.” profits, and he revealed all his Infection built-in, not bolt-on (remarkably effective) marketing WhenBusy lets people schedule strategy even though it meant “A friend of mine knows how meetings in currently-available competitors would learn them too. to get popular on Twitter.” time-slots without having to share your calendar. Instead of trading He didn’t just have an “authentic “We’re going to get reviews emails with lists of available on blogs.” voice,” he made public promises. time-slots, you send the link That’s compelling. to your calendar page and the “We’re going to start with our other person uses the product to own network and grow it He didn’t just “tell it like it is,” schedule a meeting. This is the he gave up his marketing secrets from there.” viral step: Having trialed the tool, and opened his company books. the stranger might use it herself, That’s newsworthy. “We’re going to use an affiliate then more people find out about program so our customers sell it, and so forth. it for us.” This isn’t merely “being human” it’s almost too much honesty! Note that at no point did I say “a “We’re putting a ‘Retweet’ button button lets people ‘like’ this on inside the product to encourage In a world where everyone and their Facebook.” I know of no companies viral growth.” brother is “joining the conversation,” who have “gone viral” because of you have to truly bare your soul if you want to compete on the16 • The Pragmatic Marketer • Volume 8, Issue 4, 2010
  17. 17. 5 Lessons from 150 Startup Pitchestransparency front. It’s not for better lead quality, a more efficient It’s always fun to tell a journalisteveryone, and I’m not suggesting conversion rate, and straightforward like you that we enable softwareit ought to be, but there’s no sense trials with minimal tech support. Of developers to review each other’sin going half-way. course it’s not quite that simple but code because your reaction is it’s a step in the right direction. always: “Wait a minute, you’reTell a story seriously telling me they don’tThe number one mistake founders At first when someone asked do this already?” The ideamake when trying to generate press what my company’s tool suite was, of editing and review is sois talking about what the company I would say: embedded in your industry youdoes rather than telling a compelling can’t imagine life without it, andstory. Without a powerful narrative, Smart Bear makes data-mining you’re right! You know betteryour chances of getting big tools for version control systems. than anyone how another set ofpress and enthusiastic users who eyeballs finds important problems.spread the word are somewhere It’s a description so esoteric that,around zero. although accurate, not even a Of course two heads are hardcore geek would have any idea better than one, but developersIt took me five years to figure out what it is, much less why it’s useful. traditionally work in isolation,(a) I needed a story and (b) what mainly because there’s a dearththe story was. It’s hard. But one Years later, when it was clear that of tools which help teams bridgestory beats a pile of AdWords code review software became the social gap of an ocean,A/B tests. our sole focus, I got better at integrate with incumbent tools, describing it: and are lightweight enough to still be fun and relevant.Advertising [transmogrification] Revenue You know how Word has “track changes” where you can make That’s what we do: BringI know that nowadays marketing is modifications and comments and the benefits of peer reviewabout “relationships” and “authority” show them to someone else? We to software development.and other things which cost timebut not money. But don’t be so do that for software developers,quick to throw out the idea of integrating with their tools instead Now the reason for excitementspending money to make money. of Word and working within their is clear: We’re transforming howAdvertising isn’t dead; you can standard practices. software is created, applying the agestill buy eyeballs. I’m not talking old techniques of peer review to anabout “triage” strategies like Better, yes, and for a while I industry that needs it but where it’sbuying AdWords linking to a page thought I nailed it, but still no traditionally too hard to do.of ads, I’m just pointing out that press. Eventually (thanks to helpfulmost companies don’t depend journalists) I realized I was still juston “joining the conversation” to describing what it is rather than That’s a story!acquire customers. why anyone cares. I left it up to the Follow these simple guidelines and reader to figure out why they should set yourself apart from the massesIt sounds simple: The average get excited. who continue to make the errorscost of acquiring a customer is $C identified in this article. With a little(advertising, sales, support, doing Eventually I developed stories like time and careful preparation, yourdemos) and the lifetime revenue you the following, each tuned to a pitch for funding should impressget from that customer is $R, so if certain category of listener. Here’s investors and hopefully you get theC < R you have a business. C can the one for the journalists: financial support to begin the nextbe driven down with cheaper ads, phase of your company’s plan. Jason Cohen has started four companies (including WPEngine and Smart Bear), both funded and bootstrapped, ran three to millions in revenue, and sold two. He is the author of Best Kept Secrets of Peer Code Review. A geek-turned-entrepreneur, he now blogs about startups at http://blog.asmartbear.com The Pragmatic Marketer • Volume 8, Issue 4, 2010 • 17
  18. 18. Are your product management and marketing teams overloaded with tactical activities, spending too much time supporting Development and Sales rather than focusing on strategic issues? The Pragmatic Marketing Framework ™ Business Marketing Positioning Plan Plan Market Market Buying Customer Pricing Problems Definition Process Acquisition Win/Loss Distribution Buy, Build Buyer Customer Analysis Strategy or Partner Personas Retention Distinctive Product Product User Program Competence Portfolio Profitability Personas EffectivenessSTRATEGIC TACTICAL MARKET STRATEGY BUSINESS PLANNING PROGRAMS READINESS SUPPORT Competitive Product Launch Sales Presentations Innovation Requirements Landscape Roadmap Plan Process & Demos Technology Use Thought “Special“ Collateral Assessment Scenarios Leadership Calls Status Lead Sales Event Dashboard Generation Tools Support Referrals & Channel Channel References Training Support © 1993-2010 Pragmatic Marketing Visit PragmaticMarketing.com or call (800) 816-7861
  19. 19. SeminarsLiving in an Agile World™ Requirements That Work™ Strategies for product management Methods for creating straightforward product when Development goes agile. plans that product managers can write and developers embrace.Practical Product Management® Principles of the Pragmatic Marketing Framework, Effective Product Marketing™ the industry standard for managing and marketing Repeatable, go-to-market process to design, technology products. execute, and measure high-impact marketing programs.Pragmatic Roadmapping™ Techniques to plan, consolidate and communicate Product Launch Essentials™ product strategy to multiple audiences. Assess organizational readiness and define team responsibilities for a successful product launch.Executive BriefingsDesigned specifically for senior management,Executive Briefings discuss how to organizeProduct Management and Marketingdepartments for optimal effectivenessand accountability. In addition to the extensive published schedule, training can be conducted onsite at your office, saving travel time and costs for attendees, and allowing a much more focused discussion on internal, critical issues. Pragmatic Marketing’s seminars have been attended by more than 60,000 product management and marketing professionals.
  20. 20. USER EXPERIENCE UXThe Third Objective By Larry Marine and Sean Van TyneObserve Persona Triggers Desired Tasks Metaphors Two Outcomes Words20 • The Pragmatic Marketer • Volume 8, Issue 4, 2010
  21. 21. 3 UXConventional wisdom holds that Business, marketing, and UX Define your userthe true measure of your product objectives are complementary and experience objectivesuccess is in how well it meets support each other. Marketingyour business and marketing objectives directly impact UX To create your user experienceobjectives. But what about the objectives in that marketing objective you must first havethird objective—user experience? strategy defines target markets, a clear understanding of yourApple, for example, has developed which includes target customers business and marketing objectives.a reputation very different from and users of the experience. There are plenty of books andMicrosoft. Which one would Moreover, UX objectives help articles on this subject. Decide onyou say succeeds at setting and refine the target market. And as one key business objective andmeeting successful user experience much as business objectives guide one key marketing objective whenobjectives? marketing objectives, they guide defining your first user-experience UX objectives, too. In many cases, objective.How is a user experience objective UX objectives refine both businessdifferent from a business or and marketing objectives. User experience objectives mustmarketing objective? Common align with your users’ needs.business objectives focus on For example, we conducted Successful UX objectives are borneincreasing revenue or decreasing research with a client to uncover from a deep understanding ofcosts. Marketing objectives focus ways they could attract their your users’ environment. Applyingon increasing market share and competitors’ customers and proven user-centered designdeepening existing relationships. identified a more lucrative and methods provides a straightforwardWhile necessary objectives, they unmet need within the customer approach to gaining insight thatfocus more on the business and organizations, but not in the IT accurately defines your objective.product. User experience is about department, where all of themanaging the customer side competitor products were focused. There are seven steps in definingof the equation. This new opportunity was closely your user experience objectives. related to the existing product While the insight that defines yourUser experience (UX) isn’t a warm offering and merely required a objective can occur in any of theand fuzzy superlative such as “easy focus on a different user group. following steps, you never knowto use,” or “delightful.” A good This new insight transformed which step it will be, or if separateUX objective needs to be much both business objectives (reduce insight from each step combine tomore specific and measurable, like costs) and the marketing objective form your objective. So you mustbusiness and marketing objectives. (attract competitors’ customers). commit to the whole process. But, The company was able to change don’t go into analysis paralysis. business and marketing direction, At this stage, all you want are increase revenue by expanding an insights, words, metaphors, etc., immature market-base, and now that suggest what the key users’ dominate their market. desired experience is or should be. The Pragmatic Marketer • Volume 8, Issue 4, 2010 • 21
  22. 22. UX3 User Experience: The Third Objective Observe Observe Persona Persona Triggers Triggers Desired Desired Tasks Outcomes roles cute Outcomes STEP 1 STEP 2 Give the described user Don’t ask, observe Define your key users names to help keep the design team focused. In e-commerce projects, Listening to your customers’ (persona) we’ve found three basic user roles: suggestions may lead to incremental Based on your marketing objectives, improvements instead of real you should have a clear idea of Browsing Betty—who, without any innovative market solutions. Rather where to find your target users. specific objective, ambles through than asking your users via focus Personas are a common tool to help the mall looking at various shops groups, interviews, or surveys, you define your key users. Personas and items. will have much better results going are a stand-in for a unique group out and watching them perform the who share common goals. They are Surgical Sam—who knows exactly tasks related to your product. It’s fictional representatives—archetypes what he wants, where it is, even better when you observe them based on the users’ behaviors, its cost, etc. performing the task without your attitudes, and goals. product as their task process may be Birthday Bob—who has 40 minutes modified to conform to your specific You need to be more specific than left on his lunch hour and $40 to solution. All you end up doing, then, your typical demographic-based buy a birthday present for his 6-year is automating their frustrations. customer description. You should old niece. He doesn’t know what be able to not only describe 6 year-olds like or what his niece When users perform a task, your users in terms of their wants specifically, but he’s got 40 not every action is verbally demographics, but also be able minutes and $40 to find something. communicated to the observer, to describe their cognitive and often because users perform tasks behavioral attributes. It’s not uncommon for users to unconsciously, or don’t see them as start in one role and then switch important, or think they, the user, Another way to think about your to another, thus switching hats. are the problem. For example, your users is in terms of the various and Betty may find a pair of pants and users may have created special more specific roles they perform. then realize that the belt she saw information “cheat sheets” to do We all wear different hats. With at another store would go perfect their job. These cheat sheets each hat, we endeavor to achieve with the pants, so she switches from indicate something in the task different objectives and bring being Betty to being Sam. domain is missing or too difficult varying degrees of task knowledge. to perform. Instead of looking at your users as The task objectives and knowledge a single person, describe them more basis of each role is different Sometimes when we solve a specifically by the roles they assume enough to warrant a different design market problem, our solution when performing separate tasks. perspective and therefore a different may completely eliminate existing UX objective. But you cannot design workflows, activities and tasks with for all three simultaneously. You a better process. In many cases, must focus on a single customers only know their way of user role (for now, doing things while we possess a anyway). broader perspective across many customers’ processes and a deeper understanding of technology capabilities. An individual customer does not have our aggregated view of the larger market problem across multiple customers. 22 • The Pragmatic Marketer • Volume 8, Issue 4, 2010
  23. 23. User Experience: The Third Objective 3 UX Persona Triggers TriggersPersona Desired Triggers Desired Desired Tasks Tasks Metaphors Metaphors Tasks Metaphors Outcomes OutcomesOutcomes STEP 3 STEP 5 STEP 6 Define your customers’ triggers Define tasks Understand your Every task begins with a trigger Users perform a series of tasks in customers’ metaphors event. Wouldn’t it be nice to know order to achieve an objective or People typically use shorthand terms your target customers’ triggers? desired outcome. While this step to discuss their tasks. Rather than That’s why observation is so much can be rather involved, you need to telling someone to “open up the more informative than self-reporting describe the key steps of the task Two TwoTwo word processor, choose the XYZ Words WordsWords mechanisms. Most users are not domain from a 10,000-foot level to Corp Memo Template, using Times aware of what triggers an activity. get a handle on how users’ perceive New Roman, 12 pt. font, write a They more often describe what their tasks. memorandum to the engineering triggers them to use your product, group regarding this decision.” but the real trigger event often You should be able to describe They simply say “draft a memo to occurs much earlier than perceived. their tasks without specifying your Engineering.” These shortcuts are solution, again to avoid automating often metaphors and metaphors Good design is about managing user their frustrations. Too often we suggest objectives. expectations. Expectations are a see high-level task analyses key component of the trigger event justifying a company’s solution Understanding your customers’ and may point to a user experience rather than describing the user’s metaphors helps you understand objective. The appropriate focus on problem domain. their objectives from their this objective allows you to manage perspective, in their language. your users’ expectations. For example, our first step in Knowing their language is designing what has become a very especially important in successful online florist website the next step. involved observing men buying Triggers Desired flowers at flower shops, not Metaphors Tasks Outcomes STEP 4 online. What we learned from our observational research of the high- Understand your customers’ level tasks was that the triggers, desired outcomes outcomes, and task drivers were Users turn to your product to solve very different from what was a problem and have a solution in supported by the online florist sites mind. Typically that solution is just at that time. This ensured we were not going to merely automate the Two a part of the desired outcome. For Words example, buying flowers online is current frustrations. not the desired outcome. Getting out of the doghouse because you That observational insight led to the forgot your anniversary is. These design approach that supported the end-result outcomes are one of highest average conversion rate on the more predominant factors in the web! defining your user experience objectives. The desired outcome rarely has anything to do with your product. It is more likely related to something generic to the users’ needs. The trick is identifying what those needs are and how your product can serve those needs. The Pragmatic Marketer • Volume 8, Issue 4, 2010 • 23

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