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Mvc denver startup week 2014


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Mvc denver startup week 2014

  1. 1. Minimal Viable Channel So, you’ve got a start-up, and you’ve proven MVP. Should it become a business? Perry Evans Closely, Inc
  2. 2. housekeeping  Open WIFI: Assembly – Startup Week  A word to TAXI and Assembly.  The container pool is closed, but we’ll have a food truck!
  3. 3. old vine entrepreneur four start-ups later MapQuest Jabber Local Matters Closely
  4. 4. Some context  Lean start-up/MVP discipline is outstanding.  MVP is not designed to confirm viability of a business.  Go-to-market methodology is barely visible in startup advice.  Where tech and sales/growth hacking cultures collide.  Minimal Viable Channel / Go-to-market Hacking is a dialog in need of a framework and dialog
  5. 5. Minimum viable presentation  Some stage setting  Closely case study on go-to-market failure  Applied learning – walk through punch list  Open Q&A
  6. 6. “The MVP is intended to ensure that the market wants the product before a large time and monetary investment is made.” Eric Ries
  7. 7. I’d probably have 5 years of my start-up life back, if someone had sat me down earlier on this topic!
  8. 8. Pause and celebrate your MVP success.
  9. 9. Pause and celebrate your MVP success. Then dig in. • Own your go-to-market model. • Frankly assess your business viability.
  10. 10. Head over heels love should be reserved for your personal life.  You’re about to make a 5+ year commitment. Your personal life and career opportunity cost have never been higher.  Take a deep dive into your business viability BEFORE you progress to raise [more] money.  Do this for yourself now, not for investors when your job is to sell with confidence.
  11. 11. Closely Case Study  Product and market space  Finding our go-to-market path  Multiple channel options  Lessons to learn from 2010-2012 Local Mobile Promotions SAAS
  12. 12. The Product Space  Consumer local shopping moves predictably to mobile and integrated with social. How small businesses promote themselves has to be reinvented.  Rethink a new SAAS + Mobile solution. The big winners are the well-timed new entrants.  Proven team, hot venture space, validated product concept.  A-list angels & board. Comcast Ventures signed on early. What could possibly go wrong?
  13. 13. Going to Market  Direct Sales  Agency Channel Partners  Large-scale SMB Solution Providers
  14. 14. Going to Market Selling to Small Businesses is expensive relative to ARPU. Let the customer tell you the scalable price points, and work from there.  Direct Sales Google CPC Analysis: $10 CPC for right keyword set. 4% “good campaign” conversion to purchase. = $250 direct cost of acquisition. Churn: 20% to 50% annual churn in category. Net cost per RR customer = $312-$500 Price Sweet Spot $50/month, less $15/mo costs = 11-15 months to recover COA
  15. 15. Going to Market  Direct Sales Evaluation of Direct Sales Model - Could we increment to improve the model? - Yes, build growth hacking team discipline - But SMB virality not demonstrable, so unlikely to break through vs. improve - The noise was getting crazy, thanks Groupon! - Acquisition cost probably going up not down - Not a Venture-attractive model - Low virality, COA coverage, churn red flags - This could be a successful non-VC business model Assessment: MEH.
  16. 16. Going to Market X  Direct Sales  Agency Channel Partners  Large-scale SMB Solution Providers
  17. 17. Going to Market  Agency Channel Partners Over 80K small agents have 10-200 local business clients. Very reachable, promising for growth hack. Give them a solution to package for their customers; let them build services on top. No COA outlay. 3- year plan to get 10% of agents selling 2 customers/month - looks scalable! Took MVP approach to channel testing. • Get out in field, paired sales, do the support • Hired consultant w/deep connections to local agents • Small scale customer testing, vary agent type/size • 3 months in Denver market only Assessment: VC Happy Dance!
  18. 18. Going to Market  Agency Channel Partners What we learned: • Not a single goal met by agency tests after 3-4 week honeymoon period • Product Push is an unnatural work habit for agencies • Agent customer base is a random act • Became a high risk channel model. • Be cautious of “aspirational fit”, test for operational behavior!
  19. 19. Going to Market X X  Direct Sales  Agency Channel Partners  Large-scale SMB Solution Providers
  20. 20. Going to Market  Large-scale SMB Solution Providers Convinced CDO/CEO of major YP to make us their next major new product. • 800K SMB accounts, 3000 sales reps. • $275K revenue to customization & sales training/support. • Price point dropped to ~$20/mo, but $0 COA. • Co-developed forecasts of 1-2K new/mo in +12 mos Also convinced major promotion publisher to align & outsource digital products. Investors delighted, began aligning product and delivery team for the channel model. Assessment: Wow, if this works…
  21. 21. Going to Market  Large-scale SMB Solution Providers The 12-month journey, post contract • New product was being added to a kit bag already full = continual jockeying for sales team attention. • 3 product launch delays took revenue start from 4 months to 12 months. • Two new CEO’s, bankruptcy protection. • New strategic plan cancelled new digital products to narrow focus.
  22. 22. Going to Market X X X  Direct Sales  Agency Channel Partners  Large-scale SMB Solution Providers
  23. 23. Our Big Mistake?  We had P/M fit, so we just went about hunting for the best channel.  There simply wasn’t a viable one that could confidently deliver venture returns.  We raised money ahead of a proven channel model, and relied on proxies and promises to “sell the go-to-market” to investors.
  24. 24. How’d it end?  We saw the signals and we had stayed very close to our market.  We began hacking a new product that we saw as a bigger opportunity.  Much bigger, to our delight.  Launched our second major product, Perch App, pre-MVP mid 2012, MVP end of 2013.  #1 Mobile Business App SXSW 2013. From 10 to 60K small business users YTD.  Brought on two new venture funds.
  25. 25. Minimum Viable Channel Assessing Your Business Viability  Zoom Out  Own Your Boiler Room  Always Be Tuning Raw content brain dump, to be refined.
  26. 26. Zoom Out Get to Know Your Real Scale  Capture your macro market size and metrics, park it in PowerPoint.  Ground-up math is critical  Truly addressable market, bottoms-up. Don’t use “x% of $yB”  Spend most of your time on 2-yr view  Dive into demand size proxies  Watch how your customers buy/use  Bottoms-up tips  Live your business. Cut your “Techcrunch time” in half!  Learn how your competitors sell & market, follow their shifts.  Be authoritative on your addressable market and dynamics.De-risk for VCs. Put your business in context of Opportunity Scale, Competition, Industry Structure.
  27. 27. Competition Don’t rest on past behavior, dissect current behavior. Everyone is in motion.  What are their strongest clients or use cases?  Get to know their executives, especially most recent hires  Board and new executive composition is a key predictor of forward behavior.  Find ex executives, customers, call/interview them. Use Linkedin, Quora, Glassdoor.  Dissect job postings to assess product plans/intentions  Seek your independent board members Drill down, continually, deeply. Spend time with non-competing businesses selling into same space. Learn from their go-to-market experiences.
  28. 28. Industry Structure Score yourself, these are key drivers of M&A exit success, and ergo – VC interest.  Product has high leverage or agitation value.  Diversity of customers, low risk of customer concentration.  Opportunity to build defensible leadership position.  Large liquid competition with no clear activity or next 12-month intention in your product.  Multiple competitors or complementary businesses with history of growth via acquisition. Where does your business fit in the value chain of your market? Are the dynamics right for a high quality future exit?
  29. 29. Your Boiler Room. Own it! Continual iteration on sales model and messaging is mission critical.
  30. 30. Knowing your channel model. Example from QuickMVP. Hacking your model with iterative testing of messaging and pricing, using Google Search as measure of market size.
  31. 31. Assessing the Indirect Path  Assessment Check-list  Does your product fill a gap that the CP is seeking out?  How well do your best fit customers align with their customers?  Is your product an “education sale” or an “execution sale”?  How does your product stack up in compensation and incentive to the field?  Is your CP well funded and have a history of quality partnerships?  Is there a process in place for direct feedback from sales and from customers on your product?  Live the People  Talk to a handful of the reps  Sanity check with customers Remove yourself from direct customer control very carefully. Investors don’t like to see loss of customer control. Indirect is most often viewed as an expansion stage strategy when the product and messaging have matured.
  32. 32. Always Be Tuning: Your Messaging.  “Product-market fit is not simply about getting the product to fit what the market needs, but describing why it matters to the market. If you do not get the message right, there is no way you will be able to scale up because you will get stuck explaining what you do.”  “If the purpose of enterprise sales is helping customers get through their own internal buying processes, strong and clear positioning empowers internal evangelists to help close deals.” Work it, rework it, rework it. Listen to how your customers describe you. Adapt to each key Use Case. Mark Birch Tom Tunguz
  33. 33. Always Be Tuning: Navigate your shift from beta customers to first market wins.  First customers calibrate your growth. Your growth calibrates your access to capital.  Assess your highest leverage Use Cases or Ideal Customers.  Go outbound, message uniquely to each segment  Avoid “FIFO” and sales rep led targeting  Build a growth hacking discipline.  @Perch hundreds of iterations created advantage in low COA  Start thinking #SalesHacking [very 2015!] Organize to win the highest leverage use cases and impactful advocates.
  34. 34. Pulling These Thoughts Together  Don’t assume MVP gives you a viable business.  Take the time to do a clear-headed evaluation of your opportunity and test/hack your go-to-market model.  Investor dialog is where a lot of this gets surfaced creating the wrong dynamic.  Do your MVC homework, THEN go to investors!  What you learn will either:  Build your confidence and prepare you well for investment & execution.  Or, it’ll depress the hell out of you.
  35. 35. Following Up  Some People I Follow:  Tom Tunguz, Redpoint Ventures  Mark Birch,  Sean Ellis,  Some Tools  QuickMVP, Crunchbase, Quora, Glassdoor,,, LinkedIn, Twitter: @perryevans