Sunday, October 15, 2006

To ask a girl out, just ask her!

I began writing today's blog because I want to share some learnings for entreprenuers today to develop their bizdev plans more efficiently than I did :-)

We have experienced and heard horror stories from the dot com bust about how large companies did dummy deals. With my startup Coola, we started with Web businesses as our customers.

I market validated and found the first few potentials even before raising money. Then we signed our first few customers and I hired a VP Sales from the Web world, who was great to get us to such customers. But, before the web world started tanking, we realized something was wrong because for large $$$ deals, we had to justify how the customer would recover the cost paid to us and we found that the large web businesses themselves did not have clear revenues. We switched to Enterprise customers with a clean software lisencing fee, which is a separate story.

All our meetings were around increasing stickyness or increasing customer loyalty, while the site customers (consumers mainly) did not pay.

Web business with consumers as customer:
ok, targeting consumers and building web businesses is in vogue again today after the success of social networking sites. I agree fundamentally there are several problems waiting to be solved for consumers so we need those sites. But remember, web consumers are spoilt- Web consumers don't pay. For any product, you can give away some freebies and get a set of early adopters to pay, that cannot build out your business.

I have two options for consumer businesses -
a) Look up the food chain. Find some existing business targeting the same consumer and make them your customer. Own all of them. For example, if you want to sell to Moms, goto P&G. Its like going to the parents to sell stuff to kids.

b) Find non-web channels to the same customers. Once you reach them, supplement with web revenues.

Web Business Targeting other businesses:
If you are all about going to Google to entice them to buy you, you don't have a b-model. I don't want to talk to you.

If you have some technology that will help large businesses, I suggest starting with validating your dreams TODAY! Is there a real need? Will they pay for it? Once you meet them, they may require your product to be built fundamentally differently because they cater to their customers who they know best.

I cannot list the number of times, I find smart, really smart entreprenuers painting beautiful scenarios about how specific companies will buy their technologies and postponing actually contacting them. They think its like asking out a girl you really like and worrying about what if she rejects. ok, its a little like that. But, with large companies, it takes a looooooong time, even if they are interested.

I think the fundamental problem is entreprenuers like to stay in their comfort zones, so the tech guys build technologies, the operations guys focus on production and operations, so customers are out there not knowing you have a solution for them.

I recently heard from an entreprenuer talking about a potential big client and how he heard they had problems *exactly* in the area he is working and he will have his solution for them in a year. Today is the time to present them your solution. Maybe they will build something else, however inferior to yours and you will have a whol team of morons to fight once you contact them with the perfect solution.

Another problem is thoerizing about all aspects of a potential deal with this large potential customer. All deals start with building relationships, which can start because you are ready to understand their problem, listen to their suggestions and have a smart team to work with them. Nitty gritty of the deals will be worked out during the contract stage, which may happen 1 year down the line if you start now, or never if you postpone contacting the customer today.

So, you want a cool date, just ask and ask now!

No comments: