Internet of Things, Brand Loyalty, CFO, Valuations, Pitching, Hiring, Failing, SaaS, Marketing, Product. Roundup #23 Nov 5 2014
This week’s Roundup #23 from Startup Management is a manual selection of 14 article links from the hundreds of articles being curated. Previous issues are available here. For daily content, please visit the website’s River of news (as a stream), or Magazine view (by category).
Redefining Competition with Connected Products
If there’s one piece you’ll want to read, and re-read, this is the one: How Smart, Connected Products Are Transforming Competition by Michael Porter (yes, the Michael Porter) and James Heppelmann, published in the Harvard Business Review [sorry, they put the firewall after it was open in the first few days]. This is a seminal article in my opinion. It starts off slow, to get the readers up to speed on the subject of the Internet of Things, but then dives into the profound implications connected products have on the relationship between customers and companies, including startups. “In many companies, smart, connected products will force the fundamental question, What business am I in?”
Brand and Customer Loyalty
Content is part of marketing, hence we call it “content marketing”. Having loyal customers that advocate for you is also part of marketing, and that’s called “advocate marketing”. 3 articles on the many ways you can boost Customer Loyalty. In “How to Turn your Customers into Brand Fans”, the 3 highlighted examples for user-driven brand evangelism are GoPro, Tourism Australia and Betabrand. In Customer Loyalty Revisited, Jeffrey Minch has an exhaustive list of customer loyalty actions you can benefit from your best customer advocates, and he introduces the interesting concept of “customers in waiting”. And to top off this topic, Casey Winters wrote Loyalty Marketing Part I: Strategies and Segments. “Every business has a loyalty problem.” The article helps you segment your customers according to loyalty and frequency, and guides you with actions for each.
As Mark MacLeod points out, not all startup CEOs get to the point where they need a real, full-time CFO. But for those that do, he has produced an excellent Slideshare primer that pins the basics of a CFO’s job, in The High Performance CFO. “The best CFOs will provide leverage to the CEO to help scale and sanity.”
The Psychology of Pitching
Yes, pitching is like playing with the mind of the investor. In The Art of the Pitch, Jason Nazar lists 9 points to follow. “Why have investors focused on your computer instead of you? You’re looking to build a relationship; you want investors engaged in an organic, authentic conversation.”
Brad Feld asserts that your valuation is a relative thing, in The Trap of Relative Value. Indeed, over time the pendulum always swings back to the “right valuation”. An entrepreneur finds out later if they were over-valued, under-valued or right-valued. If they were under-valued, the upside is easier to achieve. If they were over-valued, the expectations are tougher, and they need to live-up to that valuation, and if they don’t, the next valuation will self-correct.
Hiring and Paying Employees
I didn’t find anything counterintuitive in A Counterintuitive System for Startup Compensation, a First Round Capital review post. But the article has an exhaustive list of good hiring practices and tactics which I have seen being utilized over the years by larger companies. Basically, consistency and transparent processes are the backbone of fair compensations and happy employees. And there’s a related Quora post, How do you distinguish 10X software engineers from the rest? It lists a few tricks. One of them: “don’t look at job boards (top candidates are never looking for jobs), and don’t rely on your HR staff for sourcing them.”
“You manage a product by the principles that created it. Before you launch a product you design for the behavior you expect. After you launch you design for the behavior you get.”
Des Traynor gave this great talk about Product Strategy in A Growing Company. It’s a 27 min video that is well worth watching if you’re involved in product management or strategy.
There is a lot of wisdom in The 5 Early Mistakes That Almost Killed This Founder’s Startup — and How He Survived. “Speed and execution are not everything. Assessing the landscape to see the big picture is. Until you have your first few hundred thousand users, every feature you add must be an absolute necessity.” A must read.
Tomasz Tunguz outlines The 9 Marketing Disciplines of Great SaaS Companies, and they are: Ops & Analytics, Evangelism, Content, Website Conversion, Paid, Product Marketing, Customer Lifecycle, Communications and International. It’s a short article, but it will make you wonder if you have these categories covered.
SaaS and Products
Jason Lemkin has an excellent post that covers more than its title, If You Don’t Think You Need a VP of Product, VP of Marketing, Etc. — Then You Haven’t Worked With a Great One. He makes the important distinction between helping and moving the needle. It’s a lot easier to hire someone that helps. It’s more difficult to hire someone who will move the needle for you.
The Product Hook
Finally, Nir Eyal penned a good summary of the key concepts behind his book, Hooked, in Why Messaging Apps are so Addictive. The concepts of Trigger -> Action -> Reward -> Investment apply to any product.