Last week, I had the opportunity to give a talk on product innovation at the Fashion Institute of Design & Merchandising (FIDM). While I think they called me in to share some of the things I’ve learned during my time consulting to The Estee Lauder Companies, it’s hard to say who got more value out of the talk: the students or me.
I’ve switched industries a lot in my (admittedly) short career. Over the past few years, I’ve worked in higher education, early education, ad tech SaaS, cosmetics, and alcohol. Because of that frequent switching, I’ve often been a beginner and forced to get up to speed in new industries quickly. However, during the Q&A portion of the talk at FIDM, I realized I had stopped looking at the cosmetics industry through a beginner’s eyes. The students (all of whom were about 20 years old) were asking questions about the industry, sales channels, and technology from angles I had never thought of but seemed obvious as soon as they brought them up.
For example: among millennials, beauty influencers have huge power to drive sales, simply by recommending a product or featuring it in a makeup tutorial video. Several students brought up the (valid) point of diminishing consumer trust in influencers because of all the undisclosed sponsored posts. In hindsight, this concern seems obvious but in all my time working with beauty brands, this point has either been completely avoided or jokingly brushed off. Yet these students were able to very easily see the long-term consequences of the current influencer trend: diminished consumer trust. Instead of working with influencers or celebrities, these students were interested in figuring out how to build better peer-to-peer recommendation systems that start and end with product effectiveness in a personalized way and can’t be gamed by larger brands. Amazing concept!
What surprised me the most about the FIDM Q&A session is how unaware I was of losing my “beginner’s mind“. I’ve only been in the beauty industry for two and a half years – which is nothing if you compare it to colleagues who’ve been doing this for twenty or thirty years. But those two years were more than enough to make me miss obvious concerns with the current trendy marketing strategy. This brings up an important question: at what point do people lose their “beginner’s mind” and is it possible to keep this creative state of mind for longer periods of time?
At this point, I don’t quite know what the best solution is but I suspect it has something to do with continually exposing yourself to others without much experience and limiting your interactions with so-called “experts”. While I’m sure there’s some value in having deep knowledge within a specific field, it certainly does seem like the more time you spend working on a given problem, the more difficult it is to see the tangential opportunities that might be obvious to a beginner.
I’ll be exploring this beginner/expert dichotomy further in future posts but in the meantime, let me know your thoughts or experiences with the beginner’s mind on Twitter or in the comments!
For the typical early stage startup, closing a deal with a Fortune 500 company can provide a huge boost in morale and momentum (and hopefully cash). Enterprise deals are a signal for investors to indicate traction, a common source of free media attention, and a key factor when potential employees will weigh your offer against other opportunities.
Over the past several years, I’ve sat on the corporate side in my role building the External Innovation group at The Estee Lauder Companies, where I’ve worked on 200+ deals with startups of all sizes. Before that, I sat on the startup side of the table and led growth at several venture-backed companies; closing enterprise deals with companies like Proctor & Gamble, LinkedIn, Spotify, and Honda.
With this dual background, I’ve seen (and made) my fair share of mistakes in building startup-corporate interactions. Avoiding the mistakes below just might be the difference between celebrating a deal with a new enterprise customer and sitting on the sidelines wondering what happened. To paraphrase the classic sales quote from Glengarry Glen Ross: champagne is for closers.
Mistake #1: Assuming Large Companies Have Limitless Cash
Yes, you may be pitching to a billion-dollar company but the person you’re pitching to doesn’t have a billion-dollar budget. While corporate budgets may (keyword: may) have more wiggle room than startup budgets, your corporate counterparts are still dealing with many demands on a limited budget. On top of day-to-day budget concerns, large companies, even successful ones, may implement spending freezes for specific departments. It’s entirely possible that your potential customer will be comparing your product with something in a completely different industry, simply because you’re competing for the same budget dollars.
Have some empathy for the budget concerns of your corporate counterparts and it’ll pay off by differentiating you from other salespeople they encounter.
Mistake #2: Trivializing Deep Corporate Knowledge
While it is possible that your startup is “changing the world”, the Fortune 500 companies you’re pitching to have already changed the world and know a thing or two about how things work. There’s nothing more annoying to your corporate counterpart than trivializing the deep knowledge they have of their industry.
You can also run the risk of shooting yourself in the foot by extrapolating current trends in your presentation. Do you really think you’re the first person to tell a corporate innovation director with twenty years of experience that artificial intelligence is going to take over every industry by 2030? Whether you’re right or not, the point is they’ve heard that story before and may view it as a sign of arrogance. Showing some humility and using phrases like ‘our hypothesis’ go a long way towards establishing your honesty and credibility.
Mistake #3: Using Too Much Startup Jargon
True story: the first time I mentioned the word “accelerator” in a corporate R&D lab I was consulting for, a senior scientist gave me a confused look and said he “didn’t realize particle accelerators were funding startups now”. While this may initially make you facepalm, it was a great reminder that those of us in “startup world” truly live in a bubble that most of America, and the world, are not part of. Taking the startup jargon down a notch will help you get your point across.
It sounds cliché but knowing your audience is the key to effective communication. When pitching to individuals who’ve spent their entire careers in large companies, avoid using startup words that they won’t understand and connect with. It’s not the job of the audience to figure out the presenter – but it is the job of the salesperson to make sure their pitch isn’t going over the audience’s head.
Mistake #4: Ignoring Implementation Costs
In the omnichannel world we live in, any large company with a physical retail presence is constantly pitched new in-store technology concepts. While the startups offering these technologies are charging reasonable prices (often as low as $30/location/month), what is often ignored is the cost a company must incur to implement a new technology. For example, a technology that provides customer intelligence via iPad to in-store sales staff so they can sell better requires an extensive training program, troubleshooting, and potentially even in-store hardware upgrades. So even though a technology like this may only cost a total of $6,000 per month (200 locations x $30/location/month), the implementation costs (for things like hardware and training) across 200 locations could easily exceed $100,000.
Implementation costs are difficult to avoid entirely but there are steps startups can take to help their clients reduce costs and get themselves closer to signing a deal. These steps include negotiating reduced hardware pricing with manufacturers, assisting with or even providing free training, and offering to troubleshoot software issues for sales staff. Whatever you do, the important thing is to make it feasible and simple for the large company to say yes to working with you – and that doesn’t always involve the price of your actual product.
Once you’re able to snag a meeting with a decision-maker at a large company, it means you’ve got their attention. They are interested (albeit at a very high level) in what your product can do. That said, these decision-makers are looking at dozens of other companies who are competing for the same budget. The easiest thing for a decision-maker to do is say no and any of the mistakes above give them an easy out. By always keeping your audience in mind, being empathetic to their concerns, and avoiding critical mistakes, your probability of closing a deal goes way up. And that’s ultimately the outcome that both large companies and startup salespeople are after.
We’ve all heard the cliché that we become the average of the five people we spend the most time with. Without a doubt, humans are massively influenced by those we surround ourselves with. Hang out with people who drink every day? Chances are, you’ll start drinking every day too. If your friends are workaholics, you’re more likely to be a workaholic. Accordingly, if we improve the quality of our peers, we can improve our own lives.
Of course, it’s not quite that simple. After all, we can’t just get rid of our friends and pick up “better” ones (nor should we want to). We can, however, surround ourselves with greatness by other means. Living in the Internet-era means it has literally never been easier to influence yourself through the positive examples of others. You just need to have the discipline to curate your environment with the right inputs.
Read Books – Especially Biographies
“Once you learn to read, you will be forever free”
If anyone knows the value of reading, it’s Frederick Douglass. In an era when teaching a slave to read was considered a major crime, Douglass became a voracious reader, partially through his own initiative and partially through the kindness of his master’s wife. Throughout his life, Douglass maintained that reading and knowledge have the power to free one from their present circumstances and improve their life.
Biographies and autobiographies are incredible resources for exposing yourself to real-world examples of how great individuals dealt with difficult circumstances. Even if you pay full price for your books, where else can you spend $20 and get a deep dive into the life of Abraham Lincoln, Steve Jobs, Andre Agassi, or countless others?
Another big advantage of biographies is they allow you to be mentored by the greatness of people who have been dead for hundreds, if not thousands of years. It’s not quite as good as witnessing events in real-time but it’s not a bad substitute.
Fiction is an underrated resource for surrounding yourself with greatness. After all, what we think of as “history” is usually fictionalized anyway, so why not learn from true fiction? There are tons of fictional characters who can provide positive examples for how we can act in our daily lives and there’s no reason not to learn from them. Books that come to mind are The Martian, the Harry Potter series, and the Hunger Games series.
Listen to Podcasts
If we’ve hung out recently, there’s a good chance I talked your ear off about podcasts. Although they’ve been around for awhile, I’m convinced that the podcast ecosystem is primed for hockey-stick growth. The content available now is just incredible. As more podcasts experiment with non-advertising driven business models, I expect the content quality will only increase.
Some of the best podcasts for exposing yourself to greatness take the form of interviews. Others are of the “lead by example” variety. Here are a few of my personal favorites:
All of these podcasts have deep libraries for you to dig into. Some episodes will really strike a chord – others won’t. Sample a few and discover what gets you going.
The best thing about podcasts is they make the person being interviewed seem more human and normal than articles, books, or video. When you hear incredibly accomplished individuals like Jamie Foxx, Jody Mitic, Lisa Randall, or Naval Ravikant in audio, there’s no embellishment by an author, no makeup turning them into flawless beings, and there’s simply a level of rawness that I haven’t seen elsewhere.
Finally, podcasts are a great way to make your commute useful. It doesn’t matter if you drive, take the bus, or ride the subway to work – podcasts are the ultimate way to turn that dead time into productive time.
Pay Attention to Pop Culture and Sports
I’ll be the first to admit it – the attention we pay to pop culture (and yes, I’m including sports in this category) gets on my nerves sometimes. But that doesn’t mean it can’t be inspiring. I’m far more into sports than music, film, or other types of celebrities but there are powerful examples from every field. To name a few just from football:
Aaron Rodgers going from community college QB to an NFL MVP and Super Bowl winner (I’m biased on this one – Go Pack Go)
Lesson: It’s not about where you start, it’s where you end up.
The New England Patriots ridiculous Super Bowl LI comeback win yesterday over the Atlanta Falcons
I could go on for days with these examples. They are everywhere: basketball, music, books, movies, TV shows, tennis – you name it. It’s easier to surround ourselves with greatness today than at any other time in history. We just need to know where to look.
I strongly recommend reading the blog post linked to in the tweet. It’s Uber CEO Travis Kalanick’s guide to attending CES as a bootstrapping (also known as ‘broke’) founder. The guide itself is interesting but more important is the idea that Kalanick, with an estimated net worth of over $6 billion, ever needed to think about how to go to a conference for under $100/day. The fact that this post was written only eight years ago seems incredible, not to mention that Kalanick hadn’t even founded Uber yet. That didn’t happen until March 2009.
But I’m thinking about that eight year number for other reasons too because exactly eight years ago, I turned 18. And thinking about that birthday and all that’s happened since makes Kalanick’s change in circumstances more understandable. Now to be clear, my net worth isn’t even a rounding error for Travis Kalanick so that’s not what I’m talking about here. Here’s what I am talking about: it’s insane to think how much – good, bad, and ugly – has happened in the past eight years. Some things off the top of my head:
Self-Awareness: (sort of) figured out what makes me tick and what motivates me
Started my first company the summer between high school and college. Got bit by the startup bug – it hasn’t left me since.
Got the opportunity to go to CMU and meet amazing people
I wouldn’t trade any of the experiences or relationships gained from the past eight years for anything. Not even the shitty experiences (or people). Despite what people tell you about life being short, eight years is actually a really long time. A lot of things happen and those things don’t have to be as massive as founding Uber for it to all be worthwhile.
The last eight years have been transformative in every way and I absolutely can’t wait to see what the next eight years brings – no matter if it’s ups, downs, or something in between. And with that, I’m off to drink some birthday beers with people I love. Cheers!
The other day, I was looking to buy a jump rope I could travel with. After spending (wasting?) about 30 minutes going through jump ropes on Amazon caused by searching for “best MMA jump rope”, I paused to ask a highly relevant question: what in the world was wrong with me? Why did I need “the best” jump rope? The previous jump rope I owned came from who knows where and served me fine for a long, long time. The experience felt like living my own version of Aziz Ansari’s piece about trying to find the best toothbrush.
Last week, I had a great lunch conversation with my friend Lexi Lewtan (currently building AngelList’s A-List job platform) about something similar she was noticing in the recruiting industry. Companies all wanted to recruit “the best” iOS engineer or designer for their company even though that bar is subjective based on what that company is building. No one, not even early stage startups, wanted to settle for hiring an average engineer, even if that meant huge cost savings and would get the job done perfectly well.
We’re taught in economics, entrepreneurship, and statistics classes to assume that most things lie on a normally distributed curve. This is especially true about demand – at some prices, I’d like to buy a “widget” while at higher prices, I wouldn’t.
Essentially, the post boils down to the world moving from one of scarcity to one of abundance and that leading to a breakdown of the normal distribution curve:
To build on Alex’s great post, I think we’re moving to an even greater dichotomy. We’re going to live in a world where companies AND people are either luxuries OR commodities. This trend is showing up in industries as varied as cosmetics, labor, food, and much more. Let’s start with some definitions; what’s the difference between a commodity or a luxury in this context?
Commodity: A product or service for which I’m brand agnostic and highly price sensitive, usually because I believe there is no major difference in quality between brands OR it’s just something I don’t really care about. Examples (for me): gas stations, drug stores, bottled water, socks, paper towels…the list goes on.
Luxury/Premium/Prestige: These are products or services for which I’m highly brand/review sensitive and minimally price sensitive. Things in this category for me include coffee, beer, shoes, cell phone, computer, chocolate, and many, many more. The luxury/premium/prestige category is the one where you would search for “the best” on Google or Amazon.
One key thing to remember is that the determination of a commodity or a luxury is an individual thing – for example, some people think all beer tastes the same and treat it as a commodity. I think differently and am willing to pay a huge premium for beer that I think tastes better, uses more valuable/rare ingredients, and has a better story behind its creation.
The easiest way to test whether something is a luxury or commodity for you is to imagine the price of product X increased by 10%. Would you still buy it or would you switch brands? For example, for most people, if a cup of Starbucks coffee increased from $2.50 to $2.75, they wouldn’t think twice about continuing to buy Starbucks. Similarly, if the price of a 15 inch Macbook Pro went up from $1,999 to $2,299, most Macbook Pro customers would still buy it (although probably with some complaining).
Let’s look at how the luxury vs commodity trend is affecting three very different industries:
I’ve been spending much of my time studying the cosmetics industry because of my work at The Estee Lauder Companies. Since my role is to look externally, I’ve been watching how companies position themselves and how they’re adapting to this new luxury-commodity dichotomy.
For beauty brands, there isn’t much room left in the middle – either you’re making commodities that are competing on price (in which case, your gameplan should be to cut costs as much as humanly possible and sell at grocery stores and drug stores) or you’re competing on uniqueness and luxury, in which case you need some product, marketing, or service elements that stands out.
If you think about labor in a “prestige” vs “mass-market” manner, you see a similar thing happening. Companies look to hire world class full-time employees for a select few key positions and for everyone else, they’re OK working with outside firms or freelancers. This makes sense from their perspective: why invest additional overhead for average talent when you can replace it easily with the next person who walks in the door?
This trend is part of the reason we’ve seen marketplaces for unskilled labor pop up everywhere over the past few years – not just Uber, but also Fancy Hands, Handy, Wonder, and much more. The people working for these companies are all contractors, which is a much cheaper arrangement for companies than hiring full-time, allows flexibility for workers, and allows companies to adapt dynamically to demand in the marketplace (Uber’s surge pricing is the best known example of this).
On the other side of the unskilled labor marketplaces, highly skilled individuals in certain industries have seen their salaries climb higher and higher as firms bid for their talent. This can be seen on a wide scale by looking at software developer salaries or the long-term rise in CEO pay at Fortune 500 companies. As much as it would be fun to complain that these pay issues are all about corporate greed (which is certainly a factor for the CEO pay issue), at the end of the day, it’s really about companies bidding against each other for talent that they want to acquire or keep at all costs – aka the luxury talent.
Food & Beverage
Believe it or not, there was a time when coffee was a commodity item. For those of us who’ve grown up in the era of the $5+ latte, the commodity coffee era is a difficult world to imagine. I assure you, however, a world in which coffee consisted of hardly drinkable sludge that cost $0.50 was a very real place.
The late 80s and early 90s featured the rise of a company called Starbucks. You may have heard of them. The key distinctive trait of Starbucks was taking a commodity item that no one thought much about and elevating it to a level no other coffee retailer had imagined or done on such a large scale.
What does the word elevating mean? In this context, elevating coffee meant Starbucks started with higher quality beans than any of their existing competitors (luxury), roasted them with a more precise science than their competitors (luxury), integrated the story of Italy, espresso bars, and the Third Place (luxury), and included an ethical component (luxury). Compare that to a gas station that would pour some black sludge in a styrofoam cup and sell it to you for $0.50 (commodity). All of these elements factor into giving Starbucks the cache to sell a commodity product as an affordable luxury for almost 10x what their competitors were selling at. Howard Shultz (the man behind Starbucks) tells the full story behind the commodity to luxury rise in detail in his book Pour Your Heart Into It: How Starbucks Built a Company One Cup at a Time.
Today, the rest of the food & beverage industry is doing its best to try to break out of the world of commodity items. Whether they do or not remains to be seen but the tide has turned in luxury’s favor as more and more people are paying attention to the ingredients in their food. This creates an opportunity for brands to elevate (there’s that word again) healthy ingredients, the lack of preservatives, ethical sourcing, freshness, or dozens of other desirable food characteristics.
Commodity vs Luxury: The Way Forward
The main, short-term outcome of this commodity vs luxury transition is that companies are going to be forced to make decisions about how to invest in their futures. My guess is that more companies are going to invest in building brands that are luxuries. Why? Because a luxury’s key differentiator is uniqueness – which could come from a unique ingredient, a novel process, or a fascinating background story – any and all of which can be sustainable competitive advantages.
Building a commodity business seems to me as an outsider to be a lot more difficult. Commodity businesses would be competing mainly on price which makes it easy to imagine commodity businesses becoming a race to the bottom with margins getting slimmer and slimmer until there are no profits to be made. Commodity businesses survive on high volumes and while of course there will always be a (huge) market for them, I think we’re moving to a world where people will buy a higher percentage of products at a premium that last longer, work better, and are more unique – which by necessity means purchase volume will go down. This trend could also be tied to growing income inequality – fewer people in the middle class – but that requires more research to figure out.
Something I haven’t mentioned anywhere else in this post but runs in the background of all these trends is technology. Technology, especially data but also includes manufacturing tech like 3D printing, is giving companies the ability to create customized and personalized products in almost any industry – which is certainly one way to create a premium product. When a company has created a customized product for you and owns the data to continue improving that product, it becomes a premium experience with a competitive advantage. That’s a tough combination to beat.
Staying in shape, mentally and physically, is obviously important to overall well-being. Personally, I find my mind is sharper and more importantly, I’m a much happier person when I take care of myself physically.
Since last April, I’ve been traveling a ton for my consulting work, typically somewhere between 2-3 weeks every month. Traveling is something I love so I can’t complain too much about that buuuut it certainly makes staying in shape difficult. Before this travel madness started, I had a regular gym routine (3-4 days of lifting weights, 2-3 days of cardio) but that’s difficult to keep up when you’re in a different place almost every week.
Over the past few months, I’ve learned a lot about staying in shape while traveling. As is usually the case with me, most of these lessons were learned the hard way:
Skip the hotel breakfast
Free hotel breakfasts are almost always god-awful, especially if you’re staying at a road warrior hotel, like Homewood Suites or Residence Inn. Tell me if this sounds familiar: Soggy, somewhat rubbery scrambled eggs, breakfast potatoes that taste like they’ve been out for weeks, and some strange processed meat as a side.
Oh, I forgot about the waffle maker.
Do yourself a favor and skip most of that. Maybe grab some eggs and toast if you’re really hungry. But probably the safest items to consume in a hotel breakfast are the coffee, tea, and juice. With all the other stuff, you’re going to be consuming amounts of sodium and sugar that’ll leave you feeling exhausted for the rest of the day.
So if you’re not going to eat breakfast at the hotel, what can you eat?
Find a grocery store
Grocery stores are amazing places. Even in the middle of nowhere, you can find a grocery store that sells healthy food. My advice is to go to a grocery store the day you arrive and pick up a few things. Obviously food choices are somewhat dependent on whether your hotel room has a fridge/microwave. Here’s what I typically buy, assuming there’s a fridge:
A few apples
Some nutrition bars (I like Nature Valley Oat & Honey bars)
That sounds like a solid breakfast to me.
Take advantage of free exercise
This is a concept I try to use all the time, not just when I’m traveling but it’s even more important on the road. The idea is this: if you have to do something, for example, go from the ground floor of the hotel to the 4th floor, there are two options available to you:
Option 1: Take the elevator
Option 2: Walk up the stairs
Even though option 2 is more energy intensive, it’ll take you to the same place as the elevator, you’ll burn a few calories, and you’ll probably save yourself the stress of waiting for an elevator that takes forever and the awkwardness of being in an elevator. Related question: aren’t elevators just the most awkward places ever?
Another great form of free exercise if you’re in a city is just walking to meetings instead of taking an Uber or cab.
Get good at hotel room workouts
Let’s face it: hotel gyms leave a lot to be desired. That said, there are some great workouts which don’t require any equipment and can be done in your hotel room (like this and this). Start doing them regularly when you’re on the road and add your own variations to keep it interesting. The easiest exercises to do in a hotel room, no matter what size, are:
Pushups (all kinds)
All sorts of ab exercises
Take advantage of real gyms when you’re home
On a related note, if you’re on the road regularly, it’s easy to get into a routine of laying on your couch and watching Netflix when you’re home. I love Netflix as much as the next person but make sure you squeeze in some “real gym” time when you’re home. A real gym is a place that has barbells, plates, machines, and space.
If I get home before 8pm from a trip, I try to squeeze in a short, gym session the same evening.
Free meals aren’t really free
One great thing about work travel is being able to expense your meals. That’s amazing right?! Well, yes and no.
The good news is that you can take advantage of being in a new place and try types of cuisine and restaurants you typically wouldn’t go to. In some industries (like the one I’m working in now), work travel can also entail fancy dinners which gives you an opportunity to try more upscale restaurants you probably wouldn’t choose on your own.
The downside? Well, all those meals might be covered by your company/client but that doesn’t mean the calories don’t count. Just because dessert is covered doesn’t mean you should get dessert.
Remember the “freshman 15” from college? (I do…) You see a similar effect among new consultants for a very similar reason. I remember when I first started college, the “coolest” thing was being able to drink soda with every meal. A few months later, despite being a college athlete, I had gained 15 pounds and it was pretty obvious that the soda needed to go. Don’t make the same mistake as 18-year-old Neil.: try to eat the same way on the road as you’d eat at home.
But that doesn’t mean you shouldn’t enjoy the perks of going to fancy restaurants! Just be smart about it.
For someone who travels a lot, I still haven’t learned how to properly sleep in hotel rooms. Almost without fail, I find it difficult to fall asleep the first night I’m in a new hotel room. Knowing that allows me to plan for it. Most nights I sleep for about 7 hours so on my first night in a new room, I’ll try to budget 8-9 hours for sleep, which gives me some time to toss and turn and still get a normal amount of sleep. It doesn’t always work but it helps.
Skimping on sleep is a great way to get sick while traveling – probably the worst possible combination.
Avoid alcohol, especially late at night
Related to the above, drinking alcohol affects your quality of sleep and can also contribute to getting sick. If your travel requires you to fly, keep in mind that planes dehydrate you so drinking alcohol before, during, or immediately after a flight can be rough on your system (and on your skin). If you do choose to drink, just try to balance each drink with a glass of water and you should be able to avoid dehydration.
And yes, I learned this lesson in the worst possible way by going out in SF the night before a 6:30am flight (what the hell was I thinking?). Next time we’re in the same city, ask me for the story.
If you haven’t heard of StandStand before, you need to check it out. Basically it’s a portable standing desk made of a three interlocking pieces of wood. Great product that travels nicely in a laptop bag.
Especially after sitting for a while in a plane/train, working on a standing desk instead of sitting down feels amazing. Trust me.
Traveling for work can sometimes (or usually) be rough but being smart about how you travel, eat, and move while on the road makes all the difference between a miserable trip and a productive one. I’ve been on both sides of the productive/miserable spectrum and believe me when I say the productive side is a lot more fun. Let me know if you have any other suggestions for staying in shape while traveling – I’d love to try it out.
Getting started in a new industry can be super challenging but in today’s world of shorter stints with companies, quickly building working knowledge of a new industry is an extremely valuable and essential skill. Becoming fluent in your industry quickly means you start providing value sooner to your team, customers, employers, investors – everyone.
Back in the day (2012), I showed up to a lunch meeting in Pittsburgh with Adam Paulisick unprepared to answer his questions about the economics of college admissions, the industry I was running a company in at the time. He gave me some advice that stuck with me ever since: To win, you HAVE to know more about your industry than anyone else – there are no excuses.
Since that embarrassing episode, I’ve tried to apply Adam’s advice to everything I’ve done and developed a step by step process that makes the challenging process of getting up to speed in a new industry a bit more methodical:
Step 1: Read as much as you can about the market
There’s nothing to replace this step. Read EVERYTHING – articles, journals, books, forums, industry history, even tweets. Don’t judge anything you read yet – at this point in the process, you don’t know anything. If there’s some kind of overview book, start with that – if not, start with articles because they’re usually written in layman’s terms. You should absolutely be taking notes – the key here is to start building a knowledge base. Allow yourself to go down the rabbit hole.
One last thing on this topic: give yourself the time you need to read about the industry. Study for this like you studied for the SAT and make sure you block the time off on your calendar. This is just as important as any meeting.
Step 2: Find people who know a lot about the market and spend time with them
Talking to knowledgeable people and asking questions is something that should be done mostly in parallel with reading but make sure you’ve at least read a little bit first so you can ask relevant questions. Don’t worry about forming opinions yet – just keep building knowledge. Asking someone for their time initially feels scary (why would they want to talk to me?) but you’ll find that smart people: a) generally want to be helpful and b) are generous with their time when they sense you’re genuinely curious about their life’s work.
A simple hack here that’s been magical for me: Ask each person you talk to in the industry for one other person they recommend you talk to. Even better, ask if they can introduce you. Very quickly, you’ll have a network of really smart people who genuinely want to help you learn. #winning
Step 3: Form opinions and test them
The first two steps in this process are fairly straightforward – they require work but your ego isn’t at stake. The third step is what will require some courage. To figure out if your mental “picture” of your new industry is correct, you’ll have to form some opinions AND get a reaction on those opinions from knowledgeable people. Without getting a reaction on your opinions, you’ll simply be forming a (likely) incomplete/incorrect mental map of the industry. Feedback is what allows you to correct, iterate, and improve on your mental map to create something resembling reality.
One of the most amazing things about the discovery process is that this is the stage where tons of ingenuity comes from, likely because at this stage, you’re reasoning from first principles (as opposed to ingrained dogma). Cherish this point of the process even though it’s scary sometimes. The worst-case scenario is that you say something stupid – no big deal.
Step 4: Repeat, repeat, repeat!
This process isn’t something that should only be done when you first start working in a new industry. It should be done constantly so that you continually grow your knowledge base and keep your mental map up to date. The ultimate goal is to have what athletes refer to as “fingertip feel” of your industry.
Bonus Tip: Your ego is your worst enemy
All of the suggestions above require leaving your ego at home. If you can’t do that, all the feedback in the world won’t improve your mental map of any industry. Remember, feedback isn’t an insult – it’s a gift and a huge competitive advantage. Allow yourself to accept feedback and you’ll find that you’ve learned more about your industry in 6 months than most people learn in 10 years.
On the surface of it, selling something is pretty weird. You’re basically using words, Jedi mind tricks, and (occasionally twisted) logic to convince someone that they should do something, which usually consists of them giving you money.
Oh and if you’re about to skip this post because you’re not a “salesperson”, let me ask you something: have you ever had a job interview? Have you ever pitched an idea? Have you ever asked your teacher for a deadline extension? Yea…you’re a salesperson. Don’t be ashamed, we’re all salespeople. Own it.
So if we absolutely have to do the uncomfortable act of selling something, we might as well do a good job right? The art of selling is first and foremost about confidence. If you don’t believe in what you’re selling, you can be damn sure no one else will either. Salespeople require a similar level of unshakeable confidence as athletes do and just like athletes, salespeople tend to have a “sales prep routine” to get into the right sales mindset. Here’s one that works for me:
Step 1: Watch these 2 videos (language NSFW) featuring Vin Diesel and Ben Affleck from the movie Boiler Room. Awesome demonstrations of sales techniques in here too:
Best quote from these videos: “There is no such thing as a no sales call. A sale is made on every call you make. Either you sell the client some stock or he sells you on a reason he can’t. Either way a sale is made”. Word.
Step 2: Review your plan – why should this person give you what you want?
I’m not a big believer in sales scripts. In my opinion, scripts are a great way to make yourself seem robotic and unlikeable (unless you know the script really, really well – so well that it’s second nature and you don’t have to think about it). That said, it’s still important to have a gameplan in place – where do you want the conversation to go, how you want it to flow, and what you want them to do. Most importantly, you have to be able to answer the question: why should the other person do what you want them to do?
Step 3: Review objections – why would someone say no to what you’re selling?
Inevitably when selling, someone is going to say no to you. The key is how you handle their objections. Obviously you need to know what the objection is in order to respond to it and improve in the future, so make sure you make the effort to find out. It amazes me how many people take “no” at face value in the sales process and completely miss the opportunity to iterate on their product/pitch. By understanding objections, at the very least you know what you can improve for next time. And yes, you should be writing these objections down.
Step 4: Watch Alec Baldwin motivate you to sell in Glengarry Glen Ross (language NSFW)
Remember: Always be closing!
On a more serious note though, the AIDA (Attention, Interest, Decision, Action) framework that Baldwin talks about is really, really effective. Learn it and use it.
Step 5: Go make the sale
You got this. Have fun with it – what’s the worst that’s gonna happen? They say no? Their loss.
Step 6: Drink some coffee (because coffee’s for closers only)
If you want to go deeper into learning sales skills, I highly, highly recommend buying Jeffrey Gitomer’s Sales Bible book and getting tons of real life practice. There aren’t any shortcuts to getting good at this stuff. It just takes confidence and hard work.
Over the past ~2 years, I’ve been working almost exclusively on customer development and growth at Mom Trusted, with my consulting clients, and at Workhorse. In 2015 alone, I’ve had upwards of 100 customer development conversations. Along the way, I’ve learned a few lessons, some from personal mistakes and a few from observing others.
Here are some of the pitfalls to avoid if you’re trying to learn something about your potential customers, instead of just paying lip service to the “customer development” buzzword.
Being Scared To Talk To Customers
This is, by far, the most unforgivable customer development sin. It’s impossible to get an accurate sense of reality without understanding, in extreme detail, the motivations and fears of your target customer. This fear of customer interaction lies in the fact that most founders (I’ve fallen into this trap in the past) have a mental picture of what their product/experience looks like and don’t want to burst that bubble. Maybe they also have a mental picture of what success will look like after they sell their company to Yahoo! for $100 million and don’t want to ruin that fantasy world by finding out that customers don’t want what they’re selling. Everyone has their own reasons for being scared to put themselves out there but this is the most dangerous sin on this list.
Putting A Layer Between You And The Customer
This is one I’ll never understand. I’ve come across founders, that for whatever reason, put a layer (or two) between them and potential customers. I don’t know if this stems from shyness or bubble bursting syndrome or what, but the net effect is that these founders always hear what their customers want or are frustrated with from some third party source. This is a great way to get incomplete or even plain wrong information, since the people who make up the layers (presumably employees or contractors) will try to tell you what you want to hear.
By not hearing any feedback directly, it’s easy to delude yourself into thinking things should be a certain way with no real evidence. In contrast, some of the best founders – including Jeff Bezos (Amazon), Steve Jobs, (Apple), and Tony Hsieh (Zappos) – correspond with their customers directly on a regular basis, even after their companies became multi-billion dollar Goliaths. Sorry, 10 person startup founders – there’s no excuse for not talking to customers directly.
Not Empathizing With The Customer
Empathy is such an underrated part of customer development. The problem with purely asking questions and using the responses to build your model of the target customer is that sometimes people don’t always verbalize the underlying emotional need they’re trying to express. For example, the success of Facebook can be very much attributed to people’s loneliness and desire to stay connected. But very few people would ever say that they use Facebook because they’re lonely. They would say they want to “stay in touch with family and friends” or “share important life events with people close to them”.
Customer development is all about building a complete model of the target customer. To build that complete model, you absolutely need to know the following:
What gets them out of bed in the morning?
What do they care about?
Who is their customer?
How are they measuring success?
What are they motivated by?
What keeps them up at night?
Empathy isn’t really something you can fake. Customers can tell if you’re just phoning it in and don’t really care about solving their problem. Be genuine and you’ll be pleasantly surprised by what they share with you.
Not Even Knowing Who Your Customer Is
This sounds dumb – how can you not know who your customer is? It’s actually a really common issue for B2B startups at the earliest stages. For example, imagine you have a software tool to help salespeople. If you’re taking a top-down approach where you sell to the VP of Sales and sign an enterprise contract, then your customer is not the junior salesperson, it’s the VP of Sales. If you’re taking the bottom-up approach and getting individual salespeople to use your tool and then drive adoption through their organization, your customer is the junior salesperson. You can see the end result of these alternative approaches by looking at the difference in UX between Salesforce and a tool like DocSend. To me (not a VP of Sales), DocSend looks awesome. Salesforce, on the other hand, does not. I’m not the target customer though – with the success Salesforce has had, it’s pretty obvious that their target customer likes them a lot.
By properly defining the customer, you can start to get accurate answers to your customer development questions, which is the first step to building a product that solves a problem for someone.
Every company, whether it’s a startup or a Fortune 500 corporation, is 100% dependent on its customer. Having a thorough understanding of a customer, their life, and their motivations is the only way to create something they actually want. Remember: while potential customers usually have a fixed need they want fulfilled, which can be physical (for example, hunger) or emotional (loneliness), the form of the solution may change over time. The only way you’ll be able to understand the need and the form of the solution is by truly empathizing with your customers’ pain. It’s a skill that takes practice but it starts with something super simple: Ask questions and actually listen to what your customers tell you!
I’ve been noodling on a theory for awhile related to mental toughness. The theory is this: There‘s a huge difference in mental strength between those who’ve been “failure-tested” and those who haven’t. Failure-tested is a bit of a vague term so let me explain what I mean before diving in further.
When I say failure-tested, I’m not just talking about someone who has started a company and failed. That’s just one example. It can also include people who’ve gone through devastating injuries or accidents, recovered from an addiction, gone through a divorce, or any number of tragedies. The key to being failure-tested is not the event that constitutes “failure”, but the effect the event has on personal identity.
For example, when a football player gets an ACL tear and has to sit out for 12 months, are they still a football player? Of course they are but 12 months of not doing what you think you were born to do can shatter personal identity. If someone’s personal identity revolves around a company they started and that company fails, their personal identity is destroyed. The same thing happens if they self-identify as a husband and their marriage dissolves. My hypothesis is that true failure (and the negative mental effects associated with it, like depression) only occurs when someone’s personal identity is destroyed.
I started thinking about this as I read Sam Sheridan’s excellent books on martial arts: A Fighter’s Heart and The Fighter’s Mind. Sam talks about how the best thing about MMA (mixed martial arts) is that it allows you to use whatever style you want, from muay thai, to kung fu, to Brazilian Jiu Jitsu, and see if you can make your opponent “submit” (AKA “tap” or quit). When someone submits in MMA, the fight is over. It’s great because it makes it more unlikely for serious injuries to occur (since you have the option of quitting) but to a fighter, the act of submitting means that your opponent has total power over you – they could kill you, if it were a street fight.
When someone is forced to submit during an actual MMA fight, it can shatter the fighter’s world view and make it nearly impossible to get back in the cage, which by definition, requires you to think you can win. Yet unlike boxing, most of the best MMA fighters aren’t undefeated, so how is that possible? The answer is that these top fighters can take the mental beatdown that comes with failure, pick themselves back up, and improve for next time. It’s more than simply getting back up – these fighters actually get better after these losses. The losses push them further for next time.
How does this all tie into someone being failure-tested? When someone has experienced the pain that comes with their personal identity being shattered and comes back from it to take another shot at life, they’ve been failure-tested. I’ve noticed this a ton in the startup world – founders who’ve failed and try again are often some of the most mentally tough people in the industry (and most of them have failed at some point). You may argue with his methods but Uber CEO Travis Kalanick is a great example of this. At one point before Uber, “Kalanick was filing for Chapter 11 bankruptcy and sleeping in his parents’ house”. Uber is not Kalanick’s first company and he has definitely been failure-tested, probably in more ways than we are even aware of.
An even better example than Kalanick: When Elon Musk was at Paypal, he couldn’t afford an apartment so he lived in the office and showered at the local YMCA. Unrelated tangent: I used to work out at that same YMCA when I lived in the Bay Area (not during the same time period obviously). The trials for Musk didn’t end there though. He later invested ~100% of his (now massive) net worth into Tesla and SpaceX. At one point, he had to borrow money from friends to pay rent, despite being mega-rich on paper because Tesla couldn’t make payroll unless he put in his last $3 million into the company. Talk about being failure-tested – his life could’ve been a rags-to-riches-to-rags story. Instead, he’s now one of the most accomplished human beings of all time.
So how does all this apply to you? There’s a lot I could say about this but overall it all sums up to one thing: take risks and put yourself in a position where you’re testing yourself. This all depends on you but could include things like:
Run further than you’ve ever run before
Lift something heavier than you’ve ever lifted
Start a new hobby
Try a new sport
Ask out that girl or guy that you’ve been afraid to
I think there’s a lot more to say about this topic in many different areas – especially hiring and personal relationships but I’ll save that for future posts. This is already too long (that’s what she said….).