Take-aways from a MIT talk on this topic in 2016
Hold an accurate perspective
- “You need money to create a good product but you need a good product to create money...”
- Getting the right talent is hard, especially with technical co-founders and celebrity endorsements. But no matter how big or small you are it is possible as long as you find talents that share similar passion and values - people love to help when they believe in your mission.
- You should aspire to be a leader, not just a manager. No matter how good you are at growing the business financially, your business will only grow if people like working with you. Recognize where others can complement you or even do better than you and work collaboratively.
Acquire customers in a two sided market
- It’s always easier to get the supply because they are the ones who make money!
- The harder part is to get the demand. At first, it will take some gut sense to get initial traction. One way to get immediate traction is to lower the barrier for entry, but be aware that there is a tradeoff with the quality of members you engage.
- Market place and network effect are critical- once you build them it is really hard to disrupt your business. Products can always be replicated but it’s hard to replicate a strong network so getting there first is important.
- Think beyond traditional sales cycles – are there other opportunities such as partnerships? Think of the customers – what are their social cycles? Where can we find them indirectly?
- Online marketing is a great tool for targeting people in an indirect way – are people looking for related things that might lead to a sale?
Fundraise from investors
- Every time you raise money, your valuation increases - you want to create a positive momentum.
- Creating a sense of scarcity can sometimes be a good strategy - saying NO to offers can sometimes signal that there is a momentum to engage and if someone doesn’t take this deal now it’s only going to be more expensive for them to engage later.
- Testing and iterating is critical
- Test and iterate! Try getting customers even before you have a product and then refine it.
- This is especially valuable with a digital product that you can test.
- If you take this approach, then by the time you get momentum (and hopefully some celebrity endorsements) you already have a reliable product.
- Testing the LTV (long term value) and CAC (customer acquisition cost) is extremely valuable when deciding on go to market strategy and reaching on to investors later on.
Develop quality relationships
- Make an effort. Commit to getting to know people that you find valuable and spend the time and effort to get to know them and develop relationships.
- Don’t take NO for an answer, be persistent. Find creative ways to leverage your network to create introductions.
- Think of meetings as meaningful relationships - how can you create value and be helpful for others. Offer something - even if the other person doesn’t need it at the moment, they still feel respected and valuable and are more willing to engage.
Engage with BOD
- Once you assign a board member, it is very hard to remove them. Be very selective with who you place in your board.
- When selecting a board member, bring someone who is credible, that adds value and that you feel comfortable with. Don’t let others decide for you and go with your feel.
- Pick your battles because you can’t fight them all but remember that this is YOUR company. So base your decisions on data but follow your intuition as well -if you feel strongly about something go with your gut.
Other general take-aways:
- When building a business, it is sometimes useful not to know everything - it forces you to test, go out there and talk with people, benchmark.
- Focus on making a progress. If you grow, build and progress, others will want to engage with you and your business will eventually succeed organically.
Special thanks: Martin Trust Centre, MIT