Many people see the beginning of a business as just having one good idea, but to actually reach success and draw investors, a lot more hard work is needed. To understand the best practices for actually building a business and drawing in a customer base, we spoke with Tony Surak, chief marketing officer and partner at DataTribe.
ABERMAN: There are few things more important for an entrepreneur than finding customers. How does a go to market strategy differ from the skills necessary for an entrepreneur to build a technology, or start a tech company?
SURAK: I think there’s similarities, but also big differences. Ultimately you’re trying to answer questions, and the big question is: what problem are you trying to solve for people? And I view startup experiences as a series of experiments, not unlike an engineer or scientist going into a lab, saying, I really want to try to answer a question. Often those questions are bowled really way out there on the edge of whatever they may be involved with. And so, they set up a series of experiments to work their way toward answering that question. So, engineers, same mindset.
I mean, I’m an engineer by training. It’s the same mindset. Where the difference is, instead of the lab, you’re dealing with people in their work environment, and you’re trying to figure out: what problem am I solving for them, to the point where they’re willing to give me money? That’s the art and the challenge, I think, for technical people who built some amazing technology, or product, but really don’t know what to do with it. So, I sit there and listen to pitches, and at the end I say, well, so what?
ABERMAN: That’s the hardest conversation I always find I have with entrepreneurs, because when you invent something and create a product, it really is like it’s your baby. And you love it, and you want everybody to love it. And so a friend of mine once said, you know Mike Tyson remarked, everybody’s got a plan until they get punched in the face. Well, having a technology is great until you need to get somebody to want to buy it. And ultimately, the response I will get from many entrepreneurs is well, OK, where do I start? So in a world where there’s so many things for entrepreneurs to do, how do you coach them? Are there three things to focus on? What do you tell them to get off and do?
SURAK: One of the first things that I encourage them to do is to not have a mindset where you’re trying to get revenue. The key thing is, you’re looking for feedback. So when you go through your universe of contacts, your network, where you’re trying to get to the people where you think they will be users or even buyers of whatever you have, you don’t want to come across as, I’m trying to sell you something. It’s more of a, hey, I’m working on something. I think it’s really interesting and important. I’d love to get your feedback on it. Can we have a meeting? Can we have a discussion?
And in that discussion, don’t jump to the demo. Don’t start showing cool features, cool lights, whizzing bells, whatever. Have that conversation about, hey, I think your environment is like this. We’ve seen all the people have challenges like this. Tell me about your place. Do you have that same challenge? If you don’t, great. That’s feedback. That’s, at that stage, more important than revenue.
ABERMAN: Revenue comes after people can’t live without your product, right? But you’ll never know what people can’t live without unless you actually go out and talk with them. That is the challenge. It also bears out why I think it’s really important to either be able to sell fund, or have the right investors, early on, because I’ve seen companies get just destroyed by angel investors who drive the company to get revenue as soon as possible. They end up getting the wrong kind of customer, or the wrong kind of revenue. Can you talk a little bit about what makes a good revenue, vis-a-vis a bad revenue for your business?
SURAK: At some point, any revenue’s good revenue. A lot of companies will start as services business as consultants. Most of my early stage experiences here in the Mid-Atlantic have started that way, just because it didn’t have that rich D.C. ecosystem that exists in other parts of the country. But at some point, you have to separate yourself from the service revenue, consulting revenue, and start getting proof points that my assumption of what I’m selling,and building, people will buy in that form in this way. And, can I get some proof points? So, you’re looking for that streak.
You’re saying, OK, I’ve gotten a company A to give me money. I’ve gotten a company B to give me money, but they did it in a similar fashion. And what I mean there is that dollar amount, the form of the contract, is it a subscription versus a one time sale? Do I need to bundle services to implement that? What’s the expectation on follow-on support, and sales support? You’re looking for those patterns. Traction is the one indicator for investors. If you have traction of people buying your stuff the way you envision it to be in the long run, that is the number one piece of evidence. That’s the signal that there’s smoke here, and there may be fire underneath.
ABERMAN: So to conclude: to go from being a technology to a product, identify some customers who have common attributes, sell them something that they want in a similar way. And once you’ve accomplished that, then you have the kind of scalable revenue that would get an investor excited, or get other people excited.