Archive for the ‘VC’ Category

Pricing

January 22, 2012

Benny Daon, is one of my favorite entrepreneurs. why?

  • he is  hard working -when i met him first in 1998, he was bootstrapping his company. this included packaging CDs in cardboard boxes prior to shiping to customers.  i believe this is a sight i will not see again.
  • he is insightful – he named his product “the cloud” in 1998. early to market?  i believe the company still has a TradeMark for the word cloud. i did not know how to say ‘cloud’ till 2009.
  • he is unusual – named his company Shunra. perhaps the only start-up in the world with an Aramaic name
  • he still loves coding

and he is also a social entrepreneur

his claim:  the most important page one your website is the pricing page.

how insightful.

that’s the one page you want all your customers to get to.

it also exposes many of your values. what your company really stands for. show me your pricing page and i can tell you who you are

here is what i think is a great pricing page. why?

  • pricing parameters are associated with value created
  • transparent – lends itself to fairness
  • variable –  i pay for what i get
  • simple
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1 page, 1 slide

January 17, 2012

can you describe your company in 1 slide?

that is really hard.

usually takes quite a bit of time to understand your customers well enough to articulate your value in 1 slide and for the customers to agree.

but these days people have less patience and want to make decisions quickly.

would it be a pie chart of what you save them on costs?

would it be how you increase their revenues? or profits ?

perhaps how we improve their conversion ratios?

I always liked the signs posted on poles next to stoplights saying

“loose 10 kg in 10 weeks”

these guys can explain their business very quickly.  they have to – no angels, no VCs.

today i spent 2 hours with some guys, and i still do not understand their business. but they seem very close to something very interesting. hence the 2 hours.

back to the guys who want me to loose weight (and i should).

what is their cost per lead?

i bet the conversion ratio is not that high; and their best conversion ratios and channels are word of mouth. for all of us working on digital marketing machines, let not forget that. our customers can create the best leads for us. does your product/service make it easy for them to recommend you?

more often than not, the answer is “not”….

or

“paint your house for 1399NIS (3 rooms)”

the beauty with that one is that up-sell is coming. i bet’ya his ASP is > 1399NIS.

the photo here is one for a plumber. ( called ‘installer’ in hebrew – no downloads, no SEO)

“the fast plumber”

a bit too much text?

this plumber does not drive an old truck.

he drives a motorcycle. and this sign is on the box on the back of the motorcycle where he keeps most of his tools.

we all know it is no fun to seat at home and wait for the plumber. the fact that he is on a motorcycle, makes me believe his customers wait less. made me want to call him.

finally, lets see, on your website, most users or leads end up reading/using one page and then make a decision.

what is your most important page?

 

 

 

 

The man in the arena

January 16, 2012

it is the beginning of the year.

happy new year. 2012. the end of history?

maybe just something different.

expect the unexpected?

some of my companies are struggling.

the 2nd half of 2011 has been miserable. everyone is waiting. people seem to prefer to delay decisions. channels are clearing their inventory levels, with no new orders. people are zipping their pockets. money is not coming out. with a few exceptions.

two classes. the haves and have-not’s. the ones who have clear growth.  predictability. visibility. and the ones who are working just as hard. trying to figure it out. that is why we choose this.

i realize i am not in the trenches. my job, my line,  is to support the entrepreneurs who are in the front. not a lineman, a line-backer.

Here is how Teddy Roosevelt described it in an April 23rd, 1910, speech in the Sorbonne, now named citizenship in a republic.

here is looking at you

Amir, Israel, Yuval, Omer, Nili, Yonathan, Zvi, Tal, Guy, Avner, Pierre, Guri and Doron:

It is not the critic who counts; not the man who points out how the strong man stumbles, or where the doer of deeds could have done them better.

The credit belongs to the man who is actually in the arena, whose face is marred by dust and sweat and blood;

who strives valiantly; who errs, who comes short again and again, because there is no effort without error and shortcoming; but who does actually strive to do the deeds; who knows great enthusiasms, the great devotions; who spends himself in a worthy cause;

who at the best knows in the end the triumph of high achievement, and who at the worst, if he fails, at least fails while daring greatly, so that his place shall never be with those cold and timid souls who neither know victory nor defeat.

LinkedIn?

December 7, 2011

I pressed a button I did not intend
500 emails went out inviting older contacts I am not really in touch with to LinkIn.
Within 1 minute, 10 people accepted. the movement in the network. the signals coming back. I could visualize it.

Now I am learning about my new connections. Including my mom whom I have been avoiding as a facebook and LinkedIn contact for about 7 years. Hey, I love my mom. But I wanted to keep my facebook contacts to friends, not family, not a way to ‘watch my kids’ (Carmel is 20 today); my LinkedIn contacts to people I remember and am willing to help with a request and feel comfortable asking for help. While i am now connected to more people, I am concerned about the “noise” it can create

Linkedin is

which would you rather be?

September 5, 2011

in life, and in your startup, what would you rather be?

this earth digger?

moving earth one bucket at a time

or

    this guy, who skates almost frictionless on ice?

its kind of a loaded question.

yet, it is surprising how often in life and in business we choose the digger.

in Start-up life, as en entrepreneur or CEO, there are several ways you can make your life easier.

yet some people choose to dig a hole rather than skate.

the most common way to make life hard for you self is in your business model.

the most common mistake that is still common amongst early-stage SaaS startups is to go for direct sales:

  • it is costly.
  • it takes a long time to figure out
  • it changes the DNA of your company early. how easy is it to change later to Self-Serve after your VP sales has dedicated a year to sell direct.
  • it effects the leads you seek, and their costs
  • it gives a false sense of control
  • oh yeah, and the switch later, is really painful

most of the above applies to our bad-traits as individuals, too.

Q3

October 4, 2010

it is that time of the year

everything that has waited since the end of july is now coming back

it is the end of the holidays

and time to loose some weight

but it is also time to realize how to budget better

i am not talking just about personal budget

talking about startup budgets:

  • q3 is just another quarter.   NOT

back in December when it was time to plan a budget q3 looked very innocent. another quarter with 20% growth above q2. does that work for you?

well, in my portfolio and especially over the last 3 years, q3 has been very weak. and this year it affected almost every single company and in a big way. why?

  • this year, the Jewish holidays were in September and all of them were in September. crucial work was lost during the build up period of the last 4 weeks

more importantly

  • August is now a vacation month in the US, and not just in europe. while it is nice that we are learning from the french to rest and enjoy our families, it is important to realize that q3 may be as weak as q1 if not weaker.

personally i feel a bit ashamed as i tool a lot of vacation time this summer (mondial in south Africa with Gil, a wedding in the Philippines). but for those of you who work harder than me, and there are quite a few out there, please remember to plan for a weak q3, and come October you will be thankful.

SaaS and usage, a key success factor

August 19, 2010

Do you know who is using your software?

as a provider of SaaS software, you should be concerned with who uses your software.

And how much

first, a step back

there are many advantages to the SaaS model:

  • it scales
  • it can be inexpensive in the early stages, which are very risky, to understand if there is demand for your service
  • more importantly, you can find out predictable customer acquisition costs with a reasonable investment

therefore, many VC software investments are going into SaaS and cloud oriented business models

consequently, a lot of money is spent on getting customers

digital marketing, buying keywords, diverting traffic and numerous other efforts (some in the physical world)  focusing on creating leads and converting them to customers.

but then, what is next?

as the SaaS oriented companies mature, their key challenge becomes not just cost-per-lead and optimizing conversion ratios in the funnel.

what we have given up with the SaaS model, is direct contact with end users.

so, are we all to become like 3M, a great company, without intimate knowledge of its end-users?

one of the key challenges today in SaaS companies is what is driving usage.

i always like things that get high usage. e.g. a pen that runs out of ink (where do all that other pens go?)

are your customers getting high usage out of your system?

as an investor in several SaaS companies (i think i have the largest portfolio in Israel, including CloudShare, SaasPulse, TaKaDu and Panaya) i would like to point out several key issues that i see companies run into:

who are power users?

why are some users using less of the system and its features?

which of my customers is getting best bang for the buck?

getting insights into these issues is not simple if you did not plan for it in advance.

between managing growth, operations (we need to be up 24×7), and leads, i find that usage is often neglected

yet, understanding usage has important benefits:

  • it can become a competitive advantage. the process of building a ‘usage dashboard’ also creates barriers to entry.
  • it can impact your digital lead machine: segmenting your customers and understanding where to find more happy ones through the usage model can potentially reduce marketing costs considerably
  • if you sold 10 seats, but only 3 are highly used, the likelihood of growing within an account is not high. as many SaaS models penetrate enterprises at a departmental level, or low in the organization, they are highly dependent on growth within existing accounts. increasing the ratio of power users against seats sold can increase cross-sale and up-sale ratios. this is very attractive to a SaaS based start-up
  • it affects churn. detecting unhappy customers, or ones that are not using the system to their advantage may reduce variable costs for a while. However,  company valuation is highly correlated not just to operating margins, but also to low churn rates. to get the most out of the SaaS subscription-based model, the lifetime of a customer is crucial. if a customer is a user for 18 month or 48 month, has immense impact on profitability, cash-flows, and therefore, valuation.

i therefore claim that understanding usages is crucial. it can lower marketing costs, increase revenues from existing accounts, lower churn, and increase your company’s impact on its space.

However, it is not yet mastered in many SaaS start-ups.

shock-o-late

July 28, 2010

what is really israeli?

shoko (chocolate milk) in a bag for breakfast is high on the list. 

it looks slightly less pretty when one drinks it

why it is so deeply en-grained in our culture?

maybe because it is breakfast, early memories, mom, and a certain body part….

but i am here to write about a more serious topic,boards.

just one more reference to the delightful shoko bag. one summer morning i left it on the kitchen counter. in the afternoon, the shoko was not that good. shoko-late and shock-o-late

and now, focus. attention. silence.

one of the most important parameters in having an effective board meeting is ‘when do you send the board package’.

in the past i have even read academic research to support this.

you send a board package late, board will not be effective.

it will be  shock-0-late

remember. boards do not like surprises.

again. boards do not like surprise.

and some board members like to come in prepared.

now for the tough part. how late is late?

i have seen management teams  send the package the morning of the board meeting. this is often as people land in the city of the board from an over-night flight.

what is the message? you really want the board members effective? more importantly, it probably means the CEO and the CFO and other members of the team worked on it all night. how effective are you going to be running a meeting with so little time to prepare?

back to basics. no extremes. is a day before the board good enough?

i say ‘no’. it does not give enough time to prepare.

best is the weekend before the board. this, however, is either not practical or does not have the latest information. still, i encourage you to try it. delight.

how about at least 48 hours in advance? i think it is achievable, allows people time to go over and ponder, and even call and discuss misunderstandings or disagreements.

Board Deck

April 29, 2010

Size of deck is inversely proportional to effectiveness of the package

when my companies get confused, lose focus, i get a very fat board package

i think the deck should be very consistent in its make up

and it should not be hard to produce the board deck, because it is the manifestation of how you run your business. most of the data is redundant to your daily and weekly dashboards

entering a confused board meeting raises the question of what the journey will be like

so i am left with the decision if i want to be on board or on deck?

Give me your tired, your poor

April 13, 2010

in the last month or so, three different times a US VC said no to a deal we were working on.

the usual reply is that it is really interesting, but

there is some risky or serious work to do:

  • the CEO is not proven
  • the go to market is unclear
  • can it scale?

so, we are left with the deal.

alone.

reminds me of Emma Lazarus‘  ‘The new Collossus‘ (which welcomed, in spirit, immigrants to the land of opportunities and freedom, America):

“Give me your tired, your poor,
Your huddled masses yearning to breathe free,
The wretched refuse of your teeming shore.
Send these, the homeless, tempest-tossed to me,
I lift my lamp beside the golden door!”

the poem by the way was solicited as a donation to an auction. it took some time, but now it is not only engraved on the Statue of Liberty, but also in the collective American memory.

believing in the unwanted made America great.

don’t we alone want for someone to just ‘take a chance on me‘?