Tag Archives: Entrepreneurship

The Dogshit Bar: A Memorable Market Research Concept

I can’t tell you the number of times I’ve seen market research that suffers from one key problem.  It goes something like this:

  • What do you think of PRODUCT’s user interface?
  • Do you think PRODUCT should be part of suite or a standalone module?
  • Is the value of PRODUCT best measured per-user or per-bite?
  • Is the PRODUCT’s functionality best delivered as a native application or via a browser?
  • Would you like PRODUCT priced per-user or per-consumption?
  • Rank the importance of features 1-4 in PRODUCT?

The problem is, of course, that you’ve never asked the one question that actually matters — would you buy this product — and are pre-supposing the need for the product and that someone would pay something to fulfill that need.

So try this:  substitute “Dogshit Bar” (i.e., a candy bar made of dog shit) for every instance of PRODUCT in one of your market research surveys and see what happens.  Very quickly, you’ll realize that you’re asking questions equivalent to:

  • Should the Dogshit Bar be delivered in a paper or plastic wrapper?
  • Would you prefer to buy the Dogshit Bar in a 3, 6, or 9 oz size?
  • Should the Dogshit Bar be priced by ounce or some other metric?

So before drilling into all the details that product management can obsess over, step back, and ask some fundamental questions first.

  • Does the product solve a problem faced by your organization?
  • How high a priority is that problem?  (Perhaps ranked against a list of high-level priorities for the buyer.  It’s not enough that it solves a problem, it needs to solve an important problem.)
  • What would be the economic value of solving that problem?  (That is, how much value can this product provide.)
  • Would you be willing to pay for it and, if so, how much?  (Which starts to factor in not just  value but the relative cost of alternative solutions.)

So why do people make this mistake?

I believe there’s some feeling that it’s heretical to ask the basic questions about the startup’s core product or the big company’s new strategic initiatiave that the execs dreamed up at an offsite.  While the execs can dream up new product ideas all day long, there’s one thing they can’t do:  force people to buy them.

That’s why you need to ask the most basic, fundamental questions in market research first, before proceeding on to analyzing packaging, interface, feature trade-offs, platforms, etc.  You can generate lots of data to go analyze about whether people prefer paper or plastic packaging or the 3, 6, or 9 ounce size.  But none of it will matter.  Because no one’s going to buy a Dogshit Bar.

Now, before wrapping this up, we need to be careful of the Bradley Effect in market research, an important phenomenom in live research (as opposed to anonymous polls) and one of several reasons why pollsters generally called Trump vs. Clinton incorrectly in the 2016 Presidential election.

I’ll apply the Bradley Effect to product research as follows:  while there are certain exception categories where people will say they won’t buy something that they will (e.g., pornography), in general:

  • If someone says they won’t buy something, then they won’t
  • If someone says they will buy something, then they might

Why?  Perhaps they’re trying to be nice.  Perhaps they do see some value, but just not enough.  Perhaps there is a social stigma associated with saying no.

I first learned about this phenomenom reading Ogivly on Advertising, a classic marketing text by the father of advertising David Ogilvy.  Early in his career Ogilvy got lucky and learned an important lesson.  While working for George Gallup he was assigned to do polling about a movie entitled Abe Lincoln in Illinois.  While the research determined the movie was going to be a roaring success, the film ended up a flop.  Why?  The participants lied.  After all, who wants to sound unpatriotic and tell a pollster that you won’t go see a movie about Abe Lincoln?  Here’s a picture of Ogilvy doing that research.  Always remember it.

ogilvy

How to Manage Your First Sales VP at a Startup

One of the hardest hires — and one of the hardest jobs — is to be the first VP of sales at a startup.  Why?

  • There is no history / experience
  • Nobody knows what works and what doesn’t work
  • The company may not have a well defined strategy so it’s hard to make a go-to-market strategy that maps to it
  • Any strategy you choose is somewhat complex because it needs to leave room for experimentation
  • If things don’t work the strong default tendency is to blame the VP of sales and sales execution, and not strategy or product.  (Your second VP of sales gets to blame product or strategy — but never your first.)

It’s a tough job, no doubt.  But it’s also tough for a founder or new CEO to manage the first sales VP.

  • The people who sign up for this high-risk duty are often cocksure and difficult to manage
  • They tend to dismiss questions with experienced-based answers (i.e., well we did thing X at company Y and it worked) that make everything sound easy.
  • They tend to smokescreen issues with such dismissals in order to give themselves maximum flexibility.
  • Most founders know little about sales; they’ve typically never worked in sales and it’s not taught in (business) school.

I think the best thing a founder can do to manage this is to conceptually separate two things:

  • How well the sales VP implements the sales model agreed to with the CEO and the board.
  • Whether that model works.

For example, if your team agrees that it wants to focus on Defense as its beachhead market, but still opportunistically experiment horizontally, then you might agree with the sales VP to build a model that creates a focused team on Department of Defense (DoD) and covers the rest of the country horizontally with a enterprise/corporate split.  More specifically, you might decide to:

  • Create a team of 3 quota carrying reps (QCRs) selling to the DoD who each have 10+ years experience selling to the DoD, ideally holding top secret clearances, supported by 2 sales consultants (SCs) and 2 business development reps (BDRs) with the entire team located in a Regus office in McLean, VA and everyone living with a one-hour commute of that office.
  • Hire 2 enterprise QCRs, one for the East and one for the West, the former in McLean and the latter in SF, each calling only on $1B+ revenue companies, each supported by 1 local SC, and 2 BDRs, where the BDRs are located at corporate (in SF).  Each enterprise QCR must have 10+ years experience selling software in the company’s category.
  • Hire 2 corporate reps in SF, each sharing 1 SC, and supported by 2 BDRs calling on sub $1B revenue companies.  Each corporate rep must have 5+ years experience selling software in the category.

In addition, you would create specific hiring profiles for each role ideally expressed with perhaps 5-10 must-have and 3-5 nice-to-have criteria.

Two key questions:

  • Do we know if this is going to work?  No, of course not.  It’s a startup.  We have no customers, data, or history.  We’ve taken our best guess based on understanding the market and the customers.  But we can’t possibly know if this is going to work.
  • Can we tell if the sales VP is executing it?  Yes.  And you can hold him/her accountable for so doing.  That’s the point.

At far too many startups, the problem is not decomposed in this manner, the specifics are not spelled out, and here’s what happens instead.  The sales VP says:

The plan?  Yes, let me tell you the plan.  I’m going to put boots down in several NFL cities, real sales athletes mind you, the best.  People I’ve worked with who made $500K, $750K, or even $1M in commissions back at Siebel or Salesforce or Oracle.  The best.  We’re going to support those athletes with the best SCs we can find, and we’re going to create an inside sales and SDR team that is bar none, world-class.  We’re going to set standard quotas and ramps and knock this sonofabitch out of the park.  I’ve done this before, I’m matching the patterns, trust me, this is going to be great.

Translation:  we’re going to hire somewhere between 4 and 8 salespeople who I have worked with in the past and who were successful in other companies regardless of whether they have expertise in our space, the skills required in our space, are located where out strategy indicates they should be.  Oh, and since I know a great pharma rep, we’re going to make pharma a territory  and even though he moved to Denver after living in New Jersey, we’ll just fly him out when we need to.  Oh, and the SDRs, I know a great one in Boise and one in Austin.  Yes, and the inside reps, Joe, Joey, Joey-The-Hacksaw was a killer back in the day and even though he’s always on his bass boat and living in Michigan now, we’re going to hire him even though technically speaking our inside reps are supposed to be in SF.

This, as they say in England, is a “dog’s breakfast” of  a sales model.  And when it doesn’t work — and the question is when, not if — what has the company learned?  Precisely and absolutely zero.

If you’re a true optimist, you might say we’ve learned that a bunch of random decisions to hire old cronies scattered across the country with no regard for strategy, models, or hiring profiles, doesn’t work.  But wait a minute — you knew that already; you didn’t need to spend $10M in VC to find out.  (See my post, If We Can’t Have Repeatable Success Can We At Least Have Repeatable Failure?)

By making the model clear — and quite specific as in my example above — you can not only flush out any disagreements in advance, but you can also hold the sales VP accountable for building the model they say they are going to build.  With a squishy model, as my other example shows, you can never actually know because it’s so vague you can’t tell.

This approach actually benefits both sides

  • The CEO benefits because he/she doesn’t get pushed around into agreeing to a vague model that he/she doesn’t understand.  By focusing on specifics the CEO gets to think through the proposed model and decide whether he/she likes it.
  • The Sales VP benefits as well.  While he/she loses some flexibility because hiring can’t be totally opportunistic, on the flip side, if the Sales VP implements the agreed-to model and it doesn’t work, he/she is not totally alone and to blame.  It’s “we failed,” not “you failed.”  Which might lead to a second chance for the sales VP to implement a new model.