Why The Business Problem You Choose to Solve Will Make or Break Your Startup


It’s hard to get honest feedback. Hearing, “It’s interesting” is not really validating a product. There’s a scale of comments with or without value. Entrepreneurs need to judge if the feedback is valuable and stay skeptical.Pete Koomen, Optimizely Co-Founder and CEO

Choosing a problem to solve is one of the most vital decisions your startup will make.

If you choose a weak problem, you’ll quickly find out when you try to sell, but unfortunately, the difference between an average and a significant problem is much harder to make out.

You might be able to build a successful business solving a lesser problem for your prospects, never quite realizing the amount of money you’re leaving on the table.

Prioritizing problems is an essential exercise. In the end, you might decide to pass up on a significant problem for lack of passion or interest, but at least you will have chosen a problem in full awareness.

Beyond scoring problems, there is no magic formula to help you select the problems your company wishes to solve.

You need to draw a line in the sand and decide which problems to address. Be mindful that intuition, passion and the entrepreneur fit should also play a role. Your team is a critical part of your business’s success.

How to Find Your First Customers When Your Startup is Ready to Sell

The place you should start any Complex Sale is the place where you have the greatest degree of credibility. – Robert Miller and Stephen Heiman, Strategic Selling Authors

You met with a lot of stakeholders in the business. At what level do you start selling? Do you sell high to executives? Or low to the management staff? How many people in the organization need to say yes in order to make a sale? In what order do you need to contact these people?

To analyze which prospects are more likely to buy, you must understand their company’s situation. There are four situations an organization can be in:

  1. The company is in growth mode. They seek optimization looking for more, better, faster, nicer, etc.
  2. The company is in trouble. They wish to bridge the gap between reality and their business objectives.
  3. The company is satisfied with their current solution. They — wrongfully or not — perceive that their current solution meets their objectives.
  4. The company is over-confident. They over-estimate the situation they’re in, misreading the trouble they’re in.

People buy when, and only when, they perceive a discrepancy between reality and their desired results. – Robert Miller and Stephen Heiman

Although it is possible to sell to a company satisfied with its current situation, your first customers are more likely to come from companies seeking growth or a way out of trouble.

You must understand the roles of your prospects to avoid barking up the wrong tree. Would they be the ones buying the solution or would they help influence others to buy?

What The Best Startup Founders Have in Common

Don’t worry about failure; you only have to be right once.Drew Houston, Dropbox Co-Founder and CEO

Many of the world’s most successful B2B entrepreneurs didn’t initially set out to do what you now know them for.

Hiten Shah, Co-Founder of KISSmetrics famously spent a million dollars on a web hosting company that never launched, and Bill Gates failed to build a computer business that automatically read paper tapes from traffic counters for local governments.

One of the big reasons why these entrepreneurs became successful is that they were able to move on when their businesses didn’t work out.

Most of the entrepreneurs I’ve interviewed for Lean B2B did not use a formal Product-Market validation process; they developed their own system. Sometimes that system was inspired by the available literature and other times it was wholly made up.

The consistent theme among successful B2B entrepreneurs is that they understood the importance of customer insights. They never stopped listening, testing and adapting. The market changes and so should they.

You do this enough times and you learn that even the most seasoned of us really don’t know. You’re constantly learning. You can sit down with any entrepreneur in the Valley and, no matter how successful they are, they will tell you about the failures. They will tell you about the 90% of the things that they did that didn’t work at all. – Ranjith Kumaran, PunchTab Co-Founder

Deep customer understanding is an incredible barrier to entry. As a startup founder, your ability to understand the market gaps and react accordingly will be one of your strongest competitive advantages.

How well do you know your customers?

How to Find Early Advocates for Your B2B Startup

Early adopters are great for opinions, but they’re lousy for growth.

The best early adopters are also advocates or champions for your startup (“earlyvangelists” in the words of Steve Blank).

Advocates want to be first using a product and they like to brag about their discoveries. They’re in a position to benefit from fresh innovation and have the visibility and influence to bring your solution to attention.

Working with the right early advocates can substantially reduce the effort needed to sign your first customers, get case studies and convince other companies to follow.

Here’s how to find the influencers among early adopters:

At this point, if you’ve been doing your research properly you should have 50, 100 or more early adopters on a list and this list should look a bit like this:

A LIST OF EARLY ADOPTERS

Example of a list of early adopters

Since you’re looking for early adopters with the potential to become evangelists, you’ll separate the prospects that are setting the trends from the ones that follow them.

There are two aspects to this:

  1. Personal influence — how many people can this early adopter influence?
  2. Company (or employer) influence — how many companies can be influenced by a case study from their employer?

For each early adopter on your list, you’ll look at:

  • The number of followers they have on Twitter;
  • The number of followers of their followers on Twitter;
  • The number of contacts they have on LinkedIn;
  • The rank, role and network size of their contacts on LinkedIn;
  • Their activity level in groups on LinkedIn;
  • The number of articles or publications they have;
  • The number of talks they gave (# of SlideShare presentations);
  • The number of blog posts they’ve written;
  • The popularity of their blog (comments, shares, etc.);
  • Their visibility on search engines (# of links on Google);
  • The number of times other people have quoted them (e.g., Google search “James McCarron”);
  • Their Klout score;
  • The word-of-mouth in the industry; etc.

Although Klout scores are not a perfect measure of social influence, they capture a lot of these metrics for a fast assessment.

You’ll assign a grade from 1 to 5 to your early adopters, ranking them by their personal influence level. The more reach, visibility and references your prospects have, the higher their grade should be.

You’ll also highlight the most influential companies on the list. The actual grading is not as important as the priorities you assign to your prospects.

A PRIORITIZED LIST OF EARLY ADOPTERS

Example of a prioritized list of early adopters

Armed with your prioritized list of early advocates, you’ll be able to focus on recruiting from the right companies for problem interviews and get the right influencers to work with you.

How to Look Like a B2B Market Expert Using Secondary Research

Total immersion in the market is extremely important. Read everything you can to understand what you can do better than the competition. – Martin Huard, Ex-Admetric Co-Founder and CEO

With so many magazines, reports, surveys, whitepapers and blogs available online, it’s very hard to justify not doing a minimum of research on your target market.

A few searches on Google allow you to find dozens of blogs and reports for just about any industry. Depending on the target market you chose, Forrester Research, Gartner, Forbes, Marketing Sherpa, Tower Watson or other independent analyst publications might have already done the heavy-lifting and synthesized the industry for you.

Find the relevant research reports (Gartner, IDC, Forrester, etc.) that everyone refers to. Some stats and ideas are gospel in the industry; SlideShare presentations are a great way to make these data points surface.

Sign up to all the newsletters, blogs and websites that your prospects read. You can find these publications by looking at the links they share on social networks like LinkedIn, Twitter, etc.

Set up a few Google Alerts and Twitter keyword alerts with terms from your pitch to follow the trends. You will be more relevant if you keep up with the latest news of the industry.

No matter what source you choose, your objective with secondary research is to figure out where the industry is headed, identify the players in the space, understand the types of products being sold and their perceived value by customers (if any).

If you can start making sense of the decision-making process of prospects and find the industry influencers, you’re doing very well. Your goal is to become one of them.

The Most Popular Lean B2B Customer Development Content of 2016

It was another busy year for the Lean B2B community. Lots of innovation, learnings and a new game. The community grew significantly and will soon expand into Vietnam and South Korea with the release of Korean and Vietnamese-language versions of the book.

Here are the top Lean B2B posts of 2016. It’s an opportunity to re-read favourites and catch up on some reading. Thanks for being part of the community.

Happy reading!

How Strong Are Your Startup’s Competitive Advantages?

The only real competitive advantage is that which cannot be copied and cannot be bought.Jason Cohen, WP Engine Founder and CTO

Since the market is global, competitors are quick to copy features, ideas and products.

Nowadays, the only competitive advantages that still stand a chance are, as Jason Cohen mentioned, that which cannot be copied and cannot be bought.

This might mean:

Even the most complicated features will eventually get copied. Unfair advantages are not essential to a startup’s success, but if your team has one, you might as well use it.

So, how strong are your business’s competitive advantages?