Category Archives: Sales

Bureaucracy, Economics, Fundraising, Sales, Startups, Strategy, Uncategorized

Cheat Code: Try to Pay More

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When I was running my little “shareware” business in college, I hired my first PR firm. Press really moved the needle for us (credibility and reach), and I wanted more. This PR firm had some very big name clients and lots of connectivity to the journalists and publications we cared about.

There was a monthly retainer, something like $10,000, and I fought hard to negotiate it down to something like $5,000. Almost immediately I was disappointed. I was getting almost nothing from them.

But of course I wasn’t. The firm only had so many favors they could call in. Should they use them on their biggest customer, or their smallest one? I was their smallest one.

I had an epiphany: Don’t negotiate down. Negotiate up. Try to be the highest paying customer.

I fired them, met with this Boston firm named fama PR, told them I wanted to be their highest paying client, and asked them point blank what that would take. I was a college kid and they probably thought this was funny, but we worked out a plan by which I’d pay them $40-$60K+/month (in 2003!) for certain performance.

If I remember correctly, we had different tiers: get us on The Today Show and that’s $10K, front page of USA Today/NYT/WSJ also $10K, lesser tier $5K, etc.

We launched this product called DidTheyReadIt in May 2004, and it was on the front page of USA Today, and then Carl Quintanilla came out to interview me for The Today Show. And many more. I still have the PR book they built of all of the appearances. It was insane.

Mission accomplished: biggest client.

The moral of the story is you get what you pay for. There are related learnings, too. The principal-agent problem is real. Shared services with no currency are hard. Let’s dive into those.

This played out many years later when hiring tech recruiters who typically take a percentage of first year salary (of the placed employee). They might take 15-30% depending on the market.

Remember what a tech recruiter does. They often find a really good candidate and peddle him/her to every company to maximize the chance of earning their fee. (In many cases, they’ll send cold emails about this — “I have 4 amazing candidates!”).

At TrialPay we once lost a REALLY good candidate and learned that our recruiter (who sent us the candidate!) was ACTIVELY selling him to reject our HIGHER offer and instead take an offer from another company! What the hell? My team was so pissed.

But of course this happened. We had smartly (and stupidly) negotiated the fee down. Let’s say we offered the engineer $150K, the other company offered the engineer $140K, and you’re the recruiter — would you rather get 30% of $140K, or 15% of $150K?

Was this unethical of the recruiter? Yes. Is this how the world works? Also yes.

You get what you pay for. The world is a competition and you are better off maximizing outputs versus minimizing inputs.

Marketing, Sales, Startups

How To Sell and Raise Awareness

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There are only two jobs at an early stage startup: Making the product, and selling the product. That’s it.

Here’s how to sell the product.

Contrary to popular belief and movies that lionize sales: You can’t sell until somebody is ready to buy. And you don’t know when they’re ready to buy.

Every other human brain is (to you) a random number generator. Once a year it might fire “1” (yes). Your job is to make sure you show up around this time, or are remembered such that they call YOU when it fires a “1”. Most of the time it’s a “0.” Sometimes people only change their mind when enough time has passed, irrespective of data (https://www.arampell.org/2023/09/01/when-to-escalate-vs-wait/).

Bother the person every day and they’ll get a restraining order. Hire an Ivy League kid afraid of rejection who nudges them once every 5 years, and they’ll forget who you are when their brain (or circumstances) finally says “yes.”

We consequently had a rule: everyone should hear from us once a month. You need to mix up the way people hear from you. We had light, medium, and heavy. Light might be a personalized email or forwarded news article. Medium would be an in person visit (often “I happen to be in the area…”). Heavy would be an event or gift.

This rule applied to current customers (account management), prospects (sales), and strategic partners (see my thread on selling your company: https://www.arampell.org/2023/01/04/how-to-sell-your-company/). Everyone must hear from you every month or on some regular cadence.

One year at TrialPay we were sending out very nice, customized gift boxes. It seems kind of cruel to throw away a plant (versus, say, a cheap mug or t-shirt), and nobody can kill a cactus since they can survive in a desert. So we sent everyone a cactus in a blue, dinosaur TrialPay pot. When visiting customers for years to come, I always saw that pot. When their brain said “maybe I should use that alternative payments thing” there was a cactus staring at them with our logo, and likely an email within a few weeks.

If you’re selling to somebody important, you need to remember they are overloaded and you are their last priority, but there’s a secret way in: the Executive Assistant. My dad taught me this trick. Send a nice gift to every EA every year and you’ll be stunned at the results.

The former President of PayPal once took a 6 week sabbatical and when he came back he was stunned that I was the first meeting on his calendar. We had breakfast and his first words: “How the f*** did you become the first meeting on my first day back?” I smiled.

The way to model most big company behavior: anyone can say NO, but nobody can say YES. How do you get to yes?

You need to sell horizontally; everything above applies to probably 5-10 people in the organization you are selling into. You need to prevent the NO from crashing the party.

Next: building awareness. As I’ve mentioned, normally you can’t sell to the CEO since your product is likely not one of their top priorities:

https://www.arampell.org/2018/01/13/dont-just-sell-to-the-ceo/

https://www.arampell.org/2022/12/08/the-goldilocks-zone-of-cost-irrelevance/

We had tons of competition, companies that did the exact same thing as we did, making all sorts of grandiose claims.

So my job, as CEO, was to position us and myself as an expert in the space. How? By ensuring that we became the source of truth for the press, and an “expert” to the CEO’s actual bosses: Wall Street and analysts.

Since I was trying to both make the term “transactional advertising” a thing and get through to PayPal, I reached out to every single analyst who covered eBay. Cold (and once a month until they responded!), but with lots of thoughts around where payments were going.

It was pretty cool when one of them eventually asked the CEO of eBay what his plans with transactional advertising were. “You mean…like…Alex Rampell’s company?” Boom. Inception.

The same applied for the press. I once was told that the Press never wants to be too fawning over any particular subject, such that they’d have to write something bad about Mother Teresa just to be balanced. We got great one-off standalone articles in the NYT and WSJ about us, but what now?

The answer: come up with a metric that YOU OWN. Who could uniquely talk about conversion rate for Facebook games? TrialPay! Or abandoned shopping cart rates. Etc. Thus rather than having a standalone piece, my goal was to have an “According to TrialPay…” in every single article.

And then these press pieces were fed into the “once a month” engine. You need to assume that NOBODY reads these (statistically true!), so your job is to use them as external credibility and sheepishly send them out, include them in marketing collateral, etc.

Because when you have a 5 horse race and you need to win, you need to SHOW that you’re the market leader with external validation, and you can’t get caught up in the lies of marketing collateral where everyone CLAIMS to have features X, Y, and Z or even customers A, B and C.

Lastly, for most products, there’s plenty of selling that needs to happen AFTER you’ve sold. Your existing customers should still hear from you (at least) once a month, and you should set clearly defined goals for your account management team. More on that later.

Fundraising, Sales, Startups, Strategy, Tweetstorms, VC

Getting to Five Customers

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Originally posted as a Twitter thread on March 06, 2023

When starting a company, can you get to *5 customers*? Who are they? Why will they trust YOU?

As a VC, these are questions I always try to ask (selling B2B). I’ll tell my story of how my company got our first 5, and why 5 seems like a good heuristic of “you’ve got something”

I love the term “productize” — it effectively means turn a “service” or “consulting” project into a repeatable widget. Does a large n of customers need/want the same thing, or *roughly* the same thing with few customizations? Then…it *might* just be productizable

If you get your Uncle or Cousin to use your product, maybe it was a favor…which is a feature (not bug) if it indeed is the SAME product you can sell to a few other strangers. But a lot of times a “few” customers is just a collection of favors and is Fool’s Gold…

Fool’s Gold because it’s just not repeatable and hides brutal market feedback. You can only have so many college roommates, cousins, and uncles. But if you get 5 distinct customers to “agree” on the same set of features, it’s a very good sign and you’re off to the races.

TrialPay started off as something I used for my own freemium software business. “Don’t want to pay $10 for my app? Get it for free if you sign up for Netflix or get a Discover Card or shop at Gap.” It worked great so I decided to turn it into a company…and raise venture $

But a lot of times ideas/companies come in waves — two other companies basically popped up at the same exact time. Identical idea/value prop. Lift Media (@jmurz) and MyOfferPal (later merged/renamed TapJoy). We all pitched the same VCs within weeks in 2006!

I had a key advantage over them in that I still had my software business so could “create” traction — I was my own first customer. Could figure out if things were working. But more importantly, it gave me credibility in “my community” of freemium software developers.

After starting the company, my co-founder @terryangelos and I went to the “Shareware Industry Conference” in Denver…and we signed several customers there, the largest being WinZip. I gave a talk on my results with my own products…so had the credibility and knew this niche

This was so niche that few outside of the industry even knew of this conference…or had the credibility/connections with this somewhat esoteric group of businesses/people. I remember meeting @bradfurber and @allennieman there…at a relatively unknown (but big revs!) company…

But sometimes, particularly when building a “transactional” business (versus “per-seat” where you know # of employees), there are these “diamond in the rough” customers that turn out to be huge. Brad and Allen’s company (Sammsoft) was one of them. Huge client.

My *now* friend @jmurz of Lift Media was super smart, incredibly hard-working, and was building his nearly-identical business…he was my arch-nemesis at the time!!…but we got a big early lead, which later turned into a big fundraising advantage too…

And honestly it was almost entirely because:
A. I had a captive early customer that would do anything I wanted (customer was…me!)
B. I found a bunch of other customers that “looked” like me — no chasm to cross. “I sell $30 Windows software, you sell $30 Windows software”

As we expanded, this was one thing that never ceased to amaze. Companies *across* verticals often have a hard time being the first in their space…getting Skype or Fandango to use us was not really helped by the fact we had WinZip. “Oh, that’s totally different.”

My advice to developing a killer product and go-to-market — and ensuring you don’t end up over-engineering into a void or losing to another competitor — is that you need both a founding team (founders/employees) and a founding *group of customers*

You need some vision, flexibility, and fortitude to make sure YOU are building the product, not your customers — otherwise it’s the Henry Ford “if I asked my customers what they wanted, they would have said a faster horse”

But you also need real market feedback so getting some friendly customers — who are willing to bet on you (kind of crazy to run your business on a money-losing startup!!), ride out some bumps, and give more than an occasional testimonial…is crucial

So sometimes 0->1 is not all that hard (if “1” is your Uncle). Getting 1->5 is actually what’s hard…synthesizing feedback, and building that trust that no 12-months-of-cash-left startup is just “entitled” to. It’s a crucial ingredient to success.

Some ideas on how to do this:
A. Give equity to your early customers or have them invest
B. Have no shame plumbing every connection you can – favors and believers
C. I tend to think the best companies are ones that came out of personal experience / you can be 1st customer

Thanks to @1nternetjack for the idea on this one. And watch this scene from one of the best Simpsons episodes ever, about the perils of *overly* conforming your product to just one customer:

Customer Acquisition, Sales, Startups, Strategy, Tweetstorms

The Goldilocks Zone of Cost Irrelevance

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Originally posted as a Twitter thread on December 08, 2022

“The Goldilocks Zone of Cost Irrelevance”

Some of the most valuable companies provide a crucial service, but don’t charge enough to have customers care enough to switch/think about switching

Janitorial services, payroll services, etc. Hard to be displaced / hard to get in.

At TrialPay I called this the “Janitorial Services Problem” — imagine writing a BigCo CEO: “I will make your toilets 19% cleaner for 7% less cost!”
CEO likely won’t care or even care enough to *find the person who DOES care*
It’s actually possible nobody does!

There really is a Goldilocks Zone here. If you represent a giant cost, it’s worth optimizing/RFPing. If you’re too cheap you likely can’t afford a sales team to sell in. But if you’re “just right” — irrelevant to COGS, but you have high margins and a large n of customers…wow

For many of our clients we were a small % of their revenue. Nice, but not crucial. Unlike janitorial services (which every office needs), we were doing something new — so category creation in a zone of irrelevance (eventually it became a category, though)

Moreover, put yourself in the shoes of the CEO…who likely only cares about 1-3 BIG things/KPIs that will move revenue, profits, stock price, save their job, secure their bonus, etc

So if you have a “janitorial services” type product — hard to get in, hard to displace, not incredibly relevant — how do you start? Some things we tried to do…

If leading with your product — do not just try to “go high” — selling to the CEO, board, whatever. They likely will not care! They will not care to find the person who cares! This is a rookie mistake I see many entrepreneurs make.

HOWEVER, if you do get a high level connection, try to lead with something they care about, and link it to your service. I would always try to figure the key priorities of the company and try to lead with that, versus “we’ll make/save you some small incremental dollars”

As an example, they might have (strategically) cared about showing they were ramping up Facebook customer acquisition (in 2011). Or mobile. Optics — if linked to a “braggable” KPI — almost always trump small dollars.

One other clever thing we did was use a bundled hook, as I called it. BigCo CEO didn’t care about our product, but did care about supporting Charity XYZ — so it was a much better reach out to say “we are working on something to support XYZ…”

We did a promotion called “The BigBundle” where 100% of proceeds benefited the American Cancer Society. We kept nothing, not even payment fees. The bundle consisted of…products from our merchant customers that we would sell to consumers.

It turned out to be a pretty clever hook — doing well by doing good — to get more companies to use us. In order to include their product, they needed to sign a contract with us, integrate some code (so we could deliver/authorize), etc.

I often described a customer journey as 10 stages.
Stage 1: Who the hell are you? Go away
…
Stage 6: Contract signed
Stage 7: Code integration complete
Stage 8: Small test done
…
Stage 10: Fully live and turned on, key integrations done

The “BigBundle” got us to Stage 7 with several dozen NEW customers — which then made it really easy to solve the Janitorial Services Problem in the future

After finishing the charitable promo, we had signed contracts and live integrations — so now the sales pitch was so much easier. “Just reply ‘yes’ and the toilets will automatically get 19% cleaner at 7% less cost — we’re already integrated and past procurement”

And once we were the new Janitorial Services Company, we could defend our position quite nicely — knowing how hard it was to get in 🙂

Inspired by a morning conversation with @davidu and @martin_casado — thanks guys!

Customer Acquisition, Sales, Startups, Tweetstorms

B2B2C

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Originally posted as a Twitter thread on May 18, 2018

The reason B2B2C models are so interesting: when we look at fintech investments, the questions of “how do you get distribution” and “how do you make sure somebody else doesn’t outbid you” are paramount. If you can nail a B2B2C model, you lock down both:
https://a16z.com/2018/05/17/b2b2c-business-models-rampell/

I like to joke that the best way of investing in fintech is to buy Google stock and Facebook stock (or even CreditKarma private stock!) — that’s where all these companies go to acquire customers

It’s because it’s REALLY hard to have an organically adopted product in financial services. Do you rave about your once-every-10-years mortgage? Will your raving be remembered by the friend who needs it in 5 years?

Some companies have solved this (eg @TransferWise). But for others, you need a quasi-proprietary distribution model to prevent all the economic rent from flowing to a FB or GOOG. And B2B2C is uniquely well suited to fintech since it’s often a horizontal layer (see post)

Customer Acquisition, Sales, Startups, Strategy, Tweetstorms

Don’t Just Sell to the CEO!

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Originally posted as a Twitter thread on January 13, 2018

There are a broad range of products/services that you CANNOT sell to the CEO or senior exec of a company — too irrelevant to them. You either need to figure out how to position your service against EXISTING top priority to CEO, or you are better off selling “lower” in org

But sell too low, and at a company where the principal-agent problem is at its peak (employees are agents, corporation is the principal), and “saving the company money” or “making the company money” are totally irrelevant.

So for most products and services, you need to find somebody in the “middle” and figure out how to make the agent, not just the ethereal principal, win.

Some of the most valuable companies operate in the “zone of irrelevance” because there is no impetus to switch them out (think: payroll, janitorial services, etc) and costs are not SO high, so not as much margin/competitive pressure

In many cases you need to wait for a fundamental shift to challenge one of these companies, or get very, very creative (and very determined) selling into “the middle.” But it’s ironically much stickier to be in the “zone of irrelevance, yet necessary” for clients