BarshBits

5 Do or Die Tips For Demoing Your Product To Deliver Awesome Results

Over the weekend I watched 11 different companies demo or discuss their products at DreamIt Ventures' Kickoff Event.  These are brand new companies many of whom have never demoed or pitched their concept in front of a large audience.  Without any guidance or coaching, they did a very nice job.

Watching their demos reminded me of a trend I often see where people completely miss a great opportunity to showcase their solution and really connect with the audience. Often when demoing a new product (software, hardware, device, physical product, etc.), the person giving the demo misses the boat on getting the right message across effectively.

Too often, I see demos where the person just goes through feature after feature, but never "brings it home" to show the value that those features bring.  Remember, during a demo, you are selling benefits, not features.

So, for your next demo, think about the following demo checklist:

1. What are your top 3 key messages / benefits you are trying to show/prove/sell?   During the demo make sure to hit your "top 3" multiple times.
2. Think about using "use cases."  Talk about the problems your target customer typically has ("use cases"), and use those problems to drive the demo making sure to clearly demonstrate how the problems are solved using the product.  Once you show how a problem is solved, wrap that up by saying something along the lines of "... so, the benefit is ____."
3. What are your core differentiators?  Make sure to demonstrate them clearly.  Often demos don't clearly show what truly makes your product unique and different.  Make sure to highlight what makes you special.
4. Make sure to connect with your audience as you go through the demo.  Don't talk TO them, instead have a "conversation" and pull them into the demo.  Ask leading questions like "Do you have this problem too?"  "What are your top problems?"  "Would this work for you?"  Generate buy in by having a conversation.
5. When you are done the demo, what do you want your audience (whether it's an audience of 1 or 1000) to think, say, do, or ask?  Create a list of answers to those in advance, and create your demo to drive your desired outcomes. 

Other terrific blog posts on how to deliver great demos can be found here, here, and here.

Let me know what works for you and add to the conversation in the comments below.

Want A Better Valuation? Decrease Your Assumptions.

Lately, as part of the DreamIt Ventures team, I've been listening to and screening tons of applicants and applications looking for funding.  I'm always surprised when I ask an entrepreneur about their "key assumptions" and as they answer, it seems like it's the first time they have really thought this question through.  My definition of a key assumption is a critical aspect of the business that is a linchpin, and if the assumption is incorrect, everything starts falling apart like a tumbling house of cards.

I generally find that most businesses / ideas are based on 3 - 7 key assumptions that represent the highest risk factors that will determine the likelihood of success.  This applies to both new and ongoing businesses.

As you are thinking through your business, business model, new product, or new service, make sure to ask yourself and your team:

• What key assumptions are we making?
• How can we figure out if our key assumptions are correct and do it quickly and in a capital efficient manner?

The more key assumptions you have, the more risks there are.  More importantly, if you are looking for outside funding, as assumptions decrease, value increases.  For a new venture or product, one of the best ways to decrease assumptions and increase your value is to get a handful of early customers / users / clients to use your product or service.  Finally, keep in mind that you can usually get rid of many key assumptions by being clever, and thinking outside the box.  Try to burn up your intellectual capital before looking for significant outside capital.

Areas where I see the highest concentration of key assumptions in new ventures:

• Positioning
• Competition
• Market demand
• Pricing
• Market adoption rates
• Revenue forecasts

Focus on eliminating your key assumptions that make up your key risks.  Don't build a house of cards.

5 Surprising Ways To De-Risk Your New Idea Using Google Adwords - Part 2 of 2

In my earlier post this week, I described 2 ways you can use Google Adwords to test a new idea.  In that post I talked about testing your positioning and how your new idea stacks up against the competition.  Let me expand the concept further with 3 more aspects you can test.

Think about using Google Adwords to also test the following:

1. Pricing -- Once you have the positioning refined, you can start testing pricing assumptions.  Most entrepreneurs make a lot of assumptions about their pricing. Instead of assuming, do some high speed A|B testing and ONLY vary the price across multiple ads (keeping the refined positioning constant).  For example use the positioning copy that you wrote and tested, then write several ads along with different pricing -- e.g., "Only $9.99/mo" "Only $4.99/mo" "Only $19.99/mo". Now look for pricing trends in the click through rates.  You can also test different prices tied to different benefits to see if changing your positioning/benefits changes perceived value and what customers would be willing to pay.
2. Demand -- Will you run the ads and have "no clicks" or close to no clicks?  What will demand be like?  How quickly will you run through your ad budget?  This will help you understand if you have the positioning and pricing right, and tied to the right keywords.  It will also help you understand if you have a viable idea.
3. Cost of Customer Acquisition -- You'll learn a lot about how much you have to pay per click to get visitors to the landing page (they are NOT customers yet as they are not buying, just visiting).  It's a start.  It's not the total cost of customer acquisition (just SEM costs as of today) but if you can be clever and get people to the site for 5 cents, that's a lot different than if it costs you 50 cents or a $1.

Testing on Adwords is not perfect, but you'll usually learn a lot quickly and spend very little money.  And, you can do it before a single line of code is written, a prototype of your product is built, or you have rolled out your new service.  After Adwords testing is complete, it may be a good time to start speaking with potential customers.

Want to know more?  Some great articles on testing with Google Adwords can be found here, here, and here.

If you give the Adwords testing approach a try, please join the conversation by reporting back in the comments section with your experiences and refinements. Enjoy!

5 Surprising Ways To De-Risk Your New Idea Using Google Adwords - Part 1 of 2

I am doing work with a team on a new product / company idea.  This idea would be both consumer and business facing.   We want to test quickly the positioning and value proposition for each target customer's point of view.

Instead of doing formal focus groups or initial lengthy primary research interviews, we'll start with a more informal process that will deliver results quickly and inexpensively.  This is not perfect, but a great place to start in the de-risking process.  It's quick, easy, and capital efficient.

You too can use a similar process on a new idea you have.

Use Google Adwords to test the following aspects for each target customer.  When people click on your test ads, you can drop them to a placeholder landing page.

1. Positioning -- Put together a series of ads where you vary the positioning (e.g., key benefits or differentiators) of the new idea and see which positioning gets the most clicks.  You can quickly test various positioning concepts and instead of guessing which positioning will resonate best with the targets, let the crowd decide.  Also, you'll find out what benefits are most important to your target customers by looking at the click through rates of the different ads and seeing which rank the highest.
2. Competition -- Write a set of ads that simulate your competitors' positioning and then write a set of ads showing your positioning (highlighting your differentiators) and hopefully show solid lift based on your differentiators. If you don't see lift, you'll have to brainstorm and try to refine.  You can capture great data here to use later if pitching for investment money.

Later in the week I'll post again with 3 more uses of Google Adwords for marketing testing including testing price points, gauging market demand, and learning more about your cost of customer acquisition.  Stay tuned...

When can I start speaking with potential customers?

Earlier this week I gave a talk at the TechAviv New York meetup at the NYU Stern School of Business.   About 250 people attended the event.  After my talk on de-risking and turning assumptions into knowledge in a capital-efficient manner, an entrepreneur came up to me to ask a question:

When is it too early to meet with potential customers?

My feeling is that it's almost never too early to start speaking with customers. Whether you are creating a business facing or consumer facing product or service, I strongly believe in speaking with customers as early as possible (being careful, though, if you have any particular intellectual property you are trying to protect via patents).  Think about trying some of the questions below and modifying them to fit your particular situation (whether a product or service; whether business or consumer facing):

• Would you use this product?  Why or why not?
• What do you think are our strengths and weaknesses?
• Does this solve a large, urgent need for you?
• Can you describe how this would help you increase revenue or decrease costs?
• How are you solving this problem today?
• What product(s) would you be replacing if you started using our product?
• What do you think is missing?
• What do you see as the top benefits this would provide?
• Who do you see as a competitor to us / our product?
• What obstacles would you see to implementing / purchasing this product?
• What value do you see this provides?  Can you describe that in monetary terms?  (In other words, "What would you be willing to pay?")

When finishing the meeting with a potential customer / consumer, don't be afraid to try a trial close and ask something like "So, if we fixed the things you pointed out and were willing to sell it at the price we discussed, would you go ahead and purchase it now?"  LISTEN carefully to what they say.  Hear if they throw up and objections / obstacles to the sale.  You may have to drill down a bit more if new things come up but the information will be highly valuable.

De-Risking Your Business Model: A How To Guide

I recently presented to the current crop of companies at DreamIt Ventures -- a pre-seed fund that helps great people with great ideas build great companies.  DreamIt is based in Philadelphia and is very similar to Y Combinator.

During the last few months at DreamIt, many speakers have discussed how early stage companies need to de-risk their business plans, and one of the DreamIt founders, David Bookspan, asked me if I could come in and talk about how to actually do it.  So, I put together a presentation for DreamIt with categories of risk to think about with specific checklists and "how to's" for de-risking particular classes of risk common to many types of business.  The presentation is embedded at the bottom of my blog post.

For more great reading on de-risking, Josh Kopelman of First Round Capital has 2 excellent blog posts here and here.

Thanks to Brett Berson, an awesome summer intern at First Round Capital for his quick edits and feedback as well as his comments and input he offered during the talk.

Please comment below and feel free to add your ideas on how to de-risk, and let me know if / how these techniques work for you.

Finally, don't forget to de-risk the next time you get in your car.  Wear your seat belt!  It's one heck of a value proposition! ;-)

New additions to blog post made 30 July 2008, based on a comment below from James Nelsen:

There are similar techniques to de-risking that I did not point out in my original blog post.  Thanks to James Nelsen for pointing out the Wharton technique of Discovery Driven Planning (DDP).  This is an excellent technique that you can use for de-risking and more information can be found on it here.  Another great technique is called Assumption Based Planning, and that de-risking technique can be found here.  Thanks James!

Derisking Your Business Model Dream It July 2008 V2.1

view presentation (tags: barshbiits.com sbarsh steve@barsh.com barsh.com)

10+ Motivating Ingredients for Strengthening Your Value Proposition Today

In my last post, I discussed the value proposition of a seat belt, and if that value proposition is so strong, why did it take decades to get good product adoption by end consumers?  Seat belts have a great value proposition, are FREE, ubiquitous, have no learning curve, and yet for decades adoption was very low.

Now, if the seat belt, with its extremely compelling value proposition (possibly the ultimate value proposition), has problems with adoption, how can you make YOUR product / idea / service have great adoption ASAP?   Really challenge yourself to think outside the box on how compelling you can make your idea.  Make sure to layer into your extremely compelling value proposition at least a few extra ingredients.  And, most importantly, align the ingredients of your value proposition with what really motivates your target customer to buy or use your product or service!

So, here are what I call "motivating ingredients" that I find help align a value proposition with what really motivates people to buy or use a product. So, I strongly encourage you to use the following motivating ingredients by trying to answer the questions: "How is my idea / product / service..."

• Fun?
• Entertaining?
• Sexy?
• Exciting?
• Enticing?
• Really simple, easy, and solves a big problem that currently takes way too much time, and is a big pain?
• Addicting (in a good way)?
• Helpful in raising someone's social status?
• Able to provide immediate or nearly instantaneous results / gratification / feedback?
• Able to relieve an enormous pain that is occurring right now, not necessarily a long time from now?
• Highly disruptive (in a good way)?
• Able to make someone say out loud "Wow!" or "How did I ever live without this?"
• Able to provide a great ROI (in hopefully a very short period of time)?
• Something that makes people feel good about themselves?
• Able to save a lot of money or helps you make a lot more money (hopefully as quickly as possible)?

Years ago Brad Feld had a great entry on his blog --> "Are you selling vitamins, aspirin or antibiotics? (I.e. a luxury, a nice-to-have, or a need-to-have)."

Think about your value proposition.  Is your product / service:

• A luxury
• Nice to have, or
• A must have?

Try to use the motivating ingredients above to get your product or service to a "must have" status for your target customer/user and aligned with their true motivations.

Next time you get into the back of a taxi, think to yourself, "why am I not putting on my seat belt, when the value proposition is so high?"  Go back to the list of the motivating ingredients above, and ask yourself how seat belts do in answering the questions (IMHO, not too well).   Then think about your product or service and how you can get great adoption by strengthening your value proposition in innovative ways aligned with what your target customer really cares about.

What would YOU say really motivates people to buy or use a product or service?  Please comment below and feel free to extend the list of "motivating ingredients."

Buckle up!

Is Your Value Proposition Better Than a Seat Belt's?

Do you want to put on your seat belt today?  It's right there.  It's FREE!  And, it has one heck of a value proposition -- it could save your life!

For decades, seat belts, with their "killer" value proposition (pun intended), struggled for mass adoption.  If a product with such a great value proposition struggled for so long, how can you get your product / service  to "break through" and be the next big thing as quickly as possible?

It seems that some people choose to not wear their seat belts for varying reasons.  "It's just a short trip." (FYI, 75% of most fatal or injury-causing accidents happen within 25 miles of your home).  "It's uncomfortable."  Okay, for some that might be true.  For some, I think it's just laziness.  I've talked about that before  -- some people just choose to "do nothing" rather than buy or use your product or service (even if it's free and could save your life!).

So, if you are creating your new Internet company and say "It's free, everyone will use it!"  Just think "Seat belts are free, can save your life, and it took 60+ years, new law, and hundreds of millions of advertising dollars to get to an 80% level of adoption."  How are YOU going to do better than that?

I've been meeting with a lot of entrepreneurs and early stage companies lately who ask me to look at their business and give my thoughts on how compelling I find their value proposition.  They are taking to heart the advice I gave in this post about creating an extremely compelling value proposition.

When I hear entrepreneurs say "I think my value proposition is awesome!  Everyone will want to use it!"  I come back with "Just like seat belts?"  Then I go on to explain...

What's the value proposition of a seat belt?  And, do you find the value proposition extremely compelling?

• In the event of a car accident, it will most likely save your life!  IMHO, that's pretty darn compelling!
• The cost to use the product: Nothing!
• Distribution / reach: 100%
• Difficulty in using (user interface): No difficulty
• The US adoption rate today is around 80%.  About 10 years ago, US adoption was only around 58%.
• There are some really great statistics about seat belts.  Give them a read.  I bet you'll be surprised.
• By law, you now must wear them, unless you are driving through New Hampshire where I guess the laws of physics don't apply.  So adoption was driven by acts of law and changing consumer behavior (which is very hard and very expensive).

Now, if the seat belt, with its extremely compelling value proposition (possibly the ultimate value proposition), has problems with adoption, how can you make YOUR product / idea / service have great adoption?   Really challenge yourself to think outside the box on how compelling you can make your idea.  Layer into your extremely compelling value proposition a few extra ingredients.  And, most importantly, align the ingredients of your value proposition with what really motivates your target customer to buy or use your product or service!

What's the motivation to use a seat belt?  Is it sexy?  Not particularly.  Is it exciting?  Not really. Will you make more money or save money?  No.  Will the benefit be immediate?  Maybe or maybe not.  Most people don't really think they will be in an accident so there is no near-term benefit.  And, maybe that is the problem.  There is no "instant gratification" (that is, until the accident occurs).

In my next blog post, I'll go over that list of ingredients that I use on my work, and when meeting with entrepreneurs, to align a value proposition with what seems to really motivate people.

Stay tuned...

Why Many Entrepreneurs "Miss The VC Boat" and What To Do About It

I am going to do this quick 15 minute presentation at Supernova 2008 on Wednesday, June 18, 2008 in San Francisco.  Here is the presentation via SlideShare.  I'll blog the details of what's behind the slides at a later date...

The point of this presentation is that over the last few months I've seen many early stage companies making the same mistakes, and these are mistakes that I don't typically see covered in the blogosphere.  So, I wanted to move the ball forward and share a few tricks/techniques that I think nearly any early stage company can use immediately.

Let me know what you think.

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Stop Coding, Start Marketing! Getting Your Positioning Right.

After encouragement from many people, and in particular from Josh Kopelman (whom I have the utmost of respect for and who writes an awesome blog), I am finally blogging.  In my blog, I will express my “point of view” on starting and growing companies, technology, venture capital investing, and other areas of interest.

Lately, I have been exploring my potential personal transition from being a tech company entrepreneur to being a venture capitalist. Over the last few months I’ve had the wonderful experience of camping out at First Round Capital as well as meeting and working with many young companies. In my encounters I always try to add value by giving feedback and ideas on their go-to-market strategies, business plans, and differentiators while helping them critically think through their business strategy.

Over these last few months I have found that many companies I meet with really lack a clear, crisp positioning that exudes an extremely compelling value proposition (eCVP).   So, I thought I would start off my blogging adventures by talking about something that is critical to “get right” from the beginning (although it can certainly evolve), is pretty easy to do, but most companies seem to have trouble actually doing it (or doing it correctly).

For the many entrepreneurs I meet with and who will hopefully read my blog posts, I ask you to please stop thinking about code and start thinking about marketing.  Positioning is a great place to start.

So, how do you come up with great positioning?

Here is a very simple formula adopted from Crossing the Chasm, a must-read book written in 1991 (and revised in 1999) by Geoffrey Moore.  Here is an adaptation of a formula Geoffrey discusses in his book:

• For (target customer)
• Who (statement of need or opportunity)
• The (product / service name) is a (product / service category)
• That (statement of key benefit - that is, extremely compelling reason to buy or use)
• Unlike (primary competitive alternatives, including "doing nothing")
• Our product / service (statement of primary differentiation).

It looks simple, and it is.  But going through the steps of "filling in the blanks" is a very powerful, focusing process.  WARNING:  Going through this with a few people in a room (or at Starbucks) often takes an entire morning or afternoon of debating, brainstorming, and sharpening words to "get it right."

Let me talk about each one of these items and give you some tricks and traps that I have learned over the years.

Target Customer

• Answer the question:
  • Who is your target customer?

• Think about:
  • Are there multiple types of customers?  If so, you may need multiple iterations of this formula / positioning for each customer segment.
  • Think about dividing your customers into customer segments, and/or breaking them down by psychographic or demographic.

Statement of Need

• Answer the question:
  • What is your customer’s  “statement of need” or opportunity (what do they want)?
• Think about:
  • Be careful here!  Think about what they want, not what you think they need.
  • "Wants" are much stronger than "needs."
  • Try to be as simple and direct as possible.
  • Ask yourself the question "How do we KNOW what they want or need?  Is this what they want or need or what we THINK they want or need?"   How many potential customers have you talked to / interviewed / polled to try to verify what you think they want or need? Have really good answers here.  Trust me, VC's will really probe on this issue! :-)  On a side note, VCs will also ask (and you should also be asking yourself) "What will they pay, and how are you sure?"
  • Look at it from the customer’s view, NOT yours.  You need to stand in your customers' shoes.
  • People and businesses will spend money on what they really want, but not necessarily what they need.
  • Be careful of thinking that you are smarter than your customers.  I've heard more than one engineer say things along the lines of "I know what they need and what's best for them, who cares what they want!"

Product Service or Name

• Answer the question:
  • What is the product / service name, and what category does the product / service fit into?
• Think about:
  • This one is pretty easy.
  • If you are starting a Web 2.0 company you could use one of several free company name generators such at this one or this one ;-).

Key Benefits

• Answer the question:
  • What are the key benefits -- the extremely compelling reasons to buy or use the product / service?
• Think about:
  • Put these in a priority order with your best at the top.
  • This is where you want to kick into coming up with your eCVP (extremely compelling value proposition).
  • Think about if / how these benefits are extremely relevant to your target customer.
  • What problem are you solving?
  • How are you making things "better / faster / cheaper?"
  • Make sure these are being stated as benefits, and not "features" (more on this later).
  • Make sure that the benefits are aligned with what’s relevant to the target customer.
  • Make sure to tie back to the wants and needs you came up with earlier.
  • If you have more than one customer type, you could have multiple sets of answers aligned with each customer type.

Competitive Alternatives

• Answer the question:
  • What are the primary competitive alternatives, including "doing nothing?"
• Think about:
  • As you probably already know, never say "I have no competition."  It's just not true.
  • Really think hard about all of the different types of competitors you have.
  • One of the biggest competitors I find most people forget about is the incredible inertia for your target customer to DO NOTHING!  How are you going to overcome the their inertia to do nothing?

Primary Differentiators

• Answer the question:
  • What are the primary extremely compelling differentiators that make this unique? 
• Think
  • Try to think "outside the box" and use strategies like ideation and Blue Ocean.
  • Think about -- does your target customer perceive your differentiators as relevant to them?  I have seen a lot of “alignment” problems  where the entrepreneur lists differentiators that really are not relevant  to their target customer.
  • Think about how your differentiators are defensible.
  • Make sure your differentiators are being listed as benefits, and not features.  For more reading on coming up with benefits instead of features see here and here.

So, plug your answers into the formula first listed above, smooth over the text, and you should hopefully come away with a very tight, coherent, well-focused, targeted, differentiated, extremely compelling value proposition.

As a side benefit you should end up with a great "elevator pitch."

In a future blog post, I’ll share a very quick, cheap and easy way to test your positioning in the real world to see how your positioning appeals to your market (the world will be happy to tell you if your baby is cute or ugly!).  Stay tuned...