Protecting Yourself From Premature Acceleration

Premature Acceleration?

A B2B technology startup with an innovative, differentiated technology should sell to the early adopter, the innovator—period.

Often, however, these startups get marketing and sales advice from potential investors or the brain dead management types who inhabit large technology companies and thus think they know something about how a new technology finds its market.

Invariably these are people who would not know how to find an innovator if it had an ankle bracelet tracking system.

Initial acceleration is very different if you are a startup. Acceleration is not measured in dramatic customer growth; certainly not if you are in the B-to-B market space.

Acceleration should be a multi-faceted process that can result in becoming the disruptive player in a category. To become disruptive, you need early adopters to get what you do, bring you to their friends and praise your offering to the few people who really can help you make a market.

Acceleration is achieved by “finding the customers looking for you.”

That means you are looking for kindred spirits who understand the value of your technology and want to bring it into their firms, enhance it, smooth it out, refine it, and help you sell it to others just like them.

This means finding the 2% – 3% of the market who really do need what you are selling and will embrace you with the benefits of shorter sales cycles, excellent references, real feedback (not Survey Monkey junk).

One of the most common mistakes B2B tech startups make is listening to the advice of VCs, angel investors, “uncles” they have collected who have no real downside to offering terrible advice. That advice is almost always about dramatically growing your sales and marketing resources so you grow revenue fast.

And it is wrong. The right strategy is almost always to conserve cash with a passion.

Zero marketing is always better than bad, ineffective marketing.

Do not hire sales people–you cannot afford or find the types you need. The sales people you want should work on a 100% contingency basis.

They share in what they kill. If they do a great job, they are in line for full time employment some day. If not, nothing is lost. Yes, they are really hard to find. Consider the alternative: you hire 2-3 former VMware, Oracle, SAP, HP type reps. They fail because they need a constant flow of leads from a massive marketing bureaucracy to keep their dial pads moving.

These people cannot find the early adopter; they would not know what to do with one if they did.

Just two of them cost you about $500,000 you do not really have and generate nothing. Then they bad mouth you all over the industry noting you have no infrastructure. They never find the innovator or early adopter because the early adopters for Oracle and VMware are dead from old age.

So, take your time and find that one person who will lay out a sensible strategy to find those few early adopters who can get you started. Share all their sales proceeds generously—think 20%-30% of gross.

When you have your first and second customer, use the customer to find the next customer. There is an interesting dynamic with early adopters—they know others just like themselves.

This is how you get started developing what can become a disruptive technology and keep your equity.

Typical B2B tech mistakes: hiring a full blown marketing department, hiring the expensive sales force, investing in infrastructure before you can effectively use it—results in losses, replaced by financing rounds B, C, D.

This brings you dilution and eventually, servitude.

Find the customer looking for you. Works every time it is tried.