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3 Things Foursquare Should Learn from Trulia (TRLA) and Yelp To Get to $100M in Revenue

Today was an incredible day. I had the extraordinary pleasure of being on the New York Stock Exchange floor this morning for the IPO of Trulia (#TRLA).  It was the most exciting day of my career to date (that’s me below).  I was on the founding team at Trulia and was responsible for building the sales organization between 2005 and 2010. The Trulia sales team now accounts for half the Trulia’s 500+ brilliant employees and most of its revenue. I left in 2010 to start Crunched on a mission to help other companies build large sales organizations with technology.

So what does Foursquare have to do with Trulia and Yelp?  A great deal, actually. For starters, all three are essentially media companies. All three drive massive engagement from mobile devices, Foursquare exclusively. All three cater to consumers on one side and small to mid-sized businesses (SMBs) on the other. All three have “listings” search, discovery, check-in, and some type of rating and reviews at the very heart of their core service and value proposition. Foursquare and Yelp both help consumers discover, rate and review local businesses, like restaurants.  Trulia helps consumers find homes and make smarter home buying decisions in the process. It gets those home listings from real estate brokers and agents, which are basically small and mid-sized business. All three companies make money almost exclusively from advertising from two basic groups of advertisers: large brands and SMBs. All three companies sell a mix of brand advertising like banner ads, as well as integrations and sponsorships to large brands like American Express and the advertising agencies that represent them. They also sell advertising to small businesses in the form of banners, featured listings and local promotions.

 

That leads to the 3 things Foursquare should learn from Trulia and Yelp:

  1. Brand Advertising Doesn’t Scale Online – The best thing about brand advertising is that big brands have large advertising budgets that they spend every year without fail.  The three worst things about brand advertising:
    1. Lumpy & Unpredictable Most brands buy on a campaign and/or seasonal basis.  For example, Home Depot advertises mostly in the summer to promote barbecues and gardening tools and in the winter to sell snow blowers and shovels. American Express spends like crazy when it launches a new card, and then pulls back. This means you can run a multi-million dollar campaign for a brand one-quarter and then not hear from them again for six months to a year. You cannot build a scalable, repeatable business on that kind of revenue stream, especially if you want to be a public company. Only the top three or four largest media properties get guaranteed revenue a year in advance for their ad inventory, known as “up-fronts.” More on that in #3 directly below.
    2. Category Exclusivity – For most vertical web properties, the number of national brand categories that make sense for your site are limited. In other words, it only make sense for certain types of companies to advertise around real estate or restaurants.  Foursquare has a huge deal with American Express right now, which seems like a great partnership for both sides. I’m sure AMEX is writing Foursquare nice big checks to get access to consumers using their credit cards to buy from local businesses all day, as those SMBs pay AMEX 3-5% of each transaction.  What’s wrong with that deal? Well, most likely American Express has exclusivity and Foursquare cannot sell to Visa or MasterCard while the relationship is ongoing.  Oh, well. There goes an entire category of advertisers that make sense for Foursquare wrapped up in a single partnership.  Not only does that limit your revenue opportunities, but also when you have category exclusivity, the loss of that one brand advertiser is a big hit to your top and bottom line unless you can replace it immediately.  Remember what Mom told you, don’t put all your eggs in one basket.
    3. Massive Scale Required – Advertising for national brands is still all about reach and frequency. As popular as the Internet is today, the vast majority of advertising dollars still go to TV. Why? Because that is still the easiest, most efficient place to reach hundreds of millions of consumers. Brands advertise the same way online. Brands spend something like 80% of their online budget with a handful of sites that have the biggest audience, which is almost always Google, Facebook, Yahoo and Microsoft (Bing).  The remaining 20% of the budget gets allocated to thousands and thousands of sites and mobile applications.  Ouch!  Since supply outstrips demand, it is a big race to the bottom in terms of the price advertisers will pay and websites can charge.  A very significant percent of online brand ads are sold for low single digits ($1-$5) per thousand views or impressions, known as a cost-per-thousand or CPM. Thus, you need a massive number of users and traffic to make money at that game.  Google, Facebook, Microsoft and even Twitter have the kind of scale to make this work, but most other media properties don’t.  Sure, Foursquare has 20 million registered users, but only a fraction of them are active.

2.    Small Business Advertising Scales - Selling to small businesses has at least three major advantages over large brands:

  1. Recurring – Yelp sells local businesses 3, 6, and 12 month advertising plan commitments at a cost of $300 to $1000 per month, according to pricing on its website.  Trulia sells featured listings and local ads to real estate professionals for similar monthly amounts, according to pricing on its website.  Everyone wins.  Local businesses get a constant flow of new leads and customers and Trulia and Yelp get predictable monthly revenue that is very, very sticky. It is a symbiotic relationship.
  2. Diversified – Yelp reported 19,000 local businesses buying advertising last September in its S-1 filing.  Similarly, Trulia reported 21,544 real estate professionals buying advertising in its recent S-1 filing.  Diversification of customers is a very, very good thing.  You will never notice when Yelp or Trulia lose a paying customers, because they have tens of thousands more and add hundreds of new ones each day.
  3. Premium – Small businesses usually advertise on a hyper local level, and in advertising the more targeted your ads the more effective and the more expensive. The brand advertising inventory of most websites goes for low single digit CPMs, as mentioned above. However, the highly geographically targeted ads bought by small businesses often drive transactions and go for premium effective CPMs in the hundreds of dollars.

3.    Selling to SMBs Requires A Massive Sales Organization – The challenge and opportunity to selling advertising to small and mid-sized business at $300-$1000 month is that you need thousands of them paying to scale.  That means you need hundreds if not thousands of salespeople calling on them. If you search Yelp on LinkedIn, you will find 600+ salespeople working at Yelp, which generated $33M in revenue in the most recent quarter, for a $130M annual run rate.  If you search Trulia on LinkedIn, you will find ~250 salespeople working at Trulia, which generated $29M in the first half of 2012, for a $60M annual run rate.  Do you see the correlation here? Its a numbers game.  The contingent of these sales teams selling to SMBs is probably making 50-80 calls per day, connecting to 6-10 SMBs per day to close a hand full of subscriptions each per day.  This is a high volume, transactional business and it requires lots of humans making lots of calls, doing lots of presentations and demos and charging lots of credit cards.

If you search Foursquare on LinkedIn, you find only 2 or 3 of its 80 employees are salespeople. The rest are product and engineering.  I’m pretty confident those few salespeople are calling on large brands like American Express, which means Foursquare is putting very little to no effort into monetizing the only scalable customer base that will get it to $100M and beyond.  It is easy to get sucked into the allure of large checks written by sexy brands instead of paying attention to thousands of little checks from the SMBs that will ultimately represent the majority of revenue needed survive and thrive.

The longer Foursquare waits to build this sales organization the harder it is going to get.  I love product and engineering centric cultures in the beginning of an Internet company’s life while you are trying to nail the end-user experience, but the longer you wait to bring in the sales team the harder it will be to integrate them into the culture.  Adding salespeople to a large, engineering centric company culture is like trying to put a baboon’s heart into Christian Slater (he dies). I could write an entire series of posts on the challenges associated with bringing sales, product and engineering together harmoniously under one roof, so I will not go into that here.  More importantly, the longer Foursquare waits to build its inside sales organization the longer it is going to take to build a scalable, repeatable revenue source that will take it from a cool app to a viable, sustainable company.  The longer it takes, the higher the risk that someone else beats them to it or passes them by.

Maybe there’s really only one thing that Foursquare should learn from Trulia and Yelp; that it needs to build a massive sales organization as soon as possible and focus the majority of its resources on small to mid-sized business to get to $100M in revenue and beyond.  Go Foursquare, check-in to that!

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Network Effects And Viral Loops

Network effects and viral loops are the holy grail of growing the user base of an internet service rapidly and cheaply.  I talked a little about network effects in my previous post about using radically reduced pricing to disrupt a market. But in case you missed it, when network effects are present, the value of a product or service increases as more people use it.  Online social networks are a great example; sites like Facebook, Twitter and Google+ become more useful as more users join.  Groupon is an amazing case study of leveraging network effects to get new users to invite everyone they know your website, as the more people they invite, the cheaper the products and services on Groupon become for them and everyone else. The businesses that list their services on Groupon get access to massive amounts of new customers in exchange for offering them volume discounts. In other words, the value of Groupon increases for everyone involved the more people use it.  At SalesCrunch, we tap into network effects by capturing and measuring all the knowledge that is transferred in business meetings across your company.  The more people that have meetings, the more statistically relevant, actionable intelligence we can give them in return.  The graphic below is a perfect example. Because we measure when people are paying attention in meetings that happen on our platform vs. when they are off checking email, for example, we can look at thousands of meetings and tell you the optimal length of a meeting based on how long people tend to pay attention and at which point they tend to drift off.

Viral loops are the self-perpetuating mechanisms that constantly bring new people to your service.  The first well know example is hotmail.  Every hotmail email had “get your free hotmail account” in the signature, which drove millions of new users in a matter of months. Facebook’s photo tagging feature is also a great example.   You upload photos of you and your friends and tag everyone in those photos. Your friends and your friends’ friends get an automatic email from Facebook letting them know they and/or someone they know have been tagged in one of your photos.  That brings them to Facebook too see the photos, which increases the likelihood they will upload their own photos and tag their own friends, which brings those people to Facebook to see photos of themselves and people they know, and so forth and so on.

As you can see from the below diagram, the way this plays out at SalesCrunch is that our users bring lots of attendees to our platform for meetings. Some percentage of those attendees become users and bring even more attendees.  More attendees drives more users, and more users drives more attendees, etc.  Per the above, the more users using the platform the more interesting and statistically relevant the information we can provide you about the effectiveness of your meetings.  That intelligence spurs more enterprises to have more employees host more meetings with more attendees to get better insights and so forth and so on.

In a nut shell, network effects and viral loops can drive massive amounts of users significantly faster and cheaper than any traditional marketing.  The key is to build them into your service from the very beginning, not try to bolt them on after your product is built.

20 more posts to go in my 30 posts in 30 days challenge. It is actually getting easier and more enjoyable to write a post every day.

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How to Choose a Venture Capital Investor

As we prepare for our second round of venture capital financing at SalesCrunch, I thought it might be interesting to talk a little about the process we are going through to select the people and firms we want to work with.

I have raised a few rounds of venture financing in my career dating back to the first coming of the Internet in 1999, but there has never been a better time to be a technology company raising venture capital. There is more money available from more venture firms than ever before, even compared to the “web 1.0″ days. Back then there were only a few proven business models like ecommerce (Amazon | eBay) and online advertising (Yahoo).  It wasn’t clear then, nor is it clear now, if online advertising would be big enough to support more than a handful of select companies.  A disproportionate amount of ad revenue still goes to a few large players like Google, Facebook and Yahoo. Remember, advertising is all about reach and frequency, so if your audience is small….  Anyway, now there are several additional proven business models, including social commerce (Groupon | Gilt), social selling (Chloe & Isabel), virtual goods (Zynga), consumer apps (iPhone store), consumer subscriptions (Birchbox), marketplaces (TaskRabbit | WorkMarket) and software as a service (Salesforce | SalesCrunch:), to name a few.  There is also more liquidity from acquisitions and IPOs then there have been in a long time.

More proven business models and liquidity means there are more options than ever for entrepreneurs to raise capital.  So how do you pick your ideal firm? Here are a few of the more important things to consider:

  1. Vertical focus – first and foremost, focus only on partners and firms that have experience investing in your space. Make a list of the companies in your space that you most admire and research their investors, but avoid your competitors’ investors if the company is still active in their portfolio, as it will be a conflict of interest. When I left Trulia, most of my personal venture connections focused on consumer internet companies. Most didn’t have experience or interest in the consumerization of enterprise software. They took meetings with me because they knew me, but I ended up wasting a lot of time before I finally focused on people and firms that really understood and appreciated what we were doing.
  2. Stage – what you don’t want to do is waste your time pitching firms that are too early or too late stage. If you are raising $10M, an early stage firm with a $30M fund likely won’t be able lead the deal or write you a $5M to $10M check. Conversely, if you are raising $1M and you are pitching an $800M fund that has no track record of doing seed stage deals you are probably wasting your time. The other thing to be conscious of is how much of the fund has already invested and how much is allocated for future rounds in existing portfolio companies. If a firm has invested or allocated a large percentage of their fund you could be wasting your time. A good salt test is to see when they raised their last fund via press or filings and how many investments they made in the last year compared to each of the previous three years. If they raised a while ago and have slowed down considerably, you have a pretty good indication.
  3. Reputation - Now you have your initial list of ideal partners and firms, start doing your homework on which have the best reputations. You can search the web to quickly figure out which are the top tier firms in your space. You can also get a sense of the partners by Googling them and reading their blogs, but you will need to work a little harder to get the real skinny on people. Go on LinkedIn and figure out who you know in common and start asking anyone that has worked with them about their experience. You want to talk to entrepreneurs who worked with them in successful startups and ones that have failed so you know what to expect in both situations. I’ll do a dedicated post about the most important terms in a venture deal, but at this stage you just want to find out if the firms on your list have a reputation for fairness and for being entrepreneur friendly.
  4. Chemistry - you are going to have to live with your investors for a long time, so you better like them.  Chances are they will join your board and you will spend a great amount of time in good times and bad solving big problems and overcoming interesting challenges. Spend as much time dating them as you can with them before you get married.
  5. Geography – this is much less of an issue than it use to be.  When Trulia got started back in 2005, you needed to be in Silicon Valley to get funded as an internet company. Now, there are more hubs like New York, Austin and Denver and VC’s get on planes more than ever.  SalesCrunch has investors from New York, Silicon Valley and Boston. Groupon and 37Signals are in Chicago.  All that said, if you are a starving and/or unproven entrepreneur, you will have to move closer to one of the hubs to afford to take meetings and have VCs willing to invest in you.

We are very fortunate to have some amazing, top-tier investors already at SalesCrunch. We are just looking for one or two new investors who can help us take the company to the next level, so we only need a short list of four or five that match the above criteria to find the one or two we need. If you are starting from scratch, your list might need to be a bit longer and include lots of angel investors as well. This isn’t as comprehensive as it could be, but at least its a good start.

26 more posts to go in my 30 posts in 30 days challenge.  Its getting harder now.

Credits:

Image of Steve Jobs and Mike Markula provided by Ink Magazine

Image of iFund provided by The Christian Science Monitor

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Love Your Customers by Specializing Your Sales Team

Everyone has heard the age old adage that it costs less to keep the customers you have than it does to acquire new ones.  That is true on multiple levels. First, there’s the cost of getting someone to buy your product or service in the first place, or the “cost of acquisition.”  Then there’s the cost of unhappy customers spreading negative word-of-month that turns one lost customer into several very quickly.

It’s a wonder then that so many companies fail to staff and train sufficient account management and/or customer service people to ensure existing customer happiness and success.  Too many companies assume that salespeople are properly motivated to manage customers after the sale is made, but just the opposite is true.

Salespeople are paid commissions to keep them focused on one thing – selling.  But if the only tool they have is a hammer every problem looks like a nail.  Meaning, if they are compensated to sell then that’s what they are going to do.  You want salespeople swinging their hammer at customer problems when appropriate, but most problems post-sale require a less blunt object.  Account managers, customer service reps, technical support, etc should use a different set of tools and be compensated on metrics that measure resulting customer satisfaction, like retention and churn.  Only when customer problems require a hammer does the salesperson get called back in to nail the deal!

At SalesCrunch, we have a very highly specialized sales organization broken down into three groups.  All three groups wear the “Customer Success” moniker regardless of what role they play in the customer life cycle as a reminder of their #1 priority.  Here’s how the groups breakdown:

  1. Customer Success Consultants. Our consultants are 100% focused on qualifying prospective customers to ensure there is a good mutual fit. They schedule a meeting with our Customer Success Managers if, and only if, our platform alleviates at least one big pain for them.
  2. Customer Success Managers. Our managers take handoffs from our consultants, drill down into customers’ deepest, darkest problems and demonstrate the aspects of our platform that can help them the most. They then manage the entire customer procurement process until an agreement is signed.
  3. Customer Success Specialists. New customers are immediately assigned a Customer Success Specialist who does 1-on-1 training with each and every individual user to get their account setup and run them through the platform until they are 100% confortable before the first time they use it with a customer.  Our business and enterprise customers often have dozens or hundreds of individual users, so this is no small feat. Our specialists also provide ongoing support to customers.

By specializing our team, all three groups are super focused, motivated and compensated to ensure their part of the customer experience is the best that it can be.  It also makes them highly efficient by eliminating context switching between prospecting, qualifying, selling and servicing customers, all of which require very different skill sets in our opinion.

This is one of many posts I will do around the benefits of specializing your sales team, so stay tuned.

27 more posts to go in my 30 posts in 30 days challenge.

Credits:

“Love” homepage post image provided by Lyndit.com

“Will You Buy Mine” post image done exclusively for DirtySexyMoney by Eric Uhlich Illustration. All rights reserved.

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Is Super Pro Rata Super Bad?

I was talking to one of our investors the other day about our upcoming fundraising when told me his firm wants to participate in this new round “super pro rata”.   It reminded me of all the funny MBA-speak we have in the Internet startup world. So what does he mean by super pro rata and is that a good thing?

There are two answers to this question, but let’s define pro-rata before we talk about super pro rata.  It is extremely common for investors to have “pro-rata rights”, or the right to maintain their percentage ownership in a company in later stages of financing. So, if Accel invests $1M in your first round in exchange for 20% of your company they have the right to keep that 20% ownership in subsequent rounds of financing by investing more money. Incidentally, your company is now worth $5M ($1M is 20% of $5M) after the financing or “post-money.”   Let’s say you raise $10M in your second round of financing. Accel needs to invest $2M in that round just to keep their 20% ownership stake, which leaves 80% of the financing to new investors. So let’s say these new investors are also buying 20% of the company for this new $8M. This means your company is now worth $40M ($8M is 20% of $40M) post-money.  That means Accel owns 20% and the new investors own 20%, for a total of 40%, and both investors have the right to keep their 20% stake going forward. While Accel had to pay up to own exactly the same percentage of the company, their 20% is now worth 8x their original $1M investment or a whopping $8M. Not a bad return, but it’s only on paper right now so don’t get too excited.

Now, let’s look at where super pro rata comes into play. There are two different ways super pro rata is used. One is super good and one is super bad:

  1. Super Pro Rata – If Accel wanted to own more than 20% of the company in the second round of financing then they would want to participate “super pro rata”.  Simply put, they want to own their pro rata percentage of 20% and they want a piece of the other 20% the new investors are going to own with additional $8M investment.  Presumably, they want to own more because the company is doing well and it’s smarter to invest more money into something you know is getting traction rather than to invest in a new, unproven company or concept.  It is ultimately up to the founders to let investors own more than their pro rata in subsequent rounds. When an existing investor wants to participate super pro rata, it is a good sign and it sends a positive signal to other investors that things are going well since existing investors have the most information about a company.
  2. Super Pro Rata Rights – This is when an existing investor adds the contractual right to buy more than their pro rata share in subsequent rounds into the term sheet of the first found of financing.  It might seem like a subtle difference, but wanting to own more and having the right to own more are very different.  Plenty has been written about why super pro rata rights are bad by Mark Suster, Brad Feld and David Beisel. Net-net, this is bad because it significantly reduces your options for new investors in subsequent rounds, which drives the valuation of your company lower and reduces your chances of getting funding at all.  As Mark points out, if the investor that has super pro rata rights exercises them, then there might not be enough room in the round for new investors, so they get to name their price. If they have super pro rata rights and don’t exercise them, it sends a red flag to new investors. Basically, you’re damned if they do and you’re damned if you don’t, so don’t do it!

So, to sum it up, super pro rata is super good, super pro rata rights are super bad.

28 more posts to go in my 30 posts in 30 days challenge, so stay tuned.

Photo complements of Break.com and EntertainmentWallpaper

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How to Compensate a VP, Sales at a Tech Startup

This post originally appeared on the SalesCrunch blog.

A friend of mine, the Founder & CEO of a fast-growing online media company, is getting ready to hire his first VP, Sales. He emailed me asking about compensation ranges. For context, his company’s platform accesses millons of highly engaged consumers and it sells targeted advertising to brands and the advertising agencies that represent them. Here is the question he asked:

“Quick question regarding sales compensation.  I am looking to hire a VP of Sales, and have a couple really solid candidates coming who I am likely going to make one offer to. Both have asked about compensation for the role, and both are pretty heavy hitters (with 15+ years experience).

One worked in top positions dating back to Lycos… the other is the current EVP of Sales for (a six-year old, 100+ person media company in NYC) who started when they were a few guys. Trying to get a sense of a compensation package (salary, % sales/bonus, equity) for both that they won’t balk and at the same time we aren’t shooting the moon on either.”

I asked a few key questions to better understand and assess the situation:

Q: Are you hiring this person to build a team, sell or both?  If build a team, how big and how fast?

A: Person would likely start by helping us continue to refine/pitch, the packaging of the story to brands/agencies. We’ve already got a couple people who would report into them (who are already making inroads with agencies). For team, would think adding a couple more people over next few months is about right. This would give them 4 people under management, which hopefully would get our foundation pretty solid as we then really look to scale out.

Q:  How far along is the product you are selling? Have you sold a bunch already and proved it works and just need to scale or are you still in customer development?

A:  In terms of existing traction, we’re in some good conversations and already have some very early cash coming in around advertising (~$50k/mo). Have only started a couple months ago though, so idea is to bring in someone who can take the helm on sales and push ball even faster, while helping us optimize existing guys on team selling, as well as get us thinking about other resources we may need.

Q: Are they going to manage ad operations as well or is that going to live under someone else?

A: Yes, our current ad ops person would be reporting into them.

Ok, so before putting a number on this position, let’s talk a little about the kind of team this VP, Sales is likely to manage. I am going to use ad sales in this example, but these numbers hold as true for salespeople selling Software-as-a-Service (SaaS), traditional software (if it still exists) and most other high-tech products as they do for online media.  Sales reps calling into large brands and agencies can make between $100k to $650k on the high-end. Yes, you saw that correctly – $650k on the high-end.  Let’s say they don’t have any experience selling online advertising, but they worked as an account manager or on a sales operations team and know the mechanics. You can expect to pay a salary of $50-$75k with an opportunity for them to make up to another $50k+ in commission the first three years. Their quota is likely between $500k-$750k a year.  A friend of mine ran a team of 30 reps on the national ad team at Google.  They would often train people right out of college and they fell into this camp with a OTE (On Target Earnings) of $100k on the high-end their first few years. Once they have 3-5 years experience, they should be expected to sell ~$1-$2M a year and their OTE is somewhere between $125-$175k with ~$100k of that in base salary and the rest in commission.  If they have 5+ years experience and are good,  they should be selling anywhere from $2M-10M on the very high-end. If they are selling $5M, their OTE is somewhere around $350k, $125-$150k base and the rest in commission. It is the exception rather than the norm, but I can think of two people off the top of my head that were selling more than $10M and who where making $650k+/year.  One was at  Shopping.com (eBay) and one was at a fast-growing ad exchange. Both had 10+ years experience and both built very deep relationships at most of the brands and agencies in their space. In other words, they owned the customer relationship and they got paid handsomely for it. That is somewhat unique to the advertising world.  Its a great situation for the rep, but not so great for the company, as it watches its highest paying accounts walk out the door every day.  A topic for another post.
So now you know a little more about the people on the team this VP, Sales will hire and manage.  How much do you think they should make? More than the sales executives they manage? Not necessarily. The irony of becoming a sales manager is that you get a ton more responsibility, but you often make less money than your highest performing reps. In fact, the highest performing reps are often the highest paid people in a company with under $100M in revenue. How is that for career advancement? Comp for this level of VP, Sales at a fast-growing tech company losing money is $200k-$250k+ plus equity.  For comparison, comp for a VP, Sales at an established, profitable online media company can be $300-$500k plus equity, more if they manage a really big team. I actually found the below VP, Sales Compensation Survey on the Boston Search Group website after writing the above. It proves these numbers hold up for SaaS as well as online media. To determine the equity portion on the startup side, I use Fred Wilson’s model for all positions at a startup company. It comes very close to what I was doing historically and it’s a nice, objective third party source you can point candidates to for credibility.
So now the question is how do we structure the compensation for our new VP, Sales to drive the desired behavior?  There are at least two common models to comp a VP, Sales:
  1. Base salary + commission override on the team – basically, they get a smaller percentage on every deal their team closes.
  2. Base + bonus.

Whatever you do, you don’t want the VP, Sales to own any accounts.  If they own accounts, the sales team will see their manager as competition who gets to cherry pick the best accounts instead of a coach or a resource to help close deals. At the early stage of the company, you want a player/coach who is selling side-by-side with each rep. I don’t like option #1 at an early stage because it forces the VP to focus too much on short-term revenue at the cost of the long-term product, customer and team development.  I like #2 with the bonus based on no more than 3 key performance indicators (KPIs), as its impossible to focus on more than 3 in any given quarter. Also, I suggest bonus be paid quarterly so the VP is motivated by the KPIs and so those KPIs can be changed quarterly with company priorities.  The 3 KPIs early on might revolve around 1. Revenue 2. Recruiting 3. Ramping existing reps.  You can modify these as time goes on to focus on new priorities. For example, the revenue KPI might be more specifically targeted to new accounts if the priority is to broaden the base of customers. If your VP is managing sales operations, as is the case above, then one of the KPIs could target customer satisfaction to make sure ops is filling orders and managing customer well on the backend.

By the way, none of this addresses the type of person you want in an early stage company as your VP, Sales. Despite conventional wisdom, you do NOT want a veteren sales executive from a large company in your space. You want an evangelist that knows how to deal with uncertainty, a complete lack of structure and can manage the customer development process. I go into more detail about this in my post “Startup sales: The Missionary Position” and in my interview with Steven Blank “Tips for Hiring your First VP, Sales at a Startup“.

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When to Use Radically Reduced Pricing to Disrupt a Market

Today, we announced that SalesCrunch is radically reducing the price of our next-generation, online meeting platform by 60-70%.   Before I go into why, let me start by saying that we started SalesCrunch to “Apply Science to the Art of Selling.”  We never intended to get into the online meeting market. We did it for three primary reasons:

  1. Science is about Measurement. We could not think of a better way to literally get into the conversations that sales professionals are having with customers and measure what works so it can be repeated with a predictable outcome. In fact, it’s not about the meetings, themselves, but what happens in the meetings we most care about.  There is a wealth of knowledge shared in meetings that has never before been captured or analyzed, until now.
  2. The Future of Business is Virtual. Increasingly more interactions with customers are happening virtually as distributed workforces become commonplace and large purchases are increasingly made without the need for face-to-face meetings.
  3. Virtual Sales Meetings Suck. Online meeting technology is archaic, horribly broken and despised by the vast majority of users.   The incumbent 800-pound gorillas, WebEx and GoToMeeting, face classic innovator’s dilemma that make it nearly impossible for them to make radical changes with new technology without a backlash from their users.

Our Original Pricing “Strategy”

I took an economics class in business school focused on price elasticity and other complex methods and models for pricing a product appropriately.  All that went out the window when we priced SalesCrunch. We simply looked at what competitors were charging for outdated, broken technology and decided to charge a small premium. After all, we have a significantly better platform that eliminated the need for software downloads and measured everything that was going on in your meeting to provide valuable intelligence. Basically, we charged $59 because we could.  Not a very scientific or disruptive approach and not my finest hour.

The Disruptive Pricing Decision

We were humbled by how positively the market received our platform.  We clearly hit a nerve and were solving a big problem.   We were surprised when companies started telling us they wanted every employee to have their own personal online meeting room, not just their sales team. They wanted pricing that could scale to hundreds and thousands of users and $59 per person per month just wasn’t cutting it.  We started doing what most companies make customers do–haggle for volume discounts. It was ugly for both sides and added a ton of friction to the buying process, which is costly for everyone. This made us think about how the most innovative companies disrupt existing markets and create entirely new ones by removing this friction with significantly better products at significantly lower prices than the incumbents.  I instantly thought of a long list of examples:

  • Netflix vs. Blockbuster. Nexflix came out of nowhere and put Blockbuster into bankruptcy by letting you keep movies as long as you wanted without late fees while delivering movies right to your door, saving you time and gas money.
  • Salesforce.com vs. Oracle. Salesforce.com launched a simple, web-based CRM solution for $50 per user per month when the only other alternative was paying Oracle millions of dollars for complex software that took a small army many months to install and many more months to deploy.
  • Dropbox vs. Microsoft. Three-year-old Dropbox is taking Microsoft by storm as it offers an infinitely simpler file-sharing platform at a fraction of the cost of Microsoft Sharepoint.
  • Google vs. Microsoft. Gmail offers a far more elegant and inexpensive alternative to Outlook and Exchange Server and is winning over thousands of individuals and enterprises everyday as a result.

The Impacts of Radically Reduced Pricing

There are many incredible benefits when radically lower pricing is done at the right time and place:

  1. Disrupt the competitive landscape. When radical pricing results from more efficient technology platforms, incumbents cannot easily compete despite their economies of scale. Often, they have extensive infrastructure costs tied to a legacy platform that cannot be changed fast enough to meet the price of a more efficient technology platform.
  2. Steal market share. New technology at significantly lower price points often start off addressing a niche in the market incumbents don’t see as big or profitable enough to worry about.  As the niche grows and the new entrant starts getting its own economies of scale, the incumbents unable to change infrastructure often go “upstream” to customers who can afford to pay a premium. The problem is that the new entrant is also constantly going upstream. The incumbent increasingly loses market share along with the technology advantage they once enjoyed. In the last three years, Salesforce.com has taken a significant percent of the Fortune 500 away from Oracle.
  3. Non-linear growth. Selling complex, expensive products requires a great deal of customer education and handholding.  Customer education is expensive, as it requires large sales and marketing machines and adds significant time to the buying process.  An increase in revenue only comes directly and linearly as you add salespeople and increase your marketing budget. When a solution is radically simpler and cheap enough for any individual user to put on a credit card, it can grow exponentially faster than any sales and marketing organization can scale.
  4. Grow a market. Perhaps the best part of radically pricing that comes from new technology infrastructure is that it can exponentially expand the size of a market that was artificially stymied by high prices.  The first ten million Dropbox users probably never heard of file sharing, let alone Microsoft Sharepoint.  Not one of the five million small businesses in the US could afford Oracle, but they can all afford $50-$150 a month for Salesforce.com.

 

When Can You Disrupt a Market with Radically Reduced Prices?

Being the lowest cost provider doesn’t mean you are going to be disruptive. Here are a few questions we, at SalesCrunch, asked to put ourselves to the test:

  1. Do you have a significantly better product? You can buy Blackberry smart phones for $100 while iPhones cost $400. HP tablets cost $150 while iPads run a cool $600. Why hasn’t Blackberry or HP disrupted Apple? Because Apple products are radically better. Price on its own doesn’t disrupt a market.  You need the one-two combo of a significantly better product at a steeply lower price to truly disrupt a market.
  2. Do you have a sustainable cost advantage? You cannot beat a multi-billion dollar company in a price war by playing on its turf.  Eleven years after its founding, Salesforce.com continues to rapidly steal market share from Oracle because Salesforce CRM is easier to use and is delivered 100% over the Internet.  Meanwhile, Oracle still requires a complex software installation that costs millions of dollars and small armies to install, maintain and train.  The infrastructure costs of delivering this type of product are enormous and there is no way Oracle can come close to meeting Salesforce.com’s price to compete.
  3. Do the incumbents face innovator’s dilemma? The bigger the market leaders, the more likely they cannot react to new entrants and new technology.  The longer a company has been around and the more customers they have, the larger the investment in outdated, costly infrastructure and the less tolerance existing customers have to radical change. The once beloved Netflix got pummeled when it tried to make radical changes to stay ahead of how we consume media online, losing 800,000 customers and having its stock price slashed from $300 to $75 per share in a matter of days.   Polaroid went bankrupt because it couldn’t turn its massive ship from instant film to digital despite seeing the need years earlier.
  4. Can you grow the market with radically reduced prices? Are the incumbents in your market charging artificially high prices because of historically large legacy infrastructure costs that created barriers to entry that have been eliminated by new technology?  Is there a broader use of your platform that could be unleashed if the price were in reach of a single user with a credit card?
  5. Can you build network effects and/or a brand as a barrier to entry? When network effect is present, the value of a product or service increases as more people use it.  Online social networks are a great example; sites like Facebook, Twitter and Google+ become more useful as more users join.  As stated earlier, for SalesCrunch, it was never about the meeting platform; it’s about all the data and intelligence that can be gleaned from customer interactions that is valuable.  The more people have meetings, the more statistically relevant, actionable intelligence can be realized.

SalesCrunch measures everything that is going on in a meeting, including what percent of time people pay attention and what percent they are distracted, how long the best and worst meetings last, what percent of the time the best salespeople spend talking vs. listening to the customer and the average number of slides used in the best and worst meetings.  LinkedIn profiles are automatically integrated, complete with job titles that can tell you how often decision makers are present in your meetings or how much your internal meetings are costing you based on the number and frequency of meetings and the caliber of people in each meeting.  The platform tracks who opens your emailed presentations and proposals down to the minutes and seconds they spend reading every page.   The more often you use the platform, the more valuable all these analytics are to everyone else on the platform.  You can quickly determine what separates the top 10% of your salespeople from the bottom 10%.  Back out one level and SalesCrunch can benchmark your sales team against all other users in your industry on the platform and show you exactly where you can improve.  Think about how Netflix or Amazon get increasingly better at recommending movies and books you might be interested in as more and more people shop from them.

In conclusion, radically reducing prices alone does not a disruptive opportunity make.  There is a perfect storm of new technology infrastructure that spawns drastically better, cheaper products that can grow virally while large incumbents who once enjoyed near monopoly pricing cannot turn the ship fast enough to compete.  SalesCrunch is extremely lucky to be at the center of such a perfect storm.   As Michael Arrington wrote in TechCrunch in 2007 when Cisco bought WebEx for $3.2 Billion: “There’s a good chance it (WebEx) isn’t going to work properly. WebEx is exactly the kind of company that is being disrupted by new web startups, who are creating cheaper and better alternatives to older web applications[1].” It only took four years for the perfect storm to land on SalesCrunch’s front door. I hope someone knocks on your front door soon.

[1] http://techcrunch.com/2007/03/15/cisco-buys-webex-for-32-billion/

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Four Flavors of Social Selling

When we launched SalesCrunch last year as a “Social Sales Platform” we did so on a mission to disrupt old school sales and introduce a new way to sell that applied science and collaboration to the art of selling.  But around the same time, companies in different spaces started using “Social Selling” to describe themselves with very different meanings.  So this is a brief look at what we have seen as the four emerging flavors of social selling and a few leading players in each category.

I. Social CRM

Salesforce.com’s homepage describes Customer Relationship Management (CRM) as “the combination of business processes, people, and technology to achieve this single goal: getting and keeping customers”.  CRM systems like Salesforce are meant to capture lots of detail about a customer so the company can anticipate its needs.  For example, imagine showing up at a hotel that knows what paper you read, which room you like and what you want for breakfast because it was all captured in their CRM the last time you visited. But the weak link of CRM platforms is that they depend entirely on highly paid sales professionals to manually enter enormous amounts of mundane info from their interactions with customer every day. In other words, CRM is only as good as the information salespeople put in it!  And it is widely known that most salespeople enter the bare minimum they can get away with. And rightfully so: the more time they spend doing data entry the less time they spend with customers closing deals. In fact, there is an inverse relationship between the success of a salesperson and the amount of information they enter into their company CRM. The highest-producing reps often do the least amount of activity logging in CRM and get away with it because management won’t mess with success. That makes what successful reps do hard to repeat and makes it difficult for the company to manage the relationship with customers without that person and what’s in their head.

Social CRM is changing that by putting the increasingly vast amount of information about customers available online and in social networks like LinkedIn, Facebook and Twitter at your fingertips so you can get a single, up to date view of your customers’ without manual data entry or switching between applications.  Obviously, the more current information you have about your customer the easier it is to make a personal connection, build a relationship and tailor your solutions to meet their individual needs.

Gist finds the latest news, social media status updates and other info about your contacts and automatically puts it into one view for you.  You can even rank your contacts inside of Gist so you get info about your most important customers at the top of the page when you login. It can integrate with your inbox, mobile device, web browser, or CRM.  Gist was bought by Blackberry a year or so ago, but you don’t need a Blackberry to use it. Gist is completely free, at least for now. The Salesforce integration is a bit kludgy, as it basically navigates you to that contact’s webpage in Gist framed inside of Salesforce where you can scroll around.  But it does eliminate the need to navigate away from Salesforce, log into Gist and search for that contact’s updates.

InsideView aggregates “sales intelligence” about your customers from news sources, social media networks, legal filings, etc to provide information about companies and contacts directly within your CRM.  The last time I spoke to them, pricing was $99/user/month.  There is a limited free version.

LinkedIn for Salesforce allows you to see LinkedIn profiles and company information without ever leaving Salesforce.  You can see what you have in common with leads and contacts, similar profiles and even get real-time trigger updates on your accounts and contacts to know the right time to call.  Pricing is $29 to $39/user/mo.

IntroRocket is a service integrated with Salesforce, LinkedIn, and Facebook to provide co-workers with a company-level view of each other’s contacts and connections to business prospects tp facilitate personal introductions.  We use IntroRocket at SalesCrunch and it’s awesome. The best part is that it takes 3 minutes to get started.   It costs $99/user/year from CRM users and it’s free if you access it from your browser.

SalesCrunch Connect is our very own online social sales presentation platform that helps you… well, connect and present to customers faster and measure results in real-time.  You get your own personal meeting room in a browser, with no software download.  LinkedIn profiles, Twitter updates and local weather and time for everyone in your meetings help you make a personal connection and know how to tailor your pitch.  Premium versions of Connect integrates with Salesforce to automatically add presentation attendees as contacts and meetings and emailed presentations as activity to Salesforce so you never have to do data entry again.  There is a free version of Connect and premium accounts range from $39 to $99 per user per month.

SalesCrunch CrunchConnect

II. Collaboration Around Customers

Outside of social media marketing, “Social” has mostly translated to, and is increasingly synonymous with, collaboration in the enterprise.  As social becomes mainstream, the platforms that power it are increasingly making social collaborating with colleagues and customers mainstream as well.  This is great news for sales professionals for several reasons:

  • Salespeople can more easily find and solicit help from others within their own company that can help get deals done.
  • Customer suggestions, complaints and other feedback from the sales front lines are now accessible where everyone within the company from product to marketing to senior management can see it and pitch in. Gone are the days where customers give feedback to salespeople, who have no vehicle or audience in the company to make use of it.
  • Many enterprise social platforms feed critical customer conversations, feedback and other information related to customers and revenue opportunities directly into CRM systems so manual data entry, the weak link of CRM, is increasingly becoming unnecessary and obsolete (Thank God!).

Jive Software is the pioneer of “Social Business Software”.  Jive’s platform is known as Facebook for the enterprise, complete with activity streams, status updates, micro-blogging, file sharing, messaging, profiles and other tools to facilitate collaboration and relationship building with customers and colleagues. Jive caters to large enterprises and has over 650+ “blue-chip” customers like HP and SAP with millions of employee users, according to its CEO Tony Zingale in his IPO road show video.  Jive doesn’t publish pricing, but it’s rumored to be in the low single digits per user per month.  (Discloser: Jive is a customer and partner of SalesCrunch)

Yammer is also a social enterprise network, most commonly referred to as Twitter for the enterprise. Like Jive, Yammer has activity streams, status updates, micro-blogging, messaging, groups and other tools to collaborate with colleagues and customers. Yammer caters to small and mid-sized companies, claiming over 100,000 business users worldwide. Yammer has a free basic account, and premium accounts start at $5 per user per month.

Salesforce Chatter Salesforce has its own enterprise social network in Chatter, with similar functionality to Jive and Yammer and deep integration into Salesforce.  There is a free, basic version of Chatter, but if you want to tie conversations into Salesforce, Chatter Plus starts at $15/user/month.

SalesCrunch Connect makes online meetings with customers simple, social and collaborative.  In addition to bringing your LinkedIn and Twitter social profiles into meetings, Connect also records every meeting and makes it instantly available to anyone else in the company to review and collaborate on later. Meeting attendees and recordings are also added to Salesforce automatically for easy access and reference by anyone within the company later.

III. Party Poppers

There is a new generation of consumer product companies combing the party-planning model pioneered by Avon, Tupperware and Mary Kay with online social networks to turn what use to be referred to “direct selling” into “social selling”.

Chloe & Isabel is a fashion jewelry company reinventing the direct sales model online. Chloe & Isabel helps 18 to 28-year-old women leverage the social networks they’ve built organically online to start their own jewelry business. The company designs, produces and markets a range of jewelry pieces priced between $18 and $200. Interested sellers, called “Merchandisers”, can sign up to create their own online boutique where they can curate and sell Chloe + Isabel jewelry on a 30% commission. Merchandisers also have access to the company’s online library of training videos to learn how to bring their online network into in-person parties or “trunk shows”. (Disclosure: Chloe & Isabel is a customer of SalesCrunch and the two companies share at lease one investor).

Stella & Dot is a direct-sales jewelry business that empowers women (called stylists) all over the country to sell bracelets, necklaces, rings and other accessories to friends and acquaintances. Each stylist has a personalized e-commerce site with a custom URL so jewelry can be promoted with the help of Facebook and Twitter.  Stella & Dot has revenue of $104M in 2010. (Disclosure: Stella & Dot and SalesCrunch share at least one investor)

IV. Social Shopping

Another fairly new phenomenon, social shopping is basically online shopping where shoppers’ friends become involved in the shopping experience.  Social shopping attempts to emulate and accelerate the power of offline word-of-mouth online inside social networks like Facebook.  Here area few cool examples:

Groupon is the obvious and most epic example of social selling. Groupon made it easy and economically rewarding to share the shopping experience with your friends.  The more friends you get to pile into a daily deal the cheaper the item becomes. (Disclosure: SalesCrunch and Groupon share at least one investor in common)

Pinterest is a social catalog service.  It is a self-described virtual pinboard, where you “share and organize the things you love”. Most of those things tend to be design, fashion and other luxury consumer products, which are shared by your friends and easily clicked on and purchased by you.  As this TechCrunch article shows, Pinterest is growing insanely fast.  Rumor has it that Pinterest is one of the leading sources of traffic to hand-made goods marketplace Etsy.

StyleOwner where Chloe & Isabel manufacture their own jewelry and empower their “Merchandisers” to sell them online and in person, StyleOwner helps “STYLEpreneurs” to create an online store and personalize it for their social network by curating from a catalog of existing fashion brands they already buy from.  Members, called STYLEpreneurs, provide friends with customized recommendations and make 10% commission on every sale. (Disclosure: SalesCrunch and StyleOwner share at least one investor)

So where SalesCrunch defines “Social Selling” as a new way for salespeople to sell that applies science and collaboration to the art of selling, there are at least three other flavors of social selling emerging. It will be interesting to see how these categories evolve and expand.

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Screwed by the Press?

After much debate, we made the decision to hire an independent public relations (PR) consultant a few months ago to help us launch SalesCrunch to the world.  PR is a very political business and a big financial investment that is very difficult to measure.  One good story can put you on the map, but more often than not companies spend tens or hundreds of thousands of dollars on PR only to add more noise to the world than signal without much to show for it.  It can literally make you or break you.  I considered handling our PR myself.  At the end of the day, PR is mostly just sales – hardcore, phone pounding, boiler room pitching till you’re blue in the face kind of sales.  I am a sales guy to theUgly Head core, so that part I get and even thrive on.  Its the other part, the ass-kissing, soul crushing politics around who writes about who, what and when, that is mind boggling to me. So we decided to pay $8,000 a month for six months for 1/3rd of an experienced PR consultant that had the contacts and patience to play the game. Two and a half ass busting months and $20,000 later, we are ready for the public launch of our flagship product CrunchConnect.  Everything was going according to plan, until disaster reared its ugly head.

We lined up several days of back-to-back press briefings and demos the week before the announcement.  The first briefing is with a New York based online news rag.  The reporter is young, fairly new to the job and shows up wearing jeans, a flannel shirt and Chucks, typical for a reporter covering the downtown tech startup beat. We get to talking and he turns out to be a nice, wholesome, Midwestern kinda guy.  We get along swimmingly and the demo goes off without a hitch. We both follow up via email with niceties and it’s pretty certain he is going to give us a good write up. Score!

You know the saying that timing is everything?  Well, that’s absolutely true of PR.  You start pitching press a week or two before you are ready to send a release on the wire to give reporters enough time to do research and write an article in advance.  As soon as the first reporter writes about your news its basically old news and the desire for other reporters to cover it plummets like a man’s labedo after age 50.  To give as many reporters as possible the opportunity to break the news while it is still news you put an embargo on the release, which basically means the reporters agree not to publish their story until a certain date and time. In our case, we have reporters agree to it, we plaster it all over the advance release, we put it in our follow up email and we shake on it. Confused by all this? Don’t worry, so was the reporter from our first briefing.  Instead of waiting till the embargo lifted Monday at 7am he accidentally released it the very next day.  Ugh, can you say “train wreck?”

Train Wreck

After I pulled my heart out of my throat, I wrote him the following email:

On Wed, Mar 23, 2011 at 12:45 PM, Sean Black wrote:
Hey Dylan,

Can you please take down the story you posted ASAP? Per the press release, it is embargoed until Monday, March 28th at 7am ET.  We really appreciate the kind coverage and great story, but we want to make sure everyone has the same opportunity to cover it.

Best,

Sean

To which I got the following response:

On Wed, Mar 23, 2011 at 1:06 PM, Dylan wrote:

Hi Sean and Kristi:

This is completely my fault and I apologize for the carelessness on my end. Please trust that there was no ill will behind it. With that in mind, it’s the policy of ours and every publication out there not to remove a post. I’m between a rock and a hard place on this, and I hope it hasn’t caused exceptional damage or grief.

Very sincerely,

Dylan

OMG We're ScrewedLike any industry, the New York tech scene and the press that covers it is a pretty tight knit community. I happen to know the COO and the VP, Business Development of the company for which the reporter works and several of my investors and network know the CEO. A campaign of emails and calls ensues pleading to have the story taken down until Monday so other reporters will cover the story, but to no avail. Here is the verdict in an email from the CEO:

Sent: Wednesday, March 23, 2011 3:22 PM
Subject: Re: SalesCrunch Embargo Violated

Have now talked to everyone involved here.

Normally, in cases like this, companies reach out and ask us if we will agree to an embargo before providing us with any information. We agree or don’t agree to the embargo depending on the circumstances, and then the company decides whether or not to go forward and share the info.  My understanding is that that did not happen in this case.

My understanding is that when Dylan and Sean talked the first time, Sean did not mention anything about an embargo or the conversation being off the record.  He then followed up with an email saying that the information could be released on such-and-such a date that Dylan didn’t missed (our error).

If this is in fact what happened, the initial conversation between Sean and Dylan would be considered on the record.  And, for obvious reasons, we don’t allow folks to go on background after the fact.

We don’t ever want to surprise or burn anyone, and Dylan should have seen the language in the email and brought it to Sean’s attention (and his editor’s).  But at least from what I understand now, there was never any agreement to or mention of an embargo in their initial conversation.

If your understanding is different, please let me know.

Thanks.

So basically it came down to a he said, she said technicality and the decision went against us. Now, if this were any other outfit I might be upset, err livid. But then Dylan’s editor called me to apologize and assured me there was no ill-intent and said he even tried to lobby our case with his CEO.  The COO and I exchanged emails where she apologized and pretty much said the same thing. In the end I think my first impression of Dylan as a wholesome, good guy was the right one. He didn’t intentionally break the embargo, it was just a newbie mistake, as his editor assured me.  Moreover, I know the rest of the people within the organization to be of high integrity and I believe them when they tell me they took it very seriously and that it was a very difficult decision to make, but ultimately it came down to journalistic integrity for them. So in the end I wrote them all an email thanking them for tying assuring them there was no hard feelings, and I meant it.

Welcome to the roller coaster ride called a startup.  Stuff like this happens all the time, sometimes good and sometimes not so good.  You learn from it and move on better for the experience and determined never to repeat the same mistakes twice.   I’m sure this wasn’t a fun experience for poor Dylan either. Being the cause of a few hours of chaotic calls and emails from several influential people within the very tech community that you cover that involved your editor and entire senior management team culminating with the CEO had to be a pretty dreadful outcome for him.  So it looks like everyone involved learned a hard lesson this week and I am sure everyone wants nothing more than to put it behind them and move on.  So that’s exactly what we are doing.

We are not yet sure of the consequences of the broken embargo. Who knows, maybe it will turn out to be a non-event.  Then again, maybe our $20k and two and a half months of hard work will have been for not. But whatever happens, we will press on (no pun intended) and live to fight another day.

UPDATE: We ended up getting tons of press, so disaster averted after all

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Decadence vs. Dedication

Last week I was invited to an all expense paid, five-star trip to Vail, Colorado to attend the American Ski Classic with my wife. The company that invited me is wooing venture capitalists and CEO’s of fast growing technology companies (i.e. prospective clients) on the trip for five nights and four days.   We would get paired with an Olympic skiing legend on a team that will compete in two days of racing, enjoy five days of dinners with the Olympians, catered slope-side lunches after racing, tickets to watch the pros race, and a free pair of race skis. OMG!

2011 Korbel American Ski Classic

They had invited a good friend of mine and his wife a few days before me and he declined. I told him he was nuts – “how on earth could you turn down such an amazing opportunity”, I said.  When they invited me I agonized over it for 24 hours, but ultimately so no as well.  So why did we have to turn them down? Was it conflict of interest or moral obligation? Hell no! If someone wants to offer me an all expensive trip to a five-star ski resort with absolutely no strings attached other than the common courtesy of considering them when we are in the market for their services then we are free and clear to accept.  No, the reason wasn’t nearly as complicated as that.  In fact, the reason is simply that we are too damned busy building and running our companies to take advantage of the many perks people dream about when they are working their way toward the top.  Oh, and here’s the thing about those fancy lunches and dinners we get invited pretty much every day of the week – they are work!  You are almost always entertaining clients or being entertained, which is really just an elegant way of saying you are selling or being sold. When you are “on” all day it is exhausting to be “on” all evening as well.  Of course we do these events at night because its our job to see and be seen, but truth be told most CEO’s just want to go home with their significant others, climb into their PJ’s and veg in front of the TV. Sure, we absolutely appreciate the invites and the people, but after a while fancy dinners aren’t so special anymore as the novelty quickly wears off.  Ultimately there is a pay-it-forward obligation affect to being invited to these things, so everyone gets what they want in the end.

Am I sitting here writing this post eating my heart out that I am not going to the American Ski Classic to be paired with an Olympic skier, sip Champagne, and hobnob with a bunch of other CEO’s and fancy people wearing my brand new race skis?  Oh God yes!  But I take comfort in knowing that if I continue to keep my head down and execute on our plan now my investors and I will have lots more opportunities like this to turn down in the future. So in the end its just a matter of delayed gratification.

In the meantime, I’ll study the itinerary below, close my eyes and imagine myself slope-side eating fancy food with fancy people and then live vicariously through my friends that did go on the trip when they get back (and yes, I blacked out the name of the company hosting the event in the hopes of getting invited again next year). Please feel free to join me on my imaginary trip to Vail.

American Ski Classic Itinerary

American Ski Classic Itinerary 2 of 2

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