Everyone has a plan until they get punched in the mouth — Mike Tyson
“This seems pretty simple to me. You know exactly who your customers are. Heck, there is probably 400-500 decision makers that can make you business. So, what are you waiting for?” said our mentor after an excruciating deep dive into exactly how much we can save our potential customers.
Welcome to figuring out the one metric that matters. A place where you cannot hide from the fact that you hate to sell what you created. For those of you who develop products for a living, you know exactly what I’m talking about — switching from developer to salesman.
I don’t think I have ever met a product development person who likes selling what they created. I just think it’s one of those self-selection type of things. Kinda like the reason I’m an engineer and not a doctor — blood and guts. Yuck!
Get Your Priorities Straight
It’s a funny feeling to be told, in no uncertain terms, that you are avoiding doing what you know in your gut you must do even if scares the living shit out of you. Sure, you have been on plenty of sales calls. Heck, you’re the genius who invented the product in the first place yet somehow, it’s different when you are just “the tech guy” brought in to answer questions. Why is it so hard to sell what you created? Is it because you are too close to it?
The feeling is kinda like someone saying that your baby is ugly, when the fact is, Gerber won’t be knocking on your door anytime soon. I know it’s downright scary to step out into the sales void and confront all of the criticism even though, deep down in the bowels in your soul, you know will make your company better.
Our distro team meetings with our mentor were the wakeup call we needed to kick us into high gear and define the metrics that matter the most to us.
The One Metric That Matters
Businesses can look at many different metics but when you are part of an accelerator, it’s best to only focus on one.
The one metric that matters can really be anything you and your team choose but it has to do one thing and one thing only — drive growth. Growth (as well as accelerating growth) is what all investors want to see and the quicker you can grow and maintain growth, the better your story will be.
For Lab Sensor Solutions, the one metric that matters is trials. In our business, Sensors as a Service for healthcare, most customers don’t have the time to understand what we do yet they have a big need to monitor their samples. They also want to “try before they buy”, which means a trial.
Trials (both paid and free) are a great way to gage customer interest and get them to try your product. That’s why most B2B (and B2C) SaaS platforms have either a 14 day or 30 day trial to wet a customers appetite. It’s a great way to see how much interest is out there in the marketplace.
Forcing functions are those events that force someone to make a decision. Forcing functions can be short term (e.g. 15% off this month) or longer term (e.g. Implementation of the Affordable Care Act). These forcing functions are different for every company. As a company, you need to understand what is going to force your one metric that matters up and to the right. No easy task.
We had three forcing functions in our market place: ACA, Medicare reimbursement and auditors cracking down on our customers. All of these forcing functions were creating market demand for our product and that should show in the one metric that matters.
Product Market Fit
Hand in hand with forcing functions is whether or not whatever you build actually has a market. This is a pretty steady drum beat from Marvin and the team because a product that fits the market should be growing rapidly. If you have a product that does not exactly fit your market then, adoption will be slow and all of your attempts to force adoption will either not move the needle enough or flat out fail.
Product market fit can be a tricky beast since markets are all about timing. If you have the timing right, then adoption should be brisk. Get the timing wrong and you’ll have to really think long and hard about exactly what you are doing and if the market is ready for your product. This then brings up the question that most founders dread — pivot to a new product or market.
You Should Pivot To …
Pivoting sucks. No if ands or butts about it. Mind you that even though pivoting sucks, if it has to be done, you just have to do it. Plenty of companies at 500 pivoted once they were in the program. Even more were strongly encouraged to pivot to something that would adopt faster. Even my company toyed with the idea of pivoting to something easier. We even took meetings to figure out the new market and it’s dynamics.
In the end, we decided to not pivot because our one metric that matters was growing and we saw a dynamic in the marketplace that was rapidly making our customers start to pay attention. Sometimes, you just have to trust your gut and wait it out.
Nothing Focuses the Mind Like A Hanging
Metrics matter. Growth metics matter the most. Going into demo day, you want your metrics to wow investors. In fact, if you could only put up one slide, it would be your traction slide. This singular focus will make it much easier to raise money and set you up for the grand finale — demo day.
Demo day hangs over you like the hang mans noose. Your only chance at a pardon is to have killer metrics and pitch like hell. More on that in the next post.
The next post up deals with the best aspect of 500 Startups — pitch prep. Pitch prep is one of the best aspects of 500 Startups. Once I post that one, I’ll link to it here.
This post is part of a three part series on my companies experience at 500 startups. If you found this out of order, the best place for you to start is here.