In thinking about this recently I’ve realized people (and by association their company) can fall into several high level categories:

DIRECT & INSIGHTFUL “FROM THE GUT”:

• Provide clear direction on what they are looking for, steps/deadlines, and provide feedback as you go thru the process in timely manner
• Often get to salient differentiators quickly and leverage practical experience to guide their thoughts
• They give quick yes/no answers and tell you why they are going in a particular direction … even if not with you or your product.
• Their rationale for the decision passes the “sniff test” and you feel they paid attention to your ideas in appropriate manner.

Recently I’ve been raising money for a startup I’m heavily involved with.  We have seen a number of VC’s and mostly all have fallen into this bucket.  One in particular, however, stands out as a great example.  I’ll keep the name private for the moment — but you might figure out who it is.  I pitched him a few years ago when he was with another firm in the area for a different company I was with and about 20 minutes into the 1 hour meeting he said “guys I’m gonna pass … and here is why”.  At first it was a little difficult to take the feedback (and quick no) but upon reflection it was spot on and it allowed us to move on to more relevant targets (we eventually closed a round with more appropriate VCs).    This partner has now moved on to his own shop and I reached out a few weeks ago to see his interest in this new project. He quickly responded to email dialogs and set the meeting up in an appropriate window given calendars.  After our first meeting went 30 minutes over allocated time we had clear next steps, got clear feedback as we went along, calls returned promptly … and then a prompt NO!

OK … so the story didn’t have a happy ending — but regardless I still really liked the process, have a good feeling for the VC, gained insight on what he didn’t like/had issues with and we can continue on in funding process.

These types of people/companies are winners!  You may not always agree with the output but bet your money here and you will win!

CONSERVATIVE & DETAILED “FROM THE DETAILED DATA” :

• Want lots of analytical data and deep details (sometimes more than any others have asked for)
• Involve many people in the process
• Make decisions based on matrix comparison and after thorough technical research
• Takes a longer time to plan but execution is usually on target to goal dates
• Once they make a decision it is bought in from top to bottom and execution commences immediately

This style is often driven from the top of the organization and can really work well … if used appropriately (i.e. does not get too bogged down in irrelevant analytical detail and BS).  At a company I was with for much of the ’90s we DID NOT follow this decision making process and it was reflected in the well known culture of the company.  Sure we got things done fast — but often at a longer term cost. In contrast at my first startup we did spend a lot of time planning, looking at strategic implications and for the most part made decisions in a quick and clearly communicated fashion.  The success of that company and the market reputation we developed I can clearly equate to the decision process we utilized.

On the sales side of dealing with these companies you have a longer process than “from the gut” people — but as long as communication stays open these can often be the most rewarding wins and long term relationships.

While these companies/people are methodical and slower moving they are not likely to be down for long in tough markets and assuming they don’t trip over the curb stone the longer term horizon is likely well seen.  The trick here is to balance strategy and tactics!

SLOW MOVING & DYSFUNCTIONAL “WILL THEY EVER DECIDE ON ANYTHING”:

• Say they move fast … but they don’t and decisions drag for evvvvvver
• Say they are consensus driven … but they are not
• Say the will give honest feedback … but it is not provided
• Say they are going to be a great company … but it can’t be!

OK — this is pretty obvious and there are unfortunately too many of these types of companies, investors, and people out there right now.  The challenge is figuring out how to identify them so you don’t waste precious sales resources or personal time chasing them for funds, sales, or a job.

In running sales at my last company we called on a few of these types of companies.  They ended up wasting a lot of our time, ate up travel budgets, gave us false hopes and it took a lot of effort to get the internal team to walk away (which we correctly did before it became a larger problem). Oh and the one company I’m thinking about in particular is now in Chapter 11.

I admit its hard to walk away from a perspective customer who say’s all the right stuff about project funding, meets with you, returns calls every so often … but can never say no!

Its hard too to not go after a VC who you is with a firm that all indications are they are not doing investments or running out of money … but still meet with you!

Walking away from a potential job because the interview/recruiting process and company culture feels “Dysfunctional” is also hard but think about it … if they can’t make a decision during a RECRUITING process what will life be like as an employee!

I’m sure there are many other subsets of these types of companies and great examples but I’ve experienced all three of these distinct types in the last week or so and just couldn’t let it go without a comment.

Currently I’m helping three different teams raise money each in a unique market (Cloud Storage, Robotics, and Alt Energy) but all with the same challenges.  What I find amazing (and I guess refreshing for someone like me) is how similar the needs are between each company seeking to raise the funds and how with a really open team you can quickly see the problem in telling the story and embark on fixing it.  Honestly you do not have to be a domain expert you just have to listen well and apply common lessons from past experiences and the answers/ideas start to flow.

To understand what I’m talking about first lets look at VC traits as to craft a story you have to know your audience.  As a general rule VC’s are:

• Outgoing, personable, generally willing to listen, Type A … BUT
• Short attention span … if you don’t figure out and diffuse their major objection is likely to be within opening minutes your toast (more on that later)
• Feedback is weak and not often helpful as they don’t want to appear rude (“that idea just sucks”), want to preserve relationship, can’t share partner/firm dynamics and lastly don’t want to deal with time consuming counter arguments
• They often DO know more about the markets than they let on AND the competition you are going to face in coming years — but you have to listen carefully for signals in their questions to gain from that insight.
• Lastly they look at on average a deal or two a day at some level … they only do a few a year so pretty easy to say no to you if any hair raises on their neck!

So with all that against raising money and communicating your idea here are a few of the simple steps I follow when embarking on the process:

1. Develop a crisp story and refine constantly
2. Create a targeted and phased VC approach list and track progress/follow-up crisply
3. Have your customer & market references ready to go for 2nd level questions/diligence in various forms to meet different styles
4. Bring the right pitch team to meetings
5. Follow-up for feedback appropriately and with expectations in right place
6. Never lie and ALWAYS admit problems, concerns, communicate openly
7. Once they say no … it over.  REALLY
8. Don’t get discouraged

Lets quickly jump into each of the above area so I can explain further what I’m talking about because this list is pretty obvious — but here is the point … I’m amazed by how few people really do it!

STORY DEVELOPMENT:

There are great posts on what should be in a Exec Summary or VC pitch – HERE & HERE so I’m not going to cover that part.  What I’m going to comment on is the mechanics and mistakes I’ve seen.  First figure out what the likely objection is and bring it to the front on the deck.  For example if you think that VC’s may not know a lot about your end market or growth prospects get that on the table before you explain the solution.  If concerns are competitive in nature bring the competition slide right up front and say why you are different before you show product ideas.

What this does is kills the tendency we all have to listen to a pitch and decide why the idea won’t work. By eliminating the common objectives first people sit back and listen in a more appropriate frame of mind. I’ve even gotten up and verbally said “here are the three things you are likely concerned about X,Y, Z because we have heard this from others. Well in this presentation we are going to tell you why these concerns are unfounded and how we  have the ability to kick Big Guy Named Competitor, do have a unique go to market approach, and have the following four customers behind our idea and will leave you with an MP3 of their testimonials on the way out”.

Another tendency I’ve seen is to try and do too much in the first meeting and put too much information out.  My favorite technique to resolve which my CEO at Sitera taught me is to lay out all the slides on the conference room table and look at it from above.  You can really then see redundant information, which slides are too wordy and can go to pictures, and re-order your points in rapid fashion.

Last point on story development is time allocation.  It will take you 6-8 weeks before you are really ready to go and plan too to regularly schedule time once active to modify your existing approach and story.  Yes, that sounds like a lot of time and you can have draft decks for “friends of the company” before that period but remember it takes time to get crisp data and good at telling the story.  Don’t rush it and constantly rethink, change, dump slides/ideas you worked days on and question “will they get it”.  Remember you get one hour max on first meeting and they are not being dumb in not getting it (yes, I had someone say that to me once) it is your story they can’t get!

TARGET & TRACK:

Putting together a real approach strategy is critical.  It’s just like a sales pipeline you have to know who to target, understand the funnel, track responses and actions, and know when it is appropriate to ask for the order.

I like to break my approach list into these categories and approach the meetings as follows:

• “Friend of Mine/Company” — Tell them upfront you are pitching them first and only looking for feedback and issues.  Don’t expect investment.  You know partner very well and they know it is practice.  Pick 2-3 guys to talk to.  Keep it casual.
• “Initial Targets” — Local to your company, mid-size firms, domain knowledge with history of investing in your space and stage.  Pick 4-6 guys to target and then refine pitch.  This is not Madison Square Garden — but these guys are real so do it right. Odds are 1 may stay active .. but that’s OK its a big ocean.
• “A List” — OK now you are ready.  Hit the big guys.  The ones who are very active.  Pull out all the stops to get meetings.  I’d still stick with an approach list of about 10 and realize that will take about 30 days to really hit and schedule. So reality you will have two waves to refine your pitch.

OK … now the dilemma.  If you do it right life is good.  No further early pitches as you have enough action to feel like you are going deeper into DD with at least three firms.  However, life is never that good.  What to do next?

I always keep my list of “B’s” and “C’s”.  If my my meeting pipeline is looking bare I go to the next group on the list. I may also start thinking about strategic partnerships.  I’ve also refined my story a lot during this period and my deck from the “friend of mine” stage looks very different to what I’m pitching today.  I like it better!

DUE DILIGENCE MATERIALS:

This one is obvious but there are a few ideas I’ve used that work well. Here is a good post from Flybridge Partners on the DD process

First customer references.  You will need them and it is a big favor to get someone to go on the record with a VC.  It is also a little scary if you are not there to know how it is going to go. One trick I like is to record the customer interview session and then provide as an MP3 file to the VC.  Its actually quite easy to record (use a teleconference service and record feature) and then have a third party “interview” the customer as if they are a VC asking questions.  Of course you tell the person you are recording and can even tell them you will only send with permission.  Best part is you can ask questions that go to competition, why they picked you, etc and weave a great story.

Another good idea is to create an on-line extranet of all your DD documents.  This way you can simply give access to the room and even get records of what/when items were looked at.  Makes your company look professional too.

BRING THE RIGHT TEAM:

You need to bring at least two people to every VC meeting and maybe three.  Not only does it allow you to showcase your depth it allows for a better post mortum review and honest critique of the meeting.  There are however, things to avoid.  Many obvious but I’ve seen these happen … really. In early stage deals team dynamics are almost more important than the technical feasibility.  If VC’s sense any concern what so ever they will go with there gut and pass right away.  Here are some good rules to follow:

• Agree ahead of time who presents what and how much time to spend on topics.  Know who is QB.  They set the tone, pace, everything.  Follow their lead if they call an audible (i.e. VC walks in and doesn’t want to use the flow you have).
• Don’t correct/argue (even a little) the person talking on your team.  If a minor mistake let it slip or correct appropriately later but NEVER in challenging factor.
• Let everyone talk.  If you bring them to the meeting at least have them perform a task or address an area of expertise. Show em/ off.
• Presenter does not have to be CEO.  Sometimes VP of sales or marketing is simply better.  Have CEO do intro, financials, and leave “details” to others.
• Body language is important.  Yes — I’ve heard of people falling asleep on pitch team and looking at BB’s … NEVER, NEVER, NEVER!

FOLLOW-UP:

Some VC’s will caucus after your meeting and only give feedback on call after first meeting.  Don’t be surprised.  It is important to follow-up with an email after the meeting and get any questions/actions documented or out of the way.  If you don’t get feedback live in 48 hours by them reaching out … call and leave a message.  Wait … and call again 48 hours later.  Don’t be a pain but push for resolution.  By the way — if they are really in love they will start chasing you.

BE HONEST:

This goes really into story creation, DD preparation, and follow-up sections.  It is also obvious.  Look every business has a problem, every person has a failure, every plan has a weakness.  Admit it!  You might avoid an issue in meeting 1, 2, or 3 — but before they write that 7 figure check they will find it out.

My favorite story on this is from my Cabletron days.  The founders on Cabletron (which became a NYSE traded $1.6B annual rev company) could not raise VC money and the founders flunked a personality profile test they were subjected to per tales they told.  Didn’t stop em — they became members of Forbes richest by mid-90′s.

ONCE THEY SAY NO — MOVE ON:

I’ve never seen a VC revisit a “no” answer.  Even if one partner passes others will VERY RARELY look at the deal.  Many dynamics cause this — but if your are turned down don’t hold out hope of a re-connect.  Sure you can go back to friends in a firm and run stories and ideas by them but take them off the list and call’em what they are … PASSED!

DON’T GIVE UP:

The question is often asked … when should I go and get a real job, get the internal round, or close the company.  I’ve been involved with all of these thoughts personally.  I’ve had to close two companies when Series B or C could not be raised for various reasons and also had success when I thought the company was toast.  My favorite example is Sitera where we were really down to weeks in the bank and looking for a new lead.  Long story short — we got the lead and <12 months later sold the company for more and 25x return on capital!

Would welcome your thoughts on the Do’s and Don’t and experiences on raising money from the entreprenrual side!

To give you an idea of how simple it is (and cheap) lets play a game similar to the old “Price is Right” game show where I give a list of items and you guess how much it would cost.

Here goes:

1. Custom website domain for one year
2. Hosting service for your website
3. 100+ email accounts, group calendar, collaboration — with no advertising that you administer and control
4. Very professional well laid out website customized to your unique needs
5. Blog site with ability to post via web interface or mobile device
6. Twitter and LinkedIn, site customized to your needs (note I avoided Facebook for business stuff as I think that is more of use for personal stuff & family)
7. Ability to add pictures to your blog, twitter or other feeds
8. Search engine optimization
9. Google AdWords purchase

Well now guess …

10 years ago likely $100K and leave off items #5 thru #8.

2 years ago you could have all items but it would cost about $20K plus consulting to figure out what these things really meant and a very hard time convincing management to spend.

But if you guessed $17.95 for all of it in 2009 … YOU WIN!

Let me break it down as it is really amazing and how I created a very simple web presence myself for a project I’m working on:

• Website URL purchase (used GoDaddy and only selected service to buy the domain for 1 year w/coupon for $7.95 — avoid all the other add-on stuff they sell DO NOT NEED!)
• FREE* Web Hosting (used WordPress and mapped my custom URL to their site so when people go to wadeapp.com it is actually WordPress but hidden from user! Note I did need to purchase $10 credit for URL mapping service* to map to wadeapp.com and used PayPal to buy credit … couldn’t be easier.
• Group Email (Used Google Apps to have FREE email with custom addresses which I can setup and administer (i.e. wade@wadeapp.com or info@wadeapp.com) Note good instructions here too from WordPress on using GoogleApps and although looks daunting … very easy!
• Used the WordPress templates they have for free to pick a look I liked and then customized unique home page and sub-pages.  Don’t forget to use widgets for extra info!
• Signed up for Twitter to setup my Twitter name (wca1) and got the free TweetDeck application to make it easier to follow groups of people and reply (oh and I customized my Twitter background and applied it for a different look).  Note a good way to find people or conversations is to use Twitter Search or Twitter Location Finder Application
• Made sure my LinkedIn site I use for networking pointed to my website and also advertised my link in my profile
• Signed up for TwitPic to be able to send mobile pictures to my twitter account via mobile phone (check out http://twitter.com/wca1)
• By using keywords in Meta tag of word press blog I was able to start the SEO process
• Lastly used AdWords to purchase a few key search terms (like my name) so that if you Google “Wade Appelman” you find me quickly … it I only bid $.01 per click (guess I was cheap!)

One last thing — I didn’t need to setup a storefront to take in money or sell a product but if you do need a backend — check out this very cool product BravoCart. Other services I use regularly include Constant Contact and Siebel CRM onDemand but more on those usage models another time.

Now this whole effort took me about 4 hours at the most and I did it to learn the latest tools and try out the experience for a project I’m working on that is for another startup.

Try out these steps and tell me what you think and be blown away by the latest options if you haven’t tried it in the last … 3 months or so!!

I’ve told my friends over the years about the event (because no one understands that we have a holiday on Patriots Day in Massachusetts) and no one really gets it.  Sure they know guys 20+ years older than the actual participants dress in authentic clothing/uniforms and do a great job of bringing the story to light but they don’t get a sense for the event itself.  Pictures tell part of the story and of course the written word — but a well done video brings you right into the action.

The Boston Globe has a great piece that was posted today here.  I particularly enjoyed, however, the VIDEO and noted that it was created by a friend from town Joanne Rathe.  I know her as the staff photographer for the Globe and always look for her work.  I found this piece interesting because she has done an excellent job morphing from shooting stills to using multimedia to tell the story when required. Now maybe I’ll find out she has done this a lot — but regardless the newspaper world is moving to use “new media” and bringing new technology to bear and I think its great example of telling the story in a new way … using the same staff!  The Lexington Minuteman paper has a good set of links too for additional coverage.

Here is the video:

The experience for the end-user is fine as you can simply click the “play” button and sit back and watch/listen. 

Setting up the presentation is not straight forward.  To add an audio track you have to link to an .mp3 stored on some other location on the web and then thru a very clunky interface map your recording to the slides.  It also seemed to die on me a few times — but that was likely a workable bug. 

Bottom line — this is a great way to get out a message cheaply — it is not, however, ready for the average MARCOM employee without a little IT help.

Check out the example from Lightstorm Networks.

http://polarisdigitalmediasummit.wordpress.com/reading-materials/

The rest of the BLOG is also interesting … not only in terms of the content but the “openness” <if that’s a word>.  A great way to get a feel for the market as a reader … AND a great way to set new categories and influence the market if you are an attendee! 

It seems that besides the typical personality/stereotypes that exist in all teams (i.e. “the shouter”, “the paranoid one”, “the CEO favorite”, etc.) there is one thing they all have in common … they want personalized, individual sales tools that match their exact selling style, territory/customers, and that are ALWAY’S current.

The web with electronic publishing has taken us a long way since the days of 1000 brochures organized in the trunk of the car and literature rooms that took three people to manage.  Today (and really since Web 1.0) we have electronic product briefs, web based document management systems, and just a few paper brochures that you hand to customers which really serve as a way to remind them of your web address.

One thing I found, however, is that printing these materials really sucks!  Sometimes you really want a hard copy to send or show.  It is still more professional and like a snail mail thank you card has a lasting impact.  The problem with printing today is cost vs. quantity and of course the wide range of quality options not to mention shelf life of the piece as everyone is spolied by “electronic updates”.

I recently had a client that wanted to distribute a white paper and a series of product shots with high quality graphics and illustrations.  We toyed with creating the typical web page and .pdf white paper … but decided to go the old fashioned way.  Custom, Printed … BOOKS for each individual sales team member (about 25) AND targeted to the prospect.

After talking to Kinko’s (and about dying at cost for fairly low quality) I went on to discover MyPublisher.com after reading a Wall Street Journal Story about them.  We were able to very quickly create 25 custom books (11×15 full color bleed) with mat cover and send them to the sales force in less than 24 hours !!  I expect that now that we have a system in place we will deliver these types of materials on a regular basis.  Oh and by the way … no professional graphics person, agency, or admin personnel involved here.  Only the marketing and sales team members!

The team couldn’t believe it (actually neither could I …) and most importantly the customer reaction was fantastic.  I actually got a call from a fellow VP of marketing from one of our customers who was shown the book and wanted to know how we did it and the budget (less than $200).

Pretty cool example of how marketing in the Web 2.0 world has gotten to be pretty personal.

• Did the spam filter kill your email before they saw it ?
• Did they open it and ignore it?
• Did they hit your links?
• Which links did they hit?

And the list goes on. 

It kind of reminds me of junior high school when you tell a friend you like the girl in the science class and are going to ask her out if she gives you “the vibe” you hinted you wanted to see (no one likes to be turned down … so you are of course cautious). So you wait and wait … NO SIGNAL.  Same type of questions as today with business email, did she get the message or was she just ignoring you ??  

Well I’ve just tried a new Web 2.0 service that I’ve been waiting for since I first started doing emails 20 years ago … if I only had it 30 years ago in Jr. High I may have actually gotten that date with Mary S!

The tool is called Sales Genius and basically it tracks if the email you sent is opened by the recipient, what links they went to on your website (assuming they follow the main link you provided in the email), and then notifies you the SECOND they actually hit the site or open the mail.  The cool part is that it is very transparent to the recipient, easy to set up and send directly from Outlook, and sold as monthly service … so low cost. Now an inside sales rep can prioritize his calls to the contacts that have seen the mail, clicked the link, etc. No more guessing !!!

 IS THIS REALLY NEW?

Yes …  these tools have been around for a while if you were a savvy software guy, got IT and marketing support, and had days to create bulk mails … frankly they were never easy enough for an individual sales guy to use — so they were not. 

This one is and thats the key. 

I was skiing this week with  a bunch of sales guys and that’s why I tried the site.  They were talking about how they wanted to know this type of data but couldn’t get their IT and marketing guys to give them the relevant data they wanted.  I remembered seeing the funding announcement last week from Mohr-Davidow Ventures that they had done this deal so I checked it out.

I know now my mother hasn’t open my email to her from this AM, my wife has, still waiting on a few others … I’m now addicted to the email beep notification (kind of like the Southwest Airline ding)

Lets hope the spam filters do not kill this tool (maybe that’s why my mother never answers her email … its the filter !!) as it truly is a marketing and sales guy’s dream for a truly personalized sales approach.

Sure you need the crispness of your message in the “form” of a press release — but what about the ideas suggested in this article from Beaupre PR.  I think that it won’t be too long until we see this as the gold standard in how innovative companies get their news out. 

Time to reinvent the press release?

There is a movement bubbling in the PR blogosphere to re-invent the press release. It’s time that the old saw caught up to the new “social media” era of Web 2.0… in which news should be tagged, linked, syndicated, blogged, Digged, Flickred, MySpaced, and “conversationalized” online, proponents say.
 
The idea for the so-called new media press release stemmed from a call-to-arms blog posting titled Die! Press Release! Die! Die! by Tom Foremski, a former Financial Times reporter whose Silicon Valley Watcher blog is considered one of the most influential in U.S., according to Bacons.
 
The traditional press release is nearly useless, he argued, too heavy on spin and too light on the supporting facts, Web links and other resources journalists typically turn to flush out their stories. In his own words:  

How do you talk about all of your customers and market momentum in a way that is intuitive, innovative, and plain and simply — not just a boring list of names and stats? (i.e. “30 of the fortune 50 use our product”, or a web page with 1000 logo’s on it … yawn)

We all know the age old saying “a picture is worth a thousand words” — but again how do you do it with customers, and in many cases those that for a variety of reasons don’t or can’t be mentioned?  One great way to show this is through a demographic map.  Political campaigns have been doing it for years by coloring towns, counties, and States with their respective parties color as they get poll data to suggest voter preference.  But again, without costly polling and surveys how does a company use data it has to project real-time maps of its customers.

 Well I came across a really interesting idea when researching this problem.  Sun wanted to show momentum for its free Solaris O/S program and created a visual map to show all of the SYSTEMS that were using the product. It hit me over the head — wow 80,000 plus users and it was interactive so I could see which neighbors and regions were in fact using the product.  In other words … they sucked me in.

To do this they used a mapping tool that superimposed a red dot every place an installation occurs … right down to the street data (for privacy the really only show it to a zip code level).  You can then scroll out for a world view or zoom in for a specific regional view.  It even does the math to tell you how many systems are represented in a given view.   What is truly innovative is how they automatically track the users by correlating subscribers to their software update service to the mapping system — providing real time/automatic charts.

This is a great example of using data your customers are willing to provide (when they register for a download or auto update feature), applying web technologies to graph the data, and then use cyberspace (in this case Suns CEO blog) to tell the world about it.

For more details on how this map was created they cover it here. 

Again, another great example of using technology to tell a marketing story that is simple, powerful, and best of all something that people will remember.