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5 very real problems that hold back B2B startups

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I have worked both at an enterprise size company and a startup trying to do business to business (B2B) sales. Here are my two cents on five problems you must overcome to succeed.

1) The “Everyone is a customer” problem

When you are building a product with a small team, you can’t afford everyone to be your customer. You just don’t have the resources. By narrowing it down to a segment or niche audience you are able to focus on the right customer pain points. Video ad server Videoplaza signed one of the biggest broadcasters in Sweden before even a line of code was written, and developed the entire product over 6 months in collaboration with that client.

2) Charge too Little

Microsoft can lock companies in for 12 months with $100,000/month with enterprise level software. SEO service Wincher charges €6/month. What’s the difference? Of course Microsoft has a future proof brand and an extensive support service. But also included are some consulting and training hours, and these are available for startups too. Set up your sales crew and start exploring your upsell options. In my opinion most startups charge to little, and Microsoft too much.

3) Not understanding how money works at Enterprises

Budgets are usually set once per year at a big company. Every department has a chunk of money to spend on investments like your company. Make sure you time it well in your sales cycle. Another strategy is to sell a basic trial for just under $500/month. A manager can usually charge this amount on her company credit card without hazzle.

4) Not recognizing the ecosystem

You need partners to grow your company. Get involved with the organizations setting the standards in your industry. They talk to all the big guys. If you are building your company on top of existing infrastructure like Facebook or Apple, you should get involved with them to get them to promote you to their clients. Later on, you can increase the value and reach of your product by letting other companies build upon it. Videoplaza has several ad format suppliers, ad networks, ad analytics companies and video players that have integrated with them.

5) Not preparing to go global

If you are in the US, China or India your market size will help you to get big, but if you are launching in a European country, make sure you are not just a local player in 5 years or you will be eaten.

Please add more deal breakers in the comments or social media!

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Why I practice Code Therapy

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For me programming has always been a very creative activity, like drawing, playing an instrument or gardening. There is something about sitting in front of a computer and realising that there are endless possibilities to create something almost magical, if I just put my mind to it and figure out how it works.

I started at a relatively young age of 14 to explore the different possibilities with Amiga and PCs. By then it was all about games and making pretty graphics float around on the screen. The big revolution came of course with the Internet and web browser. Thanks to HTML it became even easier to create something colourful and best of all; I could show it to anyone by sending a link in an email. Few things have blown my mind more than that.

These days I don’t work as a programmer any longer. I realised I would not be the best of what I did and I found it more compelling to focus on the business side of what the products could do, rather than the actual code writing.

So I practice what I’d like to call Code Therapy instead. I sit for hours on my spare time and build small products and services with the few programming skills I have. Sometimes I explore a new framework for responsive design or implement a small user login against a new database or test integration possibilities against different social media services.

I have probably about 50 or 60 unfinished projects on my computers. For some of them I of course initially thought they would make pretty decent products one day, but I did not have the time or motivation to finish them. About ten years ago this was rather depressing. Why could I not get my products out there? But I later realised that the products that I didn’t finish wasn’t really that awesome to begin with. And it wasn’t a waste of time. It was practice, it was exercising my brain, it was creative. Most of the code was also later used in other products, that did go live.

The most exciting thing about this is that when I talk to other developers, almost all of them are doing the same thing! They build stuff and leave it to grow old on their computers. It’s just early sketches. A part of their legacy as code artists.

For me the Code Therapy helps me understand what new technologies can offer and what business opportunities we can develop from it. Also it’s a way for me to escape reality and put my mind to work, solving a puzzle I created myself with pieces I find on the Internet.

I hope more developers will stop feeling bad about their unfinished projects and realise it’s not a waste of your time. It helps you grow. Personally I would never hire a programmer who was not coding on his/her free time. Please send me your thought via twitter or the comments below.

Photo by: Riebart

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3 contradicting definitions of mobile strategy

“We need to go mobile”. Well, what does is mean? Here are 3 definitions of “mobile” that totally contradict each other, and you need to consider them all!

In a world where “mobile first” is a mantra for new startups and expressions like “adopt to mobile or die” scares and confuses the established market leaders I think it’s time to punch a hole in the bubble and define what we really mean.

1) The mobile technology

When is a device mobile? When you can carry it around? in that case, everything from laptops to mobile phones are mobile. But that’s rarely what we mean. We usually mean “mobile phones”, but the concept recently became more complex with tablets entering the arena.

What this really boils down to is that mobile phones and tablets are built on a different platform than old fashion computers with different user behaviour. We use touch and gestures rather than keyboard and mouse. We use apps over surfing the web. Your strategy for mobile technology need to include how your user will use your product. Are you building an app or a website. If you are using video or audio, is it in a format that is supported by mobile devices? Can you (and should you) use the same third party services like before, like ad server or analytics tracker?

2) The mobile screens

Screens in different sizes have been around since the dawn of Internet, and in the beginning it was a relatively small variety. With phones and tablets getting access to the internet, the previously rather small issue became larger and poured gasoline on the fire for trends like responsive web design.

Adapting to the different screens is not a mobile strategy, but we like to call it that because it’s phones and tablets that look bad. Today, there are hundreds of screen sizes – from smart TVs to mobile phones, so you need to have a scalable screen strategy for different ways of viewing your data in your app or website.

3) The mobile customer

Your customer can user your product anywhere. If they can’t you are doing it wrong. But with mobility comes lots of opportunities and considerations. Your users’ connection to the internet can vary a lot. They can use your product in the comfort of their home, abroad or for just five minutes on the bus.

For an e-commerce company this is particularly important. In what location and when are customers likely to develop purchasing behaviour. Are there some products that are more interesting when they are at work or at home? When are they likely to show something they found online to a friend? Are they more likely to discover a product on Facebook than on Google when they are on the bus? When will the customer complete a purchase transaction? Your strategy for the mobile customer has very little to do with technology and very much to do with marketing. Be sure to get the strategy right and know your customer.

These three perspectives are scratching the surface of ”mobile” and are closely tied to how we as consumers (and producers) are developing new user behaviours. I would love to hear your thoughts on this.

Picture by: Garry Knight (CC)

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Time is always a Billion dollar opportunity

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The old expression “Time is money” is true. Time is the only thing every person have about equal amounts of in this world and that’s why we get so frustrated when we are wasting it on something. Turned the other way around it’s also a master unique selling point for entrepreneurs.

Lew Cirne the founder New relic, also founded a company called Wily, built to make the programming language Java self diagnostic while running. This is pretty standard stuff these days but not when Cirne started. The product became a massive success, and why? The software saved hours of waiting and troubleshooting. As Cirne puts it “Good software doesn’t waste users’ precious time, and makes those hours spent in front of the screen more pleasant and more productive.” If you haven’t listened to his session on the Stanford Entrepreneurial Thought Leader series, do that.

Another good example is Spotify. When they launched there was already free music available online, via bittorrent and MP3 sites. What Spotify did was to make it a more convenient experience by offering you to instantly find and play a song, with a few clicks. Suddenly there was no need to surf endless sites cluttered with porn ads to find the best version of a favourite song, and then wait for it to download before you could listen to it.

Our time is most valuable when we feel we have little of it. We want to have time for both family and work, need to travel far or just to manage many projects at once. TechnologyAdvice.com is a company specialized in saving time for companies by helping them choose the right software platform for their infrastructure. Pricerunner and other price comparison sites focus on getting the best comparison on products, saving you hours of time to browse the web for reviews and information.

There are countless other companies that optimise for time. Google being the closest to mind spent the better part of their business getting the one thing you are looking before your eyes in a flash.

To save people time or make the time they spend valuable is an amazing opportunity to grow a really successful business.

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The foolproof way to prioritise tasks in agile development

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Which is the most important task to work on right now? When working in an agile environment, this needs to be crystal clear to everybody involved. Is it a newly discovered priority 1 bug or maybe the most critical feature for this sprint? Who decides? The product manager, the team or the stakeholder that shouts the most? I’ve seen it all in many organisations and then only way to get around it really is to agree on a way to measure what’s critical.

The impact matrix is one of many ways to prioritise among user stories, bugs and minor features and to me it’s close to foolproof. Why? Because any way you use this, it will make a big impact for your product and it’s also really easy to use.

Just ask these two questions for every task: “How many of our users will this affect?” and “How often will the average user benefit from it?” Then use the scales and place your task in one of the squares. Top right tasks are high priority!

You can do this during sprint planning or in the middle of a sprint. It doesn’t matter, because the answer should always be the same.
Here is a Google Doc with the matrix ready for you to use today!
https://docs.google.com/spreadsheet/ccc?key=0Ai4ooumOasgddF9kY3hkS1F3ai05REwwNDdZRWl5R3c&usp=sharing

For most tasks it will be easy to use it, and for some cases harder. For example: If you’re looking to build a tracking-feature that will allow marketing to acquire ten times as many users as before, this needs to be measured on that scale. Not that it’s 4 people at marketing using a feature often.

This is not my invention, but unfortunately I have lost the source (a blog post). If you know it’s origin, please notify me and I’ll add it. Also I’d like to test this on non tech work too, as it could be used in any department. Let me know if you’ll try it!

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3 key reasons to why User retention is your most important metric

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What’s Your most important Key Performance Indicator (KPI)? New users? Sales per day? Website visitors? I would argue that they are all secondary to User Retention, i.e. retaining users and make to come back after one day, one week and one month. Here’s why:

  1. User retention is the most accurate metrics to show that people like your product or service. As Nir Eyal puts it in his great book “Hooked”; You want to help your users develop a habit of using your product.  The higher retention you have in the long run, the happier your users are and the more likely they are to recommend your product to a friend.
  2. Forget about new users for a second. It’s nice to see growth, but it’s worthless without people coming back. If less than 30% of your users are coming back one week after signing up or less than 20% of them are coming back after one month, then stop spending money on marketing and social media posts. Your funnel is leaking and you need to fix it. These numbers are of course different if you are selling cars on a website, then if you are trying to get people on board a new social network, but it’s a good ballpark figure.
  3. Sales and user retention are closely correlated. The more people are getting involved with your brand and your product, the more likely they are to buy something. If you constantly get them to come back to experience something new, reward them for their progress and create a habit, your sales will come.

So how do you do it? Make sure to set up proper cohort analysis of daily new users and track their 2nd day, 2nd week and 2nd month retention. How you define retention is up to you. In it’s basic form it’s just people coming back and opening an app or visiting a webpage. You could also tie it to some key product actions like logins or posting some user generated content.

Google Analytics can’t do cohort analysis (as far as I know), so I recommend you use a service like Mixpanel or Localytics.

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The battle cry for your startup

Let me tell you the story of why you are here, why you do what you do and why you will save us all.

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Friends and allies, we are on a mission.
The enemy is destroying our land. For too long have we stood by and let our brothers and sisters fall victim for the oppression of the tyrant <insert main competitor>. This beast has put his claws into innocent people all over the world and for too long has he ruled the world. But fear not. This beast is not a god. He can be hurt and even slayed.

The beast rely on his followers. We will free these followers one by one from his iron grip and bring them into the light. It has already begun. The first person to go free is Annie Appleseed. Annie is <insert target customer age> years old, <insert occupation> by trade and has a passion for overcoming <insert customer problem>.

We have given her the tools she needs to shine. Annie long walked in the shadows of doubt, thinking she would never be more than a peasant, never destined for greatness. We reached out to Annie through <insert primary marketing channel> and solved her agony with <insert your USP>. Annie rose and now stand tall. She donates <insert LTV> gold to help our cause as long as we stay true to our word.

Annie is just the first wave. Many more will join in but be careful brothers and sisters. The beast does not like rebellions. He will retaliate with furious anger and great force. Only by sticking true to our main advantage will we succeed: <insert competitive edge>. This is why the people will follow us.

We cannot do this alone. We are seeking allies in every corner of the world that will help us spread the message of salvation. We are forming a companionship with <key growth partner> to help us out. Even though they see the light their help will not come cheap. Fortunately we have received intel on that they need <insert partner benefit>, which we can provide.

Brothers and sisters. It’s time to pick up our weapons of salvation and free this land!
It will be a journey of blood sweat and tears, but in the end we will harvest the riches of our work and bring prosperity to our world.

To arms!

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From starting to working at – the story of Osom

osom-wireframeI work at Osom. I used to say “I’m starting a company”, but these days I’m not starting, I’m working. So what’s the difference?

About a year ago, I met with Anton Johansson, at the time CMO at Twingly. We had lunch and talked about how much we loved startups and discussed the exciting companies emerging in Sweden. I had quit my job at Videoplaza just before that and was now looking for a new passion fire up my engine. Then we said goodbye.

A month later two Twingly guys popped up in Stockholm, Anton and Marcus. They wanted to start a company. I had never met Marcus before, but after meeting som 100+ devs in my life, I quickly realized that this guy was the real deal. We had a founding team, but what should we do? I joked about the founding of HP anecdote from Good to Great, where Hewlett and Packard in their original business plan stated who the founders were but had no idea on what the product should be or who the customer was.

We dug deep into what we knew, the trends of e-commerce and social, to find what we should build with our company. Eventually we found a personal need for a smooth, mobile classified ads service with focus on inspirational and social shopping. The idea of Osom spired and our level of excitement rose by the minute! We had fallen in love with the features and social behaviour of Instagram so this came be the foundation of our tool.

We talked about features, started making wireframes, threw away some bad ideas we had the week before and started playing around with a backend model. At the same time we started meeting with great people we know to toss the idea around and get feedback. We got great advice on how customer acquisition from the launch of Avito in Russia, great feedback on product UX from Spotify and great industry insights from leading classified sites executives. The honeymoon was over, and this was the wakeup call. This is much bigger and harder than we realized. I’ve heard this from entrepreneurs all the time and now I said it myself.

Focus. We needed to ship an awesome product and we needed lots of buyers and sellers. There’s a chicken and egg problem with marketplaces, that we needed to solve. We focused on getting sellers onboard. Still, this was a general idea and we needed to pin it down to a niche tribe of customers to start or spend a billion dollars on marketing. That’s not the startup way. To go big, you need to start small. After some analyzing we basically choose fashion and vintage enthusiasts which has a strong social community.

Ok, we had an idea and a founding team. We needed a name. We tried a great variety of names with embarrassing candidates like “Funk dunk”, “Papski” and “Nine Camels”. Yeah. I know… Then “Osom” came along. It grew on us and stuck. Yay! But wait! WTF? There is already an app in the App store with the name Osom. It’s some vague social media reputation thingie. Did we change the name? No. We choose another name in the App store. It’s more important to have a sticky name than a perfect domain name or app name.

So, how did we build the app? No one in our team was fluent in Objective-C at first. If we were to build an iOS app, we needed more people. I got in touch with Markus and Christoffer from a common connection (who I owe a beer). Both working with cutting edge iOS and Web development at Modern Times Group – Viasat. It was a great meeting and somehow I convinced them to meet with Anton and Marcus. The chemistry was there. After a couple of beers we had one of the best startup teams in Sweden and could start building a product for real!

Lot’s of things happend during the fall of 2012. We registered the company Osom AB, The Osom app lauched as a prototype. Anton pitched the idea at Pirate summit in Köln and won a price. We started putting people on the waiting list for the app to be launched at getosom.com.

osom screenshotIn 2013 awesome designer Eric joined the team and put the final spark in our app. We moved into our first office. Anton and I made Osom’s first public conference speak at SSMX in Stockholm.

Osom successfully launched in the app in App Store, April 2013.

 

 

And this is where the starting part ends.

 

Nowadays, I’m working at Osom. I’m doing customer acquisition, partnerships and managing our product development. I’m talking to users on a daily basis, feeling their agony and happiness. We are actually growing faster than I originally anticipated, but we have much more work to too.

It’s going to be a hell of a ride.

osom-group

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Growth Case lessons learned from Billion dollar companies

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How do you grow a company really, really big? I read this great article called “The Surest Way To Build A Billion-Dollar Internet Company”, by James Slavet, partner at venture capital firm Greylock. Slavet brings up the few companies (Amazon, Yahoo, Skype, Dropbox and others) that actually crossed the magical line of having a billion dollar valuation in the US and tries to deduct some key components on why these companies succeeded. His conclusion from looking at the companies reads:

the best way to create a consumer Internet company worth north of a billion dollars is to build a digital transaction business – a company that connects buyers and sellers so they can more efficiently transact.

This got me thinking.

The better part of the companies in the article fit under that description in one way or another. But is this what they set out to do in the first place or when did they find their path?

Paypal was originally two companies called Confinity and X.com. They were both in the financial space trying to solve email payments and beamed transactions between palm pilots, which were pretty much the iphone of that era. After a successful merger they founded Paypal. Thanks to Ebay, Paypal managed to grow a substantial loyal user base that even put Ebay’s built in payment service (“ebay payments”) out of business. Eventually Ebay acquired Paypal and the rest is history.

So what about Ebay?

In 1995 Programmer Pierre Omidyar built “AuctionWeb” as a part of his personal website. In 1996, they made a licensing deal with Electronic Travel Auction to sell plane tickets. The service grew phenomenally well and ran 2 million auctions in 1997. The company, changed it name to Ebay, raised some money and took the company public in 1998.

Among the more recent examples we find Dropbox and AirBnB, both yCombinator graduates.

Dropbox was founded by MIT student Drew Houston for his personal use. He then went through the yCombinator program with a bit of seed funding and launched at the Techcrunch50 conference. The service grew rapidly due to some clever viral features, like sharing folders with people that are not yet subscribers and getting more space by inviting friends and connecting more devices.

An then there was AirBnB. Brian Chesky and Joe Gebbia had a problem. They couldn’t afford expensive hotels when visiting conferences. As a way to make money and help out people visiting San Fransisco for conferences, they rented out air mattresses in their livingroom. As a bonus the founders launched a special brand of breakfast cereal which was a part of the Airbnb experience. The founders joined the yCombinator program and got famous for the concept of “growth hacking”, getting a lot of users from the Craigslist house rental section. The services grew and now, AirBnB has a global presence with a billion dollar valuation.

That’s it. Four companies that tweaked their path to grow where the clients appear.

Further reading:
– Thiel in Talks to Invest in Airbnb at $2.5 Billion Valuation
– Dropbox Hits 100 Million Users Says Drew Houston

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Why your USP has nothing to do with your product

Ok, you’ve built a product and now you’re trying to nail the product’s Unique Selling Proposition (USP) to create a compelling marketing message. Let me stop you right there.

The first mistake we do is to treat the USP as a product feature. It’s not. The USP is about the customer. It’s either what the customer can do (or as Kathy Sierra puts it; Kick ass at) or it is what the customer can identify with.

The classic USP-question is “Why should I buy from you instead of your competitors?” The easiest way to solve that is to put your self in your customer’s shoes.

How to kick ass

We have several internal drives or motivators that are the reason why we do what we do. I’ll leave it for other bloggers to elaborate on the various drives, but in designing a product or service you must have an idea what the person using it is doing and feeling.

A game for example, may satisfy many different drives at different stages. MMORPGs can satisfy the need to be social in a safe environment with other people that share a common interest. It also let’s you compete and overcome challenges which gives you a sense of purpose and fulfillment. By getting better at playing the game you overcome even more difficult challenges and are fed with new obstacles into a continuous feedback loop of challenge and achieve.

The basic design is to quickly be able to kick ass at something and then find a route to master in small steps. Instagram is a good example. Snap a picture and add a filter. “Wow, my picture looks awesome. I want to share this with my friends”. Then you play around with filters, maybe read up on basic iphone photography or import photos from your DSLR camera to Instagram to kick ass even further.

When designing your USP, highlight what the user can do, or even better what results she can achieve. Another important step here is to “be remarkable”. Your USP had better be something worthy of remark, or at least cause a raised eyebrow of interest.

  1. Five guys playing on one guitar is remarkable
  2. Five guys playing without a guitar is just another acapella song

Your new screwdriver is not “ten times stronger”. You can “cut the build time of your new kitchen in half and leave time to be with your kids” or “if you are left-handed, you can now do your carpentry without getting blisters in your hand”.

The benefit is a verb.

How to identify with something

Should I buy a watch from Breitling or Casio? That’s easy! It’s a matter if you are rich or poor! Right? Well, what about Rolex, Breitling or Omega? The price difference is there still but not as obvious. It comes down to who I am and how I see myself. So you look at your friends but also the brand advertising. The latest James Bond actor is the poster boy for Omega and some American celebrity millionaire is showing of a gold Rolex on another poster. Who of the two do you like best? Who do you identify yourself with.

The USP in this case is a way for your customers to find a connection or bond to your brand, business or product without having a clear verb on why something will make me do something better. Maybe I feel superior no matter which product I use. “Hey man, stop trying to sell me an Android phone. I’m an Apple fan!“. You didn’t compare your apple TV to other Internet connected digital media receivers. You were wow-ed by your friend’s iPhone two years ago. So, you just KNOW Apple produces superior products…

The definition of a USP for your brand are values that run through your entire marketing from the choice of people representing your brand, to the tone in your advertising and graphical presentation. It should be something that the customer can identity with, feel safe with and rely on.

If you are having trouble finding values, try defining what the customer should feel when she encounters your brand or product or what is the first sentence coming out of their mouth is

  • Playful – Let me try!
  • Comfortable – Yes, I found what I was looking for!
  • Nostalgic – No way!
  • Intrigued – What’s that?
  • Shocked – WTF!?
  • Inspired – Wow, look at that!
  • Relieved – Finally!
  • Creative – I bet I can control this with my iPhone

That’s it for now. I will do a dive into who the customer is in a later post. Please comment on this.