Survive, then thrive.
Nice axiom, something that sounds like a cliche, and brushed off.
In times of crisis, you will want to focus your efforts on survival. In fact, every startup should begin with this kind of thinking… as a successful startup is an oxymoron.
What does that mean?
If you think about any new company, and their needs to get paying customers for their new and unproven value proposition – you will notice that it’s really an impossibility.
Here is an example dialog that any NewCo founder has had to wrestle with:
Founder: Hi, I would like to pitch you our new company NewCo, and the great new product we are launching that does XYZ.
Prospect: Great, do you have reference customers?
Founder: No.
Prospect: Do you have a case study of a similar business to mine, done by a third party to validate your claims and promises?
Founder: No.
Prospect: Do you have assurances that if I give you a shot, and implement your solution, that you will be in business next year? Do you have enough cash to survive?
Founder: No.
And so on…
In fact, the forces are against you when you are small and new, and the forces are with you when you are big and “old”.
Many founders deduce that giving away their product or service for free, is a way to handle the objections of the prospect. They think about it at first just for the trial/eval/POC. It will remove the objection of price, right?
Not so fast. In fact, you would not want to begin a free pilot, especially with larger companies.
Why?
The bigger the company, the more red-tape they have to go through to purchase anything, including your stuff. Whatever you think it will cost to do the pilot, in both time and money… double it.
If you think that it will take 2 months, 1 flight, and $30,000 of your time/services… then double it.
Nothing ever advances in the speed you imagine, as the buyer has so many other projects and priorities ongoing. If they ONLY dealt with one project, your project, and had no distractions – then maybe things would get done based on your inward looking estimates.
Back to survival. Even when you are not facing a crisis, you should focus your efforts on survival.
Why? Because you have limited resources before you either get paid, or will need more investment.
You have 24 hours in a day, you have so many folks on your team, you have so much money in the bank. Every minute the resources are depleted. As the saying goes, time is money.
Pop quiz:
You have one prospect who is committed to testing your service, and willing to pay you your travel expenses for a pilot of 45 days.
You have three other prospects who are willing to test your service, without paying anything, without any commitments.
What to do…
Most founders, especially first-timers will think “why not take them all, run four pilots?”
Makes sense, right?
But you can not give four companies the same level of attention. Yout commitment to success is all about “mind share” and your ability to focus on a few things that matter, for survival. Spreading your self, your team, your commitment and your mind share – can lead to spreading yourself too thin.
If you decided to take all four pilots, three months from now, the outcomes are:
1) All four prospects had a successful pilot, converted to paying customers and be references.
2) Some prospects had a successful pilot, those are converted to paying customers and and be references. Those who had a bad experience will either say nothing or something to anyone who asks.
3) No prospects had a successful pilot, they all did not convert to be paying customers and none will be a reference. Those who had a bad experience will either say nothing or something to anyone who asks.
Right?
Let’s play the odds game.
What would you say are the odds of outcome #1 if you only took ONE prospect, give it 100% of your attention and team’s mind share?
You see, even if you only take ONE, the outcome is NOT 100% success.
So any additional prospect you take on, simply divides your resources to smaller and smaller chunks.
If you focus on survival, you would rather take one paying prospect, who has a real business need to become an early adopter and a reference. That one prospect can help you learn, be more forgiving, and provide you with feedback.
Three pilots that have no commitments may only slow you down, drain your resources and may NEVER use the service, nor buy it, nor value it, nor be a reference to the next sale.
Remember the impossibility of the dialog every NewCo goes through? The only way to get out of it, is to have a reference customer. In fact, you change your sales strategy from evangelical selling to reference selling once you have a reference. It is that important.
Thus, you would rather fail with one prospect, learn and then move to the next vs. failing with all four.
Industries are notorious for sharing “back channel” references, and you do not want to burn yourself and the company.
Back to survival. Imagine that now you are facing a crisis, like a global pandemic like COVID-19 which makes everyone tighten their belts. What should you do to survive now?
Well, you should do more of the same if you run your company based on survival instincts. Otherwise, adopt the survival instincts and focus your scarce resources on what works, and do not spread yourself too thin.
References and quotes:
“Bad companies are destroyed by crisis, Good companies survive them, Great companies are improved by them.” – Andy Grove, Intel
When a startup is better off saying no to revenue?
