

The startup’s ‘customer partners’ slide: All those logos and no dollars? - jzfried
http://venturebeat.com/2014/11/22/the-startups-customer-partners-slide-all-those-logos-and-no-dollars/

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rdlecler1
In another world this would be good advice, but in the hyper competitive world
of fundraising , entrepreneurs are unfortunately incentivized to over promise
and under deliver because most startups are not Google or Facebook. Being
honest with investors can be construed as doubt. Until we reward for integrity
and honest dialogue expect strong selection for sociopathic entrepreneurs.

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nraynaud
I can confirm that. And I can confirm that investors are unable to tell if a
B2B company has actually already found a product/market fit or not.

But I have to say that there is a part of investor responsibility too (at
least in France), by using the risk taking tax breaks on the fund and then
refusing to invest it with people who have not yet found the right
product/market fit, everybody is incentivized to lie about their development
stage. And in B2B you can lie buy presenting revenue generated through selling
professional services.

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drsim
If you have a clear plan to productise the professional services and not
provide them using people on your payroll, and make this transparent to
investors, it is in no way lying. In fact, I'd call it a smart way to
kickstart a two-sided marketplace.

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nraynaud
This not how I have seen it happen.

First, politically I think that when creating your product you might want to
keep the cards close to your chest, so in-house consultants who lunch
alternatively with the product engineers and the customers is a way to do
that. My second political idea (gotten from "crossing the chasm") is that you
don't kickstart platforms, you start a killer application and if you get
success, you open it to third parties, you can't start as a platform, you
mutate into it.

What I have seen happen tho, is sales people pressured or rewarded for either
the generated revenue or the gross margin they generate. The easiest way to
generate a sale is by selling man hour, because the delivery date is set, it
can be quick at the quarter's or fiscal year's end, and there is no real
fiddly evaluation of the delivered features (the consultant was there or not).
The other trope is that sales people are attracted by big companies (for the
brand recognition and the gross margin), where investments are complex and
slow to move on, but man hours are bought on the running budget, not on
investment, and the sale can move way quicker.

And so, by selling man hours at famous big co, you can put a logo and some
revenue on your investor's slides. You still haven't found a product/market
fit but you have earned some time before it is discovered.

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drsim
If you're building a marketplace why would you not seed it with what you have
easiest access to? If you can perform a service in-house that will in future
be provided by a marketplace seller and the demand is already there: do it.

Users of my free app were asking for services that I could perform. I didn't
want to perform the services myself forever but I had zero platform, processes
and people in place to achieve that on day one. So I performed the services
myself.

This gave me a solid understanding of the customer problem and what I'd need
to code up to enable service providers to perform the service directly with
customers.

Now I perform zero services with all of my service providers connecting
directly with customers. We take a percentage cut as a true marketplace.

The chicken and egg problem of two-sided marketplaces is hard. If you're
building a meals-on-wheels service and you need to cook the meals yourself to
get the supply side going: do it.

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jdawg77
I've done the logo dance more than a few times as the lead marketer at a
startup, suggested it to the CEO or done so myself for a business. A few
things I don't see in this article which are reality when dealing with a
massively large contract (say with one of the top 5 internet companies at the
time).

* Preferential payment terms - a large co will say, "If you offer better pricing than you offer to us, you'll automatically reduce our rate to the new low rate offered." This ensures you can't price gouge them, but it also ensures that if you price correctly, telling other businesses that's your lowest rate will potentially make them more likely to close.

* Large customers that are household names instills a trust with a firm that helps them close deals with companies that are smaller in the B2B space in particular (5+ years in sales doing professional services, friends who run similar firms, etc).

* It's not only sociopaths (per the first comment above, lol) who can close deals with name brand firms. I fully agree it's probable some who raise money are sociopaths.

The phrase, "Manage your own psychology," has really stuck with me after I
heard from Sam Altman in that Stanford class - knowing more than a few people
who've been under a lot of stress in their role over my life has really helped
me understand that we all crack in our own unique ways when the pressure
cooker starts to heat up. (edit, spelling).

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aomurphy
I thought this was going to be about pretending to be a larger company. For
years my mom pretended to be my dad's secretary when people called his work
number and he wasn't around, bringing the size of the company up 200%.

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barking
Sorry for being pedantic but I think you meant 100%

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andrewljohnson
The title should be changed - inaccurate and isn't the original title either.

This isn't about pretending to be big, it's about pretending to have real
signed customers during a pitch. I expected it to be about pretending to be
big by puffing up team size.

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busterarm
Integrity is an increasingly rare and valuable commodity.

