Sunday, June 28, 2015

Thanks Ed!

I would like to thank Ed Zitron for dramatically elevating our firm's profile!
Jason Lemkin introduced Ed to Storm.  Ed is an unusual PR person.  He is the anti-PR PR person, as illustrated in his Newsweek interview, A Conversation with the World's Most Self-Loathing PR person.

Despite Jason's endorsement, I was a natural skeptic after working with and seeing numerous PR firms and people.  Notwithstanding my initial skepticism, Ed has significantly helped Storm's PR by helping both the media savvy (like Jason Lemkin and his SaaStr efforts) and the media un-savvy (like myself).  What is his secret sauce?  He finds and extracts the authentic value from everyone and designs the right PR strategy to showcase that authentic value for that person.  For example, he suggested and arranged for my interview with Adam Bryant from the New York Times, who published today an interview with me in his Corner Office, called "Tae Hea Nahm of Storm Ventures:  A Believer and a Skeptic in One."  
I have been avid reader of Adam Bryant's Corner Office column, but never thought about getting interviewed by Adam -- until meeting Ed. 

Ed, thanks for all your help!!

Achieving Product Market Fit with Tracking Spreadsheet

In achieving Product Market Fit, I find it helpful to create a comprehensive, tracking spreadsheet, as shown below where each row is a potential customer.
The first section in the spreadsheet summarizes the Ideal Target Customer -- who is the customer? who is the buyer? the person's title and department? what industry is the customer from?  The title is extremely important, since you can later target LinkedIn and search for that title.  The industry/department can also help focus the company's demand generation efforts.

The second section summarizes the Use Case -- Name of use case, # of active users, usage metrics and key results (benefits) resulting from using the product.  Early product management is about reducing friction -- reducing the time to value through better onboarding, reporting, ease of use, ...

The third section summarizes the Value Proposition -- What is it? How to value it? What price is the customer is willing to pay? What are the alternatives (who, pricing and what are their issues) -- some may be internal solutions?

The fourth section summarizes the timeline -- source to the customer, and then dates of the 1st Mtg, 1st Trial and PO.  This provides the early data for the sales and marketing model.

The fifth section is for customer anecdotes and other comments.

This spreadsheet is an organic document.  I normally see this spreadsheet expanding significantly (ie, adding more columns), as the company is looking for Product Market Fit. But, after PMF, only few columns and rows become important.

We have done well investing in companies prior to Product Market Fit (Airespace and MobileIron), But we are also very interested in B2B software companies that have found very early Product Market Fit, especially since we have experience accelerating early growth and helping through the entire startup journey.

Sunday, June 21, 2015

Finding Early Acceleration from Product Market Fit

After achieving Product Market Fit (ie finding the Ideal Customer Use Case), the company should be able to accelerate early growth by getting more customers just like the Ideal Target Customer and by just closing them.  In other words, the Company has found a replicable sales and marketing model, as shown in the table below:

PRODUCT MARKET FIT

REPLICABLE SALES/MARKETING MODEL
Who is the Ideal Target Customer?

Get more customers just like the ITC
-- focus website, messaging, branding, references
-- focus demand generation/leverage (virality)
-- focus business development
-- focus product management
-- focus new hiring (relevant experience)
-- focus the whole company
How sell to them?

Just simplify the closing
-- which sales rep closes better à sales rep profile, sales playbook
-- reduce sales friction/overcome obstacles à sales playbook, product management, pricing
-- build a culture of winning (ie successful closing) à better commissions, recruit even better sales people
How much will they pay?

Calculate potential market size
Calculate early business model 

What is Product Market Fit?


In earlier blog posts regarding Product Market Fit, I focused on Happy Customers -- active, paying, referenceable customers.  Unfortunately, I saw companies with extremely happy customers, but not able to accelerate growth.  Slow growth is expensive and demoralizing.

Once these companies found the Ideal Customer Use Case, though, they could find and close more similar customers in a fast, predictable manner.  They started to accelerate growth.

This is why I revised the Startup Journey.

Now, I define Product Market Fit as 10+ active, paying, referenceable customers that fit an Ideal Customer Use Case.  This corresponds to around $500k ARR (10 customers paying $50k/year, or 20 customers paying $25k/year).

The Ideal Customer Use Case means understanding:

- Simple use case (value proposition for the product; how/why the customers use the product?)
- Ideal Target Customer profile (buyer title/decision criteria/authority; and customer profile/industry/ department)
- Crisp message

Achieving Product Market Fit (understanding the Ideal Customer Use Case) helps answer three key questions:
1) Who is the ideal target customer?
2) How to sell to them?  Why should they buy?
3) How much will they pay?

Storm's 15th Anniversary Party

Recently, we enjoyed celebrating our 15th anniversary with the people who made us successful.
Here is a photo of one of our cofounders (Alex Mendez) looking like Robert DeNiro.
A photo of another cofounder (Sanjay Subhedar) talking with our LP's.
Frances and Jordan who worked very hard to make the party a big success!  We really appreciate all their hard work.
Arun with Lou who runs the Marketo Launchpoint ecosystem.
Anshu with his former Salesforce colleague, Scott from Cloudwords.
And finally, a photo with Jason and Ryan.

Revised Startup Journey

Since my my last blog post in April 2014, I wanted to revise the steps in the Startup Journey:

Basically, I split the "Happy Customer" stage into two:  Product Market Fit and Accelerating Early Growth.

So, I find it helpful to divide the Startup Journey to becoming a Great Company into five Life Stages (Founding --> Product Market Fit --> Accelerating Early Growth --> Category Leadership --> The Platform), and focus the discussion on the immediate next stage -- which is much more achievable.

Wednesday, December 10, 2014

Interview on HsuUntied

I was recently invited to be a guest on Richard Hsu’s podcast series called  HsuUntied, which discusses lawyers and their side hobbies.  Richard and I worked together at Venture Law Group.  Feel free to listen to the podcast at HsuTube.com.