Skip to main content

Follow the Money

Over the past few weeks I've advised a half dozen entrepreneurs at various stages of startupdom. I have a lot less time to chat or review things because I'm working full time, serving on the school board, and developing my own stuff nights and weekends.

So I cut to the chase. "What are you selling, who's buying it, what are they paying for it, and how often?", and change the verb tense depending on their stage. It really focuses the conversation on what the business is.

Ideas are great. I love to hear ideas and shoot the shit about them. But business is primarily about income and expense, and if you have none for the former then the latter is going to stop you in you tracks eventually.

Follow the money. Stop guessing about where it will come from. Figure it out.

So how?

Call potential customers.

Talk about the benefit of your offering, and ask them if they'd be interested, and if so, what they think it would cost. Let them know you're a startup and doing research. Some will be too busy to help you. Others won't want to put the phone down.

Listen to them all, ask probing questions, but mostly let them tell you what their issues are related to your proposed product.

Should I go to this conference? No, I don't think so. You need to sell something and get some early reference customers. Should I go to this other conference? Sure, it will help you sell something and get some early reference customers. Should I hire a PR firm? No, you need to get some early customers first. Should I raise $750k? No it's more than you can put to productive use and you need to show that you can scale sales with half of that.

See where this is headed?

Nothing happens until you make a sale. If you're already selling, you might test higher price points; are you leaving money on the table? Who's looked at you but passed? Talk with them and ask why (in the form of 5 or 6 questions, and be respectful of their time).

We make assumptions all day long--that's part of the risk. But you need to test those assumptions with constant research into prospects, existing customers, and lost prospects. Get into the habit of talking to a few customers or prospects a day.

That's where your answers are.

They aren't here on this blog, they aren't in Lean Startup, they aren't in your business plan, or Techcrunch, or some event, or some meetup, or a call with me.

Start with the customer, and everything else will fall in place.


  1. Sound advice. Working the phones can be tough but I have received a mixed response.

    In these responses I have learned a lot so it is extremely valuable. Gonna press on and secure 3 customers this week.

    Keep the knowledge flowing Charlie!


Post a Comment

Popular posts from this blog

Beta Signup

I've been working for quite a while on a new search concept, though the further in I get, the closer the rest of the world gets to what we're doing. So today I'm inviting you to sign up for the rather modest beta, which will be ready soon if we can nail down a few difficult  details. Jawaya is a way of navigating the web and getting better results. And that's as much as I can say right now, because we're not a funded startup, and things are moving really fast in this space--it's going to be very competitive. I predict there will be about 10 funded startups in the next 6 months doing something similar. One of them will be mine, and we aim to make it the best. We're raising a round of capital to fund the team, and are shooting for early sustainability. This is my fifth company; my fourth in the tech space, and my third software company. I think it will be the biggest and can possibly have a positive impact on the world by reducing the amount of time it takes

Where Innovation Happens

As I get closer to a go/no-go decision on a project, I've been thinking about the difference about my vision for the project and the supportive innovations to enable the core innovations The vision combines (in unequal parts) product, core innovation as I imagine it, the application of that core innovation, design, marketing,  developer ecosystem, and business development. The core innovation enables everything else, but it's the application of the innovation that makes it meaningful, useful, and in this case, fun. This week we're testing initial approaches to the implementation for our specific application, and that's where we'll develop the enabling innovations, which is basically where the rubber meets the road. The difference is that the enabling innovation happens at the source of real problems only encountered in the making of something, and in a project like this just getting the essence of it right isn't enough; it also has to be safe, the compone

The Real Jobs Problem

It's the economy, stupid.  Well, yes, it always has been, if you're in the distortion field of politics.  But whose economy? The pundits, the White House, the Republican candidates all miss the mark. They keep talking about debt, taxes, and monetary policy. None of those things tell the real story behind today's economy.  The Old Economy Keynes was right--in the old economy. Economy gets weak, pump some money into the economy through public works projects, which  1) puts people to work, which  2) boosts the economy and  3) generates new tax revenue, while  4) leaving us with another generation of reliable infrastructure to support  5) more growth (for growth's sake, which is another post).  The Beach Ball Imagine a beach ball, partially deflated to represent a recession. Got it? Now imagine the govt pumping that beach ball back up through sensible public investment (which we haven't seen for decades). The New Economy Same beach ball, same pum