When Customers Attack

Not all of your customers will love you. 320px-LemonsharkIn fact, many of them won’t even like you. In my career building products and services, I have been referred to as: idiot, moron, incompetent, joker … and many, many more offensive terms involving profanity which I won’t reproduce here.

It is hard building something new and sending it into the world. As a maker, you feel that your work is a reflection of yourself and the way people respond to your product is how they respond to you. If they love your product you feel validated, but if they hate it you feel like a failure. You have to rise above that in business. You should not fear angry customers.

You should fear customer apathy.

The most dangerous thing for you and your business is customers who don’t care. They look at your product and move along. They never engage, they never care, they never think about it again.

You want customers to be angry, because that means that at least they care. Someone who is angry is someone who cared and was disappointed. Maybe the customer thinks your product is too hard to use, too expensive, not powerful enough, etc. Whatever the reason, they wanted your product to be better than it is. They wanted to love you.

Many of the best customers I’ve ever had, the ones that become evangelists for my products and brand, started off hating my products. It is by working hard to reverse their disappointment and make them happy that they become happier than someone who is satisfied at the beginning. An unhappy customer is a chance for true customer success.

So, how do you turn an angry customer into a friend? There is no one answer but here are a few things that will help:

  • Active listening. Respond quickly and clearly, demonstrating that you understand why they are angry. Many people get angry just because they feel ignored. Eschew automated email responses for personal phone calls or in person meetings.
  • Customer empowerment. As I mentioned – angry customers care. People who care have great ideas! Empower them by asking them how they would improve the product. What would they like to see done differently? Take that feedback and show them that you are listening through product improvements. Close the loop and ask what they think after the improvements are made.
  • Stay calm. If someone is screaming at you, it’s easy to get angry yourself. Always remain calm and treat them with respect. Your calm and respectful presentation will calm them down and have them treat you with respect in return.

It is not always possible to turn an angry customer into a friend. Sometimes customers are angry for reasons that have nothing to do with you or your product and are just using you as a punching bag. Even so, you need to treat every angry customer as an opportunity since you can never know that ahead of time.

We all want all of our customers to love us and be perfectly happy. That will never happen, so focus on the skills necessary to turn around bad relationships. You may find some of your best customers that way.

My new company, Outlier, is hiring our first few employees! If you are interested in joining an early stage company and working on the cutting edge of data intelligence, coffee is on me. Drop us a line here


Image made available by Albert Kok via the Creative Commons Attribution-ShareALike License.

The Three Most Important Words

When I was a first-time founder, I aspired Question_mark2.svgto be completely in control. All of my role models were passionate visionaries who appeared to have all the right answers. I thought that part of the job of the founder was to be sure of what to do in any situation.

That, of course, is an impossible ideal and a very unhealthy attitude. Being a founder is more about questions than answers, and you are in unknown territory more often than not. Trying to pretend like you are in control is more distracting than productive.

I became a much better leader and founder when I started using three simple words. Three words that I think are the most important words any founder can say.

“I don’t know.”

It is very scary to say “I don’t know”. Whether you are meeting with your team, your board or potential investors you are admitting that you don’t have all the answers. You are admitting vulnerability and a gap in your knowledge. You are admitting you are not perfect.

Once you allow yourself to say “I don’t know”, something magical happens. You open the door to new ideas from your team. You demonstrate honesty to your board. You show potential investors that you are practical and aware of your limits.

Better yet, you encourage the people around you to admit when they don’t know something. Instead of trying to fill gaps with words or half formed ideas, teams empowered to admit they don’t know the answer will move faster and work together better. No one is perfect, and admitting that sheds unnecessary baggage.

So, next time you find yourself in a situation where you are not sure, allow yourself to say “I don’t know”. Then, follow it up with “but let’s figure it out.”

My new company, Outlier, is hiring our first few employees! If you are interested in joining an early stage company and working on the cutting edge of data intelligence, coffee is on me. Drop us a line here


Image made available via Public Domain on Wikipedia.


Backwards, Thinking

When you get to where you are going, are you sure it will be where you needed to be?

Many first time founders set their company treasure-map-153425_640goals based on what they can do. They focus on product improvements they can make, how many customers/users they can acquire and which employees they can hire. All of this thinking is extrapolating from where they are right now to where they think they can get to in the foreseeable future. This kind of thinking makes you feel like you are in control.

Unfortunately, it’s an illusion.

The reality is that where you can go is completely meaningless. What really matters is where you need to be. If you want to raise funding, become profitable, etc. there are clear goals you have to reach. It is rare that you can reach them just by slowly moving forward.

What you need to do is think backwards.

Instead of thinking about what you can do, start with where you need to be. In 12 to 18 months:

  • How many customers/users do you need to have?
  • What does your growth rate need to be?
  • Who do you need to have on your team?

Once you have those goals, work backwards to set your quarterly, monthly and weekly goals. Make decisions that will increase the likelihood you can get to those goals. Those goals should be your lighthouse in the fog of war. If something does not get you closer to those goals, even if you can do it easily, skip it.

For example, I spoke with one founder of a social mobile application which was doing pretty well as a side project. His plan for growth was a series of blog posts and content marketing strategies because that is what he knew well and could get done in a few weeks. However, those blogs only reached a few hundred people. When he learned he needed to get to hundreds of thousands of users (instead of just hundreds of users) to make his business viable this strategy seemed silly. Yes, he could write the blog posts but even if it went well it would never get him to where he needed to be. Instead, it was better to focus his efforts on channels that had the potential to get him there.

If you have read about the “Series A Crunch“, this is one of the major factors. Raising a seed round is a great milestone, but if you don’t work backwards from what you need to be able to raise your Series A you can burn through all of that seed money and not be in a position to raise any more.

Think about where you need to be and work backwards to figure out what you need to do. You’ll be much happier knowing that you are pursuing a worthwhile goal.


My new company, Outlier, is hiring our first few employees! If you are interested in joining an early stage company and working on the cutting edge of data intelligence, coffee is on me. Drop us a line here


Image belongs to the Public Domain

Cheating is Allowed

One of the things I struggle tracingwith as an artist is a constant inferiority complex. While I am a pretty good illustrator, whenever I spend time on any art sites I see the amazing work done by others and feel like I am a complete novice. I’ve spent 20 years learning and perfecting my technique but these others make me feel like I’ve only just gotten started. How did they find an easy button where I still struggle?

If you are a founder of a company, you understand that feeling well. You see your friends and colleagues raise large rounds of funding or get lucrative acquisition offers and you are still struggling to get those first few meetings. Where is the easy button they found?

Often, when you feel this way, you are making some bad assumptions. For example, when I first see a beautiful illustration of a person’s face I always assume that the artist draws the same way I do – from memory or imagination. In reality, many artists trace photos. In fact, there is evidence that even the great Renaissance painters were tracing their subjects with the use of mirrors. Tracing is infinitely easier than drawing free hand, and the result is always significantly better.

However, by assuming they were approaching the problem a certain way I assumed they were simply better than me. In reality, they just found another approach to the problem which is easier and has much better results!

Some artists consider tracing to be cheating, but in reality no one cares. No one looks at a given piece of art and says “Well, they didn’t do this the hard way…”. The same is true for your company! Your goal is to build a successful business, not to build a business the hardest way possible.

What are some short cuts you can take as a founder?

  • Sell to your friends. Every enterprise software company’s first 10 customers are friends of the founder. In fact, many of those customers might buy the product only because they are friends! That is perfectly fine as long as you quickly move on to non-friend customers, since all they gave you was a head start.
  • Leverage existing networks. Every YCombinator enterprise software company launches with 50+ customers – how do they do it? Most of them are other YC companies who want to help out a fellow founder. You can do this as well, by plugging into the network of your investors and advisors.
  • Hire your old team. Many experienced founders initially hire people from the teams at their prior job. Considering how hard it is to hire in the technology market, having the advantage of a trusted relationship and existing work style is a great way to build your initial team. It’s both less risky and easier to close someone who knows you already.

These short cuts won’t build your business for you, but they do give you a head start in a time when you desperately need the help.

The next time you feel like things are really hard perhaps it is worth rethinking your approach to try and find a short cut. Or, maybe it’s just really hard.

Image courtesy of Flickr user Smoobs via the Creative Commons Attribution 2.0 License.

Selling Your Company

It happens to every founder at some point. Fsbo_tabletYou realize building your business is harder than you expected. You’ve been working for a few years without finding breakaway growth. The team is tired and losing some of their passion, overwhelmed by the work that needs to be done. You need to start a new round of fundraising soon and are not sure you want to invest another 3-4 years into building this company. All of a sudden, you find yourself thinking of selling.

Selling your company always seems like an attractive option. Instead of working harder you can get out now for a few millions dollars, pay back your investors and pocket a little extra for the few years of hard work. You read about it happening everyday in Techcrunch so why not you? You have a great team and an awesome product, some large company would surely pay for that.

Unfortunately, that is not how it works.

Companies are bought, not sold (as everyone will tell you). Selling your company when things are not going well requires a number of forces to converge in your favor at the same time:

  • An acquirer must have the need for your team, product or customers at a price you will accept.
  • Your team must be willing to work for the larger company for a few years.
  • Your investors must be willing to sell for a price that is likely a loss for them.

It is surprisingly rare that these three factors converge at the same time. When acquirers come knocking, you and your team might be fresh off a round of financing and flush with your dream of riches. When you and your team decide to sell there may be no acquirers ready to move. And even if your team and an acquirer are on board your investors might not be willing to give up.

That being said, selling while under distress can be done. It takes a lot of work on your part, as a founder, as you need to do a number of things at once:

  1. Focus on maximizing the value (and hence attractiveness) of your business by emphasizing the things acquirers will value. That includes your customers, product, team, etc.
  2. Spend a lot of time networking to find any and all potentially interested acquirers. You need two or more to get a decent deal in negotiations and these will usually come from existing partners who know your business well.
  3. Convince your team to continue to work hard during the search for an acquirer, despite all the uncertainty and unknowns. This can be the hardest part, especially if they are already feeling burned out.

It is a hard balance and few companies successfully navigate it. I have seen teams fall apart right before a deal is closed because of fear and uncertainty. I have seen great teams with great products look high and low never to find any interested acquirers. Even if you find an acquirer, most distressed companies are treated as “acqui-hires” which means the team gets a token bonus in addition to a job offer. A small reward for years of hard work.

The only real chance you have for being rewarded for all your hard work is to build a business that grows. If that looks impossible, maximize the strategic value you can provide through your product, team and customers while pursuing relationships with potential acquirers. In other words, the normal things you do as a founder.

So, time to get back to it.

Image made available By Prokopenya Viktor (my own picture collection) [Public domain], via Wikimedia Commons

The Myth of “SaaS”

Software-as-a-Service (SaaS) has taken the technology world by storm. These days, all new software companies are SaaS which simply means they are based in the cloud and have subscription pricing. With the exception of mobile applications and e-commerce, almost all new companies are following this model.

It’s not surprising. The benefits of SaaS over older models of software delivery are clear. Cloud based software can be updated and improved much more rapidly than on-premise software, with a fraction of the cost of maintenance. Subscription pricing means that revenue continues to roll in month after month for the entire life of a customer. What is not to like?

However, many founders of SaaS companies have unusual levels of stress, even more so than typical founders. Your typical SaaS startup founder will:

  • Spend a few days every month trying to follow the latest SaaS metrics fad, based on blog posts like this*. They are searching for the perfect metric to compare themselves against other SaaS businesses.
  • Try desperately to reach a mythical MRR milestone that will magically open the door to raise their Series A.
  • They spend time meeting the best “SaaS” investors, even if those investors are completely unfamiliar with their space.

The ironic reality is that there is no such thing as SaaS anymore. SaaS has become so pervasive that the term is the equivalent of “Internet” or “Web” or “Software”. There are SaaS companies across every vertical, every market. Some charge millions of dollars a year and others charge $5 per month. Some are profitable with only 5 customers, others have 500,000 customers and still are in the red.

SaaS no longer means anything because the world of SaaS has become too large.

Those SaaS founders I mentioned earlier are under abnormal stress because they are chasing the myth of a “typical” SaaS business. There is no such thing as a “typical” SaaS business and all of the fancy metrics and analytics you hear about are attempts to normalize and compare SaaS businesses that are completely different. The only ones who benefit from such normalization are investors, who want help in picking and choosing which companies to support. As a founder, you only care about one business: yours.

The good news is that the world is much simpler when you abandon this myth of the “SaaS Business”. Your business, while it might be SaaS, is not governed by complex new metrics but by the The Most Important Equation for Your Business. Your MRR does not matter, there are businesses raising Series A rounds with $0 MRR everyday. What matters most is The Only Thing That Matters, just like with any other business. Investors will look at your rate of growth first and your MRR second.

In short, you are building a business. Just because it is SaaS does not mean the rules are different, only that there might be more distractions. Do whatever is right for your business.

Then, when you are successful, don’t be surprised when another founder tries to model themselves after you. It is SaaS, after all.

* This blog post is actually very good. I only point it out since every founder I meet that reads it finds it more confusing and intimidating than helpful. 

How to Get What You Need

I have many conversations with founders that start with “I need…”. “I need to raise money.” “I need to hire more people.” “I need to find some more customers.”

It is very easy to develop tunnel vision when building your company, as you are tackling difficult problems everyday. Your world consists of aggressive (maybe impossible) goals and you evaluate all the things you need to be able to achieve those goals. Those needs become your entire focus.

The problem with focusing on your needs is that no one else cares.

When prospective investors, employees or customers look at your company they don’t care about your needs, they care about what you can do for them. Investors don’t care that you need to raise money, they care about whether you can produce a return on their investment. Employees don’t care that you need to hire more people, they care that you offer unique and valuable opportunities. Customers don’t care that you need their business, they care about whether you help them solve a problem.

When you think about the world this way, you realize why many first time founders struggle. They focus too much on their needs and not on how to create enough value so that people will want to fulfill those needs.

Getting What You Need

In order to get what you need, you need to make the opportunity to give it to you such a great deal that no one would ever pass it by. So, if you need..

  • To Raise Funding: Make your company an amazingly attractive investment. This should be a combination of traction, team and vision (and perhaps revenue). Make the terms of investment friendly to both you and the investors so they don’t feel you are trying to take advantage of them.
  • To Hire People: Make your company an amazingly attractive place to work. Empower new hires to learn and expand their roles, giving them the freedom to be creative while holding the responsibility of delivering important parts of your strategy. Hire for passion as much as skills.
  • To Sell Customers: Make your product an amazingly attractive solution to a problem they have. Not only should your product be easy to use, it should be easy to get set up and priced to make it a clear decision for the customer.

Remember, when an investor, candidate or customer is considering whether or not to choose your company they are not deciding if you are a good company. They are deciding if you are better than the hundreds (or thousands) of other companies in the market, some of which may be in entirely different industries or businesses. You are competing with everyone to stand out, not just yourself.

So, next time you find yourself saying “I need” try to rephrase it as “Here is what I can offer”. It will greatly improve the chances that you get what you want.

You can’t always get what you want
But if you try sometimes you just might find
You just might find
You get what you need

– The Rolling Stones