No $30,000 naming consultant here, don't you know.
Kidding aside, our new name and website are oriented to refreshing the greater community's awareness of our continuing focus on early stage Information Technology investing. As 25 year old firm, Grotech has recognized and realized many industry, segment and compay opportunities. The focus upon the best early stage companies has been a consistent theme throughout 7 Funds. The box below summarizes our positioning.
If you didn't arrive at this blog via our website, please take a moment and check it out at http://www.grotech.com
Any CEO attempting to raise money and succeeding at generating real interest is well advised to determine the respective reputations of potential partners. This isn't to say that every comment will have a basis in fact. Many will not. But a reputation is well earned for most people even if it is not universally consistent.
In any competitive situation, juices will flow, tempers may flare and verbal restraint will diminish in the heat of the moment. Jibes and snarky remarks can characterize the dialogue when competitors discuss each other. Obviously, this is completely natural. I am always struck by how competitive forces do play out. Sometimes it verges on the comical, the joke I tell is of the local attorney innocently inquiring whether a local legal competitor "has gone back to pig farming?". Now, I exaggerate for effect but the questions about competitors can often be pointed and loaded. Then again, you owe it to yourself to run down the pig farming angle if you're going to rely on that attorney.
As it relates to VC's, we know more about each other than we can freely or readily say. We have a sense for which VC's will attempt to "grab the steering wheel" once they're in the car. There are a few good ones, there are some great ones. Some are difficult. Some are cheap. Some are cheap, difficult and frequently drunk after 10pm. You get the point. Ask around. Ask plenty of others what they know about your potential partners.
Now you may hear a few bad things about good people and a few good things about bad people, but a consistent picture always emerges that tells a reliable story. The reputation of the individual partner will often be of greater importance than the reputation of the firm but it pays to be cognizant of both. The reputation story is one you should know and carefully consider before moving forward with a firm.
One of the greater challenges of the CEO is the translation of revenue challenges into plans, commitments and expenses. It doesn't help that both your good salespeople and the bad salespeople are both lying about their sales numbers. So aside from the ultimate results, what is the difference between good and bad salespeople's projections?
The difference between a good salesperson and a bad one is usually that the good one knows that he/she is misrepresenting the projected number and by how much. The bad salesperson typically doesn't know that the real number that is likely given their efforts, pipeline and skills. So, both the numbers from the good and the bad salesperson are mis-representations. What's a start up CEO to do?
Seek specifics, be realistic, consider the process and dissect the facts.
Seek specifics: This is just about the customer, conversation and meetings details. It is about the gives and gets. What has the customer given and what has the customer gotten.
Be realistic: Unless you hear that something compelling (other than a government regulatory item like a new law -- which doesn't count or matter usually) is going to move the customer to act. Assume that it is going to take longer than it should to close the deal.
Consider the process: Compare everything you hear to the successful sales processes that have proceeded this one. If you study the way customers adopt and buy your product, you'll be able to synthesize the learnings in a way that individual salespeople are often to slow to internalize into behaviors. Salespeople are not frequently or adequately introspective about process. That's your job.
Dissect the facts: Or more directly put, try to assail the salesperson's assumptions. The salesperson's assumptions, particularly the faulty ones, will drive their results. You need to discern what is known from what it believed and from what is hoped for by the salesperson.
All of which leads the CEO to derive a personal sales forecast which is based upon facts and the reasonably expected outcome of proven process.
Distribution channels are still a valuable necessity in a lot of industries. But in many industries, they are truly under attack.
We're seeing opportunity after opportunity where value will flow from the content creators and thought leaders without the participation of a distribution channel in the classic sense. Whether it is writer, artist, musician, reviewer, subject matter expert or other, the Internet is enabling the flow from its source to a multitude of destinations without restriction. More importantly, value is flowing too.
An example of this is BrightHub. BrightHub aims to enable product reviewers to participate in the economic impact of their articles. Consider for example, that a product reviewer may have established a large following and be a trusted source. What is the fair economic value for a truthful, positive review that drives product sales? Who receives that value?
Heretofore, a magazine might pay the reviewer a small portion of the true economics to the reviewer and leverage the resulting impact to drive ad sales. Good for you if you're the magazine. Bad for you if you're the reviewer. So in the BrightHub model, the reviewer benefits from the value of their own brand and participates in the industry created by their work. I only point to them as a suitable example.
They're are, in fact, many great examples of the content creators disaggregating the distribution channels that have long retained economic value by restricting the conduit and leveraging the resultant scarcity.
We live in a great time but it isn't going to be great for everybody.
![Reblog this post [with Zemanta]](http://img.zemanta.com/reblog_e.png?x-id=68ceb483-e965-45ee-99ad-7fc267977b39)
