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Archive for October, 2011


Let Me Advise Your Start-up!

Wednesday, October 26th, 2011

I love Founders Institute’s new Founder Advisor Standard Template. I am on the advisory board for several companies – most of them very early stage – and one of the things I have always done is have a “conversation” about my compensation, without putting anything in writing. Given my desire to be an asset to the company, one of the things I have always done is say, “let’s defer getting this all legaled up”. I don’t want my start-ups wasting money on lawyers pre-fundraising (or even post, frankly) – and I have always felt that I am both a little bit willing to risk getting screwed and a little bit willing to demonstrate my value and worth. Once I demonstrate how hard I work for my companies, I have yet to be screwed, so in that respect my approach has tended to work out well for me. But I have always thought, “It would be nice to formalize this”.

Founders Institute’s attempt to create a “seed series” standard document for setting up advisory boards is a brilliant idea and very valuable to early stage start-ups. I also am a fan of the approach that they have taken to recognizing that various advisory organizations will have varying levels of commitment.

It is getting easier and less expensive than ever to build a high-performing start-up.

How Important is First Look?

Tuesday, October 25th, 2011

Man, John Ebbert didn’t call me on this, but I have an opinion and here I go:

AdExchanger recently asked a bunch of people about the value of “First Look” at inventory.

I felt like the answers reflected a range of sophistication on the topic, but I am here to tell you that first look is the whole ball of wax.

In fact, first look is so important that it drives home the value of RTB as a disruptive force in advertising: the chance to see every impression is incredibly valuable.

I have blogged a fair amount about the incentives and value of front-running inventory, but let me recap in brief:

  • Getting “Frequency 1” users allows a network to have more reach than competitors – a powerful lure for brand sales: This was one of the keys that helped (and continues to help) people like Yahoo! and dominate the market.
  • More visibility improves the reach of behavioral campaigns – if you see more of a user with a given behavioral characteristic (e.g. retargeting behaviors), you can show more impressions and make more money.
  • The more ads a person has already seen, the worse an ad performs: The chance to use earlier impressions has a powerful impact on conversion
  • More reach – particularly low frequency reach – is a key driver of monetizing CPA campaigns.

The result is that both DR advertisers and brand-focused ad networks reap substantial benefits from peaking at inventory.

RTB has been a great equalizer here – suddenly boutique companies that have very low fill rates or occupy a tiny niche in the market have the chance to peak at huge volumes of impressions without committing to purchasing them. This capability has helped drive the success of many of the ecommerce companies that have sprung up in the wake of the evolution of online advertising.

Organizational Credibility and The Need To Tell Lies On The Job

Wednesday, October 19th, 2011

Being in sales is incredibly difficult. If you are not in sales and you wonder why some sales people make crazy money, the answer is that sales is hard. Most of sales involves experiencing a steady stream of belittling and rejection and your average person simply cannot cope with that. I, for one, am on the record as being a terrible cold caller. Calling 99 people and hearing how dumb I am so that I can get to that 100th person who will hear my story is very tough.

The result is that if a sales person has a good relationship, that is like a gold vein to them. You treasure it! Someone that you can call on again and again and they will buy from you repeatedly is incredibly valuable.

The result is that, at some level, a sales person will treat a new job with suspicion. They simply cannot afford to burn their valuable relationships if it turns out their new employers products suck. Many sales people would rather fail at a new job and keep their confidence and relationships intact than risk blowing up a customer.

The result is that for a company to get a salesperson going, they must instill 100% confidence in their products in a salesperson. Particularly for early stage businesses that are just building their sales organization, this can be very difficult.

Instilling that confidence is not second nature to most people. In fact, I would say that the average person wants to:

  1. understate and overdeliver
  2. be honest about capabilities

These two things can be deadly in early interactions with a sales organization.

Selling a tiny bit ahead of capabilities is critical for the success of most organizations.

Quick sidebar: I was working at a publicly-traded company at one point in my life and I was listening to the earnings call and I heard the CEO describing some capabilities we were developing. I turned to my boss and said, “Oh my god, that was a complete lie the CEO just told.” To which my boss responded: “About time he started competing with everyone else.” My bosses point was excellent: Everyone else in our industry packed their calls with lies. We knew this. Turnabout was fair play in this situation.

Similarly, I was confronted with an interesting challenge recently: We are building a large sales force basically from scratch. We had a product that is coming out in 30 days and during a sales presentation, I presented it as such: “Regarding X, This product will be available in a 4-6 weeks, I will give you plenty of details then.”

I do this for two reasons:

  1. I am a believer in building my organizational credibility through meeting my commitments. If I say, “X will be done by Z”, it will be done. If I lack confidence, I refuse to give dates because I want people to know that when I give a date, they can bet their bottom dollar that it is going to happen.
  2. I like sales to sell what we have. One of the things that drives me nuts about sales people is that when you tell them what is coming, they tend to tell their customers – which can cause a customer to hold off on placing an order – which can cause a salesperson to say that the reason they can’t sell is because “X product isn’t done”. So I always tell people, “Tell the salespeople that the product will never get any better. If they want to work here, they have to figure out how to sell what we make.” Of course we want our product to get better, but a good salesperson should figure out how to sell what we have. To be all Glengarry Glen Ross about it, if you can’t figure out how to sell our crappy product to these good leads, I don’t want to give you the good product to sell. Make it rain!

Regardless, my boss came over to me afterwards all fired up: “You need to go back to the sales force and re-characterize our capabilities in this area as being available today.” My response was, “But it isn’t!”. To which he replied, “That is not germaine to this conversation!”

Great line.

Moral of the story, if we waited 6 weeks to start selling a capability we will have in 30 days, we won’t see a deal for the next 90 days. And it is Q4! Now we have the capability and our team is actively closing business around it. Win/win.

While many product people, and many people in general, take the same approach I typically try do – organizational credibility development through constant under-promising and consistent over-delivering – it is critical to success in life and in business that you recognize moments where this philosophy serves you poorly and a little over-promising and then going out and making it happen is actually what it takes.

Furthermore, it is important to recognize that sometimes your organizational credibility isn’t what is important. If the business needs you to take a body blow – hey buddy, that is why you get paid the big bucks.

One more story: In my first company, I remember closing our first six-figure deal. Prior to that deal, our biggest job had been around $70k and this job was for $250k. My partner said to me when they offered us the business, “We might not be able to do this!” My response was, “If we can’t do this, we will never have the kind of company we are trying to build.” We took the job, we made it happen, we built a company I was proud of and led it to a great exit.

It is easy to always under-promise. Easy. Just push back whenever people push on you to over-commit. It can be a habit. But don’t think that just because you are always making your commitments and managing expectations that you are doing the right thing. What is hard is recognizing moments when you need to demand more of yourself and your team to catalyze change.

Going “Blind” with Ad Networks

Tuesday, October 4th, 2011

When I worked at an ad network, many of our publishers wanted to be “blind” – that is, not identified as available inventory in our network. Let me give you an example: Yahoo might give an ad network some of its excess ad inventory to monetize. Yet Yahoo does not want other sales organizations out there telling advertisers, “Oh, I can get you on Yahoo inventory, buy from me instead of that Yahoo sales guy”. Yahoo wants the ad networks money and the network values high-quality, good performing inventory, so the best of both worlds is to be “blind”. The ad network promises not to use Yahoo’s name and Yahoo gives them the inventory on this “blind” basis.

As a product guy, I always respected the desire to be blind, but I always wondered how effective it was out in the field. People have to get paid and a lot of people will do what it takes. I generally imagined there was a fair amount of “wink, wink, nudge, nudge” that took place when agencies and network sales guys talked about inventory – “Let’s just say that I can get you a lot of inventory on sites about Yodeling”. It always seemed like there was a lot of potential for miscommunication about what was blind and what was not as well.

Now that I am in a product role as a company that is first party to a lot of inventory, this has tempered my thinking about a lot of network interactions: I don’t trust “being blind” as a panacea for channel conflict. I was already involved in a situation where one network that I gave inventory to on a blind basis told an agency that they had our inventory – we fired them the next day.

One of the amazing things about networks that don’t respect blind status is how the desperate sales guy – who may indeed close that one sale – thinks that it doesn’t get back to the publisher. OF COURSE IT GETS BACK TO THE PUBLISHER. Generally speaking, the agency has no horse in this race, so when the publisher asks why they aren’t getting a buy, the agency invariably tells them, “Network X said I could get your inventory through them”.

I would love to hear Ad Networks perspective on how they make sure that blindness is respected. Similarly, are there publishers out there that have a “system” to make sure that blindness is honored?