{"id":1001,"date":"2010-08-31T12:00:53","date_gmt":"2010-08-31T11:00:53","guid":{"rendered":"http:\/\/t-machine.org\/?p=1001"},"modified":"2010-09-01T13:09:47","modified_gmt":"2010-09-01T12:09:47","slug":"vcs-angels-and-beta-pages-theyre-wrong","status":"publish","type":"post","link":"http:\/\/new.t-machine.org\/index.php\/2010\/08\/31\/vcs-angels-and-beta-pages-theyre-wrong\/","title":{"rendered":"VCs, Angels, and Beta Pages: They&#8217;re wrong"},"content":{"rendered":"<p>There is a curse afflicting the startup world right now. It&#8217;s insidious, it&#8217;s harmful, and &#8211; as a potential customer &#8211; I&#8217;m fed up of running into these brick walls of customer-hatred. Each time it happens, yet another startup generates massive harm for itself, and I&#8217;d like to see this madness STOP.<\/p>\n<p>(by &#8220;startup world&#8221; I mean: West-coast USA-style startups &#8211; i.e. Silicon Valley VC&#8217;s and Angels, the startups they back, the people seeking money from there, and any startup that follows their way of thinking. I do *not* mean &#8211; for instance &#8211; old-style Europe startups, who haven&#8217;t even grasped the idea of a pre-funded &#8220;beta&#8221; release yet. This post probably will sound new and scary to some of them. For everyone else, this is already standard practice)<\/p>\n<p>EDIT: I forgot (!) to add: when it works, for the startups that use it sparingly, and for the *minority* that are well-suited to it, it works fine. But the current trend is for *everyone* to try it &#8211; and that&#8217;s where the failure lies. &#8220;When all you have is a hammer&#8230;&#8221;<\/p>\n<h4>What are we talking about?<\/h4>\n<p>Startups today are advised to build a micro-website with just 1-3 pages that gathers people&#8217;s email addresses and does nothing else. This is supposed to show &#8220;traction&#8221; (in the number of emails captured) and &#8220;early lead generation&#8221; (by creating a pre-made mailing list of potential customers you can later approach), as well as &#8220;idea\/product feedback from potential customers&#8221; (soliciting opinions from these people by emailing them and trying-out your ideas on a fresh audience &#8211; BEFORE spending the money to make the product).<\/p>\n<p>I can&#8217;t remember where I first saw this, but its been promoted by a number of major VC&#8217;s on their blogs and tweets, and it&#8217;s generally seen as a sign that a startup is hip and modern and knows its shit. From memory, it&#8217;s been popularized too by things like Y Combinator, Seedcamp, etc &#8211; the places that up-and-coming startups go to learn &#8220;how to be better at being a startup&#8221;.<\/p>\n<h4>The importance of courting Early Adopters<\/h4>\n<p>First para of wikipedia&#8217;s summary on what is an <a href=\"http:\/\/en.wikipedia.org\/wiki\/Early_adopter_%28marketing%29\">Early Adopter<\/a>?<\/p>\n<blockquote><p>\nTypically this will be a customer who, in addition to using the vendor&#8217;s product or technology, will also provide considerable and candid feedback to help the vendor refine its future product releases, as well as the associated means of distribution, service, and support.\n<\/p><\/blockquote>\n<p>Why do we care about these people? Because we certainly do care; we care very much. Startups pore vast amounts of energy into wooing this crowd.<\/p>\n<p>In this context, there&#8217;s several valuable uses of these people (<\/p>\n<ol>\n<li>They&#8217;re customers: they&#8217;ll pay us\n<li>They&#8217;re &#8220;easy sell&#8221;: by their nature, and their needs, they&#8217;ll buy the product with only a small amount of urging\n<li>They&#8217;re trendstters: they will do considerable amounts of marketing *on our behalf*, unasked-for, and unpaid\n<li>They&#8217;re vocal on feedback: they give us huge amounts of valuable insight into what&#8217;s good and bad about our product, and what we could\/should\/mustn&#8217;t change about it. Ditto for pricing. Ditto for marketing. Everything, really &#8211; they&#8217;re like the world&#8217;s most friendly and hard-working investor, giving the most honest feedback about the company&#8217;s products every single day\n<\/ol>\n<p>Three things on that list shine brightly, and are where old-style startups haven&#8217;t caught up yet: these people massively reduce the startup&#8217;s SALES and MARKETING costs. A small, lean startup doesn&#8217;t yet have the cash to hire a sales team. Nor a marketing team. Also, the founders usually don&#8217;t *quite* know what it is they&#8217;re selling, or how best to describe it.<\/p>\n<p>These early adopters make SALES EASY, they do FREE MARKETING, and they ADVISE ON WRITING A BETTER SALES MESSAGE. Wow. Awesome!<\/p>\n<h4>When Early Adopters Turn Bad<\/h4>\n<p>Let&#8217;s look at the *second* para of Wikipedia&#8217;s description:<\/p>\n<blockquote><p>\nThe relationship is synergistic, with the customer having early (and sometimes unique, or at least uniquely early) access to an advantageous new product or technology.\n<\/p><\/blockquote>\n<p>i.e. for all that FREE juicy goodness your Early Adopters are giving you, you&#8217;re expected (usually: required) to give back, in spades. Usually what you give back is worth more in cash than what you receive &#8211; but it&#8217;s all about timing. The cash &#8220;cost&#8221; to you is due in the future, in the long-term product discounts, etc. Whereas the cash &#8220;benefit&#8221; to you is accrued in the present, in the form of increased sales *today*. And cashflow is the thin that tends to kill startups, so this is hugely valuable for you.<\/p>\n<p>And &#8211; unfortunately &#8211; these &#8220;beta&#8221; websites tend to completely ignore the &#8220;give back&#8221; part of the relationship.<\/p>\n<p>Here&#8217;s the problem: if you piss-off the visitors to that micro-site, you generate *disproportionately* large hatred of your company, your team, and your product. Just as an Early Adopter is inclined to tell everyone how wonderful your product is (even though it doesn&#8217;t work yet, and they&#8217;ve only got a partial version) &#8230; they&#8217;ll equally tell everyone how terrible your product is (even though it&#8217;s not finished, and they&#8217;ve only got partial info).<\/p>\n<p>These people don&#8217;t conveniently sit around waiting to SERVE YOUR STARTUP &#8230; no, they&#8217;re people with reputations of their own, with thoughts and feelings. That&#8217;s what makes them so valuable &#8211; other people trust and listen to them. And that means they&#8217;re expected\/required to report the bad along with the good. Upset them at your peril.<\/p>\n<h4>What does a potential customer want?<\/h4>\n<p>When they come to your website, an Early Adopter has a rough pyramid of needs. The more convinced they are of your product &#8211; OR the more it seems to fit a problem they already know they have &#8211; the further down this list they&#8217;ll go:<\/p>\n<ol>\n<li>information\n<li>a demo\n<li>a service\/product\n<li>purchase-form\n<\/ol>\n<p>&#8230;and they&#8217;re impatient, by nature. If you convince them with your first sentence that your product is even ATTEMPTING to fix a problem that&#8217;s causing them major pain right now, they may well *immediately* run to your &#8220;pricing&#8221; link, straight from the home page.<\/p>\n<p>Incidentally &#8230; in that case, here is a person TRYING TO GIVE YOU MONEY. You don&#8217;t always want their money &#8211; it might come with too many strings attached &#8211; but, generally, you probably do. You certainly want to consider it, not cut-them off mid-stride and tell them to piss off and leave you alone (which is what a lot of sites do).<\/p>\n<h4>It takes two to trade<\/h4>\n<p>But lets go back to the most basic need: information.<\/p>\n<p>Someone comes to your site. Why?<\/p>\n<p>You can bet that &#8211; no matter what else &#8211; they want Information. Who you are, what you&#8217;re selling, why is it useful &#8230; might they want to use\/buy it for themselves?<\/p>\n<p>And here is where most of these beta sites today do a full-frontal face-plant straight onto the tarmac.<\/p>\n<p>Here&#8217;s what most sites do:<\/p>\n<ol>\n<li>I won&#8217;t let you see the site until you fill in a form\n<li>Give me your email address\n<li>I&#8217;ll show you a webpage telling you nothing, but vaguely promising to contact you &#8220;at some time in the future&#8221;\n<li>The rest of my site is completely empty\n<\/ol>\n<p>This reminds me of The Pirate Code, courtesy Disney:<\/p>\n<ol>\n<li>Take what you can\n<li>Give nothing in return\n<\/ol>\n<p>&#8220;Synergistic&#8221;, says Wikipedia: i.e. a trade, an equivalence: you rub my back, I rub yours.<\/p>\n<p>Only &#8230; with these startups, it&#8217;s all about TAKING the customer&#8217;s info, and then sending them away empty-handed. No wonder a lot of visitors come away with a vague sense of having just been scammed &#8211; this is exactly how most con-artists work!<\/p>\n<h4>Why? Why, for the love of all that is good?<\/h4>\n<p>Not every startup is created equal; if the founder of Twitter, or Facebook, or Google, or &#8230; etc &#8230; choose to start a new startup now, with a new product, then you can be sure thousands of people will beat a path to their door just on spec of who the founder is. They don&#8217;t know what it will be, but they know they want in &#8211; if only for the bragging rights to say &#8220;First!&#8221;.<\/p>\n<p>To a lesser extent, there are startups whose product approaches a need so great, and so tightly defined, and so cutting-edge &#8230; that customers will again come beating down the door IRRESPECTIVE of any sense of rationality or sense.<\/p>\n<p>But, for most startups, that&#8217;s not the case.<\/p>\n<p>For most startups, if you throw up a &#8220;gathering email addresses TRUST ME I&#8217;M NOT A PORN-IN-YOUR-INBOX SITE REALLY&#8221;, it&#8217;s not so simple.<\/p>\n<p>For most starutps, who then use that landing page as *the main funnel for all outside contact*, this is a disaster.<\/p>\n<p>For instance, last week I met a startup co-founder who gave me his business card. Only it wasn&#8217;t his card &#8211; when I followed the web-address, it proved to direct straight to the funnel for gathering email addresses. Ironically, the site didn&#8217;t even have contact info. The founders had linked to their twitter profiles.<\/p>\n<p>(and the main founder had then back-linked his Twitter profile to this funnel site! Way to go, idiot: now there&#8217;s literally no way of contacting you directly. I have to @reply you on Twitter and &#8220;hope&#8221; that you will be gracious enough to a) bother to check your @-replies (since Twitter doesn&#8217;t inform you automatically) and b) avoid irritating my own followers with meaningless private messages I had to send to you in public)<\/p>\n","protected":false},"excerpt":{"rendered":"<p>There is a curse afflicting the startup world right now. It&#8217;s insidious, it&#8217;s harmful, and &#8211; as a potential customer &#8211; I&#8217;m fed up of running into these brick walls of customer-hatred. Each time it happens, yet another startup generates massive harm for itself, and I&#8217;d like to see this madness STOP. (by &#8220;startup world&#8221; [&hellip;]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[50,46],"tags":[],"_links":{"self":[{"href":"http:\/\/new.t-machine.org\/index.php\/wp-json\/wp\/v2\/posts\/1001"}],"collection":[{"href":"http:\/\/new.t-machine.org\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/new.t-machine.org\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/new.t-machine.org\/index.php\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"http:\/\/new.t-machine.org\/index.php\/wp-json\/wp\/v2\/comments?post=1001"}],"version-history":[{"count":0,"href":"http:\/\/new.t-machine.org\/index.php\/wp-json\/wp\/v2\/posts\/1001\/revisions"}],"wp:attachment":[{"href":"http:\/\/new.t-machine.org\/index.php\/wp-json\/wp\/v2\/media?parent=1001"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/new.t-machine.org\/index.php\/wp-json\/wp\/v2\/categories?post=1001"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/new.t-machine.org\/index.php\/wp-json\/wp\/v2\/tags?post=1001"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}