Why Salespeople Make Ba...

Editor’s note:  Contributor  Ashkan Karbasfrooshan  is the founder and CEO of  WatchMojo .  Follow him @ashkan . Company founders are the quintessential cheerleaders , promoting their vision and company every chance they get.  But that doesn’t mean that they are necessarily the best at two core functions: selling and fundraising (and many are bad at both but excel at other functions, like technology). While generating revenue and raising capital require a lot of the same traits, in my experience those who are good at one tend to be poor at the other. Always Be Closing: Coffee is for Closers Some salespeople are driven by money, others less so – but all are driven to close the deal.  The more deals we secure, the better, and if in the process we generate more revenue for our organization and ourselves, then great. Most salespeople will tell you that selling is an art.  But negotiating to sell software or advertising (or any product or service, for that matter) is very different than trying to secure funding.  In fact, I’ve learned if you’re really successful at sales then you’re almost doomed at fundraising. What does it take to be a great salesman? Ultimately, selling a good or service requires that 1-    you hustle; 2-    you always follow up; 3-    you don’t take no for an answer; 4-    you offer more and more value until you close the deal. When I was studying finance to pursue a career in investment banking, I was working in customer service for a large bank.  Repeatedly I was told that I would make a great salesman, which to a young finance grad was as complimentary as telling a woman she is handsome.  Eventually I landed at a nascent online publisher and ended up in ad sales and sold a lot of ad deals despite the worst ad market since the Great Depression.  The publisher in question has now evolved as a must-buy for most media buyers, but at the time it was a fairly unknown brand deemed way too racy for most mainstream marketers.  I wasn’t driven by money, but I was good at selling… so until I figured out what I wanted to do next, I kept selling (and writing). After that company was acquired, I cashed in my shares and left my sales job to start WatchMojo, where despite having the ability to bootstrap and self-finance the company I sought to raise capital because I wanted to build a really big company, fast, and because I felt that it would give me street cred, but, I was remarkably bad.  I don’t think I was that bad, but the result (or lack thereof spoke for itself). To be fair, maybe I was bad at fundraising because: a)     I didn’t have to raise capital, knowing I could rely on the proceeds of the sale and my sales commissions, so I wasn’t desperate enough to accept draconian clauses ; b)     I started a content company and investors are generally adverse to content ; c)     My company was based in Montreal, d)     Me just doing a bad job of it. In all honesty it was likely all of the above.  In any case, throughout the journey, I learned that selling a good or service is nothing like selling your stock. What does it take to be a great fundraiser? It occurred to me that as good as I was at selling (though I had no desire to be a salesman again per se ), fundraising required a different set of skills and techniques.  You have to: I-              Play hard to get, “be a challenge” and pretend that you’re just not all that into the other party; II-            Create the illusion that the “train is about to leave the station” unless an investor signs on; III-          Be disciplined and go through periods of time without following up with the interested investor, because the saying “absence makes the heart grow fonder” applies here, too. IV-           Ultimately, be less than sincere.  Push someone to table the term sheet to shop it around, even if you have no intention of honoring it. These are fundamentally different traits and behaviors than when you are selling a good or service. Scarcity The main difference between selling and fundraising is the outcome: unless you’re selling a unique asset like real estate, when you sell someone something, you are not precluded to working with others or selling the same good to someone else: you can keep selling the same asset over-and-over again. In advertising, even if you sell someone an ad spot, you can sell the same spot to someone else on another day, or better yet: create a new ad unit. In fundraising, once you close a deal, you are technically married to the investor, for better or worse. Why are the greatest salespeople doomed at fundraising? Ultimately, a great salesperson will be able to unearth revenue, and keep the lights on. They say the best form of equity is sales. Perhaps, but if that’s the only route you take, you might end up selling yourself short. I’m not saying that some people aren’t born to do both well, many people are.  But if you have been good at one and think you will naturally be good at the other, think again—there’s a good chance that the skills required in one aspect of business is fundamentally different than those required for the other. Photo credit: Nicolay Stanev /Shutterstock

Late-Stage Web Companie...

One of the defining trends of modern web companies is that the top ones have been choosing to raise giant, private late-stage funding rounds instead of going public. In 2011, some of these rounds got so big that they passed the other types of companies that typically raise the biggest fundings each year — manufacturing and infrastructure technology companies that need to heavily invest in real-world goods to scale their businesses.  Look at the ten companies that raised the most money this year in  CrunchBase . Facebook is at the top of the list this year with its $1.5 billion round in January led by Goldman Sachs and Digital Sky Technologies. Groupon is close behind, with a $950 million round led by DST, with Morgan Stanley and a long line of venture and private equity firms in the mix. The rest of the list is dominated by web companies, too — Zynga, Twitter and LivingSocial are next. In the previous four years, most of the ten largest investments have been in cleantech, biotech, electronics, networking and other industries of the less virtual sort. In 2011, the only two companies squarely in hardware-oriented businesses are wireless networking company LightsSquared and white-label healthcare device manufacturer Kaz. While it’s true that big web companies have been putting hundreds of millions of dollars into physical goods like data centers and servers, they’ve also been using large portions of these fundings for something that to buy shares back from early investors and employees. Up until recently, the main way stockholders made money was by selling their stakes on the public market. The other side of this trend is that public investors aren’t able to get their money into companies when they’re still at peak growth phases. The private equity and venture firms getting into the later stage deals are instead the ones benefiting from the differences in valuations (that is, unless the late-stage valuations are so high that they exceed the eventual public offering prices, and leave the investors underwater). So, why are web companies waiting to go public? One main rationale is that they don’t want to be subject to the quarter-by-quarter profit growth demands of public investors. Instead, they want to focus on building long-term businesses free of outside interference. They may also not like the often-ugly IPO markets — for good reason, judging by the mixed public performances of Groupon and Zynga. Or the increasingly heavy regulatory costs. Anyway… the late-stage web funding trend is still playing out. Facebook is widely expected to go public early next year, and Twitter and LivingSocial likely will too, later on at some point. Meanwhile, a new crop of web-oriented companies are also raising big new rounds at valuations of around $1 billion , including AirBnB, Dropbox, Spotify and Gilt Groupe. Each of these is in an earlier stage of life than the companies in the top ten, and may be raising big amounts now for other reasons, like easy terms offered by lots of eager investors. Earlier-stage companies appear to be some of the few bright spots in a world that is offering mostly poor investor returns. [Image via the BBC .]

Gillmor Gang 12.31.11 (...

The Gillmor Gang — John Borthwick, Robert Scoble, John Taschek, Kevin Marks, and Steve Gillmor — wound up the Old Year and previewed the next one. In fact, we are already well into Social Spring, what with SOPA, Go Daddy, the media scramble, Louis C.K. and the $5 download, Spotify and the independents, Apple AlmostTV, Microsoft irrelevancy, and the end of email. We’ve had fun, and while we’re at it, please consider helping my daughter’s Creative Arts Charter School in San Francisco recover from a five-alarm fire . Thanks to everyone who showed up this year, and especially those who didn’t. @stevegillmor, @borthwick, @scobleizer, @jtaschek, @kevinmarks Produced and directed by Tina Chase Gillmor @tinagillmor

Keeping Up With The Nor...

The holidays for most people who read this site involve answering a cornucopia of tech support questions for their relatives. Honestly, I’ve watched friends field the most frustrating 45 minute IT department-level questions during holiday time with the family, which inevitably devolves into more of those types of conversations in between, “Pass the gravy.” These conversations will only increase in frequency as the average consumer wakes up to smartphones and the app economy. According to Flurry , nearly a quarter of a billion app downloads this year occurred on December 24th and again this Christmas Day, more than 2x any other day thus far, ever. If you’re building an app or another kind of tech service you better pay attention, as increasingly many of your users will be what investor Chris Dixon and others refer to as “Normals.” Or what I like to call, dumb people. JUST KIDDING. So who are these “Normals”? Well the Normals are a group of people who don’t check into Foursquare, use Square or upload photos to Instagram, until they do . The Normals are more likely to know what Pinterest is than Quora. The Normals had no idea that ‘Angry Birds’ was a phenomenon when they downloaded it because it was a featured app in the App Store (true story). To Normals the name Michael Arrington rings absolutely no bell. Sometimes you almost even envy them. Introducing mom-in-law to Adele. Also trying to explain why Adele album isn't on Spotify. And also, what Spotify is.— Peter Kafka (@pkafka) December 31, 2011 And sometimes they’re as annoying as all hell. Arguing for the 20th time with your Dad about the superiority of an iPhone versus a Blackberry is not fun — Neither is getting into an email race at the Thanksgiving dinner table, and winning like you knew you would. Okay, maybe that is fun. So what are you supposed to do if you’re a techie faced with trying understand how a Normal would view a product? Well first of all pay attention: Normals above all care more about problem solving than acquiring the newest fanciest thing. And if you’re designing products for them, you should be painfully aware of that. As a public service announcement I asked Quora , a product that is still fumbling around in the Normals department, how product designers gather insight into handling a Normal user’s needs versus a techie’s. Techies are “driven by writing their blog post and voicing their opinions or by staying ahead of the curve,” answered Quora product designer Rebekah Cox, “Normal people don’t have those artificial needs which fuel a drive to discover something new for the purpose of discovering something new. They have actual problems to solve.” Cox reveals the flaws in the ways that techies adapt their products for Normals with two different examples, one of a sample thought process that leads a techie into thinking they know what a Normal person wants [1] and then, what a Normal actually wants (versus what a techie thinks they want) at  [2] : [1] “There’s so much work involved in managing all my Twitter accounts, there should be a tool to manage that and Facebook and YouTube and my RSS feeds all in one place.” [2] “My home theater isn’t great, but I’m not sure what I need to make it better. Tom has Blu-ray and is happy with it. Can your site help me with that?” In the first case [1] , the early adopter is extrapolating that a normal person would have the same problem that they do but at a lower frequency, based on the (wrong) assumption that normal people just have less complex versions of the problems held by techies (lots of RSS feeds). In fact normal people just don’t have unmanageable quantities of social accounts and most likely don’t even know what RSS is. All they care about is that their home theatre is up to snuff [2] . “I would advise that you orient your UI around the job to be done — around the problem — and not the person,” says 37Signal s product manager Ryan Singer echoing Clayton Christensen . The issue with this argument is that many problems have much narrower use cases than a given product designer could aim  for, for example, Cox’s [1] above.  And hitting the widest use case possible is a sweet spot that is essentially the holy grail of technology — as it basically means traction. Hoping that my friends returning to Silicon Valley have had a very Merry Annual Normals Market Research With The Family.— Gabe Rivera (@gaberivera) December 27, 2011 YouTube product manager Hunter Walk holds that the differences between scaling big and scaling small are subtle yet super important especially considering the nuances of user interface design. He uses his experience with Google an example … “The notion of using certain keywords such as adding ‘weather’  to a location query in order to display a forecast on the results page (eg New York City weather) was something us geeks did early on and many normals learned to do over time. On the other hand, search operators (such as using an * as a wildcard) are totally geeky and will never cross over to normals who don’t need a command line language for Google. Instead operators are aimed at power users who when they are especially satisfied with a service are more likely to generally recommend it to normals.” It’s sort of tricky. In order to figure out how to entice Normals to use their products, many technology entrepreneurs have to serve as “aimchair technology anthropologists.”   Normal adoption can mean the difference between success or failure, 10 million downloads versus 100k. Startups like Wolfram Alpha and Friendfeed have learned hard way that you can’t ignore Normals just because you’re really smart. You can be a tech industry darling like Foursquare, Quora or even Google+ and be completely blindsided by something like Pinterest — which got way more press coverage in mainstream (and female focused) media before it ever really resonated with the tech press. Pinterest has an approachable personality and it’s easy to use. Learn from it guys. Techies can’t see the forest for the trees, and Normals can only see the forest. The solution may lie in applying that metaphor to a famous Oscar Wilde quote, “We’re all in the forest, but some of us are reaching for the trees.” Or maybe remembering that you once were (and in some ways are still) a Normal, even if you’re now a techie. Image: Via

Cup of Joe: How To Be A...

Oh yes I can already hear the champagne bottles popping! Happy new year! 2012 is going to be an amazing year! Have you made your resolutions yet? If one of them is to be a better marketer then I have a secret strategy in store that is sure to get you started on the right foot! Some define marketing as a process which creates wealth. So if you want to get better at marketing then you need to get better at creating wealth. I am a big believer that practice makes perfect so how about start creating some wealth right now for an organization that needs it? No I am not talking about SEO or social media. I am not talking about PPC or conversion optimization. The fastest and most dependable way to create wealth in 2012 is to donate to a non-profit or charity. When you give your time, money, and resources to a non-profit you are creating wealth for them. They then are better able to enrich the world, and thus expand “humanity’s wealth”. Donating to a nonprofit makes you a better marketer because you get to see a how much potential your skills and resources have to change the world. Donating to a nonprofit makes you a better marketer because it gives you a perspective that doesn’t normally fit within commercial endeavors. Donating to a nonprofit makes you a better marketer because it makes you a better human being. Its important to pick a nonprofit that you care about to spend your time and money with, but, here are a few of my favorites! Shriners Hospitals for Children National Youth Leadership Network CARE Catholic Charities USA Happy New Year! [ photo credit ]