Minimal Viable ChannelSo, you’ve got a start-up, and you’ve proven MVP.

Should it become a business?

Perry EvansClosely, Inc

housekeeping Open WIFI: Assembly – Startup Week A word to TAXI and Assembly. The container pool is closed, but we’ll have a food truck!

old vine entrepreneur

four start-ups laterMapQuest

Jabber

Local Matters

Closely

Some context Lean start-up/MVP discipline is outstanding. MVP is not designed to confirm viability of a business. Go-to-market methodology is barely visible in startup advice. Where tech and sales/growth hacking cultures collide. Minimal Viable Channel / Go-to-market Hacking is a dialog in

need of a framework and dialog

Minimum viable presentation Some stage setting Closely case study on go-to-market failure Applied learning – walk through punch list Open Q&A

“The MVP is intended to ensure that the market wants the product before a large time and monetary investment is made.”

Eric Ries

I’d probably have 5 years of my start-up life back, if someone had sat me down earlier on

this topic!

Pause and celebrate your MVP success.

Pause and celebrate your MVP success.

Then dig in. • Own your go-to-

market model.• Frankly assess your

business viability.

Head over heels love should be reserved for your personal life. You’re about to make a 5+ year commitment. Your personal

life and career opportunity cost have never been higher. Take a deep dive into your business viability BEFORE you

progress to raise [more] money. Do this for yourself now, not for investors when your job is to

sell with confidence.

Closely Case Study Product and market space

Finding our go-to-market path Multiple channel options Lessons to learn from

2010-2012

Local Mobile Promotions SAAS

The Product Space

Consumer local shopping moves predictably to mobile and integrated with social. How small businesses promote themselves has to be reinvented.

Rethink a new SAAS + Mobile solution. The big winners are the well-timed new entrants.

Proven team, hot venture space, validated product concept.

A-list angels & board. Comcast Ventures signed on early.

What could possibly go wrong?

Going to Market

Direct Sales

Agency Channel Partners

Large-scale SMB Solution Providers

Going to MarketSelling to Small Businesses is expensive relative to ARPU.

Let the customer tell you the scalable price points, and work from there.

Direct Sales

Google CPC Analysis:

$10 CPC for right keyword set. 4% “good campaign” conversion to purchase.= $250 direct cost of acquisition.

Churn: 20% to 50% annual churn in category.

Net cost per RR customer = $312-$500

Price Sweet Spot $50/month, less $15/mo costs

= 11-15 months to recover COA

Going to Market

Direct Sales

Evaluation of Direct Sales Model

- Could we increment to improve the model?- Yes, build growth hacking team discipline- But SMB virality not demonstrable, so unlikely

to break through vs. improve

- The noise was getting crazy, thanks Groupon!- Acquisition cost probably going up not down

- Not a Venture-attractive model- Low virality, COA coverage, churn red flags

- This could be a successful non-VC business model

Assessment: MEH.

Going to Market

Direct Sales

Agency Channel Partners

Large-scale SMB Solution Providers

X

Going to Market

Agency Channel Partners

Over 80K small agents have 10-200 local business clients. Very reachable, promising for growth hack.

Give them a solution to package for their customers; let them build services on top. No COA outlay. 3-year plan to get 10% of agents selling 2 customers/month - looks scalable!

Took MVP approach to channel testing. • Get out in field, paired sales, do the support• Hired consultant w/deep connections to local agents• Small scale customer testing, vary agent type/size• 3 months in Denver market only

Assessment: VC Happy Dance!

Going to Market

Agency Channel Partners

What we learned:

• Not a single goal met by agency tests after 3-4 week honeymoon period

• Product Push is an unnatural work habit for agencies• Agent customer base is a random act

• Became a high risk channel model.

• Be cautious of “aspirational fit”, test for operational behavior!

Going to Market

Direct Sales

Agency Channel Partners

Large-scale SMB Solution Providers

X

X

Going to Market

Large-scale SMB Solution Providers

Convinced CDO/CEO of major YP to make us their next major new product. • 800K SMB accounts, 3000 sales reps. • $275K revenue to customization & sales training/support. • Price point dropped to ~$20/mo, but $0 COA.• Co-developed forecasts of 1-2K new/mo in +12 mos

Also convinced major promotion publisher to align & outsource digital products.

Investors delighted, began aligning product and delivery team for the channel model.

Assessment: Wow, if this works…

Going to Market

Large-scale SMB Solution Providers

The 12-month journey, post contract

• New product was being added to a kit bag already full = continual jockeying for sales team attention.

• 3 product launch delays took revenue start from 4 months to 12 months.

• Two new CEO’s, bankruptcy protection.• New strategic plan cancelled new digital products

to narrow focus.

Going to Market

Direct Sales

Agency Channel Partners

Large-scale SMB Solution Providers

X

X

X

Our Big Mistake?

We had P/M fit, so we just went about hunting for the best channel.

There simply wasn’t a viable one that could confidently deliver venture returns.

We raised money ahead of a proven channel model, and relied on proxies and promises to “sell the go-to-market” to investors.

How’d it end?

We saw the signals and we had stayed very close to our market.

We began hacking a new product that we saw as a bigger opportunity.

Much bigger, to our delight.

Launched our second major product, Perch App, pre-MVP mid 2012, MVP end of 2013.

#1 Mobile Business App SXSW 2013. From 10 to 60K small business users YTD.

Brought on two new venture funds.

Minimum Viable Channel

Assessing Your Business Viability

Zoom Out Own Your Boiler Room Always Be Tuning

Raw content brain dump, to be refined.

Zoom Out

Get to Know Your Real Scale Capture your macro market size and

metrics, park it in PowerPoint. Ground-up math is critical

Truly addressable market, bottoms-up. Don’t use “x% of $yB”

Spend most of your time on 2-yr view Dive into demand size proxies Watch how your customers buy/use

Bottoms-up tips Live your business. Cut your

“Techcrunch time” in half! Learn how your competitors sell &

market, follow their shifts. Be authoritative on your addressable

market and dynamics.De-risk for VCs.

Put your business in context of Opportunity Scale, Competition, Industry Structure.

Competition

Don’t rest on past behavior, dissect current behavior. Everyone is in motion. What are their strongest clients or use

cases? Get to know their executives, especially

most recent hires Board and new executive composition

is a key predictor of forward behavior. Find ex executives, customers,

call/interview them. Use Linkedin, Quora, Glassdoor.

Dissect job postings to assess product plans/intentions

Seek your independent board members

Drill down, continually, deeply.

Spend time with non-competing businesses selling into same space. Learn from their go-to-market experiences.

Industry Structure

Score yourself, these are key drivers of M&A exit success, and ergo – VC interest. Product has high leverage or agitation

value. Diversity of customers, low risk of

customer concentration. Opportunity to build defensible

leadership position. Large liquid competition with no clear

activity or next 12-month intention in your product.

Multiple competitors or complementary businesses with history of growth via acquisition.

Where does your business fit in the value chain of your market?

Are the dynamics right for a high quality future exit?

Your Boiler Room. Own it!

Continual iteration on sales model and messaging is mission critical.

Knowing your channel model. Example from QuickMVP.

Hacking your model with iterative testing of messaging and pricing, using Google Search as measure of market size.

Assessing the Indirect Path

Assessment Check-list Does your product fill a gap that the CP is

seeking out? How well do your best fit customers align

with their customers? Is your product an “education sale” or an

“execution sale”? How does your product stack up in

compensation and incentive to the field? Is your CP well funded and have a history of

quality partnerships? Is there a process in place for direct

feedback from sales and from customers on your product?

Live the People Talk to a handful of the reps Sanity check with customers

Remove yourself from direct customer control very carefully.

Investors don’t like to see loss of customer control. Indirect is most often viewed as an expansion stage strategy when the product and messaging have matured.

Always Be Tuning:

Your Messaging.

“Product-market fit is not simply about getting the product to fit what the market needs, but describing why it matters to the market.  

If you do not get the message right, there is no way you will be able to scale up because you will get stuck explaining what you do.”

“If the purpose of enterprise sales is helping customers get through their own internal buying processes, strong and clear positioning empowers internal evangelists to help close deals.”

Work it, rework it, rework it.

Listen to how your customers describe you.

Adapt to each key Use Case.

Mark B

irchTom

Tun

guz

Always Be Tuning:

Navigate your shift from beta customers to first market wins.

First customers calibrate your growth. Your growth calibrates your access to capital.

Assess your highest leverage Use Cases or Ideal Customers. Go outbound, message uniquely to each

segment Avoid “FIFO” and sales rep led targeting

Build a growth hacking discipline. @Perch hundreds of iterations created

advantage in low COA

Start thinking #SalesHacking [very 2015!]

Organize to win the highest leverage use cases and impactful advocates.

Pulling These Thoughts Together

Don’t assume MVP gives you a viable business.

Take the time to do a clear-headed evaluation of your opportunity and test/hack your go-to-market model.

Investor dialog is where a lot of this gets surfaced creating the wrong dynamic.

Do your MVC homework, THEN go to investors!

What you learn will either: Build your confidence and prepare you

well for investment & execution. Or, it’ll depress the hell out of you.

Following Up

Some People I Follow: Tom Tunguz, Redpoint Ventures Mark Birch, Birch.co Sean Ellis, GrowthHackers.com

Some Tools QuickMVP, Crunchbase, Quora,

Glassdoor, SimilarWeb.com, Conspire.com, LinkedIn,

Twitter: @perryevans

perry.evans@gmail.com