1/ My fav "how to sell" book is "Never Split the Difference" by @VossNegotiation
One particular technique in it has come in super useful as an entrepreneur. It basically talks about never accepting the first "No" you get and ask 4 times in different ways
2/ As an entrepreneur you hear "No" a lot. From sales, investors, potential recruits. You have to come up with good mental models on how to handle it.
This technique is helpful because it helps you think of "No" as a point of learning and gives you concrete steps to take.
3/ The way I utilize it is to try to understand why we are hitting a particular roadblock and how to get across it. An example interaction:
potential client: sorry we aren't interested
me: why not?
potential client: we are busy
me: Its really easy, we could set it up for you
4/
potential client: I checked, we are still not interested.
me: any particular feature that would help get you across the line?
...
And you can do this not just with clients, but with partners, lawyers, basically anyone that says "No". At each step you learn something new.
5/ I have been doing this for 3 years and I still find it uncomfortable to come back after each no.
Even when it doesn't convert a No to Yes (most of the time it doesn't), you come away from the encounter knowing a lot more and it improves your pitch for the next time.
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1/ How I CEO (part #4): Why I don't believe in cash bonuses.
At my pervious startup we had a sales bonus driven culture and it sucked.
We have avoided it at Mercury and here is why 🧵
2/ There are three main categories of bonuses, and I think all of them are bad ideas:
1. Company-wide bonuses: This is basically that everyone gets a fixed bonus — let’s say 20% — and it's just a thing that the company does (often but not always tied to company performance). 2. Performance-based bonus: This is usually something that’s happening on top of a company-wide bonus, so maybe it's 20% for everyone and then another 5% on top of that based on a great review or something like that. 3. Role-based bonus: This a bonus that’s tied directly to the nature of a particular employee or team’s function, like a sales bonus, or maybe a project bonus.
3/ The first one, the company-wide bonus, is mostly self-serving to the company — the big benefit being that you can just like cut it when things are not as good, like if your profits are low or if there's a downturn in the market.
If you work somewhere and your salary is basically variable based on how the company is doing or the markets are doing, it's hard to plan your life around it. I think most people, if you give them a fair comp and you offer them equity, would prefer that to the volatility of a bonus-based comp structure.
1/ Heard this sentiment from entrepreneurs thinking of launching new companies twice this week:
AI is changing so fast that it’s hard to come up with an idea in it and it seems pointless to do a company outside AI.
Some tips I gave:
2/ instead of trying to come up with the perfect AI idea that stands the test of time, I would recommend focus on using this as a learning opportunity.
AI is not going anywhere. Anyone who starts today is going to be an amazingly early adopter in 5 years time.
3/ if you want to operate in AI you have 3 ways right now:
1. Go deeply technical and try to do cutting edge AI 2. Go deep in a domain you know better than anyone else and apply AI to it 3. MVP lots of ideas in AI and see what sticks
June to sept has been an awful time to raise. Expect the same mid-nov to mid-jan for winter.
Investors are taking more time in DD and its hard to build momentum or meet everyone during breaks.
3/ Have a deck and data room ready
More prep is required now.
You should have a deck, data room and projections buttoned up before going into the meeting. This will let the investors properly diligence the company and keep things moving fast.
As the 2022 fundraising market is turbulent I have heard a lot of founders asking this question.
Here are some frameworks I use:
A. Runway
B. The Rule of 40%
B. The Burn Multiple
2/ A. Runway
If your runway is <4 months and you don't have an upcoming imminent cash infusion then you should be doing whatever it takes to decrease your burn today!
It's better to make deep cuts early and extend your runway, rather than wait till you have no room to maneuver.
3/ B. The 40% Rule
If you are growing fast and you have runway its okay to have higher burn.
Your annual revenue growth rate + your operating margin should be >=40%.
A big investor says no, a big customers is churning, an important employee quits, a competitor raises a big round!
Often it can feel like your startup is in existential crisis. Here are some techniques to deal with the situation:
2/ “Dont react immediately”.
These things rarely need immediate responses. Go for a walk, have a coffee, sleep on it. Things won’t seem as bad after some time and your reaction can be more reasoned.
3/ “Talk it out”.
Don’t try to do things alone, share with your team, your investors, other entrepreneurs, your partner.
It can be tempting to portray a strong front and pretend you don’t care but it will help you contextualize things and come up with a response.