iSPIRT works to transform India into a hub for new generation software products, by addressing crucial government policy, creating market catalysts and grow the maturity of product entrepreneurs. Welcome to the Official Insights!
Author: ProductNation Network
ProductNation has been set up by a team of enthusiasts who have created a platform for entrepreneurs, employees and indeed, onlookers to share ideas, ask questions and gain knowledge about various dimensions of the software product business.
Section 56(2)(viib) of the Income Tax Act, 1961, or the dreaded “Angel Tax” was inserted by the Finance Act, 2012 to tax any capital raised by a closely held company which is above its Fair Market Value (FMV) as income from other sources, with Rule 11UA(2) stipulating the following two methods for determining the Fair Market Value:
Net Asset Value (NAV) Method
Discounted Free Cashflow (DCF) Method
However, the Fair Market Value in section 56(2)(viib) is defined as the value
(i) as may be determined in accordance with such method as may be prescribed (Rule 11UA(2));
(ii) as may be substantiated by the company to the satisfaction of the Assessing Officer, based on the value, on the date of issue of shares, of its assets, including intangible assets being goodwill, know-how, patents, copyrights, trademarks, licences, franchises or any other business or commercial rights of similar nature,
whichever is higher;
This section, in particular, has been a bane to small businesses, startups, and investors as it seeks to tax any amounts invested by a resident individual into a privately held company. In the sections below, we will explore the problems with the sections that govern the Angel Tax issue as well as the remedies that have been actioned by the government.
With a few more recommended clarifications and modifications, the entire issue can be resolved to incentivise the ecosystem and reward good behaviour.
Analysis of Section 56(2)(viib)
The reason why 56(2)(viib) evokes such fear in the hearts of startups and investors is that it bestows significant discretionary powers in the hands of the Assessing Officer (AO), goes against the principles of the DCF method, and until recently, discriminated against individuals on the basis of residency.
There are four major issues with this section which causes significant problems to Indian startups.
1. Lack of Enforcement of the Law:
56(2)(viib) clearly states that the FMV shall be the higher of:
— Value as per NAV or DCF (Rule 11UA(2)) OR
— Value to the satisfaction of the AO based on the value of the company as of the date of issue of shares
From a plain reading of the section, it can evident that even if the AO is unsatisfied about the value of the Company or believes the value to be lower, the disjunctive OR allows for the higher value to be the Fair Market Value (FMV).
Ideally, the Assessing Officer should not have the discretionary power to disregard a valuation acceptable to the entrepreneurs and a group of sophisticated investors and arrived at by a professional in the form of a qualified Chartered Accountant or a Category I Merchant Banker. Many startups have faced a challenge whereby the AO takes the lower value as the FMV and taxes the entire premium as income in the hands of the companies. This results in the law not being fully enforced, leading to consistent bias against the companies.
2. Discretionary powers of the IT Officer:
The valuation arrived at by the Company is on the basis of a Valuation Report given by a qualified Chartered Accountant or Category I Merchant Banker, is based on the inputs of the management and is acceptable to sophisticated investors. However, it has the additional criterion of being to the satisfaction of the Assessing Officer. This subjective interpretation often goes against the objective valuation methodologies specified in the Income Tax Act.
For tech entrepreneurs or ventures with long gestation cycles, this hampers the flow of invaluable capital needed to scale their businesses and causes a lot of them to flee to other countries like Singapore or the United States of America to escape this requirement to satisfy the AO.
This imputes significant discretionary powers in the hands of the IT Officers and exposes startups to the tender mercies of the taxman. It also takes away from the very basic tenets of finance, as shown below.
3. Projections vs Perfection
The principle of a DCF valuation is to encapsulate the present value of possible future cash flows. These are based on a Business Plan prepared by the entrepreneur to the best of their abilities and subject to various risk factors, market conditions, etc.
To penalise an entrepreneur for failing to exactly reach their projections by comparing it to their financials on a later date vitiates against the very premise of DCF and robs of the uncertainty inherent in it.
The market penalises failure by making future funding harder to come by, an erosion of brand value, of morale, etc. — but adding the risk of a massive tax liability for assuming that the future is certain will cripple the entrepreneurial mindset of venturing forth in spite of deviations from ideal plans.
The law states that the FMV is based on the valuation methodology adopted as of today, but takes into consideration what the future may hold. However, 56(2)(viib)(ii) flips this on its very head, as shown below.
4. Present Tense, Future Uncertain
56(2)(viib)(ii) states that the Company needs to satisfy the Assessing Officer based on the value of the Company as of the date of the fundraise, whereas the valuation methodologies (56(2)(viib)(i), which leads to Rule 11UAA), allow for you to discount future cash flows as of today.
These contradict each other as the value as of today will always be less than the value in the future.
This allows for the complete disregard of the DCF methodology by the AO, leading to taxation on the basis of the present Net Asset Value instead of the probable future value.
The Added Dread of Section 68
In addition to the challenges with 56(2)(viib), Section 68 of the Income Tax Act, 1961 adds another dimension to these issues. Section 68 states that any sum credited to the books of accounts of an assessee can be charged to tax if:
The assessee is unable to explain the source of the credit;
The explanation is not to the satisfaction of the Assessing Officer
Several startups, who have faced off with the sword of section 56(2)(viib), also have to contend with section 68, which again allows for significant discretionary powers in the hands of the Assessing Officer compounded by the discretionary powers already afforded by section 56(2)(viib).
This tag-team reminds one of the chants that haunted the English cricket team during the 1974–75 Ashes tour of Australia-
Ashes to Ashes, dust to dust, if Thomson don’t get ya, Lillee must.
Given a choice, several entrepreneurs would rather brave the danger of the speedsters than the discretion of the taxman.
Remedies Already Enforced
The government has taken several proactive steps to protect and nurture the startup ecosystem in India. But this Sword of Damocles still dangles over the head of every entrepreneur. Until it is sheathed for good, there will always be fear about these issues.
On June 14th, 2016, the CBDT released a notification stating that for any company registered as a “Startup” and recognised by the Department of Industrial Policy & Planning (DIPP), any amount raised from an Indian tax resident will be outside the scope of section 56(2)(viib). The total list of exemptions to this section are:
Any funds received from a Venture Capital Fund or Venture Capital Company
Any class of people as notified by the Central Government, such as:
— From June 14th, 2016 — for a company registered as a “startup” under the Startup India Scheme — any resident
While this goes a long way in helping future companies, those who raised money in assessment years 2015–16 and prior are still exposed to this section even if they are startups.
With a few more additions and clarifications to these sections, the last vestiges of doubt can be quickly addressed to help the startup ecosystem proceed forward with clarity and confidence.
If a company has a valid valuation report in accordance with the law, the tax authorities should not be able to question if the valuation is justified based on prospective information
If any entity qualified to be a startup from June 14th, 2016 onwards, 56(2)(viib) should not apply for any funds raised at a premium from the date of their incorporation
The exemption under 56(2)(viib) offered to a startup shouldn’t be denied on the technical failure of not applying to become a startup if they qualified to become recognised
The PAN details of the Investors should be sufficient explanation of the nature of the cash credit for Section 68 and for the Assessing Officer to decide, based on the investors past tax filings, if the source of income can be substantiated or not
Out of the USD 10 Billion of investment into the Indian startup ecosystem last year, only 10% of it came from domestic investors. If the inspirational Make in India and Startup India visions of the government are to be achieved and the true value of the ecosystem is to be unlocked, the government must focus on encouraging domestic investment instead of penalising it. Domestic investors shouldn’t be discriminated against and treated sub-par to foreign investors in terms of the legitimacy of their money, which is the current status quo under 56(2)(viib).
Quick Update: We have submitted our response on 30 January 2018. You can find it on this link
It is widely known that the amount of data generated daily worldwide is rising at an incredibly exponential rate. Yet, what remains shrouded is how this data, particularly those data types concerning or generated by us, as individuals, are being used and stored by both the public and private sector. As we move into a data-driven world, it is crucial that the laws developed around Data center on the premise of both empowering and protecting the individual. In fact, the main purpose of the 4th layer of India Stack, the “consent layer”, is just this: to provide for a set of tools and utilities, as part of the Data Empowerment and Protection Architecture (DEPA), that empower citizens to assert control over their data.
The Justice Srikrishna led committee of experts has released a White Paper articulating their provisional thoughts on the Data Protection Framework, and are seeking public comments on the subject. iSPIRT will be submitting a formal response to the White Paper. This blog post lays out our current views regarding Data Protection and we seek suggestions and comments from the larger iSPIRT community as we finalize these into iSPIRT views.
We want the community members who are keen to contribute on the topic. If you have any feedback or you’re interested in contributing to the response, please reach out to us at [email protected]
Restoring balance between the individual and data controller
From social media platforms to online loan applications, to ride-sharing apps, many of the services we access regularly require mandatory data collection from the individual to the data controller, either on a one-time but often on a recurring basis. Data collected by data controllers often gets used in ways far outside the stated purpose. This in turn automatically places the individual at a data-disadvantage, so to speak. We believe that this current industry practice is an anomaly and data collected must be used only for the purpose it was collected for and nothing else. The law should work towards enforcing this principle and aim to restore balance across all elements of the privacy construct i.e consent, notice, choice, etc.
In addition, the use cases for data are also rapidly evolving. Without empowering the individual, in addition to restoring the balance, a data protection law cannot be considered complete; bringing us to the second core principle.
Data should be used to empower and not for harm
Indians will be data rich before they are economically rich. They must be empowered to use their data for their own benefit. For example, I must have access to a secure mechanism to share my financial information with a personal finance application such that I may easily track my spending and get intelligent recommendations on where to invest.
Progress in the area of data sharing is evident as in February 2017, the Digital Locker Framework was proposed as a national standard for aggregation. Along with it, an Electronic Consent Framework for enabling consent for sharing of data has also been released.
Yet, what about the vast amounts of personal data that have already been collected under various legal frameworks? Under new norms, individuals can be empowered by being given an option to “opt-out.” Where this is not feasible, the law should favour the rights of the individual, placing the higher onus on the data collector.
Individuals have Rights over their Data
When consent models were first implemented in the 1980s, data was largely static in nature. The opposite is true today with data being tracked, processed, and correlated in a multitude of forms, from the trends of our online shopping choices to the timing of our financial transactions. This transformation calls for a move away from the antiquated “consent-based model” to a “rights-based model” for data protection. The proposed rights model can be guided by three principles: accountability, autonomy, and security. Together these principles will ensure that individuals are provided a right to fair treatment, right to information, right against processing, and right to the security of his/her data. For additional information on the rights-based model, the Takshashila Institution has released a Discussion Document on this very paradigm.
The White Paper stays away from the word ‘ownership’ completely and instead opts to create rights which are always with the individual. The individual has a right to each piece of data that relates to her, and she can exercise this right to accomplish everything all that she needs. The data controller does not have any rights to this data other than those granted by the individual. We (iSPIRT) need to come to a conclusion as to whether this language is sufficient from our perspective.
Data controllers must be accountable
Data controllers are typically organisations (including non-profits, governments) and hence much more powerful than individuals. While consent is important from an empowerment standpoint, we are also aware of the practical shortcomings of this approach. Many users do not or can not know enough to make a truly ‘informed’ choice. The data controller, on the other hand, has been entrusted this data by the user for a specific purpose – it is a very conscious act, and they must be held responsible for how this data is used. This is a fiduciary responsibility, and the controller must keep the data secure, ensuring that the user does not come to any harm from their possession or handling of the data.
This accountability needs to be enabled and enforced by multi-dimensional checks & balances through an independent Data Protection Authority and appropriate adjudication process that will process dispute resolution when situations involving privacy harms have occurred.
Times of disruptive change require agile regulators
Successful businesses today must have the ability to evolve rapidly. Operating in this environment will require regulators to be agile and provide timely intervention. The law must also recognise that these changes are accelerating and that it will be impossible, at this time, to cover everything. Thus the law should empower regulators by providing a framework with a set of principles which are timeless, along with a mechanism that can change with the times and a context to provide suitable intervention.
Leveraging technology for enforcement
Data is no longer the imperative of a few industries, but fast becoming a utility across industries. Therefore, unlike other regulators for Savings, Lending, Banking or Telecom, the Data regulator will have to deal with at least 10,000x the number of entities. Every company deals with the data of its employees, shareholders, customers, vendors, etc., which may fall under the supervision of this regulator. In such an operating environment, it makes it imperative for the enforcement of the law on data to leverage modern technology tools to drive compliance, investigation, etc.
For example, the authority could create a technological framework for enforcement (such as data audits, logging, etc.) to minimise the effort required and only needs to regulate the exceptions or data breach notification could have the objective of helping mitigate the consequences of a breach and to serve as notice for an incident.
Balancing India’s needs for privacy, transparency, and development
Balance is a universal aspiration in all aspects of life and an essential requirement for smooth, sustained and predictable growth. If the balance between privacy and development is not maintained, we may end up with a scenario where an individual may not be able to use their personal data, sitting with one data controller (say tax authority) for a beneficial service from another authority (eg new loan). Similarly, the balance between privacy and transparency is also essential, especially for scenarios involving the utilisation of public resources i.e. a PDS shop refuses to provide details of beneficiary it services under the garb of privacy and is thus able to misuse the system to create ghost beneficiaries.
The law should encourage concepts such as anonymised open datasets and democratised access to other datasets that serve the public interest, paving the way for data to become a public good. The UK’s Biobank & RBI’s effort to create a Public Credit Registry are good examples of data becoming a public good.
There is also a need for balance in the efforts and action of the state and private organisation on surveillance and related activities. With newer technologies making access to data easier and cheaper, it becomes even more important to tread the path of balance more carefully. History has proven, time and again, how surveillance will be misused for personal benefit. Therefore, the law should explicitly call out principles to prevent misuse of surveillance.
In addition, the new law must harmonise various existing laws, particularly, the Information Technology Act, 2000, Aadhaar (Targeted Delivery of Financial and Other Subsidies, Benefits and Services) Act, 2016, and Right to Information Act, 2005, which directly or indirectly touch upon the issue of data protection.
Overall, the law should strive to create a balance between protecting personal privacy, providing transparency and accountability for institutions (including government), and ensuring development, growth, and empowerment for the individual and other market participants.
Innovations: Trust Score & Consent Dashboard
It is refreshing to see the White Paper bring out new concepts for consideration like the Trust Score and Consent Dashboard.
The innovation of a Trust Score could also provide a means to empower users by assigning every data controller a score based on the robustness of their data protection and data use practices. At a minimum, this would create a red-flag in the mind of the user, versus the black-box that users currently manage, prior to sharing personal information.
Having said that, the actual design of the Trust Score will be critical. It is easy to understand that the score will punish past incidents of data misuse, but we must also decide what behaviour to reward. Should the score be decided by a centralized authority or through decentralized feedback from end-users, audit agencies, etc.? iSPIRT welcomes views on designing such a Trust Score.
A Consent Dashboard could help individuals easily view to which organisations they have provided consent to process their personal information and how that information has been used.
The Consent Collector entity, part of MeitY’s Electronic Consent Framework, may be extended to perform the function of a Consent Dashboard. Through the consent dashboard, businesses may capture and log user consent, provide users with the ability to see what data has been collected, give users the ability to revoke their consent and erase their data, be able to notify users in a timely manner in the event of a data breach, and most importantly give users the ability to easily port their data to another data controller.
The Consent Dashboard could be designed in a manner such that it only generates and tracks an individual’s consent for collection and sharing of data. However, the data could be directly sent from the Data Provider to the Data Controller (and Data Processor) without passing through the Consent Dashboard. In this way, the Consent Dashboard could just be a registered entity, not a regulated entity, and be maintained by a third party instead of the government.
We request your thought/comments on the principles above, and in helping to add/subtract to the list. The final principles will guide and inform iSPIRT’s response to the Sri Krishna Committee White Paper. If you wish to engage more deeply on this topic of Data Empowerment & Protection and help us frame the response, please let us know by reaching out at [email protected]. The feedback submission on the White Paper is Jan. 31st 2018, thus we request all responses by Jan. 20th 2018 to receive consideration.
Update : We have submitted our response. You can find it on this link.
This post has been co-authored by Shrikant Karwa and Sarika Mendu.
The Product Market Fit or PMF in short is one of the first holy grails that every entrepreneur strives to achieve. The second Holy Grail is also another “P” – Profits, which I will deal with in a blog post later.
I will share my learnings of what constitutes a Product Market Fit for an Enterprise Healthcare product, based on my journey of building HealthMacro’s DiagSmart product that is focused towards Diagnostics Labs and Radiology Centers.
I have travelled across 5-6 states spanning several cities, meeting hundreds of Diagnostic & Radiology Lab owners to come to this understanding.
An ideal product-market fit has the following characteristics:
Timeline : Usually for an enterprise product, it does take time (somewhere from 1.5 yrs to 2 years) to achieve a market fit after the product launch. Once one has achieved this, it means the following.
Strong understanding of customer needs, budget and value chain : Once you meet a customer, you know where he/she fits in the Price Chain. You have deep knowledge of his customers, his competition, his pain areas, his revenues, and his annual budget.
Acceptable across multiple segments : Usually we build the first product with more features, and then realize customers do not want all or are not willing to pay for all features. So you segment it. Segment it based on # of users or # of features to make it affordable for a wide market. We segmented it as DiagSmart Mini (lower end) to Basic (Value Product) with Enterprise and DiagSmart Premium models for top end customers. Each model has differentiating values based on the price customer is willing to pay.
Strong understanding of your competitors’ strength and weakness: Deep knowledge of your competitor’s strength and weakness, w.r.t Features and pricing is key. You need to respect your competitor as you still discuss with customer why they will benefit from your offering. In one instance, we had to segment the Product as a DiagSmart Mini to fend off competition with a lower price range model.
Acceptable across regions: In a country like ours, where there are no healthcare standards, in every region there will be local players who will have dominated the market with their product. Selling in newer regions and winning there is one important trait. For our lab product, adherence to existing NABL lab format reports was the key to driving acceptance.
Clear Value Proposition: Your demo should do the work of showing how financially beneficial the product is to the prospect. You do not explain much. User experience is key here. Ensuring a flawless demo, where various customer stakeholders (owner, lab staff, Finance, Front desk…) finds their needs met is key in the demo meeting.
Your rate chart should explain the cost in a simple manner and the customer chooses what he needs based on his budget.
Other Guidelines to ensure Successful Product Market Fit :
Single Code Base : Once you allow a customization for a particular customer, it no longer remains a product. It becomes a project. You end up with multiple versions, resulting in larger teams to maintain it.
Hence, a single code base is critical. There should be options turn on/off certain features/customizations, based on customer budget/needs.
You take inputs from the customer to the product, and based on the value to the product, you decide to add it to road map or not. All customers have one code base.
Customer Care : You have a efficient Customer Care or Post-Sales Support team to take care of all their needs, with a clearly tracked process. Customers know how to reach you and what to expect as turnaround time.
You should be able to support new cities/regions without having a local office/support center.
Strong Engagement : Customers get monthly newsletters informing them of the progress of the product and the company. They respond with their feedback, inputs.
Strong Testimonials and Referrals : You should start getting strong testimonials from customers explaining how your product or Service has helped them. They do not hesitate to recommend you.
Water tight agreement with customers : You have strong water tight agreements with customers protecting your business. There are clear descriptions of services, costs and timelines, termination clauses leaving nothing open ended.
Clear mapping of the entire Business Process : All processes Pre-Sales, Sales, Sales to Engineering handoff, Customer On-boarding process, Customer Care process are clearly defined. All process are documented, clear training plans when you hire new folks. All members follow same process.
In summary, you lead the customer/prospect overall in all aspects of business. You are not dependent on few customers for their inputs/business. Customers respect you and trust you.
That’s when you have achieved “The Product Market Fit…”
When I was a kid, the only goal that I had in my mind was to become a cricketer and play for India. But never did I get an opportunity to play beyond the gully cricket and few matches as part of the school cricket team and my cricket was just restrained to the park level.
My dreams of scoring a century have now finally been full-filled. Playbook RT, something that started in the early days of iSPIRT, turns 100. This is my first century, the gully cricket ones not withstanding.
As crisp as that sounds, it took us around 15 Round Tables to distill this elevator pitch, and truly understand our own product-market fit.
This is the story of how it all began, and of the amazing journey, the lessons, the people who made it all possible. For those of you who love visuals more or are pressed for time, there is a photo-story at the end of this post — please feel free to scroll to the end of this post for that.
Ashish was a splendid host for the first playbook. I still remember the yummy samosas and kachoris that we got during the break and I still remember Ashish helping his office boy in serving tea to all the participants. I was blown away by the simplicity and the humbleness of Ashish. Thanks to Nikhil Kulkarni(Flipkart) for capturing all learnings in a subtle way.
I got to read a wonderful blog post by Sridhar Ranganathan on Products and I did reach out to him to see if he could help us with the Playbooks. He liked the idea and Aneesh did the selling to him. Sridhar travelled to different cities and did the first playbook for us in Chennai & Hyderabad.
We did a late beginning for Mumbai and thanks to Avlesh(WebEngage) for helping us in starting the movement with Sandeep’s support. Avlesh disappeared in the middle of the playbook and he had lots of documents to sign as it was a saturday… But I remember Sandeep holding the fort till Avlesh came back and shared his learnings of building WebEngage.
Organizing and hosting a playbook is no small feat. It has taken us a lot of time to put together the following checklist. Feel free to use it if you would like to put together something similar for your community. We have built new initiatives like Cohorts, etc using the same principles.
There cannot be more than 12–14 participants. The sweet spot is 10–12 participants. Minimum number is 5.
We must select participants with similar levels of maturity in the context of the topic. (Over time we should develop a predicted coherence score and see if that prediction is valid based on post-RT data collection.)
Adequate discussion should take place with the Facilitator on the topic. It should be sufficiently narrow. It should not be about batting as a whole but about how to play leg-spinners. There would be a Plan B by the Facilitator if the topic ends up being too narrow. It is wiser to err on the side of being too narrow, rather than being too broad.
It is mandatory to for a first-time Facilitator to attend a PlaybookRT for at least one hour.
Curator should discuss Facilitator checklist. This discussion should happen before selection of the topic.
Four weeks advance notice should be given for PlaybookRT if it is not tapping into a pre-curated participant list (e.g. BEX or InTech50). This is to ensure cross-city participation.
Postmortem call (30 mins) is mandatory. Participant feedback and other learning should be discussed in this call. At the end of the call Curator should assign an overall rating (on a scale of 5) to the PlaybookRT.
Participant feedback for NPS Score must be collected.
You must select a topic that you are comfortable with. You must have expert practitioner knowledge about this topic.
You should reach out to startups to scope out the specific topic areas you’ll cover.
You should be part of the curation (i.e. shortlisting) of the participants… you must try and get participants at the same level.
You must do the homework on the final participants. You must learn about the startups by visiting their website. You must also understand the challenges faced and expectations from the PlaybookRT (this information is in the form filled by the participant).
Identify 2–3 participants that could be anchor attendees — folks who will trigger conversations and also add value to the conversations.
Engage the participants for the first 30–45 mins to break the ice. You should go beyond introductions — Something on the lines of: We are struggling to do xyz. The goal is to create an atmosphere of trust so that they spell out more details.
Participants are continuously requested to chime in with their views. You should also make sure that everyone speaks in the room. For instance, Shankar Maruwada asks very specific questions to participants along the way. He is able to do this because he has done homework on each participant beforehand.
Seating should be such that people can see each other.
Make sure that the focus area of the RoundTable is 6–8 points. It is difficult for participants to retain more than.
Encourage the usage of whiteboard with participants. This allows people to change position and brings energy in the room. Peer learning is vitally important. Don’t be a sage on stage.
Share list of books/videos/tools that participants should use after the RT.
Ensure there is a break taken after 150 minutes.
At the end, summarise key learnings by each participant. Everyone speaks for at least 2–3 mins.
My job has been very simple, just keep hunting for the Curators & Facilitators and allow them to make the magic happen 🙂
Special thanks to Niraj Ranjan Rout(Hiver) & Rushabh Mehta(ERPnext) for introducing the new format i.e the Tear Down sessions and helping early stage(pre-product market fit) companies on helping them find their product market fit.
All the Maven’s have signed the below code of ethics:
Our team of Dedicated & Committed Volunteers who made this happen in each city
Thanks to you who make time in your incredibly busy lives to make these sessions happen.
Many volunteers who have helped in writing blogs for and about the sessions and also help in editing some of my blogs… especially Sairam Krishnan & Kingston David.
I am terribly sorry if I have missed out someone here! I know you will be modest but please do let me know so that I can add your name here. In highlighting your efforts, we motivate others in our quest to make India, a ProductNation…
ProductNation Founders Tribe
There are around 1000+ Founders who have leveraged the playbooks and the list can be accessed here.
There are hundreds of big and small moments that have made up this journey so far — it is impossible to capture them all here, but I am sharing some of these moments via this photo story — I hope to give you a flavour of the energy and spirit of what made us reach 100!
Building great products requires us to understand customer needs and its nuances, are more often than not, counter-intuitive to our assumptions. The Design Thinking Roundtable session by Deepa Bachu helped us identify methods to bridge this gap between building great products and understanding customer need. I was lucky enough to be part of the small group of product managers, designers, and fellow entrepreneurs to have an engaging discussion onimportance of design as an innovation strategy. How well do you know your customer?
How well do you know your customer?
Deepa’s opening question “Do you know your customer?” probably got all of us thinking on do we really know our customer. Personally, I somewhat know my customer. Just for that veryreason I am sitting at my client’s front office to fulfill the basic requirement: that of understanding my customer better. Working with Enterprise businesses requires us to learn and appreciate that we have 2 types of customers: 1> Management 2> the Actual End-user. We build our assumptions from our conversations with the management team who are the decision makers, but it’s the end-user that matters. The end-user, who is the employee should stand to benefit equally or probably more than the management, for our product to succeed. Every designaspect, needs to be geared to make the daily user happy. Understand your customers
Understand your customers
After knowing who your customer is, the ascent for a better product begins with sitting down with the end user in an amicable environment to learn about their challenges and their day to day experience. Deepa pointed out the importance of empathy, active listening and observation to help capture the end-user’s experience. Her role play exercise with one of the participants around the difference in the approach on asking open-ended questions while actively listening and observing delivered a completely different set of answers, in comparison to when as an interviewer she was asking closed ended questions and was not actively listening. In short, let your customer speak & take notes!!
Participants in the middle of the interview role play exercise
Remember that the customer is only explaining their challenges or sharing their activities. Value addition to our product comes with inferring from these observations to identify insights. To find that hidden customer need, we will need to introduce adequate structure to the information collected from the customer / end-user. Some of the tools for us to use are:
Empathy Maps to record our observations, which helps us split the talk and action of the end user that we can use to interpret the observations
Ecosystem Maps help us understand the customer’s environment and his / her ecosystem. A map to tell us the sequence of events that are leading upto our solution or after the solution.
Problem Statement helps us see the customer’sview point and their emotionalconnect to the problem. From a product point of view, we can turn a poor customer experience into customer delight by evoking the right positive emotion after using our product. Mind you, these folks are your product advocates.
The core of design principles is not nailing your UI/UX, it is matching your customer need, the problem they are facing in the environment they are using / will use our product. Only when the experience matches this customer need will we really see true customer benefit. Value addition of this benefit requires the need to collect the right metrics to understand if we genuinely made a difference instead of vanity metrics like just increased downloads / users.
By understanding our genuine impact, we can course-correct our product with continuous improvement coupled with rapid prototyping to help us slowly move towards our product goals and vision.
What’s the one thing participants will do differently after the #RoundTable?
Overall a great learning experience thanks to Pensaar and iSPIRT for setting up this session.
Editor’s Note: This #RoundTable happened to the 99th one and there was a small celebration on this occasion. It’s been a great journey so far and we’d like to thank all the participants, facilitators and volunteers who made this possible. Here’s to making India a Product Nation.
Michael Jordan once remarked: “I’ve missed more than 9,000 shots in my career. I’ve lost almost 300 games. 26 times I’ve been trusted to take the game’s winning shot and missed. I’ve failed over and over and over again in my life and that’s why I succeed.”
Ask any entrepreneur, and they will say, well, this is the story of my life. Owning a business is one of the most cognitively challenging jobs. To move from a stable job with a steady income to one where uncertainty is the flavor of the day every day takes courage, competence and confidence. Most of all, it requires an emotional tolerance strong enough to deal with the pressures of change and unpredictability, not to mention the mental fortitude to navigate through it.
As iSPIRT approaches its 100th Playbook Roundtable, Avinash conceived the idea of a completely different roundtable theme. One that focused not on strategies and tactics that a founder could apply to his product but one that focused more on the tremendous evolution that an entrepreneur goes through in his or her journey. And who better than Abhishek Sinha of Eko to facilitate such a roundtable.
The playbook was held at Eko’s office on 3rd June 2017 with a select set of entrepreneurs in the Delhi NCR region.
Taking a leaf from Jeff Bezos’s playbook, Abhishek drafted a 6 pager that covered important phases in his entrepreneurial journey, and all the participants spent the first 30 mins going through it.
In this 6 pager, Abhishek shared real life stories all through his journey of 6d and Eko. These stories touched upon how he became desperate and did more of the same. How he understood for the very first time that it is critical to think different. How he attempted at thinking big and audacious. Why being young and with it being foolish and naïve helped. Once one has started on a big goal why it is critical to developing the understanding of the landscape especially regulations. How he learned the importance of execution, scaling and making money. The mistakes he made when Sequoia and Khosla wanted to write cheques and he couldn’t close the deal.
More importantly the lows in his personal life and how he sought help to get things back on track. How he has personally exhausted all options to lose and hence winning is the only option. Today, as a battle-hardened entrepreneur, why he has the conviction of success.
These thoughts set up the tone for an interesting set of candid discussions and expressions over the next few hours. I have captured some of them below:
Enjoy your journey
Most of us started on the entrepreneurship journey with the idea to create something cool or do something fun. It was never about creating a billion dollar business.There was a lot of pureness to this thought as we went about solving one problem at a time, and having fun. But slowly we stop enjoying ourselves. We stop thinking differently and start doing the same thing again, and again. This brings in predictability but stops us from experimenting different things.
So when you are questioning your journey and your growth (success or lack their off), just remember you are where you are supposed to be. It will work out fine, just trust in your journey. Sit back and relax and enjoy the ride. You will be surprised where it takes you.
Once you get to the top of the mountain you may come to miss the fields below. So take the climb one step at a time and enjoy the journey, entrepreneurs.
Abhishek reflected on near-death experiences in his business and how he managed to get over it. He hasn’t been able to put my head around why a certain deal fails and why one succeeds. Ambarish from Knowlarity too chimed with a similar thought where atleast one or 5 occassions, something happened that kept him and his business going. If one simply applies theories of probability to these random events, the result becomes even more inexplicable.
This has driven Abhishek towards the realm of spirituality and over a time trust in a higher energy which has taken care of him. He has become a strong believer in destiny and a higher power, and that if we pursue our dreams the doors will open up.
At the risk of being cheeky, I couldn’t help but share this SRK dialogue.
Believing in destiny though is not about sitting back, and letting whatever is happening to happen.
Create a Cause or Purpose that People can relate to
Abhishek mentioned how he takes inspiration from religious organizations that create a cause that people can relate to, and inspires them to work towards its goals. Mark Zuckerberg in his recent commencement speech at Harvard also touched upon this, where he mentioned that when President Kennedy was visiting NASA space center, he asked a janitor what was he doing, to which he replied “I am putting a man on the moon Mr. President.”
A sense of purpose truly comes from within, and you can’t find meaning with a company that doesn’t share your values. So one of the simplest ways to cultivate a meaningful workplace is to stack your team with people who share the passions of your company. When everyone is aligned as a part of a bigger movement — that’s when the true meaning behind your work (and your company) shines through.
Ambarish shared how he ensures that all candidates, interns and vendors in his company are interviewed personally by him. This does take away a sizeable amount of him time, but it helps in multiple ways:
It keeps his team on the check as they know all vendors and candidates have to get past Ambarish
In his interview, Ambarish dissuades candidates to join by spelling out all the challenges of working at Knowlarity. This ensures they don’t just actually hire but let those people who in who really want to join Knowlarity
Driving ownership in teams and individuals
Entrepreneurs are problem solvers and product people, and are able to spot patterns & problems in the current scheme of things, and the relevant solutions very easily. And we immediately get our teams to work on the solution. This is a bottom up approach. You instruct an employee to perform a task or even accomplish a goal. But in effect you still own that task or goal. You tell the employee what you want, you define success and you create metrics to measure that success. That’s accountability. The employee takes responsibility for getting done what you want.
However a top down approach requires entrepreneur to only mention the problem to the teams and outline the contours, and let them come with the solution. This requires patience, and as more often than not, the solution will be staring right at your face while team members will go though their own curve before they discover it. But once the team members do come up with the solution, there is more ownership as this is now their baby.
Ownership happens when an employee comes forward and says, “I’m going to make this happen. Here’s what I will do. Here’s what I will accomplish. And here’s how I will measure progress.”
If you only have one or two employees and you love to micromanage, you can get by with hiring people you will simply hold accountable.
But if you’re truly trying to scale your business for growth, micromanagement soon fails. There is simply no way a chief can be involved in every task, process and decision.
If you foster a culture of ownership, you don’t need to be involved in every detail. You can focus your attention elsewhere, secure in the knowledge that owners will always come to you when they have problems or need help.
Be Different and Not Just Better
It’s not about doing more or better, it’s about doing different. If you can create that which is new and different you stand a greater chance of success. You can find white spaces that you can fill in.
When you break rules, you experience something unique. Ensure you savor this uniqueness even if your ideas bomb because these unique and different efforts will create experiences that themselves are unique.
Create Crisis In Your Mind
An entrepreneur often needs to play mental games with himself or herself. These games allow you to challenge yourself and create a crisis in your mind that pushes you to think creatively and innovate. If fear of the unknown has you tied down, try this: after you find yourself posing the “what if?” question to yourself, answer it. By doing so you bring that unknown fear into reality and make it more tangible and certain. With certainty comes clarity and with clarity comes opportunity to crush all challenges.
Remove Safety Nets and Bring Focus
Having safety nets or diversions lead to entrepreneurs loosing focus.It sometimes become imperative to remove these safety nets. When you have safety nets, you are not all in. It makes you timid to jump in with both feet. But when you remove all these safety nets, you have only one choice: take the leap.
Having your back against the wall you are forced to go all in, forced to make it work, forced to believe in yourself.
The session culminated with Abhishek sharing how he is taking inspiration from the Android model and smartphones that creates an unbundled experience for consumers. Feature phone could do (i) calling (ii) messaging (iii) entertainment / games (iv) value added services like calendar, alarm, notes etc. Though all these are fairly tightly bundled and hence customer couldn’t exercise choice – take it or leave it. Smartphone is an unbundled architecture. It offers the same four functionalities though as its architecture is completely unbundled and open – it empowers the customer to make the choice basis their transaction scenario / context and cost. A similar framework could be applied to several industries to create unique products and solutions.
As the session ended, one could sense how Abhishek had been socialised to the highs and lows of business life. The mental game of entrepreneurship often feels like Snakes and Ladders. There were days for Abhishek when he just wanted to run away, where he felt as if he was in freefall and plummeting to the ground without a parachute. But, looking back, those are the moments that defined him. He has accepted – sometimes with a lot of delay and a good fight – that he was the architect of the bad situations and he accepted full responsibility for them. That is how he bought his freedom.
It’s only by acknowledging your failures that you can build on your successes.
Guest Post by Rajat Harlalka, Volunteer for iSPIRT
The toughest challenge in your startup journey is getting to the milestone of first 100 customers. iSPIRT’s 97th PlayBook RoundTable, ‘Zero to One’ was held last Saturday in the hot and humid city of Chennai.
Ankit Oberoi from AdPushUp moderated the RoundTable which was attended by 13 other startup founders eager to know how to crack this. The PlayBook didn’t have formal presentations but rather involved everyone into an engaging conversation that was both informal as well as informative.
First things first, as early stage SaaS startups, “Kneel down and build your product well, when bootstrapped” was Ankit’s advice.
Identifying Target Customers
Emphasis was made on identifying your target customers to help you build the right inbound and outbound strategies. Ankit mentioned that a good way to find your target customer type is to look at your top ten customers. Few entrepreneurs looking to generate quick revenue might tend to drift towards a service model.
Arvind Parthiban, CEO of Zarget had an insight on this trend — “Going the service way will work only if one can scale up right and maintain profitability in the longer run”.
Inbound Marketing Tactics
A majority of the discussion was about inbound procedures. 3 simple things should make up your Content Marketing strategy –
Identifying your target persona
Creating quality content
Setting up distribution channels
Just creating content will not cut it! You need to market it right to do justice to its quality.
Though it is a painfully long process, bootstrapped startups have the luxury of time and they should invest in building on content strategies around long tail keywords. Much emphasis was given as to why content should be created for personas. An example that was pointed out for this was Groove’s blog where the focus is exclusively on founders.
It is right for early-stage startups to focus on generating traffic through content but the real focus should be on giving value to the readers. Conversions can happen even later and not necessarily while reading your content. Growing a subscription list through your blog is not only a no-brainer, but a must have item in your growth stack .
Ankit stressed on how Neil Patel talks about why you need to urge your readers to subscribe right from the start. When you have a subscribers list, you can nurture them to share your content and build a bigger subscribers list which will ultimately increase your brand value and improve your customer base. Initial days of your startup journey are when you can do such things that take time to scale.
Intent Defines Inbound
Categorize your efforts based on intent when you are going all out on inbound marketing. Content writing has to be segregated widely into two types –
Buyer intent content are the ones written with the focus on ranking higher on search engines. These should have focus on keywords and the main objective of these content pieces are to sell your product.
Value intent is when you become a Thought Leader of the industry you are in. Helping your customer persona should be the name of the game when you generate such content. At times, you don’t even have to put a link back to your product when you write such content. Educative long form content with simple writing works best.
Just like content writing, content distribution too has to be categorized based on intent.
SEO intent — You share the article/blog with search engine ranking in mind
Sharing intent — You find avenues where people are bound to share the post more
Distribution intent — Sharing in one place that sets off a chain of shares
Be spot on with your content!
Creating a content calendar is a must! Knowledge sharing on this topic pointed out that the calendar should be finalized, ideally, in the first few days of the month. Decide on buyer intent topics with the help of keyword planners. Thought leader articles can be written with the help of community platforms — find answers for the most-asked questions. Quora is a gold mine to search for blog ideas.
The consensus from the more experienced entrepreneurs at the RoundTable was that content has to be tested too. The headline is the most important bit of your article/blog. Ankit spoke about how 75% of your readers don’t actually read your content but rather scan for information. He shared a personal insight on how just a headline change helped AdPushUp make an article go viral overnight! Check out this article here.
As much as headlines, the first few lines matter too! In fact, most people who share an article actually read the intro and then skim through the article. Sharing happens not because people read it fully but because they feel it is relatable to something they would read and want to express to their circles about the type of content they would read. Your formatting should be spot on to help them digest your post in just a few seconds!
Headlines need to be tested extensively. Vengat from Klenty stressed on how testing one variable at a time is imperative for success. Ankit talked about how he narrows it down from a couple dozen headlines for their blogs. A/B test between the best ones to ensure you get the best variation.
Types of articles to try…
The Zero to One #PlayBookRT stressed on a few interesting article types startups should try –
Summarizing Comprehensive Blogs — Found something useful? Write a brief, original summary of the blog. This will rank organically. Ensure author credits are given.
Roundups — Take a pick of useful tips, quotes, tools etc., and do a roundup. Reach out to the people/products/companies you mentioned and they will share it to their followers
Skyscraper Technique — Find an awesome content and piggyback on it. Find linkable assets, make it better by adding in your thoughts or collating ideas. Reach out to the authors of the post and share it on social media.
While on the topic of Content Marketing, the topic of paid promotions came into play and it was agreed upon that paid promotion for articles should be done with the intent only to hit a critical mass. With paid promotions, readership is not improved but only the views are artificially increased. A good insight from one of the attendees was to try and push notifications about blogs through live chat platforms like Intercom.
Hiring your inbound team
There are two types of talent you need on your inbound team for achieving success in your content marketing endeavours. The hustlers & the experts. Hustlers are those who understand the market and the distribution channels while the experts should be the ones strong in content.
AIESEC is one hiring venue that you should consider for smart and affordable talent.
You need to break down your web analytics — group traffic sources and optimize for each and every source. Ankit explained how Google not only ranks posts but also pulls down posts with the help of Ryan Fishkin’s social experiment. He urged people to open a top ranked post and immediately go back to the search results page. The search engine bots picked this up and realized people no longer find the post valuable and dropped it by one position!
We live in a smart world! And to outsmart Search Engines, you need smarter content tactics.
Quick look at a few other learnings
Arvind and Ankit then shared their experiences with events generating brand value and how that indirectly helps your inbound conversions.
PR is yet another way of getting social approval. It reduces sales cycle as well as helps with search engine rankings.
Vengat shared his learnings from Prodpad’s gamification for trial users that kept urging for additional actions for trial extension. This would inevitably lead to more activation.
There was a brief session on PPC campaign optimization and how Google’s Quality Score is important
Out-take on Outbound
Ankit stressed on the fact that if a startup concentrates well on inbound tactics and is all set for the long run, outbound becomes considerably easier. Most US companies go all out on inbound tactics. Being in India, we have the luxury to work on outbound marketing at relatively cheap costs.
Tools like BuiltWith, Datanyze, SimilarWeb are in this space. The problem to be addressed would be scaling the process without expanding the existing team. As you reach out to more and more people, the data bulk can be huge to handle if you don’t automate/semi-automate the process.
An entrepreneur’s journey is one to be cherished and the initial acceleration from 0–100 customers is enjoyable though dotted with challenges. The 97th Product Nation PlayBook RoundTable turned out to be a learning experience for everyone who attended and hope this article threw light on what was discussed to those who weren’t lucky enough to be part of it.
Never miss an iSPIRT event again — stay tuned to this page for updates on upcoming Product Nation events. Guest blog post by Kingston David, Zarget
Let me set the stage for iSPIRT’s 98th Playbook held at the EKO office in Gurgaon.
43 Degree Celsius in a very dry and dusty Gurgaon summer, a Playbook on “The Hard Truths of Entrepreneurship” and a bunch of battle-hardened entrepreneurs of the size of a cricket team – What do you think was the result of the match?
To call it special would not be ‘different’ if you go by the words of the facilitator of the playbook – Abhishek Sinha, Ceo, EKO.
A ‘Different’ 98th Playbook may be the best description for this session which discussed business strategy, unit economics, content marketing, sales, team building and not to mention investors and fund-raising.
If you are like me, you may be wondering what was so ‘Different’ about it. If you attended the session, you would know, that none of the above was even mentioned. (Apologies, I think fund-raising was mentioned once)
So what did this eleven talk about on a Saturday afternoon.
It would not be incorrect to sum it up as ‘101 things an entrepreneur finds difficult to share’. It was about emotions. And I will leave you with just ————-
To keep the confidentiality of the participants, none of the —– points are being attributed.
The session began in Jeff Bezos style, with Abhishek distributing a 6 page memo about his journey as an entrepreneur. In Abhishek’s words, he was starting at a blank document for over 15 days. If I were you, I would kill to read those 6 pages. It is not worth a ‘miss’. This beautiful write-up raised the perfect questions and many follow-up questions that the participants added to, with a ‘stunned’ surprise.
Lets roll with the eleven.
1) Destiny is a Child
If you are a parent, you would understand that a child is spontaneous and unpredictable. An entrepreneur’s destiny ‘seems’ to be exactly the same. In Abhishek’s EKO journey, he recounts many occasions when the business was on the brink, and then something happened. Not once, but more than once. In one such occasion, a loan of Rs 6.5 crores got arranged overnight and it has been over 5 years, but the loan agreement is still awaiting signatures.
This was enough to get other members involved into the conversation. Everyone seemed to agree that there was some ‘force’ – very difficult for the human mind to comprehend – that conspired to make things happen. Shah Rukh Khan’s ‘kayanat‘ was also invoked to substantiate. But whether destiny always resulted in a positive outcome, well that debate continues.
To sum it up, it does seem that ‘Destiny favors the Brave’.
2) Create a Crisis on purpose
More than half of the group testified to this. The situation – each one was expecting some financing to happen, but because of demonetization and Trump being elected as President, the cheque did not find its way. Everybody seemed to have found a unique creative way to solving the cash flow problem whether it was a commission-based channel partnership, or a unique sales incentive or just changing the payment plan. Looking back, the participants reflected that it was only in crisis-like situations that each one of them found a unique solution, to move the business to the next level.
For this, I guess, it would be best if Abhishek could sometimes do a webinar with screen-sharing. To put it in short, Abhishek stressed that the way in which smartphone unbundled calling, messaging, VAS which was earlier bundled in a feature phone, in a similar way, the current payment technology framework would be unbundled. This unbundling in payments would happen in ID, Source of Funds, Payment Network, Authentication, and Loyalty. Are Fintech entrepreneurs ready to build on this opportunity?
4) Recruiting – Interview the Intern | Work-Life Balance
Ambarish – Founder and CEO of Knowlarity – shared that he is involved in the interview of each team member, even interns. It was an interesting share that each participating entrepreneur listened to, with great intent. His approach at Knowlarity is to discourage candidates from joining and by creating an interview process that requires a lot of work. e.g. The interview process for interns is a 12-hour full day long interview that involves many steps like writing, quantitative, interviews and then followed by a final interview with the CEO at 8 PM on a Saturday. Only 40% survive the process and the rest 60% quit but rewarded with a chocolate on the way out. Interestingly, Ambarish also shared that how categorical they are, when it comes to the matter of work-life balance. It is made clear to the candidate that there is just work. Obviously, this was contested by some other participants in the room, including Abhishek, who have seen improvement in personal and people productivity by making attempts at work-life balance.
I personally thought that for the entrepreneur ‘Work is Life’. It would be interesting to get some feedback from the readers on this subject.
This topic begets a dedicated playbook session. Entrepreneurs present at the playbook did accept that CoFounders eventually move on (for various reasons including getting bored) and in the interest of the business startup, it is vital that agreements are put in place that takes care of governance of exits. It was all about the basics when it came to managing CoFounders and their interests.
6) Baba, Are you?
Don’t we love Babas in India?
I understand that matters of faith is a sensitive subject. I encourage you to take it very lightly. For this was a very important insight that emerged from the Playbook. This was fleetingly mentioned in the 6-page write-up Abhishek had shared at the beginning of the session. He expressed how bewildered he was, to see how some of the religious organizations in the country are able to pull off massive following without any monetary exchanges. How volunteers commit time, money and energy to such movements? The cohort attributed it to the ‘Cause’.
Abhishek picked up ‘Cause’ and stressed the need to reinforce it time and again in the team.
He went on to add that as Founders and CEOs, we all have a duty to be like a ‘Baba’. He highlighted how a Baba only encourages, inspires and supports, that is exactly how we should be to our team – A Baba.
Are you being a Baba?
If you enjoyed reading this and somewhere feeling that you missed the session, it is true, you indeed missed a ‘different’ kind of playbook.
“If I had to guess, Social Commerce is the next area to really blow up” – Mark Zuckerberg
‘Social Commerce’ or more simply ‘Social Payments’ has been a relatively new concept to come up in the last few years. And in most cases, it remained like the early days of big data – easier to toss around but not presenting a clear picture. I believe the vagueness gets accentuated by the fact of the word ‘Social’ being a part of it. This is what leads a whole set of audience out there, to think that just latching on to or simply appending a ‘pay’ option inside a social network makes up for the concept. Nothing could be further from the truth. The true meaning of the word ‘Social’ in ‘Social Commerce’ is actually the full context of your real life use cases where any social activity is involved. For example – a dinner with your friends, an act of planning and sharing cost for a gift, so on & so forth.
In fact, if you actually ponder, you would perceive that the real driver of this phenomenon has been something else entirely. It is the proliferation of ‘shared economy’ lifestyle that makes these social use cases so prominent and common for us.Also your payment instances and touch points intersect across the whole matrix of these use cases. Traditionally, the process has been pretty fragmented with the social & fun experience never coming across in those payments you made with your friends. Until now!
And the reasons are plentiful. Let’s start from why social commerce has not worked with the incumbents (your digital wallets) –
The pain of uploading money first from your bank account (because come on, you don’t keep large amounts of money in your mobile wallet)
The limits of sending money to another wallet (You can’t send more than Rs. 10k at one time as a normal user!)
The charges and time delays on withdrawing my wallet balance into my bank account (They are charging you for transferring your money back to yourself!)
And I am sure you must have realized that the arrival of our own stack – UPI is the one of the key turn arounds (the ‘Paypal moment’) for Indian ecosystem, especially in terms of enabling ‘Social Payments’ as a category to exist independently in a big manner. UPI has brought about 10X the simplicity and 10X the speed which is a core pre-requisite for situations where you need to share money with your friends without any awkwardness. Now imagine adding all your social use cases on top of this beautiful and secure base of UPI. As you may have realized by now, that not only does it create a completely new paradigm but also increases the value by an order of magnitude (because of the network effects).
Once the wheels of motion start on any evolutionary path, it becomes almost impossible to stop them. The natural extension is that this category is bound to grow in India as well both in numbers and value (give the fact that it has already reached to 10s of billions of dollars in the west (US) with Venmo and the east (China) with WePay). The key thing to remember here is that in any new economy, it requires a fresh approach and outlook since the positioning is different from traditional P2P players and hence the product delivery and experience also needs to be different for the user. There have been numerous examples around the world with large social networks trying to add a basic P2P payments functionality and hoping it to take off in a big way. But it has not worked that well numerous examples like Snapcash (P2P payments via Snapchat in US).
This brings us full circle to the two golden philosophies that have stood the test of time again and again –
The products that work on the premise of ‘this thing/activity can be done here too’ never make the cut. For example – ‘You can send money on Paypal too!’ is NOT what a Venmo user is thinking.
Once a consumer associates a product with a certain repeat and high frequency use case, it becomes nearly impossible to change his habit and perception for that product. For example – Messenger has traditionally been a place for sending messages and that is what a user thinks of when he recalls that app (and not for sending money).
This is where the formidable advantage of having a clean slate comes in –
Tailoring the product design around your real world habits when it comes to splitting, collecting, managing and tracking all your payments with your close contacts
Ensuring that the experience is insanely fun so that it takes away all the awkwardness that traditionally accompanies any monetary transaction with your friends
Ensuring that the product caters to all your use cases to such a minute detail that even you get surprised when it comes to the features!
Needless to say that I am more than excited about how the Indian market is evolving in the fin-tech domain (especially with the Indian government supporting it at an awesome level). Look forward to continued awesomeness and magic along the way.
One of the top two responsibilities of the CEO is to ensure that there is sufficient cash in the bank at all times. That often requires raising money from investors; an unpleasant task for most people! This article discusses a mindset change that is useful for fund raising.
The company by itself is a product that is best sold gradually and continuously to the investors — both public and private.
When we buy any product — say a mobile phone — we do so either because someone told us to or because our research led us to it. Even when we research a product, our view gets influenced by what we have heard about it. In the world of consumer goods, this is the power of the Brand. Raising money also relies a great deal on how the company is “perceived.” This perception is the company’s brand. The first round of money is largely driven by this brand perception. A lot of other aspects of the company (including fund raising in subsequent rounds) are affected by brand, as we will discuss in this article.
A company has two types of brands that coexist — the brand of the company and the brand of its product(s). Frequently the company’s brand gets forgotten or confused with that of the product. Yet, the company brand is omnipresent; created by the team, vision, past success, market opportunity, etc. For e.g. Nandan Nilekani’s next startup will have an immediate brand because of the team — well before the product has even been identified. As mentioned before, the first round is primarily driven by the company brand because there is nothing else.
The importance of company brand to fund raising often diminishes with time because delivered financial and operating metrics become the criterion for evaluating the company. When customers start using its product, the company’s brand gets pushed even further back because the overwhelming brand is that of its product. However this neglect is a wasted opportunity. In most companies there is no explicit recognition of the company’s brand and it has no identified owner. Given the criticality of the company brand for raising money, it’s imperative for the CEO to build that brand. CEOs who are very skilled at raising funds realize that they need to maintain the company brand in addition to the product brand. Consider for e.g. PayTM where Vijay has successfully navigated in and out of many businesses, while keeping the company brand associated with the promise of the future. Another example of the company brand being a driver is Theranos, the Palo Alto based Health Tech Company; of course the Theranos story did not end well because their brand was not backed by execution. However just that brand alone enabled Theranos to raise a fortune.
The Company Brand is not built in a day
Company brand building happens well in advance of fund raising and ideally never stops; the intensity just varies with time and circumstances. There are many ways to build the company brand in the early years of a company’s life.
1–1 engagement with investors to cultivate familiarity: set up periodic meetings with relevant investors to keep them updated, get their views, and build a relationship. These same people will talk about your company in forums and eventually people buy from people.
PR — press appearances are noticed by investors (and by prospective employees, and customers). Its often hard to stay in the press for the right reasons so this has to be dealt with conservatively.
Presence in forums — establish the position of a thought leader, be seen by peers in the correct context. These same peers will be used as references by future investors. So speak at events like the NASSCOM product forum or TIE.
Key influencers in many areas; they can be cultivated as references or engaged as advisors
Customer proxies — for e.g. head of HR of INFY if the product is to be sold to HR
Product experts — for e.g. an advisor from Apple for a company that banks on usability
Go-to-market experts — for e.g. someone from the sales team at Workday, for a SaaS company
A good company brand offers benefits that go beyond fund raising. It drives recruitment and retention (e.g. “best place to work”). It drives sales because customers often buy the company before they buy the product (e.g. the proverbial purchase from IBM). It drives policy/public acceptability (e.g. Google/Infosys wanting to be seen as doing good.)
Company brand building therefore needs to be owned explicitly — often by the CEO — and catered to as one of the critical outbound agenda items. By investing in the company brand from day one, the company’s odds of successful fund raising go up substantially.
The capability to build something – a product or a solution – is, but, just the start of things. Capability is needed to build a product but capability is not what gets your product to be loved by your (potential) customers.
One leverages capability to create a functionality (call it a feature, if you may). This functionality is created based on a broad understanding of the market needs e.g. one needs a mode of transport to go from one place to another. That is a broad market need. Based on this realisation, we set about building our solution. Depending on how one has understood the problem, the solution may result in producing a physical product like a new kind of cycle or a service, like a cab-hailing service.
This can be called creating the functionality.
But this too is not enough. With functionality, one has expressed his/her understanding of the problem and to a great extent how one’s own perception has influenced the solution. When one goes a step further to get into the specifics of particular user needs (as compared with the broad market needs that I mentioned a bit earlier), then one starts to look at the usability or, as I prefer calling it, the usefulness of the solution.
To understand the user’s needs one needs a deep understanding of human behaviour itself. More specifically, one needs to observe and understand human behaviour in specific situations. So while one can build functionality based on a market need, to build usability, one needs to really observe and understand the user.
Being a keen observer, I notice multiple things and many times I find myself wondering at the thought that went behind creating that experience. An interesting example is this wash basin that I found at a major sports store.
Numerous times I have been a witness to a mis-aligned combination of tap, tap knob, wash basin and basin outlet. I am sure you too have. This one ranked among the top. The tap was actually hidden away. Did the person who put this thing together, have the capability? Yes! Did s/he understand the general market need? Yes! Did s/he really think about the user while building this? I would say, No? Or maybe, s/he did not care enough. But I am sure you get the point of usefulness.
In our own experience for the past 2 years, we have build multiple hi-tech features, cracking complex technical problems, patting ourselves on the back for being the geniuses that we are. But we realise that this is just a demonstration of our capability and what we can build from here is mere functionality until we get into the skin of the user. Of course, when I say user, each solution could have multiple, each with his/her own whims and fancies and hopefully a few common universal traits.
At RobusTest, on a daily basis, we try to bridge the gap between functionality and usability. Reminds me of something that I learnt in school about a variable tending toa value. In our case, on the number line between functionality and usability, we are striving towards usability – which is a constant goal but never completely reached.
The same should apply to any product/service and may well, be that small tweak that may get you that product/market fit that you seek.
How one entrepreneur’s mountain looks like a VC’s molehill
The apocryphal story of a newbie B2B founder, with deep domain knowledge, but no experience as an entrepreneur or in a startup. Note that while this example is not based on a single entrepreneur, it’s a composite to highlight the extremes.
Amita was a deep domain expert, with 15 years of experience in Wicro’s manufacturing services vertical. She identified a specific problem that a few of her customers had, costing them millions every year, which would get solved with a software product she dreamed about building. Being bitten by the entrepreneurial bug (her classmate founded FlipDeal), she decided to work together with a few old friends and colleagues, and start a business attacking the problem, with a couple of trusting old customers agreeing to do a paid pilot when she had the product ready.
As Amita and her team built the product, they initially used their own savings. Friends advised her to go to VCs, since this was exactly the kind of high-tech manufacturing software product that many VCs said they would fund. Amita was excited, she had seen FlipDeal raise a few Billion $, and felt that though her startup didn’t need as much, it would be good to raise a few million to hasten the pace.
The first VC meeting was a disaster, she was asked for their TAM (Total Addressable Market). And she was hardly able to define it well enough on the fly. The VC also said that manufacturing software was passe, IoT was the future.
“What’s my TAM?” she wondered on the ride back to the office.
“What’s our TAM?” the team asked her.
On the one hand, the specific problem they were solving was only for manufacturers in the auto ancillary business. This was a big sized market they thought, 60 odd large customers and a few hundred smaller ones spread over US, EU. The problem their product solved cost the large companies a few million dollars a year, and cost the smaller companies a hundred thousand dollars a year. Overall solving this problem would save the industry $300M. Of this, they estimated, they could charge $75M for the product.
The team was happy. There were few competitors and they felt they could become a good solid $25M business.
The next meeting with another VC was even worse than the first one.
“$75M TAM for an IoT product? For someone as experienced as you, and with the stellar team you’ve got, why are you taking so much risk — 8/10 startups fail you know — for such a small market?” advised the VC, running a $100M fund. “We will only fund you if you’re looking at a $1 billion market, and can make $100M annual revenue, otherwise the risk/reward doesn’t work out”.
Amita was baffled at how easily she and her team had been about to step into such a bad risk/reward tradeoff, even though they were smart, thorough professionals, who should have known better.
She decided to attack a much larger market, that was nearly the same as what they were trying to solve a problem for. Of course she didn’t know any customer in that area, but they were manufacturers too. Wouldn’t they have the same problems? No one in her team had done sales to the new segment, but how hard could it be to sell to a new vertical?
Back in the office, the team brainstormed the new market, $3 Billion wide, IoT for manufacturing across different verticals. Now the product roadmap had to change, since they needed to address different problems for different verticals, and they needed to make the product more generic. They had to drop some of the more intricate features for the auto-ancillary features too. That market was only a small drop in their overall bucket. So they obviously couldn’t do everything the small little market needed.
Miraculously the next VC agreed to fund Amita’s IoT product startup in a $3B market, and the team was now flush with cash, $2.5M to be exact. “Off to the races, let’s hire more people, build the product, get some more early customers” Amita thought.
But soon things weren’t rosy any more. Building the generic product that spanned multiple markets took much longer than expected.
Their early believers in the auto-ancillary turned sour, the product they were building was now not solving the specific point problem they had.
Their small initial pipeline ran dry, but they had a large pipeline of new prospects who they had never met before, who were all looking good to start engaging. But the sales cycles turned out to be much longer than expected outside of auto-ancillary. Perhaps the problem wasn’t as serious for others?
Their money was running out too, the $2.5M was designed to run for 18 months. Now at 12 months, staring at 6m of runway, with no product launched, no pilots won, and increasingly long sales cycles, Amita was at a loss.
Where had they gone wrong?
Wasn’t it supposed to be less risky to go after a large market?
Shouldn’t they get a great pipeline from the new sales guy they hired for a lot of $?
When their product built for a $75M TAM generated solid early paid pilots, why were they struggling to get any engagement in a $3B market?
Wasn’t it validation that they had a world class VC on board?
This is the story of some of the most capable founders with deep domain expertise, that I meet every month. While they have tons of deep experience, product ability, and network, it’s typically in a small specific domain, and not in a large, deep market.
In the process of building their startup, IF they move from small markets they know like the back of their palms, to large markets where they don’t know as much, the risk they are taking explodes.
On the other hand, if they are domain experts in the larger market, or end up creating a new large market, out of the small market they start in, then they have a great chance of building a true $1B+ business. Deep domain experts with 20+ yrs of expertise, selling and building for F500 — are best off hunting Whales, or Brontosaurus as Christoph Janz writes.
Typical VC fund economics
VCs with $100M funds need to return $300M to their investors. That’s the promise they make to their investors, 4X gross returns in 10 years as Fred Wilson shows, from a portfolio of top notch startups. And as Tomer Dean points out 95% of VCs fail to deliver sufficient returns to their investors!
So with 8/10 funded startups failing, a VC needs each startup in the portfolio to shoot for a $100M cash return to the fund. With a 20% ownership at exit, the startup must be worth $500M at exit, in 7–10 years from funding.
A startup seeking VC funds, therefore needs to rocket from $5M-$500M market cap in 10 years or less to be a success for a VC. To do this you have to build a $100M revenue business. This demands a market size well in excess of $1B.
At this return rate, the VC is ok if 90% of their startups fail the test, and fall short of returning $100M cash to the fund. That’s the risk/reward the VC is talking about.
At the other end, for a founder who has initial customers, has solved similar problems in the past, has a strong team, there’s actually little risk in making the first $1M revenue. Factor in a small market where no one else is solving the particular problem really well, they have little competition, and may win customers through referrals quickly. They have a good chance at building a $10M revenue startup, which might be valued at $40M.
Computing the risk/reward expected outcomes
In the VC model, going after a large market, the founders/employees end up owning 20% of the company at exit, with a 10% chance of getting there.
20% x $500M x 10% = $10M expected outcome.
In the bootstrapped model, going after a small market, the founders/employees own 80% at exit, with a 40% chance of getting there.
80% x $40M x 40% = $12.8M expected outcome.
Very similar expected outcomes, but very different risk profiles.
On the one hand, VC money is like strapping a nuclear fuel powered jet packon your back. When it works you get to orbit, but 8/10 times when you’re not ready for it, you’ll die.
On the other hand a longer slower more arduous climb up Mt. Everest, the rate of death is still high, but substantially more manageable risk wise.
Which path you choose as a founder, should depend on the size of the market you’re chasing, the cost of acquiring customers in that market, whether there are network effects that aid early movers, how much it will cost to build the product out to the quality the market demands, your own affordable loss, and more. And as Clement Vouillon says both paths are fine, but do know which path you’re on!
Too many founders are going to VCs with sub-scale markets (< $1B), and blaming them for not taking risks. A VC is NOT in the job of taking risks. They’re in job of building a high reward portfolio, and a small market can’t give a high enough reward.
Many founders think this is a one-time decision. Absolutely not! As Atlassian, Github and others have shown, it’s totally possible to bootstrap to find the right market-fit, and then take growth capital when you’re truly ready.
If you’re an early stage SaaS founder, and want to do this better, stay tuned for some hands-on assistance to grow past this choice.
When #iSPIRT announced a roundtable on ‘Building & Scaling Growth Teams for Saas Founders’ with Ashwin Ramesh (Synup) leading it, I was thrilled to join it, assuming it would be a direct take off from Ashwin’s session at #SaaSx4. Well, we were not disappointed. I am sure the other participants share my feelings on the outcome – It was an action-packed interactive session on the strategies one can use to be successful in SaaS.
Most fellow founders who joined the discussion chimed up with a common theme, with questions on how to get good inbound leads, how to scale up, crack the game, and most importantly – how to switch from outbound to inbound.
In this post, I want to provide a summary of all the tools that were discussed in the roundtable to help in content creation and distribution, and tools that will help you do outbound in a structured way. The sheer number of tools that we discussed was overwhelming to the group, to say the least.
Content is still King, so let’s lead with it.
Content: Good content is more important than the fact that it is a blog or a post or guest post. It could be anything that attracts folks, and gives your product or service the attention span needed. Some of the examples of good content that were discussed include websites, checklists (e.g. http://localseochecklist.org/), videos, visualisations, infographics, data driven content, Quora ads, & Answers wiki.
Now that you have the content, let’s shift the focus to distribution. The traditional models of distribution have become saturated. No one’s going to come just because you wrote and published something. So you need to come up with innovative ways to distribute content. Well written content, if it is not reaching the intended audience, is a dead investment and one has to have deliberate policy of setting aside a budget, even if it’s a small one, for distribution of each piece of content. You should try the following options:
Start contributing on reddit, and especially to a subreddit specific to your industry, business area or technology. The strategy suggested is to become active participants of a specific community, engage in discussions, post comments, contribute and build your credibility. The content you may share here would be actively promoted by other participants and also gets picked up other channels. The key is to build credibility and be supportive to other members.
Another idea is to sign up to https://inbound.org/ and once again be an active participant, and a slowly become a regular contributor.
A third option is to use services like QUUU to distribute or share content across social media including Twitter , Facebook.
Investing in FB paid ads also has been found effective for many businesses.
If you feel that the above strategy is high on investment and low on initial results, start using article syndication services like Outbrain or Taboola to engage your target audience while they are browsing or reading interesting content on the web.
A good way to use Taboola or Outbrain would be to use it with Bombora, one of the best B2B intent engines. It gives you better options to identify / reach your B2B customers. There are integrations available for Bombora with Outbrain, and you need to decide on the budget.
If you need to reach out to key influencers to help you share your content on a wider scale, use Buzzsumo to build the list and also get an idea about what your competition is sharing.
Once you have the list, use Buzzstream to manage the outreach that is desired. It helps manage the relationships and also monitor the content sharing.
One related area which may be of benefit is to reach out to journalists using tools like Haro and Bite Size PR.
If you have good content, you can choose to distribute the same through newsletters. Look for a curated list of newsletter sites or owners and get your content into these newsletters. It is an ongoing challenge for newsletter publishers to get good content for their readers, so reaching out to provide them content becomes a win-win proposition
Social media is a powerful medium for reaching out to a wider audience. Tools that may be used for leveraging social media audience are:
Lead Sift ( twitter ) – This is used to keep track of potential customer who are engaged by your competition . Helps in qualification of leads and setting up engagements faster
EngageWise : To help present your content to a wider audience based on the interest they show in similar content. This helps in growing the pipeline using the reach of social media.
Lead Feeder : Identifies the visitors to the website thereby qualifying the visitors and makes better / faster engagement possible. Offers and integration to CRM as well.
Ad Espresso : One can create and test FB Ads in a very short time and run ad campaigns instead of single ads to effectively reach the different sections of audience thereby reducing cost and increasing efficacy of the ad.
Any website / online content strategy has to consider SEO. Some of the tools that can be used for SEO include ( apart from the tools offered by Google )
Screaming Frog – This can be used for in-depth technical analysis on your site . It is a website crawler, works very fast & quickly allows one to analyse the results in real-time.
Another key element of growth involves reaching out to prospective customers. For that , email is still the most effective mechanism. When it comes to using outbound emailing, getting good data ( email ids ) is equally important as the mail content and delivery strategy .
For Creating the Data ( emails ) the options available are
Scrape websites for data
Screaming frog : The custom extraction feature allows you to scrape any data from the HTML of a web page using CSS Path, XPath and regex
Scrappy : An open source and collaborative framework for extracting the data you need from websites, in a fast, simple, yet extensible way.
Some other common tools are
Builtwith : One may get to see leads in your list by known technology spend, the usage or non-usage of competitor or other technologies as well as the usage or non-usage of entire categories of technologies like A/B Testing.
Limeleads : Access to a large repository of business leads across multiple verticals
Buy data from publishers like D&B . This link is useful for Indian websites only.
Once you have the data , cleansing or cleaning up email list is the next key activity
External agencies may be employed to clean up the email list. There are many service providers engaged in doing this for an acceptable consideration.
Once the email list has been curated, then you have to decide on the best way to engage the prospects or identify a delivery mechanism. There are many tools which support a structured approach to sending mails in a personalised manner, away from the mass mailers.
Klenty : This is an outbound sales automation tool for your inside sales team to prospect, outreach and follow up at scale.
Prospect : A simple tool for sales automation. Works well for cold emailing and drip marketing.
Quickmail : Another simple tool to automate outbound emails.
Outreach : Yet another platform that supports emailing and calling.
Any inbound process revolves around the sales funnel. Organisations constantly look for increasing the conversation across all stages of the funnel or improve the funnel itself. Some of the recommendations that came out of the extensive discussion included usage of Google Analytics and other exclusive tools for understanding the user’s journey in your website and app through session recordings, heat map analysis, etc. It would be good if cohorts are defined before initiating analysis so that patterns can be identified.
Heap: Automatically captures every user action in your web or iOS app and lets you analyze it all retroactively.
MixPanel: Follow the digital footprint of every user across mobile and web devices. Know precisely what happens inside your product.
Inspectlet: Inspectlet records videos of your visitors as they use your site, allowing you to see everything they do.
Hotjar: Can be used to understand user behaviour as it visually represents their clicks, taps and scrolling behavior on your website.
Crazy Egg: Through Crazy Egg’s heat map and scroll map reports you can get an understanding of how your visitors engage with your website.
Other tools that were mentioned include marketing automation tools and A/B testing / multivariate testing tools. One common suggestion which came up was to use best in class tools rather than using all in one kind of tools. A few examples of specific tools are mentioned below. Since all of them are well known, I don’t think it’s necessary to add a description of what they do.
A big thanks to Ashwin and the roundtable participants for listing these tools and sharing their experiences in using them. I may have missed out one or two of the tools discussed. Look forward to your comments on these tools and also suggestion of other equally valuable tools for inbound / outbound processes.
Disclosure : I am Neel Padmanabhan part of Team Lucep and head India Operations . Lucep is an instant response call back tool that is currently being used by several businesses around the world for handling inbound leads. The tool is designed to encourage visitors to the website to contact the sales team and get a response as quickly as possible.
Before writing something down about our experience at the recently held Product Nation Camp (PNCamp) product teardown session, I think it would be better to give a short perspective on the overall event from the viewpoint of a fairly reclusive startup in the B2B Saas space.
UrbanPiper has been around for some time; however, for a pretty long period, we haven’t taken part in any SaaS focused events. Well we did, but all of them were in Bangalore. The ones that we attended too, were mostly about networking with hundreds of people milling about and ready to deliver an elevator pitch if you so much as said “hello” to them. Nothing inherently wrong about such a gathering, but if networking isn’t your one-all-be-all purpose, these events stop making sense once you’ve attended one or two of them.
The PNCamp was suggested to us by one of our advisors. Not sure what to expect, the only reason we agreed to go was because we hadn’t attended any event for a decent length of time.
The event turned out to be a delightful experience — spread across a full day (Saturday), it was a small (80-100 people) gathering of focused individuals from a curated list of startups, with an evolved sense of SaaS business and products reflecting a matured outlook towards problem-solving. There was a team (including the founder) from the matured startup – Zenoti, which anchored most of the sessions and did all that they could to share their learning with the rest of us fledgling startups. The day’s events were well regulated to avoid any feeling of drag creeping in, and at all times, it felt like everyone was invested with a great deal of interest and purpose to contribute to each other’s box of learning.
The product teardown was the first session scheduled after a short inaugural talk by the PN team and the guest of honour – Mr. Jay Pullur (Founder of Pramati Technologies).
As it usually is with all things unprepared for, UrbanPiper was invited as the first startup to step up for the teardown. Not having any previous experience of a product teardown, I had no idea what good or bad was in store, and that in a strange way helped me calm down and focus upon telling the audience a good narrative about the UrbanPiper story.
THE TEARDOWN PROCESS
The teardown allows the speaker, a representative of the startup core team, to speak about their startup for 5-10 minutes. As part of the initial presentation, some basic questions are asked by any member of the audience. These questions are usually of the nature to understand a bit better about the proposition of the startup.
Once the presentation is through and the first wave of questions answered, the team from Zenoti takes over. They systematically explored aspects of the technology platform – the finished product, product interfaces, on-boarding process – but it all starts with the “deconstruction” of the website.
For us, the UrbanPiper website (https://urbanpiper.com) had been an effort to put up a decent web presence. Where “decent” merely meant that it was better as a façade than what our competitors had, and it somewhat managed to convey the platform’s proposition.
The following is what we felt manages to tick most of the checkboxes when it came to a Saas-based startup’s website:
The next 15 minutes was a logical and well-executed act of unravelling the pointlessness of doing things half-baked and half-thought. While the focus was directed towards our website, but it didn’t take much effort to see signs of the same problems when it comes to setting a product vision, selling, pricing, negotiating, fund raising, marketing, etc.
The primary theme of the teardown can be summarized as:
What have you built and how do you intend to sell it
Does your website echo the thought-process expressed in #1
The website teardown focuses on:
The messaging around the primary proposition of your product/platform
The explanation of how your target audience can use your platform
The long-tail value of using your product/platform
How has your platform made a difference for the merchants/clients who have been using it for quite some time
As ominous as a “teardown” sounds, the first thing to know is that it’s a very friendly event. Instead of feeling defensive about getting “exposed”, it is best to view the teardown as a get together of well-informed friends who point out the gaps in your plan to save you the blushes in the future. Think of the last time when a friend of yours pointed out that your fly is open – that probably best sums up the purpose of the teardown.
Another important aspect is the quality of feedback–you have some of the best minds, who have most certainly been-there-done-that, offering you their undivided attention so as to offer you advice which is best suited for you.
For us, the key takeaways boiled down to:
Narrow down the area UrbanPiper wants to focus on. Instead of positioning the platform for every merchant, it would make it much easier to scale if we simply focused on being the best in one domain, and then decide to pursue another one.
Overhaul the website to focus on simple messaging instead of using buzzwords, which would most likely make no sense to even the people you’d like to sell to.
Break down the journey a merchant would have from not using our platform to the benefits of signing up and thereafter.
Last, but certainly not the least, build out the product and the website with a focus on selling globally. This involves a change in setting out a more global plan, but the start needs to be with the website–which should reflect in no uncertain terms the intent to cater to a global audience.
It’s been a week since the PNCamp, but we have already finished work on the first iteration of making some much needed changes to our website. This iteration is by no means a finished product, but it certainly embraces some of the direction that we should be taking with our platform’s positioning.
It gives me a lot of pleasure to unveil the new look of our website–
While this is just our first iteration, there are some key elements that we wanted to address:
Focus the messaging around the domain that works for us.
Take the visitor through various parts of the platform in a gradual and relevant manner – the features should unravel themselves as an easy to understand narrative.
Use styling which gives the site a crisp look and feel, such as to measure up to the expectations of a global platform.
Add a blog (https://urbanpiper.com/blog) section to write about the platform and make a visitor find out more. Not to mention, reap the benefits of better SEO.
Prominently showcase a video which ideally has a current merchant talking about the platform.
THE WAY FORWARD
We have just begun an interesting journey of making UrbanPiper relevant for the next phase of growth. During the PNCamp, Sudheer (founder of Zenoti) had suggested that I read a book – Crossing the chasm (Geoffrey Moore). I’ve just read the first chapter of the book, and already it feels like there’s going to be lots to learn from it.
Whatever be in store, it will surely help us rediscover ourselves at an important juncture of growth for UrbanPiper.
If I were to pause for a moment and reflect upon the events and the actions we’ve taken, it’s not like there was a grand revelation or something. Working in startups, we all carry a bunch of latent thoughts. However, in the everyday hectic operations of running a startup, we often lose “perspective”. If we’re lucky, then we have some good friends from other startups with whom we hang out regularly, and exchange notes, which in-turn helps us gain some of the lost “perspective”. But then, having friends from startups which have tread a path similar to yours, call for rather long odds.
Events are usually good to meet an eclectic group of individuals from the startup world, but then, most of them are primarily about networking, and soon lose value for all the effort that needs to be put in for attending them. And then, we just become lazy, letting our latent thoughts remain buried, while we continue to endure every aspect of a tunnel-vision syndrome.
For what it’s worth, the Product Nation Camp, was certainly a refreshing take on the idea of a startup conference – or rather, unconference. You’ve got a room full of smart people, doing smart things, and wanting to help you see things differently – to help you gain some of your lost perspective.
Customer feedback is gradually becoming the cornerstone of growth initiatives.
A new research published in the Harvard Business Review found that the act of just asking for customer feedback in itself is enough to help keep customers satisfied and coming back for more — even when they do not respond to your request.
Several theories of consumer psychology point to the fact that even a simple satisfaction survey appeals to your customers’ desire to be coddled, reinforcing the positive feelings they might already have about your product, and making them more likely to buy from you.
The very process of asking questions or seeking opinions induces people to form judgments that otherwise wouldn’t occur to them. They might not consciously realize that they love a feature unless you seek feedback about it.
Customer feedback has become one of the primary drivers for long term growth. Present day organizations jump at every opportunity to talk to the customer or learn about them. Businesses are spending millions of dollars on setting up feedback channels: emails, reviews, surveys, website analytics.
The pertinent question now is: how do you utilize these channels to actually learn from the feedback? Before you establish the viability of a channel, it is crucial to develop a clear picture of WHY you are collecting feedback.
Are you seeking first-hand advice on product improvement? Are you building a new feature for which you’re seeking the users’ inputs? Have you been receiving a lot of complaints? Once you have the end goal clear, proceed to the tactical part: how do you collect feedback?
There is no one-size-fits-all tactic to gain information from your users. Different situations require different methods of collecting customer feedback. For example, a survey form sent to an already disgruntled user will only make matters worse; a phone call works better here.
Let’s find out what are the best methods of collecting customer feedback:
THE BEST WAYS TO COLLECT CUSTOMER FEEDBACK
There are hundreds of ways to collect feedback from customers. The ones we’ll talk about here are the most popular — they are the most effective too.
1. Long form-based surveys
These most common way of collecting customer feedback are survey forms with a set of questions that are usually sent in an email.
The one thing you have to always keep in mind here is to not get carried away and ask too many questions.
QuickTapSurvey states that the connection between the number of questions and the time spent answering each question is not linear. The more questions your survey has, the less time your respondents spend, on an average, answering each.
In other words, the more questions you ask your respondents, the more likely they will “speed” through it, and the quality and reliability of your data will suffer:
It is clear from the above table that the longer the survey, the less time will the respondents spend on each question. The takeaway is to make the survey as short as possible.
There is, however, no ‘ideal’ length for a survey. A few experts do say that anything between 5 and 10 questions is a decent number.
To keep your surveys short, a good rule of thumb to keep in mind is: only ask questions that fulfill your end goal. Ensure that every question serves a clear purpose. If you do not intend to use the information, do not ask that question. The aim is to collect customer feedback and not to have them write an essay.
For example: If you are surveying a customer who has just exited your paid plan, there is no point asking them if the onboarding was easy! Your only aim should be to understand why they are leaving and what can you do to prevent that.
It is also important to start with open-ended questions. Let your customers surprise you. Multiple choice questions will give you answers based on your own assumptions. If you really want to know what the customer is thinking, give them an open-ended question.
A great open-ended question is: What do you love the most about the product. It is also a great hook to have your respondents start the survey on a positive note.
When to use form-based surveys to collect customer feedback
The best place to use this is when we want detailed inputs and have some open-ended questions to ask. This should only be sent to an engaged user, who you’re sure would like to take the time to provide feedback to you.
One way we used this in Hiver was to understand from our users which integrations we should build. We asked customers open-ended questions about how they use Hiver. Then asked them which integration they’d like to see, which was an MCQ, followed by another open-ended question about how they’d like to put the integration to use.
2. Short in-app surveys
Customers are constantly thinking of ways your product can work better for them. Maybe parts of your app do not have what they are looking for, or maybe the design could look a little better, or maybe they found something that is broken.
More often than not, they will not reach out to you on your support address. That happens only when the problem is big. But for the minor lapses, your users will just give up and walk away slightly frustrated.
A great idea is to offer a survey while your customer is using your app. The survey can be prompted the moment a user has finished interacting with a particular feature in the app. Since the user is already in the process of using that feature, it is very likely that their feedback will be very precise and to the point, and not ambiguous.
Remember: Your users are on the app for a certain purpose, it is not a great idea to throw a long survey at them. Keep it to two to three questions that are relevant to the page that it’s being displayed on.
Intercom.io is a fantastic tool to trigger in-app surveys in your app. For example, the moment a user finishes using a particular feature, a quick question like the one below is a great way to get their ideas about improving it.
When to use In-app surveys to collect customer feedback
When you want a quick feedback from someone who has performed a certain action. Timing is of the essence here — you have to trigger the survey at the very moment a transaction ends.
The questions should be specific to what the user is using or has just used, and NOT about the product in general.
3. Phone calls
It’s said that if you truly want to understand someone, you will have to talk to them.
The surveys and tests will give you tons of data but they can never tell you what a person truly feels about your product. This is when you need to reach out to your users through the phone. It is a personalized and proactive method that generates the best responses.
Hearing a person’s voice and tone is the best way to sense what they actually feel about your product.
A call will help you tell the features that get users excited, features that really make their lives easier.
The key here is that the person calling the user should genuinely want to understand their problem and offer solutions. Do not do it because you have to do it. Do it because you care. This is not a sales call.
The second factor to keep in mind is the time when you call. Studies have shown that customers are more likely to respond between 8 am and 9 am, and between 4 pm and 5 pm. Lunchtime, between 1 pm and 2 pm is the absolute worst time to reach out to anyone.
When to use phone calls to collect customer feedback
Scheduling calls with your users, talking to them, and making sense of feedback which is not as structured as entries in a form is a lot of hard work. The key here is to focus on the users who can give you the best feedback to improve your product or service.
It makes sense to do phone calls only with the users who are avid users, have deep knowledge about the area you operate in and can give you actionable feedback.
This is not a good avenue when you want to reach out to a lot of people at the same time.
4. Transactional emails
Transactional emails are the ones that you receive right after signing up for a new service, or upgrading to a new plan, and so on. Basically, these are emails triggered by a certain interaction between the user and your app.
More often than not, transactional emails are treated like a necessary notice and companies would not put much effort in creating a dialogue with the customer. These emails often lack the aesthetic appeal of the website and the newsletters and deliver an inconsistent customer experience — that’s a shame.
Contrary to this popular practice, transactional emails can be used as a powerful weapon to foster a dialogue with customers. If we look at email open rates, these emails do better than all other emails, says an Experian report. The reason is that people actually want to receive these emails — for instance, they want to know if an upgrade went through or not. Asking the right feedback question in these emails will certainly get good responses.
Viking does a great job at it by asking users to rate their delivery right after they have delivered a product:
In situations when you do not have a question to ask, it’s a good idea to give your users a very easy way of getting in touch with you. Buffer does it neatly:
Interestingly, the peak-end rule states that ‘our memory of past experience does not correspond to an average level of positive or negative feelings but to the most extreme point and the end of the episode’.
Say a user receives a transactional email just after they’ve upgraded — asking a question at that juncture would evoke positive feelings about the product and set them on the path to loyalty.
When to use transactional emails to collect customer feedback
When a user does something significant: signs up, upgrades to or exits a plan, and so on. You can send them a quick one-liner question or a short multiple choice question. The key is to gain an insight at the right time without burdening them with too many questions.
5. Net Promoter Score Surveys
It’s the simplest question you can ask your customers: ‘’how likely are you to recommend us to a friend or colleague?’’ It is, basically, a method to measure your customers’ sentiment about your product.
People who rate you 0 through 6 are known as “Detractors”, those who rate you 7 or 8 are known as “Passives”, and those who give you a 9 or 10 are known as “Promoters”, as illustrated here:
Net Promoter Score (NPS) = Percent Promoters — Percent Detractors
Let’s take an example. Say there are 100 respondents.
10 responses were in the range 0 to 6 (Detractors)
40 responses were in the range 7 to 8 (Passives)
50 responses were in the range 9 to 10 (Promoters)
NPS: [(50/100)*100] minus [(10/100)*100] = 40
The worst score you can get is -100 and the best score you can get is +100.
Apple uses NPS surveys to find detractors and improve their retail store experience. Whether a customer made a purchase or scheduled an appointment to try on an Apple Watch, they e-mail a survey to rate the in-store experience.
Remember: Any score above zero is good, anything above +50 is excellent, and over +70 is considered world-class.
The greatest advantage of NPS is its simplicity and ease of use. It can be set up in minutes and is easily understood by everyone in the organization. It also makes it very easy to compare yourself with the industry standards.
When to use NPS to collect customer feedback
When you want to understand the general sentiment of your users about a transaction. You can use NPS for any of the touchpoints that the customer might have with a team: sales, customer support, etc. For example, it is a good practice to send an NPS survey after a support query is resolved.
6. Suggestion boards
Suggestion boards take collecting feedback a notch up: it allows users to collaborate on ideas with not just the company, but also with other users.
These boards allow users to create feedback posts which can be upvoted or commented by other users. Top posts that have been upvoted or highly commented can help you discover what the majority of your users need.
The best thing about suggestion boards is that ideas that had been suggested by some customers became popular ideas among others who hadn’t thought of the benefits those ideas could bring.
Aha.io is a wonderful tool for creating these boards.
It is important to make the board very easy to navigate. Users should be able to add new posts with ease. Creating categories, allowing your customers to view the most popular ideas, and making it searchable are key.
Results will take some time to develop. Feedback will not be accumulated immediately. Wait till your users leave enough feedback so that you can determine which ones are popular to your entire base as a whole.
When to use suggestion boards to collect customer feedback
When you are looking for new ideas from your users. You should start with inviting the extensive users first — they know your product well and will be in a better position to suggest improvements or new features.
After you have a few ideas on the board, you can start inviting more users — they can upvote or comment others’ ideas even if they do not have one.
Once you’ve collected the feedback you want to pay attention to, the next step is to analyze the data and take actual steps to make things better for all stakeholders.
WHAT TO DO WITH THE FEEDBACK YOU’VE COLLECTED
“Every day, companies solicit feedback from customers, yet only a few translate that feedback into meaning. An even smaller fraction of companies actually take action or close the loop with the customer, to let them know their voice was heard,” says Whitney Wood, managing partner of the Phelon Group.
If you handle it right, the dialogue between you and your customers can become the biggest growth driver for your business.
The only way to reward your vocal and consultative customers is to roll with the punches and bring in actual changes.
Let’s talk about taking the feedback data to actual use:
1. Identify product improvement areas
More often than not, your loyal users would have developed an expertise of your product features; some of our users understand the product as much as our product managers do.
The standup product improvement meetings can only take you so far — the real insight comes from the ones who use your product regularly.
No matter how hard you try to empathize with them and put yourself in their shoes, your users will always have some exciting ideas that you did not think of.
So, stop brainstorming and start following the advice your customers give you. Not only will your customers appreciate your willingness to listen and implement their ideas, but you will set yourself apart from your competitors, as a business that genuinely cares.
LEGO Ideas is quite possibly one of the best examples of how customer insight can be used for product development. Enthusiasts can easily submit their own designs on this mini site. The projects gathering more than 10,000 votes from the community undergo LEGO review and are turned into new sets if the review is favorable.
2. Feed it into your product roadmap
Nobody understands the pain points of the product as well as the customers. If companies are able to incorporate customer feedback into the product roadmap successfully, they have certainly come very close to the ideal market-fit.
It is crucial to classify feedback into improvements and game changers. Let’s take a couple of examples from Hiver itself.
A few of our customers thought shared labels can have different colors as that would help them manage their inboxes better. Now, this is a product improvement — we added it to our ‘task manager’ and had implemented in almost no time!
After we built the shared mailbox, a few customers suggested we implement automation that will allow emails to be assigned based on a few pre-set conditions. Now, this is a game changer as it would significantly reduce the time people spend on task assignment. We added it to our ‘brainstorming session’ and discussed the pros and cons of doing it. It took us a few weeks to build it, but it’s been worth it.
The biggest challenge is to get your customers to suggest. Would they really bother to spend time suggesting a feature?
Fitbit implemented the suggestion boards and noticed that even the ones who did not have a suggestion were either upvoting and downvoting. Ideas suggested by other customers became popular among others who hadn’t thought of benefits those ideas could bring.
3. Find your niche
Most companies are not a hundred percent sure about the verticals they should focus on. It is never an exact science and companies end up spending huge amounts on trial and experimentation.
Customer feedback can be a good way to find out where you belong.
During the process of analyzing feedback from customers from a broad spectrum of verticals, you will begin to see patterns as to where do the majority of your happy customers come from.
Once you have discovered the verticals where the majority of your happy customers exist, start working on strengthening the relations you already have with them. Strive to make them your advocates and seek recommendations.
4. Prevent customer churn
Are you stuck with the principle that negative feedback should be swept under the rug and kept silent? It is a clear indication that you have set your customer success goal to a low ‘simply meeting customer expectations’. It is crucial to use feedback to improve customer service.
A customer who has taken the effort to call you is a lot more likely to tell their friend about the same problem — ignoring the negative feedback will have a compounding effect.
Contrary to what most businesses think, a negative feedback is an opportunity to prevent customer churn and foster a long-term relationship with the customer. These are the guys who’d need a little extra work: call them, understand their problem and ensure you do your best to make them happy. Ensure that you check on them regularly — make them feel ‘cared’. Showing that you care goes a long way in building a healthy business relationship.
By keeping the two-way conversation open and building trust gradually, you can turn these problem customers into raging evangelists.
Remember: they have taken the time out to give you a feedback when they could have just switched to another product. Any feedback is a display of interest in your product. Be wise and use feedback to improve customer service.
5. Discover potential advocates and nurture them
Customer satisfaction is the primary indicator of how happy they are with your product. Gathering feedback will help you quickly identify the happiest of your users.
The next step is to nurture them into advocates. Get them sufficiently excited to rave about your product and recommend it to friends and colleagues. Monetary rewards do not motivate advocates. Do simple things — thank you notes is a great idea.
HEX is one cool company that attributes a lot of their success to the handwritten notes they send to their customers.
Here are some great ideas to turn your customers into advocates.
Imagine the world where most of your new customers came from business referrals. This can be achieved only when you know who your advocates are.
6. Motivate your team
Customer feedback can act as a secret driver to motivate employees.
Say you’ve been hearing praise about a feature — pass compliments directly to the person who built the feature, and ensure the team knows it too. It is a good way to encourage healthy competition among your team members.
Say you’ve been getting some brickbats about a certain feature — pass it to the person who built the feature and let them talk to the irate customer directly. It makes them feel in charge of that feature and they will be ready to take more ownership in the future.
Share conversations that are interesting and come up with new ideas about the product (improvements or game changers) with the whole team. It would help everyone understand the larger picture.
Wrapping Up: Feedback matters
A startling truth about most SaaS companies: your support team always understands more about what the customer needs than your product team.
It is time you start discussing your product roadmap with the support team as well — they are the ones who know about the ‘actual’ problems your customers face.
Building a good product and marketing it well is the job only half done. A lasting commitment to evangelizing a customer-centric culture, followed by a fierce commitment to gathering, analyzing, and sharing the feedback across the company plays a vital role in propelling your product and the business forward.
Always go back to your users and tell them you implemented something they suggested — this is a solid step in building a long term relation with them.
Originally published by Niraj Ranjan Rout at hiverhq.com on April 5, 2017.