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Entrepreneurship

The Brutal Truth about Marketing Your Software Product

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We tend to hear a lot about software industry success stories. But most of us mere mortals have to fail a few times before we learn enough to succeed. In this guest post William Echlin talks about the hard lessons he has learned about creating and selling software products.

Probably, like you, I started developing my own software application a few years back. I had this dream of working for myself and becoming financially independent. The money side was a nice goal to have but ultimately I was looking for the fulfilment of working for myself. Sound familiar? Well, if it does, you may have learnt many of the lessons I’ve learnt. I don’t mind admitting now that I got carried away. I got carried away with building a test management application to the extent that I forget about many of the key things you need in place to build a successful business.

After a few years work I’d created the leading open source test management application (a product called QaTraq that’s still available on Source Forge but a little dormant). It had cost me time, money and effort. I’d achieved some success with building and marketing a free product. Next stop taking it commercial. This is where it gets brutal.

About a year into leaving a full time job I’m taking the last £1,000 out of the joint bank account. I’m making some sales but it’s damn tough. A few months later and I’m in the supermarket £15,000 in debt wondering if my credit card is about to be rejected for the families weekly shop. You read about this sort of thing in biographies on successful entrepreneurs. These guys take it to the limit and then succeed and make millions. Sounds so glamorous. When your wife, 3 year old son and 1 year old daughter depend on that credit card being accepted believe me it’s NOT glamorous.

Building a business has always been about balancing design, development, sales, marketing, support, testing, etc. When you’re a one man band that’s not easy. You try to do everything. You’re bloody brilliant at building the product. The trouble is, once you want to make a living out of it, that “building” is almost the least important bit. After I’d spent 5 years building my product I stumbled upon one very useful piece of advice. It was a little late for me but maybe it’ll help you….

“Learn how to market and sell before you build your product. Learn these crafts by picking a product that’s already been built and act as a reseller”.

That’s worth reading again (it’s counter intuitive). What’s being said here is that if you can’t market and sell a product (ANY product) then the odds of succeeding with your own product are slim. If you can’t “market and sell” what on earth is the point in wasting all that time, effort and money building your own product? If you’re never going to be able to market it, and sell it, why build it?

So find a product in a slightly different sector and sign up as a reseller. Save yourself the time and effort of building a product and practice marketing and sales with someone else’s product first. Create a web site, develop an ad words campaign and start promoting with social media. Sell the product! If you can’t get the hang of this why bother building your own? If you can get the hang of building your own marketing machine it won’t be wasted effort. If you’re clever and pick the right product / sector you just need to switch the product on your site a year or so down the road. Once you’ve built the marketing and sales engine switch it to sell the product you’re building.

I’m not saying that this is the only way to go about it. I’m just saying that if you don’t have the determination to learn, understand and be successful with marketing and sales early on, then it’s unlikely you’ll succeed with your own product. So why waste time building it. It’s a tough lesson to learn. One I learnt the hard way.

And the specific lessons I learnt the hard way? Well I’d do these things first if I was ever to do this again:

1. Create at least one lead generation channel as an affiliate for another product. That lead generation channel will probably be a web site and as part of that you’ll need to master things like:

  • Google Adwords
  • Social media
  • Email marketing
  • Blogging
  • Link building

All these things take a lot of time. Do you have the determination to learn and execute on all of this?

2. Spend some time in a sales related role. Initially I was working in a full time job whilst building my own product in my spare time. The best thing I did was offer to help the sales team with product demos. I learnt lots from working closely with sales people (I didn’t like them very much, but that’s a different matter) and clients. If you can’t do product demos to clients, or you can’t talk to clients confidently then you don’t stand a chance of selling anything. People buy from people and a product demo is THE place to show case YOU (and the product)

3. Spend time learning about re-marketing. A lot of money goes into getting that initial lead. Don’t waste it! Understand Google’s re-marketing campaigns. These allow you to follow the people that came to your site and continue serving them banner ads on other sites. Understand email marketing once you’ve captured an email address. Yes I hate most of this when I’m on the receiving end. The reality is that it works though. That’s why companies do it (and why Google make so much money). I’ll tell you now that your business won’t survive if you don’t master some of these techniques. And if your business doesn’t survive then every ounce of effort you’ve put into building that application is wasted!

4. Spend time learning about cross selling. A significant amount of revenue can come from cross selling other products. When was the last time you went to a restaurant and they didn’t try to sell you a bread roll? When was the last time you flew somewhere and they didn’t try to sell you priority boarding? For you this might be in the guise of selling your leads to other companies that have complementary products. It might be providing different editions of your application. There are many other ways to add additional revenue streams to your prime product sale. These streams are absolutely critical to the success of your business.

5. Don’t try to become a sales person. You don’t have to be a sales man/woman to sell. Some of the best sales people I’ve worked with are those that just go out of their way to HELP the customer. They understand their niche inside out and have the gift, not to sell, but to HELP. People that are looking to buy something want help. They want an itch scratched or a problem solved. If you can help them with a solution then you’re most of the way towards making the sale. Forget all this rubbish about psychology and techniques to influence people. The best thing you can do is enter the mind set of helping! Go out of your way to help.

I don’t have all of this right by any stretch. I know one thing though. Products don’t sell themselves. And if you’re not prepared to start learning about sales and marketing you won’t sell your product.

It was all a bit ironic for me though. I spent years building my own test management product to help software testers. It even started out as the leading open source solution in it’s market for many years. I mastered SEO and created a great lead generation process (the oxygen of any business). I created a version which I put a price on and sold to companies. I even sold to a number of significant companies. But I just couldn’t do all of it. I couldn’t balance the design, development, testing, marketing, sales, support, etc. It’s brutally painful when this dawns on you.

In the end what I’d really mastered was lead generation. I ended up with a web site that attracted my target audience but failed to sell much. When you realise that, you realise that it’s the product. Nothing wrong with the marketing and sales. It’s the product. There were better products out there. Kind of tough to swallow but as soon as I did, I moved on. These leads, or rather people (because leads are actually real people), were looking for help. I just needed to provide them with the right product and services. So I started reselling other products and providing consultancy around those products on my test management website.

In the end I had one of the toughest bits right. If you get the lead generation right you’ve built a marketing foundation that you can build any type of business around. For me I just wished I figured the marketing piece out before I’d built my product. Now I just work on my marketing. Oh, and I help companies with their software testing and test management. For me at least, it’s much easier this way.

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About the Author

This article was written by William Echlin of SuccessfulSoftwares.net.William Echlin has spent 20 years in testing, working on everything from air traffic control systems to anti-virus engines. He had a bad experience in his early childhood trying to effectively manage test cases with vi (he’s still a huge fan of vi but recognises that text files make a lousy repository for test cases). In an attempt to deal with these childhood demons he became a consultant on all things related to test management. see more.

Entrepreneurship

Why Angel Investors are Shaking Up the Global Startup Scene

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Candace Johnson is someone who has made a global impact on our modern international telecom and broadcast business. She co-initiated the foundation of SES-Astra and SES Global, which today owns a fleet of 54 satellites and broadcasts 6500 TV channels. And she founded the world’s first Internet-based online service, Europe Online, making it into one of the first broadband Internet services.

But it was in her role as president of EBAN, the European trade association of several hundred business angels, which brought her to Eindhoven’s High Tech Campus recently. She explains why angel investors are making a difference to the global start-up scene and explodes several myths that surrounds the way they do business. She spoke with StartupDelta’s Jonathan Marks.

Building the match between angel investors and hardware startups

“People often think that angel investors are people who do investments around the corner, locally, or in services like e-commerce. To be frank, when the HTCE management told me that they were focussing on the hardware side of things, I was thrilled.”

“What I’m trying to do as President of EBAN, and having incubated MBAN (MENA Business Angels Network) and ABAN (African Business Angels Network) under my presidency, is to extend the scope of angel investments. The vast majority of angels are already tech savvy. But we need to educate our successful angel investors to invest more in hardware and infrastructure. We also need to help start-ups develop a pitch that speaks to the interests of angels, so they can get funding for their initiative.”

“We run the EBAN Training Institute with the goal of raising standards. We’re seeing more and more that the best angel investors are serial entrepreneurs. They bring their trusted network, expertise and experience to the table.”

“Money is important too, but it is not at the top of the list. Business angel investors are high net worth individuals who usually provide smaller amounts of finance (€25,000 to €500,000) at an earlier stage than many venture capital funds are able to invest. They are increasingly investing alongside seed venture capital funds.”

Angels are more important than most people know

“We follow the guidelines and standards developed by the European Venture Capital Association. For over seven years, during the depths of the financial crisis in 2008 until the recent recovery started, it was the angel investors who took over the role of early stage financing. More than €7.5 billion are being invested annually in Europe, with a sustained growth in recent years. Of that €5.5 billion comes from angels. In fact we have had to professionalize our profession to meet the demand of the growth in this early stage ecosystem.”

We always have an exit strategy

“Angel investors can only continue to invest if they have exits. I hear many people talk about investing. Only a few discuss exits. I want to change that. I also stress that proven entrepreneurial success is essential in order to become a member of our association. We need to ensure that useful “lessons learned” are shared with the start-ups. They are always based on hands-on real-world experience. We have no time for people who are using new blood to try and correct mistakes they made in their own failed companies.”

“EBAN was started in 1999 together with the European commission. For the first ten years, I think people were too focussed on the investing part. Now we need to focus on exits and returns on investment. Without returns, business angels are out of business. And remember there is only a short window of opportunity during which start-ups can scale-up to becoming global success stories”.

“Our feeling is that you should not make an investment in a company unless you can see the path for the exit. The exit may be a trade sale, an IPO, etc. The exit also does not have to be 100 %. It does, however, have to bring you a return on your investment so that you can continue to invest. This approach helps you focus on building great companies. There’s always competition in healthy markets, so no-one can afford to waste time. We’re not a charity; we’re doing this because we love building and financing global success stories. We’re therefore looking for companies with a real marketable product, not a prototype or a collection of well-presented ideas.”

Is there specific advice you can share with high-tech startups?

“In the last few years we’ve seen the rise of the accelerators alongside incubators. They have helped raise standards because a good idea needs to be validated by the market before it is the basis for a high-growth company.”

“As investors, we always need to see a start-up demonstrate that they have first clients and initial revenues. We’re not saying that they have had to scale or show market traction. But if we are going to put in our personal money, then we expect the founder to be resourceful enough to work out the first product, to have found the first clients and show us evidence of the first revenues.”

“The incubators who help get an idea into reality and the accelerators have been good at making startups better prepared for angel investment, offering the right coaching to turn an idea into a validated business. That means angel investors are better able to select the growth companies and focus on making a good return on their investment.”

Hanneke Stegweg

“We recognise that young companies need to present their business proposition to the angels attending our annual conference. So we’ve created ways that teams get immediate, honest feedback on the quality of their business presentation. We have one full day of preparation and coaching followed by a Global Investment Forum. The best go on to pitch to the entire network. This year, the “company to watch” category was won by Hanneke Stegweg, who is the Dutch CEO of the iLost company. Together with Neelie Kroes, I am keen to see more women founders lead entrepreneurial teams.”

What needs to change for things to move faster?

“We held this year’s EBAN congress in Eindhoven at the recommendation of several members. They all work in the innovation and financing of innovation field. But this region also came up in our discussions with StartupDelta. We have worked closely with Neelie Kroes when she was with the European Commission.”

“We were tipped off to the High Tech Campus specifically by our Russian members: the Russian Business Angels and the Skolkovo Foundation who are building the Skolkovo science park just outside Moscow.”

“And last, but not least, I know Eindhoven from my work in telecommunications and broadcasting hardware field. We often came here to work with Philips on the establishment of the DVD and MPEG-4 standards.”

“During our visit to the Brainport area it was clear that there is more than enough money in the region and a healthy appetite to invest in innovation. But there are some caveats that we feel need to be addressed.”

“Frankly, I think we are rather tired of the “nice-to-have” e-commerce companies. We would prefer to reinvest in world-class companies who are building something tangible, solving a real-world challenge. They need to demonstrate they can scale and become global.”

“We can see that the efforts by many have helped to raise the bar in the Netherlands and that’s good news for everyone. But remember there is a difference between entrepreneurs and SME’s. Entrepreneurs are the only ones to change our world. They create large companies, worthwhile employment, and that grows into large revenues.”

Failure is not an option

“We should get rid of this talk of failure being an option. If you’re taking angel money, it is NOT OK to fail.”

“If you take third party money, you have a responsibility as an entrepreneur to do everything you can to make a return on the investment of your business angel. The media keeps talking about friends, family and fools. But that’s nonsense! Founders, families and friends build great companies!”

“I have always been a free marketer at heart. Europe and The Netherlands need to create nations of investors. I believe in the power of private sector-led investment. Government needs to follow the leads set by business angels, not the other way round. We are investing our own money and using our years of experience to scale up these companies. An entrepreneur who is not willing to work and dedicate her or his lives 24/7 to achieve the goal should look elsewhere for money!”

“We’re fortunate that the EBAN network acts as a magnet for excellence. We were honoured to have the President of the European Research Council and the Head of Technology Transfer of the European Space Agency address our Congress to show us where the technology trends are going and where we should invest.”

“From a venture and entrepreneurial financing perspective, we were most grateful to our colleagues from the United States who joined with our European, MENA, and African colleagues to set the bar high in creating, building and financing global success stories. Amongst those joining us in Eindhoven from the United States were the president of the Global Accelerator Network from the USA, the president emeritus of the Angel Capital Association of the USA, the President of Start-Up Angels and Board Member of Up Global from the USA. We also welcomed the President Emeritus of the Crowd funding association of the US as well as the chairman of New York Angels. And we were delighted with the presence of David S. Rose, the president of GUST.com. These are some of the world’s best experts in angel investing.”

“They all said they were pleasantly surprised by the high standard of the startups that came to Eindhoven from all over the world. It was well above what they had expected. Start-ups from Africa, Middle East and Europe traditionally explain what they do, rather than explaining to investors why their idea is important. But that’s changing rapidly for the better. Entrepreneurs are also getting better at defining what they need in order to scale-up.”

NEXT STEPS : It’s all about active networking

“I should explain that in expanding our reach in Europe, with have formed alliances with the European Space Agency and the European Research Council. They also have their own accelerators and incubators. I think the onus is on the angel investor community to help bring this scientific community to a higher level of entrepreneurship. They need to think about the market for their inventions from the beginning. I believe we can help these organisations filter out the very best ideas and give those the attention they need to scale ideas into real businesses. There needs to be a validated market need for the technology they are developing.”

“We have two main events. There is the annual EBAN congress, this year in Eindhoven and next year in Porto, Portugal. And we run the EBAN Winter University, this year running from November 17–19th in Copenhagen. We’re doing this with leading organisations active in Europe’s creative industries. And all this is in addition to individual events and competitions organised by EBAN members at a local, regional and national level.

Increasingly we’re assembling cross-border syndicates, both between European countries and increasingly inter-continental networks linking Europe with innovation hubs in Africa, Middle East and North America. As companies scale and go global, it is important they have access to an international shareholder network. It’s a softer landing when they cross continents.

We also believe there is a way in which we can build partnerships with techno-business parks around the globe, led by the flywheel initiatives shown by High Tech Campus Eindhoven over these very fruitful days in the Netherlands.

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About the Author

This article was written by Jonathan Marks, Executive Director at Photon Delta. See more.

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Entrepreneurship

Myths & Facts about Entrepreneurship

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Today, there is a pervasive and nearly deafening mantra insisting that you quit your job and become an entrepreneur. The collective says you should do it today because every day you wait brings you closer to a life of poverty and regret.

A central theme in the entrepreneurial world is challenging the status quo and questioning conventional wisdom in search of new and better ways of doing things. If you’re just going to follow the pack, you may as well just get a real job and call it a day.

Entrepreneurship can be incredibly rewarding. Starting your own business may be the best decision you ever make. But it’s not for everyone. There’s a lot to consider before you take the plunge and a lot of myths to expose, starting with these.

Let’s take a glance at some of the Myths of entrepreneurship:

1. You’ll be Happier

Entrepreneurship can be incredibly rewarding. Starting your own business may be the best decision you ever make. But it’s not for everyone. There’s a lot to consider before you take the plunge and a lot of myths to expose, starting with these.

2. You’ll have more freedom, control and work-life balance

If you’re on your own, chances are you’re going to find yourself wearing all sorts of hats and working 24×7 for a very long time. Work will become your life. There’s nothing wrong with that, but not everyone feels more freedom and control that way.

3.You’ll be more fulfilled

Do we know what just about everyone loves to do? Great work that accomplishes goals they can be proud of. One can do that working for a big company, a small company, or their own company. Fulfillment has nothing to do with business ownership. If one wants to manage, lead, or run a business, it’s better off learning the ropes in a good company before starting your own.

4.There are no jobs; technology and outsourcing killed them all

It is shockingly untrue. If technology destroyed jobs, then which one will you call the most lucrative and fastest-growing industry on the face of the earth.That’s right: technology. If you can’t find a job, chances are you lack in-demand skills or education, in which case, yes, you might want to consider starting a small business which does not require much of exclusive skill sets in particular.

5.Entrepreneurs Live a Glamorous Lifestyle

That’s again untrue. Most entrepreneurs do not live a glamorous lifestyle; if they do, their investors should cringe. Entrepreneurs are notoriously frugal, hard working and opportunity-obsessed with little time for outside activities. These qualities are not hallmarks of the glamorous life.

Now,Let’s look at some of the facts of entrepreneurship.

  1. Most successful entrepreneurs succeed by exceptional execution of ordinary ideas: See Jiffy Lube, Starbucks and Charles Schwab.
  2. Most successful entrepreneurs concentrate on minimizing risk rather than taking huge risk at the time of starting their companies.
  3. Successful entrepreneurs use their innovative passion in many ways, such as buying companies, creating new ventures within larger companies and re-strategising nonprofits.
  4. More than 80 percent of new ventures are boot-strapped from personal savings, credit cards, second mortgages and the like. The median start-up capital is about $10,000. Waste Management began with a single truck; Sam Walton started with $5,000. So, in short access capital is not required to startup.
  5. Being first to execute well and delight customers is not at all important for success. A lot of startups have entered quite late in a particular startup industry and have done well.

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About the Author

This article was written by Utkarsh Sharma.

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