By Steve Blank
In a startup instead of paying consultants to tell you what they learned you want to pay them to teach you how to learn.
Roominate, one of my favorite Lean LaunchPad teams came out to the ranch last week for a strategy session. Alice and Bettina had taken an idea they had tested in the class – building toys for young girls to have fun with Science, Technology, Engineering, and Math, and started a company. The Roominate dollhouse building kits are being sold via their own website and soon, retail channels. They’ve shipped over 5,000 to enthusiastic parents and their daughters.
As soon as they had designed the product, they found a contract manufacturer to build the product in China. Alice and Bettina are hands-on mechanical and electrical engineers, so instead of assuming everything would go smoothly, they wisely got on a plane to Dongguan China and worked with the factory directly. They learned a ton.
But we were meeting to talk about sales and marketing. They outlined their retail channel and PR strategy and told me about the type of consultants they wanted to hire.
Hiring Channel Sales
“So what would the retail channel consultant do?” I asked. Alice looked at me like I was a bit slow, but went on to describe how this consultant was going to take their product around to buyers inside major retail chains like Target, Toys R Us, Walmart, and others to see if they could get them to buy their product. “That sounds great.” I said, “When are you leaving for the trip?” They looked confused. “We’re not going on any of these calls. Our consultant is going and then he’s going to give us a report of how willing these stores are to carry our product.” Oh…
I said, “Let me see if I understand this correctly. What if a buyer asks, can you make a custom version of your product? Can your consultant answer that question on the spot? What if a buyer said no? Will your consultant know what questions to ask right then to figure out how to get them to yes?” I let this sink in and then offered, “Think about it for a minute. You’re going to pay someone else to learn and discover if your product fits this channel, and you’re are not going to do any of the learning yourself? You didn’t skip the trip learning how to manufacture the product. You got on a plane yourself and went to China. Why doesn’t this sound like the right thing to do for channel sales?” They thought about it for a moment and said, “Well we feel like we understand how to build things, but sales is something we thought we’d hire an expert to do.”
Hiring PR Agencies
We had an almost identical conversation when the subject turned to hiring a Public Relations agency. Bettina said, “We want to drive customer demand into our channel.” That’s smart I thought, a real clear charter for PR. “What are they going to do for you?” I asked. “Well all the agencies we interview tell us they can survey our customers and come up with our positioning and then help us target the right blogs, influencers and press.
This felt like déjà vu all over again.
I took a deep breath and said, “Look this is just like the channel consultant conversation. But in this case it’s even clearer. Didn’t you get started by testing out every iteration with girls and watching firsthand what gets them excited? Don’t you have 5,000 existing customers? And haven’t you been telling me you’ve been talking to them continuously?” They nodded in agreement. I suggested, “Why don’t you guys take a first pass and draft a positioning brief with target messages, think through who you think the audiences are, and you take a first pass at who you think the press should be. The team looked at me incredulously. “You want us to do this? We don’t know the first thing about press, that’s why we want to hire the experts.” It was the answer I expected.
“Let me be clear,” I explained. “At this moment you know more about your customers than any PR agency will. You’ve spent the last six months testing positioning, messages, and talking to the press yourself. What I want you to do is spend an hour in a conference room and write up all you learned. What worked, what didn’t, etc. Then summarize it in a brief – a one, max two-page document that you hand to prospective PR agencies. And when you hand it to them say, “We know you can do better, but here’s what we’ve learned so far.”” They thought about it for a while and said, “We want to hire a PR agency so we don’t have to do this stuff. We’re too busy focusing on getting the product right.”
I pushed back, reminding them, “Look, half the agencies that see your brief are going to decline to work with you. They make most of their money doing the front-end work you already did. You do need to hire a PR agency, but I’m suggesting that you start by raising the bar on where they need to start.”
You Need to Do the Learning
Thinking that founders hire domain experts to get them into places and do things they don’t have any clue about is a mistake most founding CEOs make. It’s wrong. If you plan to be the CEO who runs the company, you need these resources teaching you how to do it, not reporting their results to you. For Roominate I suggested that Alice and Bettina needed to try to find a channel consultant who would take them along on the sales calls and have the founders meet buyers directly. Why? Not to turn them into channel sales people but to hear customer objections unfiltered. To get data that they – and only they, not a consultant – could turn into insight about iterations and pivots about their business model. And to see how the process works directly.
A year from now when they will be hiring their first VP of Channel Sales, they want the interview to go something like, “Well we sold the first three channel partners ourselves – what can you do for us?”
The same is true for hiring the PR agency. The conversation should be, “Here’s what we learned, but we know this is your expertise. Tell us what we’re missing and how your firm can do better than our first pass.”
As a founder – when you’re searching for a business model make sure that you’re the ones doing the learning… not the outsourced help.
There’s Not Enough Time
The biggest objections I get when I offer this advice is, “There’s not enough time in the day,” or “I need to be building the product,” or the more modern version is, “I’m focused on product/market fit right now.”
The reality is that they’re all excuses. Of course product and product/market fit are the first critical steps in a startup – but outsourcing your learning about the other parts of the business model are the reasons why your investors will be hiring an operating executive as your replacement - once you’ve done all the hard work.
- You need to do the learning not your consultants
- Most consultants will think that’s their secret sauce and not want your business
- The smart ones will realize that’s how they’ll build a long-term relationship with you
- Hire them
- Not understanding the other parts of your business model is a reason investors hire an operating executive