Johnson Cook

Atlanta tech investor. Entrepreneur.

Johnson Cook - Atlanta tech investor. Entrepreneur.

Nail Your Business Model or Nothing Else Matters

 

EndOfRunway

 

 

One of my biggest hard lessons learned over my entrepreneurial journey has been the importance of having a clear, focused, and simple business model.  We’ve all been impressed with the successes coming out of Flashpoint at Georgia Tech, and I believe this is exactly why. Flashpoint puts startups through the “pressure cooker of customer discovery” and forces them to power through hundreds of customer interviews in order to build out the Business Model Canvas.

In my first company, we chased our business model for years.  We had some good proprietary technology, so we had some product components. But we also offered services. We integrated the pricing and billing because we wanted to win the deals. We won some customers on variable pricing and some on fixed pricing. We did win the deals because of this, and we did make some money, but it was always hard to see the path to greatness and giant success because we had so many different options ahead of us. We could double down on services, hourly billing, fixed margins and really add bodies and billable hours. Or we could ramp up R&D and accelerate the product side, hire a ton of sales and go down the SaaS path. Choices, choices.

Having too many options can be a bad thing for startups. When I meet with early-stage entrepreneurs, often doing their first startup, I start to see problems immediately when they have to describe (or worse, draw a chart) showing “How We Make Money.

When you’re starting up, you have the world against you. You have a boulder the size of a dump truck that you and you alone have to push up Stone Mountain.  You have so many things to figure out, you can’t afford to be be figuring out a new business model for long.

Be innovative on your product or your service. Be cutting edge and invent a new widget that the world has never seen, but don’t try to do it on a business model. Either sell a product, sell an ad, or sell a service.  Ripoff and duplicate a success story in your space.  Copy a business model exactly.  (Side note: unless you are a black-belt entrepreneur with good funding or know a specific space really well, I’d advise against any business model that is two-sided.)

When the airplane starts accelerating down the runway headed for trees is no time to figure out which direction you want to go. You pick the direction and accelerate, and get your ass airborne fast, or it will be a short trip.

 

 

 

Startup Steak and Startup Sizzle

 

Tell me your mouth Isn't watering right now.

Tell me your mouth Isn’t watering right now.

Let’s talk about Ruth’s Chris steaks.

When I think about RC, the first thing I think of is that awesome smell of butter melting on steaks when you walk into the room. It hits you in the face and is so deliciously intoxicating.

Then when the server describes to you all the features of the steak you’re about to order: where it’s from, how it’s prepared, etc, they tell you that it will arrive at your table sizzling on a 4000 degree hot plate (or whatever) covered in garlic butter.

Then when you finally get to cut into that first bite, it’s pretty much, absolutely, spot on perfect.

Every time.

I’ve never had an RC steak less than perfect.

At Voxa right now, all day long we are talking about, debating, and wrestling with our product’s steak vs. its sizzle.  No, it’s not because we have Ruth’s Chris every day for lunch… although, if any investors out there want to offer, perhaps it could become a company benefit.

It’s because every startup product has some steak and some sizzle.

Our steak is what people really buy. This is what they need. This is the point. It’s why they come to our restaurant.  If the actual steak at RC didn’t taste perfect every time then the sizzle would be a sham. It would be wasted effort, and probably would eventually cause folks to associate that smell with a bad steak. Pavlov Steak.  (Maybe I only like the sizzle because I’ve been trained Pavlov style to know that a good steak is coming.)

Startups and high-energy entrepreneurs love to talk about the sizzle. We love to promote it. Demos are best with sizzle.  Sales guys especially love to talk about features that cause the buyer to have a “Wow” reaction.

The steak at Voxa is pretty unsexy. We simply make Email to Salesforce.com work. Really work. Like bulletproof, brilliant, and automagic.  We take a really simple, annoying task and make it go away. That’s the steak. It’s a darn good steak (near perfect, I dare say), and our prospects are talking to us and buying from us because of this steak.

But….! We also have this delicious sizzle. Ahhh, the buttery delight of Natural Language Processing (NLP) for emails. The spice of automatically reading email and magically interpreting actions to do even more than just log the email in Salesforce, we will do everything else that needs to happen in Salesforce.

(Example: If today I say these words in an email to you “Voxa could be a fit” … my Voxa App has been told to interpret that to mean you are a lead for our sales team, and you will be automatically added as a Lead in my Salesforce.com account and assigned to a sales rep and probably called very soon. :)  I never had to even login to Salesforce for all this to happen, I just sent you the email and said the words.)

We are building this sizzle now, and it’s the most fun to build, admittedly. But when we sit down each week at our sprint review and evaluate priorities and the time allocation for the week, we (so far) have landed on the decision to keep the steak first priority and keep making it a better steak. Since we are so young we spend only a fraction of our limited engineering resources on the sizzle features.  Hopefully, this percentage of time will go up as we add engineering resources.

For my startup friends dealing with this: One day you will have it all, and it will all work together in clean harmony. Sizzle adding value to your steak.  You’ll get there, but having the discipline to prioritize the steak first is an important lesson that doesn’t come easy.

 

 

Are You Having Fun?

 

Last week I was talking to one of our Voxa team members about how we’re doing as a team.   We now have 7 full-time and with some extra hands helping out part time, it’s a very early-stage team of 9 high-energy Voxans.  It was a good dialog around finding the best role for everyone on the team and how and where each person adds value specifically. He wanted to be sure he was performing up to par.  Knowing how you’re doing can be tricky when the roles are so early and not yet clearly defined.  Of course I assured him that he’s doing a fantastic job and then it occurred to me to ask him a very important question:

“Are you having fun?”

At the time, that question even caught me a little off guard. In all my years leading small teams, I have asked many questions. Questions like:

  • On a scale from 1 to 10, how are you feeling this week about the company?
  • Are you satisfied with your job here?
  • Would you recommend to your best friend get a job here?

But for some reason, I have never thought to ask “Are you having fun?”

I’m not sure why I’ve never asked that question. Perhaps because work isn’t about having fun, it’s about making money, getting s**t done, making a mark. But isn’t doing something meaningful supposed to be fun? Isn’t pushing yourself to be better and to make a mark supposed to be FUN? If it’s not fun, then isn’t there something else you can be doing?

This question has been hanging in my mind since last week and I will continue to think about it. Even when it’s hard as hell, when we lose deals, when people quit, when competitors win… looking back, it should still be fun… I think. Don’t you?

Our parents never came home from work and answered the “How was your day at the office” question with “It was FUN!”   And looking at my own routine, I probably don’t say that enough either.  But as I sit here writing in the clear-thought and positivity of the morning with an objective outlook on the day, I’m wondering if I should start focusing more on the fact that what I do is a ton of fun.   What if my kids can grow up hearing me say repeatedly that when I was away from them, I was having fun.

Why not? What’s the downside?   If you look at the construction of success, I hardly think you would find that fun is a detractor.  Winning customers is fun. A productive team is fun. A hard day of meetings is even fun.    The challenge of a hard competitive battle over a big deal is fun… even when you lose (sometimes).

This is an energy boosting topic for me and I hope it will be for you as well. Ask your team if they are having fun and try to evaluate your day and verbalize to others that you’re having fun.   Who knows— maybe if you say it often enough, the next hard day that comes along won’t feel quite as hard and you might even squeeze out a grin.

 

Inside the Mind of B2C VCs – What B2B Startups can Learn from B2C Investors

 

b2b_b2cThere is an interesting dialog in Atlanta right now around the lack of B2C startups and successful tech companies. My only comment on the dialog itself is that I wish it could stay positive and not come across so negative from a few folks. It’s really great topic with powerful ideas around how to make change.

In parallel to those Atlanta conversations, as follow-up to the Bay Area trip with Kasim Reed, I’ve had the opportunity to chat at length with VCs who do very well investing in consumer startups. Also, I’ve learned a great deal by helping our Atlanta Ventures Accelerator company, YikYak negotiate investments from B2C focused VC’s from Silicon Valley.  I’ve learned that the way the B2C crowd thinks about growing startups is completely foreign to me, and learning how they think has opened my eyes to some valuable points for my own B2B startup, Voxa, and can help others as well.

It’s easy to sit atop the imagined ivory tour of Enterprise SaaS startups that can generate substantial revenue very early and proclaim that businesses without revenue models don’t make any logical sense and aren’t sustainable… but… B2C startups benefit from a clear, undeniable, singular focus that often times it is hard for B2B folks to achieve. B2C startups must be 10000% completely focused on building the best product, period.

Build the best product, or die.

One of the investors in SnapChat, Facebook, and Twitter told me that they tell their portfolio entrepreneurs over and over to stop thinking about monetization. They tell them that monetization will be figured out in 3-5 years at the earliest. Instead, focus on the user experience. Focus on building a product that has tremendous value. Live inside the head of your users. Be a user!  Use the app yourself constantly. Always be thinking what you can do to make it more useful for yourself.  It’s very simple what to do.

In the B2B world (and I can already see this happening in Voxa), it can be easy to get distracted with the other challenges of building a sales oriented business.   You have to put a ton of effort and energy into your customer acquisition machine. If you do this before the product is fully ready, you will have issues.   If you have success with your sales efforts, but have a product that hasn’t been fully proven to add sustainable value, you can be falling into traps you set for yourself. While it’s important to find the balance between sales and product, remember that when you put your “product hat” on to think like a B2C startup.

Think about what features and improvements make the product the best to *use*. 

In any startup, you will always be prioritizing your product roadmap. As you get users, you will add more desired features. Some of these features make the product easier to use, while others may be growth hack features. Features that are intended to make the product more far reaching perhaps shouldn’t be prioritized over features that make the product 10x more valuable to the current user base.

It’s all a balancing act. Everything is a compromise.  Remember to give both sides of the equation intense and intentional attention.

I look forward to learning more from B2C startups as Michael Tavani becomes successful in bringing a boat load of energy towards more B2C in Atlanta. Way to go Michael!

 

 

Takeaways and Trends from Silicon Valley – Trip with Mayor Kasim Reed

 

Johnson Cook and Kasim Reed

Mayor Kasim Reed

Last week was awesome. I had the honor of traveling with a delegation of community leaders, including Mayor Kasim Reed, John Yates of Morris Manning & Martin, Bernie Dixon of Atlanta Tech Angels, and the Invest Atlanta executives to Silicon Valley to meet with the top investors (both venture and private equity) about Atlanta.

The purpose of the trip was information gathering, first and foremost. We went to hear their impressions of Atlanta. What do they think of Atlanta from a deal perspective? What do they know about Atlanta? What deals have they done here and what deals have they missed here?

Ted Schlein, Kliener Perkins Caufield & Byers

Ted Schlein, Kliener Perkins Caufield & Byers

Overall, the feedback was very positive about Atlanta. West Coast investors love the town. Georgia Tech was always mentioned in the first breath.   The talent wars for engineers is a major challenge for West Coast companies and the fact that we have GT right here is a huge asset, and they know it.

What I was most excited about was the consistency of feedback. There was little variation in the opinions and even less variation in the advice and recommendations.   When asked “How do we engage your firm to invest in more Atlanta companies?”  The responses were consistent.  I will share the top six areas of advice here.

Mayor Kasim Reed, Bernie Dixon, Johnson Cook, Bruce Cleveland

Mayor Kasim Reed, Bernie Dixon, Johnson Cook, Bruce Cleveland

1. Focussing on connecting Atlanta investor community to the SV investor community is a more scalable bridge than connecting individual deals.   When investors have close relationships with other investors, things move faster. When a VC receives a call from another VC saying “this is a good one, you need to see this” — it is so much more efficient than the typical ratio of seeing 200 deals to make on investment.

Bernie Dixon, Brook Byers,  Johnson Cook

Bernie Dixon, Brook Byers, Johnson Cook

2. Facilitation of visits really does help.    12 to 20. That’s the number of companies that an investor needs to see (in their specific area of investment) to justify getting on an airplane.  If the community can help facilitate these pitch days and tours, it is a meaningful needle mover.

3. When investors look at startups, having Fortune 500 customers matters a lot.  Investors said it in every single meeting. If Atlanta can connect our large corporations to our startups for the purpose of making the customers, investors will get really excited.  Having Home Depot, Coke, Cox, Georgia Pacific, UPS, Turner, NCR, Delta, and their peers on your “current customer” slide deck is a giant deal.

Interwest Partners Visit

Interwest Partners Visit

4. Focus on supporting entrepreneurs.  This was one of those that is almost so simple it’s obvious.   Creating an environment that is super entrepreneur friendly, really does matter. Help the entrepreneur. Make things easy. Help them avoid distractions, help them find each other, help them find money. Make the focus on helping the entrepreneur build great companies and the investors will find them.    Venture Capital is a very efficient industry. Money travels with ease.

5. Infrastructure for growing startups matters.  I was delighted to hear this direct feedback from Brook Byers and Ted Schlein at Kleiner Perkins.   Building community centers like Atlanta Tech Village and ATDC is far from trivial. When they put money into a company they just want to say “GO and GROW LIKE HELL” … they don’t want their portfolio entrepreneurs having to go out and shop for furniture, look at office space, negotiate with internet providers… they just want them to get their ass in gear and go.   Incubators and community centers with flexible growth oriented work spaces make a huge difference.

6. Our engineering talent pool, mainly Georgia Tech, is our top advantage. Given that the biggest challenge of Valley startups is finding and retaining solid engineering talent, it is no surprise that the big VC’s see Georgia Tech as a key advantage of Atlanta startups.   Bruce Cleveland at Interwest Partners, for example, shared with us his model for offering engineering students who intern with a portfolio company then join full-time after graduation a major signing bonus. It’s the same money you would pay to a recruiter, so just give it to the student instead.

This trip energized me and everyone else on the trip. It was an awesome confidence builder and the great start to many new relationships between the West Coast and Atlanta.

My last takeaway is that we need more trips like this. Startups should get on the plane as often as they can afford and get out there to soak it in, shake hands, get business cards and start to build the bridges.   The more surface area that touches the West Coast ecosystem, the stronger our own ecosystem will be.   Plus, it’s beautiful out there.

SandHill Road