Tag: Sales

How to Get Warm Intros Right: My Ground Rules as a VC

Learn the ground rules for warm intros—double opt-in, reputation, skin in the game, and more. Avoid common mistakes & get intros right.

As a venture investor, warm intros are my lifeline, both as a receiver (new deals) and a giver (for portfolio founders & co-investors).

Given the sheer volume of the intro pipe I deal with, I also see the goods and the bads of it all. In particular, I see folks making 101 mistakes and breaking what have become fundamental rules of intros that the Valley plays by. Break them, and it screams, “I am not ready to play in the major leagues yet!” to the ecosystem.

For the benefit of everyone out there, sharing some of my ground rules for warm intros:

1/ Double opt-in

Internalize this deeply – double opt-in is the only right way to do intros. Violating this cardinal rule significantly reduces your credibility.

2/ Reputation

Implicitly underlying every warm intro is your personal reputation. In the venture ecosystem, judgment is everything, and who you are vouching for is a major signal for it. Think about that the next time you agree to introduce someone.

3/ Skin-in-the-game

I treat intros without skin in the game or demonstrated conviction as low-signal “favors”. Personally, I don’t do this type of intros at all. But definitely receive a ton of them.

As they say, talk is cheap. Or in the context of this post, “sending an email is cheap”. The signals underlying the email are what matter.

4/ Limited bullets

When I started my career in venture, one of the Partners taught me a valuable lesson that I follow to this day – “you only get 3 bullets with each relationship in a lifetime. So fire each bullet carefully”.

Being indiscriminate with warm intros is the worst thing you can do as a professional. It’s like spamming – your credibility goes down exponentially with each ask that hasn’t been thought through properly.

5/ Acceptance rate

Controlling the acceptance rate is as important as the send rate. As a constructive participant in the flow, you are individually responsible for ensuring no time gets wasted on either side.

So it’s important to control that carnal urge to “network” and vet each inbound request properly to ensure there is a high likelihood of mutual fit before the actual meeting.

It’s exactly like qualifying sales leads. Just because someone is doing a warm intro doesn’t mean it’s a good fit at this point in time.

Hope these rules are helpful. Wishing you a long track record of fostering interesting & useful connections.

Why Networking Alone Won’t Build a Successful Career (And What You Need Instead)

Networking only works when the product being sold via it is top-class. It’s important to get this order right in any career strategy.

In my profession as a VC, I tend to cross paths with many people whose main professional superpower is networking. They tend to be visible at most events, are very active on social media, have at least a surface-level connection with most people who matter in their specific areas, and are likely to say, “You are pursuing this? Oh, I know XYZ who is also in this space really well”.

In most cases, the gigs these folks like to pursue include running communities, creating podcasts, running venture syndicates/ SPVs, GTM consulting/advisory, holding ecosystem events, and engaging with govt. bodies, think tanks & non-profits, etc.

In private, they often confide in me about their desire to take their careers to the next level, both monetarily as well as from an influence perspective. They feel like mere small cogs in the wheel, and despite doing a lot of grunt work, get only a small piece of the pie, with founders, domain operators, and investors grabbing a majority of the value created.

I have thought hard about this predicament, and one conclusion I have come to is that networking skills by themselves aren’t enough. They need to be combined as an amplifier alongside a core set of one or more of the following:

(1) Technical skills

(2) Education & work pedigree

(3) Proven track records in a domain

Without this core, a pure networker is categorized at the lower ends of the business hierarchy by various stakeholders in the ecosystem.

A few examples to illustrate this:

  • Shreyas Doshi being a great content creator, amplifies his top-tier product management career. Somebody just churning out product content without a proven product track record to back it will be considered a mere content marketer as opposed to a credible expert.
  • Fred Wilson (of Union Square Ventures) being an excellent writer, gives an extra edge to his proven skills as a VC. Somebody trying to “act” like a VC on LinkedIn & at events, trying to hustle into deals via SPVs/ syndicates without the core skills or pedigree of what it takes to become a solid venture investor, will be viewed as a venture grifter in a few years’ time by the ecosystem.
  • Ryan Hoover combined his main spike of community-building with his technical chops, both as a founder & product builder, to first create Product Hunt and then parlay it into venture investing via Weekend Fund. Somebody who is just a community creator/ curator, but without any edge-chops at a sector or operating level, will end up only as an amplifier for other companies, founders, and investors, and capture only a minute piece of the value.

I believe this is an important insight that is even more relevant in this age of social media, influencers, and communities. Especially in Tech, both companies & careers seem to be over-indexed on building “distribution” for themselves, without realizing that distribution will work only when the core “product” is top-class.

For any youngsters out there reading this, I urge you to first focus on transforming yourself into a compelling & differentiated “product”, which would typically require studying at the best quality university you can crack, working at the topmost market-leading company in your space, using both these platforms to build core technical skills of some kind, and then continuously executing & refining those skills to slowly & steadily build a track record in your field. This will realistically take at least a decade in the real world.

Only when you have made significant progress toward this goal of becoming a compelling & differentiated “product”, should you then start to focus on building various “distribution” channels for it, with networking & social media being important pillars.

If you get this order backward, there is a significant risk of ending up as a lower-end “ecosystem hustler” who ends up amplifying other companies & individuals that are more compelling products, and the latter end up capturing a lion’s share of the economic pie over you.

Quick US GTM Tip For India-Based Founders

From recording many episodes of An Operator’s Blog on US-India GTM, one clear pattern is emerging from the experiences of many founders:

“If you are new to the US, don’t have a strong brand and/or connections to existing cliques (eg. haven’t done your Masters here, haven’t worked a Big Tech job, haven’t done YC etc.), cold outbound is likely to have a low success rate, especially in the initial phases of US GTM.”

Cold outbound tends to work better when done on the back of adequate customer validation, social proofing & ecosystem reputation, all of which take time to build.

Rather than depending too much on cold outbound, a better use of time when on the ground in the US is to:

1/ Build 1:1 ecosystem-level relationships with influential/ connected founders, operators, and investors.

2/ As you meet each person, try and get some warm intros. That’s your best shot at getting a relevant 30-minute meeting where the other side is leaning in.

Meet → Ask for one intro → Meet this new person → Again ask for another intro → Rinse & repeat…

3/ In parallel, execute an ongoing track of building your early reputation in the US (Bay Area?) ecosystem via social media content, engaging in relevant communities, regularly showing up in VC mixers & meetups, and generating value for the people you are meeting.

The main objective of the first 6 months of US GTM is to put the foundational elements of a future GTM engine in place. At the heart of it is:

(1) unique value + (2) reputation + (3) relationships = (4) brand.

Curiosity As A Networking Cheat Code

Do you struggle with creating an instant connect with a new person during events, dinners, or warm intros? Sharing the cheat code for cracking this problem.

Whatever career you might be pursuing, there is a core aspect that never changes – every business is a people business and our success depends on being able to create an authentic connection with employees, customers, partners, and investors.

Creating this connection is the easiest when there is some sort of shared history or commonality. However, this tends to be a relatively small circle of people that can get tapped out pretty quickly. Our professional and personal growth depends on continuously expanding this circle by being able to connect with and influence a fresh set of people, perhaps each week if you are in sales or are a founder, but every few months at the minimum for most of us.

We meet these new folks at events and conferences, through warm introductions from shared networks, and in many cases now, establishing the first contact on social media. Given the noisy world we live in, each one of us barely gets a few minutes during a first meeting to establish chemistry with a complete stranger. If we fail to create a positive vibe during these initial minutes, it’s unlikely that this relationship will ever enter our professional funnel for a possible collaboration later on.

As a venture investor, I am at the mercy of this problem statement every day. Being able to quickly bond with a new set of founders, LPs, co-investors, and operators is a core part of the job. I totally concur with this thought from Semil Shah (Haystack):

Venture capital is a people-flow business.

Semil Shah (Haystack)

Personally, going to events and mixing around has given me unprecedented ROI (I previously shared my events playbook – “Networking at Events for Introverts“). I have also made some wonderful friendships by doing 1:1 meetings via warm intros.

During these conversations, I have tried various mindsets, approaches, and mental models to deconstruct interacting with strangers. I keep running experiments across mixers, dinners, and 1:1s, introspecting what worked well and what didn’t in a particular context. Essentially, I have been trying to distill it down to whether there is something fundamental that seems to work across contexts, and which, therefore, merits being incorporated as a core behavior.

One such element I have seen work really well is demonstrating a natural curiosity during the first few minutes of interaction with a new person. With each passing year, I have come to believe more and more that:

The cheat code for faster career growth is having the ability to influence strangers by demonstrating curiosity.

We live in a highly egotistical, self-absorbed world where everyone is a creator, trying to market their personal brand and posting content about themselves. Most people love to talk, and talk only about their stuff!

I have observed very few people taking a genuine interest in another person’s journey. Asking interesting questions of someone you have just met has become a lost art. The social conditioning of this era drives people towards talking more and listening less.

However, humans have a basic yearning to be heard. Have you noticed that when someone appears to be taking interest in what you have to say, you feel a natural pull towards this person? In this attention-starved society, when someone devotes that scarce currency to a first conversation, it’s extremely powerful.

I see this working in so many situations. When pitching to a potential customer, the key to closing a deal is taking the time and devoting attention to understanding their pain points and concerns, instead of mindlessly plonking your product on them.

An investor can leave even the most seasoned founders with a warm feeling during the 1st meeting if they take the time to go beyond superficial pitching theatrics and truly try and understand their journey, their backstory, and what they have painstakingly built.

The key to a successful partnership is listening to the other side to understand their goals, motivations, and what they care about, including the personal journey and incentives of the individual championing the deal.

Genuine curiosity can be incredibly disarming. It’s about putting the constant internal self-talk to the side, being in the moment, and focusing on understanding the other person. If this becomes a consistent part of your personality, you will automatically see this translating to a bunch of new meaningful relationships each year.

Subscribe

to my weekly newsletter where in addition to my long-form posts, I will also share a weekly recap of all my social posts & writings, what I loved to read & watch that week + other useful insights & analysis exclusively for my subscribers.

Founders, Stop Serving the “Wrong” Customer

As a founder, it’s easy to start seeking positive validation by onboarding any type of customer that’s ready to buy. However, in the long run, the strategic risk of onboarding the wrong customer often far outweighs any perceived short-term benefits.

Ruthless but fair “customer qualification” can help founders manage this risk.

One of the main pieces of advice that founders get is the importance of “talking to customers”. Everyone from Paul Graham to Eric Ries & Steve Blank has championed listening to customers as the bedrock of building new products. But what if all customers aren’t created equal? And that listening to some could lead you astray?

This point came up during separate conversations I recently had with two enterprise founders. In the first case, the founder is an India-based SaaS company that has most of its initial customers locally and is now looking to expand in the US. In the second case, the founder runs a deep tech software company, also India based and similar to the first one, having initial customers local and now looking to expand in Western markets.

Both founders mentioned something interesting – looking back on their ~2-year journeys of building their products from scratch, they feel that building for their initial set of customers hasn’t given them the clarity they were hoping for and in many ways, might have even sent them down the wrong path.

In the SaaS case, to paraphrase the founder:

“Even today, I have no idea why these customers are buying my product or requesting a particular feature. It’s like they are asking for a buffet & choosing from it in a way that’s completely unclear to me.

On top of it, the exec buyer isn’t even bothering to check whether the teams are using the features being asked for.

Essentially, besides some small revenue, I am not getting any feedback or learning that can help me craft the roadmap. It’s all noise, no signal.”

As I was digesting this, I heard a similar sentiment from the deep tech founder just a couple of days after. To paraphrase again:

“Even though we are having lots of conversations with potential customers, given this space is super early in India, these companies have almost no useful feedback to share. The depth in understanding & appreciating the problem statement we are going after is just isn’t there.

Even though we have converted some of them to paid customers, I feel the way forward is still fuzzy.”

If you look at both these startups from the outside, they are doing all the right things – talking to customers, building what they are asking for & getting paid for it. They are hustling on the ground, iterating quickly, shipping features & doing everything that say a YC would have told them to do.

But on a closer look, both founders have an uncomfortable feeling that these customers aren’t taking them in the direction they need to go in (which is building a product that can scale globally).

What’s your next Base Camp?

I had previously written about Vinod Khosla’s concept of “Base Camps” – that any startup’s execution needs to take it from where it’s today to the next Basecamp. This is a strategic place of progress, de-risking, recuperation, and reflection. A milestone where the team consolidates & re-strategizes for the next phase.

The idea is not to hike aimlessly, but to execute a specific, long-term mission to reach the peak of Mount Everest, with Base Camps interspersed on the way. In the earlier examples, the current sets of customers seem to be taking the founders down random trails, giving them the high of working hard & burning calories on a hike, but not necessarily taking them closer to the next Basecamp on their respective Missions.

Importance of customer qualification

Peeling the onion on this philosophy a bit more, the idea of “customer qualification” becomes really important in this context. Founders need to deeply think through what their next Basecamp is, what they are trying to test & accomplish on the way, and what type of customers would get them there.

All customers aren’t created equal – some are more likely to be strong design partners as you build the initial product, while others might have deeper pockets but will also demand a lot of organizational bandwidth. Some might not be in your ideal target geo but can help you bootstrap & get market credibility. Others might be in your ideal geo but require a long sales cycle that could consume a significant part of your runway.

Also, these are dynamic situations. As the startup evolves, a customer that made sense to onboard 18 months back, may no longer fit the company strategy. Or the “purpose” the customer serves in the startup’s larger Mission might have evolved. Maybe it was a great design partner logo to have then, but can now only serve the limited purpose of being a cash cow to keep the lights on while a pivot is being executed.

Customer qualification needs to be an ongoing strategic priority in the go-to-market plan & serve as a critical gating factor in how resources are being allocated.

What’s key to qualifying customers at the earliest stages?

Three words come to mind here – judgment, courage & creativity.

1/ Judgment

If there is clarity around company/ product strategy & as an outcome of it, what the next Basecamp looks like (“where you need to go”), founders need to use their judgment & figure out what types of customers are likely to make or not make sense (“how to get there”).

These won’t be black-and-white calls in most cases, so investors & advisors on the cap table should closely support the founder in rigorously thinking through the approach, especially given the resources (capital & talent) either already at hand or what can be realistically gathered from the market (“what gets you there”).

2/ Courage

Once there is sufficient clarity around what types of customers are your best bet to reach the next Basecamp, it’s time to ruthlessly execute that clarity. It could involve resetting expectations with existing customers, saying no to new feature requests, or even gently “firing” specific customers.

The courage to have tough, honest & transparent conversations will be a critical part of execution here. And as a founder dealing with an ambitious mission, limited resources, and high expectations of the team & stakeholders, you don’t need to be apologetic about this. In fact, you owe this to yourself & the company. And given most startups are default-dead anyway, what do you have to fear?

3/ Creativity

A quick disclaimer here – I am by no means advocating treating customers unfairly or dumping them without remorse. In fact, I have seen so many cases of enterprise customers being at the receiving end of a startup shutting down on short notice that I fully empathize with them being wary of engaging with really early-stage startups.

At the same time, it’s a brutal reality that most startups are default-dead & living on thin ice. Therefore, it’s totally the founder’s prerogative to do whatever it takes so that the company can survive.

Balancing the interests of your customers, who were also your earliest believers, as these hard calls are taken is where creativity becomes super important. In all likelihood, there is going to be no path where everyone around the table is going to end up happy. Founders, supported by their investors, need to think of creative ways that can minimize damage to customers.

As an example, a startup I was previously an investor in was making a hard pivot from serving individuals & SMBs to classic, large ACV enterprises. Obviously, the company could no longer afford to service existing customers in the former bucket while also building for the latter. However, the founders also realized that the software was in many ways, mission-critical for existing customers. So instead of turning off the existing product entirely, the company decided to put the product on maintenance mode, only keeping it live “as-is” with no shipping of new features. The founders had transparent 1:1 conversations with each existing customer, explaining the decision & the rationale. Almost all customers were happy to keep using the product.

A few years down the road, the company was being liquidated and the legacy product had to be shut down. The founder then shifted legacy customers to his private cloud so their business wasn’t disrupted. Treating early customers fairly while staying within the context of new business realities was a philosophical call taken by the founders & they stuck with it even after the company ceased to exist.

Closing thoughts…

While running an early-stage startup, it’s easy to fall prey to the pitfall of seeking positive validation by onboarding any type of customer that’s ready to buy. Sometimes when capital is constrained, it even becomes unavoidable. I mean, who can say no to revenue?

However, in the long run, the strategic risk of onboarding a wrong customer often far outweighs any perceived short-term benefits. Founders need to be aware of the next Base Camp they are gunning for, and in order to pave the most efficient path to it, use a combination of judgment, courage & creativity to qualify customers ruthlessly but fairly. And lastly, do not feel apologetic about it!

Subscribe

to my weekly newsletter where in addition to my long-form posts, I will also share a weekly recap of all my social posts & writings, what I loved to read & watch that week + other useful insights & analysis exclusively for my subscribers.

Meeting customers IRL still works

As the business world reverts to a blend of remote & in-person, meeting customers IRL is becoming important once again, especially in a slowing economy.

Sharing some thoughts on how jumping on a plane & meeting people could be key to unblocking growth for your business.

I was recently in a brainstorming session with a portfolio company that is struggling with stagnant growth. The company is profitable, has clear PMF as demonstrated by loyal top-tier customers, yet is unable to grow the business fast. It has major logos but the ACVs just aren’t expanding.

Now, as with any startup, stagnant revenue is a symptom & the causes could be many. In order to do a root-cause analysis & subsequently unblock growth, my immediate actionable input to them was simple – “go and meet customers in-person”.

When the bolt of lightning called Covid struck our planet, paradigms of doing business changed overnight. As workers went remote, so did interactions with customers. In fact, as companies were forced to do business with each other over video calls during the lockdown months, people discovered that it was both highly productive and profitable to drive the sales process sitting anywhere in the world with a laptop & a stable Internet connection, engaging customers living thousands of miles away over a shared screen.

As the world is stabilizing into a new-normal, many companies are now realizing that the success of a fully remote sales & BD process is highly contextual. In hindsight, its applicability & effectiveness became extraordinarily broad based in 2020 and 2021, mainly due to:

  • An excess liquidity fueled, demand-on-steroids environment, and
  • Altered social norms of human engagement.

Simply put, everyone wanted to buy so badly that the only bar the sales process needed to clear was to show up on a Zoom call. And, it also helped that nobody really wanted to meet a stranger in-person & take the risk of Covid transmission.

Now, as we sit in 2023, both these factors no longer exist:

  • Demand is contracting across industries, courtesy of the ongoing cycle reset driven by rising interest rates.
  • Post vaccine, broader social norms have reverted to a blend of remote & in-person. What proportion will they reach at steady state is hard to predict, although with the present return-to-office movements even with Big Tech like Amazon & Meta, my guess is 60% in-person & 40% remote (assuming a continuing trend of 3 days per week in office).

It’s critical for all founders & operators, especially those in early stage startups that typically have finite resources to deal with business headwinds, to quickly embrace this reality. In a 60-40 IRL:remote world with contracting demand, it’s unacceptable if founders & senior leaders aren’t getting on the plane to meet customers & build trust.

Meeting customers IRL has multiple advantages. First, leaders taking the time to travel & spend bandwidth in listening is a strong demonstration of commitment. It’s Strategy 101 that in most cases, it’s easier to grow a current customer vs land a new one. Even in consumer products, product leaders first focus on retaining existing customers + re-activating inactive ones, before filling up the top of funnel with new leads. In any business, growth is possible only when existing customers are happy.

Second, breaking bread with customers builds 1:1 trust with their execs, putting a human face to contracts, transcending beyond employers & current deals to opening up the possibility of these leaders becoming your personal champions for long after.

Third, getting informal feedback about their product experience as well as larger problems & challenges they are facing, & then connecting the dots across multiple such conversations, is the best way to do a root-cause analysis of “why are we not growing fast enough?”.

Going back to the portfolio company I mentioned in the beginning, I gave them a very simple & actionable plan for the next 8 weeks to unblock growth:

  • One founder to play what I call a ‘Key Accounts’ role.
  • Literally make an excel sheet of top 5-10 customers, hop on flights, meet key execs IRL, get feedback, hear their problem statements & build a personal rapport via drinks/ dinner.
  • As an output of each meeting, create a simple roadmap for (1) enhanced customer success, where customers are unhappy and (2) in-account revenue expansion via upsell/ cross-sell, where customers are happy & want to grow.
  • Finally, and most importantly, partner with relevant teams (product, delivery ops etc.) to unblock & provide execution momentum to these customer-wise revenue roadmaps.

The founder’s role shouldn’t end with token customer visits. Driving results by providing the necessary context, energy & cross-functional unblocking help to operating teams is the real output all stakeholders are looking for.

Btw, as I was working on this draft, star product operator & angel Gokul Rajaram posted this thought yesterday on the importance of building relationships in enterprise sales:

On a side note, willingness to get on a plane often is a career hack I used very successfully at Alibaba & something that I learnt from my then boss. While our international peers in US & EU offices loathed traveling to China & facing all the inconveniences (from jet lag & language to food & other cultural disconnects), me & my team would show up in Hangzhou every month, blending in with our local colleagues & building trust over meals, rice wine & karaoke. Slowly, we came to be known as the “true believers” – the only team willing to make the sacrifice & do a round-the-world trip every month to get s**t done. We gradually earned the right to be ‘insiders’, getting access to unique growth opportunities within the Group.

Now in this new phase of my career as a tech investor, am doubling-down again on this approach. As I ramp up venture investing in the US-India corridor, I am aiming to spend at least 2 weeks per quarter in India & devote more operating time to portfolio founders, grow new deal flow, cement old ecosystem relationships as well as initiate new ones.

Let me end this post with an article from Jason Lemkin of SaaStr that I really like – 10 Things That Always Work in Marketing. This is a must-read for anyone looking to unblock growth in their business. The suggestions go much beyond marketing, touching on all aspects of go-to-market. Reproducing the section on visiting your largest customers:

Subscribe

to my weekly newsletter where in addition to my long-form posts, I will also share a weekly recap of all my social posts & writings, what I loved to read & watch that week + other useful insights & analysis exclusively for my subscribers.