Monday, August 19, 2013

The Collision Installation

The Customer First-Run Experience That Is Taking Over the SaaS World

There is a type of non-scalable conversion tactic for new customers that has been deemed the "Collison Installation" (after Patrick Collison of Stripe fame). It involves giving new and prospective customers a slice of your time to help them get setup on your software. Of course, it only works well if the CLTV > (cost of time involved in setup), so it's not so good for consumer startups, but good for companies who have products with high switching costs (like payment processors).

However, this tactic has been in use by quasi-consultant bootstrappers and web shops for a long while. And before that, there were sales engineers who helped install and setup large, complicated systems, so the concept is not new. So, its not exactly fair to give credit to Patrick Collison, but it has certainly changed thinking inside of YC, so I'm proposing a new name that honors the concept and the namesake as well as emphasizes the process and the benefits. Henceforth, I deem that it should be called the:

"Collision Installation"

The concept should be clear, you impart kinetic energy into customers by "colliding" with them in an installation process that sends them sailing into the CLTV stratosphere. You build a working relationship from the get-go that is very similar to consultancy, but it has the recurring revenue numbers that make consultancies weep with jealousy. That relationship is maintained over time by automated means, but that initial collision is never forgotten by your customer.

If you collide hard enough - create a great experience with your technical expertise in the loop - and follow up often enough, you make it psychologically very hard for your customer to switch to some other provider.

The downside: you lose momentum in the kinetic exchange.

"If you collide hard enough - create a great experience with your technical expertise in the loop - and follow up often enough, you make it psychologically very hard for your customer to switch to some other provider."

The problem that this overcomes is actually competition. You can create at least a short term competitive advantage if you simply provide better initial customer service that your competition. Also, its hard to compete globally with an ever increasing competitor landscape with marginally fewer convertible prospects. With a collision installation, you make use of the fact that you're local, with no language barrier, and familiar with the culture.

Keeping Momentum During The Collision Installation Process

If you lose momentum with each kinetic installation.... (now, keep in mind I'm talking about the early bootstrapping days when its just you and a partner)... then you have to spin up the flywheel again to continue being productive in the mean time. The answer is to space out your collisions. Monday/Friday or Tuesday/Thursday should be set aside for collisions and on-boarding, and the rest of the week should be set aside for building and maintaining product development or marketing momentum.

There will typically be, in any team of varied expertise, some period of time where one member has downtime while the other is busy doing their thing. For example, in a designer/developer combo, the designer is going to have an awful lot of downtime and will need to pick up on the collision installation process.

By the way, none of this works without leads. So if you don't have leads, you better work on your inbound sales channels. More on that to come in a later blog post.

Monday, August 12, 2013

The Long Slow Search Before the Long Slow Ramp of Death

The "Long Slow Ramp of Death" is just as hard as it sounds, but getting to the ramp, any kind of ramp in the first place... oh golly. 

A Graveyard of Good Intentions

What if I told you that the Long Slow SaaS Ramp of Death is actually the winners circle? By the time you've reached any kind of ramp, you'll have endured what Felix Dennis calls "The Search". For many people, but especially bootstrappers, "The Search" represents a graveyard full of trial and error, both great and small. As far as I know, there is no way around this. On your way to the Ramp, if you ever arrive, you will hear success stories from other people that have found their ramp. This will prompt you to try more things, which is good, but you'll be depressed when you have to kill most or all of those ideas in the end. If you have thin skin and you're getting ready to start the search in earnest, I strongly suggest you quickly grow a layer of rhino pelt.

Glimmers of Hope Die Hardest

While you're busy digging plots for your old ideas, a new idea will surge up and you'll get energized. Other people may get excited with you. And you'll get back to work. At this point, you might build something pretty great. At this point you might win the bootstrapper lottery and be invited to prestigious events, but in the end, no one remembers your name and it doesn't do much for your company. You can decide what you really need is more engineering talent to throw at ideas, and you'll sometimes find solid business partners who believe in your idea with you, but life can intervene and cause reliable people to flake. You can try coat-tailing by working with people who have been highly successful in the past (I have), but its no guarantee. You can be featured in the media, and if sustained, this can actually create an escape velocity of sorts.. but more often than not, it doesn't lead anywhere. Soon, the ideas that you felt had the greatest chances of winning are laid to rest among the fallen.

These are the most painful friends to lose. They had so much potential.

What You Can Do: Execute Well

You: "What?", you say "Half my problem is that I don't know what good execution looks like!"

Me: "Hmm... good point. Lets just introduce you to the shorthand version of good execution: Keep going, but, go faster"

You: "This fast?" {goes amazingly fast}
Me: "No, faster"

Why this?       "Speed is the only competitive advantage" -Max Levchin

Going fast yet? Great, have you brought in someone smarter than you yet? Do that.

Done that?

Great! Now have smart people critiquing your idea.

Done that?

Great! Now, find more people! Find powerful people!

Done that?

Great! Now, join communities, get involved, be prolific, keep going!

Why all this then?      "You need to kill naivete." -anon

In Conclusion

On the Long Slow Search Before the Long Slow SaaS Ramp of Death, pick up the pace, grow some thick skin, keep going, go faster, involve smarter people, kill naivete. Good luck.