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August 2023

What Are The Patterns?


One of the questions I often ask founders is “What is working and what’s not working in the business today?” What I’m trying to do is identify the patterns they see among customers.

Identifying patterns and reinforcing them is one of the most important elements in building and scaling a startup. Unfortunately, it’s not a common skill, and if you don’t have it yourself, you will want to make sure it exists somewhere on your executive team.

In an early stage startup, it is essential to to seek out patterns among users and prospects to identify those with a higher likelihood of paying you. The patterns are key elements of why your product resonates with certain people and not others.

While it’s tempting to make this a quantitative exercise based on title, company size, vertical market and so on, the question you are trying to answer is: what causes some prospects to buy and not others? Demographic issues have an influence, but it may also come down to the particular problem the customers are trying to solve and the circumstances around it. I have found it helpful to understand the qualitative elements around customer situations and then try to determine ways to enable customers in those situations to put up their hand and identify their need.

At MySQL, we had a scale problem many startup companies would envy. We had millions of users and thirty thousand new downloads every day. The high volume of users made it harder to distinguish between free open source users and corporate customers who might be inclined to pay. A big part of the job in marketing and sales was to identify patterns which put people into one bucket or the other. We developed a content strategy that made it easy for users to self-select into different categories.

For example, we knew that there was a class of applications for embedding a SQL database into an application or hardware appliance for which MySQL was demonstrably better than competing databases from Oracle, Microsoft and others. So we created webinars, white papers and case studies that highlighted how to evaluate MySQL as an embedded solution. These were targeted specifically to engineering managers and product managers who were the most likely decision makers. Now instead of searching for a needle in a haystack, we had a much more clearly set of prospects who were trying to learn all the could about the problem they were trying to solve.

The embedded use of MySQL wasn’t the dominant pattern among our users. It was probably somewhere between 15 and 20%. But we knew they had very specific requirements of low-maintenance, high efficiency, low-memory requirements for which MySQL was ideally suited. And it was a very profitable segment with deal sizes that could be well into six figures.

We developed similar content strategies for CIOs (and those who wanted to become CIOs!) to learn about open source technology, for Database Administrators who wanted to improve SQL performance, for users concerned with security and so on.

Once you uncover patterns about your users, you can use that information to better optimize your sales and marketing approach. These patterns may also suggest opportunities for features which better serve specific segments of the market.

You don’t need a pattern to represent the vast majority of your buyers for it to be useful. As long as it can be identified and targeted, it may be worthwhile. (Or said differently, there is rarely a single unified pattern that meaningfully defines all your users.)  In fact, trying paint such a broad picture of your audience may yield such generic information as to be completely useless. It is better to be laser focused on specific types of customers and use cases than to be a wandering generality.

And although quantitative analysis can be helpful, I have found that the two best ways to uncovering patterns are to talk to customers and talk to sales people. Just ask: why did they buy from you? And listen.  The most successful sales people often have a highly developed intuition around customer patterns. But in my experience, only about 20% of sales people are good at explaining those patterns back to management. So your best bet is to do customer visits with sales people and then ask the sales rep how often they see similar situations. That’s also a good reason to have marketing people take part in customer calls. You want your marketing team seeing what the sales people see and helping to identify patterns. 

What experiments can you run to uncover patterns among your users? What makes some users buy and others stall? And how can you better serve those distinct segments? What changes to your product, marketing or sales process can you use to optimize for patterns?

Are there patterns you've seen in your business that have been helpful? Let me know by posting a comment below. 

The Power of Velocity


Running a startup can sometimes feel like hell. And as Churchill said, if you’re going through hell, keep going. Forward progress can be hard to maintain when there are customer disasters, technical setbacks, funding challenges and more. But what other option is there?

As a startup, making forward progress is essential. And if there is any competitive advantage a startup can have over larger competitors, it’s that it can and must move faster.

Let’s face it, most large companies, no matter how agile they once were, get bogged down. The more success they have, the more they grow, the slower they get. Middle managers are hired, rules are made, and new processes are created all in an effort to ensure that no mistakes are made. But those processes and the bureaucrats who create them also cause a side-effect of slowing things down. The culture that once boasted of moving quickly, becomes complacent and accepts that because there are more people, things take longer.

New competition? Let’s take a wait-and-see approach. Sales problems? Schedule a review at the end of the quarter. Need more engineers? Budgets have to be approved. New product idea? Surely that can wait.

Most startups move fast. But if you’re not careful, you can end up re-creating the same bureaucracy found in larger companies.

If you’re the founder, CEO or executive, you can’t make all the decisions youself. That will only result in slowing things down as a pile-up forms outside your office, your email in-box or your Slack DMs. So you must create a culture that empowers others to make decisions. And you must set the pace for making decisions quickly.

In an efficient startup that means if a problem is found on a Monday, you’re brainstorming ideas on Tuesday, picking the best solution by Wednesday, implementing it Thursday and measuring the results by Friday. That might seem optimistic for some problems. Engineering complex solutions might take weeks. But for many other problems in sales, marketing, customer service or finance, it should be achievable.

Startup leaders need to demonstrate the importance of velocity to their teams. There will always be a desire for more more input, more discussion, more research, more data, more analysis. But that must always be tempered against eroding the advantage of startup speed. And in truth, how often does delaying a decision yield better results?

In the early days at Zendesk, we faced significant competition from Salesforce who had acquired a smaller competitor of ours called Assistly. Assistly was priced cheaper than we were and appealed to very cost-conscious small businesses. We created a “never lose on price” campaign which gave our sales managers the ability to aggressively compete on price against Assistly and other low-end competitors. We trusted our sales team to not lower their price unless they had to. And we knew that by approving a price match in real time with the customer demonstrated our ability to respond quickly to their needs. We also knew that getting a similar discount app, a trial period extension, or other change from Salesforce would typically require three levels of escalation taking weeks inside of Salesforce.

It’s possible that we left some money on the table with customers who might have gone with Zendesk instead of the lower-priced rival anyways. But the confidence the sales team developed during this process, the momentum within the company and impact on the culture was well worth it.

As you grow your company, you will often need to develop additional layers of process. There will be board meetings, executive meetings, departmental review meetings, pricing committees, product councils, launch meetings, and a myriad of short-term task forces. In all cases, these processes will be set up to generate better decisions, or more transparency, or higher collaboration, fewer surprises.

However, if you’re not careful, meetings and processes may end up bogging down decision making and watering down accountability. So whenever you define a new process, be clear on who owns the decision and when it will be made. And at any point if you are reaching the point of diminishing returns from these meetings, ask that the decision gets made immediately.

If a process or meeting has outlived its usefulness, don’t be afraid to disband it. This is especially important as you bring in new managers or executives. Give them the opportunity to eliminate the bureaucratic processes of their predecessors by paring back the number of attendees or scope of meetings.

As you look across your organization, are there decisions now taking longer than they should? Are there too many layers of approval? Is there confusion about who makes the decision? What steps can you take to cut through the layers so that speed remains a competitive advantage?

Let me know your thoughts by posting a comment below.