By Poornima Vijayashanker
A little over a month ago I began advising a new startup. The founders told me about a deal they were working on to acquire a pretty big customer. They were trying to “land a whale”.
The founders went all in because they were pretty excited about the prospects of the deal. If they closed the customer it would give them the credibility they needed to attract employees and additional customers, and increase their revenue, which would attract investors.
If they didn’t get the customer… well they just didn’t think about that!
Getting the customer was the goal and it would help them accomplish all their other goals. They were being “strategic”.
Productivity doesn’t equal progress.
For the first 3 weeks, I watched them prep for meetings, attend meetings, and review what came out of each meeting.
They felt like they were inching closer to closing the deal.
As their advisor I knew what was really going on, because I have had a number of experiences like theirs.
Just like a real whale, the customer was deliberately moving slowly… The customer’s indecision was their actual decision. But being first-time founders they didn’t see it.
At the 4 week mark, the founders’ energy and motivation started to wane.
I knew they had become too attached to a particular outcome, it was consuming them, and if they continued on this path they’d feel defeated.
Activities need to be attached to goals.
I sat the founders down.
I reminded them of their highest goal: to pitch to investors in 3 months and close a round of funding. To accomplish that goal they needed to pursue activities that would help them show progress.
We talked about what it meant to show progress: they needed to close customers and generate revenue.
But spending all their time chasing a whale that they couldn’t close soon would generate exactly: $0.
Don’t worry about waste.
Going all in, caused them to take up time that they could have been spending on attracting other customers, customers who they might have been able to close faster. No point in worrying about waste. It was time to move forward.
I also helped them realize that even if they landed the whale, investors would be concerned about how much of the business was controlled by one customer.
Investors would be more receptive to seeing that the company had acquired a lot of smaller customers, who they closed quickly over a period of time, than the one whale that took months to land.
But to run the new experiment, I’d need them to trust me, and stop focusing all their energy on one particular outcome.
The founders agreed that it was important to take a step back and stop directing their energy towards a particular outcome.
They could make more progress by going after some smaller customers. While it might mean they make less money initially, over time it would be a healthier strategy for their business.
Now I want to know what was the last whale you tried to land? Was it a customer, a job, a promotion, or something else? Did you become fixated on landing the whale or did you re-focus your energy and make progress?
Let me know in the comments below!
Great post…. such a natural pull to focus on the one big potential. Takes much wisdom to keep it in perspective.
Always a pleasure to hear from you Christopher! It is easy to get caught up in the moment, which is why it’s important to have advisors and people who have your best interest in mind.
If you’re open to sharing, when was the last time you tried to land a whale, and what did you do?
This is helpful because I’m finding myself pulling away from a whale right now, and this helps affirm that I am doing the right thing.
Hi Suzanne! Thanks for sharing what you’re going through. What do you think you’ll do next?
Hi Poornima, thank you for sharing this story. It really connected with me because it supports what we decided to do with our startup. Right now, we are working on a startup, Elektet, that helps electronics design engineers find electronic parts faster. Our plan is to release the beta version of our website on June 7th in order to fully validate the features and tools.
Just this month, we were lucky enough to have an article written about us on EE Times and that generated a lot of interest from the industry. Here is the link if you are interested in taking a peek:
http://www.eetimes.com/document.asp?doc_id=1326499
We received a message from a big company that was interested in importing their part information on our website. In addition, they were interested in maybe investing in our company so they wanted to see an executive summary.
I was excited about this and started to work on it and the beta release efforts were put on hold for a week. I talked to my partner and one of our advisors after the 4th day and we realized how big the opportunity to pitch to an investor is and we understand we may only get once chance.
To increase our chance of acquiring funding, we need to show traction. We need to show we have engineers using our site providing positive feedback and companies partnering with us and wanting to import their part information on our website. We need to show evidence that the companies and the engineers are willing to pay a subscription fee for our tools. After all, investors need to know how the company will make money and if it will make enough to provide a nice return for them.
The big whale was us focusing on the investor money without fully validating. Though we have preliminary validation, we understand we need to have more than just emails and phone conversations to convince investors.
This was a huge lesson learned and we are happy that now we are back on track and focusing on the release of our website to acquire that much needed feedback. Build, measure, learn, iterate. We keep telling ourselves now. 🙂
Thank you once again for sharing.
Thanks for sharing your experience Javier! Kudos to you and your team for realizing that phone call and emails != traction 🙂
Since you mentioned that you need to acquire companies and engineers who are willing to pay for a subscription fee, how are you planning to prospect?
Thank you for the kudos! This is what we are thinking: on the beta version of the website, we are going to create a landing page where we are going to create three subscriptions options for the engineers with a price. We will have a CTA to get their feedback on how much they are willing to pay for the tools we plan on developing.
For the companies, we plan on first reaching out to them, offer a demo, and get them interested enough to want their parts posted on our website for free so engineers can start to search. In that demo, we plan on explaining what tools we plan to provide for them and the value. We can explain that there will be a free trial and then we will offer a paid subscription after the trial is over.
We are not sure if this is the best way to go about it, but we are hoping to learn by trying this approach.
We have come up with multiple potential channels of revenue, but we are not sure what the best way is to introduce our pricing model to the companies without scaring them, especially since we are a new startup.
Although, we are still in product development stage. But I completely understand the concern here. I am in talks with few Big QSR’s like Burger King and Pizza Hut for my product. I have sensitised them about the product so that by the time we are ready they will also be ready with a decision. I am not relying completely on them though. We are talking to smaller brands too. Exposing our offerings to them. Let’s see how it pans out. I must say it is kind of difficult to sensitise customers without the actual product.
Great post. We have also been focused on a couple big healthcare whales and have just had this exact conversation on our team.
Hi Amanda, thanks for sharing what you and your team are working on. What were the results of your conversation?
It’s good that you are approaching both big and small customers. Since you are concerned about them being ready with a decision, have you asked them what would cause them to hold up making a decision? Often it’s good to understand their concerns and who the decision-makers are.
Great post. Fully agree with it. Mark Suster also has a great post on that topic: http://www.bothsidesofthetable.com/2009/09/16/most-startups-should-be-deer-hunters/
Thanks a lot Daniel, and appreciate you sharing Mark’s post. It is definitely spot on! What else would you add to this subject?
In India, the whales move slowly and firmly taking all the technical , commercial inputs(for which otherwise they have to spend lot of money and time); you will be surprised to see your inputs forming their procurement specs from your competitors.
the whale tries to come back after the competitors fail to provide aftersales service.
companies having easy access to public money scuttles any entrepreneurship
janardhana that must be frustrating. How have you learned to innovate in spite of it?