Recognizing a Rock Star

(Repost from a Selling to Small Business blog to which I contribute.)

In a comment posted to [an earlier] entry, a reader noted that so many "stories are the same". That is so very true, even with rock stars- one more boy from south central LA; one more girl from Topeka, Kansas; one more aged star launching a comeback tour. There isn't story we haven't heard before. I often wonder how many iTunes tracks can actually be sold from singer-songwriters singing soft, halting guitar ballads about love and loneliness. Apparently, the answer is a staggering amount.

There are two very similar reasons. First, people want to hear it. They have an emotional connection to it. They like to hear something that reminds them of their youth, their passion, or their softer side. It reminds them of a part of themselves. Second, there will always be young males and females making the music, because there will always be youth, heartache, and beauty. People will sing about. And because everyone experiences those things, at least some of us will listen to it. See reason number one.

Small business has the same connection with most Americans. It is the American way. Everyone either has done it or would like to do it one day, if only... It is about taking risk, seeking independence, and taking care of your life. When they tell their story to the average American, they get quiet looks of admiration and respect. They are accustomed to this position in life, despite where it has actually gotten them on the totem pole. They have fought the good fight or are still fighting it.

A small business owner may have a similar story to the one you heard yesterday. The fact is that their story has subtle differences from the other. Those differences indicate the most important struggles that the business owner overcame. Despite the similarity of today's story to yesterday's story, that story is very real. It impacted the business owner in dynamic ways and changed who they are. Listen carefully: it IS who they are. A story like that has soul, funk, a bass line and a harmony. It might sound like last year's hit, but it is this year's hit, and more importantly, it is your potential customer's hit. Until you recognize and revere that story, the story of a rock-star, small-business owner, you will never be truly effective at selling to small business. You'll just get lucky sometimes.

If you want to build a relationship with a small business owner, take the time to hear their story. They always love to tell it. If they don't offer it, look around, it is probably on the walls of the small front office. Ask questions about pictures and awards you see. Be impressed. You should be. And then ask the big Hollywood question, "What gave you the idea for this business? How did you get started? Could you tell me how you got this GREAT idea?" Then sit down and let them tell you a story. When they are done, recognize their accomplishments (that they are, indeed, a rock star) and note how impressed you are that they got to this point.

If you have the time in your sales cycle, spend your entire first call listening to the story. Then say "Whoops! Look at the time! I have to go! Mind if I come back next week?" Without even pitching your pitch. I guarantee that when you return next week, they will look at you with more open eyes. They may even ask to hear your story!

The Story of a Rock Star

(Repost from a Selling to Small Business blog to which I contribute.)

In a former life, I was in the music industry. I met the right star at the right time, and my entrepreneurial spirit did the rest. I was a part of an innovative group that developed new versions retro grass roots marketing and distribution. We dabbled in internet distribution before most people knew what the internet was. We had some star power behind us and we had a lot of fun!

To the public, the star is everything. In the industry, the star is simply the leading edge marketing tool. They are the story and the talent that leads consumers to products. Talent is important; the star has to have a great media presence, a great voice, inherent performance compulsions, and a moderate ability to think on their feet. Talent in one area is not hard to find. Talent in all areas is in abundance in every major city. But talent with a great story is rare. These are the stars. They sell products.

I was fortunate to work with one of the best star stories of the last decade. I first met this star before her 20th birthday. She lived in her van, and sang nights at a coffeehouses and bars. She was fortunate enough to get a spot in a San Diego club and was surrounded by some leading talent of the early nineties. She studied them and learned from them. There were more talented people around her, but she was the one to receive a big contract. She had one of the biggest debut albums of all time, with a number of subsequent albums.

There are many aspects to her story that can illustrate the points that I am getting to, but I'll just share one. I attribute a single reason this songwriter became a star. While all the very talented musicians around her spent their time between and after sets, hanging out back stage and drinking (among other things), the teenage girl did something different. She met her fans and really talked to them. She told her story at every show. She positioned herself at the exit and shook every patron's hand. She asked people if they liked her music. She asked people to come back and see her. One of those hands she shook was an executive from Atlantic Records. They came back to see her, and brought a contract.

This is my first contribution to a new Evan Carmichael blog. They are a few analogies I will draw from this story over the next months. The basics are these: Every small business owner is a rock star. Every small owner has a story and some degree of talent. Every small business owner wants you to know their story, not just their "music". Later we'll talk about how every small business owner only wants to sing and tell their story, just like a rock star. If you are going to sell to a rock star, you must understand these things. Finally, we'll talk about how to take this and shape into a sales strategy. We'll talk about how to convince a rock star that you are the best agent. And if you are still reading, we'll talk about how to get a rock star to sell product.

The Pitfalls of Deferred Compensation

I have recently been asked if I would "jump-in" to a start-up for 100% "deferred compensation" or equity. My answer was a definitive "NO".

My experience (on both sides of the coin) is what drives my agreements for "jumping in". I have found that unless there is at least minimal salary paid ($2k-$4K month) plus long-term, success-driven compensation (stock, equity, profit sharing, etc.), one or more of the following things WILL happen (usually all of these to some degree):

1. The company will not fully value the energy and investment the individual puts in (particularly before it creates revenue, when all the hardest work happens).

2. The individual will not full value the company and invest their time and energy fully (driving the company to revenue as rapidly as possible). This is inevitable and can kill a company (I don't care how motivated either is).

3. The company will probably lose a key individual at a critical moment because they got a great offer from a later stage company that brings their personal finance to a high cash flow positive (instead of cash flow negative). As a result, the company could lose the contract (or investor).

4. The company founder gets tired and folds. The partner/employee is left with nothing.

You could get lucky and find someone with great personal resources that will work for deferred salary/equity. In fact, it happens often. See number 2 again. It will happen. Let's say I have $7 million in the bank, but I like work, so I get involved with you. Then my daughter gets married. And I invest in an exotic resort in the Caribbean that I like to visit. I buy a new boat to play with. My energy involvement in the company slows; the company's growth slows. You may find a capable executive that has a reserve of cash or a severance agreement. See number 3. The chance of one of these two being the case is about 90%.

A minimum salary creates commitment and loyalty between the company its contributors that an equity stake just can't create. I have seen this happen both ways time and again.

I've been the start up guy with "my" company. On the part of the company, we want to take the smallest risk possible. We want our employees to take that risk with us, though they will not reap nearly the reward we will when success is reached. (Their ROI is not as high for the risk) In doing so, we create more risk around our success. With limited resources this seems necessary, but there are often ways to create a little cash flow to create this commitment. The key is to make the commitment in the right areas first.

A better path for business/corporate development is to allocate a small salary for that individual to pay their household bills (hence creating loyalty). Compliment this with significant bonuses associated with sales/investment milestones. Then ice the cake with a long-term vesting equity stake. This would interest me, and I could bring some a great wealth of experience and talent to bear on both business development and corporate development.

I am so clear on this that I won't get involved any other way. This may be tough for a founder to hear, but any talent looking for a great opportunity will probably say the same.

If the time to grow your business is right now, you may also look to your board of directors for help. At this stage, you should have picked board members that can provide limited resources part time, but can commit to a number of years. This is significant talent. These people will be contributors of one or more primary pieces of success. They will be strategic partners, possible clients, or experts. They will bring resources to the table. Standard practice for board members of a start-up is to compensate these board members with vesting equity. However, if you need someone to hit the phones, visit clients, or create documentation- you will need to hire.

Entrepreneurs are brave and courageous. They deserve respect and loyalty. But they must also grant this to those that help them realize their dreams. Properly executed this will pay dividends to the success of the business over the years.