What is business development?

Chapter 2 highlights the customer vacuum: if you’re not addressing real customer problems (with the right message, product, market, channel, implementation, process, value proposition, etc), your startup is extremely likely to fail.

Business development is exactly that – a repeatable process that helps you to understand your customers.

The Business flywheel. It is a fundamental, cyclical part of the company process. Each step informs the next one. It takes a huge amount of energy to start the ‘flywheel’ – less to accelerate and even more so to maintain.
  • The Business flywheel. It is a fundamental, cyclical part of the company process. Each step takes input from the previous one and amplifies it as an output for the following step.
  • The best way to make sure it does not slow down is to understand what metrics matter at each stage of the process and measure them meticulously. ‘If you can’t measure it, you can’t improve it’
The business-development flywheel is a single step of the business flywheel, and a cyclical process that must always be done based on customer feedback. Its usefulness scales from products, which are whole companies, to single product features in a suite of offerings.
  • Ideas do not matter as much as the right execution does. In fact, if through this process you do not find already existing competitors, or discover someone else who is working on exactly your problem, something is wrong.
  • The reality is that getting to your first ten enterprise customers requires you to focus on business development, not on sales, not on that old startup bullshit of ‘just talking to people and seeing what happens’.

What’s the difference between business development and sales?

  • Business development is a process of discovering WHAT and WHERE. Sales is a process of taking the WHAT and WHERE and making it SCALE.
    • Business development is all about finding your innovators, understanding what works and then checking your hypothesis with early adopters.
    • Sales, on the other hand, is all about applying and adopting already-learned lessons to the early and late majorities in order to scale your business.
    • There is a big gap between those groups, known as ‘The Chasm’.
  • Early stages are very unscalable – but by skipping it we will not have anything to scale, or worse, will try to scale the wrong thing.

One question from us:

Which of your products are in business development and which are in sales?

Why do startups fail?

Another week, another chapter from The Founder HandBook – this time Chapter 1 – a short chapter with some punchy insights on why startups fail. We pulled the reasons – thanks to Crunchbase…over the next few weeks of sharing insights, we’ll outline how be less wrong….and get to success.

  • Focus on being ‘less wrong’ rather than ‘right’
    • ‘Everybody has a plan until they get punched in the mouth’
    • Never full picture – rapid planning based on customer feedback and iteration
    • goal is not to go for the right answer, but rather to minimise the wrong choices while learning.
  • Failure to pivot / no financing / run out of time / failed expansion / poor marketing / poor sales execution / no market need, are only manifestation/outcome of poor business dev (i.e. not understanding your customers).

One question from us

What challenges do you have ahead that could lead to failure?

The alliance framework

The Alliance: A New Framework For Managing Today’s Employees (theallianceframework.com link)

Cover art by: http://www.theallianceframework.com/


If you would like to expand on the topic as a guest post, know of more resources/posts/essays/etc that we should share here or simply spotted an error, please get in touch with us!

Why negative feedback rarely works

Harvard Business Review: Negative Feedback Rarely Leads to Improvement (hbr.org link)

Cover art by: https://www.changeboard.com/article-details/16177/how-can-you-deliver-negative-feedback-in-a-positive-way-/


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Build a strong (support) network

Revenue Collective: Even high-growth managers need backup. You face challenges on your career path, from performance and compensation, to advancement and reputation. We help you navigate this often-volatile landscape (revenuecollective.com link)

Buffer: Crafting a Support Network as a Founder and CEO (buffer.com link)

Cover art by: https://buffer.com/resources/support-network-founder-ceo/


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Focus on building trust with investors first

Ray Walia of LaunchVC: How to Hack Your Way into Getting an Investment Deal with an Investor (medium.com link)

Cover art by: https://www.marxentlabs.com/culture/how-to-build-trust/


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Build network effects

NFX: The Network Effects Bible (nfx.com link)

NFX: The Network Effects Manual: 13 Different Network Effects (and counting) (nfx.com link)

Cover art by: https://seekingalpha.com/article/4253043-sustainable-competitive-advantages-network-effects


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How product market fit feels

There is no one-size-fits-all definition of how product market feels, but we tend to think about it as physics resonant frequency: When an oscillating force is applied at a resonant frequency of a dynamical system, the system will oscillate at a higher amplitude than when the same force is applied at other, non-resonant frequencies (wikipedia.org link) – you are not exactly sure where it is (because real-life systems are often too complex to have exact systems), but you can measure it and identify when you are going in the right direction, and once you are in the ballpark, even if not exactly spot on, the system will amplify its own signal.

Also see:

Cover art by: https://groco.com/uncategorized/how-to-efficiently-scale-with-capital/


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It’s not the best product, but best execution, that wins

A classic example of not the best product but best execution winning is the Betamax vs VHS format war. Betamax was, in theory, a technically superior recording format over VHS due to resolution, slightly superior sound, and a more stable image (wikipedia.org link). However, VHS out-executed Betamax by really understanding and delivering for their market/customers needs (theguardian.com link)

In similar vein, it’s not the first (startup) to market but first to product-market fit that wins.

Cover art by: https://blog.ediphy.io/best-execution-and-the-lean-startup/


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Product premature optimization

Premature optimization can be defined as optimizing before we know that we need to. In Donald Knuth’s paper “Structured Programming With GoTo Statements”, he wrote: “Programmers waste enormous amounts of time thinking about, or worrying about, the speed of noncritical parts of their programs, and these attempts at efficiency actually have a strong negative impact when debugging and maintenance are considered. We should forget about small efficiencies, say about 97% of the time: premature optimization is the root of all evil (c2.com link)

Just like in programming, this concept applies to business processes too. Also see:

Cover art by: https://xkcd.com/1445/


If you would like to expand on the topic as a guest post, know of more resources/posts/essays/etc that we should share here or simply spotted an error, please get in touch with us!