Startup Sales and the Dangers of Whale Hunting

“From hell's heart I stab at thee;

for hate's sake I spit my last breath at thee. Ye damned white whale.”

Every early-stage startup founder wants to harpoon a whale. A whale is a huge corporate customer that can feed your startup for months and that will build immediate credibility. But whale hunting is dangerous. Many large corporations move painfully slow. They take years to make decisions, and they’ll tax your resources to the limit. If you’re not careful, you could get trapped in a costly and never ending sales cycle, so you need to weed the slow ones out. They’re like Ahab’s dreaded “white whale,” chasing them will drown your startup.

How can you tell if you’re hunting a white whale? Here are 5 signs:

1. The prospect refuses to pay for a pilot. This usually occurs for one of two reasons. One, he isn’t confident your product is valuable, or two, he doesn’t have the authority to budget for a pilot. Either way, this should set off alarms.
2. Your product isn’t core to their business. In any company, the people core to the business have the most clout and get the biggest budgets. A VP of Engineering in a software company is more influential than his real estate agency counterpart. If you want your sale (and startup) to move quickly, you’re better off solving problems for the money makers in a company. They have the budgets and power to get deals done.
3. Your main contact isn’t a decision maker. If you’re new to sales, it’s easy to get excited the first time you find an enthusiastic employee at a prospect company. However, if he isn’t a decision maker, you should be careful. You could lose months of your life selling to someone who doesn’t have any authority. Before you invest too much time, learn who is making the purchase decision. Whenever possible you’ll want to meet the decision makers and validate that they’re just as enthusiastic as your contact.
4. The company always rolls out new technology slowly. Most big companies are not early adopters. For a variety reasons, they roll out new technology slowly. When the time is right, ask the prospect about the last few technology rollouts.
5. Another department is promoting a different solution. If competing groups are promoting different solutions, you may end up in a hairy political battle and your project will get killed because you’re on the losing side

I could go on, but I’d bore you and myself. Instead, I’ll highlight the common thread: if the decision maker doesn’t feel an urgency to deploy your product, you’re probably chasing a white whale. An early-stage startup can’t waste time on these clients. Come back after your series B.

What if all your prospects seem like white whales? That’s a sign that you haven’t found product-market fit. You shouldn’t have to force the product down your customers’ throats.

Startups Can’t Sell To Corporations

Startups can’t sell to corporations. Corporations don’t feel pain. They don’t have needs. A startup can, however, sell to the people in a corporation.

This might seem like a pointless distinction, but more often than not, an entrepreneur tries to sell to the needs of the corporation. Her sales deck focuses on ROI, increased sales, cost reductions, or EPS increases. But a customer will never buy for these reasons. A customer buys a product because it improves his life. It eliminates his pain or makes him happy.

To be successful, an entrepreneur needs to understand how her product will impact the decision maker.

• Will this solve one of his biggest problems?
• Will it reduce or increase his workload?
• Will it make him look good to his boss?
• Will it make him look unorthodox? Does the company culture support risk taking?
• Will he need to fight with other departments to get approval?
• Will he have to struggle for a bigger budget?
• Will it get him a promotion or could he lose his job?
• Will it make him happier?

These are the questions bouncing around in your prospect’s head. Take the time to understand him and how buying your product will benefit him. Then craft your strategy and message to discreetly accentuate that benefit.

Crowdsourcing the Singularity

“Come on. Learn, goddammit.”
- David (Mathew Broderick) to Joshua, War Games, 1983

I’m reading the Singularity is Near by Ray Kurzweil. For those of you who’ve never heard of the Singularity, “it’s a future period during which the pace of technological change will be so rapid, its impact so deep, that human life will be irreversibly transformed.”

According to Kurzweil, we’re currently living in the 4th Epoch and are rapidly approaching the 5th Epoch, which is the Epoch where all of the Singularity goodness begins.

"Looking ahead several decades, the Singularity will begin with the fifth epoch. It will result from the merger of the vast knowledge embedded in our own brains with the vastly greater capacity, speed, and knowledge-sharing ability of our technology. The fifth epoch will enable our human-machine civilization to transcend the human brain's limitations of a mere hundred trillion extremely slow connections."

- Ray Kurzweil, The Singularity is Near

The singularity will begin when we build intelligent machines like Joshua from War Games. Combining human understanding with silicon’s raw processing power will result in an explosion of innovation and progress. This argument makes sense. However, I think Kurzweil may have missed an intermediate step between the 4th Epoch (today) and the 5th Epoch (the beginning of the Singularity). Let’s call it Epoch 4.5.

Epoch 4.5 is when our brains’ “mere hundred trillion extremely slow connections” will help computers transcend early stage artificial intelligence. We’ll do this by greatly expanding crowd-aided artificial intelligence, resulting in computers that provide a Joshua-like user experience. The crowd will support, train and augment these computers’ intelligence in real-time on a vast scale.

On a small scale, Mechanical Turk is already doing this, which is why Amazon’s tagline is - “artificial, artificial intelligence.” Here are some other real world examples:

• reCaptcha uses CAPTCHAs to digitize books. Every time you enter a CAPTHCA to register for a website or buy something, you’re helping a computer understand text.
  

• Google has created an ESP game where two people look at a picture and type in words that describe the picture. When the words of two players match, the players get points. Google then uses those words to index the images for Google Image Search. -
  

As crowdsourcing becomes more prevalent, larger pools of on-demand workers will be available. The computers of Epoch 4.5 will leverage this ever present crowd to address their intellectual weaknesses.

As a small thought experiment consider an advanced Roomba. Let’s call this Roomba SuperRoomba. SuperRoomba’s AI isn’t much better than Roomba’s; however, SuperRoomba is connected to the crowd. When SuperRoomba’s AI is stumped, it queries the crowd for help. Here are a few examples:

• One of my former Long Island neighbors orders a SuperRoomba. SuperRoomba carries the latest speech recognition software, but he still can be confused by a nasally, Long Island accent. When presented with a confusing word, he sends the offending audio clip to a worker in the crowd. The worker corrects SuperRoomba’s understanding, training him to recognize “Dawg” as “Dog”

• My old neighbor outfitted his SuperRoomba with a security camera. While video analytics can detect motion and a small subset of activities, it can’t tell the difference between a real threat and my neighbor’s dog. While patrolling, if SuperRoomba encounters sudden movement, he sends a snapshot to a worker, who evaluates the threat level.
  

Where will this crowd come from? To make Epoch 4.5 a reality, millions of workers will need to be available to serve these requests in real time. The best source for this labor is the same labor pool that currently staff factories. Factories using tens of thousands of workers construct complex products in mass every day. In a similar manner, online information factories could process computer requests. There are certainly enough underemployed people in the world to staff these virtual factories. According to the UN, 1.4 billion people make less than $1.25 a day. Most of these people work in terrible conditions and would jump at the chance to work in a safe office environment.

SamaSource, a non-profit that brings crowdsourcing work to African refugees, has already shown a demand for this work, as well as the ability to reach these workers. Imagine the impact if an additional 1.4 billion brains came online to guide, correct and train the next generation of artificial intelligence. We could provide safe and decent-paying jobs to the world’s poorest and simultaneously bring about a revolution in computer intelligence.

Is That a Bomb in Your Pants or are You Just Happy To See Me?

There was a lot of uproar over the "Underpants Bomber" in the days after Christmas. The talking heads on the Sunday morning shows pounded the TSA hard and wanted to know how this guy got through. It isn't possible to point a finger at one reason. Tons of small mistakes led to the security breach. My sense is that most people feel airport security is ineffective.

Recent research backs that feeling up. A test at O'Hare found that TSA agents only found 60-75% of planted guns, knives and bombs (all fake of course). It's nearly 10 years after 9/11 and we're still not very good at airport security. Why? Well, according to research by Harvard Prof. Jeremy Wolfe, it turns out that human brains really suck at visually searching for rare events. When an item shows up only 2% of the time, which is the frequency of contraband in luggage, people miss the item 30% of the time. However, if the item appears 50% of the time, people miss the item 7% of the time.

One solution to the problem would be to insert staged contraband images into the image feeds so that 50% of the images contain a gun, knife or bomb. If TSA had done this last year, they would have intercepted 4,504,455 more prohibited items (most of it probably 60z bottles of hair gel).

At ReTel, we've experimented with similar techniques to improve the visual search capabilities of our auditors. Understanding the way the brain sees is a big part of successfully leveraging the crowd to analyze video.

Crowdsourcing and San Fran Awesomeness

Last night I went the Crowdsourcing Work Meetup event in my new hometown - San Francisco. The energy, passion, and excitement in this city is incredible. Chicago never could have staged this event. I feel really lucky to be here. ReTel is at the geographical and ideological epicenter of a brand new technology that is going to change the world. My co-founder, Adam Rodnitzky said it best - "This is turning into a movement." He's right. The wave is building and it is going to change lives all over the world.

Lucus Biewald, the CEO of Crowdflower, moderated and organized the event. He's a great guy, and if you're interested in crowdsourcing, you should read his blog - http://blog.doloreslabs.com/ . The other speakers were great as well. Here is a list:

Aaron Koblin, a local artist, who created The Sheep Market, Bicycle Built for Two Thousand and Ten Thousand Cents projects.

Leila Janah, a social entrepreneur who runs Samasource, our fantastic non-profit partner.

Sharon Chiarella, VP at Amazon in charge of Mechanical Turk.

Panos Ipeirotis NYU Stern school professor who writes one of my favorite blogs on crowdsourcing and Mechanical Turk.

If you want too see an amazing visualization of the power of crowdsourcing, go to Aaron Koblin's website - http://www.tenthousandcents.com/. It's amazing.

If you want to get into the underlying coding and theory behind crowdsourcing, go to Panos Ipeirotis blog -http://behind-the-enemy-lines.blogspot.com.

If you want to learn about how crowdsourcing is going to save millions from poverty, go to http://www.samasource.com/.

Ok, I've got to go. I've got a board meeting this afternoon. :)

TechStars Changes Everything

Mark O'Sullivan, the CEO of Vanilla, blogged about TechStars today. He titled his post "TechStars for Life," and everything in it is 100% true. If you want to go to TechStars, read it. If you don't want to go to TechStars, read it and you'll know why you MUST to go to TechStars.

To put it simply: TechStars changes everything.

"Oh, but, George," you whine. "Didn't you have to give up 6% of ReTel's equity."

I robbed David Cohen blind. 6 points is a steal. Any start up with promise will earn these back ten-fold. You will get tremendous mentors, new customers, new partners, new investors, and a network of friends that will change your life.

It's the network of friends that meant the most to me. Of course all of these friends are business associates in one way or another, but the network you establish in TechStars and in Boulder goes way beyond - "you scratch my back, I'll scratch your back."

It probably sounds like bullshit, but they really care. David, Brad, Nicole, Andrew, Tim, Josh and all the founders believe that entrepreneurship is a truly noble pursuit; that it is something to be admired and nurtured for its own sake; and that each entrepreneurial success improves the chances for all entrepreneurs.

Why else would David open source the TechStars playbook? While I was there multiple incubators from around the country came in to see how he runs things. He freely shared everything with them.

So, if you have a start up or are thinking of launching a start up, apply to TechStars. It will change everything.

Artificial Intelligence - Why Bother?

Sometimes a complex problem has a simple answer.

The economist recently published an article on an advanced robot arm - http://bit.ly/8IqyF

A quick description:

"Shadow Robot has developed a robotic hand that closely mimics the human version. It has already sold several of them to various universities and to NASA, America’s space agency. And it has taken an order from Britain’s Ministry of Defence, which wants to try the hand out on the arm of a bomb-disposal robot. . . .

The robot hand mimics the movements of a human operator who wears a special “virtual reality” glove equipped with sensors that can determine the positions of the fingers inside it."

This seems really cool, and I can think of a lot of neat applications. What doesn't make sense to me are the next steps they plan to take:

"The next stage of development, says Mr Walker, will be to add some level of intelligence. The company is involved in a European Union programme to develop technology, such as machine vision, to make robots cleverer. This would enable the hand, for example, to recognise an object like an egg and know how to pick it up without breaking it. Unless, of course, it was clever enough to know that it was making an omelette."

Why add AI to this thing? For $4 bucks an hour or less, you could have people in India or China work remotely using these amazing hands, and they already know what an egg is. Strap the arms to a torso with wheels and a webcam and you have a fully functional C3P0. They should focus on getting the manufacturing costs of the arms down. It will take decades upon decades and millions of dollars for an AI creation to match what remote workers could do today.