This post is about Venture Capital in Professional Services. It is also a movie(s)r review.
Reviews, celebrity interviews and NSA surveillance chatter had me expecting a great movie.
It started amazing. Great story, interesting characters that were well acted, creative cinematography, costumes that seemed right for the period. Quippy one liners and the dialogue was natural and true.
Sometime around my 12th handful of popcorn, approximately 1/2 the way into the movie, the people in the seats next to mine commented “ooooh, this is getting goooood” as more complexity busied the storyline, romances that had been flirted became real and tangled, subplots and nuances kept me immersed.
Yet, as I reached into the last unpopped kernels in my large size bag I wondered, is this too much?
The complications have gone beyond a plausible remedy.
I prefer my former, distracted state, I search the area beneath my seat for remnants in my popcorn bag. Surprisingly, it has more popped corn then I remember it having. I eat away.
The story has become so lost in amusements that it can’t recover to come to a close. Huge explosions, some banter and without bothering to tie up any threads or subplots the movie comes to a close. Someone got shot, someone gets the girl and a nice soundtrack, credits roll.
It started great, ended horrible.
Also and by the way, Professional Services Companies are episodic. Clients must enter, exit and return and you must be able to reliably forecast attrition and earnings.
What starts as a simple plot conceived by an entrepreneur: “I see an opportunity” gains its own cast of characters, each with their own subplot. Each will pull the initial vision in a direction. Each will have their own favorite thrilling theatrics that they want to see employed.
I think the most compelling storyline is simple: Get lots and lots of clients. Everybody needs to be aligned and engaged with this ambition.
Anything else tangles the plot and the only way out is improbable, belief must be suspended and special affects (like a lucky buyout) employed.
Technology may enable an efficiency in selling, staffing ratios, integration, on boarding and servicing a client, but it does not become a differentiator. This is 2014, Festivus day 7, and fancy user experience is the expected, the best you can get to is par.
Get clients fast and furious. How?
Great question, I’m glad I asked.
A. Is to use some other companies distribution. Their salespeople. This rarely works to gain real, lasting velocity in clients but it does make great news announcements and that has its own value. The problem is having realistic expectations about what the channel partner can produce, how much effort/time/cost/resources need to be spent to get the thing started, and how much continuous visibility/presence/incentives are needed to get it traction. I would use this approach more as marketing and public relations and to gain validation, then as a true sales channel.
B. Building your own sales capacity is ideal, but it is expensive and you have to anticipate some churn in staff. Its time consuming and a bit of trial and error until you can acquire vital sales metrics such as sales productivity and efficiency per rep. Adding significant sales staff also means hiring support, mid level managers, pricing discipline and a marketing budget. Its expensive but the surest negotiable path to quantity/ quality control.
C. Exist inside another company’s ecosystem. This is also ideal if your product can plug into something like an Intuit universe. Here the challenges are managing a distributed workforce. Sales can exist remotely and even be a call center, which should complement a nice client facing UX. It is different than leasing another companies sales force because you’re not competing with other products or sales person mind share. You have to manage prospect velocity and because you don’t control quality, there must be mechanisms to turn away bad prospects without offending the ecosystem owner. They don’t want to lose this client, they want to sell them something else. Much of your resources will be spent on what to do with the ‘non clients’.
D. All of the above. Thats big bucks but its a big bucks business. I say raise more money, do it right