Be Careful When Discussing Your Competition
Posted on September 19, 2012
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Some people think the way to grow a business is to badmouth the competition. That is what I thought 10 years ago when I started my first company. I would talk to customers who might ask about our competition, or ask if there were other options, and I would rant about all the problems of our competitors. And yet, we still lost business to them.
One day, as I was in the middle of my rant, a guy told me “I don’t think that’s true, I kind of liked them.” That guy became a customer of my competition. And that was the day I changed my tone. From then on, anytime someone asked about a competitor, I would say “they are great and I am sure you would be happy there, but here is how we are different.” I would focus, not on their deficiencies, but on the things we offered over and above them. Over time, it worked. Our sales ticked up and we grew significantly bigger than the closest competitor. Not only that, but some people who chose our competition actually referred people to us because we were “nice guys” and they thought we might be a better fit for that customer.
I was reminded of this last week when I went to a talk at MIT by George Lakoff. His talk was about framing in political campaigns and how it affects the neurological structures of perception in your brain. If you have studied brain science, you have heard the term “fire together wire together,” which basically means activating neurons together strengthens the connections between them, and increases the likelihood that they fire together again. So Lakoff’s suggestion was that when you argue about politics, never use the phrases and terms that your opponent uses, because all you do is activate those neurons in the audience, and those neurons then trigger other neurons that they were previously associated with. In other words, you actually strengthen the neurological bonds of your opponent’s ideas in most minds, the exact opposite of what you are trying to do.
This has big lessons for startups. Some people think the way to build a startup is to have an enemy to rally against, but your real enemy in a startup is non-consumption. It’s apathy. It’s the status quo. At Backupify, we never mention our competitors unless someone else brings it up. Why? Because mentioning them doesn’t strengthen our case, it just drives people to go check them out. We often ask users who have switched from competitors to us not to mention that if they review our product (although some occasionally do). In some cases, we even send customers to one of our competitors who we think may be a better fit, if the customer is not in our target customer profile.
So if you think about how to respond to your competition, particularly if everyone in the space is still a startup, here is my advice:
1. Never mention them unless the customer brings them up. All you do is send them business. 2. If you do mention them, just say “they have a good product, you should check them out, but here is how we are different.” 3. Don’t be afraid to send business directly to your competition in some cases. In a social world, people may still send business your way even if they didn’t choose you as the right solution for their needs.
No one likes to be around a negative person, and if your competitors want to build a negative brand that is all about how bad you are, don’t stoop to their level. Customers will see through it, and the negativity will just send more business your way.
In Praise Of UnSexy Businesses
Posted on July 1, 2012
Filed Under Business, Crowd Stupidity | 2 Comments
There is money in unsexy. Really, there is. You wouldn’t know it from the hype. If you read tech blogs you might think the only things that get funded are new mobile social viral apps that let you find new music or new restaurants. But one of the things that is eye opening about becoming a venture backed CEO, about getting on the inside of the companies that get venture funding and meeting other CEOs of venture backed companies, is understanding the difference between what really happens in VC backed startups compared to the inaccurate-consumer-focused-hype-driven world of startups presented by tech blogs.
Backupify is a perfect example. Backing up SaaS applications like Google Apps and Salesforce isn’t the most sexy business in the world. When I explain it to most people, their eyes glaze over. Unless of course they are I.T. managers at large companies, in which case, the idea of moving to the cloud and still maintaining their own backups is pretty damn sexy.
When we used to pitch for funding back in the early days, 2009 and 2010, I always felt like we were less interesting than all the cool hip companies that would also pitch at the same events. But over time many, if not most, of those companies, have gone away, while we have raised $10.5M, grown to millions of dollars in revenue, 30+ employees, and a marquee customer list.
There is sizzle and there is steak, and in the early days of a company you have to sell the sizzle. But once you get revenue, you can sell the steak. And the steak can be a powerful attractant. Every six months I go around and update a dozen VC firms on our progress, whether we are raising money or not, and as unsexy as our business is, I still get a really good response because it turns out that backup has some really good economics.
For one thing, customers rarely leave. If you choose a backup provider, you stay with them a long time. It’s a pain to switch, and the provider has all your data and you don’t want to risk losing something in a switch, and it’s really cheap - usually costing less than 1% of the value of the data created to protect that data. And like most backup businesses, our customers don’t login and use us every day, in fact, only a few percent actually lose data and need the service in any given year. But at those moments they need us, the ROI on our service is in the hundreds or thousands of percent. When you translate this to economic terms, it means that for a SaaS company, we have very very very low churn rates. We have churn rates that, at multiple VC meetings, elicited a verbal “WOW” from VCs.
My two former attempts at web companies were both sexy. They were focused on the cool trends at the time, and they both failed. Backupify is not very sexy. But I’ve come to realize that unsexy can make money. Unsexy can actually make a lot more money than most sexy businesses. Unsexy doesn’t attract dozens of competitors, so as a result, we play in a market that really only has 3 players, and if this market turns out to be as big as I believe it will be, all 3 of us are going to do really really well.
So, beware of what you read. The companies that appear to be successful aren’t always the ones that really do well over the long term. If you are thinking about a startup, be careful of the allure of sexy. Unsexy can be very lucrative, and at the end of the day, the steak matters more than the sizzle. Don’t be afraid to be a little unsexy.
Dynamic Web Strategy and The Failure Of Best Practices
Posted on March 19, 2012
Filed Under Business | 1 Comment
One of the difficult things about redesigning a company website is that everyone has an opinion. What’s worse is that everyone has data to back it up.
If you have ever been engaged in this process, you’ve probably had people send you articles about how shorting the page or lengthening the page or changing the sign-up button to blue/red/green/rainbow, or whatever they are supporting - increased conversions by 300%. And you’ve probably wondered how all of this conflicting data can be true. I thought about this recently when this article about burying signup buttons to get more signups made the rounds here at Backupify. Burying a sign-up button is counterintuitive, so why does it work?
The short answer is: the web is dynamic.
What I mean is, best practices for one type of website at one point in time are not absolute. Your website doesn’t exist in isolation, it exists out on the web, in relation to everything else. When people browse the web, they develop a set of expectations about how things should behave based on the sites they visit. So when everyone changes their website, it affects how visitors perceive your website, even if your website doesn’t change.
What it means for designing a new website is that you have to think about the right mixture of novelty and comfortability. If your page is too novel, people won’t be comfortable engaging with you. If your page is too average, you won’t stand out and won’t be able to highlight the most common action paths on your site.
The overarching lesson is that you need to be constantly changing, updating, experimenting, and measuring website behavior. Watch common trends (like the new long homepage format some companies are using) and try them on your site, to see if they work for your users. But whatever you do, don’t get bogged down in the “best practices” debate. It takes forever to resolve and by the time you agree on what the best practices are - they’ve changed.
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