The Merchandising Technique
Doug Leone led Sequoia for 25 years. These are a couple of key highlights from Invest Like the Best.
Venture is the commodity side!
You can either be on the field (as a founder/operator)
Or on the sidelines (as a VC/board member)
His GTM strategy (this is completely brilliant!)
The Merchandising Style
1 - Vision
if the vision is wrong, we're all going home, assuming we're some place in a ballpark..
2 - Product
Then it starts with product management. what are we building? To product marketing, how do we position it? How do we tell the story? How do we have the 3 words for describing what we do? How do we have the 30 seconds, 2 minutes? And everybody can do with 10 minutes. Very few people can do the 3 words. And then how do we do the demand gen? How do we do the sales? And wherever that cycle is broken, it looks like a bad salesperson. This guy can't sell.
Actually, the truth of the matter is if you've got product market fit, even shady salespeople can sell. When we first invested in ServiceNow, we had the BT prior to Frank Slootman coming in, in sales, and they were selling like crazy. So that was my lesson. And so for me as a Board member, I have to debug the merchandising cycle.
Product can't sell. Why? There's not enough leads. Oh, well, I know to fix that. Why don't we get some more BDRs. Then you can talk to the BDR guys. Here, you can have 5 BDRs. Well, then they start fessing up. Well, it's not really a BDR head count. It's that the message isn't playing right.
Well, I knew that, but its nice you admit it, let's go back to product marketing. What's the message? Is that the right message? Is that the wrong message? And that's based on the product we're building. This is the product management. And so I work very hard at debugging upstream this merchandising cycle, so we can figure out what the real problems are. And as I think about it, take these rocks out of the river so that dam water can flow as fast as possible.
He can’t do the black magic
Can’t find PMF - THAT IS RESERVED FOR FOUNDERS (and why he gets more involved at later stages.)
Components of great positioning:
Simplicity, crystal clearness, something a mere mortal can understand. If you can describe it and you can understand it you're out to lunch. Singularity of purpose. When I go to the store, I buy a pencil because I want to write. I don't want a pencil because I want to write, I scratch my back with the tip. It doesn't work like that.
Singularity of vertical market early on because you want to be narrow. You have no resources. You've got to be narrow.
Product Drag on the back end will eat you alive:
You also have to understand for each product you sell, how much drag is it on the back of the company. If I sell you pencil, there's no drag in the back of the company. If I sell you a solution that everyone requires 6 months implementation plan, 3 features for each one, then you can go as far as you can because your bottleneck is no longer at the front end.
On sussing out the killer gene:
You look what they've done. Have they taken risks in life early on? Have they put their guts on the line? I tell candidates with children that it's okay if you choose a parallel track life, i.e., when you become a bank, a consultant. And it's okay if you want to take risks. What's not okay is do one and always spend your life thinking you did the other. And the killer gene for me is stay away from the parallel tracks. Just put yourself out there with no net. And usually people that are a little desperate in life, that only have one way to go and that's up or forward, they tend to have the killer gene.
In closing:
Don’t be afraid to inject some misery.
Don’t shy away from Constructive Suffering!