At the idea stage, most founders are focused on building a product that customers find interesting enough to try. The truth is, proving that the product can provide consistent value to the customer is as important as attracting the customer. After all, a product that seems useless after the first try clearly lacks validation. This is a common situation where marketing and promise are enticing, but the product doesn’t meet customer expectations. Retention is built around data. You need data to understand where the product falls short and the customer loses interest. If you’re launching a new startup product, you don’t have data. But what you can do is analyze your competitors’ products and speak with their customers to map their journey and understand what keeps them using those products or why they decided to look for another solution. Especially in the early days, personalizing onboarding and product experience, even with as simple as a dedicated account manager or salesperson, can not only boost sales but also, it’s an opportunity to listen to customers’ needs and expectations, which will play a key role in understanding what your solution lacks and how it can be improved. Read More >>

New research suggests that there’s a population tipping point for supporting a booming tech industry.  “Become the next Silicon Valley.” So many cities have adopted this goal that it has become a cliché.  Many policymakers want to emulate the economic success of the San Francisco Bay Area by drawing tech workers to their own cities—even if they are relatively small.  Growing cities tend to follow a universal pathway, moving from work that relies primarily on manual labor to jobs that rely more heavily on cognitive labor, the researchers report. In a study of U.S. urban areas, the team found that the tipping point tended to occur when the population reached about 1.2 million. Small cities under that threshold may not be able to build a strong tech industry because they don’t have enough people in other industries—from public transit to laundry services—to support software engineers.  As employees become accustomed to working remotely during the COVID-19 crisis, it’s possible that industries suited to remote work, such as tech, will become less tied to particular cities. This shift might alter the universal patterns of urban development.  Because new ideas, by definition, don’t have a defined vocabulary, they usually require some degree of nonverbal communication, which isn’t easily replicated in a Zoom meeting.  How does this finding square with the idea that cities need to pass a certain population threshold to establish strong tech businesses?  Even though these companies are less beholden to population growth than others, a substantial part of their expansion does depend on the number of people in the city.   Read More >>

Research shows that in many types of sequential competitions, the order of competitors can have a significant effect on judges’ evaluations. But what effect does competitor order have for startup pitch contests? We conducted four pitch competitions with business student entrepreneurs as a field experiment to determine whether — and how — the order of pitches affects investor interest. Pitch competitions could be similar to persuasive arguments, where the first contestant enjoys a primacy advantage because evaluators often anchor on the first argument, making them less open to different ideas. Or perhaps we would find no order effects at all. Unfortunately, you don’t often get to choose your place in the pitching order. But if you can, do your best to avoid pitching first. This may feel counter-intuitive for some entrepreneurs, as going first may feel like a move that signals initiative and a go-getting attitude — traits that are generally a positive for startup founders. But the research shows that when it comes to pitch contests, jumping into the shark tank first doesn’t pay off. Investors strive to make rational decisions about where their money goes. Once you become aware of the existence of order effects, you can deliberately counteract them by revisiting your initial judgments after all the pitches are complete. Don’t let something as meaningless as pitch order impact your evaluations and cause you to overlook a good opportunity. Read More >>

To get to the top and remain there, businesses must constantly develop new capabilities as they leverage existing ones. Keeping both priorities in play is tricky in the best of times, which is why legacy companies of late have been increasingly outsourcing innovation to tech start-ups via partnerships or outright acquisitions, a trend that has generated tremendous value for start-ups and their investors. However, with economic activity now slowed to a crawl in many sectors, firms have increasingly shifted their focus to short-term survival considerations and longer-term innovation priorities have temporarily fallen by the wayside. One result is that start-ups have been hit especially hard. Interestingly, late-stage start-ups were more pessimistic than early-stage ones, despite experiencing less severe fundraising woes in the pandemic (see below). It may simply be that inexperience breeds an optimism that can survive initial encounters with adversity. Investors, too, do not appear to be thinking beyond the pandemic. Depending on the nature of their business, companies are either busy capitalizing on the market changes produced by the pandemic, or scrambling to adapt. This opportunistic approach may not hold true in other entrepreneurial ecosystems and may also vary as a function of the level of government support.  Read More >>

As an entrepreneur, one may have passion when one is pitching your solution to investors and customers. But passion alone won’t make one more technology pitch stand out above all the rest. Everyone remembers a good personal story. Thus it behooves one to highlight one’s message with a bit of storytelling. Storytelling in business means personalizing communication here and there with anecdotes to highlight important points, and make the message come alive to peers and constituents. It is not about trying to be a stand-up comic, or weaving theatrical tales. Here are some key ways that personal stories can raise the message above the standard sales pitch. First, it is important to show that one is authentic and deserves another’s trust. Sharing stories is the first step to building a real relationship with other people in business, as well as in one’s personal life. Next, it is imperative to connect to people’s emotion as well as logic. When it comes to the art and science of persuading others, one can never afford to forget the power of emotions. At least one study has shown that 90 percent of decisions are made based on emotion, but that people then go back to logic to justify their position. Third is to relate when and where one’s passion started. In most cases, a new startup idea and plan is driven by a specific personal incident that has instilled a conviction about this opportunity. Next is to explain one’s contribution to a higher purpose. It is popular to highlight how a solution contributes to a higher purpose, such as saving the environment or helping the less advantaged. Additionally, it is unfortunate that most elevator pitches, product descriptions, and marketing messages are abstract, and include no characters at all. People remember people, with associated emotions, whether that main person is you, someone you know, or a customer you lost. Weave a real person throughout your message.  Read More >>