MAP Accelerator Program — Week 7
As Solstice AI is currently running customer discovery and desperate to chat to anyone in the industry to gain a better understanding of electricity price and demand forecasting as well as energy production adjustments to react to demand forecasts, this week’s first session was quite a useful one.
Cold Emails
If you want to chat to someone that you don’t know, it’s always useful to have someone else introduce you to them. But what if there’s no one in your existing network that knows that person? Well, that’s when you send a cold email. It’s quite clear that writing is an important skill for a startup founder to have, whether this is for marketing material, talking to investors or to establish business relationships.
Whenever you send a cold email to a new contact, it is important to do your homework about that person, which allows you to personalise your introduction. People can smell it, when an email template is used. I receive plenty of them every week and you can tell, that they sent that same email to 100 other people without doing any work. I usually don’t even read them.
So, the perfect email is (1) short and to the point, because no one wants to read through an essay, (2) not too formal, but personal, (3) has a clear outcome stated, like “I would like to meet this week” or “Can we please have a call next week”.
It is also important to follow up. Just because someone doesn’t respond, doesn’t always mean that they’re not interested. There’s a fine balance between annoying them and following up with them, because the first email slipped through the cracks on a busy day. I feel a 2nd and 3rd follow-up might be acceptable, ensuring each follow-up message is shorter and provides some additional info. Last but not least, it’s okay to send a “final” message, where you let them know that you said what you wanted to say and the ball is now in their corner. This can create a sense of urgency, if the other person is actually interested in your work, but is just procrastinating on a response.
Pricing
Any startup at some point in their journey has to face the pricing question. The general advice is to avoid a price that just takes the cost plus profit, as this ignores the customer completely. Instead, it is important to understand the value the product or service provides to the customer and how much they are willing to pay for it. Competition should not be ignored and will affect pricing too.
Prices evolve over time, just as your product or service and customer needs do. This also means that different customer segments should have different price tiers.
One methodology and pricing schema that stood out to me is to (1) analyse the customer value your product or service adds, then (2) follow up to gauge the price sensitivity of the customer, because it can vary from the value your service provides. Finally, I like the idea of providing a price structure to the customer that allows them to pay for what they use with an upper limit. To illustrate that: imagine a service subscription, where each access of your service costs the customer 5ct. If they stop using the service or don’t use it much at all, they pay almost nothing, which is fair, because you’re not providing much value to them. If they use it a lot, you have to set the upper limit, like a maximum of $5000 / month. Picking the transaction cost and the upper limit of course is done using the method outlined before. This makes it very easy for a customer to onboard and try out your product/service, but only pay full price, if they actually get good use out of it.
This also implies that you should not confuse pricing with budgeting. Just because you need more revenue, doesn’t mean you simply can raise prices.
General Housekeeping
Another session this week went across multiple topics. Here are a few of the insights that stuck out to me:
- Raising (VC) money might be unavoidable, especially if you are trying to provide a very polished product to enterprise customers or if you have large companies with large teams as competition. If you grow organically, you might be too slow to build the polished products or lose out to the competition.
- Credibility in the industry helps with fundraising and you should not talk to too junior partners in VC firms, as they usually are not decision makers and might waste your time.
- Especially as a technical person it can be hard to motivate yourself doing the business-side and general admin chores. It is important to identify the critical pieces that are necessary for survival and focus on them. Get help or outsource as much as possible of the rest.
- Lots of large enterprises have annual budgets and for you to get a sizeable contract, you need to start discussions early to be included in the budget. Don’t expect ad-hoc subscriptions, especially if you provide enterprise services with larger price tags.
- Remote work is okay, although it is important to have at least one in-person touch point maybe every 6 months or so, as this establishes a better personal understanding of the remote workers and create better relations.
