Your Customers are Telling You How to Grow Your Business! Are You Listening? Webinar

Good afternoon, everybody, or good morning, depending on where you are, and thanks for joining us today for this new episode of our Sinda Thought Leadership Series, Thought Leadership Thursdays. And we're really glad today to welcome Randall Laveau and Martin Brickford from Bosch Academy and Bosch Startup Science. So Sinda has developed a partnership with Bosch Boss. We talked about that at the end of last year, and then we built that up, and we have this partnership up and running now. So Marty and Randall are 2 founders of the Boss Startup Science and working closely with Greg Shepard, who founded the Boss Academy and the Boss Methodology some time ago. And they've been really helpful in helping businesses figure out operating systems, what have to do to succeed, not only for small businesses but also for lifestyle companies. And we're really very happy to have this partnership running because now we can provide you with some insights about the BOSS system and what you can do. And this is really a very, very, very big incentive for CINDA members and for your startup clients and also your enterprise clients. So we really Yeah, urge you to follow us and to follow through the information that we'll put on the CINDA website because we will have other sessions. So today we're gonna concentrate on the customer side, like how do you make sure that you identify who your customers are and why this is so important. And tune in for other series because we'll have others on May 18th about the pitch deck, and we also had, we will have another session in June on the exit strategy. So very important for all types of companies too. So that being said, I'm just gonna hand over to Randall and Martins. Thanks very much for joining us today. Just a few housekeeping. I'll be in the back scene as usual. If you have some questions, please type them in the chat. And also we'll do a Q&A at the end. So you can save your questions also for the Q&A. And we'll be happy to talk about that with Martin and Randall at the end. So the floor is yours. Thanks very much for joining us today.

Perfect. Thank you so much, Stephanie. We are so excited to be here representing Boss Startup Science, and we are just excited to share our approach, our service, and our methodology with you, and looking forward to more webinars and more interactions. So while I go ahead and kick this off, let's go through quick introductions. So my name is Randall Laveau. I am a CRO and founder of both Boss Capital Partners, which is our investment syndicate, and Boss Startup Science, which is our service to both entrepreneurs and investors. So I have over 15 years of experience as both an investor and entrepreneur. My strategic focus and my expertise is in growth. So we define growth as sales, marketing, service delivery, and support. So I have extensive experience in building go-to-market plans, exit strategies, and generally helping startups and entrepreneurs grow, scale, and even exit their businesses. Marty, I'll turn it over to you.

Okay, fantastic to be here. Everybody, I appreciate the time. My name is Marty Bickford. Again, a founder of Boss Startup Science, been working here in Silicon Valley for just over 25 years, have gone through 6 startups with exits on multiple of those, but I really like to focus on standardization, monetization of technology, and helping not only the companies I'm at, but excited to be at Boss Startup Science to help other companies scale profitably. And just excited to be here. So just a little background.

And so before we jump in, just some context. BOSS stands for Business Operating Support System. And this is a methodology that we've put together over the last 15 years. And what BOSS does is it helps entrepreneurs and startups effectively move through a maturity lifecycle in order to get to a desired outcome. So whether it's a high-growth business that's taking on investor capital or a lifestyle business that is not taking on investor capital and has no intentions on exiting the business, BOSS helps you navigate the common pitfalls that entrepreneurs run into, including the 90% failure rate. And so we developed this in an effort to help entrepreneurs. Marty, myself, and Greg, the founder of BOSS, have all been successful using BOSS as both entrepreneurs and investors. We started BOSS Capital Partners, which is our investment syndicate, and all of our portfolios exclusively use the BOSS methodology from onboarding to exit. So today's presentation is going to share with you not only the BOSS approach, the lifecycle, but also the specific instance of how to identify your ideal customer profile and why that's so important. But before we get into that, Marty's going to give some background on why we started this and why we feel that entrepreneurs have such a desperate need for a solution like this.

So yeah, you know, one of the first things that we did whenever we looked at what type of, you know, looked at these methodologies and how we could help folks, because we knew that these things helped us, right, in terms of avoiding failure and growth. So When we looked at it, we started looking at sort of why is this an issue, right? Well, one of the biggest issues is that out of the folks living, you know, in poverty, living in subpar situations, only 4% of those folks ever have the chance to actually take a step out of that income gap. Which is really fundamental to the mission that we're on here at Boss Startup Science, right, is we are here to help entrepreneurs be successful. And this is the driving reason, is because when we looked at this data, we realized that there are only a few ways that people actually can get ahead, right, and move from being, you know, in that 99% into a more middle-class sort of situation. Now, 98% of those folks that actually do make that jump, out of that 4% that do make the jump, 98% of them do it from what we would call a windfall. So that's a huge— this is not just grinding through day after day in a regular job and working 9 to 5. It's a windfall, and this comes either from inheritance, from lottery.

Yeah, lottery.

A lot of folks, like a big percentage of the folks that make this jump, actually win the lottery. And but the one that's close to our heart is starting your own business. So entrepreneurship is a path to making a difference from a family perspective on your where you sit from a financial perspective. And 75% of those windfalls are actually, which leaves quite a bit to the lottery and inheritance side, but 75% of those folks who make that jump that have that windfall, it comes from starting a business. And what's interesting to us, because we're very focused on underserved and disadvantaged markets and how we can help those folks. 4 out of 5 of those entrepreneurs who make that jump have some sort of learning disability. And this is close to us because of our backgrounds and our families, right? But, but what's really interesting is in that 75%, um, it's still not a very high success rate, right? So out of the folks who are trying to make this jump, Still 90% of them fail. And this is not a new number. This is a systematic problem with the way that businesses are started and the way that they are funded, right? So the venture capital groups and who fund these businesses have these numbers built in. This has been going on since venture capital's been around. They've only been around for 20 years, and these numbers are very stable. So the research shows that 90% of folks who start a business will have that business fail within a 5-year period. And so what we want to do with BOSS is show the, the path to be in that 10%. We've learned this stuff, but it's not just our learnings. We've done a lot of research on where these failure points are. And one of the key failure points that we're gonna show you is not listening to your customers. Right? And but before we get there, we wanna show you, because, you know, we're all— we all wanna be in that 10%. We're gonna show you some of the ways that people don't make it in.

Right?

Because knowing the importance is, is half the battle here of listening, because oftentimes it's not. comfortable to listen to your customers, they're going to tell you things that you don't want to hear.

And so before we started developing the BOSS System, and like I said, this was nearly 15 years ago, we started looking at why startups are failing. And the interesting thing is we ran this survey nearly 15 years ago and we ran it again just last year and the results were almost identical. So you think about that in terms of a 15-year span. And, you know, I don't even know if they had iPhones 15 years ago, but I know that innovation and technology with the internet connectivity bringing people closer together has changed drastically. Yet still this 90% failure rate exists, and still the same reasons as to why it exists are here. So obviously something is off. Right, and what we determined in our research is that these common reasons as to why companies are failing are in fact lagging indicators. So we're not going to actually be able to solve the problems by just knowing why, but it's important to understand the why in order to get to how to fix this. So as we started moving through this, we found 2 of the key pieces as to why companies fail and why startups fail. Sit at the very top in terms of capital and management team. So running out of the cash for the last 15 years has been the most consistent, and this could be access to cash, this could be inability to fundraise, or this could be improper management of your, your cash flow. And so you look at this in 2 ways potentially. There are underserved communities that flat out just don't have access to resources. People, money, and time. But then there's also people who do have access, however, are not skilled or not educated on how to properly manage cash, manage fundraising in order that they don't dilute themselves, that they don't run out of cash, and they don't continue a vicious cycle of constantly fundraising. So when we looked at the second reason, We found not the right team was up here, and this is really just a poor management team. The common thing that we found about this is principle over position. So what many founders do is when they are struggling in an area, and the most common instance that we see is a product or engineer founder will build a great product, build a great vision in terms of a business, be able to fund that business, but then get to the point where they have to start selling the product, selling the service, and they're unable to do that. So the common thing to do is go out and hire someone with a lot of experience, potentially even a Rolodex or a big network that they could potentially walk in the door with, with plenty of deals. Unfortunately, what we see in these situations is those people with a lot of experience have the experience in the wrong Areas. They can run a team, but they can't build a team, right? And so you see this happen where people come from the enterprise down to a startup, and inevitably those hires most of the time do not work. Because those hires are typically part of your management team, you're giving up equity. There is a long ramp-up time where you're potentially wasting money, wasting time. And potentially even wasting interactions with your clients. So we find that creating the business around the principle of what needs to be accomplished versus the seniority or the experience of the person in that position is the most important thing. There is something to experience. However, if you don't have specific niche experience within a startup or within that industry, It typically will result in failure. Now the next area, in fact the next 3 to 4 areas, pricing and cost issues, product without a business model, poor marketing, ignoring customers, all tie to your inability to understand your customer. We define the customer as ICP, ideal customer profile. And these are the types of accounts that you could service. So everything from starting at your market analysis to understanding how big the universe is, then going down to your ICP analysis where you do account segmentation to understand how many accounts within the universe could I actually sell my product to. When you don't start at the right point and you don't have correct or factual information or detailed enough information, you could potentially point the arrow at the right target and end up moving down a path that isn't going to yield the best results or best returns for your company. So Marty has extensive experience with building and developing ICPs. And in fact, Marty, you've got a really great story, a couple good stories about what could happen if you don't select the right ICP.

So good stories mean that, uh, learn some hard lessons in terms of, uh, not defining who your customer is and not listening. So, um, one of the businesses that I was at, um, one of the, the mistakes that we made was having a very loose definition of who our customer was. And it was a very common mistake where your customers defined as the people who are willing to buy your product, people who are— who have money. The problem with that is that as your, you know, the ideal customer, right, is, is really designed to keep you on track in terms of alignment with what you're building, what product you're building, right, what features that ideal customer wants. And where they find the value. And if you— and not only that, but also how you align your operations, right? So this is very much an important alignment exercise. And if you start listening to the wrong customers, you're gonna start building features, you're gonna start changing the operations of your business to suit a potential customer base that is not gonna be long-term or will actually take you off track. Right, or cost you more money. So I was at a fairly large organization, uh, where we were in, um, you know, having some trouble in terms of financials and people paying their bills and, um, staying with us long term. So we had a lot of churn was the main issue, and they were telling us they weren't having— they weren't getting value. And this was an ad tech platform. Right, and what we had done was started listening, but we started listening to the wrong customers. Customers who we, we, once we dug deeper under, we understood that the value that they were going to get from us was around some of the edges of the product. They liked some of the things that we were doing and we were able to sell into them, but they weren't the type of customer who was going to stay with us long term because the value that they received with us was, was temporary. So what's really important is that you define who that customer is, right, and tie that to where you want your business to be. And you start doing that by understanding the different characteristics of who that customer is and matching them up with the characteristics of your own company and what you want your company to be. Having that vision— and I know we're not going to go into exit strategy on this call, But understanding where you're going tells you the type of customers that will help you get there. And once you understand who those customers are and where they're going to get— receive the value from you and what you can do in terms of servicing them, in terms of cost, right? Does this customer going to take a lot of resources from me, or can I— or is it such a good fit that they're gonna understand my product and put it to use and stay with me long term? Now, at this company, we didn't do that. We started listening to everybody who was willing to pay us, and we spent a year building product for customers who were temporary. That put us on a very, a very shaky financial path because our service costs started going through the roof. We were in a rush to build out product that was ultimately going to be thrown away. Right, once we defined who our actual customer was. So what we did is we took a step back after getting to the, the edge of the precipice, you know, the edge of the cliff in terms of running out of cash and deciding who our ideal customer was. Once we did that, then we were able to listen to the, the right customer and build for them, right? And when you have the right customer, Then you don't have to be afraid that— of what you're listening to. If they're telling you the truth and you've got good relationships with them, then you can build for them directly. And what this allowed us to do was to focus our development resources, our customer success or support resources only on those customers, and it was costly. We had to lose about a third of our customers at that point. As we defined— redefined our ICP. Now, they didn't all go away at once, but we stopped building for them, we stopped selling to them, and we had to be disciplined with our sales approach to only sell to them, only market to them. But when you get that right, right after you go through the pain— and what we're, what we're hoping to do is, is help you avoid some of that pain by showing how to define the correct ideal customer profile. Then all everything becomes aligned, right? There's that saying that, that smooth is fast, right? So when you're not— when you're listening to the right folks and you're only building for the right folks, then everything moves a lot better. Then your, your customer interactions become meaningful. Every interaction then becomes meaningful when it's the right customer because it's important. Otherwise, you're sifting through what's good feedback and what's not. And it goes back to that principle over position, because if you're not listening to the right folks, then opinion and ego starts to creep in in terms of who you should listen to and who you shouldn't. So the point here of starting with the who you're going to listen to, right? You can't start ignoring. You have to start listening to the right folks. And so starting with who that ideal customer profile is, is extremely important, and it will help you avoid the poor marketing, the price issues, which is ultimately about value. You know, pricing towards value. All these things you can avoid by understanding and listening to that ideal customer.

Yeah, very important. And then as you look at these next areas— lose focus, lack passion, burnout, and failure to pivot— this is all based around the inability to create a purpose-driven business. And what we mean by that is one of the core principles of BOSS is beginning with the end in mind. In order to know where you need, or where you are, or What your destination is. You need to know where you are and where you want to go. That will help you determine the correct path and the most efficient path to get to your desired outcome. When you don't have a purpose-built business and you're just growing for the sake of growing, this could cause you to overserve or underserve specific clients, meaning you're spreading yourself very thin, potentially losing focus, suffering from burnout, and eventually lacking passion. So as we continue to go through our research, what we found is there's 5 key themes into which startups fail. So we talked about the first one, management team and dysfunction within the management team. This is that principle over position. And also not being able to understand when to bring on certain functional areas within your management team. And so what we have is a lifecycle that tracks the maturity of a company. And as the company grows, different functional areas turn on. For instance, you do not have service delivery and support teams before you have a product or before you even start selling, right? There is a progression in order to bring on these functional areas and bring on the right people to manage them. Failure to understand customers, and Marty just talked about this in terms of ICP. I even have a unique story. My first business that I started and exited, I spent over 6 years in the business. And ignorantly, I was assuming all growth was good growth. If there was a customer out there that was willing to give me money, I was willing to sell my product to them and build a team to help service them. Unfortunately, what happened is this caused me to extensively bloat my support and delivery teams. So we had a very large team and a lot of headcount, and a lot of the burn was focused on servicing a wide, diverse range of customers from different industries. So about 50% of my customers were from the marketing space and the other 50% were made up from various other industries such as media, hospitality. I started to experience great success within year 5 and 6 and an acquirer came to say he was interested in potentially buying my company. As I sat on the table, we started looking at the customer base and I had no idea why they were interested in buying the company or what their plan was. I just was excited to the fact that someone had recognized what I had done. When we started going through the transaction and discussing numbers, I quickly realized that about 50% of my customer base didn't matter to them. So therefore, they were not willing to give me any money for that customer base. So I was gonna end up almost at a loss in this situation because of the fact that I couldn't get any value out of this customer base. So what I had to do is I stopped the negotiations. I went back and similar to Marty, I had to essentially let go of 50% of my customer base and start to sunset them and specifically focus on one ICP, one group of people, because I knew that my potential acquirer was interested in that specific customer base. I was able 2 years later then to regain that money. However, it was a long stressful road and there were many opportunities to potentially fail in that. So you could see by not selecting the right customer, even though things could appear to be going great, you may, if you don't understand the direction your company is going in and what the potential acquisition conditions are for the acquirers, you could be building the wrong type of company and be very disappointed with the return that you get when someone's willing to buy it. So that brings us to the next part of why companies—

Randall, if you don't mind, I'll jump in a little bit on this too.

Yeah.

So one of the things, you know, we keep talking about the ideal customer, right? How do you grow your business by listening to your customers? Well, what we're trying to say here is it's really important That you, before you listen, you, you identify who that customer is, who is ideal. The first step of listening is trying to align to who that ideal customer is, because that is where the growth will come from. Once things are aligned there, the rest of the listening becomes easy once you know you're listening to the right people. Now, at Boss Startup Science, This summer we're rolling out this full package in terms of online learnings about avoiding all of these different failure points. We do have a piece right now that's available, gonna be available in the next couple of weeks where you can come into our system and actually we'll walk you through defining that ideal customer. But here are the key points, and that is, You have to first understand what problem you're solving for them.

Right?

What impact— then what impact your product can have. You have to understand where that customer is located and do you have the means to reach them in a profitable way. You have to understand do you have the means to service them in a profitable way and what their needs are going to be. So some types of customers are much more needy than others. In some companies, I've found that large customers are much easier to service than smaller ones. And, and that's because of price points. Right? So you have to understand, do they have the means to actually afford your product? Just because your, your business can solve their problem doesn't mean that your ideal customer can actually afford it. And if they can't afford it, you're gonna find yourself in what Randall was talking about, a situation where servicing them becomes much more costly than it's worth. So you're spending a lot of time trying to retain customers and trying to help them through understanding how to utilize your product. So understanding these things on the front end, right, what their means are, and can your product solve it in an efficient way for them and for you? Helps you narrow in. And the tools that we're going to have available for you guys to come in and test, uh, will help you go through this exercise of defining who that customer is. Because once you understand them, then— and you understand who the specific ideal customer profile— then listening becomes very easy and it becomes very profitable. Because not only is it easy because They're aligned to value, right? Not— and it's not a reach for them to be able to afford your product, but they're aligned to the value, which means that they're willing to have an open conversation. Anytime you get back into discussing, can I afford this, you're not listening to what's going to grow your business. You're listening to their issues that they maybe shouldn't have purchased your product in the first place because they can't afford it. It should always be a, you know, an easy process for them to afford it if the value statement to them is strong enough. So once it's aligned, listening becomes very easy, and everything you listen to from that point is a benefit and helps you grow very, very quickly. But I just wanted to point out that we're going to have these tools available on the site, and those are the initial steps, and this is why that's so critical. Exactly.

Sorry.

Sorry, Randy.

No, that's great. There's a second part to this too. And if you're a growth business that's driving towards an exit or a strategic exit, there's an interesting evolution that happens in the lifecycle of your business. At first, you build a product or service to sell to a customer. This is your ideal customer profile. But as your company matures, what happens is the company becomes the product that you then sell to your next customer, which is the acquirer, right? So the acquirer or your potential acquirers, which we call IAP, ideal acquirer profile, they have a specific set of acquisition conditions. These are the KPIs or drivers in which they determine the value of a company and how much they'll pay for it and what multiple you'll get for it. So by beginning with the end in mind, one of the core principles of BOSS is to bring together both your ideal customer and the customers that you serve with your product or service As well as your potential acquirers, right? This— the traditional lifecycle of a company is 3 to 5 years. So looking out 3 to 5 years from now, who are the potential acquirers and what are their conditions? One of their conditions, if your acquirer or if the acquirer industry is expanding, right, their strategic effort is to expand within their current industry. and increase what's called share of wallet within their existing customers. One of their most important drivers is that you're servicing the same customers that they're servicing, or your product or service is an easy— it's easy to sell to their customers, right? And they measure that by customer acquisition cost. So before the company goes to market, before you release the product, BOSS takes you through a process to understand exactly what the strategic outcome is, where you are right now, and where you eventually need to go, which is dictated by both your customers and your potential acquirers, who will literally give you the answers to what it takes to receive a certain multiple for your company. Along with building an ICP, BOSS Academy helps entrepreneurs do this through what we call a North Star system. And we'll explain more about that in a minute here. Now moving through the other themes, the next one is overvaluation. And this specifically happens in companies that are raising money from outside investors. So, When you look at the 90% failure rate, that means 90% of entrepreneurs that start a business are failing. If you flip that on its head, that means 1 out of every 10 investments that an investor making— is making is succeeding. So what happens within the investor community is they're essentially playing a numbers game. They're as confident about their success in an investment as your success in building your business, right? And so what they're forcing entrepreneurs to do is, well, because of this, investors want to write big checks because they want to write sizable enough checks and make big enough investments that when a company does succeed, it will erase the sins of the past 9 investments that they make that didn't work. So this causes entrepreneurs to have to position their companies and do unnatural things with their companies, such as raising their valuation or claiming that they're larger or can grow bigger than they actually can. And this is all in an effort to receive capital, to keep the business going, and to hopefully get good resources from this investor. The unfortunate thing is when you're first building the company, you have one, no idea how much it's going to be worth. And 2, it's potentially at its lowest valuation. So you're giving away the most of the company without understanding what it is at this point. And immediately entrepreneurs are put in a bad position where they're gonna have to start going through this vicious cycle of continuously raising money in order to make up for what the investor expectations are. When an investor gives money, they're expecting typically a 2 or more like 3 to 5x return on that investment. So that means if I were to take money today, I have to look at what is the value of my business if I were to 2 to 5x that fundraising round. Can I do that within the next month, quarter, year? Unfortunately, entrepreneurs aren't thinking this way, and this is causing them to raise more money than they actually need, which if you're raising more money than you need, you're gonna start to use it in places that you don't actually need, which is gonna throw off your maturity and cause you to essentially grow the wrong way. And what this all comes down to is entrepreneurs receiving bad advice, similar to the management team dysfunction and bringing in someone from the enterprise that doesn't understand How to build a startup. Receiving advice from one-hit wonders, people who aren't native to your specific industry or skill set, and often visionaries are the ones who give bad advice because people seek advice from visionaries who aren't operators typically. They're not users. So while an idea may sound good, the practicality of people actually living within the solution or the product is unknown at that time. So what BOSS does as well is takes companies through a lifecycle. And in order to understand the lifecycle, we need to understand the specific maturity milestones and validation points. And so there's 5 very important ones when building a company. To vision, which means I understand where I strategically wanna go. To product, which means I have a product to sell. To revenue, which means I am able to sell my product, receive revenue, but from in-ICP customers. Then to break-even, meaning my business is sustainable right now and I either don't need to or don't need to take as much outside investor capital. And then to exit, which is a very strategic milestone where you start to break down and understand specifically what it's gonna take you to sell the company. So what this all leads to is the lifecycle model, the Boss Startup lifecycle model. And the phases within here, and I'm gonna just build this out while I'm talking here, are intended to guide an entrepreneur through some of the biggest questions that they have. And anyone who is an entrepreneur here probably has asked themselves this question many times, which is, what do I do next? Where do I go from here? How do I dimension this decision that I have to make, whether positive or negative, right? We— the analogy we used is someone having to play a sport. Let's say they have to play soccer or football, but they've never played that sport before. They have no concept of what it is, and you drop them on a field and hand them a ball and just say, go do soccer, right? They're not going to know which goal to go to. They're not going to know the rules. Can I touch the ball? Do I have to kick the ball? What am I supposed to do? It's very similar for an entrepreneur. However, entrepreneurs are at the disadvantage where most investors understand this lifecycle model. And as an entrepreneur, if you've ever sat with an investor and you're wondering, why are they asking me these specific questions? It's because innately they're thinking of this lifecycle model. They're trying to plot you and understand when they could take your business to a potential return or to an exit. So the lifecycle works like this. First of all, to understand it, the lifecycle lasts 3 to 5 years, and typically from inception to exit, the traditional lifecycle is 5 years. However, it takes time just to get to a product that you could actually start to sell. So a lot of companies spend a lot of time early on in vision and product, which is good. So starting at the first stage here, vision. This is where you take your idea, you document your idea, and you try to validate your idea through a vision process. Most entrepreneurs, or a lot of entrepreneurs, take advantage of accelerators at this point in their maturity. And accelerators are great, right? Accelerators will help you get through ideation. They'll help you build your pitch deck, help with some of the structure of your business. And hopefully introduce you to investors, right, that are going to be able to give you your initial funding round. So the typical lifespan within an accelerator or incubator is about 3 to 6 months. Whether companies go through an accelerator or not, there are strategic advantages, but what you need to do in this stage is be able to articulate your vision in a pitch deck. And get an investor to have confidence in your vision that they will give you money to go build the product or service that will become the company. So after that 3 to 6 months, the startup then moves into product, and the maturity milestone here is to product. So again, when I mentioned use of funds and bringing on the management team and functional areas, You start to look at the four common functional areas of a company. A company, you have shared services, which is HR, IT, legal, accounting. You have product and engineering. You have sales and marketing, and you have service delivery and support. Now, some people and organizations may call those different things, but they essentially all align to those four functional areas, which are crucial. Especially at the beginning of a startup. So making sure that when you move into product, at this point, you should just have your founding team, which is doing the role of shared services, right? Setting up the entity, developing the cap table if you're taking on capital. And the next hires you should make, if it's not one of your capabilities yourself, is your product team, which would be a product manager and a lead engineer. And the goal here is to get to MVP status of your product, minimal viable product. And this is a very important distinction here. Engineer and product founders tend to over-engineer and overbuild their products, just like sales entrepreneurs and startup founders tend to sell a product before it's even ready. Right? So what's important here is that you should be building what is considered minimal viable product. The way to understand this is through understanding your customer. And so there's a process that lies within this lifecycle called ABLE, which is Alpha Beta Launch Experience. And you use your customers in order to move through this process. What we like to call it at BOSS is a user advisory board, and we mentor companies on this process, which ends up really helping in initiating the life of the business and initiating and creating a sustainable business. So how this process works is when you are in your vision stage, you need to validate your vision. The way to do this is to go to people trusted within the industry, potential users, or people who could take advantage or benefit from your idea and get them to validate it. You're simply asking, if I were to build something like this that solves these problems or exploits these opportunities, would you be interested in buying this? Is this something that would help the market? And that group of people would nod their head and say, yes, you'd go build your pitch deck. and then move on to build your product. These people that you use to validate your vision will be the same people that you should go to to build your product requirements when you start building your product. They're gonna be able to tell you through those requirements what your minimal viable product is. This is very important. Once you start to launch that product, you go through what's called ABLE, Alpha, beta, launch experience. So the first launch is alpha. So that same group that validated your vision and gave you your product requirements, they should now be testing your product or solution. Once they give you feedback in your alpha, they should then again test in your beta. And at this point in beta, you may open up the testing to more people than just these core group of people that made up your user advisory board. But the idea here is that taking them through this experience and leveraging their knowledge in this experience, what should happen is they should end up being your first customers. And this is an important distinction, right? And it's important to understand they're in ICP, they've already validated the vision, they validated the product, so getting them to pay for the product should be fairly easy. And now you have in-ICP referenceable customers that could help you go to market much faster and much easier than doing it by some other approach. So after you move from product, your goal is now to get to revenue. Your user advisory board should be your first revenue-paying customers. And again, the focus here is in-ICP, right? You want your ideal customer profile to be giving you revenue for this. After you've hit revenue, now you need to fully go to market. And in this phase, there is a key metric or KPI that's very important. And this goes along with your ideal customers, right? And how your customer could tell you how to run your business. And this metric is customer acquisition cost ratio to lifetime value. You may have seen this as CAC to LTV, CAC to LTV, or customer acquisition cost to lifetime value. And what this is, is essentially a go-to-market ROI metric to know how much does it cost for me to acquire a customer in ICP and what is the lifetime value of that customer. And so as you move Through this lifecycle, this bar moving up here represents valuation. As your valuation increases, investor confidence increases. As you move through these maturity milestones, it's helping investor confidence to increase. So at this point, when you can go to your investors and say, I know specifically how much it costs to acquire a customer, I know how many customers I need to acquire to meet my acquisition conditions. from my potential acquirers. So therefore I need to raise this amount of money and Mr. or Mrs. Investor, you know, it's gonna, the use of funds is gonna be correctly spent and you know what to expect in terms of an ROI. There is nothing better than raising investor confidence through CAC to LTV.

Now, Randall, can I emphasize a point there?

Absolutely.

On the user advisory board, So these folks, the way that Randall described it, you know, they're NICP and that CAC to LTV ratio is the fundamental metric that allows for growth because you need to be able to pour more marketing dollars into a situation that's gonna provide the most growth and the most value for you. And it's never too late to, you might be in your growth phase, you might be in your optimization phase, And if you're seeing symptoms of less and less profitable marketing, it's never too late to go back and establish that user advisory board. But what you will be doing is going back and validating vision with them, validating ICP, validating product, right?

You're gonna be— you're gonna—

and it's the farther— the more time you take to go reestablish that user advisory board, that trusted group of those core customers, and start listening to them, the more costly it is to you. You've wasted money, right? And you're gonna have to reset, and resets and pivots are expensive and they're risky for you. So no matter where you're at, start that user advisory board today. Start listening to what they have to say about the vision for the company That value and understand what that CAC to LTV ratio is, because that's your baseline. You can expand your ICP, you can expand the customers that you're going after, but those are the most profitable for you. That should be the core of your business, and those are the folks you want to listen to the most. And if you're already past that phase that Randall's talking about, start it over. Not saying stop your business and start over, Saying start back with those customers at the vision phase, understand where the core value is of that MVP, and that is the diagnosis for your growth issues, is going back to that ideal customer profile and listening to your user advisory board. It's much better to have a small group of customers that are trusted and you can communicate with. than spending money on a go-to-market plan when you haven't done that. You're gonna waste a lot of money trying to diagnose by spending money who your best customers are than simply listening to them in a, in a very intimate way. And it stops you from having to pivot and reset. So start now, no matter where you're at on this lifecycle.

Yeah. And by the way, the Boss Academy and Boss Startup Science have curriculum, education, and actual tools to use for each one of these validation points in each one of these levels. So the idea is giving someone a tool is one thing, but educating them on why it's important and working within the confines of your business as you're learning and executing Is extremely helpful. So like Marty said, if you're not at the inception stage of building your business, that's okay. You could be 5 years in, right? The idea here is by leveraging this process, you will have a purpose-built company and you will understand what your North Star is or what your strategic direction is as told to you by your customers and by your potential acquirers. So the next stage is here, growth and optimization. This comes down to one, being able to understand the processes within your business and standardize those processes. So standardization is very important, especially to a startup. And what standardization is, is essentially documenting the best practices within your company at each functional area level. So one of the biggest things that could, you know, tank a company or hurt a company is loss of headcount. When employees themselves are better than the position and they leave, they take with them a lot of information, right? So again, principle over position. You want to make sure that you have the functional areas, the processes all documented so that anyone can come in and fill in for somebody, or when someone does come in, they could ramp up very easily because those processes are documented. Now what's also important when you get into optimization is continuous improvement on those processes. And we call that kaizen. And kaizen or continuous improvement is hard to execute if you don't have anything documented. The other important thing to this, through standardization and through documenting your business and the best practices and essentially how your business works, when you get to the transaction table with a potential acquirer, they're gonna ask you that specific question. Before I buy your company, how does it work? And typically what they're gonna do is start a diligence process and sit and interview the key functional areas of your business and document it for themselves, right? The assumption is, is the company doesn't have this. So what does that do? That pushes out the transaction timeline, and now you're extremely vulnerable, right? And this is something that you have to be careful of as an entrepreneur and that acquirers will do strategically to you. Is hang you up in diligence, trying to understand how the business is working, taking your people who are in the business, running the business away from their core job, knowing that it's hurting the performance of the business, essentially lowering the valuation and lowering the multiple. Right. And so not to sound like this happens all the time, but it's a potential to happen and you have to prepare yourself for that. So by documenting and standardizing, you're able to not only ramp up employees quickly, be able to recover from an employee leaving unexpectedly, and then, of course, at the transaction, make that process as efficient as possible. So there are a couple foundational threads that flow through the lifecycle. And these are the core components of BOSS. the business operating support system. So Marty, I'll turn it over to you in terms of discussing how these interweave themselves as foundational threads through the lifecycle.

Absolutely. And then I'll try to go quickly because we want to, I think, hold a few minutes for questions if— I know we're coming up on the hour and be conscious of everybody's time, but the foundational threads of BOSS Right? It— our structure. So that documentation, it's, it's, it's critical when you're building an organization that you build an organization to perform efficiently. Effectiveness is efficient and effective are the 2 keys here. And understanding what those KPIs are to measure those things. Documentation, right? In terms of being able to repeat those things the same way over and over again, because as soon as you start doing things multiple ways or letting people sort of pick their own adventure, your structure starts to break down and you start to become less efficient. And it's easier to start this way than it is to go back later after everybody's defined their own path. The North Star is that understanding of where you're going and how you're gonna get there. So what's important to your customers? What's important to you? Right? This is defining your roadmap before you start execution. And it's never too late. Anytime we talk to companies about issues they're having, it typically goes back to defining your North Star, circling back to listening to your customers and making sure that you are aligned with who your ideal customers are and that you're providing the value at the right price with the right feature set that's gonna keep them with you long term. Right? And building that core sort of rabid group of customers that are gonna stay with you for the long haul. It's never too late to go back to your North Star. And in fact, like I said, it's always the first place that we start No matter where you're at in the lifecycle. So that's critical. Strategy is simply, you know, how you're gonna get there. Right? And strategy is typically the easiest thing for all of us. If we understand who our customers are and where we're trying to get, there's no CEO in the world who's at a lack of strategy. You know, most, most of us on this phone can come up with strategy fairly quickly. Tough thing, or the more difficult thing to do is to execute against that strategy. You have to have good structure, and you have to good have a good north star in place to be able to execute effectively and efficiently. Standardization protects us in the ways that Randall just described. Right? Standardization allows for kaizen. Standardization also allows for interoperability with an acquirer or partners. Right? If we don't have a standard process, we never know how to improve, and we don't know how to work with each other. Customers always also like standardization. They wanna know that you're a stable organization that's gonna get that same, you know, if you order the same thing on the menu every, every week, you're gonna get that delivered the same way because that's what you love. That's what you've come to expect. So This is part of the science part of Boss Startup Science is standardization, repeatability, and being able to have unit economics that will scale your business correctly. And then kaizen is a constant diagnosis of issues that typically come down to your ICP, right? How do we improve? How do we improve our unit economics? This is what accelerates growth. What we've done in that lifecycle is getting to the point of kaizen, is having good fundamentals that we can fuel and spur our growth. And the common thread through all of this comes back to the North Star and understanding that ideal customer profile. So who are they? What is the value that you want to get from them? Or the value that you're going to provide to them? What's the cost? Can they afford it? Right? And then how do you reach them where they're at? What are their watering holes? Where are they learning about this type of information? Where not the core group that you're talking to every week and and really in partnership with, but as you look to market, how do you find them? Right? And again, it all comes down to listening to that. core group of customers that are gonna be with you throughout the journey. They will tell you what should be standardized. They will tell you where your execution efforts should go, and they define for you your, your strategy. Without them, you're just guessing, and that's a bad place to be. So those are the threads, and, and you can see the common thread throughout all of this stuff is listening to a core group of customers who are going to be with you throughout the journey. They are what you build your business on. And we hope that the tools that we'll provide you guys after the call will actually take you through some of the practicum of actually defining that first step of who that ideal customer profile is. From there, it becomes very easy to listen to them because you know That, that is, that is what your business is built on. So we're at the top of the hour, Randall. Should we open up to questions, or do you want to dive in more, in more detail?

Stephanie, what are your suggestions?

Hey, we may want to open for some questions because, yeah, I'm conscious of people's time also, and, you know, we're kind of at the end of our working day here in Europe, so it's probably a lot of information to digest for everyone. So yeah, feel free to reach out to Randall and Martin or to Kim and I, you know, because we are cooperating with the BOSS Academy on that. And As I said, we're going to have some more sessions to come or exchange of information on various content threads throughout the year and also more after the summer. Just opening up if there are some questions. I have one quickly if you allow me. I mean, I think the ICP is a key element. We all understood that and so on. And Marti, you talked about your experience with with a previous ad tech company and how you handled churn. And I know for a fact that churn has been a very important issue for some of our SINDA members who came from more legacy businesses and are transitioning to digital and to more agile companies. So my question here is, when you're defining the ICP, do you Is it relevant to consider a type of 2-tier approach with high-end customers and like middle-sized customers and you service them differently?

That's a great question. So what the key is starting with a singular ICP. So this is the customer that your business is built on. This is your foundation. As you start to grow, you're going to expand into multiple ICPs. So your service, your products or your services may expand and you maybe look to service different markets, right? You also need an ICP that is big enough, that where the market is big enough to sustain growth to where you think you're going. But as your products expand and your services expand, Your ICP should be defined against those specific offerings. So you don't change your ICP on your core offering, but as you look to provide, let's say, service on top of it, of a SaaS platform, that you may have a separate ICP that you approve the resources to go into that. It may not be as profitable, but it still may help you grow.

Okay.

Now once you look at churn, right, you, you should already have that ICP well defined because your churn issues may be tied to your ICP, but it may be tied to execution. It may be tied to structure. It may be that you simply have— weren't listening good enough, and you have certain features that if you just made some minor tweaks, you could resolve those churn issues. So when we go through churn analysis, we first look at ICP and regroup on that, make sure that we're aligned. We make sure that those core group of our customers are still aligned to our core product, and then you have to go through a MECE process of defining all the reasons that people have churned. So mutually exclusive, collectively exhaustive, What are all the reasons that people churned? Put those into buckets and then created an issue tree that helps you identify the specific solves for each one of those churn issues and prioritize them that way. Right? But if you don't have the foundation of those ICPs, then you're going to be solving problems in the wrong way or prioritizing the solve in those ways. And you may decide that some churn is okay. Because you're— you have a low acquisition cost and you may just decide that your lifetime value with them is smaller than you expected, and that may be okay too, right? If you're churning in your ICP, that is the most valuable information to understand, and you have to break those issues apart and tackle them one by one. And that should be the highest priority of any business, is solving churn issues within that core group, and then moving to your secondary and tertiary ICPs that you may have defined throughout your lifecycle.

Very good. Just, you know, another one real quick. I don't see anybody. Please don't be shy and ask your questions, but I had another one on context. and seasonality and, you know, taking, well, the pandemic into, for example, into account. So how do you have to redefine your ICP over time and context, or is it something that is supposed to stay kind of stable in the timing? For example, if you're a seasonal business, probably your ICP is going to move over, you know, from season to season. So Is it set in stone or is it— does it evolve with the context and seasonality?

So that's one of the challenges that we all face, right, is that nothing is constant. So the ICP should not change in terms of who your core business is, and if you have a seasonal business, then you should understand that and your processes and your expectations should should track along with that. Obviously, with the pandemic, the growth of new technologies that we're seeing come online like blockchain and all this new stuff, things are changing rapidly, and the value that our ideal customer might get from our products is changing with it. So we have to stay absolutely in tune, right? And when we see churn in our ICP That's a sign that we may be missing something. We may not be tracking, we may not be listening close enough to what their concerns are. So we have to, you know, part of our job is to anticipate, but we can't anticipate always well enough. We have to listen to the customers and what their concerns are. So as executives, our job is to predict the future. Right? We have to do that in concert with our customers. So that's again why that core is, is so important, because things are constantly changing and our ideal customers are ideal changing. We need to understand the rate of change and understand how and, and have a structure for when we go readdress. Like we said earlier, it's never too late to go back to that core group of customers. That should be a constant activity. It's the number— it's the most important thing that we can do, and anticipating change and reacting to it quickly is extremely important. The value that we provide to those customers will change over time, and that ICP should adjust over time, but it should be the slowest changing thing in our business.

I would add to that that Along with seasonality, you have external market conditions, you have external factors that come in. Your ICP isn't typically gonna change, but the narrative to your ICP will typically change with some of those conditions changing. So for instance, in a bull market, people are looking to make money or exploit an opportunity versus a bear market, they're looking to save money. So let's say I had a piece of automation tool in a bear market when their people are looking to save money, I'm going to talk about how that automation tool helps reduce the amount of headcount that you have, right? Saving you money. And a bear— a bull market when they're exploiting an opportunity and they want to make money, I'm going to talk to them about how it makes your current headcount even more efficient. You could double down on what you're doing, right? So the narrative is important to keep in mind when discussing with your ICP. If you're making drastic changes in your ICP, that means your business is changing and your north are would likely have to evolve and change with that, along with your potential acquirers.

Yeah, and I'll add on to that, that our customers may grow out of our ICP. So Skechers was a customer of mine for a long time, and when we first sold Skechers, we sold to the president. It was a small company, or smaller than it is today. And as they grew, right, we started having to deal with procurement because they— their size changed and they grew out of our ICP. And that's okay. We don't want to hold on to them too tightly or we will again go off track. So yeah, it's— there is constant change. And Randall's point about the market itself changing. is extremely important too. And like he said, it's how we go to market to them that often changes.

Yeah, wow, thank you very much, Randall, Marty. I think it's been really insightful and just looking forward to the next one. So thanks very much everybody for joining us today. Of course, we'll share the recording also of the session if your colleagues, if you have colleagues who could not attend and want to— would like to get access to that. And feel free to have a look at the website, both startupscience.com, to get more info. And stay tuned with the Sinda announcements, because as I said, we're going to have another one in about a month on the pitch deck. So very important also to realize what you can and cannot do and cannot pitch to your investors. And we also have the running orders of the Sinda webinars going through. And tune in for next week because very wisely, we're gonna have a key takeaways session on key takeaways from the sales workshop that we did with Sinda, with some of our Sinda folks about a month and a half ago. So it's pretty much tied in into what we spoke about today. You know, how do you make sure that you have, yeah, you identify your customers? How do you sell to your customers? And what are the key takeaways that we've seen? So same time every Thursday at 5 PM CET, please tune in. And Randall, Martti, it's been great to have you guys.

Thank you.

Thank you very much and wish you a very nice day and see you at the next one. Thank you.

Thank you, everyone. Thank you.