How to Secure a Pilot Customer for Your Startup with Kent Summers

Hey everyone, how's it going? My name is Ehan Isaacs, I'm the head of global growth for the Founder Institute. Super stoked to be back here on a Monday. We have a very, very interesting webinar for you today. It's all about how to secure your first pilot customer for your startup or startup idea. An amazing speaker who's a veteran in sales is going to come and give you all the amazing tidbits of advice. For those who've been here before, you know the drill, we do these webinars typically Mondays and Wednesdays, and we're all about providing value and trying to showcase as much knowledge within the startup space from, you know, fundraising, validation, marketing, sales, you name it. With that being said, I just want to go over some housekeeping items just to make sure everybody knows where everything is, and then we'll bring up our speaker shortly. So the first thing is, you can see there's a chat function. Please use that to communicate with others. As of now, please let us know where you're calling in from. I see Jamaica, I see Germany, Maine, London, Hungary, Hungary, Barceló, Vancouver, Lancaster, Vancouver, New York, Minneapolis, Brazil, Chicago, France. We have a very global audience. I'm here based in Dubai, UAE. So, you know, thank you so much for joining us today. We had about 340 or 350 people sign up for this event today. We're at about 134. I'm expecting that we'll get to maybe about 150 or so. So that's the messaging function. Please use it to discuss with everyone. The more important is the Q&A button. Please use the Q&A button to feed us questions because when we do the Q&A, I'm going to be pulling it directly from the Q&A section so we can bring it up on stage. Last but not least, you'll see there's a bunch of emojis at the bottom. Please use the emojis to showcase, you know, positive feedback hopefully on the presenter's content. With that being said, Akshay, if we can bring up Kent and let's get this started. Yes, this session will be recorded. We'll send it out to you in the next 48 hours, ideally later on today. While Akshay is bringing up Kent, I just want to run this poll so everybody You can see, but it'd be great to know, you know, from the 150 people that are attending today, is your company pre-revenue or do you have paying customers? It'd be good to kind of get— okay, interesting. So votes are coming in. We're at about majority of the audience, I would say, is pre-revenue. Okay, that's good. But it's creeping up. You're seeing some paying customers. That's it. Hey, Kent, are you with us? Just unmute yourself and show your video. Okay, so about 75%, uh, cool.

You see me all right?

Yes, I can. Hey, Kent, how's it going?

Yeah, good. And how are you? Good morning, good afternoon, good evening, everyone.

Uh, awesome. Thanks again, uh, Kent. Uh, I think you're all set. Do you just want to share your screen and let's kind of get this show started? Uh, sorry everyone, just one last thing. The way today is going to work Kent has about 20, 30 minutes of content. We're gonna do some Q&A after and then we're gonna spend the last 10 minutes talking. We'll do some virtual networking and then we'll go from there. Then it should be pretty interesting. I'm really excited for today's topic. Kent, before we begin, you're a fellow sale, from one salesperson to another, I gotta ask, in your SDR days, how many dials were you doing per day, per week?

Well, uh, this may date me a little bit, but you use the right term, dials, uh, because that's what we're using back in the day. And honestly, I can't say, uh, that I ever counted, but, um, I was wearing Band-Aids, so I love that.

Yeah, I think for my first SDR job, my boss told me is to do 500 hours a week. It doesn't matter. I think it was just more about getting the I don't think it was the most effective sales training, but it definitely got rid of my fear of the phone. So, uh, awesome. Well, really excited for this, Kent. I'm gonna hide myself. I'll pop back on, uh, shortly, and then I'll be in the chats, uh, as well, uh, giving answers. But yeah, the show— the stage is yours, Kent.

Great, thanks, Ian, so much. And, uh, hello everyone. I really look forward to spending, uh, the next few minutes with you, sharing with you things that I've learned through my career of just a few startups. I've been in startups my entire career, starting back in the late '80s doing this thing called a browser, and up until I retired about 20 years ago and shifted my attention to working closely with founders to help them avoid all the mistakes that I made through my career. Today I'm really talking about pilots, the essentials, how you get started with a new customer. And we're going to go through some material here for 25 minutes or so, and then we're going to shift into a Q&A session where my partner Jim McDonald is going to join me on stage here, and we'll address any questions or concerns that you may have. In short, Jim and I have been around the horn just a little bit. Myself, a career startup founder. Jim, a career enterprise B2B salesperson. Some of the material that you're seeing with me today comes directly from the course that I've been teaching at MIT for the past 15 years, B2B Sales for Startups. And it's all practical information. I'm not big on theory. I'm really big on helping founders with practical tools that they can apply right away to help improve the growth of their business. So if you're thinking about a pilot, many of you are pre-revenue. Some of you are into customers right now with paying paying customers. You either succeed or not in getting the attention of a prospective customer. And most of you do. But then there's kind of a pause and you're trying to figure out, well, how do I get this person to become a paying customer? So you learn a lot of things about the customer that are necessary to close a deal like their goals, their objectives, what they value. Really their pain and the challenges, the problem that they're trying to solve and how your product might fit with that. And even their behaviors, their habits, sort of who's who in the zoo, what are the people involved in the decision-making process, etc. And this is all great. But then there's the question of how do you convert all this understanding and momentum that you've invested into this company, into a paying customer. And that's where the pilot enters the discussion. And so why do they matter? Well, the toughest part in B2B sales is getting started with a new customer before confidence in you and your company and your product value is established. It's all demos, PowerPoints, etc., but nothing is proven. And it's great that you have testimonials and videos and case studies and all that stuff. But customers today, they don't believe that. They don't buy something until they've tested your product inside their company with their people, with their data, and have established value. So just because you understand their needs, their pain, their objectives, right? You've got good chemistry with people. And you believe your product is a great fit, unfortunately, that's not always compelling enough to drive the sale. And getting a commitment for your full license, the annual license or subscription— most of us are selling SaaS offerings these days— it's oftentimes a bridge too far for prospective customers. They feel like they're at risk. It's pre-value. They're really, they're really going on, you know, trusting the claims or assertions that you may have made during the sales process, but they really haven't confirmed it themselves. So pilots are the enterprise sales standard approach for getting started with a new customer. Pilots make it easy for new customers to try your product with low risk, and they're if they're properly packaged, they demonstrate and remove any mystery around the value of your product and how it improves their business or fixes their pain. And in parallel, builds confidence and trust in you and your company. The real reason that pilots matter a whole bunch is they scale across many customers. Once you figure out how to properly package, price, and execute a pilot offering, it's a very repeatable process where everyone— it's a set play for everyone on your team. And you'll eventually learn that you're not selling your product to most customers right away. You're really selling a pilot. So pilots become the first thing that you sell to new customers, whether they're paid or free. Pilots are not customers. They demonstrate customer interest in your offering, not customer acceptance. And that's the big difference between a pilot, is the difference between interest and acceptance. So think of pilots as the final step of your sales process. Most pilot failures, they have nothing to do with customer need. Or product value. Most pilots fail because they're too customized, they're too unstructured, and importantly, they're missing essential commitments necessary for prospective customers to convert to a full product license. Right? There's no, there's no contract, verbal contract between you and the customer to convert. Should you meet the success criteria of the pilot. Of course, pilots also fail because the product fails to establish value. That's not something that I can help you with today, but I can help you with the social contract. The main culprit in my experience, the reasons why pilots fail, is that lack of a mutual understanding and commitment in the pilot agreement itself what I call the expectation gap. So there's two main challenges with pilots. The first challenge is getting to a signed pilot agreement, right? And structuring the pilot agreement in a way that establishes the right expectations of the customers, inspires confidence in them, and they're actually willing to sign because they have that confidence. Once they sign a pilot agreement, the second main challenge is converting them to a paying customer. And that comes down to pilot execution, right? Establishing the product value and converting the pilot to a full product license. So there's your needs as a startup company, there's the customer's needs in solving that problem, and the intersection between those two different sets of needs are where those conversions occur. And it all starts with the agreement. So if you want to convert a customer to a pilot, to a paying customer, it's really, really important that you have all the necessary terms and conditions clearly spelled out and agreed upon in advance of the pilot. And so that's really what we're going to be spending most of our time today talking about. So getting started with a new customer, you're all excited about your product. You know everything about it, all the capabilities, the value, etc. And your belief going into a sale is that your value proposition is so compelling that the pilot's going to want to do something with you. They're going to want to buy your product. What you don't understand, and there's a good reason you don't, is because it's invisible. Is all the status quo forces inside that organization that pull that fulcrum of making a decision, pull it toward them and away from you. So regardless of the strength of your value proposition, it ends up getting crushed right from the get-go and you don't even see it. So the onus is upon you if you want to get a paying customer to lighten the load, right? Make it really easy, low risk for them to try your product as a precursor to purchase. So these status quo forces are very powerful, right? And there's this natural organizational resistance to change regardless of the value. And that's because there's people, policy, existing business practices, could be compliance, training, workloads, relationships. There's a whole bunch of stuff below the waterline that you don't see you're eventually going to impact or displace with the new offering. So that's really what you're competing against, is the status quo. The best sales practice when you're selling business-to-business is to define a low-cost, low-risk path to do something with you as a test to a purchase. So it's these pilots with low entry points I've learned are really effective at lowering decision barriers and helping customers overcome the overwhelming tendency to do nothing. So getting started essentials with the new customers. Ask yourself, what can you offer a new customer today that solves a real problem, is narrow in scope, is low cost and low risk, establishes the value related to the pain of the problem that you're solving and builds credibility and trust with you, and most importantly, provides a logical starting point for doing more with you in the future. The best opportunities I've learned in enterprise sales actually start with a low entry point, a pilot, and have significant revenue growth potential. In enterprise sales, we refer to this as land and expand. If you try to expand before you land, you're going to have a really hard time closing new customers. But if you figure out how to capture that beachhead to land with them with a successful pilot, you'll find that those pilots, the conversion between pilots and full customers licenses is 3 to 10x greater than trying to sell customer offering right from the get-go. So what are the essentials of a pilot? First of all, the packaging and the pricing of your pilot. As I mentioned before, the terms and conditions of your pilot agreement and making sure they set the right expectations, the mutual expectations between you as the seller and the customer as the buyer. And of course team execution to establish that value. So I'm going to start with the pilot package itself. And there's, there's different approaches to packaging trial officer, trial officers, also called pilots, also called proofs of concepts. And there really is no universal approach to packaging a pilot. I'll just say that there's many considerations that have to do with your target industry, the type of product that you're offering, the pricing, etc., etc., that impact how you decide to package. But there's generally 2 or 3 different ways of packaging, which I'll go over with you here in just a moment. Each different way of packaging a pilot provides different constraints on the product value. You're not giving them the entire product. You're holding back a little bit. I'm sure all of you are familiar with the freemium trials out there with the SaaS offerings that are all over the internet these days. And depending upon the constraints that you put on the product value, you have different sales challenges related to converting that pilot into a paying customer. And as I just mentioned, There's a lot of different considerations— product, industry, target, customer-specific things. There's really no universal approach, but there's some general approaches. The first approach is called the horizontal pilot package, right? And this is where you limit the functionality of your product, you limit the capabilities. So if you have 2 or 3 modules, you just provide them the entire Module A as your pilot, right? And that, that Module A, that limited set of capabilities scales into that organization unlimited. So unlimited data, unlimited users, etc., etc., but with limited capabilities and value. With a horizontal pilot package, the sales challenge Here is to convert customers to purchase more capabilities and value. So you're, you're, you're, you're marketing to them, you're pitching to them that, hey, I've got a lot more value behind what you just tried and here's the price. So you can leave that module alone, you end up with a low-paying customer, or you upsell them into different modules or different, more advanced capabilities. This is the typical approach to most freemium offers, most freemium SaaS offers today. Conversely, there's the vertical pilot package, and this is where you provide prospective customers during the pilot implementation 100% of the product capabilities and value. It's everything that you do, all the capabilities of your, of your product are available to the, to the potential customer, but it does not scale inside the organization. Limited users, limited data, other restrictions that you put on it, but they can see everything that you do and use everything you do. In the case of a vertical pilot package, the sales challenge is to convert the pilot into to purchase scale into the organization, more users, more data, more time, etc., etc. So these are completely polar opposite approaches to packaging pilots. The horizontal approach where you limit the capabilities but you have unlimited scale versus the vertical pilot where you have unlimited capabilities but strict limitations on the scale and the usage. In addition, there's another way, and typically used for very large prospective customers, called the Site Pilot. And this is where you provide 100% of the product capabilities and value and scale available, but it's limited to one site within the customer's location with all your standard, you know, licensing restrictions. And the sales challenge here is to convert success within that single site to multi-sites within that customer's organization. So these are the three fundamental ways of packaging a pilot offering: the horizontal package, the vertical package, and the site package. Moving on, regardless of what package you use, ultimately the conversion to a paying customer comes down to the expectations, the mutual expectations that you establish at the outset that are memorialized inside that pilot agreement and that you agree to before you start a pilot. And there's some things that you really have to have, some essential items that are part of that pilot agreement. And that's what I'm going to shift to right now, is talking about these 10 keys that are essential to converting product trials into paying customers. The first key is commitment by stakeholders in the organization. The people that are involved in making the decision agree to, up front, to staff the pilot. In other words, they commit to the necessary resources in order to implement a successful pilot. If your pilot is 2 months or 3 months, whatever that might be, you'll find that sometimes pilots are never accepted because a manager or director inside a target customer's organization has no idea what impact this pilot may have on other priorities or other projects they have going on. And if they have no idea, how that's going to impact other priorities, they're not going to sign a pilot. So it's really important. Pilots usually don't require a lot of work on the part of prospective customers. But regardless of that, it's really important that you educate a prospective customer in what resources they need to dedicate in order to execute a successful pilot, even if it's just half of a full-time equivalent in a week in a certain role, that's all you need. It's really important that your pilot agreement lay that out for them so they know that they're not going to be robbing Peter to pay Paul to try out your new product. Stakeholder commitment to staffing the pilot is really essential. Second, the second commitment is the expectation that if you meet the success criteria in the pilot, this is actually confirming their decision to purchase the full license of your product. They're not trying the product to make a decision. They have already— they've already determined that they want to buy your product. All they're doing right now is just proving that it meets the value that they expect. So the second major thing that stakeholders need to commit to upfront is that the pilot confirms their decision to make a full purchase if the success criteria is achieved. And that's the second point. The second key to a successful customer pilot is that success criteria for the pilot in the license purchase is defined up front and it's very explicit. 1, 2, 3, or 4 things. And these success criteria are typically tied to the return on investment value of your product. So some of you, your products improve user efficiency, ease of use, they lower costs, they improve quality. Whatever your value proposition is, there's usually metrics around that that you can measure. So what you do is you agree with the stakeholders up front. Okay, if we can do it in half the time that you currently perform this certain business function, that is a criteria for success which will trigger a purchasing decision. So whatever your return on investment proposition is, make sure you agree with the stakeholders up front that if you meet that criteria, that confirms their decision to purchase. If you fail to establish clear pilot success criteria upfront, prepare for the goalposts for success to shift in the middle of the pilot or completely disappear at the end. So it's really, really important that you agree on what success is before you start the pilot and get— make sure that you have stakeholder commitments to those that criteria. The third key to a successful customer pilot is they are aware of your full product licensing investment post-pilot success. Right? Oftentimes pilots are sold for a discount price or a trial price. Right? And it's really, really important that that low price does not, establish a bad precedent with the customer or set expectations that once they're successful with the pilot, that they're going to convert to the full license using that same price. Right? So it's really important that the product license comes as no surprise to the prospective customer. And when I get into agreements in a few minutes here, what I typically do with a pilot agreement is I attach my full product licensing schedule is an attachment A to the, to the pilot agreement, just to make sure that they really understand that the pilot is a bridge to a full product license. And that comes as no surprise. The fourth key to a successful customer pilot is both parties agree mutually agree to a limited timeline. You never want pilots to drag on, or worse, have no predefined timeline, because that's exactly what they'll do. And eventually it'll become the new normal. There's no hard stop where they lose your product. Interest wanes. There really needs to be a hard stop date to the pilot. Um, most common practice in companies that I've run and worked with, you know, over many years, you want to have a pretty tight timeframe. Usually 30 to 60 days is adequate for you to prove the value of your product. Now, it might be very, very different if you're selling into biopharma. It may be a 6-month pilot or a 9-month pilot. It really depends upon the nature of your offering. But the key here is to understand the time to value, right? How much time is typically required for end users of your product to be able to verify those success measures after the pilot kickoff? And that's the time to value. And again, the most common time to value with most enterprise SaaS offerings are somewhere between 30 and 60 days, you know, 4 weeks, 6 weeks, you know, something like that. Number 5, the pilot cost must be agreed to. There's a lot of people out there that are providing free pilots, and personally, I am not a fan of freemiums or free pilots because To me, they indicate a lack of priority or commitment on the part of the company. I want their skin in the game, right? I think I read some statistics last week that said for every 250 freemium, you may get 5 paying customers. Well, think of the cost to implement and to manage and to execute and to follow up on 250 freemium offers, and I question whether or not the cost of the sale exceeds your license agreement. So I'm just not a big fan of free pilots. Usually, if you're solving a pain, that pain is worth something in that organization, and at the end of the day, they're willing to pay money because it's a priority for that pain to go away. That's really what you're looking for. When I go to sell a pilot to a customer, I say, listen, I'm not trying to make money here, but I'm definitely not going to lose it. I'm going to cover my cost here. So typically the discretionary budgets within most enterprises are somewhere in the $5K to $20K range, and that should be enough for you to cover your pilot implementation cost over that, that 30 to 60 day period. So make sure that you come up with a price for your pilot. Raise a bar, right? Have people write a check for your pilot. You will find that people that will actually convert to customers are more than willing to pay that small fee in order to solve that problem. What you can also do, another technique is the negotiating technique, is, is to If you get pushback on the pilot fee, offer to fully credit that pilot fee against the full licensing fee so they don't feel like they're paying twice. Number 6, make sure that you have a fixed offering scope. Your package is fixed. There's nothing custom and that you can deploy your pilot very rapidly within 1 or 2 days with your team here, and that the capabilities within that package, that fixed package, can satisfy the, the predefined success criteria within the pilot agreement. So you have a prepackaged product scope that minimizes the technical risk, and there's nothing custom during that pilot deployment. Number 7, the deployment itself. It's a set play for your team. You've got a pilot playbook. Everyone on your team, including you, the founder, sales, product manager, tech, even your office manager with invoicing, everybody knows their role. You're meeting on a Monday. We've got a pilot with Company X on Wednesday. Everyone knows their role and responsibilities, correct? Get after it. Right. So there's no surprises. Nobody drops the ball. Right. One of the important things in a small company is you have to behave like a big company and treat prospective customers like your most valued customer, especially before they are one. Right. Behave like a big company so they don't view you as a startup. The 8th point, the 8th key to a successful customer pilot is that you pre-schedule weekly standing 20-minute meetings with your prospective customer just to make sure you can stay on top of the progress of the pilot, any obstacles or gotchas or special requests they have or to-dos. But make sure the pilot's running smoothly. Make sure you pre-schedule those. If you have a 6-week pilot, you've got 6 20-minute meetings. I found that 20 minutes is the perfect timeframe to schedule a meeting for these types of things because it enforces efficiency of communication. People know that it's not robbing time away from other important things that they're doing. And if it turns out that you need more than 20 minutes to work through some obstacles or things that you need to help them with, it could be training or whatever, then you can take that time. But just don't ask for more than 20 minutes up front. You'll find that most companies are more than willing to accept those prescheduled meetings over the duration of the pilot. The 9th key: treat the prospect like your best customer. I have a good friend of mine, he's a retired CEO. He calls it radical collaboration, right? Surround them with your love, with your support, with your training, right? Show them your bench strength. Show them the people on your team. Go above and beyond meeting their needs. Do all those kinds of things so that They can see their future self and what it's like to work with you. Make them want to work with you because they really enjoy working with your team and they know you're going above and beyond to service their needs. That's really, really important. And then the final point is to make sure that these first 9 keys that I just shared with you are written down in a simple 2 to 3 page pilot agreement. And it has to be simple. It's not a 10-page agreement. It's a 2 to 3 page agreement that's designed to expedite legal security review and scrutiny and get their approval. And it has all the essential pilot agreement terms and conditions contained in that agreement. And once you've written this down and sent it over to the customer, There's the final key, right? Which is the pilot debrief and close. So following the pilot, right? No more than 2 to 3 weeks following the completion of your pilot, have something in your pilot agreement, a fixed schedule here where you're connecting with the stakeholders. And the purpose of that meeting is just to go through each one of the success criteria and get confirmation from all the stakeholders on your performance, the pilot performance against the success measures that are outlined in your pilot agreement. Because you've defined the success criteria in your agreement upfront, right? The customer is not going to introduce new reasons that they needed unmet needs necessary for them to purchase your product, right? Because they've already agreed to it upfront that this is the criteria to purchase. So you're not going to be surprised by new and different things or different reasons or proxies for the reason why they're not going to purchase your product. All you're doing in this meeting is just confirming your pilot performance against predefined and very explicit success criteria. Now, it's possible to miss one of those criteria and just say, hey, listen, our bad. We didn't really understand that, or that wasn't as you had represented. It's actually much bigger than a breadbox. We'll just make some adjustments. No product or full product can handle that problem. Rarely can you miss more than one of those success criteria. And expect your pilot to convert to a full license. And importantly, you really need to look for a driver, right? A driving event, right? Moving forward with a license as soon as possible must be perceived by the customer as more beneficial to them than seeking a delay. So those are the 10 keys in the follow-up the 10 keys that are essential that must be represented in your pilot agreement and discussed with prospective customers upfront and signed within the pilot agreement that are essential to convert a pilot to a paying customer. And just understand, right, that a successful pilot all by itself, right, may not be enough, right? It's really important that during that pilot, you continue to effectively communicate the value of your product versus what they're currently doing and are really timely in addressing any objections or concerns that may result, that may surface as a result of them using your product. And that most importantly, they build a relationship of trust and confidence with you throughout the sales process and the pilot. And you will discover, as I have many times, that value-based pricing, that is your full product licensing model, not your pilot model, that's a lot easier to achieve and establish after you nail your landing. So you've landed, now it's time to expand. And you start with your pilot, you hit your success criteria, and that converts to a full license within the business unit, or in some cases the entire enterprise that you're selling into. I've discovered that price is almost always the number one objection with prospective customers before value and trust is established. But after a successful pilot implementation and you've achieved that success criteria, their concerns around price goes from like number 1 to number 6. And I know that you're starting a new company here and the price of your offering has much more to do with the economic value of the price, the problem that you're solving, not what it costs you to build the product. So for example, if you're solving a $1 problem, for 500,000 employees, you've just created half a million dollars worth of value out of thin air. So don't be afraid to add a zero to, to your price. And if you haven't done before, here's a little help there. That's where the zero key is on your keyboard. So your assignment here today is to incorporate these 10 keys into your standard pilot agreement, right? And like I said, there's no set— there's no, um, you know, standard, uh, pilot agreement, right? There's a lot of considerations that have to do with your target industry, your price point, um, the licensing model that you have for your product, your unique customer needs and the problems you solve, and your value proposition, right? Adapt all those things to your standard pilot agreement, but make sure you you don't overlook any one of these 10 keys. Make it easy for prospective customers to get started with you. Don't compete with yourself. This is the first thing you're selling. Just make sure you set the right expectations up front or your pilot will not convert. The second thing you need to do, and also part of your assignment, is to build an execution playbook for your team. To implement pilots with excellence. And what this will do is establish the confidence in the product value and really serve to convert that pilot experience that customer has with you and your organization, your product, to a paying customer. So that's it. In a nutshell, those are the 10 keys that are essential to a pilot. Those are some of the challenges, the different ways of packaging pilot, and a couple of assignments here that will help you make some progress on building toward a successful pilot agreement and process for your product, for you, and for your customers. We have— I wanted to mention our group office hours here. Following this, um, myself and Jim are going to be working closely with founders. If you do have questions about how best to structure your pilot offering and your process to maximize customers signing it and conversions between pilot and licensing customers, we can help you with that. All attendees to the group office hours will receive a proven pilot agreement template. It's a source MS Word template here with all of these best practices and terms and conditions already in that template. It'll make it a lot easier for you to adapt it to your specific product and customer needs without overlooking something. Here's the link to the group office hours here. I believe some of the gentlemen at Founder Institute will be also sending you that link in the chat here as well. If it's also— you're going to do that?

Yeah, it's in the chat, guys. It's pinned to the top and I just shared it to everyone.

Thank you, Ayan. And a couple other things that you may have found helpful, as I mentioned, this pilot contact comes directly out of my course at MIT. There's also a book that covers the entire course material that's now available on Amazon. Don't buy it if you're not going to give me 5 stars because everyone's been giving me 5 stars so far on the book. And I'm really happy that it's helping a lot of founders execute with excellence on their startup. We also have a LinkedIn newsletter called Startup Sales Field Notes that Jim and I All right, um, I think with that, uh, we are moving into, um, Q&A session here. Ayan?

Yeah, let's, uh, hop over. I was going to talk about the office hour, but I think you already covered it.

No, go right ahead. Go right ahead.

No, there's nothing, there's nothing else to add. You know, this is a first for Founder Institute. We're really excited. Uh, you know, Kent and I have been discussing this for the last few weeks. Um, my background's in sales and As everyone saw, his content is stellar, so I'm really glad he's doing this. We wanted to kind of provide some additional value by creating this presentation, and then you guys can book some time in the group office hours to ask your specific questions, right? Like the nitty-gritty of like around the pilot, maybe some legalities, tactics, or whichever, right? So everything's in the landing page, go check it out, and if there's any questions, feel free to pick up the phone. Getting anyone at FI. With that being said, I do want to switch over to Q&A. We got a ton of questions. Uh, Kent, that was a phenomenal presentation. I've attended a lot of these sales ones. I think, uh, this is your second sales presenter we've had this year, and it's going to be a hard act to follow, but I really do appreciate it because that was really, really good content. I wish I had access to that stuff when I was a founder or doing these type of engagements. With that being said, we do have Jim here, so I just wanna make sure he switches the view up here so we can see all of him.

There he is, there he is.

Hey, Jim.

I'm here, yes, thank you.

Awesome, we still have about 194 people live. Let's start burning through some of these questions because there is a lot and I just wanna go through this. So I'm gonna share one stage. Carmelo from Brazil is asking, specifically about packaging. Is it good to mix your packages? You said you talked about horizontal, but doing the pilot, that's maybe not enough value generated, so then you expand vertically to add functionality. I guess another way to summarize this is like, how would you look at packaging within the pilot?

No, that's a great question, Carmel. Well, the easy answer is if one's not working, shift to the other one. Right? So, but putting them together is really not feasible. So, you know, sort of doing a mashup in packaging is really not feasible. But listen, if you, if you go out there with a horizontal pilot— by the way, I'm a big fan of the vertical packaging model. Show them everything you have, but limit the time and limit the scale. So if I were to take a preference over either one of those, any one of those approaches, I'm the biggest fan of the vertical packaging model because it shows everyone all the value that you have, but limits the amount of people that can use it. It's kind of like, you know, you go inside a restaurant and you order a 10-course meal, you lay it out on the table, but you only allow 3 people to sit at the table and everyone else is outside the window looking looking at that delicious food, right? They want to come in and sit down at that table, and if they see all the food, they're likely to pay to sit down at that table.

Yeah, comment I had on that, just to add a little to it. Sometimes your, you know, what you're building, the product you're building and bringing to market, will dictate what kind of a pilot approach you can have just by the nature of what it does. And how it works. So, you know, that's one piece to consider. And the other piece is you want to have the pilot get somebody really excited about buying, about taking the next steps and committing to the next step. So how do you expose some real key nuggets of value, right? But leave enough on the table to basically the big rollouts where they're going to get the big payback, right? So think about the value that the customer perceives you're going to be getting from the pilot process and then subsequently the deployment, and that should probably help you decide on which path to take.

Awesome. Uh, let's move on. Uh, Quintana from Washington's asking, how did your playbook change? Obviously we have a startup audience, a lot of founders, but people are looking to do pre-sales while the product is being developed, or co-development, let's say. Uh, Would you stick to the same playbook, Kent, or would you make some adjustments? What are your—

Yeah, I know that's a great question, Katana, and that's a typical question from a pre-revenue company. In that case, it's really not called a pilot, it's called a beta release, right? And it's really important, and I found that most successful companies at MIT, they build their beta with customers, not for them, right? So they engage customers. I'm always asked the question, when do I start selling in my startup? And the answer is yes, right? Get to the customers as early as possible and get them, include their feedback in the product design stage. And that's a beta release, not a pilot. And then you'll find that after they found that they start to they see their requests in the design of the product, they're much more likely to convert to a paying customer. So that's a bit of a different animal. It's a beta program playbook versus a pilot playbook. Does that help?

I guess, Jim, do you want to add anything to that?

We just, you know, in general, I mean, it's great if you can get customers before your product's done, because you, you know, you want to find out what they want and give it to them, right? I was— Kent's heard that me say that about 80 times now, because it really is about finding and making sure you're building something that they need, not something that just looks good or seems interesting, whatever. If you can find people interested, the challenge is developing relationships and gaining their trust to want to co-op— cooperate with you on building this beta level or co-development of a product without wanting to try to own the IP or other things. You want to be careful on that side when you do that. You've got a really good trusted advisor, strategic partner, versus someone who might be trying to take, take advantage, learn from you, and then maybe go develop themselves.

Okay, uh, this is by Casey from St. Louis. He's asking, what's a reasonable way to handle a request for a pilot extension? And I guess just to add to this, because I did see some questions in the chat, uh, if people are having— maybe during the course of the pilot they're getting issues, maybe the client is unhappy, KPIs were missed, whichever, like stuff, stuff can go wrong. So maybe if you can answer both questions of like, how do you handle an extension?

Yeah.

How do you manage a firefight in the middle of a pilot?

So, so most of you probably have SaaS offerings. And when I, when I mentioned that $5K to $20K is typically the discretionary value, it's important that you're in some cases that your pilot model is compatible with your licensing model. In other words, it's a monthly fee. So one of the ways to manage that question is to charge— say, let's say you have a 3-month pilot, you charge $5K a month for the pilot. They want an extension, that's fine, they're going to pay another $5K. In other words, they're paying to extend the value to ensure that you don't lose money, right? And they continue to keep their skin in the game. So that's one half the answer, and that is when the prospective customer they make the request to extend the pilot for whatever reason. You can always, you know, you may get back, hey, listen, we were really busy. We really didn't have a chance to do it. That's the reason why you have, you know, to really kick the tires on your product. That's the reason why you have that weekly stand-up call meeting to make sure that they're actually using it there and they're experiencing the value and they're meeting those success success measures. If, on the other hand, you fail to meet success criteria, you can always request to extend the pilot if it takes longer to meet that success criteria, but you will be much harder pressed to get them to pay for that.

Yeah, the only, the only comment I'd make, I'd make towards that too is just You know, when you engage with a customer, like, you have an opportunity to really develop a very honest and transparent, you know, and productive relationship. So, you know, be honest and, you know, be upfront. And if things are going sideways because of things you, you know, you're experiencing, you know, be honest about it and try to, you know, work on ways where you can rectify the situation earlier. And then if you see them not participating or not working or not, you know, delivering on their end of the bargain, with a pilot, you also want to be, you know, willing to call that out too and have a good dialogue, have an honest dialogue. Not having a conversation about something you think might be going wrong always ends up in a really bad place in my experience.

Yeah, it's exactly right, Jim. There's no such thing as kicking a problem down the road, especially at the pilot stage. Yeah. It's like the Hunt for Red October, when the missile comes out, close the distance before it arms, get right after it.

It's a great analogy, great movie as well for those who spent some time.

It is a great movie.

All right, so let's do one more question just to be conscious of time, so, and then we'll wrap up for networking. I saw this one by that— oh wait, where is that? Sorry, just give me a sec. I just had it here and then— okay, yeah, Jerry from, uh, he's a CPO in the US, is asking any best practices or differences in creating a beta versus a pilot. I think your presentation was definitely more pilot-centric, and I think some people here might be interested in a beta, but like, yeah, slightly different, or how would you approach it?

Yeah, no, no, exactly. It's a good question, Jerry. Um, so typically betas, uh, you do not charge for betas, right? When you— what you do is you select, as Jim mentioned, you, you pick 3 or 4 really, really good trusted collaborators that are going to give you the feedback, that agree to test it and give you feedback, etc. They're not paying for that because they're helping you, right? And you're building it for the market majority. The important thing there is to make sure you select the right 3, 4 companies that represent the market majority. They're not just down some rabbit trail with highly specialized needs, but they represent the total addressable market that you're going after. Betas are never charged for. I've never seen a a beta that people pay for. The nice thing about a beta though is when you select these 3 or 4 trusted partners to beta test your product, what you do is you offer them sort of a sweetheart deal in converting from the beta to the 1.0 release of your product, the initial production release of your product. So, and that's when they convert to being a paying customer. And in exchange for doing that beta, you may end up saying, hey, listen, your first year subscription is free. Thank you very much for giving me the feedback throughout the beta period, but you'll pay the full subscription year 2. So you give them some thank you for that. The important thing here is you do not want to leave the gate with a product without any reference customers, right? And sometimes you have to give it away to get a reference customer. And that's, that's your silver bullet in sales, is making sure that you've got a real live customer that has realized the value of your offering and they're willing to vouch for you in the marketplace. Because at the end of the day, when you're selling a product, all, all customers want to know is, have you solved the problem for somebody similar to me, and when can I talk with them? So the most important thing there is to get a reference customer. It's actually more important than revenue if you take a longer-term view. Jim?

Uh, no, I agree. Uh, you had a great point I was going to make too, right at the end there. Thanks for making it.

That's what partners are for, Jim. I think we have time for another question. Ayan, maybe?

Yeah, yeah, sure. Let me pick one of these. So this one was interesting, asked by Mohammed from Ajman, based in the UAE. He's like, when does a pilot start becoming a non-pilot? Like, how do you kind of— let me take it one step or there's like— at least make sure it stays within scope because it can be very— like, you can jump on a customer call and like, you guys can get super razzle-dazzled and like, all right, so Muhammad, great question.

That comes down to your discipline and following a fixed scope, right? And a pilot becomes a non-pilot when one of two things occur. Customer says, oh, I love it, or one of three. I love it, um, but I'd like, you know, it needs to have X additional functionality. That's great, you need to license the product right now, and, um, here's what'll, what we'll charge you for the extra extension. Number two, they say we love it, we're willing to pay for it. Now it's not a pilot, it's a licensed product. Or number three, unfortunately You failed to meet our success criteria. Thanks but no thanks. Right? So those are the 3 sort of conditions or scenarios where a pilot becomes a non-pilot. Obviously, you really want to do a great job with the pilot deployment and convert them to a paying customer in either the first or second scenario. Jim, do you have any thoughts on that?

Yeah, so, so a couple of things. First one is, uh, Discovery prior to trying to pitch or close on a pilot is critical. And, you know, as you're developing this idea of a pilot and you're testing it out with customers and you're learning, we get that discovery document really, really well honed so you know exactly the shortest amount of information, least amount of information that's going to give you a really good insight into that customer, whether or not they're going to be a good pilot and potentially whether or not it's they could be a good customer, right? So that's critical. And as Kent said, it's, you know, you really have to have your expectations set up front going in, you know, and it's not just the actual requirements, but also the timeline and acceptance criteria itself. All three of those things need to be met. Again, going back to that weekly meeting, you're gonna be able to get a sense pretty quickly, you know, and that weekly meeting should be obviously an email out to the team on both sides. Where we're at, what are outstanding issues, what have to be worked, and you'll know, you'll get early warning signs of things that might be going sideways or might, that might need addressing.

Oh guys, this is great. I wish I had you two around when I was getting my teeth kicked in as an SDR, but like, uh, this is like super, super insightful. I'm so glad that you've come, that you've come on and shared this knowledge with everyone. This is very tough, you know, securing your first customer, getting a pilot, and like, I think, you know, if you're a founder out there, follow by the tee what Kent and Jim are talking about. This is like gold, and like, you, and you can just read the chat, there's a lot of people who are praising the both of you for your knowledge and your experience. So really, thank you so much for, you know, coming on and just sharing about your experience about running these programs and all of that. We're gonna wrap up here, folks. Just what's gonna happen is I'm gonna end the session and everyone will have virtual tables, you know. Hopefully Kent and Jim can stick around, you know, join the table, ask him, ask him for a few questions. I think we'll do that for about 5 to 10 minutes before we wrap up. You know, like I said earlier, Kent also mentioned that if you have questions about best practices around sales, running a pilot, or whichever The link is there. I'll throw it out there one more last time. Book an office hour. Those have become really insightful. We've had like, I think close to 70 people right now do this and like all of them have gotten a lot of value. So feel free to jump onto that. Kent and Jim, any final words for the audience before we hop off?

No, no, I, you know, listen, this is just one of 100 things you need to get right when you're doing a startup, the other 99 matter too.

Yeah.

Yeah, I mean, my only comment is, you know, Kent and I have a lot of fun, you know, talking with people and sharing our experiences. You know, it's not because we got it right the first time, it's because we got it right the third or fourth or fifth time, you know, and learned. And so, you know, we're happy to be able to pass this information on to people and, where we can engage and try to help, uh, particularly in the whole sales process, uh, all 100, uh, topic areas.

So awesome. Thank you. Well, thanks so much for taking the time. Uh, we're gonna wrap up here. Uh, Kent, Jim, thanks so much. Uh, folks, we'll see you on the networking table.

Everyone have a great day. Thanks, Ryan. Thanks, Jim.

Thanks.