1. Minimal Viable Channel
So, you’ve got a start-up, and you’ve proven MVP.
Should it become a business?
Perry Evans
Closely, Inc

2. housekeeping
 Open WIFI: Assembly – Startup Week
 A word to TAXI and Assembly.
 The container pool is closed, but we’ll have a food truck!

3. old vine
entrepreneur
four start-ups later
MapQuest
Jabber
Local Matters
Closely

4. Some context
 Lean start-up/MVP discipline is outstanding.
 MVP is not designed to confirm viability of a business.
 Go-to-market methodology is barely visible in startup advice.
 Where tech and sales/growth hacking cultures collide.
 Minimal Viable Channel / Go-to-market Hacking is a dialog in
need of a framework and dialog

5. Minimum viable presentation
 Some stage setting
 Closely case study on go-to-market failure
 Applied learning – walk through punch list
 Open Q&A

6. “The MVP is intended to ensure that the market
wants the product before a large time and monetary
investment is made.”
Eric Ries

7. I’d probably have 5 years of my start-up life
back, if someone had sat me down earlier on
this topic!

8. Pause and
celebrate your
MVP success.

9. Pause and
celebrate your
MVP success.
Then dig in.
• Own your go-to-market
model.
• Frankly assess your
business viability.

10. Head over heels love should be
reserved for your personal life.
 You’re about to make a 5+ year commitment. Your personal
life and career opportunity cost have never been higher.
 Take a deep dive into your business viability BEFORE you
progress to raise [more] money.
 Do this for yourself now, not for investors when your job is to
sell with confidence.

11. Closely Case
Study  Product and market space
 Finding our go-to-market path
 Multiple channel options
 Lessons to learn from
2010-2012
Local Mobile Promotions
SAAS

12. The Product
Space
 Consumer local shopping moves
predictably to mobile and integrated
with social. How small businesses
promote themselves has to be
reinvented.
 Rethink a new SAAS + Mobile
solution. The big winners are the
well-timed new entrants.
 Proven team, hot venture space,
validated product concept.
 A-list angels & board. Comcast
Ventures signed on early.
What could possibly go
wrong?

13. Going to Market
 Direct Sales
 Agency Channel Partners
 Large-scale SMB Solution Providers

14. Going to Market
Selling to Small Businesses is
expensive relative to ARPU.
Let the customer tell you the
scalable price points, and work
from there.
 Direct Sales
Google CPC Analysis:
$10 CPC for right keyword set.
4% “good campaign” conversion to purchase.
= $250 direct cost of acquisition.
Churn: 20% to 50% annual churn in category.
Net cost per RR customer = $312-$500
Price Sweet Spot $50/month, less $15/mo costs
= 11-15 months to recover COA

15. Going to Market
 Direct Sales
Evaluation of Direct Sales Model
- Could we increment to improve the model?
- Yes, build growth hacking team discipline
- But SMB virality not demonstrable, so unlikely
to break through vs. improve
- The noise was getting crazy, thanks Groupon!
- Acquisition cost probably going up not down
- Not a Venture-attractive model
- Low virality, COA coverage, churn red flags
- This could be a successful non-VC business model
Assessment: MEH.

16. Going to Market
X
 Direct Sales
 Agency Channel Partners
 Large-scale SMB Solution Providers

17. Going to Market
 Agency Channel Partners
Over 80K small agents have 10-200 local business
clients. Very reachable, promising for growth hack.
Give them a solution to package for their customers;
let them build services on top. No COA outlay. 3-
year plan to get 10% of agents selling 2
customers/month - looks scalable!
Took MVP approach to channel testing.
• Get out in field, paired sales, do the support
• Hired consultant w/deep connections to local agents
• Small scale customer testing, vary agent type/size
• 3 months in Denver market only
Assessment: VC Happy Dance!

18. Going to Market
 Agency Channel Partners
What we learned:
• Not a single goal met by agency tests after 3-4 week
honeymoon period
• Product Push is an unnatural work habit for agencies
• Agent customer base is a random act
• Became a high risk channel model.
• Be cautious of “aspirational fit”, test for operational
behavior!

19. Going to Market
X
X
 Direct Sales
 Agency Channel Partners
 Large-scale SMB Solution Providers

20. Going to Market
 Large-scale SMB Solution Providers
Convinced CDO/CEO of major YP to make us their next major new
product.
• 800K SMB accounts, 3000 sales reps.
• $275K revenue to customization & sales training/support.
• Price point dropped to ~$20/mo, but $0 COA.
• Co-developed forecasts of 1-2K new/mo in +12 mos
Also convinced major promotion publisher to align & outsource
digital products.
Investors delighted, began aligning product and delivery team for
the channel model.
Assessment: Wow, if this works…

21. Going to Market
 Large-scale SMB Solution Providers
The 12-month journey, post contract
• New product was being added to a kit bag already
full = continual jockeying for sales team attention.
• 3 product launch delays took revenue start from 4
months to 12 months.
• Two new CEO’s, bankruptcy protection.
• New strategic plan cancelled new digital products
to narrow focus.

22. Going to Market
X
X
X
 Direct Sales
 Agency Channel Partners
 Large-scale SMB Solution Providers

23. Our Big Mistake?
 We had P/M fit, so we just went
about hunting for the best
channel.
 There simply wasn’t a viable one
that could confidently deliver
venture returns.
 We raised money ahead of a
proven channel model, and relied
on proxies and promises to “sell
the go-to-market” to investors.

24. How’d it end?
 We saw the signals and we had stayed very
close to our market.
 We began hacking a new product that we
saw as a bigger opportunity.
 Much bigger, to our delight.
 Launched our second major product, Perch
App, pre-MVP mid 2012, MVP end of 2013.
 #1 Mobile Business App SXSW 2013. From
10 to 60K small business users YTD.
 Brought on two new venture funds.

25. Minimum Viable
Channel
Assessing Your
Business Viability
 Zoom Out
 Own Your Boiler Room
 Always Be Tuning
Raw content brain dump, to be
refined.

26. Zoom Out
Get to Know Your Real Scale
 Capture your macro market size and
metrics, park it in PowerPoint.
 Ground-up math is critical
 Truly addressable market, bottoms-up.
Don’t use “x% of $yB”
 Spend most of your time on 2-yr view
 Dive into demand size proxies
 Watch how your customers buy/use
 Bottoms-up tips
 Live your business. Cut your
“Techcrunch time” in half!
 Learn how your competitors sell &
market, follow their shifts.
 Be authoritative on your addressable
market and dynamics.De-risk for VCs.
Put your business in context of
Opportunity Scale, Competition,
Industry Structure.

27. Competition
Don’t rest on past behavior,
dissect current behavior.
Everyone is in motion.
 What are their strongest clients or use
cases?
 Get to know their executives, especially
most recent hires
 Board and new executive composition
is a key predictor of forward behavior.
 Find ex executives, customers,
call/interview them. Use Linkedin,
Quora, Glassdoor.
 Dissect job postings to assess product
plans/intentions
 Seek your independent board
members
Drill down, continually, deeply.
Spend time with non-competing
businesses selling into same
space. Learn from their go-to-market
experiences.

28. Industry
Structure
Score yourself, these are key
drivers of M&A exit success,
and ergo – VC interest.
 Product has high leverage or agitation
value.
 Diversity of customers, low risk of
customer concentration.
 Opportunity to build defensible
leadership position.
 Large liquid competition with no clear
activity or next 12-month intention in
your product.
 Multiple competitors or complementary
businesses with history of growth via
acquisition.
Where does your business fit in
the value chain of your market?
Are the dynamics right for a high
quality future exit?

29. Your Boiler Room.
Own it!
Continual iteration on sales
model and messaging is
mission critical.

30. Knowing your
channel model.
Example from QuickMVP.
Hacking your model with
iterative testing of messaging
and pricing, using Google
Search as measure of market
size.

31. Assessing the
Indirect Path
 Assessment Check-list
 Does your product fill a gap that the CP is
seeking out?
 How well do your best fit customers align with
their customers?
 Is your product an “education sale” or an
“execution sale”?
 How does your product stack up in
compensation and incentive to the field?
 Is your CP well funded and have a history of
quality partnerships?
 Is there a process in place for direct feedback
from sales and from customers on your
product?
 Live the People
 Talk to a handful of the reps
 Sanity check with customers
Remove yourself from direct
customer control very carefully.
Investors don’t like to see loss of
customer control. Indirect is most
often viewed as an expansion
stage strategy when the product
and messaging have matured.

32. Always Be Tuning:
Your
Messaging.
 “Product-market fit is not simply about
getting the product to fit what the market
needs, but describing why it matters to
the market.
If you do not get the message right, there
is no way you will be able to scale up
because you will get stuck explaining
what you do.”
 “If the purpose of enterprise sales is
helping customers get through their own
internal buying processes, strong and
clear positioning empowers internal
evangelists to help close deals.”
Work it, rework it, rework it.
Listen to how your customers
describe you.
Adapt to each key Use Case.
Mark Birch Tom Tunguz

33. Always Be Tuning:
Navigate your shift
from beta
customers to first
market wins.
 First customers calibrate your growth.
Your growth calibrates your access to
capital.
 Assess your highest leverage Use Cases
or Ideal Customers.
 Go outbound, message uniquely to each segment
 Avoid “FIFO” and sales rep led targeting
 Build a growth hacking discipline.
 @Perch hundreds of iterations created advantage
in low COA
 Start thinking #SalesHacking [very 2015!]
Organize to win the highest
leverage use cases and impactful
advocates.

34. Pulling These
Thoughts
Together
 Don’t assume MVP gives you a viable
business.
 Take the time to do a clear-headed
evaluation of your opportunity and
test/hack your go-to-market model.
 Investor dialog is where a lot of this
gets surfaced creating the wrong
dynamic.
 Do your MVC homework, THEN go to
investors!
 What you learn will either:
 Build your confidence and prepare you
well for investment & execution.
 Or, it’ll depress the hell out of you.

35. Following Up
 Some People I Follow:
 Tom Tunguz, Redpoint Ventures
 Mark Birch, Birch.co
 Sean Ellis, GrowthHackers.com
 Some Tools
 QuickMVP, Crunchbase, Quora,
Glassdoor, SimilarWeb.com,
Conspire.com, LinkedIn,
Twitter: @perryevans
perry.evans@gmail.com