One of the fastest ways to go out of business is by spreading yourself too thin. Most people operate this way because they lack a cohesive business strategy.
Knowing that strategy is crucial to your success, I sought out a proven practitioner to reveal everything you need to know about strategy, from what it is and what goes into it, to what to implement and how to communicate it.
In this episode, I sit down with Ken Cho. Ken is an experienced entrepreneur and the cofounder of multiple venture-backed startups including Spredfast and his most recent venture People Pattern.
Not all mistakes in business are avoidable, but executing without a strategy definitely is. You owe it to yourself and your team to learn from Ken and set your startup on a definitive path.
Have comments, questions, ideas, or feedback? I want to hear it. Tweet me at william_griggs.
Topics Covered In This Episode
- What impact can a bad strategy or no strategy have on a startup?
- On the flipside, what impact can a good business strategy have on a startup?
- When I say “strategic” what company come to mind and why?
- How do you define strategy inside of a startup?
- What are all of the different components that make up a startup’s strategy?
- How do you build the right strategy?
- Who needs a say?
- Can it be validated?
- How do you get alignment on direction?
- How do make sure your company stays on strategy? How do you communicate it?
Ken Cho: William it’s a pleasure. It’s a thrill of a lifetime
William Griggs: Thrill of a lifetime I’m sure. I’m sure you know you’ve launch multiple successful companies. You have done a lot with your life. But this I’m sure is probably I don’t know you tell me. Is this the best thing that ever happened to you?
Ken Cho: It’s the third best thing that has happened to me.
William Griggs: Okay, what’s one and two?
Ken Cho: I’ll be honest with you, marrying my wife is the best thing that ever happened –
William Griggs: Okay, in case she hears it.
Ken Cho: And the birth of my two children are the second and this is a close second. But I have to put it as third.
William Griggs: Okay, perfect. So, when your kids grow up a little bit more and they listen to this broadcast. Yes they know where they stand right behind their mother.
Ken Cho: Exactly.
William Griggs: But ahead of this broadcast.
Ken Cho: That’s right.
William Griggs: The audience knows over here knows that I teased a little bit in the introduction about your background. We have a simple goal but it’s the powerful goal for this episode. So we want to have founders listening to get what they need to know about strategy for their startup. We had Dean on from Eagle Eye Networks and Barracuda Networks and he talked about a couple of things. He talked about the two biggest things from his perspective in executing a startup is tragedy and executions.
So I found you on the capital factory vendor website, I don’t into your background. You look like you have the perfect kind of a fit for this tragedy episode to do with that we are going to kinda dig into your experience and pull out some actually role, knowledge nugget our audience can use that. But before we do that we do like to give the guests the chance to kind of state their case. As far as to why are you the right person to talk to about strategy and what your background is as well, as what you’re currently up to at People Pattern?
Ken Cho: Yeah, well thanks for giving me the platform to talk about what I think about strategy. You know strategy again from my standpoint once you start to learn or understand through mistakes – through my mistakes. You can understand kind of – there is a playbook that you have to run when you are an entrepreneur and the playbooks are different by vertical but in terms of the SA software vertical there is a play that I think can be used for multiple or for other founders of SA software. And I learned it. I learned it through:
A.) Through luck.
B.) Through experience.
And through that experience I made a lot of mistakes so you know this is my second SA software company. My third start up all together but my second SA software company and I’ve applied the things that I’ve learned in my first SA software company spread fast to People Pattern and it’s really compress the timelines and kind of the success metrics that that most entrepreneurs and investors look for. So you know that’s my case, I have the experience. I made the mistakes and this is why I’m here on the broadcast and hopefully someone could learn something from my experience.
William Griggs: For sure. I’m confident they will and I am confident you know that they know a little bit more about your background, they’re not going to turn this broadcast off and go I don’t know watch Gilmore girls, or any other television show that they’ll warp their brain, their gonna stick with it and they’re gonna listen throughout. So that was a great summary. So let’s just hop into kind of the first topic. If we’re thinking about strategy. What can you know a bad strategy or new strategy what kind of impact can that have on a start?
Ken Cho: Yeah, so like I mentioned before, the impact on a bad strategy – the impact of a good or bad strategy. It’s about time right can either compress your timelines or you can elongate those timelines. If you elongate them it’s going to cost you more money, right? Ultimately it comes down to how much cash you have in the bank. If you can execute on your strategy and you don’t have any hiccups you know, that means you’re going to have a compressed timeline that means that’s going to be less burned on you. And so a bad strategy ultimately is going to put you in a cash crunch and every entrepreneur knows what a cash crunch feels like.
It is not a good thing, you start to panic, and it starts to snowball if your strategy incorrect and you know you’re going to have to pivot. And what I like to say and I like to quote my current investor Brian Stoolie is, “A pivot means you know it’s not a badge of honor. It means that’s who fucked up.” Right so that means you have to raise more money or you have to put more money and that’s really the impact of what a bad strategy would do to you. It will impact it will impact the bottom line because it will elongate your timelines.
William Griggs: Got you elongate your timelines could lead to failure. On the flipside, what impact have you seen a good business strategy can have on the startup?
Ken Cho: Yeah, you know, in terms of that obviously you have more cash in the bank, but it also creates momentum outside of the company for recruiting purposes. It also helps with attracting partners in terms of business development. It also attracts new customers. Ultimately, if people are comfortable about how you execute on a certain strategy and that strategy is right or a great product market fit. People are going to be confident in the ability of your company to execute.
So again, just as if you had bad strategy and you have that snowball effect into all these negative things of cash burn and people leaving your company a great strategy has the opposite effect. You know you will attract people, you’ll get the word out, people would want to be part of what you’re doing and ultimately clients who want to see what your product is.
William Griggs: Got it so it kind of cover up how bad it could be, we covered up recovered how good it could be. When I say if we take a step back and when I say something like strategic if I just use the word strategic what company comes to mind. And why?
Ken Cho: Yeah, that’s a great question. You know strategic in terms of these days I’d say Warby Parker’s is probably someone who I admire or it company that I admire when it comes to strategic right. They assess a certain vertical in this case it’s the eyeglass market. They did a lot of research around it. They didn’t have the background in the eyeglass market so it took a great strategy before they start to execute on it. And you know they truly disrupted that market. I really have a lot of – I really have a lot of respect for those guys at Warby Parker because they have done a fantastic job of understanding the market. How you’re going to disrupt it ahead of time and they executed against it.
William Griggs: That’s a good one so you talked about kind of the idea, you talked about the market. What are other kind of different components that make up a startups strategy in your mind?
Ken Cho: Yeah, you know, obviously there’s a lot of moving parts in a startups strategy. I just kinda serially put it out there:
A.) When you have a startup. You have to come up with the product basis.
Right it’s always – it’s always based around the product.
B.) Then you have to understand maybe do some research around.
C.) Is there a product market fit, is there a need in the market for that.
D.) Then you have to start building it.
Right and so understanding these steps and went to execute on them is pretty important to your overall strategy I think I just kind of repeated word or define what strategy is but it is hey, hypothesis around the product, is there a product market thesis around that. Can you find an early adopter or early customer and the customer I use that loosely you will need your use case right or someone was going to potentially use it, right? I say give it – at times to give it away, right and what you really want to understand is how the ultimately the end user is going to use your product, right.
I wouldn’t spend any money on business development, I wouldn’t spend any money on a sales – on a sales force at that point, you know I wouldn’t spend any money on marketing, right. It would be product, product fit, try to find a couple of use cases around that product, build the product to the point where you then want to build an inbound marketing engine, right. You feel like you could start to sell this product that you have. I would then start spend money on marketing there and once you start to build that inbound marketing engine I would then start to build up your sales force, right.
There’s a lot of different ways that you know I’m probably going into the minutia or the granularity of it, but then there is also a kind of within marketing there’s marketing plays and marketing strategies that as a SA software company that we would employ:
A.) Like I mentioned it before, building, and in marketing structure.
B.) Then building an outbound marketing structure.
C.) Then it’s analyst and cozying up to analysts there.
And so they are playbooks and strategies within each of those you know departments, products, marketing how these service fit in and then sales and that’s the way I created spread fast and that’s how I’m creating People Pattern. And you know I do have a good kinda sense of timing and when you should start to execute against your overall strategy.
William Griggs: Got you. So just to summarize it. It sounded like you started with a product thesis. Is that how you kind of view the world, you view kind of what you’re – what problem you’re trying to solve, and how you’re trying to solve it?
Ken Cho: Yeah it’s always start with a product thesis that’s exactly right:
A.) Is there a need for that product in the market?
B.) And then where does that fit in the overall market?
You know to be honest with you right now we’ve got four major use cases for People Pattern right now and those are four different titles that we are going after right. So what we’re trying to do is try to understand and prioritize which one of those four we want to go after in 2015. Right. You know that’s – that is to understand that strategy and the strategy to make sure your focus on one or two and not on four of them is something that entrepreneurs have to understand that you can’t do it all right, you can spread yourself too thin.
There’s not just enough money to focus on all four of those – on all of those four use cases right now. Yeah so that is kinda what we look at here at People Pattern and then this tragedy work we’re going for.
William Griggs: Yeah, so its product thesis, you talk about product market fit and making sure you have those use cases. Like you talk about you have those four use cases continuing or really starting to build up the active solutions so you’re not starting to build it out before you understand that there is actually need and that there is actually use cases. It sounds like you start building once you start to say some themes inbound engine, inbound marketing engine makes sense a lot because you know a lot of the cost is not to advertising are a lot of the other stuff that’s inbound.
You’re leveraging demand harvesting our around Google and SUO, and SEM to get some people in the door that might be looking for. You build up those early customer base may be that you have. You know referrals that you can get or testimony is that you can get from them, and then you start to bring on this is force and start to figure out that model that makes a lot of sense. Did I get that correct for the audience?
Ken Cho: Yes, that’s best exactly right. You know, in all of that kind of coincide to the metric is cash in the back right. So a sales force is expensive, marketing is expensive. You want to make sure that you put the money in the right places at the right time. And the right you know when your earlier on. It’s about building a product and understand that market – I rather spend my money on that. On developers and people focus on the product. Than a salesperson who has nothing to sell, right. So, it just makes a lot of – it makes a lot of sense and there.
William Griggs: Yeah, it makes a lot of sense. Then, so if we are developing the strategy and were getting feedback from the market and let’s say we are – if we’re not on the right track obviously, we can get that feedback we can be iterate, we can figure out our bur, we can manage all that stuff . But if we’re on the right track or if we’re still trying to figure out how do we actually go about communicating that to the company?
It seems like you know in the startup lots of things change day over day. You’ve got to make sure customer support is in line with project managements, in line marketing and all that good stuff. How do you think about actually communicating this tragedy out?
Ken Cho: Yeah, that’s a great question:
A.) It’s about transparency. In my world I want to know you know I want to make sure that the development team, the data science team understand where my sales team is on vice a versa.
Right if my sales teams say hey platform is not ready for prime time and I can’t say anything that sends a message back to my development team to say you know what do we need to make sure it gets to prime time? Right and you know as the leader of the company I have to make sure that everyone understands the impact and everything is measured. Right. So how you communicate that is through numbers, right? You can say we’re four months behind that impacts our forecasts by X amount of dollars, which means we are not cash flow, breakeven for another you know that extends our timeline out another six months right.
Where we only have money for two months right so that means I’m gonna have to go out and raise to make up that difference right. So the whole how everything ties together the only way you can have folks kinda understand their contributions or their impact on the company to have complete transparency around the Xs and Os of what sales does impact development what development does impact sales and marketing, right so vice a versa. I think the theme around that is:
A. You have to have goals in terms of metrics and goals.
B. And then transparency in terms of communicating those goals and where you stand against those.
William Griggs: And then as far as the after tactic of communicating this, is this in like quarterly company meeting? Is it in the weekly functional meeting how do you think through that process?
Ken Cho: Yeah, so there’s lots of layers of communication that we have at People Pattern and that I had at spread fast. I have the weekly all hands meeting so everyone in the company is they are on a weekly basis and I have every single department talk about what went well and what didn’t go well and what they need to be successful, right.
So that’s what we call the big table meeting here at People Pattern and that’s done on a weekly basis.
Also then have weekly one on ones with all of my management team to understand kind of – that’s again – that’s – understand what they need to be successful? What’s going well and what’s going wrong. And so that we have weekly communications, I’ll have lots of ad hoc one on one meetings not only with my managers, but with folks that are critical to a start and short term project or you know something that needs to get done in the short term. So it’s a lot easier – it’s a lot easier when you’re 20 people that it is when you are 200 or 2000 people.
William Griggs: Right. So we’d talked about the impact of what bad strategy can have or no strategy. We’d talked about how good it can be if you have a great strategy. We’d talk about the different elements inside the strategy. We’d talked about how to communicate out this tragedy to the team, to the leaders of each function. Make sure everyone is on the same page; get the feedback in from like you were saying sales.
So we can get that the product or we can get that engineering so we all know – everyone knows that the alignment is and what the focus is. You talk about being even before the transparency being goals and metrics driven, so you can hold people accountable. So you can have more to be transparent about. It’s not a loosely-goosey goal of doing this by you know, sometimes next year. It’s a very specific so people can be held accountable to that. We talked about a lot of stuff is there any one piece that we’ve missed that our audience should know about?
Ken Cho: Well, yeah. I mean one thing that I would like to kind of elaborate or enhance is the metric driven experience and having not only understanding the impact, but also as the leader of this company. I want to make sure that my employees or the company understands how we are valuated or evaluated from the outside right. So as a sass company, it’s about topline revenues and renewal rates right. Those are two things, and those are the two growth measurements that outside investors are looking for.
So I always kind of put that in terms of how our outside – how we are beings viewed on the outside. And why we are going after a certain metrics. And you know the sass world, it’s definitely topline revenue and renewal rates are you to type things so make sure you take care of your current customers, make sure that we’re going outbound, or at least building that seals engine and that marketing engine. So that we are trying to prove that topline right now, right.
And ultimately I think everyone – everyone at the company wants to know how that impacts your cash position. But understanding those fundamentals and how we are valued from the outset perspective is key to how we then measure our inside – our inside goals.
William Griggs: Got it. Very cool. That’s a definite piece that we needed to drive too. So thanks for bringing that up. If people want to connect with you on line or learn more about People Pattern. How can they do with that?
Ken Cho: Yeah, you could either connect with me on twitter at chonuff C – H – O – N – U – F – F or you can fire me an email at firstname.lastname@example.org.
William Griggs: Perfect. I’ll put the links in to people pattern and your twitter handle in this show Ken. Thanks for again for joining us today. It was an awesome episode.
Ken Cho: Thank you very much love being here.
Ken Cho’s Bio
Ken Cho is a recognized entrepreneur, enterprise social media software thought leader and co-founder & CEO of People Pattern. People Pattern, a VC-backed company, has developed a self-learning segmentation & user classification technology that leverages insights from both proprietary & open data to engage the appropriate audience segment with the proper message at the right time. Ken is responsible for guiding People Pattern’s overall product and strategic direction. Previously to People Pattern, Ken co-founded Spredfast growing it from 0 employees to over 120. Spredfast raised $34 million in venture capital. Its offering is aimed at big brands, designed to enable dozens or even thousands of employees within an organization to post from company accounts on Facebook, Twitter, YouTube, Google+ and LinkedIn. Spredfast’s Enterprise customers include Whole Foods, Starbucks, Target, IBM, Discover, Aramark, Caterpillar and Intuit. Ken serves on Spredfast’s Board of Directors.
In addition to his responsibilities at People Pattern and Spredfast, Ken is on the board of directors at KLRU, Austin’s public broadcasting station and home of Austin City Limits. Ken also serves on the Advisory Board for The University of Texas at Austin’s Master of Science in Business Analytics program. Ken holds a bachelor’s degree in economics from Wesleyan University and an MBA with a focus in marketing and information management from the McCombs School of Business at University of Texas at Austin.