Here is the transcript–edited for clarity and hyperlinked for context–for my recent interview with Floyd Tucker of DreamSimplicity Marketplace:
FLOYD TUCKER: Good morning, this is Floyd Tucker with DreamSimplicity. I am here with Sean Murphy, the CEO of SKMurphy, a consulting firm that focuses on high tech startups. Sean, you started SKMurphy back in 2003 and now have a team of six consultants helping high tech startups generate a repeatable, scalable business. You are also the founder of Bootstrappers Breakfast, which is now in eight cities.
Sean, thanks so much for being with us.
SEAN MURPHY: Good to be here.
FLOYD TUCKER: Sean, you have a passion for entrepreneurs: what drives your passion to work with bootstrappers and startups?
SEAN MURPHY: The neat thing about early stage startups is that everyone is really customer-facing.
It’s a small boat, there’s no place to hide. And for that reason, you are more able to take risks to get somewhere. You can’t stay where you are: you’ve got to move forward.
Big companies can solve harder problems in some sense, but they’re typically more constrained by politics and by other kinds of challenges. Small firms tend to be more innovative and more energetic.
FLOYD TUCKER: OK. Is there a certain formula for startup success or is each one unique and blazing their own trail?
SEAN MURPHY: Each team is unique. They have unique skills, unique talent, and a unique background. That being said, we normally a see five stages that teams go through.
FLOYD TUCKER: What are some of these milestones that you’ve been seeing?
SEAN MURPHY: In the beginning the real questions are:
- “What’s the problem we’re going to solve?”
- “What’s the product we’re going to develop?”
That’s the formation problem.
To get open for business you’ve got to figure out who’s going to be on the team. Who’s going to be part of this company?
Once you’ve got the team set, your next question is who will be the early customers. Who is your customer?
If you can close some business, you can now say, is there a niche we can identify, is there a business model we can sketch out here? Pricing points, all the things that are involved in actually creating a sustainable business.
And finally, when you’ve got it sustainable, can you make it a scalable business? Can we scale this up? Can we transition from heroic efforts to routine, excellent performance?
FLOYD TUCKER: I understand the formation around a product, and of course be open for business. Can you tell me a little bit about the early customer stage?
SEAN MURPHY: We just spend a lot of time on this. It’s a very different sales style than you’ll see later on. It’s a conversational sales style. It’s much more about understanding the problem.
You’re trying to solve three equations, three unknowns:
- Are you talking to the right people?
- Do you have the right features?
- Do those features translate into benefits that are going to be useful to them?
FLOYD TUCKER: What’s involved in the scaling up stage?
SEAN MURPHY: This is actually a hard problem for a lot of founders. Because most people don’t go to startups to create processes and establish structures. They go to startups to make their own rules and to improvise new solutions.
So the challenge is really the transition from the heroic to the routine.
I think the other aspect of that is that the people that tend to do well in the early stages of a startup tend to be generalists. To prosper, to scale up, you’ve actually got to hire specialists that are good in a particular position.
And you’ve got this transition to the need for more process and the need to hire specialists, so things are not as fun anymore. Now, they may be much more lucrative, but they’re not as fun.
FLOYD TUCKER: I feel I have a good understanding of the roadmap that we’re talking about. Can you give a couple of examples of some of the common issues that you’ve seen?
SEAN MURPHY: A lot of people when they start companies are in the grip of a vision. They see this full-featured product. They see this Death Star or “Swiss Army Chainsaw” that’s got all this stuff, right.
And the reality is that customers are only going to buy for one or two reasons.
So you really have to focus on “what’s the least that we can do to start to be able to sell?”
Because if you’re bootstrapping, you have to sell sooner rather than later. So what’s going to move the needle for the customer.? And it’s ultimately where you’re going to get their perception of value.
So the challenges are:
- slimming your features,
- understanding what the customer’s time table for buying is, and
- understanding what the customer values about what you’re offering.
FLOYD TUCKER: Given the fact that most startups have limited resources, with time, money, personnel being issues for them, why should they look to outside advisors?
SEAN MURPHY: Founding teams bring a lot of passion to what they’re doing. There’s often what you might call “a full and frank exchange of views” around certain topics.
It can be useful to have people you trust, whether it’s friends, acquaintances, people you have worked with. On an informal level, you can bounce ideas around with. That gives you a kind of emotional perspective, or emotional distance, right?
Formal advisors can do the same thing for you; they may also be more familiar with some of the early market issues.
As you formalize that process, half of the value is actually in the team coming together, agreeing on a set of objectives, agreeing on a story and then getting feedback as a result. It’s half in the preparation and half in the delivery. So I would say it’s perspective, it’s getting used to setting targets formally.
FLOYD TUCKER: So, Sean, as founders get closer and closer to market, what are some of the things that you see them getting stuck on?
SEAN MURPHY: Many times, the founders, in the beginning, will sell to people that already know them. And so, a couple of things happen as a result:
- They really don’t really understand why people buy. Because it could be that they were more “a friend doing you a favor”.
- They don’t realize how important the process of establishing trust is. And so they undervalue that, and it trips them up later on.
- And they don’t know who to sell to next, because they’re out of friends.
Another thing that can happen is that an early customer may use a product in a certain way that’s different from what the team anticipated. And the team is in the grip of the vision, their thing is “hey you’re using my product wrong!”
When in fact, what they may have done is to point you to where the market really is.
FLOYD TUCKER: Sean, I want to thank you for your time today, but I do have one last question for you. You know, to me you don’t sound like a traditional marketer. How do you differentiate yourself?
SEAN MURPHY: So, the people that come to us, that are bootstrapping, are unhappy with current level of revenue.
We focus on revenue. Whether that means that we are doing sales process, we’re doing marketing, we’re doing business development, what we call customer development that covers all of those.
FLOYD TUCKER: So Sean, thanks so much for spending some time with us. To learn more information about Sean, and SKMurphy, visit SKMurphy.com and bootstrappersbreakfast.com.