The Resilient Entrepreneur, Edition #71
Hi there
I hope you had a great week!
Here are the topics in today's edition:
- Lonely Leadership Decisions: Insights into Silent Battles
- How to Find Product-Market Fit in B2B SaaS: Large vs Small Customers
Please reach out if you have comments, questions, or suggestions for articles!
Talk soon 👋
Tom
LEADERSHIP FOR RESILIENT ENTREPRENEURS
Lonely Leadership Decisions: Insights into Silent Battles
Lonely leadership decisions are part of every leader’s job. How to handle tough choices, decide with partial knowledge, and trust your gut.
During my years working for an airline, many of my colleagues have undergone the upgrading course to become airline captains. It is widely known that this is the most important and also the hardest training a pilot can get.
When I met one of my colleagues for the first time after his captain’s upgrading, I asked him what it is like to be a captain. He said, without hesitation:
“As a copilot, I would look left to the captain when a problem came up. When I look left now, I only see the clouds.”
Although I am not a pilot, I love this perspective. You don’t have to be the President of the United States, the commander-in-chief of an army, or the CEO of a multinational conglomerate to know it’s lonely at the top. Airline captains, startup CEOs, and even single parents often have to make serious decisions without having anybody to turn to. That doesn’t mean they don’t have anyone to talk to, but in the end, their decisions are often very lonely.
Taking lonely decisions is easy when options are black or white, or when decisions don’t have huge consequences. To stay with the airline jargon: “Chicken or beef sandwich?” That’s an easy decision to take, with zero long-term consequences unless you are allergic to either chicken or beef. And if you are, the decision is easy to take, too.
Black or White? No, Grey
Let’s change worlds and dive into the grey areas of life. As the Founder & CEO of Yonder, a B2B SaaS company, most of the decisions aren’t as black-and-white as chicken or beef.
Promising Features
Shall I promise a certain feature to be developed and available by a certain deadline? What happens if I don’t promise it? Will I lose customers? What happens if I promise it but don’t make the deadline? Will competitors win over customers from me? How can I promise a certain feature before I know all the technical details to be considered?
Merging Teams
What happens if I merge two teams? Will efficiency and collaboration improve, or will we just shift the hectic? How will the affected team members react to the proposed reorganization? Are there any signs that some aspects of the reorganization will create new problems?
Saying Goodbye to Colleagues
How do I tell a person that it’s time to leave? Some people are great for the jungle phase of a startup, but they aren’t for the more structured dirt track or even highway phases. When did you notice for the first time that this person — although having contributed to the success of your company — is not the right fit anymore? How are you going to tell the person, and what specific facts will you use in this unpleasant meeting? Have you thought about the reactions in the affected team?
Finding Investors
How do I get the commitment of a lead investor for a financing round? Is everybody hesitating because the valuation is too high, or because growth is too slow? What will happen with my existing investors if I agree on new terms with a new lead investor? Will everybody start following once I have that new lead investor, only for the round to be oversubscribed? Or will nobody follow, with the round eventually dematerializing and leaving me out in the rain? And if that’s the scenario, was my agreement on new terms with that new lead investor the root cause, or something else?
Anticipating Problems
What do I do if a customer doesn’t pay their overdue invoices for months? Factoring and debt enforcement are easy in your home country, but how about far-away countries such as Saudi Arabia or Malaysia? And before you start debt enforcement and threaten to suspend SaaS service, can you find out what’s the true reason why a customer doesn’t pay? Are they unhappy with your service, corrupt, overly bureaucratic, or close to bankruptcy?
No Right or Wrong Answers
Twist and turn those questions the way you want, there is only one certainty: There is no right or wrong answer to them. Even with all the thinking, talking, and decision-making methodologies in the world, nobody can guarantee that your decision will be right in the rearview mirror.
I can guarantee you two things only: First, if the decision proves to be a good one, everybody will expect you to pass the kudos to the team, and stand back. Second, if the decision proves to be a bad one, everybody will point their fingers at you.
Let’s return to aviation. An airline captain in a troubled situation needs to make a decision within the shortest possible time, using only the information he or she has available at that time. It’s easy (and pointless) to debate after a safe landing (or — God forbid — a crash) what should have been done differently, had the captain known X or Y.
The same goes for product development, hiring and firing, and fundraising. Always assume decision makers have good intent, but respect the fact that they operate with partial knowledge, and they too are human and hence will make mistakes.
Listen to Your Gut Feeling
Retrospectively, many big problems I had to deal with brewed slowly over time. They brewed because it’s easier to delay a lonely decision than to make a bold decision with an unknown outcome.
However, whenever problems exploded in my face, my inner voice always told me that I would have known for a long time that I would have to solve the problem with a bold but lonely decision.
Even if you’re an analytical person, always listen to your gut feeling.
LIFE HACKS FOR RESILIENT ENTREPRENEURS
How to Find Product-Market Fit in B2B SaaS: Large vs Small Customers
Explore two paths to product-market fit in B2B SaaS—targeting large or small customers first—and understand the trade-offs of each approach.
Excitement is in the air. You have just founded a new company, and you and your co-founders set to work. What do you need to do?
Forget the company registration and the setup of your website.
Start working on your product immediately because that will earn you money.
Founders should spend 99% of their time on product questions, focusing on finding product-market fit as quickly as possible.
But what does product-market fit mean? Product-market fit means that your product solves a real problem for a clearly defined group of users — so effectively that they are willing to pay for it, continue using it, and recommend it to others.
Now the difficulty is not just to build a product that solves a real problem, but find the clearly defined group of users that will pay for your product. You can have an excellent product that doesn’t resonate in the market because you are talking to the wrong group of users.
From my experience as Founder & CEO of Yonder, a B2B SaaS company, let’s look at two possible ways to find product-market fit.
Option 1: Serve larger B2B customers first
This is what we did at Yonder. We had solid knowledge in the documentation software sector from our professional experience at Swiss International Air Lines. So it felt natural to target customers similar in size to Swiss International Air Lines, and that’s how we found our first customers.
A few months after launching Yonder, COVID-19 struck, and our sales pipeline in the aviation sector was eradicated within a split second. We decided to venture into different verticals, successfully finding customers in the critical infrastructure sector. And guess what: Those customers were also larger B2B customers.
The advantage of targeting larger B2B customers is mainly the larger average deal size: You need fewer customers to make a living. Furthermore, larger B2B customers tend to be more sticky and have longer contract durations, as they have to go through lengthy procurement exercises before awarding a contract.
On the downside, sales cycles will be much longer, and the buyer universe is smaller: There aren’t that many larger B2B customers in your market. Furthermore, larger B2B customers will have many functional and non-functional requirements you will need to meet before closing your first deal.
Option 2: Serve smaller B2B customers first
At Yonder, we only gained our first smaller B2B customers in a second phase — when we expanded our marketing function.
That’s the main advantage of targeting smaller B2B customers: There are many of them, and targeting them through a largely automated marketing function is easy. Also, sales cycles are typically shorter than with larger B2B customers. Last but not least, the functional and non-functional requirements will often be lower for smaller B2B customers than for larger B2B customers.
On the disadvantages side, you will need many smaller B2B customers to make a living. Therefore, you must automate onboarding, billing, and interaction much earlier if you serve smaller B2B customers. Smaller B2B customers will also churn much easier than larger B2B customers, by simply not renewing when their renewal comes due.
Conclusion
If I could start all over, would I target customers the same way we did it? Probably, yes. Solving the pains larger B2B customers have with electronic documentation and then transferring the value to smaller B2B customers is a good strategy. However, I would strengthen the marketing function much earlier than we did: You can’t just target smaller B2B customers, but also larger B2B customers with an effective marketing machine.
Is our way the only way? By all means, no. Some of our competitors follow the same approach as we do, while some other competitors first focus on smaller B2B customers before taking on larger B2B customers.
As usual in entrepreneurship, there isn’t black or white: Entrepreneurs must find the specific way that works for their product and their clients. There is no shortcut to product-market fit.
About Me
Growing a company 📈 in uncertain times 🔥🧨 is like running a marathon — it demands grit, strategy, and resilience.
As a tech entrepreneur 💻, active reserve officer 🪖, and father of three 👩👦👦, I share practical insights and write about my experience in entrepreneurship, leadership, and crisis management.
When I’m not solving problems, I recharge and find inspiration in the breathtaking mountains 🏔️ around Zermatt 🇨🇭.
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