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Archive for February 2010

Pros and cons of Push and Pull product positioning and differentiation

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In my view, there are two types of product positioning and differentiation: Push and Pull.  Both have benefits and drawbacks.


A Push positioning and differentiation strategy assumes that you understand the market and your customers well enough that you can come up with some positioning that sets you apart from the competition.  You have a vision and hypothesis about why you’re different and better, and you push that message to the masses, without extensive customer validation.

Pros: To develop this kind of positioning, all one has to do is look at the competition’s literature and come up with positioning that seems sufficiently different from the alternatives.  Potentially saves time because it can be done without speaking to customers.  Maybe a good first step in developing a go-to-market strategy.

Cons: The competition may have it all wrong and have no idea about what customers really want, so trying to work around the competition’s messaging may be pointless, since they all have it wrong anyways-and you probably do too since you haven’t spoken to any customers!


A Pull positioning and differentiation strategy implies that your customers tell you what features, functions, positioning, and messaging that they find most compelling.  You use these “pulled” items as the crux of your messaging and positioning versus a hypothesis about the messaging and positioning that will resonate with a customer.  This is how the Customer Development guys would argue that you should develop your messaging and positioning.

Pros: You’re using positioning and messaging that has been validated by numerous potential customers in your target market.  These are the reasons they see your solution as different…and who are you to argue with the people who have the money?

Cons:  Requires extensive customer interactions to identify the things that customers feel are the differentiated features of your product.  Easier said than done and may require several, iterative cycles of customer interaction.

What are your thoughts on Push vs. Pull?  Are there certain markets or types of products where one strategy is superior to the other?

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Written by John Gannon

February 21, 2010 at 2:14 pm

5 ways to recognize a good Startup Salesperson

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Over the last couple of years as I’ve been deeply involved in startups as an early stage investor and now operator, I’ve noticed that one of the most critical pieces to the puzzle is the 1st salesperson.  Startups in particular require a certain type of salesperson that has a set of key traits, and those traits can be very different than those desirable for salespeople selling into existing markets.

Here are 5 traits that I think are key to identifying good startup salespeople:

  1. Most or all of selling experience is within startups – A salesperson who has had great success for 20 years selling for big, established tech companies is probably not the right person to build your team around.  You need someone who knows how to sell the company vision AND who can close your first couple of deals to early adopters, even though your product is pre-release or newly GA.
  2. Wants a leveraged compensation plan – This person will be comfortable with a lower base as long as they have a package that is heavy on commission and equity.  They are motivated by cash but take the equity portion of the comp package very seriously, because they believe in the product and the company vision.
  3. Doesn’t need a big expense budget – Your startup barely has enough money to pay the employees, let alone pay for a couple of Morton’s steakhouse dinners every week.  Make sure your salesperson isn’t going to need to use expensive activities to generate prospects or sales.
  4. Can sell the product as spec’d – The startup salesperson should be able to find prospects who will buy what the development team has built.  This will be harder than finding prospects who will buy your product if you add a few additional features, but the benefit is that you’re not bloating your feature set and doing custom development to win every deal.   There are many startups that fall into this trap, and its hard to move from here into a repeatable scalable sales model.
  5. Shouldn’t be aVP of Sales’ type –  You will need a VP of Sales if you figure out a scalable, repeatable revenue and sales model and need someone to manage your growing sales team.  Until then, stick to the folks who are hunters, love selling startup company technology, and enjoy having a huge territory in which to sell.
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Written by John Gannon

February 17, 2010 at 8:00 pm

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Scaling MySpace, Farmville, and Second Life

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James Hamilton of Amazon Web Services wrote up some nice posts about how MySpace, Farmville, and Second Life handle huge amounts of bursty traffic.  Interesting reading if you’re in the business of building high volume web services.

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Written by John Gannon

February 16, 2010 at 4:42 pm

Bessemer Pre-MBA VC role

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(Thanks to Mark Davis who forwarded this one to the Blue Venture Community List)

Venture Capital Analyst at Bessemer Venture Partners

Location: Greater New York City Area10010 (Greater New York City Area)


LinkedIn Exclusive — this job is available only on LinkedIn

Job Description

BVP is seeking an investment analyst to join the firm for a two year analyst program. The analyst role is ideal for someone who is self-motivated, competitive, passionate about technology, and excited about the opportunity to speak with hundreds of entrepreneurs. The position is located in the firm’s Larchmont, New York office, which is 35 minutes by train from Manhattan.

Analysts gain first-hand experience with the full breadth of venture capital activities and work on the cutting edge of business, technology, and innovation. BVP takes a “roadmap-driven” approach to investing by developing investment theses in sectors that are ripe for innovation and proactively reaching out to companies within these areas. Analysts serve a critical role in working closely with Partners and Associates to map out investment roadmaps, predict emerging trends, and identify exciting investment opportunities.

Analysts’ primary responsibility is to interact with hundreds of entrepreneurs each year in an effort to originate new investments for the firm. Analysts are given the opportunity to work in a wide variety of sectors— including consumer Internet, online retail, mobile, enterprise software, financial services, healthcare IT/services, cleantech, and emerging areas of technology. Analysts also work closely with the firm’s senior professionals to develop investment roadmaps and conduct due diligence processes associated with these opportunities.

The Analyst position provides a unique opportunity to experience the role of a venture capital professional, speak with hundreds of executives at high-growth technology businesses, and gain exposure to all aspects of the venture capital investment process.


Job Requirements

– BA/BS from Ivy League or equivalent institution.

– Outstanding academic record with significant campus leadership experience/extracurricular achievements.

– Intellectual curiosity and passion for technology/entrepreneurship.

– Basic understanding of business and accounting, but extensive study in these areas is not required.

– Comfort proactively contacting and speaking directly with CEOs of companies.

– One to two years of prior work experience at a leading investment bank, consulting firm or technology business is preferred. Outstanding graduating Seniors from the class of 2010 will also be considered.

– Two year commitment in the New York office. Select analysts who demonstrate exceptional performance will have an opportunity to stay for a third year.

Company Description

Bessemer Venture Partners (BVP) is the oldest venture capital firm in the United States, carrying on a tradition of active venture investing that has continued since 1911. With offices in Silicon Valley, Boston, New York, Israel, and India, the firm manages one of the largest venture funds in the industry. Over the past 30 years, BVP has taken more than 100 companies public and generated top-decile venture returns.

BVP was an early investor in dozens of companies that have fundamentally changed industries, including Skype, Postini, LinkedIn, Yelp,, VeriSign, BladeLogic, HotJobs, Gerson Lehrman Group, LifeLock, Gartner, International Paper, Maxim, Parametric, Staples, Veritas, Parallels, Sports Authority, and W.R. Grace. BVP invests across investment stages and across all areas of high technology—including Internet, software, digital media, cleantech, biopharma, healthcare IT, and financial services.

Job ID: 844169

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Written by John Gannon

February 6, 2010 at 4:01 pm

Observations 6 months after leaving the VC business

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Two boys jumping & diving. Dos chicos saltando...
Image by Xosé Castro via Flickr

It has been a little over 6 months since I took the plunge and left L Capital Partners to join VMTurbo.  It has been a great move so far and a huge learning experience.  Unfortunately, this move hasn’t been helpful in maintaining a regular blogging schedule (See “Prioritize relentlessly” section below) so this post has been a long time coming.

I hope some of these personal experiences and observations are helpful to some of my VC friends who have always toyed with taking the plunge, as well as people who may be thinking about careers in VC or in VC backed startups.

And if you’ve played on both sides of the ball, or have thought it about it, chime in with your thoughts.

1) Prioritize relelentlessly. If I was 23, unmarried, with no kids, I could devote 80 hours a week to work.  In fact, that sounds like many weeks at my first startup.  However, I’m now 32, married, and have two kids. :)  Therefore I need to make every working hour as productive as possible-it is just not an option to work on the wrong things.   Fortunately, startups are about results and not “ass time,” so I can be creative with how and where I achieve them.  Another good reason to set 3 goals per day and per week, and devote yourself to crushing them, instead of having 10 TODOs and doing a mediocre job on all of them.  (Better get this blog post done and get back to work…)

2) Beware of spinning your wheels on way-too-early business development. So far I have not heard (or witnessed) any good reasons to put much effort into seeking partnerships right off the bat.  In the software biz, business development is all about taking your product and combining it with the products of other companies to develop a Whole Product.  When you are still doing Customer Discovery and Customer Validation (see Blank and 4 Steps to the Epiphany), you’re still trying to figure that stuff out and aren’t going to have much of an idea of where you can plugin with other companies to make that Whole Product.  An exception to this caveat would be opportunities to use APIs as business development, which in an ever more cloudy world would allow you to create a Whole Product without having to cut any deals.    However, for most behind-the-firewall enterprise software stuff, an APIs as BD strategy isn’t going to make much sense.  (BTW I have heard from friends doing mobile startups that BD is critical in the early stages…so your mileage may vary with this particular tip.)

3) Learn to love “The Ask“. In a startup, you’re constantly asking prospects to take the next step, asking for introductions, asking for feedback, asking for money, asking for references.  You’re constantly asking, when often it is not immediately clear to the receiver of “The Ask” what the benefit will be.  Nothing at a startup happens unless you make it happen-and making stuff happen usually requires an “ask”.  So get comfortable with it!

4) Business development skills and personal network are highly transferable between VC and startup...  Warm intros and getting people to take my calls/emails was a big part of my job as a VC, and its a big part of my job at VMTurbo.  If you’re looking for an escape hatch, moving from VC to business development at a startup is a pretty logical move, and one where your industry network will have the most impact.

5) …and those due diligence tools come in handy, too. Startups play in a world of imperfect information and compressed timeframes, as do their investors.  Being able to get a quick handle on markets, competition, and processes is very important when you’re trying to quickly determine the best route to market, or to pivot and investigate new processes or markets when the first set doesn’t pan out.

6)  Fail.  It’s OK-really. Given the uncertainty within and around early stage startups, there is a better than 50% likelihood that any decision you make on any given day will be wrong.  I’ve never been wrong so many times in such a short period of time :) Just means you need to fail faster.  Get your minimally viable product to the market as fast as possible, hear the feedback, iterate, lather, rinse, repeat.  This really hits home once you actually try it, because you find that erring on the side of releasing something what seems like “too early” is actually the best way to get feedback.  Customers engage most deeply when they can see and touch.  Slide decks and landing pages are nice and can certainly help gauge demand for a solution to a problem, but there ain’t nothin like the real thing.

Update: Here are some great perspectives provided by two other VCs who left the industry, Sarah Tavel (formerly of Bessemer) and Sam Gerstenzang (formerly of a16z).

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Written by John Gannon

February 2, 2010 at 9:47 pm

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