We recently got the chance to sit down with Cyprus native and London resident Chrys Chrysanthou from Notion Capital at Bayzat‘s offices where we discussed some of the challenges of building a B2B tech business. Kauffman Fellows Chrys and our own Yousef Hammad led the lively conversation.
Here are some of the nuggets that Chrys shared during our chat…
- Beware of false positives. This is one of the biggest mistakes Chrys sees startups make. Be careful not to misunderstand traction, because it could be the wrong kind of traction, and keep on trying to figure out how big is the pain point, and who hurts the most. Is there a big enough wallet on the pain point? $1 million in run rate can still mean negative margins if you’re not scalable. Chrys says they took a company from manual delivery to an API which took them from negative to 80% margins, which at $100k revenue is a far better place to be.
- When and how you expand to a new market depends on your structure and culture. If you have one founder, it’s tricky to expand. If you have 2 founders, leave one behind. If you’re one founder, make sure you have enough time to hire, on board and ramp up someone to manage the home office.
- Consider Asia as your first new region to expand. Most US startups will stop in Europe first so you have a head start from MENA.
- Expansion is often more expensive than startups plan for. There’s always more competition in bigger countries, and startups often underestimate CAC in new and more competitive markets.
- Preempt commoditisation in your industry. If you’re in an industry that is quickly being commoditised, beware of Google and Amazon, however keep in mind that they are focused on the consumer and B2C. Instead of going mass, “productise it” as an easy to include API and find a big enough pain point for a specific use case.
- Free customers take as much time as paying customers. This is why freemium models tend to work better. When startups raise pricing, free customers are naturally shed, and entrepreneurs tend to have a knee jerk reaction to try to save them, often as a matter of identity. “We have 6000 customers” on a website isn’t a good enough reason to worry about getting those customers back.
- Product Market Fit is not a one time exercise, it’s an evolutionary process. Subscription models for recruitment platforms may not make sense for SMEs not looking to hire on a monthly basis. Introducing a “pause” feature means churn sees a massive drop, and the potential to reactivate customers is high. Playing around with tricks like this is critical to retaining customers.
- Use data to drive your decisions. Let go of your misconceptions about who your customer is. Test test test. This takes a lot of time but it’s worth it to determine your primary and secondary use cases. Make sure you set up the right systems to collect the right data points, and feed them back into marketing and product regularly.
- Don’t build new features because you think that’s what your customers want. Noise and complexity creates a pain point. Be firm in not jumping straight into building new features customers ask for. And do your best to capture the reasons for drop-off in real time, emailing them after they’re gone is a lost cause, they don’t care by then, but don’t underestimate the possibility of getting a customer back once you’ve build a feature they had asked for.
- You might have tech that’s differentiated for now, but commoditisation is coming for you. The next stage where Chrys believes the future will go is “Do you know how to sell this?” To adapt, move away from a horizontal approach, identify and train the right sales team within a verticalised market and build your moat. Pick the best of breed, put your secret sauce on it, and go crazy on a vertical. Then you will win.
Chrys joined Notion as Principal in 2015 from Accel Partners where he was a VP on the investment team focusing primarily on B2B opportunities, within infrastructure software, cloud computing, IoT/M2M and Big Data technologies.
Prior to Accel Chrys was at Amazon Web Services where he led Business Development efforts of the startup ecosystem, across Europe, Middle East and Africa. Before AWS he was COO of Living PlanIT, a B2B startup technology company in the IoT/M2M space, enabling the development of intelligent and sustainable urban-scale environments. Previously, Chrys worked at Cisco for approximately 10 years where he led Services-related investments and acquisitions worldwide. At Cisco he also worked in the IT and Operations departments leading teams across large scale business process re-engineering and enterprise software migration projects.
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Image courtesy of Helsinki Business Hub.