Simeon Simeonov

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• Hello Simeon, I just recently started a small guerrilla marketing business with two other partners. We really need some advice on how to get it off the ground. Im not sure if I have the appropriate materials ready to approach potential clients and even still, how can I do it effectively to secure a meeting? This sort of thing was never learnt in school.

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    The answer depends on the strengths & weaknesses of the founding team and your differentiation from everyone else doing this.

• Than you so much for your previous answer, it helped a lot...To follow up on your answer, you had mentioned something very interesting to me, incentives being a way to work with web developers to create lasting relationship. My question for you now is what types of incentives are we talking talking about?? Also what types of question would be wise to ask a developer you're doing business with?? Thanks!

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    It sounds like you haven’t done this before.

    You should try to find an advisor who’s hired lots of good web developers. It’s the only good way to prepare.

• Should I concentrate on scaling my user base if it's at the expense of revenue? What is better: 1 paying customer or 100 unpaid?

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    The answer depends on your business. What’s the value of an unpaid user vs. a paid one now and in the future? What’s the cost of acquiring a free vs. a paid used? Is it a winner-take-all market? When you did into these questions, you’ll find a path.

• My startup is an online video company almost 4 years old now and is only ready to start monetizing now which will bring in just hundreds of dollars per month, not thousands. Development, building up new videos, and building a community has taken 2-3x longer than forecasted. What types of questions from investors am I likely to get around these issues and adversity I've faced?

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    The questions may vary but the gist will be the same: what’s different now?

• Hi Simeon. We are an early stage bootstrapped web & mobile app startup for a niche job search market and are currently looking to build critical mass (of job seekers). The job providers won't pay for the service till this is done and we're not planning to charge job seekers so freemium and paid apps are out. Ads could be a potential model but we aren't currently keen about it as we feel they may hinder the user experience. Are there any other revenue models that you can suggest?

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    I agree that ads won’t work—you probably don’t have the volume of usage to make advertising revenue meaningful.

    I think you have a customer development problem. The fact that neither group of your users is willing to pay or adopt + use the service suggests that you have the wrong product and/or the wrong audience.

• I run a small business with $500k in revenue and intend to double it in size this year. In addition to recruiting the best talent, what systems would you advise founding to maintain stability and prevent problems that can commonly arise from aggressive growth? Thank you!

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    The answer very much depends on the business and the strengths/weaknesses of the leadership. You want systems to help correct for areas where you and your team are weak. Where people are strong, systems are much less needed.

    Side note: 100% y/y growth is not aggressive for startups.

• Who is responsible for defining customer service? customer or the company? We have seen situations where customer service is defined on the pages of Newspapers to mean the same as Public Relations or branding as it were, but you know what? It is only the customer/client that can actually say if the service so received is pleasant or otherwise. So let organizations stop enhancing service level via print media.

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    Responsibility matters less than the end result. Figure out what works for your company and don’t worry about what others are doing or telling you to do.

• I have friends that have expressed interest in investing in my business. How do I go about setting this up? For example if they put in $500 for 10%, does that mean 5 years down the road when my business is worth $5 mil , I should give them $500k ? Even though for a measly $500 they don't have to do all the hard work .

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    There are three main ways to raise money:

    • Straight debt paid out as cash. Pretty simple: you have to decide seniority, interest, term, etc. Sometimes this type of debt has some optional equity coverage or “kicker” to sweeten the deal.

    • Convertible debt: the cash will convert into equity as a price determined in the future. Also pretty simple: you have to decide on interest rate, conversion term, discount rate and valuation cap.

    • Equity: the cash buys a portion of your company immediately. The biggest difference here is that you have to agree what your company is worth. Then there is the equity time (Common or Preferred). In the case of Preferred Equity there are also tons of rights & parameters to think about.

    There are plenty of resources online that explain the variations in great detail. If you haven’t done this before, you ultimately need a good lawyer or advisor who’s done it many times or you can make some costly mistakes.

• During customer development phase, how many people should you talk to in testing your assumptions? Is 1000 enough? Or if you send a prototype that has rousing success, should you move into developing the service? Or is more cust dev needed?

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    Customer Development is an iterative algorithm. You never stop doing customer development. You ship while you do it.

    The question about when to stop any particular hypothesis test is a very important one and is one of the hardest to answer. It very much depends on the test. Ultimately, the goal is convergence to an outcome. If you are talking to people face-to-face, you start seeing the same points over and over. If you are doing a high-volume online test then you may want to run two separate groups and end the test when you see them converge (the idea here is that random effects would have disappeared by then).

    You can find some more info about hypothesis testing on my blog.

• How does someone do proper customer development?

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    Read Steve Blank and Eric Ries and follow “agile ideology” — you can read more about the latter on my blog.