It’s incredibly tough to build a B2B startup. Founders applying novel technologies to improve traditional industries deserve nothing but our respect.
Sales cycles can be slow, early stage investors can be skittish to invest without more validation, and incumbents’ intentions to compete in your space are often a constant threat.
There’s no one panacea for these problems, but startups can help grease the wheel of the sales and fundraising cycles with one often-neglected form of analysis: the stakeholder incentive map.
The stakeholder incentive map
B2B startups with awe-inspiring technology often don’t rigorously analyze the psychology and incentives of their product buyer, which can sometimes be a different person from the end user.
Furthermore, many startups fail to present a hypothesis on how they will “cross the chasm” from enthusiastic innovators and early adopters to the early majority, as discussed in depth by Geoffrey Moore in his classic Crossing the Chasm.
This problem is particularly acute among startups developing applications of bleeding edge, frontier tech. Founders must carefully manage expectations by bridging the gap between the hype of new tech and the realities of its implementation.
In telling their story, especially while fundraising, every B2B startup needs a stakeholder incentive map in their pitch deck that highlights this analysis. Rigorously analyzing your stakeholders’ incentives will help enable your success.
Your incentive map should ask such questions as:
- What is the buyer’s biggest problem?
- What is the buyer’s personal risk/reward ratio? In other words, if the new product doesn’t work, what would result?
- What ROI does the user need to show the buyer (and others) in order to gain their support?
Here’s an example of a slide I wish I saw more often. Take it and use is as your own template (click to view):
You can access a Google Slide version and some additional considerations here.
For the types of AI startups that we invest in, for example, founders should avoid pitching their solution to potential customers with “AI as magic” type language. We’re beyond the point where this is effective.
Instead, they should emphasize the quantifiable ROI of the solution. Founders that can empathetically take the perspective of customers and deeply understand their personal risk/benefit ratios will stand out in both investor and customer discussions.
Find your champion
Founders can also alleviate these issues by focusing their analysis on one type of targeted champion who can drive the startup’s product to mass adoption. In Salesforce’s early days, for example, the company focused on getting buy-in from sales team members who could quickly begin adopting the solution and then advocate for it among higher-level executives.
Furthermore, founders should find out what milestones they need to hit in order to get to full commercial deployment in as much detail as possible. Then, after obtaining this information from their internal champion, they should bake these milestones into their early pilot agreements to unlock future revenue.
My hope is that B2B founders start including more of this rigorous analysis in their pitch decks to make their stories as compelling as possible.
Samiron Ray is Principal at Comet Labs.