Business RX: Advice on improving or starting a business

Sep 24, 2013

Elana Fine, managing director of the Dingman Center for Entrepreneurship at the University of Maryland's Robert H. Smith School of Business, will take your questions. This week, she is joined by special guest Dan Berger, founder and chief executive of event planning technology company Social Tables. Social Tables recently received a fresh round of funding worth $1.6 million and increased its workforce by 45 percent .

Hi all - I'm excited to chat with everyone today. Hopefully some of what I've experienced with Social Tables will be applicable to the problems you're facing today.

Excited to get started - ask away!

How did you get paying customers to understand they had a problem that Social Tables could solve?

We constantly do different types of  customer development to validate and justify product enhancements. Our goal is to not build a feature until we have a customer ready to pay for it. This way, we know customers "understand" the value of our solution.

The best companies usually don't have to do a lot of selling to their customers.  You are on to something if your potential customers immediately understand the pain point.  Look for head nodding. Trying to explain the problem to a potential customer often means that is not a big enough problem for them to pay money to solve. 

Dan - I saw you on CNN online, how did that opportunity happen? How did you get that kind of amazing press?

That's actually a funny story that has two parts. It started in Austin's SXSW at the CNN center. I snuck in and met a pretty high ranking CNN person. I kept in touch with her for the right opportunity... Keep this in mind for a sec.

Carin, who did that piece, actually covered lots of tech, I ran into her at an event and got her contact info. I reached out and pitched her on an idea for a piece that I thought matched the angles she covers. She liked it and we ran with it.

When that piece ran, I pinged my CNN.com contact and we magically got on the homepage. :)

Dan - you received some great press for your recent raise and hiring.  We speak to a lot of startups that really struggle with making hiring decisions. Can you shed some light on how you've approached hiring?

 

Most startups say "hire slow, fire fast" and we operate a little differently. We like to say "hire fast, fire fast".

 

We have hiring process that works really well for us. Each department manager leads the charge on hires and keeps a pipeline of candidates warm (that's part of their responsibilities). We do 2-3 phone screens before bringing anyone in. Once we have an in-person interview, they will talk to 6 people on the team. Everyone gets involved so we get a really good perspective on the candidate.

Congrats on your recent raise.  We hear a lot of chatter about current angel/VC activity.  What  about the Social Tables story was most compelling to investors? 

I have heard some investors say that with us, they "Bet on the jockey and not on the horse." I think that some of our investors only bought into what we're doing just a few months ago. The idea is that if they like the founder then they will back him beacuse they know the idea is not final. As long as he is intellectually curious (asking questions), intellectually honest (taking feedback and acting on it), and nimble (frugal with money, willing to change, and swalling his pride) they are someone they want to invest in.

Enjoyed your recent Cap Business article. How do I take my start-up idea and scale it for global growth? I want to sell principally in my home country of Finland, but currently live here.

Global? I would start with local :)

I think that one of the things we're seeing is that in order to compete,  startups DO have to think globally and actually have parallel work streams, with global being slightly behind the local approach.

The reason behind that is that by the time you get to global, your antiquated competitors would be entrenched in APAC and AMEA.

I operate my own furniture restoration business. I have a large customer backlog -- about 4 months worth, and I also lose customers because they don't want to wait this long. My friend recommended that I should raise prices, but I am afraid it will be unfair to my customers and I may lose a lot of them. What would you recommend? Thank you!

Have you looked in to getting some flexible workers? Seems like you could manage demand and backlog by hiring some contractors that get paid per item.  I'd imagine in your industry there might be qualified craftsmen looking to take on projects.  I wouldn't raise prices unless you are confident that you are leaving money on the table (no pun intended). 

Awesome question and classic dilemma. This is what my mother would call "Problems of the Rich."

I would *EXPERIMENT* with higher prices. Just try raising prices by a little on a control group (every other inbound call?). Remember - price communicates value. 

You can also scale the business to meet the new demand. I'm assuming you don't want to train new folks, growth is not important for you, or you don't want to focus on HR/training matters. You might want to consider bringing someone in to run this growth while you focus on what you enjoy most.

At your current stage, do you find a lot of prospective hires are expecting equity? Without disclosing the details, how have you typically approached comp structure as you've moved beyond the founding team and C level hires?

I *expect* and *want* people to ask for equity. That's one of the biggest incentives I have to provide my teammates. I want them to have skin in the game. Before our Seed round we did stock grants, we now do options and everyone gets them.

With C level hires they do expect significant equity and are willing to take major salary hits for it. 1-3% is normal.

I am considering using crowdfunding to fund my product launch. Have you been involved in any successful crowdfunding campaigns? What are the best strategies to achieve success? Would you recommend other funding sources instead?

I wish I could help you with that but this is not something I know well. That being I said, I do know a few tricks:

1) The last 5 days of a campaign are the most important.

2) The number of backers, NOT the size of the donations, is what matters and make campaigns bubble up to the top.

3) Video. Video. Video. :)

4) Make sure you enter this endeavor understanding that kickstarter is a futures market for products.

5) Leverage the hell out of your social networks for network effects.

Everyone around me is starting a business of some sort and I am catching the entrepreneurial bug. My problem is I can't think of a good idea. Every time I see someone like Social Tables or other cool startups, "Why didn't I think of that?" inevitably comes to mind... So, my question is, how to find a good idea for a startup? How do you know it is a good idea? Thank you!

Social Tables is not what it was 12 months ago. Ideas change. It's not about the idea, it's about the execution. Choose something you feel strongly about and try it out, listen to customers, and change as necessary to build what they want.

There is, however, a lot of opportunity in enterprise so I would look at that. Lots of white space. Key is getting a few critical customers to validate what you're doing in the market so that others dive in soon thereafter.

I am a Web site developer and balloon twister... yes, two very unrelated hats to wear... I interact with various small groups that put on local events. It always amazes me how much effort they put into planning an event and how little they do after the event to make sure the word gets out about the good they were able to do. I would think that after each event, they should write up an article, post pictures, share links with news media that covered their events, etc. Sure, it might be too late to attend the event, but that doesn't mean that people would want to know what they did and how the funds raised will be used to help local charities. I almost think I need to put on another hat as a publicist to help groups gain the positive image not just before, but after their events.

An event is a community. Even though it has a hard start/end time, it doesn't mean it has to die. Events should continue in communities online through the sharing of ideas, lessons leraned, media, etc. That's one of the core beliefs for us here at Social Tables -- Every event is an opportunity.

As follow up to your reply on "firing fast" -- what do you mean by Fire Fast? Do you give 2nd/3rd chances or do you look for immediate fit?

We aim for 100% retention so we always put people on personal deveopment plans. It's all about discipline around hiring. Know your values, hire against them, make sure your hiring processes align with them and include different people from your organization.

Sarah Halzack actually wrote a great piece on how Google hires that I recommend everyone read.

 

There seems to be a lot going on in the event space, how do you keep differentiating Social Tables without losing focus?

Focus even more and know your target customer insanely well. You can't do everything... well, you can... but not yet. :)

What do you find most painful about being an entrepreneur?  What are the worst days? The best?

I love hiring and developing people... so any day I see a teammate grow, do something they havent done, or tell me "I've learned more the last month than I have my entire life," I light up.

For the same reason, it's scary. Your teammates depend on you and you need to meet their expectations if you want them to think about you as their long term employer.

What social media platform, in your experience and opinion, is most useful when promoting a product? Do they all have their benefits and pitfalls?

I think they are all useless for promoting a product. They are great for building credibility, pushing out content and becoming recognized as an authority. Those should be your goals around social media... not promotions/sales. At least not until you have a great following.

I agree - unless you can brilliantly promote lightbulbs during a Superbowl blackout -- social media has low ROI for product promotion.  As Dan mentioned, many startups use social media to establish themselves as thought leaders.  I'd just be careful about overallocating time or hiring a "social media" expert too early on.  Make sure to think about your audience, for younger demographics you need to be flexible and move from Twitter to Instagram, Vine, or whatever will be next. 

I am a full-time professional working plenty as it is. However, I've had a great business for a few years now. I want to pursue it, but while I have the skill set, I do not have the time. I want to find an organization or person that can get things started. Any ideas?

We are actually seeing a lot of demand for "hired founders." I think given the economy, there are a lot of talented operators who would make great entrepreneurs but just can't risk leaving their jobs.  I would caution you that someone you partner with might not be nearly as passionate as you are about getting an idea launched. That being said, organizations like CoFounders Lab have platforms in place to match you with resources.  

Dan - thanks again for your time today.  Any aditional advice you'd like to pass along to the CapBiz community?

My pleasure! This was very different, a lot of fun, and thought provoking. I'm always bad with those open-ended questions but I guess if there's one thing I would recommend to people, it's target a customer like a laser and build something people love :)

In This Chat
Elana Fine
Elana Fine was appointed Managing Director of the Dingman Center in July 2012, after joining the team in 2010 as Director of Venture Investments. As Managing Director, Elana's primary focus is leading the Dingman Center in support of its mission and strategic plan. Key responsibilities include oversight of our student venture incubator, Dingman Center Angels investor network, business competitions, and technology commercialization efforts. Elana earned an MBA in Finance and Accounting from the University of Chicago's Booth School of Business in 2002, and earned a BS in Finance, from the University of Maryland, College Park, in 1997.
Dan Berger
Dan is the founder and chief executive of District-based hospitality SaaS company Social Tables. Previously he served a senior Member of Congress, chaired a political nonprofit, and ran a Web consultancy. Dan has a BA from Hunter College and MBA from Georgetown University. He lives in Washington's U Street Corridor with his girlfriend Beth and dog, Leroy.
Recent Chats
  • Next: