In JC’s Newsletter, I share the articles, documentaries, and books that I enjoyed the most in the last week, with some comments on how we relate to them at Alan. I do not endorse all the articles I share, they are up for debate.
I’m doing it because a) I love reading, it is the way that I get most of my ideas, b) I’m already sharing those ideas with my team, and c) I would love to get your perspective on those.
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💡Must-read
👉 Peter Reinhardt (CEO of Segment) - Learning How to Sell (Join Colossus)
Selling value:
I'll never forget the first sales meeting
Walking over to the sales meeting in the financial district in San Francisco with Mitch. Mitch stops and says, "Peter, in this meeting, you need to ask for $120,000 contract." And I was like, "Mitch, that is 1000 times more expensive than our public price listing. I don't know what you're smoking. I cannot go in and ask for a 1000x price increase."
Once in the meeting, [the client] Nat's like, "Okay, well what's the price?" And I was like, well, and I turned beet red. I was like, "Nat the price is $120,000." And I was not believable in any fashion. And he looks at me and is like, "How about $12K a year?" And I was like, "How about $18K?" So he agrees to $18K and became our first contract, I think or the second contract once we finally got around to signing. So he was victorious. He saved 85%, but still I was completely mind-blown because here we were charging 150x, literally 150x. That was a second big awakening moment for me.
In B2B sales, value is what you should sell on and value is what matters to the customer. They couldn't care less what cost basis is.
Can you get the customer to actually tell you what the value is that they get out of the product? And then can you connect that to what the product does.
➡️ I love the concept of selling value instead of cost+margin. In our industry we want to be radically transparent, so we sell insurance at “cost”, and add the membership fee for the value we generate. We think it is the best of both worlds, and a relationship of trust with our customers. I think we could be better at selling our value though, and getting our customers to tell us more about it.
How to do it:
What's hard about it is that it's awkward.
"Well, we're having some challenges with our data. So that's why we wanted you here to walk us through your pitch." And somebody was like, "Well, why do you have problems with your data?" And then the person responded, "Oh, well we have trouble integrating this, that, and the other thing..." "Well, but why do you have trouble integrating those things?" And it's like, "Dude, you're supposed to be telling me that it's hard. Why are you asking me?" And then the customer was so baffled by this but then just kept answering these questions and we're articulating the pitch. We're self-articulating the pitch back to him and all he was asking was why.
It was extremely effective. You just get the customer to articulate it, clarifying for them, it's clarifying for you.
➡️ Asking why until it becomes very awkward has made a huge difference in many of my negotiations/discussions.
How do your customers want to buy? That is what matters here. And so we have different parts of our market. Some parts of our market want to self-serve.
But most of our market is companies that want to turn the crank on the same SaaS buying process that everyone else has and run a proper sales process with multiple vendors and salespeople and sales engineers, and so on. If that's how they want to buy we got to show up.
➡️ Finding out how our different types of customers want to purchase.
If you have normal software margins of 80% or whatever,
Those economics close at $1.5 to $2 million. If your margin starts coming down from 70%, 60%, 50%, 40%, your quota fundamentally has to go higher because you've got less contribution margin for the 80%
So therefore you need to drive more volume per sales rep but those are the fundamental constraints that you're planning with.
➡️ How can we drastically increase the volume per sales? What needs to be true in terms of product? In terms of sales process?
The concept of like a bottleneck theory of business which was like there's always one bottleneck somewhere that's constraining growth. And so isolating what those bottlenecks are and making sure that we're executing against changing them is super important. Trying to build this intuition and inspection model of how do you go and verify at all of these levels it's actually going to close.
➡️ We should ask ourselves this question more often.
🏯 Building a company
👉 Dan Rose about doing the right thing, and how to interact with CEO (twitter)
I was a middle manager in Amazon's retail business and Charlie was a vp of engineering (on his way to svp and co-founder of AWS). [...] I ran into Charlie at the company picnic. I pulled him aside and said "we need to do something right away because Jeff is pissed." He looked me in the eyes and said "let's forget about Jeff for a minute, what's the right thing to do here?"
This was an aha moment, it never occurred to me there could be a difference between what Jeff wanted and what we should do. But I knew there was a better answer. We discussed my recommendation and Charlie agreed with me. Then we talked about how to get Jeff on board.
It's hard to push back on the CEO, they have the most context and power. But their context is wide and shallow, and sometimes they miss important nuance. The job of a senior leader is to fill in that nuance by framing decisions clearly and escalating efficiently. Not to complain.
At the end of the day, the CEO gets to decide. But until they make their final decision, a leader's job is to make their case. Great CEOs encourage dissent and leave space for debate. Great leaders have the ability to discern that space, and agility to make their case effectively.
Great CEOs are also stubborn, decisive, impatient and wicked smart (trust me, I worked for two of them!), which makes it difficult to push back. It's natural to just do what they ask now and complain about it later. Effective senior leaders know to do the opposite:
They make a strong case, patiently working through the pros and cons and debating for as long as the decision is left open. And when they lose a debate with their CEO, they disagree and commit, and start selling the decision to others so there's alignment up and down the org.
If you don't trust the judgement of your CEO, you're working at the wrong company.
I didn't complain, and I never said I told you so (neither did they).
➡️ I hope the team is not doing stuff to please me but because they believe it is the right thing to do, that we always have healthy debates and we accept challenges.
👉 Avoid letting another company insert themselves between you and your users (Paul Graham on Twitter)
Avoid letting another company insert themselves between you and your users. It not only weakens you, but also deprives you of valuable signals about what your users want.
➡️ That is why we refused to work with brokers as intermediaries (we can work with them if they are consultants).
Avoid Faustian bargains with companies that promise you users, but on their terms.
➡️ I love this focus on defining what “your terms.”
🗞In the news
📱Technology
👉 Google Cuts App Store Service Fee. The overall service commission on subscriptions will be 15% instead of 30% starting January 1.
👉 OpenAI is eliminating the waiting list to begin using its GPT-3 natural language processing technology.
🏥 Healthcare
👉 The Secret 3-Step Master Plan to Cure Healthcare - Not Boring by Packy McCormick (Not Boring)
The example fo Plaid:
Developers love Plaid because instead of having to integrate with thousands of different banks, all with different requirements, and then maintain all of those integrations, they just integrate with Plaid. Plaid does the rest.
Today, Plaid partners with nearly every major bank, and many smaller ones, but back in 2013 when Plaid launched, it didn’t. What bank would trust a young startup with its customers’ credentials? So Plaid got creative.
Plaid manually scraped, pulling information from the bank account and making transfers to Venmo on users’ behalf.
Some banks tried to stop Plaid, but eventually, Plaid got big enough that banks had no choice but to play ball.
Today, Plaid is massive. It partners directly with banks.
➡️ I think we could start by being a lot scrappier sometimes. As we are doing now with Doctolib, and we could approach that in many ways we build product.
The case of NexHealth:
NexHealth started by reaching out to those vendors directly. Maybe they’d be interested in partnering to improve the patient experience? The vendors all told them to buzz off.
So instead, NexHealth made its first counterintuitive bet. It decided to build a SaaS product for healthcare SMBs and sell it vertical-by-vertical, starting with dentists.
Their ServiceTitan-like SaaS product was just the Trojan Horse into EHRs, their equivalent of a Venmo user logging into their bank account. When the admin at an SMB signed into NexHealth, and then connected to their EHR using their admin credentials, NexHealth scraped the database to access patient records and integrate them with NexHealth, and reverse engineered the systems. Once they had one customer that used eClinicalWorks, for example, NexHealth could integrate with any eClinicalWorks system.
Once NexHealth had integrated with enough dentistry-focused EHRs, it went to dentistry-focused companies and developers and said, “Here. If you build with our API, you can integrate with all of the EHRs you need for one low price.
Today, NexHealth integrates with over 45 EHR systems, supports 75k providers, and touches 30 million consumers.
➡️ Should we interface with all doctor software?
👉 Doctolib, un nouveau monopole sur ordonnance ? (Libération) (French)
«S’ils sont seuls sur ce marché, ils vous tiennent, et la relation se modifie : vous n’êtes plus un client, mais devenez le prestataire de cette entreprise», pointe le Dr Jérôme Marty, président du syndicat de l’Union française pour une médecine libre (UFML-S).
Jean-Paul Hamon de la Fédération des médecins de France (FMF)
Mais il faut reconnaître que ses concurrents ont gagné une certaine visibilité, notamment dans certaines villes comme Toulouse pour Keldoc ou Marseille pour Maiia.
En octobre 2018, une fronde emmenée notamment par le docteur Bertrand Legrand se lève contre la société.
Interrogé, David Bitton qui depuis a revendu sa start-up au développeur de logiciels de santé Cegedim et s’est complètement retiré du monde de l’e-santé, a refusé de s’exprimer.
Adrien Parrot est médecin-ingénieur, président de l’association InterHop qui fédère ingénieurs en informatique, médecins et juristes.
➡️ Do you think that Alan should integrate with doctor software? What would you like to see? With whom would you like to see us integrate?
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