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The following video transcript is generated automatically by a computer algorithm that learns and gets better on a daily basis. Please accept our apologies if some content below doesn’t make sense:

Hi, everyone. Welcome to the Daily Dose podcast. This is the podcast where we discuss things from the news and social media that’s interesting to us as business owners and entrepreneurs. I’m James and I’m joined by my co-host, Marcella. I mean, how are you? Very good, thank you. We’ve got our usual supply of Twitter inspired talking points today, one which is pretty recent and timely, and a couple which are from the archives. So the first one is talking about PENITENTE now. So Pelletised has been in the news for various reasons. It’s been valued. I think it was 20 billion the other day, which, you know, is quite a nice chunk of change if you’re in the market for that. And also, Apple launched their streaming fitness competitor kind of service, which is presumably going to have an impact on sort of Pelton’s revenues and finances. But that’s all yet to play out. So they’re somewhat topical at the moment. So I’ve got a tweet here from a guy called Turner Novak and he’s v.C. And he says, The full story of peloton is one of incredible grit and determination. John Foley, who is the CEO of Pellington, raised four hundred thousand to two million dollars place money valuation from eight angel investors from 2011 to 2014. He pitched three thousand angels and 400 firms. Almost everyone said no. Eventually, he raised 10 million from one hundred angels. The company is now worth 20 billion. So the illustration there is. Pellington is IVC, let people know pelleted a lot, people heard a Pettit’s in quite a few people own a Pellington. There’s one in the house where I’m staying at the moment. I haven’t used it, though, like cycling. But, you know, it’s a very popular products. And when you look at these sort of like giant successful consumer products, it’s quite hard to visualise where they started out or what kind of went on in the background. And the assumption is usually are, you know, either this was some tremendously well funded thing, which is true. You know, they raised a lot of money over time or it got spun out of some large company or something like that. But that wasn’t the case, you know, behind the scenes. This guy went out, did a phenomenal amount of graft in terms of raising money and doing that kind of thing. And from my perspective, being involved in a few sort of fundraisers over the years, that is that is really true. Like I have, you know, I and the people that I’ve raised money with did not go out and speak to 3000 people. Farfel an order of magnitude less than that easily. But it’s still a lot of hard work and getting a funding round over. The line is extremely hard work. There’s lots of legal stuff, there’s lots of convincing to happen, there’s lots of negotiating and it’s really, really distracting, to say the least. You know, if you’re already running a company and you’re trying to make a success of that company, you got to start out. And in particular because you’re usually raising money, because there’s some sort of deadline where you either run out of money or you need some money to invest in whatever it might be in that time based pressure. There’s a lot of stress and there’s a lot of. Mental effort and physical effort that goes into sort of raising this kind of money and you really need to know this before you go in so that you can sort of set in your mind. Okay, I have. I think I have an understanding of this sort of amount of effort that’s gonna be required over this period of time. But the other thing to bear in mind is, is that it’s finite. Right. You either you either raise the money or you don’t. And the period in which you go into it is, you know, if there’s a light at the end of the tunnel and it finishes eventually, because while you’re in it, it could be really like, holy cow, this is this is hard work and laxly grind. What you’ve you’ve raised a whole bunch of cash over. This is your very successful at doing that. What what what has been your experience, that kind of that I think you’ve been sort of putting on the cash raising treadmill? My sense of the value of this.

Yeah. So one of the pews companies have founded, it’s on their lending business. So you always I mean, the lending business basically borrow money at some cost and lend it out with, you know, a market based that that’s what it is. So so you constantly need to get money to lend. So it was super intensive. I’m notable thought you need the equity. So it was very time consuming. And I yeah, I did fight long on this case as well because I talked to I would say I would talk to a thousand people and get like five investors or 10 max. So it’s like less than one percent version rate and it’s. Yeah. In the process, though, you learn a lot of stuff. I would say the details doesn’t matter on those numbers.

It’s just the take away will be like super hard and time consuming.

And you need to you need to put a lot of effort and and don’t quit unless, as you said, you have a timeframe. You should set that length and either you raise it or not or the option is right if you raise less. Just do what you can with the money you raised or or make progress as well. Without the need necessarily of having money. So the more you cut the show from no progress product point of view, MBP market feed that Sedra that the better the odds. I mean, of course, sales as well. These are very good metric to show. But the more you’d have to show that, the higher the odds of raising the funds. And timing is key on. So yeah. Without entering into the details of fundraising, what we’re gonna do, maybe another another focussed on tips for fundraising. But yeah, don’t sell down big numbers game. I would say so. It’s not that. Oh is a one percent conversion rates. If I took two X I will get why it’s not like that necessarily.

You need to think it. You need to target it very well.

And you need to do very persistent. But you need to understand how to talk to when I want to tell them and all that kind of things. But certainly is something that could very well be full time for a long period of time.

So you should not underestimate it or you should think very carefully before entering into that that journey.

Yeah, I think another topic we should cover, a future point, which we weren’t. On this particular episode is, you know, the the bootstrapping versus raising money, the, you know, the pros and cons of having a Start-Up where you take funding and the president comes away, you sort of you bootstrap your Start-Up or your business from the revenue that you raise. I think also that is quite important. When you talk about, like the CEO’s role in a Start-Up now, you may well be a one person Start-Up, in which case you’re wearing every single hat, including CEO. But, you know, in a small Start-Up, oftentimes the CEO is sort of key to roles, are raising funds and being the sort of clench seller for the product, particularly if you are sort of in the enterprise business, the business kind of space. Then you roll out the CEO to sort of shake hands on the deal with the large deal with a large customer and didn’t necessary. And, you know, I think most CEOs that I know, most people who are in those kind of roles, that is a hundred percent of their work. You know, they should also be doing other things as well. But fundamentally, that’s that’s kind of the split the. So it’s all money, money, money, money, basically.

And you should also so. So I think the married on this case of Peladon from the founder and CEO is not the amount of money he raised or how much money it’s worth because, you know, you can get lost with valuations on under funded.

But maybe your country or in your segment racing way less than that is as hard on as important. So, so, so don’t take that, you know, Tic TAC or just and just undo run this case by analogy and it may not apply to yourself. But the take away is that it’s hard. It’s going to take a lot of time and effort and you should not. But but yes, certainly you should set deadlines. You should go. Yeah. Well, I only if you want to make it.

So speaking of the CEO’s role, as well as the fund raising and the sales and the office manager and making sure the toilet rolls in the office toilet. Another very important role for the CEO is to sort of chair and manage the meetings that occur in a company. So as soon as you get to the point where there’s more than one of you, then you’re going to start to have meetings. And meetings in many ways are the lifeblood of companies and of start ups. But they can also be the sort of the biggest drain. And and there’s an art definitely to having a good meeting. So we got a tweet here from a guy called Steve Schuffman, who’s an angel investor and the creator of Found a Library. And he is talking about meetings and the quality of meetings. He says if you want to improve the quality of your meetings, just ask these questions before you dive in. No one who’s leading or facilitating. Number two, who’s capturing notes and action items. Number three, what’s our objective? Number four, what’s the desired outcome? And number five, what does success look like? I in my personal experience, you know, I have been a participant in many, many, many, many meetings, as I’m sure everyone on the planet has. I’ve also led quite a few meetings in my role as kind of like CTO, a private company. I’ve led quite a few technical meetings and done sort of scrum and agile and things like that, which are, you know, have some meeting components to them. They’re they’re more structured than sort of typical business meetings. But. Meetings can be the absolute death of companies or it can be the death of productivity for sure. I think typically there’s there’s a knee jerk reaction where any sort of decision needs to happen, where everyone says right. Someone says the person who needs that sort of decision, wools, will have an edge, I think. Let’s have a meeting. And most meetings, a lot of meetings are called on an ad hoc basis. And without having that kind of structure and without having a win when they get to free form is when things start going downhill because it’s really easy to call a meeting. It’s quite hard to cancel a meeting. It’s very easy to answer meeting with having no preparation. And it’s quite hard. To have a meeting where you are, do you come prepared? But the quality and outcome of the meeting is is, I would say, exponentially proportional to the amount of pre effort that people are put into that meeting. Meaning? So very famously, for example, when I was in the way Jeff Bezos runs meetings, is that he has any point that has to be brought up in a meeting with an Amazon. The person has to prepare a memo prior to the meeting, which gets circulated to all the people who attended the meeting prior to the meeting. And everyone is expected to read that before the meeting. So in other words, people are turning up with a pre prepared thought out. I’m very structured like the way they prepare their memos. It’s not just a free phone thing. It’s very structured, structured headings. And exactly like Steve last month saying in this tweet, everyone comes with the no pre knowledge of what it is. The problem is that they need to discuss all the o the decision that needs to be made. And the way the meeting works is literally as just a coordination point of right. Everyone has an understanding who needs to discuss a point, opening something up or do whatever. And then a decision is taken and you move on to the next thing. I know as an engineer, I have I have a preference for structure in all things, but I have a preference for structure meetings. The worst kind of meeting is where a very important person in the business turns up and, you know, basically sits there and sort of pontificates for like two hours on some given topic to feel important. You know, I’ve been in plenty of those meetings over the years and, you know, the productivity losses, you know, if you got 10 people in the room, that’s like every hour of the meeting is 10 hours lost productivity in the in the company, you know. So they’re very expensive. What what what are your sort of thoughts on meetings and your experiences with meetings?

Yeah, I agree that that they need to call a structure. I would also say that you should I discourage coming to any meetings, especially long meetings. And I would say also it depends on what’s the meeting about. So if it’s technical, I probably signed development or engineering. Yeah. Probably unless there is a big problem to solve. Or are these Corie session, then it’s probably better to do like a daily 10 minute, you know, standups or dot.com stuff where it’s more like a follow up to make sure their things are going well.

And this is like fourth session to clear doubts. But other than that, maybe a weekly sprint goal or something like that. But that’s more for. Again, for processes that, you know, have milestones on UNCAP, he sets Gwent sequential. So for our team to start work on something someone else needs to get out of, part’s done. So then it’s important to know how that’s going on and the progress and so on.

But when it comes to other type of less tangible meetings, from our results point of view, like H, r or or your business or strategy or even your brother design or those brainstorming meetings could be very dangerous. I’m not saying you shouldn’t cut it.

Yeah, definitely. You should go with an end goal in mind, at least one for the meeting. I should you should really keep it as short as possible. And also, if you can do it remotely without, you know, people meeting up physically, that’s important as well, because it really takes a lot of time. I mean, people will go see my coffee do online and offline. Here you are on this. How are you? What did you do last weekend? So. So it’s not only about the meeting itself, but all the preparation for the meeting and the post meeting. So. So it’s really you should really think thoroughly before calling for a meeting. I just have questions. Just cop calls. That’s very, very efficient and calls up. But also you have a lot of tools that are like Newcome post questions like on Slack and received responses on demand or collaborate on slike very efficiently without the need of having meetings all the time. And there are other like project management tools as well. Not to not only stack always email. You know, I think you and us, we don’t have many meetings. And when we do, it’s mainly a podcast. What we do is just to solve something. But it’s not about yet. Probably, you know, that that speaks well on how we complement each other.

But still, I think in general, you will see a mosque as well asking TSA to keep meetings a very short fifteen minutes or don’t have them at all. Just got calls on this and that nowadays. Yeah.

Time is the prime asset. So yeah. And you shouldn’t be trapped into bureaucracy or socialising is fine. But don’t, don’t mix it with meetings, don’t mix productivity with socialising. And that’s, there’s a very thin line there.

I I’m quite a big fan of, so I think once you get beyond a certain number of people within a company, then sort of meetings become a necessary evil in many ways. I think when when you’re sort of like small five, six, up to five or six people, I think you can do things on an ad hoc basis like you’re describing there, which is like you can just sync and connect babe with a phone call or WhatsApp or whatever it might be. And stuff just gets sorted out kind of naturally just because of the natural communication you have between people. I think once you get beyond a certain number and I think the number will be different for different sorts of businesses and it will just be different depending upon the sorts of roles that are involved in the meeting as well, whether it like very junior and very senior or whether they’re sort of equivalent his. I’m quite a big fan of sort of structured. Ways of running businesses. So there’s there’s a good one, which I like by a guy called Gina Whitman called the Entrepreneur Operating System, which, you know, a lot people talk about. No. And they have a very sort of standard set set of meetings with very standards set set of things that you bring to it. And one of the things that I found most useful out, that is. They actively encourage the meeting participants to sort of shout at each other during the meeting. Off topic, meaning, you know, if you’ve met to talk about a BNC, if someone starts in one day, you know, it’s allowed and encouraged for people to say, no, this is. We’re not discussing that here. That can be sorted out elsewhere or something else can happen about it. But because in most meetings that are more ad hoc, there is no it’ll be considered very rude for someone to sit there just like, no, I’ll tell if it can’t do it. Whereas I think having that sort of veto will get out of jail free kind of button really, really helps this sort of stuff megalo.

Yeah, I agree on that. I think it’s crucial to go on analytical approach on far as any company build systems. So if you can’t stand the rice the way meetings are held up, put some rules there that will definitely be useful and it will also be part of the culture of the company.

And if people if you have a framework that people can stick to it, they don’t need to think as much.

So it will take them less time to prepare the meeting properly and everyone will know what to expect. But. Yeah, I like it, this is more broadly on on consumer businesses to get feedback all the time. So from the analytics on sales, marketing on on what are the customers saying? And this that so. So that’s a. Now the real cold, hard truth on all the rest of planning and this is that you should be productive and measured productivity as well.

Based on that, the output per hour.

So our impact on on on sales and customer satisfaction, at least not so then meetings should be based on how to improve the metrics, your rate of BOD, but then don’t get hung up too much. I’m talking more now about I think our more mature company knows how to handle meetings unless they get to be when then it’s a problem, but it’s not as big as some of us are. Next essential thread as it is for our Start-Up. If they’re having way too many meetings and not making progress towards what they need to do, they do really need to focus on getting things done and receiving feedback from their market and from the customers and iterate quickly. So, yeah. In short. Yeah. Until you just do a cover market then. Yeah. Just do you really need to focus on productivity versus some planning.

Yeah, I agree. I think the creeping bureaucracy problem of larger successful businesses, i.e. something which could dead the success of an already successful business, is a different class of product than, as you say, you know, the meetings and coordinations and getting to the truth, which you need when you are trying to find a market or you’re trying to get to profit area, trying to do whatever.

I have seen entrepreneurs from corporates coming to start companies and they do plan a lot, which is not bad. I mean, it’s always good to have structure, but I don’t know.

I’m not like that.

Yes, I can care. Right. Our final topic for this podcast is the thorny topic of product pricing and pricing is one of our businesses. Massive unknowns is, you know, is something which people think should be science is but is very, very much an art. It’s something that you essentially have to initially gas up and then iterate over time and see if you can find the right answer. But it’s it’s it’s the closest thing to unknown magic, I think, in business, apart from possibly hiring. But yeah. So we’ve got to hear from a guy called Matt Wensing. I think I’m pronouncing his name right. See that all venting. And he is the founder of Summit, which is a financial product, financial SAS products. And he he’s talking about the pricing, a B2B SAS app, which is basically what he’s running. And in his tweet, he says, okay, well, how do you approach the version zero the very first way you want to try and price your products? And he breaks it down into three chunks. Number one, you ask the question, what metric of your customers business does your value correlate with most highly?

Meaning?

The value that your app brings to the customer. Like what what number in their dashboard or what thing that they’re tracking, does it most closely correlate with a match with number two? It is charged more as the product supports the use cases and activities associated with increasing amounts of that thing. So you want to set your pricing strategy such that as your customers see is with using your product. You you want to increase your price. Along that same metric so that you are participating in the success of your customer, your customer is succeeding because of using your product. So it’s a win win for sort of both parties. And his third point, he says. Still, number two, into features or a metric that approximates number one. So this is about making the sort of sales of our ally case to new customers, that saying, OK, once you found that kind of those linked things so that the thing that your app provides and the success metric for your customers, if you can link those two things together, then in your sales material and in your discussions, you can make the case for. You can have case studies of like, oh, OK, a customer, the customer side X and then now at Y because they using our product and there’s a direct correlation. Línea hopefully or super super línea to between how it is that we charge what it is, the cost of the thing does. And the success that the customer sees at the other end of the sky. Now, that’s, you know, that’s a good way of doing it. And that sounds like a plan. It is very much easier said than done. And I think it’s something.

So you typically see it, for example, in a lot of enterprise software and things like that charge on a per seat licence, because the correlational the assumption is, is that the more people that the customer is putting into using your system, they’re doing that because they’re seeing more success. They can afford to hire more people. They’ve got, you know, more people in there. And so charging per seat is one way of approximating kind of the success of the products. That’s not always the case. One way to know if that sort of pricing isn’t working is you find your customers reusing the same log in for everyone you know in the office. You know, they’ve got one they’ve got one log in and, you know, they’re constantly fighting each other for that log in and constantly. So it’s on a Post-it note on the wall when you go around to their office. You know, here’s the log in for your product.

That’s probably a notification that you haven’t quite sort of hit that that ideal and that you should try and sort of vary the way that you are charging on that basis.

What are your thoughts? That’s very interesting. And yeah, actually slack if you’re not using some users, it reimburses. But yeah, I think they are the core concept here.

So bottom line will be when you’re selling either software or anything.

People don’t cannot care less about you and your presence on your technology. They only care about them and how they are going to benefit. So you should if you want to sell anything, you should start by reinforcing first identifying and then communicating, then, you know, reinforcing the message to them on their benefits.

So if you are selling in this case software, you should really understand how you either you save costs to them.

You save time or you increase revenue. And then if and then it could be different for different company sizes. So there is not like a recipe for all products.

But I think the only recipe, if you are going to the fundamentals, is just understand your customers business and how you are saying which metric you are going to improve their cost savings time or increase revenue. And then you can charge based on that. So if are increasing revenue by one million per year because of your technology, you can charge half of that or a third of that. And yeah, it will. They will, Bayt, because it makes sense for the same. It’s a jar saving cost, et cetera. Whereas maybe same technology, but to a different customer, which has been your operations, they do increase their revenue by 10 million. Then maybe you can charge more. It’s. Yeah. It’s like a revenue share could be in that case. Of course, you need to cover your costs as well. So you should always keep in mind what are your costs on? And depending on the customer, what will be those marginal or incremental extra costs.

But are a really bad way to price? It is, oh what are my costs? I’m going to pass it all to a customer with a profit margin. That’s that’s usually a bad thing. You should really benchmark on what’s out there.

And also especially had do they benefit from your country or your approach. So I should be really onda in their shoes. Not yet. Not subjective because you love your product and you think it’s great. La la. So yeah, it’s case by case I would say until you really find your sweet spot.

Yes. So value based pricing rather than margin based pricing, right? Like the charge based upon the value that the customer gets out of it, not how much it costs you to manufacture it. Innocence, one thing. So if you are going to approach your pricing or your products does seat itself to or service suits itself to this sort of class of pricing. One thing you got to be slightly careful of is you’re often trying. What you often come to is like a table or a tree of plans.

So you’ll have like start a medium large or bronze, silver, gold or whatever it might be. However, you sort of segment’s up your pricing strategy and what you’re looking to do is you’re looking you’re looking to split apart the sort of features or the limits of the different plans based upon the size of the customer or the success that they’re seeing. So rather than doing seat by seat based pricing, it could be, for example, you charge if your system saves a bunch of data coming out of the client’s use of the product, then, you know, the small plan will have like a small number, 10 things. They’ll save 10 things that made him want to say 50 and a large one will save one hundred. And so you get your pricing plan based upon some usage of the system, more saving of the system. The thing you got to be careful about is when you’re segmenting out those features into the different plans, things like that is if it’s really obvious to the customer that the lines between them are arbitrary. So in other words, they are you know, they might be on the beginner or small plan and they might be hitting the limit or getting close to the limit of the large plan. In which case, their costs like jumped by an order of magnitude or something like that. Then if the thing seems really, really arbitrary, it’s like, you know, in their heads, they’re saying, oh, well, you know, I know it doesn’t cost them, you know, that much more money to provide that extra service that’s literally just there said I have to pay more money for the same thing because, you know, I’ve bumped up into the next class. You will get a lot of pushback on that and you will get people who will actively do crazy things to just try and stay under that kind of like limit because of the difference between the pricing, people will be going in and sort of deleting old data to stay under the data capital. They’ll be going in and then we do lots of lots of busy work, which is which will reflect negatively on you. And will you know, you want your system ticking away in the background, being completely transparent and seamless, and everyone vaguely doesn’t even really know it’s theirs. All they know is, is that value comes in. There’s no much there’s not much hassle associated with it. I will stay on will be a customer for years to come. We don’t want to change. So you’ve got to be careful about how your segmentation looks to the customer, because if it seems to kind of like gouging, then you will you will see that kind of thing. A lot people who will be very close to within sort of 20 percent of the top limit of the plan who are sort of hovering there and never get any higher and you won’t want them into the other. That’s that’s a symptom that maybe that, you know, you need to adjust your pricing or adjust the segmentation between the plans for sure.

Absolutely. Yeah, that’s a good point.

OK. All right. Thanks very much, everyone, for listening. We’re back every Thursday. Please cheque out our YouTube channel where we post this podcast and our other videos. You can search for networkers, which is two words where you can find the link in the show notes for this podcast. If you’re interested in help, mentorship courses for entrepreneurship and starting businesses, please cheque out our website, which is at Networkers Dot Co. See your next one to.

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