Know the value of “no!”

So I got up at 4:15am and drove up to Fresno (from San Clemente), way too early for my 2:00pm meeting, but early enough so I could get WiFi and coffee from Starbucks, and answer a bunch of emails.

At 2:00pm I met with the president of a local college; a warm lead/introduction that was brokered through one of our investors. At approximately 2:25pm I said “thank you very much!”, got into my car, and drove 286 miles home.

She said “no.” In my face. Straight up. And it was good.

Good you say?

1. Sharpen the focus — Founders have happy ears. Hearing “no!” reminds you that your product is not meant for everyone. It reminds you to segment the market, develop a persona, focus on your early adopters, zoom in on exactly who they are, and be relentless about targeting them.
2. Find the WHY behind the NO — I had heard No through email, or through analytics, bounce, abandoned carts, etc. The difference with seeing No as a blip on a dashboard or some red dot in a report, versus looking someone in the face and having them tell you that your product isn’t right for them is HUGE. By being there in person I was able to use other tools (like my eyes!) to capture valuable information: their size (number of employees), the maturity of their systems, roughly how much they spend on IT, the number of calls that were coming in and how many people were answering them (which is important to me)… Furthermore, we were able to dig into what No really meant, and the WHY behind the No.
3. Test for other parameters — The first thing you do when getting to No in person is to test as many parameters as you can. So I tested other price points, features, even bundles. At one point I found the combination that COULD have turned the No into a Yes, but there was no way I was going to shift the direction of our product for one customer. I simply did this to collect more information and see how far off she was from our target persona. You can even do A/B testing of your feature ideas and see how they react. Not sexy, but valuable.
4. Learning to “qualify out” — I first came up with this concept during my management consulting days, and shared the methodology during a talk at 500Startups. Similar to the first bullet, the idea is that you not only come up with the target persona but also develop a target filtration process so suitable prospects can easily determine fit at a low cost and higher rate of velocity. This means your website messaging, who you target for paid traffic, their first time experience, your pricing, T&C’s,… Designing this requires direct observation of the situation, taking questions and objections from the customer, finding the patterns so you can setup the filter.
5. “What did you think it was?” — Wow, how easy is it to simply assume that others will see your product as you do. Wrong! This intro came from someone who loved our product, and in turn introduced it through email to a friend. At one point she said “this is nothing like Fred described it!” Through more Q&A I determined where things were being lost in translation, and how she perceived us and the product. Hearing No gave me the opportunity to dig deep in this area as I had nothing to lose. Can you imagine an email exchange asking for this information? What would the response rate be? 2%? What would the accuracy rate be???
6. Reduce churn early — Lets face it: when you have 100's or 1,000's of customers you are are going to have a semi-predictable churn rate, and will do all you can to reduce to maintain it. Early on however, you want to optimize for high-touch, high-love. As a founder you should be in contact with 100% of your early user base (whatever that means for you). By “qualifying out” early you can reduce churn and make a bigger impact with the customers you connect with.
7. Hearing No makes the Yes even better — I need people to want my product, and in doing so they are validating the past 3 years of my life. As painful as the No’s are they make the Yes all the sweeter. Imagine if everyone said Yes to you? There would be no magic, no pat on the back moment. I’m a big fan of BJ Fogg and Tiny Habits, and this reminds me of his reinforcement principles. It’s tough hearing No, from anyone. But it makes you hungry, hard working, and grateful of the Yes.
8. Hearing No makes you humble — I had a lot of success in my past life. Not going to lie, it was pretty good. This startup shit is hard, really hard. I even got a lot of Yes’ when we first started out (focused on F500 market, my background) so my arrogance was unchecked. Hearing No has humbled me. Brought me to my knees at times. I remember hearing No 80+ times from investors, and what that taught me. Hearing No has humbled me, in many ways. It has changed me as a father too. When I hear No I thank the person saying it, because I know it must be hard for them too. Especially when they are doing it to your face.

What have you learned from No?

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