Caterpillar Cowboy

Whenever you tell entrepreneurs and investors that you’re going after the small business market, the inevitable question is, “What is your customer acquisition strategy?” I thought I’d lay out my thoughts on this, as it relates to Postling.

Customer acquisition, which really means “How will people know you exist, and how will you convince them to care”, usually comes in four forms - sales, advertising, channel partnerships, and word of mouth. We decided that sales was completely out of the question, because we didn’t have the money or the expertise to do sales well. We’ll do some testing to see if paid ads on Google / Facebook will work for us, but I’m skeptical, especially after hearing from Drew Houston of Dropbox how poorly it performed for them.

That leaves channel partnerships (top-down) and word of mouth (bottom-up), and that’s where we’re headed. (Also, read this superb post by Mark Suster about the dangers of channel partnerships.) So how do we get word of mouth going?

That’s where Sidewalk Collective comes in. Sidewalk Collective is a monthly meetup for local business owners to teach each other how to use various technologies to improve their business. We had our first event last month in NYC and this month will be holding events in NYC + LA. (Next up, SF and Philadelphia!)

Here are the components of our strategy:

1. Peer leadership. While Postling is the official organizer of the meetup, the meetup discussions are lead by other Sidewalk Collective members. This is important; if we were to lead the discussion ourselves, it would come across as too much like a sales pitch.
2. Start with influencers. Our strategy is to reach out to the business owners who are already on Twitter / Facebook — the ones who “get it” and are role models — and ensure that they have a fantastic experience at their first event. If they leave their first event having learned a ton and are excited for the next one, they will bring their friends to the next event (who will bring their friends, too). 
3. Work with local organizations. The Chamber of Commerce is a great partner in driving awareness. Same goes for your local greenmarket, neighborhood small business associations, etc. All of these organizations are looking for valuable events to recommend to their members (in order to earn their annual dues).

What’s in it for us?

1. Permission marketing. At the end of the event, people inevitably ask, “Thanks so much for the great event… so what is Postling?” And we can tell them how they can use Postling to apply all of the great tips and strategies they just learned about using us. 
2. Customer development. We are hearing straight from our target customers’ mouths what pain points they experience, what their routines are like, and what keeps them up at night. 
3. Cultivating awesomeness (read this!). Forming real relationships with our customers and helping them be more successful leads to the kind of sticky loyalty that lower-priced copycats can’t defeat. 

If you are interested in creating a Sidewalk Collective in your city, email sarah@postling.com. If you would like to discuss a sponsorship opportunity, email josh@postling.com. Our next event is Tuesday, May 25th at 7pm in both NYC (tickets) and LA (tickets), with a free Postling workshop starting at 6pm.

Two weeks ago, we launched a new design for Postling (and many thanks to Jess and Kevin for their amazing design talent). Three weeks prior, I had written a blog post about how I raised $200k in 6 days at SXSW (including from Dave McClure in the time it took him to smoke a cigarette). I think it’s time to explain in more detail what happened and where we are going.

Postling v1.0 was a social media management tool for small businesses. It was $9/month with a 30 day free trial, and you could manage your blog / Facebook / Twitter / Flickr all in one place. We got several hundred users but not a lot of conversion into paid.

Postling v2.0 was the same thing, but expanded to allow multiple people to manage multiple brands, and targeted at enterprises. We made the single user version free, and it cost $30/month/license. We got several thousand free users and ~$1000/month in recurring revenue, but sales cycles were 4+ months, investors didn’t see anything interesting, and we were pretty inexperienced (and uninterested) in enterprise sales.

With this launch of Postling v3.0, we are getting back to our roots with small businesses but expanding the vision a bit. My goal for Postling is to be the dashboard for local businesses that brings together the best tools they need and teaches them, via community and algorithms, how to use those tools effectively, resulting in driving more people through the door. (Hat tip to Greg Battle for forcing me to write that positioning statement. It’s an incredibly helpful exercise.) 

Another way of saying this is we want to solve two problems for local (brick & mortar) businesses: What tools should I be using for my business? How do I become an expert at using them?

It should be fairly obvious why we (and investors) like this idea so much better, but I’ll count the ways: bigger market, less competition, more potential for secondary (and tertiary) products, better alignment with our experience and passion, and stronger network effects.

With this new focus, we redesigned our site, launched Sidewalk Collective in NYC (coming soon to LA, SF, and Philadelphia), and have some seriously awesome stuff in the works. I’ll be describing those in more detail over the next few posts.

GigaOm just posted about the $350,000 angel round we just raised. Here’s the inside story how we raised the money.

Back in January, we raised about $150,000 from friends & family - my mentor from DreamIt Ventures, my old Amazon VP, my parents, a friend from college, Jeremy Arnon (a bizdev guy I met at NYTM) and his twin brother, and a Wall St. banker who is the best friend of Josh (my new business development guy). We considered doing convertible debt, but ended up pricing the round. (Happy to explain that in a future post if anyone is interested).

Our excellent lawyer (Jay Rand, Manatt) put a clause in the term sheet that gave us 60 days after the close to fill out the round, which officially closed February 4th. Smart move, considering we just filled up the round today, 57 days later. 

Then, Venturehacks launched AngelList, which changed everything.

AngelList is a collection of amazing angel investors, all waiting for your brilliant idea. You fill out an application and, if you’re awesome enough, your application will be sent out to everyone on the list. You’ll then be introduced personally over email to anyone who is interested.

As reported by Venturehacks, we sent out our application once, touting our idea of “social media management for businesses”, got 8 fantastic introductions, and were ultimately funded by David Rose and Chris Yeh. The Venturehacks guys came back to us and said, “We want to send your application back out onto AngelList with the added social proof of being invested.” 

To give you some context, over the last 3 months, we followed the Customer Development methodology and went outside of the building. And we found that the social media management tools space was commoditizing quickly, with everyone concentrating on selling to a small sliver at the top (media companies, PR, agency, etc). We also met with VCs, who gave us the same feedback. So it was time to pivot.

So we pivoted (explained in the GigaOm post, but I’ll say more soon), and sent the new direction to AngelList. And this is where the craziness started.

My first phone call was with Tom McInerney, 3 hours before I was flying out to SXSW. After about a 30 minute phone call, Tom was in. He then introduced me to his friend Paige Craig, who would also be at SXSW. I met Paige in Austin, and after meeting, he told me he was in. The next day, at a Venturehacks meetup at the Four Seasons hotel, he pulled over Dave McClure. We went out to the balcony (he wanted a cigarette) and I pitched him. He was in. The following day, I spoke with Thomas Korte, who moved up our scheduled phone call a couple days once he heard Dave was investing, and he was in. I also got an email introduction via my friend Russ (founder of SeatGeek) about his investor Kal Vepuri, who was also at SXSW. Kal and I spoke on the balcony of the Austin Convention Center, and I was blown away by his intelligence and humility. So Kal was in. Finally, my friend Michael Galpert of Aviary connected me with Gary Vaynerchuk, who is a perfect investor for us given what he is passionate about (social media for businesses). David Cohen finished off our round not too long after that.

So that’s it. Through a combination of a great team (Chris & Haim founded Etsy), customer development, responding to feedback, AngelList, networking, and being able to articulate a compelling vision backed by domain expertise, I was able to raise $200k in the 6 days of SXSW! 

If you have any questions, leave a comment or email me at david.lifson@gmail.com. Thanks!

Tomorrow, I’ll be presenting Postling to a bunch of digital media executives and investors at PluggedIn, hosted by Founders Roundtable. Should be a great event. 

Here are the slides for my presentation. Make sure to click the “Notes on slide 1” tab underneath the slides to read my speaker notes. I’m most excited about the search functionality we’ll be launching soon (see slide 13).

Let’s remember two quotes, one by Google CEO Eric Schmidt and one by Amazon founder and CEO Jeff Bezos.

Eric Schmidt: “Let’s not check the rearview mirror, or else we’ll drive off the road.”

Jeff Bezos: “A different way to organize your energies that can be very effective is to be competitor-focused. If you’re competitor-focused, you have to wait until there is a competitor doing something. Being customer-focused allows you to be more pioneering. We have found that, on the Internet, “me too” strategies seem not to work very well.” 

Yesterday, there was some ridiculous discussion about the death of RSS. It started with Steve Gillmor, moved on to Mike Arrington, continued with peHUB, and got so out of hand that Fred had to post about it. Read Fred’s post if you need more help understanding why it was a ridiculous discussion.

As a startup entrepreneur, there is definitely a lesson to be learned here: Understand who your real customers are and focus on solving their problems. Ignore the competition and ignore the tech mob. This is something we’ve taken to heart with Postling.

Obviously, Postling is a very young product. But we do have a clear understanding of who our customers are and what the problem is: Business adoption of social media is here to stay, but there is no unified interface from which to interact with all the different tools one needs. Businesses are spending too much time learning and using the ever growing number of social media tools and platforms. That time could be spent focusing on what they know best, which is growing their business.

When we launched Postling, a bunch of the comments we saw on TechCrunch, Mashable, and ReadWriteWeb were centered around “Ping.fm does this and supports all these other social networks” and “Posterous already lets me do this plus has all of these other features.” Ping.fm and Posterous are great products, but they are solving different problems for different customers. So instead of playing “feature catch-up”, we launched some unique features of our own:

• All comments left on your content are pulled into one place, regardless of if it is from your blogging platform or Twitter or Facebook or Flickr.
• You can publish status updates and photos directly to your Facebook Fan Pages.
• You can choose where you publish to, instead of ignoring community context and blasting it out everywhere.

It’s been one month since we launched Postling, and we’ve been overwhelmed by the response. We have more customers than we would have expected and have been working on various partnerships that will allow hundreds of thousands of people to benefit from using Postling. And we’ll keep listening to our customers and learning about what they need and ignoring the rest.