Alan Gleeson

Praise Where Praise is Due

by Alan Gleeson on February 3, 2012

It all started with a simple email exchange. The final mail was short and to the point ‘ thanks for the great customer service, sadly it is unusual.’ It got me thinking.For me the exchange was pretty straight forward. A customer had emailed in with a query. I was in early, before the customer service team had arrived and I logged in to our email management tool. It was a straight forward request so I jumped in and answered it. The customer came back later than morning with another question and having had the initial correspondence with me I again answered it. No big deal?

Then I remembered a recent experience with a utility here in the UK. I was dumb founded when I mailed them with a billing inquiry and received an auto reply advising that I could expect to hear back from them “within 28 Working Days”. They had to be kidding? But they were not.

I diarized forward the 28 “Working Days”. The 28 working days passed. My query remained unanswered. It prompted another mail. You guessed where this is going – the same automatic response. I headed straight to Twitter where I relayed the story as best I could within the constraints of a 140 character limit. I think my post contained a phrase relating to them ‘abusing monopoly powers’. My response from a concerned customer service person was within the hour, yet this impressive response time was not matched by any substance. The query remained unanswered until eventually thirty something working days after my initial mail I had a meaningful response.

While these two extremes represent different narratives, I’d like to think more and more of us are striving to be more like my opening example. In today’s world, customer service needs to be improved to levels that even Tony Hsieh of Zappos.com fame would be happy with#. It needs to be personal, responsive and device agnostic. Customers are no longer content to sit ‘on hold’ while the premium priced number racks up a bill under their name. Social media brings transparency to all and service levels increasingly inform purchase decisions.

As managers we need to adapt to this new world. If it means extra training for staff then so be it. Or better product design. Or increased resources. As one entrepreneur I heard speak recently put it – “every customer service contact is an opportunity for us to assess whether we could be doing things better”.

Finally, if it means better tools and products to manage customer service these too need to be considered as worthwhile investments. In this instance, Email Center Pro, a cloud based email management tool we developed in-house at Palo Alto Software played it’s part in enabling me manage incoming support mail efficiently. A good workman praises his tools.

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How to Negotiate with Prospective Investors

by Alan Gleeson on January 26, 2012

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Image via CrunchBase

Raising finance is a time consuming process and can also be quite stressful (particularly as time progresses). There may be some date in the future where your current trading position is no longer sustainable (which has brought you to the table in the first place). It is worth remembering that you need to recognise that the more desperate your situation, the more vulnerable you will be, which will typically result in poor decisions. Hence the sooner you can commence the process the better.

Similarly, if the investment is for growth capital, as opposed to capital to keep you afloat, the circumstances and investment terms will vary.

Firstly, you need to identify some potential smart investors (by ‘smart’ I mean investors who bring more to the table than just cash i.e. access to a network of contacts, distribution etc). You then need to submit a business plan (or executive summary) to them so they can assess the opportunity with more context (ideally you’ll have a warm introduction to these people). Assuming you pass this hurdle they are likely to invite you to a meeting. If you have been asked to come in to pitch you need to remember that the process should be a balanced discussion rather than a monologue. You need to frame the meeting so that it resembles an interview where the discussion is two-way, rather than a one way interaction where the prospective investors scrutinise your business plan as you defend the content. As I have detailed previously, it is not just about the cash, so you need to be clear about what other requirements you have to help you secure ‘smart money’.

The following questions will give you an idea of some of the areas you should explore with them.

What can they bring to the table other than just cash? While the requirement for funding is typically the main reason to engage with external investors, it is also worth identifying other criteria that are important to your business, such as contacts or ‘access to markets’. Ideally you’ll look to partner with an investor who has knowledge of your specific sector, as well as a network of contacts that can be called upon when needed.
What is their preferred exit strategy? It is worth gaining an understanding, up front, of the timeframe in which they are looking to exit, as well as an understanding of their future plans. For example, you might want to know whether they are likely to be interested in any subsequent investment rounds (if required).
What is their required level of involvement? It is also worth understanding at an early stage how active a role the investor wishes to play in your business. There is no point taking investment from someone who does not bring the required contacts to the deal or who insists in involving themselves with the day-to-day running of your business.
What other investments have they done? You should ask the prospective investors if they could provide you with some references from current investments, as it is highly advisable that you speak to people from companies they have stakes in, so you can fully gauge their style. Venture Capitalist, Mark Suster suggests in his blog post ‘How do you reference check a VC’ that: ‘First, I would say that most entrepreneurs do almost no reference checks or at least do them very informally. Don’t let that be you. Most VC’s will happily supply you with a list of CEO contacts of the people who will speak to you about working with them. Don’t be afraid to (politely and respectfully) ask for this. In fact, they will think better of you because you’re demonstrating that you’re the kind of thorough person that they wanted to invest money into in the first place.’
What are the terms of their investment? Finally you need to be very clear on the terms of the investment i.e. above and beyond the headline rates. You may receive a term sheet which outlines the terms of the investment, and this will need to be reviewed by someone qualified to do so. While this may seem an ‘optional expense’, it is not, as term sheets can include onerous terms and must be treated with caution. In short, you need to enter discussions with investors from a position of strength rather than a position of desperation!

By having a strong business plan, an impressive team, a viable market opportunity, and a keen understanding of the investment process, you can ensure that you engage on strong terms. As in any negotiation, you are seeking to strengthen your hand. If you can ultimately have multiple investment sources to choose from, you will increase the chances of a satisfactory outcome for all involved.

Alan Gleeson is the General Manager of Palo Alto Software UK

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Troubling Times in Europe

by Alan Gleeson on October 6, 2011

Economic woes continue to dominate the headlines here in Europe (as in the US). Solutions to the problems are less forthcoming. One thing is certain, once the dust settles, the implications arising from the problems will be far reaching. The European Union is under significant stress (especially the members of the common currency) and it conceivable that some members will soon be forced to leave the Euro. How it will all play out is impossible to figure out, but the likely scenarios mean that profound change is likely and uncertainty abounds. On the ground it is equating to reduced demand (as people squirrel savings away – despite historically low rates), increasing unemployment and nervous financial markets.

As if this was not bad enough, a leading Swiss bank UBS has recently announced losses of $2.3bn following the actions of a ‘rogue trader’. This loss raises serious questions about the risk management capability of large financial institutions, as well as the incentive structures for staff who are motivated to take large gambles with other people’s money. Of more pressing concern is the fact that bank losses from reckless trading continue to happen (losses sustained by Anglo Irish Bank are the main reason that Ireland is in such trouble).

The problems run deeper however, spanning all parts of society, as the widespread looting and rioting in the UK last month illustrate. Two articles in the London Evening Standard newspaper give some insight into the background of the rioters and offer a contrasting light on what goods are desirable for this group.

“On the worst night of London rioting almost every shop in Clapham Junction (London, UK) was ransacked – except one. The bookshop. In one of the most telling images of the summer, looters stole TVs, hair products and iPods, but the Waterstone’s branch was left untouched. What this free-for-all revealed better than any consumer behaviour poll could, is that many young people have no desire for books. Not even when they are apparently free. Source: Evening Standard

This short anecdote is highly instructive, suggesting as it does that the current generation of 18-30 year olds (the main group charged) have little interest in reading. (Of course there may be another simple explanation such as enhanced security at Waterstone’s -although I feel the above deduction is solid and the most plausible one).

On the opposite side of the street as it were, JD Sports Fashion, a sports apparel retailer was one of the favourite targets of ‘Britain’s rogue shoppers’ as it revealed that $1.1M of stock was looted in last month’s riots. Chairman Peter Cowgill declared that “The riots were a bit disturbing in some respects,” he says. “But I guess they demonstrate the desirability of our merchandise.” Source: Evening Standard

At the moment the outlook in Europe is pretty bleak and business plans are being updated to reflect this uncertainty, or to put it another way; they are being ‘downgraded’ to reflect more modest growth projections.

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Different Views from Opposite Sides

by Alan Gleeson on September 22, 2011

Today is the first in a new series by Alan Gleeson, managing director of the Palo Alto Software UK offices. The series will focus on business issues and commentary from the EU perspective.

John Dennehy is a serial entrepreneur based in Cork, Ireland. His latest venture Zartis.com is an impressive software-as-a-service application that makes it easier to manage the recruitment of employees. The software integrates with applications such as Facebook and LinkedIn and pulls data into a dashboard so employers can save time and money managing the entire hiring process.

Despite the difficult economic conditions in Ireland, entrepreneurship is buoyant. There are a number of reasons for this; a supportive government, a highly educated workforce, a falling cost base and a favourable tax regime. It is also a function of both attitude (Irish people are generally very entrepreneurial in outlook) and culture, i.e. the geographic context of being a small island with limited resources has meant that Ireland has always relied on overseas trade. For others, a career in entrepreneurship is a matter of necessity when compared with the less palatable alternatives of emigration or a stint on social welfare. The unemployment rate currently stands at 14.5 % (September 16, 2011) with a high portion of this being amongst young graduates.

Like many of his peers John’s outlook is global, with a strong focus on the US. The market opportunity in Ireland is simply too limited for Internet ventures like Zartis.com to succeed without looking overseas. An island population of 6.4 million is a far cry from the US with over 300 million. Europe can also be a difficult place to do business with different currencies, languages, legal systems and heterogeneous cultures. As an Irish Government Minister once said;

“As Irish people our relationships with the United States and the European Union are complex. Geographically we are closer to Berlin than Boston. Spiritually we are probably a lot closer to Boston than Berlin.”

Source: http://www.djei.ie/press/2000/210700.htm

The view across ‘the pond’, as the Atlantic is known, is very different depending on which side you are standing on though. For many US entrepreneurs the path is pretty straight forward; gain traction domestically and then look to expand overseas using Ireland or the UK as the first overseas outpost. The benefits of locating in the UK or Ireland are compelling as there are no language barriers, a well educated populace and well developed communication infrastructures. In Ireland’s case a compelling corporation tax rate and a strong Irish American diaspora has made Ireland the more popular of the two in many instances. As a result American behemoths such as Intel, Apple, EMC, Microsoft, Facebook and Google all have extensive European bases there.

From Europe, breaking into the US is a much tougher proposition. Establishing a US base is expensive and can be tricky given additional red tape with everything from securing work visa’s through to establishing legal corporations.

The popularity of the American search engine, Google can also serve to inhibit the growth of European Internet firms. The search results we get here in Europe typically contain numerous results from US sites displacing local sites that may have more relevance. Given that search engine results are hugely important in gaining market awareness, this factor makes it more difficult for many European Internet companies to compete favourably with their American counterparts. Of course there is more to the story than just that, in my view, Americans are also less risk averse compared to Europeans and more likely to embrace new technologies so customer adaption rates can be much higher in the US.

Despite some of these structural limitations, entrepreneurs like John do succeed. If you build a great application with a strong customer proposition and back it up with an effective marketing budget, the importance of location diminishes. Eventually you may end up with a call from a US Venture Capitalist or competitor looking to acquire you as Autonomy and Tweetdeck did.

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Time for a Plan B

by Alan Gleeson on January 7, 2011

One of the main challenges entrepreneurs face is gaining market acceptance or traction i.e. custom in sufficient volumes to transition to profitability. If they are not getting traction after one month of operations, entrepreneurs need to quickly assess what they need to do to fix matters. Increasingly this means they need to be extremely flexible with their business models, something that is a lot easier to achieve in less capital intensive start-up’s such as Internet based ones.

This flexibility is something that does not always sit easily with their early stage investors (investors tend to want some degree of certainty with regard to the type of business they were investing in). In the past protection was provided by documents such as the business plan, and the Memorandum of Association which set out the line of activities a company could undertake.

However such inflexibility is no longer wise, a point author Steve Blank argues in his post ‘But what does a Business Model have to do with my startup’ . In this article he states that the primary role of an entrepreneur is to iterate and test assumptions and hypotheses they have made with regard to customer behaviour and demand until they find a commercially viable business model.

‘Your startup is essentially an organization built to search for a repeatable and scalable business model’

In other words he is saying that entrepreneurs operate in such an uncertain environment that flexibility has to lie at the heart of everything they do and they are essentially functioning as a market researcher.

In many respects this shift in perspective is most appropriate to Internet startups where entrepreneurs can develop a website at low cost, offer a range of services and focus their efforts on the one that gains most traction. Hence a key skill is to know how to ‘pivot’ to an alternative product a concept author Eric Ries first described;

“I want to introduce the concept of ‘the pivot’, the idea that successful startups change directions but stay grounded in what they’ve learned. They keep one foot in the past and place one foot in a new possible future. Over time, this pivoting may lead them far afield from their original vision, but if you look carefully, you’ll be able to detect common threads that link each iteration.”

Ries is a key proponent of something called the Lean Startup movement, which argues that startups need to develop products and markets by focusing on testing, agile development, constant iteration in response to customer feedback and the need to have a very strong customer focus.

While Ries and Blank talks about the need for entrepreneurs ‘to pivot’ , authors of the book Getting to Plan B, John Mullins and Randy Komisar argue a similar point advising entrepreneurs to recognise the importance of having a ‘Plan B’. They argue that many start-ups build business plans on flawed assumptions and fail as a result. They prescribe a systematic process which bears many similarities to the methodology prescribed by Blank, where the entrepreneur is encouraged to iterate, replicate innovation seen elsewhere, and to ensure that they are learning from their experiences.

Paypal is a great example of one such company that went through numerous iterations before settling on an email payment system. As founder Reid Hoffman described recently;
‘Over the years PayPal has made multiple significant pivots. The company started as a mobile encryption platform. Then it was a mobile payments company. Next PayPal was a combination mobile and Web site payments company. Finally PayPal became an email payments company. Each pivot over the life of the company was the result of rethinking the business but maintaining the vision. The focus was always to become a payments operating system; but the nature of the operating system changed multiple times.’

The implications for both entrepreneurs are investors are pretty straight forward. Early stage investors need to encourage entrepreneurs to focus less on the product side and more on the customer side. Entrepreneurs must not blindly adhere to a business plan, but rather use business planning in the form of milestones, targets and goals to ensure that they can spot when something is not working and pivot accordingly.
Alan Gleeson is the General Manager of Palo Alto Software, Ltd, creators of Business Plan Pro®. He holds an MBA from Oxford University and an MSc from University College, Cork, Ireland. For further information on writing a business plan, visit www.paloalto.co.uk

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Business Startup Exhibition in London

by Alan Gleeson on May 27, 2009

Given the international nature of this blog we have many readers around the world, including the UK. We’d like to advise those based near London that we will be exhibiting at the Business Startup Exhibition in ExCeL London. The exhibition takes place on Thursday May 28th and Friday May 29th and is completely free to attend. Alan Gleeson of Palo Alto Software UK will be presenting a workshop entitled ‘Will my idea work?‘ on Thursday at 10am. Please feel free to drop by (we are on Stand 215) if you are in the vicinity.

Alan Gleeson

Palo Alto Software UK

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Black Swans and Strategic Business Planning

by Alan Gleeson on May 22, 2009

What are black swans and what have they got to do with planning?

The term ‘back swan’ is a metaphor for a highly improbable event, and is derived from the previously held assumption that ‘all swans were white‘ until the discovery of black swans in Australia. The term ‘black swan’ then came to connote an occurrence or an event which was previously assumed to be impossible. (Nassim Taleb) The concept is not a new one. In economics, such black swan events are known as outliers, in that they sit outside the range of typical occurrences spread around a mean.

Find out what all of this has to do with planning in this new article -

Black Swans and Strategic Planning by Alan Gleeson (Palo Alto Software UK)

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Helping to cut costs for UK based businesses

by Alan Gleeson on May 19, 2009

cmypitch.com, a UK based business website which provides online services for UK entrepreneurs and SMEs, has just relaunched with a more diversified offering. While their original focus was predominantly on providing a video based platform for entrepreneurs to pitch their ideas, the new site has a much broader range of offerings.

In part, I assume, to reflect changing economic conditions, they have added a number of sections ranging from a ‘free special offers section’ to a ‘cash back section’ to a ‘price comparison section’ for utility providers to small businesses. These changes would seem to reflect the cost cutting drive many UK SME’s are on as they attempt to shore up their P&L’s against a back drop of falling revenue.

Hopefully this cost cutting mindset is temporary, and entrepreneur’s and SME’s get back to doing what they do best- exploiting opportunities, and hopefully shifting the emphasis back to true entrepreneurship.

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Business Planning workshops scheduled for London

by Alan Gleeson on January 7, 2009

Palo Alto Software Ltd is delighted to announce that we will be running a number of business planning workshops in London, U.K., commencing on 27 January 2009. These business planning workshops will be run in conjunction with Company Partners, a Wokingham-England based business matching service, and will be held at the British Library in Central London. These workshops will be the perfect complement to our best selling Business Plan Pro product and will cover everything from pitching your business to understanding key elements of your business plan such as sales forecasting.

There are a small number of early bird tickets still available for this inaugural business planning workshop.

Alan Gleeson
Palo Alto Software U.K.

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Lessons for Entrepreneurs- Techcrunch UK & Ireland event

by Alan Gleeson on December 17, 2008

I attended the Techcrunch Talk hosted by Mike Butcher in London yesterday (December 16th). It was a fantastic event with a host of excellent contributors including Barry Vitou (Winston and Strawn), Sean Seton Rogers of Balderton, Andrew Scott of Rummble, Greg Marsh of Index Ventures and Colette Ballou of Ballou PR.

Here are some of the key lessons from the event:

1. Need to monetise early

The days of entrepreneurs being able to spend two years on a concept before it brings in revenue appear to be well gone. The revenue model also needs to be built in up front rather than tacked on afterward.

2. The more revenue streams the better

If possible, seek to supplement income for your new idea while it is in development, e.g., can you undertake some consultancy? Better still, can you find someone who will help pay for a prototype?

3. Manage cash flow

Ensure your business plan includes a realistic cash flow forecast, break-even points and milestones. Click here for more information on cash flow management.

4. Next year is the year of bootstrapping

As funding dries up, cash burn rates need to be managed very carefully. Bootstrapping is likely to become increasingly important for entrepreneurs.

5. Need to reduce cash burn with new solutions

Entrepreneurs need to closely analyze where they are spending to assess whether there are significant cost savings to be made from switching to newer more competitive solutions, e.g., outsourcing hosting to Amazon hosting.

6. Need for better business plans

One thing evident from the pitches, was the need for better business plans given the more competitive market for funding. Many high net worth investors have suffered in the past year (across a range of asset classes), reducing the number of angels currently looking to invest.

For more information on the Techcrunch event click here.

Alan Gleeson
Palo Alto Software Ltd – UK

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