TSP BONUS | TIM SANDERS – Transcription
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John Livesay:
Welcome to The Successful Pitch. Today’s guest is Tim Sanders, the author of “Deal storming.” He said, “When a deal is in danger, don’t go down alone. Collaboration is not a last resort.” He said, “If you really want to stand out from your competition, show that you have rapid problem solving processes in place that allow you to not stay stuck.” When you’re talking about your team, he tells the difference between a tall team, and a wide team. Be sure to listen to find out what he means by that.
Finally, he has great insights on how you have to sell, not only yourself to get customers, but to sell yourself to get the investors to pick you out of all the other pitches that they’re hearing. He has tons of secrets on how to make deal storming your secret sauce, because you combine deal making, which is left brain, and brainstorming, which is right brain. Together, you get deal storming. Enjoy the episode.
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Today’s guest is Tim Sanders on The Successful Pitch. There are few people in life that change your life, and there are few books in life that change your life. For me, I had the fortunate ability to have a book change my life, and the author of that book change my life. That book was “Love is the Killer App” and that author was Tim Sanders. Over 10 years ago, I read that book, was completely blown away by the content and reached out to him via email. We started a relationship, and I was honored and thrilled beyond belief that he was willing to write a foreword to my book that came out over 10 years ago. We have since had an amazing friendship and relationship.
He continues to inspire, not just me, but thousands and thousands of people around the world. He spent most of his career on the cutting edge of innovation and change. He was on the ground floor of the quality movement, the launch of the mobile phone industry, and today he’s now all about disruptive change. He was an early stage member of Mark Cuban and Todd Wagner’s Broadcast.com, which had the largest opening IPO in history. After Yahoo! acquired the company, Tim had a great title called the Chief Solutions Officer, and he was tapped to lead their value lab which enabled sales teams to close hundreds of millions of dollars. By 2001, he was up and running as a leadership coach. Then now, in 2005, he founded Deeper Media.
Tim, thank you so much for joining me on the show today. You have been a guest of potential of mine since I started this. I’m now 70 episodes into it and I feel like I’m really prepared to talk to somebody.
Tim Sanders:
My pleasure to be with you, John.
John Livesay:
Yes. I always love to hear the story, because one of the things that I’ve learned from helping people on The Successful Pitch craft good pitches, the importance of story telling. Nobody tells a story better than you, Tim Sanders. I’ve heard you speak live multiple times and you just grab the audience with these amazing stories that are not just funny and interesting, but have these great take-aways. Can you tell us how you became such a good story teller?
Tim Sanders:
Well, I have been fortunate to live through a lot of really interesting stories. Over the course of time, I’ve always tried to learn something from every interesting encounter because a lot of times, stories are just that. They’re encounters. They’re problems, movement, encounters and solutions. To answer your question specifically, John, I begin to really work earnestly on story development as I started to give more speeches on the lecture circuit because I needed to move audiences to action. I learned that as we tell stories, people are with you during your talk. If the story reinforces something, then they’re willing to make a change.
I read a book around 2002 titled “Working the Room” by Nick Morgan. It’s been re-titled since then by Harvard Business Press as “Give Your Speech, Change The World.” It’s by Nick Morgan, he blogs at PublicWords.com. I hired him to be my coach because he specializes in learning how to write a speech that is structured around one of the five architypal stories, then learning how to use anecdotes, what most of us call stories. How to use anecdotes to change the viewer or the attendee’s perspective.
He taught me that there’s only five stories in the world. There’s the love story. There’s the revenge story. There’s the hero’s journey. There is the fish out of water, also known as the stranger in a strange land. Then, lastly, there is coming of age. That’s it, and these five stories are deeply coded into our collective psyche, through mythology and story telling, right? We know these stories inside and out.
As a communicator, if you think of your speech, or if you’re telling an anecdote, if you think of your story as following one of those five lines, that it has a very predictable plot. It has a beginning, it has dynamics. It has a result, and the result has a moral to it, and the moral becomes actionable to the people that hear it. That’s what I’ve worked on for a really, really long time. In my business, I write books, I give speeches, to help people change their perspective or validate their perspective. Stories move people.
I’ll say this finally, perspective is just our story or stories about how the world really works. Whether that perspective is a religious belief, or a political ideology, or a business best practice, or an entrepreneurial habit, these are all based on the stories that are in our mind about how the world really works, right? What’s successful? What does karma mean? All these things, so that’s why stories are so powerful, because they feed one’s overall perspective.
John Livesay:
That’s great. It either helps you reinforce your perspective, or give you a new one. That’s literally what you’re trying to do when you’re pitching an investor is to get them to think about something, ie, your idea, or app, or product, in a way that they haven’t thought about that would generate them to want to write a check to you versus all the other pitches they’re hearing in a day.
Now, you have a new book coming out called “Dealstorming” and I just think the title and where it came from is so fascinating. Would you tell us that story of deal making and brainstorming from Yahoo! days?
Tim Sanders:
Well, absolutely! It actually traces all the way back to when I was at Broadcast.com. Basically what happened is we got a new sales VP that came in and he’d been with a variety of different start-ups that had gone from zero to a billion dollars. He knew that the problem for most of this is that we’re so underfunded in the start-up, we just try to do everything on our own, right? He taught me in a meeting, if you want to be successful, you’ve got to learn how to never go down alone. That when you get stuck in a situation, say trying to raise money, trying to make a sale, whatever.
He says “Build a team.” What he taught me is the difference between a tall team and a wide team. A tall team is a team of people that work in line with each other all the time. In the business world, think of it like sales manager, sales person, account coordinator; those three, they work in a vertical line, right? A lot of times, that’s who’s collaborating to finish the sale.
Those teams aren’t as successful as the wide variety of teams. For example, think of the account executive partnering with someone in the marketing department, partnering with someone in operations who actually delivers on the signed deal, and then partnering with someone in pricing, in the finance division. That’s a wide team. Multiple disciplines coming together around an opportunity because they all have a stake in the outcome. The wide teams absolutely beat the tall teams in the market because when you bring together diversity, ideas bump into each other, perspectives collide together, and that’s where innovation really happens.
When I went to Yahoo! after the acquisition, I specialized in creating wide teams to conquer business development challenges. Whether it was trying to sell something, trying to buy a company, or … looking to acquisition, trying to do partnerships. We worked a lot, John, on rapid problem solving because I believe that the speed in which we solve all those little problems that lead to the done deal is our only competitive advantage. Rapid, rapid problem solving is how companies stay great and get great.
When you look in the world of start-ups, whether you’re going to go back and look at Facebook, or AirBNB, or Uber, that’s what those people did. They just cycled through the thousand little problems that were between vision and reality. They did it faster. Think about this in the world of start-ups. Facebook was faster at solving problems, whether they were technical problems or problems. They were faster than Myspace. Uber was faster than ZipCar, who was the big kid on the block when they first came on along. AirBNB was faster than HomeAway, who was also the industry leader when they came along. When you look at a lot of these real trophy case studies on start-up world, what I see is not a brilliant invention but in fact, rapid problem solving culture. In every one of those three cases, they were merely improving on an existing product.
John Livesay:
That’s so great. We’re going to talk about both of those ideas because when you give a pitch to an investor, one of the key slides is who’s on your team?
Tim Sanders:
Right.
John Livesay:
If a start-up founder were smart enough to buy “Dealstorming” and quote from it, that they don’t just have tall teams, even though they’re lean, they have a wide team and that everybody in the company is part of the team, and part of the sales process to generate revenue. That would make an investor sit up and pay attention of “Oh, this person’s created a culture that’s a little bit different than other start-ups I’m talking to.”
Tim Sanders:
Yeah, let’s talk about that for a second. You make a good point. I’ve built a couple of start-ups in my day. I fell for the romantic notion that the ultimate start-up is two engineers. Have you ever heard that?
John Livesay:
Yeah.
Tim Sanders:
Well, I’m not an engineer, but I’ve had a start-up where it was me and two engineers. Then, they added more engineers, and then we raised money, and added more engineers. What’s wrong with that? You basically an engineering stack and a non-engineering founder. That is not a wide team, okay? When you think about a start-up, you need to have your core engineering team, but you need to make that add from marketing and sales. You need to make that add for operations, or it could be operations/finance. You need to make that add to have somebody that’s dedicated to say, partnership development, or whatever. I’m just kind of making this up, but as an investor’s able to look at a founder tree, and see that they’ve recruited the center, the forward, the point guard, the shooting guard, the power forward. They go, “Okay, that’s a real time.”
Here’s the issue. If all you do in start-up world is put together the skill positions, the engineer for example, that’s the equivalent in the NBA world of having a team comprised of the five best point guards in the world, but that’s all you’ve got. They won’t even win half their games, and I don’t care who you pick. So, that’s a very good point.
John Livesay:
Great, well the other thing you said that I just love, we’re going to tweet that out is, “Rapid problem solving is a competitive advantage, because that’s another key slide that investors look for on the pitch deck.” Which is, what’s your barrier to entry? If you can show-
Tim Sanders:
Exactly.
John Livesay:
The mindset, and be an example would even be better, of how you solve problems rapidly with a short story, again, boom! That sets you apart from all the other pitches they hear. Those two, great, great points.
One of the things you say that I also love is that “Sales genius is a team sport.”
Tim Sanders:
Yes, so if you want to build a collaborative culture, you must dispel yourself and your people of the myth of genius that believes in the lone inventor, the one person. The one person who comes up with the idea, and on his or her own, changes the world. It is, John, a romantic notion that is not true.
John Livesay:
Well, that’s a big myth buster, isn’t it? So many people are wanting all the credit, or especially if you’re a founder, you think you have to do it all by yourself, and all the weight of the world’s on you. It can feel very lonely, but if you start collaborating with other people, maybe even outside of your company to get other ideas and other perspectives, and ask for their advice. It suddenly frees up your creativity, doesn’t it?
Tim Sanders:
It does. Think about Steve Jobs, if he never worked with Steve Wozniak, if he never worked with Jony Ive, if he never worked with Tony Fadell on the iPhone. I mean, think about all the collaborations that Steve Jobs depended on to be the world change he was.
Another way to think about it is, from the invention community … I don’t know if you know this, John, but Thomas Edison is more of a brand that stands for 14 people in a lab than the individual that we think of-
John Livesay:
Yeah.
Tim Sanders:
That had the light bulb moment.
John Livesay:
Wow, I know that.
Tim Sanders:
Yeah, that was a consortion. There was a guy named Thomas Edison, he certainly was a coach/figure head. His name went on the patent. Then the scientific community, they typically always attribute an invention to one person. It makes it easier to market those articles, or those inventions. The reality is, over and over again, from Charles Darwin to Eli Whitney, I can prove to you none of them did it on their own. It’s just a romantic notion. That’s important.
John Livesay:
Yes.
Tim Sanders:
If you understand that a great innovation is a bunch of people on a bunch of ideas creating a soup. Then, somebody notices something in the soup, call it the alphabet soup, they notice a legible word, that’s when it all happens. It doesn’t happen unless we bring people together, so we have to believe that genius is a team sport. What I mean by this is genius is not in the person, genius is in the work. If we, as leaders and entrepreneurs, if we don’t understand that, then we won’t collaborate unless we have to. Collaboration is not the last resort, it is the first step that we take.
John Livesay:
That’s another great tweet. “Collaboration is not the last resort.”
Tim Sanders:
That’s right.
John Livesay:
That’s great, because that sets the whole tone for the culture of the company you’re creating. One of the things I want to ask you about, Tim, is what you’re doing in “Dealstorming” with innovation templates. As you know, that’s what everyone’s looking for is the big idea that’s going to change things, that’s going to have a huge growth. How did you come up with a concept of an innovation template, and what’s in it?
Tim Sanders:
I started out my professional career in quality circle management. Now, this goes back to the 80s. At the time, United States manufacturers were under fire by Japanese competitors who had learned this new quality management technique. It was called TQM. Here in the US, we called it but basically, it was all about being able to trace down a manufacturing defect down to the root cause and then using statistical process to design away from it. We basically, in the United States, we had to catch up, but we had to learn that inspection. That’s not how you determine quality and manage quality. You determine and manage quality by finding the root problem, and then collaborating your way into a statistical model to eliminate defects by design.
Anyway, I started to use a couple of different techniques and then they worked for me again later in sales, and business development. I’ll give you an example, John. In lean manufacturing in Japan, starting at Toyota, there was a process called the 5 whys. The 5 whys is what a manager would ask to get to the root cause of the defective product. Someone might say, “We are getting a lot of brakes returned because the left and the right don’t match perfectly.” That’s a defect. That’s a symptom.
The manager might ask, “Okay, why is that?”
“Well, because the lave at the factory doesn’t cut them 100% equally. They’re only perfect 90 times out of 100. That’s why we have 10% defect.”
“Why is that?” Second why.
The person says, “Well, because they go slightly out of calibration over the course of several days. And, that’s why eventually, since we only calibrate one a week, that’s what creates the variance.”
“Why is that?”
“Well, we only do the calibration once a week because we have to bring in outside company to do it, and we don’t have the budget for that. So, we only have a budget for once a week.”
“Well, why is that?”
“Well, because when we made the presentation in Japan about defects, they told us that that was an acceptable amount. And, that we have our budget for calibration, you know, based on that. But you know, obviously that’s not right.”
Then the last question is, “And why is that?”
It’s that, “Because Japan headquarters doesn’t understand the cost of re-work. They don’t realize that we work as 3 times more than manufacturing, and there’s the root cause.”
Now the manager goes, “Oh, so the solution to this, cascading solution to all of this is to create a cost of re-work down to the skew level.”
Now, they’re not just listening to some general number like 10%. They’re realizing that it’s causing the factory to lose $250,000 a day. Changes everything. Now, “We will approve the cascades,” right? Now, “We will approve calibration every single day to get rid of variants,” and that’s exactly how Japan conquered their quality problems.
This is the same for a business. When someone calls and says, “We can’t get a term sheet from that VC.”
You just said why, you back into it. You start out. “Why is that?”
“Uh, well first of all we can’t get them to call us back. We think they’ve.”
“And why is that?
“Well, maybe when we presented to them, they kept pounding the for traction and we were explaining how to was but we just don’t have that many users, so we’re really stuck on traction.”
“And why is that?”
“Well, because this particular VC only invests in traction, they don’t really invest in IP, or teams.”
“And why is that?”
“Well, because this VC got burned 3 years ago by investing in a great team.”
Now you have your problem, you get it?
John Livesay:
I totally get it.
Tim Sanders:
You’re going from “We can’t get the term sheet signed” to “We have to help this VC get rid of this hangover.”
Or, “We have got to find a VC that does invest in people and ideas, not just traction.” So, I’m using a start-up centric 5 whys, and that’s a template.
John Livesay:
That’s great.
Tim Sanders:
That’s a really good template, because to quote John Dewey, “A problem well defined is half solved.” What I found is that in many situations, we try to brainstorm before we know the root cause of the problem. So then we brainstorm a solution that reveals yet another problem, which frustrates us. It’s like whack-a-mole, and you’re the mole.
John Livesay:
Don’t brainstorm until you really get to the root of the problem, will save you tons of time and lots of frustration, right?
Tim Sanders:
Yeah. I’ll give you another quote, I’m a quote machine, right? Abraham Lincoln, “If I had six hours to chop down a tree, I’d spend four hours sharpening my axe.”
John Livesay:
Yes.
Tim Sanders:
When you think about collaboration, please invest at least 25% of the time having an honest and transparent discussion about the root cause of the problem that has you there to begin with. Because, every deal is a 100 problems solved.
John Livesay:
That’s so true for an investor, and what the investors are looking for when they listen to a founder pitch them is, “How do you think? How did you come up with this idea? How did you get this team?” The fact that you could talk about how you solve problems rapidly to get this competitive advantage we talked about earlier through this innovation platform from the whys would really make your pitch stand out, wouldn’t it?
Tim Sanders:
Yeah. If you’re in front of an investor and you say, “We have a product that is, you know, going to appeal to a really big, addressable market. We think it’s a outstanding, very fit competition to all the other existing products in the space. But what makes us different is that we have a culture in place of rapid collaboration. And, we’ve built a process that’s scalable and repeatable that helps us bring people together when we get stuck anywhere, business development, product development, and rapidly solve problems. And, we benchmark solving problems faster that our nearest competitors.” That’s going to impress an investor because that speaks to maturity.
John Livesay:
Yes.
Tim Sanders:
Right? When I’ve looked at some recent investments, that’s always my question is “Okay, give me a situation where you can get stuck on traction, whatever it is.’ Build a product, make a sale, acquire users, that’s usually the three areas you get stuck in. “What do you do when you get stuck in acquire users? Talk to me about that process.”
If they look back at me and say something like, “Well, we’d try something new or we’d try it again.”
I’m like, “Well who is this ‘we?'”
If they like point to the other guy and say, “Me and my partner.” That is not collaboration. That is partnership. There’s no diversity there. It’s two point guards I’m staring that. That freaks me out.
I want to have them look back at me and say, “Well, that’s part of why we want you to invest in us, because we want you to join our collaboration web, because this is what we do. When we get stuck, we talk to competimates, other start-ups that we’ve met at conferences who have this same problems, right? We talk to existing business partners like Rack space and they help us. We’re actually good at recruiting inside champions at the customer. But we collaborate, we have this process, and what we do is we pick a team of everybody that has a stake in the outcome, or expertise about the problem. Then, we write a deal brief, and they get the brief three days in advance. And then, we have a two hour meeting that with the following structure. Then after the meeting, we have this execution process in place. And, we repeat and rinse until we solve it.”
That is really impressive to an investor because that’s something that mature companies eventually figure out. The start-ups don’t do it that way.
John Livesay:
Right, and it’s that emotional intelligence that you were speaking to earlier, and that’s why investors love investing in serial entrepreneurs because hopefully they have figured that out. But, the information you just gave somebody who is possibly starting their first start-up, they can now save all that frustration and make themselves look like an experienced start-up by just having that kind of answer and structures set in place.
Tim Sanders:
Yeah, you know I always taught the four Ps of investing. Investors invest in past, meaning how many times have you exited, that’s the big one, by the way.
John Livesay:
Yeah.
Tim Sanders:
There’s nothing in your bio descriptions that will sing more than got somebody’s money back, or was on a team that had a big exit. So, there’s past. The second p is people, and what that means is they can execute and build something. It’s really important that when you talk about someone’s bio, if they don’t have a past of returning money or being part of an exit, they do have a past of building stuff, right? We don’t care where you went to college. We really don’t. We don’t care what product you’re associated with, or what great company you’re associated with. We want to know what you’ve built, because when I talk to a lot of really good VCs, they’re always asking, “Is that guy a salesman or is he a real builder?” So, when they look on a bio sheet, they’re looking for people that can get work done with their money. That’s the most important second P.
The third P is product, and the fourth P is process. Process might be the … It’s almost what I like call, the human software of a company, like “this is the process by which we attract users. This is the process by which we build or improve products.” You get what I’m saying?
John Livesay:
Yes.
Tim Sanders:
They’re looking for the Ps once again: past, people, then there’s product, then there’s process.
John Livesay:
Yeah.
Tim Sanders:
In that order, by the way.
John Livesay:
Yes. Well, I love that because the two reasons companies go out of business that are in start-up mode is lack of funding and lack of customers. So, you as the founder have to make sure you have a good product market fits, or you get customers something they’re willing to pay for. Then, you have to be able to sell yourself to get funding. You’re selling yourself to get customers. You’re selling yourself to get funding, which really makes “Deal storming” the number one book that every start-up should be reading because they’re going to need those skills for customers and fundraising.
Tim Sanders:
That’s right, you’re going to need it over, and over again. Raising money is just the first hard deal. The other thing I’ll say is, if you sell a service to a business, whatever the technology solution, an advertising solution, if you are B to B, you cannot social sell and test and scale, and be successful. I’m just … This is the millennial’s dream, but it’s not true. This is a big concern I have for start-ups. We live in a world today where they want to build a sales development rep model where they social sell to create contact. They use email to get you to try the demo. They give it away to you free, then you eventually subscribe and then they scale up your subscriptions where it starts out at 5,000 a year with a dream of going to half million a year. Guys, that is not a sustainable business. Let me tell you why.
A competitor who’s got more courage to go after the million dollar in the first place, and put a human being in front of that buyer or buying team, they will eliminate all of the room for you on the deal. I can’t tell you how many small start-ups are like, “We were inside you know, Zappos, we were … working with them for 10 months, and we’ve gone to 500 users, and we’re building 6100 a month. All of a sudden, this other start-up came in and did a $700,000 deal, and everything’s gone.”
I’m like, “Well how long did it take them to do that?”
“Two months. They showed the customer how much they could save by working with one solution provider, how much more efficiency they could get by getting reporting from one solution provider.”
I’m like, “Well, the difference between you and them was they had the process and the courage to go after the whole deal, and you were stuck trying to do what I call the no-resistance model of start-up sales.”
John Livesay:
Just give us a little sliver, let us prove to you this works, and there’s no risk. But, the risk is somebody else is going to be brave enough, as you said, to come in and ask for the big enchilada, right?
Tim Sanders:
Yeah. We’d rather be … I like this one. We’d rather be ignored than rejected. That’s why social selling’s so hot. That’s why email marketing is so much more fun. You just much rather ‘like’ somebody’s content, and then message them and say, “Hey, I’ve seen you do the thing. I’d like to have a quick webinar to show you our product.” Then, they’d be … You’d email them a link to the demo.
You never have to have a live conversation like you and I are having right now, where they can basically say “no. I reject you and your product.” Then, or even go through what our parents went through, trying to set up a meeting and then going to their office, and going into their conference room, and having a live one-on-one and asking for the big check, and all of those really hard things. We don’t want to do that anymore.
The quality deal really is the only way that you build barriers to entry in the world we live in today. “Deal storming” gives you a process, even when you’re small, to build a quality team inside outside your company, and conquer huge deals. I have worked with start-ups in the last few years that have had the to go in and ask for two, three, four, five million and then ended up getting to avoid a B round by making a sale.
John Livesay:
Yes.
Tim Sanders:
If your B round was a couple of big deals instead of another beat down, or another dilution, I’m telling you, that’s the way you want to do it. Too often, especially these start-ups, they just believe there’s going to be a friends and family, there’s going to be an angel, there’s going to be an A, and a B, and a C. No, I say, pursue quality deals early enough with this “Deal storming” process and A round might be your last.
John Livesay:
Nice. That’s such great information. Well, the time goes so fast with somebody like you with such specific take-aways, but I did want to make sure the people know how to A) get “Deal storming,” follow you on social media. What’s your Twitter and all that good stuff?
Tim Sanders:
If you want to get a free chapter of “Deal storming,” it’s titled ‘Sales Genius is a Team Sport,’ 30 pages plus. Just go to Dealstorming.net, that’s Dealstorming.net. On all social media networks, I am @SandersSays. ‘Sanders’ like my last name, and ‘says’ like Simon says. I’m SandersSays everywhere. I accept all LinkedIn requests.
John Livesay:
Nice. Well Tim, it’s been a pleasure. I’m so excited for everybody to get “Deal storming” in their hands because I know all your other books have been hugely successful, and this is going to be the biggest one yet.
Tim Sanders:
Thank you so much, John. I appreciate you buddy.
John Livesay:
Likewise.
Thanks for listening to The Successful Pitch podcast. If you like the show, please go to iTunes and write a review, and encourage your friends to write reviews, too. It really helps get the word out.
People say that the longest distance is between someone’s mouth and their wallet. People can tell you they’re going to invest but when it comes time to write the check, they don’t do it. How do you get people to say “Yes” and then follow through? Visualize yourself on a left side of a riverbank and you have to cross the river, and on the other side of the river is where the funding happens. First you make up your idea, then you make it real, then you make it reoccur. Once you start dipping your toe into the water to get funding, that’s where I can help. I get you across that river faster than you would on your own, with a lot less frustration than you will get when you hear a bunch of “No’s” and you don’t know why. So, if you want some help getting funded faster, with less frustration, go to my free funding webinar, SellingSecretsforFunding.com/webinar, sign up, and get in-depth information on how you can get funded fast. Thanks.