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Tim Sanders has been involved with disruptive change for the past 30 years. He was on the ground floor of the mobile phone industry and the birth of the World Wide Web. He has written several books including Love Is the Killer App, Dealstorming, and more. Tim talks about his innovation template, how to build fantastic teams, and tell great stories.
Dealstorming – Interview with Tim Sanders
Today’s guest is Tim Sanders on The Successful Pitch. There are a few people in life that change your life and there are a 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 changed my life. That book was, Love is the Killer App. That author was Tim Sanders. Over ten years ago, I read that book, was completely blown away by the content. I reached out to him via email. We started a relationship. I was honored and thrilled beyond belief that he was willing to write a foreword to my book that came out over ten 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.
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. He was tapped to lead their value lab, which enabled sales teams to close hundreds of millions of dollars. By 2001, he was often running as a leadership coach. Now, in 2005, he founded Deeper Media.
Tim, thank you so much for joining me on the show today. You have been a guest potential of mine since I started this. I’m now 70 episodes into it, I feel like I’m really prepared to talk to somebody like you.
My pleasure to be with you, John.
I always loved to hear this story because one of the things that I’ve learned from helping people on The Successful Pitch craft a good pitch is the importance of storytelling. Nobody tells a story better than you, Tim Sanders. I’ve heard you speak live multiple times. You just grab the audience with these amazing stories that are not just funny and interesting but have these great takeaways. Can you tell us how you became such a good storyteller?
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 really just that. They’re encounters. They’re problems, movement, encounters and solutions.
I began 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 retitled 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 archetypal stories, then learning how to use anecdotes, what most of us call stories, how to use anecdotes to change the viewer or the attendees’ 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. Lastly, there’s the coming of age. That’s it.
These five stories are deeply coded into our collective psyche, the mythology and storytelling. 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, then it is a very predictable plot.
It has a beginning, it has dynamics, it has a result and the result has a moral to it. The moral becomes actionable to the people that hear it. That’s what I’ve worked on for a really long time. In my business, I write books, I give speeches to help people change their perspective or validate their perspective. These 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. What’s successful, what does karma mean? All these things. That’s why stories are so powerful because they feed one’s overall perspective.
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, i.e. 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.
You have a new book coming out called Dealstorming. 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?
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. He had been with a variety of different startups that had gone from zero to a billion dollars. He knew that the problem for most of us is that we’re so underfunded in the startup. We’re just trying to do everything on our own.
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, salesperson, account coordinator. Those three, they work in a vertical line. 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. 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 look into an 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, rapid problem solving is how companies stay great and get great.
When you look in the world of startups, 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 startups. Facebook was faster at solving problems, whether they were technical problems or BD 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 Startup World, what I see is not a brilliant invention but in fact rapid problem solving culture. Because in every one of those three cases, they were merely improving on an existing product.
That’s so great. We’re going to talk about both of those ideas. When you give a pitch to an investor, one of the key slides is who’s on your team. If a startup founder was 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, “This person has created a culture that’s a little bit different than other startups I’m talking to.”
Let’s talk about that for a second, you make a good point. I’ve built a couple of startups in my day. I fell for the romantic notion that the ultimate startup is two engineers. Have you ever heard of that? I’m not an engineer. I’ve had a startup where it was me and two engineers. They added more engineers, and then we raised the money and they added more engineers.
What’s wrong with that? You basically had an engineering stack and a non-engineering founder. That is not a wide team. When you think about a startup, you need to have your core engineering team but you need to make that add from for marketing and sales. You need to make that add for operations. Or it could be operations/findage. You need to make that add to have somebody that’s dedicated to say, partnership development or whatever. I’m just making this up.
As an investor is 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 team.” Here’s the issue, if all you do in Startup 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. I don’t care who you pick. That’s a very good point.
Great. The other thing that you’ve 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 and create 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 of the other pitches they hear. Those two are great, great points. One of the things you say that I also love is that sales genius is a team sport.
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.
That’s a big myth buster, isn’t it? Because so many people are wanting all the credit, especially if you’re a founder, you think that you have to do it all by yourself and all the weight of the world is on you and it can feel very lonely. 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?
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. Think about all the collaborations that Steve Jobs depended on to be the world changer 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 that had the light bulb moment.
I didn’t know that.
That was a consortium. There was a guy named Thomas Edison, he certainly was a coach/figure head. His name went on the patent. In 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. If you understand that a great innovation is a bunch of people and a bunch of ideas creating a soup and then somebody notices something in the soup, called the Alphabet Soup, they notice a legible word. That’s when it all happens.
It doesn’t happen unless we bring people together. 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.
That’s another great tweet. “Collaboration is not the last resort.” That’s great. That’s 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 is looking for, the big idea that’s going to change things, that’s going to have a huge growth. How did you come up with the concept of an innovation template and what’s in it?
I started out my professional career in quality circle management. 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 Six Sigma.
Basically, it was all about being able to trace down a manufacturing defect 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 and 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.
I started to use a couple of different techniques. 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 Five Whys. The Five 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, “Why is that?” “Because the lathe 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, “Because they go slightly out of calibration over the course of several days. That’s why eventually, since we only calibrate once a week, that’s what creates the variance.”
“Why is that?” “We only do the calibration once a week because we have to bring in an outside company to do it. We don’t have the budget for that. We only have the budget for it once a week.” “Why is that?” “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 based on that. Obviously, that’s not right.”
The last question is, “Why is that?” It’s that “Because Japan headquarters doesn’t understand the cost of rework. They don’t realize that rework is three times more than manufacturing.” There’s the root cause. Now, the manager goes, “Oh, the solution, this cascading solution to all of this is to create a cost of rework 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. It cascades, “Now, we will approve calibration every single day to give it a variance.” That’s exactly how Japan conquered their quality problems.
This is the same for a business, when somebody calls and says, “We can’t get a term sheet from that VC.” You just ask five whys. You back into it. You start out, “Why is that?” “First of all, you can’t get them to call us back. We think they pulled up.” “Why is that?” “Maybe when we presented to them, they kept pounding away for traction and we were explaining how, but we just don’t have that many users. We really were stuck on traction.”
“Why is that?” “Because this particular VC only invests in traction. They don’t really invest in IP or teams.” “Why is that?” “Because this VC got burned three years ago by investing in a great team.” Now you have your problem. Do you get it?
I totally get it.
You’re going from, “We can’t get the term sheets 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.” I’m using a startup centric Five Whys. That’s a template. That’s a really good template.
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. We brainstorm a solution that reveals yet another problem. It frustrates us. It’s like whack-a-mole and you’re the mole.
Don’t brainstorm until you really get to the root of the problem. It’ll save you times of lots of frustration.
Yeah. I’ll give you another quote. I’m a quote machine. Abraham Lincoln, “If I had six hours to chop down a tree, I’d spend four hours sharpening my ax.” 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 hundred problems solved.
That’s so true for an investor. 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 have you solved problems rapidly to get this competitive advantage we talked about earlier through this innovation platform of the whys would really making your pitch standout, wouldn’t it?
Yeah. If you’re in front of an investor and you say, “We have a product that is going to appeal to a really big addressable market. We think it’s an outstanding, very fit competition to all the other existing products in this space. 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. We benchmark solving problems faster than our nearest competitors.”
That’s going to impress an investor because that speaks to maturity. When I’ve looked at some recent investments, that’s always my question. “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, “We try something new or we try it again.” I’m like, “Who is this we?” If they 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 guard I’m staring at. That freaks me out.
I want to have them look back at me and say, “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 competi-mates, other startups we’ve met at conferences who have the same problems. We talk to existing business partners like Rackspace. They help us. We’re actually good at recruiting inside champions, like the customer. We collaborate. We have this process.
“What we do is we pick a team of everybody that has a stake in the outcome or expertise about the problem. We write a deal brief. They get the brief three days in advance. We have a two hour meeting with the following structure. After the meeting, we have this execution process in place. 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 startups don’t do it that way.
It’s that emotional intelligence that you were speaking to earlier. That’s why investors love investing in serial entrepreneurs, because hopefully they have figured that out. The information you just gave somebody who is possibly starting their first startup, they can now save all that frustration and make themselves look like an experienced startup by just having that kind of an answer and structure set in place.
I always call it the four Ps of investing. Investors invest in past, meaning how many times have you exited. That’s the big one, by the way. 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. There’s a past.
The second P is people. 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.
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. 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?” When they look on a bio sheet, they’re either 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, it’s almost what I like to call the human software of the company. 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?
Those are the four Ps. Once again. Past, people, then there’s product, then there’s process. In that order, by the way.
I love that because the two reasons companies go out of business that are in startup mode is lack of funding and lack of customers. You, as the founder, have to make sure you have a good product market fit so 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 Dealstorming the number one book that every startup should be reading because they’re going to need those skills for customers and fundraising.
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, a technology solution, an advertising solution. If you are B2B, you cannot social sell and test and scale and be successful. This is the Millennial’s dream, but it’s not true.
This is a big concern I have for startups. 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. They scale up your subscriptions where it starts out at 5,000 a year with the 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, 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 startups are like, “We were inside Zappos. We’ve been working with them for ten months and we’ve gone to 500 users. We’re building 6,100 a month.” All of a sudden, this other startup came and did a $700,000 deal. Everything is gone.
I’m like, “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, “The difference between you and them was they had the process and the courage to go after the whole deal. You were stuck trying to do what I call the no resistance model of startup sales.”
Just give us a little sliver, let us prove to you this works and there’s no risk. The risk is somebody else is going to be brave enough, as you said, to come in and ask for the big enchilada.
Yeah. I like this one, “We’d rather be ignored than rejected.” That’s why social selling is so hot. That’s why email marketing is so much more fun. You’d just much rather like somebody’s content and then message them and say, “I’ve seen you do the thing. I’d like to have a quick webinar with you to show you our product.”
Maybe you 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 could basically say, “No, I reject you and your product.” 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. Dealstorming 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 startups in the last few years that have had to go in and ask for two, three, four, five million and they’ve ended up getting to avoid a B round by making a sale. If your B round was a couple of big deals instead of another beat down or another delusion, I’m telling you, that’s the way you want to do it.
Too often, especially these B2B startups, they just believe there’s going to be a friends and family, there’s going to be an Angel, there’s a going to be an A and a B and a C. No, I say, pursue quality deals early enough with this Dealstorming process, an A round might be your last.
Nice, that’s such great information. The time goes so fast with somebody like you, with such specific takeaways. I did want to make sure that people know how to A, get Dealstorming, follow you on social media, what’s your Twitter and all that good stuff.
If you want to get a free chapter of Dealstorming, it’s titled Sales Genius is a Team Sport, 30 pages plus, just go to DealStorming.net. On all social media networks, I am @SandersSays everywhere. I accept all LinkedIn requests.
Nice. Tim, it’s been a pleasure. I’m so excited for everybody to get Dealstorming in their hands because I know all your other books have been hugely successful. This is going to be the biggest one yet.
Thank you so much, John. I appreciate you, buddy.
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