Why going to market is like “prying open a big heavy door”
MaRS will welcome Carol Leaman, president and CEO of Axonify, for Entrepreneurship 101’s next Lived It Lecture on Wednesday, April 8, 2015, from 6:00 to 7:00 p.m. Register for the event here.
“I told them I was going to be the CEO of a company.”
That was Carol Leaman’s reply when she was asked what career path she wanted to pursue as a teenager. Years later, while she was focused on building a career in corporate finance, that entrepreneurial feeling was lost—until she started to recognize the degree of involvement required for the younger companies in her portfolio.
“In a larger company, it’s hard to see your direct impact, while in a smaller company, everything you do can have a very big impact,” explains Carol.
When the opportunity came to work with one of these small companies, she felt a sensation that this was what she was meant to do and was exactly where she needed to be. While she was scared and excited, she also knew she was back on track and felt at home.
Roughly 15 years and four companies later, Carol has lost no momentum as a serial entrepreneur and a true company builder in our startup community. She scaled Fakespace Systems, a virtual reality company, from $3 million to $30 million in revenue and positioned it for acquisition in 2003. From there, she started RSS Solutions, an enterprise manufacturing software company that was sold in 2006. PostRank, a real-time engagement monitoring and analytics platform for social web content, was next, and was sold to Google in 2011.
Currently, Carol leads Axonify, an award-winning platform that marries adaptive learning technology and gamification with corporate learning and training. Carol is also a dedicated mentor and advisor to startups. We first met back in 2008 when I was initially building a provincial team of entrepreneurs-in-residence for our Business Acceleration Program. Carol was the first entrepreneur-in-residence at Communitech, a role that has since flourished into a full offering of startup services at the organization.
Given all of this, I was keen to capture a few of Carol’s insights from her entrepreneurial journey so far.
Q&A with Carol Leaman, CEO of Axonify
Amie: You’ve managed to raise capital at times in Ontario (and Canada) when venture funding was scarce. How did that happen?
Carol: For PostRank, we were lucky to be in Waterloo, Ontario, where we had a local venture capital firm with a specific mandate to invest in opportunities from the community. That firm had made an initial investment in PostRank in 2007, so when the recession hit at the time when we were raising further funding, in the absence of everyone else in the market, our investors acknowledged the progress we had actually made with the company and continued to support it. Because of timing and the local, small market of capital available, the company was able to survive in a time that was not friendly for raising capital.
With Axonify in early 2012, it was a very different situation. In Canada, the investment trends favoured consumer-based companies, which was not where Axonify played. Through a previous relationship with an American venture capitalist who had a deep understanding of the space that Axonify operated in, we were able to raise the funds.
Amie: You have now seen three tech companies through to acquisition as the CEO. Do you ever start a company out with the exit in mind?
Carol: It’s not ever about building a company with an exit in mind. Rather, it’s all about building a business that delivers real value for the market segment and, therefore, real value for the company. Building a company with the goal of an exit takes the company down a different path and loses its focus. These companies might be more accustomed to riding the wave on flash-in-the-pan trends. It’s risky enough building an early-stage venture without adding all of that uncertainty to it. You can mitigate this risk by building a solid company early and defining what you have that your customers are willing to pay for in a meaningful way. Then you can build incrementally on that.
Amie: How do you market and sell a company’s products at such an early stage when you’re still trying to figure out what the company is going to be?
Carol: With Axonify, now things are more tactical. We know the market really well, though things are still morphing. It also helps you keep an eye on the competitive landscape—it never stops. Your goal at an early stage is to generally be moving in the right direction and not specifically moving in the wrong direction.
Going to market is like prying open a big heavy door. With your first prospective customer, the door is cracked open slightly. You can see a little bit into your marketplace through the crack and you can only manage to get your foot wedged in it a little bit. Pay very close attention to that customer. Listen to them, find out what their needs are and incorporate their feedback. Then the door will open a little bit more. Then get another customer and do the same thing, and the door opens a little wider. As you keep moving incrementally and get enough of these successes, then themes start emerging from your customers. The door will keep opening wider and wider, and you’ll get clearer visibility into what’s on the other side of the door. When you get that visibility, that’s when you pour gas on the fire and start ramping up your sales.
All too often early-stage entrepreneurs find the crack in the door and manage to wedge their foot in, but don’t pay attention to their customers enough to be able to open the door further.
Amie: What are a few key pieces of advice that you have received from advisors and mentors that you pass along to other entrepreneurs who you mentor?
Carol: First, raising capital is going to be a lot harder and take a lot longer than you think. Pay close attention to your cash flow and manage it accordingly for the long run. Even upon raising investment, the cash does not come as quickly as you might expect.
Second, really understand your market. Many early-stage companies do a very superficial analysis of their market or go after markets that don’t exist. Basic business fundamentals with respect to customer discovery have been lost. Founders don’t talk to their prospects early enough to figure out who their customers are and what they are willing to pay for. Instead, you should do detailed discovery about the market. If your solution fits and if the market is gigantic, then pursue it.
Third, focus—and only on one or two things. Once you find that “wedge” in the door to your customers, focus on it. Don’t be distracted by shiny objects, just pick the one or two areas that you can explore with your customers that won’t dilute your efforts. If they don’t work, then move on to the next one or two things.
Finally, don’t underestimate the value of marketing, no matter how early you are in the process. Relying only on the value of your intellectual property (IP) as a competitive advantage doesn’t work anymore. Anyone in the world can build anything right now, so getting to market is not an IP or technology race anymore, it’s a marketing race. Don’t ignore marketing over the first one to two years, as having that marketing lens early will hone your values as a company.