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Venture Building

Venture Building · Chapter 1 of 4

Who, exactly, is your customer?

Every week someone in the company makes a decision about product, price, message and channel. Each one decides with their own picture of who the customer is. The engineer builds for the technical profile they imagine, the salesperson talks to the buyer they meet, marketing writes for a third person. The decisions come out misaligned, and no one sees the cause.

The usual answer is the poster persona: a fictional name, a stock photo, age, marital status. It is hung on the wall and never consulted again. What works is something else: a model of how that person makes the purchase decision, drawn from real conversations.

FOUR QUESTIONS

1. How does this person decide?
2. What makes them decide now?
3. What holds them back?
4. Who else takes part in the decision?

Whatever does not answer one of the four is left out, including name and photo.

In selling to companies, the fourth question is decisive. The person who uses is not the one who pays, and the one who pays is not the one who vetoes. Sales material that speaks to one and ignores the other two explains why deals move along well and die in the last meeting.

And the raw material is conversation about what has already happened. “Tell me what it was like when you decided to solve this” produces information. “Would you buy a tool that does this?” produces politeness.

In the full program

The seven fields of a persona, the source tag for each field (verified, inferred or assumed), the five roles of the buying committee and the anti-persona: who is not a customer, and what it costs to insist.

Venture Building · Chapter 2 of 4

The customer says they would pay. Do they?

“How much would you pay for this?” is the most natural question in the world and the least informative. The person sincerely answers with a number they have no way of knowing. Someone who liked the idea gives a high figure to encourage. Someone who already sees themselves buying gives a low figure to prepare the negotiation.

A pricing mistake is one of the few that cannot be noticed while it happens. A price that is too low looks like success: it sells fast, customers give praise, and the margin erodes for years. A price that is too high looks like a product or sales problem.

The way out is to swap opinion for behavior. The evidence rises in four steps:

1. Direct question. Costs nothing and proves nothing.
2. Sensitivity questionnaire. Returns a range, not a point.
3. Choice between packages. The person gives something up, and the weight of price shows.
4. Real money. Pre-sale, paid pilot or letter of intent with a value. It is the only one that decides.

A free pilot is not on the list. It tests willingness to try, which is abundant and does not turn into revenue.

And the conversation with the investor changes. “We think the market pays X” and “we tested with eighteen companies in the profile, and eleven accepted X in pre-sale” are different conversations.

In the full program

How to run the test without burning the market, the confirmation criterion written before running it, what to do when the market pays less than it costs to serve and the test quality checklist.

Venture Building · Chapter 3 of 4

Does each new sale help or hurt cash flow?

A company can grow fast, have satisfied customers, look good on revenue and lose money on every sale. While there is cash from a round, the effect does not show. When the cash runs out, it shows all at once.

The math is done per customer, from the top down:

THE MATH PER CUSTOMER

Revenue. What one customer generates in a year.
− Direct cost. What exists only because this customer exists.
− Cost to serve. Support, onboarding, people dedicated to the account.
= Contribution. What the customer leaves to pay for the company’s structure.

The most forgotten line is the cost to serve, and it is the one that distorts the math the most when it is missing.

The cost of acquiring the customer stays out of this calculation, because it is paid only once. It goes into another one: in how many months the contribution pays back what the acquisition cost. A company with a good ratio between customer value and acquisition cost, but with a twenty-four-month payback, needs to finance two years of acquisition. The faster it grows, the bigger the hole. It is the case in which the company goes broke while growing.

The aggregate math hides the rest. It is common to discover that an entire segment loses money and is financed by another.

The negotiation changes too. Whoever can slow down and survive negotiates. Whoever needs the round to pay the quarter’s payroll does not.

In the full program

How to define the unit, what goes into and what stays out of each line, the three methods of calculating customer value and where each one goes wrong, and the analysis that shows which lever (price, retention, cost to serve or acquisition) moves the result the most.

Venture Building · Chapter 4 of 4

Does the company sell, or only the founder?

A moment comes when the company realizes something uncomfortable: the growth up to that point had no mechanism behind it. Sales happened because the founder sold, because one customer referred another, because it just turned up.

The test fits in one question. If you double the investment in demand generation, does twice the revenue come out the other side? With what delay? A company with an engine answers with a number. A company without one answers with hope.

THREE SIGNS THAT THERE IS AN ENGINE

A known relationship between what goes in and what comes out. How many contacts generate a customer, and in how much time.
Independence from the person. If the departure of the best salesperson cuts revenue in half, what exists is dependence.
Scale by addition. One more salesperson produces a predictable increment, after the ramp-up time.

The founder is the company’s best salesperson: answers any technical question, decides the discount on the spot, and their presence signals importance. None of that transfers directly. “Hire someone who sells like me” is the formulation that guarantees frustration.

What transfers are three things: the method, the knowledge of the objections and of the arguments that work, and the authority to decide. And there is an order. Hiring a salesperson before writing down the method makes the salesperson invent their own, and what they invent becomes the company’s method.

The goal is not for the founder to leave sales. It is for the company to be able to sell without the founder when it needs to.

In the full program

The five components of the engine, each with its own indicator, the math that turns a revenue target into a hiring plan, the sequence of the founder’s transition and the sales playbook, with the test that tells whether it works.

Full program

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