Pivot

This is the fifth chapter of Kommon: A Startup Story, a set of key lessons for first-time founders told through the story of the successes and failures of my business.  

I have been told that putting these lessons within the full narrative of an early-stage startup, including real customer data and product feedback, has meant they really resonate for first-time-founders in helping them navigate their own startup journeys. ‍The introduction to the series with further details on why I wrote it can be found here.

Introduction

In April 2022, we had a choice.  

We had strong signals that new manager development was a compelling problem for customers, that they wanted to solve it with training, and they wanted to solve it with us.  But did we want to solve it with them?

My co-founder and I had set out to build a scalable software business, not a training company.  But we had also just made more money from a workshop we sold during customer discovery for a product that didn’t exist than we had in six months of selling software.  

That workshop had also gone well.  Here’s some of the customer feedback we received:

• ‘I thought it was great!! Personally, I thought it was really nice and helpful to just have an open conversation about this topic with my peers as we clearly have had similar experiences and challenges but have never really talked about it before. Having that door opened will definitely make those conversations much easier going forward.’
• ‘There’s so much value we get from you, you really understand us’. 

It wasn’t what we set out to do, but there were strong signals that we should consider building a manager training company. Perhaps there was an opportunity to productize a training business into the scalable, tech-enabled company we originally set out to build?

We realised the only way to really figure this out was to try doing it.  

This chapter is about how we ended the year having sold thousands of dollars of management training, with a growing sales pipeline, and a big question about what to do next.

The New Manager Playbook

We were determined not to repeat some of the mistakes from the past year.

We were already on firmer ground than our SaaS app. We had a defined customer with a problem they needed to solve and wanted to put money behind.

What we didn’t yet know was how to solve that problem in a way that created value for the customer at a price they could afford.  

We needed a way to test this cheaply and quickly.  We succeeded through the best piece of content we ever created.

The Idea

People Teams in startups of 30 to 300 staff are asked to do an enormous amount.  I use ‘Teams’ loosely here.  In companies of up to about 50 staff, this is usually one person.

If you think HR/People teams deserve little credit, you’ve probably only had to deal with poor ones.  The good ones are an incredible asset to any company and take responsibility for a range of vital tasks. 

Let’s start with fundamental HR administration like pay, benefits, recruiting, and onboarding, without which no company could function.  Then there’s the development of key workplace policies, for example around health and safety, harassment, and discrimination. As the company grows, there’s also a bunch of HR-y stuff which also gets put onto their plate like manager training, performance management, culture surveys, mentorship networks, DEI, and company values.  

All this is often expected of a team of one or two people, who may be experts in some of those areas but who otherwise are adapting to the hand they’ve been dealt and are learning on the job.  

If you talk to a People professional, they will almost always need more support but often they get little to no budget for it.  Measuring the benefits of good People practices is hard and HR is often viewed as a cost centre where doing more with less is the name of the game. 

So when it comes to manager training, in our customer discovery conversations with these teams we heard the following:

• New manager training is always a challenge: every growing firm reaches a point where they need to promote people internally into their first management roles.  Most firms recognise that this is a big leap and those people should have some help making that transition. 

• Responsibility for new manager training often doesn’t fall to experts: The best managers don’t typically organise management training because they’re usually busy running the teams that deliver the most commercial value to the company. Solving this problem is often seen as something that sits in a People Team’s remit, regardless of whether they have done it before. This means that people with little or no management and/or training experience (but who could be excellent recruiters, administrators etc) are tasked with figuring it out.   

• It’s hard to know where to start: if you haven’t organised management training before, there are an overwhelming number of options to consider.  How should you approach the structure of the training, should it be online or offline, what topics should be included - basically, will it work? And the whole time you know that if you get it wrong, your busy staff will resent you for committing them to hours of training that’s not helping.

• ‘I’m looking for something like a playbook’: one word came up over and over again in response to these issues - a ‘playbook’. People Teams wanted a proven roadmap that would make training design choices for them. They wanted an asset that they knew would lead to helpful training and happy managers, and save them hours of time figuring it out.

We decided that would be the value we would provide to these teams - an instant roadmap towards excellent new manager training. Rather than spending hours trying to work out what to do, People Teams could just read our advice and quickly understand the fundamentals of a great training program. 

Oh, and we would call it what we knew they were looking for: ‘The New Manager Playbook’. 

The Playbook would be free, but we knew that many teams would still need help implementing it in their organisations. We hypothesised that this playbook would lead to lots of conversations with potential customers about their training needs and how we could help solve them.

We planned to publish this playbook with two options for paid services which would give us signals as to customer interest:

1. Training materials: if they liked the roadmap and wanted to implement it themselves, they could pay us for the training materials to do that.  This was a simple, low revenue, high-margin content play.

2. Training course: if they liked the roadmap but wanted help implementing it, they could pay us to run it as a training course. This would involve me as a facilitator and coach, and would be a higher-revenue but lower-margin opportunity.

If we converted Playbook readers into paying customers, we knew we would have both an acquisition funnel and a strong product signal for how we should develop the business. 

The Playbook

Ok, all great in theory, you might say.  But you still need to create the content, what do you know about manager training? 

Turns out we knew everything we needed. To build Kommon, I’d spoken to hundreds of first-time managers about their challenges. That data was as valid for building a training course as it was a SaaS product.  What put us on to the training opportunity in the first place was People teams telling us they weren’t sure about our software but that we sure did seem to know a lot about managers.

This was also one of those situations where my co-founder and I were the user for the product.  We’d both sat in terrible corporate training before and knew what resonated and what didn’t. 

We set ourselves a high bar.  What would be a manager training course that we knew would work and that we would be proud to give to our own first-time managers? 

We knew what had to be at the core of it.  During our customer discovery conversations with managers, one factor consistently separated those who felt comfortable transitioning into management for the first time and those that didn’t.  The key differentiator was the ability to speak to someone about their personal challenges in the role.  

Those who had acclimatised to management well all had a boss, mentor or colleague they felt comfortable discussing their challenges with.  That meant that they could solve their problems in real time, and feed those learnings back into their daily work.  This often happened by accident.  Most managers are not so lucky with their mentors.  The majority experienced feeling unsure in the role and that asking someone for help was a sign of failure.  In turn, this meant they made more mistakes, took longer to acknowledge them, and took more time to learn. 

For our training, we knew we wanted to give everyone a place where they could discuss their personal management challenges.  This was the key to success.

We settled on a ‘Learn, Do, Discuss’ model where participants would be given some engaging content to digest on a new topic and a set of actions to try out with their team, before a facilitated discussion with a coach or their peers about their experience.  The key value adds for People teams were:

• Engaging structure: as anyone who has organised training will tell you, the hard part is keeping your busy trainees engaged.  The discussion component created a natural touchpoint every 1-2 weeks which trainees had to attend and be prepared for, keeping them accountable and engaged.

• Focussed content: there’s endless leadership advice out there but for new managers, less is more. The Playbook told People teams what was important and focussed only on the critical skills new managers needed.  This reduced the time commitment for managers and meant every session was invaluable.

The Playbook was only a 6 page pdf.  But it gave People Teams a roadmap for effective manager training, with high engagement, but low time-commitment.

We would have been proud to roll it out in our company.  Now we had to see if they would be in theirs.

The Launch

As mentioned in previous chapters, when we launched the Kommon app, we were guilty of two product sins in particular:

1. Not setting strategic targets to measure our experiments and hold ourselves accountable.
2. Not engaging closely enough with waitlisted customers.

We weren’t going to make the same mistakes again:

1. Targets and accountability: we said the Playbook would only be successful and the basis for continuing Kommon if we made $8k from it, either from training materials or from commitments to training courses.  We set quarterly strategies for what we wanted to achieve, the weekly/monthly milestones for how we would achieve it, and committed to strict reviews at the end of each quarter to assess what had worked and what hadn’t.

2. Customer engagement: We would follow up with everyone who downloaded the Playbook and profile all our users to learn as much as we could about who was getting value from our product.

We launched the playbook on 24 May through direct outreach to existing HR and executive contacts, our newsletter list, social media, and relevant leadership and learning Slack communities. 

In the month following:

• Page visits and downloads: 671 people viewed the playbook page, with a strong 41% conversion to downloading the playbook (277).
• Focused HR/People persona: The people we hoped we would reach were downloading it (to an almost scary degree of targeting).  Our email list comprised almost exclusively people professionals and senior leadership figures in growing companies.  What we weren’t expecting was how the content resonated not just with startups but with multinational firms who despite their size were still clearly finding new manager development challenging.  We had downloads from Twilio, Atlassian, and SAP, to name a few.
• New users: of those who entered their emails, 90% were new contacts. 50% of the traffic to the page was direct as people shared the link to the page. It was genuinely spreading by word of mouth because of how much it was resonating with our audience.
• Conversions to paid: the launch led to 19 conversations with prospects for paid work.  Two were direct enquiries about training materials, and one for the training course, with the remainder more general introductory discussions. All were from People Teams/Senior Leadership in companies of less than 300 people, plus three with VC firms/accelerators looking for assistance with their portfolio companies. 

We got the following specific feedback:

• Head of Product: ‘This is a great resource/framework for first-time managers’
• Learning Designer: ‘Thanks for the wonderful resource’
• Learning and Development Manager: ‘OMG this is a gold mine!’
• People Lead: ‘We discussed the new framework, and to say we're both ecstatic about it is genuinely not an exaggeration. I've skimmed through and it seems like it's going to be a great fit for our needs, and the timing of it is perfect.’
• Senior Executive:  ‘I was impressed with how much you managed to pack into a tight package: kudos on that. It's different from what's typical. I liked how down-to-earth it was and how approachable.’

By coincidence, as we launched the Playbook I was also invited to attend Running Remote, a remote work conference that attracts a lot of attendees working in Operations and People Teams.  

Conferences can be a huge waste of time, but providing they contain your potential customers, one thing they are useful for is testing your messaging.  You can have tens of conversations with potential customers, noting what people respond to, and iterating your approach. At Running Remote, it was night and day how much more engagement I got when I spoke about our playbook for new manager training rather than presenting Kommon as a software company. 

We were looking for positive signals for our new approach and we had found them. 

Productizing the Playbook

We had learned before that enthusiasm for our content didn’t necessarily mean enthusiasm for becoming our paying customers.  The next phase was to work out what the results of the playbook launch meant. We wanted signals which could be the basis for a successful product or service. 

After reviewing all the data from the launch, we came up with three hypotheses to test:

1. Manager Onboarding App: one way of interpreting the playbook enthusiasm was that readers identified with its key value proposition that it would save them time setting up a manager training program.  But the Playbook was just a pdf.  The scope for using software to help People teams do that was much greater.  What if there was a simple application that People teams could use to set up best-in-class manager training?  What if we created a niche Learning Management System (LMS) just for this. Niching is a tried-and-tested business strategy and by making the product focussed on this use-case,  we could make it the best possible experience for customers. 

2. Training Materials: just from the initial launch, we had two expressions of interest from People teams in purchasing the training materials so they could run the Playbook course themselves.  Perhaps there was a business to be built selling content to People Teams to help them do their jobs?

3. Training Courses: the launch almost immediately led to some advanced discussions about running manager training for various Series A startups (in addition to the training we had sold earlier in the year as part of customer discovery). Perhaps it was as simple as that - customers just wanted great management training? 

We decided to test all three hypotheses.

Manager Onboarding App

We were most excited about the manager onboarding app. We had been hoping for a signal from the playbook towards a way to productize manager training and build a scalable technology company.  This was it.

However, as you will know by now, if there was one lesson I took from the original Kommon app, it was not letting the product you want to build cloud your understanding of what your customers want.

So we decided to pre-sell our manager onboarding product.  We wouldn’t build anything.  Instead we’d use a quick landing page and some mock-ups to see if we could get some letters of intent to buy from prospective customers. 

We had lots of email addresses and warm relationships from the playbook launch of the types of customers who would be interested in this product.  If we couldn’t get at least two of them to sign on as enterprise customers, or at least design partners, then the idea wasn’t worth pursuing. No matter how much we liked it. 

We set up a good landing page with the value proposition, some design mockups, and a waitlist. For distribution, we ran several email campaigns directing customers to the page and reached out to some warm leads.

We managed to get 10 customers on the phone to discuss the product.  Those conversations were a textbook example of a classic product trap.  They contained just enough straws of enthusiasm for a founder to clutch at and believe they were onto something, but nowhere near enough evidence of a genuine need for the product. 

Of the 10 potential customers we spoke to:

• None committed to a letter of intent or to be a design partner.
• Three said they would be willing to see a demo when it was ready if we built it.
• Seven said they were happy just organising management training themselves or through a third party. 

Three companies also joined our waitlist (including one $multi-billion software company) but none responded when we followed up to ask for a conversation.

A year ago we might have taken the three companies that asked to see a demo as a sign we should proceed.  But now we knew better. This wasn’t enthusiasm for our product.  We had seen what real product pull looked like with the Playbook and the ongoing training discussions (more on that later).  Asking for a demo was actually an absence of enthusiasm dressed up in a small concession to make us feel better.

This was fine. The onboarding app wasn’t a bad idea. The open/click-through rates on our emails, engagement with the landing page, and willingness of customers to speak to us showed it had promise.  However, it didn’t solve a critical problem in an area that People teams had a budget for. We had acquired lots of interest, but few firm commitments.

We had set ourselves a target of two pre-sales or design partners and we got none. We retired the idea and moved on to the next one.  Our product discipline was improving.  

Training Materials

The fact we already had purchase commitments for our training materials was a promising sign.  A potential market for this type of enabling content for People teams was a high-margin opportunity we wanted to explore.

In contrast to the onboarding app, we already had the pre-orders to motivate us to create the product.  Once we had put together the materials for these initial customers, we ran a sales campaign to see if we could get any results.

We re-advertised the materials to all those who had previously downloaded the playbook, and refreshed our funnel for any newcomers to the playbook to make the offering more prominent. 

We got good open rates from our contacts (~45-55%) and reasonable click through rates to our landing page (17%). However, again, we got limited further purchase commitments.  When we watched back some of the user sessions, it was noticeable that users dropped off when they saw the pricing.  

We set quite aggressive pricing for the training materials at $475.  While we knew this was a meaningful commitment for a People team to put on a credit card, we also knew it represented incredible value in terms of the time we were saving them. Yet, it seemed off putting to many of our potential customers. We concluded that there probably was a market for this content at a lower price point.  However, we were beginning to recognise a pattern in cost of sales.  

Selling manager development solutions is not straightforward.  Most of the companies we had spoken to didn’t know what they needed. They were looking to us as experts to advise them on what ‘good’ looked like and the type of approach they should take.  Our successful training materials sales had still involved at least one call with the customer, and we felt that any future sales in this market would need to be similarly high-touch.  With that cost in terms of sales time, it didn’t make sense to be selling training materials at a low price point.  It only made sense if that small sale was a stepping stone to something larger. If we were dealing with customers who only wanted to spend $475 or less on a set of content, then they weren’t going to be the foundation of our business.

The path we’d started exploring towards a content business seemed to already be taking a turn to our third hypothesis: management training.

Training Courses

This business had been staring us in the face for over a year.

During my initial conversations with potential customers about their management challenges and the Kommon app, I was told by one Series A founder:

‘Give me comprehensive new manager training I can pay $250-500/manager for and I’ll buy 10 right away'.

While I don’t believe good manager training exists at this price (to my previous point about cost of sales not supporting low prices), here was a customer who had explicitly told me what they wanted to throw money at me for.  I hadn’t been paying attention because I wanted to build a SaaS business.  But now I finally was.

Of our three hypotheses, new manager training was the one we were least excited about.  It was a lower margin business which didn’t promise a swift pathway to productization or scalability.  On the other hand, we had initial customers willing to pay us thousands of dollars for our course.  It was exciting to see such enthusiasm for a service we had created.  

The only way to know whether we wanted to run a training business was to actually run one. So we said yes to our initial customers and got to work. 

The New Manager Playbook Course

Over the next few months, we ran manager training for about 50 managers in four companies, in a combination of peer learning workshops and 1:1 coaching. 

We got some outstanding feedback, particularly for the 1:1 coaching.  When we surveyed course attendees:

• 83% scored it 5/5 for satisfaction, with the remaining 17% giving it 4/5
• We had an NPS score of 75, which is generally regarded as outstanding (and higher than Apple - 72)

Here’s some of the comments: 

• “Highly recommend to any first time managers. A comprehensive course that covers everything you'd need to know. Will was always very astute and quick to understand how my stories/experiences at work related to the course and probing me for more information and what I could do better”
• “The Kommon programme and speaking with Will regularly has had a long-term positive effect on my relationships with both reports and senior management. My ability to remove emotion, understand the resources available and tackle difficult managerial issues has been dramatically improved, benefitting my career and our business as a whole.”
• “Will was fantastic. The combination of thought-provoking content and a great guide lead to some invaluable sessions that have changed the way I work for the better.”

This feedback was reflected commercially, with customers committing to training courses for their next cohorts of managers and providing referrals to others they knew who could use our services.  

We were getting into rooms with established companies, our product and message was resonating, and we were making sales.  

After multiple failures, we knew we had the makings of PMF and the foundations of a business. We now had to decide whether we wanted to pursue that opportunity.

Challenging Circumstances

One of the times building Kommon that I’ll always be most proud of was through August and September 2022.  

We had initial customers signed up for our training course so I decided to take a short holiday in late August before diving back into what I knew would be a hectic time. I knew that September would involve running our first courses, while also trying to find more customers and evolve our product.  

During the holiday my partner badly broke her leg, and we had to spend several days getting her the care she needed before flying home where I became her primary carer for eight weeks while she recovered.  Her care was my priority but this was also a critical moment for Kommon. We knew we needed to nail these initial courses to establish our reputation, get the testimonials and references upon which to build the business, and actually get paid. 

I worked as hard as I’ve ever worked in my life but I’m proud to say I made it all happen.  My partner always came first and I gave her all the care she needed to support her recovery.  But the training courses were also a great success.  

This time reminded me of two things:

• Know your priorities: startups will always ask for more of your attention. It’s up to you to decide how much you want to give them and how much you want to give to the other parts of your life.  Hopefully you’ll find yourself settling into a balance which works for you. But sometimes a sudden event will force you to reassess that balance.  When that happens, knowing what you really value in life will help you make good decisions about how to spend your time and what to prioritise. 

• Customers are humans too: as an early-stage startup, when every potential sale is crucial, and you’re told to make every effort to ‘delight’ your customers, your instinct is to avoid anything which might jeopardise closing deals. However, with my partners’ injury, I knew that running our initial courses on their original timeframes was going to be almost impossible.  I also felt that our customers would understand if I asked to postpone by a couple of weeks given the circumstances.  And yet, we were so focussed on pleasing our customers that I still questioned whether I should make the ask.  In the end, of course I did ask, they were very understanding and it was no problem at all.  Customers are humans too and arguably sharing the circumstances with them helped show my personality and build the relationship over the longer term.

Key Lessons

Product

• Persistence pays off: it’s a truism in startup literature that those who succeed are the ones who manage to stick at it.  They’re the ones who keep recycling their learnings into new ideas until they find the one that sticks.  This was also true of Kommon.  We could have given up after our software failed but we used the knowledge and contacts from that experience to find a new customer and build a successful product. 

• Deliver a genuine MVP: you hear various startup cliches about basic MVPs, and how if you understand your market, you can deliver value to sophisticated customers with something as simple as a pdf.  I’ll be honest, I never really believed this. Then we did it. We created more value for a paying customer in 6 pages than we did in months of software development. Your MVP can be as ‘minimum’ as that, if you understand your customer.

• Focus on products which delight customers: speaking with customers about our software felt fine, it felt positive. Until we knew different, it felt like something worth building on.  But the feedback for the playbook and the training was glowing and immediate.  The difference was night and day.  It’s only worth spending time on products where you get the latter.

Sales & Marketing

• Recognise good customers: even in a tightly defined customer segment (People teams in companies of 30 to 300 people) there are still ‘good customers’ and ‘bad customers’.  I don’t mean in terms of their ethics (although that can also be an issue), but in terms of how good they are for your business. Good customers are looking for a solution like yours and have an available budget to pay for it.  Bad customers are the opposite.  However, bad customers can initially look a lot like good customers and you can spend a lot of sales resources on them with little prospect of a purchase.  Key to running an effective sales process is finding which questions to ask which help you identify good and bad customers early in the sales cycle.  This is a long-winded way of saying what sales people will already know as ‘qualify your leads’.

• Speak your customers’ language: the title of the New Manager Playbook wasn’t an accident.  It was what repeat customers said they were looking for (even if they didn’t know precisely what it would look like). Talking our customers’ language enabled us to create a compelling landing page that converted well.  

• Test your messaging whenever you can: talking to prospective customers, whether that be in formal meetings/calls or in passing at conferences and events is a vital way to test the positioning of your product.  As you meet with different prospects, you’ll notice which phrases resonate and which don’t, enabling you to refine your pitch.  Over 48 hours at the Running Remote conference, I spoke to at least 30 potential buyers and my pitch was completely different by the time I left.

• Calculate your cost of sales: as soon as your sales process begins to involve multiple calls with a customer, you will need to have a product which has an Annual Contract Value (ACV) of $20k+ (with the potential for revenue expansion) to make it worthwhile. If you find yourself spending hours with customers to close sales which are worth less than this, your business is unlikely to be sustainable.

Operations

• Set targets and conduct reviews: for this phase, my co-founder and I were stricter about setting targets for any experiments we ran or work we did, and interrogating any success or failure before committing to further work.  This made us far more effective and improved our focus on ideas that genuinely moved the needle.  While we had done this in previous months, because we were sceptical that management training was a business we wanted to build, we were far more rigorous this time round. This level of focus and rigour should have been how we we were operating all along.