The Montana Mogul: RightNow CEO Greg Gianforte (Part 7)

SM: In your opinion, what are some of the typical problems entrepreneurs have?

GG: I think the biggest problem is they think they have to a perfect product before they can go to market. The reality is that learning does not start until you have some value proposition. When you go through the process of selling a product before you actually have a product, you learn a lot about the wants and desires of your target customer base.

Another problem is that entrepreneurs fail to immerse themselves. You have to figure out who your customers are and spend time with them. You have to know their industry. When you think you have figured out the solution to their problem, go back and ask them for money. Do not say, “If I had this would you buy it?” Say “I will do this for you and I want you to write me a check.” When they say no, then the learning begins. You take their inputs and modify your product concept, then call the next person on the list. This is an iterative process you do until companies start writing checks. The key is not to promise something you can’t deliver in eight weeks. Find the feature that delivers critical value. Once you have your customers’ commitment, go build it. There is flexibility in terms of timing of payments, but you get the essence.

I also think a lot of entrepreneurs do not know the equation of business. That’s sad. The equation of business is simple. Income – Expenses = Profit. You cannot influence profit directly. You can only influence income or expenses. Your value proposition to your customers needs to revolve around income or expenses. Tactical offerings focus more on cost than revenue operations.

SM: One of the things that stood out to me when I read your book was your discussion on “The Art Of Thrift”. Would you mind going over that for my readers?

GG: The first myth is “I need an office to impress my clients”. I don’t agree. If you are bootstrapping you need to spend your money where it can make a difference. Unless you are an accountant or a lawyer, your office is not going to make you money.

Second, don’t get caught up in the “I need a really expensive IT system” idea. You can go a long way with used computers, open source software, and hard work.

The third myth is “I have to pay full price for phone bills”. You might be surprised what types of discounts you can get if you ask. You can go out and buy calling cards if the phone companies won’t give you a break.

The fourth myth is related to the third. A lot of people think they need an expensive phone system. You don’t! You need something that meets your needs, and nothing more. The dial tone does not sound any better on a more expensive phone system.

Fifth, a lot of entrepreneurs think they cannot afford a salesperson. The real question is, “How can I employ someone for nothing?” My first employee at RightNow, Marcus Bragg, was only offered a commission structure. The thing is, he was selling a product that we knew the market wanted.

The final myth is “I am too small to ask for a discount”. That is not true. Call large suppliers and ask for a deep discount. If they turn you down they will do it nicely, so what is the harm? If they say no, then just ask them what performance level you need to reach before you get a discount.

SM: You have said many times that business is not just about the money. Can you comment on that?

GG: It used to be that if you asked kids what they wanted to be when they grew up, they would say they wanted to be a fireman, policeman, or an astronaut. Today all they say is “I want to be rich”. I think that is really sad. Greed is not a virtue. There is nothing wrong with making money, but I believe that when you build a business you need some form of higher purpose in the work you do.

SM: Would you describe it as an ethical value proposition?

GG: If you want to describe it that way, yes. At RightNow we help companies serve their customers. I think every one of us is given certain skills, and ultimately we will be held accountable for how we use those skills. Here in Bozeman the average salary of our employees is $50,000. That is more than double the average salary in the community. I feel that is a great accomplishment that resulted from my ability to build a business.

SM: Congratulations on many levels! This has been an incredible story and I look forward to watching your company’s progress.

This segment is part 7 in the series : The Montana Mogul: RightNow CEO Greg Gianforte
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