Building The Machine 22: Forcing Functions
Forcing functions are your friend.
🌊 Thanks for being here. I am Eric Friedman and I share my thoughts about Building The Machine: those that are creating flywheels to make startups grow. This is a collection of what I am writing, reading, and thinking. I hope you enjoy it.
Forcing Functions ✍️
I love forcing functions, a forced reason to take action and produce a result.
Whether a fundraising event, hiring, or sales/partnership opportunity- these can be especially useful to make all parties move faster. If you do not have one then you can end up in purgatory and in the end, time will kill all deals.
Interestingly in the computer interaction design sense there is a very different definition;
A forcing function is an aspect of a design that prevents the user from taking an action without consciously considering information relevant to that action. It forces conscious attention upon something (“bringing to consciousness”) and thus deliberately disrupts the efficient or automatized performance of a task.
This can obviously be a distraction or interruption (as mentioned above) so the nuance is important. Having worked on many deals that seem to go dark with the other party (think endless sales calls or follow ups) getting back in front of someone in the right way is key. If you interrupt it is worthless, but if you add value you can get back into their flow intelligently.
There are a few types of forcing functions and methods I have seen work and wanted to share them below.
Fundraising forcing functions are important because VCs will endlessly kick the can down the road until the next launch, the next milestone, the next version – all the while letting folks know they are excited. If you really break things down, this is there job – de-risk a venture scale investment to deploy capital at the right time. This keeps the firm and final answer on investing nebulous and entrepreneurs moving the firm in their tracking sheet or CRM around for no reason. Forcing functions that can helpful here;
A Material Update – something big happened to the business, landed a big customer, acquisition costs went down, strategy started working, new city launch, breakout growth, etc…
A term sheet (seems obvious but not communicated often) – someone willing to lead the investment and now you can heard all the others in
An Epic Hire – brought on someone new that is going to change the business
A pivot – may not seem obvious but some investors that weren’t a fit before may see things differently
Partnership Forcing Functions can be tricky because they typically don’t involve revenue, which drives most business decisions, but there are other reasons to do the deal. Typically a startup wants a POC with a LargeCo. and they move at a glacial pace. Understanding what the team you are talking to actually needs this month/quarter/year is critical. Here are a few I have seen work:
PR Opportunity – for the LargeCo. to show innovation and working with a small company for the sake of shareholders, their customers, or a corporate initiative they are working on. Hard to manufacture, but if you can tap into something they already have going on its a great way to get it done. Give it to them on a silver platter and do all the work here.
Team member growth (or using their narcissism) – If you have an executive that is looking to make their next move and needs a win, this can be a way to understand their goals and align them with your own. I have seen this work when someone is looking to make a splash in their org or get a win on their resume for something big and it works.
Exclusivity – This can be great if you have another partner, or frame things in a way that could leave them out. An example “We are only going to work with one company in the banking category for this launch/feature/partnership and we want it to be you” Just don’t write too many of those love letters or be disingenuous with your offer.
Time Boxing – Offer on the table and a deadline for moving forward. A strong bluff if you have no backup, but a reasonable move if you have a team and want to move onto the next company/prospect/project as a small agile team
Candidate Forcing Functions – are hard because you want to hire the best people, hire them fast, and keep your OpEx low. The moves I have seen work here are:
Fundraising Event – something is happening on the valuation of the company and you can get someone to start before a third party mark of the stock options/RSU package offered.
Project Kicking Off – the train is leaving the station and the team/pod/project lead is going to start the work now not later.
Time Boxing – as mentioned above, an exploding offer can be a tough bluff but get things moving if someone is really dragging.
Signing Bonus – Interestingly, many early stage teams can answer the question “would you pay an extra $10K to the recruiter if they could get an engineer tomorrow?” with a resounding “yes” but when I ask about paying this directly to the candidate they stall out. I think its a mental hurdle they can’t get over, but its worth it and you can decipher what is truly motivating someone if this is the answer.
Sales Forcing Functions – there are two ways of looking at this one. Similar to partnerships above, you have a prospect that hasn’t signed. Additionally you could be on the negotiating side of things and want to close a sale but negotiate for something. Here are my thoughts:
You are the seller
Pricing ends at month end (then goes up)
New feature set deployed – built for them or general
Roadmap access – looking for select partners to influence and provide feedback on roadmap
Client or Partner Council – seat on the “council” to meet with exec team about needs
Free onboarding – you may not even have this as a product, but putting a customer success person in their office to get them started works wonders
Steep Annual pricing discount – can be helpful to close a deal, lockup some ARR, and ensure usage of the product
You are the buyer (basically the opposite of above)
Wait until the end of the month – see above 🙂
Offer up X budget and if planning is done for the year they won’t get another shot at this business until then (works well!)
Offer up a yearly price for cash today (at steep discount)
Package other things into the same tier or program
Obviously all of these delve into the psychology of who is on the other side. Empathizing with who you are dealing with is extremely helpful. Although the title is not great, you can find many of these tactics in the infamous book How to Win Friends and Influence People.
I am a big fan of forcing functions, reference them often, and now I can point people to this post because I talk about them so much.
As always, these are things I have seen work well but open to what others have seen and ways to improve this list. Let me know.
I started bringing over some of my posts from my blog like this one. Like all my writing its an experiment and hoping to learn from growing
What I am reading 📖
1️⃣ Link rot is real. Online content is disappearing - 38% of webpages that existed in 2013 are no longer accessible says Pew Research.
2️⃣ Peacock, Netflix, and AppleTV in a bundle - “There are only two ways to make money; bundling and unbundling” so says Jim Barksdale
3️⃣ Hackers and Malware in gaming - preying on kids playing video games. My guess is that there is more of this than anyone realizes because reporting and tracking is so sparse.
4️⃣ Goodhart’s Law “When a measure becomes a target it ceases to become a good measure.”
5️⃣ How do I teach these kids? Really good deep dive into the future of education at the dawn of AI. I am fascinated by this as I did not see a solution to the teachers/education/skill building system until now. This all gives me a lot of hope for customized and 1:1 tailored instruction and exploration that will soon be possible with an Internet connection.
Celebrate your wins 🏆
Making the time to write more.
Sticking to a decent workout schedule.
Got a win? Send it my way to celebrate and list here.
Agreed! Forcing functions are one of the fundamentals of management, and the better you get at using them the faster your team will move.