Today’s aging in place companies have opportunities for investor funding that did not exist a decade ago. Founders and executives are naturally spending more time, energy and creativity courting investors. The goal is funding at a high, tech company valuation. Connecting with venture capitalists and strategic partners, creating an investment thesis about industry disruption, and negotiating valuation is a priority.
Is the priority a tech company valuation, or customers’ hearts?
Technology companies that can grow to multiples of their present size (“scale”) are valued at multiples of mere service businesses. For many aging in place technology companies, the company story focuses on the technology. Executive conversations, public relations opportunities, and the every day “how we talk about us” centers are imbued with the technology, not the customer.
Yet to the customer, a company is brought to life in the real people they see or interact with, or by the benefit of using the product. The value to the customer is not in the technology per-se, but in the customer experience of the product. The technology is a backdrop to delivering a product that is valued by the customer more highly than competitors’ products. The technology should improve the customer experience, not become the customer experience.
Why business owners want a tech company valuation
Like runway fashion, valuation trends shift from year to year. Hot technology trends have included marketplaces, platforms, big data, wearables and artificial intelligence.
New businesses that prominently use technology can grow at exponential growth rates.A typical services business is happy with double digit growth from one year to the next. If a services business can grow 10% per year, a technology-based business can grow 10% or more every MONTH. With high growth rates, a tech company valuation is significantly higher than a services business. Owners of tech companies keep more equity ownership for each $1 received from investors than a services company.
For example, a services company such as Generations Now might be valued at 1x annual revenue. A fast-growing marketing technology company such as HubSpot might be valued at 100x annual revenue. I’d rather it be worth $100 million than $1 million.
Talking about technology in the hopes of achieving tech company valuation creates missed opportunities to acquire customers.
Every week, we curate news in the 50+ marketplace for Generations Now Weekly. If the newsletter contains a review of 15 articles, rest assured we’ve culled 485 articles. What I see in today’s media coverage (which reflects PR pitching), and my years in investor relations, public relations and marketing, lead me to this conclusion: low quality “here’s an app” articles don’t move the needle in customer acquisition.
The problem with low quality “app roundups” is apparent. Nobody wakes up looking for another app to load onto their phone, or another device to hook up to their wifi. People wake up with problems and want benefits. Similarly, focusing on VentureBeat instead of the top regional news sites on Facebook, could be a misdirection of limited time and energy.
In aging in place, there are universal opportunities for companies to be the solution: home safety, caregiving, personal connection, community creation, medicine management, injury prevention, legacy creation, family experiences, travel, retirement finances, encore careers, transportation.
Solve one of these problems and the world beats a path to your door? Not necessarily. To persuade older adults, a solution is not enough. Companies should focus on the benefits that are real in customers’ lives when the problem is solved.
The benefit is the product, not the product, and not the technology.
Below is a new promotional video for a hearing aid from Unitron. Doctors are the intended audience. Note that we never see the hardware. The focus of this marketing video is on one clear benefit, not the top 5 features. We never see a spec sheet. We simply experience the benefit.
Executives often want to imbue their journalist conversations and blog posts with (pick a buzzword) scaleable / technology / platform / api / cloud-based. I’m a huge believer in the power of relationships with investors and media, it’s in my DNA. If the customers come and they stay, the company will have the monthly recurring revenue to get the valuation you deserve. No amount of buzzword density will get a tech company valuation without the proof in the metrics.
Stay focused on customers, and they’ll come to you (and your sales team)
Here are 4 tips to keep the company’s story focused on customers:
1. Storytelling — Drop great customer and employee stories into your conversations with investors and journalists. Great stories need to come from the mouths of senior executives, as well as posted on the blog. Tell stories about how your company is solving a problem or creating joy for the senior, not only the caregiver.
2. Spend time — For every day spent talking with a potential investor or updating your VCs or the board, spent an hour talking with a customer or employee. Encourage your managers to do the same. You’ll find great stories here, pain points and opportunities.
3. Minds & Hearts — Map how your product aligns with the psychological desires of people 50+ — like generativity, creating experiences, improving the quality of life, optimism, authenticity, simplicity, communications from real humans (not logos) and living in the present. Answer the question, “what does solving this problem mean you can do in your life?”
4. Test it — Many companies test their UX and marketing messaging. Try testing stand-alone articles generated through PR and pieces of marketing collateral. Does a potential customer trust the message, want to learn more or find out how to get the product?
Focus on the customer, and the tech company valuation will come.