Many years ago, when I still had bounce in my legs and ran with the best of them, I played college football. And when I was a freshman on the team, a friend and teammate told us a story about when, as a high school player, he had been pulled from a game after making a big bonehead mistake that had let the other team score.
In his recounting of this event, my friend told us how as he trotted off the field, he stopped next to the coach and said he was sorry. The coach then glared angrily at him. Grabbed his facemask and yanked it so his face was inches from his own. Then the coach said the line that our college team would repeat over and over again on our way to winning two conference championships: “Son, sorry doesn’t win ballgames!”
The most challenging test faced by a startup is finding and securing those first customers willing to bet on the company when no one has heard of the firm and when the product has yet to be battle-tested.
At this stage, trust is your number one product feature and that will carry the deal. Trust is forged separate from the product and created during the sales process. And it’s the human part of the sales equation. When you’re trying to capture those first customers, it’s important to realize that any action that negatively affects the trust created can derail the sale.
In a startup, everyone is highly anxious about getting these early deals signed for many reasons. To the person working the account it can feel like everyone from the CEO on down wants in on the sale to make sure that it gets closed. If a company is not careful, this all-in, pile-on effort by the CEO and others can blow up a deal by damaging the trust built up between the prospect and salesperson.
Don’t try to hire a sales savior. Just hire to get to the next rung on the Startup Sales Evolution Ladder.
Recently, I spoke with a young entrepreneur about hiring someone to help him grow his company. He was tired. He was awash in things to do, with more tasks being added to his to-do list each day. And he needed help. And I could see he was dreaming of hiring a savior - someone that could do everything he couldn't and more, someone to make all his troubles disappear.
It was at that point I asked him what he needed help most with now. This got the conversation going in a whole new direction. And it helped him look at potential hires in a new light. And I could see that he was no longer dreaming of a savior but of someone who could help him now with specific tasks that would keep his startup moving forward today.
Hire for a purpose, not to be saved.
Like my friend, many startup founders are tired or fearful of the sales process and dream of a sales savior. And many look to employ one in their first sales hire. They want someone to "make sales rain down." Founders look for sales saviors in many places, and they come in different flavors, the outsourced salesperson, the college roommate, or the big company Sales VP.
In sales, the difference between the best and everyone else is that stars don’t waste time with time vampires - non-buyers. So, ask you self, how much time are you wasting each day trying to engage and sell non-buyers? Likely more than you should.
Many a founder wastes precious time and money trying to sell to non-buyers – that company or individual who cannot or will not purchase what the young firm is selling. Hell, many experienced salespeople waste time this way too.
But, the best startup founders who are out pounding the pavement quickly discover ways to segment out qualified buyers from non-qualified. In other words, they learn to disqualify fast.
A few days back, I met an executive from a well-to-do technology investment firm via Zoom. The meeting was a typical Zoom meeting. Her camera showed me more of her forehead than anything else. She rarely made eye contact with me – she never looked into the camera during the meeting. And her surroundings made it look like she was conducting this meeting from a broom closet.
So, just minutes into the meeting, I was thinking more about this lady's forehead than what we were there to discuss. And I was also wondering why she was in a broom closet. And then I realized she had lost credibility with me. How could this high-level executive, associated with a well-known tech investing firm, present like a first grader using Zoom for the first time?
After the meeting, it struck me that this type of presentation is now the norm across the business world. Many people have settled for this below-average type of production.
A lot is written about raising money for a startup. There are thousands of blogs that discuss the topic. There are pitch events where you can go to present your company and the opportunity your company represents. You can take classes on how to raise money. You can hire people to help you raise money. But, at its core, raising money is just another exercise in selling. If you have never sold anything, then recognize that you are selling when out hustling for capital. And selling is hard, and therefore raising money is hard.
Having raised tens of millions of dollars for different companies in different amounts, a quarter-million here and a million there. And having sold and built teams that sold large and small ticket software products over the years, I find the process of raising money to be remarkably similar to selling a new product for the first time.
Raising money like selling a product comes down to two things:
At a startup, the more prospects you speak with and the more you try to close, the quicker you learn what markets need and what customers desire. And whether you have what it takes to build a great company.
In other words, the faster you learn, the quicker you get to a rinse and repeat sales model that drives predictable revenue. And an accelerant to this learning is urgency. An urgent problem moves the prospect to act. Without it, selling gets harder - meetings do not happen, deals drag out, or they do not get done at all.
In a startup, anything that speeds up the sales cycle speeds up learning and helps a company zero in sooner on their ideal customer, helps them understand how buyers make decisions and how to attract them, and what the company’s real product superpower is.
Sales is the lifeline of any business. And no matter what the fundraising market looks like, if a company founder can increase sales month over month, they are on the road to success.
So, below are fifteen plus one sales maxims that I like to share with those founders that attend our Exponential Boot Camp for Startup Sales. These sayings set the tone for the program. And hopefully, give them some perspective on what sales is about in bite-sized chunks.
During the boot camp, I also like to share with the group a little-known statistic from the paper “Earn versus Burn: Financing Strategies of Successful Entrepreneurial Sell-outs” by Robert Wiltbank. This statistic exclaims of entrepreneurs who achieve exits, those that finance their companies primarily through sales, out-earn VC funded entrepreneurs by four times.
If a statistic like this does not get them to focus aggressively on sales and selling and adopt the fifteen maxims below, I am not sure what would.
Startup Sales Due Diligence Basics: understand the two-mode Sales Model - Developmental and Systemic Sales
A startup is a race and a journey. It is a race to get to a repeatable sales model before running out of cash. And it is a journey of understanding and development of a sales model that can sustain the company. However, many startup founders lack the experience and acumen to build a sales process from scratch, which will seriously hinder their ability to complete the startup race.
At the Exponential Boot Camp for Startup Sales, to help founders better understand and navigate the sales journey they are on or have ahead of them, we introduce and train them on our two-mode sales model. The model highlights the different selling and hiring efforts and activities they must undertake at various stages along their journey. We have named these two sales modes, Developmental and Systemic Sales.
The selling and hiring activities in these two modes are vastly different. Understanding these differences helps entrepreneurs plan their journey with more foresight, better manage their cash resources, engage more effectively with prospects, and hire more astutely. In short, it helps them make sales decisions with more clarity and purpose.
If you are an angel or early-stage investor, looking at deals through the two-mode sales model's lens helps you understand how well your founders appreciate the task ahead of them.
It’s a mistake I see made over and over again. A first-time entrepreneur assumes that selling at a startup is like selling at an established company. Many angel investors and mentors from established companies make this mistake too.
If you have never been in a startup before or been the founder of one and run the startup sales gauntlet, you will likely make this mistake. And it is not a trivial one to make. Many first-time founders have sunk their companies because they did not approach startup sales correctly. Others that made this mistake just cost themselves and their investors a ton of money and wasted more time then they had to spend running a sales process that was ill-equipped from the outset.
You approach customers and close deals in a startup very differently than you do at a going concern. Selling at an established firm usually means executing on a well-tested plan to sell a product with a track record of meeting the needs of customers willing to pay. Essentially, you follow a map down a well-traveled road. Whereas at a startup, you are on the opposite end of that spectrum. At the beginning, usually, it is just the founder, some ideas, and grit.
But there is a process and a rhythm and a methodology to startup sales. Done right, it allows a startup to move forward in a productive and results-oriented manner.
I was in Montana last week on vacation and was lucky to be able to fly fish for a few days. Of course, while out fishing on the Gallatin river, I had my son take pictures of me so I could post them on Facebook and Instagram and let my friends know what I was up to.
As you can see from the picture, the photo shows me standing in tall grass, smiling, and holding my fly rod. Of course, later in the day, when I posted this image and wrote, “Lucas and I, caught zero fish,” I got some snide comments back from friends. They said, “water is required” and “find water.” Implying that my inability to catch any fish stemmed from the fact that I was not near the river.
And later that evening, while reviewing these comments, I got thinking about what a good analogy fishing is to startup sales and especially early efforts. The point being, you cannot generate sales or learn what customers want until you engage. Or, in this case, find the water and toss your line into it.
A young salesperson today asked if he should drive out of his way to visit a potentially sizeable account. When he asked the question, his plans already had him on the road, traveling for three days, visiting numerous prospects while driving over 1200 miles in total. And now he would need to put in another day away from home and drive an additional 200 miles to visit this account.
By all measures, he had already planned a great sales trip. His itinerary had him visiting many high-quality prospects. In other words, he was engaging in the right sales activities that would have him on the road for most of the week. However, now a prospect, a potentially significant account, was saying that she could meet with him, but he would have to extend his trip, and travel that much further. One more day on the road; one more meeting.
This situation goes to the heart of generating business and creating sales, and the effort required to get a startup off the ground. Let us be clear: You always take the meeting! No matter how tired; how far away from home you are, If the prospect says they can meet and you are within striking distance or even if you are not, strike! You may not get the opportunity again, grab it. Grab it while you can.
In the future, I can guarantee you that this young person, if he wants to become a great salesperson will never have to ask me again if he should put in the effort and go out of his way to meet with a good prospect! No matter how tired he is.
Written by Tim Bates
Click here, to learn more about the Exponential Boot Camp for Startup Sales,
Startup Sales: Framework for Identifying a First Market Segment to Attack For Pre-revenue and early revenue companies
For many entrepreneurs, unless you pick the right first market and the right people to engage with, you won't be able to generate the traction you need to either attract outside capital or produce capital on your own to finance your startup's growth.
Hence, the way you approach and determine where to attack first will decide whether your startup gets off the ground or crashes and burns before it even gets started.
This framework is designed to help you determine where your best first market opportunities lay.
1. Identify a segment which will be quickest to embrace your offering. Time matters, there is limited time and money available for most startups.
The goal is to create a beachhead that will generate early momentum, speed your learning, and create reference points for other prospects as well as show your investors or potential investors that you are gaining traction.
In this first phase, revenue is secondary.
Startup Sales: What Value does your Product or Product feature bring to the market? Is it Medicine, Vitamin or Laughing Gas
Is it medicine, vitamin, or laughing gas? How do you convey the value of a feature or product concept to your team or get them to discuss it based on market value? One way is labeling.
As an entrepreneur, there always is another shiny object to chase. With a talented development team at your disposal, you can very easily chase any of these flashy baubles. The secret is for you and your team to stay focused on those few features or overall solution that your target customer needs. If you discuss your product features or product as to whether it is a medicine, a vitamin, or laughing gas, it helps your team focus on the value the market will place on it.
Many in the startup world simplify the entrepreneur journey into three stages – Build, Scale & Exit. However, it helps the entrepreneur to look at the process more granularly - more definition provides more direction. For this post, we break the startup lifecycle into six actionable stages from ideation to value realization, with each being an essential part of the journey on a company's growth curve.
By delineating and defining the steps along this curve, the entrepreneur can better understand where they are on their journey, where they must go, and what must get done. In turn, this assists her in acting and communicating more succinctly and clearly with her team, investors, and other key constituents about what steps to take to achieve her goals. This engagement then helps the company build a stronger foundation from which to scale the business, deploy capital, and create value for investors.
The startup sales process is challenging. Many founders are not salespeople by trade, so we at the Exponential Group, working with input from other startup CEOs and sales professionals, developed the "Selling Framework for Startup Founders". It is a simple set of actionable ideas that entrepreneurs can refer to when selling that will make them more effective. This podcast digs into this framework.
Click here, to learn more about the Exponential Boot Camp for Startup Sales,
Selling is what makes business happen
By Tim Bates
The company founder plays many roles, the most important is Chief Salesperson. In this role, they're responsible for attracting, enticing, cajoling, strong-arming, badgering, or essentially doing whatever it takes to produce those first company defining deals that launches their firm. If they play this part well, they will move their company forward. Done badly, it is likely their company never gets off the ground.
Now some say that a great product sells itself, so if you have one of these magical gadgets, count yourself extremely lucky. For the other 99.9999 percent of you founders, put your selling hats on and head to the door, because selling your offering is what will turn your little idea into a company.
Moreover, because many founders are not salespeople by trade, the Exponential Group and MESA, working with input from other startup CEO’s and sales professionals, developed the "Selling Framework for Startup Founders”. It is a simple set of actionable ideas that entrepreneurs can refer to when selling that will make them more effective and increase their odds of signing cornerstone deals that will in turn help propel their company to that next rung on the sales growth ladder.
Tim Bates, Dan Kinsella,
Jim Moar & Kent Lillemoe
for the MESA Organisation
A Call to Arms about Cash Management
For many companies, time is money. For early-stage companies, money is time. This framework underscores this brutal reality.
You need loyal customers and super-duper products for startup success. However, they're rendered useless if you don't respect the fact that cash will always be king, and you need it to survive.
A simple truth, cash-flow surprises kill many startups. One out of three startups dies from a cash crisis. Therefore, as an entrepreneur, you need to understand and, more importantly, master cash management basics before mismanagement bites you in the ass or, worse, puts you out of business.
In its simplest form, proper cash management means controlling your inflows and outflows of cash, so you never run out!
Here, we outline seven fundamental concepts of cash management that every startup founder must adhere to to minimize cash-flow crises or an all-out business implosion.
The Gap Stage: Between Market Fit and Scaling or The Blood, Sweat & Tears of Selling Your Ass Off to Get to Sustainable Growth
The Gap Stage
The first significant group of customers you sell your product or service to is special. They set you on your way to sustainable growth. I’m not talking about signing up an early adopter or two. I am talking about that first sizable group that you work your ass off trying to and then selling. They become your company’s foundation for growth. They create the forward momentum needed to move your business to the next level. As an entrepreneur, signing up your first 50 customers who pay $2000 per year or the 20 that pay $20,000 is a distinctive stage in the evolution of a startup. I label it the Gap Stage. It’s the stage after you determining market fit, but before you press the gas pedal down in order to scale the business. It’s the messy stage. It’s a hard but transformative stage. It is here that you birth your business.
In the next 90 days, if you must put money on the table to prove to your investors that your product concept is the real deal, are you in a Demand Harvesting (DH) or Demand Creation (DC) mode? For those that answered, DH go to the head of the line. For those that said DC, grab your ass and kiss it goodbye.
Demand Harvesting is about finding and selling to companies or people that are already in the market, NOW, looking for solutions for a specific problem. Anything else is Demand Creation.
An entrepreneur should never confuse the two. Many do. It is one of the reasons many startups struggle early on.
An entrepreneur and team create a product, start to market and sell it, and then urgent problems sprout up as the sales and marketing process gets underway. Now the entrepreneur and team do what many young companies do – they bounce around from problem to problem, to sales attempts, to marketing tries, back to the problem, and back to some other urgent issue. Then after a period of sporadic sales and marketing efforts, predictably, panic occurs.
Surprise, surprise! Because of these herky-jerky sales efforts, deals are not flowing in, cash is tight, and the team is bewildered as to why their efforts to sell their new great product are not producing the expected results. There may be other reasons at this stage why sales are not happening, but the fundamental one usually is the lack of consistency in their sales and marketing efforts.
The other day, while out on a long roller blade, I happened to be listening to a podcast by Tim Farris. (You need a long outing on the blades to consume one of his recordings.) He was referencing pricing, startups, and a statement that Marc Andressen’s made. Marc indicated that the No. 1 theme that their investment companies have when they are really struggling is that they are not charging enough for their product. And this reminded me of a key startup rule of thumb. If your customers have not complained, every now and then, that your prices are too high, then you have not priced your product or service high enough.
Price objections are part of the sales game. But if you are dialed in to your target customer, their needs, etc. and are making some sales, and if you have never gotten push back on price, it is highly likely that you are leaving money on the table. Lots of it.
Trade shows: It seems we have all attended them or helped organize one or two. Intentionally or not, over the years, I have used them and other such events to launch new businesses and products. As I look at them through the entrepreneur lens, I see that they are more than just marketing exercises. They are forcing functions* that can drive overall company growth.
As an entrepreneur, you should recognize and embrace the power of these forcing functions. Don’t just let them happen or go to waste. Seek them out. Use them to manage the growth of your business and propel it forward.
Think about how people in your company act day in and day out. There is a routine. Everyone thinks they work hard. They are smart, and they put in long workdays. Then reflect on how everyone responds when there is a hard stop when the company needs to present and demo its latest, greatest product at a major trade show or deliver it to that first customer.