Product-focused Founder Turned Sales Leader Shares How Founders Can Fuel Sales Success
Most startup founders, especially technical ones, aren't too interested in selling. They want sales, of course, as all founders certainly understand that sales will ultimately make their product successful or unsuccessful. But some founders still cling to the Mark Zuckerberg model: make something so huge, so compelling, so viral, that nobody has to worry about sales for years.
But even Zuckerberg had to pay attention to a form of sales at some point.
Yes, it can be intoxicatingly fun to simply write code and geek out on a product all day, every day. But the sooner founders spend real time contemplating their sales processes, the sooner they can realize true revenue acceleration.
Founders shouldn't be seduced by market misconceptions of how some unicorns—Slack, Dropbox, Stripe—have sold their products. Most companies won't make products that form the vanguard of an industry, like these ones, and it's a mistake to underplay the role that active sales have had in these companies' successes.
Don't confuse sales with marketing. They're not necessarily the same thing. As Jessica Livingston explains, sales for new startups should involve outreach that is narrow and deep—it takes effort and the cultivation of relationships and understanding users' needs. Marketing, on the other hand, is broad and shallow.
Many of the most successful startups have a founder who's taken over the sales process, owned it, and honed it.
Pete Kazanjy is one of the the preeminent thought leaders in Silicon Valley on this topic of “founder-led selling.”. It's with his guidance—and by leveraging sales materials he has made public—that we put together this guide on how to build a SaaS sales process.
Product guy turned sales guy
When Kazanjy started Talentbin, a kind of search engine for job candidates—he was maniacally focused on his product. That was the cool thing to be in Silicon Valley, and it still is. But before raising money from First Round, among others, Kazanjy had a stark epiphany: "I realized that we'd go out of business if we don't start focusing on sales in a big way."
Before that moment, Kazanjy recalls himself as the stereotypically product-focused founder. "I was that founder who thought, 'sales guys suck, they're all bros,'" he says.
But Talentbin needed sales or it would die. Kazanjy dove in. In effect, he went from being a reluctant salesman to the company's first sales manager to the the company's first sales leader to, after Talentbin was acquired by Monster, being in charge of 600 sales people at the bigger company.
At this point Kazanjy has written a book on the topic—Founding Sales—and become one of the preeminent voices within Silicon Valley on how to manage startup sales correctly from the start.
So it's not hyperbole to say that FundersClub has the perfect person within its network of funded founders from whom to learn on this topic.
Key things a sales organization should focus on, first:
- Customer Development: What are we solving? How?
- Existence Proof of Value Creation: Does it actually work?
- Existence Proof of Value Exchange: Will someone pay?
- Small Scale Repeated Value Exchange: Will many people pay?
- Beginning Value Exchange Specialization & Abstraction: Can non-founders sell this?
For each of these things, Kazanjy likes have a goal around which activities can be built, as well as speccing out the tools used, who will do handle the work, and what the exit criteria of this task should be. He will also define what he calls the "anti-pattern," behavior that is common among startups and founders that not only fails to advance things toward the goal, but it can also put forth false positives, thus reinforcing bad strategies.
From the top:
Customer Development: What are we solving? How?
The goal: Discover and validate pain points in the market that can be solved with a unique application of technology. Build that technology.
Activities: Engage and interview potential customers to uncover painful kinks in their processes and what those companies and people are using now as solutions—and how those solutions could be better. These interviews should be well-documented and made available to be digested by multiple team members. From these interviews, the startup should be able to form hypotheses on what needs to be built. These ideas should then be put in front of the same potential customers, and tweaked. From here, founders can build the initial feature set.
Startups should aim to find users and customers who play different roles in their companies—primary users, buyers, managers, etc. Founders need to know if their product appeals to all levels of an organization; this is when a product can experience rapid uptake.
Who does what: Founders of both the technical and business variety should partake. This critical exercise determines the mission and product of the of the startup. As a product evolves in a space, as it should, some of this work can be done by other team members, but the initial spate can only be handled by founders.
Task Complete: When a statistically significant number of prospective customers have been interviewed and a conclusion, behind which there is critical mass, has been reached. If the team has interviewed people at 10 companies, and all of them express very similar things about pain points and their needs for potential products, the work here is likely done. But if the findings are more split, more people and more companies will need to be interviewed, perhaps as many as 20 or 30.
Anti-Pattern: Founders shouldn't put their heads down and just build a product with a set of assumptions, one of them being that people will just show up and use it. The best products require intimate understanding of the pain point and the current solutions available.
Existence Proof of Value Creation: Does it actually work?
Goal: Prove that the product is actually creating value
So at this point founders believe they have struck upon a problem whose pain is sufficient enough that companies will pay for a salve—and it's an issue that founders know they can address with technology. But nothing is certain until it's been proven. Thousands of startups have hit upon products that sounded like good ideas at first, but turned out to be execution nightmares or, worse, simply bad ideas.
Activities: Rearing a group of beta customers who will provide the main proving ground for the product. Their use of the product should be tracked and monitored closely. It's here where crucial changes and pivots will be made in the product.
Who does what: Again, this is a task for founders. If there is a founder who is more focused on business and marketing, this should be her task.
Task Complete: The job is done when founders have gathered sufficient proof that the product provides a solution to the pain point whose impact can be seen in chosen KPIs. It is these data that will make the case that the product is worth money, that its ability to mitigate this pain point is well worth its cost.
Avoid this: Handing this task to a sales employee. This kind of thing is the fabric of the company, and it needs to be in a founder's hands.
Existence Proof of Value Exchange: Will someone actually pay for this?
Goal: Pretty simple - get people who seek promised KPI improvement and pain point mitigation to pay for your product.
This is an important step for developing the sales pitch. The sales narrative, the demo, and the implementation process need to be defined, practiced, and iterated upon. Founders and sales employees need to demonstrate that, yes, people will pay for this, and that they know how to best get them to that point of saying yes.
Activities: Demonstrating the entire sales process—presentation to potential customers, outlining the product's ROI, acquiring potential customer agreements, and then finally, and just as important, executing a successful implementation.
Who does it: Again, this is a seminal step in the building of a viable startup. A founder must be involved in setting the appointments and ensnaring the leads, doing the selling, and performing the implementation and on-boarding.
Task Complete: Founders can feel accomplished when a critical mass of customers is paying money for the value created by the product, and that this set of customers strongly believes they are receiving the value promised in the pitch of the product—and such value is reflected in the applicable KPIs.
Avoid this: Kazanjy defines the primary anti-pattern here as not charging for the solution—giving it away—and thus failing to prove the actual value exchange. That's not to say that successful companies haven't done exactly this, but it only pushes off a required hurdle that any successful start up must get past at some point.
The second biggest mistake companies can make here is successfully selling the solution to customers, but failing to follow up and ensure that customers receive the promised value. This can create churn and open the door to more conscientious competitors.
Small Scale, Repeatable Value Exchange
Goal: Identifying and codifying the end-to-end process of sales, from obtaining leads to closing and on-boarding customers. This is about creating documentation so that these tasks can be carried out by others.
Activities: Engaging a critical mass of prospective customers—30 or more—who are wholly new to the product and company. Each prospect is run through the sales process and, for this to be successful, a significant portion of them, 20% or greater, will turn into paying customers who realize value from the product.
Identify and finalize sales resources: Customer prospect lists should be compiled and defined here, as well as identifying the key contact at these companies and how to reach them. Messaging such as e-mails, and phone messages, if used, should be standardized to some degree. Sales presentation materials should finalized, as well as a script for running through any demos.
Who does it: A founder, likely a non-technical one. This is the step that defines the sales process for the startup. This effort can be accelerated by a junior sales employee who can organize and engage inbound leads, while setting up appointments for the founder.
Task Complete: Founders can feel like they'e nailed this when they've accumulated a dozen or more customers, depending on how many prospects went through the funnel, and when the sales process has become a clear, repeatable and documented set of operations. This collective process should be in a state it where can be handed off to a non-founder.
Avoid this: Don't have somebody else do this in place of the founder. This is part of the critical path to building a successful startup that sells to enterprises and other businesses. Founders should also try to avoid acquiring prospects in a willy-nilly way, where only a small fraction of them reach the point of success. You can't define processes and structure without using, yes, processes and structure.
Proof of Value Exchange, Abstraction & Specialization
Goal: Prove that the sales process and activities just defined can be learned and executed by a non-founder without exposure to an exceedingly steep learning curve.
Activities: Hiring, training and managing a new employee who sells. The founder will continue selling during this period, but will devote significant time to bring this new employee up to speed, and helping them hone their own understanding of the product and of the sales processes around it.
Who does it: This is still about the founder who has been handling sales. She now has to maintain the momentum of the sales machine, while bringing on others who can augment and replicate her efforts.
Task Complete: Founders can consider this task accomplished when the new hires are engaging, pitching, and closing customers who fit the ideal profile—which means they will find success with the product and remain on long-term. The new sales employees should be as efficient as the founder in selling and converting.
Avoid this: Don't hire too many people in sales initially, as the new hires will require a lot of the selling founder's time. By hiring too many people at once, a founder's time and knowledge is over-leveraged, and it will lead to poorly-trained and ill-equipped sales employees. Founders should also avoid under-leveraging themselves and concentrating too much on the tasks of selling rather than imbuing the new hires with the knowledge to do it themselves.