Category: Uncategorized

Nothing forgives like growth does. An e-commerce startup was looking for Series A funding. Investors told them to improve their CAC and come back. When they did, the investor felt that the churn was too much. The perplexed founder wisely decided to focus on growth and ran a series of successful growth hacks that took the business to 5x in terms of GMV.  When they went back to the investor, they got a warm welcome and the funding. Turns out that once you demonstrate growth, people stop asking too many questions. Growth is the single most important indicator that the idea is sound and so is the execution. 

There are of course limits to this argument. Purchasing growth at any cost is not a wise approach in my opinion, notwithstanding the madness that capital markets and the venture capital ecosystem are witnessing today.

More than any claim of ‘potential’, ‘market size’, ‘pathbreaking product’ etc., the surest validation of the idea is actual business. User adoption may be a close proxy but it is not the same as paying customers. There are exceptions. For example, in high tech, the demonstration of a significantly better product itself may be a valuable milestone. In some cases user adoption may indeed be a reliable indicator. But for the most, revenue growth matters.

This is a statement of end result, so from an entrepreneur’s point of view this statement alone does not add much insight. Let us look at some actionable implications of this idea.

1. Given multiple paths for product roadmap choose the one that gets you to paying customers the fastest.  
2. A product feature is only important if the customer sees value in it. This seems self-evident but surprisingly often we build features that the customer ‘ought to find valuable’. This is not to justify neglect of below-the-surface features, like security. These have an implicit value and customers believe that we are taking care of these things even if they are not visible.
3. If you are in the user acquisition phase, strategize the fastest path from user adoption to paying customers. 
4. If customers are happy to use a product when free but drop it when a fee is sought, it means that the product is not valuable enough. The idea is not validated. Again, the exception is where revenue from customer is not the goal rather revenue from data is.
5. If customers find value in a product but find it hard to adopt or use, you have a problem. It is your problem to solve. Pay attention to how your product will operate within the customer ecosystem.
6. The customer experience must be so good that he becomes an advocate of your product. This is necessary for you to create growth. Customer experience must drive product.
7. Look at reaching the repeatability stage. Are you able get to a stage where acquiring and onboarding a customer is not such a huge task that it prevents you from paying attention to existing customers or hurts your ability to convert existing prospects?  If not, what can be changed?  
8. Don’t optimize for inefficiency just yet, unless it is affecting traction. Let growth be North Star for now.
9. Raise funds soon enough so that there is no discontinuity in your growth.  If valuation seems like a deal breaker, remember that optimizing for valuation in an early funding raise (post Angel round) where you are diluting about 15% to 20%, is not important.  It’s more important to raise enough capital.

When it comes to enterprise products, knowing when to walk away from a sale is as important as is to know when to pursue one.    This is tough because every sale looks valuable.  But sometimes you are actually better off without the sale. 

Unreasonable demands, changing goalposts 

If the prospect makes unreasonable demands or keeps changing requirements throughout the deal cycle you may to step back and think whether this deal will work out.   Will this customer go live? Are there too many conflicting voices here?  Some organizations just have a culture of being unreasonable with vendors. 

In such cases you may want to modify your strategy and be smart about what to offer and what to hold back.  You must bargain judiciously throughout the sales cycle.  Be emotionally detached from such campaigns so that you can walk away if required. 

Reference-ability 

You spend so much energy and attention on taking a customer go live.  Often this effort is disproportionate to the revenue from the customer.  This is because you want each implementation to be a reference case for future sales.  Does this look likely in this case?  If not, you want to reconsider the sale or at least relook at the overall value of the project.   Too often the line ‘this is a strategic sale’ is used to give the prospect undue discounts and attention.  You need to be hard-nosed about this. 

Hobby Project 

This has been seen in several AI projects.  The real intent of the project may be to give the CTO something to brag about, or to shore up his performance metrics for the year.  In such cases you will see that the customer insists on a low value “pilot” project.  If you sense a weak ‘intent to go live’, you want to be careful about time and effort spent.  May be enough reason to walk away. 

Product Integrity 

When a prospect asks for changes that may severely impact your product road map, you want to ask yourself if it is really worth it.  It may be value add to your product or it may destroy it. 

Exclusivity 

This a huge red flag.  When a prospect asks for blanket exclusivity is a straight forward reason to walk away.  Even partial, time-bound exclusivity conditions must be looked at with caution. 

IP 

Sometimes prospects demand that ‘their ideas’ must be their IP.  This can create a serious problem for you in the market.  Also consider that investors will look askance at such contracts. 

Unlimited Liability 

When prospects demand unlimited liability for business deliverables or third party action, you have to say a straight ‘No’.  Again, this condition will destroy value in the eyes of your investors.   

Walking away is never easy.  It takes conviction and self-belief.  The surest way to make this a little easier is to have a strong pipeline. 

Here are ten attitudes that you must be burnt into your startup’s personality to have a growth mindset. 

1. One of the founders must be ‘sales obsessed’.  Not just interested, eager, energetic, but ‘obsessed’.   This will ensure that your startup is always on the lookout for growth opportunities. 

2. Your value proposition must be clear and tangible.  It must matter to the customer. This needs to be kept in mind from the very beginning and through your product iterations.  It is better to have a sharp product for a smaller (but not tiny) audience than a blunt one for a large target segment.  Of course, its golden to have both. 

3. You should look at ‘usability’ and ‘sellability’ in product strategy and design.  That means several things: 

1. The product makes it easy for the customer to decide.  This is not to be interpreted simplistically as merely lower cost or as premium offering.  The offering must be compelling in its totality.  This means there is a feature(s) that is very attractive and the negatives (e.g. price) are small in comparison.  By features one does not mean technical features alone.  For example, beauty or elegance may be a key feature (think Apple).  And this compelling proposition must be easy for the customer to see and experience. 

2. It must be easy for the customer to go from buying to getting results.   

3. A related point, it must be easy to setup and go live.  If, for the customer, adopting the product requires significant preparatory work, either you do it for them or you provide the tools to help them do it easily.  Consider including the necessary services as part of the product offering.   

4. You need to balance product feature richness with ease of setup and use.  Customers are no longer dazzled merely by feature rich demos. 

The point to be emphasized is that these factors are to be kept in mind from the product strategy and design stage itself.  They should continue to be important as your product iterates. 

4. You should place great importance on user experience and ensure that customer satisfaction does not suffer as your business scales.  You could empower your UX team to take operational decisions regarding product, service, support and other teams. 

5. ‘Selling’ must be a key value for your organization.  Selling is everybody’s responsibility directly or indirectly. 

6. You need to advocates within your organization to transmit the voice of the customer so its loud and clear internally at all times. 

7. Your entire organization should rally around for large, breakthrough opportunities without you having to push your people. 

8. You should not penny pinch on Sales.  You need to be smart about spending but you can’t settle for anything but the best quality sales operation. Only one horse wins the race.   

9. You need to always thinking long term.  You can recognize when it is good to walk away from a sale. 

10. In some cases, it takes a long time to build the product – e.g. medical devices.  In such cases you could try to find ways to constantly test your offering in the interim with your target customers using demo videos, VR, mock ups, scaled down versions, 3D prints.  Basis this you can try to get advances or purchase orders from early adopters.  There is a big difference between ‘we are very interested’ and ‘we are buying’. 

The above are not things to do, but attitudes to inculcate.  The best way to do it is to internalize them yourself and constantly talk about it with your people. 

In the context of enterprise sale, making the transition to hiring a salesperson is one of the most critical steps in scaling up your startup.  This post follows up after the previous one.  If you haven’t read it, you can get it here. 

Let’s assume you have recruited a senior salesperson with familiarity with subject matter and sales experience.  Once you have recruited her, there a lot to be done to make her successful.   

Make sure you are not making any of the following harmful assumptions 

1. “If she is really good, she will figure out what to do.”  – don’t make a hard role even harder. 

2. “She needs to be an entrepreneur like me.” – an entrepreneurial mindset is precious but she does not need to be like you.  Please the previous post. 

3. “She is an expensive resource.  I expect her to take over and drastically reduce my time spent on Sales.  I have too much going on.” – Alas, it never works, expensive resource or otherwise.  Plus, you should never be too busy to sell. 

4. “Why would she need handholding?” – It is not about her capability.  You need to do whatever it takes to set her up for success specifically in the context of your business. 

5. “This is all I can afford for a salesperson.” – Having considered all things, If you have decided that an experienced salesperson is needed, don’t penny pinch.  There are a variety of ways to design the compensation package.  Remember that Sales is like a horse race.  The best horse wins.  No prices for coming second. 

6. “I have no money left for Marketing.”  Without Marketing cover you will cripple her in a fiercely competitive market. 

Make sure that you do the following to set up your salesperson for success. 

1. Set up a formal sales pipelining, case review and tracking – it should be led by you. 

2. Actively help your salesperson resolve objections and hurdles that come up.  Talk to her daily.  

3. Keep improving your collateral, script, objection handling database as you learn more and more. 

4. Ensure that she has a strong voice in product design and roadmap. 

5. Ensure that she never feels helpless when dealing with people within your organization. 

6. Organise the funds to provide adequate marketing cover and lead generation support.  As mentioned in the last post, a salesperson is only one piece of the jigsaw puzzle. Prioritise this expense. 

For B2B startups there comes a time when the founder can no longer manage the sales process himself and needs to hire salespersons to keep up. This is an important transition and you must succeed at this. But it is hard to do and failure is more common than success.

There are such a wide variety in situations that it’s hard to boil this down into a checklist. We will try explain through case studies. This is the first in a series of posts on this topic.

Pramod’s Testing Services

Pramod runs a software testing product-as-a-service that helps banks accelerate user acceptance testing and crash their go-to-market time for new product launches. He found success in India as banks found his proposition extremely valuable. Pramod ran the sales process entirely on his own; he is very good at consultative selling. He reached his prospects primarily through his friends in the industry and ex-colleagues.

It seemed like a good idea to expand to North America. The value proposition was as valid for USA and the prospect of dollar sales was alluring. He hired a VP, North America Sales, a professional with 20 years of experience in FinTech sales at large companies. It cost a pretty penny. The Indian business was generating some cash and Pramod put all of it on his US bet.

The salesperson was quickly able to get meetings with mid-level IT managers at prospective banks and from there upwards to SVP IT – typically 1 level below CTO. At each bank this process took about three calls and two in-person meetings. The journey took about three months.

With six months in and no deal, Pramod told himself that he should be patient. After all, he reckoned, this kind of selling takes time. There were tons of discussions, presentations, demos. In a couple of leads he was told ‘bank is waiting for the right project to try our service’. In short, a lot of action but no business.

As each month went by Pramod got nervier. Pramod demanded that his VP start to expand his circle beyond banks in the East Coast and that he cold-call IT managers at banks in the Mid-West. The VP refused to do cold-calling saying that it was not his job and that it would damage his career. After 12 months, Pramod and the VP had an angry fall out and that put a pause to Pramod’s US ambitions. Some precious money spent and even more precious time lost.

Someone Like Myself

We can think of several things that went wrong with Pramod’s strategy. Here we focus on one mistake that Pramod made – the assumption that the ideal salesperson to hire would be ‘someone like myself’. Turns out that this mistake is made quite often.

Early in your startup’s life you are constantly making little (and sometimes large) modifications to the offering and value proposition based on what your prospect wants to hear. You are constantly making promises to move the deal forward. This works when you are also in charge of the product and implementation teams. You have the information to manage risks while making such promises. You know how much to oversell. You know you can rally the Product team to deliver should the sale happen.

With a salesperson it gets harder. She needs to work with a tighter product definition and a tighter script. She can afford to make fewer off-the-cuff claims while constantly coordinating with the product team. At the same time, she needs to be able to navigate through unscripted territory ever so often and judiciously push back on product and implementation. Indeed, this role is much harder than yours!

Preparing to induct the first salesperson

You have to equip your salesperson with the preparation and tools to succeed.

Firstly, set up a formal sales pipelining and review process even if there is only one person in the Sales team. Understand that there are different moving parts here. Know the ‘Sales Journey’ – finding prospects, to getting a meeting, to reaching the decision maker, making the pitch, resolving objections, managing multiple stakeholders, making the proposal and finally closing the deal.

Map out what is required for each step. There is a ton of material out there to educate yourself. Nevertheless, it is hard when you actually do it. Your mentor could help you.

Figure out the weak links – your Sales team is only as good as the weakest link. Also figure out those characteristics of your customers that made them especially attracted to your offering. Make sure this essence is not lost as you delegate.

Figure out the ‘who is doing what’ question. Who is expected to generate leads, who is expected to walk the streets, who is expect to close? Is it too much to expect one person to do it?

Understand that there are several pieces to this jigsaw puzzle that must be solved for. Your sales hire is but one of them.

For instance, do you need somebody with a ready rolodex (large price tag!)? Do you need someone to generate leads? Do you need Do you need a digital marketing expert? A person who can do concept selling once contact is established? Do you really need feet-on-the-street?

Once you know what your salesperson is expected to do, you can figure out what kind of profile best suits the position. It’s unlikely to be someone like you!

What you are being asked to do in this post is not easy. But you must start this process and keep improving it with experience. That matters more.