Perhaps the single greatest early challenge faced by founders in early markets is going from product to sales — specifically, a repeatable sales process. Occasionally, a product draws the market with such force that the company is flooded with inbound queries; however, these situations are incredibly rare, and come with the pitfall assumption that bottom-up adoption means no need for sales. But in the vast majority of cases, a product released in an emerging market lands with a dull thud, and it’s up to the company to figure out how to sell it.
In the vast majority of cases, a product released in an emerging market lands with a dull thud, and it’s up to the company to figure out how to sell it
I’ve written a lot about the differences in common advice for those in pre-chasm (vs. post-product-market fit) startups — including how to tease apart signal from noise, and the importance of product marketing when creating a category. But when it comes to sales in pre-chasm markets, how do companies go from “hunting” for product-market fit to actually scaling a sales org around a repeatable sales process? My partner Peter Levine has shared the must-watch fundamentals of sales for technical founders, but beyond the basic mechanics, what mindsets can founders use to frame, navigate, and avoid the common pitfalls of building the sales process in their enterprises?
Here are some of the mental landmarks — misconceptions to avoid, rules of thumb — that I’ve used both as a board member and as a former tech founder with a product line that now has an over billion-dollar run rate.
The term “sales” comes with the (often negative) connotation that you’re convincing someone to buy something they may or may not need. As a result, early tech founders bias towards incredibly “salesy” early sales hires, because how could any customer resist that charisma?
Sales in early markets should be about finding the few right customers strategically aligned with the vision of the company and the product
But sales isn’t about selling product to whomever you can convince to buy it. It’s not even about selling to customers who think it’s a good idea and will pay for it. Sales in early markets should be about finding the few right customers who want it badly enough, so that they have the internal fortitude to work with a startup, put an unproven product into production, and weather the inevitable hiccups along the way. This amounts to customers that are strategically aligned with the vision of the company and the product. Since it’s a complicated discussion — involving the ethos of the company, the technical landscape the product will be entering, the technical underpinnings of the product, and the strategic position and vision of the industry — generally, the only people who can do that discussion justice in the early days are the company founders or early executives.
This mindset towards sales is key for startups in early markets. Because sales is such a critical part of determining whether or not you have product-market fit, it should be intimately involved with product design, release, and feedback cycles. And if you as the product visionary or company executive can’t sell the product, then no one can (if someone does, they’re likely selling it to the wrong person for the wrong reason and creating problems down the road).
Clearly, founders and/or early company executives have to be able to sell the product — that’s one of my rules of thumb. Even if they can’t negotiate a price (I was notoriously bad at that) or know how to navigate the procurement process, if given the right access, and they’re still not able to convince the customer, I’d take a long hard look at the product, the market, and the customer.
In other words: don’t assume the problem is a lack of sales talent.
This leads into the perennial question of the first sales hire. I’m a fan of the first sales hire being a strong senior sales rep who will carry a bag and close deals. A good “first sales rep” will find ways to get you in front of the right person — they’ll reverse engineer the org chart; they’ll find strategic initiatives that align with the product; they’ll sniff out budget and champions within the account. They’ll even help negotiate the price and navigate procurement. But they don’t typically “sell” — that’s the founder’s job.
I’ve heard founders often lament that their sales reps “aren’t technical enough”. But sales reps don’t need to be technical; early market sales reps should be able to instead do the following: (1) qualifying customers and deals (understanding whether there is a real opportunity or not); (2) finding budget (remember, in early markets there may not be an existing budget line); (3) mapping the target org (figuring out who the key decision makers and stakeholders are); (4) calling in reinforcements (startup founders, product managers, etc.) at just the right time; (5) navigating procurement and pricing.
Founders often lament that their sales reps ‘aren’t technical enough’
What’s the difference between early sales reps and mature sales reps? A mature market sales person can often get a deal done by leveraging existing relationships. But given the limitations on resources, the last thing you want is to sell to the wrong customer who doesn’t value what you have. Not only will they ultimately churn out, you’ve given yourself erroneous market signaling. “Buying” your way into a customer base is dangerous as a pre-chasm startup because you often don’t know who the initial customer set is going to be.
In addition to hiring early sales reps with the above qualities, I also recommend hiring a sales engineer per sales rep. This is one of the main ways to scale out the technical founders when building a sales org. For non-technical products and extremely popular open-source products you may not need a 1:1 mapping of sales engineer (SE) to account executive (nor should you hire the same profile as a direct sales person). But in early sales, my inclination is to over-invest in SEs, and then over time reduce the ratio per sales rep.
So what does a sales engineer do? While an account rep is responsible for “quarterbacking” the sale and generally has a lot of know-how the technical founder doesn’t (procurement, negotiation, discounting, etc.), the SE is overtly responsible for getting an account to “technical close”. This means they’re the ones doing the actual selling.
Even though they don’t write a lot of code (if any), sales engineers should be deeply technical. Many of the SEs I’ve worked with have a deeper and broader technical understanding of the products they represent and how they are used than the engineers working on those products! SEs should also be great with customers; this means they’re not only people-friendly, but have a keen understanding of the market landscape and what differentiates different players.
After you’ve hired your first few sales reps and engineers, make sure you have a strong product marketer, too. Why? Because product marketers are responsible for sales enablement — that is, arming the sales team with material to help them sell.
The sales “pitch” — the broad rationale of why your product is the right one and why now is the time to buy it — will generally come from the founders, and will be refined over hundreds of meetings (with the account reps and SEs). But that’s all tacit, implicit knowledge that isn’t useful in scaling a sales process. That’s where product marketing comes in: It’s the function responsible for winnowing down the broad seat of discussions into simple, repeatable positioning. The earlier you get a product marketer into this discourse, the more context they’ll have in creating the positioning — and sales collateral — that is the primary means of controlling your sales teams’ discussions and ensuring everyone is selling the same thing to the right people.
Are there then too many people who aren’t actually selling? For early sales, I recommend keeping a relatively light overall sales configuration — 2-5 reps, 2-5 SEs — until you see that you truly do have a repeatable sale. And while it’s always tempting to experiment immediately with different geographies and verticals, I’d resist that urge (unless there is really strong natural market pull) until you’ve hired a strong sales exec to help determine those directions.
It’s very common for startups to immediately hire a senior sales exec who spends most of their time setting up Salesforce and implementing a process that anticipates scale before the company has even closed a single deal. When that too-early hire leaves (and they almost always do), it’s an enormous setback for the company not just in terms of lost time and opportunity, but in terms of culture. Because a sales team that’s starving for oxygen is one of the most disruptive forces in a company: They’ll sell things the company isn’t building, they’ll pressure the product manager and developers to fast-track or implement that “one feature that will get a deal done”, or they’ll sell to people who don’t really need your product.
A sales team that’s starving for oxygen is one of the most disruptive forces in a company
Don’t bring in a VP of sales too early. The textbook answer for when to scale sales is when 80% of your reps are hitting a quota that is set at 3x their on-target earnings. However, that assumes that your reps are able to maximize contract value, and that you have sufficient pipeline to make up for slipped deals and such — early sales often takes years to get to that sort of regularity.
So I would recommend bringing in a head of sales once your sales reps are consistently selling. Not only are they closing real deals and chasing real pipeline, but ideally, there is also some repeatable model emerging (similar buyers, similar cases) from the sales process that signals how to scale.
A strong VP of sales is good at implementing such a process and building teams. They’re also good at what else is needed to take your sales process to the next level: maximizing contract value, managing a pipeline, and knowing when to expand to new regions. There are sales leaders who can both drive sales directly and scale a team, but in my experience they are the exception. So unless you’ve seen them do it (or know someone who has), hire the strong sales leader only after you have a few producing reps. The converse is all to common and rarely seems to work.
* * *
The bottom line is that sales starts with the founders. Again: If the founders can’t sell it (or at least convince a customer they want to buy it), it’s unlikely that anyone can.
Sales starts with the founders
Similarly, if you can’t build a direct sales team that can sell your product, it’s very unlikely someone else’s sales force can — whether of a technical partner, OEM, integrator, or reseller. They’re all perfectly valid routes to market as a company matures, but don’t rely on others as a substitute for figuring out direct sales directly.
Very rarely is having others do the sales for you — or hiring more sales heads early on — the solution to a lack of sales. But don’t also assume that more sales or a different sales lead will overcome a lack of product-market fit. In early markets, it’s all about striking the right balance — using an incremental sales approach both as a tool to drive into the market, and as an indicator of how strong the fit actually is.