Founder Led Sales
Sales like anything you want to be great at, takes hours and hours of practice. 10,000 hours. And there's no shortcut.
As a Founder of a startup, you’ll end up wearing 10+ hats and you’ll go through various stages of “Sales denial”.
Especially before you’ve hired 2 AEs and then a Head of Sales.
This write up is specifically focused on the early early days. Pre product market fit. Think your first 10, 25, or 50 customers. Let’s call it: the journey from $0 to $500,000 in Annual Recurring Revenue (ARR). And by golly, it can be both exciting and daunting, and feel like you’re leading a band of misfits.
You know, like these folks.
Below, we'll explore three common issues Founders face and discuss strategies for overcoming them.
Challenge #1: Prioritizing ROI
One of the biggest challenges Founders face on the road to $500,000 in ARR is prioritizing Return on Investment (ROI). Founders must ensure they're spending their limited resources wisely and generating enough revenue to sustain their business. To do so, they need to understand their customer acquisition costs and focus on channels that provide the highest ROI.
According to Manny Medina, CEO of Outreach, "It's essential to focus on the channels that have the highest return on investment and maximize the efficiency of those channels. In the early days of Outreach, we focused on cold calling and email outreach, which proved to be very effective for us." By prioritizing ROI, Founders can maximize the impact of their limited resources and drive sustainable growth.
Quick sidebar. I’m an incredible fan of Outreach (Seattle company!) and of their leadership. But I just want to put an asterisk next to the cold email approach being the best way to build your pipeline in 2023. If you’re stuck or if you’re in planning mode, drop me a message and let’s brainstorm. There may be a better way for you to create effective pipeline.
Source: TechCrunch article no longer available. I Suggest diving into this piece in HBR if you are in B2B Sales or Revenue Tech.
Challenge #2: Customer Acquisition
Another common challenge Founders face is customer acquisition. Founders must identify and target the right customers and build a strong pipeline of potential leads. This requires a deep understanding of their target market and the ability to identify customer pain points and needs.
To overcome this challenge, Founders must focus on building a robust sales pipeline and leveraging data to optimize their customer acquisition efforts.
A few quick suggestions:
- Set up a CRM. Use HubSpot or Salesforce from day one. Don’t live in a Google Sheet, c’mon!
- Record your calls - every.single.meeting. Don’t be cheap or silly and just use a Free Zoom. Get yourself Salesroom (for call recording and note-taking) and contact me if you want to see pro-tips.
By analyzing data on customer behavior and preferences, Founders can tailor their sales pitch and approach to meet the needs of the Early Adopters in their space.
Challenge #3: Founder Led Sales
Founder Led Sales is another common approach that requires a bit of confidence, magic, focus, and that you find your inner Neo.
Founder Led Sales. Let’s just define it first…
It’s the pipeline generation tactics and sales approach where the founder of a company takes on the role of the primary salesperson, leading the sales effort and directly interacting with potential customers to build relationships and close deals. This approach is common in early-stage startups and requires a deep understanding of the sales process and a willingness to adapt quickly to changing market dynamics. Founders who adopt a Founder Led Sales approach must leverage data to identify potential customers, prioritize customer acquisition, and optimize their operations.
Source: Adapted from the article "The Challenges of Founder-Led Sales" by Michael Katz
Founders must leverage their network, their passion, their product manager + user feedback instincts in order to: identify potential customers, build relationships, and close deals. This approach requires a deep desire to get it and the ability to stop and say I just need to be shown what good looks like. Or I just need to hear how this should look, feel, and sound, so I can then make it my own. Think about trying to learn to play Golf or learn to cook a complicated recipe - it’s going to help to have hands-on guidance and instruction or at least a safe space to chat and discuss and pick apart the blockers. If you’d like to discuss and have a conversation, drop me a message.
Because a Startup and GTM motion will evolve every 3 months. A Founder and the internal team must adopt a data-driven mindset and prioritize continuous learning and experimentation. By leveraging data to drive decision-making and optimize their operations, Founders can build a machine that excels at both near term and long term inputs and outputs.
Said much better, in the words of Bill Ackman, "The most successful investors and entrepreneurs are the ones who can analyze data, identify trends, and make informed decisions." This sentiment is particularly relevant for Founders navigating the challenging journey from $0 to $250K to $500K in ARR.
Source (p.74)
Mark Maples further echoes this sentiment, stating that "Founders who prioritize data and experimentation have a higher chance of success." By leveraging data to inform their decision-making and adopting a rigorous and analytical approach, Founders can overcome the challenges they face and build a successful and sustainable business.
Source (Authority Magazine, 2021, January 11)
Conclusion
In conclusion, the journey from $0 to $500,000 in ARR is a challenging one, requiring a data-driven and strategic mindset. By prioritizing ROI, customer acquisition, and Founder Led Sales, and adopting a rigorous and analytical approach, Founders can really surprise themselves and push through the phases of Outbound pipeline creation and Sales process enhancements.
It will likely take you 6 months and a few gray hairs. Or longer, according to Malcom Gladwell: "In fact, researchers have settled on what they believe is the magic number for true expertise: ten thousand hours”.
Source: Gladwell, M. (2008). Outliers
Then when the time is right. Bring in a Head of Sales to turn the dials.
Perhaps this whole thought process could be summarized best by the CEO of MixMax.
Olof Mathe:
Yeah. What I’ve extracted from just my own introspection on this is, there’s just a huge difference in the skill set you have to have to be a successful entrepreneur, pre-product market fit versus post-product market fit. What really distinguishes a lot of entrepreneurs is we’re typically pretty multi-functional, we have this can-do attitude, pre-product market fit, we might be juggling 10 or more functions on our own, and we’re so used to diving into the nitty gritty and details of all functions that we often forget that there are people who are literally 10 times better in all of these functions than we are.
Source: SaaStr
This post was almost entirely generated by OpenAI and ChatGPT.
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