Some Thoughts about Selling at Startups

Posted on Mar 31, 2012 | 39 comments


Many MBA programs still cater too much to the needs of large, corporate management jobs or prepare students to enter big consulting companies or investments banks.

If you haven’t read Adam Lashinsky’s awesome new book about Apple, you should. It takes on many of the lessons MBA programs and Corporate America have been teaching about business for the past 50+ years and questions whether lessons from Apple might be more applicable in thinking about the future.

It is with this backdrop that I was really happy to learn from my friend Ethan Anderson (HBS alum & founder of RedBeacon) about an awesome program at HBS run by Tom Eisenmann called Launching Technology Ventures. Here is a sample of the reading list for the course that gives you a flavor for just how modern and practical this course is.

And that leads me to today’s post.

I got an email recently from my friend & fellow VC, Jeff Bussgang from Flybridge Capital Partners in Boston. Jeff (also an HBS alum) co-teaches the LTV course with Professor Eisenmann. He wrote me about a student of theirs who had written a blog post as a class exercise in which she had challenged assertions that I had made in a previous blog post.

That student is Erin McCann, who formerly worked in sales at Google, so she had pretty strong ground to stand on in her sales arguments. Her post is short & well written so definitely worth a read if you’re a startup person and want to hear some sensible views on sales. It’s titled “When Managing Sales People, Stage Matters.

The fact that the course asks students to write public blog posts is a testament to its more modern teaching style. It’s one thing to write a class paper – it’s another to write a public blog post in which the person you’re challenging gets to respond. Awesome!

The post of mine that Erin took issue with was TEDIC – The Excuse Department is Closed in which I characterized typical sales reps as driven nearly exclusively by cash and very quick to find excuses for sales processes that aren’t working well. My list of excuses includes that seasoned sales people employ include: product, pricing, competition and lack of sales support.

Erin’s main points:

“As a former tech sales executive, I agree with many of [Mark’s] lessons — when applied to later-stage, post-traction point startups . However, I advocate a more nuanced approach for early-stage startup teams”

1. Feedback isn’t always an excuse – and often sales people can provide the best feedback to your product teams

2. Sales people aren’t always motivated only by cash – especially in early-stage business you need to focus on equity because cash won’t be plentiful

3. Complaints about support may be real – it might actually be time to scale and give your sales people more leverage

I actually don’t disagree with Erin’s post, which is why I think it’s a great read for you.

That said, I think it is written without taking the full extent of my sales articles into account. My guess is that Erin hadn’t seen some of my earlier posts – so I could understand why she took the positions that she did. My guess is that we are likely in total agreement.

I thought it would be useful for others who maybe missed my sales series to have access to the main arguments in one central place with links out to the details.

Specifically,

1. I don’t recommend that you hire traditional sales people when your company is too early-stage. I wrote about that here – regarding “evangelical sales”. In your earliest stages the founders should do much of the selling precisely for the reasons Erin highlights: you need customer feedback to refine your product, your pricing and your differentiation versus the competition.

2. When you are ready to hire sales staff I don’t recommend bringing in people who are too senior. I wrote separately about that here – regarding “hiring people who punch above their weight class.”  People who have “done it all before” often need bag carriers to assist them, are often accustomed to earning to high of commissions relative to what you can afford and are more equipped to sell once you’re gotten product/market fit and are quick to leave if things take longer to develop than anticipated.

I like to hire (not just for sales, but for all roles) people who aspire to be at the next level and are out to prove they can step up if given the chance.

3. There are different types of sales people; mavericks often work best early on. I wrote about the four types of sales people here. Mavericks have innate sales talent but are not necessarily good at following a process.  This resonates strongly with me because I personally have almost no ability to follow a process.

I think it works well for startups because in startups there are inherently less rules and with customers there is less clarity about your product category. Mavericks thrive in environments like this whereas rule followers may be frustrated by your lack of process.

As you grow you definitely need process-driven people. The leaders will be “superstars” who are inherently great at selling and follow processes religiously. Journeymen don’t have natural sales DNA but can be very effective by following the processes you set up. All of this is covered in the article.

4. As your company starts to grow faster, if you don’t adopt processes you will limit your growth. I wrote about that in my post about scaling sales – arming & aiming: A, B, C’s. and in a related post about objection handling.  As your company grows you need to division of labor based upon different skill sets. Erin talks about that here:

“Sometimes reps just don’t like the grunt work – for me, creating proposals always felt like a huge waste of time compared to closing more deals.”

She’s right.

As your team grows you start to segment sales teams into account executives & sales engineers. The latter tend to be more technical and can do a better job at dealing with all of the technical objections that will come up in the sales process not to mention: Talking about integration, building customer-specific versions of your demo and addresses implementation requests.

You may also build “inside sales reps” that handle phone calls the might either be speculative leads to be qualified for the field sales teams or perhaps they handle lower-value deals.

When you’re even bigger you might build sales ops teams that handle: Territory segmentation, sales compensation planning, forecasting, RFP generation and the like.

It is also common to divide sales executives into two types: Hunters & farmers. The former focuses on winning new customers and the latter on growing revenue at existing ones.

In my posts also talked extensively about the integration of marketing and sales. Marketing’s job in working with sales people is twofold:

A. To arm – which means to give the reps all of the sales collateral they’ll need to effectively win sales campaigns. This includes presentations, ROI calculators, competitive analyses and so forth.

B. To aim – which means helping sales reps figure out which target customers to focus on. It’s about helping weed out the non-serious leads from the urgent ones.

In Summary

I applaud Erin for speaking up against my TEDIC post because in isolation my post isn’t precise enough. I also applaud Tom Eisenmann & Jeff Bussgang for bringing this kind of discussion into an MBA program. Hopefully this post gives a more complete picture of my thoughts on selling at startups.

And finally a reminder: Selling is about listening & reacting and not “pitching.” I encapsulate that in an analogy I had heard years ago. Be careful not to be a crocodile sales person – you know, all mouth and no ears.

I’d be happy to discuss / debate further in the comments section. Happy selling.

  • Ram Srinivasan

    Mark, am mentoring a blended learning startup & which has just started its sales efforts, your posts are great help. Thanks,  Ram

  • sanberdoo

    Mark, Context is important here.  It depends on what you are selling and to whom you are selling.  For example, selling into corporate IT is different than securing a WalMart vendor number.

    For a start-up of any kind, I recommend a business development professional as opposed to a sales professional. A BizDev professional in an established company will work between sales and marketing and serves 4 functions:

    1. Introduce new products into new markets
    2. Identify and develop strategic alliances & partnerships
    3. Prototype sales strategies & processes
    4. Identify and negotiate M&A opportunities (or investors)

    Sales and marketing organizations are expensive, especially for early-stage companies and consultants are very risky.  Surprisingly, experience in bizdev (although it helps) isn’t as important as energy and a detailed understanding of the mission and the value proposition. 

  • Paul Leblanc

    Hey Mark. Great article. I fully agree with all your points and have to underscore point 2 and 3 (which I believe in many ways go hand and hand). I have seen this play out dozens of times over my career. Last proof point was recently when we hired one of the brightest and reputable people in the industry for a senior sales role in one of my businesses and paid them over $350K base. They had 25 years experience and a giant reputation. However, it didn’t translate into even a quarter of their pay package in incremental revenue. So, we had to part ways with a 3 month severance. There is something to be said for “hustle”. I could write a book on the gravity of that word. It’s fueled by so many powerful things. The best ideas on earth go nowhere without a strong dose of this. Many times someone seasoned just doesn’t have the same hustle they started with (which created all their success to begin with) and that sure isn’t helpful when you have a startup (or even a mature hungry business) that is about the hunt. Resumes help, but hustle trumps any day!

  • http://www.twitter.com/sugdaddy Michael Shafrir

    Is there a link to Erin’s post?  I didn’t see it/missed it.

    At MIT Sloan we have 15.387 — Technology Sales and Sales Management.  The professors are Howard Anderson (founder, Yankee Group, and co-founder Battery Ventures) and Lou Shipley, (CEO of VMTurbo) so they’ve fought the sales battles before, and the content is decidedly non-academic , focusing much more on solving practical sales situations and issues.  There’s a similar sales class at Stanford GSB — co-taught by Peter Levine (Andreessen), a former 15.387 professor.

    So yeah, there’s not much in the typical MBA curriculum about sales, and as a pre-MBA salesperson myself, I understand that you have to sell to learn to sell, but there are small pockets of MBA curricula “teaching” sales (or at least getting students to think about sales).

    I’m a TA for 15.387 at Sloan…it’s a great class.

  • http://bothsidesofthetable.com msuster

    Yes. I agree. Totally. I guess my description of “evangelical sales person” is often pretty close to a biz dev professional. And of course most of my comments are applied to tech / software startups (as usual). Thanks for adding your views.

  • http://bothsidesofthetable.com msuster

    Yes, completely. Hustle is a must in every member of your tech startup – sales included. 

    I learned the hard way. I hired a super senior head of sales at my first company (at the request of our VCs). I set up a meeting with the CIO of Unilever and asked him to attend with me. He refused. He said, “he had only been on the job for 3 weeks and didn’t understand our pricing & positioning well enough to attend.

    I went alone.

    He lasted only a few months. It was a very expensive mistake.

  • http://bothsidesofthetable.com msuster

    I did link to the post but hadn’t finished editing by the time you had read it. If you go back now you’ll see it. 

    It’s great to hear that there are more entrepreneurial courses being taught at many MBAs. I hope to get the chance to visit many of them over the following year. So far I’ve given talks at Stanford, UCLA, USC, UCSD, Columbia and NYU.

    I was in Boston recently but it was early January and apparently it was still break. Bummer!

  • Brad

    I come from a sales background, got an MBA from a top 20 “factory,” am loaded up with 20 years worth of $700/month student loan payments, and frustratedly realizing that I’ve got to do everything the exact opposite of what I learned, in order to get my startup off the ground.  Love your posts, Mark, and your attention to educational reform.  I hope you will someday start an online education program of some sort, and save as many people as you possibly can from the future-stealing, ineffective, unethical factories of “education.”

  • http://beta.rocketlistings.com/ Brian Sirkia

    Thanks for the post Mark, I definitely agree that the founders should manage sales at the earliest stages.

    I’m considering having my salespeople (for awhile the founders) also double as customer service reps. I want everyone in the company to do some customer service, but having the sales team do the most. And I mean going beyond the normal customer service inherent in a normal sales cycle, but answering customer service calls from users they didn’t sign up.

    Do you think that makes sense as a strategy? Again, this is for early-on, eventually I’ll want to dial it back so the sales team is doing mainly sales and we have dedicated customer service reps.

  • http://mattr.co/ Jack Holt

    So true. I made the mistake of hiring the “sales guy” in my first startup. 

    Actually, Mark, the way I’d characterize and vet the wrong type is that they need a price sheet or rate card to sell. “What are we going to charge for it?” This will immediately identify the wrong character for your position if you’re early.

    The other revelation to me is that, when your startup is young, self-promotion can kill you. I wrote a short post here: http://bit.ly/ycmGco that basically states, “if you have to promote your startup yourself, that means no one will do it for you. And, by extension, means that your startup’s idea is not good enough.”

    Thanks for this, Mark, wish I had read it 8 years ago…Jack

  • Brian Dixon

    As the founder of a risk mitigation and exec benefit firm geared toward startups, and one that is currently focused on BOTH marketing AND hiring/training new sales staff, your message hits home. Your segregation of sales professionals and advice to not hire superstars in the early phase is spot on. Looking forward to reading Erin’s book. Cheers.

  • http://www.justanentrepreneur.com Philip Sugar

    Here’s the thing.

    Every single MBA program discussion on sales and Erin’s discussion on sales assumes one critical thing that the vast, vast majority of startups don’t have:  One single shred of name recognition or a willingness for a potential customer to take a call.  Sure when you work for Google, Foursquare, or Groupon people know who you are and will take your call.

    The real skill is when people say I don’t know who you are and I really don’t even ever want to get to know you.

    Now that is selling.  I’ve watched countless salespeople who work for big names and people that think they can sell because they’ve worked for an already successful startup flounder, and flounder miserably when the encounter the usual situation which is I don’t know you and I don’t want to.

    I think that is what Mark has been writing about.  No different than trying to raise VC, sure if you are one of those big three your skill is how to say no to potential VC’s not trying to figure out how to get them to say yes.

  • http://gregmberry.com Greg Berry

    I can’t agree more with the adoption of sales processes.  This allows you to hire less expensive people while also achieving better results.  The processes need to be continually refined and in some cases, A/B tested.  Our sales people are relationship builders and responsible for ensuring we are top of mind when the opportunity comes about.  We handle the “technical” sale internally, which is also process driven.  I’ve been taking a “process approach” since reading The e-Myth Revisited about 10 or 12 years ago.

  • Kevin O’Leary

    Where’s your old stomping grounds on that list of MBA talks!?  It would be awesome to see you speak at UChicago – there’s a great class that was developed in the last few years at Chicago Booth called Entrepreneurial Selling that echos a lot of what you said in the post.  (there’s a description and syllabus online here: http://www.inc.com/magazine/20110401/best-courses-2011-entrepreneurial-selling-at-the-university-of-chicago.html).

    It’s really interesting to see how many schools now have a course or two on sales, and I’d love to see more of it in MBA programs.  I took the Entrepreneurial Selling class here at Booth in the fall and one of my biggest takeaways was how applicable the skills learned in selling are to other aspects of business and life.

  • http://bothsidesofthetable.com msuster

    Thanks, Kevin. I working with the staff there to plan a trip for this year. More soon.

  • http://bothsidesofthetable.com msuster

    I think having EVERYBODY in the company answer customer service calls in the early days (and early in a new hire’s experience) is a great idea. It helps you stay grounded to the issues your customers have.

  • http://bothsidesofthetable.com msuster

    Thanks, Jack. The one thing – sometimes when a product category is too new you have to be self promotional even if you’re convinced your product adds tremendous value. But directionally I agree with you. Thanks for your additions.

  • http://bothsidesofthetable.com msuster

    Exactly. I didn’t want to point that out in the post because I didn’t want to take away from some excellent points that Erin makes.

    I always tell startups – make sure you hire people in the early days who have experience at selling at at least one “unbranded” company. Sure, it’s great if they were trained at Oracle, Salesforce, Google, etc. But it’s totally different when you have to call somebody from some shitty company that nobody has every heard of.

  • http://blog.ideatransplant.com Jan Schultink

    The corporate pyramid is not very good at giving good career paths to functional superstars (sales people, analysts, programmers, presentation designers, to name a few). Sooner or later you are expected to leave the trenches and become a manager in order to get paid better and/or maintain your social status. Such a waste of talent.

  • http://www.decisiondesk.com/ John Knific

    Great advice. I heard Toni Schneider (Automattic) say the exact same thing. We’re going to have all new sales people and developers at our startup pair off with account managers. I’m sure it’s different for every company, but our support team always has the best customer insights…which is why I still jump in and handle tickets when I can.

  • http://petegrif.tumblr.com/ Pete Griffiths

    Wow. I was shocked how current and relevant the course reading list was. Truly excellent.

  • Charles Ramsey

    All interesting, but no comments around the dramatic change in the modern (technology) customer and how sales approaches need to morph, and rather dramatically.  I have been in sales, starting with major account management with IBM 20+ years ago and have been in executive management and the VC world both now for the last 10.  I have seen a lot of change!  

    In today’s software industry, generally speaking, if you  need expensive heavy hitter sales people, you might have a product problem.  Prospects today want to self educate, and the modern “sales process”  is all around having a light touch and knowing when the time is really right to engage and, as you say Mark, “punch above your weight.”  “Closing” means being able to accurately communicate what your unique value proposition is and help the prospect overcome their natural fear of making a decision.  Many times today, that can be an SE and a phone based rep.  Remember, signing a contract (of any magnitude) is a job threatening proposition and there is an audit trail right back to the person that made the decision.  I prefer to instruct that there is no such thing as “closing a deal.”  A customer is able to weigh the benefits of the proposed solution and realize that their career might be improved, or their task  made easier, but today, the well informed make most of their own headway down that path.  

    The internet has changed so much and sales is absolutely being changed for ever by it.

  • http://www.twitter.com/sugdaddy Michael Shafrir

    Thanks for linking to the post.  I’m responding here instead of upstream because I wanted to also respond to Philip’s post.

    First, in regards to sales classes at MBA programs — I see them as separate from the more entrepreneurial classes at MBA programs, but yes, it’s all good.  The sales class at Sloan actually spends 6 weeks running through scenarios where you are the startup so we really focus on the unbranded startup angle.

    Second, the one thing that made me cringe at Erin’s post, was when she said “sometimes reps just don’t like the grunt work — for me, creating proposals always felt like a huge waste of time compared to closing more deals.”

    That’s a huge red flag for me and that’s an attitude that I think comes from selling at a large company where you have a huge product marketing team, support staff, account managers, etc, and name recognition.   When we started selling our recruiter product at theladders (and I really mean selling, as in revenue = $0), we hired three very experienced sales reps as our first salespeople that all came from very large, established, respected companies.  Two of them last less than 3 months — their first questions were “where are our sales materials?” (we had none), “who can help me put together this proposal” (you), and “I’d like to fly out to California to visit this client” (sure, just as soon as you close some deals).  The one that made it was the one who knew the answers before she asked the questions and took care of her own business.

    It’s also really easy to say “well, just hire an account manager” but it just doesnt work that way in my experience.

    Also to Philip’s point, there is a huge, huge, huge difference in selling at TheLadders (or any other unknown startup) where the conversation ALWAYS started “Are you familiar with TheLadders?”  “No.” “OK, let me tell you about it.” “Can you call me back later” and selling at American Express (which I also did, after TheLadders) where we had CMO’s coming to see us to show them how we could help them!  That was a real eye opener for me.

    Lastly, would love to have you at MIT, but among our many quirks is out 6-7 week winter break.  Let us know next time you’re in Boston!

  • Rajesh Unadkat

    Thanks Mark for another great post. I am co-founder and CEO of an early startup. We are just starting our sales efforts. Any thoughts on how/where to find “evangelical sales” people who are motivated by “equity” and building a company v/s cash? I have limited “Sales” network and wondering if there are any networking events or other sources that may help.

  • Sherif Koussa

    I can testify to NOT hiring sales or marketing people who are too senior, they promise you too many things but they rarely gives you any of those things because they would loose the carrot. And I can testify also to not hire sales people until you have some sales, which is counter-intuitive but the bottom line is: they won’t sell if you (the founder) can’t sell, also how would you (the founder) know if they are good sales people if you can’t sell yourself.

  • http://twitter.com/peteripowow Peter Tippett

    Mark, as usual you have done a great post. 

    As a startup moving in to a successful traction mode, we found that we had to look for a different type of sales process. We are dealing with the intersection of the Internet and TV, but our customer is the TV networks who don’t get it. Once we knew this clearly, we knew we had to fit the eco system, so we used a two pronged sales process of the evangelist to sell our product to the TV show with a vision and education process while the professional sales person negotiated the deal as they understood the politics of the beast of TV.

    The other key is we went in with the process of  getting them to “buy” and not to “sell” with the building of a relationship of trust and as a startup, I feel this is key to building a long term relationship. This creates ownership on there side which is a big difference as they are now pushing our product through the network on to many more shows, becoming our sales team, and then it is all about the relationship we have built.

    The key I have learnt is :-  
    1. know your real customer
      2. know the eco system of decision making – what’s in it for them and the end user, not you 
    3. find the right people who get people to buy – relationship and trust building 
    4. BUT, who you pick must fit your way of doing – willing to get their hands dirty 
    5. Know the strengths and weakness of all and build the systems to deal with this 
    6. Willing to say NO to a deal 

    A startup it is all about having people who are multi disciplined but also are specialists, but willing to teach others and learn new stuff outside their skill as well.Finally, as you can see we have used a paired model for selling to get the best of both sides playing to each others strenghts and as we are in complex, high value, long term deal situations, this is paying off, but we are also laying our foundation for the long game part of our business (the end user) and that is the hardest part of making sure everything is for this and willing to walk away of need be.

  • Khanna James

    Kevin-

    You bring up a beef I have with Mark since for years he continually pumps up or mentions hbs, wharton, etc. and pays no deference to his alma mater, Chicago Booth.  It’s a shame as he really does a disservice and as a proud alum I’m ashamed to call him a fellow alum.  He should be boosting up Booth not pumping up those institutions.  He only perpetuates the media crap that takes place with hbs being boosted up…He really doesn’t deserve to be called an alum of Chicago…Go back and look at his videos on TWIVC and other places…what an awful alum.

  • http://www.justanentrepreneur.com Philip Sugar

     Exactly right.  Its great to see somebody that’s seen both sides of the table from a sales perspective and you have.

  • Yaniv Tal

    Thanks for the great post. I randomly met a sales exec from a large tech company on a plane and we hit it off right away. Instead of thinking of him as a candidate for hire, we just brought him on as an adviser. He’s been really helpful and while I would love to bring him in one day, I think it’s important to realize that there’s more than one way to skin a cat and even if you’re not ready to hire somebody for a certain job, it doesn’t mean that you can’t try to keep them around.

  • http://www.mealdrop.com Michael Zaro

    wow, we got a hater in the house  ;) Not that you needed defending Mark, but i’d take your lessons learned over what i learn in class anytime. My university is awesome, but experience > textbook IMHO. Both failing and succeeding in my startup has helped me learn more than all but a few classes in my time as an undergrad.

  • Barry

    Now we are getting to the heart of the issue. Phillip/Mark well said. I’m a professional salesmen, not because I am good – I am, but because I constantly improve my trade craft. Going from Microsoft to an unknown co is truly like going from day to night. So, I had to become better at my profession to survive and make an exceptional living.

    Because I am a exceptional salesmen (it started early, selling the principal at school on the merits of mischievous nature ~ of course to avoid capital punishment (read: getting a swot)), I have become an exceptional entrepreneur. I’m at my fourth startup, this time as the CEO, a social commerce platform in a $200B staid industry, whose executives would prefer to go back in time instead of facing the future. A challenge to sell into to say the least.

    My sales team is led by another Maverick, younger than I, but just as good and five junior, highly energetic teammates with their eye on the price. Each with degrees from good schools. In just 4 short months they have executed extremely well, getting 200+ of the 400 marquee brands to coalesce around our platform, in part because we followed the principles laid out in Mark’s early blog posts.

    Furthermore, I had to be the lead salesmen for months while running the company, push development to deliver a beautiful product, hire every person, while managing our burn-rate at or below budget.  So for those soon-to-be-entrepreneurs who think they will turn sales over to another person exclusively… start rethinking your execution strategy. If you look at those who have come before you and me (Gates, Jobs, et. al), you will see they were the chief salesmen (and women) first.

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  • http://adingintheuniverse.com/ Emily Merkle Snook

    Emphasis on knowing when to say no to a deal. 

  • http://adingintheuniverse.com/ Emily Merkle Snook

    I have had much success with that model.

  • http://brickseller.wordpress.com/ Jonathan Brickman

    Mark, I like this a lot..I vividly recall a small business/entrepreneurial course I took at Northeastern taught by an entrepreneur, no college degree…and I will never forget his comment that stuck with mje for life and has inspired me “There are lots of good ideas and most die at the dinner table.”…Most MBA programs don’t teach this!!!   Secondly, I purposely look for and hire salespeople that are a little off center and have something to prove.  I always say that the best salespeople come from dysfunctional families and have a hole that can’t be filled…I typically stay away from the “Top 20″ MBA clones because I don’t see the same raw energy there.

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  • http://www.tunnel1.com/ David @ Tunnel1

    Mavericks are great for any start up positions or even dry ones. Years ago, I was considered one. Now people depend on me and companies can rise and fall based on the work I do. All because I wasn’t afraid to try it a different way than everyone else. Well done Mark.

  • Mike O’Horo

    Good stuff here, Mark.  However, I have to challenge your use of the expression “natural sales DNA.”  All the research says there’s no such thing as a “natural” at anything.  Exceptional performers in any field are the product of training, coaching, focused practice, and feedback — over the course of years.  There are people who have a greater willingness to sell, and that “want to” is certainly a big factor, but sales, like any other profession, is learned, not innate.