What bankers can learn from startups about sales [Workshop]
Earlier this year I gave a workshop in Austria for the probably coolest bunch of bankers I've ever met.
Erste Group, which is one of the world's largest financial service providers and has been in business since 1819, created a subsidiary that operates more like a startup than a bank—and it's those people from BeeOne who invited me to share my sales insights.
Here's a 20 minute excerpt. (If you've been following us for a while or read The Ultimate Startup Guide To Outbound Sales, you'll be familiar with most of it.)
They also had an artist from LiveSketching there who turned the talk into a painting.
Click on the image for full size:
(They even drew my two little boys, because I always show them off when I speak. Obviously, that makes me love the drawing even more. :))
Steli: In case I fall asleep, somebody throw something at me. Aim at my head. I am jetlagged as hell. I had only two hours of sleep last night and only two hours of sleep tonight or yesterday.
So I’m really feeling it. So here’s how I’m going to do this. I’m going to go through those slides and really you guys should shout out when you have questions, when you disagree, when you want to comment and make this as interactive as possible.
Yeah, we don’t have to wait until the end for questions. That’s basically what I’m saying. The next thing is I’m going to curse a lot. So I apologize to everybody in advance. The guys that invited me, saw me on stage, I always curse – nobody told me not to do it. So just expect a lot of curse words.
About Steli Efti
So a little bit about myself first. My name is Steli Efti. I'm originally from Greece. I was raised in Germany, in the south part of Germany. For the past eight years, I’ve been living in Silicon Valley in San Francisco. So you take the Greek culture, the German one and the American one and it turns into something interesting.
So I’m going to tell you a little bit about my background. I’ve been a serial entrepreneur my whole life. Another way to say this is I’m totally unemployable. I have zero credentials. None of you would ever hire me for anything. I dropped out of high school when I was about 18 years old, started my first businesses, did a few small businesses back in Europe.
Then in 2007, I had this idea. As an entrepreneur, you have this idea sometimes that could change the world that you think would be your legacy and if you’re really a hardcore entrepreneur, you have an idea like that, that’s going to be world-shifting about every two weeks or so.
So I thought back then this would be the legacy of my life. I was in technology and I had no background in technology. Up to that point, I spent maybe five minutes a month online. I got my first computer which was a laptop when I was 22.
So knowing nothing about technology and having nobody in my network that did, I decided the best course of action was to buy a one-way ticket, sell everything I had and fly to San Francisco.
It turned out to be a pretty good decision. My only goal was really to be the stupidest person in the room and for eight years, I’ve accomplished that mission every single day.
The first startup that was supposed to change the world finally failed. It took me another two years to realize that. So I was kind of a living zombie startup founder. Then I did something else that I want to share with you guys.
So in 2011 – this kind of relates to Fintech. That’s why I’m even bringing it up. I’ve never had this on a slide deck in a long time. This is a company called SwipeGood. That’s how we started in 2011.
I have two co-founders, Thomas and Anthony. Thomas is Swiss. Anthony is actually really American from the real America, so the real America, so the heartland. [0:02:52] [Indiscernible]. Almost.
So we’re like one-third American, two-third European. The first idea that we had was a simple idea. It was a company called SwipeGood. The product was called SwipeGood and what it was, was we allowed people to go online, put in a debit or a credit card.
Every time your made a purchase, we would round up that purchase and keep the change and give it to your favorite charity or cause. The Bank of America has a Keep the Change Program in the US, which is basically the same mechanism but it goes to your savings account versus going to a cause or charity.
They’re making over $10 billion a year in those transactions on to saving accounts. So we wanted to do something similar at a larger scale, because we would include all banks. But instead of giving it to your savings account, we would actually want to give it to a charity or a nonprofit.
The mechanics were really simple. Average round-up amount would be about $20 per month per consumer in the US. Those were the numbers that we were seeing through our users. We would take a five percent cut. That’s a dollar per use per month. We would basically introduce the nonprofit and charity world with something they’ve never had before which is recurring revenue.
Not every six months you throw a huge party and you do all the money, fundraising at one big event. Then you have to find a way to allocate all the money and then rinse and repeat. You have to another big fundraising event.
No. Month by month, 20 bucks per person. In a way, that eliminated friction so people didn’t have to make a decision. How much do I want to give? What can I afford? I could always round up to the next dollar, a few cents here or there.
It means if you purchased something for hundreds of thousands of dollars, the roundup can – at a maximum it will be 99 cents, right? So that’s how we started.
[0:04:39] We got into a Y Combinator which some of you might know, which is kind of a pretty prominent accelerator if not the premier accelerator in the world and went off to the races. Our growth was amazing until it wasn’t. Now I won’t bore you because that story alone would be an hour.
But we had even people like Ashton Kutcher who’s pretty awesome in person by the way. He was like – his charity was on SwipeGood and we met with him a couple of times. We had Oprah’s team on there. We had a lot of celebrities. We had tons and tons of nonprofits on this. We got press, crazy press, our growth... it was like off the hook until we raised a few million and the timing was perfect.
Just a few months afterwards, our growth started flattening out because our initial distribution channel didn’t work out. I’m not going to tell you why unless somebody really wants to know.
So we tried all kinds of different ways and eventually we arrived at the idea of actually focusing on the B to B market and go to corporations, have them sign up with our credit cards and then promote it and match their employee cards and do acquisition that way.
Building a sales force for startups
Around that time, we started thinking about the challenges of startups that actually do distribution, especially the B to B world and the challenge of actually building and creating a sales force to do so.
So we thought, “Why isn’t there an Amazon AWS for sales?” Why isn’t there a place where a startup founder could just go in? There are a million salespeople. A salesperson equates to a server and I can just say, “I want 10 of them and they should call this kind of people. I want to have all the recordings of the call and all the real time analytics. If it works, I want to scale up. But if it doesn’t, I want to scale down.”
Then we realize that doesn’t exist because it’s fucking hard, right? It would be pretty fucking amazingly hard to do. We thought, “Yeah, that’s kind of a lame excuse not to do it. If nobody has done it, let’s just do it ourselves.”
So that’s what we did. Basically it was the same company but we started a product or a service called Elastic Sales. What we did basically, instead of wasting any time researching the market and creating PowerPoint presentations or a website or a logo, find a name, what we did is on a Tuesday morning we decided, “All right, let’s just fucking do this. Let’s try it out.”
What we did is we spent Tuesdays scraping some list off CrunchBase. Series A companies in the B to B space that we didn’t know. Our network was pretty extensive in the US. So we’re like we don’t want the world to know yet. Still we’re SwipeGood. We’re getting press and all this. We don’t want the world to know that this model is failing yet. We don’t want the world to know that we’re experimenting with new things.
So they just cold called a bunch of technology companies with more than 10 million in the bank, that sell to enterprise clients and that we don’t know. We will use fake names and we will pitch them on the service.
Let’s have the market educate us why this is not going to work, right? Let’s find out – we will just price it and we will just throw something at them and see what people say.
We did this for about two weeks. The idea was we will do it for a month. If we get one customer, we might want to actually do this.
We did this for two weeks and had seven companies that wanted to pay us money and our scalable sales force was like myself and one other guy. So we’re like, well, there’s this beta program and it’s very exclusive and you can only reserve your spot until this time. Once we have two spots reserved, everybody else has to wait. We’re only going to give you one salesperson to do a pilot with, to test this.
What we basically did is we took two of the most random ones. We said, “Let’s just start with those guys,” and see if we can actually deliver what we promised.
So we ended up working with over 200 venture-backed startups in Silicon Valley. We worked with some international startups, usually when they wanted to enter the US market.
Building sales software sales people love
What we did from day one is basically we started developing an internal piece of software called Close. You can find it. It’s public now. We have a lot of European customers.
So we started – because two of the three co-founders – I’m non-technical. The other two guys are technical. Because of our bias towards building product and our hate for sales software that’s out there, we’re like let’s just fucking do something ourselves.
I’m not going to use Salesforce for 10 hours a day. I’m not going to use any other CRM off the shelf for 10 hours a day. So let’s just build something ourselves. We started doing that and we called it our secret sauce and that’s how we were recruiting salespeople, how we’re retaining them.
We basically for the first time ever started building software for salespeople, basically by the salespeople and even the engineers in our company have a pretty high sales IQ. The way they were building it is basically sitting in the sales room next to the salespeople and going, “Wait, why are you doing this?” Well, because I have to go here and log this and do this.
That’s fucking stupid. All right. Let’s fucking fix this. This should not be four clicks. Oh, why are you taking notes while you’re making the call? What is all this fucking paper on your laptop? What is this? Well, no, this fucking sucks. We need to fix it.
It took us a few months to actually really have a vision. When we started, we just knew we hated everything. But we really didn’t have a product vision. But then as we were doing more and more and more sales campaigns and we had more and more salespeople doing different kind of sales into different markets with different products, we actually started developing a real vision for what the sales software ought to be. The software started becoming better and better.
I launched him two years ago and him five months ago. I’m actually the non-technical founder here. So my wife actually launched them but I was doing the business development and the marketing for it.
So there’s no real reason. I love my children so I show them off whenever I can.
Sales exploration vs. sales execution
So let’s – so I will start with a little bit of high level sales process and then I will go move – to do in the sales exploration phase, this is very much like product/market-fit for sales. You have to focus on learnings, not yet on execution.
As a startup, you always have to do both. You can’t just be like, “We’re just learning a lot. This is great.” You also have to have some results especially once you launched.
But you have to focus on figuring out a model that’s predictable, repeatable and scalable. Once you have that … [recording interrupted]
[...] those customers, with like a quarter. Some people are like, “I’m not exactly sure what I would do,” accounts and sales, blah, blah, blah, right? To some people. How many people do sales over email? Real quick. That’s the same amount, different distribution.
How many people actually have to go to their customers and sell them in person? All right. So it’s equal. If it wasn’t, I would actually lean one way or another in terms of what I’m talking about.
So really, I’m going to go just really …
People are coming to me and saying, “Oh, we are going to be calling 100 people per day. I think we can convert about 10 of them every day. This is the average customer lifetime value. This should be what we pay our salespeople. This is how it scales, Steli.” Oh, cool. Yeah, you’re calling 100 people and you’re going to close 10. Awesome. You’re never going to close 10. You know why? Because the average reach rate if you’re doing cold calling for instance is 10 to 15 percent.
So you’re only going to reach 10 people. You’re not going to close 100 people of the people you reach. So if we actually apply your logic of 10 percent, then you would close one person and even that seems unreasonable, right? Depending on the factors.
But how does that now work your math into how scalable this is? Oh, shit. If that’s really true, then the math doesn’t work at all. Yeah, exactly. All right. So you need to actually figure out how to reach people. If you do cold call, you have to figure that out. It should be above 15 percent. If you’re below that, you’re dead in the water usually.
If you’re above that it could really work. The other thing is if you’re calling inbound leads of people that sign up, I want a demo or something else, do yourself a favor and call these people within five minutes of sign-up. If you use Close, shameless plug, we can actually do that real easily. We have calling integrated into the sales software. So we get another notification. Somebody just signed up. You click their phone number and you’re calling them. It’s recorded and tracked into the software …
You want to call within five minutes because your reach rate is going to be 100 times higher than when you call them an hour later or a day later because people are on their computer right now. They don’t do – they’re not in meetings. Some of them might but most of them not in meetings, not anywhere else. They just filled out this thing. They have the contacts and everything.
You have their attention. You called. You’re saying, “Welcome to the platform. I wanted to personally say hi. How is it going? How did you find out about us?” Just qualify them, if you know who they are and if it requires any more work.
So first, you always need to reach people. You need to sound good and this is just generically something. It was great! It was great chatting with you! Let me know if you have any more questions. Then they hang up and then they’re like, “I hope it’s going to become …”
I’m really confident this guy is going to be a customer. He loved it. How about asking the person if they want to buy? That’s a crazy idea. How about embracing – so what if they say no? It’s a good thing. Ask them even before you make a presentation. Before I present anything, do you want to be a customer of ours? No. OK. I was just checking. Let’s go through this. How about embracing them, that no is not the end of the world.
It’s just a part of the process. Don’t hide from it. Don’t run from it. Embrace it. Make it part of it.
Sales emails, similar thing. First thing, people. I get like multiple people. Today I got like five people sending me emails saying, “Steli, can you give me feedback on this sales email that we send?”
There’s no subject line. It’s the first thing I look for. When you don’t include a subject line, my reply which is autocanned is, “Where the fuck is the subject line?” I don’t care about anything. If the email isn’t opened, it doesn’t exist. If your subject line sucks, nobody reads the email, right?
If you’re doing really well, your open rates are going to be like what? Thirty percent? Forty percent? If you’re like at the top of the mountain of open rates. If you’re doing cold emails, you might just have like a 10, 20 percent open rate.
That means out of 100 emails you sent, only 20 will even open to have a chance to look at anything you’ve written. So you need to optimize them for the open first. That’s the top of the funnel, not only like whatever the content is.
People think because the email has the most text, it surely is the most important thing. It’s not. It’s just like with ads and everything else. Optimize the subject line first. Then they have to read whatever you’re writing them. Yeah.
Participant: So what are your tips for optimizing the subject line?
Steli: So don’t make it sound like a marketing email. "Here are 100 reasons why Close will change the life of all salespeople in the world." It doesn’t sound like a human being. It doesn’t sound like I would write that email to you. It’s a fucking idiotic subject line. I would never write this to a human being, right?
So it needs to sound like it comes from a human being. It needs to sound like it’s from person to person. You don’t want to do HTML. Anything that suggests that this was sent to multiple people will drop your open and your conversion rates immediately.
...Interact. You seem interested in what I have to offer. We exchange business cards or whatever. I sent you an email. Hey, it was so great to meet you at this event. I don’t hear back from you.
If I’m amazingly aggressive, I will send you another email. I don’t hear back from you. Now I’m going to start making up a story. That story is going to be like, “Well, I think that he really hates me. He thinks that my hair is ugly and my feet are too big and he thinks that we will never make it. He had this look in his eye that was telling me he fucking hated me.”
I will make all these stories about why you fucking hate me and then I’m going to be like, “He’s actually an asshole. I never liked him.” We’re going to create all these fucking wasted energy and I will stop following up with you.
That’s where 90 percent of all deals are lost is because you’re not following up rigorously enough. Here’s my simple follow-up strategy. When I meet with somebody and we have a positive interaction, I will follow up with you indefinitely. That means forever until I get a result.
Forever. I don’t care about the result. Yes, no, I don’t give a fuck. It doesn’t matter. As a startup, all that matters is creating outcomes, creating results. I can deal with nos. No as a result is an outcome. Cool. I can deal with it. Yes, obviously that’s a better outcome. What I can’t deal with is the “maybe” or “I don’t know,” because that shit is – I can’t do anything with that. I can’t make any decisions on that.
I haven’t learned anything from that. That is the slow death of every startup. Lots and lots of activity that creates lots and lots of non-outcomes. How are you going to progress with anything that way?
Most people are afraid of inconveniencing other people, seeming needy. Oh my god, I don’t want to be that guy that …
Deliver the baby in a Ferrari and then it never cries and sleeps from day one and everything is just simple. No. Fucking birthing a company is hard. Get over yourself, right?
You know what? It’s good that it’s hard because it means that all your competitors are like little whiny babies. They’re like “I don’t want to follow up anymore!” while you’re following up. You know what’s going to happen? You’re going to be winning those deals when they lose.
One of our investors invested in the company. He wanted to make an intro to a guy whose product all of you have used and it’s in the payment space, so you guys put one and one together. You will figure out who I’m talking to.
So billionaire, amazing guy. He sends an email to me and he says, “Hey! You should meet with Steli. These guys are awesome.” The guy responds and says, “Awesome Steli. Yeah, let’s meet.”
We are high fiving each other. We are throwing a party. This is going to be amazing. Best investor ever. I reply, “How can we do this time or that time or that time? What’s happening?” No reply.
I sent another email, no reply. I sent another email, no reply. I sent another email, no reply. Forty-eight emails later, 48, I get a reply. You know what the reply was? "Fuck Steli! Thank you so much for following up. I was traveling. We had this crisis with this and this to deal with. Can you show up tomorrow at 1 p.m. in my office? I did. We closed the deal and he invested in the company.
All the other people that were like, “Oh, he doesn’t like us. Oh, what an asshole. He doesn’t even respond to me,” get over yourself. Like all these people didn’t even get a chance to present, right?
So you want to follow up relentlessly. When somebody tells me no, I start following up. Yes.
Selling to large organizations
Large organizations. You’re never selling to Coca-Cola or IBM or Deutsche Bank or whatever. You’re always selling to a human being, to Bob, Mary, another human being.
I did an interview with Gary Vaynerchuk. Some of you might know him. He’s an awesome guy. You can look him up online if you don’t know him. You should. He went from like a fucking wine store, a liquor store at the corner, to making it a big wine business. Then now he has basically an ad agency, a social media ad agency that has 500 employees and is growing like crazy. There’s going to be 1000 employees by next year. He’s a multi best selling author and all that shit. When I was talking to him, I was like, “Hey Gary, how did you go from selling fucking wine to selling multimillion dollar ad campaigns to high level executives? What’s the difference?”
He’s like, “There’s no fucking difference. Always sell to Bob. Always sell to Mary. Always sell to people. People are people. They have needs. They have fears. They have emotions. You need to connect with them and need to understand them. It doesn’t matter if you buy wine or something else. It’s always a human being on the other side.”
When you’re selling to large organizations, you need to understand that you’re going to have to sell to lots of people. You might just have been seeing Bob but Bob is not the only person involved. Bob’s …
Managing objections with friendly strength
I’m really concerned about X, Y and Z. I’m not sure if we can do this. Listen, the last 10 people that we did business with said the exact same thing. You know what? At the exact same time. So here is what usually happens next.
We’re going to do X and Y and Z. It’s going to eliminate most of the security issues. Then we’re going to do this and then we’re going to get into business. Because you know what? This is going to be life-changing for you guys. We’ve established it. This is the right fit. So let’s go ahead. Let’s go through all the steps we need to take. See? I have no doubt. I’m telling you, this is what’s going to happen. You know what? People love that.
People love to deal with people that have clarity, that have strength. Oh, this guy seems to know what he’s talking about. Let me just do what he says, right? So you want to have strength coming from a good place, coming from a loving place
… out of this talk, write down three people, three people that you wish you would have closed, or had a meeting with, or something, but you never heard back from them, write down three names, and then send them a fucking follow up email today.
The other thing is, there's a simple tool, you can use Close for this, but if you don't want to do that, there is a tool called FollowUp.cc, it's the simplest tool there is for follow ups, it's an amazing tool. All of you, you're crazy if you're not using it.
Here's how it works... they just became a customer of ours, but besides that, I've been recommending them for a long time. Here's what it does. You sign up for followup.cc. You then import... it's about 10 bucks a month... you then import the followup.cc email addresses into your email address book. And then everytime you send someone an email, you can actually BCC like email@example.com or firstname.lastname@example.org or whatever you want the followup reminder to be.
Here's the beauty of this. When the reminder hits, it actually hits in the thread. So what happens is, if we had like three emails, and then I bcc email@example.com, because I want to follow up after 3 weeks on the third email I sent you, and in three weeks, that email will pop up, and in the email thread the email is like "hey, you wanted to be reminded", and I can just click a single button and email the guy... or there's a little button that says snooze, snooze for a day, a week, a month or whatever. And that way you don't have to use any other tool, software, it's in your inbox, it happens beautifully in the email thread...
Prefer to listen? Here's the audio-only version of the talk: