Traction Book Interview on Startup Sales
Here's a recent interview Justin Mares did with me. Justin wrote Traction: A Startup Guide to Getting Customers, together with DuckDuckGo founder Gabriel Weinberg.
It's a great book for startup founders, and if you buy before September 15 you'll get a bunch of awesome bonuses.
Here's an overview of what we talk about:
- the different stages of startup sales
- founder-led sales
- sales challenges for technical founders, and how to overcome them
- developing a sales model that works
- scaling sales
- the difference between good and great sales people
- ... and more ;)
Listen in!
Transcript:
Justin Mares:
Awesome. Okay, cool. Steli, you have a ton of experience with startup sales. One thing that we talk about in Traction Book is we talk about kind of a phased approach where startups are in the early stages where they're trying to go from 0 to 100, 0 to 1,000 customers. There's more of the growth phase of 1000, 10,000 and then there's kind of the scale phase past that, which is where some companies like HubSpot, Salesforce and the like are in that now.
In your opinion, how have you seen sales change across all of those different phases? What do startups need to know, depending on the phase that they're in?
Steli:
Yeah, that's a great question. When we were running an outsourced salesforce in the heart of Silicon Valley basically doing sales for other startups or technology companies, we liked to divide companies into two stages to simplify things: sales exploration and sales execution.
In exploration, what that means is that you typically have already a few customers maybe. That's after you put a product together and you've got it validated and some people like it and some companies pay for it. But you don't yet have a repeatable and predictable sales process where you know exactly the amount of results you're going to drive by the type of activities that you're going to take. You haven't figured it out in a way where you can see the future and you know exactly what to do to hit your numbers next month and the month after.
In the exploration phase it's just like with the customer development process. It's a lot more about learning than about executing, because you don't know yet what to execute. A lot of times companies will make, startups and entrepreneurs will make the mistake of taking the few customers they have and the few results they've seen and thinking, "Well, this is great. We have 20 paying customers. We want to have 2000 paying customers. Let's just hire a bunch of salespeople and have them go nuts and hopefully it's going to create a lot of revenue for us." That usually is not that great of an idea.
In the exploration phase you want to go step-by-step. The very first step, I would say, is as founders, it needs to be a founder-led sales approach where you actually do a lot of the sales selling yourself. Even if you're technical, even if you think you don't have experience, you need to be selling because the type of feedback you're going to be getting, the type of signals and data points and information that you are going to be receiving is going to be completely different from some salesperson you just hired a few weeks ago because they lack the context and experience and really depth of knowledge and connection to your market, your idea, your product, your technology.
So having you speak to people and have them describe to you their problems or why they don't want to buy your solution is invaluable and you can't outsource that. You can't give that task to somebody else. You need in the early days to do this yourself. Even if it sucks, especially if it sucks, to feel that pain and figure out why does it suck, what is so difficult about selling my solution, what works, what doesn't, what kind of emails do people respond to, what about this sales approach is really good or bad? A lot of times founders want to take this like I'm comfortable working and just hire somebody right off the bat to do it and that's usually a bad idea.
At the beginning I would advise people to do sales themselves. Then once you've done it, you'll sell for awhile as founders and you've seen some results, you've created some successes, some things work, some things didn't, you might be tempted to be like, "Well, we're growing. We don't have just ten customers now. We have 50 and it gets harder and harder for me to do the sales stuff and I need to do other things as well, so let's now just go out and hire a bunch of sales pros, right? Preferably with 20 years of experience in our market so they can just come in with a rolodex and get us to 2000 customers like that." Which is what I call "entrepreneurial pipe dreams", like unicorns, like magical fairy dust that solves all your problems.
Whenever you can actually hire a salesperson with 20 years of experience for your teeny-tiny startup that hasn't figured things out yet, you should be scared sh**less. You should be running for the hills because that person is probably better at selling bullsh** than actually selling products. If somebody's really great at sales, they're making a sh** ton of money somewhere, why would they leave to come to work at your company where a lot of things are not figured out yet? And they're probably not going to be making that much money now. They might eventually but not at this point. You need to ask yourself that question.
Anyway, once you've done it yourself for awhile, I would recommend people to go and find some young talent. Find people that have a kind of entrepreneurial sales DNA, that have the hustle DNA, that are young, ambitious, that want to be part of a startup, that have that competitiveness but also some compassion so they actually care about people, they actually care about the things they are selling, they're not just in it for themselves and their profit. Hire two or three inexperienced people to work with you and you still manage that.
I know that sucks and founders are like, "Well, I don't want to manage a sales team. I don't know anything about sales and now I'm hiring these people that don't know anything about sales. We are the clueless crew. How can this actually succeed?" But just like anything else, that's the only reason new companies exist. If the experience companies already provided everything necessary in the world, there would be no need to create new things.
With sales it's similar, in the early days, once you have a bunch of things that work and you have a little bit of success, it's not fully repeatable but it kind of works and you've closed some deals, you have some customers, bring in a little bit more fire power, not to scale what you've accomplished, because what you've accomplished is not yet scalable. But to actually expand more work and more experiments and try more things and have also people that push you to focus more on that.
Once two salespeople show up, all of a sudden you have to give this a lot more priority than when you were alone. Some days you did some sales and other days you just worked on the blog or your new logo or something else. Now you actually have two, hopefully young, bright people sitting there, looking at you, saying, "What are we going to do today to create sales?" That's going to force function you to actually make it a priority for a short period of time.
Test more, try more, experiment more. Once that works a little bit better that what you've done before and you've gotten some good results from it, that's really the time to then look to hire some junior sales leadership, somebody that has been made sales manager, managing a team of four or five people at a company that's a year or two ahead of where you are right now in terms of stage.
After that person takes what you've done, they take that team, they improve on it, they expand, they hire a bunch more people that get it to the next stage and only then will you have something that's pretty, not 100% repeatable and scalable but pretty close to it, that's when you bring in the VP of Sales, a really senior person that can take what you have and now they scale it and put in hiring, new recruiting processes, improve the compensation plan, put in a training plan. They do all these things to create a structure and infrastructure to scale, but that's kind of the last stage of sales hiring for startups and new ventures. When you start, you do it yourself and you hire some young talent and you manage and do it with them, and then you hire some leadership and then eventually you graduate to senior leadership and senior executives.
Justin Mares:
Got it. Okay. There's a lot to dig in there. The first thing, what do you say to founders, especially technical founders who a lot of them kind of have this mentality of, "I'm not good at sales"? What do those people do? Do they just have to suck it up and just not be good at it and deal with it for months at a time? What do you say to those types of people?
Steli:
Yeah, that's a good question. I think there's two separate things to pay attention to. Number one is actually figuring out . . . Most technical people have a skewed understanding and a wrong one, in my opinion, on what sales really is. They think sales is all about talking, sales is all about bullying people into a direction that you want them to. Sales is all about being an extrovert and being out there and loving the attention. Sales is all about being the Wolf of Wall Street basically.
A lot of technical people, rightly so, are like, "I hate these people. I don't want to be one of them and I don't want to have to do this sh**." I agree with them and I think that sales is really not about that. At its most fundamental level, sales is all about asking questions and actively listening and not so much about talking. I find that a lot of engineers are really good at sales; they just don't realize it. What I love about engineers is that a lot of times they've learned to not stay on a surface level understanding. They'll really dig deep.
When you say, "Well, what I'm looking for is something that will help me with email marketing," most salespeople, marketing people who are extroverts would go, "Oh, you need something that helps you with email marketing. We have something that helps you with email marketing. I think you should be a customer." An engineer will be, "Whoa, whoa, whoa. What does 'email marketing' even mean? What exactly do you need? Is it newsletters? Is it something else? What sucks about the solutions that are out there today? Have you tried something?" They've learned to actually really dig deep to understand what actually is it that we're talking about.
If you're able to do that, you're already 80% a sales pro because that's really what it's all about is talking to people, discovering what their true needs are and challenges and what their real situation is and what they care about and what they don't care about and what's important to them and what's not. Once you arrive at a real understanding of who the other party is, then it's actually easier to sell. Because if they're a good fit, if you think you have truly solved that problem, you throw what I call "one dart".
You pitch them in exactly the way that your product delivers value in their world in the way that they want in their own words. You just use all the information you gained to tell them, "You know what? This is actually a good fit. Here's why what we do addresses your issue exactly the way that you want it."
All you have to do is really practice, listen carefully enough until you are at the point where you're convinced they should buy, then don't tell them about all your features, don't tell them about all your functionality and technology. Don't start telling them about your life story. Just take everything you've learned from them and translate it into how is my product solving this person's problem in the way that they care about, and then let's just talk about that. If you're able to do that, you're going to be able to be really good at sales.
A lot of technical people will be like, "I'm an entrepreneur. I'm just not a sales guy." Well, here's where sales and entrepreneurship are very closely related. In sales, if you know how to listen to people and really learn about their needs and build rapport and then pitch them effectively on how your product solves these problems, the only other thing you need to do to succeed is be okay with rejection and embrace it.
Be okay that if you're going to go out there and take a shot and connect with people and ask them about what their needs are and try to convince them to buy your product once you've been convinced that they should, some people always say "yes" but not all of them. A bunch of them will tell you "no". You have to figure out how to emotionally deal with that rejection and keep marching forward. You have to be able to actually embrace that rejection, because if you don't get any no's, you can't get any yes's. If you don't get people telling you "no", you won't be able to close deals.
Nobody has a perfect record here. Everybody has to deal with rejection and that's very much what entrepreneurship is all about. You can't just optimize for 100% hit rate of everything you do works because, you know what, just keep a normal job that's really well pre-defined if you're trying to optimize for comfort and want to avoid rejection.
If you're able to deal with rejection and you're able to actually be a really good listener before you start talking and trying to pitch people on your ideas or your product, you have everything you need to be good at sales, really.
I was talking to Patrick McKenzie, @patio11 as some people will know him, and he spent some time in our office down in Palo Alto. We were chitchatting about sales and here's a guy who in his personality is really nothing that you would consider a sales guy. Nothing about his person, nothing about the way he carries himself, nothing about the way he's dressed, his look, his haircut, nothing tells you, "Oh, this is a sleazy sales guy."
But he's a fu**ing sales machine because he figured out, "What are the basics of selling? This is not that hard. And this is actually useful and important." So he just gets the basics so he gets the job done and he's not apprehensive about it or dogmatic about it, but he's really pragmatic. Sales is something that helps, something needed in the world and it's actually easy to understand. Here's the five steps of how to actually do this so let me use it to propel my business and my products and the things that I'm doing forward.
Understanding what sales really is and understanding that you don't have to be an a**hole to sell and you don't have to be somebody that's a fast talker and that loves to hear themselves talk all the time to be successful in sales, busting these myths, I think, can help a lot with engineers embracing sales and not being so afraid of associating themselves with it.
The other thing is just realizing to a certain degree you have to just . . . In startups and entrepreneurship sometimes you'll have to do work you don't really fu**ing love because it's really, really important. You don't have to do it forever but in the early years it's really, really important for you to do it because you won't be able to scale something if you haven't really discovered what people truly care about and how to deliver that value to them and sales is a great way to do that because it kind of takes you out of your comfort zone of sitting on your couch with your laptop researching things on the Internet to having to go out in the real world, sit next to another human being or sometimes call them and tell them why you think what you have is really valuable and then listen to them telling you, "I don't care."
That's a lot more uncomfortable than saying, "Oh, I just had four clicks and our conversion rate is not optimal but . . ." All that sh** is pretty comfortable but I think to face real rejection from real people is something people don't enjoy and it sucks and it takes a lot of time but it can't be outsourced. It's really crucial. You have to be out there pitching your solution, learning from real people what they like and dislike and if you don't like that, you might find a way around it.
A lot of times if you're in the end consumer space and you develop some game that's a one-hit wonder or even a two-hit wonder, you've developed some app that gets massive viral traction, the rules there are different. But if you're in B2B, if you're selling to business or professionals, if you're building a SaaS product that people have to subscribe and pay monthly, if you're in that world, embracing the sales is going to help you be a better entrepreneur and build a better business.
Justin Mares:
Got it. Okay. You mentioned a couple different ways that entrepreneurs can approach sales. In your mind, what really separates the good salesman from a great one?
Steli:
That's a good question. Separates good people from great people? I do think that it really comes back to what I was saying before. Empathy, competitiveness and compassion. Great sales people are really competitive. We have a bunch of engineers in our team with Close, with the company that we're running, and our engineers are actually, at this point, by this time, are really good at sales, all of them, just because they've been exposed to it so much.
The difference between understanding or being good at sales, like being able to ask the right questions, practice and listen, figure out what people care about and then give it to them in an impactful way, that can be learned. That's something good salespeople do.
The other thing that good salespeople do is kind of figuring out how to go out and communicate effectively in a high frequency, so either do a lot of emails or a lot of calls, being out there networking, whatever. All that stuff can be done. The real difference between good one and great salespeople is consistency because here's the thing that sucks about sales: sales is very much kind of a competitive sport.
Let's take basketball. If you're a basketball pro, let's say you're Michael Jordan at your prime and you go out on the field and it's a new game and the clock starts, you don't get extra brownie points because you're Michael Jordan and you've been playing really well for the last four years. The score reads 0. You have to perform today. It doesn't matter what you did last week.
That's what makes sales really difficult is that it doesn't matter if you had a great sales week and you closed this huge deal and everybody high-fives you and you did an amazing job, it's Monday, it's a new day. What happened yesterday doesn't matter anymore; you have to perform again. If you don't, you're going to suffer and your company's going to suffer. You have to perform every single day.
That's really hard for most people. Most people have high highs and low lows. Some weeks they do a good job. Some weeks they do a bad job and they're inconsistent. The difference between great salespeople and good ones are not that the great ones have some kind of magical charisma and, yeah, there's some people that are really charismatic, yeah, there's some people that have some cool ideas and hacks and tactics, but the real difference between the good and great ones is consistency.
People that do it everyday, that show up everyday as if it's their first day and give it their all consistently over long, long periods of time and people that can bring it everyday, that's really the big difference.
Justin Mares:
Got it. We talked about earlier how startups can essentially scale through different sales stages, how it depends on the stage of the company and what you need to accomplish, all of that. When you're going from the startup phase, like it's just the founder calling his first couple customers and making sales, what do you do to scale up that process, especially if the founder doesn't consider him or herself a salesperson? How do you decide how to build a process, how to hire people, all of that stuff?
Steli:
Well, I think that you shouldn't worry about scaling that. All you should care about in the early days is finding things that work, discovering things that work and learning more about your market, your customers, your business model and the way to effectively deliver your value to your market, whatever that means.
So what you do is you try things and you see what the results are and you try to figure out if there's ways to improve the results. Then you see if the results are good enough so that they would warrant you building your business on top of them, even if it's just one channel of things you are considering doing for the long term, versus you doing certain other things that bring you zero results and you try to improve them and you can and then you just kill that as an option. You say, "This is not working for us so I'm going to stop worrying about it."
I think that the mistake I've seen too many very, very early founders do when they just start doing sales, they overthink things. Sales is not that different from product development. You overcomplicate things. You worry about how are we going to build the scalable infrastructure for a solution that nobody cares about. You're worrying about the wrong things.
I was talking to a founder today that has been doing sales for two or three months himself. He had some decent success and he's thinking about getting one or two junior people to join his team in his company in a sales and business development capacity and he was telling me he's been worrying about hiring people for the last six months and the reason why he hasn't started recruiting or hiring is because he's trying to come up with the perfect compensation plan for them, for his SaaS solution.
I was like, "Oh, cool, so what's the progress you've made in the last six months working on this compensation plan?" He laughed and said, "Well, I haven't really made any progress." I'm like, "Oh, cool. How many days in the last six months have you worried about this?" He's like, "Every single day I'm worrying about this."
We've all done this. This is insane. Don't worry about it. Just hire some people and be honest with them and tell them, "Listen, guys, this is not fu**ing IBM. I don't know what the solution is. I don't know what the right sales compensation model is. The benefit to you guys is not that this is the best sales job that's predefined and already working. The benefit and the reason why you guys should join is because you're going to learn how to develop these things. You're going to really learn how to build a startup, how to be entrepreneurial. We're going to develop these things together. We're going to find out what works and what doesn't."
"So I'm going to give you guys X in base salary and then hopefully in the next two or three months we'll find out a way to start with a simple bonus or commission structure and we're going to expand on it and you guys are going to be able to influence that together with me."
It's not about you figuring it out on your own in your head and then having the magical solution that at the first try is going to be perfect. It's about iteration, being okay making mistakes. You're going to make mistakes. Compensation structures are going to be wrong and you're going to have to revise them and change them constantly. The types of salespeople you hire are going to be wrong. Once you discover what really is your marketing, you're going to have to change it.
There's going to be so much change. Because you have to realize that your business is going to be constantly changing until you've figured it out completely, don't worry about the details so much. Done is better than perfect. Just get going. Try things, get some success. If it works and it works repeatedly, do more of it. If it works and doesn't work repeatedly, that's dangerous.
That's actually one of the most dangerous things is when you consistently perform in a certain way and get very inconsistent results. That's one of the most schizophrenic things for entrepreneurs because what the hell am I to decide now based on this data? Why is it working one month and it doesn't work the other months?
In sales a lot of times that has to do with not inconsistent pitching or salesmanship, but with inconsistent types of prospects and leads that you're generating. This is a topic for another full 30 minutes to discuss but my main point is don't worry so much. You're going to make mistakes, just like with anything else. Embrace it, be okay with it, and focus on the one thing that really matters is just learning and improvement, momentum.
Have we been smarter about sales this week than last week? That's the only thing that you should care about. If the answer every week is "yes", you're on the right trajectory. If the answer every week is "maybe", you could do better. If the answer is "no", you're in trouble.
Justin Mares:
Sure. That makes sense. To end, what is the single biggest thing that you see startups struggle with in terms of sales, especially in the early stages?
Steli:
That's a great question. There's many things but one thing that I can give that I think fits what most companies are going through is trying to make things work that don't work, like doing more of them and trying to scale things that are just inherently not scalable.
I'll give you an example. Lots and lots of startup, they'll close a bunch of deals on their first couple of customers through, let's say, investor referrals or just their network. You go to your friends, peers, people you know, people you know you know, and get references and referrals and close your first couple of customers that way, which is perfectly fine the way you should get going at the beginning.
But then what they do is they take those results and they just say, "Well, I closed 20 customers, let me hire 10 salespeople. Each of them should close 30 customers and we're going to be up and running." The question is, well, how did you close these people? Is that really repeatable? Can these people you hire get the same type of leads in the same type of way you did to create the same results?
Too many people don't really think this through. "Oh, sh**, no they can't." Okay, well, if they can't, what ways will you make available to them to actually create results? Where are the leads going to be coming from? Where are the prospects going to be coming from that these salespeople have to sell?
I think too many times startups get a little bit of results and they don't ask themselves, "Wait. Let me go back to the source that generated these results," which usually is leads, your leads, your prospects. Where did they get those from? Can I grow this source? Is this source really scalable? Is it a repeatable one? If I hire somebody can they tap into the same source or create a similar one for them?
If not, then there's no purpose in hiring lots and lots of salespeople. They're not going to have anything to do. They're not going to be able to do anything because you close your family and your grandparents. Okay, cool. How is that helping them in actually going and creating more results for you?
So I think that really asking yourself, "Are the results we're driving, are those repeatable? Can we consistently repeat them? Do we have a certain level of predictability? Do I know what kind of sales we're going to generate next week or next month?" If the answer is yes, yes they're predictable, yes they're repeatable, then the last question is, "Are they scalable? Can I grow this? Is this big enough so that I could hire another person doing this or two people?"
Only once you have a "yes" as an answer, it doesn't make sense to try to grow sales by hiring more people. A lot of startups make that mistake that they take results and they don't ask themselves, "Is this really repeatable? Is this really predictable and is it scalable? Can it grow? How big is this pool that I've created the results out of?"
Justin Mares:
That's fantastic. Well, dude, this has been great. Is there anything that you think we should cover before we wrap?
Steli:
A million things but no, I think we covered already a lot and you can tell I'm super passionate about this topic so I could talk on for hours. I think if people are interested to learn more about very specific B2B sales because that's the thing that I know and I teach and we practice everyday, you can go to https://blog.close.com. Close is our company. We write two, three articles a week. I try to write very technical things, how to negotiate discounts on your closed pre-paid deals, how do you price, really practical things. So if you enjoyed this session I think you'll enjoy the blog and that's probably a really good place.
The other thing is people can get in touch with me if they want to chitchat sales, I offer sales office hours to lots of people. Fifteen-minute sessions where we jump on Skype on a call and you tell me what you're doing and I'll try to be as helpful as possible.
People can always reach me at steli@close.io, if they want to say hi or book a sales office hour and chitchat.
Justin Mares:
Awesome, man. Well, this has been fantastic. Thanks again for doing the interview and we'll chat soon.
Steli:
Awesome. Thank you so much.
Justin Mares:
Cool.
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