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Sales Learning Curve

Month: July 2021

Sales Learning Curve

Posted on by erin

Picture this: You’re a startup founder that has built a disruptive SaaS email marketing tool that completely changes the way businesses track customer engagement. You’ve been up and running for two years, closed a seed round, and connected with a market segment that loves your product. Suddenly, your startup is generating $2 million in annual recurring revenue (ARR). Now, it’s time to expand and go. You’re ready to raise millions of dollars in financing and step on the gas.

At Companyon, having invested in many B2B SaaS startups emerging from the seed stage, we see this story unfold a lot. While so much has been accomplished at this point, the hard work is just beginning. The startup must now transition from a product-centric, founder-driven operation to a go-to-market-centric operation. That means new processes, systems, and operations to support new goals and ambitions in what will soon be a much larger enterprise. And that naturally means hiring — take a nice deep breath — a sales team. Yikes!

Many of our startups are between $1M and $3M ARR when we invest and often have terrific product-market fit but little to no scalable sales infrastructure. Sure, most startups budget for a VP of sales in their post-seed round, but there is usually no thought beyond that and no current sales leadership in place. And that’s because most startup founders don’t know what they need or how to build and implement a sales infrastructure.

Your First Instinct

Salesforce. Adobe. ServiceNow… We get it. You’re going to try and impress VC firms by hiring some name-brand VP of sales who, with their years of experience and profound wisdom, will propel your team to a Series B round. It’s a no-brainer, right?

Actually, what many founders don’t realize is that these name-brand sales execs aren’t doing much direct selling. They aren’t in the trenches working the phones and negotiating deals with customers. They are instead likely managing complex sales supply chains across multiple product lines and territories. In fact, their job challenges aren’t relevant to yours because they can lean on established brands, established products, and massive marketing budgets to do most of the selling for them.

Could these name-brand sales execs thrive once they leave the support of their big(ger) company? Will they be able to work independently and build a sales process and hire a team from the ground up? Remember, your brand has little to no recognition, and the resources will be scarce.

Unfortunately, when a seasoned sales exec jumps into a raw startup environment with a fraction of a budget, few resources, little brand equity, and no sales operations system, they are probably going to fail. What’s even worse is that you may not realize this for at least six to eight months into their tenure. At that point, you’ve wasted capital, maybe equity, and as much as half of your funding runway, assuming your startup is funded for the next 12 to 18 months. You can’t afford to do that.

Know Where You Are On The Sales Learning Curve

So, if you can’t hire the name-brand sales exec, what do you do? Before we try to answer this question, please read The Sales Learning Curve, a classic paper by Mark Leslie and Charles Holloway that is a must for any founder or CEO trying to build a sales team.

The paper focuses on the launch of new products and the organizational learning curve required to make these new products succeed. The learning curve is similar to the situation faced by most post-seed B2B startups. According to Leslie and Holloway, the sales learning process unfolds in three distinct phases: The initiation phase (seed), the transition phase (post-seed), and the execution phase (Series A).

  1. Seed: Startups typically offer steep discounts, frequent product customizations, and customer access to core engineering resources to their early adopter customers. This phase is a natural step in gaining some early traction and finding product-market fit. At this point, you probably aren’t hiring sales reps.
  2. Post-Seed: You’ve got some referenceable customers, sales are likely picking up, and renewals are happening. Now, it’s time to scale. Your focus should shift to building a repeatable sales model, improving your messaging and positioning, and carefully adding sales reps. The sales yield should be 2x the cost of each existing rep.
  3. Series A: It’s time to execute. Get your core model in place and hire the “steady-state” team to put it into action. At this point, companies are well-positioned to hire new sales resources at the fastest rate that the company can support.

Cue The Renaissance Sales Rep

Now that you have read The Sales Learning Curve, you should know exactly who you need to hire to jumpstart your sales efforts. That’s right, of course, we are referring to the renaissance sales rep. Here are the skills and characteristics these unique reps bring to the table:

  • They are as entrepreneurial as a sales rep could possibly be.
  • They have experience at an early-stage company and want to do it again.
  • They are willing to learn and adapt…again and again.
  • They roll with the punches and do not point fingers or make excuses.
  • They can walk away from deals that will never close.
  • They will push back on prospects that try to get something for nothing.
  • They are willing to forgo compensation in return for company success and equity.
  • They believe success (money) will come eventually.

We have worked with and mentored several renaissance sales execs and reps over the years. Typically, we find them right after we invest in a new company. Successful founding-team sales reps are almost always renaissance salespeople. They not only tolerate the grind but enjoy it.

So you might be wondering by now the secret to finding and recruiting such a rep. Let’s leave that to the next post.

Are you ready to find your very own renaissance sales rep? Companyon Venture Partner Nate Bowler will walk you through his playbook for identifying and hiring the renaissance rep.

Renaissance Sales Rep Playbook

Posted on by erin

If you have read Companyon’s post about the Sales Learning Curve, then you know how vital the renaissance rep is to the success of a B2B startup emerging from a post-seed round. As a refresher, the renaissance sales rep is an entrepreneur at heart that has had experience at an early-stage company and is chomping at the bit to do it again. They are willing to adapt, roll with the punches, work with the team, and are not obsessed with the money – at least not right away. Think the opposite of someone who has ten years of experience in a sales role at a name-brand, super established tech company.

But how do you find the renaissance sales rep? Unfortunately, the title will likely not be on any LinkedIn profiles. Lucky for you, throughout my time as a founder and CEO of startups, I’ve encountered the renaissance sales rep many times and know how to identify these individuals. Here’s my playbook.

Hire for the skills, not the role

A lot of times, when companies look to hire, they are looking for another default, white-label sales rep. Someone who has worked in sales at companies everyone has heard of and done the nine-to-five workday. But startups aren’t just looking for everyday salespeople. They are looking for entrepreneurs that can solve problems, adapt quickly, and work with a team.

So, when you hire your renaissance sales rep, you want to approach it in the same way that a college coach approaches recruiting high school athletes — and no, we are not talking about buying sports cars for your prospective hires. When you see kids that get drafted out of high school, many times, they’re not position recruits. They are simply recruited because the coach sees the skills they have as a pure athlete. They don’t get recruited as a wide receiver or second baseman. The coach knows these are fantastic athletes that will contribute. They may be punt returners or tailbacks, who knows, but they’re recruited simply because their skills are clear as day.

That’s what I tell startup CEOs. You’ve got just to find your best sales athlete. Find somebody that loves the freedom and flexibility of figuring out an early-stage problem. This person may not have 10 years of sales under their belt, but make no mistake, they are competitive, and they want to win. They want to close deals, but they’ve got integrity. They work well with the team. They may have never played the sales position before, but you just know they will jump at the opportunity if presented with it.

They can tell a story

If you are going to sell something, you better know what it does, who it helps, and how it helps. You better know how customers will learn about the product, how they will acquire it, and how motivated they are to acquire it. You need to find someone capable of absorbing this information and then can tell a good story around it.

All great salespeople know how to set the hook. They can help people understand what it is you’re offering and why it’s meaningful. A renaissance sales rep is willing to iterate that or try it again in a different way until the story sells.

What I’m alluding to can also be referred to as the consultative sales rep. A consultative rep doesn’t go into a situation just pitching a product and features, but they engage the prospect in a conversation to sort of pull out the pain points that are relevant to what they are selling. Then the selling is easy because you aren’t just selling a product. You’re selling a solution that the prospect essentially just said they need. To do that, you need to find someone who can listen, who will be consultative, and who can engage.

They play on your team

Finally, the renaissance sales exec understands the importance of listening to the CEO and founders and isn’t hellbent on doing things independently. After all, who knows what you are selling better than the people that built it and have been working with it since day one. The renaissance sales reps understand that they are one piece of your overall strategic vision. They are one of the nine batters in your lineup.

When they go to sell, they are selling your story with your pitch materials. They are okay with you holding their hand — especially in the beginning — and using your lines, your key points as the CEO, and your overall approach.

The renaissance sales rep learns the product and gets the hang of things, then the CEO can start having a constructive dialogue about what they are seeing out there. What has worked? What hasn’t worked? Which part of the story is not resonating with potential customers? Why are sales going well or not well? What do you think we should do? All of that will come in time, but first, the renaissance sales rep needs to be able to trust the process, and they need to show an understanding of this from the get-go.

Why I Joined Companyon Ventures as Operating Partner

Posted on by erin

For thirty years, I have enjoyed the often challenging role of President/COO/CEO, alongside a founder who wants to scale their business. I have built business models ranging from commercial open source, self-serve, inside sales, and enterprise sales. I have worked with passionate teams to scale business from PowerPoint to $100million ARR, taken them public, enjoyed multi-billion dollar valuations and multiple M&A or PE exits, and sadly, some that went nowhere.

Whilst I have learned many different SaaS techniques and models, what has always stuck with me most is the tremendous emotional and psychological shift that a pre-Series A company, especially the founders, has to go through to build a more scalable company.

As a President/COO/CEO working alongside a founder I have practiced how to coach a founding team through that organizational transition so that they are ready and excited to leverage the techniques and know-how we can bring to the opportunity. Think of it like muscles and tendons. You bring all the different resources and know-how to supercharge a sales motion (muscle), but if you haven’t strengthened your management to engage that growth (tendons) you’re going to have a nasty injury. My passion has been learning how to strengthen the management ‘tendons’ while growing the go-to-market (GTM) ‘muscle’ of an early expansion company.

Companyon, seeing the same challenge, created the Companyon Platform Team, a coalition of experienced startup operators and consultants, who can de-risk execution and then augment the precious few resources available to our companies through the fractional use of subject matter experts to deliver tactical execution of work. In addition to the Platform Team, Companyon also built a roster of fund investors known as Venture Partners who are able to lend their advice, expertise, and networks to the firm and its portfolio companies. I started my relationship with Companyon as a Venture Partner before jumping all in as the Operating Partner.

As the Operating Partner at Companyon Ventures, I get to carefully curate the Companyon Platform Team for each unique portfolio company’s needs. Rather than working exclusively with one company for 3-4 years, I can accelerate multiple companies at a time, leveraging a pool of experienced Venture Partners impassioned to share their know-how with fellow entrepreneurs and a team of carefully curated service providers who know how to execute the GTM Strategy and pass on that know-how.

What makes Companyon different is its laser focus on that critical transition from product-market-fit to early-expansion-stage when a company needs to establish a scalable GTM motion for the first time. Every business has a different need in building that capability. Because Companyon doesn’t have a dedicated growth team, it’s not in the “everything is a nail and needs a hammer” mode. Instead, at Companyon we can bring together the right mix of venture partners with deep domain knowledge and execution partners to deliver on the strategy.

For each new investment, we use the due diligence process to not only assess the viability of each investment outcome but to jumpstart the acceleration of the company’s GTM Motion. While other investors are focused on legal docs, market reports, and the cap table, Companyon is already building the GTM muscle. It’s an integral part of our assessment and it’s quite common for our companies to engage the Platform Team ahead of the investment funding. With only a short window to the subsequent Series-A investment milestone, Companyon portfolio companies get an important head start.

For me, the Operating Partner role at Companyon Ventures is the perfect blend of go-to-market strategy with organizational development toward a clear goal of value creation. If you would like to connect (or reconnect), please feel free to reach out to me at [email protected].