Startup Sales is not Traditional Sales

One of the biggest mistakes I see young entrepreneurs make is to assume that sales at a startup is like sales at an established company.

Founders often make this mistake because they lack sales experience. But even those with some exposure to sales can hold this faulty assumption. The problem is made even worse when a founder hires based off this thinking, bringing on salespeople who are ill equipped to meet the challenges of startup sales and subjecting them to unreasonable performance expectations.

I’ve been a victim of this error myself. As a co-founder, I tried to apply the structures and assumptions of my sales training at an established company to my first startup. And as a sales leader at a young company, I saw firsthand how unrealistic assumptions about results can hurt morale.

The best way to avoid this problem is to go back to the basics: the nature of a startup. I love this definition from Steve Blank, the father of Customer Development and Lean Startup methodology. He defines a startup as a “temporary organization formed to search for a repeatable and scalable business model.”

Blank’s definition captures the reality that all new ventures are essentially built around a bunch of guesses. The business model, the problem the startup solves and the profile of the ideal customer are all based on assumptions.

The biggest assumption: that people and organizations will pay money to address the problem that the startup solves - and in large enough numbers, quickly enough and for enough money to fund the startup’s long-term existence. This is different from established companies, where sales usually means executing on a well-tested plan to sell a product with a track record of meeting the needs of customers willing to pay.  Startups search for a path while sales at an established company is more like following a map down a well-trodden road.  It is therefore crucial for startups to develop sales strategies that are tailored to this reality.

To succeed in sales, a startup needs to engage customers, test market hypotheses and design products based on customer feedback - from its earliest days and every day thereafter. Startups cannot afford to build their products in isolation, postponing the almost inevitable conclusion that customers won’t act as founders initially expect. By then, it is often too late, and founders hoping for a “superhero salesperson” to come in and save the day will be sorely disappointed.

Building a solution the market wants through continuous customer feedback is an entrepreneur’s “job number one.” For early stage companies offering a new product, learning from the market is much more valuable than any individual deal. As with lean product development, the primary goal of startup sales should be learning and iterating based on that knowledge, until you find a message, market and price point that works.

Job number two is to set up sales to succeed. At established companies, new sales reps often go through extensive training after they’re hired – on the product, market, target customers and how to engage them. Often, there is historical data on conversion rates. For example, the company likely knows the number of initial sales conversations required to get one closed deal, and how much time it takes, on average, to get there. 

Startups rarely have this structure. What they need is their own unique, organized sales training program that arms new salespeople with the lessons learned and remaining assumptions about the best way to engage the market. Due to the uncertain nature of a startup, much of the plan will be based on limited experience, often through the founder’s initial efforts to sell the product. But some plan and some data is better than nothing. Without structure, startup salespeople will not know who to target and what level of activity they should maintain. They will be subject to the unknown appeal of the product, whatever tactical sales skills they’ve developed (however relevant) and the founder’s expectations – which may or may not be realistic.

Finally, startups also require a unique type of salesperson - one that often takes a little more digging to find. The ideal first sales hire for a startup should be able to lay out the company’s go-to market strategy, be flexible when best-laid plans inevitably falter, develop scalable processes around those strategies and tactics that work, and be on the front lines selling to customers. Most junior salespeople don’t have the strategic and operations experience, and often the senior ones are too far removed from tasks like cold calling. It takes time, sales expertise and a clear understanding of unique startup needs to make the right sales hire.

The best advice for founders is to stop expecting the stability of an established company. You must embrace the ambiguities of life as a startup, accepting the inevitable ups and downs that are part of the journey, but remain committed to serving the needs of the customer. Such an approach may be the only connection between all types of sales.