Time to Market

Time to Market S01E08 – How Founders Can Learn Sales on the Job

- - - - -

Étienne Garbugli:
Hi Sean, today we got a great question from a listener: "How do B2B startup founders, especially those whose background is in technology and not sales or marketing, become effective at sales?"
It's an excellent question for us to tackle on this podcast because many founders have to "learn sales on the job." They may have worked on innovation, or they may have a business career, but they lack expertise in sales. Suddenly they are in a situation where they need to pitch, whether to hire--which in a startup means convincing them to join--to sell, or to partner with larger organizations.
All of these involve elements of selling, such as convincing people to take action, listening to make your presentation more effective, and having empathy for others.
So many founders find themselves involuntarily thrust into the role of lead salesperson. Can we give them the essential actions they must take to be effective--the 20% of the art of selling that has 80% of the impact?
Sean K. Murphy: This "I am an involuntary salesperson, how do I learn how to sell" is a fantastic topic and one I am personally familiar with. I started a couple of businesses in my teens and had to learn how to sell to get business. I had a photography business. I was the editor for the high school yearbook, and the class ahead of us had left us with a deficit, so we had to start selling ads immediately to get the printer to work with us.
It was one of those very stressful experiences that you reflect on and say, "That was good for me." Many founders have a couple of self-limiting beliefs or mindsets about selling: the first is that "great products sell themselves," and the second is that "marketing is a tax that products pay for being unremarkable." These two ideas have probably destroyed more early-stage startups than any other crappy advice I can think of. OK, there is also "build it and they will come." I will stop here before this becomes a podcast about toxic startup posters.
Étienne Garbugli: I think people tack something on to “build it and they will come,” which is that they will come at the exact right pace that you need to scale your company and not just trickle in every once and a while.
Sean K. Murphy: Yes, and you can guess their needs without having to talk to or negotiate with them. You never have to negotiate, and you never get their needs wrong. You will show them your product--or even just your idea for your product--and they will immediately say, "I have to have that."
Étienne Garbugli: I don't know why founders with little experience in sales assume it requires less skill than writing code. It may be part of a more general pattern of looking down on skills you have not mastered and assuming, "How hard can it be? It can't take as much practice and skill as engineering." Once you start making sales calls that make you feel like you've been kicked in the face, you realize, "Hey, this sales thing is not as easy as I thought it was gonna be."
Sean K. Murphy: Founders are surprised when their product announcements are met with a resounding silence. There's also a view in B2B that the best salesperson is the most accomplished liar you can find, which is a terrible misperception of the skills needed.
I meet teams--who have yet to close any customers--who want to hire a commission-only salesperson who will fall in love with their product and know how to sell it on day one.
Étienne Garbugli: Movies like "Glengarry Glen Ross" reinforce an "Always Be Closing" view of sales that omits the reality that you sell with your ears. The view of sales as trickery and deception permeates software startups, who believe a good salesperson can force customers to buy or "sell ice to Eskimos." Founders often have a strange perception of sales.
Sean K. Murphy: Some of it is formed by experiences with salespeople who misled them, cold-called them and spewed a pitch without listening, or were only interested in a transaction rather than a long-term business relationship.
There is a common shortcoming to articles that offer sales advice to early-stage founders. They may be beginners as salespeople, but they're not first-level salespeople. They have a much broader scope of responsibility and frequently need to ask themselves, "Is this prospect telling me something that will require a change in the product, a change in my message, or an adjustment to who we are targeting as our ideal customer?"
First-level salespeople are selling to make quota; they're given sales tools that more or less work and they have to execute. Founders are very different. They are selling to meet payroll and keep the lights on, which means they can let the team down, which is a higher risk bar. Their pitch, product, and target customer set are hypotheses that have yet to be proven.
Étienne Garbugli: Isn't it part of the issue here that we use the word "sales" for both kinds of activity? In the first, the traditional sales role, you have a pitch that works for at least a specific customer segment.
In the second, you are trying to figure out how to position and sell your product while many unknowns remain. I often see startups hire a sales leader who was successful in a situation where the unknowns had been defined. But it's not a good fit where the product is unfinished, and their understanding of the benefits is still evolving, complicating the positioning.
You need salespeople with different profiles for two distinct kinds of activities: the discovery phase and the execution phase. Calling these two separate challenges "sales" causes problems.
Sean K. Murphy: That's an excellent point. We need to distinguish between ensuring the product is ready for the market, that there's a fit with the needs of your target customer segment, and navigating the challenge of learning how to sell it, which occurs in parallel.
When you have proof from paying customers that your product provides value, you can incentivize the salesperson to get that order. But founders must hold themselves accountable for creating value in the customer's business, which may occur days or even weeks after the purchase. Or sometimes, it never does, and you must refine your target customer definition.
There is also churn or non-renewal, which in the first year usually means you did not provide the value you promised. So, the founders' finish line includes expanded use, case studies, and referrals. It is much farther away and more challenging to achieve than getting the first purchase order.
And the founders have more variables to determine: product configuration, message configuration, and ideal customer. They must solve most of these mysteries before hiring their first salesperson. So, you're right: we are using the same term for discovery and execution, and it's not appropriate.
Étienne Garbugli: So let’s talk about the early sales that are more about discovery. What’s the best way to get started so that you are advocating for your product and closing deals where you can.
Sean K. Murphy: Much of it is trying things you think will work that don't. You look at the scoreboard; many of the innings have zeros. You've pitched a number of places, and nothing's worked. You may have some "wiggles of hope" that may be random and, unfortunately, may prove misleading.
You need to continue to get in front of people whom you believe will benefit from your product. Our approach is usually driven by content--writing, talks, audio, and video. You can join communities they are part of and look for online conversations around the problem or need you address.
One tactic we explored in our "Extending Your Runway" episode was to adopt a product adjacent to yours that you can complement or extend. This allows you to introduce yourself to the market as a lower-risk extension of an existing solution.
One distinction I like to make is that marketing is a broadcast, and sales is a conversation. You can generate interest and inquiries using marketing techniques., but you must have conversations to close deals.
Étienne Garbugli: I see founders with little or no experience in sales will sometimes focus on tools or techniques instead of grasping the essential need
to build business relationships. They throw products at companies and ask them to buy instead of taking a strategic approach to building relationships. The skip trying to understand other perspectives and needs and instead of using that to suggest how their product may offer a solution jump to "buy now!" Often a change in mindset and approach is needed to enable the right kind of discussions with business prospects.
Sean K. Murphy: You are making a really good point here. I also see many founders grab onto a CRM, an email generation tool, or some other outreach tool because now it's a technology problem, and they understand technology problems. Now this sales thing is easy: it's not about people at all; it's about technology. I can mimic the Google Insect Colony and never talk to customers, just send them messages. This is a common failure mode for technical entrepreneurs.
When they are getting started, we always tell teams, "You are going to have so few prospects to manage; let's just use a spreadsheet." That way, we can figure out our approach as we go and revise it quickly as we learn about our customers' specific needs. Don't jump to tools hoping you can transform the need to have conversations with customers into inflicting pain at scale using technology.
Étienne Garbugli: It's a way to avoid starting the real work of sales, of having conversions with customers. Instead they say: "I need to figure out the CRM thing. I need to figure out the other parts of the solution before I start speaking with customers. I'm not ready. Just give me three weeks; I need to set up my whole process. It's going to be amazing! We will have these perfect emails coming out..."
They frame a layer of sales automation as part of their solution. In their mind, it becomes part of the product or the total solution they are building. Which means they also have to test it. At the end of the day, it simply adds another layer of delay.
I think we all must learn to see a startup as more than a purely technical challenge. Part of maturing as an entrepreneur is realizing that successful businesses understand their customer's needs and perspectives. You have to center your focus on building mutually beneficial business relationships to grow your startup.
Sean K. Murphy: A few years ago, I was working with a small team that was bootstrapping by offering some specialized services. We worked up some messaging for a market exploration effort, and one guy, Peter, said, "I'll do the outreach; I've always wanted to learn about that." I suggested we just send personalized emails to people we knew or had met during our networking efforts, but Peter felt that was too low-tech.
So he starts experimenting with several different outreach tools, and a couple of weeks go by. The CEO, who was managing two consulting projects that were keeping the lights on, could tell they were wrapping up. He said, "Peter, we agreed to start outreach last week."
Peter tells him he is working on it, mastering some complex coding options to personalize the messages and doing research to gather more email addresses. Another two weeks pass, and Peter is still researching and experimenting with more complex options.
So I told the CEO that if we had sent two or three dozen personal emails several weeks ago, we would be having conversations with people who might need our services or who could introduce us to firms that might need them. Peter's been sharpening his sword all this time. He started with a broadsword and he is now holding a letter opener that will be a steel toothpick in a few more weeks.
Part of the challenge, as you well know, is that you want to work in small batches because you know the least when you start. There is no point in widely broadcasting a message that's off. The early conversations don't always go well: you discover that many of your great ideas are not as well received as you anticipated. It's often a slow and painful learning process punctuated by periodic epiphanies.
What have you seen startups do to manage the challenge that you have very few people who will talk to you, and most of those conversations don't go well?
Étienne Garbugli: Well exactly! A big part of the B2B challenges is learning as much as you can from an initially low volume of leads.
When I work with organizations that only get a few leads per week, it's very challenging to do message testing. A lack of test data slows your speed of iteration. You can do cold email outreach, but you won't necessarily get an explanation for why messages are not connecting. Understanding their objections and real issues can be problematic, much less uncovering the gaps in what they comprehend of the information you are putting in front of them.
The closer you can get with some organizations to have discussions, the easier it is for you to iterate. I'm working with a few organizations that don't have experienced salespeople. This lack of salespeople is not a handicap if they have people who can have business-level discussions with prospects about the problem space they are facing-- instead of just talking about their product or solution.
So step one is to be able to connect with customers and understand their thinking. If you can build proximity with a few customers, you can get a deeper appreciation of their needs and start to engage with a broader set of prospects.
Reaching out to or approaching people can be intimidating, but you must get across that chasm. Otherwise, it will always feel like the worst part of your week. When I first started consulting, I worked with a coach who told me, "You have to do cold calling one day a week."
Once I began cold calling, it was the worst part of my week by far. But I kept at it, and it was like building muscle. Once I started practicing, it got easier, and I saw some success. I became more comfortable interacting with stakeholders and decision-makers in organizations. And I gained a much better understanding of my market and started to close deals.
Sean K. Murphy: We take a different approach. I'm not a huge fan of cold calling. I find that it takes a psychological toll on a lot of technical founders, that it can destroy their will to live. We try to get them into communities or groups where prospects hang out--target rich environments--and look at what questions are being asked and the answers other prospects give.
Can we find evidence or at least indications that our target customer has the problem and is looking for a solution that we can help them with? We don't do LinkedIn cold outreach or any kind of cold outreach. Responses rates tend to be very low--two to five percent. Most of the teams we work with are attacking markets of 500 to 1,000 firms. So if you send 300 emails based on your best information, but you are off, you have firmly planted a poor impression.
I also dislike veterinary marketing approaches a team refuses to talk to customers. Instead, they try and infer intent from mouse movements using Hotjar. I have had my last conversation about "what does this mouse movement mean?" My answer was always, "I don't know; we have to find a way to talk to the guy."
Étienne Garbugli: I think we are both saying that the first step for learning sales is feeling comfortable conversing with strangers. I don't do cold calling anymore, but I found the process of mastering it helpful, even if it was more than a little painful.
I've also seen entrepreneurs who go to events and practice their pitch with a bunch of different people to get more comfortable giving it. Especially when the event is in a space that allows you to have informal conversations.
Sean K. Murphy: Developing content that addresses the outcomes prospects are looking for or paints a "before picture" that captures the situation or the challenge they're in is a good way to get their attention. You can also provide some guidance on solving a problem: content marketing solves the same problems as your product does. Good content should at least help prospects make progress in meeting their needs.
Instead of calling it "sales," I encourage founders to think about solving customer problems or managing projects that deliver results customers are looking for--and willing to pay for. Customers don't view the endpoint as paying for your product but paying for the result that your product delivers. In B2B markets, this reframing from customers paying for your product to paying for results often unlocks a lot of creativity.
Étienne Garbugli: Yeah, I think about this quite a bit. When you frame your customer relationship in terms of product, it can create a separation between the customers and your organization. You start talking about product features instead of what the customer is trying to achieve. It's much more productive to explore how you can deliver value. You can offer different levels of productized solutions or even provide a result as a service.
Moving the product to the side allows a more open discussion about the flow or exchange of value, which I find more helpful.
Sean K. Murphy:In our first episode, we talked about what it means to be "in a market." One definition we settled on was that you're making offers that the customer is considering. They may say yes or no, but you have done enough discovery and diagnosis of their needs that you can offer something--a product, a service, or a hybrid solution--they can pay for.
People confuse making an announcement, emailing blind offers, or getting visibility on Product Hunt with being in the market. If prospects are not responding and asking questions, you are not in the market.
Markets are conversations driven by mutual curiosity and a desire to exchange value.
Étienne Garbugli: What criteria can you use to measure your progress? How can you tell how well you are doing? When you're having these first discussions, whether due to cold calls, community participation, content marketing, referrals, or other tactics, how do you tell you are going in the right direction?
Sean K. Murphy: I think there are two tests. First, can you identify from symptoms that the customer offers a root cause or a diagnosis that they're at least willing to entertain? Can you connect their view of their problem or need with what you are offering? Are you having conversations with people you believe you can help?
Second, can you accurately predict how much time and effort it will take to deliver an initial result proving your value? If you promise you can help, they ask, "How much will it cost, and how long will it take?" You cannot answer, "We have no idea." If they ask, "How do we get started?" you cannot answer, "We don't know. No one has ever asked that before."
Most prospects process your value proposition as a timeline and cost. They care how long it will take and how much it will cost. So I think you are on the right track when you can make an accurate diagnosis and commit to a cost and project timeline.
Étienne Garbugli: I agree that your initial discovery efforts are critical to recognizing the challenges inside the customer's organization so that you can see how and where you can deliver value. It still leaves you with the need to structure your product or solution as an offer to an actual customer.
Sean K. Murphy: I know you have also gone through this, but it takes more than one conversation. First-time entrepreneurs visualize sales as a conversation with a stranger that ends in an offer, but it usually takes three to six conversations--or more. It's complicated in B2B markets because at least two to four people get involved when it's a significant problem for the business.
There is the economic buyer who has or finds a budget for the purchase. But that person will typically also want your product or solution to be vetted by somebody with deep knowledge of the problem and someone who will manage the deployment and rollout.
So, you have to look at this as half a dozen conversations, don't assume you will get there in one sales call or dialog.
Étienne Garbugli: I agree but that sounds quite intimidating to an entrepreneur who has not done it before. Let’s walk through how to stay in the game for all of these conversations. I have a first meeting or a call with someone at Cisco: how do I build on that initial interaction to have these six meetings?
Sean K. Murphy: You're right; it can be intimidating. You proceed one meeting at a time. In the first call, you aim to understand their needs and determine if you can help. If you believe you can, then you try to get a second meeting. Before the end of the first call, you have to tell them something they didn't know that they view as relevant to their situation. You can also ask them for more information and give them homework in addition to what you signed up for. But you have to win each next call one step at a time. There are few shortcuts to building trust and understanding their situation deeply.
Étienne Garbugli: So you need to offer expertise, new insights, or new knowledge to get them to agree to a discussion of the problem space and how you can help.
Sean K. Murphy: Yes, at least for the teams of scientists and engineers I typically work with. Once they can talk about the problem, they become more comfortable because they have years of experience with at least aspects of it. That's less threatening than trying to quote, ask for the order.
I think you've got to provide a certain amount of insight to demonstrate your bona fides. And then you've got to figure out a simple offer, where you may ask for specific information or data to construct a more realistic or targeted demonstration or a tailored proposal.
Étienne Garbugli: How do you evaluate whether things are going in the right direction? Say you get your second meeting; how do you tell if you are getting closer to a deal?
Sean K. Murphy: One metric is whether the person or people in the first meeting have a real problem or are they just complaining? A real problem, a critical need versus a “nice to have” is typically a goal or objective at risk. A goal normally has an associated timeline and economic impact.
Next test: if they have a real problem, can you help them? If you cannot help them you can offer suggestions for where to look for help but you have to bow out.
Now you have to offer proof that you can help, but the customer is in control, they have to want another conversation. The next call should be within two or three weeks if it’s a serious problem. If they ask to talk again in a few months then that’s a polite “not interested.”
Sometimes it can stretch out to five or six weeks. If you are talking to a European firm in mid-July and they say let’s talk in September there may be too many people with relevant information or interest on vacation in August. If it’s an American firm, there is the same gap between Thanksgiving and New Years.
Étienne Garbugli: Sometimes a company may sound interested but put off the next meeting for more than a month. They may suggest, "Let's talk again after the holidays." How can a founder who hasn't gone through this process several times tell the difference between typical delays and a polite form of 'not interested?" How can they tell if there is actual interest or if it will be a waste of time for the startup?
Sean K. Murphy: When you start out, you don't have many leads or much experience determining who is serious, so you should err on the side of pursuing versus assuming it may be a waste of time. An initial bias toward pursuit has two benefits. You may convert some low-probability opportunities just by chasing them, and more conversations mean you can learn faster than if you drop them too soon.
You ask tough questions on these podcasts. This is another area where I wish I had a deeper understanding so that I could give you, our audience, and my clients, better answers.
An initial win rate of 5-10% is typical, and 30% is outstanding. As we gain more understanding about a particular customer segment, we tend to shoot for a 30% win. Mature companies can aim for 50-60%, but accepting a 30% rate encourages valuable experimentation that speeds learning.
Étienne Garbugli: When I was learning sales, I worked with an advisor whose model was to take every meeting you can initially. Gradually you refine your understanding and become more selective. You have a lot to figure out: the key attributes of a good customer, their common questions and concerns, and your ideal customer profile.
Even if you're taking meetings that may lead anywhere, you are also figuring out what roles are typically involved in the decision and who usually acts as a champion. Refining your sales recipe is a long and sometimes frustrating process. But the more prospects you can put in your pipeline for at least a conversation, the faster you will move forward.
Sean K. Murphy: One rule of thumb I have for measuring progress is that after each conversation, you should have learned more about their business and needs. If you finish a call or meeting and you've explained in detail how your product works and how it will solve their problem, but you don't know more about their needs, then that's a red flag.
It's easy to fall into the trap of viewing a sales call where you do all of the talking as a success because it feels good when prospects listen, and you are naturally proud of what you and your team have accomplished.
A good sales meeting divides talking and listening roughly 50-50. You should be learning more about their needs and what alternatives they are considering. But if you ask questions and they deflect multiple times, that's also a significant red flag. If you don't understand how they are solving their problem now, framing the advantages you offer will be very hard.
They should be curious about what you offer. If they don't ask questions, this may be a "check the box" meeting at a company that requires three vendors to be considered.
Étienne Garbugli: Let’s look at it from the perspective of a technical founder who is a great programmer developing a solution and picking up sales for the first time. What’s a key take-away from this episode for them?
Sean K. Murphy: What questions will you ask to diagnose whether a prospect has a problem you can help with? Focus on what questions you need to ask to uncover their needs. You also must be able to provide at least a realistic estimate of not a firm commitment for how long it will take for them to see positive results or additional value in their business. It's less about all your product's features and more about delivering value.
Étienne Garbugli: I agree: product-market fit means you can commit to delivering something that will create some impact in the organization.
In the previous episode, we talked about introverts and extroverts; I want to add a takeaway for introverts. If you're uncomfortable having these discussions, find a way to get more practice with active listening and gaining relevant information from a conversation.
There are many good guides on doing interviews that can help you with this. Gradually build the muscles--and systems--you need to do more strategic selling, where you understand a prospect's needs and struggles, can offer advice on possible solutions, and influence their purchase decision.
Sean K. Murphy: Founders often look for a salesperson who is a fast-talking extrovert, but I think they misunderstand what’s required in B2B. You actually have to ask questions and listen. Introverts often make more effective salespeople for high ticket items because they don't feel obligated to interrupt the customer’s description of their situation or needs with more things the product can do–unless the customer asks about it.
Étienne Garbugli: Do you have a takeaway for extroverts?
Sean K. Murphy: Yes: listen more, talk less.
Étienne Garbugli: I think that's pretty good coverage of the challenges founders have to navigate to sell their product. Maybe if we leave it there, where can people go to ask us more great questions like this one or to give us feedback on the podcast?
Sean K. Murphy: You're @leanb2b on Twitter, and I'm @skmurphy. So, please look us up and let us know what you liked, what we can do to improve, and what other questions or topics you would like to see us address.
Étienne Garbugli: We'll see you in the next episode.

- - - - -

Resources mentioned:
https://www.youtube.com/watch?v=Q4PE2hSqVnk