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August - 2008 - issue > Entrepreneur 101
Selling Your Way to Startup Success
Gunjan Sinha
Friday, August 1, 2008
Over the years, I have observed a number of startups – some successful and some not so successful. Some of the startups are small 1-2 person startups trying to build their product; others have gone past the funding stage and are now trying to sell their product or service. And some other startups are at a matured stage, and have to figure out how to scale their sales and revenues to hit the IPO Promised Land. As we all know, sales success plays a critical role in the very success of these startups. In all these cases, it boils down to how effectively one embarks on the right sales strategy for each phase in the startup’s lifecycle. In this article, I have tried to share how different stages of the startup might require different types of selling approaches. Sales managers, founders, and sales executives can do well to better understand what approach of selling might work in their specific environment.

Pre-Funding, Early Stage Startup
Chances are, in this early stage you have a very small team, mostly developers or technical founders with little or no prior sales skills. Your best bet at this stage is to focus on getting your early sales wins, which will provide the critical validation of your product or service for the VCs or angels. The most effective selling approach at this stage is to try the following:

Offer up your ’technical’ expertise to your prospects as if you were consulting for them. As a consultant, or small team of consultants, you can slowly introduce your product or service to the customer. Since, you would have already won their trust and are part of their team, this is a great way to establish your sales strategy at this phase.

Another proven approach is to team up with other startups who are a bit larger than you, and who need help accelerating their product to market. This approach will give you both credibility and a win in the marketplace. I recall, when I was in the early stages of whowhere (a web 1.0 company), we were able to partner with Infoseek (a leading search engine at that time, pre-google!). Infoseek needed to compete with Yahoo!, and was looking for white pages, yellow page service on their website, and whowhere was able to offer that to them. Such a partnership put us on the map of VCs and other players in the industry.

Post-Funding, Early Stage Growth
Companies that have received their early stage funding are now at a phase where they have to demonstrate success on how to convert their product and technology into a market success. Typically, in this phase one is looking to get enough customers and partners as the business model is established and the startup can now prove to itself that it can indeed seize the market opportunity, which got the VCs attracted. Many startups fail in this stage, as they are unable to translate their early promise into sales momentum, which the VCs are looking for, and it is the job of the founders and early employees to build that sales momentum through effective selling. Some approaches that work in this stage are:

Clearly one needs the right sales team to go after the market opportunity. It may be a small team, but you still need the sales passion and a hunger to go after creating these wins.

It also helps at this stage to leverage the credibility of the VCs, and build a nice ‘advisory’ network, which can help open the doors for you. Sales success has a lot to do with relationships; you need your network of advisors to help you with leads and sales. Not all advisors will be effective for your team, but those who are in a position to, and inclined to, open the doors will be most valuable for you and your sales team.

This is the phase, where it is critical that the sales or business development executives ensure that they continue to leverage their technical and solution teams as best as possible. Many a times, the newly hired sales executives post funding, begin to operate in their own silos, and are not able to draw upon the strength of the rest of the early team. If you sense that team selling is being hampered, you need to take immediate action to build the right sales culture.

At this stage, it is critical that ‘relationship selling’ is deployed to focus on prospects where one can influence the sales outcome through relationships of the VCs or the sales teams. You still do not have enough credibility to go out to unknown prospects and convert them into real wins.
Instead of focusing on outbound cold calling, I have found inbound inquiries which come to your website through some simple marketing techniques can be a more effective source of sales and revenues.

Mid-Late Stage Startups, Scaling Revenues
Companies in this stage are typically doing $4-10 million revenues, and are now looking to scale to $50-100 million revenues in the next 4-5 years. The challenge now is about scale. Techniques, which worked well to get you here, may not scale up to take you to the next level. Things that might work at this stage are:

Creating small accountable teams that are still owning up to small ‘revenue or sales’ quotas. Perhaps creating 3-4 different small sales teams might be a better way to create scale, than to have one large ‘monolithic’ sales division. Such smaller sales teams are able to bond together and learn from other sales teams. There is a healthy sense of competition between these different sales teams. Large teams inherently create inefficiencies and chances are that you may be loosing your startup edge, which got you thus far. Maintaining the small company culture through these smaller teams is the best way to get scale at this stage of the company.

You do need one strong sales leader who can help these different sales teams to learn from each other and align them effectively.

At this stage, there is tremendous pressure on the delivery organization to deliver to the promises made by the sales teams. It is equally important now to have teamwork ingrained not just within the sales organization but also in the different delivery organizations.

Companies at this stage also need strong market and analyst endorsements to keep the momentum up. Raising credibility for the startup through these endorsements will help in getting more leads, but more importantly to help win customers against competition.

I hope, through this article I have at least raised the awareness on how our selling strategies and approach ought to change as the company evolves through different phases of growth. An adaptive management team will learn from the marketplace and change its strategies as the company evolves.

The author is the Chairman of SiliconIndia.com and MetricStream. An internet pioneer, he was the co-founder and President of WhoWhere? Inc., a Internet directory services company acquired by Lycos in 1998 as well as eGain, an online customer service company. Sinha can be reached at gunjan@metricstream.com

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