000: The SalesFounders Podcast
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“It’s one thing to have a great idea. It’s a completely different thing to systematically prove your customers agree.”
When you think about it, most startup concepts originate around the customer. Yet, as entrepreneurs get mired in the details: product development, funding, or investors, they often lose touch with the customer.
From the perspective of the customer, there are really only two things that matter. First is the product or service you provide (technical). Second is the exchange the customer experiences as they engage with you (sales). Both are essential and neither can survive without the balance of the other.
There are many reasons for startup failure. The most common, premature scaling, can usually be traced to a breakdown between the sales and technical functions. This breakdown leads to a disconnect with the customer.
THE STARTUP SALES GAP
This disconnect is what we call the startup sales gap – the transition between seed capital and sales revenue. This is the stage where the majority of startups struggle to survive. Here are a few examples.
- Think of the last time you launched a product or service that seemed like a home-run, yet it struggled to gain the traction it deserved?
- Or perhaps you’ve found yourself stuck in the product development trap investing more and more money into your product hoping a better product will sell itself?
- Maybe you’ve gone out and tried to sell it yourself but realized you lacked the experience and message to connect with your customers?
- Or perhaps you’ve actually sold the product and then realized you didn’t have the systems or support to handle more customers?
FAMOUS EXAMPLES OF THE SALES GAP
This is the story told by millions of entrepreneurs every day. Consider a few famous examples of the sales gap:
KODAK – a dominant player in the industry for more than 100 years who discovered digital photography in 1975. Yet in fear of cannibalizing their film business, they would wait until 1995 to start “testing the waters.” In 2001 Kodak found themselves on the outside of one of the largest disruptive shifts in history – a key factor in their BK filing in 2012.
BLOCKBUSTER VIDEO – in the year 2000 Blockbuster had an opportunity to acquire netflix for $50 million. Not seeing any reason to disrupt a seemingly happy customer base they passed on the opportunity. In 2008, they cited “challenging losses, $900 million in debt and strong competition from Netflix, Redbox, and video on-demand service” in their Chapter 11 bankruptcy protection. (Netflix’s current market cap – $50 Billion)
PETS.com, a promising online pet store that went public within a year of being launched. In spite of a $300 million bankroll, a Super Bowl ad, and wild assumptions of inevitable online sales growth, pets.com sold themselves into insolvency in less than a year. I guess that happens when you take a 66% loss on every product you sell.
DECODING STARTUP FAILURE
As startups approach the sales gap, there are two places they tend to break down. On the technical side we see founders that focus on the products and assume that a perfect solution will sell itself. Sales avoidance motivates the need to raise capital and acquire strategic partnership. These measures often dilute the founders equity and distract from the needs of the customer. As we learned in the case of Kodak, there is more to a successful startup than just innovation.
On the sales side, we see entrepreneurs who often overlook the validation process, business model, or the technical presence that is requisite to scale. Validated learning and system development are often neglected in the pursuit of users, revenue or the allure of early sales traction. Like Blockbuster, sales performance alone can be quite deceiving.
When I look back on my career, in spite a handful of companies and more than a quarter-billion dollars in sales, I struggled with certain elements of entrepreneurship. I clearly had a sales focus but didn’t know my blindspots. I would typically overlook critical details of the business in consideration of perceived sales traction – which was often not sustainable. Fortunately though, my sales experience caught the attention of a number of technical founders facing their own set of unique challenges. Realizing that I had an ability to address the technical challenges they were facing, I started to see the balance that connected us. It was as though we were standing on opposite ends of this sales gap, both struggling to reach the customer.
A SALESFOUNDERS PERSPECTIVE
Regardless of your background or experience in sales, selling is part of everything we do. While that may seem daunting to some, the good news is that it is a process that can be broken down into steps that any entrepreneur can follow. Consequently, the greatest asset an entrepreneur can have is a sales perspective – an understanding of the “sales process” and an ability to infuse that perspective into every facet of the business. At SalesFounders, Our mission is to help entrepreneurs leverage proven sales strategies to bridge the startup sales gap and generate scalable sales revenue.
The SalesFounders podcast was created on the premise that sales strategy and development, although vital to startup success, is an underserved component of the startup playbook. We’ve reached out to top VC’s, entrepreneurs, and thought leaders. We explore their journey through the sales gap and learn from their experience. Where did they struggle? What did they learn? and how did they ultimately succeed?
The show is for early stage startup as well as established companies with existing sales. Salesfounders will empower you with actionable content that you can implement immediately to enhance your strategy, generate revenue and scale. Beyond the podcast, there are additional resources available for you to engage with our guests, network with other entrepreneurs, and stay on top of the latest trends and strategies.