The Greatest Sales Mistakes Founders Make
Blue skies, rolling hills, and earned perspiration. I was on a Saturday bike ride in Marin with a group of friends months ago. As can happen in weekend cycling, conversations grow in intensity, as you’re sweating away. The group had broken up into two tandems. Each duo was locked in its own exchange, as the beautiful Northern California landscape zoomed past us. My new buddy Sam (not his actual name) had just learned I was a sales coach, and he had my ear that afternoon. Sam’s startup operates in an antiquated industry and consequently, his go-to-market is challenging. But, armed with a sharp mind, and the swagger a top MBA program can provide, he strikes me as up to the task.
He went on, “I have a guy that can start working for us in sales. It’s not going to be expensive at all. He’s willing to take a part-time salary and some equity. He seems really pumped about what we’re currently building.”
I countered with a few questions, “How’s your sales process? Do you currently have a clear path to revenue? Have you closed at least a few customers?”
“Well…we’re running a couple pilots right now. But nothing is closed.”
“Okay, that’s a good start. Do you have a reliable way to get in front of customers? What’s your top of funnel looking like?”
“We get in front of folks via warm intros. Our investors and advisors have been great with those.”
“Okay, I’d be careful about hiring too early in sales. Even if it comes cheap.”
Fast forward a few months.
I get a text from Sam. “Random question, what would you say is the comp range for AE and SDRs both base and OTE (non-Bay Area)?”
My antenna goes up. I respond; asking him if he’s looking to hire.
Sam texts again, “Yeah. Wanna grab a drink or dinner? I probably need to drop the guy I have, and hire someone different.”
We sit down to discuss it days later. His sales process is still not in place. His problem isn’t personnel. He is delegating sales far too early.
Founders delegate sales before having a proven path to revenue.
Founders will think to themselves, “I’m just going to get a salesperson or two, and they’ll take my product to market. Plus, my strengths lie in building product. I should get someone that knows how to do sales.” While this initially feels like solid reasoning, here are the subtleties that most founders miss with this thinking. If there is no path cleared to revenue — this might mean getting the first 10 to 30 customers for most startups — then there’s no clear playbook for these new sales reps to execute. You have to remember: most salespeople are rarely both sellers and builders. It’s a rare find to get a salesperson that can both sell and refine an existing sales process. Never mind building one out from scratch. Those that have shown they can do it — folks that have sold and built out a sales model out of thin air — end up being very expensive. Out of price range for most seed stage companies.
Another factor comes into play: most salespeople aren’t equipped to navigate a startup’s product-market fit stage. Salespeople will think narrowly because that’s how they’re trained. They often haven’t thought enough about the problem the product is solving, or the product itself, to bring back relevant pieces from the market to the founder. They might report back like this, “Well, our conversation went pretty well, but they didn’t appear to be fully sold. I should have tried pitching them leading with this other value prop. I’ll try that on my next call and see how it goes.” Or they might say, “Well, I’m not sure LinkedIn is working for us yet. I was able to reach out to 23 target prospects yesterday and haven’t gotten a response yet. I need to figure out if we’re reaching out to the right folks, or if I’m leading with the right pain points.” This, instead of relaying information about a missing product feature. A feature that would allow you to close the deal, if you would spend the next two and a half weeks building it out. The salesperson just can’t rightfully have the entire context of the company, the problems being solved, of the entirety of the product, to skillfully navigate the path to product-market fit.
By contrast, founders devote 12 to 18 months at times, interviewing potential customers, obsessing over the problem, and carefully crafting a product as a potential solution. That type of intimacy both with the problem and the product can’t be infused into a new salesperson in a matter of a few months. It plainly can’t be scaled.
The other huge risk of delegating out sales is not getting direct feedback from the market. Founders that insulate themselves in ivory towers while their salespeople chase down deals in the trenches are putting their companies in great danger. Direct feedback from the market is worth its weight in gold in the early stages. Without it, it’s impossible to ascend to product market fit. That’s why it’s important to prevent any game of telephone from sprouting up. Nothing should get lost in translation. Founders need to hear it directly from the horse’s mouth. Unvarnished. That’s really what you’re seeking as a founder. You want to hear the market’s truth. Any slight distortion can be hazardous to your startup.
What ends up happening in the majority of cases where reps are hired on too early is a total sales reboot. Without a clear path to revenue, the sales reps grow frustrated about not being able to hit their quota or revenue number. They end up quickly getting a sense that they won’t be able to collect on their commission and will most certainly fall way short of their OTE. On the other side, founders expect the reps to deliver on sales, even if they haven’t provided a playbook. Founders end up growing frustrated at the lack of deals getting closed. The relationship usually ends up in one of two ways. The founders end up firing the reps, bewildered by their lack of sales production. Or the reps read the tea leaves and quickly realize that too few things have been figured out. They promptly grab their bags and bail, realizing their talents would be better monetized elsewhere.
As a founder, your best bet is to go out and sell your product yourself.
You’ll have one major advantage. Most folks would rather chat with a founder than with a coin-operated salesperson. In our work building outbound for folks, we’ve noted far higher response rates to emails sent from a founder than from an account executive. It’s natural: most prospects would rather talk to someone that has obsessed over finding a solution to the problem they are facing than a paid mercenary looking to make a quick buck by closing their next deal.
One last point before moving on: how can you identify the right characteristics for the salespeople you want to hire if you haven’t sold the product yourself? Salespeople come in all shapes and sizes. Some lean on their ability to build long-term trusted bonds with prospects through consultative selling. Others are highly transactional, possessing a cheetah-like ability to quickly close on an opportunity.
How do you know what salespeople you need if you haven’t done it yourself?
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Founders over-rely on their networks to sell into.
Most of my work comes from YCombinator companies. YC is a sturdy launching pad for startups for several reasons. One, you get friendly alpha testers from fellow startup founders willing to test drive just about any piece of software. That’s a huge advantage initially. But as my therapist has a habit of telling me, “Even your greatest strengths have a shadowy side to them.”
Selling to your friends has a really good chance of creating false positives. Your friendly conversations will more than likely not deliver you the cold hard truth when you need it most. Yes, there might be some easy pilots, free trials, and even some early revenue to pick from the money tree. But, all of those might have been handed to you because the relationship existed. You can’t be sure you closed the deal because you were pitching batchmates or because they had an acute pain that your product eradicated. Would the conversation have gone the same way was this a completely cold lead? Could you have maintained their interest through the sales funnel? Would they have been as receptive to your pitch? Could you have even gotten your foot in the door?
You get my point. The waters are muddied.
Only selling to your network and not engaging in what I call real sales only delays the hard yards you’re going to have to put in initially. Any network, however large, will get depleted at some point. And not having a way to generate leads and pipeline after that is only kicking the can down the road. You end up having to pay the piper. You might as well start with the work early on.
This leads us to our next point…
Founders don’t invest early enough in go-to-market and top-of-funnel activities.
The oxygen of any sales funnel is leads coming through it. Without it, your sales are dead. And yet, I see a lot of founders having a hard time putting in the work at the very top of their funnel. It’s not the most glamorous work. But without investing at the top of the funnel, founders will go through lulls or run dry. There could be weeks or months when no new opportunity enters their pipeline. Your sales engine comes to a sputtering stop. And it’s certainly no way to build a reliable sales process that will predictably generate revenue.
You have to be willing to settle in for the grind. Put your blinders on, and keep your nose to the grindstone. You have to conduct a lot of experiments, with the goal of unlocking message-market fit. What message can I send a prospect that will elicit their interest enough to agree to a 15-minute call with me? What pain points should I hit on to get folks to respond? The nitty-gritty of researching prospects, personalizing messages, setting up campaigns, and analyzing data that comes back from the market is not always appealing. But it does separate the companies likely to succeed from those that are likely to end up in the startup dead pool.
Founders do not engage in market-led product development.
Many founders treat their product like their baby. They might go in full gestation mode for 18 months, ensuring their progeny is nurtured to infancy. These company creators might go months without having any customer-facing interactions. One issue with treating your product like a baby is that you’re not putting it up for adoption in most instances. A product is meant to be shown off to the world repeatedly, and tested for adoption. As founders, we tend to want to protect our product from outside forces. We want to give it time to evolve naturally and build itself up, without having to deal with the harsh truths of the outside world. Our instinct is to isolate ourselves in our product caves and keep building.
And yet, isolating yourself from customer feedback only hurts your chances of hitting product-market fit. The only way to ensure that you’re getting closer to PMF is by having regular interactions with the market. Having a healthy cadence of customer development meetings on a weekly basis is the answer. If you isolate yourself too much, you run the risk of not building something that most people want.
The most successful founders are willing to let the market dictate what they should build. They are willing to stand on that ledge, show their half-baked product, and ask their customers for brutally honest feedback. It is sure to sting at times, but it’s much better than getting sideswiped with the realization that you’ve spent the last eighteen months building something that nobody wants.
Founders give up on outbound after a few campaigns appear to fail.
I hear the following from founders a lot, “Yes, we’ve tried outbound. We’ve sent out several cold email campaigns and haven’t gotten any replies. We decided to stick a fork in it because we were not getting any traction on it.” The next thing I’ll typically do is ask them to show me what they’ve done. They’ll usually unveil less than 10 campaigns. And sometimes, a few campaigns even show some positive signs. And yet, they’d thrown up their white flag.
We need to redefine success for outbound in general. A 1% interested reply rate is considered successful in automated email outbound. That’s right. For a 4-step automated email campaign, you are doing well at that rate. The interested rate is the conversion rate you should hang your hat on, in automated email outbound. But the others we optimize for are open and reply rates. We try to get to 40% for open rates and 6% for reply rates. For 4-step campaigns. Laying those out as barometers for success usually helps us redefine where we stand and where we should be heading.
The other dimension is time. In automated email outbound, it’s rare to hit it out of the ballpark in the first few campaigns you send out. It does happen. But it’s not standard. The first hurdle we need to clear is the open rate. That rate hinges on deliverability and subject lines. We’re focused on testing a bunch of subject lines early and also making sure our emails are getting into our prospects’ inboxes, and not their spam folders. Without a decent open rate, your prospects are not reading your email body copy. You could be sending out a blank email. It wouldn’t matter. Once those opens are dialed in, our attention shifts to writing engaging email body copy, which is reflected in our reply rate. And when engagement is unlocked, we can focus on getting more interested replies.
As you can now tell, this process is laborious, lengthy, and methodical. With clients with whom we build out email outbound, I’ll set the expectation upfront that we should allow ourselves at least 4 months to get a sense of whether we might get some traction for this initiative. And that’s with launching 4 to 6 new campaigns on a weekly basis.
I distinctly remember a chat with a client a few years back. We were 4-plus months into our engagement, and we had finally turned the corner in our outbound initiative. He told me, “Paul, in month 3 there, I was really worried we weren’t going to get this to work.” What turned it around, you ask? We went with founder-to-founder copy versions that leveraged the kinship existent amongst entrepreneurs. We pulled these out from our bag of tricks after numerous copy versions just fell flat. We ended up generating $6M worth of pipeline over a 6-month span for this SaaS startup. Before starting work with them, they had no top-of-funnel to speak of and were relying on warm intros to garner their few opportunities.
At Whitetruffle, where I ran sales for 3 years, it took us a full 6 months to fully build outbound. It became our most successful customer acquisition channel, responsible for 50% of our net new MRR on a monthly basis.
So next time you send out a handful of campaigns that only generate a few tepid replies and you start thinking to yourself, “This is really not the right channel for us,” take a deep breath and remind yourself that automated email outbound is not a sprint. It’s a marathon. A grind that will test your patience and rigor. Once you integrate that, you’ll be able to tolerate the effort required. Because when it works, it’s a beautiful thing. It’s a scalable money machine.
Founders forget to put themselves in their prospects’ shoes.
Founders can’t wait to show off and sell their new baby. “Isn’t she so cute?” “Look at all those bells and whistles?” “Don’t you think this feature is so awesome?” “Isn’t this UI so slick?” We might agree to all of these things. Barring any major lack of self-awareness, what they’re most proud of is usually worth paying attention to. And even praising.
Where they typically miss the boat is forgetting what’s most important to their prospect. Folks aren’t interested in buying yet another product. They buy solutions to their problems. Prospects walk around begging us to answer the question, “Can you eradicate my pain?”
And yet the founder tells you about the elegance of their piece of software. Or the killer feature. Or about how few clicks it might take to accomplish certain tasks. This ends up bleeding into everything from their email copy, to call scripts and website messaging. Prospects and customers have busy lives. They are bombarded with hundreds of commercial messages each and every day. If you want to be able to capture their attention and close them as customers, you have to tailor your pitch to their major problems. Tell them why they even need to pay attention to your pitch. What pain are you promising to completely rid themselves of?
Without that, you’re at a standstill.
Founders don’t sell the next steps in the sales process.
The thinking often goes like this: “I’m going to demo my product to a prospect…and if it solves their problem, they’ll buy it.” Those thoughts invariably lead to a sharp drop-off in your sales funnel.
Just selling your product doesn’t do the trick a lot of times. You also need to earn your prospect’s time and attention at each step of the sales process. I can’t tell you how many times I hear clients that swear they felt enthusiasm and excitement during the demo from prospects only to have them ghost them later on. I lived it too when I was running sales at Whitetruffle. If you’re unable to tell the prospect why they need to attend the next call, or why they must enter their credit card info in your platform, then you’re running the risk of losing them at that stage of the process.
What founders tend to forget is that prospects are busy people. They have a ton of priorities, professional and otherwise. And our product might not be at the center of their world every single waking moment. It might have felt that way during the 30 minutes you spent with them demoing. But when they step away from that Zoom screen, their chaotic lives hit them square in the jaw. Their youngest child comes home complaining about the school bully. Their dog has digestive issues that require an urgent trip to the vet. Their husband has gotten a mediocre quarterly review from their overbearing boss. You had taken center stage in your prospect’s mind for those few moments, and they felt like you’d solved one of their many problems. But, when they press “End” on their Zoom app, life happens. And there’s a great likelihood that you start tumbling down their priority list. The onus is therefore on you, the salesperson, to sell them on the next steps. What value are they going to get by attending the next step in the sales process? You surely have your own selfish motives for getting them to move down the funnel. We all get that. But what you need to figure out is what they’ll be getting from that next step, and convey it to them.
Here’s an example, from my Whitetruffle days:
We would sell the account optimization call at the end of our introductory call. Our spiel would go something like this, “Typically what happens here is for companies like yours is this…we schedule an account optimization call. During that call, we’ll not only show you the full platform with all of its bells and whistles, but we’ll also make sure to properly set you up for your 14-day free trial. That will include setting up all of your job reqs in such a way that you get the most relevant candidates on a daily basis. We’ll also ensure your company profile is up to snuff so that it attracts as many candidates as possible. Finally, we’ll make sure you know how to use the platform to its fullest, so you can start sourcing candidates for the first 14 days and beyond. How does that sound?”
Guess what this pitch was met with?
Enthusiasm. And a fine understanding of what they’d be getting from their next call. That translated to less drop-off in the funnel and a lower no-show rate at the account optimization call.
Founders don’t consider sales a transfer of enthusiasm.
Product-centric founders will focus on what they know: their product. And its bells and whistles. What they feel might be the winning features and functionality. That’s all well and good. But it’s also important to get the prospect emotionally invested in said product.
When founders talk to prospects, they at times forget to pick up on emotional cues that are coming through in conversation. Instead of looking at the positive emotion and excitement that is coming at them and then amplifying it, they plod along in their product demo. Every groan, word, or onomatopoeia should be treated like gold by a high-level salesperson. It’s your guide to what your prospect is thinking and feeling, as the demo is happening. A raised eyebrow, even through Zoom, might indicate some curiosity about a feature that is being described. Perhaps it’s time to expound on how the feature works and how it will make the prospect’s daily life that much easier. A slight smile might indicate contentment with what is being shown. You might want to keep going, just as you are. A frown as you get to talking about pricing might let you know that you need to do a better job of justifying value. Perhaps it’s time to go through a back-of-the-envelope ROI calculation.
My point here is that there should be many opportunities during a demo to create some enthusiasm around your product. Some of it might be about manufacturing it from scratch yourself, in the way you showcase the offering. You can be pleasant. Exhilarated by the idea of solving a problem for your prospect. But what’s even more potent, and less tiring, is to tune into your prospect’s emotions and create a positive feedback loop. Each time your prospect gives you a signal they are getting excited, it’s your opportunity to amplify that feeling and hand it right back to them.
You hear her say, “Whoa…this is something we could use for our quarterly reviews.”
You might answer something like this, “You’re very much echoing what a lot of our customers tell us. It wasn’t the initial use case for the product, but I can tell you it’s now one of the leading ways people use this platform.”
You have validated and amplified what they have just told you. And you’ve passed the emotional baton back to them. They feel legitimized in their point and you’ve added some heft to their initial feelings. Plus, you’ve made them feel part of your group – your existing customers – so they don’t feel alone in feeling how they’re feeling. And moreover, you subtly included them where you’d like them to land: the customer bucket.
This little bit of emotional Aikido will more than likely end up leaving your prospects super excited to work with you. The enthusiasm you initially showed in your demo will rub off on them. But you won’t be manufacturing a majority of it out of thin air. As a well-attuned salesperson, you will be leveraging their emotions in a quest to get them enthused about buying your product.
Founders will sell features over benefits.
Our babies deserve all of our love. And for a founder, the baby they are putting into the world is their product. The pride and love they have for it knows no bounds. That kind of passion is why I love working with founders. It’s rewarding to be able to help founders get their products out into the hands of their customers in exchange for money (Okay…that’s where the baby analogy starts to break down 😂).
But you get it. If you’ve conceived and built something from scratch to solve a problem you had identified in the wild, you’d surely be proud of it too. But that pride can lead some founders to be a bit myopic. Some founders will get into the weeds about a particular feature or functionality without necessarily tying it back to high-level benefits.
What you end up having if you sell this way is a prospect that becomes disinterested in your demo. They doze off or lose interest. Because at the end of the day, they’re not interested in yet another feature. Or another piece of slick UI. What they’d like to answer is, “Can this product fix my annoying problem?” If you’re about to convince them that your product will eradicate their painful predicament, then you’re in business. You can of course show off your problem in granular detail, but it’s important to tie it back to an overarching narrative about value that is going to be delivered.
Founders don’t qualify well enough.
Often, founders will come to me and ask me why deals aren’t closing. The first thing I’ll look at when that happens is their qualification. All too often, they’ve been letting through prospects that didn’t have much of a chance of closing. They were careless about their qualification and therefore let a bunch of leads into the pipeline that shouldn’t have been considered opportunities.
Qualification has been invented as a way to focus the salesperson on deals she can actually close. Without a rigorous qualification process that ties into a well-defined Ideal Customer Profile, you run the risk of spending time and energy on deals that have very little chance of closing. Talk about a waste of precious resources at early-stage startups.
That’s why I insist on installing an ICP when I start out with new coaching clients if it hasn’t already been done. With an ICP in place and an accompanying set of qualification questions, the founder can then go out and sell with the peace of mind that they won’t be wasting cycles on leads that weren’t meant to close in the foreseeable future.
I’ll close with this: startups are bound to make their own unique mistakes. There’s no avoiding it. But there’s a much greater chance you’ll survive the unique ones if you avoid the common ones outlined above. Sidestep the (now) known potholes, get out of the ones you invariably land into, and maximize your chances for survival at the grueling startup game. And please report back with others we may have missed in this piece. I’m anxious as always to continue to conversation.