So far, Obvious Startup Advice has focused on early-stage startups, and today I’d like to shift gears a bit and write about an issue I see more often with mature startups (and companies that aren’t even startups at all), so fair warning…
Recently, a friend sent me an article from Harvard Business Review called “The Sales Learning Curve.” Listed under their Manufacturing section, I wasn’t sure how relevant it would be to startups, but as I read, the phrase that kept coming to mind was, “Well, duh.” The article (in several thousand words) essentially says, “You can’t have a sales team for a product before you go through the sales discovery process.”
Well, yeah. Duh.
As I’ve said before, the CEO of any company is always responsible for the first 20-30 sales. This applies no matter how big your business is, because even if you’re a unicorn, launching a new product means starting at zero from a sales perspective. Yes, you have a better-known brand. And if it’s a vertical extension, you have open-minded prospects. But you still have to make sure your product solves real problems. You need not just an MVP, but an MVM (minimum viable market) as well, and the two have to align. And one person has to own it all.
Let’s take a tour through a company lifecycle.
Startups begin with just a couple of people; let’s say a programmer, a designer and a CEO. There’s no salesperson yet, because only the CEO can articulate the product vision and engage in customer discovery. Only the CEO can make the first sales.
Three years in, the company has seen some success. They’re running at a $5M ARR (annual run rate) with a sales team of four people. Two years after that, they’re really humming, with a 20-person sales team, plus a marketing team, churning out $20 million a year.
The CEO says, “It’s time. We have so many customers, it’s time we sell them something new.” And here’s where these companies too often make a mistake.
The CEO tells his Project Manager to design a product that does a thing. The PM designs it, and hands off to the engineers who build the thing. After it’s built, the sales and marketing team step in to sell the thing. Or they try to sell it.
Unfortunately, in this scenario, there’s no one person truly in charge of the product. While they likely spoke with customers, they never validated through sales. PMs in larger organizations have a role generally more akin to order taking, and, sadly, “what features would you like?” has fuck all to do with “what would truly motivate you to spend money for a solution to your problem?”
Meanwhile, there’s a sales and marketing team that has to sell the product, but they had no input into how the product was built. Without a proven sales playbook, they have no consistent way to speak with prospects, qualify them and overcome objections. What follows is a constant stream of even more feature requests, all theoretically required to close the next customer. It won’t be a surprise to anyone when the product is shuttered 18 months later, having never found a market.
No one took ownership of both product and customer development (HINT: they’re the same thing). No one was responsible for validating customer need through early sales. The process was bolted together by disparate teams, and no one was responsible for the overall vision.
Let me be clear: I’m not advising that CEOs of mid to large size companies making millions of dollars a year with hundreds of employees drop everything to sell every new product her company launches. That’s unrealistic and in many cases unreasonable. But, that doesn’t mean new products can be built by committee. While the CEO might not launch every product, every product needs a CEO.
Now for a self-deprecating real-life example:
As a 22-year-old college drop-out, I joined Imagine Media as their first web guy. Within a year, we had the most successful gaming website on the internet. And as a 23-year-old, I naturally felt that was mostly thanks to me.
I had an opportunity to go on a sales trip with Simon Whitcomb, who was, up until recently, a sales guy for Imagine’s print publications. On the plane, Simon asked me what I saw myself doing in five years, and I brazenly told him I wanted to be put in charge of Imagine’s web business. We went on to have a passive-aggressive back and forth (mostly me, not always passive) over who the ultimate business owner for Imagine’s web properties should be. Later, when one of us was promoted to Network Director, it wasn’t me.
I was angry. Angry. For. Years. And, while I have nothing but warm feelings towards Simon today, I was still a bit sore when I started thinking about this blog post. And that’s when I thought to myself, “Am I high?!?”
Up to the point Imagine put Simon in charge, I had never once thought in terms of selling our websites. I had no idea how to get people to pay for it, or even who those people were. I was a good product manager, a voice for our readers, and I cared about building our audience. But I had no fucking clue what advertisers wanted.
Simon, on the other hand, was responsible for convincing major advertisers like Nintendo, Sony and EA back in 1996 that advertising on this new thing called the internet was worth their time and money. He carried the water so eventually the sites that became IGN could have a huge sales team. He deserved that promotion, because even before he got it, he owned the web business and was personally responsible for its sales success.
There are a lot of efficiencies to be gained by moving to a matrix organization as your company scales. This. Isn’t. One of them. No matter how you organize your employees, recognize that someone needs to ultimately own each business. They need to communicate the vision to the internal team and external prospects. They need to ensure the best people available are working on that vision. They need to prove the product’s right to exist by convincing early customers to pay money for it.
Heck, that almost sounds like a CEO.
— Eric Marcoullier
Over the past 27 years, I’ve been a software developer, a project manager, a CEO and a co-founder. But, underlying it all, I’ve always been a product guy. And now that I’m a coach, I bring that product-driven love of the customer to my clients. Whether your company is launching its first or twenty first product, I can help ensure that your business grows through best practices. Please drop me a note at eric@marcoullier.com or visit my coaching site at Marcoullier.com and let’s set up a time to chat!
(Photo by Pien Muller on Unsplash)
Almost forgot to give the most obvious startup advice about this topic. Every product needs a “GOOD” CEO. It is entirely possible for the person in charge of a product to fall in love with their own ideas, ignore market feedback, and pursue a vanity project with the company budget as their expense account. I’ve seen so many instances of the person in charge of a product line completely lose sight of the need to connect it all together, and focus on what they believe is cool.