The Startup Abyss

the_abyss_by_alexiuss-d5im6xf_0The longer I work with enterprise tech startups and later phase emerging technology companies (23 so far as an adviser, consultant or employee), the less certain I am of any particular formula or pattern for success that works from one to another.

Yet all around me I see various people hawking their “formula for success” for startups. Some have small amounts of data that might indicate they are onto something – at best – while others seem to have taken what worked at their first and last startup, and now project it as the “path to success”. I’m not hostile to any of it, and try to keep up as I’m open to anything that works. But over time, I can’t help but become a bit skeptical about many of the claims made. Fyi, I’m not going to name names here as I’m not trying to drum up a flame war, rather, I just want to share a couple of thoughts with you all.

Every successful startup that I’ve been with had one thing in common: A coherent and valid narrative about why their product/service was groundbreaking or game-changing or a big functional improvement or a significantly better cost/value eversus the alternatives their target market had available to them. They knew when “they were in the right meeting” in the sense that they had a keen understanding of who they were helping out with their technology. GitHub? They were all about developers, they really didn’t care about the enterprise. Genius – and now they are clobbering traditional SCCS in the enterprise, because they understood developers.

Salesforce.com? They understood CFOs and the executive suite in general. Many people seem to not realize that all Salesforce did for a long time was replace big SFA systems sold by Siebel and others in the enterprise at 1/10th the ongoing cost of ownership compared to say Siebel  (SMB was different). The product and features/functionality were not better, in fact they were inferior for a long time. They also went after midmarket in a way those big “enterprise software sales” modeled companies could not do nimbly or cost effectively. But in the enterprise, they sold to executive leadership in terms of total cost of ownership, yet it was with the same old features SFA systems had been delivering for 10+ years already. The product innovation was about it being in the cloud, but in reality what that did was make a much lower cost of ownership – there wasn’t a single functional breakthrough in Salesforce’s product in terms of user experience.

I could go on but here’s the point. The question you need to ask yourself is this: What is your big idea? Why does it make a difference? What do my users really need? What would thrill them? Who are the other stakeholders and what do they care about? It seems to me that some startups seem to feel that there focus should be on building a “sales machine” when that is a relatively easy thing to do once you’ve got something worth selling. Having something worth selling in the first place is the hard part to figure out and should be your total focus until you get there (achieve product-market fit first).

I realize this isn’t exactly a newsflash, but I think for early phase startups who are struggling to win early sales, this lesson needs to be deeply internalized. In many ways, the lure of the latest email template or tips on “CXO selling” or ideas on how to set goals for SDRs or how one can “scale” are a distraction from the most important issue an early phase tech company faces. A hint to founders who get distracted by this – most of you don’t know much about sales to begin with, so don’t try to build a sales organization. Instead, try to build a product that is good enough that people actually want to buy it – and then hire sales leadership that has real experience to build out your sales team. You’ll know when its time – it’s when you are getting leads coming at you, and you are being pulled into deals instead of pushing every day.