Monday, June 15, 2015 by John Sharp (Hatcher+) 23,704 Views
If there existed an award category for "most unrewarding, misunderstood, underrated job on the planet", the strongest contender for that title would, in my opinion, be "Head of Sales." At a startup. :-)
If you've just been offered that job, and were looking forward to a rewarding, clearly-defined, well-remunerated path to glory, brace yourself - you may indeed enjoy three months of glory, but if you last a year, it's either going to involve a miracle, a deep lasting friendship with the founders, or that rarest of rare events for a startup - an out-of-the-box Structured Sale.
Structured vs. Unstructured Selling
If you were lucky enough to be granted the title of "Head of Business Development" at your startup, as opposed to "Head of Sales", your chances of success just improved considerably.
Why? Because "Head of Sales" infers that you're selling something with a defined price list, tiered range of services and support programs, and standardized offerings and contracts, whereas "Head of Business Development" does not.
"Business Development" is really code for "unstructured selling" - the practice of sitting down with prospective customers (aka "Prospects") and testing hypotheticals, such as "how much do you think this would help you save", "what would you pay for this?", "would you buy from us if we dropped the capex and increased the licensing fees?", or "what if we sold to your customer base and split the revenue?" - until an understanding is reached between buyer and seller.
When a fixed price list is handed down from inexperienced founders, that first sale can sometimes be a long time coming - sometimes forever. Whereas when you work on Business Development deals, it's understood that the pricing - and the contract terms - are probably going to be different every time. Sometimes massively so.
Want to emulate the greats? Take a peek at the kind of crazy contracts that industry leaders like Apple, Google, and Microsoft did in their early days... for even great companies it can take many years for prices to stabilize and contracts to standardize. At which point it becomes safe for a Head of Sales to take on that role. In the meantime? For a more rewarding role, try "Business Development."
Sales Process, TAMs, Sales Funnels, and Relationship Selling
I had the misfortune of once working with a VP of Sales who, being an ex-boxing promoter, viewed every prospective sale as an opportunity to create a staged event, complete with etched invitations, leather jackets with logos stitched onto them, and "hot chicks"... his philosophy was, if they come to the event and have a good time, they will be forever in our debt and remember the brand fondly, and find us on the Internet and figure out how to give us money.
While exciting, this, you will agree, is not a scaleable "sales process". A sales process works by first figuring out who needs your product, then figuring out the percentage of those people you can reach via your distribution network (the "Total Addressable Market" or "TAM".) And if your distribution network is the AppStore, then maybe your Head of Sales simply needs to pick a price, hire a solid digital agency, and raise a few million bucks to spend on AdWords.
But what if your average sale is a million bucks and your distribution network is an enterprise software reseller? What if it's a telco? I've sold plenty of product via both these channels, and the sales process for setting up these outlets can span months, sometimes years - and often comes down to "relationship selling", or selling based on building of friendships and establishment of trust between executives at the respective companies.
In these situations, maintaining a "sales funnel" - in which different opportunities are categorized by the level of engagement and assigned a respective probability of closing - is critical to success. When we manage fund-raising campaigns at Hatcher, we maintain within our CRM a ranking of investors based on seven different levels, from Engagement through to Closed - with a negative ranking that tracks why an investor passed (No Funds, Not Fit With Mandate, Too Large, Too Small, etc) for future reference.
Maintaining a sales funnel has other uses of critical importance to a startup - by focusing resources on those prospects most likely to close, the company can keep a close eye on expenditure while pushing maximum sales pressure in the right area.
No process? No CRM? You will struggle to maintain your edge beyond a handful of prospects - and you will start to forget to call people back. Bye bye trust, and bye bye deal. Your struggle will seem mighty, but your results will not. You will end up being (and feeling)... misunderstood.
The first recommendation is one that most successful startups employ out of the box: create a sales process. Sign up for SalesForce, or another proven CRM platform. If your business is proprietary or your developers find the platform a little too restrictive to develop for, then write your own based on any number of open-source options, or from scratch. If you're on AdWords, then for God's sake, track your goals. Become a power-user of every tool you can get your hands on.
The second recommendation is, decide if your sale is a structured or an unstructured sale. Be honest with your sales force about your ability to meet the demands of a large enterprise, or provide sterling levels of support. If you don't have a sales contract written yet, write one - or download one of the thousands of licensing agreements available via Google. Post your cell phone number on your support page. There is no excuse for not being ready to support a purchase.
The third recommendation is, short-circuit all of the above: hire someone who has done this before. Successfully. For a startup. And preferably within the same industry. This is not a job for the faint-hearted - and as we've just seen, in this briefest of essays, the sales job inside a startup can be the most unrewarding, misunderstood, and underrated job on the planet.
John is a Partner at Hatcher Plus, the leading data-driven venture capital investment firm. John has extensive commercial experience at the senior management level, having been the Chief Executive Officer of Authentium, Inc. the Managing Director, Asia, of WorldSpace, and CEO of Hatcher, the precursor company to Hatcher+. A tenacious and driven executive with longstanding board-level and C-suite level management experience within high-growth companies, John also brings a strong history of capital raising from an extensive network of investors globally. As Chairman and CEO of cybersecurity pioneer Authentium (acquired by CYREN in 2010), John co-authored three US patents and developed and sold cybersecurity solutions to some the largest organizations in the world, including the US Department of Commerce, NASA, AOL, British Telecom, Comcast, Cox Communications, Google, McAfee, Microsoft, Symantec, and Telstra. As CTO at Hatcher+, DocDoc, Heardable, and ThoughtRiver, John has designed and developed several highly-innovative technology platforms using cutting-edge approaches to data processing, user interface design, and workflow optimization. John is a frequent blogger and an in-demand speaker at venture events globally, and has extensive experience implementing ESG solutions as Chairman and/or board member of numerous start-ups, including director roles at trade finance provider ASYX and payment aggregator Mozido, and roles as Chairman of MENA-based financial services pioneer Telr, and the leading Cambridge-based legal services technology company, ThoughtRiver.
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