Newsletter 67: Startup Ideas - Sales
Startup ideas #4
Welcome to another edition of the Struggle.
The Struggle is a bi-weekly newsletter where I share my thoughts and learnings from running a startup in Southeast Asia.
As a thought experiment, I will be releasing a few articles breaking down problems I would address if I start a new company tomorrow.
We have been taught our whole lives how sales is a second-class profession. People frown on sales because of the perception that one is selling just for personal gain and commission.
I used to feel the same way; sales was the last thing I wanted to do in my career because of the negative stigma around it. I thought that no good, self-respecting person would want to work in sales.
Movies contributed to the negative stereotype as they often portray salespeople as sneaky or sleazy.
After all, what comes to mind when you hear someone works in sales?
Perhaps a scene from the Wolf of Wallstreet or a spam caller trying to sell you yet another credit card that you do not need.
Like with everything else, there is some truth to the stereotype.
If done poorly, sales can be ugly. Aggressive targets on crappy products push employees to desperation; in turn, they work hard to hit daily call targets or spam prospects with way too many emails.
Unfortunately, bad experiences stand out more than good ones, and social media has broadly amplified the poor image of sales.
To top it all, universities are not doing a great job of educating people on the topic either. For example, when I studied business in Denmark, we barely touched on sales. At times it felt like my degree was designed to go around business development and focus instead on the most sought-after skills like finance, strategy, excel, marketing, thus helps you prepare for popular jobs like investment banking and management consulting. But close to nothing on business development.
While there are definitely terrible examples of sales practices, and we meet the stereotypical salesperson every once in a while, I would argue that these ideas about selling are all misconceptions; in my experience, sales is not what people think it is at all. It's not about tricking or manipulating anyone to get their money; it's simply a question of helping someone solve a problem that they cannot solve on their own.
It wasn't until I became a startup co-founder that I truly understood the upsides of being good in sales. One of the biggest lessons of my entrepreneurial journey was that no skill is more important than sales (unless you are a builder).
We sell at all times to attract new employees, convince VCs to invest, get partners on board, and acquire new clients. So no matter how great your product or brand is, you are constantly selling your vision. That’s especially true in the early days of any business when there is zero proof that the product is any good or the business model will work.
“Sales deserves WAY more respect than it gets.
You can't thrive in your career without being able to sell.”
Alex Lieberman, Co-founder of the Morning Brew
My experience with sales
When I joined Greenhouse back in 2017, my title was General Manager. While that sounds fancy, I was measured primarily on the new revenue I was bringing. In turn, the first lesson I learned was that the more responsibilities you have, the more important sales become. To cope with that new reality, I studied intently the world of B2B sales to understand best practices in the space.
Through a mixture of self-education and first-hand experience, I learned how business development boils down to two fundamentally important things:
Understanding your ideal customer profiles and buyer persona
Solve big problems for your customers
Without a clear definition of your ideal customer profile and buyer personas, you won’t be effective. It feels like you are shooting blindfolded. The more clarity you have around the ideal clients, the easier it gets to prioritize prospects and deliver value.
Today, Greenhouse helps companies grow revenues in new markets. So my job consists of meeting founders and business owners to understand their objectives and then support them with securing first deals in new markets.
It blows my mind that many of the business owners I talk to, irrespective of how long they have been in business or how large their brands are, struggle to articulate who their ideal clients are. Vague answers like anyone can be our client frustrate me big time because it’s a testament to how little the company invests in improving their business development efforts.
A well run B2B business will have a crisp definition of:
Ideal customer profiles - how large are those companies (employee / revenue-wise), what industries are most relevant, where is the business located, and a sense of how large their budget is.
Buyer persona - who exactly is the decision-maker within a given organization, their job title, and even traits from their personality.
Triggers - events that could create an opening for contact with a prospect.
Without having a comprehensive understanding of that, it’s tough to be effective in your sales role. Unfortunately, that leads business development (BD) people to approach prospects at random, strengthening the poor image of the BD role. This, in turn, leads to frustration for the prospect as they are spammed and chased about irrelevant products, followed by desperation for the salesperson when deals are not materializing.
A few decades back, it must have been hard to study your ideal customer profile and buyer persona in detail because the internet was not as widely accessible as in 2021. But today, it’s an entirely different ball game. Finally, we have access to all the information we need to study prospective clients; by doing so, we can understand what’s important to people, the problems they are facing, and when is the right time to have a conversation about solving those problems.
Assuming you have done your homework, thus, engaged at the right time with the right person, it’s all about listening, understanding their problems, and offering solutions.
If it’s not a good fit, move on. The better you know who are your ideal clients, the easier it is to let go of unqualified prospects and not waste everyone’s time.
But if you can help, do whatever it takes to help that person.
In my experience, truly helping people always leads to positive word of mouth, bringing even more revenue down the road.
Luckily today, the negative reputation of sales is gradually evaporating. Software sales / BD has become a great role since it gives you the ability to a) connect with interesting people on a day-to-day basis, b) solve problems, c), in the process, earn commissions and bonuses.
That does not mean it’s easy. Business development is a performance-based field, and merit is not subjective. Sounding smart in front of your colleagues won’t help you to close deals. The process is delicate, and it requires emotional intelligence, a deep understanding of your field, and great social skills. Yet, as Naval says:
“learn to sell, learn to build, if you can do both, you will be unstoppable.
The ultimate is when one individual can do both. That’s when you get true superpowers. That’s when you get people who can create entire industries.”
Why am I excited about the sales space?
If you work in tech, you would know that product-led growth is all the hype in today’s highly digital world. That’s natural given the dynamic of freemium models where you are able to experience new products partially at no cost:
“…using in-product levers to grow, in place of or in conjunction with external marketing and sales channels. When people can try your product for free, they experience the value of your product before making the decision to pay. This turns more people into happy users, creating more opportunity for them to tell their friends, who in turn tell their friends. This can trigger virality and widen the top of your funnel.”
Kieran Flanagan, VP of Growth at HubSpot
In turn, more and more startup founders look at product-led growth to scale their businesses. Organizations like Reforge have built a valuable business by doing a great job in designing cohort-based studies on everything related to product-led growth.
The benefits of a product-led approach are potentially more scalable and in-expensive growth, but the downside is that it’s quite difficult to get it right. Nailing down what to give away for free, what features must be paid for, and where exactly to implement growth loops in the user journey is challenging.
Additionally, the more expensive your solution is, the harder it is to achieve product-led growth. Any solution that costs +$1000 would most probably require the involvement of a human to educate and nurture prospective users.
Fortunately, the SaaS market is big enough, and there is room for both approaches, sales and/or product-driven growth. For example, consider the following graph, illustrating the growth of software as a service during the past several years:
Given the massive size of the market, there is plenty of space for companies that leverage product-led growth and solutions relying on a large salesforce.
Although software is eating the world, slowly impacting every aspect of the physical world, sales is here to stay and remains the number one acquisition channel for enterprise solutions.
Opportunities in sales
Ask any founder about one thing they want to improve about their business, irrespective of industry, size, and geography, and they will answer more revenues.
Recruitment and marketplaces
Although the growth of revenues is top of mind for founders, surprisingly few solutions help address that. The most common way to increase revenues is by building a sales team, which often happens through solutions like LinkedIn or other job portals.
The downside of building an in-house sales team is that recruitment is hard, and most job portals are too generic, trying to cater to all possible industries.
Let’s take the example of LinkedIn being the world’s leading professional network.
While you can easily find prospective candidates for your new sales team on LinkedIn, the experience across all job verticals is essentially identical. Meaning, you can find people, but would you be able to find the right people for your product and team?
“We are already beginning to see innovation bubbling up with newcos using this vertical play in the jobs platform space. From engineering (Hired) to blue collar (Merlin, Wonolo) to oil services (Workrise) to hospitality (Pared, Instawork, Qwick) to bookkeeping (Paro), each of these new companies are building a user experience and business model that works better—for both candidates and employers—than the generic LinkedIn model. In other words, the great unbundling of LinkedIn may have already begun.”
Platforms vs Verticals and the Next Great Unbundling by Jeff Jordan and D'Arcy Coolican
Hence why I expect that a lot of new startups will attack LinkedIn the same way Craiglist was unbundled throughout the past decade, there are opportunities to focus on one vertical, then solve the pain point 10x better.
Sometimes such unbundling can be so powerful that the newly formed startups can get a lot bigger than the vertical they disrupted and even bigger than the platform as a whole. If you solve the problem better, you can compete for a much larger share of the vertical, not only against digital but also traditional players.
The first attempts in the BD space include marketplaces like Overpass and Crewscale. Such models consolidate and vet qualified sales reps, similar to how Toptal disrupted recruitment offering the top 3% tech talent or how Lemon is helping founders find affordable developers.
Last but not least, we have not seen much innovation in the outsourced sales space. The current market size is about $2.7B and is expected to grow to $3.1B in several years. That’s a considerable size, and it presents opportunities for productizing sales bundles and launching B2B marketplaces to consolidate supply and improve NPS scores. So far, the efforts have been predominantly in the B2C space, where marketplaces like Overpass or UpWork give you access to SDRs, but I have not stumbled on B2B marketplaces yet.
Niche communities
During the past few decades, we experienced a boom in tech communities. Early on, there was Reddit and Hacker news; today, we have hundreds (if not thousands) of smaller, niche groups built by like-minded people across marketing, no-code, starting a company, startup investment, education, etc.
As the number of communities is growing, many have pivoted from free to paid because a) we have the necessary tools to enable easy monetization, e.g., Pico, Patreon, Buy me a coffee, etc. and b) free communities tend to be noisy with a gradual but steady decrease in value.
Between 2020 and 2021, I spent +$5000 on professional online communities. These have been among the best investments I have made. Communities allow you to expand your network by meeting high-caliber people in an environment designed for trust, unlock new customer acquisition channels, and discover serendipitous opportunities.
A few examples of great paid communities include:
eCommerceFuel is $99 per month. Members must own a 7-figure eCommerce business and have “deep operational experience.”
DemandCurve is $1500 for lifetime membership + access to their content.
OnDeck starts at $2500 for lifetime membership + access to cohort-based education.
Everything Marketplaces is $49 per month. Members must “actually operate & know marketplaces.”
Makerpad is $600 for a lifetime membership. Membership is invite-only, and a max of 30 invites are sent each Friday.
Yet, I cannot think of many well-organized communities focused on business development and sales. Perhaps the only one that comes to mind is Pavillion (previously Revenue Collective). Pavillion raised $25M earlier this year because of their stellar growth surpassing 5000 members worldwide. The costs of entering Pavillion are 80 to 120 USD / month depending on where you are based, which comes with access to the world’s largest community of sales and operations professionals, educational content, support services for people between jobs, and a lot of events.
But there are not many other similar groups even though the market is definitely big enough. So I would expect more niche communities to appear in the space, offering a mix of education and networking for the world’s best operators. There are opportunities for cohort-based programs too, where you bring the top members of each community to design curriculums around the latest best practices and tactics in business development.
To summarize
In my opinion, the most obvious opportunities in sales cover:
First, unbundling LinkedIn to provide a more tailored experience of identifying and engaging with relevant sales development reps or account executives. Most likely, that will happen through more B2C marketplaces like Toptal and Overpass.
B2B marketplaces where you can engage with outsourced sales agencies. In turn, that offers many opportunities for productizing the service to maintain high margins.
Niche communities and cohort-based programs where you can bring the world's best sales operators to connect and learn from each other.
In this article, I use the terms sales and business development interchangeably, even though some people may argue how they are quite different.
Sources: