Early-stage Founders: Sales Will Solve Almost All of Your problems
How to prioritize sales over raising money from investors, especially when cash is running out.
You’ve put countless hours into building a product you’re proud of and that you’re sure will meet consumer demand. Time to start knocking on investors’ doors, right?
Not so fast.
A big mistake startup founders often make in the early stage of their company is prioritizing fundraising over selling to customers. From what I’ve seen, they’re either too focused on product or raising money and don’t invest enough time in building a customer base.
You’re probably wondering, “What if you’re running out of money fast, and you already have a couple of interested investors? Wouldn’t it be easier to close that deal and put sales on the back-burner?”
Easy? Maybe. But it might not be the smartest decision.
Even if you’re close to getting a yes from a VC (that’s with a term sheet), it isn’t a quick fix. Getting an offer is just step one. And then there’s due diligence and lawyers, and it drags on for months. Trust me, I’ve been through it.
If you’re running out of cash, going after sales is a better solution to your problem. It’ll extend your runway, which means maybe you won’t even need to try to go out and raise a million dollars from VCs.
When Proposify was getting off the ground, my co-founder Kevin Springer and I had business expenses and our own personal expenses to consider, but there was no money coming in the door.
We benefited from having each other because Kevin could focus on getting cash by raising money, while I worked on building up traffic and signups, and performing customer research for the product. Raising money was important to us, but so was putting in the groundwork to get people actually using our product.
Nothing to be afraid of
Some new founders can be a bit delusional, thinking that the order of operation is: raise money, get cash in the door, then hire salespeople. They’re doing whatever they can to avoid closing that deal themselves. But, usually, companies are more successful when the founder is a competent (or great) salesperson themselves.
While selling doesn’t come naturally to all founders, it is a skill that can be learned, like playing an instrument or learning to code. You might have a strong aptitude for it, but even somebody who sucks at sales can get good enough to close a couple of deals and keep the company afloat.
Becoming a salesperson
It’s imperative that the founder of a company learns to sell. After all, in the early days, you’re all you’ve got. You have to sell employees, investors, and customers on your vision for the company and why they should align themselves with you.
With these tips you’ll be well on your way to interacting with leads and closing deals:
Digging for leads
When you’re sourcing leads, it’s important to consider what size customer you’re going after.
If you’re selling a low-priced product to SMBs, you can use inbound and paid marketing with self-serve sign-up (that’s what Proposify initially did).
If you’re selling a high-priced, five-six-seven-figure, customized solution to enterprise clients, then high-touch sales is the only way. You need to cold-call prospects, book meetings, do demos, and follow-up.
Buying email lists often doesn’t work. A better solution is getting into LinkedIn Sales Navigator and creating a list of targets based on job title, company size, and location. Free and paid tools make it easy to find email addresses and phone numbers.
I once heard Michael Litt, CEO of Vidyard, talking about how in the early days he built a scraper that would scour the web and show websites that used videos on the home page. He knew those were people that could use his product, so he used that information to build his first leads list. Get creative when sourcing leads, but don’t waste time overthinking it. Remember: the key is picking up the phone.
You should be reaching out to new leads daily. Cold-calling is scary as hell, but it’s far more effective than emailing. You should do a combination of both.
My business partner Kevin is a seasoned sales guy, and his strategy is leaving a voicemail with a basic pitch, telling them he’ll send an email, then following up with an email telling the prospect he left a voicemail. From there, you should create a cadence follow-up until you get a firm yes or no. For more tips, read up on the best cold email I ever received and how to steal the approach.
Nail the demo
Get leads on a Zoom call and keep your demo brief. Focus on asking the right questions and learning about their biggest pain points. Use what they tell you to reframe your product demo around alleviating their pain. People don’t buy vitamins, they buy painkillers.
Do NOT review every feature of your product and don’t train them on how to use them. Get them to that, ‘Holy Shit, I need that!’ moment as soon as possible and leave them wanting more.
Win over all parties
In mid-market and enterprise sales, be prepared to tackle multi-threaded deals; deals where you have to sell to multiple points of contact like procurement, IT and legal, which require you to tailor your pitch to each audience.
The IT director may not care about what you promised the CMO; she cares about your product’s security, compatibility, and compliance. Legal cares about what’s in your service level agreement. Get good at understanding each of these personas so you don’t hit roadblocks far into the sales cycle. Keep asking your main contact what else is required to make this a done deal.
There’s a secret weapon to use on a lead who’s been kicking the tires a little too long: the time constraint close, which is giving leads a bundled offer and a date they have to accept it by. When you’re early stage, you can offer a lot of free service to get deals closed and money in the bank. Don’t worry about if it will scale. Using a time constraint makes you look powerful, which is what you want.
Here’s an example, “Since our CS team will require about four weeks to get you up and running I want to make sure we can get you into our pipeline. If you can get me the signed agreement and deposit by this Wednesday we can guarantee to get it fully implemented before your AGM (or whatever important deadline they have). Otherwise there will be a few others in line and it will be a month or so after that.”
This closing technique assumes the customer wants your solution and has just been stalling on making a decision. A statement like this does two things; it puts you in control of the sale, thus increasing your leverage in the power dynamic, and it puts pressure on the lead to make a decision.
As hard as it is when you’re three weeks away from running out of cash, don’t come across as desperate. I once talked to a founder who said he was trying to use a 60% discount to get leads to sign. But that signals to the customer that the product either isn’t valuable or that they were being overcharged before. Most B2B customers don’t care as much about price (it’s not coming out of their personal bank account) as they do things like ease of implementation, ROI, and how it will make them look to their boss.
Stay in the driver’s seat
You have to take control of the sale. So many founders get flustered when they can’t close deals, which makes them think they’ll never make any sales and that their only option is raising money from VCs. Keeping a level head and being persistent will help you through it. Always be prepared to walk away from a sale—simply having that mindset paradoxically helps you close more deals.
Even if your number one goal is to raise money, you should still focus on getting sales because having revenue will give you leverage with investors.
If you have zero dollars in sales and you’re running out of money in a month, it’s going to be almost impossible to close deals with any investor because they won’t want to put money into something that needs cash just to survive. Investors are looking for companies that have product market fit, a customer base, and are just looking to scale. They’re not looking to resurrect a dead horse.
Your sales should be your first priority. Everything else, like administrative, operational, and financial goals, should be pebbles that float around the big rock of sales.
A note to technical founders
Technically-minded founders can be the most resistant to selling. Just getting them to talk to people about the product can be a challenge, let alone getting them out of their shell and trying to close a $30K deal.
A lot of technical founders have a cool piece of tech that they’re trying to retrofit it into a problem, and when they try to drum up interest in it, they run into challenges. A common cause for roadblocks is not making customer development a part of their everyday schedule.
You must get into the rhythm of booking calls with customers every week to learn what they need. That’s really how you get your first 10 customers.
As Steve Jobs put it:
“You’ve got to start with the customer’s needs and work backwards. You can’t start with the product and try to figure out where you’re going to try to sell it. I’ve made this mistake probably more than anybody else in this room. And I’ve got the scar tissue to prove it.”
Putting sales off to raise money is like putting the cart before the horse and it will ultimately set you up for failure.
Sales are the foundation on which you build a company. Get some customers in, make sure you’re building the right thing for the right market and, start growing through sales. And only then would I recommend you go out and start talking to investors because at that point you can prove your product has legs.
You need to do the hard work now of carving the path so that eventually you can hire a few reps and even a VP of sales to take over. But until then, it’s on you to close.