I have been reviewing a lot of advice about sales and B2B tech startups. The one thing that strikes me is that much of the advice seems either too high-level or is inappropriate. By inappropriate, I mean I see advice that simply does not apply for early-stage startups. Even if the authors provide caveats, it is easy to miss the nuance of when said advice should be applied.
Startups grow in very distinct phases. At first, you have an idea, but no product or customers. Then, you have a pilot or two with alpha customers using a product that is very half-baked. Later on, you have a few more customers that are paying for the more finished product. If all should go well, you are probably on your way to scaling up the startup into an actual sustainable business. At each of these stages, different rules apply when it comes to one’s sales strategy.
Each of these phases in the life of a startup comes with different rules and different problems. This is especially true for one’s approach to sales. For example, many founders make the mistake of hiring a VP of Sales when there is barely a product to speak of. Startups are much better off waiting until it is time to scale out the company and they need to build a complete sales team.
So before we go any further with the Sales for Startups Series, let’s understand that there are distinct growth stages for B2B startups. Therefore, when I provide advice, it will be in the context of one (or more) of the stages listed below. I refer to them as Stage 1, 10, 100 and 1000, because each stage is immensely greater in scope than the previous one in terms of sales growth. In other words, the magnitude of customers a startup is working with dramatically increases with each stage.
- Stage 1. This is the classic pre-product stage, or customer discovery stage, to use Lean Startup parlance. There is probably only one “customer” at this stage, which is a situation more akin to a consulting gig to build a specific customer solution. The purpose is to create a working, generic prototype of the solution and to gauge market interest in this minimal product.
- Stage 10. This is the product-market fit stage, or customer validation stage, where you now have a handful of customers testing the product who provide clarification on the validity of the solution and the potential of the market. In practice, this generally ends up being 3-5 customers as resources are too tight to handle more.
- Stage 100. This is the pre-scale stage, or customer development stage. You have a proven product and understand the business model. The goal here is to build a base of loyal, passionate and successful customers to establish credibility while preparing the startup for full-on growth. Depending on the product, this growth could be less than 10 customers for complex products, or up to a few hundred for self-serve SaaS apps.
- Stage 1000. This is the scaling stage where the startup is a known market entity with established customers, has a solid business model and is focused on accelerating growth. For enterprise tech startups, this is the stage that defines the true market challengers, and when the startup evolves from a scrappy startup to an actual business that has a clear understanding of how to acquire customers and the cost of doing so.
With these stages in mind, it is clear that a startup’s sales strategy should be radically different from stage to stage. Applying scaling tactics at the pre-product stage would be as ridiculous and counter-productive as doing inefficient product-fit tactics at the scaling stage. That is especially true when it comes to building a sales process and organization. Just as product development is an iterative and layered approach, a similar approach is recommended in developing the sales team. Therefore, skipping ahead is not a wise decision.
Whenever you read something about sales and startups, be mindful of how the tactics mentioned can be utilized given the stages explained above. As we proceed with our Sales for Startups Series, I will also make sure to note the appropriate stage(s) where my advice would be applicable.
This article was originally published on Strong Opinions, a blog by Birch Ventures for the NYC tech startup community.