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Enterprise Sales | Startup School

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Watch full video here: https://www.youtube.com/watch?v=0fKYVl12VTA

TL;DR

Software startups can transform their growth by successfully selling to large companies. Founders should actively participate in the sales process, even before their product is fully refined.

Speaker Info

  • Pete Kuhman: Group Partner, Y Combinator

Main Ideas

  • Closing enterprise sales can significantly boost a startup's growth.
  • Founders' involvement in sales is crucial, especially before achieving product-market fit.
  • The sales process consists of several stages: prospecting, outreach, qualification, pricing, closing, and implementation.
  • Sales skills can be learned, and technical founders can excel in this area.
  • Pricing strategies should be flexible and experimental to find the right market fit.

Jump Ahead

Detailed Analysis

Enterprise Sales for Software Startups

Overview: Closing enterprise customers can be a game-changer for software startups. Founders should dive into the sales process, especially before hitting that elusive product-market fit. The journey involves navigating through the sales funnel stages: prospecting, outreach, qualification, pricing, closing, and implementation. Along the way, you'll pick up valuable tactical advice and learn from real-world experiences.

Founders should be directly involved in sales before product-market fit.

  • Pete Kuhman believes that founders possess the vision and credibility essential for successfully driving early sales efforts.
  • Hiring salespeople early might seem like a good way to let founders concentrate on product development, but it can actually create a disconnect with customer needs.

Pricing should be flexible and experimental.

  • Optimizely kicked off its pricing strategy by quoting higher prices to gauge customer demand and willingness to pay.
  • High prices might scare off some customers, but they also attract those who are genuinely interested.

Implications

  • If more technical founders start getting into sales, we might see a change in how startups go about acquiring customers and developing their products.

Key Points

  • Sales is a learnable skill, and founders, especially technical ones, can excel in it.: Founders can significantly enhance their sales efforts by leveraging their expertise and passion for their product. By viewing sales as a problem-solving activity rather than a mere transaction, they can effectively communicate the value of their solution. This approach not only empowers them to take charge of the sales process but also allows them to connect with potential customers on a deeper level, ultimately driving success.
  • The sales process before product-market fit is entrepreneurial and requires founders' involvement.: For startups aiming for product-market fit, founder involvement in sales is crucial. This direct engagement allows founders to align the product with customer needs and iterate based on feedback, ensuring the product evolves in a way that resonates with the market.
  • Prospecting involves identifying potential customers and creating a sales hypothesis.: Understanding the market and forming hypotheses about potential customers is crucial in the prospecting stage. This approach helps identify those who will benefit most from the product, ensuring that sales efforts are targeted effectively for maximum impact.

    "My name is Pete Kuhman. I'm a group partner at YC and a YC alum. I was co founder and cto of optimizely in the winter 2010 batch. In this talk, I'm going to walk step by step through the process of closing your first enterprise customers. I'm going to do that by focusing on successive steps in the sales funnel, prospecting, outreach, qualification, pricing, closing and implementation. I'll do my best to include lots of tactical advice and counterintuitive lessons I picked up while I was learning how to sell at optimizely. I'm going to focus on enterprise sales for software startups. But this talk should still be broadly useful to any founder getting started with sales regardless of the size of your customers or what you're selling. Why am I giving this talk? Well, first, I know there's demand for this. Sales is the number one concern during the batch for most of the founders that I work with at YC. Second, I know from experience that sales is a learnable skill. My co founder Dan and I both had technical backgrounds. We knew how to build a product, but we didn't know how to get people to use it. We figured it out through trial and error, and that's the first big lesson I want to impart today. If you're the founder of an early stage startup and you're building a product that you're hoping other businesses will buy, you are capable of selling it. That's the good news. The bad news is that you're probably the only person capable of selling your product. That is, if you aren't able to sell your product yourself at first, chances are you're not going to be able to hire somebody else to do it for you. Now, if you're anything like we were, you're probably thinking there are lots of talented salespeople out there. Wouldn't it be faster to hire one of them than try to do it ourselves? After all, that's what you'd probably do with any other role, like designers or lawyers or accountants. The problem is that sales before you find product market fit is very different from sales after you find product market fit. Sales pre PMF is fundamentally entrepreneurial. It requires vision and credibility with customers, and lots of experimentation and a tight feedback loop with the people building the product. This is a role for founders. So does that mean if you're a team of technical founders building a product, you should go find a business co founder to do sales? Well, you probably don't need a business co founder to sell either. I've worked with many technical founders who turned out to be great at selling, in some cases very much to their surprise. So why is that? Well, if you're a technical founder building a product, you have several advantages that will give you a big leg up in selling. First, you're an expert both in the problem you're solving and the product you're building. And second, you have conviction. You sincerely believe that your product will solve your customer's problem. Expertise and conviction are surprisingly important in sales. This is especially surprising to people who mistakenly think that selling is a dark art full of psychological tricks. Sales isn't about tricking people, it's fundamentally about helping people solve their problems, and engineers are great at doing that. Anyway, now that I've hopefully convinced you that you're capable of selling your product, let's talk about how to do that. Like I said, we're going to go through the step in a typical sales funnel together. Let's start with prospecting. Prospecting means finding potential customers. The output of this step is a list of companies you think might need your product and the specific humans at those companies you think might buy it. There are lots of tools you can use for prospecting, but before you start, you need a hypothesis. A sales hypothesis goes something like customer x has problem Y and our product will help them solve it. A good hypothesis makes prospecting easy by clarifying who you should be talking to. For example, at optimizely, our initial hypothesis was something like this. Marketers at small and medium tech media and e commerce companies want to run a b tests on their websites, but they can't because off the shelf experimentation tools require users to write code." - Pete Kuhman

  • Outreach should focus on generating inbound demand and finding warm introductions.: Warm introductions and personalized outreach significantly boost engagement success rates. By building trust and credibility, these methods prove to be more effective than cold calls, leading to higher conversion rates.

    "Now that you have a list of leads that is specific humans that are likely to buy at the companies you're selling to, you'll need to get their attention. This step is called outreach. The goal of outreach is usually to schedule a meeting with your prospect. Most founders think of cold outreach as the primary mechanism for doing this, but the easiest way to get a meeting with a prospect is to get them to reach out to you. Even if you're planning on using a sales led approach, you should still do everything you can to generate inbound demand. Launch early and often. Create technical content like videos and blog posts that prospects can find while searching for a solution to their problem. Build self serve demos that people can share. Find online forums where your customers hang out and establish yourself as an expert by answering questions. There's no one way to do this, but the better you get at grabbing your customers attention and getting them to reach out to you, the more efficient your sales process will be. On that note, if your customers all hang out at industry conferences, you should be there too. Find a way to get a list of attendees ahead of time and set up lots of meetings in advance. Once you've identified a specific prospect you want to talk to, start by trying to find a warm introduction. If you can, look on LinkedIn for shared connections and ask for an intro. Sending cold emails is usually the least efficient way of getting prospects attention, but it can still be effective if you approach it the right way. Start by writing each email by hand. Make your emails short and to the point, and make the ask clear. You should also make it clear why you're reaching out to each recipient. Specifically, humans have built in spam filters, and if your email looks like it was sent to thousands of people, it's going to get deleted. On this last point, there's a handy rule of thumb to keep in mind for cold emails. Only send emails that you yourself would be excited to read. If you wouldn't be excited to get the email you're about to send, your prospect probably won't either. Before we move on, I want to spend some time talking about a particular anti pattern I see with a lot of YC founders. Many founders start by talking to anyone who will take their call, and the problem with this approach is that it selects for the people who are easiest to talk to, not the people who will be great customers. So if you're not disciplined about it, you'll end up wasting all your time chasing bad customers that are easy to talk to. I see why C founders make this mistake all the time." - Pete Kuhman

  • Pricing is experimental and should be approached with flexibility and learning in mind.: Startups can enhance their success by adopting flexible pricing strategies. By adjusting prices based on customer feedback and market conditions, they not only validate demand but also strike a balance between delivering customer value and generating revenue.