Your Startup Origin Story: Sales is Not the Villain!

There’s a common storyline for newly minted entrepreneurs…it goes like this: I have a product… a widget…a service. It works…I think it works pretty well. And so now I’m going to hire a bunch of sales folks…probably a VP of Sales and he’s going to do the hiring…and then we’re going to launch and then we’re going to get working and execute on that hockey stick picture I have in my investment deck. Oh, and we’re also going to do the market launch, some PR about our funding, and spend a few bucks updating the website.

Now every superhero has their origin story…and in this episode, I’m going to ask Chris to dive in and talk about Startup Origin Stories: Is Sales the villain if something goes awry? Is sales the hero? Where’s the kryptonite in today’s VC funded startups and businesses?

Chris Beall (00:00):

Welcome to another session with the Market Dominance Guys, a program exploring all the high stakes speed bumps and off-ramps of driving to the top of your market. It all starts, right now.

Corey Frank (01:00):

So I’ve been thinking about a conversation, Chris and I have had these last few weeks, quite a lot. There’s a common storyline it seems, for newly minted entrepreneurs or even current business owners. And it goes like this. I have a product, a widget, a service, and it works. I think it works pretty well. And so now I’m going to hire a bunch of sales folks, probably a VP of sales, and he’s going to do the hiring and then we’re going to launch, and then we’re going to get working and execute on that hockey stick picture I have on the financial slide in my investment deck. Oh, and we’re also going to do the market launch, maybe some PR about our funding and then spend a few bucks updating the website. Now every superhero has their origin story. And in this episode, I’m going to ask you Chris, to dive in and talk about startup origin stories. Is sales the villain if something goes awry? Is sales the hero? And where’s the kryptonite in today’s VC-funded startups and businesses?

Chris Beall (02:11):

Take our beliefs as an entrepreneur. The belief that we have inside that we can solve a problem that’s out there in the world. We need to turn that belief into two things. Thing number one is a message that is designed to cause somebody to take a meeting in order to learn more about this great insight that we have. And the number two thing is a list of people that we believe have a problem in their day that frustrates them. That feels wasteful to them. That keeps them from going where they want to go. We need to make a list of those people. And then we have just a very simple next step in the recipe, which is hold conversations with those people to set appointments, to have this meeting, that what we’ll call this discovery meeting and the number one way that we know we should stop.

Stop moving forward. And pivot is when we cannot get that meeting flow rate or that meeting ratio conversation and meeting ratio above 5%. until we do that, we don’t really know enough to hold those discovery meetings. We hold them anyway, but we’re holding them without knowing how to get them. There’s no point in having something downstream, that’s very desirable that we don’t know how to get. We need to be able to get those discovery meetings and we need to get them at a known cost and a known flow rate. Costs because money’s important flow rate because time is important. We run out of money. We run out of market opportunity if we don’t move fast. So what are those flow rates? The ratio is turns out a 5% conversations turning into meetings is one of them. It turns out another one is about 20 conversations per day.

That’s a 100 a week. That means each week we exhaust statistically the information that we can get for a market of 10,000. 10,000 square root of 10,000 is 100. We’ve sampled the 10,000 sufficiently after 100 conversations.

Corey Frank (04:07):

After a week.

Chris Beall (04:08):

After a week, if 100 conversations in a week lead us to five meetings, then we know we’re on a path where we can go and amp that up and say, let’s hold those five meetings in the following week or whenever the next week or two. And let’s go get another 100. At the end of the first month, we have 400 [crosstalk 00:04:25]. The problem is if it takes you 50 days to do a cycle instead of five days to do a cycle. And by the time you’ve done the average number of cycles, unless you just get lucky, right? Luck is wonderful. You get lucky, you get a hit on the first one. It’s 5%. You hold those discovery meetings. They say, “Oh my goodness. I just can’t believe that we’re talking about this. I’d buy that. I’d buy that for twice as much as you’re talking about.” If that happens, great, boom done. Don’t keep doing this process. Don’t tune it any further. Make that list. You got the list, go sell.

So make the product, fill it in with services. Do all that stuff. Unfortunately, normally it’s five, six pivots to get there. Why? Because there were subtleties that you missed when you formulate the problem in your head and those subtleties come back as feedback and discover. So now you need to change the message, but you don’t want to change it reactively. You want to change it deliberate. So how do we do that? We hold the discovery meeting. We take the feedback from the discovery meeting. we say, “Oh, that’s interesting.” That’s how, if I put this in the message, this word, it’s normally one word, maybe two, then maybe I get a higher flow rate of meetings. You put that word in the message. You do another five days, you have another 100 conversations. You see what happens? Do I have seven meetings? Do I have five minutes? Do I have two meetings?

Whatever it happens to me at some point you’re in that process, you’ve done three, four or five pivots. Five pivots will cost you a month and a week at 20 conversations a day. Five pivots at the usual rate of conversations will take you a year. So the differences between a year and a month and a week. This the key to everything. Is to get the cycle time to pivoting on the product, which is at that point, representatives nothing more than the message. And the message is nothing more than eight, 10, 16 words, right? Our message is this. And it took a little while to get there. I believe we’ve discovered a breakthrough that completely eliminates the waste and the frustration. Keeps your best sales reps from being effective on the phone or even using the phone at all.

That’s a pretty simple message. It follows a bunch of rules that might not be obvious to folks who don’t make messages for a living. It doesn’t mention a product category because if you mentioned a product category, they won’t take the meeting. They’ll just say, “We’re set.” There’s a whole bunch of things you’re not doing in that message. That’s pretty simple.

Corey Frank (07:11):

And this is a common theme for new sales folks. I have a product, I have a widget, I have a service and I’m going to hire a bunch of sales folks. And we’re going to launch, we’re going to do the market launch, PR and product and new website. And then we just need the folks to hit the phone and sell a bunch of stuff. The last mile, every, all the hard stuff is done at this point. Right?

Chris Beall (07:37):

Absolutely.

Corey Frank (07:38):

And we’ll just hire a bunch of inside sales reps, just hire a bunch of field reps, and then this product should sell itself. I’m an inside rep. And I pick up the phone and I usually have a script or a screenplay that my sales manager got from their sales VP who went to a bunch of workshops, or this is how they sold for the previous 15, 20 years. And lo and behold, when my results don’t show it in the first 30, 60, 90 days. It’s because I’m not working hard enough, or because I don’t have enough tools in my tech stack, because no one’s picking up the phone. So I think when we look at the basic building blocks, step one, chapter one, verse one as a sales professional with an already established or assumed to be established product that is good enough in a marketplace that speaks to a problem that should be fixed or ameliorated in the marketplace.

What are some of the common missteps that I would have as a sales rep that I don’t even know I’m about to jump into. I’m assuming it’s just the quality of the script or quality of the lead. If only people would pick up the phone and then once they do pick up the phone, these are the ratios that I’m stuck with. And I guess it truly is a quote-unquote numbers game at this point. So what is the known or the unknown that I’m about to step into as a sales rep, as a sales leader, when I spring forth all these new sales, glistening sales phones, and sales stack galore, et cetera, when I’m just about to hit the starter’s pistol?

Chris Beall (09:26):

Wow, that’s a heck of a question. I actually think the setup turns out to be the big issue. And then the setup being, when you go and hire a bunch of salespeople, I’m going to look at it, not from the sales person’s perspective, but from the perspective of what I’ll call sort of the entrepreneur investor, somebody who’s got skin in the game on this thing. And if the product launch, the go to market fails, they’ve got a serious problem. Problem is that they’re going to run out of money and they might get another shot. Somebody else might take the market, whatever it happens to be. So I think the big problem is that they’ve hired salespeople before they actually know how to sell the product. So the biggest mistake I see people make is thinking that hiring a sales leader and having that person hire salespeople is the next step after you have an offering and you’ve described the offering in some marketing communications sense, usually you describe it first to investors.

Even if it’s not institutional investors, somebody has got to foot the bill for getting started with any new product. That’s true of products that are launched as companies or products that are launched out of companies. In both cases, you have somebody who’s saying, “Okay, I’ll spend some money to take this state of the world out there from whatever it is right now to, hey, it’s better because we’re solving this problem.” And then we’ll make a bunch of money doing that. And isn’t that wonderful. That’s why we’ll put the money into it. So somebody thinks there’s a return and they take their imagination, the investor’s imagination, and I’ll call it the product proponent or the product champion, the entrepreneurs imagination about what can happen.

And they flesh it out through a whole bunch of difficult, expensive activities, including building the product, which I think is the most bizarre of those activities, given how expensive it is to build something. And this is very true in software, but it’s true in other fields too. It’s even true in services where you build out, hey, this is what we’re going to do. Or you build out the software itself. Here’s my minimum viable product, or here’s my one data or here’s my beta or whatever it is. And they haven’t actually gone out and sold the least expensive version of the product through a series of conversations that give clean feedback as to whether anybody cares enough to even take a meeting. And when you work at logically, you sell a product until somebody will take a meet. So taking a meeting is the first signal that the product has a chance in the marketplace.

And if you flip it around and say, “Okay, so what’s the strongest signal that you should not launch your product?” It’s if you take a message out that says, here’s the problem I think I could solve for you. And no one will even take a meeting. So why would you build a product that you can’t get a meeting for? Therefore you should go get the meetings first. The number one mistake that people make is they don’t go and get the meetings first before they build the product. It’s a cart before the horse problem that is truly disastrous because the cart leads the horse off a cliff into that thing, that Jeffrey Moore calls the chasm. And then you go down into the chasm where there’s no revenue and you spend your time after all of this investment is invested in the building of the thing, you’ve invested in the website.

You’ve invested the marcomm, you’ve invested in talking to each other so much that you should have stopped years ago. You’ve invested in your imagination. You’ve invested in maybe your marriage not being quite so good anymore. You’ve invested in all of this stuff. And now you’re going to go find out if your investment has a shot. Nine out of 10 times as originally formulated. And I’m being very, very, very, very generous here. It doesn’t have a shot.

Corey Frank (13:15):

And at that point, the companies go through multiple pivots. They try to re-engage and re-establish. So at what point is it 50% product viability and you start selling? When did this convergence, this meeting where the product development and the sales meet? It’s not at the five-yard line where the product is 95% done, 50-yard line, where the product is still malleable enough to adjust. When is that kind of that magic minute where, okay, concurrently start the sales reps as we are going to concurrently start building the foundation of the product?

Chris Beall (13:54):

I believe the way it should work is this. The safe way to take products to market is you conceptualize the product. You go, and you talk to some people who have the problem. If you are not a subject matter expert, what, by the way, in the problem that’s being solved. If you don’t have deep roots in that problem, you’re going to have serious problems with your product anyway. Because products don’t solve parts of problems, they solve whole problems. And the whole problem includes a bunch of subtleties that you don’t understand unless you pin on the other side. So when somebody comes to me and says, “Hey, Hey, Hey, I’m going to do this incredible product.” And it’s in a domain they know nothing about, I know of one, somebody who was very irritated with the fact that their beloved grandparent was treated poorly by the medical system, by our healthcare system, going through very old age and ultimately death.

And so he decided to start a company to solve part of that problem. And it was the problem around prescriptions and treatments. And was the price fair. He didn’t really have an insider’s knowledge of that. I don’t know how you would gain that except 20 years in the healthcare payments and insurance industry, but it was very well intentioned. And yet it was like watching somebody try to kind of climb Everest barefoot. I mean, there are those of us who will trot up to Everest barefoot, but you’re not going to get very far up on the mountain barefoot. And that was, the good intentions meant nothing. So if you are on a product domain, if you’re not a domain expert in that product area, you probably shouldn’t be trying this anyway. If you are, you probably have a pretty good idea of message.

And if you can take that message and weaponize that so that you can actually reliably get a calibrated response out of the message itself, that will tell you whether you even should embark on building the product itself. So in a sense it’s, while is still in the air at kickoff, the question is, can you feel the kickoff or is it going to bounce around down there and be recovered by the other team who’s not going to punch it in? The real question is, can you catch the damn ball? And you don’t know until you give it a try. So here’s my recommendation of how to do this. This is Chris Beall’s extremely cheap way of reliably and safely taking products to market with zero investment. And it works like this, make up a message using this technique. So imagine the person that will care about this problem the most. Call it your ideal customer.

Imagine it’s Friday, it’s 7:00 PM. You walk into their favorite bar. There at the third barstool from the left, there is your imaginary perfect, perfect customer. They got two empty beer glasses in front of them. They got one of them that’s a third of the way drunk down. And they don’t look completely happy. Even from the back. The body language says, maybe not a great week, maybe in fact, a pretty bad week. So you just saunter in, you put on your empathy face, you sit down in the barstool to their left, you turn to the right. And you say, “Hey, how was your day?” And this person’s kind of look at you, your ideal customer’s going to look at you and say, “You have no idea.” And then they’re going to tell you about their day. It turns out that’s who you’re ultimately selling to.

You may have a product that solves a problem for a company, but you never sell to a company you’ll only sell to this person. And the only thing you’re going to sell to this person is a meeting to learn more about why you think that you can solve a problem that’s in that, how was your day litany of complaints? So they’re going to lay out what’s their day all about. And you come up with a simple message and your message goes like this. I believe we’ve discovered a breakthrough that completely eliminates, and you take the worst part of their day. That’s there every day. That’s the source of their frustration, where they don’t have the time, the resources, or the support to do their job as well as they think they should do it. And you put that in that message. And then you weaponize that by putting an opener in front of it, that causes that person should you get them on the phone to stay on and listen to the next 27 seconds.

And you put a closer on it, you take it out and you see if you can get 5% appointments. The threshold for go-to-market is 5% appointment setting with the message that represents your product. The reason it’s 5% is this. When you look at how products and solutions to problems work on the buy side, they tend to cycle about once every three years. That is if I just bought a solution or implemented a solution, I’m three years away from my next consideration of a solution for the same problem. So if everyone in the market is trying to solve a problem, and by the way, if they’re not, you’re doing it, right? If your product isn’t solving a problem, that’s trying to be solved by a lot of people in different ways. You’re out of your mind. You can’t take that into the market.

So now I’m the first guy to recognize this problem is very odd, right? That means you’re going to have a lot of conversations. Would you say, “Do you know that you have this problem?” That is not a good conversation to have. You have to have a conversation that says, “When we were in the bar the other day, and you said you have no idea.” The third thing you mentioned is that whatever, it’s somebody who runs the lab for testing wine. The third thing you said is one more time, the owner of the winery walked in and dumped 400 tests on me. And he knows that the lab has only got a capacity of 200 a day and they had to be done by the end of the day, because the stuff’s going to ship. I hate that. Why don’t I get more lead time? Okay.

So say you have a product that without any changes, other than sticking it in his wine testing lab will increase his capacity by from 200 to 600, by reducing the cycle time of an individual test from five minutes to one minute, and it eliminates the need for some precursor chemicals or whatever, that’s your imagined product. Okay. So say I believe we’ve discovered a breakthrough that completely eliminates the waste and the frustration that comes from having a sample set of 400 dumped on you when you only have capacity for 200 and you got to get it done today, and you can’t make any mistakes.

And the reason I reached out to you is to get 15 minutes on your calendar to share that breakthrough with you. Do you happen to have your calendar available? That is a weaponized message that will get those who are currently kind of interested to pay attention. Well, concurrently kind of interested if they’re interested once a quarter and they’re replacing their solution once every three years, there are 12 quarters. So only 8.5% of the market is even available to you right now. So if you go above half of that 5%, you will dominate the market. If you can set appointments with half the available market, which is 8.5% of the total market, and you can do that right now, you can terminate the market.

Corey Frank (21:17):

The 5%, how do I know when I’m reaching the 5% or how do I know how to compile my total addressable market, where I reached this magical threshold of 5%? The metrics that are involved is one thing, but it sounds like from your perspective that the pain messaging has to resonate with a certain subset of the market to even be viable.

Chris Beall (21:49):

You have a fundamental problem. This is like the hardest problem in science in general. Which is that you have multiple variables in play and each one has its own characteristic yield. So you have one variable, which is who are you trying to talk to? So don’t worry about how hard they are to reach, this isn’t 5% of those that are in the list. It’s 5% of those you talked to. So now there’s an efficiency question around the cost of talking to them all, which we can address separately. But this is really, if I have a conversation with somebody who is hypothetically that person in the bar, that person, my ideal customer, which is an entity in my imagination. So I try to take my imagination and turn it into a list of people. And the beauty is, by the way, it’s a list of human beings, where the company they work for is a characteristic of them, not the other way around. That is the kind of company they work for as an attribute of the person.

The person is not embedded in the company, in this conversation, but the person is the person who’s going to respond and take the meeting. Early on, all we’re trying to do is solve the problem of getting a flow of meetings to happen. If we get the flow of meetings to happen, we’re going to get information about whether the product really makes sense, but so far, all that’s like problems zero, get flow of meetings with hypothetically qualified folks who have this problem. So how do I get that flywheel moving? First, I’ve got to get a little bit of purchase on it. So I have to take a guess, right? Do I grab the slippery part? Do I grab the gritty part? I don’t know. I don’t know. All I can do is hypothesize. So I make a list. That’s my best hypothesis. It’s the one that was in my head, as well as I can turn that into data using sources.

There are such great sources now, there are two ways to get this done right now that are so marvelous. They’re kind of, they are truly transformative. One is go to Zoominfo and do a query, John. Yeah. 93% of the time or some crazy number like that, that query in Zoominfo is going to contain enough of your ideal customers, that you will be able to quickly subset it based on the response to the conversations you’re having. And as long as you have enough folks to talk to, to determine statistically, can you get this to this 5%, you can get the job done. Remember the job we’re trying to solve is should we taste it? Should we make a product to solve this problem? This is why the poor sales person is at the other end of this, trying to deal with the fact that they’re trying to sell a product that shouldn’t have been made, or maybe shouldn’t have been made, or is off by 5%.

But it’s the 5% accounts. And nobody knows because nobody’s gone out to set the meetings. So they get it all backwards. And they say, “Salespeople, you go set the meetings.” Well with whom? Oh, let’s start guessing now. Right? You got to do your guessing early. So your first guess is you make a list. The second way to make a list as you go to LinkedIn sales navigator, you do the same kind of query that you would have done in Zoom info. You’re looking for folks that are a little harder to find than the Zoom in query will let you do. And you always manually inspect the list. A list that’s worth calling is a list that’s worth inspecting. When it should never call a list that has not been inspected. Otherwise you can end up with artifacts of the query, not artifacts of your imagination, screwing up the list. That is if you’re doing a query and the query has keywords in it.

And one of the keywords is short and common. You’re going to get pollution in the list, false positives that come from the excessively broad match in that query. And so they’re going to be in there. What you do is you take that list into say, Excel, you select the whole thing. You pivot it. You make a little pivot table, that’s got the title and the count. And you look for titles that are totally inappropriate, or the count is big. And you simply then go back to the main list and you sort it by title, and you wipe those out. They didn’t belong in there in the first place. And they’re just, they’re by catch. Think of it as you’re fishing, you think you’ve got your net set up correctly, but now you’re catching dolphins. Okay, well, get the dolphins out of there. It’s not a good play, right?

Corey Frank (26:06):

But at this stage, the bigger, the list does not necessarily mean the better quality of a list because you’re still at chapter one, verse one stage of trying to prove there is a market by validating meeting metrics. And most, whereas most sales leaders would probably say, “Oh, I can. I just did a query on Zoom for this select group, this title group. And I have 43,000 available folks. I’m excited. I need to hire them at that point. 40 sales reps to take it. And I’m going to use all that VC money to hire 40 sales reps when the market really hasn’t been addressed yet, because I’m going off of my list size without a manual inspection to validate it or to vet that out.”

Chris Beall (26:56):

Yeah. And if I ever get to that stage where I’m a sales leader, I’m kind of screwed because this work has to be done before any sales leader at seller hire. This is the work that has to be done before the product is built.