I read an article where Peter Thiel said that most startups fail because of difficulty in Sales and distribution.
I read over and over again the value of Sales and the need for a founder to focus on "the business side", but then I still marginalize the role of sales.
A lot of startups are founded by programmers, who know a lot about programming but not much about sales. This makes them able to see all the upcoming problems in the technical bits of the company, but not the upcoming problems in sales. Most effort is then spent on the technical side because "that's where the problems are."
Actually, it is exactly Dunning-Kruger when DK is applied to areas of expertise and not simply general knowledge. One of the frequent contributors to the Science-Based Medicine blog uses it this way to explain why you need to be wary of highly-respected academics in one field weighing in on completely unrelated fields.
It doesn't actually work that way, though - ads are worthless if people don't convert, and you make them convert by building something they actually want, and you figure out how to do that by talking to them, one-on-one. So you still need sales.
> This makes them able to see all the upcoming problems in the technical bits of the company, but not the upcoming problems in sales. Most effort is then spent on the technical side because "that's where the problems are."
ugh. this is 100% me. spent 6 years working on a hard problem. Why? Because ironically people wouldn't pay large sums of money for it and I figured that if I made it 1000% more innovative than the market I'd surely justify the price.
I sometimes look back and see how fucking naive I was. I'm a totally different mentality now. It's figuring out how to get paid and making sure you are able to CHARGE people for it. You just need to get to the absolute MVP. If it's something nobody has seen before then you don't even need to build it. Just try to sell the god damn thing before you even build it. However, if there are already established markets and competitors you can't do it without risking looking like a snake oil salesman but what this is the problem of many engineers, we view making money as evil and negative because we devalue our work, we just don't see the business value and so highly possible we end up working for free at some point our careers.
For example:
Marketer: Our software that will boost your sales by 50%.
Developer: It just scrapes data from other companies and resells you public data. You can find it on github.com
VP of Sales: Shut the fuck up.
Anyhow, I can't stress enough. Startup is 80% people and 20% coding. I've learned my fucking lesson the hard way.
I moved from focusing on tech to sales. It's a tough but rewarding transition. If you are selling SaaS pickup a copy of SPIN Selling as a gateway into what you should be doing.
Some of it is a B2B vs B2C difference. A lot of the big apps we think of like Facebook and Google started as B2C.. where viral marking and word of mouth is what you need.
If your startup is some enterprise product that cost $1000 a month.. or a small business app that cost $100 a month.. you are unlikely to get word of mouth users, and need to actually go down the sales route in one way or another.
It was also easy to convince users in 1998 to try a new search engine at least once. It's one click, zero commitment. At the time the majority of people still weren't using the Web regularly, so you're acquiring users from a rapidly expanding base; people that had no allegiance or bias in relation to an existing search engine. Further, AltaVista & Co sucked big time. Sifting through the volumes of spam in pre-Google search engines was a real pain.
Starting a Web/mobile email client today? Nearly everyone already has an email address, and they've likely had it for a long time. They're comfortable, they have a large index of emails at their current service, and eg Gmail is a 'good enough' product for most users. Extremely different scenario vs the one Google faced.
You have not yet met a really great salesperson. They will not let you marginalize them. Only the poor ones will. BTW, it is hard to have a business without customers. And whoever finds those customers is a salesperson.
> Lesson 7: Letting Your Startup Rule Your Self Esteem Is Dangerous
Seems obvious, but there's a reason it happens so often. If you live and breath your startup, you're better prepared to take on opportunities. Even if you're only at your desk "working" for 8-10 hours a day, you can find a lot of serendipity by talking about it with friends and family. Wait, you know somebody who could be a customer? Wait, you made money on your last job and want to invest? Wait, you want to work with us? It's easy to get into a mode where you're forever pitching, networking, and being your company, because there are real benefits.
That said, I've talked to a weirdly high number of people who had a kid while founding a company. Their tongue-in-cheek logic: "This is something that's obviously more important than my company. If I'm going to have my self-esteem wrapped up in anything external, it's better to be my child than my company. My business may fail, but I will not fail to raise this kid."
> At least I didn’t go into debt. I can’t imagine the stress of founders who start by living off credit cards. I further can’t imagine the stress of people trying to support a family while starting a company.
I can't relate to this at all - there must be a tiny portion of entrepreneurs that can. I've been blessed to be in a position where I've never (as an adult) been hopelessly poor, but I've absolutely been in a place where I've worried that I'd have enough money to last until pay day. I've been in a position where I've sold anything I could think of to have enough money to buy food, diapers, or enough fuel to get to work and back for the rest of the week.
Yes, there isn't much money in solving non-problems. Instead, find people in pain, and sell them band-aids.
In the 1980's I worked for an Electronic Design Automation startup (during the go-go years for EDA). Our CEO said: "If you asked customers to give a letter grade to their current EDA tools, most would give a "D" or "F". If we can get a "C" we will do great."
He was very right. People in pain open their wallets easily, even for a stop-gap solution. That gives you money to do the solution that eventually gets graded "B" and even comes to define "A" if all goes well.
I like that question. Keeping with the health metaphor, it forced me to think up this: "Hunt like a shark, act like an ER surgeon." Go where the customers are losing the most blood, then when you get there get them patched up and stable by the end of your shift. Eh... needs work. Another forgettable quote from the half-bakery.
I found this to be a great article and can identify very closely with it. I created a webservice back in 2010. Fortunately I am still operating, although certainly not "killing it". At least not enough to go full time.
Lesson 1. Sales and Marketing. So true. I think every entrepreneur greatly underestimates sales and renvenue growth. It's easy to create "top-down" market share spreadsheets and imagine the opportunities. It just never works that way. I am starting to learn that Sales is a major part of any company. People tend to think that just because there are fewer and fewer brick and mortar stores, and face to face meetings for that matter, that sales isn't an integral a part of a company.
Lesson 2. Indeed money is important. But at the same time how necessary is it for a lot of what Silicon Valley is producing these days. Hardware and development tools are the cheapest they have ever been. You certainly don't need a ton of venture backing to create a web service. That is the approach I am taking.
Lesson 3. With my web service I never created spreadsheets with forecasted user growth. But at the same time can say growth never really took off the way I had hoped. More important to me is year over year growth.
Lesson 4. I am still running this as a sole founder... Anyone out there interested in sales/marketing?
Lesson 5. Great point. Always a difficult decision knowing what features to add. More and more I add features and have the requesting customer at least partially fund the development of it. And more often than not don't release them as a "public" features. Sometimes you have to resort to "consultingware" until your fully self-serve web serivce takes off on its own.
Lesson 6. Indeed. Never be afraid to reach out to people who sign up for your service and ask them more. Stackoverflow is a great site to "find peoples pain".
Lesson 7. Yes - you always have to keep your chin up, especially on days where you feel
It would be interesting if Ross could share some indicators on his revenue. If not, other metrics like how long it took to get the first sale, etc.
I just have a lower risk tolerance than a lot of people. I am totally down with creating something new, I just refuse to leave a job that pays the bills to do it. If you work 40-50 hours a week at your real job, that still leaves 10-50 hours per week to work on your own thing, depending on how driven you are, how much stuff you scheduled that week, etc. Startups are so risky that it's way better to reduce your risk any way possible.
Of course, if you go the VC funded route and want to be huge, then go for glory and quit your job. But if you want to build a smaller, steadier side business that you grow over a longer time, don't quit your day job.
This post completely resonated with me as a former Googler making the leap into startup founder. It's been drinking from a firehose learning what it takes to get a product off the ground. What I've found is that the entrepreneur community is extremely supportive of each other.
For other Xoogler Entrepreneurs out there, a couple of us have started a Xooglerpreneur community with over 600+ Xoogler/Googler entrepreneurs. The group has been hosting monthly tech talks, founders lunches, and other networking events. We have active local chapters in LA and NYC with additional groups growing in Chicago and London.
There is an active Slack channel and the group is organizing an Xooglerpreneur Demo Day later this year as well as setting up an Xoogler Angel Fund.
HN jumped the shark into the realm of blatant self-promotion years ago, getting worse over time. I'll admit I've done it a few times too. Feel dirty, but, the market is a jungle.
This was an interesting read in particular to contrast with other startup letters. The focus in the first point on sales and other roles is interesting because I've noticed before these posts focusing on the product (such as http://playbook.samaltman.com/).
The idea that the sales and business will come naturally seems to stem from this kind of advice. It's clear that there needs to be some kind of balance that is usually not talked about.
39 comments
[ 3.1 ms ] story [ 81.4 ms ] threadI read an article where Peter Thiel said that most startups fail because of difficulty in Sales and distribution.
I read over and over again the value of Sales and the need for a founder to focus on "the business side", but then I still marginalize the role of sales.
I'm I broken or do we all do that???
Kind of related to the Dunning-Kruger effect.
ugh. this is 100% me. spent 6 years working on a hard problem. Why? Because ironically people wouldn't pay large sums of money for it and I figured that if I made it 1000% more innovative than the market I'd surely justify the price.
I sometimes look back and see how fucking naive I was. I'm a totally different mentality now. It's figuring out how to get paid and making sure you are able to CHARGE people for it. You just need to get to the absolute MVP. If it's something nobody has seen before then you don't even need to build it. Just try to sell the god damn thing before you even build it. However, if there are already established markets and competitors you can't do it without risking looking like a snake oil salesman but what this is the problem of many engineers, we view making money as evil and negative because we devalue our work, we just don't see the business value and so highly possible we end up working for free at some point our careers.
For example:
Marketer: Our software that will boost your sales by 50%.
Developer: It just scrapes data from other companies and resells you public data. You can find it on github.com
VP of Sales: Shut the fuck up.
Anyhow, I can't stress enough. Startup is 80% people and 20% coding. I've learned my fucking lesson the hard way.
Agreed. I have recently come to that revelation :)
Interesting, applying Dunning-Kruger outside it's original scope. Good explanation for the brilliant-yet-incredibly-dumb Dr. Ben Carson.
Going into this thing, I really thought it was all word of mouth. After all, that's how Google exploded.
And I didn't realize that 99/100 people might not like what you built, but that 1/100 is enough to support a successful product.
But you need sales and marketing to find that 1/100.
If your startup is some enterprise product that cost $1000 a month.. or a small business app that cost $100 a month.. you are unlikely to get word of mouth users, and need to actually go down the sales route in one way or another.
Starting a Web/mobile email client today? Nearly everyone already has an email address, and they've likely had it for a long time. They're comfortable, they have a large index of emails at their current service, and eg Gmail is a 'good enough' product for most users. Extremely different scenario vs the one Google faced.
Seems obvious, but there's a reason it happens so often. If you live and breath your startup, you're better prepared to take on opportunities. Even if you're only at your desk "working" for 8-10 hours a day, you can find a lot of serendipity by talking about it with friends and family. Wait, you know somebody who could be a customer? Wait, you made money on your last job and want to invest? Wait, you want to work with us? It's easy to get into a mode where you're forever pitching, networking, and being your company, because there are real benefits.
That said, I've talked to a weirdly high number of people who had a kid while founding a company. Their tongue-in-cheek logic: "This is something that's obviously more important than my company. If I'm going to have my self-esteem wrapped up in anything external, it's better to be my child than my company. My business may fail, but I will not fail to raise this kid."
Me, I got a dog. It's working out!
Ego. Nothing wrong with it as long as it's kept in check but let's not pretend we don't know where the drive comes from.
I can't relate to this at all - there must be a tiny portion of entrepreneurs that can. I've been blessed to be in a position where I've never (as an adult) been hopelessly poor, but I've absolutely been in a place where I've worried that I'd have enough money to last until pay day. I've been in a position where I've sold anything I could think of to have enough money to buy food, diapers, or enough fuel to get to work and back for the rest of the week.
"Don't go off to the races, solving difficult problems for people who won't pay for it"
and
"To us its a bunch of tables and CRUD generated on top of it. To them, its whether or not theres a free plan."
and
"Recognize when there is a poor market fit and CHANGE the situation. Falling in love with your own creation tends to blind you."
gg startups, hello drudgery
In the 1980's I worked for an Electronic Design Automation startup (during the go-go years for EDA). Our CEO said: "If you asked customers to give a letter grade to their current EDA tools, most would give a "D" or "F". If we can get a "C" we will do great."
He was very right. People in pain open their wallets easily, even for a stop-gap solution. That gives you money to do the solution that eventually gets graded "B" and even comes to define "A" if all goes well.
Lesson 1. Sales and Marketing. So true. I think every entrepreneur greatly underestimates sales and renvenue growth. It's easy to create "top-down" market share spreadsheets and imagine the opportunities. It just never works that way. I am starting to learn that Sales is a major part of any company. People tend to think that just because there are fewer and fewer brick and mortar stores, and face to face meetings for that matter, that sales isn't an integral a part of a company.
Lesson 2. Indeed money is important. But at the same time how necessary is it for a lot of what Silicon Valley is producing these days. Hardware and development tools are the cheapest they have ever been. You certainly don't need a ton of venture backing to create a web service. That is the approach I am taking.
Lesson 3. With my web service I never created spreadsheets with forecasted user growth. But at the same time can say growth never really took off the way I had hoped. More important to me is year over year growth.
Lesson 4. I am still running this as a sole founder... Anyone out there interested in sales/marketing?
Lesson 5. Great point. Always a difficult decision knowing what features to add. More and more I add features and have the requesting customer at least partially fund the development of it. And more often than not don't release them as a "public" features. Sometimes you have to resort to "consultingware" until your fully self-serve web serivce takes off on its own.
Lesson 6. Indeed. Never be afraid to reach out to people who sign up for your service and ask them more. Stackoverflow is a great site to "find peoples pain".
Lesson 7. Yes - you always have to keep your chin up, especially on days where you feel
It would be interesting if Ross could share some indicators on his revenue. If not, other metrics like how long it took to get the first sale, etc.
Of course, if you go the VC funded route and want to be huge, then go for glory and quit your job. But if you want to build a smaller, steadier side business that you grow over a longer time, don't quit your day job.
For other Xoogler Entrepreneurs out there, a couple of us have started a Xooglerpreneur community with over 600+ Xoogler/Googler entrepreneurs. The group has been hosting monthly tech talks, founders lunches, and other networking events. We have active local chapters in LA and NYC with additional groups growing in Chicago and London.
There is an active Slack channel and the group is organizing an Xooglerpreneur Demo Day later this year as well as setting up an Xoogler Angel Fund.
Sign up here: http://www.xooglerpreneur.com