The only way to sell is to sell direct
By Nick Adams
Figuring out how to sell your product in the earliest days of a startup is one of the biggest challenges founders face. While it sounds appealing, the strategy to sell through partners and relying on product-led sales at the Seed stage of a company always make me highly uncomfortable. Increasingly it seems many founders casually toss around the statement “we are going to take a bottoms-up strategy, like Slack, to bring our product to market” or “we have a partnership with [insert giant tech/consulting firm] that is going to sell our product to their [insert absurd number of customers].” This is fine as a vision but, in the beginning, the only way to get your product into the hands of customers is through founder sales.
As a disclaimer, when it comes to scaling your business from initial traction to a more established business, I am generally a big fan of product-led sales and/or channel strategies for certain types of products and industries. Cybersecurity products, for example, traditionally have a preference for reseller partners. When done right, both models can create significant leverage for your distribution and deliver exceptional LTV:CAC ratios. When done wrong, they can be painful distractions and potentially drive your business into the ground.
Simply put, there is no shortcut for direct, founder-led sales at the outset of a startup’s lifecycle.
In future posts we will outline best practices for implementing both distribution strategies. For now, I want to dispel some of the folklore about both approaches. Without question, Slack has set the gold standard for a bottoms-up sales strategy. Their ability to get individual teams to collectively buy into a common communication platform is remarkable. However, it didn’t happen just because they built the best technology. They had an early pivot in the focus of the company, were relentlessly focused on customer feedback, and gave white glove service to each client. If you haven’t read this interview with Slack founder Stewart Butterfield on First Round Capital’s blog, you should.
The comment from Butterfield that jumps out most to me is this:
“We begged and cajoled our friends at other companies to try it out and give us feedback,” Butterfield recalls. There was Cozy, which sells rental management software for landlords and tenants, and the music service Rdio. “We had maybe six to ten companies to start with that we found this way.”
This is the epitome of founder-led direct sales. He goes on to describe how they obsessed over customer feedback and continuously challenged themselves to onboard larger teams and, eventually, Slack would make its way throughout an entire organization. The rest is history and certainly the stuff legends are made of. But let’s also remember that Slack raised over $1 billion en route to their IPO. That kind of capital gives you the opportunity to try and fail at a lot of different things.
Likewise, expecting another company to sell your product before you know how to sell your product is near impossible and almost guaranteed to fail. Even as an established company, building a successful channel strategy is very complex. At the core of the issue is human behavior and incentives. Sales reps at your channel partners have a quota that they need to hit and a commission structure that dictates how they are going to spend their time. Unless your product can help them reach those goals more easily than their own company’s products or help them earn more money, then your product will be relegated to a slide with a bunch of other logos conveying that their company plays well with others or to the bottom of the pricing sheet that will only be viewed [and most likely removed] by procurement.
In future posts we will outline successful channel and product-led sales strategies. Until then, keep pushing for those first customers and iterate as fast as possible.
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