Speed in Sales at Startups
The defining characteristic of the Silicon Valley startup is speed. It is so important that not a week goes by without a successful investor/founder extolling the benefits of moving quickly.
Move faster. Slowness anywhere justifies slowness everywhere. 2021 instead of 2022. This week instead of next week. Today instead of tomorrow. Moving fast compounds so much more than people realize.
Jeff Bezos leverages speed in Amazon’s decision-making process. From Amazon’s leadership principles:
Speed matters in business. Many decisions and actions are reversible and do not need extensive study. We value calculated risk taking.
Bezos’ elaborates:
Many decisions are reversible, two-way doors. Those decisions can use a light-weight process. For those, so what if you’re wrong?
Second, most decisions should probably be made with somewhere around 70% of the information you wish you had. If you wait for 90%… you’re probably being slow… If you’re good at course correcting, being wrong may be less costly than you think, whereas being slow is going to be expensive for sure.
Patrick Collision highlights on his personal website “examples of people quickly accomplishing ambitious things together.” A few of my favorites:
The Eiffel Tower. The Eiffel Tower was built in 2 years and 2 months; that is, in 793 days. When completed in 1889, it became the tallest building in the world, a record it held for more than 40 years. It cost about $40 million in 2019 dollars.
The Berlin Airlift. On 24 June 1948, the Soviet Union initiated a blockade of Berlin. Two days later, the Berlin Airlift commenced. Over the following 463 days, the US, the UK, and France flew 277,000 flights with 300 aircraft to deliver the supplies required to support 2.2 million Berlin residents. On average, a supply aircraft landed every 2 minutes for 14 months. As part of this effort, Tegel airport was built. Planning started in July 1948; construction started August 5 1948; the first landing took place November 5 1948 (92 days after construction started); the official opening of the airport took place December 5 1948.
The Pentagon. The construction of the world’s largest office building was led by Brehon Somervell. The decision to proceed with the project was made on a Thursday evening. Initial drawings were completed that Sunday. Construction started two months later, on September 11 1941, and was finished on January 15 1943, 491 days later. When asked when something was needed, Somervell’s go-to response was “the day before yesterday”.
Startups must build speed into their culture. But to do so, the old habits from working at larger companies must be un-learned. I’ve lived this personally.
In 2006, I joined Yelp as employee #20 when the company had $1M in annual revenue. When I moved on 11 years later, I was running a $120M business with hundreds of people reporting to me. I moved back into working with Seed, Series A/B, startups- and it took me a couple of months to re-adjust. I had to throw out my desire to build a perfect strategy and forecast for the business. Instead, I had to re-learn that a startups’ nature is that most stuff won’t work. Instead, you have to keep your eye focused on the truth, look for glimmers of success, continue to take positive action, and not sweat the bumps in the road.
Unlike big companies, in startups, you can’t optimize your way to success. Optimization is the enemy. Something either works or doesn’t. If it works, go ahead and optimize it. That’s easy. It’s harder to accept when something isn’t working; stay optimistic but cut your losses and try something new.
Another startup lesson is that timelines are arbitrary. I learned this naturally when I was a kid. When I was doing creative work, I would stay up all night and write songs in my room. When inspiration struck, I didn’t say to myself, “Ok, so I’ll plan to write the verse today, the chorus next week, and then hope to get the whole thing done by the end of the month.” I would write until it was all out on paper. Not unlike how I stayed up late and wrote this post in one day.
Startups are creative work. You are creating something from nothing, a product, a company, a dream. And just like creative work, when inspiration strikes, you have to grab it. In the early days of successful startups, the team should be inspired all of the time. Sometimes by progress and sometimes by challenge. They have to want to work on something non-stop until they can get it live and out into the world. Until the problem the startup was created to solve- is.
Meanwhile, at big companies, everyone has to run the business simultaneously while they try to launch new ideas. It’s logical that things happen slowly. New projects get going over weeks or months because everyone has a day job and has to keep the existing business humming along.
There is little opportunity cost to spending most of one’s time on a significant, new, important initiative at startups. The biggest opportunity cost is in moving too slowly.
It’s always a race against the clock. And so we are obsessed with speed.
In the world of startups, the idea of speed is often mentioned alongside shipping products and executing company-wide sprints but rarely is it discussed explicitly within the function of Sales.
Yes, speed can be an advantage in quickly developing a winning product and beating the competition. It can also rapidly iterate your sales motion, build your sales team, help you win deals, and grow revenue more quickly.
A startup’s sales team shouldn’t be thinking of the opportunity cost of trying out a new sales motion or different sales messaging. The real cost is in doing the same stuff that doesn’t work.
With that, here are five tactical examples of how to apply speed in sales at startups.
Speed tip #1 — Hire Fast, Fire Fast
Many startups live by the principle of “Hire Slow, Fire Fast.” They deploy this principle intending to create a lean, high-performing startup.
I agree with the “fire fast” part. Your startup’s culture should have a high tolerance for change and minimal bureaucracy. Make the most of this structure and move fast. If a salesperson does not represent the company well (internally and externally) or is not putting in the work-they’re out. Those are easy decisions.
What if a salesperson is a good culture fit and puts in the work- but is not hitting numbers? My approach is simple. If you don’t know if a person will be successful in their role, then the answer almost always is- no. Suppose you give me a salesperson who works hard, has a great attitude and quickly implements feedback. In that case, I am confident I can coach them to success. I know they will be successful. It is just a question of effective coaching and time. If they’ve got the potential, you have to decide if your startup can afford to put in the time.
If you don’t know if someone is putting in their full effort, bringing a positive attitude each day, implementing feedback, and improving-then the answer is no. They’re out. Uncertainty slows startups down. If you remove uncertainty around the team, you can move much faster-the rest of the company benefits.
On the flip side, I disagree with the “hire slow” part. Once you have decided to fill a role, hiring is a simple process, a series of steps. Those steps can happen in one month, one week, or one day. It’s up to you.
You can build a great sales team from 0–20 people in 2 months. I know because I have done it.
Other companies will move slowly, meaning you can win candidates by moving quickly and confidently.
Some easy examples:
- When you get a referral, call them that day.
- Get people on site quickly. If you like a candidate, schedule the next meeting at the end of that call.
- If a candidate negotiates, know what your terms are and get back to them immediately.
- When contacting references, ask for five minutes later that day vs. scheduling the call for days out.
- If you are hiring sales classes, have the start dates finalized and scheduled for every 2–4 weeks, so you can slot new hires into the next class the moment you close them.
Speed tip #2 — Ramp your team quickly
Sales training is another area where speed can have a massive impact on revenue. The more quickly a salesperson “ramps up,” the faster they begin producing. Many startups underinvest in sales training. When you combine efficient hiring and training, the impact is massive (and obvious).
Let’s look at an example:
- Startup A hires 2 AEs to start January 1, 2 AEs to start March 1, and 4 AEs to start May 1. Their average ramp to $5K in MRR takes 3 months.
- Startup B hires 5 AEs to start on January 1 and 5 AEs to start February 1. Their average ramp to $5K in MRR takes 2 months. Because they hire a little faster, they churn through 2 AEs in their first month.
- For the sake of simplicity, let’s say that all AEs do not generate material revenue until ramped.
Here are the numbers:
Startup A does $1.02M in revenue in 2021. Startup B does $2M in revenue in 2021.
- Startup B comes into 2022 with $4.56M in ARR, Startup A $3.12M.
- All else equal, in 2021 and 2022, Startup B generates $2.42M more revenue (+152%) than Startup A from accelerating new customer acquisition during March-July 2021, despite both companies being at the same level of new MRR and headcount for more than 70% of the two years.
How can this be executed in practice? Startup B would hire one extra recruiter, one sales training manager, and one additional sales enablement person to support the aggressive plan. The cost? ~10% of the incremental revenue generated.
Suppose you have the capital and can execute at speed. In that case, the ROI for hiring fast and ramping quickly in SaaS is overwhelming.
Speed tip #3 — Apply new ideas and sales messaging immediately
When hiring your early sales team, look for people who have a track record of adapting and evolving their way to success. It’s better to have a group of explorers forging their trail in the wilderness than a team expecting the road to be paved and mapped in front of them. If you hire right, you can set the tone for iterating quickly on your go-to-market motion. Perhaps most importantly, new hires breathe life and fresh ideas into startups.
Now that you have hired correctly, make it a daily habit to brainstorm new ideas and approaches to selling the product. Then test them immediately, meaning, on that day. Too many salespeople get nervous about trying a new “line” or approach. Taking risks and having the courage to get outside of one’s comfort zone should be celebrated within your startup’s culture. Early on, sales messaging should live and breathe, not exist as a static script.
By testing and iterating new ideas daily, you will get feedback from your customers quickly. The best sales motion and messaging will rise to the top, organically.
Speed tip #4 — Explore new customer segments
In the early days at Yelp, consumers used the site to search primarily for restaurants. Over time, they began to write reviews and search for spas, salons, auto repair, locksmiths, and plumbers. As this evolved, each week, the sales team explored new categories of businesses to contact in search of the best return on its time. This act was so ingrained into our culture that we would watch the live feed of new reviews on the homepage. It gave us a real-time feed of new businesses and categories to contact.
This approach was not straightforward. We had to learn the structure and quirks of new industries quickly. To succeed, we built a culture of respect for small business owners, genuine curiosity, and a willingness to fall on our face. Today, 45% of Yelp’s Revenue is in the Home and Local Services category. Restaurants still drive consumer usage but only makeup 10% of revenue. Billions in revenue started with a handful of salespeople thinking, “Sure, why not? I’ll try calling a carpet cleaner” and then taking action and quickly iterating their approach.
Speed tip #5 — Use speed as an advantage in your sales cycles and messaging
When your sales team first connects with a prospect, chances are they know little about your company and product. So your potential customers will have a long list of questions.
- What is this product? Should I even pay attention? Is it worth learning about, is it relevant to me? Important? Urgent?
- Does this salesperson call a hundred people per day with the same pitch? Do they care?
- If I am interested, what is the process for learning more? Will this take a bunch of time to test or get started?
As it turns out, the timeline and speed with which you approach these questions will influence the client’s perspective and your ability to go from cold call to close.
Let’s take them one by one.
What is this product? Should I even pay attention? Is it worth learning about, is it relevant to me? Important? Urgent?
If your sales team lobs over calls/emails once every week asking, “let me know when you have some time?” then the answer is NO. A cadence of weekly emails suggests that something is no more urgent than taking out the trash, which I do weekly.
Instead, they should be more assertive. Here is an example: “ Hi Bob, I heard the news about (important recent initiative for the prospect). I’ll send over a couple of relevant ideas over email today and give you a follow-up call tomorrow at 11 AM. If you prefer to talk another time, reply to my email and let me know. Thanks, Bob. I look forward to helping out and talk soon.”
I have seen response rates 2X by mentioning in a voice mail that you will follow up the next day vs. asking for a callback.
Does this salesperson call a hundred people per day with the same pitch? Do they care?
By incorporating a bit of research about a prospect’s business (show me you know me), you are setting yourself apart from 75% of other salespeople. By sharing that you will follow up the next morning, you signal that you’re not waiting to see which businesses respond; you are interested in speaking with this prospect directly.
Even if I am interested, what is the process for learning more? Will this take a bunch of time to test or get started?
The most common mistake I see in a startup’s sales process is the salesperson failing to clarify the next step. This slows down sales cycles.
Here is a battle-tested approach to wrapping up calls.
The salesperson should stop the conversation with seven minutes remaining in the call and get a pulse on the client by asking “trial close” questions. If the client isn’t ready to move forward- figure out what steps are necessary to move on to the next stage in the sales process. The salesperson should then validate the timeline for accomplishing those steps and schedule the next call. More often than not, the prospect can achieve those steps in 24–48 hours, and the salesperson should schedule the subsequent call within the current week. The salesperson should be able to do all of this in five minutes, and they should then end the call with two minutes to spare.
Instead, many salespeople leave no time to trial close and agree on the next steps. This mistake leads to the salesperson “giving the prospect a little time to think about it,” arbitrarily scheduling a call for one week out, and then “checking-in” via email. The prospect is no longer in a “buying process.” They are in a “sales process.” A process that will now take weeks or months. Game over.
Sales teams at startups should constantly be evaluating each stage of their sales process and testing new approaches and language to move things along faster. For many products, sales timelines are arbitrary and are greatly influenced by your team’s sales motion.
I hope you found these tactical tips for speed in sales at startups helpful. I’ll leave you with one more quote.
A good plan violently executed now is better than a perfect plan next week.
- George Patton
So what are you waiting for?
Originally published at https://www.petehancock.me on January 19, 2021.
