Steve Blank just shared an interesting anecdote from his days in marketing, where he created what he thought was the ultimate data sheet, only to find his CEO and VP of sales literally setting it on fire.

The VP of Sales had an insightful quote: “the only thing your datasheet will do is give a prospective customer a reason for saying ‘no’ before our salespeople ever get to talk to them.”

The real morale of this story to entrepreneurs isn’t about sales versus marketing, but rather the following:

You need to know how your customers make buying decisions.

This differs depending on price point, industry, and purchaser. Make sure you clearly know who your buyer is (not always the user): how they generally think and act, how much budget they often have to work with, and the rules and constraints they are subject to.

Learn about how people think *today*, because this does change. There is no question in my mind that people’s buying processes and thinking have evolved considerably since my start in software in 1994.

But overall, you want to go with the flow and not fight human behavior. It is possible to revolutionize how something is purchased, especially if you are radically changing the price point, but this takes time.

At Fred Wilson’s Donors Choose event, I met a bright college senior from my alma mater who wanted to work for a startup as prep for eventually founding a company himself.  Like me, he wasn’t a programmer, so the two of us discussed the best place to start.

A non-coder founder has to wear a lot of hats: you will most likely be in charge of big chunks of tasks like customer and market development, alpha/beta test management, fundraising, product features, wireframes, financial business model, customer support, legal issues, etc.  That’s a lot of shoes you’ll need to fill, so where to start?

Here’s my advice on that first job to chase, what size company, and some ideas on how to get the job:

Start with Sales, but Do Marketing at the Same Time

A job in Sales, Marketing, or indirect Business Development?  If you want to start your own company eventually, you want experience in all three, but I recommend starting in sales, because there is nothing like the experience of generating and closing business.  You might find this scary or uncomfortable at first, but take the plunge.  You need this skill — an entrepreneur is constantly selling to customers, employees, and investors.  As a founder-entrepreneur, you’ll get even more familiar with “scary” and “uncomfortable”!

If you’re doing sales for a dynamic startup, no one is going to stop you from also doing “marketing” unless it is hurting your performance.  You can discuss positioning and get respect because you’re on the street listening to the market.  You can work on improving the materials you need to create and close business, and then be a hero by sharing it with everyone else. You can volunteer to help customer acquisition projects.  It means working two jobs and long hours, but your goal is to learn and achieve as much as possible right?

On the other hand, if you go into marketing, it is much harder to do part-time sales, because you can’t pick up and drop relationships and sales cycles based on the needs of your “official” job in marketing.  Sure, in a good company you’ll be able to talk to some prospects and customers, even sit in on a few sales meetings and calls, but you won’t be able to learn the guts of how to develop a pipeline, shape a customer, negotiate pricing and contracts, etc.  And frankly, there is nothing like being forced to cold call.  It’s not fun, but it’s something every business person should learn.

But why do I need to do this when I want to create a lean Web startup that doesn’t have a direct sales force?

Building a company takes more than agile coding and A/B tests.  There are exceptions where virality was almost miraculous, but that is very hard to duplicate.  If you start a company, expect that you are going to have to get out there, cultivate a market, cultivate investors, and sell sell sell.

How Big A Company Should I Join?

Don’t go to a really big company if you want to learn how to be an entrepreneur.  It will give you a great brand for your resume, but won’t teach you what it means to do sales and marketing for a startup.

If you are coming straight out of school, I would target companies between 25 and 100 employees.

You want to join a company that is small enough where you get to learn a ton and be a real part of the team, but big enough to have some momentum, venture capital backing, market credibility, and management.  It will be easier for you to start in sales after a startup has cleared some initial hurdles; furthermore, the larger team implies that there should be a little more support and mentorship available.  You also want to start with a company on your resume that was big enough that someone else would have heard of it, even if it tanks.   There is a BIG difference between a 25-person startup and a 100-person startup, but once you’re within that range, I would prioritize by picking a team, a VP of Sales, and a product you’re really excited about.

How Do I Get A Sales Job?

In this environment, it is going to be tough because startups are managing growth very carefully.  Luckily there are glimmers of sunlight peeking through so some companies are investing in the future.  You have the downside of being inexperienced, but the upside of being cheap.  Your job is to stand-out as a go-getter, and you’re going to need that attitude as a salesperson and entrepreneur.

Once you have your list of target employer companies (researching portfolios of VCs who invest in your target city is a good place to start), do your homework on their product, current customers, and online buzz.  Prioritize the companies you are most excited about.  Look at their websites to see if they have sales openings, but if you’re really really jazzed about a company, don’t let a lack of a job posting stop you.  Instead, do something for Company X that goes above and beyond the norm and proves you love their business, understand their customers, and are a total go-getter.  (an easy thing to say in an interview, but another thing to prove!)

Here’s one idea: go ahead and actually put that sales hat on.  Think about who you might know, or be able to get to, who fits the Company X’s customer profile.  Tap into your alumni network or parent’s network and try to find someone who would be willing to talk to you.  Explain your situation and motivation so they realize how they can help, and try to get into a meaningful dialogue about the following:

1. Whether they have heard of Company X, and if so, what they think about it. If they are already a customer, how do they feel about the product/service?
2. If they have not heard about X, find out if they have a problem that X’s product might solve.  Try to learn about their pain points and how they have tried to solve it.
3. Ask if they know any of Company X’s competitors, and if so, what they think?
4. take notes and listen; a great salesperson listens and engages in a two-way dialogue, not a 1-way advertisement.

You now have something of value to Company X — at minimum, you have additional market data, and at maximum you have a customer prospect.  Call up the VP of Sales or CEO and leave a concise message saying who you are, that you want to work for the company, and that you have done this work, gathered this information, and would love to share it.

Time and effort, yes — but this effort doesn’t have to be only for conversations with Company X.  You might not have time to do this for every potential employer, but there’s no reason why you can’t spin a story around this work to other employers: it shows you know how to network to a prospect, qualify them, draw them into a dialogue, understand their pain and thus understand how to position a product as a solution.

I’ll add that if you are looking at a consumer company that sells integrated sponsorships to advertisers, it might be hard to get to the advertisers, so another approach is to talk to the target consumer demographic. Try to recruit new customers for the product (make sure it’s the age and gender they care about), do a little market research study on what people do and don’t like, and present that information to the company.  Again, you’re now adding concrete value to the business and proving you don’t just sit on your ass waiting for the world to hand you something.

It’s a lot of work, but then startup sales is a lot of work.  Compared to passive graduates who do nothing more than glance at a website before showing up for an interview, you will stand out as a massive breath of fresh air and show that you have some serious startup moxie.

Of course, you don’t have to take this exact approach, but whatever you do, don’t be passive!  If you really don’t think you’re quite ready for sales, by all means start with a marketing job and then try to transfer over to sales when you feel ready.

Best of luck!

This week saw two interesting and related posts on startups and hiring/careers.  Mark Suster wrote about who you should hire into your startup, and Chris Dixon wrote about the ideal startup career path.

Mark’s message is to hire hungry, smart people who want to get to the next level in their career, not the ones who have already arrived. Chris writes, “if your goal is to start a company, it is mostly a waste of time to work anywhere but a startup – with the possible exception of a short stint in venture capital.”

These two statements are related. Working for a big company can give your resume “brand power” making you more hireable, and in some cases more fundable, but it will not teach you about startups.*  Even venture capital won’t teach you what it means to be in the trenches.

Their posts got me thinking specifically around startup sales.

Hiring Sales People
If you are a business person (rather than a coder) and want to start a company, I highly recommend getting direct sales experience (I’ve done marketing, bizdev and sales, and usually wear all three hats, but the latter was most transformative for me as an entrepreneur).  Doing this for a big company can be very useful for your career, but doing so for a startup will be more applicable to your entrepreneurial goals (especially if it’s young enough where you can wear a few different hats).

In general, sales people from big companies are used to a different market environment and set of resources behind them.  They are used to coming from an important brand name, not cold calling as a “nobody”.  They are typically used to selling products that have already been fleshed out, have achieved market success, have lots of marketing backup and customer references.  Their sales process itself might be very complex, but the sales person gets to focus mostly on the relationships because the product itself, and everything around it, has already been figured out.

A startup, especially one creating a new market, has none of that.  The product is a moving target, pricing and business model are being defined as you go, the market isn’t always aware it needs your innovation, marketing materials barely exist, customer case studies are only a handful, etc.  In other words, you have a completely un-commoditized product and a sales cycle that is complex on multiple levels.  If you drop a sales person successful with “figured out” products into this new, unstable environment, you risk them quickly becoming incredibly frustrated, consuming vast amount of company resources as “support”, promising the wrong things to prospects, and pointing a lot of fingers.

I agree with Steve Blank that you don’t want to hire much of a classic salesforce before you have product/market fit (instead try to find product marketing or product management people who are scrappy, personable, and aren’t afraid to sell, cold call, etc). Even when you are starting to get confident about product/market fit, be careful with hiring:

• Don’t hire someone who is used to a relatively simple product/ process for a highly technical sale or a complex, multi-step enterprise sale, even if they are really personable.
• Don’t sacrifice hunger for a rolodex. You want someone hungry, determined, ambitious and willing to hit the streets for you.  A rolodex is very useful, but not enough.
• As a startup, you never have as much time to mentor people as you wish, so also be careful with someone completely green.  They can work out beautifully, but only if 1. they love your product, 2. they are smart and willing to listen / apply lessons, 3. they are ready to work really frikkin’ hard.  They don’t yet need to have learned to be a “closer” — as CEO in the early stages, you will be the best at that as long as something is fully teed up. I’d rather have someone green who fits this bill than someone experienced but lazy.
• Don’t overpay for a sexy candidate — by which I mean compensation should be heavily commission based, and if you agree to a high guaranteed commission level for the first 6 or 12 months, give yourself an out in your employment agreement so you can more easily fire them if they end up sitting on their ass collecting that money (which I, sadly, watched happen at an enterprise software company early in my career).
• Take quick action if someone proves ineffective in your environment — both the company and the sales person will be better off parting ways and finding fit elsewhere.

Of course, if you find someone completely awesome that belies standard guidelines, be willing to follow your gut.  Guidelines are by nature generalized, but people are individuals.

Additional Points of Interest on Hiring & Careers
Mark Suster also repeats the saying “A players hire A players, B players hire C players, C players hire D players.”  It’s an expression I heard at my first job 15 years ago at Trilogy, and something I still believe is absolutely true.  I’ve learned to listen to my gut when it comes to hires.  Every time I have been uncertain about a hire and went ahead anyway to meet growth needs, I have come to regret it.

*Greg Battle, an interesting guy I met in college and who I recently rediscovered on the net, also had this to say about careers:

“I’ve been fortunate enough to work in a startup capacity at many big companies, so it’s not necessarily a choice of one or the other. Big companies launch new products, divisions, and lines of business too. Saying you “love startups” isn’t enough either, as there are so many steps in the startup business cycle, from founding, alpha, beta, pre-funding, growth phase, pre-IPO, etc.. When thinking career, you have to consider the nuanced nature of each position, independent of the catch-all bucket you may place it in.“

I think Greg is right to remind everyone not to oversimplify. Every startup I’ve been part of (going on 6 now) has been different, with many different lessons.

Previous thoughts on startup sales: Don’t Be Afraid to Lose

Mark Suster always provides interesting food for thought.  In a recent post “Most Startups Should be Deer Hunters“, he examined whether startups should go for “elephants, deer, or rabbits.”

He is right to warn of elephants.  They can bring in cash, please your investors with a brand name, and put your company on the map in terms of credibility and new waves of public relations. However, you have to be careful about the cost (I discussed this a little in “don’t be afraid to lose“).  I remember one client I was representing at Broadview that had gotten themselves completely beholden to Citibank.  As a customer, Citi gave them a metric ton of money each year, but in turn completely dominated the startup’s product team and dev roadmap. They ended up with a 1-company market, and struggled to sell the business.

By concentrating your revenue on one or two really large customers, you also embrace very unhealthy operational risk.  If a large customer changes its mind (and this can happen for many reasons: your champion is restructured away from the scene, they get acquired, they face a business crisis of some kind, etc), excessive dependence can turn into a nasty spiral of layoffs and collapsed morale.

However, don’t be afraid of the enterprise market IF it suits your business model and product.  Not every large company will act like an overpowering elephant, or at least, they might try, but you can certainly try to hold your ground.  You need to be willing to pass/lose on a big, but bad, deal (and in this case, it helps to have investors who have been entrepreneurs themselves).

The deer market isn’t necessarily easier to attack, however.  This could be seen in the later stages of the client/server ERP market.  SAP and Oracle had strongly penetrated the Fortune 500, so were looking at growth from the mid-market where a set of smaller ERP competitors played.  They soon realized that the sales cycles in the mid-market could be as long and as complex as going after the Fortune 1000, but the revenue reward at the end was considerably lower.  It was still a decent market to chase (albeit with a different cost structure), but a lot of pre-conceptions were dashed against the rocks.

I recently discovered Mark Suster’s blog Both Sides of the Table, and have really enjoyed his posts on entrepreneurship.  He has a good post called “Embrace Losing” that talks about closing sales and learning from mistakes.  I’d like to piggyback on the post with two of my own anecdotes that can be summed up with the simple thought: don’t be afraid to lose.

Believe in your product (or rethink your business)
In the mid-nineties, I was at a small venture-backed startup selling systems management software for SAP installations.  My territory had one really really big fish: Chevron.  When I moved over from launching the product on the marketing side to direct sales, I was stunned to realize that management was afraid of selling to Chevron.

Why?  Chevron was a key market influencer.  In enterprise software, you often see a small number of customer companies who rise to the top as market leaders.  Everyone else watches these organizations for lessons and to point the way. These are the companies most often quoted in the media, and most commonly on conference panels. In the western half of North America, Chevron was that big dog for SAP installations.

The prevailing thought was that if Chevron refused to buy after beta testing the product, then word would get out, and our reputation would be sunk. After all, we were up against SAP’s own solution as well as major players like Platinum, BMC, and CA.

My attitude was (and is) simple: if you’re going to play, go all the way.  Building a company is hard enough, but if you don’t believe in your product enough to risk losing, then you have a serious problem.  You won’t always win the gold medal every time you try, but you will never achieve greatness by going for anything less.  If you seriously do not believe you can win, then you need to rethink your business, your product, and your target markets.

The ending of this story was a happy one.  Few wins in my career have been more satisfying.

Don’t Negotiate Away Your Future
There’s another ugly side to the fear of losing, and that is being willing to win at all costs.  Salespeople with this attitude are both useful and dangerous because they end up negotiating for the other side, not your company.  That obsessive sales drive to win can make amazing things happen, but without the right checks and balances, you can find yourself in a situation where a deal gets closed and after the champagne loses its bubbles, dreadful reality hits.  The “win” turns out to be a feather in the cap of the sales person (and sometimes a big commission), but the organization is left holding a huge bill.

Common ways this manifests itself in negative ways:

• allowing a single customer to take over your product development roadmap in such a way that kills your relevance to the broader market (at Broadview, I occasionally had the challenging task of trying to sell startups who had one amazing blue chip customer and yet no future at all because they were completely under the thumb of that client… valuations in those situations were less than desirable)
• poorly defined acceptance criteria and/or payment terms that put the company’s resources and its balance sheet completely at the mercy of a client
• an unprofitable deal that consumes too many resources and offers too many promises for not enough in return — often a result of a rushed or undermined scoping process
• giving up intellectual property without adequate constraints on the other side

I’m not saying you do not want to go the extra mile to land a key customer.  I’m not saying that a loss leader does not have its place and time.  Sometimes going for gold means investing resources or cash in a sale, or taking on future problems.  However, you want to make these decisions carefully because they define your future.  You need to remember that the signing of a contract is not an end, but a beginning.

You want your sales people to have that drive to win win win, but you have to structure your company in such a way that there are checks and balances preserving the bigger picture and ensuring smart contract terms.  When you are negotiating, you have to have the confidence to stand up for yourself.  If you are too afraid to lose, then balance goes out the window and it can take your future with it.