Hey! Welcome to EarlyGTM post #1. My goal for this Substack is to keep each article as short, sweet, and efficient as possible.
Ok, so first off- congratulations on the product market fit! It’s now clear that your SaaS startup is going to work, at least on some level, and your investors are urging you to start building out a sales team.
What now?
Well, you’re going to feel two emotions right off the bat- you’re going to be bummed when you find out how much salespeople make. Your early team has a lot of equity but doesn’t get paid a ton cash-wise. The avg. salary (on target earnings, meaning base + variable) for a strong, proven seller is probably more expensive than the salary of your highest paid employee to this point.
And then, once you realize how expensive the whole thing is going to be, you’re going to start backpeddling, and think “wait… do we really need a sales team? Maybe we can productize the selling process somehow- after all, our product is very easy to understand and organic, free usage has been hockeystick-like.”
We can debate these points forever- but if you run a SaaS software business, you need a human sales team. If you want to build a good sales team, you’ll need to pay them competitively. To pay competitively, you have to participate in a very expensive market for sales talent.
This exact story played out at Dropbox, Slack, and then, Clearbit- so all three GTM roles I’ve had in my career.
Quick storytime: I got a job as an enterprise seller at Slack in 2016, soon after Stewart Butterfield famously claimed (or was misquoted, depends on who you believe) “no salespeople for us!”
Odd that I got hired 8 months after this Business Insider article was released. So why the backpedal?
It was the legendary Ben Horowitz who advised (the equally legendary) Stewart Butterfield that sales was an absolute must-have for this company (he experienced this first hand in founding Netscape, who later faced off against Microsoft’s goliath)- here are eight reasons why:
1. Your competition will have a sales team.
Your company is going to have competition. That competition WILL have a sales team. And that sales team is going to destroy your non existent sellers by talking $#!^ about your product, by taking the BigCo CIO out for dinner, by evangelizing their product within your install base, and as a result, your product will lose.
Fast forward: turned out to be absolutely true in Slack’s case. Microsoft Teams was created later in 2016, and was bundled as a free add on for Microsoft O365 customers. Microsoft’s army sellers essentially sold a free product- the sales cycle was convincing CIOs to turn their free product on.
2. Someone must crystallize the buyer’s PAIN and IMPACT
The process of buying an expensive software doesn’t happen if the buyer doesn’t understand PAIN and IMPACT at a very conscious level. Early adopters can reach the pain/impact realization on their own, but medium and late adopters will not, at least at the rate you need in order to win the market. Only humans can do this (at least in 2020 pre robot AI takeover.) If a buyer doesn’t acutely feel the pain of not having your product (let’s face it- they’re busy and likely responsible for a lot more than what your product solves) and understand the difficult-to-quantify IMPACT of solving this pain, they will not change their behavior.
3. Your competition will use your viral product as lead gen
Even with the advent of bottom up software adoption (a playbook that David Sacks, my boss at Craft Ventures, invented with Yammer) there is typically a decision maker who can cripple your product’s viral growth [within their company] with the snap of a Thanos gauntlet. If Slack is growing virally at BigCo, and BigCo’s CIO decides to standardize the whole company on Microsoft Teams, Slack’s underdog run is over within that company for at least 3-5 years. That’s an eternity in the tech world.
This happened at ton at Slack. Slack’s free usage only served to validate that *this type of product* was needed, BigCo CIO took note of that, and chose Microsoft Teams, which was free with their O365 subscription and basically scratched the itch that Slack free usage revealed. Game over. Your hard earned viral usage is now a lead gen machine for your competition.
4. Pricing power
If you want to charge a decent price for your product, that’s going to spur natural inaction with a decision maker- or at least an instinct to “shop around.” The stickershock will cause that decision maker to evaluate cheaper alternatives. Without a human to explain why the cheaper alternative won’t work as well as the premium product, the cheaper product with a sales team will beat you.
Why? Because a good salesperson is a project manager to push an evaluation along, and help the buyer check off the questionmarks they’ll inevitably have about the solution. A good salesperson makes it easier for a decision maker to complete their evaluation, all while trying to stack the deck in their favor as the evaluation unfolds.
Salespeople do discovery, tailor a pitch to the needs of the customer, will demo the product, will answer any and all functionality questions, and will help resource key asks internally. If you don’t have a sales team, buyers will begin their relationship with you feeling unsupported.
5. The discounting beautiful dance
Unfortunately, the discounting song and dance has become a key step in the way that software is purchased. If a company has a procurement team, that team justifies their salary by negotiating discounts. A no-sales-for-us-Slack wouldn’t discount deals. They’d show you the price on a self serve page, and that’d be that. And actually, that sounds like a wonderful world, and probably where we’re heading in the future.
But for now, procurement wants their pound of flesh. They’ll get it from their local b̶u̶t̶c̶h̶e̶r̶ salesperson, who understands the dance. The conditioning of buyers to expect discounts must stop, and until it does, you’ll need to be able to negotiate.
By the way, Ryan Neu at Vendr is building the future of how software is purchased and procured- he is working on solving the discounting song and dance, and is helping companies procure software more efficiently in the meantime.
6. Once your early adopters adopt, inertia (to do nothing) takes over
Organic, free usage requires human interaction (in most cases) to harness into an actual buying process. Newton’s first law of motion (inertia) states that an object at rest stays at rest. Once you account for the early adopters (who weed themselves out by raising their hands and buying), there is typically not a good impetus to get someone at a company to spend tens or hundreds of thousands of dollars on a new solution. Especially if the free version of your product is enough- remember, your enterprise solution is also competing against your free solution.
The bottom up sale cycle requires a human being to take note of the usage that’s happening, identify the decision maker, reach out to them, and try to convince them to engage in an evaluation.
7. You’re racing your competition to grab land
Once a new category of software is created, everyone will get excited- investors especially. That’s because a total addressable market of “every single business in the world” has just been unlocked for you to sell to.
The issue is, speed matters a lot in this type of race. Again, once a big decisionmaker picks a product to solve a certain type of problem, the window to sell to that company is closed for the next five years. Once a company standardizes on Microsoft Teams, Slack’s opportunity is blocked.
Sales is the team motivated to penetrate their territory as fast as possible, hit their number every single quarter, and leave no stone unturned. That dynamic simply doesn’t happen as fast with marketing-led campaigns.
8. If you don’t have sales, you’re signaling that you won’t invest in their success
It’d be weird if a company had no sales team, but had a world class customer success team to get a buyer up and running and ensure that they’ll be successful on your product.
So customer success is an equally important function to sales for nearly any product used in the enterprise. A decisionmaker needs to know that you will support them and guide them to a successful deployment. If a buyer purchases your product, and it’s expensive, and the deployment flops, that represents career risk to them.
Sandler (sales training) taught us all that “personal pain” is a key reason why people buy. Not supporting their deployment will cause a massive amount of personal pain- the decision maker will suffer if they aren’t supported by sales AND customer success.
Summary
If you are lucky enough to find explosive product market fit, you’ll face competition from incumbents, who will copy you, and new entrants, who will want to steal your thunder.
If you don’t invest in a sales team, your competition will, and sellers for inferior products will beat a superior product without sellers. It is pure hubris to believe this is not the case. No product is SO good that it can’t be copied relatively well.
The copies will have sellers who will fight for their product like their career depends on it, because it does. They’ll fight for their product like their family going to college depends on it, because it does. When a new category is created, it becomes a race to solve a decision makers’ problem within a company. Sales accelerates that race massively.
You don’t want to be caught in a state of status quo complacency (and defenseless on the front lines) when your competition is fighting tooth and nail to beat you. You need to bite the bullet and invest in sales. It will hurt, but not nearly as much as losing over and over to your rivals.