Startup struggles: tackling product and sales problems

In a list of the top 20 reasons startups fail published by CB Insights, 10 reasons are related to product or sales issues. The analysis of 101 startup post-mortems found that a shocking 42% of startups failed because of “no market need” and 17% failed because of “poor product.”

Why are we still building products before testing markets? Are there systems that startups can implement to diagnose and solve product and sales problems before it’s too late?

At last weeks Scale Up event guests gained insight on these issues from two awesome founders: Wiley Cerilli of First Round Capital and SinglePlatform, and Danielle Weinblatt of Take the Interview. In case you missed it, we’ll get you up to speed with our 5 favorite takeaways:

1.Stop asking “is it time to start selling” and master the pre-sale

Instead of the typical ‘if you build it they will come’ mindset, Wiley adopted a ‘if you buy it, then I’ll build it’ mentality’ at SinglePlatform. Embodying this mindset, he attempted to sell SinglePlatform to executives with just a deck outlining his vision, before any product was built. And it worked- people were ready to sign checks. The meetings also provided him with key customer insights: which slides or buzz words were getting them excited? Which slides were triggering negative responses? He modified the deck and the product idea based off these observations.

Danielle took a similar approach. While still at HBS she had the idea for TTI, and decided to develop a short deck to test the idea before investing time and resources. She set up meetings with her future customers, Heads of HR, and eventually had enough people interested that she decided to start building the product.

2. Feature creep: fight the urge to be everything to everybody

Entrepreneurs need to be ready to say no to prospects. Everyone faces a lot of rejection early on, but when you finally get someone to say ‘yes’ to your product and they ask for additional features, you cannot just launch a bunch of crap. Constantly adding features for the sake of pleasing buyers or keeping up with competition will make you subpar at a bunch things rather than being great at one thing.

How can founders decide when to explore an idea for a new feature? Danielle and her team developed a product strategy that includes product requirements that new features must fit into. The document requires that a new feature solve one of 4 key challenges, keeping the team focused on solving specific pain points.

3. Biggest sales mistakes were around hiring

Let’s be clear: the founder sale is not replicable. Founders can walk into a meeting with little to no sales process in place, get excited, and close deals. The people that founders hire to do sales cannot do this. Sales professionals need structure, processes, and scripts given to them from a founder.

Mistakes made around hiring sales leadership waste time and resources, hurting revenue, which hurts funding opportunities. There are two reasons sales leadership in startups often fail: (1) founders don’t know what they’re looking for/how to interview a VP sales and (2) startups need to have an internal structure and sales process in place before bringing on a VP, but often do not. Founders cannot expect someone to learn how to sell the product, how to navigate a messy/evolving internal structure, and how to develop a sales process to train sales reps. After making a few mistakes in this area, Danielle and the team established internal structure and a training program with Skaled’s sales organization consulting.

4. Replicability > revenue > scaling

When launching new products or features entrepreneurs must focus on establishing a replicable sales process that solves one problem for one customer. Focusing on a small base may lead to less revenue early on, but mastering a replicable sales process ultimately leads to scaling and larger revenue gains in the long term- leading to more funding opportunities.

Trying to scale or reach the masses early on would be a huge mistake, and it’s unlikely that you’ll ever be able to successfully scale without first mastering your sales process with one customer base.

5. Distinguishing and solving product vs messaging issues

To avoid the development of bad products, larger startups can dedicate a few reps to testing new features. These reps can do what the founding team did at SinglePlatform, and sell the new features before they’re built.

Danielle advised the audience to set up CRM metrics to track exactly what’s going wrong at each stage of the pipeline. If customers drop out after the first meeting or before a demo, you know you have a messaging issue. If 20 deals have been lost at the final stage because you didn’t have a specific feature that your competition had, you clearly have a product issue.

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