Dave Lu

@davelu

The Most Important Skill of a Founder: Sales

After starting two companies, I’ve learned that sales is by far the most important skill a founder should have. And yet, it’s something that no one ever pointed out to me. I was an undergraduate at the Wharton School at UPenn. I got my MBA from Stanford Business School. In six years of business schooling and after hundreds of thousands of dollars in tuition fees, I did not take a single course in sales. No one tells you that you will be constantly selling as a founder. Selling your business idea to investors. Selling your company and culture to potential hires. Selling your product or service to potential customers. Selling your dream and vision to your employees. As a founder, you must have 100% conviction in what you are building because your success literally depends on it. If you don’t believe in what you’re selling, why should anyone else? Building a business that you aren’t excited or passionate about or only because you think it might make money will eventually be exposed. You won’t be able to raise money, hire, acquire customers or inspire your employees if you’re faking it. You have to convince yourself that your idea is the best thing since sliced bread or don’t bother pursuing it because you won’t be able to sell it to anyone if you can’t even sell it to yourself.

The three most important words in sales (Glengarry Glen Ross)

Fundraising

When you raise money from people, whether it’s from angel investors or venture capital partners, you learn how important it is to perfect your pitch. You are selling your dream to investors to make them believe in you and your idea. A good founder can sell a bottle of water to an investor standing next to a water fountain. They make believers out of non-believers because they know how to vividly paint a picture of a huge opportunity and outline a plan to capitalize on that opportunity. “Every smartphone in the world will be used to augment reality.” “Cryptocurrency is going to replace all forms of payment.” “The marijuana market is going to be a $30 billion industry by 2021.” Whether they eloquently use words or artfully use numbers, a successful founder can induce FOMO (fear of missing out) in an investor because they make the opportunity seem THAT good. A good founder can make an investor envision a product that has not yet been manufactured or a service that has not yet been delivered. “Get a black car on-demand in five minutes for less than the price of a cab ride.” “Never go to a grocery store again.” “Live like a local when you’re traveling.” These were mere ideas that were sold to investors. No investor wants to add to their anti-portfolio, so you just need to convince them that they will regret not investing in you.

Make it hard for them not to invest (Futurama)

Recruiting

Convincing someone to give you money that has a lot of money to give, is often a lot easier than trying to convince a talented and in-demand candidate to forego other opportunities (with all of the potential upside and/or stability) and join your unknown company. The earliest employees are the toughest sell. Good talent always has a myriad of options because they’re always being pursued. When you are a few people with some money and an idea, you have to sell your company on little more than potential. Great founders are like the Pied Piper and can draw the best hires to a company because they are effective at proselytizing uncertain candidates into fired-up employees. Those employees are an extension of the founders and learn how to sell the company and the dream to future employees. A potential hire could be one conversation away from accepting an offer to join your company or turning you down. Know what their career goals are and what they want out of their next job and address those needs and wants. Sell your strengths as a founder and as a company. They need to sense strong conviction about your vision and plan for the company. If you or your team don’t believe it, why would they?

You need to go above and beyond to land the best recruits (Jerry Maguire)

Marketing & Business Development

I started a company that sells a service to restaurant operators, a notoriously difficult audience to sell to. Restaurateurs are known to have have razor thin margins and are extremely cash conscious. Trying to convince them to pay for anything can be challenging unless your value proposition justifies it. They are inundated with sales pitches from vendors constantly. Loyalty programs, POS systems, delivery services, reservation platforms, suppliers and the list goes on. They don’t have time to read your sales e-mails or answer your sales calls. If you want to sell them something to a restaurateur it better be a painkiller and not a vitamin. Your job is to effectively convey that your offering can cure their pain in your brand messaging, advertising, drip campaigns and sales pitches. The goal is to get that sales and marketing playbook figured out and eventually hit a tipping point where organic growth and word of mouth drive adoption which drives down your CAC (acquisition cost). Every founder should be striving to hit that tipping point.

Even if it’s a tough crowd, you need to convince them you’ve got what they need (12 Angry Men)

Motivating Your Team

As a founder, it is up to you inspire your employees. They look to you to get them fired up and excited to come to work each day. They look to you to give them conviction about your company vision and mission. When I was a product manager, it was my responsibility to get buy-in from engineers to build what I needed built. Getting buy-in is all about making people believe not just through words but by data and action. Your job is to sell your team on your goals and strategy to get there. If you don’t back these up with reason or logic, it will be hard to convince them to follow. Blowing smoke can only get you so far. You have to lead by example. Getting your hands dirty and digging in with your troops is a very effective way to earn the trust and respect of your team. Why would people listen to you or follow you if they don’t respect you? Showing that you can empathize is a critical skill as a leader and founder. Understanding what people are working on or experiencing is an important first step to motivating them effectively and getting them to rally behind you.

Get your team fired up and ready for to take on the world (Hoosiers)

Tips on Selling as a Founder

Although it’s impossible to summarize years of experience selling as a founder, here are a few suggestions:

  1. Know your audience: Do your homework before you meet with your potential customer, investor or recruit. If you don’t care enough to learn about them, why should they care about you? Find points of connection or relatability with your audience. This could be a city that they’ve lived in or a school they attended. Take the time to look up their profile on LinkedIn or AngelList. If they’re an investor, look up their previous investments on Crunchbase or the firm website. Investing just 5–10 minutes to study your audience can pay off huge dividends.
  2. It’s about them not you: When you’re writing a sales e-mail or creating a marketing campaign, don’t make it all about you. If your e-mail is all about what you can do versus what your potential customer needs, you’ve already lost. If you’re trying to sell Advil, you don’t talk about ingredients like Acetylated monoglycerides, colloidal silicon dioxide, cornstarch, croscarmellose sodium, etc. You sell Advil by describing the soothing relief you can provide for searing headaches. People will listen if you resonate with them through empathy and thoughtfulness.
  3. Social proof: This is a basic sales and marketing tactic from social psychology, just as scarcity is, but it is very effective. If investors see other impressive people backing you, they are more likely to invest in you as well. When I told potential investors that Jeremy Stoppelman (CEO and founder of Yelp), Thomas Keller (The French Laundry) and Steve Chen (CTO and founder of YouTube) all invested in our company, they listened a lot more intently to our pitch. When we market to San Francisco restaurants and tell them that The Slanted Door, Saison and Octavia all use our service, it makes them take us a lot more seriously. When I try to recruit new hires and tell them our team comes from Apple, Lyft and Amazon, they are much more likely to take the job. People don’t like to be the first to take a risk. You can effectively create credibility and confidence through social proof.
  4. The long game: It’s a marathon not a sprint. It’s rare that you close an investor in one conversation. More often than not, it takes multiple conversations over a span of time to convince someone unless you have incredibly mind-blowing traction and data. If you don’t have those numbers, you will need to build a relationship where the other party is invested. That could be an investor or someone you’re trying to recruit. Investors are in high demand and the best recruits are usually employed and not on the market. Spend time nurturing these valuable relationships. If it’s someone you really want as an investor or a hire that you would kill to win over, then schedule regular coffee meetings and go out of your way to help them out even if it might not benefit you in the short run. It might take months or even years to pay off, and it may never pay off at all. But I have found that investing time with the right people will always pay off.

Every founder brings a different skillset to the table when they start a company. It might be a technical background to create a unique algorithm or technical solution. It might be a sales background to get the first handful of customers. It might be a product background to have the vision and be able to build a great product or service. It doesn’t matter what you were in your previous life or what experience you had from your past, when you become a founder, you have to become the best salesperson you can be if you want to succeed.

Recommended Reading

Even if you have no first-hand experience, it’s worth taking the time to invest in reading books about sales and the psychology of sales. Here are some highly-recommended books on the topic:

The MBA textbook on sales and negotiation Influence: The Psychology of Persuasion by Dr. Robert Cialdini.

The data-driven analytical sales book The Sales Acceleration Formula: Using Data, Technology, and Inbound Selling to go from $0 to $100 Million by Mark Roberge

The classic sales book which is the result of 12 years of studying effective sales performance SPIN Selling by Neil Rackham

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