Exits are Rare — Here’s What I Learned After Four
I have spent my entire career in sales. I’ve been part of four firms with exits totaling over $1 billion, launched 49 products to market maturity, and closed billions of dollars in deals. Around 90 percent of startups fail. Andressen-Horowitz has an even dimmer view.
Most companies focus on building a product, raising money, and they fall into the trap of believing revenue creation can be solved later. It can’t.
SALES MAKES EVERY PROBLEM EASIER OR IRRELEVANT
Revenue creation makes any business goal more attainable. Prospecting-based organizations win nine times out of 10 because most sales of new products occur via voice-to-voice, full contact sales interactions, not slick marketing. When scaling, the only thing that matters is consistent pipeline development held accountable for revenue creation.
YOUR IDEA DOESN’T MATTER UNTIL THE CLIENT THINKS IT DOES
To get firms to care about your product, you have to solve their problem. Too many growth companies try to “think outside the box” and spend far too much time focusing on their smart idea and not how it solves a problem that companies consider mission-critical. One of my favorite client quotes is “just because no one can sell it doesn’t mean it’s not a sellable product.” When no one is buying, that’s precisely what it means.
SALES IS STORYTELLING
Whether raising money or bringing a product to market, there is still a human being making a decision. The story of your product must be compelling and presented in a way the client can believe and invest in. Over 70% of a client’s perspective on a product relies on the salesperson. Why trust something that critical to anyone but an expert.
THERE IS NO SALES UNICORN
Time and again, we hear firms say they “just need a salesperson.” No unicorn can do all the necessary parts of running a real sales system alone. Sales involves marketing, prospecting, deal management, leadership, system creation, and many other things to be successful. 17% of all full-time jobs in the US are sales jobs.
ENTREPRENEURS WILL BUY INTO THE SUNK COST FALLACY
The sunk cost fallacy is where firms will have invested so much time and resources in a direction that they are afraid to pivot even when glaring evidence is present. At one point in time, Netflix mailed DVDs to your home. Model change is good. Nimble organizations survive. Embrace data that challenges your model.
THERE IS RICHES IN THE NICHES, BITCHES
Many firms suffer from the slow death of being willing to do whatever pays. You can do lots of things or be the best at one. At Pitchstack, we are sales and product launch experts. It’s the only thing we do. By narrowing your focus, you ensure your success. Sales is most natural when you say, “we do this, and we are the best.”
RAISING MONEY INSTEAD OF BUILDING A BUSINESS
The VC model is one of the best and worst things to happen to technology and high-growth firms. More CEOs spend their time raising money than they do running their business. If you build a great company, the money comes to you. In one of the firms we worked with, I joined after it took less than 90 days to raise one of the largest Series A rounds in Austin history. Focus on the business model, and the money comes to you.
IF YOUR GOAL IS TO EXIT, YOU HAVE ALREADY FAILED
The businesses that ultimately exit are mostly ones that set out to build an incredible company, and a byproduct of that was that another firm wanted to buy them. A compelling idea, great product, strong leadership, and a motivated team will ultimately not survive the inevitable struggles of business building if your drive is to get famous or rich through an exit.
PROFITABLE MODELS ARE NO LONGER AN OPTION
The economics of your model is like stepping on a scale. The numbers don’t lie. It doesn’t require a business to be profitable, but its model has to be. There is simply no endless supply of money to pour into a business. Making money requires you to say no to a lot of unnecessary things, and it ensures your longterm success. Boring companies that solve real problems are beautiful.
SALES MATTERS THAT MUCH?
I am no genius. The only way we have such an excellent track record is because we focused on revenue creation — always.
1. Sales is the fastest, cheapest, and most consistent path to scale.
2. Sales validates your model and offering the quickest way possible.
3. Sales experts are artists at conveying complex ideas to create revenue at pivotal growth moments.
4. Increase the likelihood of your success by investing in the right sales resources on the scale journey.
5. Sales demands an honest approach to market appetite, focus on your most compelling offerings, allows for less time raising capital, surfaces misaligned organizational objectives, and proves a profitable model exists that is scalable.
Sales IS scale. It always has been.