How to Get Your First Customers | Startup School

Summary

In this insightful talk, Gustav from Y Combinator discusses the critical early stages of startups, emphasizing the importance of manual customer recruitment and sales. He argues that founders should initially handle sales to deeply understand their customers and product. Gustav shares strategies for writing effective sales emails, building sales funnels, and the necessity of charging for products to validate value. He also stresses the importance of working backwards from goals to understand sales conversion rates, using real examples from successful YC companies to illustrate his points.

Takeaways

• 🚀 **Importance of Non-scalable Actions**: In the early stages, startups must do things that don't scale to gain traction, as growth doesn't happen by itself and requires founder involvement.
• 🛠️ **Product Development with Users**: A good product is rarely built in isolation; it is developed in conjunction with customers, and thus may not be perfect when first introduced.
• 💡 **Founder's Role in Sales**: Founders should initially handle sales to understand the customer, maintain control over the startup's narrative, and ensure the product meets customer needs.
• 📈 **Sales Funnel Basics**: Understanding the sales funnel is crucial, starting from prospecting to closing, and recognizing the importance of each step in the process.
• 📊 **Tracking Conversion Rates**: Keeping track of conversion rates at each stage of the sales funnel is vital for understanding where improvements are needed and for setting realistic sales goals.
• 📧 **Crafting Effective Sales Emails**: Writing concise, clear, and direct sales emails that address the customer's problem and include a call to action is key to successful outreach.
• 💰 **Charging for Your Product**: Charging for a product is essential to validate its value and to ensure that you are building a real business, not just a free service.
• 🔄 **Iterative Learning Process**: The early days of a startup are about learning and iterating quickly; founders must be willing to test, learn, and adapt to succeed.
• 📉 **Understanding the Startup Curve**: Recognizing the ups and downs of the startup journey, including the 'Trough of Sorrow,' and understanding that perseverance is key to reaching product-market fit.
• 📈 **Prioritizing Easiest Customers**: Focusing on the easiest customers first simplifies the sales process and helps in building momentum and confidence in the product.
• 🔍 **Utilizing Personal Networks**: Leveraging personal networks can be an effective way to find early adopters and start generating sales, as these contacts are more likely to take a chance on a new product.

Q & A

What is the primary focus of Gustav's talk at Y Combinator?

Gustav's talk focuses on how to transition from talking to users to acquiring the first customers for a startup, emphasizing the importance of doing things that don't scale at the early stage of a company.

Why is the mindset of 'doing things that don't scale' important for early-stage startups?

This mindset is crucial because it encourages founders to manually recruit customers and engage directly with users, which is essential for understanding customer needs and driving growth, rather than relying solely on a good product to take off on its own.

What is the 'startup curve' and what does it illustrate about the journey of a startup?

The startup curve is a visual representation of the typical trajectory of a startup's growth, illustrating phases such as launch, the trough of sorrow, the crash of ineptitude, and eventually finding product-market fit. It shows that founders play a critical role in navigating these stages and making a difference between success and failure.

Why should founders be the ones doing sales in the beginning?

Founders should be the ones doing sales initially because it allows them to understand their customers deeply, gain full control of their startup's destiny, and ensure that sales become part of the company's DNA.

What is the significance of charging for a product in the early stages of a startup?

Charging for a product is important because it validates that the product provides real value to customers. It also helps in identifying serious customers and prevents the pursuit of leads that are not genuinely interested.

Why is it recommended for startups to start by selling to other startups?

Selling to other startups is recommended because they typically have shorter decision-making processes and less bureaucracy, making it easier to close deals and learn from the sales process.

What is the main mistake startups make when it comes to sales according to Gustav?

The main mistake startups make is not doing enough outreach and not working their way backward from their sales goals, leading to incorrect conclusions about the effectiveness of their sales efforts.

What are some characteristics of an effective sales email according to the script?

An effective sales email should be short, use clear language, address the potential customer's problem, avoid HTML formatting, include social proof, and have a clear call to action.

Why is it advised to avoid offering free trials in B2B sales?

Offering free trials in B2B sales can lead to a lack of commitment from the customer. Instead, a money-back guarantee or the ability to opt-out is preferred as it still requires an upfront commitment and signals that the product provides value.

What is the importance of tracking conversion rates in the sales funnel?

Tracking conversion rates is crucial for understanding the effectiveness of each step in the sales process and for identifying areas that need improvement. Without this data, founders cannot make informed decisions or receive helpful feedback on their sales strategy.

What are some resources Gustav recommends for learning more about sales and startup growth?

Gustav recommends 'Founding Sales' as a book and 'lineage newsletter.com' as a resource for additional insights into sales and startup growth strategies.

Outlines

00:00

🚀 Entrepreneurial Growth through Non-scalable Actions

Gustav, a group partner at Y Combinator, introduces the concept of 'doing things that don't scale' as crucial for early-stage startups. He outlines the importance of manual customer recruitment and the common misconception that a good product alone guarantees success. Gustav emphasizes the need for founders to take initiative, referencing Paul Graham's essay and Airbnb's early strategies. He also highlights the 'startup curve', illustrating the challenges and the critical role of founders in overcoming them.

05:00

📈 The Fundamentals of Early-Stage Sales and Customer Engagement

This section delves into the necessity of founders being personally involved in sales to understand their customers and gain control over the startup's destiny. Gustav argues against outsourcing sales until the founder has mastered it. He provides examples of successful founders who excelled in sales and shares insights on writing effective sales emails, including brevity, clarity, and a direct approach to addressing customer problems.

10:02

💡 Prioritizing and Executing Effective Sales Outreach

Gustav advises startups to focus on the easiest customers first and to build a large pipeline to increase the chances of sales conversions. He discusses the importance of prioritizing potential customers based on their likelihood to close and the value of leveraging personal networks. The paragraph also touches on the simplicity of selling to other startups due to shorter decision-making processes and the reality that most people are not early adopters, necessitating a larger number of outreach attempts.

15:04

💰 The Importance of Charging for Your Product and Qualifying Customers

The speaker argues against offering free trials or unpaid pilots, stating that paying customers are a testament to the product's value. He suggests using money-back guarantees as an alternative to free trials and emphasizes the need to increase prices until customers complain but still pay. Gustav also stresses the importance of qualifying customers during the first call to ensure they are a good fit for the product.

20:05

📊 Working Backwards from Sales Goals and Tracking Conversion Rates

Gustav explains the concept of working backwards from sales goals using a sales funnel, highlighting the need to understand and track conversion rates at each stage. He warns against the common mistake of not doing enough outreach and relying on scalable growth channels too early. The speaker recommends using a CRM to track data and provides examples of successful sales emails from Y Combinator companies that led to significant contracts.

🛠 Tools and Strategies for Scaling Startup Growth

In the final paragraph, Gustav recommends tools for managing the sales process, such as apollo.io, close.com, pipedrive, and hunter.io. He also suggests reading 'Founding Sales' and subscribing to the Lineage newsletter for further insights. The speaker emphasizes that while scalable growth channels are important, startups must first engage in non-scalable actions to establish a customer base and understand their market.

Keywords

💡Sales Funnel

A sales funnel refers to the process that leads a potential customer from initial contact to making a purchase. In the video, the sales funnel is discussed as a critical tool for startups to understand and manage the customer acquisition process. It is used as an example to illustrate the importance of tracking conversion rates at each stage, from initial outreach to closing a sale.

💡Early Adopters

Early adopters are the first individuals or organizations to embrace a new product or idea. The video emphasizes the importance of targeting early adopters in the sales process because they are more likely to take a chance on a new product. The script mentions that most people are not early adopters, and startups need to identify and focus on this group to gain traction.

💡Outreach

Outreach in the context of the video refers to the proactive act of contacting potential customers to introduce and sell a product. The script highlights that many founders do not do enough outreach, which is a mistake as it is essential for understanding conversion rates and building a customer base.

💡Conversion Rate

Conversion rate is the percentage of potential customers who take a desired action, such as making a purchase. The video script discusses the importance of tracking conversion rates at each stage of the sales funnel to understand how effectively a startup is moving potential customers towards a sale.

💡Customer Onboarding

Customer onboarding is the process of integrating a new customer into using a product or service. The script points out that startups often overlook the importance of onboarding, which can lead to high churn rates if customers do not understand how to use the product effectively.

💡Early Stage Startups

Early stage startups are new businesses that are in the initial phases of development and customer acquisition. The video's theme revolves around the unique challenges and strategies that early stage startups need to employ to grow, such as doing things that don't scale and focusing on manual customer recruitment.

💡Minimum Viable Product (MVP)

An MVP is a version of a new product with the minimum features that allows a startup to collect user feedback and validate the product idea. The script mentions that the Brex founders focused on building a minimum viable product to start signing up customers, emphasizing the importance of getting a product in front of users as soon as possible.

💡Product-Led Growth

Product-led growth is a strategy where the product itself drives user acquisition and retention. The video script contrasts this with sales-led growth, indicating that some startups find success with the product being the primary driver of growth, especially in the early stages.

💡Qualification

Qualification in a sales context is the process of determining whether a lead is a good fit for the product and likely to become a customer. The video script advises founders to qualify customers during the first call to ensure that they are pursuing leads that are genuinely interested and a good match for the product.

💡Scalability

Scalability refers to the ability of a business process or system to handle growth. The video discusses the misconception that scalable growth channels are the right approach for early stage startups, when in fact, it is often the non-scalable, manual efforts that are crucial for initial traction.

💡Sales CRM

A sales CRM (Customer Relationship Management) system is a tool used to manage interactions with current and potential customers. The script recommends using a sales CRM to track the progress of sales efforts, conversion rates, and other key metrics, which is essential for understanding and improving the sales process.

Highlights

Importance of doing things that don't scale in the early stages of a startup.

The misconception that a good product alone guarantees success and growth.

The necessity for founders to actively recruit customers rather than relying solely on advertising.

The role of the founder in making a startup take off, rather than expecting it to happen automatically.

Insights from the 'Startup Curve' and its implications for early-stage companies.

Why founders should be involved in sales to understand their customers and have control over their startup's destiny.

The argument against hiring a sales team too early and the importance of founders learning sales themselves first.

Examples of successful founders who took on sales roles and excelled, such as from DoorDash and PlanGrid.

The strategy of Brex founders in recruiting their first customers directly from the YC batch.

Tips for writing effective sales emails, including brevity, clarity, and addressing the customer's problem.

The sales funnel concept simplified, from prospecting to closing and the importance of tracking each step.

Advice on prioritizing the easiest customers first and the importance of not being afraid to let go of unpromising leads.

The advantage of selling to startups due to their shorter decision-making processes and lack of bureaucracy.

The myth that most people are early adopters and the reality of targeting the actual early adopters through extensive outreach.

The significance of charging for your product as an indicator of providing real value to customers.

Recommendations for tools to assist in the sales process, such as Apollo.io and Close.com.

The common mistake of not doing enough outreach and the importance of working backwards from sales goals.

The necessity for founders to understand and track their sales conversion rates to improve their strategies.

Transcripts

foreign

[Music]

School my name is Gustav and I'm a group

partner here at y combinator today I'm

going to talk about how to go from

talking to users

getting your first customers here's what

I plan to cover today one what does it

mean to do things that don't scale and

why is this mindset so so important at

this stage of your company two how to do

sales I'll make the argument the founder

should be the ones doing sales in the

beginning then we'll cover some sales

funnel information and then why is it so

important to charge for your product and

finally we'll learn how you work your

way backwards from your goals and why

that's important I hope you've read this

article or this essay the most important

essay ever written about the very early

stage of startups is do things that

don't scale by Paul Graham Paul is the

co-founder of Y commner he published

this essay about the early days of

Airbnb Airbnb is perhaps the best

example of a successful YC company who

got their feet off the ground this way

many Founders who never worked for a

startup or an early stage company

incorrectly believe that all you need to

succeed is a good product and growth

will take care of itself this is not the

case the truth is that good product is

very rarely built in isolation but

together with your customers and as a

result it's not actually that good when

you show it to your first customers set

this another way

startups don't take off by themselves

startup takes off because Founders make

them take off and you have to manually

recruit your customers it's not enough

to push a button on an advertising

Network this is uncomfortable and

Founders continuously find many ways to

avoid doing this the most common way is

believing that you can recruit people by

just writing more code or doing more

work on your machine or your robot or

whatever you're building I know this

from my experience of YC that this

actually don't work so why am I talking

about this right now learning the

tactics of sales is just one side of

this uh of of this learning the most

important side is just really realizing

that it comes down to you it's not just

knowing exactly how to do sales in

theory but actually doing it and

actually wanting to succeed another

great visualization is what's called a

startup curve this was initially drawn

by YC found program and then labeled by

Trevor Blackwell and you've probably

seen this curve before most companies go

through something like this it's kind of

like a timeline for startups here's how

it goes first you launch these days most

companies don't launch on TechCrunch but

probably on product hunt or Hacker News

or some other internet board the launch

energy that you get from this launch

eventually starts wearing off as early

adopters are looking out for something

new if you don't have instant High

retention nobody does for what you are

building then you'll enter the through

of Sorrow this can take a long time and

many companies die during this stage

they just give up and don't move fast

enough with testing new things some

startups do move fast enough and release

new improvements of their product

they'll listen to users and they improve

many still don't get anywhere further

and becomes victims of the crash of

ineptitude it's the founders to stay the

course and don't give up that reaches

the Wiggles of false hope and eventually

the promised land of crack Market fit

the learnings we draw from the start

curve is that every moment in the early

days of startups the founders are the

ones that make the difference between

success and failures if you are in the

wrong Market

it's the founders that switch to a new

one and if you don't know how to do

sales it's the founders who learn so you

have to really want it otherwise this

won't work all right let's talk about

sales and how to do sales first Founders

should learn how to do sales you should

learn how to do sales because you'll

need to learn to know your customer

talking to customers and sales are

effectively different sides of the same

coin and the same reasons Founders can't

understand what to build they don't

understand what the problem is you don't

know how to sell unless you know your

customers two learning how to do sales

actually gives you full control of your

destiny as a startup just like you can't

Outsource engineering sales has to be

part of the DNA of the founders

sometimes you just have to learn it as a

result you should not hire a sales team

until you know how to do sales yourself

only then will you know what good looks

like you also can't do sales if you

practice bad and you won't know if the

product is bad unless you've had some

effort in trying to sell it first if you

don't know how to sell don't worry you

you can learn it's probably the easiest

job to learn in startup if you know the

problem you're solving if you know

you're product intimately if you know

the market you are an expert in the eyes

of the customer they will want to hear

what you have to say finally a love for

solving customer problems is really

infectious if you're really passionate

about solving this problem they will be

able to tell if you don't believe me

here are some examples of Founders who

took on the sales job and learned to get

really good at it so Tony from doordash

matild from front Tracy from plangrid

and Steve Jobs let's get straight into

an example so these are the brex

founders Pedro and henrique when brex

was in wycomner in Winter of 2017 they

recruit the first 10 customers directly

from the YC batch June YC you have the

benefit of being around other startups

I.E potential customers the brex

founders asked themselves what would the

minimum product look like that they can

build to be useful to other startups and

then they went with strain straight into

signing up those customers the first

version was very very simple customers

just had a virtual credit card and

Enrique from brex actively onboarded

everyone of the customers himself of

course they could have waited until they

had a full-blown product a website a

Mobile app all of those things but they

decided to get going when they have

something that was really useful this is

how their first physical card looked

like this before they had this card they

just had a virtual card Rex reached out

to the their YC batch and otherwise the

companies and this is the email that

they sent I'm just going to read a brief

portion of it hey guys we're opening up

our beta for winter 17 batch friends

with the 10 spots for beta users 10 spot

this sounds like there's a limited spot

so I should take actions brex is a

corporate credit card focused on

technology companies that's me perfect

you're actually writing the email

directly towards your customers we don't

require a personal guarantee it can

underwrite startups who just got started

this was the value prop most other

alternatives to brex did not have

something like this so how much does it

cost it's free the merchants are paying

us so there's zero Annual fees this

seems like a no-brainer I would argue

that this email is probably a little bit

too long but it did work so let's talk

about how to write a great sales email

so first it should be short Max 6 to 8

sentences the brexit sample on the

previous slide is probably too long it

still worked but probably too long

people don't have time to read long

emails if you're coming out of Academia

your culture is going to be very

different you write very long emails but

in the world of sales you want to get to

the point and be brief as much as you

can two you want to make sure you have

clear language no jargon no buzzwords

just say exactly what you do and how it

works and then three address the problem

that the potential customer is having

four do not use any HTML formatting

write your email in plain text only like

you would written it to a friend say you

are the founder of the company who makes

this product many people forget to do

this describe why you and your team are

impressive include social proof and

remember to show not tell don't say

you're an expert don't say how many

years that you have been an expert if

you're in the YC match if you worked at

impressive companies in the past those

are other piece of social proof that you

can include you won't include a couple

of these ones so that the reader knows

the source and even if they don't know

you gives assign you some authority six

you want to include a link to your

website the website needs to be simple

you have to have information about the

product the website should not have a

lot of drawings or sort of like paid for

graphics you should just have

screenshots from your product and

bullets about what your product does

sometimes it works to send a short video

a YouTube video that you can embed in

the email that's very easy for the

receiver to click on and View and I've

even seen people using gifs now those

videos and those gifs needs to get to

the point right away because the the

receiver is kind of intimately familiar

with the problem but not really have

time to watch two or three or four

minutes of a potential solution and then

finally you want to include and ask for

a call or a meeting or a self-serve

whether whatever is appropriate for your

company but there needs to be a call to

action in the email that you're sending

all right let's talk about the sales

funnel the concept of sales funnels is

really quite easy I think people get

confused by the language the sales

people are using so I try to simplify it

here on the left hand side I call it the

founder speak on the right hand side I

call it the sales speak these are not

going to be perfectly mapping but you

get the idea so first you want to make a

list of customers you plan to reach out

to in sales it's called prospecting or

lead generation we'll just call it make

it the list and you can use Google

spreadsheets or something like that to

make this list then we want to send them

an email or a LinkedIn message or add

them on LinkedIn or whatever is the

appropriate way to contact these people

after that you want to schedule and run

a demo or a meeting from that response

to the email and then you want to talk

pricing and then finally close them as a

customer the last thing which you should

not forget is after you've closed them

you still need to onboard them to make

sure that they start using your product

if this is successful and you have good

retention that could lead to long-term

Revenue if you forget the last step then

you will have lots of churn because

people don't actually know how to use

your product and this is common with

early products because they are not easy

to onboard in the beginning this is not

something you spend a lot of time

optimizing so make sure that you do the

onboarding as part of this process if

you go back to the Google spreadsheets

that I'm that I'm making that I'm

putting in all the information you

should start simple but you should have

some Columns of things that you're

tracking so industry uh the company the

title the name the email maybe the

LinkedIn this could be enough to start

with a lot of CRM software comes with

these categories so these columns it's

pretty good idea to kind of use a simple

CRM software

um to kind of accomplish the same goal

but the key thing here is doing this

work up front and I've seen a lot of YC

Founders that when they are getting to a

thousand of these they're like oh this

is a very simple task I can actually

Outsource this and I think that can work

if you know exactly what it is you're

Outsourcing storing all this information

is going to be helpful for you in the

future now I made my list I understand

this the sales funnel so who should I be

going after and how should I be

prioritizing as I'm doing the Outreach

here's my most important advice when it

comes to sales your first customers

should be your easiest this is not the

time to bite off the hardest one

focus on the easiest ones what I mean by

that is you should try to do sales

make the sales processes easy for you as

you possibly can startups don't really

have time to chase every lead there's a

lot of leads out there you you don't

have to pick all of them you really

don't you're so early you can pick only

the ones that are the most likely to

close the best way to do this I have a

big pipeline where that means a lot of

people that you're emailing are

potential customers and then as you're

getting responses and you're getting to

meetings start prioritizing those who

are the most likely to close you can

probably tell from their answers to your

qualifying questions during the sales

call

avoid those who are moving slow and

don't be afraid of letting customers go

don't be afraid of letting customers go

what I mean by that is that if someone

is dragging you along two or three calls

you can always be like it's been great

getting to know you

um and I've learned a lot but

um we should talk again in six months

that's totally fine to say two

selling to people you know is going to

be easy to selling to strangers so you

should take advantage of your network

three selling to startups is the easiest

category and I've I've learned this On

and On Again with YC company

specifically the ones that sell software

it just turns out that bigger companies

have more bureaucracy more processes

they even have a specific Department

that is in charge of negotiating with

you and that takes a long time and

startups don't have any of these things

because they don't have time to create

these things but it's not a priority for

them

so startups have short decision-making

lines you can often find that the

decision maker right away as you do in

the Outreach and you don't have to go

through a difficult process that's why

startups are easier and that's why we

recommend most companies to sell to

startups at least leads me to the fourth

Point most people are not early adopters

and I keep saying this to the white

companies I work with all the time the

reason you have to sell send hundreds of

emails is not that most of those people

get really upset and be like I can't

believe you emailed me like I really

love this alternative product by hate

your product that's not what's going on

most people they email are just be like

archive they just don't care they're not

going to try a new product that comes in

through your LinkedIn or your email and

they might not be the people that try a

new product at all in their career

that's most people some other people I

remember being one of those people when

I worked at Airbnb I would love when

founders emailed me with new new

products and I would be the one signing

up for them so

when I worked Airbnb and you were a

startup email me was great I am an early

adopter I love trying new things I don't

mind the risk of trying new things so

for every outbound uh to an average

company that you send you will mostly

like most likely on the average outbound

average email average LinkedIn reach

someone who is not an early adopter to

reach early adopters you just have to

send more out by messages because then

you don't have time to convince anybody

to become an early adopter you have to

find Aero adopters and just go for them

early on don't worry about everybody

else you just don't have time to

convince them let's talk about charging

it's attractive for you as a founder and

for your company to offer your product

for free offer free trials or unpaid

pilots and these things come in many

shapes and forms however if you don't

charge your customers they are not a

customer and you don't have a company

customers paying you money is a great

sign that you're providing them real

value

so you should resist the fear of getting

a no because of price

instead of figuring out what the price

should be if they don't want to pay and

you learn this during the qualification

process in the first call or the first

meeting

if they don't want to pay that's a great

sign that you should move on to the next

customer

again fire the ones who seem like

they're not good fit move on to the next

customers

free trials are common for consumers but

if you thought about it most consumer

free trials ask for the credit card up

front and then we forget and then we pay

anyway

that's because that actually works the

best the bdb version of this

is a better one than a free trial is a

money back guarantee so we charge you if

you're not happy you can get the money

back in 30 days so 60 days

um or even better you have the ability

to opt out from the annual contract you

just pay for one month instead of the

annual fee but you should not offer free

trials in B2B sales go for a money back

guarantee and go for the ability to opt

out instead increasing your price until

your customers are complaining but still

paying is the right way to go all right

let's talk about the thing that most

Founders get wrong I've seen as many

times but there are a few things that

most wanted to get wrong and this is one

of them working backwards from your goal

with your sales funnel in order to work

your way backwards from a goal of say

two signed customers you have to

understand that each step in the sales

funnel is going to have a drop-off when

you haven't started sales yet you don't

know what these draft off percentages

are maybe you haven't done a lot of

sales before you don't know what you're

not good at maybe you're really good at

sending emails but really bad at closing

or vice versa you don't know that so as

you're sending these outbound emails you

need to take notes and start tracking

all of these conversions in this example

I'm sending 500 Outreach emails or

LinkedIn messages I have a 50 open rate

that means 250 people will open the

email five percent will respond that's

about 20 potential customers 50 of those

will convert to demo from the response

which means I'm doing 10 demos that's

pretty good but I'm not that good at

doing demos only two end up becoming

customers from the demos that's 20 I bet

you most of you don't even track this

data but you should if you track this

data you will have some idea of how long

it will take to get to 10 paying

customers if you don't track this it's

very hard for someone to give you

feedback of what's working and not

working right it's just like when you're

launching a new product you want to have

some metrics and some user data to be

able to tell if it's working when you're

doing sales you want to have this data

if you have this data people will be

able to give you feedback on what what

you're good at and what you need to get

get better at my advice is to use a

simple sales CRM software that tracks

these conversion rates automatically

let's look at the same second example

this is how it looks like for most

startups even the ones that I work with

in the batch in the second example I'm

sending 100 Outreach email it feels like

a lot to me if I keep the conversion

rates constant from the previous example

I actually end up with zero customers

and the conclusion the founders draw

after this is that sales is not working

for me and I should just do marketing or

SEO or something else or referrals or

something that sounds attractive this is

simply wrong you don't have the data to

make that call you did not do enough

Outreach to actually get to correct

conversion rate percentages in your

sales funnel so the answer here is you

sent a few minutes too few emails you

don't have the data you can't draw the

conclusion that sales is not working

even though you have serial customers

and this is the mistake that funders do

on and on and on again so to summarize

what I just went through here you don't

know your sales conversion rate that's

why you need a CRM to keep track of it

two because you don't know who is an

early adopter you have a lot of drop off

in the outbound sales that makes up on

sales ultimately a numbers game and

successful startups we like this and

internalize this three you cannot close

five customers from 10 leads it's not

possible you need a lot more app on than

that a lot more and unfortunately most

finders don't work their way backwards

from this sales funnel and they don't do

this exercise and the result they don't

succeed as sales and they don't really

know why so a friend of mine from Airbnb

Atlanta rashitzki he writes an excellent

blog and he wrote a great blog post

about how YC and a bunch of non-yc B2B

startups

um got their sales go to market strategy

going I recommend reading this and other

posts uh newsletter it's it's one of the

best ones I've come across it has a lot

of real data that he collected from real

companies uh many of them being YC

companies so in this example here in the

second column Lenny is describing the

initial sales motion of some of these

companies as you can see some of the

early ones like amplitude stripe front

they were doing app on sales emails just

like the one we described to get started

those Founders were doing those sales

emails as they get started some of the

other ones was called Product LED

product LED could mean something else

than just doing up on sales but it

doesn't mean having a big sales team and

it usually does not mean doing marketing

or SEO or something else practically it

means something that the product itself

is is sort of like driving the growth as

you're running the demo

um your goal is to close your first

customers

you want to ask a lot of questions up

front in the demos and there's the

founders who should do the demos because

you are the one knowing the product and

you know the customer pain points here

are three examples of YC emails that led

to customers so I'll let you guys look

at the details of these afterwards but

this is an app on email that led to uh

72 000 a year contract this one LED is a

very specific email that led to out

Landing a goalie as a customer and this

third example here is the one email the

same email they got them 22 different

customers all right I'm going to

summarize this again the biggest

mistakes that most finders do is they

don't do enough Outreach because they

don't work package from the goal

believing that something else then sales

is going to solve your sales problem

Outsourcing sales is wrong you should do

it yourself and you need to qualify your

customers during your first call here

are some of the tools I recommend so

there are many many many tools this is

perhaps one of the biggest categories of

potential things you could use as you're

doing sales but I recommend apollo.io

close.com formerly called closed.io

pipedrive or hunter.io these are great

tools that you can use either as a

simple sales CRM or Hunter you can use

to get contacts or potential people to

email from LinkedIn here are two

additional resources if some people ask

me for books usually there aren't good

books but there is actually one that I

come across I find really good it's

called founding sales and then I also

recommend lineage newsletter.com there

are of course other ways that you can

grow as a startup but the truth that

I've learned is that even if you end up

with say like Airbnb where the sources

of growth is Word of Mouth Google search

referrals Facebook advertising if those

are the kind of end states of your

growth strategy that's not how ambica

started they didn't start by running

Google sem or Google SEO

the referral program did not bring in

the first 2000 customers they did things

that didn't scale and they looked

different than the one they do at scale

so a lot of companies are shorting

straight into What's called the scalable

growth channels the channels that

they've heard work which is true at

scale but that's not the same thing as

when you're getting started so in this

slide I'm outlining kind of like just a

rough idea of like even if it turns out

the Google sem and Google SEO is what's

going to work at scale you need to find

another place online where these people

that you're going to reach through sem

and SEO is identifying themselves online

right and that might not be the same as

Google if you're trying to go after sem

which means search engine marketing it's

going to be expensive probably because

there's competition if you're going

after SEO it's going to take a long time

if your growth is say proc LED or

virality referrals then personal

networks selling through your personal

Network to your co-workers is the way to

get started of course if you're doing

sales you should be doing sales it

doesn't change very much like early

stage sales to to large sales basically

means all the things that I just

described here

done by 100 people in a sales team with

more automation more tools more metrics

but it's the same thing and if you

practice setup to do online marketing

it's not usually how most people start

why because you can't really easily talk

to people you can't learn from users if

the first thousand or first-handed

customers are brought in through Google

and Facebook those people are not the

kind of people that you can easily get

on a 30 minute phone call with all right

that's all I had today thank you

everyone

foreign

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