Enterprise Sales | Startup School

Summary

In this insightful talk, Pete Kuman, a YC partner and alumnus, offers a step-by-step guide for software startups to close their first enterprise customers. He emphasizes the importance of the sales funnel, from prospecting to implementation, and shares tactical advice and lessons learned from his time at Optimizely. Kuman dispels the myth that technical founders can't sell, highlighting the advantages they possess. He stresses the significance of understanding customer problems deeply and providing solutions, not just products, to build long-lasting customer relationships.

Takeaways

• 🚀 **Startup Selling Belief**: Founders of early-stage startups are capable of selling their products, especially if they have technical backgrounds and a deep understanding of the product and the problem it solves.
• 🔍 **Sales Hypothesis Importance**: A clear sales hypothesis helps in identifying potential customers and focuses the prospecting process, making it easier to find companies that might need the product.
• 📋 **Prospecting Tools Utilization**: Tools like industry lists, filtering criteria, and platforms like Builtwith can be instrumental in narrowing down the target list for prospecting.
• 🤝 **Warm Introductions Favorability**: Getting a warm introduction or generating inbound demand can be more effective than cold outreach, as it increases the chances of securing a meeting with a prospect.
• 📧 **Cold Email Personalization**: Personalizing cold emails and ensuring they are concise and clear can increase the likelihood of getting a response, and they should be something the sender would be excited to receive.
• 🚫 **Avoiding Anti-Patterns**: Founders should avoid talking to anyone who will take their call, as this can lead to wasting time on bad customers and not getting valuable feedback.
• 💡 **First Call Focus**: The initial call with a prospect should focus on qualification and understanding the customer's problem rather than immediately pitching the product.
• 🎬 **Demo Storytelling**: A successful product demo should tell a story that demonstrates how the product solves the customer's specific problem, using personalized elements to connect with the audience.
• 💰 **Pricing as an Experiment**: Pricing involves a degree of trial and error; startups should use early conversations to gauge customer reactions and adjust pricing strategies accordingly.
• 📉 **Avoiding Undervaluing**: Underestimating the product's value or offering it for free in exchange for feedback can be detrimental; higher prices can indicate a product's worth and seriousness of the customers.
• 📝 **Procurement Process Understanding**: Recognizing and understanding the procurement process within a company is crucial to avoid surprises and ensure a smooth transition from agreement to purchase.
• 🛠️ **Implementation Ownership**: Founders should treat the customer implementation as their responsibility, actively managing the process to ensure the product is used effectively post-sale.

Q & A

What is the main focus of Pete Kuman's talk?

Pete Kuman's talk focuses on guiding software startup founders through the process of closing their first enterprise customers by discussing successive steps in the sales funnel, including prospecting, outreach, qualification, pricing, closing, and implementation.

Why is sales the number one concern for most founders during the batch at YC?

Sales is the number one concern because it is a critical skill for early-stage startup founders to master in order to successfully sell their products to other businesses, and it is often a challenging skill to learn, especially for those with technical backgrounds.

What is the first big lesson Pete Kuman wants to impart to the audience?

The first big lesson is that if you are the founder of an early-stage startup building a product for other businesses, you are capable of selling it yourself, and it's likely that you will be the only person capable of doing so initially.

Why might hiring a talented salesperson not be the best approach initially?

Hiring a talented salesperson initially might not be effective because sales before finding product-market fit is fundamentally entrepreneurial, requiring vision, credibility, and a tight feedback loop with the product builders, which is a role better suited for founders.

What advantages do technical founders have when it comes to selling their products?

Technical founders have the advantage of being experts in the problem they are solving and the product they are building, as well as having conviction in their product's ability to solve the customer's problem, which are important factors in effective sales.

What is the purpose of a sales hypothesis?

A sales hypothesis clarifies who you should be talking to by stating which customers have a particular problem that your product can help solve, making the prospecting process more targeted and efficient.

Why is it important to identify the right humans at potential customer companies during prospecting?

Identifying the right humans ensures that you are reaching out to individuals who are likely to be interested in and have the authority to make decisions about purchasing your product, increasing the chances of a successful sale.

What is the main goal of outreach in the sales process?

The main goal of outreach is to get the attention of potential customers and ideally schedule a meeting with them to discuss your product further.

Why is it a mistake to talk to anyone who will take a founder's call without being selective?

Talking to anyone who will take a call can lead to wasting time on bad customers who are easy to talk to but not actually interested in buying the product, which gives a false sense of progress and can be counterproductive.

What is the purpose of the first call with a prospect?

The purpose of the first call is to qualify the prospect by understanding if they have the problem you are solving, the budget, and the decision-making authority to purchase your product, and to schedule a follow-up call for a product demo.

How should a founder approach a product demo?

A founder should approach a product demo by telling a story that shows how their product solves the main character's problem, personalizing the demo for the audience, and avoiding a simple feature tour.

What is the key to delivering a great demo?

The key to delivering a great demo is to make it feel like a good story with a clear flow, personalized for the audience, and including 'magic moments' that surprise and delight the audience with the product's capabilities.

Why is it important to ask questions during the qualification call?

Asking questions helps to deeply understand the customer's problem, which is essential for providing a relevant solution and demonstrating that you are listening and care about their specific needs.

What is the biggest mistake founders make when it comes to pricing their products?

The biggest mistake is often underpricing their product or making it free in exchange for feedback, which can devalue the product and not accurately test the market's willingness to pay for the solution.

How should a founder approach the procurement process with a potential customer?

A founder should ask questions to understand the procurement process, work to streamline it where possible, and maintain constant communication with the customer's champion to help navigate any obstacles.

Why is implementation considered a crucial part of the sales funnel?

Implementation is crucial because it is the phase where the customer actually starts using the product, and it is the founder's responsibility to ensure a smooth transition from product to solution, which can lead to long-term customer satisfaction and retention.

What is the final step in the sales funnel according to Pete Kuman?

The final step in the sales funnel is when the customer is habitually using the product, indicating a successful implementation and the potential for a long-term customer relationship.