The essence of sales is psychology.
Host: Imran Khan, Co-founder of Alliance
Guest: Sam Blond, Partner at Founders Fund
In the field of venture capital, Founders Fund is a legendary figure.
In 2002, Peter Thiel, known as the "godfather of Silicon Valley," sold the co-founded PayPal to eBay for $1.5 billion and founded Founders Fund in 2005. The fund mainly invests in consumer internet companies, with a track record including prominent Silicon Valley enterprises such as Facebook, SpaceX, Palantir, LinkedIn, and Spotify. Currently, Founders Fund's assets under management have exceeded $12 billion.
In April 2024, the largest accelerator in the crypto world, Alliance, announced a strategic long-term investment from Founders Fund, with the investment amount undisclosed. As part of the investment, Founders Fund will provide support to the investment portfolio companies of Alliance.
As a "bonus" of this investment, Imran Khan, co-founder of Alliance, held discussions with several partners and marketing executives of Founders Fund, most of whom have direct entrepreneurial experience, to explore how founders can drive sales and growth of early-stage companies, build cryptocurrency brands, and find suitable partners… Condensing various entrepreneurial insights.
TechFlow has compiled this dialogue collection into Chinese to share with everyone.
Summary
Sam's Background: Sam Blond's career has mainly focused on technology sales. He initially worked as a sales development representative at EchoSign and later held vice president positions at several companies. He is now a partner at Founders Fund, focusing on investing in B2B software companies.
Sales and Startups: Sam discussed the importance of founders' involvement in sales at the early stage of startups. He outlined three stages of sales for startups and emphasized that founders are most effective salespeople in the early stage as they best understand and sell their products and vision. For the sales team, having a successful sales model and an existing customer base is crucial for formulating effective sales strategies.
Taking the First Step: Sam suggested that founders use their personal networks to initiate early-stage sales. He encouraged founders to step out of their comfort zone, actively engage with customers, and adjust strategies based on initial sales feedback to ensure better product-market fit.
Sales Based on Interpersonal Networks: Sam discussed how to utilize existing interpersonal networks for sales, likening the sales process to a concentric circle model. He advised founders to start sales from the most direct contacts and gradually expand to a broader network.
Assessing Customers: After the initial sales call, Sam suggested asking questions to assess the genuine interest and needs of potential customers to determine whether to continue follow-up and prioritize those genuinely interested in the product.
Sales Process: Sam discussed the importance of establishing a clear sales process. Creating a clear process can help address founders' hesitations and uncertainties during the sales cycle and provide buyers with a clear purchasing path.
Creating FOMO: Sam discussed the importance of creating urgency through limited-time offers and exclusive deals to enhance product appeal.
When to Hire Salespeople: Sam mentioned that founders should consider hiring new salespeople only after acquiring several non-relational paying customers. He suggested hiring at least two salespeople to expedite learning and adjust sales strategies.
When to Invest in Marketing: Sam suggested that companies should invest in marketing activities only after confirming product-market fit, using advertising and brand promotion to expand brand market influence.
Large Market vs. Small Market: For companies targeting smaller markets, such as those in the cryptocurrency industry, Sam believed that clear positioning and high focus are key to success. He discussed attracting early users through specific product features and market positioning, and leveraging a closely-knit industry network to build brand awareness, using Brex's early strategy as an example.
The following is the main content of this conversation:
Sam's Background
Imran: Can you briefly introduce your background?
Sam:
Of course, I grew up in Kansas City, so I'm from the Midwest. I went to the University of Missouri for college and moved to San Francisco in 2008. Since then, I've been mostly in the technology sales industry. So, I initially worked as a sales development representative at a company called EchoSign for over five years, then became the VP of Sales at Zenefits for about two and a half years. I was the Chief Business Officer at Brex for four and a half years, and now I'm a partner at Founders Fund, investing in B2B software companies.
Sales and Startups
Imran: I think there might be three stages for startup companies in sales. One is the stage where founders lead sales, the second stage is trying to find product-market fit and achieve growth, and the third stage might be reaching a scale of over $3 million. As a founder with a technical background, why do you think it's important for founders to start sales themselves?
Sam:
I think there are two reasons. Initially, for most tech companies, the acquisition of initial customers is led by the founders because from the company's perspective, founders have the best chance of closing new customers, and no one understands the product or the company's vision better than the founders. No one understands the target market or the intended audience for sales better than the founders, so if the founders can't acquire customers and generate revenue, then a salesperson who knows less about these things than the founders won't be able to do it either. From the company's perspective, founders are better at acquiring customers. From the salesperson's perspective, you really want to enter an environment that already has a certain customer base, where you can emulate the success stories of these customers and understand which methods are effective in acquiring these customers. Therefore, as a sales representative, you won't come in with a blank canvas, without anything to emulate or refer to, indicating that you're not prepared for success from the sales representative's perspective. So I think from both perspectives, if you're the company, you have a better chance of acquiring customers; if you're a sales representative, if the founders have done some preliminary work, you also have a better chance of acquiring customers.
Taking the First Step
Imran: But most founders are introverted, they focus on building great products and collaborating with the engineering team. For those founders who are afraid to take the first step, do you have any advice?
Sam:
First, it's crucial to find a way that makes you comfortable. Every company I've come into contact with (currently hundreds, even thousands), including many of the most successful tech companies we know, started in the same way, where founders stepped out of their comfort zone, interacted with customers, and achieved their first revenue.
This is consistent with what I mentioned earlier, that as a founder, you can take various measures to make this process more comfortable and effective. You talked about stepping out of your comfort zone and effectively becoming a salesperson. Therefore, I think the way to acquire customers, whether it's your initial customer base or later customers, is best likened to a concentric circle. You start from the closest concentric circle, which is often your personal network. We can take Brex as an example. If you are a founder of Brex and you are selling to other founders of startup companies, we are the first business card for startup companies, so one thing you might want to do is to check your LinkedIn and make a report to see which of your network are founders of startup companies, their company size if it falls within this range, and then you start by contacting these people first.
Then as you expand, you start reaching out to your second-level contacts, and it might even be people in the same industry but not necessarily in your direct network. You keep expanding that circle until you basically cover the market you're interested in, or until you reach a satisfactory market penetration rate. It's very important to remember that this doesn't just apply to sales. It applies to all forms of business development, partnership building, and network building. It's a very comprehensive way to grow your business, not just through sales, but through multiple different avenues.
When you start to see repeat customers coming back and recommending new customers to you, or when you start to see your market influence spreading through word of mouth and other forms of organic growth, that's when you know your network is truly serving you, and that's when you can really push the boundaries and expand into new areas or verticals. This is a key part of developing any business, understanding when to push forward, when to consolidate what you have, and finding the right balance between expansion and stability, which is crucial for sustaining long-term growth.
Assessing Customers
Imran: Suppose I'm a founder. I made the first sales call, what should I do next? How do I determine the qualification of the customer?
Sam:
I do think there needs to be a qualification of customers. So let's start from there. At the end of the first call, you can ask questions like 'How much impact does this have on your business?' or 'Considering all the things we've discussed today, are you interested in this project?' You don't want to blindly follow up with those who consider these questions a low priority. What you really want to focus on are those who find this actually very interesting, and then prioritize those. Another point is if you keep hearing 'This is not really a priority for us,' and these are the target customers for whom you're building the product, then that's a signal that you might need to reconsider the product-market fit. I've seen some mistakes made by founders, where they try to push things forward without having the product meet market demand, such as introducing SDR or AE.
Sales Process
Imran: You mentioned creating a process where you can list who the decision-makers are and show this to your sales targets. Why is this important, and why should all founders do this?
Sam:
I think there are two points to consider. One is from the founder's perspective. One thing I often hear is hesitation in chasing payments, or not knowing how to handle the sales cycle and the process of acquiring customers. So, first, you want to address this from the founder's perspective, to make it as clear as pinning a tack on paper, to list the steps to follow. And on the other hand, it's the buyer. The buyer doesn't know how to buy your product. As a founder or salesperson, your job is to teach the buyer the best methods, the best ways, such as how people can start using your product, so you're addressing the problems of both roles at the same time.
Creating FOMO
Imran: Finally, how do you create FOMO? You know, you mentioned discounts, which I think is a factor, but I think there are many other factors in creating FOMO. So, what should first-time entrepreneurs do?
Sam:
I think the essence of sales is psychology. One method you can use from sales psychology is to create the concept of FOMO. This is certainly not a one-size-fits-all, but at different stages of the business, you can use different methods to achieve this. In the early stages, you might want to do something for those who can have a great impact, and you can use this to determine their interest. One way is to say, "As you can see, we are currently in the beta testing stage, we don't have a website, we only accept a limited number of customers, we're almost at that limit, we can let you join, we just need to know if you want to join, if you do, here's the process, let's get started." This will have a time limit, which will create a sense of urgency on the buyer's side. As your business continues to expand, there are other ways to achieve this, such as at Zenefits, we had a very effective implementation fee, and we would decide whether to waive it based on the customer's progress. For example, if it's early December now, if someone implements by the end of the year, we will completely waive the implementation fee, which creates a sense of urgency on the buyer's side. As you continue to expand, this might be part of your adjustments, this might be part of your adjustments during the process, it becomes a very effective way to drive action.
When to Hire Salespeople
Imran: You are a founder with a revenue of $1 million, I want to go back to your experience at Brex, when did you join? When do you think the first salesperson should be hired?
Sam:
I'm not sure if this is necessarily related to revenue. I think everyone should start with founder-led sales, referring to B2B. When you have a few, what I call non-relational revenue-generating customers, you can introduce external sales support. When you're ready to hire the first salesperson, by the way, this will map to different net asset yields and different numbers of customers. If you're an enterprise solution, your sales targets are larger-scale enterprises, so the number of customers will be fewer, and the revenue amount might be higher. If your ACV is six figures or similar, when you have three or four paying customers and a total revenue of $500,000, you might hire a sales representative. At Brex, our target was startups. In fact, before we hired the first sales representative, we already had dozens of customers. Our revenue was minimal, just earning transaction fees from limited card spending. This doesn't equate to total revenue or the number of customers.
When you're ready to introduce the first salesperson, hire two sales representatives. There are many different reasons, let's start with the speed of learning doubling. These two salespeople can share with each other, so you're actually doubling the speed at which they achieve success, because you have two different people trying different methods, they've learned different things in the past, and then they share with each other, so your progress is much faster.
Another big reason is if you only hire one person, and that person is not successful, you don't know if you hired the wrong person, you don't know if your product doesn't match the market. But if you hire two people, there will be several different outcomes. Both people might be successful. This is certainly the most ideal scenario. If that's the case, I think it's powerful evidence of product-market fit, and it's powerful evidence that you can continue to expand the scale of your business. If one is successful and one is not, it's very likely that you hired the wrong person, so you need to replace the unsuccessful one. The person you hire might be more like the successful one. If both are not successful, that's good evidence that your product doesn't match the market. This requires rethinking how to make external salespeople successful. If you only hire one person, you won't learn anything. So, hire two people, not one. Once you have two successful salespeople, you can hire a sales manager and continue to expand the organizational scale entering the market.
Imran: In a speech, you mentioned that you shouldn't immediately hire a sales manager, but should first hire two sales representatives, and if things go well, then hire a sales manager, why is that?
Sam:
I would advise almost all startup companies that before hiring a sales leader, they should first hire salespeople. When I joined Brex, I brought in the best salespeople and also wanted the salespeople there to be better than me, as I had been a sales manager for a long time. After being a sales leader for many years, if I wanted to become a sales representative again, my job ability might not be as good as a truly excellent salesperson, and that's one reason. Another important reason is that for most companies, the best sales leaders are not willing to join a company where only the founder can acquire customers without other salespeople. Because for a sales leader, joining such a company is very risky. The path of hiring two successful salespeople first, reaching a total revenue of $1 million, and then introducing a sales representative to continue expanding the market organization, allowing them to do what they do best, leading teams, recruiting and hiring employees, rather than selling transactions individually, is our philosophy.
When to Invest in Marketing
**Imran: We often receive questions from founders asking "Should we start spending money on marketing and partnerships?" So, what advice do you have for founders at the *seed round* or pre-seed round? Should they focus on marketing or partnerships, or should they purely focus on product market sales?**
Sam:
Let's go back to the concept of concentric circles. When you're just starting out, by definition, you don't have a brand, you don't have marketing. You have a founder and some engineers who have built a product. You want to test this product through the network relationships we've talked about, so you can easily connect with people and sell the product to them. You start getting some customers, just like you have evidence that the product fits the market, and we hired a few salespeople. We now have a website that people can visit, we have some salespeople, and we're getting more customers.
We've done some expansion beyond this concentric circle. One thing we did at Brex was, I want to tell other startup founders in an abstract way that as these concentric circles expand, you will want to use some marketing or branding to make your customer acquisition work more effective. I'll give two examples of what we did at Brex. One is when we launched the product in June 2018. We wanted to make a splash. What we did was, apart from doing some PR around fundraising, we might have sponsored some podcasts. The most important thing we did was put up billboards all over San Francisco, which cost us around two to three hundred thousand dollars. So, you know, this falls completely into the category of brand marketing. But if you think about the concept of concentric circles again, when we launched, we did a lot of PR around fundraising, and then we put up these billboards, and everyone in the company updated their LinkedIn and posted relevant information. Then, we specifically targeted companies and founders in the areas where we put up these billboards. If a founder passed by our billboards on their way to work in downtown San Francisco, the likelihood of them responding to us would be much higher than founders in New York, because founders in New York wouldn't have the same experience.
So, to directly answer your question about investing in marketing and partnerships, you should invest in marketing after proving product-market fit. I think the stage when this starts to happen is when the founder has acquired customers, your sales representatives are able to acquire customers, and now you have the confidence to scale the business. So, let's start investing in marketing initiatives to make our customer acquisition strategy more effective.
Large Markets vs. Small Markets
Imran: One last question, cryptocurrency is largely a slow-growing market, what advice do you have for founders who have more small and medium-sized enterprise customers and not many large enterprise customers?
Sam:
The issue is that the addressable market for this type of company is limited, because compared to other industries, there aren't many cryptocurrency companies. While it's not a direct analogy, there are some similarities to Brex. Brex was launched as the first business card for startups. In the United States, the startup market is a small proportion of the existing global companies, although not as small as the cryptocurrency market, but I still want to talk about how I would approach it. We benefited early on from two things, which I think are related to the question you just asked. First, our positioning was very clear, we were the first business card, and everyone knows what a business card is. So, I think the clear definition of our product was a big advantage for us. Second, we were the first company to offer a business card for startups. So, we were very cautious in choosing our market. If you know the story of Brex, one of the reasons Brex was successful in the startup market is that we introduced the concept of "no personal guarantee." Traditional credit cards require the founder to personally guarantee the credit card, and if they don't pay the bill, it will affect their credit score, and they will bear personal responsibility. Another thing we did was underwrite based on the company's cash balance at the bank. If you're a startup with a few million dollars in bank deposits, you can get a high credit limit. Compared to American Express, where founders can only get a $10,000 credit limit, if we underwrite based on cash balance, the credit limit will be much higher.
What's not widely known is that we weren't the first company to offer this underwriting model. There was a company called Divvy at the time, and perhaps other companies, but they weren't as conscious in targeting customers. So, when Brex launched the first business card for startups, if you were a founder of a startup, when people saw this brand, you would immediately be interested in the product because you identified with the narrow market of startups. So I think for companies selling products to the cryptocurrency market, there are a few things to keep in mind. One is to carefully consider your positioning and target audience. Another point is that this community, like the startup community, is very closely connected. So, appearing where they often appear, usually at some conferences, is important. Another point is that just like startup founders, cryptocurrency founders, and people working in cryptocurrency companies, they also know other people in the community. So, make full use of the relationships you have built to increase brand awareness among potential new customers. I think this is possible when selling to a very narrow market, but not as likely when selling to everyone.
免责声明:本文章仅代表作者个人观点,不代表本平台的立场和观点。本文章仅供信息分享,不构成对任何人的任何投资建议。用户与作者之间的任何争议,与本平台无关。如网页中刊载的文章或图片涉及侵权,请提供相关的权利证明和身份证明发送邮件到support@aicoin.com,本平台相关工作人员将会进行核查。