About a year ago, my co-founder Scott Schwan and I had just closed the Seed Round for our company Shujinko with the vision to make it faster and easier for CIOs, CISOs, and CTOs to build secure, compliant cloud environments. As first time founders, we were thrilled with this accomplishment, but we also recognized there were many challenges ahead of us — many of which we did not fully comprehend at the time.
In order to make sure our goals aligned with progressing to the next big step of raising a Series A, we consulted with John Vrionis and other VCs to understand which metrics they looked for in order to invest. Though responses varied across the spectrum, the large majority were very clear: we needed to secure 5–10 paying customers and have $1 million ARR if we wanted to raise a Series A.
We understood our marching orders and knew it was time to build the product and get selling. As engineers, we had the building product part down and we thought the sales component would be no sweat. As someone who managed a $25 million software budget in a previous life, I thought, “I bought enterprise software products before — this can’t be hard.” Wrong. Landing discovery meetings wasn’t an issue — given our domain expertise and backgrounds, my cofounder Scott and I were able to land initial discovery meetings with CIOs, CTOs, and CISOs at companies we were targeting. However, once we found ourselves running the initial meetings, handling the follow up, and trying to convert prospects into paying customers, we realized we were in uncharted territory.
After a few stumbles, we recognized we needed help, so we enlisted the support of Unusual Venture’s GAP Team, specifically, Liam Mulcahy, Director of Sales GTM. Before we knew it, we entered an informal sales bootcamp and quickly learned we had no idea what the sales cycle actually entailed. It was made very clear that we needed to rethink our perception of the sales stages and pivot our approach if we expected to land deals, drive revenue, and ultimately raise our Series A.
Here are our key learnings in order to discover and capitalize on qualified sales opportunities as an early-stage technical founder:
- Use customer interviews to establish product-market fit
Scott and I were part of the Alpha Cohort of Unusual Academy and the first session, taught by Unusual Ventures’ co-founders, John Vrionis and Jyoti Bansal, covered the importance of product-market fit. Our biggest takeaway was that we needed to start talking to customers immediately. Like most first-time founders, our first instinct was to tap our network. We quickly learned that wasn’t enough. In hindsight, we may not have built the right product at first, and this was in large part to not talking to enough customers early on. Once we realized our network wasn’t going to cut it, we hired an SDR firm, which helped us land 30–40 new customer calls. From a product-market fit perspective, this is probably one of the best things we did.
When approaching these calls, we realized that the types of questions we asked were just as critical as landing the customer calls. As technical founders, we originally made the mistake of taking an engineer’s approach and asked every customer the same five technical questions. We would then look for the data scientist’s solution to the problem — i.e. look for trends in the responses. As Liam pointed out in a recent blog post, we needed to stop thinking like engineers — now that we had received our seed round of funding, we had not only become a first-time CEO and CTO, but we were also now first-time salesmen. Liam pushed us to approach these interviews through a sales lens and dig into the business aspects versus just the technical side. We started to frame the conversation by giving customers our backgrounds and a little about the product, but having the core focus be the current state of their business, where they wanted to take it, and what might be stopping them from getting there (aka “pain points”). We went from asking, “Hey, this is what we do. Do you have a need for it?” To, “What are your pains here? How do you solve for this today? How’s that going?” Scott and I would then debrief after each meeting and said, “Okay, this is the third person that has had this type of pain.” It was a blend of being scientific in the sense that we needed to get answers to the same nine discovery questions in each call, but how we managed the conversation to get those answers became more artful. Although these calls didn’t turn into sales right away, they did inform the product, which eventually translated into sales further down the line.
2. Differentiate between a qualified and unqualified lead
Once we established our product-market fit, it was time to start filling the sales funnel with leads. That said, as an early stage entrepreneur, you’re constantly fighting to stay alive and you need to be scrappy. It’s hard to unqualify a lead and let a potential customer (or so you think) go, especially since you only have so many top of the funnel leads and are excited to have any conversation with someone who will potentially buy your product. Prior to working with the GAP team, there was no such thing as unqualified leads in our world. For us, a lead equated to, “Hey, we got a phone call with somebody!”
Now, we recognize it actually hurts us to treat every lead as a qualified lead and it’s important to ask the right questions to understand whether a potential customer has a pain/use case we can solve. Think: Do they have a pain, do they have a need, and is it something we can solve with our product? Even when your pipeline is relatively small, it’s critical to unqualify leads and thereby qualify your time. As founders, it’s important to never lose sight of how limited our time is. Why waste your time convincing someone to buy your product who at the end of the day doesn’t have a need for it and won’t end up purchasing? There are so many companies who actually do need our product and we are now focusing our energy on companies where we’ve identified a pain/use case we can solve — aka a qualified lead, not just anyone that would take a meeting, like before.
3. Adhere to one method for every discovery call and opportunity
I’ll admit, before our engagement with Liam and Unusual’s GAP team, our preparation for customer meetings was lacking, to put it nicely. We’d maybe look the potential customer up on LinkedIn to see who we would be talking to and have a rough hypothesis about what their pain would be.
Liam quickly educated us on the importance of having a method we adhere to across the team for every discovery call and opportunity. Not only does a better process help us prepare to have a more in-depth conversation with the potential customer and better qualify the opportunity, but it also helps everyone on our internal team speak a common language when reviewing/discussing deals. We were introduced to Liam’s Sales Qualification Checklist Template to help us both better prepare for customer meetings and better qualify leads. This template has also helped us think through and improve our understanding of what the customer’s pain will be, which also enables us to tailor our sales deck. Before, it was like being in the woods without a compass — “Well, let’s see where this conversation goes.” Now, we recognize the importance of doing the upfront research and having a value hypothesis we can walk through for them to prove/disprove vs. just showing up. Before we implemented this repeatable process, we would do 80% of the talking in meetings and now, customers do the majority of the talking. The impact of all of this? We know if a lead is qualified after 1–2 meetings, allowing us to better prioritize our scarce time and resources. Also, when we continue working with qualified leads, our sales cycle is shortened significantly and our forecast is much more accurate each quarter.
4. Focus on solving a customer’s pain
Previously, Scott and I would pitch our product and the response was, “Oh, this is cool.” And then we would never receive a second or third meeting. Things would just kind of die and we were left scratching our heads — the response seemed positive, so what happened?
We quickly learned that the cool factor does not matter to potential customers — again, it’s about solving their problem or enabling them to capitalize on a business opportunity. Before, we were hoping customers could connect the dots and think, “Oh yeah, this could solve my pain.” We didn’t ask enough discovery questions (at the time we didn’t even know what discovery questions were) to truly understand the pain they were trying to solve. Instead, it was all about us (“Our product is so cool!”) vs. them (“You’re saying you’re having x problem and here’s how our product can solve for it.) Through our First Meeting deck work with Scott Schwarzhoff on Unusual’s GAP Team, we learned the importance of uncovering a customer’s pain by tailoring our pitch to discuss what a potential pain point looks like, building up how it’s impacting them, their team, their business, and showing them what life could be like with our product. Liam also walked us through discovery questions that mapped to the first meeting deck and uncovered the technical and business pains associated with a problem, tailor our conversation around what it would mean to them if they could not only solve this problem but hit/surpass their goals, and ultimately make it crystal clear that our product could allow them to accomplish that. Before, the prospect used to leave the conversation thinking, “I know what Shujinko does.” After using these discovery questions, they now think, “I know how Shujinko can help us with x.”
5. Understand and leverage the psychology of sales
Throughout my pseudo sales bootcamp, I’ve come to believe that sales is the equivalent of Jedi mind tricks — there’s so much psychology and thought process that goes into it. As I mentioned before, in a past role I had a $25 million budget and I bought a lot of enterprise software. As I reflect back on the good sales reps versus the bad sales reps, I now understand why they asked some of the questions they did. Like, “Hey, we should really get time with your VP. Any reason we can’t make that happen?” They wanted to make sure they had alignment and visibility up the chain to the person signing the contract. One of my biggest learnings, especially with enterprise sales, is that you need to get executive sponsorship, so you have a direct line when things go sideways and can ask, “What’s going on? Can you unblock this for me?”
Previously, if we stopped hearing from a prospect, I assumed they weren’t interested and moved on. Now, Scott and I understand the importance of creating a sense of urgency. One tool we learned, the “breakup email,” has been extremely powerful. You send an email like, “Hey, I haven’t heard from you in a couple of weeks. I don’t want to keep bugging you — I assume priorities have changed and that you’re no longer interested in pursuing this, etc.” The response half of the time is something like, “Oh, no, no, no — we’re not out, we’re just busy. How about a meeting next week?” To a sales rep, these tactics may be inherent, but as a technical founder, there was no Google search we could do to figure this small tweak out, which ultimately made a huge impact.
When I was in college, I worked in a Western Washington University Telecom department and we had an older gentleman in his 70s working ¾ time. One day we started talking about cars and he asked me, “Matt, how does a car engine work?” I bumbled on for about 15 minutes on how I thought an engine worked, randomly throwing up terms and keywords until he finally stopped me and said, “Well, if you didn’t know, you could have just said so.” And then he just walked away. To say this was a humbling moment would be an understatement. He was very clearly making a point that you don’t need to bullsh*t — if you don’t know, it’s okay to ask.
This was a huge moment of clarity for me and has stuck with me, especially now as we work to build Shujinko. As entrepreneurs, it sometimes feels like we are expected to know everything, but it’s important to be humble enough to admit what you don’t know. You have to understand your limits. You can’t do it all — and honestly, you don’t have time to do it all. We didn’t know sales and by asking for help from Liam/the Unusual GAP team and several others, our qualified pipeline increased by 4x, our closed/won ratio jumped 30%. In doing so, I’m happy to say we hit our ultimate goal and successfully closed our Series A round. I hope our learnings will help you achieve not only your sales goals, but whatever overall company goals you have set.
- Whether it’s validating your product-market fit or initial customer discovery calls, you need to have a set list of questions you ask to every prospect (and someone to capture the results).
- Even though it can feel counterintuitive, not every meeting/potential deal is created equal; you have to have a way to prioritize where/how you spend your time.
- Great discovery calls don’t just happen, you need to prepare beforehand and think about the different paths the conversation can go down and how you will route them back to your desired outcome.
- Customers don’t care how cool your product is — they care about their problems/opportunities and how your product can help. Make sure you approach every conversation with a view of how your product can solve their pain.
- Have the humility to know when to ask for help and admit what you don’t know.
Note: This post originally appeared on Ususual Ventures blog