Rahul Sasi, CEO of CloudSEK, a cybersecurity startup, is a trained magician. He learned a golden rule early in life: You must make the audience like you before showing a magic trick.
Skilled illusionists spend considerable effort in building rapport with their audience by cultivating entertaining on-stage personas, talking to audience members, and before they get into their magic routine.
With minor tweaks, this lesson also applies to founder-led sales in startups: Prospects must like you, the founder before they like your product.
This lesson helped Rahul, a techie founder, become more extroverted (outside his magic performances) and successfully lead his company’s GTM efforts.
In this article, we decode what it takes for core tech founders (or any founder, for that matter) to excel at sales.
We spoke to Rahul and Vijay Rayapati, co-founder and CEO of Atomicwork (Blume Fund IV), a conversational ITSM software and AI service desk platform provider, to explore how founders can develop the skills and mindset to excel at founder-led sales.
We’ve also borrowed insights from our earlier interview with Shashank Bijapur, co-founder and CEO of Spotdraft, and from ‘The Outbound Sales Playbook: A Guide for Early Stage B2B Startup Founders’ by Ravi Kaushik, an advisor with Blume Ventures.
In this article we’ll cover:
- Why is founder-led sales make or break for an early-stage startup?
- How to develop storytelling skills?
- Understanding your target audience
- What should you tell your target audience?
- Tips for making a killer sales pitch.
- Transitioning from founder-led to team-led sales.
Founder-led Sales: Make or Break for Your Startup
Founder-led sales are crucial in the early stages of a startup for three reasons.
Firstly, only the founders have the deepest understanding of the product, roadmap, and vision. They have the best insight into the painpoint they want the product to solve, as they have usually dealt with it personally.
Rahul notes, “You need to figure out how to sell what you’re building since you understand your product and vision the most. Selling is a different art from building.”
Secondly, founder-led outbound sales allows founders to get feedback and iterate the product/market, accelerating the path to Product-Market Fit.
“If you don’t listen to customers, you don’t know what excites them about your product, what doesn’t, or their objections and concerns. You can’t build conviction based on a translated story from someone else like your AE or VP of Sales,” said Vijay.
Shashank of Spotdraft believes there’s no faster way to build a great product than founders meeting prospects.
"We wanted to validate the market faster. This is the fastest way, asking leading questions like Do you have this problem? This is what I'm building. All founders must know this is the best way. We also wanted to experiment with our ICP instead of waiting for people to come to us through our website, and we say, Ah, this is our ICP. So, to identify that, we had to go to every cohort, like mid-market, SMB, venture-funded, and traditional businesses. We had to run that entire gamut of experiments to realize which one made sense."
Lastly, as an early-stage company, you don’t have existing credibility. Your first few customers buy from ‘you’ and not your company. So, they need to see the founder’s commitment to the product they are betting on and championing inside their company.
So, what do founders need to learn to become great salespeople?
- Storytelling.
- Understanding the target market’s buying intent(s).
- Building credibility.
We’ll cover this and more in the coming sections.
Developing Storytelling Skills
Storytelling is the top skill in sales, and founders must find a way to tell their story effectively. This should not be outsourced, especially in the early days.
"If you're a CEO/CTO, the primary thing everybody expects you to do is get really good at storytelling - for hiring, raising capital, pitching your company, or attracting customers," said Vijay.
For technical founders who aren’t naturally inclined towards storytelling, Vijay suggests:
- Start by telling the story to yourself - Why did you start this company? It could be personal pain or an experience.
- Practice writing your story.
- Focus on three key things.
- Record yourself pitching, watch the recording, and analyze your performance.
- Read extensively to improve your storytelling.
“Take cues from people you like and practice. It could be someone in your circle, a friend, a classmate, family, or a YouTuber you follow. You’ll get better eventually,” said Vijay.
Rahul has a useful tip for early-stage startups: hone your underdog story.
“People like seeing progress. People like when things are down and then they improve over time. That progression is what people enjoy. The underdog story is really a good way to tell your story,” said Rahul.
Rahul recounts an interaction with a CISO a few years ago to drive home the point.
“Our biggest challenge has been convincing people that good cybersecurity products come from countries other than the US or Israel. Once, a CISO of a large company told me that your product is good, but I need to tell the board that I’m using an Israeli product. My struggle wasn’t putting my company at the forefront; my challenge was putting India first.”
“It’s about Indian startups making great products, not just big ones. It is not like good watches can only be made in Switzerland. The story of a small player taking on a big company worked for us, and can work elsewhere.”
Understanding Buying Intent
Understanding your target market’s buying intent is crucial before diving into sales.
"Understanding your selling point and the buyer's intent and process is important. If someone is interested in paying $100,000 for software, they'll spend weeks engaging with you. You have time to tell a story, share your product, and journey. But a customer buying a $1000 tool won't get on 10 calls with you. You have to be direct and straightforward for both to be productive," said Vijay.
Vijay’s tips for SMB and enterprise sales are:
For SMBs:
- Focus on specific features and tools.
- Be direct.
- Demonstrate immediate value.
For Enterprises:
- Focus on transformation and long-term value.
- Prepare for a longer sales cycle.
- Address multiple stakeholders.
As Vijay puts it, “Enterprises buy transformations, SMBs buy tools.”
Vijay urges founders to focus on their ideal customers and “intent signals.”
These signals could include hiring for certain roles, creating an ad budget, or searching for specific solutions.
“If you’re selling marketing software, the intent signal may be hiring a performance marketing manager, a budget exceeding a million dollars a year, or searching for information on CAC optimization. You need to consider your ideal customer profile and their ideal intent signals. When you match this, that’s where the magic happens,” said Vijay.
Knowing the buying intent hinges on the price the prospect is willing to pay. However, founders often find pricing discussions challenging. Vijay offers this framework:
“If you can deliver a $100,000 value, customers will pay $10- $20k; if you can deliver a million dollar value, customers will probably pay $100k—$200k.”
Vijay advises founders to focus on building product experience that accentuates the value beyond core features. "We invest in product design so that you feel the software is not just working and you feel happy using it. Two, we invest in customer support to help customers adopt our product and not give up when they are stuck somewhere."
How do you build credibility with your audience?
In today's attention-deficit economy, early-stage companies must quickly build credibility with prospects.
Vijay identifies the key aspects that companies can differentiate to build credibility.
1. Product experience and design: "Features are easy to copy, design is hard to copy."
2. Customer support: "Great customer support can be a huge differentiator, especially when selling to enterprises."
3. Brand awareness: Focus on your target segment, not global recognition. You aren’t Nike.
4. Compliance and certifications.
5. Financial reliability.
6. Customer references.
7. Strategic partnerships.
8. Ecosystem integrations.
Vijay suggests, "Raising capital is one way of creating trust. Another way is getting compliance certifications, along with associating with a technology partner with whom you are building such as Microsoft or AWS."
Building credibility means focusing on solving problems, not always selling to customers.
"Your focus is to help, not sell. Selling is a by-product. If you can help, you gain trust and then it's about budget, money, time, etc., which they'll give you. But get that trust by giving valuable advice on their needs first,” said Rahul.
Put the customer at the center of your outreach
Mastering cold emails and calls is crucial for a founder as the de facto salesperson.
Ravi Kaushik, advisor with Blume, says many early-stage founders focus too much on their product or technology. They overlook the importance of understanding their target persona's perspective on the sales process.
He suggests using a framework that maps your customer’s persona, the challenges they encounter, and their impact.
This approach is rooted in the philosophy that customers are primarily interested in solving their problems, not the software itself. Here are two sample tables to illustrate this framework.
Each problem becomes an input into your Outbound Email Script and Cold Calling Script. You can also use them to create a copy of the landing page!
Ravi suggests a cold outreach sequence involving reaching out to prospects via multiple channels over 2-3 weeks, including email, phone, and LinkedIn.
An important mistake to avoid is reaching out to a prospect just once or twice and then stopping, reducing the odds of hearing back. Creating a sequence provides multiple entry channels, which is helpful when starting and lacking data on the ideal channel for a prospect.
Also, we don’t know their current priority problem, so we have to hit them with all three problems we came up with.
Getting Email IDs and Phone Numbers is a solved problem. Tools like Zoominfo, Lusha, and Apollo.io provide reliable data, especially for Western markets. Apollo.io is the cheapest bundle for contact data, email tools, and dialler software.
Here’s a sample sequence for cold outreach.
Here’s a template for the first cold mail. You can check out all the templates in Ravi’s article here.
Subject: Your Own Google, Context Switch, 2024
Hi Scott,
We have yet to be properly introduced, but I'm Ravi, the Founder of TribalKnowledge.ai. I came across your Series E announcement; congratulations!
The reason for my outreach is to chat about our new product built for you. I suspect like many CTOs your team manages projects across multiple platforms like GitHub and Jira. It's impressive, yet challenging to keep everything aligned.
Many engineering leaders share that finding relevant coding contexts swiftly is a constant struggle, often leading to decreased productivity. Our solution streamlines information retrieval across your tools, cutting down search time by 30%.
Worth a chat?
Cheers!
Ravi,
Founder, TribalKnowledge.ai
Cold Calling
Follow up your email with a phone call. Utilize insights from the Persona-Problem-Impact table. Monitor email open rates; 30-50% is a good open rate in SaaS. Combining well-crafted cold emails, calls, and LinkedIn could yield a 5% meeting rate.
This is a sample of how the cold call could be carried out.
When pitching in person or over a call, it’s smart to avoid triggering cognitive biases.
Rahul advises: "If they are already using a product, don't tell them why they're wrong. Instead, say, 'Hey, good! This is what you have, but what about our product? This could add value in X, Y, and Z way.' This way, you'll have more conversation rather than trying to overthrow someone's bias."
“From this perspective, you’re giving them the space to be the boss, and they will eventually tell you, ‘This can solve this problem for me.’ And that’s how you can convert.”
Making a kickass sales pitch
How to structure your sales pitch
Rahul suggests a concise approach: "I believe your pitch should not exceed 10 minutes. Ideally, 7 minutes is better. It should be interactive, demonstrating the platform to keep them engaged. Ultimately, you are an entertainer when presenting."
Vijay offers a slightly different structure: "I would always say the first 15 minutes are about the person, not the product, presentation, or pitch. Get to know the person in the first 15 minutes; the next 15 minutes are about the problem. Then, present your product and pitch. The last 10-15 minutes are for next steps."
“Focus on one use case. Don’t focus on proof of concept; focus on proof of value, saying, okay, how can I demonstrate value to you with one main problem? If you can solve the main problem now, of course, you can solve the rest later.”
Avoid discussing competitors
Rahul strongly advises against mentioning competitors: “If competitors are brought in, you lose. In CloudSEK, I tell our sales folks not to say anything negative about our competitors. The pitch is usually like this, ‘That’s a good product, but look at what we have’. Acknowledge them. But focus on what you have.”
Get feedback on why you’re winning or losing a sale
Vijay suggests recording and analyzing pitches.
“One good thing about digital meetings is the ability to record and watch them. What's your body language like? Are you smiling? Are you serious? Are you engaged? Are you interrupting?”
He also recommends asking for customer feedback: “As you progress, close deals and spend time, then go back and ask them, ‘Why did you buy from us? What made you buy from us?’”Knowing the trigger for the sale will help you double down.
At the same time, asking prospects who didn’t convert is sometimes even more valuable. But getting people to tell you why they passed is usually tough. Hence, Vijay suggests making them ‘an offer they can’t refuse.’
He recounted how he and his team at his earlier startup, Minjar, would tell customers that if they gave feedback, they’d donate $50-$100 to a charity of their choice instead of giving a gift card. This usually worked, as customers felt compelled to participate.
Focus on actual sales to gauge your direction, not vanity qualitative statements
Rahul stresses the importance of measuring actual sales.
“Many founders say to me ‘Hey, 10 people said my product is good’. But when asked, ‘Did they pay?’ They say, ‘no’. The only thing that matters is if anyone is willing to pay.”
If you’re not making money, something’s wrong. It could be your pitch or product. Figuring this out early is crucial.
Transitioning from founder-led sales to team-led sales
As startups grow, founders must transition from primary salespeople to leading a sales team. This requires careful planning and execution to maintain sales momentum and culture.
Vijay offers milestones to transition from founder-led to founder-managed for SaaS companies selling to the US.
Stage 1- Founder-led. Get a couple of deals. Bring in logos. Hire a couple of AEs.
Stage 2- Reach a million in ARR and hire a sales director/lead.
Stage 3- Cross a couple of millions in ARR and hire the VP of Sales
Stage 4- Cross $10 million ARR and bring in a CRO.
Vijay cautions, "It's important to keep learning directly why you win and lose even after delegating. If you're a CEO/CTO, you can't say that's not my problem."
Rahul suggests instilling a sales mindset across the organization, especially in the early days. Even product managers at CloudSEK have sales targets, emphasizing that "if you can't sell what you're building, you shouldn't be building it." This ensures everyone understands the importance of sales and customer needs.
Creating a standardized sales process is crucial for scaling. Rahul describes CloudSEK's approach, "We have a tutorial on how to pitch. It's me pitching, showing a demo of the platform." This tutorial, available as a video and transcript, ensures consistency in sales presentations and helps new team members quickly adopt the company's sales approach.
At CloudSEK, even the VP of Sales must make their first pitch and secure their first purchase order before building their team. This hands-on approach ensures that sales leaders understand the product and sales process.
Founders should be cautious about bringing in executives from large companies. Rahul warns that "the sales process works very differently in a big company" and that hiring from a large corporation doesn't always work for a startup.
“You can’t hire a salesperson by listening to them talk. They are the best in the world at that,” said Rahul.
He recommends looking for individuals with startup experience who understand the challenges of building a sales function from scratch.
Vijay has another interesting tip for hiring salespeople: hire them in pairs.
“Always hire in pairs in sales. You can compare who is moving fast, who can pitch, bring somebody to demo, close, and who can’t. In the initial days, you can’t figure out if it’s a problem with the product, person, or segmentation. So having the pair, makes it easier for you to take care of alteast the person part of the equation,” said Vijay.
Finally, founders must balance their time across different business aspects. Vijay and Rahul suggest allocating time equally between product development, hiring, and engaging with stakeholders, including prospects, users, and potential partners.
Conclusion
Mastering founder-led sales and transitioning to a team-led approach is much like perfecting a magic act.
The journey begins with the pledge: presenting yourself and your product to potential customers, appearing ‘small’ yet full of promise. Next comes the turn: transforming your startup from an idea into a growing business through strategic sales efforts and relationship building. Finally, you reach the prestige: restoring balance by transitioning from founder-led to team-led sales, creating a sustainable and scalable business model.
Just as a magician's success depends on mastering each act, a founder's journey relies on excelling in each phase of sales development.
