The Founder Handbook: How to get your first ten enterprise customers

INTRODUCTION

Why does this book matter?

There are no set rules on how to succeed in building and then scaling your startup. However, we believe that there are universal lessons that every successful founder has to learn. This wisdom is usually accumulated the hard way – doing something, failing at it, learning from it and then repeating the cycle. On the outside, most companies and startups look polished, but the truth is, internally they are usually an absolute shitshow. During this book series, we’ll share our experience.

There are a lot of books out there and advisors selling their ‘expertise’ on business-development topics. However, most of the advice is theoretical and from people who have never run a startup themselves. Everything we explore in this book, we’ve tried and refined ourselves, first-hand from ‘the trenches’.

As the saying goes, ‘A smart person learns from their mistakes. A wise one learns from the mistakes of others.’ So here we are, sharing our mistakes and learnings to accelerate your journey.

Building and scaling anything means that we’re all in sales. Therefore, deliberately engineering your go-to-market (GTM) strategy through the business-development process is as important as shipping an incredible product.

Sometimes, we believe that the amazing product we have created is faster, better, cheaper – and returns a massive amount of karmic goodness to the universe to boot. All you need to do is put it on your website, launch an email campaign, hire a sales team and voilà: cash flow positive by the holidays! Result!

If only it were so easy; if only people were smart enough to beat a path to your door. In reality, the whole process of thinking through what your offer is, how it is different from competing ideas, what the best ways to reach the target customer are, which use-cases to address, and how to price it… well, that’s a bunch of really hard stuff that you will be constantly revising and updating as your company grows – and you need to take it as seriously as the product development itself. There is a reason why most large tech companies have enormous sales and marketing operations.

We made this mistake at AimBrain and we see it everywhere: too many early-stage companies hire the wrong sales teams too early. You bring in senior skills before really figuring out who the customer is, what you are going to sell to them and how your customer even wants to buy it.

This leads to frustration all round. Sales teams tend to be coin operated – you give them a target and they will move the company to try and reach it. This can lead to wasting engineering time, trashing pricing plans, inventing new use-cases on the fly and generally using up a lot of energy and goodwill. A properly developed and considered GTM can address all of that – but you need to take the time to do it.

Effectively, a good GTM strategy addresses the use of resources to get the product and/or service out into the market – and into the hands of customers. It sounds so simple, yet it is anything but. Common mistakes often sound like:

‘It’s just sales – we’ll hire an awesome sales person and they’ll figure it out.’

‘We’ll simply use the channel – we don’t need a big sales team.’

‘Our customers will come to us – we have a great product – they’ll just find us.’

‘We already talked to customers while we developed the product. It’ll be fine.’

‘We’ll advertise on Facebook and that will work.’

‘What’s GTM? What’s Google got to do with it?’

Death (and reincarnation) of a salesman

‘The only thing you’ve got in this world is what you can sell.’

It’s one of the most famous lines in Arthur Miller’s classic play, Death of a Salesman,² and it has a certain compelling logic to it. There is a fundamentally transactional basis to any business: a customer buys something from a vendor.

Only, the concept of ‘sales’ has come a long way from the stereotypical heyday of the 1940s and ‘50s when salesmen like Miller’s Willy Loman got by on their wits and would do anything to make the sale.

When it comes to the kind of companies VCs invest in today – early stage startups building the next generation of products – it is anything but the aggressive, adversarial approach of Willy Loman: vendor and customer are actually part of a single process built around shared goals. But before we look forward, let’s have a quick recap.

Once upon a time, the relationship between buyer and seller was immediate and direct, based around an exchange of goods or services in return for something – bartered goods and, later, money. The seller was the maker, craftsman or grower, and so sales was not a job in its own right.

Sales as we think of it today has its genesis in the industrial revolution and the first large-scale markets that resulted from mass-produced products. It meant makers couldn’t have a direct, one-to-one relationship with their customers any longer. Selling things became a profession.

Until recently, a customer was very much being sold to. They had almost no means of researching products and markets, and had to rely on the salesman to inform their buying decision. The rise of mass media, especially radio and television, presented new channels for marketing and also led to a better-informed consumer.

Sales strategies and techniques were devised, leveraging human psychology and behavioural insight in pursuit of the ‘win’.

The Mad Men era saw things become a bit less adversarial, as salespeople started trying to identify their customers’ problems and offer solutions rather than just flogging them something regardless.

As technology disrupted just about everything,³ sales was turned inside out. The internet empowered customers with instant information about products, markets and reputations at their fingertips.

Large-scale enterprise IT sales were followed by the SaaS explosion, but even that hype curve won’t be the end of the sales evolution.

So where are we now?

In a world of Artificial Intelligence (AI) and blockchain ‘miracles’ there is no shortage of what can look suspiciously like deep-tech snake oil. But we are also seeing truly game-changing technology find swift mainstream adoption.

As Arthur C. Clarke famously stated, ‘Any sufficiently advanced technology is indistinguishable from magic’.⁴ So ‘selling’ a piece of breakthrough product involves something like a compression of the full sweep of the history of sales, taking a pinch from each era to arrive at the close customer alignment that helps shape both product and business model.

Sure, you’ll need a bit of chutzpah to get those first conversations started. A little foot-in-the-door persistence to nudge an open-ended ‘maybe’ into a more solid ‘yes’.

But, ultimately, the sales journey is one taken by customer and vendor together and involves shared knowledge and a bespoke approach. In the case of genuinely breakthrough technology, this can take longer than typical startup cycles.

Very often, there is a pre-revenue phase of a company’s development in which they are working closely with their customers to solve real business problems and achieve product-market fit. There is real value here, with a clear commitment from the customer and a honing of the product.

A startup’s need to convert such initial traction into sustained growth has seen the rise of the Chief Revenue Officer. Usually, by the time a company reaches a Series A round, it will need evidence of solid sales being firmly within reach.

If the customer relationship doesn’t convert into bankable revenue, generally within the first three years, it’s game over – no business.

It’s tempting to conclude that the old saying ‘nothing happens until someone sells something’ still holds true. But considering the way vendor and customer are so inextricably linked in the pre-revenue development process, it might be fairer to say that ‘nothing happens until someone buys something’.

Help is at hand

Throughout this Founder Handbook, you’ll become well versed in the details and intricacies of building a solid GTM by working directly with customers (specifically – you guessed it – your first ten enterprise customers). GTM is a foundational part of any company’s strategy and is essentially attempting to answer a series of related questions through a deliberately engineered process: which use-cases, which customers, how much should we charge, what value do we bring, what demand- generation techniques should we use, what should the sales process look like, which groups within the customers should we be targeting, and how do we support them after they’ve committed? We outline the business-development process in ACT I.

On the route to success, there are a bunch of traps that will get you if you skip over this part of the process and just feel your way. These will cost you in terms of cash and time… neither of which you have much of as a founder.

The first trap is assumptive bias – believing what you already (think you) know about the market, your product and your own insights to create a GTM that is logical and well-suited to the business, and yet ends up having limited real connection with customers that derive the greatest value. That’s a game of internal flattery. The second trap is focusing too much on one specific step in the process – it could be pricing, the actual transaction, demand marketing without conversation, etc. – and in doing so, missing the integrated cycle from your customer’s perspective. GTM is a holistic, external game. It’s not about internal flattery. It’s about getting out and meeting with customers. It’s about learning their problems, as they experience them, seeing and feeling the world through their eyes, across all aspects of the lifecycle. You must find out how your customers are measured and rewarded internally, to how they understand and describe a problem, to how they find out about you, how they buy – and indeed consume – your offering, and then how the relationship and mutual success can evolve together. This is why ACT II of this Founder Handbook is dedicated to refining the business-development cycle, turning the flywheel faster by incorporating customer engagement into the process.

We wrote this book as a guide that you can follow during your growth journey. We are sharing frameworks that were useful to us at that specific stage and showing you potential mistakes before they happen, as well as giving advice on how to prevent them. You will find that there are lots of cross-references across the chapters. This is to make it simple to refer quickly to related topics while reading. We want this book to be really easy to access and navigate, no matter what topic you are reading at the moment because growing your startup doesn’t always follow a linear route.

CHAPTER ONE

Why do startups fail?

…AND WHAT DOES BUSINESS DEVELOPMENT HAVE TO DO WITH IT?

The first lesson that we learned from the AimBrain experience is that we should focus on being less wrong rather than right. No matter how seasoned you are, no matter how many times you’ve done something before, no matter how much time you spent thinking about all the potential outcomes, visualising yourself as the grand master chess player – unexpected shit will happen. Likely more often than you expect, even if you try accounting for it. As Mike Tyson once said ‘Everybody has a plan until they get punched in the mouth’. We are not saying that you should not plan – that would be irresponsible to your shareholders and yourself. Instead, in this book we will be making a case for rapid planning based on customer feedback and iteration.

Which brings us to the main question: how can we use business development to be less wrong?

Crunchbase has probably the largest startup post-mortem archive. Based on that, they distilled the top 20 reasons why startups fail.⁵ A lot of them are not reasons of failure, but outcomes of a single, specific type of failure. For example: ‘Failure to pivot’ or ‘Pivot gone bad’ – if business development is done diligently, you can uncover bigger business opportunities much sooner in the cycle, thus leaving you, the founders, enough runway to act on that plan and adjust with new information via continuous business development. ‘No financing/investor interest’ – let’s be honest here, investors, just like all of us, are greedy and would not pass up an opportunity to increase their and their fund’s limited partners’ wealth. What they would pass up on is a team with no clear metrics or execution plan, making it too risky to invest. If you have done your business development diligently, you will be able to defend your case; ‘Failed geographical expansion’ or ‘Product mistimed’ – business development should be applied to all new markets, channels, customer segments, etc. This will also inform you if the market is ready and will save you and your shareholders a lot of energy; ‘Lose focus’ – business development distills key performance metrics that matter to the customer and informs your focus; ‘Poor marketing’ – business development helps to define buying personas and how to best reach them, i.e. messaging and marketing channels; ‘Ignore customers’, ‘Product without a business model’, ’User unfriendly product’, ‘Pricing and cost issues’ or ‘No market need’ – you get the gist. These are all failure types that should have been addressed by the business-development process from the start.

As you can see, most startups fail because of poor business development, which manifests as the outcomes above.

CHAPTER TWO

What is business development?

…AND HOW NOT TO LOSE YOURSELF IN A VACUUM

The second lesson that we learned from the AimBrain experience is that you must not build a company in a customer vacuum – no matter what you build, how good it is or what revolutionary, cutting edge, deep-learning technique you’re using, if you’re not addressing real customer problems (with the right message, product, market, channel, implementation, process, value proposition, etc), your startup is extremely likely to fail. Business development is exactly that – a repeatable process that helps you to understand your customers.

Business development is a fundamental part of the company process. That’s where everything starts. We can represent a business as a cycle by using a flywheel:

The Business flywheel. It is a fundamental, cyclical part of the company process. Each step informs the next one. It takes a huge amount of energy to start the ‘flywheel’ – less to accelerate and even more so to maintain.

Each step takes input from the previous one and amplifies it as an output for the following step. As Newton’s First Law of Motion states ‘…an object in motion stays in motion…’. It is extremely important that all parts of the flywheel are accelerating together towards the same goal. If any part is malfunctioning, it causes ripple effects throughout the whole business cycle and, as a consequence, the flywheel starts slowing down. It is extremely hard to get the wheel turning initially or re-starting it after a failure. The best way to make sure it does not slow down is to understand what metrics matter at each stage of the process and measure them meticulously. As your company grows, the priorities and metrics will change, but as Peter Drucker, who is revered as the father of modern management, says ‘If you can’t measure it, you can’t improve it’. (We discuss metrics in Chapter Nine.) In a similar way, the business-development process is also cyclical:

The business-development flywheel is a single step of the business flywheel, and a cyclical process that must always be done based on customer feedback. Its usefulness scales from products, which are whole companies, to single product features in a suite of offerings.

Ideas do not matter as much as the right execution does. With the Earth’s population at more than seven billion, chances are that there are multiple people that either had, have or will have the exact same idea that you are thinking about right now. In fact, if through this process you do not find already existing competitors, or discover someone else who is working on exactly your problem, something is wrong. You are either in a genuinely cutting-edge academic research area, which means a PhD would be a better pursuit as it will take too long to commercialise, or others have already tried it and abandoned