Early-stage company growth stalls for many reasons. Many companies falter at the scale stage of development (going from 4-5 customers to 100). Many founder/CEOs tend to blame lack of funding, slow market acceptance and other factors on lack of growth or inability to scale. However, a main reason for lack of growth is that the founder/CEO is the only person who can sell the product. This creates a “zombie company”. If this is you, your company is probably in the category of “the walking dead”. This company may survive for a period (maybe an indefinite period), but make no mistake… the company is dead.
The reason is clear. You don’t scale.
Most founder/CEOs are domain experts and have never run a company before and therefore, have never built marketing, sales, sales operations or customer support functions. They may have run engineering, academic or other departments. Because they don’t have experience hiring, and on-boarding people for these other functions, there can be constant swirl and turnover around these functions. Often the founder/CEOs may be able to hire a marketing person and even get a client services operation running, but there is no rapid growth. Marketing never generates sufficient sales opportunities, messaging is never where it needs to be and sales forecasts are constantly missed. Often, a founder/ CEO will either go through multiple iterations of sales hires, none of whom work out, or these founders will stick with a mediocre sales hire who is incapable of growing the business. Most often, however, the founder/CEO simply can’t attract and hire people and then properly on-board sales people to make them effective.
Or the founder/CEO is unwilling or unable to give up control. This is a common occurrence and causes discord with the team, particularly sales, marketing and finance people who realize that the Founder/CEO does not have the expertise in these areas but insists on doing things his or her way. This spells disaster if these founders try to remain in control believing, “Only I can properly sell this.” They never truly empower their sales people, but think they have. Or, they may not hold sales people accountable for results or pre-results (like sales activity, number of sales calls or demos done…). They do not try to understand where in the sales process (if there is a sales process) leads might be disappearing and why.
The CEO role is different and Founders often don’t understand or appreciate what the CEO is supposed to do to scale the business. The Scale CEO is responsible for…well, scale. Yet many Founders are less comfortable with scale and more comfirtable staying close to “their baby”.
It is in the “Early Scale Stage” that domain expert founder/CEOs have the most difficulty. Many domain experts can often get the first 5 sales done. They have sufficient industry and product knowledge and they have sufficient industry contacts to get early adapters to buy the product. But when it is time to scale the business and the founder can’t make all the sales him or herself, the company stalls. There are many reasons for this, but mostly it is because the founder/CEO lacks experience at building a company and how to scale and does not have the experience or discipline to know how to properly launch a product or handle the required care and feeding of direct and indirect sales organization (commonly called Sales Operations).
In earlier phases of company evolution, product knowledge is the required skill set and focus. After that, product and product knowledge skills are overtaken by company building skills and specifically skills in marketing (messaging, positioning and lead generation), sales (getting prospects from interest development through the contract process without the founders involvement), customer support (getting the new customer implemented and to a reference stage without the founders involvement) and handling the financial reporting, cash forecasting, sales forecasting required to build out a true company. This requires attracting, hiring and on-boarding people who can effectively handle these functions without the founder.
Most domain expert founders who lack sales experience, fail to recognize or even appreciate how complex sales can be. They are more comfortable with functions where they are in 100% control. For instance, a technical founder can make a computer or machine do something that he/she wants it to do. But, they can’t do that with a prospective customer who has different views, is worried about risk, has people on the staff who may view the new solution as threatening or more work, who hate change and risk, are more comfortable with the status quo and who have no idea how to internally sell and justify a new product.
But, domain-expert founder/CEO’s often have never hired sales people before and certainly have never on-boarded them. This causes immense problems. Often these founders think, “Hey, you have sales experience. My product is simple. You will know how to sell this.”
Hiring sales people is always difficult, even for experienced sales managers. It is even more difficult for inexperienced founders. Hiring someone who can grasp the industry you are in, has (as example) SaaS experience and has worked in a lean startup, has a track-record, can sell a product at your price point, and that you can afford is a very tall order. And, if you don’t really know what you are looking for, you are likely to end up disappointed.
Sales people may (or may not) have the right skills and knowledge in selling, but bringing them up to speed on your vision, your culture, your purpose, your value proposition, your ideal customer as well as training them on features, benefits, potential objections, current customer reference stories and a host of other topics is critical to their success. Plus setting and agreeing on performance standards along the way is essential to success nut rarely done.
A related problem is that founders do not realize that a good sales person is not necessarily a good sales manager. So, if they are lucky enough to find, hire and train a competent sales person, this person may still be an inexperienced and ineffective sales leader. Great sales people are often lousy sales managers. So, the scale problem happens a little further down the road, but still happens.
Companies where only the founder can sell the product simply can’t scale. They often go through multiple teams of sales people and the founder ends up frustrated and always blames the sales hires for the problem rather than a lack of respect or understanding of the sales operations process. This is a process (or a function) that is responsible for the care and feeding of the direct and indirect (channel) sales organizations. Properly on-boarding, training, supporting, communicating with and measuring the progress of the sales organizations (direct and direct) is essential. But domain-expert founder/CEO’s often have never hoped sales people before and certainly have never on-boarded them. This causes immense problems.
Finally, if the founder/CEO is the sales person, then the question is: Who is running the company? These are different jobs in the scale stage of the business and both are full-time jobs. Therefore, the company flounders.
But, it is the main function of an Early Stage Growth company CEO to attract, hire and on-board sales, marketing, customer support, finance and HR people to grow the business. The success of these people is a primary responsibility of the CEO.
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