On the Bowery Capital blog in the coming weeks we present "The First Million," a series focused on the tactics and tips as founders scaled their business from zero to one. We talk revenue generation, pricing, sales, marketing, and product related matters that supported the growth of these companies. Check out our fourth interview this week with Alex Gershenson of SupplyShift.
What are some of the key things you did (e.g., product, sales, marketing) to go from 0-to-1?
- In the beginning, every single product is going to have holes - this is just reality. What you need is people who are good at thinking on their feet, who can anticipate where the customer will hit a hole, and who can ideally fill the hole before the customer ever realizes it is there.
- When you are building out an enterprise scale B2B product, you are essentially treating your first customers as your beta users, which they may not know yet. To compensate for this, you need an absolutely rock solid, superstar implementation team.
- The first sales have to be founder led sales, largely for the benefit of the product and the founders. On those early calls you learn a hell of a lot about how close you are to actual product market fit. These sales calls also help you hear your customers and you can validate your assumptions on every single one of those calls, and tweak the direction of where you are going.
- As long as you are listening to the customers intently, you are going to continue building the right thing for the market.
One of the things that is hard for new founders to understand is the architecture of a typical day when you are doing founder led sales. How did you approach it? And how did your approach evolve over time?
- It depends on whether the founders have a name and a presence in the industry or not. We started with recognized worldwide subject matter expertise, and then we went to the conferences where the customers hung out. That was probably 90% of our lead generation, getting invited to speak at conferences. If you do not have domain expertise, knock on every door, reach out via LinkedIn, and do whatever you can to get in front of prospects.
- What I tell other founders is to remember that if you ask for advice, you get money; and if you ask for money, you get advice. Always reach out with humility, and do not talk about yourself. Nobody cares about you and your company and your product, instead talk about the prospect, identify something unique to them and avoid being generic.
- I get thousands of generic inbound messages in my inbox, and I delete them because they are usually only talking about themselves and it is clear they did not do any research on what we do. Instead, do the research, figure out what that person is known for, what they are good at, etc. Recognize those things and then ask them for advice on your new project - which also just happens to be the product you are trying to sell.
- Humans generally want to be helpful. If you ask a prospect for help, and with humility, they will take a look at your thing and think to themselves, "Wait a second - this is cool and, actually, I would like to try it."
Talk to us about any assumptions you had at the outset around going from 0-to-1 that did not turn out to be true or totally flopped in practice?
- The biggest assumption we had was how fast the market was going to develop. We thought things were going to move much faster. We were building for where the market was heading - but we way overestimated how fast it would get to where we ended up at. All of our planning, all of our budgeting, all of our build out, was for a future state of the market which took longer to arrive than anticipated.
- You want to be a visionary and build for where the market is heading, but at the same time you need to meet the needs of the market as it is today. It is always a balance of meeting the market's current needs, while also building for the future.
- Focus on what you are delivering to the customer and ensure it can solve for their current pain point. Do not try to sell them on what their pain point will be in two years - most of the time they do not care. Except for the visionary leaders, the pioneers, the early adopters - they might care but that market is tiny relative to the broader market.
Can you talk to emerging founders about how to deal with market competition?
- For SupplyShift, there were not many legacy players when we launched - it was an emerging market for a product that people gradually realized they needed, but there was not the dynamic of a “we have X and how are you better than X?”
- What I found works best is honesty and transparency. Customers know that when they are pitched it is blah, blah, blah and a lot of overpromising. If you do not look and sound and act like the other salespeople, people will be drawn to you because they realize, "Wow - this is a different kind of thing."
- If you see whoever you are buying from as a partner, you are going to want to work with them. If you see them as a vendor, you are going to treat them very differently. Do not be a vendor, be a partner. From that first conversation, you need to be seen as a partner of that buyer on the personal level. You are never selling to an organization, you are selling to a person.
So you started with going to conferences and speaking at them, what other sales levers did you pull as you moved beyond conferences as your primary channel?
- In the beginning, it was all through connections. Cold prospecting does not work well in the early days because you often do not have the cash to make the marketing collateral, and you do not have the scale of a sales organization needed to support cold outreach as an effective mechanism.
- Instead, you need to leverage professional networks. Knock on every door, but also leverage any connections you have. For us, it was the recognition Jamie and I had as experts in this field. This was pre-COVID, so the world is different now, but conferences are still around.
- If you do not have that industry expertise before you start, you need to develop it quickly. Start doing webinars, start doing free events where you can bring in outside experts if you do not have that expertise yourself. Find relevant experts and put them on an advisory panel - find ways to bring them into the fold. This should not be marketing disguised as content, but instead real thought leadership. Providing real, valuable insights is another way for prospective buyers to see you as a partner.
Switching to the bottom of the funnel for a moment - what were some successful tactics there? For example, if you were having trouble converting a pilot, or were stuck in negotiations and procurement, how did you get deals unstuck?
- You always need to do the early pilots - there is no way around pilots when you are selling this kind of software and are trying to grow from $0 to $1MM. This is also where your implementation and customer success team will make or break the thing. You are going to spend an inordinate amount of resources to convert that pilot, and the way that it will convert is if you have a rockstar team making sure that that pilot is successful.
- By the time you are live with that pilot, it is likely procurement has already signed off assuming you perform. We have never encountered a situation where procurement blocks something after the pilot.
- The most important thing for the pilots is to make it so the expectations for the pilot's success are written down and explicit. Before we started being explicit about what success meant, often times a pilot would end and we would say to the buyer, "Great - so it worked.” And they would counter by saying “Well, I did not get a pile of pink cookies at the end.” But a pile of pink cookies at the end was not part of the success of the pilot. Misaligned expectations on what a successful pilot looks like can cause a lot of friction. We try to lay out some clear milestones - just a few bullet points - and if we hit those bullet points, then the pilot converts.
Would you ever do free pilots?
- Absolutely - you have to do free pilots in the beginning because you have no credibility in the market.
Any final big picture thoughts?
- I think the biggest challenge is really getting from $0 to $100k. What does it take to get those first customers live and paying? Getting anybody to actually be the first person to buy something is hard. They will always ask, "Oh - who else is using it?" and then the answer is, "Well, you are the first." Nobody wants to be the first.
- This means you end up discounting that first deal into the ground just to close it. For the first few deals, forget about P&L; P&L is irrelevant. And do not worry about that margin; your margin is going to look comical.
- If you are at zero in sales, forget about the first million. If you are focusing on the first million while sitting at zero, you are thinking about it the wrong way. Think about one deal and once you close that, start thinking about repeatability.
