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22:53
Transcript
0:01
foreign
0:03
[Music]
0:10
School my name is Gustav and I'm a group
0:13
partner here at y combinator today I'm
0:15
going to talk about how to go from
0:16
talking to users
0:18
getting your first customers here's what
0:20
I plan to cover today one what does it
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0:22
mean to do things that don't scale and
0:24
why is this mindset so so important at
0:27
this stage of your company two how to do
0:30
sales I'll make the argument the founder
0:32
should be the ones doing sales in the
0:34
beginning then we'll cover some sales
0:35
funnel information and then why is it so
0:37
important to charge for your product and
0:39
finally we'll learn how you work your
0:41
way backwards from your goals and why
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0:43
that's important I hope you've read this
0:45
article or this essay the most important
0:47
essay ever written about the very early
0:49
stage of startups is do things that
0:52
don't scale by Paul Graham Paul is the
0:54
co-founder of Y commner he published
0:56
this essay about the early days of
0:58
Airbnb Airbnb is perhaps the best
1:00
example of a successful YC company who
1:03
got their feet off the ground this way
1:05
many Founders who never worked for a
1:07
startup or an early stage company
1:09
incorrectly believe that all you need to
1:12
succeed is a good product and growth
1:14
will take care of itself this is not the
1:16
case the truth is that good product is
1:19
very rarely built in isolation but
1:22
together with your customers and as a
1:23
result it's not actually that good when
1:26
you show it to your first customers set
1:28
this another way
1:29
startups don't take off by themselves
1:31
startup takes off because Founders make
1:33
them take off and you have to manually
1:35
recruit your customers it's not enough
1:37
to push a button on an advertising
1:39
Network this is uncomfortable and
1:41
Founders continuously find many ways to
1:43
avoid doing this the most common way is
1:46
believing that you can recruit people by
1:48
just writing more code or doing more
1:50
work on your machine or your robot or
1:52
whatever you're building I know this
1:54
from my experience of YC that this
1:56
actually don't work so why am I talking
1:58
about this right now learning the
2:00
tactics of sales is just one side of
2:03
this uh of of this learning the most
2:06
important side is just really realizing
2:09
that it comes down to you it's not just
2:11
knowing exactly how to do sales in
2:13
theory but actually doing it and
2:15
actually wanting to succeed another
2:17
great visualization is what's called a
2:19
startup curve this was initially drawn
2:21
by YC found program and then labeled by
2:23
Trevor Blackwell and you've probably
2:25
seen this curve before most companies go
2:27
through something like this it's kind of
2:30
like a timeline for startups here's how
2:32
it goes first you launch these days most
2:35
companies don't launch on TechCrunch but
2:37
probably on product hunt or Hacker News
2:39
or some other internet board the launch
2:41
energy that you get from this launch
2:42
eventually starts wearing off as early
2:45
adopters are looking out for something
2:46
new if you don't have instant High
2:48
retention nobody does for what you are
2:51
building then you'll enter the through
2:53
of Sorrow this can take a long time and
2:56
many companies die during this stage
2:57
they just give up and don't move fast
3:00
enough with testing new things some
3:02
startups do move fast enough and release
3:05
new improvements of their product
3:06
they'll listen to users and they improve
3:08
many still don't get anywhere further
3:10
and becomes victims of the crash of
3:12
ineptitude it's the founders to stay the
3:14
course and don't give up that reaches
3:17
the Wiggles of false hope and eventually
3:18
the promised land of crack Market fit
3:20
the learnings we draw from the start
3:21
curve is that every moment in the early
3:24
days of startups the founders are the
3:26
ones that make the difference between
3:28
success and failures if you are in the
3:30
wrong Market
3:31
it's the founders that switch to a new
3:33
one and if you don't know how to do
3:35
sales it's the founders who learn so you
3:37
have to really want it otherwise this
3:39
won't work all right let's talk about
3:41
sales and how to do sales first Founders
3:44
should learn how to do sales you should
3:47
learn how to do sales because you'll
3:49
need to learn to know your customer
3:50
talking to customers and sales are
3:52
effectively different sides of the same
3:54
coin and the same reasons Founders can't
3:56
understand what to build they don't
3:58
understand what the problem is you don't
3:59
know how to sell unless you know your
4:02
customers two learning how to do sales
4:04
actually gives you full control of your
4:07
destiny as a startup just like you can't
4:09
Outsource engineering sales has to be
4:11
part of the DNA of the founders
4:13
sometimes you just have to learn it as a
4:15
result you should not hire a sales team
4:17
until you know how to do sales yourself
4:19
only then will you know what good looks
4:22
like you also can't do sales if you
4:24
practice bad and you won't know if the
4:26
product is bad unless you've had some
4:28
effort in trying to sell it first if you
4:30
don't know how to sell don't worry you
4:31
you can learn it's probably the easiest
4:33
job to learn in startup if you know the
4:35
problem you're solving if you know
4:37
you're product intimately if you know
4:40
the market you are an expert in the eyes
4:42
of the customer they will want to hear
4:45
what you have to say finally a love for
4:47
solving customer problems is really
4:49
infectious if you're really passionate
4:52
about solving this problem they will be
4:54
able to tell if you don't believe me
4:55
here are some examples of Founders who
4:57
took on the sales job and learned to get
5:00
really good at it so Tony from doordash
5:02
matild from front Tracy from plangrid
5:05
and Steve Jobs let's get straight into
5:07
an example so these are the brex
5:09
founders Pedro and henrique when brex
5:11
was in wycomner in Winter of 2017 they
5:14
recruit the first 10 customers directly
5:16
from the YC batch June YC you have the
5:19
benefit of being around other startups
5:21
I.E potential customers the brex
5:22
founders asked themselves what would the
5:24
minimum product look like that they can
5:26
build to be useful to other startups and
5:28
then they went with strain straight into
5:30
signing up those customers the first
5:32
version was very very simple customers
5:34
just had a virtual credit card and
5:36
Enrique from brex actively onboarded
5:38
everyone of the customers himself of
5:40
course they could have waited until they
5:42
had a full-blown product a website a
5:44
Mobile app all of those things but they
5:46
decided to get going when they have
5:48
something that was really useful this is
5:50
how their first physical card looked
5:51
like this before they had this card they
5:53
just had a virtual card Rex reached out
5:55
to the their YC batch and otherwise the
5:58
companies and this is the email that
5:59
they sent I'm just going to read a brief
6:01
portion of it hey guys we're opening up
6:03
our beta for winter 17 batch friends
6:05
with the 10 spots for beta users 10 spot
6:08
this sounds like there's a limited spot
6:10
so I should take actions brex is a
6:11
corporate credit card focused on
6:13
technology companies that's me perfect
6:15
you're actually writing the email
6:17
directly towards your customers we don't
6:19
require a personal guarantee it can
6:21
underwrite startups who just got started
6:23
this was the value prop most other
6:25
alternatives to brex did not have
6:27
something like this so how much does it
6:29
cost it's free the merchants are paying
6:31
us so there's zero Annual fees this
6:33
seems like a no-brainer I would argue
6:35
that this email is probably a little bit
6:37
too long but it did work so let's talk
6:39
about how to write a great sales email
6:41
so first it should be short Max 6 to 8
6:45
sentences the brexit sample on the
6:47
previous slide is probably too long it
6:48
still worked but probably too long
6:50
people don't have time to read long
6:52
emails if you're coming out of Academia
6:55
your culture is going to be very
6:56
different you write very long emails but
6:58
in the world of sales you want to get to
7:00
the point and be brief as much as you
7:02
can two you want to make sure you have
7:04
clear language no jargon no buzzwords
7:07
just say exactly what you do and how it
7:09
works and then three address the problem
7:12
that the potential customer is having
7:14
four do not use any HTML formatting
7:16
write your email in plain text only like
7:18
you would written it to a friend say you
7:20
are the founder of the company who makes
7:22
this product many people forget to do
7:24
this describe why you and your team are
7:27
impressive include social proof and
7:29
remember to show not tell don't say
7:31
you're an expert don't say how many
7:33
years that you have been an expert if
7:35
you're in the YC match if you worked at
7:37
impressive companies in the past those
7:38
are other piece of social proof that you
7:40
can include you won't include a couple
7:42
of these ones so that the reader knows
7:45
the source and even if they don't know
7:47
you gives assign you some authority six
7:49
you want to include a link to your
7:51
website the website needs to be simple
7:53
you have to have information about the
7:56
product the website should not have a
7:58
lot of drawings or sort of like paid for
8:01
graphics you should just have
8:02
screenshots from your product and
8:04
bullets about what your product does
8:06
sometimes it works to send a short video
8:08
a YouTube video that you can embed in
8:10
the email that's very easy for the
8:11
receiver to click on and View and I've
8:14
even seen people using gifs now those
8:16
videos and those gifs needs to get to
8:18
the point right away because the the
8:20
receiver is kind of intimately familiar
8:22
with the problem but not really have
8:23
time to watch two or three or four
8:25
minutes of a potential solution and then
8:27
finally you want to include and ask for
8:29
a call or a meeting or a self-serve
8:31
whether whatever is appropriate for your
8:33
company but there needs to be a call to
8:35
action in the email that you're sending
8:37
all right let's talk about the sales
8:38
funnel the concept of sales funnels is
8:40
really quite easy I think people get
8:42
confused by the language the sales
8:44
people are using so I try to simplify it
8:46
here on the left hand side I call it the
8:48
founder speak on the right hand side I
8:51
call it the sales speak these are not
8:52
going to be perfectly mapping but you
8:54
get the idea so first you want to make a
8:57
list of customers you plan to reach out
8:59
to in sales it's called prospecting or
9:01
lead generation we'll just call it make
9:03
it the list and you can use Google
9:04
spreadsheets or something like that to
9:06
make this list then we want to send them
9:08
an email or a LinkedIn message or add
9:10
them on LinkedIn or whatever is the
9:12
appropriate way to contact these people
9:13
after that you want to schedule and run
9:15
a demo or a meeting from that response
9:18
to the email and then you want to talk
9:19
pricing and then finally close them as a
9:21
customer the last thing which you should
9:22
not forget is after you've closed them
9:24
you still need to onboard them to make
9:26
sure that they start using your product
9:28
if this is successful and you have good
9:30
retention that could lead to long-term
9:31
Revenue if you forget the last step then
9:34
you will have lots of churn because
9:35
people don't actually know how to use
9:36
your product and this is common with
9:38
early products because they are not easy
9:40
to onboard in the beginning this is not
9:42
something you spend a lot of time
9:43
optimizing so make sure that you do the
9:45
onboarding as part of this process if
9:47
you go back to the Google spreadsheets
9:49
that I'm that I'm making that I'm
9:51
putting in all the information you
9:52
should start simple but you should have
9:54
some Columns of things that you're
9:56
tracking so industry uh the company the
9:59
title the name the email maybe the
10:01
LinkedIn this could be enough to start
10:03
with a lot of CRM software comes with
10:06
these categories so these columns it's
10:09
pretty good idea to kind of use a simple
10:10
CRM software
10:12
um to kind of accomplish the same goal
10:14
but the key thing here is doing this
10:16
work up front and I've seen a lot of YC
10:18
Founders that when they are getting to a
10:20
thousand of these they're like oh this
10:22
is a very simple task I can actually
10:24
Outsource this and I think that can work
10:26
if you know exactly what it is you're
10:28
Outsourcing storing all this information
10:30
is going to be helpful for you in the
10:31
future now I made my list I understand
10:34
this the sales funnel so who should I be
10:37
going after and how should I be
10:38
prioritizing as I'm doing the Outreach
10:41
here's my most important advice when it
10:42
comes to sales your first customers
10:44
should be your easiest this is not the
10:47
time to bite off the hardest one
10:49
focus on the easiest ones what I mean by
10:51
that is you should try to do sales
10:53
make the sales processes easy for you as
10:55
you possibly can startups don't really
10:58
have time to chase every lead there's a
11:00
lot of leads out there you you don't
11:02
have to pick all of them you really
11:03
don't you're so early you can pick only
11:06
the ones that are the most likely to
11:07
close the best way to do this I have a
11:09
big pipeline where that means a lot of
11:11
people that you're emailing are
11:13
potential customers and then as you're
11:15
getting responses and you're getting to
11:16
meetings start prioritizing those who
11:18
are the most likely to close you can
11:21
probably tell from their answers to your
11:23
qualifying questions during the sales
11:24
call
11:25
avoid those who are moving slow and
11:28
don't be afraid of letting customers go
11:31
don't be afraid of letting customers go
11:32
what I mean by that is that if someone
11:34
is dragging you along two or three calls
11:36
you can always be like it's been great
11:37
getting to know you
11:39
um and I've learned a lot but
11:41
um we should talk again in six months
11:43
that's totally fine to say two
11:45
selling to people you know is going to
11:48
be easy to selling to strangers so you
11:50
should take advantage of your network
11:51
three selling to startups is the easiest
11:55
category and I've I've learned this On
11:57
and On Again with YC company
11:59
specifically the ones that sell software
12:01
it just turns out that bigger companies
12:04
have more bureaucracy more processes
12:07
they even have a specific Department
12:09
that is in charge of negotiating with
12:11
you and that takes a long time and
12:13
startups don't have any of these things
12:14
because they don't have time to create
12:15
these things but it's not a priority for
12:17
them
12:18
so startups have short decision-making
12:19
lines you can often find that the
12:22
decision maker right away as you do in
12:24
the Outreach and you don't have to go
12:25
through a difficult process that's why
12:28
startups are easier and that's why we
12:30
recommend most companies to sell to
12:32
startups at least leads me to the fourth
12:34
Point most people are not early adopters
12:39
and I keep saying this to the white
12:40
companies I work with all the time the
12:42
reason you have to sell send hundreds of
12:44
emails is not that most of those people
12:47
get really upset and be like I can't
12:49
believe you emailed me like I really
12:50
love this alternative product by hate
12:52
your product that's not what's going on
12:53
most people they email are just be like
12:56
archive they just don't care they're not
12:59
going to try a new product that comes in
13:01
through your LinkedIn or your email and
13:03
they might not be the people that try a
13:04
new product at all in their career
13:06
that's most people some other people I
13:08
remember being one of those people when
13:09
I worked at Airbnb I would love when
13:11
founders emailed me with new new
13:13
products and I would be the one signing
13:15
up for them so
13:17
when I worked Airbnb and you were a
13:19
startup email me was great I am an early
13:21
adopter I love trying new things I don't
13:23
mind the risk of trying new things so
13:26
for every outbound uh to an average
13:28
company that you send you will mostly
13:30
like most likely on the average outbound
13:32
average email average LinkedIn reach
13:35
someone who is not an early adopter to
13:37
reach early adopters you just have to
13:38
send more out by messages because then
13:41
you don't have time to convince anybody
13:43
to become an early adopter you have to
13:45
find Aero adopters and just go for them
13:47
early on don't worry about everybody
13:49
else you just don't have time to
13:50
convince them let's talk about charging
13:51
it's attractive for you as a founder and
13:54
for your company to offer your product
13:56
for free offer free trials or unpaid
13:59
pilots and these things come in many
14:02
shapes and forms however if you don't
14:05
charge your customers they are not a
14:08
customer and you don't have a company
14:10
customers paying you money is a great
14:13
sign that you're providing them real
14:15
value
14:15
so you should resist the fear of getting
14:18
a no because of price
14:20
instead of figuring out what the price
14:21
should be if they don't want to pay and
14:24
you learn this during the qualification
14:26
process in the first call or the first
14:28
meeting
14:29
if they don't want to pay that's a great
14:31
sign that you should move on to the next
14:34
customer
14:35
again fire the ones who seem like
14:37
they're not good fit move on to the next
14:39
customers
14:40
free trials are common for consumers but
14:43
if you thought about it most consumer
14:46
free trials ask for the credit card up
14:48
front and then we forget and then we pay
14:50
anyway
14:51
that's because that actually works the
14:53
best the bdb version of this
14:55
is a better one than a free trial is a
14:58
money back guarantee so we charge you if
15:01
you're not happy you can get the money
15:03
back in 30 days so 60 days
15:05
um or even better you have the ability
15:07
to opt out from the annual contract you
15:09
just pay for one month instead of the
15:10
annual fee but you should not offer free
15:13
trials in B2B sales go for a money back
15:15
guarantee and go for the ability to opt
15:17
out instead increasing your price until
15:20
your customers are complaining but still
15:22
paying is the right way to go all right
15:24
let's talk about the thing that most
15:27
Founders get wrong I've seen as many
15:28
times but there are a few things that
15:29
most wanted to get wrong and this is one
15:30
of them working backwards from your goal
15:33
with your sales funnel in order to work
15:35
your way backwards from a goal of say
15:38
two signed customers you have to
15:39
understand that each step in the sales
15:42
funnel is going to have a drop-off when
15:44
you haven't started sales yet you don't
15:46
know what these draft off percentages
15:49
are maybe you haven't done a lot of
15:50
sales before you don't know what you're
15:52
not good at maybe you're really good at
15:54
sending emails but really bad at closing
15:55
or vice versa you don't know that so as
15:58
you're sending these outbound emails you
16:01
need to take notes and start tracking
16:03
all of these conversions in this example
16:05
I'm sending 500 Outreach emails or
16:08
LinkedIn messages I have a 50 open rate
16:10
that means 250 people will open the
16:13
email five percent will respond that's
16:15
about 20 potential customers 50 of those
16:18
will convert to demo from the response
16:20
which means I'm doing 10 demos that's
16:22
pretty good but I'm not that good at
16:24
doing demos only two end up becoming
16:26
customers from the demos that's 20 I bet
16:29
you most of you don't even track this
16:31
data but you should if you track this
16:33
data you will have some idea of how long
16:35
it will take to get to 10 paying
16:37
customers if you don't track this it's
16:39
very hard for someone to give you
16:40
feedback of what's working and not
16:41
working right it's just like when you're
16:43
launching a new product you want to have
16:45
some metrics and some user data to be
16:47
able to tell if it's working when you're
16:49
doing sales you want to have this data
16:50
if you have this data people will be
16:52
able to give you feedback on what what
16:53
you're good at and what you need to get
16:54
get better at my advice is to use a
16:57
simple sales CRM software that tracks
16:59
these conversion rates automatically
17:00
let's look at the same second example
17:02
this is how it looks like for most
17:04
startups even the ones that I work with
17:06
in the batch in the second example I'm
17:07
sending 100 Outreach email it feels like
17:09
a lot to me if I keep the conversion
17:11
rates constant from the previous example
17:13
I actually end up with zero customers
17:15
and the conclusion the founders draw
17:16
after this is that sales is not working
17:19
for me and I should just do marketing or
17:21
SEO or something else or referrals or
17:23
something that sounds attractive this is
17:24
simply wrong you don't have the data to
17:26
make that call you did not do enough
17:28
Outreach to actually get to correct
17:30
conversion rate percentages in your
17:32
sales funnel so the answer here is you
17:34
sent a few minutes too few emails you
17:36
don't have the data you can't draw the
17:38
conclusion that sales is not working
17:39
even though you have serial customers
17:41
and this is the mistake that funders do
17:43
on and on and on again so to summarize
17:45
what I just went through here you don't
17:47
know your sales conversion rate that's
17:49
why you need a CRM to keep track of it
17:51
two because you don't know who is an
17:54
early adopter you have a lot of drop off
17:55
in the outbound sales that makes up on
17:58
sales ultimately a numbers game and
18:00
successful startups we like this and
18:01
internalize this three you cannot close
18:03
five customers from 10 leads it's not
18:05
possible you need a lot more app on than
18:07
that a lot more and unfortunately most
18:10
finders don't work their way backwards
18:11
from this sales funnel and they don't do
18:14
this exercise and the result they don't
18:16
succeed as sales and they don't really
18:18
know why so a friend of mine from Airbnb
18:20
Atlanta rashitzki he writes an excellent
18:22
blog and he wrote a great blog post
18:24
about how YC and a bunch of non-yc B2B
18:27
startups
18:28
um got their sales go to market strategy
18:31
going I recommend reading this and other
18:32
posts uh newsletter it's it's one of the
18:35
best ones I've come across it has a lot
18:37
of real data that he collected from real
18:39
companies uh many of them being YC
18:41
companies so in this example here in the
18:43
second column Lenny is describing the
18:46
initial sales motion of some of these
18:47
companies as you can see some of the
18:49
early ones like amplitude stripe front
18:52
they were doing app on sales emails just
18:54
like the one we described to get started
18:56
those Founders were doing those sales
18:57
emails as they get started some of the
18:59
other ones was called Product LED
19:01
product LED could mean something else
19:03
than just doing up on sales but it
19:05
doesn't mean having a big sales team and
19:07
it usually does not mean doing marketing
19:09
or SEO or something else practically it
19:12
means something that the product itself
19:13
is is sort of like driving the growth as
19:16
you're running the demo
19:18
um your goal is to close your first
19:19
customers
19:20
you want to ask a lot of questions up
19:22
front in the demos and there's the
19:24
founders who should do the demos because
19:25
you are the one knowing the product and
19:28
you know the customer pain points here
19:30
are three examples of YC emails that led
19:33
to customers so I'll let you guys look
19:35
at the details of these afterwards but
19:37
this is an app on email that led to uh
19:39
72 000 a year contract this one LED is a
19:42
very specific email that led to out
19:44
Landing a goalie as a customer and this
19:47
third example here is the one email the
19:49
same email they got them 22 different
19:50
customers all right I'm going to
19:52
summarize this again the biggest
19:54
mistakes that most finders do is they
19:55
don't do enough Outreach because they
19:57
don't work package from the goal
19:59
believing that something else then sales
20:00
is going to solve your sales problem
20:02
Outsourcing sales is wrong you should do
20:04
it yourself and you need to qualify your
20:07
customers during your first call here
20:08
are some of the tools I recommend so
20:10
there are many many many tools this is
20:12
perhaps one of the biggest categories of
20:14
potential things you could use as you're
20:16
doing sales but I recommend apollo.io
20:18
close.com formerly called closed.io
20:21
pipedrive or hunter.io these are great
20:24
tools that you can use either as a
20:26
simple sales CRM or Hunter you can use
20:28
to get contacts or potential people to
20:31
email from LinkedIn here are two
20:33
additional resources if some people ask
20:34
me for books usually there aren't good
20:36
books but there is actually one that I
20:37
come across I find really good it's
20:38
called founding sales and then I also
20:40
recommend lineage newsletter.com there
20:43
are of course other ways that you can
20:44
grow as a startup but the truth that
20:47
I've learned is that even if you end up
20:49
with say like Airbnb where the sources
20:53
of growth is Word of Mouth Google search
20:56
referrals Facebook advertising if those
21:00
are the kind of end states of your
21:02
growth strategy that's not how ambica
21:05
started they didn't start by running
21:06
Google sem or Google SEO
21:08
the referral program did not bring in
21:10
the first 2000 customers they did things
21:13
that didn't scale and they looked
21:15
different than the one they do at scale
21:17
so a lot of companies are shorting
21:19
straight into What's called the scalable
21:21
growth channels the channels that
21:22
they've heard work which is true at
21:25
scale but that's not the same thing as
21:27
when you're getting started so in this
21:30
slide I'm outlining kind of like just a
21:32
rough idea of like even if it turns out
21:35
the Google sem and Google SEO is what's
21:37
going to work at scale you need to find
21:38
another place online where these people
21:40
that you're going to reach through sem
21:42
and SEO is identifying themselves online
21:44
right and that might not be the same as
21:46
Google if you're trying to go after sem
21:49
which means search engine marketing it's
21:51
going to be expensive probably because
21:52
there's competition if you're going
21:54
after SEO it's going to take a long time
21:56
if your growth is say proc LED or
21:59
virality referrals then personal
22:02
networks selling through your personal
22:03
Network to your co-workers is the way to
22:06
get started of course if you're doing
22:07
sales you should be doing sales it
22:08
doesn't change very much like early
22:10
stage sales to to large sales basically
22:13
means all the things that I just
22:14
described here
22:15
done by 100 people in a sales team with
22:17
more automation more tools more metrics
22:19
but it's the same thing and if you
22:21
practice setup to do online marketing
22:23
it's not usually how most people start
22:25
why because you can't really easily talk
22:28
to people you can't learn from users if
22:32
the first thousand or first-handed
22:33
customers are brought in through Google
22:34
and Facebook those people are not the
22:36
kind of people that you can easily get
22:38
on a 30 minute phone call with all right
22:40
that's all I had today thank you
22:42
everyone
22:45
foreign
22:47
[Music]
— end of transcript —
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