WEBVTT 00:00:01.740 --> 00:00:07.610 foreign 00:00:03.379 --> 00:00:07.610 [Music] 00:00:10.218 --> 00:00:15.419 School my name is Gustav and I'm a group 00:00:13.320 --> 00:00:16.618 partner here at y combinator today I'm 00:00:15.419 --> 00:00:18.600 going to talk about how to go from 00:00:16.618 --> 00:00:20.698 talking to users 00:00:18.600 --> 00:00:22.920 getting your first customers here's what 00:00:20.699 --> 00:00:24.900 I plan to cover today one what does it 00:00:22.920 --> 00:00:27.359 mean to do things that don't scale and 00:00:24.899 --> 00:00:30.000 why is this mindset so so important at 00:00:27.359 --> 00:00:32.219 this stage of your company two how to do 00:00:30.000 --> 00:00:34.019 sales I'll make the argument the founder 00:00:32.219 --> 00:00:35.579 should be the ones doing sales in the 00:00:34.020 --> 00:00:37.739 beginning then we'll cover some sales 00:00:35.579 --> 00:00:39.780 funnel information and then why is it so 00:00:37.738 --> 00:00:41.519 important to charge for your product and 00:00:39.780 --> 00:00:43.320 finally we'll learn how you work your 00:00:41.520 --> 00:00:45.420 way backwards from your goals and why 00:00:43.320 --> 00:00:47.640 that's important I hope you've read this 00:00:45.420 --> 00:00:49.920 article or this essay the most important 00:00:47.640 --> 00:00:52.140 essay ever written about the very early 00:00:49.920 --> 00:00:54.539 stage of startups is do things that 00:00:52.140 --> 00:00:56.520 don't scale by Paul Graham Paul is the 00:00:54.539 --> 00:00:58.439 co-founder of Y commner he published 00:00:56.520 --> 00:01:00.719 this essay about the early days of 00:00:58.439 --> 00:01:03.358 Airbnb Airbnb is perhaps the best 00:01:00.719 --> 00:01:05.219 example of a successful YC company who 00:01:03.359 --> 00:01:07.379 got their feet off the ground this way 00:01:05.219 --> 00:01:09.739 many Founders who never worked for a 00:01:07.379 --> 00:01:12.719 startup or an early stage company 00:01:09.739 --> 00:01:14.759 incorrectly believe that all you need to 00:01:12.719 --> 00:01:16.920 succeed is a good product and growth 00:01:14.760 --> 00:01:19.560 will take care of itself this is not the 00:01:16.920 --> 00:01:22.200 case the truth is that good product is 00:01:19.560 --> 00:01:23.939 very rarely built in isolation but 00:01:22.200 --> 00:01:26.100 together with your customers and as a 00:01:23.938 --> 00:01:28.079 result it's not actually that good when 00:01:26.099 --> 00:01:29.459 you show it to your first customers set 00:01:28.079 --> 00:01:31.560 this another way 00:01:29.459 --> 00:01:33.899 startups don't take off by themselves 00:01:31.560 --> 00:01:35.879 startup takes off because Founders make 00:01:33.900 --> 00:01:37.859 them take off and you have to manually 00:01:35.879 --> 00:01:39.539 recruit your customers it's not enough 00:01:37.859 --> 00:01:41.340 to push a button on an advertising 00:01:39.540 --> 00:01:43.920 Network this is uncomfortable and 00:01:41.340 --> 00:01:46.320 Founders continuously find many ways to 00:01:43.920 --> 00:01:48.299 avoid doing this the most common way is 00:01:46.319 --> 00:01:50.459 believing that you can recruit people by 00:01:48.299 --> 00:01:52.799 just writing more code or doing more 00:01:50.459 --> 00:01:54.419 work on your machine or your robot or 00:01:52.799 --> 00:01:56.220 whatever you're building I know this 00:01:54.420 --> 00:01:58.320 from my experience of YC that this 00:01:56.219 --> 00:02:00.000 actually don't work so why am I talking 00:01:58.319 --> 00:02:03.059 about this right now learning the 00:02:00.000 --> 00:02:06.599 tactics of sales is just one side of 00:02:03.060 --> 00:02:09.118 this uh of of this learning the most 00:02:06.599 --> 00:02:11.759 important side is just really realizing 00:02:09.118 --> 00:02:13.560 that it comes down to you it's not just 00:02:11.759 --> 00:02:15.598 knowing exactly how to do sales in 00:02:13.560 --> 00:02:17.280 theory but actually doing it and 00:02:15.598 --> 00:02:19.560 actually wanting to succeed another 00:02:17.280 --> 00:02:21.360 great visualization is what's called a 00:02:19.560 --> 00:02:23.400 startup curve this was initially drawn 00:02:21.360 --> 00:02:25.319 by YC found program and then labeled by 00:02:23.400 --> 00:02:27.719 Trevor Blackwell and you've probably 00:02:25.318 --> 00:02:30.179 seen this curve before most companies go 00:02:27.719 --> 00:02:32.340 through something like this it's kind of 00:02:30.180 --> 00:02:35.340 like a timeline for startups here's how 00:02:32.340 --> 00:02:37.439 it goes first you launch these days most 00:02:35.340 --> 00:02:39.060 companies don't launch on TechCrunch but 00:02:37.439 --> 00:02:41.098 probably on product hunt or Hacker News 00:02:39.060 --> 00:02:42.719 or some other internet board the launch 00:02:41.098 --> 00:02:45.419 energy that you get from this launch 00:02:42.719 --> 00:02:46.859 eventually starts wearing off as early 00:02:45.419 --> 00:02:48.780 adopters are looking out for something 00:02:46.860 --> 00:02:51.900 new if you don't have instant High 00:02:48.780 --> 00:02:53.459 retention nobody does for what you are 00:02:51.900 --> 00:02:56.159 building then you'll enter the through 00:02:53.459 --> 00:02:57.840 of Sorrow this can take a long time and 00:02:56.159 --> 00:03:00.659 many companies die during this stage 00:02:57.840 --> 00:03:02.700 they just give up and don't move fast 00:03:00.659 --> 00:03:05.039 enough with testing new things some 00:03:02.699 --> 00:03:06.479 startups do move fast enough and release 00:03:05.039 --> 00:03:08.519 new improvements of their product 00:03:06.479 --> 00:03:10.619 they'll listen to users and they improve 00:03:08.519 --> 00:03:12.780 many still don't get anywhere further 00:03:10.620 --> 00:03:14.700 and becomes victims of the crash of 00:03:12.780 --> 00:03:17.098 ineptitude it's the founders to stay the 00:03:14.699 --> 00:03:18.899 course and don't give up that reaches 00:03:17.098 --> 00:03:20.459 the Wiggles of false hope and eventually 00:03:18.900 --> 00:03:21.900 the promised land of crack Market fit 00:03:20.459 --> 00:03:24.000 the learnings we draw from the start 00:03:21.900 --> 00:03:26.939 curve is that every moment in the early 00:03:24.000 --> 00:03:28.080 days of startups the founders are the 00:03:26.939 --> 00:03:30.539 ones that make the difference between 00:03:28.080 --> 00:03:31.739 success and failures if you are in the 00:03:30.539 --> 00:03:33.900 wrong Market 00:03:31.739 --> 00:03:35.400 it's the founders that switch to a new 00:03:33.900 --> 00:03:37.680 one and if you don't know how to do 00:03:35.400 --> 00:03:39.719 sales it's the founders who learn so you 00:03:37.680 --> 00:03:41.580 have to really want it otherwise this 00:03:39.719 --> 00:03:44.759 won't work all right let's talk about 00:03:41.580 --> 00:03:47.340 sales and how to do sales first Founders 00:03:44.759 --> 00:03:49.139 should learn how to do sales you should 00:03:47.340 --> 00:03:50.580 learn how to do sales because you'll 00:03:49.139 --> 00:03:52.679 need to learn to know your customer 00:03:50.580 --> 00:03:54.299 talking to customers and sales are 00:03:52.680 --> 00:03:56.700 effectively different sides of the same 00:03:54.299 --> 00:03:58.319 coin and the same reasons Founders can't 00:03:56.699 --> 00:03:59.939 understand what to build they don't 00:03:58.318 --> 00:04:02.098 understand what the problem is you don't 00:03:59.939 --> 00:04:04.500 know how to sell unless you know your 00:04:02.098 --> 00:04:07.139 customers two learning how to do sales 00:04:04.500 --> 00:04:09.180 actually gives you full control of your 00:04:07.139 --> 00:04:11.699 destiny as a startup just like you can't 00:04:09.180 --> 00:04:13.080 Outsource engineering sales has to be 00:04:11.699 --> 00:04:15.060 part of the DNA of the founders 00:04:13.080 --> 00:04:17.340 sometimes you just have to learn it as a 00:04:15.060 --> 00:04:19.139 result you should not hire a sales team 00:04:17.339 --> 00:04:22.078 until you know how to do sales yourself 00:04:19.139 --> 00:04:24.120 only then will you know what good looks 00:04:22.079 --> 00:04:26.579 like you also can't do sales if you 00:04:24.120 --> 00:04:28.439 practice bad and you won't know if the 00:04:26.579 --> 00:04:30.418 product is bad unless you've had some 00:04:28.439 --> 00:04:31.680 effort in trying to sell it first if you 00:04:30.418 --> 00:04:33.719 don't know how to sell don't worry you 00:04:31.680 --> 00:04:35.939 you can learn it's probably the easiest 00:04:33.720 --> 00:04:37.680 job to learn in startup if you know the 00:04:35.939 --> 00:04:40.319 problem you're solving if you know 00:04:37.680 --> 00:04:42.959 you're product intimately if you know 00:04:40.319 --> 00:04:45.120 the market you are an expert in the eyes 00:04:42.959 --> 00:04:47.939 of the customer they will want to hear 00:04:45.120 --> 00:04:49.800 what you have to say finally a love for 00:04:47.939 --> 00:04:52.439 solving customer problems is really 00:04:49.800 --> 00:04:54.180 infectious if you're really passionate 00:04:52.439 --> 00:04:55.740 about solving this problem they will be 00:04:54.180 --> 00:04:57.900 able to tell if you don't believe me 00:04:55.740 --> 00:05:00.060 here are some examples of Founders who 00:04:57.899 --> 00:05:02.219 took on the sales job and learned to get 00:05:00.060 --> 00:05:05.579 really good at it so Tony from doordash 00:05:02.220 --> 00:05:07.560 matild from front Tracy from plangrid 00:05:05.579 --> 00:05:09.180 and Steve Jobs let's get straight into 00:05:07.560 --> 00:05:11.519 an example so these are the brex 00:05:09.180 --> 00:05:14.579 founders Pedro and henrique when brex 00:05:11.519 --> 00:05:16.680 was in wycomner in Winter of 2017 they 00:05:14.579 --> 00:05:19.439 recruit the first 10 customers directly 00:05:16.680 --> 00:05:21.000 from the YC batch June YC you have the 00:05:19.439 --> 00:05:22.978 benefit of being around other startups 00:05:21.000 --> 00:05:24.600 I.E potential customers the brex 00:05:22.978 --> 00:05:26.339 founders asked themselves what would the 00:05:24.600 --> 00:05:28.620 minimum product look like that they can 00:05:26.339 --> 00:05:30.538 build to be useful to other startups and 00:05:28.620 --> 00:05:32.459 then they went with strain straight into 00:05:30.538 --> 00:05:34.560 signing up those customers the first 00:05:32.459 --> 00:05:36.120 version was very very simple customers 00:05:34.560 --> 00:05:38.220 just had a virtual credit card and 00:05:36.120 --> 00:05:40.800 Enrique from brex actively onboarded 00:05:38.220 --> 00:05:42.000 everyone of the customers himself of 00:05:40.800 --> 00:05:44.939 course they could have waited until they 00:05:42.000 --> 00:05:46.978 had a full-blown product a website a 00:05:44.939 --> 00:05:48.478 Mobile app all of those things but they 00:05:46.978 --> 00:05:50.219 decided to get going when they have 00:05:48.478 --> 00:05:51.899 something that was really useful this is 00:05:50.220 --> 00:05:53.940 how their first physical card looked 00:05:51.899 --> 00:05:55.978 like this before they had this card they 00:05:53.939 --> 00:05:58.439 just had a virtual card Rex reached out 00:05:55.978 --> 00:05:59.879 to the their YC batch and otherwise the 00:05:58.439 --> 00:06:01.379 companies and this is the email that 00:05:59.879 --> 00:06:03.240 they sent I'm just going to read a brief 00:06:01.379 --> 00:06:05.699 portion of it hey guys we're opening up 00:06:03.240 --> 00:06:08.639 our beta for winter 17 batch friends 00:06:05.699 --> 00:06:10.020 with the 10 spots for beta users 10 spot 00:06:08.639 --> 00:06:11.819 this sounds like there's a limited spot 00:06:10.019 --> 00:06:13.379 so I should take actions brex is a 00:06:11.819 --> 00:06:15.538 corporate credit card focused on 00:06:13.379 --> 00:06:17.038 technology companies that's me perfect 00:06:15.538 --> 00:06:19.500 you're actually writing the email 00:06:17.038 --> 00:06:21.300 directly towards your customers we don't 00:06:19.500 --> 00:06:23.038 require a personal guarantee it can 00:06:21.300 --> 00:06:25.978 underwrite startups who just got started 00:06:23.038 --> 00:06:27.659 this was the value prop most other 00:06:25.978 --> 00:06:29.219 alternatives to brex did not have 00:06:27.660 --> 00:06:31.620 something like this so how much does it 00:06:29.220 --> 00:06:33.840 cost it's free the merchants are paying 00:06:31.620 --> 00:06:35.399 us so there's zero Annual fees this 00:06:33.839 --> 00:06:37.079 seems like a no-brainer I would argue 00:06:35.399 --> 00:06:39.599 that this email is probably a little bit 00:06:37.079 --> 00:06:41.939 too long but it did work so let's talk 00:06:39.600 --> 00:06:45.419 about how to write a great sales email 00:06:41.939 --> 00:06:47.339 so first it should be short Max 6 to 8 00:06:45.418 --> 00:06:48.779 sentences the brexit sample on the 00:06:47.339 --> 00:06:50.638 previous slide is probably too long it 00:06:48.779 --> 00:06:52.500 still worked but probably too long 00:06:50.639 --> 00:06:55.019 people don't have time to read long 00:06:52.500 --> 00:06:56.459 emails if you're coming out of Academia 00:06:55.019 --> 00:06:58.439 your culture is going to be very 00:06:56.459 --> 00:07:00.418 different you write very long emails but 00:06:58.439 --> 00:07:02.459 in the world of sales you want to get to 00:07:00.418 --> 00:07:04.139 the point and be brief as much as you 00:07:02.459 --> 00:07:07.079 can two you want to make sure you have 00:07:04.139 --> 00:07:09.840 clear language no jargon no buzzwords 00:07:07.079 --> 00:07:12.418 just say exactly what you do and how it 00:07:09.839 --> 00:07:14.099 works and then three address the problem 00:07:12.418 --> 00:07:16.680 that the potential customer is having 00:07:14.100 --> 00:07:18.900 four do not use any HTML formatting 00:07:16.680 --> 00:07:20.819 write your email in plain text only like 00:07:18.899 --> 00:07:22.258 you would written it to a friend say you 00:07:20.819 --> 00:07:24.300 are the founder of the company who makes 00:07:22.259 --> 00:07:27.180 this product many people forget to do 00:07:24.300 --> 00:07:29.220 this describe why you and your team are 00:07:27.180 --> 00:07:31.199 impressive include social proof and 00:07:29.220 --> 00:07:33.120 remember to show not tell don't say 00:07:31.199 --> 00:07:35.280 you're an expert don't say how many 00:07:33.120 --> 00:07:37.259 years that you have been an expert if 00:07:35.279 --> 00:07:38.879 you're in the YC match if you worked at 00:07:37.259 --> 00:07:40.919 impressive companies in the past those 00:07:38.879 --> 00:07:42.418 are other piece of social proof that you 00:07:40.918 --> 00:07:45.719 can include you won't include a couple 00:07:42.418 --> 00:07:47.219 of these ones so that the reader knows 00:07:45.720 --> 00:07:49.860 the source and even if they don't know 00:07:47.220 --> 00:07:51.660 you gives assign you some authority six 00:07:49.860 --> 00:07:53.819 you want to include a link to your 00:07:51.660 --> 00:07:56.220 website the website needs to be simple 00:07:53.819 --> 00:07:58.560 you have to have information about the 00:07:56.220 --> 00:08:01.139 product the website should not have a 00:07:58.560 --> 00:08:02.759 lot of drawings or sort of like paid for 00:08:01.139 --> 00:08:04.740 graphics you should just have 00:08:02.759 --> 00:08:06.660 screenshots from your product and 00:08:04.740 --> 00:08:08.519 bullets about what your product does 00:08:06.660 --> 00:08:10.139 sometimes it works to send a short video 00:08:08.519 --> 00:08:11.818 a YouTube video that you can embed in 00:08:10.139 --> 00:08:14.579 the email that's very easy for the 00:08:11.819 --> 00:08:16.560 receiver to click on and View and I've 00:08:14.579 --> 00:08:18.240 even seen people using gifs now those 00:08:16.560 --> 00:08:20.220 videos and those gifs needs to get to 00:08:18.240 --> 00:08:22.139 the point right away because the the 00:08:20.220 --> 00:08:23.699 receiver is kind of intimately familiar 00:08:22.139 --> 00:08:25.740 with the problem but not really have 00:08:23.699 --> 00:08:27.478 time to watch two or three or four 00:08:25.740 --> 00:08:29.639 minutes of a potential solution and then 00:08:27.478 --> 00:08:31.800 finally you want to include and ask for 00:08:29.639 --> 00:08:33.479 a call or a meeting or a self-serve 00:08:31.800 --> 00:08:35.759 whether whatever is appropriate for your 00:08:33.479 --> 00:08:37.440 company but there needs to be a call to 00:08:35.759 --> 00:08:38.580 action in the email that you're sending 00:08:37.440 --> 00:08:40.620 all right let's talk about the sales 00:08:38.580 --> 00:08:42.658 funnel the concept of sales funnels is 00:08:40.620 --> 00:08:44.639 really quite easy I think people get 00:08:42.658 --> 00:08:46.620 confused by the language the sales 00:08:44.639 --> 00:08:48.899 people are using so I try to simplify it 00:08:46.620 --> 00:08:51.060 here on the left hand side I call it the 00:08:48.899 --> 00:08:52.740 founder speak on the right hand side I 00:08:51.059 --> 00:08:54.479 call it the sales speak these are not 00:08:52.740 --> 00:08:57.539 going to be perfectly mapping but you 00:08:54.480 --> 00:08:59.399 get the idea so first you want to make a 00:08:57.539 --> 00:09:01.740 list of customers you plan to reach out 00:08:59.399 --> 00:09:03.419 to in sales it's called prospecting or 00:09:01.740 --> 00:09:04.980 lead generation we'll just call it make 00:09:03.419 --> 00:09:06.659 it the list and you can use Google 00:09:04.980 --> 00:09:08.759 spreadsheets or something like that to 00:09:06.659 --> 00:09:10.860 make this list then we want to send them 00:09:08.759 --> 00:09:12.120 an email or a LinkedIn message or add 00:09:10.860 --> 00:09:13.860 them on LinkedIn or whatever is the 00:09:12.120 --> 00:09:15.778 appropriate way to contact these people 00:09:13.860 --> 00:09:18.000 after that you want to schedule and run 00:09:15.778 --> 00:09:19.439 a demo or a meeting from that response 00:09:18.000 --> 00:09:21.360 to the email and then you want to talk 00:09:19.440 --> 00:09:22.860 pricing and then finally close them as a 00:09:21.360 --> 00:09:24.480 customer the last thing which you should 00:09:22.860 --> 00:09:26.339 not forget is after you've closed them 00:09:24.480 --> 00:09:28.080 you still need to onboard them to make 00:09:26.339 --> 00:09:30.240 sure that they start using your product 00:09:28.080 --> 00:09:31.740 if this is successful and you have good 00:09:30.240 --> 00:09:34.139 retention that could lead to long-term 00:09:31.740 --> 00:09:35.580 Revenue if you forget the last step then 00:09:34.139 --> 00:09:36.899 you will have lots of churn because 00:09:35.580 --> 00:09:38.399 people don't actually know how to use 00:09:36.899 --> 00:09:40.139 your product and this is common with 00:09:38.399 --> 00:09:42.600 early products because they are not easy 00:09:40.139 --> 00:09:43.620 to onboard in the beginning this is not 00:09:42.600 --> 00:09:45.959 something you spend a lot of time 00:09:43.620 --> 00:09:47.879 optimizing so make sure that you do the 00:09:45.958 --> 00:09:49.319 onboarding as part of this process if 00:09:47.879 --> 00:09:51.059 you go back to the Google spreadsheets 00:09:49.320 --> 00:09:52.680 that I'm that I'm making that I'm 00:09:51.059 --> 00:09:54.059 putting in all the information you 00:09:52.679 --> 00:09:56.219 should start simple but you should have 00:09:54.059 --> 00:09:59.278 some Columns of things that you're 00:09:56.220 --> 00:10:01.860 tracking so industry uh the company the 00:09:59.278 --> 00:10:03.838 title the name the email maybe the 00:10:01.860 --> 00:10:06.300 LinkedIn this could be enough to start 00:10:03.839 --> 00:10:09.000 with a lot of CRM software comes with 00:10:06.299 --> 00:10:10.979 these categories so these columns it's 00:10:09.000 --> 00:10:12.720 pretty good idea to kind of use a simple 00:10:10.980 --> 00:10:14.159 CRM software 00:10:12.720 --> 00:10:16.320 um to kind of accomplish the same goal 00:10:14.159 --> 00:10:18.719 but the key thing here is doing this 00:10:16.320 --> 00:10:20.879 work up front and I've seen a lot of YC 00:10:18.720 --> 00:10:22.740 Founders that when they are getting to a 00:10:20.879 --> 00:10:24.240 thousand of these they're like oh this 00:10:22.740 --> 00:10:26.278 is a very simple task I can actually 00:10:24.240 --> 00:10:28.560 Outsource this and I think that can work 00:10:26.278 --> 00:10:30.299 if you know exactly what it is you're 00:10:28.559 --> 00:10:31.739 Outsourcing storing all this information 00:10:30.299 --> 00:10:34.979 is going to be helpful for you in the 00:10:31.740 --> 00:10:37.320 future now I made my list I understand 00:10:34.980 --> 00:10:38.639 this the sales funnel so who should I be 00:10:37.320 --> 00:10:41.100 going after and how should I be 00:10:38.639 --> 00:10:42.659 prioritizing as I'm doing the Outreach 00:10:41.100 --> 00:10:44.459 here's my most important advice when it 00:10:42.659 --> 00:10:47.100 comes to sales your first customers 00:10:44.458 --> 00:10:49.259 should be your easiest this is not the 00:10:47.100 --> 00:10:51.240 time to bite off the hardest one 00:10:49.259 --> 00:10:53.100 focus on the easiest ones what I mean by 00:10:51.240 --> 00:10:55.919 that is you should try to do sales 00:10:53.100 --> 00:10:58.019 make the sales processes easy for you as 00:10:55.919 --> 00:11:00.360 you possibly can startups don't really 00:10:58.019 --> 00:11:02.339 have time to chase every lead there's a 00:11:00.360 --> 00:11:03.839 lot of leads out there you you don't 00:11:02.339 --> 00:11:06.240 have to pick all of them you really 00:11:03.839 --> 00:11:07.620 don't you're so early you can pick only 00:11:06.240 --> 00:11:09.299 the ones that are the most likely to 00:11:07.620 --> 00:11:11.940 close the best way to do this I have a 00:11:09.299 --> 00:11:13.379 big pipeline where that means a lot of 00:11:11.940 --> 00:11:15.360 people that you're emailing are 00:11:13.379 --> 00:11:16.559 potential customers and then as you're 00:11:15.360 --> 00:11:18.659 getting responses and you're getting to 00:11:16.559 --> 00:11:21.119 meetings start prioritizing those who 00:11:18.659 --> 00:11:23.278 are the most likely to close you can 00:11:21.120 --> 00:11:24.839 probably tell from their answers to your 00:11:23.278 --> 00:11:25.919 qualifying questions during the sales 00:11:24.839 --> 00:11:28.980 call 00:11:25.919 --> 00:11:31.379 avoid those who are moving slow and 00:11:28.980 --> 00:11:32.639 don't be afraid of letting customers go 00:11:31.379 --> 00:11:34.439 don't be afraid of letting customers go 00:11:32.639 --> 00:11:36.240 what I mean by that is that if someone 00:11:34.440 --> 00:11:37.920 is dragging you along two or three calls 00:11:36.240 --> 00:11:39.120 you can always be like it's been great 00:11:37.919 --> 00:11:41.458 getting to know you 00:11:39.120 --> 00:11:43.139 um and I've learned a lot but 00:11:41.458 --> 00:11:45.838 um we should talk again in six months 00:11:43.139 --> 00:11:48.059 that's totally fine to say two 00:11:45.839 --> 00:11:50.100 selling to people you know is going to 00:11:48.059 --> 00:11:51.599 be easy to selling to strangers so you 00:11:50.100 --> 00:11:55.200 should take advantage of your network 00:11:51.600 --> 00:11:57.420 three selling to startups is the easiest 00:11:55.200 --> 00:11:59.220 category and I've I've learned this On 00:11:57.419 --> 00:12:01.559 and On Again with YC company 00:11:59.220 --> 00:12:04.139 specifically the ones that sell software 00:12:01.559 --> 00:12:07.439 it just turns out that bigger companies 00:12:04.139 --> 00:12:09.240 have more bureaucracy more processes 00:12:07.440 --> 00:12:11.220 they even have a specific Department 00:12:09.240 --> 00:12:13.259 that is in charge of negotiating with 00:12:11.220 --> 00:12:14.639 you and that takes a long time and 00:12:13.259 --> 00:12:15.838 startups don't have any of these things 00:12:14.639 --> 00:12:17.519 because they don't have time to create 00:12:15.839 --> 00:12:18.360 these things but it's not a priority for 00:12:17.519 --> 00:12:19.980 them 00:12:18.360 --> 00:12:22.259 so startups have short decision-making 00:12:19.980 --> 00:12:24.240 lines you can often find that the 00:12:22.259 --> 00:12:25.759 decision maker right away as you do in 00:12:24.240 --> 00:12:28.919 the Outreach and you don't have to go 00:12:25.759 --> 00:12:30.600 through a difficult process that's why 00:12:28.919 --> 00:12:32.219 startups are easier and that's why we 00:12:30.600 --> 00:12:34.820 recommend most companies to sell to 00:12:32.220 --> 00:12:39.120 startups at least leads me to the fourth 00:12:34.820 --> 00:12:40.620 Point most people are not early adopters 00:12:39.120 --> 00:12:42.778 and I keep saying this to the white 00:12:40.620 --> 00:12:44.519 companies I work with all the time the 00:12:42.778 --> 00:12:47.278 reason you have to sell send hundreds of 00:12:44.519 --> 00:12:49.019 emails is not that most of those people 00:12:47.278 --> 00:12:50.939 get really upset and be like I can't 00:12:49.019 --> 00:12:52.379 believe you emailed me like I really 00:12:50.940 --> 00:12:53.700 love this alternative product by hate 00:12:52.379 --> 00:12:56.278 your product that's not what's going on 00:12:53.700 --> 00:12:59.399 most people they email are just be like 00:12:56.278 --> 00:13:01.078 archive they just don't care they're not 00:12:59.399 --> 00:13:03.179 going to try a new product that comes in 00:13:01.078 --> 00:13:04.859 through your LinkedIn or your email and 00:13:03.179 --> 00:13:06.359 they might not be the people that try a 00:13:04.860 --> 00:13:08.579 new product at all in their career 00:13:06.360 --> 00:13:09.600 that's most people some other people I 00:13:08.578 --> 00:13:11.879 remember being one of those people when 00:13:09.600 --> 00:13:13.320 I worked at Airbnb I would love when 00:13:11.879 --> 00:13:15.299 founders emailed me with new new 00:13:13.320 --> 00:13:17.579 products and I would be the one signing 00:13:15.299 --> 00:13:19.559 up for them so 00:13:17.578 --> 00:13:21.299 when I worked Airbnb and you were a 00:13:19.559 --> 00:13:23.518 startup email me was great I am an early 00:13:21.299 --> 00:13:26.278 adopter I love trying new things I don't 00:13:23.519 --> 00:13:28.379 mind the risk of trying new things so 00:13:26.278 --> 00:13:30.539 for every outbound uh to an average 00:13:28.379 --> 00:13:32.578 company that you send you will mostly 00:13:30.539 --> 00:13:35.039 like most likely on the average outbound 00:13:32.578 --> 00:13:37.319 average email average LinkedIn reach 00:13:35.039 --> 00:13:38.819 someone who is not an early adopter to 00:13:37.320 --> 00:13:41.579 reach early adopters you just have to 00:13:38.820 --> 00:13:43.560 send more out by messages because then 00:13:41.578 --> 00:13:45.899 you don't have time to convince anybody 00:13:43.559 --> 00:13:47.458 to become an early adopter you have to 00:13:45.899 --> 00:13:49.139 find Aero adopters and just go for them 00:13:47.458 --> 00:13:50.278 early on don't worry about everybody 00:13:49.139 --> 00:13:51.720 else you just don't have time to 00:13:50.278 --> 00:13:54.778 convince them let's talk about charging 00:13:51.720 --> 00:13:56.639 it's attractive for you as a founder and 00:13:54.778 --> 00:13:59.519 for your company to offer your product 00:13:56.639 --> 00:14:02.700 for free offer free trials or unpaid 00:13:59.519 --> 00:14:05.459 pilots and these things come in many 00:14:02.700 --> 00:14:08.100 shapes and forms however if you don't 00:14:05.458 --> 00:14:10.039 charge your customers they are not a 00:14:08.100 --> 00:14:13.200 customer and you don't have a company 00:14:10.039 --> 00:14:15.000 customers paying you money is a great 00:14:13.200 --> 00:14:15.839 sign that you're providing them real 00:14:15.000 --> 00:14:18.000 value 00:14:15.839 --> 00:14:20.160 so you should resist the fear of getting 00:14:18.000 --> 00:14:21.899 a no because of price 00:14:20.159 --> 00:14:24.719 instead of figuring out what the price 00:14:21.899 --> 00:14:26.159 should be if they don't want to pay and 00:14:24.720 --> 00:14:28.259 you learn this during the qualification 00:14:26.159 --> 00:14:29.159 process in the first call or the first 00:14:28.259 --> 00:14:31.679 meeting 00:14:29.159 --> 00:14:34.259 if they don't want to pay that's a great 00:14:31.679 --> 00:14:35.458 sign that you should move on to the next 00:14:34.259 --> 00:14:37.379 customer 00:14:35.458 --> 00:14:39.299 again fire the ones who seem like 00:14:37.379 --> 00:14:40.740 they're not good fit move on to the next 00:14:39.299 --> 00:14:43.799 customers 00:14:40.740 --> 00:14:46.079 free trials are common for consumers but 00:14:43.799 --> 00:14:48.000 if you thought about it most consumer 00:14:46.078 --> 00:14:50.338 free trials ask for the credit card up 00:14:48.000 --> 00:14:51.299 front and then we forget and then we pay 00:14:50.339 --> 00:14:53.399 anyway 00:14:51.299 --> 00:14:55.679 that's because that actually works the 00:14:53.399 --> 00:14:58.139 best the bdb version of this 00:14:55.679 --> 00:15:01.559 is a better one than a free trial is a 00:14:58.139 --> 00:15:03.600 money back guarantee so we charge you if 00:15:01.559 --> 00:15:05.939 you're not happy you can get the money 00:15:03.600 --> 00:15:07.440 back in 30 days so 60 days 00:15:05.940 --> 00:15:09.000 um or even better you have the ability 00:15:07.440 --> 00:15:10.620 to opt out from the annual contract you 00:15:09.000 --> 00:15:13.019 just pay for one month instead of the 00:15:10.620 --> 00:15:15.120 annual fee but you should not offer free 00:15:13.019 --> 00:15:17.159 trials in B2B sales go for a money back 00:15:15.120 --> 00:15:20.100 guarantee and go for the ability to opt 00:15:17.159 --> 00:15:22.319 out instead increasing your price until 00:15:20.100 --> 00:15:24.420 your customers are complaining but still 00:15:22.320 --> 00:15:27.120 paying is the right way to go all right 00:15:24.419 --> 00:15:28.439 let's talk about the thing that most 00:15:27.120 --> 00:15:29.339 Founders get wrong I've seen as many 00:15:28.440 --> 00:15:30.959 times but there are a few things that 00:15:29.339 --> 00:15:33.779 most wanted to get wrong and this is one 00:15:30.958 --> 00:15:35.879 of them working backwards from your goal 00:15:33.778 --> 00:15:38.039 with your sales funnel in order to work 00:15:35.879 --> 00:15:39.958 your way backwards from a goal of say 00:15:38.039 --> 00:15:42.179 two signed customers you have to 00:15:39.958 --> 00:15:44.879 understand that each step in the sales 00:15:42.179 --> 00:15:46.739 funnel is going to have a drop-off when 00:15:44.879 --> 00:15:49.139 you haven't started sales yet you don't 00:15:46.740 --> 00:15:50.879 know what these draft off percentages 00:15:49.139 --> 00:15:52.500 are maybe you haven't done a lot of 00:15:50.879 --> 00:15:54.179 sales before you don't know what you're 00:15:52.500 --> 00:15:55.679 not good at maybe you're really good at 00:15:54.179 --> 00:15:58.679 sending emails but really bad at closing 00:15:55.679 --> 00:16:01.138 or vice versa you don't know that so as 00:15:58.679 --> 00:16:03.599 you're sending these outbound emails you 00:16:01.139 --> 00:16:05.579 need to take notes and start tracking 00:16:03.600 --> 00:16:08.159 all of these conversions in this example 00:16:05.578 --> 00:16:10.739 I'm sending 500 Outreach emails or 00:16:08.159 --> 00:16:13.319 LinkedIn messages I have a 50 open rate 00:16:10.740 --> 00:16:15.299 that means 250 people will open the 00:16:13.320 --> 00:16:18.240 email five percent will respond that's 00:16:15.299 --> 00:16:20.399 about 20 potential customers 50 of those 00:16:18.240 --> 00:16:22.680 will convert to demo from the response 00:16:20.399 --> 00:16:24.360 which means I'm doing 10 demos that's 00:16:22.679 --> 00:16:26.458 pretty good but I'm not that good at 00:16:24.360 --> 00:16:29.940 doing demos only two end up becoming 00:16:26.458 --> 00:16:31.138 customers from the demos that's 20 I bet 00:16:29.940 --> 00:16:33.120 you most of you don't even track this 00:16:31.139 --> 00:16:35.879 data but you should if you track this 00:16:33.120 --> 00:16:37.320 data you will have some idea of how long 00:16:35.879 --> 00:16:39.000 it will take to get to 10 paying 00:16:37.320 --> 00:16:40.079 customers if you don't track this it's 00:16:39.000 --> 00:16:41.458 very hard for someone to give you 00:16:40.078 --> 00:16:43.679 feedback of what's working and not 00:16:41.458 --> 00:16:45.000 working right it's just like when you're 00:16:43.679 --> 00:16:47.338 launching a new product you want to have 00:16:45.000 --> 00:16:49.019 some metrics and some user data to be 00:16:47.339 --> 00:16:50.579 able to tell if it's working when you're 00:16:49.019 --> 00:16:52.320 doing sales you want to have this data 00:16:50.578 --> 00:16:53.698 if you have this data people will be 00:16:52.320 --> 00:16:54.899 able to give you feedback on what what 00:16:53.698 --> 00:16:57.179 you're good at and what you need to get 00:16:54.899 --> 00:16:59.399 get better at my advice is to use a 00:16:57.179 --> 00:17:00.958 simple sales CRM software that tracks 00:16:59.399 --> 00:17:02.639 these conversion rates automatically 00:17:00.958 --> 00:17:04.318 let's look at the same second example 00:17:02.639 --> 00:17:06.000 this is how it looks like for most 00:17:04.318 --> 00:17:07.619 startups even the ones that I work with 00:17:06.000 --> 00:17:09.779 in the batch in the second example I'm 00:17:07.619 --> 00:17:11.578 sending 100 Outreach email it feels like 00:17:09.779 --> 00:17:13.439 a lot to me if I keep the conversion 00:17:11.578 --> 00:17:15.240 rates constant from the previous example 00:17:13.439 --> 00:17:16.798 I actually end up with zero customers 00:17:15.240 --> 00:17:19.380 and the conclusion the founders draw 00:17:16.798 --> 00:17:21.359 after this is that sales is not working 00:17:19.380 --> 00:17:23.100 for me and I should just do marketing or 00:17:21.359 --> 00:17:24.659 SEO or something else or referrals or 00:17:23.099 --> 00:17:26.458 something that sounds attractive this is 00:17:24.660 --> 00:17:28.140 simply wrong you don't have the data to 00:17:26.459 --> 00:17:30.360 make that call you did not do enough 00:17:28.140 --> 00:17:32.400 Outreach to actually get to correct 00:17:30.359 --> 00:17:34.259 conversion rate percentages in your 00:17:32.400 --> 00:17:36.419 sales funnel so the answer here is you 00:17:34.259 --> 00:17:38.220 sent a few minutes too few emails you 00:17:36.419 --> 00:17:39.360 don't have the data you can't draw the 00:17:38.220 --> 00:17:41.038 conclusion that sales is not working 00:17:39.359 --> 00:17:43.439 even though you have serial customers 00:17:41.038 --> 00:17:45.298 and this is the mistake that funders do 00:17:43.440 --> 00:17:47.100 on and on and on again so to summarize 00:17:45.298 --> 00:17:49.259 what I just went through here you don't 00:17:47.099 --> 00:17:51.359 know your sales conversion rate that's 00:17:49.259 --> 00:17:54.000 why you need a CRM to keep track of it 00:17:51.359 --> 00:17:55.979 two because you don't know who is an 00:17:54.000 --> 00:17:58.140 early adopter you have a lot of drop off 00:17:55.980 --> 00:18:00.000 in the outbound sales that makes up on 00:17:58.140 --> 00:18:01.559 sales ultimately a numbers game and 00:18:00.000 --> 00:18:03.900 successful startups we like this and 00:18:01.558 --> 00:18:05.700 internalize this three you cannot close 00:18:03.900 --> 00:18:07.919 five customers from 10 leads it's not 00:18:05.700 --> 00:18:10.080 possible you need a lot more app on than 00:18:07.919 --> 00:18:11.759 that a lot more and unfortunately most 00:18:10.079 --> 00:18:14.038 finders don't work their way backwards 00:18:11.759 --> 00:18:16.079 from this sales funnel and they don't do 00:18:14.038 --> 00:18:18.000 this exercise and the result they don't 00:18:16.079 --> 00:18:20.399 succeed as sales and they don't really 00:18:18.000 --> 00:18:22.500 know why so a friend of mine from Airbnb 00:18:20.400 --> 00:18:24.480 Atlanta rashitzki he writes an excellent 00:18:22.500 --> 00:18:27.179 blog and he wrote a great blog post 00:18:24.480 --> 00:18:28.500 about how YC and a bunch of non-yc B2B 00:18:27.179 --> 00:18:31.259 startups 00:18:28.500 --> 00:18:32.940 um got their sales go to market strategy 00:18:31.259 --> 00:18:35.460 going I recommend reading this and other 00:18:32.940 --> 00:18:37.500 posts uh newsletter it's it's one of the 00:18:35.460 --> 00:18:39.840 best ones I've come across it has a lot 00:18:37.500 --> 00:18:41.640 of real data that he collected from real 00:18:39.839 --> 00:18:43.859 companies uh many of them being YC 00:18:41.640 --> 00:18:46.020 companies so in this example here in the 00:18:43.859 --> 00:18:47.819 second column Lenny is describing the 00:18:46.019 --> 00:18:49.558 initial sales motion of some of these 00:18:47.819 --> 00:18:52.259 companies as you can see some of the 00:18:49.558 --> 00:18:54.240 early ones like amplitude stripe front 00:18:52.259 --> 00:18:56.220 they were doing app on sales emails just 00:18:54.240 --> 00:18:57.960 like the one we described to get started 00:18:56.220 --> 00:18:59.700 those Founders were doing those sales 00:18:57.960 --> 00:19:01.140 emails as they get started some of the 00:18:59.700 --> 00:19:03.000 other ones was called Product LED 00:19:01.140 --> 00:19:05.160 product LED could mean something else 00:19:03.000 --> 00:19:07.859 than just doing up on sales but it 00:19:05.160 --> 00:19:09.900 doesn't mean having a big sales team and 00:19:07.859 --> 00:19:12.000 it usually does not mean doing marketing 00:19:09.900 --> 00:19:13.980 or SEO or something else practically it 00:19:12.000 --> 00:19:16.200 means something that the product itself 00:19:13.980 --> 00:19:18.058 is is sort of like driving the growth as 00:19:16.200 --> 00:19:19.319 you're running the demo 00:19:18.058 --> 00:19:20.399 um your goal is to close your first 00:19:19.319 --> 00:19:22.379 customers 00:19:20.400 --> 00:19:24.059 you want to ask a lot of questions up 00:19:22.380 --> 00:19:25.620 front in the demos and there's the 00:19:24.058 --> 00:19:28.079 founders who should do the demos because 00:19:25.619 --> 00:19:30.058 you are the one knowing the product and 00:19:28.079 --> 00:19:33.599 you know the customer pain points here 00:19:30.058 --> 00:19:35.519 are three examples of YC emails that led 00:19:33.599 --> 00:19:37.619 to customers so I'll let you guys look 00:19:35.519 --> 00:19:39.599 at the details of these afterwards but 00:19:37.619 --> 00:19:42.899 this is an app on email that led to uh 00:19:39.599 --> 00:19:44.879 72 000 a year contract this one LED is a 00:19:42.900 --> 00:19:47.100 very specific email that led to out 00:19:44.880 --> 00:19:49.380 Landing a goalie as a customer and this 00:19:47.099 --> 00:19:50.939 third example here is the one email the 00:19:49.380 --> 00:19:52.799 same email they got them 22 different 00:19:50.940 --> 00:19:54.298 customers all right I'm going to 00:19:52.798 --> 00:19:55.798 summarize this again the biggest 00:19:54.298 --> 00:19:57.779 mistakes that most finders do is they 00:19:55.798 --> 00:19:59.099 don't do enough Outreach because they 00:19:57.779 --> 00:20:00.660 don't work package from the goal 00:19:59.099 --> 00:20:02.399 believing that something else then sales 00:20:00.660 --> 00:20:04.860 is going to solve your sales problem 00:20:02.400 --> 00:20:07.019 Outsourcing sales is wrong you should do 00:20:04.859 --> 00:20:08.639 it yourself and you need to qualify your 00:20:07.019 --> 00:20:10.259 customers during your first call here 00:20:08.640 --> 00:20:12.660 are some of the tools I recommend so 00:20:10.259 --> 00:20:14.940 there are many many many tools this is 00:20:12.660 --> 00:20:16.380 perhaps one of the biggest categories of 00:20:14.940 --> 00:20:18.860 potential things you could use as you're 00:20:16.380 --> 00:20:21.740 doing sales but I recommend apollo.io 00:20:18.859 --> 00:20:24.479 close.com formerly called closed.io 00:20:21.740 --> 00:20:26.220 pipedrive or hunter.io these are great 00:20:24.480 --> 00:20:28.798 tools that you can use either as a 00:20:26.220 --> 00:20:31.500 simple sales CRM or Hunter you can use 00:20:28.798 --> 00:20:33.179 to get contacts or potential people to 00:20:31.500 --> 00:20:34.500 email from LinkedIn here are two 00:20:33.179 --> 00:20:36.000 additional resources if some people ask 00:20:34.500 --> 00:20:37.619 me for books usually there aren't good 00:20:36.000 --> 00:20:38.759 books but there is actually one that I 00:20:37.619 --> 00:20:40.619 come across I find really good it's 00:20:38.759 --> 00:20:43.500 called founding sales and then I also 00:20:40.619 --> 00:20:44.879 recommend lineage newsletter.com there 00:20:43.500 --> 00:20:47.099 are of course other ways that you can 00:20:44.880 --> 00:20:49.740 grow as a startup but the truth that 00:20:47.099 --> 00:20:53.219 I've learned is that even if you end up 00:20:49.740 --> 00:20:56.419 with say like Airbnb where the sources 00:20:53.220 --> 00:21:00.480 of growth is Word of Mouth Google search 00:20:56.419 --> 00:21:02.580 referrals Facebook advertising if those 00:21:00.480 --> 00:21:05.099 are the kind of end states of your 00:21:02.579 --> 00:21:06.960 growth strategy that's not how ambica 00:21:05.099 --> 00:21:08.939 started they didn't start by running 00:21:06.960 --> 00:21:10.380 Google sem or Google SEO 00:21:08.940 --> 00:21:13.200 the referral program did not bring in 00:21:10.380 --> 00:21:15.240 the first 2000 customers they did things 00:21:13.200 --> 00:21:17.460 that didn't scale and they looked 00:21:15.240 --> 00:21:19.558 different than the one they do at scale 00:21:17.460 --> 00:21:21.179 so a lot of companies are shorting 00:21:19.558 --> 00:21:22.740 straight into What's called the scalable 00:21:21.179 --> 00:21:25.200 growth channels the channels that 00:21:22.740 --> 00:21:27.720 they've heard work which is true at 00:21:25.200 --> 00:21:30.058 scale but that's not the same thing as 00:21:27.720 --> 00:21:32.700 when you're getting started so in this 00:21:30.058 --> 00:21:35.158 slide I'm outlining kind of like just a 00:21:32.700 --> 00:21:37.259 rough idea of like even if it turns out 00:21:35.159 --> 00:21:38.880 the Google sem and Google SEO is what's 00:21:37.259 --> 00:21:40.798 going to work at scale you need to find 00:21:38.880 --> 00:21:42.000 another place online where these people 00:21:40.798 --> 00:21:44.460 that you're going to reach through sem 00:21:42.000 --> 00:21:46.558 and SEO is identifying themselves online 00:21:44.460 --> 00:21:49.259 right and that might not be the same as 00:21:46.558 --> 00:21:51.418 Google if you're trying to go after sem 00:21:49.259 --> 00:21:52.798 which means search engine marketing it's 00:21:51.419 --> 00:21:54.240 going to be expensive probably because 00:21:52.798 --> 00:21:56.279 there's competition if you're going 00:21:54.240 --> 00:21:59.700 after SEO it's going to take a long time 00:21:56.279 --> 00:22:02.460 if your growth is say proc LED or 00:21:59.700 --> 00:22:03.779 virality referrals then personal 00:22:02.460 --> 00:22:06.058 networks selling through your personal 00:22:03.779 --> 00:22:07.379 Network to your co-workers is the way to 00:22:06.058 --> 00:22:08.639 get started of course if you're doing 00:22:07.380 --> 00:22:10.320 sales you should be doing sales it 00:22:08.640 --> 00:22:13.380 doesn't change very much like early 00:22:10.319 --> 00:22:14.460 stage sales to to large sales basically 00:22:13.380 --> 00:22:15.539 means all the things that I just 00:22:14.460 --> 00:22:17.640 described here 00:22:15.538 --> 00:22:19.798 done by 100 people in a sales team with 00:22:17.640 --> 00:22:21.538 more automation more tools more metrics 00:22:19.798 --> 00:22:23.099 but it's the same thing and if you 00:22:21.538 --> 00:22:25.099 practice setup to do online marketing 00:22:23.099 --> 00:22:28.619 it's not usually how most people start 00:22:25.099 --> 00:22:32.038 why because you can't really easily talk 00:22:28.619 --> 00:22:33.359 to people you can't learn from users if 00:22:32.038 --> 00:22:34.500 the first thousand or first-handed 00:22:33.359 --> 00:22:36.479 customers are brought in through Google 00:22:34.500 --> 00:22:38.700 and Facebook those people are not the 00:22:36.480 --> 00:22:40.860 kind of people that you can easily get 00:22:38.700 --> 00:22:42.779 on a 30 minute phone call with all right 00:22:40.859 --> 00:22:44.899 that's all I had today thank you 00:22:42.779 --> 00:22:44.899 everyone 00:22:45.779 --> 00:22:55.230 foreign 00:22:47.089 --> 00:22:55.230 [Music]