Your First Step to Startup Success

Most of the best entrepreneurs are incredible technologists. Unfortunately, not all great technologists become excellent entrepreneurs. The one thing that separates the two is growth.

It’s literally the difference between a $20M and a $2B B2B tech startup. Hundreds of incredible technology companies die every year because they failed at pulling together the growth infrastructure or built a product no one wants. Building out an effective growth org will sort out whether your product adds enough value, and it’ll give you feedback to understand how you can better add value to your customers.

According to CB Insights:

“…the number-one reason for failure, cited by 42% of polled startups, is the lack of a market need for their product.”

The difference between major tech companies like New Relic, Zapier, Zenefits, and your startup isn’t their technology. They were early in a niche market, they found a product/market fit that was tremendously valuable, and they built a growth org to share that value.

How do you build an effective growth org you ask? You build out the 3 pillars: sales, marketing, and customer success.

In the beginning, these functions will likely be held up by a cofounder or an early sales/marketing hire. Eventually, you will need to build out a team to grow your customer base. This team will have to walk in step with each other in order to maximize it’s effectiveness. Your startup depends on it.

In order to align these three parts of the growth org, according to Sean at SalesLoft, each department must establish a Service Level Agreement (SLA) with each of the other departments. This is a contract aligning the efforts of each division with the mission of the whole company and with each other.

But first, what do those roles entail…

Roles within the Growth Org

When you first start a company and there are 2 to 5 people on the team, each team member wears many hats. For the CEO, this means being the ENTIRE growth team PLUS fund raising PLUS hiring PLUS…PLUS…PLUS… Frankly, the CEO is responsible for everything you haven’t hired for yet. Kind of a tough gig if you ask me.

Once you do start hiring your growth team, these are the roles you hire for:

Marketing fuels customer awareness, builds stories of success, advertises directly to ideal prospects, engages in social media, optimizes the website, puts on and participates in events. These guys help fill the top of the sales funnel.

Your first marketing hire should be able to do 2 of these well. A killer first marketing hire would also be self aware enough to know her strengths and weaknesses and hire to her weaknesses. If you get one of these folks, give them stock and promote them regularly. They could be a key element to your success.

Sales Development prospects new potential customers based on your ICP, reach out via cold email, calls, and social media, qualify interested parties based on understanding their need, budget, and timeline, builds internal champions, and successfully hands the best candidates off to be closed. If that sounds like a lot, it is. They also test outbound language, refine the ICP, and test the sales cadence.

Marketing funnels inbound leads to sales development reps. Sales development fills the rest of the sales pipeline with their outbound sales efforts. All of the qualified and interested leads are then handed off (per the SLA) to the closing team.

Sales (closers) work directly with sales dev for a smooth hand off, help the prospect justify the cost, negotiate the terms of the deal, and successfully hand off to Customer Success.

This is a very nuanced job that involves utilizing internal champions in prospect companies, building a case for their management to get behind, getting the contract signed, and maintaining perfect handoffs from sales development and to customer success.

The best sales teams also act as the main filter for who comes in as a customer. Bad customers churn and cost a lot of resources. The goal is to be picky in the beginning, but not all of us can afford that luxury early on.

Customer success is arguably the most important piece. Not only do they need to effectively get customers onboard, they must address customer requests, anticipate customer needs and proactively assist, and give feedback on product usage to the rest of the org. They have to do all of this on a very small budget.

Customer Success is also tasked with renewing contracts with as little ‘churn’ as possible. One very effective way of doing this is to upsell customers on contract renewals. Assuming you don’t loose too many customers (<5%/year) this can give you an effective negative churn rate.

Tom Tunguz of Redpoint Ventures does an incredible job of breaking down what negative churn is and how powerful it can be for your startup.

If this org is running optimally, it is also getting referrals and building a perfect customer feedback loop for marketing, sales, and product development.

Watch out — over the next 3 years, customer success will become the key to running an ideal SaaS startup.

If you effectively fulfill these 3 (or 4) roles and align your overall growth org, it will be the the number one differentiating factor between your startup and the other 90%+ that die each year.

In the next piece in this series, we’ll be going in depth on how sales and sales development effectively contribute to the growth of a startup.

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