The 5 keys to scaling your startup from $1M — $10M

Marcel LeBrun, serial entrepreneur and tech executive, shares valuable insights on scaling a business successfully

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Growing a startup into a $1 or $2 million business takes vision and hard work. And while it might seem that you simply need to continue on the same path to get to $10 million, entrepreneurs will discover new hurdles and obstacles as they attempt to scale. Having co-founded and grown startups through this critical growth phase of $1–10M+ and beyond, to IPO, or to a successful acquisition, I have learned a number of key lessons about taking companies from startup to clear industry leader. I’ll draw a few examples from my experience as CEO of Radian6, which was acquired by Salesforce.com in 2011.

1. Finding product-market pull

Once you get to $1 million or more in annual revenue, most people would assume that your company has found product-market fit. You can articulate a compelling value proposition, have clear reasons why a customer is likely to use your product, and there is (sales) evidence to support it. Congratulations!

If you want to make it to $10M, however, there are other issues to consider. Sure, you have product-market fit, but if every sale is a major slog and every new customer acquired feels like a major exploit, then it’s possible that you don’t have product-market pull. If your product delivers clear value but it is still more of a nice-to-have and not yet a must-have for your customers, unless you learn how to find the “pull,” you’re going to struggle to grow from a small and somewhat successful business to a major industry player.

What exactly is product-market pull?

It’s when you find that sense of urgency with potential customers who want what you’re selling as soon as possible because it addresses a specific urgent pain point. If you don’t find that characteristic, you can still grow but you’re going to have a harder time getting to $10 million because you’re putting energy into pushing your ball up the hill instead of simply guiding it down.

So what can companies with product-market fit do to achieve pull?

Companies with nice-to-have products need to spend more time with customers and prospects, digging deeper into their world to find and understand where the specific pain points are.

For example, while growing Radian6, we went really deep with key enterprise customers and actually sat down with users who were using our competitors’ products to watch how they did their work. At one point we noticed that some PR pros were supplementing their search with multiple tools and collating all the results using spreadsheets and manual processes that took hours. It was a huge pain!

When we asked why they did this, we learned that there was a trust issue with our competitor’s tool. In some cases it missed content that the PR team could simply not afford to miss. In other cases, it found it too slowly. That day, we learned that the pretty dashboards and analytics were in the “nice-to-have” category compared to the grungier, more urgent problem of making sure the data-acquisition process was trustworthy, fast and comprehensive. We re-directed our R&D efforts to solve this, delivered the fastest, most comprehensive platform in the industry, and our competitors had no idea what hit them. Why were customers all switching to Radian6? We had found market pull.

I remember a comment from a VP at Dell Technologies who was initially using our competitor. He said, “You are faster than Google!” We replaced our competitor and Dell became a special flagship customer for us. This was an acute pain point for Dell, and also for a huge number of other major brands. Once we identified this, and found the “pull,” scaling our sales process got a whole lot easier.

If sales feels like a push and if your product is similar to what everyone else is selling, maybe you haven’t actually found that market pull yet. Back up a bit. Look again. Keep hunting for a more acute pain point. It’s often hidden somewhere in the details.

2. Solve the pain and the path

Theoretically, a solution to a big problem (or pain point) is more valuable than a solution to a smaller problem. But what happens if the path to implementing the solution is extremely complex and time-consuming?

When it comes to sales velocity, I believe that the simplicity of the path is more important than the significance of the pain. If the solution to a large problem is really complex to implement, then you’re going to have difficulty getting momentum and scaling your sales and implementation. However, if you can solve a problem quickly and easily, you’re going to achieve high velocity in your sales: they’ll be more repeatable with shorter sales cycles and more cost effective to scale.

People often miss that. They focus on solving a big pain point but then need all the king’s horses to make it work for the customer. They invest a great deal of time but can’t get customers to use the product to its potential, nor do the customers get the results they’re looking for. In these cases, the path to customer success is long and arduous and this will impede your sales momentum.

What you need to do is simplify the implementation and the path to customer success.

Does this mean you should set out to solve a simpler problem more quickly? Not necessarily.

The key is to try to design specific features and to also put in place better processes that help your customers get to value quickly and simply. There’s a lot of effort you can put into simplifying the path and speeding it up. Think about the things that take the most time. How can you solve them?

By simplifying the path: automating product ties, honing in on a specific use-case, you can make implementation much simpler and smoother for your clients.

For example, at Radian6, our platform had the ability to semantically enrich social data about a customer’s brand. We would identify the sentiment (positive, negative) and things like complaints or purchase intents. There were competitors in the market whose products focused on custom sentiment analysis technology and they went really deep on that capability. They could go to a hotel brand, for example, and explain to them how they could analyze precise issues like comfortable mattresses, clean bathrooms, or long lines at check-ins. They would compete with us by positioning what they had as a more advanced semantic analysis.

The problem was the path. In order to implement their solution, a customer would have to engage them in an “assessment phase” and go through some data gathering to train their solution and tune the system to achieve the promised results. Meanwhile, we could get them up and running in 5 minutes with no up-front investment. Sometimes fast and easy beats better!

Today, I see this with many AI companies who can create products that can be applied to numerous industries or problems. Sure, it can do anything, what does it do? What’s crucial is that these companies need to decide what to focus on. It takes time to build and train models and it makes more sense to build a few prepackaged solutions for a specific set of problems than starting from scratch with each client. Solve for the pain and the path!

3. Be only, not better

Competitive positioning others can’t compete with is what you’re looking for if you’re going to dominate an industry and grow from a small startup into a massive company. If you’re competing in an industry against five or twenty-five competitors, what is it that differentiates you? Should you be worried if you have 200 competitors? Not at all. At radian6 we tracked over 250 competitors…

To get ahead, many companies focus on better features. They say that they’re better at this or that thing but does that advantage matter to the customer (i.e. does it pass the “so what?” test) and can they prove it?

What really sets a company apart is finding something that ties to your specific customer pain point where you are the only provider.

Rather than saying: “We’re better than the competition at doing this or that thing,” you can say, “We’re the only ones who do this.” Then, if that capability is important to your customer, they really only have one choice in the market.

For instance, at Radian6, a lot of our competitors had custom influence algorithms that could tell brands who the most influential voices around their industry were. Most of these competitors had “secret sauce algorithms” that they wouldn’t share with customers, and spent their time trying to convince them that their “science of influence” was better. Because of that, a lot of the brands would become frustrated, as they knew that a particular blog was influential but it wouldn’t show up on the list. They would argue with their supplier.

When we discovered this frustration, we took an opposite approach and open sourced our influence algorithm, let the customers see how it worked, and gave them the ability to tune it to reflect what influence meant to them. To one brand, influencers were measured by reach and following, to another it was the depth of engagement with other thought leaders on the topic. If it was important to a brand to have a transparent and tunable influence algorithm, then we were the only choice in the market.

Our influence algorithm wasn’t better, it was the only one that was open, transparent and adjustable. And, of course, we spent our time helping customers understand why they should care about this ability. That way, we became the only choice and it made us stand out. Be only, not just better.

4. Practice prophetic marketing

Great leaders help make complex things simple. They are masters at explaining what is happening in the world and then pointing the way to the future in order to help people understand what to do to prepare. A great example of this is Marc Benioff, CEO of Salesforce.com, who starts with a history lesson of how we got here to set the context. Then, he describes the current challenges in the world of business in a way that resonates with everyone. Finally, he tells everyone what they need to do next. Take a moment to go online and listen to one of Mr. Benioff’s Dreamforce keynotes and you will see this pattern. By doing this, he becomes the industry’s trusted prophet, the voice of reason and authority. He’s not just selling Salesforce’s products, he’s sharing a vision and because his vision of the future is real and compelling, he can own the position of the business leader who can point the way and guide everyone.

These leaders stand out. For renewable energy and electric cars? It’s Elon Musk. No one is looking to GM or Ford to point the way to the future. Steve jobs did the same thing. He didn’t just sell phones. Or consider Yvon Chouinard from Patagonia, the voice of an environmentalist, not just a clothing salesperson.

The idea is to try to be the leader who people look to for interpretation of where things are going. To do this, you have to make some controversial, superlative statements. You have to tell people what is coming and how to prepare, and while you may leave a few people behind, you will definitely stand out.

At Radian6, I’d say: “Marketing is going through the biggest change in a hundred years.” People would ask how and I’d paint the picture:

90 years ago, the introduction of mass media launched a new era in marketing that helped create some of the world’s biggest companies. Procter & Gamble, who introduced the soap opera, created a multi-billion dollar multinational company on the back of one-way mass media advertising. They and other companies invested in the same thing for eighty-seven years. Now they’ve stopped. Why? Is it because the audience has moved? No. Today, the audience isn’t an audience anymore: It’s a community and it talks back. Now we have a conversation going, not just one-way messaging. Your brand is no longer what you choose it to be and you can’t just push it out through one-way marketing anymore. Then, I’d land it with this, “Your brand is now the sum of conversations about it.” This is why we’re going through the biggest shift in 90 years of marketing.

At this point, you’ve set people up to agree with you, so you now have the authority to tell them what to do. It’s a two-step formula:

  1. Help people interpret the times
  2. Then tell them what they must do

That’s what the best leaders do and people just can’t wait to hear from them.

5. Swap your #1 and #2 priorities

Believe it or not, your sales process requires as much R&D as your R&D process. While a lot of companies believe that selling is something you do when the product is ready, your sales execution will need as much debugging as your software, so if you wait until your product is ready, you’re going to stumble. If you end up taking a long time to work out the bugs in your sales process, that might mean you run out of money. If you’re already a $1 or $2 million company, it will become a drag on your ability to execute to $10 million.

Flip the priorities. Start early and oversteer on building out your sales process. A lot of founders think that if they just develop the right features, their product will sell. Sadly, that’s not true. The hardest part isn’t building the product, it’s selling it. If you develop the right sales process then you’ll earn the right to develop the right features. That means hiring your sales leader earlier than you think and getting them to start building the infrastructure and processes you need.

Building an early adopter program

Even before you have product ready to sell, consider how you can create an early adopter program that helps develop your sales capacity. This enables you to test the waters: Am I talking to the right person? Does that person have the pain point? Are they going to invest the time to engage with me? Are they going to sign my license agreement? Are there steps to becoming an approved vendor? Are there issues in my intellectual property terms and clauses that may get it blocked on the client-side? It’s better to learn these lessons early instead of when you’re trying to get from $2 to $3 million and you realize you have various barriers to overcome that keep slowing you down.

Starting early also enables you to work out the bugs and figure out the model so that you can turn up the dial confidently. Then, when you are ready to turn it up, you can turn it up hard. You invest in it more than your product. This also means executive attention. Make sales your #1 priority as early as you can. Every executive meeting, every strategy meeting should begin by first looking at your pipeline: What are the deals that we’re working right now? How are we doing with those deals? What do we need to get them closed? What are we learning?

Bonus point: turn attrition into advocacy

In the early stage of a company, when you’re focused on customer acquisition, it is tempting to neglect customer success, especially if sales are growing quickly. The problem is that this eventually catches up to you and it happens right here along the path from $1M to $10M — that’s when the attrition monster rears its ugly head. All of a sudden, you discover you have a leaky bucket that all the salespeople are pouring into. They’re doing great work but it’s not really moving the needle anymore because you haven’t paid enough attention to customer success. You can’t patch that bucket by accelerating your sales: you need to look at attrition early and build customer success teams separate from your sales team. The sales team can continue hunting for new clients, while your customer success team will ensure that the ones you already have are happy and stay with you. Even better, make sure your customer success team has a process for nurturing advocates — these are your super fans that recommend you to others. Focusing on customer success early can be a sales accelerator.

While there are certainly many ways to build toward success in scaling to $10M, these are the key insights I’ve come away with after growing my own tech companies and helping numerous other entrepreneurs. Find product-market pull. Make sure you solve for velocity by making the path to value quick and easy. Find that thing that you uniquely offer that makes you the only choice. Become the industry prophet that everyone trusts. Make sales your #1 priority as early as you can. With these five keys in mind, your growth could be exponential.