Guest post by Luciano Basile, AWS Venture Capital and Startups
This past year, I was lucky enough to work with a number of different seed funds and seed stage startups, helping them to grow and succeed on AWS. This journey took me to many conferences, and private and public events, such as the seed enterprise summit Flight 2019. Organized by Crane Venture Partners, the summit featured a string of successful entrepreneurs and early employees sharing their experience and insights. Below are the seven most important lessons I took away, that I’d love to share with you:
- Focus on finding repeatability before thinking about expanding your sales team: In the beginning, use the SPIN model (Situation, Problem, Implication, Need) and then focus on the ROI and repeatability. As you do this, ask yourself some of these questions: Which sales closed the fastest? What value did they get? Was the value coming from something we create? Focus on that part of the product, strip the rest, and repeat. You should also ask yourself: Is the market big enough? When you find repeatability and a big market, you can start hiring a professional sales team.
- You should build and iterate your sales process: Even though you start with a spreadsheet, you should create a framework and a process. This is the only way to learn and iterate. Try to understand different steps you have from pre-leads to customers, and work on how you can move the potential customers through the funnel. You should create documentation (fact-sheets, whitepapers, case studies, etc.) according to different stages, and measure conversion as well. Also, run business reviews (quarterly or monthly). Data is king, and the best way to learn and iterate from data is to forecast, run reviews, and develop action plans.
- Build a strong hiring process and company culture: First of all, establish cultural values. Interviews are important later on and should reflect cultural values. Your employees should live your company values, and you should hold your customers accountable. This culture is going to make a difference in the battle for talent.
- Focus on Product Marketing: Find a story to tell repeatable customers. Also, build as many testimonials and references as you can. You should also think about which questions customers are asking across the sales funnel, and how you can answer those in your website or FAQ.
- Use A DAR (Discovery, Analysis, Recommendation) Framework: With Discovery, bottom-up and top-down discovery are necessary. Get people from the organization to talk about pains, and uncover strategic initiatives by talking to stakeholders. Then, build up the business case. With Analysis, take a quantitative approach. State the assumptions and share those with your customers. For Recommendation, present findings back to your customers. Present ROI for customers, and quantify everything, and recommend an approach. Finally, after you implement, track metrics and KPIs over time to show the value of your product to them.
- Don’t always believe your customers: There is a big difference between a customer saying something and actually committing. You must be creative to test if customers are actually telling the truth (There is a great book about this called “The Mom Test”). Test ideas fast enough to avoid falling in love.
- Focus on retention vs. growth: There are two main ways to scale: Optimize on fast revenue growth, or optimize on strong retention. Companies used to focus on fast revenue growth, but nowadays the best way to scale is to optimize on retention. Everyone should be aligned to long term value. Sales is not about driving revenue, sales is about generating customer value. Revenue is an outcome, and successful customers are the ones realizing the value.
At AWS, we scaled an enterprise-focused company to a multi-billion dollar business in a short period of time. We learned from that experience, and built content from our leanings to help other organizations grow. As an example, we help other organizations to innovate and hire in the Amazon way. If you want to learn more about it, get in touch with your account manager.
Lastly, if you are thinking of raising a seed round, read what Scott Sage, a co-founder and partner at Crane Venture Partners, told me in a short interview. Here are some highlights:
What do you look for in a start-up when you invest in a seed round?
Crane is thematically focused on intelligent computing companies. So we have a pretty good idea of what we’re out looking for and/or we get super excited when something relevant lands on our desk where we already have a lot of expertise on their market. We’re really focused on what needs to happen in the market for a company to become really big. Are they displacing a last generation tech or creating a new market? We spend the majority of our time thinking about the current uniqueness of a product and how that relates to the current market problem that it’s solving. We love when we meet founders building a product on the back of experiencing the pain point first hand. Last we look at metrics – but at the stage where we invest, it’s all anecdotal evidence from customer discovery as we typically invest post product but pre revenue or at sub $20k MRR.
What process do you implement to help your portfolio companies after you invest?
We’re currently 10 people in total and half of our team is focused on supporting our companies post investment. We have an Operating Partner and Venture Partners who have dozens of years of experience starting companies and scaling them internationally. Our internal service offering is called Lift-Off which we use to help companies through the various stages of their GTM including implementing their sales and marketing processes’, creating qualification criteria, customer success playbooks etc.
What advice do you have to someone who is thinking to start an Enterprise-focused startup?
Simple – make sure you’re solving a “hair on fire” problem. Selling into enterprises is tough and your product needs to be a must-have rather than a nice to have. Meet as many potential users/buyers as you can before you start building as you have so many fewer chances to pivot running an enterprise co than other companies do.