How to Sell by Tyler Bosmeny

all right good morning everyone we are halfway through startup school can you believe it already Wow yeah or more correctly we will be after this week and this is going to be a great week of talks lectures conversations today we have Tyler from clever who's going to give a talk on how to sell to begin with and after words harsh and Amin from triple bite are going to talk about how to build an engineering organization to pretty important things if you want to build a successful company I will start off quickly with my usual administrivia we will shortly be sending out a mid point feedback form for you guys to fill out we really will appreciate getting as many responses as possible this is our form of talking to our customers you all and getting feedback we're always trying to improve startup school we hope to do it every year and make it better every year so please tell us what you think and what you think we should change adora and i we're talking a little bit about updates and I've talked to a bunch of people alive and some on the forum about about updates and and what makes sense for updates and just to put it bluntly think hard about your metrics the ones you're using do not use metrics what is a metric it's a metric that doesn't really measure the road to success for you it's something you're making up any startup that you're building is an enormous complicated difficult crazy task and no matter what you're doing if there is no mile stone on the way to that to achieving that enormous task then you're kidding yourself and you're not really a step on the way to success those milestones are more than anything for you for you to measure that you're making progress towards your goal so don't make stuff up because you think that's what we want to hear or just because you're bored it won't help you okay as always problems etc email to start-up school at Y Combinator calm and with that I think Tyler we are ready to go so my good friend Tyler basmati from clever hey everyone it's an honor to be here I was speaking with you today thanks for having me my name is Tyler basmati I'm the CEO of a company called clever and I wanted to talk to you about something that I think is one of the most fundamental and important things any founder needs to master which is sales and before I get started and share some of the things I've learned and picked up over the way I thought it might be helpful to share my own personal journey to sales as something that I've come to learn and just you know really appreciate and respect as a craft when I was in school when I was in college I was a math major my you know my graduate degree was in statistics I was the last person I ever thought would ever do sales and so my own journey to getting here was I was working on the college newspaper I joined the college newspaper it seemed like a fun thing to do had some friends who are on it and one of the roles they had open was they needed somebody to run the advertising for the newspaper and so I was spending in college hours a day you know figuring out how to sell ads to local businesses so we'd have enough money to print and put out the paper every day and over the doing this for several years if you know anything about college newspapers you know one of the things the biggest determinant of how much money they make every year is how well the economy is doing it's a lot of the ads are for recruiters but B I just happened to be there during some very good years and when I was leaving the advertising sales team we had we set records for the Crimson and so we just you know we sold a lot of ads and so I thought okay this is interesting you know it's it's an interesting craft and then as I was getting ready to graduate school you know getting ready to graduate go off to college or excuse me golf to work you know I'm doing math I'm thinking to go off to finance do a hedge fund something like that a buddy's starting a company and he says to me Tyler I need you to come join because you're the only person I know who knows how to do sales and let me tell you I was offended like this was not how I saw myself this was not you know what I imagine doing after school but I was also really intrigued and I was really good friends with this guy and I said oh you know why the heck not so ended up on going on a very different path and joining his startup building a sales team you know we were selling to newspapers across the country and if you've ever worked with or or thought about newspapers before you can imagine they are very hard customers to sell to and so I really cut my teeth and have a lot of fun frankly over many years figuring out how to sell into this market and we sold to a lot of newspapers then fast-forward a little bit and I come on to start clever and one of the co-founders started through Y Combinator about six years ago and if you don't know anything about clever you know we're a single sign-on platform used in schools and today over half the schools in America use clever and so we've really done a lot of selling and really had to figure this out once again in a different context and so I was thinking about you know what would be most helpful to talk about what I'd most want to hear in your shoes or what I most would have appreciated knowing when I was first starting to cut my teeth on sales and so that's what I want to share with you today it's just things I've picked up along the way some observations I've had and hopefully some practical tips that you can take home and implement you know as you get your startups off the ground running sales sales has a lot of mystique and a lot of lore around it or at least it did to me when I was thinking about sales early in my career you know when we think about sales and we think about people you know a lot of us picture Don Draper we picture these people who are so charming so impossibly funny who they always have the right line at the right moment you know to win the deal this you know they're of course incredible golfers this is how sales is portrayed in every movie in every TV show and so a lot of people go through life thinking that this is what sales is about and because we have we build up this mystique of what sales is and the types of people who can do sales I hear founders say very often things like well right now we're just building the product and once it's finished you know then we'll go and hire the salespeople well guess what hire the salespeople that's you and it's that looks nothing like the mystique and it looks nothing like the lore in my experience you know this is my co-founder Dan in the early days of clever and we were doing sales you know here he is on a broken chair in a three by three call room I think he's eating a bagel because he probably didn't have time for breakfast that's what sales looks like you know could not be further from the Don Draper imagery that a lot of people think of so sales is you and you know Y Combinator Paul Graham I remember when we were going through the program Paul Graham got up on this stage and he said you should be spending every moment of every day doing one of two things building your product are talking to users and talking to users a big part of that can be selling so this is a core responsibility of every startup founder is not just building the product but also talking to your users understanding their needs and as you'll learn that is really a big part of what selling is so this is a core responsibility for founders you know a lot of founders think well I haven't done sales before and that's true and they say well I'm not good at sales yet and that could be true too but one thing I've learned is that as founders you also have some very unique advantages that will that can make you actually the powerful at sales and very potent and the two advantages that I've noticed one is just your passion you are more passionate about the product that you're building and selling than anyone in the world because otherwise you probably wouldn't have irrationally quit your jobs and moved in with your parents or whatever you've done to start this company so one is your passion that is so powerful in sales and the second thing you have is industry expertise you know this problem better than anyone you know why it needs to exist you understand this problem more deeply hopefully than anyone and so these two things even if you've never done sales before I mean you can be incredibly effective and so don't think otherwise early on with clever one of the things we did that really worked for us was I had two co-founders so there were three of us and we just decided that one of us had to own sales it was so important that we needed one person to be thinking about this every day and so that ended up becoming me my other two co-founders were focused on building the product and implementing the product and I folk I we decided this was important enough that I decided I was gonna peel off and spend almost a hundred percent of my time selling this product starting from before it was even built so from that point you know from early enough on think about who and your company is really owning this and it should probably be a founder and it should probably be as much of a full-time job as you can spare so now I want to talk about how sales actually works and if you know anything about sales you know sales 101 as a lot of people talk about it like a funnel and there's different variations of this funnel I have a really simple one that I put up here step one of the funnel is finding prospects prospecting these are leads who might even be interested in buying your product who might even be interested in taking a call from there you have conversations okay so you figured out they're interested but you got to have a lot of conversations to figure out is this the right product for them or not third is closing okay you actually they actually want to buy the product how do not snatch defeat from the jaws of victory and lose the deal oh yes to go through a closing process and if you complete all of those things then hopefully you are in the promised land and you have revenue when you have your first sales and so this is how I think about the funnel and what I'm gonna do now is just walk you through each of these stages and share how I've approached these in my career and some tips that have worked for me along the way so your mission in the first stage of prospecting it's to figure out who will even take your call and one of the things that for me was really helpful to understand is well you're gonna hear know a lot you're talking you you start talking about a new product people and you're just gonna hear a lot of nose but one of the things that was really helpful for me to understand is you have this technology adoption curve this was put out by a guy Everett Rogers in the 60s and it starts on the left you have your innovators then you have your early adopters of new technology or early majority your late majority your laggards these are terms that people in Silicon Valley throw around that I'd been hearing for years but what I didn't know was that the inventor of this framework this technology adoption lifecycle Everett Rogers he describes it as a bell curve and he actually went through the effort of quantifying the area under the curve in each of these different segments and one of the things and so one of the things you notice is looking at this the innovators segment is just 2.5 percent of the population that means 2.5 percent of companies will will even consider buying a product from a startup that is unproven with no revenue and when you realize that - some founders that's kind of depressing like wow that's a very small percent of the market but when I found this out I actually found it massively motivating and massively invigorating because all of a sudden it makes what you have to do really clear you have to talk to you a lot of people because you have to find that 22.5% it's a numbers game means you're gonna have to reach out to Atlee 200 companies to find just two and a half on average who are even in you know potential buyers for your product you're basically playing like a version of Where's Waldo you know where you're looking for the you know the very few companies who might be in this innovator segment and so expect early on sales is not reaching out to a you know two four ten companies reaching out to sale reaching out and doing sales is a lot of grinding and it's a lot of effort in order to get the result you want when it comes to actually starting these conversations I found there's three things that work for me so in terms of finding those innovators the first thing that work has worked well for me is using my network the second which is a little surprising to people is conferences and I'm going to talk about that and the third is cold emails these are the three ways in which I find prospects I'm not going to talk about my networks I think most people understand that but I can tell you many of the earliest deals I've done it every company I've been at have been through people I've known friends of friends so do not underestimate your network especially if you know the industry you might think it's not very big but you probably know a few people and those people might know a few people and so spend some time thinking about your network because you might find some really great sales opportunities that come through there and those are the best you don't need a hundred people in your network to get to sales you can usually do it with much fewer but let's talk about conferences because I think conferences are the most underrated aspect of sales and them and one of the least understood aspects of sales when I say conferences a lot of people think I'm talking about this like CES or e3 and going you know it's at some place where there's 80,000 people and it's basically more like a rock concert than you know then it's than anything else and when I say conferences I'm talking about something very different usually they look like this usually it's a bunch of you know executives or people in a hotel room cooped up for a couple days you know oftentimes you know in places like Milwaukee or Kansas and let me tell you this is such a powerful way these conferences are such a powerful way to meet your users you have to go where your users are and many times if you're selling to a business or to a corporate buyer this is where users are they go to conferences they're there with their peers they're learning and that's where you should be - now let me say a few words about how I've approached conferences in the past because this this really is where so many of clevers initial partnerships and customers came from one figure out what are the big industry conferences for your product in your startup usually there's not just one usually there's like 10 and you have to work to figure out what they are ask people in the industry where do you what conferences do you go to which ones do you you know are on your radar but there's usually quote there's usually quite a few in definitely more than one - pick a few that you're going to attend buy a ticket sometimes they're expensive you know thousands of dollars sometimes you don't even need a ticket you know depends on the event but figure out the conference and decide you're gonna go hopefully weeks or months in advance three get the conch get the list this is such an important part of making conferences like this worthwhile find a way to know who's gonna be there write to the organizers write to sponsors you know maybe it's on the website but figure out who's gonna be there in advance don't just show up at a conference and think you're gonna like network your way and meet everybody although if you can pull that off by all means do it it's just not something that that everyone can do but when you have the list of who's gonna be there then you can email people in advance and say hey you know I'm gonna be at this event I noticed you were - I'm working on this thing I'd love to show it to you can we find some time to chat and don't just do it with a few people do it with his men potential buyers or prospects as you can my goal when I go to a conference or when anyone from clever goes to a conference is that we have our entire days booked up in 30-minute increments because we've done so much effort in advance of the conference's trying to line everything up getting these meetings and they end up becoming the most productive day of the year when we actually go and we actually get to have all of these conversations and have all of these buyers and I get to the end of a night even the first night at a conference when yeah just been doing one day and let me tell you every time I am exhausted and I am also so energized because there's nothing that's more fun than meeting with customers and meeting with potential buyers and hearing their reactions to what you're building so I cannot emphasize enough how important conferences have been in every aspect of in every company I've worked in sales at and I highly recommend you explore this so that's conferences the other and frankly the you know more probably more common approach is called emails people don't really cold call too much anymore maybe you could make it work but cold emails I mean I still do that today and and a lot of people are don't know how to write cold emails they don't know how to you know reach out to someone in a productive way I know this because I'm on the receiving end of so many bad cold emails we probably all are they're really long they're not personalized or not actionable they're boring they're irrelevant so don't do that but if you don't do that like well then what do you do how do you have a cold email you know strategy that's effective in the early days of clever in the early days of other startups we would sit and sit down and we'd send you know 10 30 50 emails to cold prospects and it would look something like this and I've actually found an old email and I put it up here so you guys can see it you feel free to copy it but it is the simplest thing in the world you'll notice it's short it's to the point it's personalized it's actionable hey my name is Tyler and I'm the CEO of clever this is you know what we do I thought this might be rel for you because of XYZ reason that's you know personal to you even if you're not in the market I'd love to chat with you about this which is true do you have some time this week later this week I'm free I'm free now or you know I'm free at this time super simple super you know this will probably get read as opposed to some of the paragraph long you know diatribes about why my product is the best and why you're crazy for not using it and before we've even met all you're trying to do is get a call with somebody and actually meet them and so we'll send out cold emails it's it's very effective but you know make sure you do it right make sure you're writing emails that are interesting to people that aren't too salesy that are personalized and that are genuine and remember all you're trying to do is get a conversation get it out of that prospecting phase and into stage two which is conversations so let's talk about stage two stage two okay if you've gone to conferences you've done cold emails you've worked your network and now you're talking to prospects this is exciting people want to talk to you they might want to buy your product this is what you've been waiting for when this happens and you get them on the phone remember to shut up and listen and when people ask me you know what's your number one sales tip what's the number one when new sales people say what's the number one thing I should practice or work on if you take nothing else from this presentation take this sales is about listening I've had the opportunity in my life to shadow some of what I who I think are some of the best salespeople in the world incredibly successful salespeople and they look nothing like the picture I showed you on the first slide you know they were soft-spoken they and what I remembered specifically was that they were world-class listeners and the reason that's so important is because that's what sales is at its core people think sales is about just you know you know like a being a battering ram and just hitting you're getting your points across and repeating them over and over until somebody finally you know breaks down by your product and let me tell you that doesn't work and what does work is is building relationships with people understanding their problems understanding what their needs are and then seeing if you can help them with your solution and in order to make that happen you have to listen so most founders when I I've shadowed a lot of sales calls and I one thing I see very frequently is a founder they're so excited they finally got someone on the phone they're hooked they're definitely gonna be the first customer and they get them on the phone and they just talk and it's understandable right you're excited you're excited that you know about your product you're passionate about it you can't wait to show off every bell and whistle but you've spent months thoughtfully building but it will totally kill your sales your sales deal what you'll naturally do is talk for seventy percent of the time on the first call and you know maybe leave 30 percent of space for the other person the best sales people in the world when I've seen them in action it's the opposite they're listening 70 percent of the time and they're asking questions like hey tell me about the problem you're having how do you solve it today why did you even agree to take my call what would your ideal solution look like if you could have anything they're asking questions because they care and they want to understand and they want to figure out how to help this person solve their problem and yes their product might be part of that solution but it involves deep listening you know we have one one trick I can share on this is we at clever we use a tool called uber conference and every conference is great but one of the things I love about it is at the end of each call it sends you an email and it tells you how much time you spent talking versus how much time the other person spent talking and it's funny because I can look at these and it's a running joke I'll look at these in you know sometimes you'll talk to someone and say I just got off a call it was great I nailed it you know where they're gonna definitely buy and then I'll look at the Eber conference you know call email at the end then if it looks like that I'll say I don't think that call went as well as you think I don't know if we're really you know ready to make that sale quite yet and so the number one thing that I hope to impress on you today is sales is about listening and it's not just about you know a hacker you know asking the right questions it's about genuinely listening and if you can do that the rest is easy it really is so you've got them on the you've you've spent all this time prospecting you've now even had your phone calls you've done a good job listening and then one thing another thing to know about sales is there's a lot of steps to the process you know up here I have a lot of different steps that you might go through in a sales process calls emails pricing calls you know sending references talking with different executives there are a lot of steps to sales and up here these aren't these aren't just steps hypothetical steps what I've put up here are actually all of the steps from one of my very first deals at clever this is one deal and frankly some of the stuff is kind of embarrassing right like met the person they were interested I emailed no response I emailed him again no response I emailed him again they responded I scheduled a call email no response I mean this is straight-up embarrassing and this is from someone who wanted to buy our product isn't that crazy so one of the things I hope to impress on you is it is a lot of work to do sales well and it takes a lot of follow-up and you kind of have to have this inhumane like willingness to just keep going and push through this this whole lifecycle probably took about two months it ended up we ended up closing a hundred thousand dollar-a-year customer but this is what it took and I I talked to a lot of founders who maybe they have a good meeting they do a follow-up email and they don't get a response and they're like oh well maybe they weren't interested after all maybe it's not a good fit and they disqualify themselves well just remember this is what a success case looks like at least if you're doing enterprise sales and you know it's not over till it's over and it's not over till they say no but sometimes you do have to kind of remind them you know hey I'm still here hey are you still interested because probably your buyers have a lot on their mind that's not you or your startup and probably they have a lot of other things going on in their life and so being persistent isn't rude being persistent can be helpful if you do it in the right way and you're respectful now I will say one thing here follow-up is really good and really important but what's also really good sometimes you get to know and getting those noes can also be really good and really helpful because when you're a small startup with this you know founder small founding team you've got to figure out where to spend your time and energy and you can't have a pipeline of hundreds and hundreds of deals going at one time you just can't you you won't be able to do it and so there's actually a lot of value my friend Steve Garrity taught me this there's a lot of value to driving conversations to a yes or no quickly because knows you can move on and get and start filling the pipeline with other people that could become yeses so I would encourage you to have relentless follow-up you know be determined go you know don't let don't let things drop but at the same time if you get a know you know see it as a as a as a blessing in disguise because you can move on to the next deal that could be a yes okay so you've prospected you've had these great conversations with customers you've you know made it through the rigmarole you've gone through all these steps now let's talk about closing this is an area that it just it's weird it's foreign so you have to figure out how to close a contract with a customer who's told you they want to buy it's harder than it sounds a lot of deals get messed up in here so let me just walk you through a few things I've learned one assuming you're doing a you know an enterprise contract you'll need an agreement and then you'll send it over to the company and they'll want to change the agreement though it's a process called redlining and then their lawyers will send it back to you and you might look at it or your lawyers might look at it you might have more changes and you go back and forth in this redlining process so the first step is you need to have an agreement to propose and by the way they're gonna expect it from you they're gonna say okay you know when they're interested they're gonna say send me an agreement and make sure that you have something or you've been working on something so that you know it's not like oh I'll get back to you in a month if you don't have something I've good news which is if you're not aware YC has an open-source sales template posted on their website and I worked on this with James Reilly it could when Proctor and some other folks including the Y Combinator legal team and wisely decided to open source this so any of you can use it obviously you'll probably need to customize it for your needs and at some point you want to get counseled but as this basic starting point there's a free template that you can use for sales and Y Combinator's website and then once you have your going into this back and forth I'll never forget it I have seen some founders let this process drag out for months fighting over the dumbest things when you are at an early stage startup when you are trying to get your first customers early customers are like manna from heaven they if you get and if you don't get them you're not gonna go very far you're done and yet I have seen startups in the early phase because they think that what they're supposed to do or someone gave them bad advice quibble over the dumbest things so my advice for you is when you get to this step especially for your first early customers they're gonna want to put weird things in the contract with indemnity clauses and warranty clauses and don't say you know get it reviewed by a lawyer don't sound anything dumb but your goal is to finish and move on and just keep that in mind and if you're going through four or five six revision processes you're doing something wrong so figure out how to move this quickly and don't quibble over small things get get the first customers because that's what you need to you know keep going okay another closing trap you got the customer interested they want to buy things look great and they come to you and they say hey actually I want to buy but only only if you had this one other feature would I buy it sounds so promising you're so close they just want one more thing sure you can build that thing it wouldn't be that hard unfortunately once you start hearing this in my experience unfortunately it is more often a pass than anything else and the thing to remember is unfortunately building that one thing when someone says oh I would buy it except it's just missing that one thing if you built it there might be there'd probably be another thing after that and another thing after that and you don't want to be in a world where you're building lots of one-off things for customers now your first customer second customer do what it takes folks but but very quickly you get in a world where you keep where you start hearing this and you realize it's not a good thing and so two ways I've seen of solving this one is well if you really want the sale and you really want to hold them to their word and have that commitment say okay well I'll build it if you if you agree to you know figure aided by the product which means I can't demo up for you today I can't you know show you reference customers on this thing you want but I will build it for you if you if you sign up and if you've spent the time listening and building the relationship and they trust you that can work the other thing is you say look we're gonna build what you know what customers need and we're gonna wait till we hear from four more customers and you know oftentimes I find even in that case if they still want the product they'll buy it even without that one feature and hopefully end up building what they need anyways but but at least then you're not building something for just one customer third closing trap free trials you get so close to someone they're so interested there that your perfect first customer and then they say yeah we just like to try it for for 60 days folks when you are starting your company and when you are out there trying to make your startup work you need things like commitment you need validation you need revenue and guess what a free trial doesn't get you any of those things and so I at every company I've been at I've never worked at a company where they did free trials we just said we can't do it we're spending a lot of time out here trying to find the right customers for our product you're spending a lot of time building the right product you know we're not gonna we're not gonna give it away for free on the hopes that maybe you'll decide you want it but we flipped it around and said but we want to be reasonable and we know you're taking a chance on us and you know there's risk so we only do annual agreements here that's our that's how we operate but if for any reason you're not satisfied in the first 30 days you can opt out of the agreement and there won't be any penalty and cancel and flip it and having it that way where the default is they're a customer but if something goes wrong they're still protected actually meets both part it's kind of both parties meeting in the middle and it and it solves for their concern that they're taking a risk on someone new well not while solving for your concern which is that unique commitment and validation to keep going and way better to be in a case where the default is that they're a customer then the default is well you need to renegotiate something in 60 days from now and you're right back where you started so to the extent you can avoid the free trial trap so that's closing so now you know how I've approached prospecting how I've approached the conversations how I've approached closing happy to answer questions on these when we when we when we break but just step end on some final parting thoughts what I've described here is the enterprise sales process I've used going from 0 to 1 million first million in revenue this is this is the exact process we've used multiple times and it's worked but not every company well every company is different and one of the things that I love to encourage founders to think about early is what kind of company and specifically what kind of sales motion are you going to have in the long term Kristof chance who's a VC has this really incredible blog post I just love how memorable it is but he says there's five ways to build a hundred million dollar business from a sales perspective if your average customer pays you a hundred thousand dollars well then you just need to find a thousand customers and you're done or if your average customer pays you ten thousand dollars then you need to find ten thousand customers and you're done or on the far end so those are your elephants and your deer on your far end he has these flies and they only pay you ten dollars but you need 10 million of them and so it helps to think about as you're starting to think about your sales motion well how much are my customers paying and therefore how many of them I gonna need to have and what sort of sales motion is going to be sustainable for my business because if you're it's the way you're selling your product today is you're flying to people you're meeting them at conferences you're doing everything I touch you know I described this very kind of high touch high energy sales process but your customers are only paying you $10 a year or $100 a year or $1,000 a year and you're gonna have to repeat that 10 million times it's impossible it's it's impossible and it's you know way too expensive for you to build your business that way on the other hand if you're successful in building a low touch sales model where you're able to do things you know scalably maybe you're selling to small businesses you know of which there's millions maybe you have some way that people doing self-service and sign up well then you can be over on the right side of this graph and you can have and you can have a lower price product but the price of your product and and your sales motion are inextricably connected and that's something that you know took me a little while to understand but I thought this graph really helped make clear is depending on how much you're able to charge for your product and depending on how much people are willing to pay for your product that'll change how you approach sales as you're building your company and building your sales team so those are some lessons I've learned along the way doing sales I want it to end and just say good luck out there you know you guys are figuring in this out it's it's the most fun time of your company you get to have these really energizing conversations with with tons of users and figure out if they're potential buyers and good luck because you'll always look back on this is one of the most fun parts of your journey so thanks for having me and I think we have some time for Q&A yeah why don't we start here thank you very much for the talk quick question you mention about follow-ups and so forth what would be the appropriate time between emails and you know just so you don't feel this you don't seem overbearing and how I I'd say on average maybe a little under a week so if you email someone and they don't get back to you I think it's you know polite and not overeager to nudge you know five six seven days later yeah oh here hi my name is raisin I was happiest on sales day at what point throughout your process did you feel like you were pestering the customers you kept you put in a nice way you know like oh you got to keep on going you got to keep on asking you got to keep on sending them along the process did you ever feel like you were pestering your customers or not yeah so the question was do you ever feel like you're pestering your customers when you send them follow-up emails I like to think that if they haven't told you know then you you know you're within your rights to follow up you know a reasonable number of times if you're talking about emailing someone eight times and they haven't gotten back to you I mean take a hint great but you know I think if they haven't told you know and especially if you had a earlier conversation where they were interested you know assume the best assume they're busy assume that they've got other things going on you might not be their top priority but there's nothing wrong especially if you're doing it on a you know weekly cadence or something like that and your emails are thoughtful and personalized I have never once in my life been annoyed by somebody sending respectful follow-ups as long as they seem thoughtful and personalized don't forget that part if it's just like I'm getting mail merged every week with another template I mean you know nobody likes that person but yeah over here yeah I would say you don't learn about product market fits from oh sorry the question was when you're getting these nose or in early sales conversations how do you know it when they're just not an early adopter or an and how do you know when they're just you should be reading signs of product market fit or lack thereof and my answer to that is I don't think you discover a product market fit from the nose I think you only discover it from the yeses so I think when you get nose there's a lot of reasons people could give me giving you nose and I wouldn't even necessarily believe you know the reasons that people you know give nose because in the same way that you can't trust when VCS give you know you know the reasons is there's just people struggle to be upfront and honest and you know everybody wants to be polite well you get to product market fit and you know you have something as when you start hearing yeses and so you just have to try and if you can't get any yeses well there's your signal that you don't have a product market fit and if you can get yeses there's your signal that you do have product market fit and I think that's all that matters what is the importance of reference customers in terms of would you prefer going out to big brands big names even if they require far more work than going full that's know but yeah that's a great question it is how should you prioritize big companies which would be amazing names and logos if you had them as reference customers or small companies which might be faster you know I I think about the advice YC gives for investors which is to do a breath for breadth-first search meaning optimized for speed and optimize for you know I would say talk to all those companies talk to the big company talk to the small company but then you'll know which ones can can move quickly and not and optimized for speed a customer is better than than no customer and the big companies are never the are never these great they're great references you imagine necessarily I would go for who needs your product the most and who will move quickly and the reference stuff and you know the logo stuff you know I don't think you have to worry about that in the early days you're just looking for validation and customers yeah over here hi area elevate this club I'd like to hear about your pricing journey and we have asked of interested customers that were beginning to now get nervous about the pricing so one of you about your journey PS I did had sales at the UCLA baby bro oh nice oh good to meet you so your question was about the pricing journey yeah and how to set pricing that is a hard question because it's so specific to every company I'll tell you what we did at clever we guessed you know we guess and you get feedback it's actually kind of neat you get feedback from the market you know pretty quickly and you can in the early days you can iterate you know there's a there's a Patrick McKenzie likes to talk about how most startup founders need to charge more and we'll usually guess too low so maybe one strategy for guessing would be to guess a number that seems reasonable to you and if you can close that sale you know try doubling it the next time and if you can close that sale try doubling it again you it's really hard to know what customers will pay but I'll tell you that that you know that original deal I mentioned for $100,000 that we closed very early on why was it $100,000 and not you know half of that or double that it was just you know us doing a little bit of this and guessing but we got feedback and you know iterated from there on the on the pricing model so I think you just got to try things be bold whatever you say you got to believe it this is the right price for our product there's no other price would that would be fair for this you know this thing and but then quickly you know be willing to iterate as you get that feedback yeah no problem in the back there yeah I'm not sure I understand the question yeah so yeah so the question is how do you if you're talking about a $50 price point for a product how do you and you know early on in a company's journey how do you bootstrap a sales effort around that I mean if you're talking about a $50 product even $50 per month you are basically basically you probably shouldn't do any of these things and you should instead invest in a marketing function because you are gonna need so many customers and you know you can't do it in a high-touch way so you know I look at things like you know demand generation and email campaigns and self-service signup flows and referral codes and things that you know companies that that small price point kind of have to do to be scalable or raise the price of your product to support you know a true sales either way but that's probably how I'd approach it [Music] why isn't there anything on your website yeah there's no product other than the product that's something I don't talk okay it sounds like sometimes founders do this I said what what if there's not enough case studies on our website for people to come by I thought of founders think they're the net it's never enough whatever they have is never enough to get people to buy if they were one had one more reference account if they had a few more case studies that's what people you know that's what it would take for people to buy guess what if you go on the Wayback Machine for clever calm from 2012 we didn't have any case studies you know we didn't have any customer testimonials all we had was a page that described the product and and you know and that was enough to get you know for people who had the need they didn't care about any of that they were like oh finally someone's built a solution to my problem great I will run through walls to get it and we didn't you know we maybe we have some of that stuff five six years in but we certainly didn't have it at the beginning so uh yeah over here sorry one more time oh what resources yes the question is what resources have I learned from you know in doing sales there is well first there's no excuse there's no there's no substitute for doing it I've read a number of books on sales I've you know watch things online ninety five percent of what I've learned has just come from trying it over and over again and actually it really appeals to the math and statistics side of me because you kind of get to a be test everything yeah you try something new in a conversation oh that didn't really work okay gonna you know try something again you just get to eater over and over and over again and so that is that is the number one way to learn sales there are some books there's this one that I love it's called how I picked myself up from failure to success in selling it's from like the 1950s and it's written in this kind of hokey corny way but it so beautifully encapsulate the journey of learning sales and you know some of the hustle and things that I was describing as part of it earlier so that's one resource I've recommended to founders but really you just got to try it okay last question yes you look I give a question hiring salespeople first of all you have no business hiring salespeople until you've done a lot of sales on your own could be good and the reason is not just you know because of what I was saying earlier about how you know good you are it's because you won't even know what kind of people to hire until you've done a lot of sales on your own you won't know what the core skills are is it is it traveling a lot is it a lot of phone calls is it a lot of like you know really good emails you just won't know once you have done sales for a while the good news is you'll know exactly the kind of people that you should hire and typically that's how I've done it so I've done sales you know by myself for three six nine twelve months done made it repeatable to a to a degree and then there's you know there's there's literature out there about what you want your first sales reps to look like and oftentimes the term that's used Renaissance sales rep I and that's kind of differentiating from the coin-operated sales rep maybe you know coin-operated meaning like they they need everything they need every piece of collateral every play book every script but then they can go out and execute on it just relentlessly on the other side of that spectrum you have the Renaissance reps what you needed to start up and these are folks who don't need a lot of direction don't need a lot of playbook and they just figuring things out and probably your earliest reps you know even a clever today I you know we're Renaissance but you know bigger companies will have much more on the other end of the spectrum and so you want to look for those Renaissance players who can are really love to learn oftentimes they'll have some industry expertise but maybe not too much you know you probably don't need the person is your first salesperson who has you know just you you probably don't want someone you know don't be too blown away by fifty years of experience not that that's bad but it's also you can probably get away you know if you have the hustle and the grit that's what's most important at this age more than experience and so yeah those are the things I look for is so a lot of energy a lot of passion kind of that Renaissance sales rep mentality and then pattern matching to what I've been doing in the sales process if they have those skills great thank you thanks guys you

Channel: Y Combinator

Views: 179,351

Keywords: YC, Y Combinator, Startup School, Tyler Bosmeny

Id: xZi4kTJG-LE

Length: 52min 33sec (3153 seconds)

Published: Wed Sep 26 2018

Reddit Comments

[u/midael]

07:30: Guess what: YOU [e.g. the founders] are the sales people. The mythic: we build product, then hire sales has never worked!
08:20: Core responsibilty of Every startup founder is to talk to the customers. Talking to customers is sales. (and other things)
09:00: Two advantages you have [in sales] as a founder: a) Your PASSION, b) Industry experience - OR - you know this problem better than anyone ===> These two can be a very powerful combination to convince people to buy
09:55: @ Clever - early on we decided that one co-founder had to own sales. Had to think about it every day, all the time.
10:40: Funnel: 1) Prospecting, 2) Conversation, 3) Closing, 4) ‘promised land’; e.g. Revenue
11:40: In first stage of prospecting, your job is to figure out who will even take your call!
12:20: [semi] Interesting take on Technology adoption lifecycle by everet Rogers (e.g. how he had quantified segments, etc.) → At startup stage with innovative product, accordingly ONLY 2.5% of entire potential market population will even consider your product. Let that sink in. That means you have to talk to a LOT of people.
14:00 Doing sales is a LOT of grinding and a LOT of work to get a result you want
14:10: How to find the 2.5%: 1) Use your network, 2) Conferences, 3) cold emails (these are the three that work for Clever)
15:30 With conferences I mean LOCAL meetups, LOCAL interest groups, SMALL venues. Go where your users are. FORGET about massive big conferences -> they’ll be waste of time for you.
16:30: That said: 1) figure out what are the few BIG industry conferences for your market, 2) pick a few, buy a ticket well ahead of time, 3) GET a list of participants AHEAD of the time (ask from organizers, scrape website, hack the app, whatever) [e.g. just showing up and networking your way around highly unlikely to work], 4) MY goal is to have my ENTIRE day in conference be booked full in 30 minute increments before conference even starts,
18:50: About cold emails…. (because cold calling is past it’s prime… email may be in the future too, but for now, don’t underestimate it)
20:00: Sample of [personalized] cold email Clever used (to some success). We would in early days gather together with team, and send ~50 of them a day
21:15: When you get on the phone with people, shut up and remember to listen. SALES IS ABOUT LISTENING. ABOUT GENUINELY LISTENING. (THIS IS NUMBER ONE TIP OF MY TALK)
22:20: People buy from people. You need to understand their problems, concerns, worries, needs,.. AND then seeing if you can help them with your solution.
23:20 On a sales call, I see founders [you] do 70% of talking, and customer 30%. BUT when you flip this, you will actually start winning deals.
23:30: Ask questions: a) tell me about the problem you’re having, b) how do you solve it today, c) why did you even agree to take my call, d) what would your ideal solution look like (ASK questions because you care and want to help customer)
24:10 @Clever we use Uber conference (another webex clone), BUT at the end, it sends me email telling how much I talked vs. the customer.
25:00 Slide about steps (MANY) of which I had to go through to close a deal (with just one customer - 2 month cycle)
28:00 There is a lot of value in driving conversations to yes or no quick. Optimizes everyones time/effort.
29:30 YC has an Open Source enterprise (contract) template
30:40: When it comes to contract / red-lining - don’t sign anything absolutely crazy, but don’t either get stuck on tiny details. You NEED those first customers. Period.
31:40: If customer asks for a feature as a condition of closing: You’re in dangerous waters/tread carefully
33:20 Do not fall into ‘free trial’ trap. Generally uncontrolled trials suck too. Just do NOT do free trials. INSTEAD: When someone asks; be reasonable; Offer 30 day cancellation period on annual subscription etc.
36:00: How many customers I need for license price X in order to reach Y - think about it
37:20: price of your product dictates pretty much how you’re going to sell it