Technology to Sales: The Evolution of a Software Startup
Software startups always start out very heavily focused on technology. They have to be; they’re building some kind of software application and most of their time has to go into doing that properly. Most software startup teams are made up entirely of developers or weighted in that direction. Have a team of 4? I bet 3 of those people are technical…
At Standout Jobs we have 8 people full-time. Six of those are on the technical side. That’s fairly common amongst early stage software startups.
But at some point, most software startups have to start changing. You can only focus on the technology for so long. Eventually, you have to start marketing and selling it. Occasionally you’ll find developers that can also serve as marketers and business development gurus, but more than likely you’ll hire on additional people to help.
Thats the evolution of a software startup — from being a technology company to being a sales & marketing company.
Most successful software companies make the leap.
You might have the greatest technology in the world, but if no one is generating buzz, marketing, brokering partnerships and selling for you, your company is very likely to fail.
Recently at a conference I was speaking to the CTO of a very successful technology company. I had heard rumors that they only had 15 people, which was surprising given their success. In fact, they were at 50 people. And when I asked him for more details on the make-up of the people, he said (and I’m paraphrasing), “We were around 15 for the first couple years, most of us were on the technical side and only the CEO was non-technical. But now in our third and fourth years, we’re over 50% on the sales & marketing side.”
That’s very telling. They spent roughly 2 years building technology and staying fairly quiet. And now that the technology is solid, they’re bringing on more sales people to ramp things up.
The best technology in the world is meaningless unless someone is out there knocking on doors.
We often hear stories of companies with less-than-stellar technology winning the day because of their superior outbound initiatives: PR, biz dev, marketing & sales.
Standout Jobs is facing that same evolution now. I see it as a threshold that software startups hit — build technology, get it out there, refine and reiterate, prove that it works and people like it, then go crazy on sales and marketing as quickly as possible. We see more and more software startups going with a free (or freemium) business model (including Standout Jobs), which means they’ll live and die almost entirely based on how much scale they can achieve. That scale is very hard to achieve through word-of-mouth alone, or through viral means (and these days we see a lot of startups try viral scaling approaches that are less-than-pleasant and accepted, such as email spam, spamming LinkedIn contacts, etc.)
If you don’t have a roadmap to scale customer acquisition, get one.
Even if you’re not ready to execute on that roadmap, you should be looking at it while you’re building your technology. You’re probably not the right person to be succeeding with that roadmap either, but when you go to hire sales and biz dev people they’ll want to see what strategies you’ve been thinking about. And, those strategies will impact product development. Just think about the viral components or features you might be able to build into your software application that could help with gaining traction…
Ultimately, the most successful software startups aren’t really technology companies, they’re sales & marketing companies. Even companies that have armfuls of patents won’t succeed in a huge way as technology companies alone; they have to prove people will pay for what they’ve built and that they can scale it to some degree before real value is proven.
So if you’re running a software startup, think about how and when you’re going to make the transition and evolve from a technology to sales-driven company. And don’t let the evolution take too long…someone will pass you along the way.
Interesting post. Funnily enough it’s essentially the same - but reversed - view from inside a sales and marketing startup. We began with an experienced business development team and so getting clients on board has never been as issue.
On the other hand, we’ve had to work hard at building the infrastructure, technology and client management processes that we had more or less taken for granted in previous employment.
I’d suggest that every startup needs to take a cold hard look at its core competencies, plan ahead and look to plug the gaps as soon as is practical.
Also, just to emphasise, I think the linked post “Launching a Startup is Barely Step One” (Instigator Blog, Feb 6th) is certainly worth a (re)read.
Here’s a “180″ for you.
Our main business found a very unique niche and need for a software app for athletic directors at high schools. We knew we could sell it all day long (our organization was very heavily tilted towards marketing and sales.)
Well, basically, the exact opposite happened. We were selling and marketing like crazy, but never managed to get the “right” tech team in place.
Well, we eventually sold that business, and the new owner dusted-off the app and did it the right way.
It’s amazing how sales and marketing get neglected, but I know from experience, the opposite can (and did) happen.
thanks,
Chris
(Banner Boy)
“Ultimately, the most successful software startups aren’t really technology companies, they’re sales & marketing companies.”
I think this is a very short-sighted statement. Any company that places more emphasis on one piece of the puzzle verses another, is compromising something. We see it all the time. there are companies that build killer technology, but don’t flourish because they create no buzz or brand value because they don’t value it nor think its a worthy investment. But the opposite is equally as true, and in fact I would argue probably more true - that there are just as many if not more companies that invest big dollars buzz-wow marketing with loaded promises, that simply don’t deliver on the promise because they compromise the integrity of their product (and try to over-compensate with marketing).
I think neither factor is mutually exclusive. If you get into this business you just can’t compromise anything. Both factors are critical to success and very interdependent.
I think this issue exists partially because our industry works within its own bubble. Successful non-tech businesses have been doing this for years, and its by no means a “new” issue for new companies. You have to value all factors of startup equally, and no one can trump another.
Too often I see these “loaded mantras” thrown around in this our industry as new insights or revelations into business entrepreneurship, and I think we need to take a larger view at the recipes for successful business outside the context of only this industry.
Good post. I’m in the process of starting a new media co and we’ve been solely focused on the tech side. And our business plan outlines this, and then the migration to marketing and sales in a few months.
I like your blog, I’ll be back!
As a Business Consultant I see these discrepancies in every startup.
The key to “doing it right” is to take a holistic approach from the beginning. Slow down your startup plans until you have actually considered every aspect of the business.
One “trick” I use with these companies is to grab an organizational chard from a major corporation, and show them what really happens in a company. A chart like that will show every aspect needed to build a strong company and not run away from yourself where you end up with either a product with no sales, or sales with no product.
Good post, Looking forward to reading more.
Good Post. I remember in the early days when it was late nights and lots of pizza. Now it seams it is endless meetings and sales goals. This seems to be a common evolution of software companies. At least the rewards are great doing what you love.
Great Blog.
I’ve always handled the sales side of our company, communication is my thing, its what I know. That is why I partnered with a guy who knows the tech side and can’t communicate a lick (okay, that may overstate things). We compliment each other perfectly.
Thank you to everyone for commenting so far!
@Banner Boy: Sure, the reverse of what I said can happen as well, but I did state specifically that I was talking about “software startups”, which by definition (at least in my mind) means a company that starts with technology first. The reverse is possible of course - where the sales/marketing is strong, and product/tech is non-existence or weaker, but I’d say most startups in this day and age (in the tech sector) fall into the category I’ve defined.
@Tony: I don’t think I was saying that you should focus on one aspect of your business more than another. If anything, I’m espousing that tech-centric companies - companies founded by guys that are neck-deep in code - need to recognize the importance of sales & marketing in order to succeed.
And I’ll stick by my statement, because a company focused solely on technology generally won’t build up a critical mass of customers in order to succeed.
We certainly can look outside our industry and should, but I’m also targeting a specific audience with my content. I would never suggest that what I write is appropriate for a manufacturing startup, for example. And the fact is, many startups in “our world” are tech-heavy. It’s all about “building a better mousetrap” instead of figuring out whether people really want a better mousetrap, and then how to sell and market it.