How Great Founders Approach Sales - Dalton + Michael

Understanding the Difference Between Good and Bad Sales Practices If I'm trying to sell you a burrito you don't want, yeah, yeah, Trying to keep cutting the price doesn't make you want the burrito. If anything you make it makes it kind of worse if you keep discounting it 'cause what's wrong with the burritos? Speaker 2 All right, welcome to Dalton Plus Michael. Today we're going to talk about startup sales and specifically mess ups, screw ups, misconceptions. Like I think that instead of trying to make a sales one O 1 style video, we want to make it more entertaining by talking about when people screw up. And that's always the most fun stuff. So when you're in office hours of the founder and you're just sitting here, you know, you're hearing kind of kind of a a ho hum story, something didn't work and then like you just hear something that makes you cringe. You're just like. Tell an example of that like where you're just like. Speaker 1 Look, I certainly was the type of founder who wasn't excited about the concept of sales and I had a lot of cartoonish ideas about what sales looks like, right? You picture like a used car salesman or an insurance salesman or just like a high pressure timeshare salesman. Oh, you love those, right? And so I'm like, man, I never want to do that. That's bad. I think that founders may resolve themselves. They need to do sales like it's a necessary thing, but they deep down are still thinking about the used car salesman somewhere. Speaker 2 It's like they never had a canonical example of good sales. Speaker 1 It's like this. It's that good sales is so good. It doesn't feel like sales. Like think about service providers. You know, I've, I've had good service providers. You just kind of e-mail them with a problem and they're like, yeah, yeah, you have a problem. Like let's fix it, Let's do the thing that you want to do. And they're super responsive and they're really nice and they understand where you're coming from. And those people are totally making money off me. Those people are selling me a product. But when I'm interacting with these people, it feels like you're not a friend, but it feels like someone that knows me, they understand me, a partner. I present a problem to them and they're in a position to me with a good or service and we both walk away feeling really good about the the transaction. That's good sales and it's so good that it would never register. In my brain is that's a salesperson selling me something. Speaker 2 Which is so weird because I'm like, there isn't another word for that. There isn't like another word. It's just, it's almost like, oh, this was all my idea. Like this was all like, I think for me, the thing that makes me cringe when the founder basically is like, you know, I think I figured out a little bit of what the customer's problem is. It's going to be really hard to solve. And like, I don't think I can solve it, but I still need to sell them something they're kind of talking to. Well, like maybe we can help them with this thing or they, you know, I know what their problem is, but they're asking for this. I'm not going to help them with the thing that's screwing them up. I'm going to help them with this other thing. I'm trying to figure out how to get out of here with doing the least amount of work possible and get paid. I'm not trying to do this like trade really like the very concept of trade where sales comes from is like by trading goods, we both end up better. Like I'm not actually engaging in. Speaker 1 Trade. I don't. Speaker 2 Want to say I'm engaging in theft, but like if we were to look at the utility, if you sell something to somebody that doesn't produce any benefit to them, but you make money in the end, I don't. Speaker 1 Think the word for that is trade. No, I think it's a different word for that. I have to think about what that word is. It's a different word. I think it's a different word. Speaker 2 But it's like so common. I think that's the thing that really gets me. It's just this like, oh, we're not, I'm not being selfless. I'm not trying you. You describe this here like, oh, I emailed someone. They tried to help me. They did help me. I paid them great, yeah, but it's so often it's the exact opposite. Why Listening and Empathy are Crucial for Startup Sales Success It's like oh like I'm trying to get paid and I don't know if I can help. Speaker 1 My mental model for someone just starting out doing sales is you have a, you want to just go talk at someone and cram it down their throats and get them to say yes. And so it's usually a monologue, yes. And you say a bunch of stuff and you list the features. Another thing is like, often founders will think that discounting is the most powerful weapon they have. They'll be like, well, I offered them a huge discount and if they bought now they get a discount. And again, when you think about it, if you don't want something like if I'm trying to sell you a burrito you don't want, trying to keep cutting the price doesn't make you want the burrito. No, if anything, you make it, makes it kind of worse if you keep discounting it 'cause what's wrong with this burrito? Speaker 2 Well, and especially in those situations, it's so clear the customer doesn't realize that they can get any value out of the product that like why are we talking about pricing? Speaker 1 It's. I don't. Speaker 2 Even know you do. Exactly. Like I don't even know why this would help me and it's almost like I'm trying to speed run. It's weird to me that like the process of helping someone has been turned into this torturous process. Yep. It shouldn't feel like torture. You should be trying. Why else are you doing this business? Speaker 1 If you're not trying to help. Speaker 2 People. Yeah, like. Speaker 1 And I, and I think it is clear a lot of people are better at sales than they realize. And it's getting them to like put the car salesman thing out of their mind and think about it to, to picture what their best sales experiences were if someone helping them with a problem and just emulate that. And I think often people have an aha moment when you say it that way, the way we're talking about it. And that's what you need to be like the the founders. I know they're best at sales, are good at listening and not saying much and being really empathetic and then truly solving the problem so that it feels like a relief to the customer. Speaker 2 I think you said it best. Good sales is good problem solving and any good founder is solving how many problems in their company every week. And if they took that exact same feeling into the sales conversation, they'd be so, you know, it's like, are your employees having a problem with productivity and yada, yada, yada. And you're like, like, let me figure out how to get this guy to, like, get out of my face without helping me at all. Speaker 1 Like it's. Speaker 2 Not how you're thinking, but it's like, oh, maybe be more flexible at this. Maybe we can help you here. I think that like if you take the core assumption that often times the customer doesn't know how to solve the problem. So the other thing that I see people try to do in sales is like, great, Dalton, give me a list of things you want me to do, I'll do them. That will obviously make your business better because you gave me the list. Yep. And then we were both profit. And it's like, how often are you selling customers? The customers like, well, I want to make more revenue. I don't really know how. Or a customer, even worse, I'm talking to somebody who doesn't really understand the whole business they're in and like, hey, can you help me do XY and Z? But you realize it's not going to really help the business that they're offering. That's a problem solving situation if you treat it that way. Speaker 1 I mean, this is like trite advice, but like a lot of trite advice, if you pretend like you're hearing it for the first time, it might hit differently. So this is one of those things which is put yourself in the shoes of a customer again. You're usually like, yeah, yeah, yeah. Put myself in the shoe. No, but really, pretend like you've never heard that before. Yes. Pretend like this is the first time someone's ever said that. Yes, actually take a minute and it's almost like a method actor. Like, pretend you're that person walking into the room. Pretend you can see their e-mail inbox. Pretend you can imagine what their boss is telling them they should be worrying about. Speaker 2 What their next meeting's going to be. Speaker 1 Yeah, like actually take a moment and sit with that advice. A lot of people aren't doing that is where I'm going with this. Like they they're like, yeah, yeah, yeah. You know, put yourself in the shoes of a customer, but they they actually have never done that exercise. Speaker 2 My version of that is imagine you were the CEO of the company that's buying your product. What would you think? And it's so interesting to have that conversation with people because first of all, they're just like, because then I'm like, OK, tell me about the business of your customer, right? Because like you're selling this product to them. It's going to help their business. Tell me about their business. They're like, I don't think about their business. And like, OK, like, well, if you're the CEO of this business, like, what do you think your top 3 problems would be? They're like, I have no idea. It's like, would your product be a solution to any of the problems of the business? Like I'm just trying to sell the marketing software, Michael. Like why are you making this more complicated than it has to be? And I'm like, are you trying to help your customer or are you just trying to accomplish your goals and your customers goals are incidental. You can certainly get somewhere with that mentality. You can, you can probably raise your seat around, you can probably hire people, you can probably raise your Series A right? Like, like there's a whole set of milestones you can have with that, but you'll never win. Speaker 1 Unless one day you, you like, wake up from this slumber and basically you fix this like this is like a you might get pretty far in never figuring this out, but one day you probably need to figure it out, Yeah. Speaker 2 I think that's the thing that confused us. Our founders is like they see these products. I mean, I've had this conversation. Founders like we use the product. It sucks. Yeah, we don't like it, but they're doing well. Speaker 1 Maybe we should do what they do. Speaker 2 Because like, if you can only see two or three steps ahead of you, you might be following or copying company with a bad product and thinking that's how you win. And it's like, no. Oh, and the other side of that is if a company is winning, you might not understand the value they create for their customers, but don't dismiss it to 0. Speaker 1 Well, that's the classic thing of dismissing a product because the design is bad. Speaker 2 Yeah man, this HRS looks like crap. Speaker 1 No, I don't know if that's the higher to bid here. Speaker 2 No, I totally agree with that. The Founder's Indispensable Role in Early-Stage Sales and Hiring Here's another fun one. I'll, I'll give you a scenario. Great. I'm doing my company. I've raised a little bit of money. I've done some sales. Now it's time to hire VP sales, right? Because like that's a whole thing. That's not my specialty. I'm just a founder. Like I can hire someone and they'll build a sales team and they'll do it. It's just that easy. Speaker 1 Isn't that how? Speaker 2 Company building works. Speaker 1 Yeah, you just hire someone and they do a perfect job and you, you ride off into the sunset. Speaker 2 Right. They're like the the title is VP sales. It seems like they'd be good at sales, right? What do you think actually happens? Like when the company does well, what is actually going on? Speaker 1 The deal with executives, and we talked about this in other videos, you want them to function at A at a high level, and they probably had a similar role in the past. And what it actually means in practice is running a team and hiring other people and managing those people. But it usually doesn't mean figuring out from first principles how to do sales. The most common source of problems is that the founder just expects a new VP of Sales to come in and just do as good of a job as the founder was doing. Speaker 2 Or the better, not doing a good job. Speaker 1 And just like know what to do and like, that's not at all what they're really prepared for. Like imagine someone was a former VP of sales at, at Google or something like that. That's a successful product with a successful machine. And they were trained. And so they were super effective at like running a team and hitting their quota. But if you're like a new start up and it hasn't been around for a while without an established playbook, it's not obvious those skills transfer over 1 to 1. Speaker 2 I can I state that more strongly. It is obvious those skills do not. Speaker 1 Translate. Those skills definitely do not translate. I mean, they could. Like they don't tend to. Speaker 2 I think what's interesting about this is as we have funded more B to B companies over the years and I think personally as I've realized that like every B to B company is just an enterprise company or not ever, the vast majority are just enterprise companies that haven't figured out their enterprise companies yet. I think one of the things that founders have a misconception on this is how personally involved the CE OS of enterprise companies are in sales. And I remember talking to, we have a bunch of founders from Palantir. I remember just being like, hey, you know, here, these deals ponds are getting these crazy deals like da, da, da. How does some junior salesperson originate $100 million deal with Boeing? Like how do they even get in the room with the right people? Speaker 1 It's PLG, right? Yeah. Speaker 2 Yeah, yeah, yeah. That Boeing came on the website, signed up, right. What was really interesting to me was like how much executive sponsorship and executive like founder level, CEO level involvement there is in those deals and how much the CEO is originating them or scouting for them is kind of handing them back to a team to kind of process a little bit. But then like debugging anything going on, like it's the exact opposite of let me hire someone and look the other way. It's like the sales organization is almost built around the founders and as a as almost like a, a multiplier effect on their work as opposed to it built to the side of them. And you know, get this questions from founders who, you know their employees. I got this great question from employees like how do I meet with this important CEO myself? And I'm like, you don't like, why would they meet with middle manager salesperson, the the CEO? This company is going to have a hard time getting into this meeting. Why aren't you asking yourself the question? How can I help my CEO get this meeting? Can we reframe like that doesn't mean it's not your deal or like whatever, like let's just separate credit out just. Speaker 1 Don't get paid, go away. Speaker 2 You're good. Can we go for the most effective solution, which isn't junior sales guy meeting with CEO? Yeah. And so this misconception is also just kind of like this idea of like you told me, I should do sales as a founder, but now that we've moved along, I can give. Speaker 1 I'm not. I'm done. Re-evaluating Consulting and the Core Principles of Great Sales Maybe the last one that I want to talk about is consulting. So I'll bring up still my favorite company. Why see never funded Palantir. I have been surprised at how many founders will say some version of, well, we don't want to do this for the company because that's going to be consulting. Well, you know that integration is going to take too long. It feels a little too one off for you. It feels like consulting. It seems like consulting is the weird boogeyman in the room, almost as if you would assume that YC has like thousands of companies that have died because they did too much consulting. Yet like I have have not seen that. So what's going? Speaker 1 On yeah, so this is one of those phrases that you're gets repeated so much yeah that it feels. Speaker 2 Like conventional wisdom. Speaker 1 Yeah, it's like being like, you know, love thy neighbor. You know, you just did it. Consulting is bad. Don't consulting. Let's pretend like we're hearing it for the first time. Let's examine this with fresh eyes. I remember in my first startup when we were not succeeding, getting a meeting with Disney because to to cut through a bunch of bullshit. They took many meetings to get to this, but like it's a heart of the matter. They wanted my startup to build a white label social network so that big fans of the Disney parks could network and share tips with each other so they could sell more tickets to Disney. And they had to control the whole thing. And like there's they gave us a speck of all the stuff they wanted us to build to like control what people could say. Like we said no, even though it would have been for millions of dollars because that was consulting. Like he was literally a big company that won my startup to not have a product and instead outsource their entire R&D because I seem like a schmuck or I'm sure they asked lots of people to do this. And you know, if one out of 20 start-ups said yes to that deal, good for Disney, it's good for Disney. So you can see why Disney would try to do those. Obviously that would have been a horrible idea from my perspective, right? And hopefully the people in the audience can see why getting $1,000,000 deal for Disney to build a just random piece of software that no one else would ever want that's super bespoke is like obviously a really bad business. Yes, that is the true heart of this advice which is just building super random stuff for big companies is a bad idea. However, the amount of times finders say oh that's consulting and dismiss it out of hand, I think it's way larger than the than the specific example I gave you. Speaker 2 Disney's not running around asking startups to build them shit all the time, Yeah. Speaker 1 And so I do think there's a question under the do things that don't scale rubric of, you know, it's it's basically a Gray area, friends, there's a lot of Gray area of what is consulting and what is not consulting. And so I would just try to be open minded and decide this on a case by case basis versus dismissing out of hand that you shouldn't do something because it's consulting. Speaker 2 That's a very measured approach. Speaker 1 OK, OK. Speaker 2 I will take an unmeasured approach. Just do consulting. Like 9 times out of 10, you're probably not doing real consulting like you probably, especially early, you're probably getting the opportunity to learn about the problem. And that is such a unique opportunity and trust your ability to productize over time because we're giving this advice in mass, right? So 10% of the companies will do this and they'll die. I apologize. Speaker 1 Michael, I don't like those odds, man. Speaker 2 90% will like 10%. Speaker 1 Is too high. Speaker 2 90% will learn something and and all too often high reframe consulting as like a deep integration is a deep Moat, a long sales cycle is a Moat. Like a lot of these things that people associate with enterprise. You can't on one hand say why does it take 80 years for someone to get off of SAP and on the other hand be like I hate long sale cycles and deep. Speaker 1 Integrations. It's like. Speaker 2 That's the game. You know, it's like, oh, man, I want to win the Super Bowl, but I hate fucking throwing the ball. And it's like, well, man, come on. Like I'll, I'll go a step further. I secretly think the reason why Palantir doesn't have more competition is because too many people shy away from anything involving that kind of sales process, that kind of cycle, that kind of product. And if Palantir figure how to make this not consulting, I feel like a lot of people can figure it well. Speaker 1 I think you could argue that they are doing consulting, but they're able to make enough of a margin and have enough scale. Again, this is semantics, but I wonder if this is a. This is somewhere in the Gray area. Speaker 2 I will challenge this. Go ahead. Disney wanted to pay you $10 million to build this website. Yeah, let's say. But let's say you could build it in three days. Is that consulting? Speaker 1 Probably not, but I think a big part of what they wanted was the operations of it and to do the moderation. It wasn't just the building operations. Speaker 2 Let's say you could build and operate it with only three days of work. So you assume we don't have consulting margins at that point. Yeah, and you probably have figured out. Speaker 1 Some kind of base? Speaker 2 Level technology that would enable you to spin that up from that. Speaker 1 Would have been the opportunity cost that's like, wait, are we in the business of making white label social networks? I'm not sure that was a good business, but. Speaker 2 That doesn't mean it's consulting. Speaker 1 I agree. I'm just thinking this through. I think sometimes people follow these pseudo tar pits where you get revenue, but it's like not that interesting. Speaker 2 To me it's actually not consulting versus non consulting, at least within the YCQ community. It's so rare that I see consulting happen. Yeah, I think it is more I am making revenue not solving that much of an important problem for someone. Yeah, I'm doing like something like I. Speaker 1 Painted myself in a corner and I'm making money. Yeah. It doesn't generalize and it's something that's exciting. Speaker 2 OK, so anyways the big take away here I want to steal two things to kind of summarize. I think 1 is this concept that like. Great sales feels like problem solving. You should be in the business of solving your customers problems. Otherwise you shouldn't be doing this and you won't win. If you want to win, you should seek to consistently solve your customers problems. And then two, the very underpinning of business trade is both sides have to end up better at the end of a deal. Please structure things in that way. Please don't. Oh well, we hit our 15% month over month goals so I won. I don't know if you won. Speaker 1 You. You. Let's not worry about that. It's your problem. It's your. Speaker 2 Problem to figure. Speaker 1 Out whether you won, Michael. We'll solve that later. Speaker 2 Understand that core principle like do right by your customers. All right. Good shot. Speaker 1 All right. Thanks, Michael.