No matter how great your solution is, how you bring it to market and execute on the revenue side of the business plan is just as important.
Warning: I’m going to be very direct here. This article is for you if you are a CEO founder who prides yourself on your technical competence. You are bright and good at what you do. Maybe you have created some pretty great technology, or you have a knack for seeing how a tech solution can solve a problem. This article isn’t about doing a better job with the tech, because tech is in your DNA. This is about everything else that needs to be done well in order to be successful as a CEO, and more importantly, how to stay out of your own way as you take the company forward.
When you have a great idea and build great tech, the assumption can be that if you build it, people will buy it. But no matter how great your solution is, how you bring it to market and execute on the revenue side of the business plan is just as important and arguably, even more so. The equation is a simple one: No customers = no revenue = no cash no business. You get the picture.
This scenario happens a lot. Phase 1: A problem is identified, maybe by a single person or by a small group of friends, colleagues or even student peers. The deck is developed, the technology is built, maybe some funds are raised, and a company is born. Phase 2: A few customers are acquired, but then suddenly the business is stuck. The CEO may have a clear vision of how the technology can solve a big problem, but there is limited market traction and not enough cash to hire more people to further the R&D on the product. The CEO has little experience with sales and begins to search for an answer.
Other scenarios might include a company that thrived on technical success, spun out of a University with potent IP, or one that nurtured and birthed a product out of a consulting or development practice, suffers as it attempts to grow or keep its customer base.
The reason I can speak to this with confidence is because I’ve sat through hundreds of business case presentations and have watched the rise, as well as the fall, of many technical startups. Through this experience I’ve learned that founder CEOs with certain mindsets can greatly limit a company's revenue growth prospects.
Here are 7 limiting founder CEO mindsets that can put the overall success of the company at risk:
- I need to hire a top gun business development person who’s been there, done that - Not a bad approach, but believing that this new person is going to save the day is not a good strategy. A bad hire can also send the company backwards. Even the best salesperson needs a strategic direction, which needs to come from the CEO. Also, revenue is required to pay that person, so you need to be doing a lot of things well to get to that point.
- Sales is distasteful - As foolish as this sounds, there is a tendency for technical people to view the pursuit of sales and revenue as distasteful. It's surprising how often this comes up. Need a reminder of the importance of sales? See the no customers = no revenue equation above.
- The tech will drive sales - Great tech can drive sales, but people have to find out that it exists in order to buy it. They also must find the right customer with the right value proposition presented to them in a way that it resonates. Channels and markets must be identified and then maximized. Some questions to ask yourself: Do I really understand my target customer? Have I maximized the way in which my product is presented? Does the product need to be sold directly to the client or can it be embedded in someone else's solution? Do you need to be a brand or is being a part of another existing brand a better business strategy?
- Engineering can make good product decisions - Sure, there are examples where this works, when you control a market so big that you can define for the customer what they want without them realizing it, like Apple. But often, having engineering teams develop products and feature sets without customer input is not a sound strategy.
- The tech is awesome, every vertical can use it and we are going after them all – Focus is key. Multiple verticals might help provide different revenue streams, as well as become an opportunity for different channel strategies, but too much is defocusing. It can stretch valuable development resources and you can end up with suboptimal solutions in too many markets. Skillfully choose a few verticals and put your efforts into those first.
- Big partners are bad, we are too small – Not always true. Sometimes, a partnership with a company who can use your products or instantly become a channel and thus a force multiplier for you is a great business strategy. There are many ways to structure good deals to overcome apprehension about size, IP, vertical market requirements, exclusivity issues, etc.
- Partners are great! – We have a huge deal with a huge partner – And here’s the flip side. If structured properly, this can be a great thing. However, I’ve seen many instances of a tech company that had a deal with some monster company and is expecting sales to go through the roof and it just doesn't happen like that. Big companies don’t have the same speed or sense of urgency that you may.
Here are 5 smart things you can do to improve your company’s chance at success:
- Force yourself to visit customers and listen - The smartest thing you can do is listen to your customers. I once had a technical product company where after our initial release, we only added features to our roadmap if our customers asked for them. We used that as an indicator of what the market wanted, as opposed to what we technoids thought the market needed. Make sure that you are iterating on the target customer and the value proposition—over and over. It’s a never-ending process.
- Learn as much as you can about go-to-market strategies – Become an expert on going to market. Direct sales, channels, strategic partners, OEM's and distribution partners are a few of the possible ways to do it. Each has its own organization and support requirements and pricing and margin needs. Study up so you really know what’s best for your company.
- Get trusted advisors to assist in deal structures - Whether it is a large OEM deal, strategic partnership or a compensation package for your VP of Sales, make sure you have some folks in your corner who have been there, done that. These can be business advisors, consultants, key investors, etc.
- Don’t assume there is only one way - Be fluid and flexible. Innovate your go-to-market sales strategy. It's not an all or nothing decision. For example, you may have direct sales in the US, but decide that distribution or a channel partner is the best way to expand internationally. It’s good to stay open and be creative.
- Join a peer group - Surrounding yourself with a group of business people with a wide range of experiences is an invaluable tool for a CEO when presented with business challenges and looking for unbiased feedback. You may have a board, but a well selected peer group is different in that there is no agenda in the feedback, and you garner a wide range of insights in a formatted, optimized and proven approach to help you tackle and address those non-technical items that may not be your strength.
You’ve made something great, something that is solving a problem, something that could help you, your company and all those involved prosper. Make sure you are setting yourself up for success by stepping out of your comfort zone and putting energy and effort into more than just the tech. Your future self will thank you.