December 9, 2016
Five Sales Disciplines of a VC-Backed Growth Company( lessons from our in-the-field experience)
All VC-backed companies need to grow. For start-ups and mature companies alike, there is actually a real cost to not expanding sales and distribution quickly enough. But in our experience, growth can also be risky and expensive if not done well. We set out to write an advice piece listing the top-5 successful sales disciplines for rapidly growing VC-backed companies, based on our 20-year experience leading their sales teams. A bit of Googling to see who else has written on the topic shows that everyone from Harvard Business Review to McKinsey has compiled lists of do’s and don’ts. These are analysts and consultants who don’t get their hands dirty with the actual selling, preferring to conduct surveys and wax philosophically instead.
Unlike those consultants, SFE works directly with technology startups–typically funded by top-tier VC firms–as we lead their international sales expansions. We’re hands-on, selling in-the-field in 28 countries and holding direct responsibility for sales results. Working with as many companies as we have, it’s easy for us to see some common patterns that lead some VC-backed company to success (and others to failure) from direct experience and without any surveys:
1.) High-growth companies aim for sales growth and profits
VCs want their portfolio companies to go from zero to a thousand miles an hour as quickly as possible, and if it means bleeding red ink that’s OK in the short term. But eventually the company needs to exit and, in the past few years, capital markets have grown leery of growth-at-all-costs unless there is some proof that profitability can be achieved. The most successful companies we’ve worked with are hell-bent on global growth, but they approach new market opportunities with both a global domination and a profitability mindset.
2.) High-growth companies see macro opportunities before they become ‘obvious’
When Wikipedia launched in 2001 as a community-maintained online dictionary, the folks at Microsoft’s Encarta group were probably laughing. When Apple nixed the CD drive from its new MacBook Air in 2008, it was heresy. When Google started working on self-driving cars in 2009, it was perceived as an indulgent sci-fi exercise. High-growth companies see macro trends long before they become ‘obvious’ and they act quickly and decisively even as the critics tease them.In a more mundane example, several of our clients at SFE have been doubling-down their investments in expanding to the UK market even as critics fret over Brexit because, in the macro view, now is actually the best time to enter UK since 1955.
3.) High-growth companies keep their burn rate in check
The advantage of having VC capital backing you is that you can burn cash to out-distance competitors. But that doesn’t mean that your spending goes un-checked. Series B and C rounds are raised mostly for fueling sales and marketing. And the smart companies we work with expand their sales and distribution channels aggressively, usually investing in international markets sooner rather than later.You do not need to drop $1M in opening a London office, which can distract senior management and delay customer engagement, and which ignores the entire rest of Europe. Smart companies invest in services that deliver actual revenue — like like developing channels and doing localized lead generation in each target country. Our clients at SFE leverage our network of in-country sales consultants — located in 28 countries throughout Europe — to test new regions cost-effectively and to develop distribution and sales results using local contacts.
4.) High-growth companies stay focused
A small or medium sized company typically can do only one thing really well. If you try to do too much, your competitor who is doing ‘just the one’ will do it better and will win. High-growth companies have a discipline of focus, which starts with product development and core messaging, and continues all the way through to international expansion. They stay focused on core verticals, and they build their sales and marketing tools and service teams around those core verticals.
5.) High-growth companies keep the core team lean and trust Partners for growth
Adding employees increases capacity, but it also increases management overhead and fixed costs — not to mention it can also dilute founders’ equity. The high-growth companies we work with often use best-of-breed contract services — from legal and accounting, to marketing and international sales expansion. They keep their core team lean and focused on developing a core product value and customer service, and they leverage a network of specialized partners that are highly qualified and can provide the flexibility to grow and adapt to an ever changing environment.If you manage a high-growth company, we want to talk to you. Since 2003, SFE has lead successful international sales and distribution growth for more than 200 clients into Europe and other expansion markets.
CEO & Founder