Why This Company Didn't Invest in an Overpaid Sales Tea…


Having cut my teeth in Silicon Valley during the first dot-com gold rush, I saw firsthand how so many VC-backed startups grew fast — and fizzled out quickly. Instead of investing heavily in building an outstanding product and limiting the spend on sales, many VCs convinced the founders to recruit the best relationship builders money could buy, overspend on fancy headquarters and quickly layer in several management tiers. This overspending would then compensate for their lackluster products.

Related: 4 Tips to Growing a Multimillion-Dollar Business With Zero Debt and No Investors

We’ve built PowerInbox with a completely different approach, fueled by the passionate belief that great products sell themselves. Rather than spending big bucks on hired guns, we’ve tapped into our founders’ expertise to take on the sales role, and it’s made all the difference for our customers. Instead of adding CROs, CSOs, SVPs and a huge marketing team to our roster, we’ve added outstanding features and functionality to our product that deliver on our customers’ needs.

And while others have built glass towers in the trendiest locations to house their elite team, we’ve taken a decidedly more grounded approach. No glitzy HQ. No opulent conference facilities. No in-house café or relaxation rooms. Just a nimble, globally dispersed, highly responsive team that’s ready to serve our customers anywhere, anytime, at a moment’s notice. Sure, we’ve had some strange looks when we tell customers we don’t have a corporate HQ. But, no one makes a buying decision based on the view from your office suite — they just want an outstanding product that serves their needs.

Thanks to today’s technological environment, the barriers to delivering and scaling a minimum viable product (MVP) have come down significantly. And, rather than invest heavily in building a company, we’ve found that the smarter strategy is to invest in building a product that satisfies our customers’ needs. By spending strategically on R&D to deliver a solution that brings value for the customer, it’s entirely possible to build a company without a headquarters, without relinquishing control to venture investors, and without a huge and expensive sales team. Here’s how:

1. Focus on building the product your customers need.

Creating a proof of concept or MVP should take only two or three people if they’re focused on the customers’ needs. Rather than building out a ton of features right away, start simple to deliver faster and gather customer feedback, then iterate and build out what and when it adds value for the customer. This can significantly reduce the upfront development costs and get your product in front of the customer sooner, where it can start earning revenue.

Related: Eric Ries on 4 Common Misconceptions About Lean Startup

2. Turn your product team into a go-to-market team and sell by referrals.

Too often in big capital raises, I see companies invest a little in their product and a lot on go-to-market (GTM) teams. This results in a mediocre product with development needs that get obfuscated by a big sales team. Instead, leverage the team who built it to sell it. In our case at PowerInbox, that GTM team was a shared responsibility between myself, our head of product and one other individual. We delivered value to the customer, which resulted in references and referrals that connected us to the next sale.

3. Scale staff only when the need is clear.

A lot of companies looking to grow will base their staffing needs on a revenue target model: If a single sales rep can bring in X amount of revenue, and they need to generate 5X more revenue, then they’ll hire five more reps with the corresponding support staff. That’s conjecture, and forecasting based on assumptions. Instead, only add new staff when you can clearly demonstrate how it will directly expand your ability to bring on new business. Make sure your existing staff is working as efficiently as possible and challenge them to deliver at their fullest potential. At PowerInbox, this approach has allowed us to operate at a much higher revenue run rate with a much smaller staff compared to our peers.

Related: 4 Things Your Company Can Do Without When Starting Up

4. Don’t waste money on an HQ.

The conventional argument for an operations HQ is primarily collaboration: Managers need to see their employees daily to discuss goals, provide coaching and oversee their progress. But, the reality is that technology makes this cost unnecessary. There are plenty of tools that enable our entire team to work remotely, check-in frequently with managers and collaborate from their own homes. We use cloud-based tools that make it easy to basically plug in a laptop anywhere and be productive.

And, because we deal with so many people across multiple time zones, meeting time is at a premium. That means we avoid the typical recurring “status meetings” that mostly just waste time anyway. When we do get together, it’s for a valid reason, extremely productive and to the point. We’re incredibly more efficient this way and the less time and money we waste, the more we can invest in growing our bottom line.

Related: How I Stopped Hustling and Started Succeeding

5. Encourage team-building outside of the office.

When you don’t see each other in person every day, there is a risk that you might lose a bit of the connection and rapport that are so critical for successful teammates. But, rather than force them into work-related meetings, instead we encourage our team to get together for dinner or group activities outside the office. This does more to build relationships, encourage communication and foster accountability than a weekly huddle around a conference table in an over-priced office space.

6. Hire smart.

This kind of flexible environment isn’t for everyone. Working remotely requires discipline and drive, and even the most skilled employee may not be suitable for the commitment it requires. In our company, I don’t know when someone comes to work or how many hours they log. But, I do know how they perform, and that’s what matters most. Here, our staff leans a bit older than is probably typical for high-tech startups in our space. But, our seasoned staff doesn’t need us to waste time managing their time. They hold each other accountable on their outcomes, which is what really matters for growth.

Related: How I Built an $18 Million Company With No VC Funding – and How You Can Too

7. Go after small capital investment.

For some entrepreneurs, nailing down a huge venture round is in itself an indication of success. The problem is that large investments come with larger expectations. Bigger raises have bigger exits and typically less control for the founder. Instead, raise smaller amounts early to gain traction and manage expectations. In order to stay lean and nimble, take as little outside funding as possible — just enough that fits with your model. You’ll maintain more control and your sanity.

You’re probably thinking, “But, how will we gain traction in the market with a small sales and marketing budget and no corporate machine behind us?” While it’s true that news about big investments, new hires and company expansions garners headlines and earns the big spenders name recognition, the question becomes just how sustainable is that strategy? As a buyer of technology, I’d sooner bet on a lean company with a winning product than a bigger company that’s burning through money, reliant on VCs and has minimal control over its future.

For leaner, nimble startups, the goal must be to set yourself apart with a superior product at an attractive price point so that customers recognize you for what your product can deliver for them, not because you’re good at chest-beating. The quicker you can get to profitability, the more control you have over your future and the more likely that growth will continue.

Related Video: What You Can Learn From This Serial CEO

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