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02. Making and selling something
Congratulations. You’ve managed to get a tonne of money for your firm. This. Firm. Is. On. Fire 🔥
Post-Funding You (Source: Breaking Bad GIPHY)
Now you need to make a proof of concept, which means we’re finally on to the fun part.
How do you go about making something? (Side note: as with every topic in this Handbook, there are A LOT of materials out there. The urtext is probably , which was enormously influential and still is. Much of what follows is very influenced by that. Also, the advice will change as you get to later stages.)
Why have we combined making with selling? Because, there’s a constant back and forth between the two. Every time you make something, it is for somebody. Having sales in your mind when you make your product is a wonderful discipline, and will really help your product. But, at the same time, too much focus on sales is to my mind not right. You’re a founder. Make something! Be bold. Think of sales perhaps as a speedometer — it tells you how the engine is going, and how fast. Build the car.
Making your first product/prototype
How do you do that?
Start by making something small and simple that allows you to get punched in the face by the market as quickly as you can. There is nothing like seeing a user use the thing you’ve made. Nothing.
A Product/Prototype in three steps
1. Define the problem: Start by identifying a problem or need in the market your product can address. Why would people use this? Can you make it even simpler?
Step 1: Define the problem
2. Who wants this thing?: There are two ways to do this:
One is to determine your target audience. Who are the people most likely to benefit? Then create user personas, which are fictional characters representing your ideal customers. Understand their demographics, behaviours, motivations, needs, taste, where they hang out, where they will see your stuff etc. This will help you design a product. Promise.
OR
Think about what made you start your startup. What was the problem you were trying to fix? How would you solve that for you as the first user? Then, what parts of your usage function would be different for other people?
3. Take the first step: What’s the smallest possible thing you can do to fix this problem? If you can solve it right now, then go make it. If not, brainstorm/talk to friends time. Alternatively, think about what your users will use first of the whole vision, and make that first step product.
Like most founders, at this point you are likely to say: “this hasn’t been done before”.
Hooray! That’s really cool. But here is the tricky thing with disruptions—they’re an extremely delicate balancing act.
When they fall apart it’s usually for one of three reasons:
1. You focus on making one amazing thing but forget it has to be part of a single, fluid experience. So you ignore the million little details that aren’t as exciting to build—especially for V1—and end up with a neat little demo that doesn’t actually fit into anyone’s life. The way around this is to talk to customers, but you probably don’t have them yet. If that’s the case, ask yourself: what would I need to use this every day? Then work backwards from there.
2. Conversely, you start with a big goal but pivot because the technology is too difficult or too costly or doesn’t work well enough. So you execute beautifully on everything else but the one thing that would have differentiated your product withers away. This is also a fine line: pivoting can be good. But don’t lose sight of what makes you special…
3. Or you change too many things too fast and regular people can’t recognize or understand what you’ve made. You can change the motor, change the dash—but it still has to look like a car. You can’t push people too far outside their mental model. Not at first.
It's fine to change but make sure your audience still recognises what the product is (Source: lilfuchs GIPHY)
Getting to Market
The go-to-market section of a pitch is often the most underdeveloped section for an early-stage company. You have to show how you will acquire customers, and how the business model supports customer acquisition profitably.
“First time founders are obsessed with product. Second time founders are obsessed with distribution”
As you’re going through the first steps of product/prototype making I’ve outlined above, you will be going to market at some level automatically, which is ace. It’s the next question that’s difficult.
How will you get lots of users / businesses using what you’ve made?
You’ve probably thought about this during fundraising. But you didn’t have the ability to test. Now it’s time to go back to it in much more detail.)
This can be approached a bunch of ways, but a good way is to use your product to figure this out, which is called “product-led marketing”.
Why? Because the next steps on product development and getting to market are pretty similar. (Full disclosure: I’m not very good at this step, but please do read this so you can learn from my mistakes).
Product-led Marketing
1. Value proposition: Define a clear and compelling value proposition for your product. Identify the unique benefits and advantages it offers compared to existing solutions in the market. This will help differentiate your product and attract customers. It will also help you sell!
2. Minimal Viable Product (MVP): What are the fundamental features and functionality? What is the thing that will help you realise you have a good idea if people like it? What is the simplest, most cost-effective, and easiest way to get it in front of somebody to test?
3. User testing and feedback: Engage with your target audience and potential customers to gather feedback. Again, lots of different ways to do this, but the main one is simple: talk to users or potential users (and understand that these are not always the same thing as buyers, but they’re at least very close).
4. What part of this is scalable?: Are there other people doing this? This helps your product and your marketing and sales strategies — it will remind you of what makes you different, and then you can figure out how to get paid for it.
Note that there are MANY opinions on this.
The classic way to do it is as I’ve put up front, to make a MVP and then iterate. That has some real advantages from the perspective of getting lots of feedback that will point you in the right direction. But it may violate also what I’ve said above about making something that you believe in.
There is no right or wrong here. Rather, it’s perhaps easiest to think of it as a spectrum, from product discovery to finished final masterpiece, Steve Jobs every detail done shiny.
Where to sit on that spectrum? Wherever keeps you in the game. Remember the only rule: don’t die. Keep building. Don’t stop. If you think you’re too discouraged to keep talking to people about your product, slip back into silent mode and build with what you’ve got. Conversely, if something is selling, don’t stop. There’s a tendency with deep tech founders to focus on technical debt, or on building the perfect stack (we talk more about this in future chapters). I say a dead startup has no technical debt. Build then fix.
A few pointers on user testing and feedback
Talking to people can be a bit tricky, so we dive into it in detail in the next section. For now, here’s a good starting point from (an OG Apple product lead):
You don’t have to come in perfectly polished for a first meeting. You can say, “I’d like to give you an early look at this. Maybe it would be of interest to you. I’d love to get your comments on it.” Listen to their feedback and learn from it. You don’t have to take every word of advice or criticism, but you should understand the reasons behind it and adjust accordingly.
Then, you can go back to your sales strategies. Are you planning to build a direct, outside sales force, and can the average selling price of your product support this go-to-market? Or are you planning to acquire customers through brand marketing or other online forms of acquisition? If so, how do you think about the costs of such activities relative to the lifetime value of a customer?
This is when investors are useful. Walking VCs through your go-to-market strategy is from their perspective a great way to show them how your mind works and how deeply you understand your audience/ customer acquisition costs. For you, it’s a free swing. Use them to figure out what you might be getting wrong. But please, remember — the only thing that matters is talking to your customers.
Talking to your customers
It is difficult to underemphasise how important this is. If in doubt, talk to users could form the best single piece of advice in this handbook.
Here are some sample questions you can ask customers to gather valuable insights and help achieve product-market fit:
In the best case 40%+ of your customers will feel like this if your product is gone (Source: Sesame Street GIPHY)
Selling
Whether you like it or not, the second you start a company, you are first and foremost a salesperson. This is not a matter of like or dislike; alas, we must sell.
This is also intimately linked with making your product.
Part of doing sales well is understanding yourself. While there are a lot of different types of sales models, what seems to be the most important — but generally unspoken — factor is that you as a founder should sell the story of what you are doing well, and speak about it with passion and enthusiasm.
I’m going to pause here: sales in this way can really boost your self-belief. There will be very few people along the way who will tell you that you are good enough, but there will be lots of people who will tell you that you aren’t. So the wonder of not only setting a vision, then a product, and finally having someone pay you money for it is an unexpected, but very pleasant, byproduct.
POV: Your future customers (Source: Futurama GIPHY)
Different types of sales models
Here are some common sales models used by startups:
Types of clients
Another unspoken benefit in refining your sales model is that you get better at figuring out customers. Determining which ones are likely to be easiest to convert, most profitable to service, and the least hassle to support, will speed up your sales enormously.
Find someone who will look at your product like this (Source: Jumanji GIPHY)
Friendly reminder: as with everything in this handbook, there is no perfect answer. The best client is the one who pays you to make your product better in a scaleable way. These… can be hard to find!
But some types of clients that work well with early-stage startups are:
🏘️ People from your community
This is the easiest group to start with because this group of people already understand what you do. They are convenient for you from an identification perspective (as it’s likely you already know them). And from a sales perspective they’re not likely to need reference customers, high-quality printed collateral, or other things that might slow you down.
🌅 Early adopters
Whatever you’re selling, whether it’s consulting services, software, or a physical product, you want to sell it to someone who has bought similar things before. They know the value proposition and they know how to work their internal decision-making processes to successfully purchase the thing.
By ‘Early adopter’ I’m talking about someone who, for whatever quirk of personality, is comfortable using products before their friends or colleagues are. They were likely on the internet first among their peers. They switch phones the day the new model comes out. They positively enjoy trying new software and are always on the lookout for new useful things.
❌ You DO NOT want to be someone’s first rodeo; they may give you very unrealistic signals with regards to how close their organisation is to making a purchase, they may not be able to properly value your offering, and it’s very likely they will be a difficult customer to onboard and service.
More importantly, early adopters will keep you in the game. You won’t feel like they’re exploiting your tech or taking your time. Rather, you’ll feel like you are on the same path. That’s what makes these clients great — they help you build in a whole bunch of ways.
How do you identify early adopters?
People who are early or reference customers of firms who aren’t competitors, but are laterally positioned relative to you.
For example, if you sell invoicing software for web development firms, look for firms which use project management tools made by startups. (You can often find customers mentioned on a company’s website.) This lets you dodge a major objection to going with a new company, because they’ve done it before.
You can also look at hangouts for early adopters, like Product Hunt or Y Combinator forums and find members who are likely to be in the industry.
People who can make purchase decisions 💸
You want to rigorously qualify prospects to find ones where people will actually pay you money.
The classic startup advice is to find a single decision maker who can green-light the adoption of your offering out of their discretionary budget. Ha! How easy is sales?!
Unsurprisingly, it rarely works like that. Plus, in the ideal world, your conversations don’t exactly go “so, can you independently decide to buy your thing?”.
But, and this is a big but, you have to ask! That. Is. Sales. Moreover, when you grow (and you will. You got this.) you will need to hire sales people. How do you tell who is a good sales person? Because they can ask this question, and give you the answer.
How do you identify decision-making power and readily available budget?
Before you have conversations, you’ll use some heuristics - i.e. mental shortcuts.
A simple heuristic to find decision makers is that business owners at small businesses typically have total discretionary authority and are still intimately involved in many significant purchases; this makes them a good point of entry for products costing $50 to $50,000.
That can be your hypothesis A. Now test! (This also has the advantage of feeling less sales-y, which is great.)
The other advantage of this is that you instantly get feedback. Even if they’re not going to use the thing, they can make the decision to adopt you and become your champion. Then, you can ask much more frankly what might make them buy the thing, and why they liked you in the first place. Gold.
Creating your sales engine
The true purpose of sales is to create value for customers.
This is why we’ve gone through everything above to try and get you started. Let us be frank: it is really hard for a startup or growth company addressing a new market or trying to solve a complex problem — which, given this is a book for deep tech, is pretty much well you.
But, ‘cos you’re awesome, you’ve figured it out. You’ve made something, figured out who will pay for it, gotten it to them and they’ve paid you money.
First… Take a bow. Can we get a hell yeah?!!!
Now, the final step. You’ve got to build a stack that systematises this. That means figuring out which parts of your product people are buying, finding what’s the juiciest part of your clientele that buys them (ie: the ones where you think there’s most likely to be the most cash for the part of your product you’ve identified as being the most valuable), and then systematising how you did it in the first place.
Basically, this is why enterprise/SaaS sales require a well-developed process with guidelines - because the market hasn’t been established yet. Our first job is to go out there and show folks a different but better way of doing business that uses tech. Our second job is to write it down and hire others to do it for us.
To do that, I am going to recommend first some structured questions and a checklist.
Sales Process Checklist
The goal here is to create a scaleable and repeatable sales process, a good framework to consider is or MEDDPICC.
✅ Metrics: These are quantifiable measurements of how your product or service benefits a prospect's business. It includes before-and-after examples of how your company has accomplished similar objectives for other customers.
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