Simple Startup Math

Neil HartleyValue Creation JourneyLeave a Comment

a pen and mathematical equations

My thanks to ex-colleague Greg Head for highlighting the often missing simple startup math in startup investor pre-pitches. He’s highlighting companies that are (generally) pre-revenue but who are articulating making it big without a supporting plan.

Startup Valuation Curve

On the valuation curve, he’s talking about businesses effectively at time zero and asking the questions:

  1. How are you going to get your first customer wins? (Founder-led sales.)
  2. How are you going to develop a predictable sales process? (Pathfinder sales.)
  3. How are you going to scale from there? (Playbook sales.)

Those are my words and a summary of an article that is well worth reading. Greg also makes the great point that the answers to these questions should be known regardless of whether investment is being sought are not.

Here at The Right Five, we’re all about ensuring you get that first Sales hire right, the first time. The Pathfinder salesperson is an essential part of the overall plan Greg was articulating in transitioning from founder-lead sales through to scale-up.

Of course, you need to complete the first stage first in proving that your product works, solves a problem in the market and that somebody will pay for it. There is a strong temptation for Founders to shy away from selling their own product but, as uncomfortable as it may feel, this is an essential step. Some Founders look to hire a commission-only salesperson as a workaround for this discomfort. We previously covered why hiring a commission-only salesperson is a bad idea.

When you’re at the point of hiring your first salesperson, recognising that you need to hire a Pathfinder salesperson is an excellent starting point. Of course, we can automate this process – it’s what we do – but recognising the role of your first Sales hire is the first step in avoiding the 7 common mistakes in making your first Sales hire.

Other dynamics at play when hiring your Pathfinder include the scarcity of resource brought on by the Great Resignation and how you should react to that – make it easy and grab what you can, or make it hard and hold out for the person you know can do the job.

In terms of the scarcity of resource, playing to your strengths is best. As a Founder, like most of us, you’ve likely had a regular job with Big Tech Inc. and I would contend that the Great Resignation started with people giving up on their big company careers in favor of more personal freedom, autonomy and purpose. Your strength is your agility so flaunt it!

Accepting second best for any position is at best an anchor on the growth of your business, at worst it is an existential threat. Getting your first Sales hire wrong will be worse than a dragging anchor for sure. Don’t make the hiring process easy for them, make it hard. This comes with advantages beyond those of getting the right salesperson into the market quickly and includes the increased commitment your Pathfinder will have to the decision they have made to join you and your business. Ultimately, the right people don’t mind hard, but they sure don’t like being ghosted at the end of a rigorous process.

Understanding how you’re going to get through the valuation/growth curve is essential, and it’s not as difficult as you may think. Certainly, for your first Sales hire, we have you covered. The Right Five to get the right one.

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