The Founder's First Role: Salesperson
In the infancy of an energy software company, the founder is inevitably the first salesperson. Selling not just a product, but a vision, is what secures that crucial initial funding and customer base. It's a stage full of promise, driven by passion. As one founder and CEO bragged that even after raising a large Series B round, he was still the best salesperson due to his relationships and ability to go through the backdoors on key prospects. But is this a good thing?
The Scaling Challenge: CEO's Role Transition
As the company grows, the ability of the CEO to distill this vision into a scalable and repeatable sales playbook becomes critical. This transition is where many stumble, unable to move beyond the personal touch that marked their early success. The company starts to show growing pains including:
- Reliance on Relationships: A heavy dependence on personal networks over systematic sales processes.
- Quota Misses: Sales teams struggling to meet targets, indicating possible misalignment with market needs.
- Inconsistent Sales: Erratic revenue streams and last-minute deals rather than steady growth.
- Heavy Discounting: The need to significantly lower prices to close deals, impacting profitability.
The Founder and CEO is on the clock and doesn’t even know it
I cannot tell you how many times the board which are made up of your largest investors start to talk about a change (Removing the CEO) amongst themselves long before it is evident in the board room. While a CEO may think hitting the wall is a normal event, the investors are looking for value creation. And buyers, especially strategic acquirers, are going to value your company based upon your predictable processes and quality of earnings, not the CEO’s ability to land sales as noted in our previous blogs.
Leveraging Wisdom from 'Small Giants'
I had the pleasure of meeting Bo Burlingham numerous times during my start-up ventures. He wrote a great book called "Small Giants, Companies that Choose to Be Great Instead of Big.” He gives a lot of learnings on how to be the best at one thing, but the capital structure is usually in the hands of one person. In other words, he describes very successful “lifestyle” businesses that do not need to build process to scale but instead develop a product and/or service that is hard to compete against. Unfortunately, you have already raised external capital and now have a natural conflict of interest regarding the business plan. You cannot stay small and be great. You have only one path: scale.
Growth Is a Huge Cash Drain: The Investor's Dilemma
In the tumultuous journey of a SaaS startup, growth often comes at a steep cost, where the lifeblood of the company isn't sustained by revenue but by the cash injections from investors. As elucidated by the accompanying graphs, the first chart starkly portrays the unsettling reality of negative operating cash flow over a two-year period.
This depiction unveils the reliance on external funding to fuel expansion initiatives, underscoring the critical role investors play in keeping the company afloat. Meanwhile, the second graph unveils a sobering trajectory of the bank balance, descending from an initial high to a precarious low.
This precipitous decline not only highlights the imperative for aggressive sales targets but also underscores the unyielding pressure faced by startups to deliver results. Failure to meet these lofty expectations can lead to dire consequences, as investors, driven by the uncompromising pursuit of returns, may swiftly withdraw support. Consequently, the imperative to develop a robust sales process becomes non-negotiable, serving as the linchpin for survival and success in the competitive SaaS landscape.
In conclusion, CEOs of B2B SaaS companies in the energy sector must recognize the urgent need to shift focus towards developing a sales playbook and process that is both repeatable and predictable. It's not enough to rely solely on personal charisma or past successes. Instead, CEOs must strategically hire and build a sales team behind a structured framework that can scale with the company's growth trajectory. This proactive approach is not just about survival; it's about positioning the company for long-term success, maximizing valuation, and ultimately achieving strategic exits. The time to act is now, as the clock is ticking, and investors are scrutinizing the company's ability to deliver predictable results.
If you want to learn how to move from CEO led sales to a process, reach out to us at maximize@MOICPartners.com
