In a recently published ebook on The 7 Deadly Sins of US Market Entry, we called out Team as the seventh and last of the Seven Deadly Sins. In this article, we will elaborate further:
“Companies cannot outsource the job of figuring out the market and getting to a repeatable, profitable and scalable sales model. This will usually require the presence of one or two founders in country. “Hiring a sales guy” before you figure out the market almost always goes wrong. The right people to figure out the market and the sales strategy are the founders. Sales guys - and channel partners - come later. They execute on a proven strategy.”
Venture Capital - Blessing or Curse?
Venture capital is a blessing – it let’s you do things faster. And venture capital is a curse – it let’s you do things faster. Faster than you are ready to.
One of the worst things you can do with venture capital is to build a team before you have figured out what game you're playing. As an international company, when you set out to enter the US market, you will have to revisit some of the territory you may already have completed in your home market. Lets recap on the phases you need to plan for a B2B Startup.
What are the Fundamental Market Entry Phases?
1. The Search for Product Market Fit
What is the problem you are solving, does it actually work, and will someone pay? You already did this at home, but unfortunately, now you have to do it again. Because it may be different. Product Market Fit means finding one customer, one use case, one value proposition that will work over and over again.
Most companies we have worked with have not done this. Not even in their home market. Even companies doing two or three million dollars in annual recurring revenue have not done this. In the US, it is crucial.
2. The Search for a Sales Model.
What sales model will enable you to find that one kind of customer prospect over and over again and take that prospect through a consistent set of steps (sales funnel) that will yield a predictable result (happy customer).
3. Scaling the Model
How can you scale that model to get many happy customers?
Too many companies think they can stay in their home country and outsource phases (1) and (2) above to “a sales guy”, “a partner”, “a distributor”, “an agency” or similar, and leave it to them to solve the customer and sales riddle. That doesn’t work.
Figure out the game. Then hire the players.
Before you bring in someone from the outside to sell, you need to figure out the fundamentals above: Who is the customer, what is the value proposition, how much will the customer pay and what is the repeatable process that will turn the right kind of prospects into the right kind of customers. This is what is mean by “Figuring Out the Game”.
If you don’t know the game, there is a huge risk that you will recruit the wrong players – no matter how talented. LeBron James is an amazing basketball player. Given the rules of basketball, no one does it better. That doesn’t mean he would be the ideal guy for your ice hockey team. Coming to the US, you are likely to “pivot” in the early stages. Each time you pivot, the “game changes”. The founders need to figure it out.
“Figuring Out the Game” is a challenging process. It takes time, it is painful, and for a long time, it offers few or no rewards. That is a job description for “owners”, not players. The founders need to figure out the rules before they can determine who to hire. When you hire a sales team before “Figuring Out the Game”, bad things happen.
My Battle Scars
Unfortunately, I am the owner of some personal battle scars I got while learning this lesson. At one of my startups, we had successfully raised venture capital. We were rapidly spending that capital to build a product no one really needed. We were not aware of that fact at the time. As the product was nearing beta, we proceeded to the next step: hiring a sales team to sell it.
We recruited a “hired gun” sales VP from a bigger company, and that VP went ahead and did what sales VPs do. He hired more sales guys. With a team of sales guys to sell a product no one really needed, we proceeded to burn through a ton of cash. We had recruited the team before figuring out the game. That was an expensive mistake.
Steps you must make before you build your international team
- Figure out our ONE IDEAL CLIENT PROFILE (ICP)
- Figure out the SINGLE USE CASE we would focus on
- Proving that our ideal client demographic would pay
- Figuring out the best way to find and sell repeatedly to that one demographic
- Hiring one or two external sales people who are a good fit for that particular sales model (e.g. know the demographic, the industry dynamics, the business problem)
- Scaling that later with additional sales people
Remember. Figure out the game. Then hire the players
Interested to learn more?
Download our FREE ebook “7 Deadly Sins to Avoid When Entering the US Market.” DOWNLOAD NOW
