Twenty odd years ago, as I launched my first startup, Mark Leslie taught me over lunch how not to blow it. "The number one reason a startup fails is ramping the sales team too soon," he said. And it is still etched in my mind. Since then, he refined the idea and published it as a paper in the Harvard Business Review.
Am reminded of Leslie's thesis now as Bitglass sees a steady stream of enterprises who are unable to deploy the CASB they purchased from competitors. An oil company, healthcare system, credit card issuer, top 5 bank, audit giant, a chemical company... And that was just in the past two weeks. And just one competitor. What is going on?
When you ramp your sales team too soon, the company does not have time to make the adjustments needed to be successful. Companies are essentially organisms that live to solve a problem at the customer, and many things need to evolve along the way to building a thriving organism. For example, the initial product may not be interoperable with other infrastructure. A buggy product might demo great in the sales process, but not be deployable at any scale. Sell and forget cannot build a company.
When a startup scales the sales team too soon, engineers get stretched thin trying to fix too many bugs all at once. The support team burns out. Then customers get burned. And then the sales people burn out. By which time the cash burns out too.
As the saying goes, "at first they went out of business slowly, and then they went out of business suddenly."