This post is the fifth in a series titled “The Chronicles of 500: Weekly Essays on What I Learned from 500 Startups.” Andy is currently the CEO at LaunchGram.
In the 1992 film, Glengarry Glen Ross, Alec Baldwin delivered an absolutely epic sales speech. The speech leaves viewers unable to forget Baldwin’s point: “Always be closing!” But it isn’t just about closing. In order to close, you first have to open.
Good salespeople know that they always have to keep their ‘pipeline’ or ‘funnel’ full. A pipeline works by filling the top with as many people as possible, and then filtering them down to buyers. Adding people to the top is called ‘opening,’ and getting sales is called ‘closing.’
This isn’t just about sales though. When you’re starting a company, you need all kinds of funnels.
You need funnels of potential co-founders, investors, customers, and hires. They don’t all come at once, so you have to grind. This is what it means to build a network. As a CEO, “non-technical” founder, or businessperson, your technical skill is knowing a boatload of people.
A lot of the skills you need for each funnel overlap, but I’ve added a few notes and comments I think are important for each type below:
This is the earliest place entrepreneurs fail. They either don’t have developers, designers, and business development people in their back pocket to call on, or they have the wrong ones and things go all kinds of terrible.
Something I think business people forget a lot is that developers and designers make great friends, and great friends can turn into great co-founders, too.
The mistake I see the most with first time entrepreneurs, and one I’ve personally made, is waiting until they’re strapped for cash to start talking to investors. Mark Suster talks about how he invests in lines, not dots. The TL;DR (too long, didn’t read) is that investors don’t like to write a check after one meeting. They like to get to know you and see how you perform over time. That gives them the ability to make a more informed decision on how you’ll perform in the future.
In a recent book called, The Defining Decade: Why Your Twenties Matter, author Meg Jay calls this building “Identity Capital.” She describes it as, “the currency we use to metaphorically purchase jobs and relationships and other things we want.” In this case, every entrepreneur needs to be building “Identity Capital” with investors they’d like to get checks from well before they ask for them.
Customers are a lot like investors. You need to talk to as many of them as possible, as early as possible. Even if you aren’t ready to sell them something, get to know decision makers in your industry, gain their trust, and drink a beer with them. It’s the least you can do.
Another great point from Jay’s book is about what she calls “weak ties.” The gist is: “as we look for jobs or relationships or opportunities of any kind, it is the people we know the least well who will be the most transformative.”
It might not be immediately apparent to you why you should know advertising executives in New York City, the CTO of a large medical software company, or a CMO you ran into at a conference. Some time down the road, however, you might look back and wish you knew someone in some space. Avoid this; minimize your risk by building an extensive network early.
If you’re lucky enough to find yourself looking to hire additional employees, you’re going to need a large pool of talent to draw from. If you’re starting a web-based business, how many developers do you know that code in the language your product is built in? How many A-level sales guys in from your industry do you know? How many graphic and interaction designers do you source feedback on your product from?
Creating a company can be all-consuming, and it’s easy to find yourself buried and not socializing. Getting out and meeting people from different backgrounds and varied skill sets is vital to your ability to grow your team. Build out a diverse network of talented people, so when you need to hire, you can.
The ability to close is essential to professional growth; there’s no arguing that. But you need to make sure the co-founders you bring on, the investors you get into bed with, the customers you tie yourself to, and the employees you bring on to build with you are worth the effort. The only way to do that is to meet and get to know scores of people from a wide variety of backgrounds.
The only way to do that is to always be opening.
My buddy, Jason Evanish, recently wrote a blog post on “The Defining Decade: Why Your Twenties Matter” that took off on Hacker News. Read it here.
As for hiring, Mark Suster has several great posts I highly recommend here.