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They have some unmet needs, they = meet you and share how painful they are. You decide to build something and = then what? Most founders I talk to don=E2=80=99t go back to everyone they d= id customer development meetings with and ask if they want to try it out. W= hy? Because they believe =E2=80=9Cthat=E2=80=99s sales=E2=80=99 job=E2=80= =9D. It really isn=E2=80=99t. I=E2=80=99d argue that until you=E2=80=99ve c= losed $1m in revenue there is still valuable information that you=E2=80=99r= e learning from every customer and prospect interaction that=E2=80=99s maki= ng the product better. It=E2=80=99s rare that you get it 100% completely ri= ght on the first try so you need to collect feedback, see what people love,= and what they do(n=E2=80=99t) want to buy. Adding someone, like a salesper= son, in between you and the end customer is like buying expensive audiophil= e headphones and then putting a piece of wood between them and your ears. Y= ou can still hear but it=E2=80=99s not quite as clear as if you were listen= ing yourself. I mean no shade against salespeople, I still think of myself = as one, it=E2=80=99s just that every layer of people between you and the so= urce reduces the fidelity of the information. At the early stage of finding= product market fit, you cannot afford to miss a thing, you must be Aerosmi= th:=C2=A0 =E2=80=9CDon't wanna close my eyes I don't wanna fall asleep 'Cause I'd miss you, babe* And I don't wanna miss a thing 'Cause even when I dream of you (Even when I dream) The sweetest dream would never do I'd still miss you, babe* And I don't wanna miss a thing=E2=80=9C =E2=80=94 _Aerosmith (__I Don=E2=80= =99t Want to Miss a Thing)_ _*I don=E2=80=99t recommend calling your customer=E2=80=99s babe, it=E2=80= =99s just the song that got stuck in my head while I was writing this part.= =C2=A0_ I=E2=80=99ve started thinking of this =E2=80=9Cstage=E2=80=9D in the startu= p journey as the Product Motion, the goal is to find unmet needs, build a w= ay of solving them, and see if what you built is good enough for people to = part with some money for it. A startup graduates from a Product Motion when= they=E2=80=99ve closed $1m in revenue and moves to the Go To Market Motion= . This is the point where most can clearly articulate your three hypotheses= : targeting, messaging, and need. If you want a handy way of mapping out al= l your different hypotheses, feel free to borrow our MarketFit Matrix ([goo= gle sheet link](https://docs.google.com/spreadsheets/d/1sutqM9Rs3gzgsu2BtNR= 80KoAO-ejpQzx93ir_tpxXPY/edit#gid=3D1373947426)). It=E2=80=99s also the poi= nt where you are likely to have good metrics on your current funnel. Compan= ies with strong product market fit will have funnels where you put 1 custom= er in and 1.2 customers come out (because everyone sticks and 20% of custom= ers produce a referral).=C2=A0 Many founders feel like they can offload sales, or even outsource it, befor= e they hit the $1m mark because they have better things to do or believe a = professional salesperson will be able to outperform them. First, there is n= othing more important at this stage than getting as much market feedback as= you possibly can. How do you know which features to build without feedback= from actual customers and prospects? Second, as the founder responsible fo= r finding the unmet needs, you are an expert on the problem space. Chances = are, most people that are experiencing the problem are doing so for the fir= st time. If you=E2=80=99ve done say 50 customer development interviews, you= =E2=80=99ve seen 50 different instances of how people are struggling with a= nd solving the problem before your solution existed. There is nobody else i= n your company that can understand and empathize with customers better than= you. You don=E2=80=99t need to know sales to be good at sales if you under= stand the problem space well. The value that being a professional salespers= on will bring is reducing the number of deals you=E2=80=99ll lose because y= ou didn=E2=80=99t follow a perfect process.=C2=A0 Everything in an early startup is about tradeoffs. Hiring a salesperson wil= l free up your time and reduce the deals you=E2=80=99ll lose because you fo= rgot to follow the process. The tradeoff is a reduction in the fidelity of = information you=E2=80=99re getting from your customers. Imagine a race wher= e you don=E2=80=99t know where you=E2=80=99re going. What=E2=80=99s more im= portant, speed or information about where the finish line is? Hanging onto = the sales role will give you more information while offloading it will impr= ove your speed. There is no right or wrong answer, it=E2=80=99s all about t= iming. Is now the right time to trade off information for speed? That=E2=80= =99s a question only you can answer. I made the trade around the $1m mark a= nd it felt about right. We were able to hire a sales rep, train them on a s= omewhat repeatable process, and let her run with things. I offer numbers to= help you understand what worked for me and what I=E2=80=99ve seen but plea= se don=E2=80=99t take them as carved in stone. They=E2=80=99re meant to be = helpful guideposts, you might have a good reason for making the tradeoff ea= rlier or later. Startups are messy and no journey is the same.=C2=A0 What revenue milestone did you hand off revenue to someone else? Who was yo= ur first hire?=C2=A0 Collin=C2=A0 PS - My first hire was an AE because we had a very strong top of funnel (~4= 0-60 meetings a month). If I didn=E2=80=99t have that luxury, I would have = started with someone in marketing or sales development to help build up dem= and so I could keep closing. I was having this conversation with a mentor o= f mine, Lars Nilsson, and he strongly recommended starting with a content m= arketing hire, then 2 BDRs, an AE, and then a CS rep. In that order. You ca= n read more about Lars=E2=80=99 approach here ([link to SaaStr blog](https:= //www.saastr.com/your-first-5-sales-hires-to-jumpstart-pipeline-generation/= )).=C2=A0 =E2=80=94=E2=80=94=E2=80=94 You are reading a plain text version of this post. For the best experience,= copy and paste this link in your browser to view the post online: https://predictablerevenue-newsletter.beehiiv.com/p/product-vs-revenue --e0f4bdb802008b48c51d97798db33c52ac47f04760ccb003bbdffd84e933 Content-Transfer-Encoding: quoted-printable Content-Type: text/html; charset=utf-8 Mime-Version: 1.0 <= meta name=3D"supported-color-schemes" content=3D"light"/>product vs = revenue product vs revenue

April 05, 2024   |   Read Online

product vs revenue

3D"fb" 3D"tw" 3D"in" 3D"email"
3D""
<= /tr><= tr>

Good morning Andrew,

You cannot separate product market fit from revenue, especially wh= en you think of it through the lens of a customer. They have some unmet nee= ds, they meet you and share how painful they are. You decide to build somet= hing and then what? Most founders I talk to don=E2=80=99t go back to everyo= ne they did customer development meetings with and ask if they want to try = it out. Why? Because they believe =E2=80=9Cthat=E2=80=99s sales=E2=80=99 jo= b=E2=80=9D. It really isn=E2=80=99t. I=E2=80=99d argue that until you=E2=80= =99ve closed $1m in revenue there is still valuable information that you=E2= =80=99re learning from every customer and prospect interaction that=E2=80= =99s making the product better. It=E2=80=99s rare that you get it 100% comp= letely right on the first try so you need to collect feedback, see what peo= ple love, and what they do(n=E2=80=99t) want to buy. Adding someone, like a= salesperson, in between you and the end customer is like buying expensive = audiophile headphones and then putting a piece of wood between them and you= r ears. You can still hear but it=E2=80=99s not quite as clear as if you we= re listening yourself. I mean no shade against salespeople, I still think o= f myself as one, it=E2=80=99s just that every layer of people between you a= nd the source reduces the fidelity of the information. At the early stage o= f finding product market fit, you cannot afford to miss a thing, you must b= e Aerosmith:=C2=A0

=

Don't wanna close my eyes
I don't wanna fall asleep
'Cause I'd miss you, babe*
And I don't wanna miss a t= hing
'Cause even when = I dream of you (Even when I dream)
The sweetest dream would never do
I'd still miss you, babe*
And I don't wanna miss a thing

&= nbsp;
A= erosmith (I Don=E2=80=99t Want to Miss a Thing)=

*I don=E2=80=99t recommen= d calling your customer=E2=80=99s babe, it=E2=80=99s just the song that got= stuck in my head while I was writing this part.=C2=A0

I= =E2=80=99ve started thinking of this =E2=80=9Cstage=E2=80=9D in the startup= journey as the Product Motion, the goal is to find unmet needs, build a wa= y of solving them, and see if what you built is good enough for people to p= art with some money for it. A startup graduates from a Product Motion when = they=E2=80=99ve closed $1m in revenue and moves to the Go To Market Motion.= This is the point where most can clearly articulate your three hypotheses:= targeting, messaging, and need. If you want a handy way of mapping out all= your different hypotheses, feel free to borrow our MarketFit Matrix (google sheet link<= span style=3D"color:rgb(44, 62, 80);">). It=E2=80=99s also the point where = you are likely to have good metrics on your current funnel. Companies with = strong product market fit will have funnels where you put 1 customer in and= 1.2 customers come out (because everyone sticks and 20% of customers produ= ce a referral).=C2=A0

Many founders feel like they can offloa= d sales, or even outsource it, before they hit the $1m mark because they ha= ve better things to do or believe a professional salesperson will be able t= o outperform them. First, there is nothing more important at this stage tha= n getting as much market feedback as you possibly can. How do you know whic= h features to build without feedback from actual customers and prospects? S= econd, as the founder responsible for finding the unmet needs, you are an e= xpert on the problem space. Chances are, most people that are experiencing = the problem are doing so for the first time. If you=E2=80=99ve done say 50 = customer development interviews, you=E2=80=99ve seen 50 different instances= of how people are struggling with and solving the problem before your solu= tion existed. There is nobody else in your company that can understand and = empathize with customers better than you. You don=E2=80=99t need to know sa= les to be good at sales if you understand the problem space well. The value= that being a professional salesperson will bring is reducing the number of= deals you=E2=80=99ll lose because you didn=E2=80=99t follow a perfect proc= ess.=C2=A0

Everything in an early startup is about tradeoffs.= Hiring a salesperson will free up your time and reduce the deals you=E2=80= =99ll lose because you forgot to follow the process. The tradeoff is a redu= ction in the fidelity of information you=E2=80=99re getting from your custo= mers. Imagine a race where you don=E2=80=99t know where you=E2=80=99re goin= g. What=E2=80=99s more important, speed or information about where the fini= sh line is? Hanging onto the sales role will give you more information whil= e offloading it will improve your speed. There is no right or wrong answer,= it=E2=80=99s all about timing. Is now the right time to trade off informat= ion for speed? That=E2=80=99s a question only you can answer. I made the tr= ade around the $1m mark and it felt about right. We were able to hire a sal= es rep, train them on a somewhat repeatable process, and let her run with t= hings. I offer numbers to help you understand what worked for me and what I= =E2=80=99ve seen but please don=E2=80=99t take them as carved in stone. The= y=E2=80=99re meant to be helpful guideposts, you might have a good reason f= or making the tradeoff earlier or later. Startups are messy and no journey = is the same.=C2=A0

What revenue milestone did you hand off re= venue to someone else? Who was your first hire?=C2=A0

Collin= =C2=A0

PS - My first hire was an AE because we had a very str= ong top of funnel (~40-60 meetings a month). If I didn=E2=80=99t have that = luxury, I would have started with someone in marketing or sales development= to help build up demand so I could keep closing. I was having this convers= ation with a mentor of mine, Lars Nilsson, and he strongly recommended star= ting with a content marketing hire, then 2 BDRs, an AE, and then a CS rep. = In that order. You can read more about Lars=E2=80=99 approach here (= link to SaaStr blog).=C2=A0

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