Sales and engineering are arguing again
The most common cause of startup bickering and what to do about it.
I’m back after a month off! I spent a week in Mallorca, and another in Madrid, and I visited with family and friends watching many sunsets. European life is not so bad. But this newsletter is about cutthroat, winner take all startup capitalism, so let’s snap out of it, put the wine down, and execute.
Sales and engineering are arguing again
Despite the cool ocean breeze, I could feel my temperature rise. I was trying not to yell, but my stern voice carries. Pizzas that definitely had avocado and arugula were sitting cold and untouched in front of us. Other people in the restaurant were looking over at us. We were the three founders of CheckWise, a food safety process automation startup, and we were supposed to be having a relaxing dinner at Blue Ribbon Pizza in Encinitas, California.
The great CheckWise implosion took place near the end of 2012 after over two years of working nights and weekends, and the reason it happened was simply lack of product market fit, but we didn’t know that at the time.
I rapped the table audibly and said, “You said you have done so many demos, so where is the feedback from those demos that says the software is the reason we didn't progress to pilot? Please be fully candid. I think there isn't any.”
Pete McCarthy, the cofounder in charge of sales and marketing, and the one with the business experience in food safety that convinced the other technical cofounder Peter Gumeson and me to join, started to defend himself, but I raised my voice further, “Meanwhile, there are 100,000-plus lines of working code in GitHub. Development are the ones that didn't deliver? Shame on you.”
But now Pete was ready with his response, “The real reason why we have no sales is because it has taken two and a half years with two technical co-founders to get such an unpolished product.”
This type of arguing probably feels familiar if you have been through a failed startup. It’s nearly inevitable that if you don’t find product market fit, and you start running out of money or patience, then the business people will start bickering with the technical people.
Bickering definitely won’t help solve product market fit, so what should you do? First determine the kind of product market fit problem you’re having:
Selling to an empty room. There might be a big market out there that would use your product, but they don’t know about it because you haven’t figured out where they are and how to engage them.
No pain. You’ve been able to get your product in front of lots of potential buyers, and they just don’t want it because their lives are fine without it.
Leaky bucket. You know how to get customers. They sign up and use your product, but then they stop. Something about the experience of using your product isn’t sticky.
All three of these issues can be addressed by changes from either tech or sales and marketing. When addressing them for your own company, you should always start by trying the things you think are most likely to help that are the least expensive or time consuming. For most startups, this will mean making changes to your sales and marketing approach. I said it. Sorry business people. You probably need to look at what you’re doing before you start lobbing f-bombs at the tech team.
Below I’ll go into more detail on each type of product market fit problem with two examples—one that can be addressed by changing sales and marketing and one that requires a product change. By diagnosing the product market fit problem and having a plan to cure it, the bickering will subside.
Selling to an empty room
The first type of problem, selling to an empty room, most commonly happens to first time founders who are technical. They have an idea, let’s say it’s an idea for a video search engine that lets users search for spoken phrases inside the videos and shows you where they are said in an impressive display in the search results. They build it, and then they start advertising it on Product Hunt and Facebook and in software groups they’re in. They know that everyone that uses it will love it because it’s unlike anything that came before it. But that’s the issue. As powerfully technical as their solution is, it’s not solving a specific problem. So they’re spraying advertisements and getting ignored. They have a few customers from their initial launch on Pruduct Hunt but it is like pulling teeth to find new ones. They’re tempted to keep building until they add the feature that people really want.
What they should do instead is identify a business problem that a certain type of business typically has. Who has piles of video and consistently looses track of where video clips with specific spoken lines are stored? Maybe they could narrow in on corporate video production service companies or learning management system companies. They should pick one and try both marketing and direct sales with that target customer in mind before adding more features.
Another, less obvious way you can end up selling to an empty room is to be a new entrant into a very crowded space. I have recent experience with this trying to sell podcast hosting. Sure, podcasters need hosting, and they will definitely buy a hosting solution, but when they go looking for it, they are met with a dozen sales people, ads, and offers. Unless you have a message that meaningfully differentiates you from the competitors, your pipeline will remain fairly empty while the incumbents continue to grow. I think in a situation like this, it is time to look to the tech team. You need to add meaningful differentiation to your product—do something 10X better than your competitors. In a crowded market with other recent entrants, having great customer service isn’t enough.
No pain
The second type of problem, no pain, is the one that brought down CheckWise. I still remember a phone conversation Vipanj, a VC and tech entrepreneur who owned a small hotel in Denver. I asked him if he would be interested in trying CheckWise for food service at his hotel, and he said that the food safety requirements he had to meet were just a bureaucratic distraction for him. It took 2 minutes for someone to take some temperatures, write them in a log, and put the log in the box in the closet. He felt certain that introducing technology to this process would eat as much time as it saved, and why start paying for something that was already nearly free.
As sure as we were that food safety temperature logging needed to be digitized and modernized, our potential customers didn’t have real pain.
If you have this kind of problem, you need to first figure out if there’s a different type of target customer that might feel actual pain—in CheckWise’s case, maybe the single location restaurant doesn’t need the service, but bigger chains would want a digital solution. Find out by targeting those other types of customers and getting feedback. Do this a lot, really look around, and think about your ideal customer. There must have been a reason you wanted to make the product in the first place. Find those customers that share that spark, and figure out where they are and how to talk to them.
And what if they really don’t exist (IE you just made Quibi), Then, you’re going to have to do a hard pivot which will require a significant product change from your tech team. Make sure they understand the logic, and can see that you really have exhausted the possible addressable market for your existing product and found that it doesn’t solve a pain people care about. And make sure you only do this one time in the life of your business. There isn’t a great excuse for multiple pivots to different products that no one really wants.
Leaky bucket
Lastly, if you have the third kind of problem, you are probably incredibly frustrated. I absolutely feel your pain. How could you be cursed with a leaky bucket?! To be able to easily find customers and get them signed up only to lose them? It’s abhorrent and unfair.
The things you can do about this on the sales and marketing side are to get better at nudging customers to use your product (notifications, email reminders, etc), creating a community around your product (Discord, Slack, meetups, conferences) and doing training or gamification that helps lock people into the habit of using your product. An example of a company that does this well is the weight loss app Noom. They use a peer cohort and a 2 week commitment to log your diet to get you habituated to using the product. If they just let users do what they wanted without those non-software interventions, they would see a much higher rate of abandonment. So, definitely start here to see if you can patch the holes in your leaky bucket without having to pull in the tech team.
If you have tried the nudges and the communities, and they still don’t work, then you have a product problem. People are trying or buying your product out of curiosity or because they think it will solve a problem they have, and it doesn’t meet their expectations. You’ll need your tech team to step in and make changes. These changes could range from overhauling the quality of the product and getting rid of points of friction in the UX or it could mean making an entirely different product in a hard pivot. Again, only one hard pivot per business—it’s not a real rule, but I’d say that if you’re a developer and your startup does more than one hard pivot, time for a new job.
One last thought on all this. You’ll notice I kept pointing out things that you could change about the way you execute: narrowing your target market, changing the highlighting your key differentiator, overhauling the product UX. None of those things qualify as changing your business strategy. A hard pivot, that’s a change of business strategy.
What I’m suggesting is that you need to adjust how you execute before you adjust your strategy, and that bickering over strategy can go away if everyone can stay focused on execution. Have a look at this article by Nathan Baschez that talks about how execution is exponential. I absolutely love referring to this as a way to help startups realize they don’t need to get on a pivot merry-go-round.
Thanks for reading, and happy building!
—Jon Christensen