Fast Sales-Driven Growth

by Krishna on November 8, 2009

A friend shared Joel Spolsky’s new column on Inc Magazine which asks if slow growth means slow death and suggests a couple of ways to grow faster:

Step One, I think, is to pluck off our biggest competitors. We’re pretty certain that we’ve already built a great product that meets our customers’ needs — but there are still too many cases where we find out that, for some reason, someone went with the other guy. So that’s the development team’s mission for 2010: to eliminate any possible reason that customers might buy our competitors’ junk, just because there is some dinky little feature that they told themselves they absolutely couldn’t live without. I don’t think this is going to be very hard, frankly. Developing great software is something I’m pretty sure we’re good at.

Step Two is something I’m not particularly good at. Not in the least bit. We have to build up our sales force. The bottom line is, we just don’t do enough selling. I’ve been working on the assumption that a product naturally creates demand for itself and the sales team just helps fulfill that demand. But I’ve realized that I have things backward. I’ve come to understand that a sales team drives demand. My problem is that I’ve never been able to figure out how to hire good salespeople. For a guy who wrote a book on how to hire great programmers, it’s mortifying how incompetent I’ve been at enlarging the sales team, which, right now, consists of one terrific account executive and a dog. (I’m just kidding. There’s no dog.)

I will tackle the slow growth/slow death issue in a later post, but what does it mean when you want to try to rapidly accelerate the growth of your business, especially when it is sales-driven instead of marketing-driven, as in the case of FogCreek? Is it just about taking more risk, as Joel seems to think?

Risk-taking is a big part of higher growth, as you have to spend money on sales personnel, marketing, customer service and technical staff while you are uncertain about the returns from such investment. Sometimes, spending money within your comfort zone is not enough to make a difference, so you may have to either take on large liabilities (bank loans) or get investors who will share control of your company.

But there is a different story with reaching for fast growth with a sales-driven approach. Which is that everything about the structure and environment of your organization will fundamentally change. First, it will change from an engineering-driven company to a sales-driven one. This means, that no longer will engineers call the shots about the direction and delivery of the software. The sales people will do that and the engineering staff will have to follow.

The reason is that salespeople are expensive and they only go after large customers. Every potential customer can bring in revenue from tens of thousands to millions of dollars. Let us say that a customer is willing to pay a site license that is equal to 25% your current revenue, but wants to add three non-trivial features that is not on the development road map. You have a choice to make here. If you decide that the integrity of your application is more important, then not only will you be writing off a huge dollar amount, but you will anger the salesperson who will probably quit. Which is not what you set out to do.

So, you take on new customers and do further customizations and changes that take the product away from its initial vision. This is not necessarily a bad thing from a business perspective, because it may meet your business goals. But it definitely will establish a new, different pecking order in your organization. And probably some of your technical employees (especially the earliest ones) will leave the organization because their personal growth needs do not coincide with those of the organization.

In a perfect world, sales and engineering could co-exist happily. But in the real world, money talks and the priorities of the salesforce always come first. Once again, there is nothing wrong in being sales-driven. Higher profits can bring financial benefits and security to everyone in the company and that may be the dream of many of them. Just don’t think that the organization and work environment will stay the same once you change your focus.

{ 2 comments }

Matt Wilson November 29, 2009 at 11:55 am

Musicians face this dilemma too. Do you want to be Britney Spears or Lykke Li? If you’ve never heard of Lykke Li, that’s kind of the point 🙂 She writes music her way on her schedule. She signed up on a tiny record label and barely tours at all.

I’m a programmer, and I’m beginning to believe that for the same reasons that commercial music is mostly crap, to be successful in commercial software, you have to be willing to write mediocre code based on the whims of idiots.

Krishna November 29, 2009 at 10:15 pm

Well, it doesn’t have to be mediocre code. But you are right in that sometimes to gain business success, you may have to make compromises.

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