“The only thing you’ve got in this world is what you can sell.”
It’s one of the most famous lines in Arthur Miller’s classic Death of a Salesman, and it has a certain compelling logic to it. There is a fundamentally transactional basis to any business – a customer buys something from a vendor.
Only, ‘sales’ has come a long way. It’s certainly very different to the stereotypical 1940 and 50s ‘heyday’ of salesmen like Miller’s Willy Loman living on their wits and doing anything to make the sale.
When it comes to the kind of companies we invest in at Episode 1 – early stage startups building the next generation of software – it is anything but adversarial, with vendor and customer actually part of a single process around shared goals.
But before we look forward, let’s have a quick recap.
Once upon a time the relationship between buyer and seller was immediate and direct, based around an exchange of goods or service in return for something – bartered goods and, later, money. The seller was the maker, craftsman or grower themselves, and so sales was not a job in its own right.
Sales as we think of it today has its genesis in the industrial revolution and the first large scale markets that resulted from mass-produced products. This meant makers couldn’t have the direct, one-to-one relationship with their customers any longer. Selling things became a profession.
Back then, a customer was very much being sold to. They had almost no means of researching products and markets, and had to rely on the salesman for information to inform their buying decision.
The rise of mass media, especially radio and television, presented new channels for marketing but also led to a better informed consumer.
Sales strategies and techniques were devised, leveraging human psychology and behavioural insight in pursuit of the ‘win’.
The Mad Men era saw things become a bit less adversarial, as salespeople shifted towards identifying their customers’ problems and offering solutions rather than just flogging them something regardless.
As technology disrupted just about everything, sales was turned inside out. The internet empowered customers with instant information about products, markets and reputations.
Large-scale enterprise IT sales was followed by the SaaS explosion, but even that hype curve won’t be the end of the sales evolution.
So where are we now?
In a world of AI and blockchain ‘miracles’ there is no shortage of what can look suspiciously like deep tech snake oil. But we are seeing truly game-changing technology find swift mainstream adoption.
As Arthur C Clarke famously stated, “Any sufficiently advanced technology is indistinguishable from magic”. It’s a quote the Episode 1 team is fond of, being apt for so many of the investments we have made.
So ‘selling’ a new piece of breakthrough software involves something like a compression of the full sweep of sales history, taking a pinch from each era to arrive at the close customer alignment that helps shape both product and business model.
Sure, a bit of chutzpah to get those first conversations started. A little foot-in-the-door persistence to nudge an open-ended ‘maybe’ into a more solid ‘yes’.
But, ultimately, the sales journey is one taken by customer and vendor together and involves shared knowledge and a bespoke approach. In the case of genuinely break-though technology, this can take longer than typical startup cycles.
Very often there is a pre-revenue phase of a company’s development in which they are working closely with their customers to solve real business problems and achieve product market fit. There is real value there, with a clear commitment from the customer and a honing of the product. This has been true of Episode 1 portfolio company CloudNC, for example, which has built ground-breaking technology in pre-revenue development with highly committed customers. The same has been true of stablemates Carwow, Passfort, and Attest, which had revenue and all had customers actively pursuing their products at Series A stage.
The need for startups to convert such initial traction into sustained growth has seen the rise of the Chief Revenue Officer. Usually, by the time a company reaches a Series A round, it will need evidence of solid sales being firmly within reach.
If the customer relationship doesn’t convert into bankable revenue, it’s game over – no business.
How a company makes that transition will be what we explore in the next part of this blog series.
So it’s tempting to conclude that the old saying ‘nothing happens until someone sells something’ still holds true. Considering the way vendor and customer are so inextricably linked in the pre-revenue development process it might be fairer to say that ‘nothing happens until someone buys something’.
Either way, perhaps reports of the ‘death’ of sales are somewhat exaggerated.