Welcome to Dalton Plus Michael. Today we're going to talk about startup sales and specifically mess ups, screw ups, misconceptions. Like I think that instead of trying to make a sales 101 style video, we want to make it more entertaining by talking about when people screw up. And that's always the most fun stuff. So when you're in office hours with the founder and you're just sitting here, you know, you're hearing kind of, kind of a ho hum story, something didn't work. And then like you just hear something that makes you cringe. You're just like, eh. Tell an example of that. Like where you're just like, oh, look.

I certainly was the type of founder who wasn't excited about the concept of sales. And I had a lot of cartoonish ideas about what sales looks like, right? You picture like a used car salesman or an insurance salesman or just like a high pressure time share salesman. Oh, you love those, right? And so I'm like, man, I never want to do that. That's bad. I think that founders may resolve themselves. They need to do sales like it's a necessary thing. But they deep down are still thinking about the used car salesman somewhere.

It's like they never had a canonical example of good sales.

It's like this. It's that good sales is so good it doesn't feel like sales. Like think about service providers. You know, I've had good service providers. You just kind of email them with a problem and they're like, yeah. You have a problem, like let's fix it. Let's do the thing that you want to do. And they're super responsive and they're really nice and they understand where you're coming from. And those people are totally making money off me. Those people are selling me a product. But when I'm interacting with these people, it feels like you're not a friend, but it feels like someone that knows me, they understand me. I present a problem to them and they're in a position to help me with a good or service. And We both walk away feeling really good about the transaction. That's good sales. And it's so good that it would never register in my brain is that's a salesperson selling me something.

Which is so weird because I'm like, there isn't another word for that. There isn't like another word. It's just, it's almost like, oh, this was all my idea. Like this was all like. Right?

I think for me, the thing that makes me cringe, when the founder basically is like, you know, I think I figured out a little bit about the customer's problem is it's going to be really hard to solve. And like, I don't think I can solve it, but I still need to sell them something. They're kind of talking to you, well, maybe we can help them with this thing. I know what their problem is, but they're asking for this. I'm not going to help them with the thing that's screwing them up. I'm going to help them with this other thing. I'm trying to figure out how to get out of here with doing the least amount of work possible and get paid. I'm not trying to do this like trade or like, like the very concept of trade where sales comes from is like, by trading goods, we both end up better. Like I'm not actually engaging in trade. I don't want to say I'm engaging in that, but like If we were to look at the utility, if you sell something to somebody that doesn't produce any benefit to them, but you make money in the end.

I don't think the word for that is trade. I think it's a different word for that. I have to think about what that word is.

It's a different word. But it's like so common. I think that's the thing that really gets me. It's just this like, oh, I'm not being selfless. You described this guy like, oh, I emailed someone. They tried to help me. They did help me. I paid them. But so often it's the exact opposite. It's like, oh, like I'm trying to get paid and I don't know if I can help.

My mental model for someone just starting out doing sales is you want to just go talk at someone and cram it down their throats and get them to say yes. And so it's usually a monologue and you say a bunch of stuff and you list the features. Another thing is like, often founders will think that discounting is the most powerful weapon they have. They'll be like, well, I offered them a huge discount and they bought, now they get a discount. And again, when you think about it, if you don't want something, like if I'm trying to sell you a burrito you don't want, trying to keep cutting the price doesn't make you want the burrito. If anything, it makes it kind of worse if you keep discounting it because you're like, what's wrong with this burrito?

Well, and especially in those situations, it's so clear the customer doesn't realize that they can get any value out of the product that like, why are we talking about pricing?

I don't even know what you do

Exactly. like I don't even know why this would help me and it's almost like I'm trying to speedrun It's weird to me that like the process of helping someone has been turned into this torturous process. it shouldn't feel like torture. You should be trying. Why else are you doing this business if you're not trying to help people like

and I think it's core. A lot of people are better at sales than they realize and it's getting them to like put the car salesman thing out of their mind. And think about it to picture what their best sales experiences were if someone helping them with a problem and just emulate that. And I think often people have an aha moment when you say it that way, the way we're talking about it. And that's what you need to be. Like the founders I know are the best at sales are good at listening and not saying much and being really empathetic and then truly solving the problem so that it feels like a relief to the customer.

I think you said it best. Good sales is good problem solving and any good founder is solving how many problems in their company every week. And if they took that exact same feeling into the sales conversation. It's like all your employees having a problem with productivity and yadda yadda yadda and you're like, let me figure out how to get this guy to get out of my face without helping me at all. That's not how you're thinking about it. It's like, oh, maybe be more flexible with this. Maybe we can help you here.

I think that if you take the core assumption that oftentimes the customer doesn't know how to solve their problem, So the other thing that I see people try to do in sales is like, great, Dalton, give me a list of things you want me to do. I'll do them. That will obviously make your business better because you gave me the list. And then we will both profit.

And it's like, how often are you selling customers? The customer is like, well, I want to make more revenue. I don't really know how or a customer even worse. I'm talking to somebody who doesn't really understand the whole business they're in. And like, hey, can you help me do X, Y, and Z, but you realize it's not gonna really help the business that they're operating. That's a problem solving situation. If you treat it that way.

I mean, this is like trite advice, but like a lot of trite advice, if you pretend like you're hearing it for the first time, it might hit differently. So this is one of those things, which is put yourself in the shoes of a customer. Again, you're usually like, yay, put myself in the shoes. No, but really pretend like you've never heard that before. Pretend like this is the first time someone's ever said that. actually take a minute and it's almost like a method actor. Pretend you're that person walking into the room. Pretend you can see their email inbox. Pretend you can imagine what their boss is telling them they should be worrying about.

What their next meeting's gonna be.

Yeah, actually take a moment and sit with that advice. A lot of people aren't doing that. It's where I'm going with this. They're like, yeah, put yourself in the shoes of a customer, but they actually have never done that exercise.

My version of that is imagine you were the CEO of the company that's buying your product. What would you think? And it's so interesting when I have that conversation with people because first of all, they're just like, because then I'm like, okay, tell me about the business of your customer, right? Because like you're selling this product to them. It's going to help their business. Tell me about their business. I don't know anything about their business. And like, okay, like, well, if you're the CEO of this business, like, what do you think your top three problems would be? Like, I have no idea. It's like, would your product be a solution to any of the problems in the business? Like, I'm just trying to sell them marketing software, my goal. Like, why are you making this more complicated than it has to be? And I'm like, are you trying to help your customer? Or are you just trying to accomplish your goals and your customer's goals are incidental? You can certainly get somewhere with that mentality. You can probably raise your seat around. You can probably hire people. You can probably raise your series A. There's a whole set of milestones you can have with that, but you'll never win.

Unless one day you wake up from this slumber. Basically, you fix this. You might get pretty far never figuring this out, but one day you probably need to figure it out.

Yeah. I think that's the thing that confuses us, our founders, is they see these products. I mean, I've had this conversation with our founders. It's like, we use the product. It sucks. We don't like it, but they're doing well. Maybe we should do what they do. Cause like if you can only see two or three steps ahead of you, you might be following or copying company with a bad product and thinking that's how you win. And it's like, no. Oh, and the other side of that is, If a company is winning, you might not understand the value they create for their customers, but don't dismiss it to zero.

Well, that's the classic thing of dismissing a product because the design is bad.

Yeah, Man, this HRS looks like crap.

I don't know if that's the hierarchy of it here.

No, I totally agree with that.

Here's another fun one. I'll give you a scenario. Great, I'm doing my company. I've raised a little bit of money. I've done some sales. Now it's time to hire VP sales, right? Because that's a whole thing. That's not my specialty. I'm just a founder. I can hire someone and they'll build a sales team and they'll do it.

It's just that easy.

Isn't that how company building works?

Yeah, you just hire someone and they do a perfect job. You're right off into the sunset.

The title is VP Sales. It seems like they'd be good at sales, right? What do you think actually happens? When it comes into as well, what is actually going on?

The deal with executives, I only talked about this in other videos, you want them to function at a high level and they've probably had a similar role in the past. What it actually means in practice is running a team and hiring other people and managing those people. But it usually doesn't mean figuring out from first principles how to do sales. The most common source of problems is that the founder just expects a new VP of sales to come in and just do as good of a job as the founder was doing.

Or that is not doing a good job.

And just like know what to do. And like that's not at all what they're really prepared for. Like imagine someone was a former VP of sales at Google or something like that. That's a successful product with a successful machine and they were trained. And so they were super effective at like running a team and hitting their quota. But if you're like a New startup and it hasn't been around for a while without an established playbook. It's not obvious those skills transfer over one to one.

I can I state that more strongly? It is obvious those skills do not translate.

The skills definitely do not translate. I mean, they could. They don't tend to.

I think what's interesting about this is as we have funded more B2B companies over the years, and I think personally as I've realized that like every B2B company is just an enterprise company, or not ever. The vast majority are just enterprise companies that haven't figured out their enterprise companies yet. I think one of the things that founders have a misconception on is just how personally involved the CEOs of enterprise companies are in sales. And I remember talking to, we have a bunch of founders from Palantir. I remember just being like, hey, Here are these deals, Pontiff getting these crazy deals, like da-da-da-da. How does some junior salesperson originate $100 million deal with Boeing? Like, how do they even get in the room with the right people?

It's PLG, right?

Yeah, yeah, yeah. It's just for grain. Boeing came on the website, signed up, right?

What was really interesting to me was like, how much executive sponsorship and executive, like, founder level, CEO level involvement there is in those deals and how much The CEO is originating them or scouting for them is kind of handing them back to a team to kind of process a little bit, but then like debugging anything going around. Like it's the exact opposite of let me hire someone and look the other way. It's like the sales organization is almost built around the founders and as almost like a multiplier effect on their work as opposed to built to the side of them.

You know, I get these questions from founders who, you know, their employees, I got this great question from employers like, how do I meet with this important CEO myself? And I'm like, you don't, like why would they meet with middle manager salesperson? The CEO of this company is gonna have a hard time getting into this meeting. Why aren't you asking yourself the question, how can I help my CEO get this meeting? Can we reframe, like that doesn't mean it's not your deal or like whatever, like let's separate credit out.

Just don't get paid, don't I?

Yeah, fine. You're good. Can we go for the most effective solution, which isn't junior sales guy meeting with C? And so this misconception is also just kind of like this idea of like, you told me I should do sales as a founder, but now that we've moved along.

I'm not, I'm done.

Yeah.

Maybe the last one that I want to talk about is consulting. So I'll bring up still my favorite company, YC Never Funded, Palantir. I have been surprised at how many founders will say some version of, well, we don't want to do this for the company because that's going to be consulting. Well, you know, that integration is going to take too long. It feels a little too one-offy. It feels like consulting. It seems like consulting is the weird boogeyman in the room almost as if you would assume that YC has like thousands of companies that have died because they did too much consulting. Yeah, like I have not seen that. So what's going on?

Yeah, so this is one of those phrases that gets repeated so much. That it feels like...

Conventional wisdom.

Yeah, it's like being like, you know, love thy neighbor. You know, you just said it. Consulting is bad. Let's pretend like we're hearing it for the first time. Let's examine this with fresh eyes.

I remember in my first startup, when we were not succeeding, getting a meeting with Disney because to cut through a bunch of bullshit, they took many meetings to get to this, but it's a hard of the matter. They wanted my startup to build a white label social network so that big fans of the Disney parks could network and share tips with each other so they could sell more tickets to Disney and they had to control the whole thing and like there's they give us a spec of all the stuff they wanted us to build. To like control what people could say. Like we said no even though it would have been for millions of dollars because that was consulting. It was literally a big company that wanted my startup to not have a product and instead outsource their entire R&D because I seem like a schmuck or I'm sure they asked lots of people to do this and if one out of 20 startups said yes to that deal.

Good for Disney.

It's good for Disney. You can see why Disney tried to do those. Obviously that would have been a horrible idea from my perspective. And hopefully the people in the audience can see why getting a million dollar deal for Disney to build a just random piece of software that no one else would ever want, that's super bespoke is like, obviously a really bad business.

That is the true heart of this advice, which is just building super random stuff for big companies is a bad idea. However the amount of times founders say, oh, that's consulting and dismiss it out of hand, I think is way larger than the specific example I gave you.

Disney's not running around asking startups to build them shit all the time.

Yeah. And so I do think there's a question under the do things that don't scale rubric of You know, it's basically a gray area, friends. There's a lot of gray area of what is consulting and what is not consulting. And so I would just try to be open-minded and decide this on a case-by-case basis versus dismissing out of hand that you shouldn't do something because it's consulting.

That's a very measured approach.

Okay, okay, I will take an unmeasured approach.

Just do consulting. Nine times out of ten, you're probably not doing real consulting. You're probably, especially early, you're probably getting the opportunity to learn about the problem. And that is such a unique opportunity. And trust your ability to productize over time. Because we're giving this advice in mass, right? So 10% of the companies will do this and they'll die. I apologize.

Michael, I don't like those odds, man. Better than 10% is too high.

90% will learn something and all too often, I reframe consulting as like a deep integration is a deep moat. A long sale cycle is a moat. Like a lot of these things that people associate with enterprise, you can't on one hand say, why does it take 80 years for someone to get off of SAP? And on the other hand be like, I hate long sale cycles and deep integrations. It's like, that's the game. You know, it's like, oh man, I want to win this super well, but I hate fucking throwing the ball. And it's like, well, man, come on.

Like I'll go so further. I secretly think the reason why Palantir doesn't have more competition is because too many people shy away from anything involving that kind of sales process, that kind of cycle, that kind of product. And if Palantir forget how to make this not consulting, I feel like a lot of people can figure it out.

Well, I think you could argue that they are doing consulting, but they're able to make enough of a margin and have enough scale. Again, this is semantics. But I wonder if this is somewhere in the gray area.

I will challenge this.

Go ahead.

Disney wanted to pay you $10 million to build this website, let's say. But let's say you could build it in three days. Is that consulting?

Probably not, but I think a big part of what they wanted was the operations of it and to do the moderation. It wasn't just the building.

Let's say you could build and operate it. It's only three days of work. You see, we don't have consulting margins at that point. And you probably have figured out some kind of base-level technology that would enable you to spin that up from nothing.

It would have been the opportunity cost that it's like, wait, are we in the business of making white-label social networks? I'm not sure that was a good business.

But that doesn't mean it's consulting.

I agree. I'm just thinking this through. I think sometimes people fall in these pseudo tarpits. Where you get revenue. But it's not that interesting.

To me, it's actually not Consulting versus non-consulting at least within the YCQ community. It's so rare that I see consulting happen. I think it is more I am making revenue not solving that much of an important problem for someone.

Yeah, like I'm standing myself in a corner and I'm making money Yeah, it doesn't generalize into something that's exciting

Okay. So anyways, the big takeaway here, I want to steal two things to kind of summarize. I think one is this concept that like great sales feels like problem solving. You should be in the business of solving your customers problems. Otherwise, you shouldn't be doing this. And you won't win. If you want to win, you should seek to consistently solve your customers problems. And then two, The very underpinning of business trade is both sides have to end up better at the end of a deal. Please structure things in that way. Please don't Oh well, we hit our 15% month-over-month goals, so I won. I don't know if you won.

Let's not worry about that. We make a problem.

It's your problem to figure out whether you won.

We have a retention problem, Michael. We'll solve that later.

Understand that core principle. Like, do right by your customers.