Many startups see fast early growth, but then plateau. Why? There are three main factors that cause the stagnation. What are they and how can we avoid them?
David Jones, an outsourced VP of Sales at Sales Xceleration, is giving us his hot takes.
In this episode of Evolved Sales Live, host Jonathan Fischer sits down with David to discuss how to address the causes of the startup plateau, how you can break loose from their grasp, and how to re-accelerate your streams of revenue.
Whether you’re in a startup environment or not, this is advice you’ll want to hold on to.
Don't forget to follow us on LinkedIn for more engaging sales insights and discussions! Happy watching!
David Jones is an outsourced VP of Sales at Sales Xceleration. He relishes the challenge of transforming struggling sales organizations into highly effective and profitable revenue engines. As a top advisor, he provides the leadership businesses need to find their best customers and build a sales engine to create record-breaking growth.
Check out the transcription of this webinar episode below!
Jonathan Fischer 0:05
It's time for another power packed episode of Evolve sales live. Welcome back. I'm Jonathan Fisher. Many startup companies experienced a strange phenomenon they have a successful watch that hits some impressive numbers very quickly. They go on to win additional rounds of funding, hire more staff and make plans to keep the growth going for years to come. But then, for some reason, the growth plateaus. It's like they flown to a certain altitude, but no matter what they do, they just can't seem to fly any higher.What's happened? What can you do to fix it? Well, David K Jones is here with us today to help solve that problem by sharing key tactics and approaches that can get you unstuck. For 20 years, David worked as a business executive building and implementing effective go to market strategies for large equity funded ventures in the areas of biotech, specialty chemicals, exotic materials, and more. Today, David is a highly sought after coach to business founders and CEOs who price it not only for his experience, but moreso for his ability to lay out clear and actionable plans that can create breakthroughs. David, we're excited to have you on the show today. Welcome.
David Jones 1:08
Well, welcome, Jonathan. It's great to be on your podcasts. I really like what you're doing. And it's nice that we're both broadcasting from Columbus, Ohio.
Jonathan Fischer 1:20
Yeah, I think out of all the many episodes, you're the very first one right here in my hometown, Columbus, we're a great center for the areas you've worked in, especially chemicals, exotic materials, venture funding. So really great to have you on today. So we'd love to have you share with the audience briefly. We have a very interesting experience and pedigree. How did you make the transition over to becoming a consultant to business owners and founders?
David Jones 1:45
Yeah, it's kind of interesting my career path because I started out actually, as a technical person, I got a degree in Chemistry and Chemical Engineering and went into the chemical industry as a as a bench chemist. And then I was given the opportunity to move into sales. And that was one of the best decisions that someone made for me, so to speak, it was a mentor who said that I should move into sales, I was good with customers. And I think it was my engineering background, though, that really helped me understand that there's a process to sales that you really have to understand what the customer's needs are first, before you can sell to him. And so I moved up in the ranks within a couple of large chemical companies, I had a chance to manage a kind of a business incubator that was affiliated with Michigan State for a while around biotechnology. So I had quite a variety of things that I was involved with. But they all were about taking new technology to market and commercializing them, whether I was in marketing, sales, or sales, leadership, marketing leadership, it was all about commercializing new products and looking for new growth. And so at this stage in my career, I was looking for something that was take me more around the consulting world, I was looking for something I could kind of give back to the community. And so I chose to align myself with a group called sales acceleration. We're a national consulting group that helps businesses with all things sales, sales, process, sales, execution, and really around their salespeople. You know, how to manage them, how to hire them, how to put them in place. And so that transition for me was just so so natural, because of my years in sales and marketing.
Jonathan Fischer 3:38
That's fantastic, really interesting background, there had to be a lot of lessons learned in building these go to market strategies for companies learning about, you know, it's probably a little bit different in the venture funded space than it is in other companies. There's probably some pressure there. They're watching those KPIs a little more closely, perhaps. Would you agree with that, if you had some comparative experiences to take? Yeah, sure.
David Jones 4:01
So I've actually had twofold. So one of the public companies I was in, we had what were called strategic expansion programs. And we used to use the word skunkworks for these, right. And so they were kind of like a startup. We ran them like a startup, we'd wear lots of hats. We'd all do a lot of things to get things accomplished. But we still had to hit certain goals every quarter, and we had a lot of pressure on us. What we didn't have was the pressure to raise funds, right? We had we had money, we could get people. So we didn't have that same pressure. But so that was an interesting way of kind of getting my toe in the water around how a startup would be. And then I mentioned that I was part of a group that actually started up companies. So we would take technology from different universities, and commercialize that and then create companies out of that. And when you're doing it, that's when I really learned about the venture space because we were working with, you know, fun, different types of unders we're working with departments in the government to get funding for these businesses, Department of Education, Department of Energy, anywhere to get that funding to get the business started, which everybody knows is really difficult to do. And then, in my last role, back with another public company, we were owned by private equity. Okay, it was a big private equity firm out of New York. And the way they ran their growth projects was very strict around the financial demands on them. And so we ran each project separately, again, like a very small business. And so we had to have funding for that business, we had to have deliverables every quarter, we had to have a roadmap on how to get to those deliverables. So really, through my whole career, I've kind of touched on the venture space.
Jonathan Fischer 5:49
That's really so fascinating. So you've seen a lot of companies in all of their stages of growth, and no doubt, you've seen many dozens of times, this phenomenon of plateauing where they grow quickly, things seem to be going well, and that just kind of the steam gets lost. What are the main factors behind that effect? As you see it?
David Jones 6:10
Yeah, when you're first starting out, you try to keep things simple. And the simpler, the better. And many companies just kind of stumble into that they have an idea for a service or a product. And it almost naturally evolves, because you're talking to everybody. So you're talking to your friends, your neighbors, your lawyer, your banker, you know, you're funding and you're going out, maybe you're going to conferences, what you're doing is you're actually doing a form of referral based selling, okay. And so you're getting these referrals, people are connecting, you're building this network. And so you have some success, because if you have a good product or good service, people are seeking you out now, because they're hearing about and it's new, and it's novel, and so so that you naturally think, Wow, this is easy. Hey, I've started to get some sales, things are starting up, right? Well, then what happens is you get busy, you know, the CEO, the owner gets busy, the organization gets busy doing the business of of making those sales, and that referral base selling stops all of a sudden, right. And now you have to put a more proactive sales approach in to get to the next level. And many companies struggle with that. And so we kind of call that the ceiling, you've really reached your first ceiling. And so at that point, you need to really understand how to do a professional job at selling, not just out there talking to your neighbors and your banker and everybody, you really have to understand how to manage sales properly. And this is many times where a business, I call it suffers in silence, you know, they're so proud of what they've done. They think they can fight through anything. And they forget that there's a whole world of experts out there, there's a whole world of free information you can get on the internet, there's a whole world of universities that have business schools that you can get help at, but you do need some outside help at that point, to really understand how to get to that next level of sales. Okay, so that's what I would suggest is kind of that first feeling.
Jonathan Fischer 8:16
Well, and it makes sense, in a way, I've had conversations on the show before with other guests that these are some smart people involved in the startup and they know a lot about their product, they know a lot about their solution. And that that intellect maybe can mislead them a little bit that they think they know more about that piece than they actually do. Would you agree with that? And is that sometimes a challenge in your consulting work? Have you found?
David Jones 8:41
So most people who start a business have a passion for something right? So they maybe you're an engineer, you had a passion for manufacturing, start manufacturing company, or maybe you're an artist, and you got an advertising? Nowhere along the way? Did you get 20 years of sales training? Okay? You just did. Right. And luckily, I did, I had plenty of mentors, I was giving given classes training year after year, big companies invest a ton of money in their people. And that's one of the benefits of being part of it, a big organization, that that type of education, it's like a PhD in sales, right? It really is. And so you need to reach out to people like that, just like you would under your, your specialty, whatever that is, you know, you reach out naturally to other peers do the same thing for sales and marketing.
Jonathan Fischer 9:34
That makes a lot of sense. So this whole issue of not having an actual formalized sales model at all, growing kind of organically early on is one of the main reasons and and there's got to be the factors at work, though to like, is there something else is it has to do with something even internal to the company that can also be a factor behind this this plateauing effect.
David Jones 9:55
Yeah, so there's really think about it. A lot. companies talk about the either the four legged stool or the three legged stool. And so a four legged stool would be sales, marketing, innovation and operations. A three legged stool is kind of sales, marketing and innovation. And when a small business is starting up, you can't be good at all of them, you just don't have the fundings, you don't have the resources to be good at all of them. And so that stool is kind of wobbly, right. And so it's more of a balancing act to try to get it get it really on par what you need to do, I tend to look at it more as a pyramid. And what you really have to do is get that base, have the sales figured out first, because if you can sell what your initial idea is around a service or product, you'll be able to figure out how to sell the next one and the next one, right. And if you're good, if you're really good, and you're out there doing this referral base sales, you really don't need a fancy marketing plan yet or marketing organization. Now, if you get your sales, pyramid kind of set, and you've got that foundation, next is that marketing low, okay, really understand how to get a broader set of customers for what you're doing a broader awareness of what you're doing. And there you have to spend some money on, you know, all the things you can do today around marketing, which is just fascinating, all the different options you have, and you could go through them, the million different things you can do. And you have to figure out which ones are best for you. But But really get that marketing nets, a lot of people want to jump to the what I call the top of the pyramid, which is innovation, right? Because they, they were excited about it, they started on it. But remember, you're not a university anymore. You're you're a company, and you really have to sell something first that have cash flow coming in. But once you get the sales set, you get marketing. Next now at the top of the pyramid is innovation, you really have to put together a very strict innovation process that allows you to work through all of the issues around starting up your second project, your third project so that you have a real company now. And so that's what I see is kind of the foundation moving forward.
Jonathan Fischer 12:17
Now, is it possible that the innovation itself could even be a problem? And what I'm thinking of here is, you know, this is the geeky side of the business. This is kind of what you might think of the fun side, if you're a founder, right? Can I kind of take on a life of its own? And now you don't really know how attuned you even are to your marketplace? Is that a real risk?
David Jones 12:37
Absolutely, absolutely. It's a an The word you just used this perfect risk. When when I was at Michigan State, we came up with a de risking project process over these innovation. And the reason is, is that different investors will accept different levels of risk. And so to get to that next level of investor, you know, whether you're at an angel stage or an A, B, or C, wherever you're out in that funding level, you need to match up your risk with investors that are willing to accept that risk. So you can't match that up unless you identify what it is. Okay, so the very first thing, when you're starting down this path of really having a portfolio of innovation, is to think through all of the what I call uncertainties about your business and its uncertainties or like it sounds, those are the things you really don't know yet, right? You don't have a real certain grass about what they are, but you kind of know which direction you have to go. So you have to identify all of those uncertainties in pretty good detail. And I mean, pull the whole team together isn't one person, the more brains you can put on this, the better. And so I'm talking about things like legal issues, you know, could be patent issues, sales issues, marketing issues, supply chain issues, all of these, if you really sat down with a group of people, you could say, You know what, we're missing this, we're missing that we're missing this, if you're a startup, you're missing a lot of things. And so you've got to identify what those uncertainties are. And then what you do is, as you look at each one of them, you can actually bucket those, and you can box them in bucket them into three different levels. The first level is kind of like it sounds, they're deal killers. So these are risks that any white single one of them if it goes wrong, could kill your whole company. I mean, it just wipes it out. And so these are very severe things that you have to separate from the other risks. The next level of risk is what's called path dependent risk. And these typically are things that you have to get information. Or maybe you have to know a little bit more about what's going on before you know which path to go down. And if you go down the wrong On path to soon, you're going to waste a bunch of time and money. And as anybody knows, time is the issue with a startup, right? You're always on that clock. You know, it's funny, it's never an ideas or money that you run out of its time you run out of it's the investors patients that you run out of eventually. And then the last level of risk are risks that are really more what I call return on investment risk. So these are tweaks that you can make to your business to increase the return on investment. Many times those are easy to implement. And people want to gyrate to those first, because they want to show some success. But that's the wrong thing to do. That's the wrong, those things should come later, you really need to focus on those deal killers first, right. And the way that you you work on those is you actually put together a roadmap for each one of them on how you would solve them. And so let's say, let's say it's a patent issue, right? You're worried about patent space? Well, you can really think through how much time it's going to take to hire somebody to do a patent search, and it's going to cost and you you'll end up with a a time and amount to address that deal. Killer risk. And you can do that for each one of them. Now, now that you have them all, the way you ordered them is by cheapest first through the most expensive. And the reason you do that is because they all can kill the deal. Why not work and use your investors money properly, by working on the cheapest ones first. And so right now you've got this order of deal killer risk. And you really need to think about how aggressive you want to be on your spend. So the most conservative is to work on those in series, right? Work on one and then another and another. Well, most people say that, hey, your that's too slow. And investor will say no, let's actually work on two or three of them at the same time. Well, that's fine, but just know what the cost is for each one of them. And don't go over your spin your cash flow. And you can actually plot that out by month. And you can tell your investor that look, this was going to be resolved in two months, this was going to be four months, six months. And by here, we're going to have all the deal killers done. Once you do that they their confidence in your management team goes way up.
Jonathan Fischer 17:22
Nice. So it sounds like this, this process of derisking that you're referring to is something you'd even apply right at the get go to your core offering not only when you're later on innovating, but your core product has got to go through this this issue of looking okay, these are the what you're calling deal killers, basically an existential threat, one of our listeners today put it in their question. So you set one example a patent right? If I brings this innovation to market, I can't protect it. I got, you know, 50,000 competitors tomorrow, there's no point in putting money behind that. So I've got to protect it. That's one great example. Are there other good examples you could cite? That could be deal killers?
David Jones 18:00
Yeah, sure. So, you know, a common one is that you have a customer, you actually have a customer identified, and you've talked to that customer? And that customer says yes, I will engage with you, once you get your your, your your system, your process or your product made. Many people don't think of that as a deal killer. They think, well, I'm going to go and I'm going to be either in a laboratory or I'm going to be online developing this thing, and then I'm gonna go out find a customer. Well, yeah, no, no, you need to work on it at the same time. So that's a great example. And another one might be another one might be supply chain. So let's, let's say your materials, you're making a material, and you come up with some exotic new product for an airplane or a car. Well, can you even get the raw materials? You know, are they available? You know, what price, are they Yeah, that could be a deal killer. And some of those are much simpler to resolve and should be looked at first, before you dive into maybe a two year long laboratory research project. You know, most people want to jump right in to whatever that development stage is, before they even think about the other deal killers.
Jonathan Fischer 19:14
Makes a lot of sense. And it's it seems like if you are willing to tackle these challenges early on, you may find ways you need to shift in all the other respects, right in terms of the heart, maybe this iteration isn't going to work because it requires this material. For example, maybe we can create it if it's a device, for example, find a way around that. So you're already iterating to attune to the risks and remove those very powerful. What are the example of how you could do that in case I can think of an instance where you kind of have to build the thing first to know so it's gonna take a little bit of seed money at least right so do how do you how do you go get a customer validation for example, if it's like maybe like a biofeedback device for exam Apples that would testing fill that gap, if you go kind of get it validated with like maybe a university and a grant and have it kind of validated or what, what are some approaches that can work in that space? And? And others like,
David Jones 20:12
Oh, yes, absolutely, there's there's plenty of folks around the world that would love to, you know, be part of your team, so to speak. So they could be validators. Maybe they're a university, as you mentioned, or a research hub. There's also plenty of customers that are early adopters who just love hearing about the greatest newest thing. Now trying to find them is difficult, you might have to hire a consultant who's familiar with the space to really find them. But if you're out there, like I said, and you're talking to everybody, and you're out at trade shows, and people know about you, these early adopters will find you, right, that's why I talked about referral based selling, they'll come find you because that's, there's somebody on there and whose job it is to find you. And so you have to be you can't be quiet, right? You can't be in a cone of silence, so to speak, and expect them to find you, you've got to be out there and making those connections.
Jonathan Fischer 21:17
So it sounds like a lot of this comes down to really being super smart with that seed money. And not overspending on the wrong leg of the stool, as it were. And maybe and not in the wrong order. Is that Is that fair? Would you agree with? Absolutely,
David Jones 21:31
absolutely. And if you're spending it in the right order, okay, your investor will appreciate that, they'll they'll say you're doing a good job of management, okay, you are doing things to conserve my money. Now, if they want you to be more aggressive and faster, they'll give you more money, then, a lot of times these investors have more money to invest. If they like how you're clicking through the pace, and spending their money wisely, they'll feel more comfortable with saying, Hey, listen, let me double down on this. Right? What they will hate is if you say, well, I'll come back to you in six months and tell you where I'm at. They don't want that, where you're like in this black box and on you know, something's gonna pop out of the birthday cake, and it's gonna be ready to go. That's not the way to do you really have to be open with your investors and, and have them be part of your team. They're smart people, they do these deals all the time everywhere. And their input on how you should manage it is really crucial.
Jonathan Fischer 22:34
It makes an awful lot of sense. So it seems like it really kind of comes down to these three areas that you mentioned, of the innovation, the marketing piece, the sales piece. Let's see if we can put some hands and feet on the conversation for listeners that if you're in a company, and you're experiencing that plateau. What do you do? Like? Is there a self assessment that you can do? Are there some specific ways you can kind of work through? Not me? You're in here now. Right? So what do you recommend to that founder?
David Jones 23:04
Yeah, so if you're struggling, the first thing is don't struggle in silence. Right? You know, talk about it amongst your team first. All right, you know, a lot of times the people in the room can help. So don't Don't be that, you know, that owner, that CEO that feels like, I've got to do everything myself, you know, really get everybody involved, and then get what I call your extended team involved. So you know, you've got a lot of people around you that wants you to be successful, pull them in and tell them what you're experiencing. Now, if you haven't really gotten a good insight of which direction to go at that point. Now you need to some specialist, right. Now, it's going to cost you a little bit of money to bring in a specialist like myself or others in the field, that have a lot of experience in this. And sometimes that third party who has a fresh look, can really spark some ideas that maybe you hadn't been thinking about. And the reason is, is because if you've done it a lot of times, you've seen the issues before and you can see how they're stuck.
Jonathan Fischer 24:12
Yeah, no doubt, no doubt. So just slow it down. Communicate. Enroll your team. Yeah, start to take a look. What Where do you think the problem is most likely to be this is sort of this is sort of an unfair question in a way. But given that you do have so much experience, I'll bet you have an opinion, where you probably going to find the issue is
David Jones 24:30
the issue is probably with the founder, okay to say that, but they are good at what they did. Right? So whatever that is, they're good. They're really good at that. But they forget that they're not good at everything. And being in business requires a team priors, everybody, so So that's usually the pinch point. Now if they're open if they're willing to share if the business is really stuck because of a tactic Call issue or sales issue, well, then you really need to bring in outside help to get you over those humps. And you know, sometimes it's just maybe you're you're doing code and you just can't figure out the code. Right? Okay? Well bring someone in who knows it or find a partner who can help you. But don't suffer in silence. Don't let it go on too long. Again, time is your killer. It's not the ideas, it's not money. It's time, people's patience. Just won't be there. If you just kind of wallow a little bit, don't do that.
Jonathan Fischer 25:36
Yeah. Yeah, you're predicting the velocity of the funding that you might receive, thereby reducing your likelihood of getting sed funding in the future. So yeah, you don't wanna let that go on too long. You might, you might really get into a full relaunch otherwise, right, which is a whole nother whole nother issue. So let me flip the question around a little bit. Let's say that you haven't hit a plateau. And you're off in your to the races. Maybe you even had round a, what do you recommend to try to get out ahead of this, are there some steps that that a founder could take to avoid this issue?
David Jones 26:12
Well, as I mentioned earlier, even if you've gone to round a, you're not 100% of the way there yet, okay. And so you really need this de risking plan, maybe you have addressed all the deal killers, but now you have these path dependent risk, and path dependent risk are things like what you're going to price your service for. Okay? That is really important on your profitability, but you can't set that price until you have some information. So that's why it's kind of a path dependent risk it, you know, you really have to understand it. The other thing is, let's say you're a material company, and you have to have some type of operations or manufacturing, you don't know that until you get to the point where the product is ready to go. And so that, again, is another path dependent risks. But those could be those could be really big for you, they can be very expensive for you. And so you need to again, prioritize those path dependent risk around a kind of a difficulty level, and really try to attack the ones that are easier first, so that you can get some momentum going, and then attack those big ones once your company is real, because again, the deal killers are addressed already. So you know, your company is feasible. What you don't know is whether it's viable or not. All right, and this is what the investors at that level are looking for. They're looking for some kind of viability. Many times in viability, this is when you're taking product out to customers for testing, right. So whether it's a new software, a new service, or a new product you're taking out, this is the time to find those early adopter, the comp companies partner with them, usually under a secrecy agreement or something so they can test it in real life, you know, in real application so that you get that feedback. This is when you find out whether it's viable or not. Right, you know, it's feasible, you've proven it. But now you got to see whether it's viable in the real world, whether you can hit the profit targets, whether you can hit your your customer targets, and then you start getting a feel for how big could this be? Now, you you have been out there talking about this huge opportunity. But now you really kind of know, once you're out there talking to customers, and you're using that product or that service, you kind of get a sense of how big this can be. And this is where it could get really exciting for a business. You know, this is where you can go back to your your investors and say, Wow, we have actually taken this out to customers. They are so excited. They're pushing us now. Right? They're pushing us to drive faster. That's the exciting part of a venture. Now if you see the opposite, and you hit another ceiling where the customer say no, no, no, it's not perfect. It's like 90% of the way there which is what you typically see the first time all right, okay, that's part of it, get back figured out that last 10% which is usually the hardest and sometimes the most time consuming part of the project is that last 10% But you've got to do that to get to the point where those first couple of customers go yes, you've got something here
Jonathan Fischer 29:24
this is where the reiterating comes in the innovation Yes, that's gonna actually save the day if it wouldn't once you have that feedback from the market. Is that kind of what what we're hearing here?
David Jones 29:33
Absolutely, yeah, you've got to be just cranking it through time and time again until you get that that perfect sweet spot of you know, pricing and, and service and product.
Jonathan Fischer 29:46
Yep. Well, David, I feel that engineer background coming through in today's conversation, everything just it feels like it's how all the parts are meant to work together. It's been great to have you on the show. I'd love to have you back. Sometimes I can sense we can go deeper. on many of these subjects and others, how can folks reach you directly if they would like to learn more about what insights you bring to the marketplace?
David Jones 30:08
Yeah, sure I can be reached over LinkedIn. You look me up David Jones with sales acceleration, you can find me. My email address is D. Jones at sales acceleration with an x.com. Or you can give me a call and my telephone number is 614-364-0698.
Jonathan Fischer 30:33
Well, fantastic. Well, David, wonderful to have you on the show and a reminder to everyone today's program is sponsored by overpass. Overpass is the world's leading low cost platform for hiring top quality talent quickly, you can open your free firstname.lastname@example.org For everybody here at the overpass team David our listeners. Thanks for being on the show. We're gonna sign off tonight. Take care everybody