The Billion Dollar Questions

Supervising Disruption

In the final part of this series, I want to come back to the premise I started with – that the challenge of building deep tech businesses is that of managing the complexity of both world class technical innovation and experienced industry knowledge. If supervising disruption is about combining ground-breaking innovation with the ability to bring those solutions to real customer problems – and in the way that customers want to consume them – creating the right customer facing capability in a company is critical. There are big calls to be made – most of them around the timing of hires.

Big cautionary tale here: I think I can safely say that in our experience the single biggest mistake early stage deep-tech companies make is hiring senior sales people to soon. It’s an easy mistake to make. You’re selling into big-pharma. You’re struggling to get the right meeting. You meet someone who appears to know everyone, can you get you into the VP of this or the MD of that – as a founder you want to run the company and code, and leaving sales to the individual with the best rolodex seems eminently sensible. You feel you are a grown up now.

But sales is coin operated. Sales people move the company toward what they think they can sell. A lot of meetings and a lot of noise starts to look like an impressive pipeline – but an experienced industry sales person cannot be expected to have a really refined understanding of the probably still loosely defined technology, nor balance the inherent trade-offs between a bit of customisation to make a sale and a whole-sale shift in direction. If you believe the milestones we’ve discussed previously, significant revenue traction typically comes after an extensive PMF dance and volume proof points have been delivered. Founders are much better placed to manage those processes.

So what can you do on this journey to balance the technical vision and the customer journey?

• Better hope at least one founder can do it – as an investor, whether or not one founder can do customer development work, or be coached to, should be a key assessment criteria. As a founding team, one of you is going to have to be that person – and you should prepare for it. As previously noted, I’m very wary of hired commercial hands – at least at the stage at which we invest.
• Or at least find someone you know who can – an inexperienced founding team should find an experienced investor or advisor. A board should try and find an experienced sales coach who can read the smoke signals for their founders. Indeed, E1 believes strongly in the need for this, so much so that we have built capability and have invested in an inhouse team – if I was a founder I would look for that support from an investor.
• The inbetweener – rather than a pure sales captain, the first commercial hire may be more of a hybrid role, an intellectual sparring partner for the CEO or whichever founder owns the customer. This could be someone with a strategy or business development background – someone who could perhaps migrate later to owning a strategy, strategic marketing or partnerships position in the company – but who has a background in the industry, is comfortable in customer facing roles, understands the trade-offs and is comfortable in negotiating one-off deals which – while sound commercially – respect the strategic needs of the company.
• The Chief Commercial Officer – and then come the big guns, for most deep tech companies a post Series A investment. Once you are really at PMF (the first iteration of it at least) then now is the time to hire the experienced sales hand who can help scale operations, build the commercial team and maximise revenue. The first 5 to 10 customer sales are going to be all slightly one-off – operationalising that base into something procedural and repeatable is typically the job for someone with plenty of previous experience. These people are out there – good ones will typically know when the time is right to sign-up, when the company is ready. Later stage investors will look for them – and they are key to growth. But only at the right time.

Of course there are scaling landmarks on the technology side – teasing out the right balance of VP Engineering and Chief Scientist in your founding CTO, and figuring out when to hire a really strong independent product lead are two that spring to mind. But for me getting the balance of tech and customer development, experience and naïve creativity right is the most important one. The right person at the right time can transform the fortunes of a company – so much so that you’ll think “we should have done this so much earlier”. But remind yourself that there was a good reason you didn’t and that timing is everything – and reward yourself by watching the rocket ship take off.