Dialogue with Founders Fund Partner Sam Blond: How Founders Drive Sales and Growth in Startups

Source: Alliance YouTube Account

Host: Imran Khan, Co-founder of Alliance

Guest: Sam Blond, Partner at Founders Fund

In the field of venture capital, Founders Fund is a true legend.

In 2002, Peter Thiel, known as the "Godfather of Silicon Valley," sold the PayPal he co-founded to eBay for $1.5 billion and established Founders Fund in 2005, primarily investing in consumer internet companies. Its successful investments include Silicon Valley stars like Facebook, SpaceX, Palantir, LinkedIn, and Spotify. Currently, Founders Fund manages assets exceeding $12 billion.

In April 2024, Alliance, the largest accelerator in the crypto world, announced a strategic long-term investment from Founders Fund, with the investment amount undisclosed. As part of the investment, Founders Fund will provide support to Alliance's portfolio companies.

As a "bonus" for this investment, Imran Khan, co-founder of Alliance, had conversations with several partners and marketing executives from Founders Fund, most of whom have direct entrepreneurial experience. They discussed how founders drive sales and growth for startups, how to build cryptocurrency brands, how to find suitable partners, and condensed various entrepreneurial insights.

Deep Tide TechFlow has compiled this dialogue collection in Chinese to share with everyone.

Table of Contents

1. Sam's Background: Sam Blond's career has primarily focused on technology sales. He initially worked as a sales development representative at EchoSign and later held vice president positions at several companies. He is now a partner at Founders Fund, focusing on investing in B2B software companies.

2. Sales and Startups: Sam discussed the importance of founders being involved in sales during the early stages of startups. He outlined three stages of startup sales, emphasizing that founders are best positioned to understand and sell their products and vision, making them the most effective salespeople in the early stages. For sales teams, having a successful sales model and an existing customer base is crucial for developing effective sales strategies.

3. Taking the First Step: Sam advised founders to leverage their personal networks for initial sales. He encouraged founders to step out of their comfort zones, actively engage with customers, and adjust strategies based on initial sales feedback to ensure better product-market fit.

4. Network-Based Sales: Sam discussed how to utilize existing networks for sales, likening the sales process to a concentric circle model. He suggested that founders start selling from their closest contacts and gradually expand to a broader network.

5. How to Qualify Customers: After making the first sales call, Sam suggested asking questions to assess potential customers' genuine interest and needs to determine whether to continue follow-ups, prioritizing those truly interested in the product.

6. Sales Process: Sam discussed the importance of establishing a clear sales process. Creating a defined process can help address indecision and uncertainty that founders may encounter during the sales cycle, while also providing buyers with a clear purchasing path.

7. Creating FOMO: Sam discussed the importance of creating urgency through limited-time offers and exclusive deals to enhance product appeal.

8. When to Hire Salespeople: Sam mentioned that founders should consider hiring new salespeople after acquiring a few non-personal paying customers. He suggested hiring at least two salespeople to accelerate learning and adjust sales strategies.

9. When to Invest in Marketing: Sam advised that businesses should invest in marketing activities only after confirming product-market fit, using advertising and brand promotion to expand brand market influence.

10. Large Markets vs. Small Markets: For companies targeting smaller markets, such as those in the cryptocurrency industry, Sam believes that clear positioning and high focus are key to success. He used Brex's early strategy as an example, discussing how to attract early users through specific product features and market positioning while leveraging tight networks within the industry to build brand awareness.

Here are the main points from this conversation:

Sam's Background

Imran: Can you briefly introduce your background?

Sam:

Sure, I grew up in Kansas City, so I'm from the Midwest. I attended the University of Missouri and moved to San Francisco in 2008, where I've basically been in the tech sales industry ever since. I initially worked as a sales development representative at a company called EchoSign for a little over five years, then became the VP of Sales at Zenefits for about two and a half years. I served as the Chief Business Officer at Brex for four and a half years, and now I'm a partner at Founders Fund, investing in B2B software companies.

Sales and Startups

Imran: I think there are possibly three stages for startups in sales. One is the founder-led sales stage, the second stage is trying to find product-market fit and achieve growth. The third stage might be reaching over $3 million in scale. As a founder with a tech background, why do you think sales should initially be led by the founders themselves?

Sam:

I think there are two reasons. Initially, for most tech companies, customer acquisition is led by the founders because from a business perspective, founders have the best chance of closing new customers, and no one understands the product or the company's vision better than the founders. No one knows the target market or the intended audience better than the founders, so if the founders cannot acquire customers and generate revenue, then a salesperson who understands these things less than the founders won't be able to do it either. From a business perspective, founders are better at acquiring customers. From a salesperson's perspective, you really want to enter an environment that already has a customer base, where you can model the success of those customers and understand what methods worked well in acquiring those customers, so you as a sales representative are not coming in with a blank canvas, having nothing to model or reference. This again indicates that you are not prepared for success from a sales representative's perspective. So I think from both perspectives, if you are the company, you have a better chance of acquiring customers; if you are the sales representative, if the founder has already done some groundwork, you also have a better chance of acquiring customers.

Taking the First Step

Imran: But most founders tend to be introverted, focusing on building great products and working with engineering teams. What advice do you have for those founders who are afraid to take the first step?

Sam:

First, finding a way to make yourself comfortable is crucial. Every company I've encountered (which numbers in the hundreds, if not thousands) started in the same way, including many of the most successful tech companies we know, where founders stepped out of their comfort zones, began interacting with customers, and achieved their first revenue.

Network-Based Sales

Imran: In your tweet, you hosted a sales talk at Gary Tan's house, where one point was about how you build your community. You mentioned leveraging in-network sales and what you did at Brex. Can you explain this concept? For those who are not part of YC or Alliance, how do you think they should consider building such a community?

Sam:

This aligns with what I mentioned earlier, that as a founder, you can take various measures to make this process more comfortable and effective. You talked about stepping out of your comfort zone and effectively becoming a salesperson. Therefore, I think the way to acquire customers, whether it's your initial customer base or subsequent customers, a good analogy is to think of it as concentric circles. You want to start from the innermost circle, which is often your personal network. We can take Brex as an example; if you are the founder of Brex selling to other startup founders, we are the first corporate card aimed at startups, so one thing you might want to do is look at your LinkedIn and create a report to see who in your network are founders of startups, and if their companies fall within this range, then you start reaching out to those people first.

Then as you expand, you start reaching out to your second-tier contacts, even those in the same industry but not necessarily in your direct network. You continuously expand that circle until you basically cover the market you are interested in, or until you achieve a satisfactory market penetration rate. It's very important to remember that this applies not only to sales. It applies to all forms of business development, partnership building, and networking. This is a very comprehensive way to grow your business, not just through sales, but through various different avenues.

When you start seeing repeat customers coming back and referring new customers to you, or when you start seeing your market influence spreading through word of mouth and other forms of organic growth, that's when you know your network is truly serving you, and you can start pushing boundaries and expanding into new areas or verticals. This is a key part of developing any business, understanding when to push forward and when to consolidate what you have, which is about finding the right balance between expansion and stabilization, crucial for maintaining long-term growth.

How to Qualify Customers

Imran: Suppose I am a founder. I made the first sales call; what should I do next? How do I determine customer qualification?

Sam:

I think it is indeed necessary to qualify customers. So let's start from that point. At the end of the first call, you can ask questions like, 'How significant is this for your business?' or 'Given everything we discussed today, are you interested in this project?' You don't want to act blindly and waste time following up with those who view these questions as low priority. You really want to focus on those who find this actually very interesting and prioritize them. Another point is if you keep hearing 'this isn't really a priority for us,' and this is precisely the target customer you built the product for, then that's a signal that you might need to reconsider your product-market fit. I've seen some founders make the mistake of trying to push things forward, like bringing in SDRs or AEs, without having the product meet market demand.

Sales Process

Imran: You talked about creating a process where you can list who the decision-makers are and show this to your sales targets. Why is this important, and why should all founders do this?

Sam:

I thought of two points. One is from the founder's perspective. One thing I often hear is hesitation when it comes to chasing payments or not knowing how to handle the sales cycle and customer acquisition process. So first, you need to address this from the founder's perspective, making it as clear as pinning a thumbtack on paper, listing the steps that should be followed. On the other hand, there's the buyer. Buyers don’t know how to purchase your product. As a founder or salesperson, your job is to teach buyers the best methods and pathways, such as how people can start using your product, so you need to address the issues of both roles simultaneously.

Creating FOMO

Imran: Finally, how do you create FOMO? You mentioned discounts, which I think is one factor, but I believe there are many other factors to creating FOMO. So what should first-time entrepreneurs do?

Sam:

I think the essence of sales is psychology. One method you can leverage in sales psychology is the concept of creating FOMO. This is certainly not a one-size-fits-all approach, but at different stages of a business, you can use different methods to achieve this. In the early stages, you might want to do something for those who can be significantly impacted, which can help you identify their interest. One way is to say, "As you can see, we are currently in beta testing, we don't have a website, and we are only accepting a limited number of customers, and we are almost at that limit. We can let you in; we just need to know if you want to join, and if you do, here's how we start." This creates a bit of a time constraint, generating urgency on the buyer's side. As the business continues to grow, there are other ways to achieve this. For example, at Zenefits, we had a very effective implementation fee that we would waive based on how quickly customers moved forward. Suppose it's early December, and if someone implements before the end of the year, we would completely waive the implementation fee, which also creates urgency on the buyer's side. As you continue to expand, this might be part of your adjustments, and it becomes a very effective way to drive action.

When to Hire Salespeople

Imran: You are a founder with $1 million in revenue. I want to go back to your experience at Brex; when did you join? When do you think is the right time to hire the first salesperson?

Sam:

I don't know if this is necessarily tied to revenue. I think everyone should start with founder-led sales, especially in B2B. When you have a few, what I call non-friends-and-family paying customers, you can bring in external sales support. When you are ready to hire your first salesperson, by the way, this will map to different net asset returns and different numbers of customers. If you are a business solution targeting larger enterprises, then the number of customers will be fewer, but the revenue amounts may be higher. If your ACV is six figures or something similar, when you have three or four paying customers and a total revenue of $500,000, you might consider hiring a sales representative. At Brex, our target was startups. In fact, before we hired our first sales representative, we already had dozens of customers. Our revenue was minimal, just transaction fees from limited card usage. This doesn't completely equate to total revenue or customer count.

When you are ready to bring in your first salesperson, hire two sales representatives. There are many different reasons for this; let's start with the fact that the speed of learning will double. These two salespeople can share with each other, so the speed at which you enable them to succeed is actually doubled because you have two different people trying different approaches, learning different things from the past, and then sharing with each other, so your progress will be much faster.

Another big reason is that if you only hire one person and that person doesn't succeed, you won't know if you hired the wrong person or if your product doesn't fit the market. But if you hire two people, there will be a few different outcomes. Both could succeed, which is certainly the ideal scenario. If that’s the case, I think that’s strong evidence of product-market fit and strong evidence that you can continue to scale the business. If one succeeds and one does not, then it’s likely you hired the wrong person, and you should replace the one who isn’t succeeding. You can hire someone who is more like the successful one. If both do not succeed, that’s a good indication that your product does not fit the market. This requires rethinking how to enable external salespeople to succeed. If you only hire one person, you won’t learn anything. So hire two people instead of one. Once you have two successful salespeople, you can hire a sales manager and continue to scale your go-to-market organization.

Imran: You mentioned in a talk that you shouldn't immediately hire a sales manager but should first hire two sales representatives, and if things go well, then hire a sales manager. Why is that?

Sam:

I would advise almost all startups that before hiring sales leadership, you should first hire salespeople. When I joined Brex, I brought in the best salespeople, and I hoped that the salespeople there would be better than me because I had been a sales leader for a long time. After many years in sales leadership, if I wanted to go back to being a salesperson, my capabilities might not be as good as a truly excellent salesperson, and that’s one reason. Another important reason is that for most companies, the best sales leaders are not willing to join a company where there are no other salespeople and only the founder can acquire customers. Because it’s a high-risk situation for a sales leader to join such a company. Hiring two successful salespeople first allows us to reach a total revenue of $1 million, and then we can bring in a sales leader to continue scaling the market organization, doing what they do best, which is leading teams, recruiting, and hiring staff, rather than selling deals on their own. That’s our philosophy.

When to Invest in Marketing

**Imran: We often receive questions from founders asking, "Should we start spending money on marketing and partnerships?" So what advice do you have for founders who are in the *seed round* or pre-seed round? Should they focus on marketing or partnerships, or should they purely focus on product-market sales?**

Sam:

Let’s go back to the concept of concentric circles. When you are just starting out, by definition, you have no brand and no marketing. You have a founder and some engineers who have built a product. You want to test this product through the network relationships we talked about, so you can more easily connect with people and pitch the product. You start acquiring some customers, and as you have evidence that the product fits the market, we hire a few salespeople. Now we have a website that people can access, we have some salespeople, and we are acquiring more customers.

We expanded a bit beyond this concentric circle. One thing we did at Brex was to abstractly tell other startup founders that as these concentric circles continue to expand, you will want to leverage some marketing or branding to make your customer acquisition efforts more effective. I’ll give two examples of what we did at Brex. One was when we launched the product in June 2018. We wanted to create a buzz. What we did was, in addition to doing some PR around fundraising, we probably sponsored some podcasts. The most important thing we did was put up billboards all over San Francisco, which cost about $200,000 to $300,000. So, you know, that falls squarely into the realm of brand marketing. But if you think about the concept of concentric circles, when we launched, we did a lot of PR around fundraising, and then we put up these billboards, and everyone in the company updated their LinkedIn and posted about it. Then we specifically targeted companies and founders in the areas where we launched these billboards. If a founder passed by our billboard in downtown San Francisco on their way to work, they would be much more likely to respond to us than a founder in New York, who wouldn’t have the same experience.

So to directly answer your question about investing in marketing and partnerships, you should invest in marketing only after proving product-market fit. I think the stage when this starts to happen is when the founder has acquired customers, your sales representatives are able to acquire customers, and now you are confident that you can scale the business. So let’s start investing in marketing initiatives to make our customer acquisition strategies more effective.

Large Markets vs. Small Markets

Imran: One last question, cryptocurrency is largely a slow-growing market. What advice do you have for founders who do not have many large enterprise customers but have more small and medium-sized business customers?

Sam:

The issue is that the addressable market for this type of company is limited, because there are not many cryptocurrency companies comparatively. While it’s not a direct analogy to Brex, there are similarities to some extent. Brex was launched as the first corporate card aimed at startups. In the U.S., the startup market represents a small fraction of existing businesses globally. While it may not be as small as the crypto market, I still want to share how I would approach it. We benefited from two things when we launched early on, which I think relate to your question. First, our positioning was very clear; we were the first corporate card, and everyone knows what a corporate card is. Therefore, I think our product clarity was a significant advantage. Secondly, we were the first company to offer a corporate card for startups. So we were very deliberate in choosing our market. If you know the story of Brex, one reason we succeeded in the startup space is that we introduced the concept of "no personal guarantee." Traditional credit cards require founders to personally guarantee the credit card, and if they don’t pay the bill, it affects their credit score, and they bear personal liability. Another thing we did was underwrite based on the company's cash balance in the bank. If you are a startup with millions of dollars in deposits, you can get a high limit. Compared to American Express, where founders might only get a $10,000 credit limit, if we underwrite based on cash balance, the credit limit can be much higher.

What’s less known is that we were not the first company to offer this underwriting model. There was a company called Divvy at the time, and perhaps others, but they weren’t as conscious about customer targeting. So when Brex launched the first corporate card aimed at startups, if you were a founder of a startup, when people saw this brand, you would immediately be interested in the product because you identified with the narrow market of startups. So I think for companies selling products to cryptocurrency, there are a few things to keep in mind. One is to seriously consider your positioning and target audience. Another point is that this community, like startups, is very tightly knit. So appearing in places they frequently visit, which are often conferences, is important. Also, just like startup founders, cryptocurrency founders, and people working in cryptocurrency companies, they will know others in the community. So leverage the relationships you have already built to increase brand awareness among potential new customers. I think this is possible when selling to a very narrow market, while it’s less likely when selling to everyone.