Zero to One: Notes on Startups, or How to Build the Future was published in 2014 by venture capitalist and PayPal cofounder Peter Thiel, along with one of his former students, Blake Masters.
As you might suspect from the title, it is a blueprint of sorts for building a startup, and its content is a condensed and updated version of the CS183 class on startups taught by Thiel at Stanford University in 2012.
In it, Thiel touches on many aspects inherent in building a successful business, most of which we won’t go through there: raising venture capital, building a founding team, and managing technological change.
However, even if the focus of the book is on building companies, and even though he keeps the discussion relatively abstract and somewhat lacking in concrete advice, there are golden nuggets in there for the aspiring sales star – from how to connect the marketing strategy with the sales approach to how pricing should inform the way you look for prospects.
Lesson #1: Sales or marketing? It’s about price.
When most people hear the word “salesperson”, they think of a man in a cheap suit going door to door hawking vacuum cleaners. Not the most flattering image.
But in business, sales is vital.
Many people, especially techies enthusiastic about breaking new ground, would prefer to focus on product innovation, but innovative products are worthless unless they’re sold. And there’s no product that people will buy without you selling it.
To put your product or service in the hands of the people who would benefit from it most, you need good distribution. This not only includes the sales channels themselves but also the effort and organization it takes to build them.
According to Thiel, you always need to consider the potential of each client before deciding how much effort you’re willing to put into making the sale.
In other words, your sales OR marketing channel’s Customer Acquisition Cost has to match the Lifetime Value you get from that customer.
There’s just no other way.
So how can we group sales methods based on CAC vs LTV?
First we have complex sales: sales of very expensive products and services (price tag >$1M). Here, the CEO has to also be the main salesperson, because clients spending such sums expect a certain amount of personal involvement from the vendor’s leadership. For example, when Thiel co-founded Palantir, a single sale brought usually a few million dollars – at that price tag, clients would accept no “account manager” other than direct discussion with the CEO.
Oozing and schmoozing
Second come the personal sales (price tag ~$10K). If single sales deals bring only a few tens of thousand dollars apiece, it wouldn’t be an efficient use of time for the highly paid CEO. In this case, the CEO relies on senior, experiences salespeople to represent him.
Thiel gives the example of Box (the cloud storage provider),which started with small groups of users who had the most acute file sharing problems. Box’s sales reps built relationships with increasingly important users in each client company: for example, they first sold a small account to the Stanford Sleep Clinic, where researchers needed an easy and secure way to store experimental data logs. Today the entire Stanford Hospital runs on Box.
Complex sales would not have worked here: if it had started off by trying to convince the president of the university to sign on an enterprise-wide solution, Box would have sold nothing.
Less schmoozing, more product demos
For products and serviced with a price tag around $100 or less, marketing and advertising should be your tool of choice. This is an area where you can market relatively low-priced products that have mass appeal but lack any method of viral distribution.
However, Thiel warns to avoid competing with big companies in the endless contest for most memorable ad campaign.
Well, maybe with the exception of the wacky inflatable arm flailing tube man
Viral marketing comes last. For products/services priced around $1 only: being cheap, viral marketing works great for products and services like Facebook, Dropbox, and Paypal itself.
Lesson #2: The “Valley of Death in Sales” is real.
You might have noticed that Thiel doesn’t give any option to small businesses selling products and services priced around $1,000. His reasoning is that there is no efficient sales or marketing channel that can offset the cost necessary to acquire customers in this price range.
In 2012 to 2014, when the book was conceived and published, it made sense.
However, much has happened in the three years since.
On one side, lead generation cost and accuracy have been vastly reduced. In 2012, with all the advancements of the Internet, you’d still need to rely on a business development team (either in-house or outsourced) to either qualify raw data that you’d buy from a “email list vendor” or to manually connect with prospects on LinkedIn or elsewhere.
On the other hand, there’s been tremendous evolution in sales automation tools: you can now personalize emails much easier (and cheaper!) than it used to be, at scale. You can send video messages that put a face to the name. You can tweet to, connect, and message people on LinkedIn and Twitter – automatically.
In fact, Cliently was built with this very goal in mind: to help entrepreneurs and sales people coming from smaller companies play on a leveled playing field with the big enterprises that otherwise have significant resources and teams at their disposal.
Lesson #3: Don’t buy into the latest marketing fad!
We’ve said it before, and Thiel seems to be with us on this one: how you price your service matters.
Sales and marketing is not a matter of AND – in most cases it’s a matter of OR.
Especially when it comes to B2B products and services, it’s much more efficient to invest in tools that can help you scale and automate your sales processes rather than in publishing more content, wasting your budget in pay-per-click ads, and collecting vanity metrics on social media.
Take it from a marketing guru himself:
Yes, we have an interest in promoting sales as an effective channel – just as they have an interest in promoting marketing and “growth hacking”. But while sales tools such as Cliently have a direct, easy to prove ROI, what you get from content marketing or social media is much more “vaporous”.
Don’t believe everything the self-styled marketing gurus will tell you.
Even they will admit sometimes they go too far.
Certified in bowties and facial hair
Comment below and let me know what you thought of this book.
About the Author
Vas Musca
A growth marketer and digital nomad, Vas leads Cliently's marketing efforts.
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