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Open Source / Tech Careers / Tech Culture

Entrepreneurship for Engineers: 4 Lessons about Revenue

Founders of Element, Jetstack.io, Percona and Snyk offered advice for startups on raising money at a panel during OpenUK’s inaugural conference, State of Open Con.
Feb 24th, 2023 7:15am by
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Entrepreneurship for Engineers is a monthly column by longtime New Stack contributor Emily Omier that explores the concerns of developers who want to build tools for other developers — and build a business around their innovations. We welcome your feedback, and ideas for future columns.

LONDON — Perhaps the most pressing question for any entrepreneur is quite simple: How are you going to get revenue? This tricky question was the focus for one of the panels on entrepreneurship at OpenUK’s inaugural conference, State of Open Con. Here were some of the lessons.

1. Get Comfortable with Sales

Many founders don’t consider themselves natural salespeople and aren’t extremely comfortable with selling. Yet panelists agreed that this is one skill founders have to cultivate and should not plan on just hiring someone to fill.

“You can not build a company without founder sales,” said Amandine le Pape, chief operating officer and co-founder of secure messaging company Element.

At the beginning of Percona, the open source database company he founded, Peter Zaitsev didn’t understand why salespeople were so important, he acknowledged — or why they got paid so much for taking customers to fancy restaurants. But after starting his company, he had to learn to sell and realized both how critical it is to a company’s success, and that it’s a skill that can be learned.

Of course, selling, like other entrepreneurial skills, is something that can be picked up  as you build your company. But if you’re planning on building a company in the future but aren’t ready to leave full-time employment just yet, Matt Barker, OpenUK’s entrepreneur in residence and founder of Jetstack.io, has a concrete suggestion: Get a job in sales. He was a salesperson at Canonical and MongoDB before he became an entrepreneur.

2. Don’t Worry About Becoming a ‘Deal-Maker’

Part of the problem with sales’ reputation among entrepreneurs is a confusion between selling and “deal-making.”

Deal-making is hammering out the nuts and bolts of a deal — negotiating price and payment terms, for example. Both are necessary, but founders don’t have to become experts at deal-making, while they do have to sell. Salespeople, on the other hand, should be amazing deal-makers.

Selling, all of the panelists agreed, is really about connecting your product to your customers’ needs, in language that they’ll understand. “Selling is distilling how the product solves a pain point,” said Guy Podjarny, founder of the developer security company Snyk.

And while deal-making might be about hammering out details, it should be relatively straightforward if you’ve done a good job communicating the value your customers will get from the product. “If we align on value, we should align on price,” he said.

3. Product-Led Growth Does Not Replace Sales

Just because you’re following a product-led growth strategy doesn’t mean you can avoid either selling as a founder or hiring a sales team, when the time comes.

“Around 70% of our deals have at least one user already using the free version,” Podjarny said about sales at Snyk. He added, “The vast majority of our deals involve a salesperson.”

That’s not just to get the deal signed, either — sales can be critical in ensuring that a new customer is onboarded correctly, understands how to use the product and how to get the value they’re looking for. Customers often aren’t as successful with the product if they don’t go through sales, Podjarny said, and that by itself is a reason to build a strong sales team.

Product-led growth is not a replacement for a sales strategy. Rather, the two work symbiotically so that users discover the open source or free product, and are then successful getting their needs met when they upgrade to the paid product.

As a company, putting too much focus on product-led growth can also end up poisoning your relationship with your community. “You do not want to look at your community as a group of leads,” le Pape said. “That’s how you get them to run away.”

If you’re expecting your open source project to bring in leads, it will change how you relate to the community — in a bad way.

It also can lead to concerns about the open source project cannibalizing your commercial offering. “Many people fear making the open source software too awesome,” Podjarny said. “Then they cripple their open source software.”

Ultimately, the open source software has to be good and provide real value, and so does the commercial product. The key is to understand which use cases are appropriate for each edition and target your outreach accordingly.

4. Accept that You’ll Make Mistakes in Sales, Too

Just like in other areas of the business, you’ll make mistakes when it comes to sales. Sure, there will be deals that could be closed that you’ll flub, but not every closed deal is a success.

“Some sales won’t be profitable,” Zaitsev said. “You’ll make promises you can’t keep.”

Barker’s word of advice about sales is in the fine print: payment terms. Especially as a young company, it can be easy to be seduced by a big deal, only to realize you’re not going to see any revenue from it in 90 or more days — and you have to deliver in the meantime, which is especially challenging if you’re a bootstrapped company.

Regardless, whether you’re building an open source business or a closed-source business, you’re building a business, which means you have to be committed to creating a repeatable sales process. Eventually you can bring in salespeople to do most of the selling, but when?

According to Podjarny, the sign to bring a salesperson when all the sales calls are sounding repetitive and you’re not learning anything new from each call.

And when you do hire a salesperson, it can be a good idea to hire two at the same time. Otherwise, if a new salesperson isn’t successful, it can be hard to know if the person is the problem or if the problem is your messaging, or even your product.

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