The acceleration program, backed by property conglomerate New World Development, has launched its second round off the back of a successful first cohort. A few days ago, United Nations Secretary-General Antonio Guterres urged world leaders to declare a “state of climate emergency.” As [...]
By William Gilchrist
How a lack of sales experience is killing the tech community
There is a disturbing trend rising within the tech investment community. Capital is being carelessly distributed at a rapid rate into under-vetted products with an undefined product-market fit. Founder experience in facilitating sustainable business strategies is also being vetted at a much lower rate than one would expect.
Rarely ever do investors look into a founder’s sales experience before entrusting them with building sales and marketing structures for their companies. Research shows that only 8% of tech CEOs have primary backgrounds in sales (Korn Ferry Institute). Ironically, most investors tend to prioritize revenue generation and market expansion as key targets for their portfolio companies.
Investors are imposing sales and marketing targets on companies run by people who have never sold or marketed products. This ‘product first’ investment strategy works in terms of generating buzz from the media. It sounds attractive on podcasts and press releases, leaving the leadership with a feeling of being ‘brilliant.’ However, users and staff end up suffering the consequences.
Take, for example, the fact that Singapore has consistently had a 30% startup failure rate within the first 36 months (SBS Group). We have accepted these metrics, yet have never challenged their logic–or our behaviors–to improve them.
The unacknowledged truth understood by most people in the Southeast Asian startup community is that returns are a source of intense pressure on companies and investors alike, but rather than synergizing strategies between investors and startups, poor results are covered up with forecasts and ‘growth numbers.’ It has grown to the point that some companies are merely looking for a ‘good enough story’ to tell their investors to stay afloat.
We don’t need to look very far to see examples of how this has had a significant impact on companies. Notably, Honestbee currently owes over US$1 million in unpaid salaries to its employees, and has discontinued its overseas operations (TechCrunch).
We are often told that investment firms will give their ‘minds and hearts’ to their portfolios, but in reality, we need their ‘hands.’ Where are the incubators that build sales and marketing departments for their companies? Where are the leadership, cultural, and sales training budgets for founders within VC firms? How often do investors teach their portfolios how to win rather than hoping that they will?
There are positive instances of active startup support in the market. For example, Malaysia’s MDeC Enterprise Division is working to bring in external specialists in business development, sales, marketing, and finance to support their startups.
Aside from these isolated cases, there aren’t many similar stories in the region. Investors sometimes suggest that they don’t want to be seen as distracting or exerting too much influence on the founders in their portfolio. However, giving these companies vast amounts of capital with no direction leads to returns-focused behaviors, and diminishes the incentive for quality output. It sets these companies up to fail.
The best solution is for investors and advisors to be more hands-on with their investments, and develop systems based on their experience to enhance areas of their portfolios from the ground up. Take the ego out of the equation and listen to outside voices looking to utilize technology for a broader purpose. Otherwise, we are simply spinning the wheels on an industry that has a great deal of promise.
About the Author
William is the CEO and Founder of Konsyg, an on-demand provider of sales services for tech companies. He began his career as a Media Relations Manager for Wai White Dragon, moving on to roles in education, marketing, and business development. William was most recently an APAC Knowledge Manager for Google, and Director of Sales at TradeGecko.