Idea in brief: excellence, ambiversion, humility, lovability and servitude are a winning combination for software sales pros. Throw in a little provocation and you're off to the races.


Hiring practices are changing in front of us. Companies like Google are unveiling data that shows that typical patterns (school ranking, degree, brain teaser results, etc.) don't correlate with job performance. And many classic hiring approaches completely backfire.

What does matter? Well, at Google it's intellectual humility (embracing others ideas when they're better) and cognitive ability (processing information on the fly). Google also looks for an element of excellence that increasingly isn't based on a university experience at all: 14% of Google employees on some teams didn't graduate from college.

With a relatively robust 2015 likely ahead, many of AGP's clients are ramping up their sales teams. Accordingly, we often have conversations around what hiring criteria they should use. 

Here's what we've learned, from building our own sales teams and helping others:

* Excellence Matters: the best sales folks have a light confidence that has come from success. There's no question about it: if they've been great before, there's a good chance they'll be great again. And accomplishments feed overall happiness, per Martin Seligman's research on positive psychology. But greatness can be demonstrated in many ways: music, sports, academics, service, volunteerism. The important thing is to look for people who have constantly worked hard and performed well against objective, measurable standards.

* Ambiverts Win: the old adage that says extroverts make the best sales people? Wrong, according to Daniel Pink, the best selling social psychologist who draws on work from Wharton's Adam Grant. It turns out that people who both listen AND communicate really well, and who are able to adapt to lots of situations, sell the best. And those introverts? They're only slightly less productive than the extroverts -- so don't count them out! 

* Humility is Crucial: per Google's points above on intellectual humility, generally humble and appreciative people tend to do much better with companies over longer periods of time (at least in our experience). Have a candidate who refers to themselves frequently in the third person? Notice a big watch that seems to scream how well they've done? Pick up an overabundant tendency to suffer from the fundamental attribution error (e.g., "my success is because I'm great; any failures were circumstantial")? Chances are, these signals of a lack of humility will cause the candidate to struggle to do well consistently.

* Lovability is Required: we all make snap decisions, as Gladwell classically outlined in Blink. And with prospective clients for your company, time and again we've found that people buy from people that they like. And really, as Barbara Frederickson demonstrated, they buy from folks they love (even if they wouldn't describe it as love, their brains deeply appreciate a state called "neural coupling"). So, for hiring? Trust your snap judgement. If you don't "love" that prospect for a sales role immediately? Keep looking.

* Servitude is Rewarded: one of our biggest "ah-ha" moments in sales was when we realized we never had to actually sell anything. All we needed to do was genuinely help people in a way that made it easy for them to buy. Like Jim Collins' Level 5 leaders who blend deep humility with intense professional will, service-oriented sales people have a winning platform.

Finally, a recent trend in enterprise sales is the use of provocation, per the TCG perspective in HBR. While provoking buyers doesn't work in all situations, a sales person who knows when and how to be provocative has one more big tool in their kit to draw from.

Of course, you will want as much experience, chemistry and value alignment as possible. But given that, look for excellence, ambiverts, humility, lovability and servitude. And see if you can find a bit of provocative glimmer. Building a team of folks with these traits may not ensure that you win -- but it will dramatically improve your likelihood while helping you create a great company culture along the way!

Idea in brief: vulnerability-based trust is instrumental in building cohesive teams, organizational health, and high-growth companies.


Per previous posts on Purpose, Linchpins, Multi-Threading and more, I spend a fair amount of time working with organizations on fundamental cultural concepts. Through my personal experience at four high-growth startups, coupled with my ongoing work with 20+ software companies at various stages, I've become convinced that organizational health is the critical foundation for company growth. While it doesn't ensure success, it's extraordinarily hard to build a company without it.

One of my favorite authors on the topic of healthy organizations is Patrick Lencioni. While his fables are airport classics, the 2012 best seller The Advantage is a must-read. Specifically, his early perspectives on building trust have been game changing for many, myself included.

Why?

Fundamentally, Lencioni argues that trust is the basis for any cohesive leadership team. Sounds basic, right? Well, until recently I viewed trust as predictability + empowerment. My early notions were that if my teams felt like I trusted them to do their work relatively independently, and if they felt like my reactions were pretty reasonable and predictable, we'd then develop a trusted relationship.

I was wrong.

In reality, what Lencioni and others have noted is that vulnerability-based trust is what enables people to truly connect. What does he mean by this? Specifically, "At the heart of vulnerability lies the willingness of people to abandon their pride and their fear, to sacrifice their egos for the collective good of the team" (p. 27, The Advantage, Lencioni).

Vulnerable teams are willing to bring their raw, fragile, broken selves to their work. They're willing to admit weakness at times and to ask for help. They develop trusted relationships as they feel like other members of their team understand them better (minimizing miscommunication and maximizing bi-directional empathy). But, even more importantly, each team member understands that by being authentic and transparent, other co-workers then have "dirt" that they could use against them. 

When coworkers withhold judgment and actually don't misuse new insights, deep trust develops.  Then, the magic starts.

Personally, I've seen this magic occur countless times over the last couple of years since I gained this vulnerability-based trust insight. For example, when I bring my deep, true, raw and vulnerable self to a professional relationship (without going overboard, of course!), barriers seem to come down, collaboration increases, productivity soars and innovation is uncorked.

How might you incorporate the concept of vulnerability-based trust into your work relationships? Lencioni has several exercises to try. I've found a modification of Personal Histories (p. 28) works well. 

Concretely, encouraging people to share a quick story about what they found challenging as a kid (often by informally doing so myself -- in the right situation and to the right level), opens up all kinds of new perspectives and conversations. It can be incredible to see people soften and view one another differently as they glean just a bit of the back story.

From there, the foundation for vulnerability-based trust can develop through Duos, a concept that transformational consulting gurus SY/Partners can help unpack and foster. 

Overall, I'd encourage even the most hard-charging of high-growth executives to explore vulnerability-based trust. You might be amazed at what it does for your meaty business stuff (e.g key metrics around revenue growth) -- and also for the overall energy of your company.

As Alder Growth Partners has grown to serve more than 25 companies, while working with dozens of other CEOs and entrepreneurs informally, we're often asked: "how should we think about sales compensation in 2015?" 


For SaaS and enterprise software companies in Austin (or markets like it), we're currently seeing a three tier trend. The below data is anecdotal and somewhat subjective -- but seemingly representative (and in line with head-hunter surveys and experienced sales folks' feedback). And it fits trends that we've seen over more than 15 years in B2B software businesses:

* Inside Sales/Market Development ($40K/$40K): for a junior seller expected to close smaller deals (e.g. <$50K per year) and/or develop opportunities for senior sellers, we're generally seeing a $30K to $50K base with an opportunity to double the base via 100% quota achievement.
* Emerging Sales/Account Executive ($75K/$75K): for a sales person with 3-5+ years of experience, capable of running face-to-face meetings and closing medium-sized deals (e.g. $50K to $150K per year), compensation is often in the $60K to $90K base range, again with an opportunity to double the base at 100% quota.
* Senior Sales/Account Director ($120K/$120K): for a strategic, provocative revenue leader, equipped to drive larger deals (e.g. $150K+ per year), navigate complex organizations, and comfortably work with C-level buyers at larger enterprises, compensation is usually in the mid $200s -- or even higher in many cases, with unlimited upside that takes top performers into the $300s and beyond.

Of course, the compensation models above also need to have appropriate quota, commissions, accelerators and other elements to them. And different models make sense at various stages of companies, especially early when equity might be a bit looser, cash is tight and ASPs (average sales prices) might be lower. 

We'll tackle more thoughts on approaches and best practices in coming posts.

Alder Growth Partners (AGP) is excited to support Pivot Freight via a small seed investment. 

Per their website: Pivot Freight provides mid-market companies with a centralized platform for shipping LTL freight. They help reduce costs through increased efficiency, carrier augmentation and statistical data analysis – all delivered automatically and dynamically.

Steve Semelsberger, Founder of AGP, got to know the Pivot Freight founding team during their participation in the Techstars Austin 2014 accelerator program (Steve is a Techstars mentor). He was impressed by the founders from the beginning. The team's hiring of exceptional CEO Rob Taylor, announced today, and oversubscribed seed funding round, further demonstrate their potential.

AGP is honored to be a small part of the Pivot Freight start-up journey.

As the year draws to a close, I wanted to personally say thank you to each and every one of the myriad of Alder Growth Partners' friends. What started early in the year as an experiment has grown to feel like a movement. And we wouldn't be anywhere without your input, votes of confidence, challenges and ultimate support. 

It's truly humbling to think of the 26 organizations that have given us a chance to provide capital, consulting and/or advisory services in 2014. Each of you placed a bet on our burgeoning concept and suite of services. And we're forever grateful for your early, first year work with us. We can't thank you enough!

Looking ahead to 2015, we see continued growth -- both for us and for you -- on the horizon. Our frameworks continue to improve through real-world implementations. Our approaches deepen through the wisdom of passing time. Further, our perspectives on what to avoid broaden as we constantly learn what doesn't work via rapid, iterative efforts at innovation.

With a relatively healthy macro environment and strong optimism in key technology sectors, 2015 is a great time to pursue additional growth -- both for your team as well as your business. And we're looking forward to providing a bit of leveraged assistance along the way!

Thanks,
Steve Semelsberger
Founder
Alder Growth Partners

Idea in brief: might accidental collisions that fuel innovation thrive outside of the traditional work environment?


There's a ton of emphasis lately on the power of creative collisions. As a refresher, creative collisions occur when two or more people spark an idea during an unplanned encounter. The traditional office coffee machine is a classic catalyst for coworkers to riff on problems, initiatives and solutions. Many great ideas are born from seemingly random encounters between colleagues who help each other.

Marissa Mayer, CEO of Yahoo!, is big on communication and collaboration fostering innovation. So much so, that she's changed her work from home policy to encourage more encounters in the office. Tony Hsieh, CEO of Zappos, also espouses accidental, creative encounters, and is working on transforming Las Vegas to stimulate chance meetings that produce meaningful results.

From our take, what's been missing from the dialogue recently is how powerful creative collisions with non-coworkers are. There seems to be an underlying thesis among many that innovation mostly happens within organizational walls. We challenge the idea.

For example, accelerators and incubators stimulate environments where many people are working in parallel on different initiatives, yet also have opportunities to help one another. Coffees, beers and lunches with aligned friends, who care and have the capacity to listen, can also stimulate innovative thinking. Time in nature, with art, and/or with family can also spark new approaches to problems. Exercise does wonders to flush cortisol and tune the brain-body for creativity. 

Fundamentally we'd argue that as long as one is out in the world with other amazing people, location is less important than mindset, energy and environment. 

Of course, if teleworking means sitting at home in a locked, small, sterile office for 8-10 hours, creativity will dwindle. But if our new, multithreaded world of work means that we're out in multiple locations with multiple people, creating porous borders in our lives for innovation to spark, we'd offer that creativity has the chance to flourish even more. 

True, coworkers may speak a common language that enables more rapid progress on creative endeavors. And incentives may align deep, time-consuming sessions. However, if our goal is quality and quantity of innovative approaches, embracing the broader world is full of promise.

Take, for instance, companies like GLG, where employees are encouraged to work with startups and constantly meet industry thought leaders. Work is heavily externalized and the best new ideas can come from anywhere. 

Or look at the Linux Foundation, where all employees work from home offices. The non-profit is incredibly innovative, turning up a dizzying set of training, event, and collaborative projects with a small, dedicated team. Further, people love the empowerment and flexibility that the firm provides.

So, what do you think? Do accidental, creative collisions have the best chance to occur in the office -- or might they also occur in the broader world around us? 

Let us know too if you've found insightful perspectives on the subject. We'd love to learn more!

12/1/14, Austin, TX. Today, Alder Growth Partners announced that it has participated in the seed round of Experiment Engine. Experiment Engine provides a SaaS conversion optimization platform powered by human expertise.

“Via mentorship time during the Techstars program, I got to know Experiment Engine Cofounders Claire Vo and EJ Lawless well,” stated Steve Semelsberger, Founder of Alder Growth Partners. “From the onset, I’ve been consistently impressed with their expertise and execution. And I am a big believer in the market they’re addressing. Overall, I’m thrilled to continue to support them.”

“Steve Semelsberger of Alder Growth Partners has been closely involved in Experiment Engine’s journey from the beginning of the Techstars program,” said Claire Vo, Cofounder & CEO of Experiment Engine. “He’s rolled up his sleeves and helped us with multiple strategic and tactical growth levers.”

Other participants in the $1M seed round for Experiment Engine include Mercury Fund and Founders Collective.  To learn more about Experiment Engine, please view their Techstars presentation (introduced by Steve Semelsberger) and visit their website.

Telling your company story is critical. But how might you deconstruct and reassemble your messaging?

Below is a six part structure that provides an effective framework for a positioning hierarchy. There's also a real-world example that highlights this approach in action (props to Mike Maples, now with Floodgate, for the example and inspiration, many years ago!).  


Six Elements of a Positioning Hierarchy

1) Market: start by clearly articulating what market you're in. An "enterprise software" company will carry a different set of strategies and assumptions than a "mobile solutions" firm will.

2) Customers: after you've clarified your market, turn to who you serve. A statement about enabling a vertical (like retail) versus a broader market (like brands) will convey important messages. Consider qualifying (largest, best, etc.) the types of customers you aspire to serve too -- as long as you can back the aspiration up with current examples (e.g., "our customers are the world's largest retailers").

3) Value: arguably, the hardest part of a positioning exercise is the value statement. For B2B companies especially, enabling, empowering, equipping and/or other "supporting verbs" carry an appropriate level of others-centricity. For B2B2C plays, consider also how your solution might impact your clients' customers too. 

4) Benefits: with clearly defined market, customers and value statements, along with time in market with prospects and customers, you can turn to conveying 3-6 primary benefits. I'm a fan of three word benefits that link nicely to your value statement. They often start with a power verb (increase, reduce, enhance, improve, etc.), lead then to a descriptive adjective (e.g. real-time or high-impact) or narrowing noun (e.g. retail or marketing), and end with a stakeholder noun (e.g. management) or impactful noun (e.g. productivity or consistency). With this three word schema, you can mix and match a nearly endless array of benefit clusters. But be warned: it's very easy to wander into the land of cheesy!

5) Capabilities: features and capabilities often get mixed up. Features are very specific things that a product does. Capabilities are broad concepts that a product enables. For example, "collect data" is a capability, whereas "guided input forms" are a feature. Capabilities often roughly parallel benefits (i.e. you may use 3-6 capabilities for your product and/or company). And capabilities can have multiple dimensions as you think about end users versus operators, for example.

6) Validation: in a positioning exercise, it's important to help your audience know why they should pay attention to you. While it's easy to claim you're "the leader in" your market, unsubstantiated statements like those are generally ignored -- and sometimes are held against you as marketing fluff. Instead, list highly recognizable customer examples and/or key statistics to show why your audience should care.

With the six parts above, you can turn to utilization via marketing materials, sales training tools and more. 

Here's an example of a press release boilerplate that roughly leverages the approach above:

"Motive, Inc. is a pioneer in helping companies to deliver technology management capabilities as an on-demand service. Motive's software adds self-management intelligence and automation to technology products and services allowing them to install, diagnose and repair themselves, or to guide users through simple steps when necessary. Companies worldwide have used Motive's software in connection with more than 30 million products and services."

Looking at this statement we can see Motive through our 6 part lens:
* Market: software
* Customers: product companies worldwide
* Value: technology management on-demand
* Capabilities: install, diagnose and repair (and guide)
* Benefits: self-management intelligence and automation
* Validation: used in more than 30M products and services

Note that there are often other aspects to a positioning hierarchy, such as a tag, campaign statements, and different length versions of an elevator pitch. Feel free to reach out with questions and let us know if you've used alternative and effective positioning structures. 

Regardless of the framework you ultimately choose, if you can master something like the six part structure above -- succinctly, clearly and with pizzaz -- you are well on your way to great company positioning and messaging!

Business is humming. You've found product-market fit. Your direct sales team is hitting their numbers quarter-over-quarter. It probably feels like it's time to pursue accelerated indirect growth via channel partnerships. 

But how do you do it? 

Below are 9 steps to help you get started.

Segment Your Paths to Market
Begin by brainstorming with your team on all of the different types of companies that might resell your product. Cross both industries (e.g. software firms vs industry consortiums vs services companies) and offerings (e.g. specific subcategories that you play in). Through this brainstorming exercise you might come up with 5-7 market segments that are worth exploring.

Clarify Your Value Proposition
For each segment, think clearly about why a reseller relationship might make sense. In order for a channel partnership to take off, you need to be able to simply and firmly state, in 1-2 sentences, what's in it for three stakeholders:

• Company Executives: strategically and via a logical revenue model, the C-Suite needs to get it. Quickly. And they need to be excited.
• Partner Sellers: account executives and their managers need to be able to remember what you do and easily understand how they'd make money selling your product -- ideally lots of money.
• End Customers: prospective buyers of your solution need to be able to clearly see how and why they would buy from your partner organization. Ideally, your product would be a simple extension to what they've already bought.

Note that if you struggle to clearly state a value proposition for each stakeholder for a market segment, you may need to remove that segment from your target list.

Identify Specific Companies
Once you have segment clarity, create a list of your top 3-5 target companies per segment. As a rule, I'd recommend that you pursue companies that are at least 10x larger than you from a revenue standpoint. In other words, if you are doing $5M a year in revenue, only pursue resellers that are doing at least $50M a year. Also, look at companies that have already structured at least one channel deal. While you can be the first, it's a lot harder to start something than it is to build on established success, personnel and process.

Create a Target Contact List
To initial dialogue with each target company, we recommend a two-pronged approach: business development and executive/product leadership. Who you start with often depends on your ability to get a warm introduction. Of course, it's generally better to start as high as possible. But, an endorsed intro into someone who is motivated to find a solution like yours can work wonders. LinkedIn 2nd degree connections -- with a tee-up from someone credible -- are great to begin with.

Gang Tackle Your Outreach
Conversely, we've also seen strong success with a two-pronged from within your organization, generally via both your C-team and the head of business development pursuing conversations, sometimes in parallel. You'll probably need a combination of email and phone calls to connect with key prospects.

Maniacally Sell Up, Down and Across
Reseller deals require enormous patience, energy and consensus. Expect sales, marketing, services, product, finance and other stakeholders to weigh-in and want to look under the covers. Deal cycles may be 3, 6, 9 or even 12 months. 

Be Clear on Reseller vs White Label
A pure reseller deal (where your product maintains its unique brand and packaging) might be the optimum starting place in many instances since it reduces friction to market. Plus, many business processes around Ts & Cs, onboarding/setup and support can be managed by your firm. Generally, reseller deals don't have minimum commitments. 

OEM, or white label, deals on the other hand require more work on both sides. But the channel partner benefits through higher margins and clear brand/product ownership. White label deals usually have minimum commitments -- often running into 7 or even 8 figures per year -- given the work required by the product company. Further, it's not unusual for an OEM deal to have an element of exclusivity to it.

Whether you intend to pursue reseller or white label deals, make sure you're clear on your expectations and ability to invest.

Staff for Success
The above provides a rough sketch on how you might start to pursue a channel. Assuming you are able to navigate the process and close a channel deal, make sure that you are staffed to succeed. Large channel partnerships often have dedicated product, engineering, services, support, marketing and sales-enablement resources. These partnerships aren't cheap to staff but the payoff and accelerated growth can be significant.

Consider Supplementing
While tackling a channel via an existing team is generally preferred, many companies don't have the business/channel/corporate development talent in-house at the time they're ready to begin. Further, many may want to test reaction to potential channel partnerships before hiring a full-blown team. 

Firms like Alder Growth Partners can help. With experienced executives well versed in transactions and partner management, we can help you jump start a process -- and provide the appropriate flexibility to turn things over to your full-time team at the right juncture. 

For more information, please contact us.

About the Author
Steve Semelsberger is the Founder of Alder Growth Partners. He has structured a myriad of alliances, reseller and OEM partnerships -- from minimally impactful co-marketing deals to $20M+ white label arrangements, both as a full-time member of high-growth software companies and via outsourced consulting arrangements.

Alder Growth Partners is a virtual, distributed network of experts. With deep skills covering product, markets, sales, corp. dev., engineering, SEM, and more, our collection of industry leaders is equipped to help you grow. 

We've recently expanded our network to 14 individual practitioners and recommended, complementary firms. If you haven't checked us out lately, you can learn more about the team here.

And if you'd like to explore joining the AGP network, please contact us.