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Ask HN: Would you outsource the business development portion of your startup?
Hi,
I often read on HN that it can be challenging for technical founders to not only learn how to scale their business operation from >10 clients, but to it do effectively enough to secure a funding round from a VC. Those of you have started your own B2B start-up or are currently running one, what are your thoughts on a consulting business that is strictly focused on business strategy for early stage start-ups? Is it a service you would consider using?
I've been thinking about creating a consulting business addressing this niche and to solve some of the scenarios I've personally witnessed founders run into:
-Spending a few months creating a product that isn't compelling enough to close more than a handful of contracts
-Miscalculating how big the total addressable market is for their product. I've actually worked with larger pre-IPO companies that have run into this issue many times. It leads to a waste of time, resources, and lowers morale.
-Unaware of how to present their product to investors and their first few clients (pitch, purpose, and value proposition)
-After securing a series A round from a VC company, the investors prefer to be passive and do not take an active role in advising the founder on how to properly scale their business. I've also seen many investors who lack sales experience or strategy consulting experience, so they'll recommend the founder to hire a sales representative to handle this portion of the business.
-Hiring the first sales rep who has experience selling either as an SDR or an AE, but lacks business strategy experience and cannot build a CRM, marketing campaigns, etc
Running into any of the scenarios I've listed can have a significant negative impact on the growth of the business and eventually be one of the factors as for why it failed.
I'd appreciate your feedback and thoughts on this (even from those who do not have experience as a founder).
Thank you!
- mimixco 6y agoMark Cuban says that you can't outsource your critical business acumen nor your critical tech. If a company founder needed a consultant to start and run the business initially, that would signal that the person is not really a good entrepreneur or founder. They won't just pick up those abilities later. Some of the key components of an individual or a business's success are inherent.
- byoung2 6y agoExactly...the 2 ingredients for a B2B startup is tech/expertise and the ability to talk to businesses. Trying to outsource that 2nd part might be a sign that B2B is not the right space for the founder. B2C it is possible to survive on tech alone since you can go viral (e.g. TikTok).
- gotoHN 6y agoWould you mind providing a source of Mark saying this? I somewhat agree with this, but I also know it wouldn't be difficult to find examples of founders who are not "good entrepreneurs" that were able to have successful start-ups by leveraging the expertise of their peers.
- mimixco 6y agoSure. He says it on Shark Tank a lot. In many episodes, Mark rejects the company because the founder isn't good at business (despite their tech) or isn't a tech person but is trying to get into a tech biz.
- mimixco 6y agoYou know, I'm not sure there are any successful companies where the founder didn't have those key skills. Sure, some small companies make it on luck, but every household company we can name was started by someone who grok'd both the business and tech sides of his industry. I also think its a mistake to see consultants as "peers." A peer is someone who works at your same level. The word means "equal." A consultant is not an equal. They're hired help and they can't have the same goals or motivation as a founder, which is another reason that companies that rely on consultants for critical stuff usually lose a lot of money doing so.