4 Key Reasons Why Unicorn-Entrepreneurs Favor Sales Over Marketing

Corporations are increasingly eliminating the Chief Marketing Officer (CMO) position from the C-Suite. Entrepreneurs should do the same.

Your Best Early-Stage Goal: Grow More with Less

To create wealth and retain more of it, focus on growing more with less. Focus on sales where you can measure the return and not on marketing which leaves you wondering where the money went. As John Wanamaker said, “Half the money I spend on advertising is wasted; the trouble is, I don’t know which half.”

4 key reasons to prioritize sales over marketing and grow more with less.

Your early-stage strategy can make you or break you for the following reasons:

#1. Cost: Venture capital (VC) is arguably the most expensive form of capital. Early-stage VCs often expect annual returns as high as 80% to 100%. Few entrepreneurs grow rich by getting early-VC. An analysis of 22 billion-dollar entrepreneurs found that those received early-VC kept 7% of the wealth created. In contrast, those who got late VC kept 16%, and those who avoided VC kept 52% of the wealth created (Truth About VC). Most VC funded ventures do not reach billion-dollar status. Entrepreneurs do worse when ventures do not become billion-dollar unicorns.

#2. Control: VCs fire up to 85% of entrepreneurs, especially those seeking more rounds of early-stage VC. Fired entrepreneurs are replaced by CEOs who further dilute the founders.

#3. Chances: Only 6% of Billion-Dollar Entrepreneurs built unicorns by getting early VC and losing control. 94% avoided or delayed VC to improve their odds of success.

#4. Come Vs. Go: Sales can be In-Come. Marketing can be Out-Go.

What Billion-Dollar Entrepreneurs did

Billion-dollar entrepreneurs focused on sales where they could measure the return on investment. Here are some examples of smart billion-dollar entrepreneurs and how they measured their sales investments:

  • Dick Schulze (Best Buy) used weekly flyers to local markets with the cost subsidized by product manufacturers.
  • Bill Gates (Microsoft) focused on sales to PC makers.
  • Michael Dell (Dell) targeted PC buyers via direct mail campaigns.

By adopting capital-efficient and measurable sales strategies, they optimized early-stage growth and kept control.

How Billion-Dollar Entrepreneurs focus on sales before marketing.

Billion-Dollar Entrepreneurs focus on sales before marketing by:

· Finding the right customer segment. Spending heavily on marketing by casting a wide net to reach many segments in the hope of finding the right one can result in a lot of wasted capital. Sam Walton focused on rural America. Brian Chesky targeted New York landlords to help them find guests.

· Finding the right sales driver. A huge challenge for new ventures is identifying the most effective sales driver that attracts more sales at the least cost for fast cash flow. Joe Martin was an online sales specialist, a key reason he was able to build Boxycharm.com into a unicorn starting with an investment of $375.

· Developing sales skills. Many entrepreneurs hope that marketing investment will translate to sales. However, among 35 Unicorn-Entrepreneurs I financed and/or interviewed, the most common skill was sales. Dick Schulze (Best Buy) started as a sales rep for Sony – selling consumer electronics to store owners before becoming a store owner (Bootstrap to Billions in www.dileeprao.com). When promoting employees, he looked at their sales track records.

By testing various combinations of strategic groups, market segments, and sales drivers, entrepreneurs can discover the most effective venture strategy to grow. Among 85 billion-dollar entrepreneurs, 99% focused on the right strategic group and segment to dominate, identified the most effective sales driver to improve capital efficiency, and honed their sales skills to grow.

MY TAKE: Many entrepreneurs hope to raise expensive and scarce VC and spend it on marketing hoping to find traction. Focusing on sales is more beneficial, as it allows for a more accurate measurement of return on investment and fosters sustainable growth. By focusing on sales, you can get some traction before considering expensive marketing efforts. And by avoiding or delaying VC, you get to control your venture and the wealth created.

ForbesFrom $375 To The Newest Unicorn In Beauty: How Joe Martin Built Boxycharm.com Without VC
ForbesWhat Can You Learn From Airbnb: Focus On Your Skills… Not The Idea
ForbesThe #1 Reason Why Entrepreneurs Should Control VCs

ForbesFrom $375 To The Newest Unicorn In Beauty: How Joe Martin Built Boxycharm.com Without VC
ForbesWhat Can You Learn From Airbnb: Focus On Your Skills… Not The Idea

ForbesThe #1 Reason Why Entrepreneurs Should Control VCs
FortuneChief marketing officer roles are disappearing at Fortune 500 companies

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