Mark LaRosa is the founder of QuotaCrush. Started as a blog on sales techniques for start-ups, QuotaCrush now provides outsourced sales consulting and services to several start-ups, incubators, and universities. Mark also plays an active, key role at Angelsoft, where he was also previously the VP, Sales.  Angelsoft provides software that helps angel and venture capital investors manage their investments.

In Part 2, Mark talks about why its never too early for startups to think about sales, how most entrepreneurs underestimate the need for sales teams because they think their products will sell themselves and the amount of client out there that want to buy from another human being.

Sean: You’re consulting for startups on sales and building out sales teams or sales organization or just trying to get the first deal in the door…

Mark: Right.

Sean: …probably more typically… What advice would you give, you know, to a couple of, typically, engineer guys, you know, starting their internet company in their garage about when to think about sales and how to think about it?

Mark: The bottom line is it’s never too early to think about sales.  The Twitter’s of the world where there’s a product that figures out the sales strategy later on is very, very, very rare.  You’re not probably get money and you’re not going to really succeed unless you’re really starting to think about that anybody really wants this product, anybody really needs this product. And so you need to be thinking about that real early on. And it is very important because you have to create something that somebody wants to buy… If nobody wants to buy you, I would say, by definition, you don’t really have a business. So you need to figure out what that is. And you need to not be afraid to be out there talking with prospects talking to potential customers to basically figure out what that product is. Now your ultimate vision may be here (gestures), and you may have to take a diversion over here (gestures) before you get to here (gestures), but getting the product over here that funds, the vision – the ultimate vision – is a way better path than just trying to go blindly out and build something that you think the people are going to come to because that’s whatever you see as the vision. When I talk to a lot of these very, very smart engineers that are building companies, sometimes there is a tendency to say, ”No, but this is a vision. I’m changing the world,” which is great, but you need to think about how you’re going to get it into people’s hands and how they are going to accept it and how you’re going to bring them along with you in your vision and you’re going to sell things along the way.

Sean: Last question: you’ve seen a lot of these startups, and so I’m thinking you’ve seen enough to have some statistical relevance… as a percentage, how many are building a product that they think will just be self serve, meaning people will just come to the site to buy it, versus those who kind of think and understand that they’re going to have to go out and sell it?

Mark: I think that there’s a very large percentage of people that don’t appreciate the amount of people-effort there is in sales and how much there has to be, and people ultimately buy from people. And some of that’s marketing, you could argue that, you know, but you’re not going to be able to do it with just SEO. The companies that are going to do it with just “Hey, it’s going to be SEO and I’m going to put a couple of ads out there, I’m going to get an ad on TechCrunch and next thing I know millions of people are going to come to my door,” again, that’s very, very rare. There’s really a large people-to-people relationship thing that happens, and as a result of that sales actually becomes even more critical to your business because as technology costs go down, as development costs go down, sales becomes a larger and larger and larger percentage and it has to become a larger and larger and larger percentage of your budget. So you’re going to be hiring people and making large decisions on who you’re paying and how you’re paying them and where they’re travelling to and all of that. That becomes a very large percentage of the money that you’re going to raise from whatever channel and so, therefore, it’s very important.  Back to your original question, you know, there’s still a big amount of people buy for people. They don’t just buy blindly off of websites, for the most part.

Sean: I think what people don’t get is: your product might be the best product ever, but there’s so much noise that have to convince someone to pay attention long enough to figure it out.

Mark: Yeah. I had a conversation with a startup yesterday, and we were discussing, and he was explaining to me, “But you don’t understand, this is the way kids think, and that’s why this is going to be a smart buy for these customers.” And I said, “Yes, I understand that and I probably agree with you that you’ve got something new and innovative that advertisers would want. However, you’re going to talk to that guy, and sitting ac77ross the table he’s going to say ‘I have to report to my boss and tell him why we’re taking money away from this ad campaign and giving it to you, and you have no metrics to prove your vision. I have to just jump off this ledge with you.’” And that’s going to be a tough sale. So I said, “I’m not saying that I don’t believe you, but that’s going to be a tough sale.” So how do you get the product, how do you get the deals that you strike so that you can bring that person to that vision with you? And that’s where a really good sales guy comes in and that’s where you’re going to need those people that can figure out how to structure those deals to get people to have your vision until you get to that point where people just look at you and say, “Oh, yeah, it makes total sense. Of course I would buy that because I can see the return.”

Sean: Absolutely. Mark we’re out of time, but thanks for coming.

Mark: Thank You.

Mark LaRosa is the founder of QuotaCrush. Started as a blog on sales techniques for start-ups, QuotaCrush now provides outsourced sales consulting and services to several start-ups, incubators, and universities. Mark also plays an active, key role at Angelsoft, where he was also previously the VP, Sales.  Angelsoft provides software that helps angel and venture capital investors manage their investments.

In Part 1, Mark talks about how when, where and from whom to raise an angel round of financing and the pros and cons of professional angels vs. friends, family and wealthy individuals.

Sean: I’m here with Mark LaRosa, from QuotaCrush. So Mark, tell us a little bit about you.

Mark: So, I’m the founder of QuotaCrush and I founded it about 18 months ago, although I ran it as a blog – just a blog about sales – for about a year before that.  It’s really about advice for salespeople and sales managers within organizations that are startups.  That’s what the blog mostly is about, and what I’ve done is extend that to be a consulting company for startups. I’m working, right now, with about four different startups as their acting VP of sales, and essentially helping them develop their sales strategy, move their sales strategy, ultimately get their product out there in a more sellable way.

Sean: Before QuotaCrush you were VP of Sales at Angelsoft which, of course, was started by David Rose from New York Angels.  So, and you’ve done a couple other startups in your life; both good and bad results…

Mark: Yeah. (chuckles)

Sean: So, if there’s two things that I could ask you today, one would be:  I guess, what advice would you have for a couple of founders in a garage about from whom to raise money? How much and when?

Mark: Yeah.  So I can tell you that you should …don’t just raise money for money’s sake. You want to get money because it’s time, because you need to expand out your business, and you want to hold that off as long as you can. So if you can do anything with bootstrapping or friends and family or if you’ve got a contract and you can take that to a bank and get a loan based off of that contract, that’s the better way to go. And then when you do ultimately get money, you want to make sure that’s smart money. It’s not just money for money’s sake.  Somebody that can help you that’s going to understand your vision that’s going to help you carry your vision that maybe can take you and give you advice. So that may be waiting until the VC rounds that may be some angel money. But you really have got to make sure that you’re getting a partner when you get that money.

Sean: So if you think about angel money, you have friends and family and fools – [inaudible] friends and family and fools – and then, sort of, professional angel communities, which is what Angelsoft tries to harness both for that community as well as entrepreneurs trying to access, right? There’s clearly pros and cons to both.

Mark: That’s right.

Sean: You just mentioned one pro for professional angels, assuming they have been an entrepreneur before and now are investing; they can give you lots of advice. What would be a con of raising money from a professional angel versus, you know, a [inaudible] guy?…

Mark: Yeah, so, with a lot of the professional angle groups, it can add some complexity to the deal. You know, with friends and family, a lot of times you getting an in and they’re just giving you the money and it will be convertible at some point. You know when you get into a professional angel group a lot of times you get into the same situation you get into with VC’s where you’re going to go through an entire round and spend up to $50,000 trying to get lawyers to close this deal and it may take a very, very long time because – we always call it, you know – “you’re herding cats”  because you’ve got all of these individual people that are making their own decisions and you’re trying to bring them together. And there’s a lot of work that you have to do to bring these angels together even though they’re a part of a professional group. And you will also find that a lot of the professional angel groups – not New York Angels and a lot of these real professional angel groups – but there’s a lot of angel groups out there that do a lot of looking at deals but they don’t actually do a lot of actual investing. So you will spend a lot of time working with these guys and you actually won’t get money in the end. So you need to look really towards the real professional organizations. You know, like right in New York here we have the New York Angels, we have Golden Seeds, you know, a lot of really great angel groups, and those are the ones that you should be making sure that if you’re going to go the angel  group route that you’re sticking with those types of groups.

Sean: Top-tier? Reputable?…

Mark: Exactly.

In Part 2 Mark gives startups some advice on how and when to think about sales.  It will be published on Friday.

Do you agree/disagree with Mark’s advice around how, when and from whom to raise angel money?  Share your opinion in the comments!