Understanding Reasons Behind Massive Failure of High Tech Entrepreneur Startups
Despite the fact that many presume that starting a tech company is easy, it is hard.For a tech business to make profits and survive in the competitive world, so much is involved.It is needful to ensure that you come up with appropriate services and quality products to attract and maintain the right size of clientele. There very many marketing strategies that have been used over the years by tech entrepreneurs to attract customers to their investment. Some of these are radio, newspapers, television, and among others.
It is hard to understand, but tech companies take longer than expected to start.What is even more confounding, it also costs more. Panning out for venture capital investments is scarcely achieved by 80% of all venture capital investments. The Sales Learning Curve is required by tech entrepreneurs to make it in the industry.
The margin of contribution per Sales Yield gauged against the all customer transactions is what the sales learning curve will track. The curve shape is different for different tech companies.It is required of all tech companies to go slow before they enter the market. In different industries, this is not a new term. The confines under which the Sales Learning Curve are in the go-slow fast before entering the market.
There is an organizational learning that takes place when sales reps meet face to face with customers and close initial sales.This is a very crucial requirement for the success of the organization.Going to the market as a requires hiring a VP of sales after completion of the beta product after which hiring many reps to “drive revenue and get to breakeven” is done. Sadly though, this is a strategy that is characterized by massive failure. This failure is guaranteed by lack of investing time in understanding the SLC shape for its product in the market.
Everyone will see a consistent pattern of highly inflated B round valuations in the tech startup entrepreneurship industry. A worthwhile note is that the down rounds for C percentage and later rounds is greater than B rounds.This is proof enough that the entrepreneurs and VC’s lightly consider the cost and time needed for moving up the SLC after completing the Beta product. They fail to understand that company is now ready to commence the SLC learning process but not likely to immediately gain market traction forthwith. The time that this process will take is not consistent and easily determined. This process may take longer for some tech companies than for others.
As you move from beta release to first release, few technically savvy sales reps need to be hired.These are the ones to be conduits between initial customers and the tech team compensated on the organizational learnings.