Start-ups, Scale-ups and SPIN

0:07Claus Klein‑Ipsen:Welcome to Mastering Sales and Negotiation. I'm Robin Hoyle, Head of Learning Innovation for Huthwaite International. I'm an author, a blogger, and a former sales director. This time, I'm alone in the studio. My co-host, Rachel, is elsewhere, and our guest is Claus Klein-Ipsen. And Claus is joining us down the line from his home in Denmark. Claus has a long and illustrious career in corporates working in the technology field. He has long experience in business to business sales of critical software. About nine years ago, Klaus transitioned from the corporate world to being an investor in startups and scale-ups involved in providing software as a service.

0:48Claus Klein‑Ipsen:Amongst his portfolio is Peak Systems, a company providing the digitisation of core business processes for businesses involved in logistics, warehouse and distribution. And Klaus is now the chair of the board. His experience in working with these new startup businesses, supporting and advising them as they begin to scale up and building sustainable businesses grounded in innovation is what I want to explore with him. So here is Klaus Klein-Ibsen and his perspective on startups, scale-ups and selling.

1:31Claus Klein‑Ipsen:Klaus, thanks ever so much for joining us on Mastering Sales and Negotiation and I'm interested to learn a little bit more about how you ended up where you now are. So just give us a kind of couple of minutes summary of your career and why you're now and continue to be interested in selling and sales and salesperson activity. Okay. Sales and sales leadership has always interested me. Very, very early days, I probably was in the same situation like a lot of people who were not in sales, that you didn't really know what sales was. And sales was maybe like a I don't know, selling vacuum cleaners or something like that, where you try to trick somebody.

2:18But I was lucky to get a sales role quite quickly where I figured out that this consulting way of working with customers, that's really about helping customers, helping customers making the right decisions, helping customers to a better place. And I spent many years in various corporate roles where I was lucky that my employer decided on spin selling and invested in having their sales team, including myself, trained in spin selling. And then later on in my career, after many years of being corporate, predominantly working with B2B software, I decided to become an investor and invest in startup companies, some of them turning into scale-ups and some good exits.

3:03And there, obviously, having my sales background, having the sales leadership background, I did use spin selling, with a number of these companies to increase their sales results, to improve their sales performance, their win rate, and so on. So that's my background. Many years corporate, passionate about sales and sales leadership, passionate about the dialogue you have with the customer and how that also works for smaller companies like startups and scale-ups. Sure.

3:38Claus Klein‑Ipsen:And you've always had, or certainly for the amount of time that you've worked with Huthwaite, you've been involved in some form or other of technology, of innovation within that tech space. And of course, that lends itself to, as we've seen in various waves, kind of an increase in smaller businesses that have started, that have been driven by a founder. And I know that you've been involved in advising those businesses and investing in those businesses, supporting them. So what are the challenges which those initial founders, usually tech guys, I'm guessing, you know, usually the people who've done coding and created some kind of digital solution.

4:24Claus Klein‑Ipsen:What are the challenges facing those businesses when they start around that whole commercialization of their offer and selling that into their target market? Yeah, I mean, it depends a little bit upon the startup. And is it one founder? Is it a team of founders with different skill sets? But sort of if you should generalize a bit. Typically, the challenge of founder-led startups is that you have this very tech-focused person. I mean, I'm in software as a service, and it is very techie people. And they have a great vision. and they love their product and how that product fits into that vision. And that enthusiasm is great also in customer meetings.

5:16But a challenge is that the founders can be so passionate about the product and their vision that it does not necessarily relate to what is the customer's situation, their problems, their issues, needs, and so on.

5:36Claus Klein‑Ipsen:Absolutely. So that idea of saying, look, this is a great product, if we just tell enough people about it, it will sell itself. And we know from experience that that generally doesn't happen. We don't actually tend to engage with people around the product, but engage with people around their issues. How difficult is it for those tech guys, those founders, whether they're a small group or an individual, to kind of make that adjustment, to realize that they've got to think a little bit more about the customer and maybe a little bit less about their product and what it is? Yeah, it differs a bit.

6:15I mean, you have some who are better than others, but there is this general challenge that they love their product so much. However, if they have, let's say, somebody else in their team who have more of sales experience, who might be lucky, who have had experience with been selling or an advisor like me or an investor like me helping them. And I think that, I mean, these guys typically are very clever and they get it. So once they get the guidance, they typically take that input because they want to win. They want to win with a solution. And if they have somebody helping them explaining how you actually can have a better customer dialogue, it doesn't mean that your product that you've invented isn't great and your vision is wrong necessarily.

7:05But it's about having a better customer dialogue that needs to better outcomes.

7:12Claus Klein‑Ipsen:They get it. Yeah, and I think that idea of them kind of moving from product focus to being aware of, have some clarity around making it work for particular customers in particular environments, in particular industries, is kind of part of that growth process. And I guess the next step within that growth process, assuming that they've successfully generated some revenue or at least enough interest in the product to attract people like you as investors, is for that to become what we refer to as a scale-up. So where do the challenges change when you move from being two or three people in a back bedroom somewhere or in a small office that you've rented into something which is more structured, organized, formalized?

8:03Claus Klein‑Ipsen:How does that affect how those organizations view the commercialization of the offer? Yeah, I mean, it also depends a little bit of an owner structure when you get to that scale up level. So, for instance, if you're still predominantly founder-owned, founder-led, then there's some challenges. If suddenly you have venture capital or private equity coming in, there might be some other challenges. And I'll try to explain that a little bit. So I'll start with the first one. So let's say you're predominantly founder-owned, 100%, 60%, whatever. One of the challenges there is that now you're a bigger company.

8:44you probably have a group of sales people you might even have a fairly large sales team yeah but but there's sort of a classic challenge which is you have to move from founder-led sales to to uh led by a sales team so it's the sales team that have to make the sales and not the founder any longer and um and there are two aspects there that that's important first of all when it comes to the subject matter expertise. So that has nothing to do directly with spend selling. It has indirectly to do with spend selling. But when it comes to the subject matter expertise, depending on which industry you're in and so on, the founder, she or he knows everything about the industry, everything about the product.

9:35And that's the reason they are actually very good at selling because they really understand the customer. and then now you suddenly have a sales team and that sales team, they need to have that same level or similar level, at least a very high level of subject matter expertise. Maybe they come from the industry themselves. That makes it easier. Maybe not. Then they have to be trained on that subject matter expertise. The second thing then is spin selling. so you need to use that subject matter expertise from that industry into a really great dialogue with the customer and that's where maybe the founder has done that very well so we've come to the level where we are but now there needs to be a sales team that needs to do that efficiently so they need the subject matter expertise but they also need the best sales practices such as spin selling

10:35Claus Klein‑Ipsen:and one of those challenges i think you've said in in previous conversations that the that idea of domain experience domain knowledge that subject matter expertise that industry knowledge isn't enough how do you advise people to deal with you know i'm assuming that that quite a lot of these um organizations when they move from startup to scale up they recruit from within the industry So they're finding people who kind of get it, who understand the technology, who understand the market a little bit. How do you help them and point them towards shifting, recognizing that the domain knowledge that they have is kind of the entry ticket?

11:16Claus Klein‑Ipsen:You know, that's absolutely the minimum that you need to be able to work in this space. So I always recommend them to go on a long-term journey with spin selling. I mean, that's what I personally have had great experience with. So it depends a little bit of where they are. If it's a really small startup and they don't have a lot of money, I mean, okay, you have to start with buying your Rackham spin selling book and read that just to begin with. I mean, that doesn't solve the whole thing, but it's a great inspiration to get started with. And then my recommendation is as they succeed and they can afford more.

11:58my recommendation is that they go to their investors, they go to the board, or if it's the founder, to then invest in participating in this Bin Selling training program. Because I just know that it's not just about reading the book. That's a great start. That's a great inspiration. But it's about getting, for instance, the e-learning content that you have, studying that as a team and then going through the training in a workshop and then following that, having the ongoing coaching by you or by the sales leader or doing team coaching, all those things that's possible. That's where you see the biggest long-term effect.

12:50The challenge obviously is that if you're a VC backed or a private equity backed scale up, then you have money to invest in that. If you're a very early startup, I mean, you're bootstrapping and that's probably down the road that you can afford something like that.

13:07Claus Klein‑Ipsen:Absolutely. But you mentioned the idea of private equity or VC funding, venture capital funding. What are the other challenges that come with that kind of investment? Because these people are looking at some point to exit from the business and to turn a profit on the investment that they made. So how does that change things for founder-led businesses moving into a world of investors with an expectation of exit? Yeah, so once you get to a stage where you have venture capital or private equity investment, obviously to accelerate the business and grow it much further, several things can happen. And I mean, it might be slightly different, but what I've seen sometimes is that you have a sort of much more structured, recommended approach, a lot of good things coming out of that.

14:01But in the worst case, it might be sort of very regimented with a focus purely on pipeline hygiene, that different processes are followed. There's a measurement on high level of activities and not necessarily the quality of the sales calls. And in my experience, yes, pipeline hygiene, high level of activity, if it's for the right ideal customer profile and those things, they're all good. but you don't get the accelerator you don't get the multiplier from from ensuring that you have a high level of quality in the sales dialogues with the with the prospective customers and and that would always be my advice to vcs or to private equity make sure you'll also focus on that.

14:57Claus Klein‑Ipsen:And I think that kind of process-based management, that idea of saying, look, there's a sales process, there's a series of stops you go through, there's the idea of understanding your pipeline, and then kind of measuring the revenue at the end of it, seems to kind of assume that if you do all of these steps, doesn't matter how well you do them or how you do them, revenue will follow. And of course, you know, you and I know that that's not quite the whole story, is it? Yeah, exactly. And I guess, I mean, it depends also on the team that comes in and the approach they take. But sort of in the worst case, you have somebody who might have great analytical skills, great process skills, but they don't necessarily have sales background, sales experience, and maybe not with something like spin selling.

15:51So they come in with this recommended approach they like structure a lot and that's what they sort of enforce through the sales organization and and a lot of these aspects could be good but what's missing is the quality uh you don't have the consultative sales calls you don't have the focus on training the sales team uh to be much more impactful with something like spin selling yeah and also just

16:16Claus Klein‑Ipsen:that focus around the customers as well the idea of of if you do this stuff right you talk there about consultative selling of the idea of understanding your customers issues their pain points their their requirements their dreams for the future that idea of being able to get that feedback loop going builds a much longer term relationship builds an advisory role for the salesperson which sometimes I think those organizations which are wedded to process kind of they don't ignore it completely but they don't give it the importance necessarily that it should have and sometimes I think one of the things that I see lots of organizations doing not just within the startup and scale-up world is according importance to the things which are easy to measure rather than measuring the things that are really important and it's that idea of saying look this is this is the stuff where it really matters do you see that in you know you've got a long corporate history class you've worked in in large organizations that's where you first came across spin selling where was have you seen that idea where organizations of either a really got the idea of concentrating on the quality of the interaction between salesperson and and prospect or customer um and then the converse of that have you seen examples where the organization really hasn't focused on that interaction and therefore may have may have maybe underachieved yeah i mean i was lucky to spend many years in a british company uh reuters that then morphed into tom's reuters and now it's part of the london stock exchange and and they invested in uh spin selling and what was uh great there is that you had uh the sales team were in that company for many years so the subject matter expertise existed a lot of people that came from the financial industry.

18:13So that subject matter expertise were in place. And then adding spin selling to that equation really meant that you could have these high value conversations with the customers and you had a long term view. So depending on where the customer was in the buying cycle, you had a relevant dialogue with the customer. And then, yeah, then I've been in In another, albeit smaller company, where there was very much a pressure on delivering short term and you couldn't have this longer term focus. And there wasn't the training given to the sales team. And that had a completely different outcome.

18:56Claus Klein‑Ipsen:Absolutely. And that idea, you also talked earlier about that idea of coaching, team coaching, supporting people. getting that almost a self-training process within the sales team because the organization starts to build experience, shares that experience, has a mechanism for doing that. Do you see that regularly within these newer startup organizations or scale-up organizations where there is a hunger, a curiosity to share stories, to get people engaged with what's happening and to learn from each other? Absolutely, but it comes down to leadership. So if you have the leadership saying that we want to invest in spin selling, and then you have the right team with people with the right mindset, the mindset to be open and also learn from each other, and also the mindset to make mistakes, then it's amazing what you can achieve.

20:01One of the reasons startup and scale-ups I was involved with is called Wired Relations. They sell into a complicated space with governance, risk and compliance software. And there the subject matter expertise is critical. But also then working with spin selling really meant that all the team members contributed and actually helped each other. So sometimes, I mean, even though it wasn't necessary, sometimes you would be two in a sales meeting so that you could do peer coaching or you could prep better ahead of the meeting. So all those great things you can get out of working with spin selling in a structured way, I saw there also.

20:46Claus Klein‑Ipsen:Yeah, and that idea of being able to have that real strong subject matter expertise, part of the role of salespeople, sometimes, not always, but sometimes, particularly in an area where you've got new innovations, where you've got regulatory and compliance issues, where you've got all of those things going on, is to help those customers, those prospective customers to navigate this complicated space. So that level of understanding, but seeing it through the eyes of the person who you're selling to rather than just giving them a whole list of things that they need to think about it really is helping them to interpret and navigate that process becomes incredibly useful and that's really about a deep understanding of what it feels like to be on the other side of the table do you help your those companies within you in which you have invested do you help them kind of see that that process change that mindset think more from a customer perspective i'm not talking just about saying oh you need to go and do a spin course but actually that idea of just getting people's line lined up in terms of the way that they think about how they approach the market did what role do you play as an investor as chairman of the board in some of the organizations that you work with?

22:11Claus Klein‑Ipsen:What role do you play within keeping people on that sort of track? Yeah, for instance, Peak Systems, where I'm an investor and I was a member of the board for a year and now I'm the chairman. There I stepped in last year when I was still a board member in sort of from time to time an advisory role to their quite small sales team. And I mean, they responded really positively. And so has other companies that I work with. The thing is that you have, I mean, most companies struggle with the sales, even though they're doing well. Everyone wants to do better. So I mean, there's not a single company, I guess, where sales isn't an issue or something people want to do something with.

23:04So people are very open to hearing about this. How can we do things better? So it doesn't really matter whether it's a team that's performing poorly or somebody who's already performing well. Those conversations are great to have and people want to listen to that and get inspired. And in Peak Systems example, this has been sort of very basic in terms of they've now been attending an open spin selling course with people from other companies to understand the methodology. And now they're using that. They're doing peer coaching.

23:43And, yeah, I can just say that I haven't been involved in a single dialogue where people then have engaged on taking this more seriously where it hasn't had a positive outcome. The problem is if you don't take the long-term view, if you think this can be a quick fix, that has never worked. Yeah, yeah.

24:06Claus Klein‑Ipsen:And to a certain extent, that's true around all training and development. You know, if it really matters, if you want to enable people to do things differently, do different things, which is one of the things that we talk about a lot, then you need to enable people to practice, to try things out, to learn from experience and to keep a focus around it. one of the things that that I was pleasantly surprised by was was you said at one point when we spoke that actually you had been out on sales calls with people as as an investor as a member of the board I can think most salespeople would be absolutely scared witless by the idea that a member of the board is going to come with me to a customer meeting but but why did you do that why did you think that was was uh an important step for you to take to really understand what was going on yeah this is actually one of my regrets that that that i found out too late i should have done this much earlier so so it's actually not that long time ago uh i started just doing that much more actively and and that was also with wired relations that i mentioned previously I'd been a board member there for a number of years before I found out that things could improve better.

25:24And that's sort of shame on me. I mean, I was sitting on the board. I should have known. But it was only when I participated in sales calls that I could see, gee, we need to lift the performance here, the quality here. And since then, that's what I'm doing. And I, yeah, maybe somebody has been a little bit nervous once or twice. But the thing is, it's done with a good intent. And I'm doing my bit to help lift people and get the company on an even better course. So it has always been sort of positively taken up very quickly or later on, definitely. But it's definitely something I would like to recommend.

26:06Participate in sales calls to see as a board member or an investor, how is your sales team doing? And if you don't know anything about spin selling, then at least buy the book and read it and then participate in a sales call to see are some of these methods I read about, are they actually being applied in the company that I've invested in?

26:27Claus Klein‑Ipsen:Yeah, absolutely. So that idea of going and taking a look firsthand, being really engaged. One of the things, I guess, that somebody with your level of experience, I'm sure you get asked this quite a lot, which is, you know, what would be the one piece of advice? You know, it's that idea. So let's break that down, if I may. So if you were talking to somebody who's got an idea for a business, so they're not yet quite at the startup stage, but they've got some good idea, they've got some technology or something new that they want to bring to the marketplace that they think will solve a problem, what would be the one piece of advice that you would give them at that start point of that journey?

27:06Okay, well, so there are two aspects to that. One has nothing to do with selling per se, but that is more like product development and so on. So this is sort of a standard startup thing that see if you can get a minimal viable product out there and test your hypothesis. So test your, is there, does this hypothesis work? Is there proof of business and so on? And then innovate in sort of agile steps if you can. That's one thing. And you might have to do pivots or micro pivots and so on. the other thing then opposite is sales now you're the founder you might be a one-man company or you might be very few so that means that some of those best practices around how do you have customer dialogues i mean i would study that a bit and self-reflect a little bit and see hey am i doing this well enough and and if you if you want to then talk to somebody if you don't have the experience yourself talk to talk to somebody that you know have had success with selling and get some advice from him or her.

28:10Yeah.

28:11Claus Klein‑Ipsen:And then if I were to ask you the same question, but this time focused on people who were investing in those scale-up businesses, so they've spotted a company that both could benefit from the investment and has headroom to grow and an opportunity to develop further. What would be your advice to an individual taking a stake in one of those businesses and providing that advice? What would be that one piece of advice that you say to them? and I mean there are a lot of things I could advise about but given the topic today I would definitely advise jump in on some sales calls and see how that is going you're going to learn a lot from that and just that opportunity to speak to potential customers must be useful even if you're not particularly expert at being able to analyze what the salesperson is doing you're getting into a dialogue which says this is the real market this is what really happens I guess Yeah, yeah.

29:04And actually, the customers like it. I mean, you don't have to hide who you are. You say, I'm a board member or I'm an investor and I'm curious to jump on a call. I hope it's okay for you that I'm here. I mean, they will always say yes, obviously. I mean, they're happy, they're flattered, whatever. They won't say, no, you cannot join this call.

29:22Claus Klein‑Ipsen:Yeah, absolutely. Absolutely. And then finally, if I may, Klaus, if you go back to those days where you're in Thomson and then you're in Thomson Reuters, and then you were coming through the businesses which you've worked with very successfully to now. Going back with all of the things that you've done in that intervening period, what would be the one piece of advice that you'd give to that person starting out in the industry, in your industry, and how would you know that that would be the right thing for that individual to have understanding of? I would study how do you get better quality in the sales dialogues and see if you could find a sales mentor, maybe somebody who's 10, 20 years older than you and who has a strong track record.