Startup Blog Post - Why selling and product development are actual the same thing

In the early days of a start-up the main roles of the founders fall into two domains: product development and sales. Product development broadly encompasses all the activities of of turn an idea into a product or service that adds value to a customer. These activities include but not limited to: prototyping, user testing, technology development, research, and creating the final product. Sales more broadly includes functions relating to marketing, advertisement, and direct sales -- basically any activity to informs potential customers about your product and value proposition and converts them from a lead into a paying customer.

To often we think of these two domains as being separate from one another. A business oriented founder might say: "once you have the product built, I will be able to meet with customers and sell it. Until then there is not much that I can do". A more technology oriented founder might say: "I have built a great product (technically speaking), how come we don't have customers yet? You must not be doing your job". In the early days of start-ups these conversations can be quite normal and they mainly stem from both parties not understanding each other's roles and tasks. This problem is further exacerbated due to the fact that these two domains should not be separated from each other because of the high level of interdependencies involved.

One way to resolve this problem is to reframe how we conceptualize and approach start-ups. Instead of breaking the company's main activities into product development and sales, we should combine these two together. Currently the best available term for this is customer development and I will use it loosely to refer to this holistic approach. But before we talk about how to effectively combine these two domains, I will take a quick detour to talk about the business model. If we take a look back and think about what exactly is a company; it might offer some insights into the problem.

Companies exist in order to generate and delivery value to a customer or a set of customers. During this value generation and value delivery process, they will earn revenues for their product or service and they will also incur a cost associated with running their organization. In the long run, their revenues should be greater than their cost otherwise the company can no longer exist. Likewise, the customer's value should be greater than the amount that they paying otherwise they will not return. The combination of the value proposition, customer segment, delivery channels, revenue streams, and cost form what we call the business model (Alexander Osterwalder has a much more comprehensive definition of a business model and for this blog post I present a simplified definition). For a company to be successful these components of their business model must all be in sync and work harmoniously with each other.

One way to define startups is: "a startup is a temporary organization with the goal of finding and developing a scalable and repeatable business model" (Steve Blank). If we look at a start up from the business model perspective then it becomes more obvious why sales and product development should be in tune with each other. From day one each component of the business model is at best an educated guess and it is really the team's job to validate it. The goal of sales is to test the value proposition with the customers and the goal of product development is to create the minimum level of fidelity in the product to elicit a response from the customer.

This close nit iteration between sales and product allows for maximizing learning and enables the validation of the business model components. The closer the cycle between building and testing the sooner the startup can validate their business model. As a result we should not try to separate the domains of sales and product development but rather us the learning from one to inform the other and vice versa.