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With billions of dollars of venture capital residing down the street on Sand Hill Road Dwayne Haskins Redskins Jersey , two Stanford professors are attempting to answer a fundamental question ?why does it always take longer and cost more to build a hi-tech company than anyone ever expects?? For all the intellect, experience and graduate degrees in the venture capital industry, the sad truth is that 80% of venture capital investments do not pan out. While the reasons for this high attrition rate are too numerous to list here, a simple fact defines every successful investment - the company figures out how to bring in more money than it spends. The secret to solving this fundamental equation these two professors believe lies in the Sales Learning Curve.


Mark Leslie Da'Ron Payne Redskins Jersey , an entrepreneur turned Stanford lecturer who took a startup company, Veritas, from nascent stages to over $1B in revenues and a recent $13.5B merger with Symantec, and Charles Holloway Landon Collins Redskins Jersey , the Kleiner Perkins Caufield & Byers Professor of Management at the Stanford Graduate School of Business have developed a framework, that goes a long way toward answering the question ?why it always takes longer and costs more?? Leslie and Holloway call this framework the Sales Learning Curve (SLC) and believe that it will prove as powerful a construct in the high tech sector as the Manufacturing Learning Curve (MLC) was to the manufacturing sector in the early (date?). Today, manufacturers wouldn't think of running their operation without tracking the MLC because of the dramatic improvements in productivity that it offers. Similarly, Leslie and Holloway believe the SLC holds the potential to fundamentally change how high tech companies are managed and will lead to more high tech companies reaching the promised land of ?positive free cashflow.? Increasing the number of cashflow positive companies should lead to greater venture capital returns Alex Smith Redskins Jersey , more capital being allocated to the sector by LPS, more early stage company formation, more innovation, more jobs Sean Taylor Redskins Jersey , and increased productivity.


So what is the Sales Learning Curve?


[Note to Editor -- there are 2 graphics that were stripped out when I pasted in the article into this form]


As illustrated above, the Sales Learning Curve tracks the contribution margin per sales rep (Sales Yield) against the number of customer transactions. The shape of the curve will be different for every company and every sector but the central tenant of the SLC remains constant ? the ?go-to-market? phase is when companies should ?Go Slow to Go Fast? (which is some advice from a Nordic skiing expert that I recently received when I asked for some tips on improving my performance prior to an upcoming race ? Google the phrase and you will find that triathletes, grade school teachers, executive coaches Wes Martin Limited Jersey , swimmers, and karate instructors are all well aware of the Go Slow to Go Fast benefits).


Leslie and Holloway believe the ?organizational learning? that occurs as sales reps interact with customers to close initial sales is crucial to the ultimate success of the organization. The classic ?go-to-market? strategy involves hiring a VP of sales once the beta product is complete and then hiring as many reps as the balance sheet will allow in order to 'drive revenue and get to breakeven.? According to Leslie and Holloway, this strategy is doomed to failure because the company has failed to take the time to understand the shape of the SLC for its product in its market. Some reports generated over the last two years by Fenwick and West, a prominent Silicon Valley law firm Bryce Love Limited Jersey , bear out their assertion. There is a consistent pattern of inflated B round valuations; the percentage of down rounds for C and later rounds is always greater than B rounds. As Leslie and Holloway state, ?One inference from this is that both entrepreneurs and VC's underestimate the cost and time required to move up the SLC after completion of the Beta product. VCs and entrepreneurs often assume that the company is ready to gain market traction at this stage when in fact the company is only ready to begin the SLC learning process, which like product development stages has a somewhat indeterminate duration.?


When moving from beta release to first release, Leslie and Holloway argue that only a few technically versant sales reps should be hired. These sales reps should serve as a conduit between the initial customers and the engineering team and compensated not on revenue targets but on the ?organizational learnings? that are achieved. Only after enough of these 'learnings? have been incorporated into subsequent releases of the product and the organization knows how to sell the product (defined as the point at which each sales rep's contribution margin is twice their fully burdened cost) does it make sense to aggressively hire additional sales reps. Leslie and Holloway posit that the SLC is immutable and can point to numerous theoretical models and concrete examples that indicate that until you have reached this pivotal point on the SLC Terry McLaurin Limited Jersey , the capital invested in hiring additional sales reps is simply wasted.


My firm's principals have served as executives, investors, board members, and consultants to nearly 50 early stage companies in the technology sector ? some successful (Microsoft) ? some not. We have found consistently the go-to-market stage (more so than product development or market expansion) is where there is the highest degree of uncertainty and the greatest potential to burn through finite cash resources typically through a misallocation of sales & marketing resources. Needless to say Montez Sweat Limited Jersey , once we were exposed to the SLC, we immediately began working to develop the tools and constructs needed to apply the theory behind the SLC to the day-to-day operating reality of rapidly growing companies.


The last thing most CEOs and venture investors want to hear is ?Go Slow? when they have a product that is out of beta testing. Having become iStarting. Cheap Womens Nike Shoes Cheap Nike Air Jordan Cheap Air Max Light Bone Cheap Nike Air Max 90 Cheap Air Max 90 Essential Cheap Air Max Hot Punch Air Jordan 1 For Sale Air Max 1 Clearance Cheap NFL Jerseys China Wholesale NFL Jerseys Free Shipping