Background

Startups are amongst the key drivers of innovation and change within the dynamic contemporary business environment. Successful entrepreneurs can very rapidly disrupt entire sectors and either go on to manage them as growing and influential participants or exit for large sums as they are bought out by other firms. In general, the challenges to new business grounding, such as access to finance, technology and business knowledge, have become more manageable as governments and the private sector have sought to smooth the pathway for these new entrepreneurs. And the incentives to create a new business have never been greater than they are today.

Most startups still fail, however. Two dimensions of this failure stand out as recurrent (see also Chap. 2):

  • the founders and their competencies,

  • the startup’s marketing and sales activities.

Since launching in 2013 as a research project , the Startup Clinics programme run by the Alexander von Humboldt Institute for Internet and Society has supported almost 250 founders (see also Chap. 3). Analysis of the data collected through the project has shown that first-time founders in particular are confronted with unknown and unexpected circumstances, and that their existing knowledge and previously gained qualifications are generally not sufficient to successfully overcome the challenges they face.

These new situations are the reason why founders need to equip themselves with competencies that enable them to act appropriately and solve the problems that arise (Erpenbeck & von Rosenstiel, 2007). Competencies are more than just knowledge, skills and qualifications. They are task focused and performance oriented (Erpenbeck, 2010; Heyse & Erpenbeck, 2009). As shown in Fig. 5.1, competencies are generally differentiated into several categories: personal competencies, activity and action competencies, social and communicative competencies, and professional and methodological competencies.

Fig. 5.1
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The four competence categories

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In contrast to personal traits, competencies are generally easier to learn and develop. This suggests, first, that competencies are closely related to the actions they engender, and that secondly, people with weakly developed competencies in important areas have scope to develop them.

According to several studies, the biggest challenges for founders and their startups are customer acquisition, and marketing and sales (Kollmann, Stöckmann, Linstaedt, & Kensbock, 2016; Marmer, Herrmann, & Berman, 2011; Ripsas & Tröger, 2015). Thus the role of the ‘Marketer’ is central in the development of a startup , be it for a single founder or a member of the founding team. Founders should pay particular attention to those part-competencies which are most relevant to the process of setting up a business. The right competencies in the areas of marketing and sales can, after all, decide whether a startup will fail or succeed.

What Competencies Are Necessary in Marketing and Sales to Ensure a Startup’s Growth?

Expert discussions with more than 15 experienced founders have shown that there are eight central part-competencies (level 1) that the individual in charge of marketing and sales should ideally demonstrate. Based on these is a group of 11 further part-competencies (level 2) which also play an important role depending on the situation and the context. These competencies are shown in Fig. 5.2.

Fig. 5.2
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Part-competencies as part of the competencies profile

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The following sections introduce the eight part-competencies identified at level 1 and illustrate those using citations from expert founders.

Credibility

Credibility plays a central role in the relationship startups have with their various stakeholder groups, be they customers , suppliers, first employees, co-founders or potential investors . Acting in an authentic way helps to address the respective groups in the appropriate way and to gain their trust. Startups tend to hold the shorter end of the stick in any negotiation and credibility helps in levelling the playing field.

You need to convince a lot of people of what you do. And you will only succeed with this if you yourself display credibility. Because, especially in the beginning, people aren’t dependent on you. They don’t need to work with you. And they will only do it if you are trustworthy .Footnote 1 (expert 8)

All marketing and sales activities undertaken by a startup need to convey complete credibility. This does not only apply to direct communications with customers , but also during other sales activities and in the creation of marketing collateral such as online advertisements, pitch decks or social media presence.

Willingness to Learn

A newly founded company is nothing but a collection of unproven assumptions. To take a company forward and achieve the goals set out, founders need to be willing to learn from their conversations with customers , the observation of their reactions and the company’s environment, and to abandon existing hypotheses and create new ones. This period therefore coincides with a series of changes to the business model that any innovative startup must contend with.

Willingness to learn is especially important as the requirements that are placed on the founders might change quite drastically. Rapid growth from one to 100 employees can require a transformation in the role of the founder or founding team.

Founders with a strong willingness to learn and adapt therefore have the best chances to develop successfully in tune with their growing company. Finally, a willingness to learn new skills is also crucial in order to fill gaps in a founder’s knowledge and quickly to gain a well-grounded understanding of new and complex issues.

In hindsight, we didn’t have a grasp on the situation one little bit. For example, I am no SEO [search engine optimisation] specialist, but I was able to make it work for us. Or similarly with SEM [search engine marketing ] campaigns, I knew that they existed and that there were some criteria, but I had no idea how to work that programme. For a while we also didn’t have a graphic designer, so I just taught myself how to use this graphics programme one day. It is just unbelievable how many new things come up every day. And everything just needs to go super fast, you need to know what to do, what you want, what the company wants and needs. And in the end, it really doesn’t matter if you studied business or law, you just need to deliver, you need to be able to do what someone who studied it would. (expert 10)

Communication Skills

Not every member of a founding team necessarily needs to be a natural at communicating. However, there should be at least one person who excels at it, and he or she should be in charge of both the marketing and sales activities. Furthermore, the ability to communicate clearly and effectively is, similar to credibility , an important ingredient in relationships with the various stakeholder groups (i.e. suppliers, customers , employees , co-founders , investors).

Startups face the challenge of proving their credibility to their stakeholders: they need to build up trust in those relationships. As a new company, initially one has no reputation with the stakeholders, and for them it is not clear if the company will still be operating in three or six months.

Good communication skills have nothing to do with being talkative and also do not mean that one is constantly communicating. It is more the ability to understand how to communicate, or the ability to communicate in the right way. It means being able to clearly express one’s thoughts and to structure conversations and to be able to clearly and concisely get the message across. And listening, too. That’s really important.

And that means having a capacity for empathy and the ability to understand what kind of person is sitting across the table from you. And in the next step, to be able to adapt one’s style of conversation to them and solve their issue. And to communicate it in a way that in the end characterises that person. (experts 9 and 14)

Good communication skills, however, go further than verbal communications; they also cover non-verbal and written communication. For example, well-structured, targeted and concise emails without spelling mistakes that get the message across to the client are extremely important. The same applies to so-called live chats, which are becoming an ever more popular method of contacting customers directly.

Customer Orientation

To listen to customers, understand their problems and find new, innovative and better solutions than are currently available is the core business of any startup. Being in touch with the customer and receiving feedback on one’s products is essential. Especially in the early phases, dealing with the received feedback in a clear and honest way is very important.

Customer orientation is important for both marketing and sales activities and starts with planning. For founders, it is important to see any issue through the customer’s eyes and to be able to switch perspectives in order to understand what the customer is really thinking. All activities and the behaviour of the startup should be adapted accordingly.

To verify reality as perceived by the customer, founders need to take a step back and rein in their own notions and assumptions.

Customer orientation is incredibly important and really number one for new business acquisition. The most successful businesses truly put the customer at the centre of their work. As a startup, if one can’t understand what the customer wants and can’t react to changes in customer or market behaviour, one will be out of the market in no time.

In the end, it’s the customers who decide what they want and what not and we all need to play by their rules. (experts 8 and 14)

Customer orientation is generally addressed as part of sustainable, fair and long-term customer relationships. In order to develop a successful startup, customer relationships need to be understood as a long-term investment. There is thus no benefit in acquiring new clients if the company will not be able to serve them in the long term owing to a misaligned service offering or inappropriate product development.

Perseverance

Perseverance is a crucial factor in overcoming resistance in the initial stages of starting up a business. Resistance might come from customers , investors or other stakeholders if they are not convinced by the idea , the product or the service . Founders need to strongly believe in their mission, and if they react to setbacks with tenacity and resilience they will be able to overcome the difficulties that arise in the early stages of their company.

Perseverance to me is a crucial meta-skill. Without that skill a person in my eyes is not a good fit for a startup, particularly in a central function during the early stages. I think the worse situations are those where you feel like you have no options. No matter what you do, there is no solution.

Financing can turn into such a perceived dead end. We also had times during which technology was a real nightmare. This happened during the holiday shopping season where you lose the sales of an entire year, where you have no solution and can’t decide on what to do. Or all of a sudden your customers go on the warpath. (experts 6 and 10)

Perseverance in marketing and sales is crucial to success. It is also important not to give in to rejection or failure, but instead to stick with it, to understand why it happened and to change things where appropriate. Therefore perseverance and flexibility should be adequately balanced. Founders need to find their own balance between perseverance and believing in their own idea on the one hand and openness and flexibility to change things that don’t work on the other.

Resilience

Startups are characterised by a high degree of uncertainty . That uncertainty is often substantial, as it is frequently unclear whether the startup will still exist in a few months’ time. Exceptional conditions need to be managed, such as working for months on end before getting some positive reactions from customers or investors or having your back to the wall because the next financing round has not been secured two weeks ahead of the next salary pay date. Such situations can put extreme pressure on founders, both physically and psychologically.

Building a company is incredibly hard work. I worked 18 hour days during the week and ten hour days on the weekend.

I put up high racks till four o’clock in the morning because nobody else did the job. (experts 12 and 8)

Once you get people to work for you, in our case a woman in customer service who previously had a permanent fixed contract, you really start to worry while you are still going through a round of financing. You must be able to handle that kind of pressure. You really carry an unbelievable responsibility towards these people. Because if things go wrong, you have to tell the people that you hired only a few months back: ‘Sorry, it didn’t work out’. And maybe that person just built a house and got a mortgage. You must be able to handle that pressure because on the other hand you have got a responsibility: maybe you have to let that one person go so that three others can keep their job. (expert 8)

Particularly extreme situations show how resilient founders are. Optimism and resilience—which can be expressed as a tolerance for frustration—are very important characteristics. Setbacks should always be expected, as most things do not go exactly as planned.

Results Orientation

Startups generally need to show results quickly and therefore, particularly in the early stages, a strong focus on the bottom line is decisive. Results orientation as a part-competency is especially relevant to the areas of marketing and sales, as these are the areas where measurable results or turnover are generated.

Results orientation simply means working without meetings, without drawing up plans, and where internal or external get-togethers don’t happen to identify next steps or to say things such as: yeah, hmm we could do it that way. But it should instead go like this: Who is doing that? You do part A and I’ll do part B and who is going to do part C? When will this be done by? We will do it by next week. Let’s meet middle of next week to clarify where we are at and to answer remaining questions. So there will be a follow-up meeting and a defined goal and clear responsibilities for each person and strict deadlines until when things should be done. That, to me, is results orientation. Nothing is left to chance; everything is divvied up in such a way that each person has clear responsibilities. (expert 15)

Two qualities are important to work in a results-oriented fashion: first, knowing what one’s targets are and their place within the bigger picture; and secondly, focusing on what matters and to be able to getting those things done. Results orientation means continuously refocusing all activity on results. For marketing this means defining goals , starting activities, measuring results and consequently analysing what has worked and what has not.

Analytical Capacity

Companies are systems that work according to particular rules. Having the right analytical capacity and judgement helps to better understand those rules and how a company works. Having the right analytical capacity helps in assessing test results of a particular working hypothesis, recognising what has worked and what has not, and deriving actions to improve or optimise.

Especially during the early stages, being able to make decisions in a quickly changing environment, and based on numbers and data, is incredibly important: will this marketing or sales activity deliver the right results for our company?

Marketing activities can take a myriad of forms and functions for any startup. For some business models or marketing channels, analytics might not be that important, for others it might be a critical success factor. Sales also require strong analytical capabilities.

Startups, in the beginning, often can’t afford to hire a specialist and the founder simply has to employ his own capacity to abstract and analyse to the best of his abilities; ensure that one ‘thinks big’ on sales from the get-go and also stays on top of the operative implementation, ensuring that it is realistic and ultimately achievable. (expert 7)

This also holds true for direct customer interactions. To immediately take in and get to the bottom of the issue at hand, understanding what the client’s responses really mean and directly responding to these, founders not only require high empathy levels and good communication skills but must also be able to think on their feet and have sufficient analytic capacity.

An overview of further important part-competencies can be found in Fig. 5.2. Readiness to get things done, big picture thinking, openness to change, good self-management , strong drive, optimism, creativity, ability to make decisions, deal closing skills , team spirit and a strong conceptual understanding are all significant.

Each of these part-competencies should ideally be highly developed, but extremely developed part-competencies can also inhibit good outcomes. An overly optimistic view can quickly turn to simple-mindedness, for example, if the circumstances do not warrant it. Openness to new ideas might tip into arbitrariness and therefore lead the startup astray. Competencies must in this context always be considered to be soft skills , to be applied with balance and good judgement.

The results show that in the initial phase of setting up a company, professional and methodological competencies, that is particular skills or market knowledge, are less relevant than a set of more generic competencies. Personal competencies and activity- and action-based competencies are the most important for the marketing and sales activities of a startup during the early phases of its development.

Next Steps for Startups: How to Develop Competencies

Irrespective of whether lean startup , customer development or design thinking is applied, the part-competencies introduced above are strongly represented in today’s most popular entrepreneurship philosophies.

Lean startup refers to the process by which founders take an unfinished prototype to market as quickly as possible (see also Chaps. 8 and 10). The ongoing iterative development is then based on real-time customer feedback. Through this model a business can be successfully set up with little capital and by applying simple, direct processes.

Customer development is a comparable concept which develops innovative products and services through a four-stage process based on real customer problems.Footnote 2 At the point of product –market fit this also delivers an ideal base to initiate the related marketing and sales activities.

Finally, the design thinking method focuses on solving problems and developing new ideas by putting the user and client needs front and centre (see also Chaps. 8 and 10).

Customer orientation and willingness to learn new things are two basic components of the above described approaches, and are often the main reasons why startups are able to develop prototypes , acquire customers and develop them into a business model so quickly.

Results orientation is probably one of the biggest differentiators between startups and established businesses. While larger companies more often tend to be more process oriented than results oriented, startups have no choice but to deliver results rapidly. Process orientation is generally manifested in the more rigid adherence to rules, structures and processes that is expected from individuals within larger organisations.

Faced with a high likelihood of failure, founders need perseverance and resilience to overcome the resistance and setbacks that they will inevitably be faced with, and despite which they will succeed nonetheless.

While on this journey, founders are aided by a large analytical capacity which helps them filter, sort and analyse the mass of information they receive and develop the right actions and decisions based on this. They will not succeed in winning over all important stakeholder groups (e.g. customers , suppliers, employees, co-founders and investors ) if they have not developed the right communication skills or are not considered to be trustworthy.

There is generally no job description for the role of an entrepreneur, as they exist for employees, managers or leadership roles in small and large businesses. First-time founders should therefore urgently consider what competencies they might need to succeed. Examining one’s own competency levels also creates a good awareness of inherent strengths and weaknesses and the resulting personal potential. Being a first-time entrepreneur means doing many things for the first time. Competencies can support founders to face emerging challenges and overcome hitherto unknown situations.

What can and must founders do to acquire the right competencies? Initially, a 360-degree assessment can help to discover if and to what level founders already display the aforementioned competencies and where there are gaps to be filled. If shortcomings are identified, this can be used as a point of departure to develop the needed competencies. The exact makeup of such a plan is highly dependent on the individual part-competencies and their scalability.

Communication skills, customer and results orientation , for example, are easier to develop than resilience and analytical capacity. Generally, all competencies are best developed through trial and error in the real world, and thus failing at a first attempt to set up a business should not be considered a personal failure. If founders are able to take this as an opportunity to learn from mistakes, they are instead more likely to succeed the next time.