Tricks the Market Will Play on Early-Stage Founders
Early-stage startups have to rely on imperfect information when making critical decisions.
A mix of intuition, past experience, and market data becomes essential to navigating toward product-market fit, with market data often being weighted most.
However, while market data is critical, it can lead to significant trouble if you misinterpret what is being suggested …
What's not often discussed are the false positives that arise and set founders down a path riddled with heartache and high risks of premature scaling.
Here are some of the biggest tricks the market has played on founders:
Traction in a local market will translate to the U.S.
This false confidence often stems from the time and effort poured into understanding the problem, refining the product, and landing recognizable logos for the local market (sometimes including subsidiaries of U.S. companies)The misstep is that founders will have spent years locally sorting product/market fit and feel expansion into the U.S. is ‘simply’ a move into an adjacent market that will be best suited and delegated to a Head of U.S. Sales.
However, U.S. expansion is far more complex, as international go-to-market strategies and local market visions never translate into the U.S.
The U.S. is unique regarding the maturity of industries, decades-old processes, 6 million businesses categorized across numerous segments/sub-segments, expectations regarding support, and similar solutions (i.e., alternatives) in the market.
The only way to avoid getting lost here is to take a Day 1 mindset, test the founder's vision/insights, and leverage their vantage point to see something forming that they likely weren’t in search of initially—expecting a non-founder to do this in isolation will fail.
2. Generating a healthy number of initial calls means sales are sorted.While leads are critical, qualification is crucial.
Some founders mistakenly believe that the ability to secure a second call indicates a qualified lead and momentum being built. This is true as long as qualification is closely examined.
Effective lead qualification requires deep testing and exploration of the buyer's awareness of the problem, the implications of not solving it, and how the problem is growing or widening within their business.
Qualification is not predicated on simply capturing more of their time OR their interest in seeing your product/demo.
A lack of the buyer's understanding in these areas usually means more education/understanding is needed (i.e., unqualified), or the lead should be disqualified.
If you feel you have a bottom-of-funnel problem, it's almost always a top-of-funnel problem — meaning you’re not speaking to the right customers, skipped critical education stage(s), or your value is not translating to create inertia (i.e., close).
Be sure you’re able to confidently inspire, convert, and close BEFORE you build out the internal team. Don’t jump the gun simply because you’re able to generate first calls – this in itself doesn’t translate to revenue ;)
If you’re thinking, “I have all these leads, I just can’t close because I don’t have the time and/or lack the sales skills.” — Think again.
More on this in #3 …
3. The founder can sell it; thus, a non-founder can.
This is a tough one to swallow, as moving out of the founder-led sales stage and into founder-managed sales is where many startups fumble.
In many cases of founder-led sales, the founder is the product, meaning their subject matter expertise and vision are what the market is buying into (especially in the up-market segment).
Founder-managed sales is when the founder starts to remove themselves from the sales process and prove a non-founder can have similar-ish success, starting with (1) the ability to create interest (i.e., generate outbound leads/understand how to feed themself), (2) the ability to hold a successful intro call with clear qualification criteria, (3) the ability to convert a sales qualified lead (SQL) into a sales qualified opportunity (SQO), and so on.
While I know speed to grow is the name of the game, you need to ensure the foundations of the sales machine are built and legitimate, which requires you to slow down before you speed up.
4. We are seeing success across two distinct market segments – smaller organizations and enterprises.
Warning – this could be a critical point of vulnerability.
The requirements for selling to 500-person- and 10,000-person organizations radically differ regarding go-to-market approaches, sales math & models, and product offerings/requirements.
In the down-market segment, which includes small businesses and the upper-end of small businesses, the user and the buyer are often the same.
As you move upmarket, these roles become increasingly bifurcated. This divergence grows as the company's size increases, and user value (the technical benefits of the product for the end-user) becomes far more distinct from buyer value (the strategic and financial benefits for the decision-maker/organization).
For enterprises, the focus is on expanding further within the organization by engaging different stakeholders, while in the down-market, the goal is to unlock more opportunities for the same individual through more product offerings.
Let me explain further: Suppose you are actively implementing your initial Act 1 go-to-market strategy with some initial validation and clarity. Assume a ~10% win rate on outbound efforts and a ~20-30% win rate on inbound efforts, leading to a ~15-20% blended win rate across two segments.
Please note this is for illustrative purposes only — if you’re still early in the journey of market validation, you will want to increase the number of net new market conversations you’re having to an additional 35% (included in data below)
Upper-End Small Business GTM Math – Assumptions:
Selling a ~$15,000 Annual Contract Value (ACV) to organizations with 500-1000 people.
15% win rate
Net New Market Conversations: > 400
but, if you’re early in sorting/validating > 550
To Close: 66 customers
Revenue: $1 million
Implication: This segment requires a high-velocity approach with a demand engine to support inside sales.
Enterprise GTM Math – Assumptions:
Selling a $100,000 ACV to a 5,000-person organization.
15% win rate
Net New Market Conversations: > 66
but if you’re early in sorting/validating > 90
To Close: 10 customers
Revenue: $1 million
Implication: High-value sales will require a far more personalized approach with a heavy focus on expansion.
Can you see the significant differences in the math and GTM strategies? Down-market is far more marketing-led, with likely a hand-off to (inside) sales, whereas the up-market is more sales-led, relying heavily on field sales and personalized engagement.
To wrap this up, it's important to reiterate that these traps are likely a symptom of passion. Founders dedicate their lives to a startup/mission, but this often comes with the necessary evil of blind market confidence.
This is why we built JJELLYFISH 8 years ago – having someone in the trenches with the founder to set up, execute, and act as a market interpreter, searching for those "ah-ha" amongst the nuance, is the adrenaline we live for too.
