Amos Schwartzfarb, managing director of Techstars Austin, didn’t set out to write a book.
He originally sat down to create some materials for Techstars companies focused on sales with answers to the most commonly asked questions.
The project evolved into his book: Sell More, Faster: The Ultimate Sales Playbook for Startups, published by John Wiley and Sons, is on pre-sale now and debuts Sept. 4th. He’s also having a launch party that evening at Capital Factory to celebrate.
Schwartzfarb has spent decades working with startups. In his latest role, he took over the managing director job of Techstars Austin from Jason Seats in 2015 and he has graduated three classes of startups under his direction.
Before joining Techstars, Schwartzfarb served as head of customer development at Joust. Previously, he was vice president of customer development at BlackLocus, which was acquired by The Home Depot in 2012. And he was co-founder and served as Chief Operating Officer of mySpoonful, which was acquired in 2011. He also served as an executive with Business.com, which was acquired by RH Donnelly in 2007. And he spent five years at HotJobs.com.
In this latest edition of the Ideas to Invoices podcast, Schwartzfarb talks about what he sees as the big mistakes entrepreneurs make when it comes to sales, sales strategy, what he looks for in choosing startups to participate in Techstars Austin, some of the breakout Techstar Austin companies and the phenomenal growth of Austin’s startup ecosystem.
One of the biggest sales mistakes entrepreneurs make is “thinking that they have a clear idea of who their customer is, what they are buying and why they are buying it before they really do and just going with gut rather than using data,” Schwartzfarb said.
The next mistake is starting with sales, before doing the research.
“Starting with sales versus starting with customer development and customer exploration and thinking that they need to get into repeatable sales before they have any idea about what can be repeatable in what they have done,” he said.
Traction is a big focal point when it comes to startups, but traction can have a lot of different definitions, depending on who you talk to, Schwartzfarb said.
“But it generally means that the entrepreneur has hit some kind of repeatability with customers, or they show that they can do that,” he said.
In his book, Schwartzfarb focuses on customer development first.
“Up until Series A, startups are still figuring out who their customer is and what they can learn from them,” he said.
The goal is to get to that hockey stick effect where sales just take off, but that requires a lot of work on the entrepreneur’s part in defining and catering to the ideal customer set, Schwartzfarb said.
“It’s akin to doing consultative sales,” he said. “You go in with a theory that you are filling a void that exists. You might have a strong conviction about it. But you’ve got to get customer data to support it.”
Entrepreneur do that by listening to prospective customers and validating that the problem they believe exists is in fact there and that they can solve it with their product, he said.
“And that it can be repeatable for a specific customer set,” he said.
Schwartzfarb is a very strong advocate for the entrepreneur to be the one facing the customer in the early days and trying to figure out whether their assumptions are right by validating the data.
He would also like to see founders working on their company without other distractions, but he realizes that isn’t always possible when some founders need a job to pay rent.
“A founder that can’t dedicate 100 percent of their time to the thing they are trying to create is setting up additional roadblocks for themselves,” he said.
Still, some entrepreneurs can be scrappy at making it all work with a job and developing their startups. That can show the ability to make things happen despite difficult circumstances, he said.
Schwartzfarb evaluates thousands of companies each time Techstars Austin brings on a new class. He ultimately selects ten to participate in the accelerator program.
To select those startups, Schwartzfarb has a checklist that entrepreneurs must meet to become a finalist.
First, he needs to be convinced the CEO can build a meaningful company and attract great talent, Schwartzfarb said.
“I’m not talking about the product or the market yet, it’s all about the person,” he said.
Next, is the team cohesive and are they the ones that have the skillset to accomplish what they want to do, he said.
“And lastly, do I believe that there is an interesting market that has a big opportunity,” Schwartzfarb said. “The product is interesting to me, but a lot less important. “
That can still leave Schwartzfarb with more startups than he has space for and so then he focuses on “who are the people we think we are going to have the most fun working with,” he said.
Techstars Austin has startups from varied industries in its portfolio including consumer packaged goods.
A couple of years ago, the Techstars program expanded in Austin with the addition of the Techstars Impact accelerator which Zoe Schlag heads up. She previously founded and ran the Unlimited impact accelerator in Austin before joining Techstars.
“What we saw in Techstars was a large percentage of our companies were impact companies,” Schwartzfarb said. And Techstars data showed impact companies outperform non-impact companies, he said.
About a third of the Techstars Austin companies are impact-driven companies, Schwartzfarb said. In addition to Techstars Impact Austin, Techstars has expanded its impact accelerators to Denver and Atlanta.
It’s not a hard sell to convince companies to locate to Austin to participate in the Techstars Austin program, Schwartzfarb said.
Austin is increasingly becoming a hotbed of startup activity and more and more companies are moving here because of the quality of life, lower cost of doing business and abundance of talent, Schwartzfarb said.
Austin is looked at as one of the best places in the country to build an early-stage company, Schwartzfarb said.
In the last Techstars class, six companies came from out of state and three have moved to Austin permanently and two more are in the process, Schwartzfarb said.
The venture capital availability has improved in Austin, but it is still lacking in early-stage funding.
Austin has more capital than a few years back, but the city still needs more seed-stage capital, he said. Investors in Austin tend to invest with more of a Series A mindset, he said.
And the top companies to come out of Techstars Austin have raised their later stage funding outside of Austin, Schwartzfarb said.
For example, ScaleFactor has raised more than $100 million in the last 14 months. Its investors include Coatue Management, Bessemer Venture Partners, Canaan, Broadhaven Ventures and Firebrand Ventures.
Other Techstars Austin startups that are expanding quickly include Chowbotics, which has created robots that make food and deliver it to people via vending machines, Storyfit in Austin, Skipper, and SkillPop out of Charlotte, North Carolina, Schwartzfarb said.
Applications close on August 25th for the next Techstars Austin accelerator. The program kicks off this year on De5c. 2nd so the Techstars companies will be ready to go to South by Southwest and pitch their ventures.
For more about Techstars, the startup ecosystem in Austin and cycling around Austin, tune in to the entire podcast.
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