52 Bicycles

Mark Leslie wrote a great column for AlwaysOn, “The Sales Learning Curve,” in 2004. In it, he describes a model for reducing the unit cost of sales through maximizing the education value of experience over time. He goes into it in more detail in a paper produced at Stanford B-school

This contraindicates the rapid staffing up that we instinctively think is the key to shortening the path to profitability. Rather than getting a dozen feet on the ground, we need to make sure we learn lessons with a small group (or singleton) first.

Could we just grow sales staff and learn at the same time? Maybe, but in my experience sprinting and chewing gum is not only difficult, it is conducive to choking.

Best of all, it points to a way that a bootstrapper could beat a well-capitalized competitor on the basis that the latter believes to be most important - speed to widespread penetration. And by having kept the venture capital powder dry, we can then raise at a higher valuation to get the working capital to staff up after we’ve climbed the curve.

Win-win.

This entry was posted on Tuesday, January 24th, 2006 at 5:16 pm and is filed under Technology Business. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed. Reddit This