Steve Blank: The Importance of Being Where Your Business Is

**Why Location Matters for Scaling a B-to-B Startup**

In order for a B-to-B startup to successfully scale, the CEO must reside in the city where the business is located. This is crucial for building relationships, closing deals, and achieving exponential growth. In a conversation with Erin, the CEO of a startup selling enterprise software to the financial services industry, it became evident that her company was facing challenges in scaling. This article explores the importance of location, the obstacles faced by Erin’s company, and the necessary steps to overcome them.

**Understanding the Importance of Location for Business Deals**

Erin’s startup had found product/market fit and had sold significant deals. However, despite these successes, the company was experiencing incremental growth rather than exponential growth. Erin expressed concern over her investors’ impatience and the comparison to a competitor that was growing at a faster pace. The primary issue seemed to stem from the location of the company’s headquarters in Silicon Valley, while their major prospects and customers were based in New York.

**The Impact of Competition and Relationships**

Erin’s competitor, though initially less concerning due to their limited product features, had an advantage in terms of customer relationships. With their headquarters in New York, their CEO and VP of Sales had the opportunity to meet face-to-face with potential customers. Meanwhile, Erin’s account executives in New York were selling to middle-tier managers and lacked access to top-level executives. This disconnect resulted in the loss of potential deals.

**The Challenges of Remote Teams and Travel**

Another obstacle faced by Erin’s company was the strain on the VP of Sales, who had recently bought a condo in Miami to be closer to her aging parents. This led to frequent travel between Miami and New York, leaving both Erin and her VP of Sales exhausted. Additionally, the remote engineering team and the use of technology for sales calls and meetings created a barrier in addressing organizational speed bumps and roadblocks efficiently. Matters that could have been resolved through casual conversations became more complex and time-consuming.

**Overcoming Obstacles and Achieving Scale**

After analyzing the situation, it became clear that Erin was inadvertently impeding her company’s path to scale. Several suggestions were made to address the challenges and achieve exponential growth.

**1. Focus on Scalable Sales**

Erin needed to assess whether her involvement as CEO in securing deals was essential due to a product pivot or if her account executives in New York could execute a repeatable and scalable sales model without her intervention. Establishing a validated sales process was crucial for driving exponential growth.

**2. Establish a Physical Presence**

Setting up a New York office without the physical presence of Erin or her VP of Sales hindered the company’s expansion. In the current phase, the goal should be scaling the business rather than incrementally adding new accounts. Hiring account executives in New York allowed Erin to believe in a scalable sales playbook, but the reality was that a remote approach was limiting growth. Establishing a physical presence in New York was vital for building relationships and closing deals.

**3. Augment the Sales Team**

To fully leverage the growth potential, Erin needed to ensure that her New York office had a substantial footprint. Hiring additional business development and marketing personnel could generate more demand. Additionally, it was essential to have a full-time head of sales in New York to support the growth efforts and remove the burden from the VP of Sales.

**4. Assess Company Headquarters’ Location**

Considering that the majority of customers were in New York and the engineering team was working remotely, Erin needed to evaluate the location of the company’s headquarters. Moving the headquarters to New York could foster stronger collaboration and alignment between the teams.

**Facing Personal and Professional Challenges**

During the discussion, it became apparent that Erin had reservations about returning to the corporate environment she thought she had left behind. However, it was crucial for her to take stock of the situation and determine her next move. With a valuable services company and products that resonated with early customers, Erin had the opportunity to build something remarkable. If she was not prepared to seize that opportunity, it was essential to consider her alternatives.

**Lessons Learned for Scaling a Startup**

In the journey towards scaling a startup, finding product/market fit is just the first step. The next phase involves establishing a repeatable and scalable sales process, which demands relentless execution in creating demand and exponentially growing sales. In cases where customers are concentrated in a specific city or region, the CEO must be physically present to build relationships and lead the way.

In conclusion, Erin’s experience highlighted the importance of location for scaling a B-to-B startup. By acknowledging the challenges faced and adopting the suggested strategies, Erin could overcome the obstacles and position her company for exponential growth.