When we decided to pursue securing a capital partner in the fall of 2007, I became an avid reader of two outstanding blogs by a couple venture capitalists, Brad Feld (Feld Thoughts) and Fred Wilson (A VC). Their blogs are a wonderful source of insight and advice for any entrepreneur seeking funding.    I spent most of my time reading and trying to internalize their posts on topics like the business plan, the funding presentation, and term sheets.  In the course of my reading, two simple posts they each wrote about saying “no” to funding requests really resonated with me.  Fred’s post was first and is here, and Brad’s comment on Fred’s post is here. 

I think these posts were comforting to me, because they made me realize that seeking funding was essentially major account selling.  When you’re selling, and you’re busy (see my last post), you come to learn that “no” can be your friend.  Naturally we’d love for every prospect to have genuine interest and ultimately buy, but we know that isn’t reality.   I’ll take an early and firm “no” any day over a long drawn out waste of time with a “maybe.” 

On the flip side, another maturity lesson every major account sales rep needs to learn is how to give a “no.”  In the long run it is far better for the business to lose a few deals because you didn’t have what the prospect wanted than to repeatedly sell things that don’t exist.  The first slows revenue growth – the second erodes the sales person’s reputation (internally and externally) and ultimately market confidence in the vendor.  The irony is that I’ve found that responding to prospect questions with confident honesty, even if the answer is “no,” increases a sales person’s effectiveness.  Major buy decisions are emotional decisions, and deals are most often awarded to the vendor whom the buyer most trusts.

One of the most challenging lessons though is learning when to say “yes,” when to say “yes but not now,” and when to say “no” to current customers.  We love it when our customers request enhancements to COBRApoint.  We have some outstanding customers, and we know that if we continue to deliver a system which meets their needs it will also be one which meets the needs of our target market.  The challenge is that we could never deliver everything each customer would like tomorrow – even if we had unlimited software development resources.  So, we have to make hard choices about priorities.  Sometimes we have to tell customers that we’ve intentionally delayed the release of a new feature in favor of making sure the current system remains strong; sometimes we have to tell customers that we’ve adjusted our development plan and elevated feature X over feature Y we know the customer was hoping for; sometimes we have to tell a customer that the feature they’d like is a nice idea, but well below others in our priority scoring model; and sometimes we have to simply tell a customer “no.” 

It is one thing for me to tell you that sales professionals should accept and even welcome a “no,” but it is quite another thing for me to think that any customer wants to hear “no” from their vendor – they don’t.  They do though want open and honest communication from their vendor.  “Under promise and over deliver” and “honesty is the best policy” may be an age old axioms, but more often than not these “age old” sayings are still around because they’re true.