David Hoskins’ Post

“You can’t cut costs to profitability” Driving efficiency for cost reduction was the best strategy before Cresta identified the most effective behaviors to driving revenue. 

You’ll know when the concept of selling to business issues clicks for you. The technical solutions of features and functions will begin growing ever more monotonous.

Sales is as simple as maximizing your time doing one thing. Talk to as many people as possible where the truth is that your solution is their best option. Everything else is noise And this is incredibly difficult. But simple nonetheless.

Genuinely curious gets thrown out a lot when talking about elite sellers. Platitude in my opinion. It’s used because it has a positive connotation and we generally don’t like describing people we admire negatively. The elite sellers that I’ve worked for or alongside were actually contrarian. Contrarian has a negative connotation. The tone around contrarian is a pain in the ass. But I would argue it’s what drives elite sellers to success. Contrarians naturally ask, “why isn’t that true” or “should we do it that way” every time they learn something new. To answer those questions, you have to peel more layers off the onion. And I think that’s the foundation of elite sellers Caveat - execution is critically important. If you do this confrontationally then it’s bound to fail. I think the only way to execute this at a high level consistency is that your pushback has to include new information for the person you’re talking with. My guess is that most sellers cannot routinely teach their prospects about their business and that’s where this fails. PS - this all may be completely contrived because I won the Pain in the Ass (Innovator of the Year) award at SKO last year.

Challenge of the day - rewrite my elevator pitch so that it speaks to the business issue I sell on. What does ServiceChannel do? ServiceChannel reduces SG&A's drag on earnings per share (EPS) by eliminating wasted spend in repair & maintenance for multisite retailers. I think this is more appropriate for my executive summary going to an economic buyer (EB). They do not care that my software tracks warranty dates for auto-routing to a warranty provider. They do not care that my software tracks landlord/tenant responsibilities for auto-routing to landlords. They DO care about reducing SG&A by $3M because it boosts EPS 85 BPS. That is something they can boast to the street on their next earnings call. So now I have a Business Issue elevator pitch in my bag.

I'm largely ignoring IRR in OMs for now. The assumptions required to project an IRR are at an all-time low confidence. We have very little idea of what cap rates will look like in 3 - 7 years (roughly average hold times). Instead, I'm focused on stabilized yield. Stabilized yield is simply the after "value-added" NOI divided by all the costs to add the value. Example: $5M purchase price $1M in renovations $6M total $650K Stabilized NOI Stabilized Yield = $650K/$6M = 10.83% Then, two questions: 1) Would I be comfortable holding this stabilized yield unleveled? 2) What's the spread between the market cap (at acquisition) & my stabilized yield? Answers: 1) If no, probably a pass. If yes, proceed to 2. 2) Greater than 150 BPS, proceed. Less than 150 BPS, unlikely to make significant money at sale, probably a pass given the effort required to stabilize is high.

I don’t think accreditation is the main barrier to entry for real estate private placement. It is the most likely technical barrier. But ultimately I think it’s knowledge that the world of REPE exists. There’s thousand of young SaaS sellers who are accredited that simply have no idea that it exits. Which is why I like the fund of funds model. It’s fantastic for exposure to a new concept. And if the fund manager is worth a damn, they’ll make up for double fees with an improved pref & promote.

If repetitions are the best way to get better at something, why don’t we scrimmage regularly in sales?

Who is selling with domain expertise that doesn’t sell to sales?