In defense of nine-month sales cycles

Most of the companies we back sell to someone who takes nine months to say yes. Founders are told this is a defect. We have come to think it is most of the value.

Why slow is sticky

A buyer who takes three quarters to sign has done a great deal of work by the time they sign. A safety review. A pilot in one plant. A conversation with legal, then a second one with legal. Each step is a small cost the buyer has paid and does not wish to pay again.

So they do not switch. Of the twelve contracts our active companies signed after a cycle longer than eight months, none has churned. We have a sample of twelve and no theory of its own, but we know what a switching cost looks like when it has a procurement department.

The office that takes three quarters to sign will take a decade to leave.

Surviving the wait

The wait is real, and it kills companies that were otherwise fine. Three habits we have seen work.

Price the pilot. A free pilot tells the buyer the work is worth nothing. A small paid one, even a few thousand dollars, moves your project from the innovation budget to the operating one. Hoistline charges steel service centers for a pilot and has never had one die quietly.

Count the cycle in stages. Nine months is one number. Underneath it are six or seven stages, each with an owner and a date. Drayline keeps a sheet of those stages for every account, and the founders read it on Mondays like a flight board.

Hire for the second year. The first sale is the founder’s. The tenth belongs to someone who is good at being patient on the phone.

What the wait looks like from inside

Ask a founder in month seven. The pilot went well. The champion has been promoted, which is good news and a delay. Legal has a question about indemnity that was settled in month three and has been reopened. The cash balance is a number the founder checks before breakfast.

This is the stretch where good companies change the product to make the wait shorter, and the product gets worse. Hold the line. A buyer who is slow because the work is hard is not asking for a lighter product. They are asking for proof, and proof takes time.

What we underwrite

We do not ask a founder to shorten the cycle. We ask whether they can fund it. That means eighteen months of cash against a nine-month sale, and a plan for the months when the champion goes on leave. It means first checks sized for the wait, and reserves held back for the same reason.

If you are in procurement this season, we are sorry, and we mean it. Please take as long as you need. We will still be here.

— Hana Voss