Manage Your Capacity Planning With the Sales Learning Curve
Startup Codex

This essential article by Mark Leslie serves as an excellent reality check for the commercial deployment phase of a startup product.

Many founders, whose company is on the verge of having a saleable product, will say, ""Now all we need is a sales team,"". And plot a sales progression curve on Excel that should lead to profitability in X months.

Mark Leslie dismantles this approach by arguing that nothing is predictable in this phase of commercialization, and that instead there needs to be a learning and discovery approach that involves the whole company, not just the sales team.

The company then enters a new phase of iterative development that he calls the Sales Learning Curve, drawing a parallel with the Manufacturing Learning Curve, which Silicon Valley has been familiar with from the semiconductor industry.

Leslie describes the different phases he identifies to establish a capacity planning based on the SLC.

Note that the article on the SLC was published in 2006 in the Harvard Business Review.

The path to economic traction for a startup company is analogous to the idea embodied in the Manufacturing Learning Curve (MLC).

In manufacturing, costs start very high and decrease as volume increases. As you traverse this curve, you move from a net loss to profit.

This is deeply embedded in the culture and planning of the semiconductor business (and the steel business) principally as a function of yield. It is why Intel prices new semiconductor products to maximize volume regardless of initial cost. They know that if they can get enough volume, they can drive the cost down and make a profit.

And, interestingly, this learning is non-predictive. Everyone knows they will come down the learning curve but no one knows what needs to be discovered week to week. Thus, the learning curve.