… it will not be able to accelerate revenues, and the business will not scale.

Arguably, there are a couple of phases in the life of a software company that are more critical than the rest. Most would argue that the initial development phase is the most critical – what will the product do and for whom?

Yet, the phase that garners the most ink or pixels is “The Chasm” – the phase immortalized by Geoffrey Moore in his book “Crossing The Chasm.” One reason for this seeming neglect of the importance of the initial development phase could be that if a company fails during this early phase, you’ll never hear about them. It’s much more likely that a company well past initial development, perhaps with VC-backing, will generate some press.

It can also be argued that the latter situations are more interesting from a reader’s perspective. So what if a company fails to deliver a product that solves any user challenges?

Why are accelerating revenues so elusive?

But software companies with real products, products that perform real tasks for early adopters, products with several or perhaps dozens of happy customers, why do they so often fail to accelerate their revenues and live up to expectations, particularly those of their founders, investors, and employees?

A typical scenario is just like the one mentioned above: The product has proven to be useful, working, and the early customers are happy. So most people would think that now is the time to hire salespeople. Funding is secured, candidates hired – everyone is ready to see the sales revenues roll in. Then, nothing, or very little.

After 6-9 months, the founder(s)/CEO/CTO and the investors huddle. The hired salespeople are just not good enough. They had fine resumes, documented successes from earlier jobs. Well, maybe they can learn? So the founder/CTO begins to go on sales calls with the sales force. And together they do close some sales. But they are clearly in a situation that doesn’t lend itself to easy scaling – after all, cloning the founder/CTO isn’t that easy.

What happens next?

This post was originally published on the digital revenue accelerator blog in February 2011 as part of atlanticcrossing.com.