Understanding your go to market genetics
Asking the right questions to build your blueprint, from first principles
“First principles” has become reeeeeally buzzy lately- it’s one of those phrases that likely means a bunch of different things to everyone who hears it.
In a sales context, first principles essentially means avoiding copying another go to market playbook simply because it worked for you (or your new VP) in the past. Though tempting, what worked for Salesforce in year 20 of its existence will not work for your startup in year 2 of its existence.
Why? Different products, different buyer personas, different adoption mechanics, different maturity levels, different market awareness, and different resources at your disposal.
This may sound obvious- but copy/paste sales playbooks happen all the time, and unsurprisingly, they don’t work (or at the very least, they fail to account for seismic meteors that can doom you if unaccounted for.)
The copy/paste playbook feels familiar, comfortable and safe, but these types of playbooks do not solve from first principles.
There is an art and science to building your sales org, but it requires an honest, clear eyed assessment of the DNA of (both) where your product will be naturally strong in the market, and where your product will be naturally weak in the market. Your sales org inherits these genetics from the product itself- because product/market fit is the very thing that has breathed life into your sales org.
It’s so important to understand each of these details as early as possible, and intentionally allocate resources to the areas that represent specific risks given the nature of your product and business.
GTM first principles = the fundamental truths of the product you’re selling
Here are 10 questions to ask yourself about your company and product as your try to custom-build your own, specific strategy.
1. What does your competitive landscape look like?
This one is more nuanced than it may seem.
If you’re creating a new category, that may seem awesome at first, but it means you’ll have a lot of marketing and educational work to do, because your audience may not understand why they need your product. It could also lead to a big incumbent (like Microsoft) copying your product and using their distribution channel as an advantage (like they did with Slack/Microsoft Teams.)
If you’re competing against a massive incumbent, you’ll have to develop a clear understanding for why people choose your product over the one they may already have access to for free. You’ll also have to quickly assess how defensible your advantage is.
If you’re competing against a fellow upstart (like Dropbox vs. Box circa 2013) - how are you going to win? How are you going to tell your story? How are you going to position yourself competitively?
2. Does your product allow for bottom up adoption?
Bottom up adoption is core to Craft Ventures’ investment thesis- products that are naturally adopted by the end user have a huge advantage over products that can only be adopted top down by gatekeepers.
Why? The cost of leads is far cheaper, and you start to naturally gain political mindshare amongst a population who is rooting (essentially voting with their feet) for your product.
3. What persona evaluates, uses and adopts this product? And how do they evaluate?
Not all personas are created equal.
The “engineer” persona probably has more clout to pay for tools they need than an HR professional. They also detest talking to, or responding to, salespeople.
A professional at a fast growing tech company has much more power to pay for your product than a professional who works in the career services department of a college or university (a slower moving, larger, more bureaucratic organization.)
Persona matters. Strategy will be impacted by who your buyer persona is, and how much political clout they have to buy. Beyond that, it’s important to predict how this persona will likely evaluate your software, and how long that evaluation might take.
Products that take a year to evaluate and deploy have a disadvantage compared to products with quicker evaluation and adoption cycles- it’s important to be intellectually curious about this, because as a founder or even sales leader, you may have no real idea how a buyer might typically evaluate your product.
4. How big is the total addressable market for your users & buyers?
At Dropbox and Slack, our product could be USED by essentially any user at any company. But a big purchase was typically purchased by the CIO.
At Clearbit, our team could only sell our product to a B2B company, whose website got a lot of traffic or inbound leads. Furthermore, within those companies, marketing ops and sales ops professionals were typically the people who had to make the buying decision. So the TAM for likely Clearbit adopters was far smaller than at Dropbox or Slack.
Total addressable market for users, and total addressable market for buyers is important to consider. How will you reach potential users? How will you reach potential buyers? It’s very possible they are two different audiences.
5. How difficult is it to implement your solution?
Founders tend to underestimate how challenging their solution will be to adopt and deploy, both as a bottom up end user, and a top down decision maker.
Some products are VERY simple to implement as end users, but may face snags when deploying at an enterprise level. Some products don’t offer free trials or free accounts, and can only be used by a decision maker deciding to pay and deploy.
Dropbox & Slack couldn’t be easier to adopt as end users. But the process of standardizing everyone on one big enterprise account requires company wide coordination.
At Dropbox, we ran into an issue where users tended to combine personal and work data into the same account. So in enterprise deployments, we discovered that we needed to create a path by which users could designate what files/folders needed to stay in their personal account, and which needed to migrate to their business account.
So it’s really important to take a beginners mindset to the process of how you think users will get started on your free product, and what needs to happen to combine free users on a bigger paid plan.
6. How obvious is the value proposition to buy (and renew!) this product?
Some product value props to buy (and renew) are obvious.
Slack, at first, seemed like it possessed a pretty obvious value proposition to buy. But as it turned out, Slack’s value prop was SPECIFICALLY applicable to teams that had already adopted Slack’s free product organically. To teams that never used Slack before, the need for a channel based chat platform wasn’t nearly as obvious, and was a far more difficult sell.
Beyond the initial sale (and sticking with Slack) - the platform turned out to be insanely sticky once purchased and deployed. Once you standardize your team on Slack, set up your complex network of groups and channels, it’s nearly impossible to churn.
You have to be clear eyed about how valuable your product is through the eyes of decision-making team, and then post sale, how sticky your product is.
How is the buying conversation going to go? Why or why not might a prospect renew? How easy is it to rip this thing out?
These factors will impact how many sellers you hire, the types of sellers you hire, and the headcount devoted to sales and customer success orgs.
7. How viral is this product once deployed? How easily do upsells occur?
Does your product easily spread to other users? Can it spread to everyone within a company, or is it only intended to be used by specific groups? Why might upsells occur? What might prevent them from occurring naturally? If you need to convince a person to expand usage, what might motivate that person to expand? How easy or difficult might that conversation be, and why?
8. How difficult is it for an end user to understand this product once they get started?
Think about a product like Airtable- there are sooooo many features and potential use cases. You could easily envision a world where a new user hears great things, signs up, and then is immediately overwhelmed by the product, never finds value in using it, and becomes inactive.
A company like that will have to design more processes to help users find immediate value on the platform. That could mean an “onboarding specialist” role (Airtable has invested in this type of role, unsurprisingly) to make sure a human interacts with your signups, or high value signups. It could mean building out more “how to” tutorials within your product, or intentional onboarding flows.
Take a beginner’s mindset to your product if at all possible- it’s very difficult, but it will help you see it as a new user would.
9. How likely is this product to go “wall to wall?” (aka, big deal velocity)
In enterprise software, some products have a high likelihood of going “wall to wall,” meaning, everyone will end up paying for it.
Slack is a wall to wall type of product- once you standardize on a chat platform, everyone in your company needs to be included.
Salesforce is not- licenses are expensive, but only used by sales.
Some products are less likely to find a wall to wall fit- they may find pockets of strong usage within a company, but there may not be much of a chance that every single employee would pay for it.
Another lens to view this question through- what is the likelihood of selling massive deals? How big do we realistically expect our biggest deals to be? And at what velocity can we sell massive deals?
10. How are you going to generate leads long term?
Are leads going to come from free signups?
Are people who sign up for free the same people who can actually purchase big deployments?
If you don’t or can’t have a freemium product, is your plan to leverage SEO? Google ads? Facebook ads? LinkedIn ads? Content marketing? Where are your leads coming from/going to come from? How costly will they be?
Summary and Conclusion
You have to be 100% honest with yourself when asking these questions. There is no startup that gets an A+ across all these categories.
Ironically- Dropbox & Slack are both immaculate companies across most of this scoreboard, but TWO factors out of dozens hampered their growth… (1) Microsoft had a competitive product that they bundled into O365 (the best enterprise software distribution network in the history of mankind) for free. (2) the CIO (chief information officer) being a gatekeeper for both products is suboptimal, to put it lightly.
Why? Collaboration products don’t solve the CIO’s pain- they solve everyone ELSE’s pain, and the CIO is there to decide between the popular/expensive product vs. the free/cheaper/already bundled into Microsoft product.
By contrast, a company like Okta (enterprise security and technology provisioning) actually solves the CIO’s pain- and luckily, the CIO is their buyer.
Scorecard & Summary
Here is an example of a simple scorecard for Dropbox and Slack. You can copy/adopt this for your own company, and add as many specific categories as you want. The goal of the exercise is to be honest with yourself about where your go to market motion may struggle, and then devote intentional, proactive thought to solving your inherent problem areas.
Example: if your product is functionality heavy but hard to understand for new users, you can’t be in denial- you should instead hire a larger than average team of onboarding specialists to help your users understand the product from the jump.
If your product is difficult to deploy post sale, you should devote more of a focus on hiring out the customer success function, and may need to hire more technical CSMs than average.
This is where first principles come into play- first, figure out where your specific go to market strengths and weaknesses lie, and then, build a strategy that properly accounts for and addresses them.
Thanks for reading EarlyGTM post #2!
Mike Marg
Principal, Craft Ventures
(for more thoughts on go to market, and occasional sports-related frustration - @mikemarg_ on Twitter)