A couple of years ago, a colleague and I began developing a process-oriented way to lead companies toward gaining market traction. The idea was born out of a conversation my colleague had with a partner at Sequoia Capital about how to significantly reduce, if not eliminate, the classic high-burn, low return tactics of typical B2B software start-ups.
So to oversimplify, the classic failure might look like:
- Build financial model based on revenue and go-to-market assumptions and present to the Board;
- Develop product;
- Hire VP of Sales w/ relevant contacts;
- Build sales plan based on promises to the board;
- Hire field sales team;
- Hire marketing person to support sales;
- Burn cash, miss milestones;
- Go back to board with new assumptions;
- Build sales plan based on new promises;
- Rinse. Repeat.
At this point, the company has opportunistically sold some amount of product, but doesn’t necessarily know anything more about the market than when they started. The company has likely already missed revenue targets, which leads to a greater desperation to make more sales. The company becomes increasingly opportunistic. Even if they manage to hit their revised numbers, the company is in trouble. It is difficult to scale opportunism.
So what’s missing?
What is missing is a market-centric approach to the business plan. What’s missing is an analytical approach to the go-to-market strategy; a systematic way of determining Which is the most efficient segment?, Who is my best buyer?, Wow do I reach them?, How much will it cost?, How do I know if I’ve chosen the right or wrong segment?, When Will I know?
Hence, we developed a specific process and subsequently implemented it, to a varying degree of success, at several companies. The specific goal of was to achieve replicable sales in the specific segment, in which you will establish a beachhead, in order to Cross the Chasm.
The process is pretty simple on paper:
- pick a segment;
- document/refine your market assumptions;
- predict/update your metrics;
- go to market;
- measure progress;
- test for replicability;
- refine assumptions and metrics;
The approach is sound. Problems lie ahead in execution, which I’ll dive into in a future post.