In times of (capital) abundance, startups can afford to overbuild their sales teams, hire the wrong sales leaders and invest resources in sales strategies that don’t pay off.
It’s not a good idea, obviously, but exuberance reigns and funding will flow. But in times of hardship, when belts are tightened and words like “burn multiple” revisit boardroom dialogues, getting go-to-market (GTM) right is critical.
People talk a lot about building the wrong GTM model, so we won’t belabor that topic, its importance notwithstanding. But we often see a different mistake: building the wrong GTM model for the current stage of a startup.
In a downturn, getting the timing and evolution of a GTM model right relative to the maturity of a business can make the business and getting it wrong can break it.
Here’s our view of what to do and when to do it.
Stage 1: Product-market fit (seed stage)
Before you start scaling any kind of sales model, you need a pipeline to support it.
Startups that are just launching a product have two paths they can follow:
- Try to sell your product to 100 people you think would be potential buyers. If not enough of them want it, iterate and keep going until you hit a bull’s-eye. This works better for an enterprise product, where there is a group of buyers you know already or who are easy to identify. The upside is, you’ll get a very clear message back. But the downside is, the message may be that you’ve gotten it wrong.
- Alternatively, market your product broadly, get as many people as possible to use your product, then work out where your hits are. This only works for a self-serve product. You can look across a large number of individuals using your product and find your best pockets of users: Who’s active? Who shares your product? Who’s converting?
Stage 2: Pricing and profit (seed to Series A)
You’ve found some customers who are willing to pay, but how much should they pay, and how long does it take for them to decide to buy? This is key: If you get your pricing and buying cycle wrong, you’ll get your entire GTM model wrong.
