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Problem-Market Fit: The Secret to Go-To-Market Strategy · GTM Made Simple

• Road block. I'm going to raise a [ __ ] ton of venture capital. The digital age. Analog forms. that doesn't scale, right? Data-driven. Ecosystem. Velocity. Market opportunity. There's a hole in the market here. About alignment. If marketing has forever changed, why do businesses still run the same [music] place? Why do we all use the same jargon with slightly different definitions? How did we get here? And where do we go next? In this original series comes a seven-episode experience examining what it actually means to go to market in a post-pandemic, [music] tech-obsessed, algorithm-driven, unnecessary complex world of B2B sales and marketing. I'm Brian Brown. And I'm Sangram Vajre. And this is [music] seven truths and one lie, an original series helping you rethink the way your company goes to market. Companies are built out of dreams. Out of the vision for something different than what is today. Too often, regardless of its size, stage, or industry, you get stuck. In fact, less than 1% of the companies will actually make it. If you want ongoing growth, you have to continuously invest in and transform [music] your go-to-market. Just like you would with your product. But the biggest question becomes, what's your next [music] move? And for us, the answer is found by ensuring you [music] know who owns go-to-market. What you'll be surprised to learn is that we've all been taught a lie. So, we set out to conclusively decide who owns go-to-market. Knowing this unlocks the power to create high-performing revenue teams [music] and achieve repeatable, scalable, enduring growth. Truth number one. Go-to-market is like building a product. And like any product roadmap, you start with the problem. [music] [music] How do you define go-to-market? Go-to-market is actually a phrase that we inherited from the prior paradigm. Go-to-market implies I made a product and I'm supposed to go to market, right? Go-to-market now is much more about securing the last mile as opposed to the first mile. The road hasn't changed, but the road blocks used to be in the first mile. If you could get the product into the market and sell it effectively, you kind of you could ring your cash register and and move on. But now, what makes early adopters so wonderful is they bring the application to you. Yeah. Not the other way around. And so that's fine, but of course that doesn't scale, right? So crossing the chasm's actually about finding problem-market fit. Because what you're looking for is a use case in a segment that is compelling enough, urgent enough that a pragmatist who normally saying, "I don't think it's ready for prime time yet." is going, "Oh, you can solve this problem? It's like getting diagnosed with something. There's a clinical trial? I'm going to go for it. I'll I'll do [laughter] that. Yeah. That's problem-market fit. And the key thing for an for a disruptive innovation at that time is you've got to go all in on a problem. Almost everything we've been taught about marketing and business strategy [music] is completely [ __ ] wrong. And if you stop and look at any legendary creator or innovator or entrepreneur that you and I admire in any domain, why do we admire [music] them? Cuz they broke and took new ground. Because they were unique. [music] They were original. They were different. And yet we compete. [music] And so it's highly counterintuitive for most people to say, "I'm going to raise a [ __ ] ton of venture capital. I'm going to put my heart and soul into building a company and a product. And I'm going to launch into a [music] zero billion-dollar market where there is absolutely zero demand. That seems insane. And yet, [music] that's why we know Sara Blakely's name, and that's why we know Steve Jobs' name. Twitter was a dumb idea. Lyft's a dumb idea. Airbnb, dumb idea. Until it wasn't. Go back in time with ExactTarget. What was the problem? What was the reason? And even the circumstances that you were when you you and your co-founder started ET? Sure, Sangram. So, like I think like every great business, you start with a problem, a meaningful problem to solve. And we were focused on helping small businesses and marketers leverage the digital age. Analog forms of marketing and communicating with customers were were very antiquated and really not very personalized. Totally not data-driven. I was incredibly fortunate to [music] pair up with Chris Baggott, you know, my my co-founder and actually my brother-in-law. And Chris had come from a database marketing background with RR Donnelley, where he had spent the majority of his career helping brands better understand their customers and then send personalized and targeted communication via print, you know, via catalogs. So, Chris really had the vision of how database marketing was going to be transformed and accelerated, you know, via the internet, which was great. Why do people fall in love with the product so much that they forget the problem? [music] So, I think it's human nature. Look, I'm an entrepreneur, too. If you ask me about, you know, [music] any of my products, I want to tell you about them all day long for 24 hours. Exactly. So, you want to talk about Category Pirates, I'll tell you all about it. You want to talk about podcast? I'll tell you all about it. And so I understand that. Yeah. However, products are about us. Brands are about us. Categories are about customers. Category is about opportunities to do something in a new and different way that will produce exponential value for customers. When we say marketing, we say go to market. There is an undisplay undeclared undiscussed unexamined context about what we mean by that. So marketing in general equals we're going to launch a product and or company service, whatever, into an existing market [music] and because we're better than they are, we're going to explain why we're better than they are and when the world gets that we're better, we'll compete effectively and we will win. And that's what we've been [ __ ] taught. There was there was a lot of anxiety in the client base for a long time about what if I picked the wrong problem? It turns out picking any problem is better than picking no problem. So that was product market fit, that was crossing the chasm. The tornado is instead of everybody going oh I don't know, are you going to do it? I'm not going to do it, you. Tornado is you're doing it, you're doing it, you're doing it. Oh my god, I got to do it too. So every it creates this huge amount of demand. So that's when product market fit matters so much. Because what's now what's going to happen is for the first time everybody has budget for the new thing. That before they didn't, you had to help create budget. Now they do and they're going to buy it you but people have budget, they spend it. So yeah. So if they don't spend it on you, they're going to spend it on your competitor. So it creates this amazing knife fight. And this is where by the way all the 90s iconic companies in the 90s were incredible street fighters. I mean Cisco, Oracle, Sun, oh yeah. Kim Keller. Uh the killer killer fighters. But that point product market fit is really really key. It's effectively the land part in a land and expand mode. [music] I like to say that I fought in the email wars. I had some early ideas based on some problems, some pain I had felt at Silverpop running a marketing organization that there may be a hole for a product shaped to do this thing. So we started building this first product. It was called Homebase. It had nothing to do with Full Story. We launched it into the world. We were getting customers. We weren't getting clear signals on what the customers were doing in the product. That was something that started the gears spinning about well, we're having a problem as it pertains to being product a product team trying to understand product interaction. So there was that. Here's the important break in the action. That product had not really fit into the market yet. Like we were building something based on something seemed like a good idea to try. So we kept meeting with these investors and they would in essence say, "Look, there's a hole in the market here. Yes, but the way you're going about it may or may not be the right way." And we were suffering from founder happy ears. We were kind of like, "They don't get it. We've got a vision for this thing." Meanwhile, we all were awake in the middle of the night staring at the ceiling thinking about what can we build into the product to make it something that people really do want. Quick sidebar here. We met with somebody that was affiliated with a venture firm. And this gentleman is a many times over sort of public company CEO in Georgia that lives on a farm way outside of Atlanta. And somebody said, "You should go meet with this with this gentleman." And so we drove out there and we went to his farm and he came in with cowboy boots on and it is big mustache a gentleman. And we gave him the pitch and we showed him the product and he kind of tilted his head and looked at us and said, "Guys, where's the invention here?" That phrase like really struck a nerve with us. Yeah, there was a little bit of pain and we had built an application to sort of workflow that pain. There was nothing that was super special about what we were doing. I think that note really set us down a path. So, product's not doing great, venture funding not coming. And then we had this pain of what are people doing in our product, how do we make it better? You know, if you remade the movie of FullStory, there's not that scene in the kitchen where all of somebody's like, "Aha, that's it. That's the FullStory idea." Never happened. It was just this kind of iteration. What if we captured data in a different way than what all these other people would do? That'd be really hard to capture data by default, everything and index it. Well, gosh, wouldn't it be cool if we could hit play and actually see what the users were doing? And he's like, "Hmm, boy, that'd be really hard." You almost want to hear those that would be really hard because that's where you get the invention. That's where you start to be able to build some technical moat around what you're trying to do out there. And so over the course of, you know, many weeks we built a very basic broken version of what would eventually be FullStory, but we had learned a lesson this time. Rather than call pivot and run into the market with this new thing. We showed it to five or 10 people and every one of them said, "That's cool." But we didn't stop there. We're like, "It's not just cool, will you pay for it?" Because we're about to ship it. We weren't quite ready to ship it. "Will you pay for it?" And and with each meeting they would say, "Yeah, we'll pay for it." Great. "Would you pay a $100 a month for it?" "Oh, yeah, absolutely pay $100 a month." And then in the next meeting it'd be like, "Would you pay $200 a month for it?" And and it was that commitment of price with this problem set and a little bit of a vention the invention that led us down the path to full story. [music] Product market fit. So if you take a big step back, I believe that thinking about thinking is the most important kind of thinking. Point A. Point B, what most people call thinking is the regurgitation of somebody else's thought that they thought sounded good to them. And unfortunately a lot of people don't stop and think. So with that said, let's just let's just look at the words. Product market fit. Everything about that phrase is [ __ ] stupid. So here's why. Yeah, I want to hear it all. It tricks entrepreneurs into thinking that their job is to fit their product into a market. And a lot of entrepreneurs do that. As a matter of fact, [music] that's what the vast majority of entrepreneurs do. And every legendary entrepreneur, innovator, creator in history [music] has not done that. So if you want to ensure failure, strive for fitting your product into a market. You got to have legendary products. [music] The product market fit is where you go from innovators and having to customize everything to where you have multiple people. And then when you start thinking about platform market fit, it's like, okay, what adjacencies? So, [music] what other stages of the customer's problem am I going to solve? How has your your idea and understanding of go-to-market evolved since [music] your time at Adobe to now as I would say modern go-to-market? I think that the crazy thing is I've been at companies different stages, small companies, super large companies, marketed to developers, marketed to CIOs, marketed to end users. The go-to-market dilemma has been the same in my decades of doing this. It really has been the same. [music] And and so that challenge hasn't changed. It's about alignment. And I've learned through the hard ways is is it's more important to be aligned [music] than to be right. There are many problems your product can solve. But once you get marketing, sales, and product aligned, that's when all the efforts are going after the same market, the same problem, and that's where you get the velocity. Otherwise, you're just spread an inch thick and a mile wide. And that's the hard decision to make. The alignment, the go-to-market is the hard decision to make and bringing those teams together to say we're going to execute on one strategy. The organization when you're not aligned, that pain is felt with the customer and the customer support agent, and it's downstream. We may be able to convince it upstream that, [music] you know, we have those solutions for you, but when it gets relayed to the long-term relationship with the customer, they're going to suffer. [music] When you walk in and you try to assess, well, how many go-to-markets are we running? Yeah. I would guess at any one company when somebody comes in to assess, it's more than five. It may be more than 10 when you really dig deeply. [music] You can't execute on more than three. And it doesn't matter if you're a $10 million company, $100 million company, $1 billion company. I challenge someone to show me where companies have been successful at executing more than three core strategies. That's the toughest part of go-to-market. Saying no, what not to do. Early days, you're trying to understand a problem, you're finding a problem that's a meaningful one to solve, and then you build a product, and you start to [music] get the signals that the product is working, and and organizations and and users are getting full value out of the product. And then ultimately kind of get to the platform, and you get to that E, that expansion stage. And that was I'd say an amazing set of learnings we had during our journey to ExactTarget was always thinking strategically about how to increase our market opportunity. And we ultimately, I think, did a very nice job of that, and we thought about expanding our market opportunity across three different dimensions. The first was just segments. So, we started out working with really small businesses, and then we built enough capability into our platform, we realized, "Hmm, mid-market large enterprises could really benefit from our technology as well." So, then we went from small business to mid-market up to the enterprise. And all along kept that SMB to enterprise focus, and we we enjoyed serving different segments. We enjoyed the challenge of building remarkably simple uh product to use for the small business, and lots of sophistication for the enterprise. But over our journey, we kept focused on how to move up to the enterprise and solve bigger and more complex problems. And really how to make email truly mission-critical and much of that was around the operational and transactional message sending. Market opportunity number one, expansion lever number one was segment. The second was product, you know, so our cornerstone product was email, but then over time we added mobile and push and we added social and we added data analytics and and lots of other products. So we're always looking at how can we add new products that we can sell into our customer base and help them drive more value. And the three was geography. We made a real concerted effort to focus on opening markets outside the US and and fortunately we're able to do so with many of our larger multinational clients, the Expedia, Nike, Microsoft. They wanted us to have an office in London and and Melbourne and Sydney and so we were able to expand around the world by working with these remarkable brands, but then also opening markets where we felt like we could gain market share and take everything we've learned in the US market and apply it in new ways. You know, over the course of time when you're building a a platform that's really scaling and really working and is very transactionally intensive, you actually end up having two areas of focus that are in conflict with one another. One is stability and performance and scale. The second is innovation. [music] And those two are in conflict with one another, so I really enjoyed the the intellectual challenge, I would say, of allocating resources, working with our technology team and trying to find the right blend of risk-taking and innovation, but also how to focus on scale and performance cuz you don't get that right, you know, really nothing nothing else matters. [music] [music] Once you get ubiquitous with a product, now you have an opportunity to become a platform. Right. But the way you monetize and organize a platform is very, very different from the way you monetize a product. But in a platform world, you're making a marketplace for third parties and you're giving them access to the installed base that you created with product market fit, [music] but now you're you're you're you're developing that to a whole different level with platform economics as opposed to product economics. And platform economics, if you look at the at the trillion-dollar valuation companies, it's all based on platform. I mean, there are probably 10 platform companies, maybe five. There's not 30. There's certainly not 100. On platforms, here's the thing. Platforms is one idea. At the meta level, what's really going on here is legendary entrepreneurs create an ecosystem around them. They create a solar system that they're at the center of. They're the sun of. And there's planets and moons that are the other companies in the ecosystem. So, they're creating abundance. They're creating more opportunity that they can get to than they can get to themselves. And the reason you become a platform business is to create [music] an ecosystem that you are the center of and [ __ ] revolves around you. The App Store at Apple's a, you know, probably the most powerful example ever ever created. That is a very, very powerful way to create demand, to create abundance, to create market cap. All that happens when you create an ecosystem. If you have a powerful ecosystem and you [ __ ] up, your ecosystem can save you. Microsoft essentially did not innovate in in very many meaningful ways for more than a decade. Hundreds of thousands of resellers and integrators and consultants and developers. And so, did they have a platform business in the way that you might be thinking of it in this example? Maybe, maybe not. But what they definitely had was a massive ecosystem. And that, at least in part, there are other reasons, too. It's an oversimplification, but in in a great part, Microsoft's ecosystem provided a landing pad for the fact that they kind of took a decade off. What you'll be surprised to learn is that we've all been taught a lie. So, we set out to conclusively decide who owns go-to-market. Truth number one, go-to-market is like building a product. You start with the problem. It turns out picking any problem is better than picking no problem. Truth number two, the revenue team has [music] a new roommate. It's customer success being thought about in an entirely different way. Nobody in in SaaS would say, "What is customer success or why?" The only thing they say now is how. Truth number three, small is the new big. If you try to boil the ocean, you're going to [music] grow quickly, but it's going to break because your product road map can't keep up with the total addressable market, not the total relevant [music] market. Truth number four, RevOps is the new growth lever. The whole execution of the go-to-market [music] could be facilitated through a revenue operations team or a team that owns those processes [music] collectively. Truth number five, retention is the new acquisition. Customer retention will determine your ability to scale. Truth number six, flywheels are the new funnels. The flywheel effect, the clients themselves will do the awareness for you, but most companies don't have that [music] flywheel because they don't have a strong enough word of mouth. So, who owns go-to-market? [music] Marketing. The narrative, they'd say, "Well, the marketing people own the narrative." And both of those answers is wrong. The CEO owns the narrative. I think ultimately the CEO owns go-to-market. Who owns go-to-market? CEO. The CEO owns the decision. Really, the CEO should own go-to-market. I think the easy answer is people think the CEO. CEO and whoever. That's that's wrong. [music] It takes a village, people likely say. Sales. Well, until we got the religion from salesforce.com, we fell to the standard answers, which was sales. I've seen sales lead a lot on that, but I'm always surprised by that cuz I actually think it's joint. It's it's customer success, it's sales, and it's marketing working together. Go-to-market is not just a sales channel, it's not just a product team, it is the sum of all parts. The more and more you see people that understand all the pieces of puzzle, the more you're going to see this integrated go-to-market concept. So, who owns go-to-market? Well, you do if you create it. The CEO. Sales. It's [music] a joint effort. Marketing. [music]