As a venture studio, High Alpha’s model is to create and fund the next generation of enterprise cloud companies. Over the last two years, we have started six different companies, helping them move from concept to full-fledged businesses.
One of the first exercises we think about with a company is their initial go-to-market (GTM) strategy and messaging. We work a great deal to define and refine this message over time and find our initial “wedge” into an industry.
The issue with many early-stage software companies and their marketing is that they think they need to boil the ocean with their positioning and GTM strategy. Instead, you should be narrowing your focus in the early days so you can provide true value to that particular audience or segment. This same rule of thumb applies to late-stage companies looking to expand into new markets or radically different product lines.
As Marcin Szelag, a partner at Innovation Nest, put it in his post (before) Growth:
“What I have learned so far is that without knowing your customer you will not get far in sales. When you are small it is hard to sell to everyone. You need focus to best optimize your resources and skills. Test various segments to find out which one works best for you, at least at the beginning. Test the different channels to find out which one converts the best – there are only that many of them. There is no point in thinking about growth if you can’t find at least one process and channel that is predictable and scalable.”
In Geoffrey Moore’s iconic book Inside the Tornado – the sequel to Crossing the Chasm – he describes this strategy for crossing the chasm in the technology adoption lifecycle as the “bowling alley.” The main idea is that when you want to gain traction with your technology product, you should identify specific market segments you want to target who will, in turn, lead to adjacent market segments – or pins – and begin the flywheel.
For early-stage startups, VCs want to know if your GTM strategy is scalable and repeatable – they want to know whether people other than the founder can sell the product. To Marcin’s point, you need to find your most efficient customer segment that becomes predictable and can help you land your first $100K and $1M in ARR.
Again, this same line of thinking can still apply to latter stage organizations who are bringing a new brand, product, or service offering to market. It’s more critical that you find the most efficient, scalable segment of your customer or prospect base than it is to achieve complete adoption amongst the entirety of your customers.
Alex Bard, the CEO of Campaign Monitor, described this perfectly at High Alpha’s November Speaker Series:
“Companies don’t die from hunger. They die from indigestion. You need to have ruthless prioritization.”
If you are trying to do too many things and trying to boil the ocean with your marketing, you will inevitably fail – you cannot be all things to all people. Instead, focus your GTM strategy and market segments and prioritize the lowest-hanging customer segments where you will provide the most value. Those segments will lead to adjacent segments and customers, and the flywheel will begin.
It is always easier to turn 10 people who love your product into 100 people that love your product than it is to turn 100 people who like your product into 100 people who love your product. Start with those ten who already love you, and go from there. It’s the fastest route to a meaningful, passionate consumer base that can sustain your business across its lifecycle.
