Go-to-Market. It’s action oriented. Entrepreneurially endearing. The topic of so many McKinsey slides. And it’s a strategy that you must carefully craft if you are going to successfully raise money.
When investors ask, “what’s your go-to-market strategy?”, you better have a darn good answer.
But there’s something even more important than your go-to-market strategy, and that’s your get-to-market reality.
The act of getting to your target market will transform your startup into a living, breathing business. It is how you will generate that ever-so-precious form of non-dilutive capital – revenue – and build the foundation for a scalable enterprise where your revenue can (i) generate a positive gross margin and (ii) grow faster than operating expenses.
Your get-to-market reality is also a battle zone. Plans will be set aside, pivots will be made, and perseverance will be the name of the game. It is where great founders become great leaders. That may sound hyperbolic, but it is true.
Get-to-market is less about roadmaps and more about lessons, and we’ll cover some of the best lessons founders can learn as they build their companies. But let’s not get ahead of ourselves. Before we execute our strategy, we must develop our strategy. Let’s dig into go-to-market!
Go-to-Market (“GTM”) strategy is a comprehensive action plan that specifies how a company will reach its target customers and achieve a competitive advantage. For a startup company, a GTM strategy is specifically about how you will acquire your first customers and establish and beachhead market from which you can meaningfully scale.
Let’s be clear, your GTM strategy is a critically important piece of your early-stage development. Translation: you must do it. Which begs the question: how do you do it? Four steps – starting with lot of intense research!
You need to take the time and dedicate the energy and intellectual muscle to answer four key questions:
1. Who are we selling to? Whether you are B2B or DTC, you need to use the answer(s) to this question to build (i) customer segments, (ii) ideal customer profiles, and (iii) personas. Each of these must be as specific as possible.
2. What are we selling? It may feel like an existential question, but it is the question you need to ask to build a value proposition. Ultimately, you must clearly articulate (i) the problem you’re trying to solve, (ii) why it matters to the customer, and (iii) why you’re different. Think of this as the pain / gain / differentiator equation that creates a valuable business. What’s the pain you’re trying to address? What’s the gain your product offers? What makes you different?
3. How will you reach them? What mix of sales and marketing will get you in front of your ideal customers? Will you employ a marketing-heavy approach and rely on inbound traffic? Or will you rely on a sales-heavy approach and tackle outbound? Sketch out the buyer’s journey to understand exactly how a buyer will find and engage with you.
4. How do we sell and make money? It is imperative – and I mean imperative – that you follow this exercise through to its logical conclusion and create a pricing strategy – subscription, one-time purchase, long-term offtake (i.e., purchase agreement), usage or service model – that demonstrates how you can sell your product at a positive gross margin. And you need to develop a sales model that won’t break the bank. Who are you going to employ to sell your product?
Use what you learned in Step 1, apply it to your TAM / SAM / SOM market analysis (total addressable market / serviceable available market / serviceable obtainable market), and pick a beachhead or beachheads within your SOM that provide you with an opportunity to secure your first revenue and scale. Be sure to pick a beachhead where acquiring the first customer will unlock second. Scaling is key!
You’re going to get things wrong (that’s normal) and you’re going to experience rejection. Rejection are okay, so long as “no’s” from your potential customers are followed by you asking “why?”.
The key here is that you need to learn fast and you need to incorporate those learnings into your ever-changing business model.
Experiencing rejection and learning fast makes for a dynamic startup. Experiencing rejection and learning slow makes for a lifestyle company. Endure the “no’s”, ask why, and incorporate the feedback quickly.
Take all this work you’ve done, incorporate into the right format for you and your team (such as a PowerPoint deck or a memo), and make sure your GTM Strategy is integrated into the operations you are building. And when the product is ready enough, then it is time for your GTM strategy to become your get-to-market reality.
A GTM strategy is a lot of work, which begs the question: why are you doing all of this? Three critical reasons:
1. Your technology needs to become a business. Revenue, baby – you must figure out how to make money. Your passion can give your business a heart and soul, but revenue will be the oxygen in your lungs.
2. You must build confidence in your investors, team, and yourself. Your money-making plan needs to be convincing enough to inspire confidence in your investors (so they will give you money), your team (so they will go execute the strategy) and yourself (so you can wake up every day with conviction). Don’t underestimate the confidence a strong plan will build.
3. With limited time and capital, you must increase your chances of success. If you are raising venture capital, you will likely have a runway. You want to invest time and energy ensuring the work you’re doing will pay off in additional capital or revenue before that runway runs out.
To be clear, no GTM strategy will ever contain the mystical power of guaranteeing your success. Increasing your odds of success? Absolutely! And that is why you need to do everything in your power to ensure you’ve thoughtfully (i.e., taken the time to) built a GTM Strategy.
Another way to increase your odds of success? Incorporate some hard-earned lessons from the get to market reality of others. Consider this a jump start on your feedback loops!
A thoughtful plan is a wonderful tool, but nothing there is nothing quite like the chaos of the marketplace to inject cracks into your plan.
Getting to market and scaling your business will be hard. Really hard. And it is going to require a responsive, flexible attitude and fierce conviction to ensure you get there. Beyond building a plan, the best way to prepare is to understand what it’s like to be there. This may be easy for second- and third-time founders to understand, but it is much more difficult for first-time founders.
1. Look in the mirror. The Head of Sales is looking right back at you. Founders will have to sell all day every day. You need to be ready and willing to take on this role.
2. Product or Project? There is a big difference. Most startups are selling a product, one unit at a time. In climate technology, a lot of startups are aiming to build a project, which requires ample capital expenditures. Knowing the difference will fundamentally shape the GTM strategy you build.
3. Know your role. Are you bringing a new product to market or fighting an entrenched incumbent? Many climatetech companies are introducing low carbon technology aimed at replacing a high carbon incumbent. This is a tall order and usually requires founders to articulate a benefit beyond carbon intensity (i.e., better, faster, or cheaper) in the value proposition.
4. Beware the MOU. Often, it is MOUseless, just like a pilot that goes nowhere. MOUs seem like a wonderful sign of commercial progress, but they are often toothless and impede actual commercial agreements. If you’re going the MOU route, then do it with specificity – and teeth!
5. The first customer could be you! Or a family member, or a close friend. Still revenue, there’s no shame in that game. As long as you’re selling your product in an arm’s length transaction, there’s no shame in starting your go-to-market journey by selling to people who know you. Remember, the goal is to get to market however you can!
6. Name your price. Don’t hesitate to ask the customer to name their price even if it varies significantly from what you incorporated into your GTM strategy. Remember, the goal is to get to market, not stubbornly execute a plan!
7. B2B = B2L. L= Larry or Linda, your target customer’s VP of Procurement in Indianapolis. Even when you are selling to another business, you are still selling to a person. There is someone in that company, perhaps someone you have never seen, who is ultimately making the decision to buy your product. You must know the archetype and appeal to their senses – including their primal sense that they don’t want to risk their longstanding job for your new product.
8. Scale at the speed of trust. Can I get a witness? Or maybe a customer testimonial? Testimonials, references, referrals are priceless at the early stages. Get them and use them to win the trust of others.
9. Keep your word. Do what you say you’re going to do. No questions asked. That makes for happy customers who love you and will give you glowing testimonials.
10. Time is of the essence for you, not them. If you have a 24-month sales cycle and an 18-month runway, you have a problem. With first of a kind, physical products, sales cycles can be long and fundraising can be hard. But you can’t bury your head in the sand on this point. If your sales cycle is longer than your runway, you need to specifically plan for a bridge or extension round and identify other milestones that will entice investors to provide more capital before that first sale.
11. Each newly acquired customer comes with two prizes. Revenue and the obligation to get another customer. Congratulations, you have a cash-paying, revenue-producing customer! Now go get another one, and another one after that!
There’s a lot more wisdom to offer, but we’ll save the 101 lessons of GTM for a future blog post. In the meantime, consider this a jump start on your feedback loops. Incorporate some of this hard-earned wisdom into your GTM strategy and allow our get-to-market realities to improve your GTM strategy. You’ll be better off for it – as will your team, investors and … wait for it … your first customers. I can almost smell the revenue!
