Perhaps the most important determinant of a startup’s success today is the founder’s ability to successfully execute on the correct Go To Market (GTM) strategy. The optimal GTM for an enterprise startup is vastly different than it was a decade ago. Founders must now embrace that the correct GTM begins at product strategy and demands that a founder function as an expert conductor of several major functions in the organization.
The level of strategic and operational sophistication required to execute a successful enterprise startup GTM has increased significantly in recent years as we have seen a major shift in the fundamental buying process and behaviors between businesses, and more specifically people, selling to one another. We now live in an era where people simply don’t like being sold to, at least not without first having warmed up to the idea on their own. For today’s founders that means learning how to build a business with a Modern GTM at the core.
What follows is a set of modules that comprise the Unusual Ventures Field Guide for early stage Founders on the Modern GTM. We’ve provided our version of a blueprint for Founders to consider and follow as they build their startups from Day 1. Our guide is broken down into a series of segments, consistent with our Unusual Method approach, that dives deeply into the “how to” of each element of building an enterprise startup with a Modern GTM.
The Team at Unusual Ventures is a group of master clinicians with extensive knowledge on the subject as a result of experience founding, investing in, and building startups with the Modern GTM. We continue to learn as we build alongside founders and therefore will provide regular updates to this chapter of the Unusual Field Guide in order to share our latest learnings, tools, and success metrics. As a team, we remain committed to our mission of being the most valuable partners for founders at the early stage.
I have great respect for the past. If you don't know where you've come from, you don't know where you're going. - Maya Angelou
Before we dive into all the details of what it takes to build a startup with a Modern GTM, it is important to understand the history of the evolution of the GTM in enterprise startups. At Unusual Ventures, we have a uniquely deep, hands-on approach to working with early-stage founders. We surround the product visionaries we invest behind with functional experts and build together to get the company to product market fit.
In order to execute on building a startup with a Modern GTM, it is helpful to first understand how the GTM motion has evolved. For the sake of time, let me oversimplify the GTM motion prominent from the 1980’s to the early 2000’s. It is important to note that hundreds of successful enterprise startups executed on this motion. Founders assembled talented engineering teams and gave them ~18-24 months to build a better or new mousetrap, their version of the “flux capacitor,” and when it was just about ready for buyers to evaluate, they would hire sales and marketing employees. If these early sales people were successful, startups quickly moved to scaling up these functions in the organization to build a revenue creation and fulfillment engine.
Marketing consisted of creating and distributing professional looking content prospective buyers could absorb, while Sales was mostly about hiring a “force” of people with strong relationships (“rolodexes”) who could wine, dine and charm their way into the C-suite of prospective buyers and ultimately drive a process that concluded with a purchase. Sales account executives leveraged large travel and entertainment budgets for all the golf, concerts, dinners, and schmoozing required to win over the influential senior executives at their target list of accounts. An entire ecosystem of Value Added Resellers (“VARS”) was born whose primary “value” was the relationships they commanded and could make available to sales hungry startups looking to push their new, better mousetraps through the “channel.”
My introduction to venture capital began in 1999. In my first decade plus in the business, I sat through hundreds of board meetings where there were lengthy discussions about whether or not it was 1) time to hire those expensive marketing and sales professionals, and 2) “how could we hire those aggressive, experienced executive leaders who had the experience and skillset to light up our sales pipeline?” The name John McMahon was frequently used as the gold standard for what the company was looking for in its hiring needs as it began to build out its GTM leadership team. John was the Sales Leader at BMC and Blade Logic, is the creator of MEDDIC and is a board member at MongoDB and Snowflake.
As a founder of an enterprise startup in the old GTM model, the simplest way to think about the company you needed to build and the order of the steps you wanted to follow is captured in the diagram below. While this is admittedly an oversimplification, the key takeaways for a founder are the serial nature of the process, and the siloed nature of the organizational design.
I’m not suggesting this model was flawed or ineffective! The results could be (and often were) fantastic for founders, employees, and investors. I am the grateful beneficiary of many successes with this model: Nimble Storage, Affirmed Networks, FusionIO, etc.
It was around 2008 when a vanguard of founders and startups, who thought differently about GTM and company building more broadly, began to emerge. They shared a common perspective on how GTM could be redesigned and more efficient; it started with product strategy choices and organizational design, and rotated around an innovative and distinct approach to engagement with Users and Buyers.
As a venture capitalist in the period between 2006 and 2008 I was frequently told, “John, you can’t make any money investing in developer tools! Developers don’t want to pay for anything and all the buying power isn’t with them, it is with the C and VP level execs.” Similarly, I was counseled, “RedHat and Jboss are anomalies; open source businesses are always going to suffer from competing with their own, good enough, free software. Companies that offer free software are not good businesses to invest in.” And finally, I remember hearing many successful VCs advise founders still early in the journey, “You’ve got to focus your company (product strategy and GTM team) on what it takes to sell to Fortune 500 enterprises and the CIOs.”
Some of you might understandably be laughing out loud reading this. While it might seem crazy now, I assure you it was the conventional “wisdom” of the time. Fortunately, I didn’t listen, as it turned out the advice was completely wrong. Why were people who had been such successful investors in prior years so mistaken? What changed? What did they miss? Consider that in the five years between 2005-2010:
These changes had a profound impact on how innovative enterprise founders began to build their companies. Connecting all the dots above we were suddenly catapulted into an era where:
For startups, the most significant change that resulted from all of the technology innovation that occurred between 2005-2010 is SELF SERVICE became not only possible, but the preferred method of engagement for customers. Adoption and purchase of new solutions became a decentralized vs a centralized process in businesses. Enterprise buyers were no longer constrained to the group defined as the executives in the C-suite who controlled all the decisions and “passed down” what was purchased into their organizations. In fact, the old model was turned upside down as individuals became BOTH the initial users and buyers of most enterprise products within their organizations, as well as the decision makers and executors for additional purchasing. Great founders saw this happening and built companies that embraced this new paradigm.
As founders realized this major change in dynamics, they saw opportunities to build companies with a radically different GTM motion. They did what great founders do and quickly studied and learned the necessary elements required to build a successful business with a Modern GTM. In my world of investing in early-stage enterprise software startups, we saw a second generation of early successes, such as SolarWinds, AppDynamics, Mulesoft, DropBox, and New Relic. These founders were rebels who from the very inception of their companies innovated as much in their technology ideas as they did in their go-to-market motions. Instead of building products and then building a sales and marketing organization to embark upon a top down motion to get to market, these companies embraced a process that adhered to the following guidelines:
These six guiding principles became the foundation of the Modern GTM. Startups built with these guidelines often flourished. Investors hungrily sought out opportunities and founders who had ideas for products and companies with this approach. Open source and freemium-based businesses were suddenly in high demand. Capital flowed into new startups who espoused this new way of thinking about GTM. Experts emerged who understood the different steps in the process and who studied optimization techniques at each stage.
Fast forward to 2021 and it is practically a given that a founder starting an enterprise-oriented business embraces a Modern GTM. But how exactly does it work? What is the founder’s role in putting it all together and managing it? What is the role of each function in the business—Product, Engineering, Sales, Marketing, Community, and Education—and how does a founder manage the dynamic among them?
At Unusual Ventures we’ve created this aspect of our Field Guide so we can share all we know and practice daily on this topic. We are delighted to share it with every founder (and every investor for that matter if it means they can be more useful to founders). In the modules that follow, founders will find the blueprint for how to organize their strategic thinking and tactical execution for building a startup with a Modern GTM.
In this next section founders will find helpful content specifically geared to answer these questions:
Continue to: The Modern GTM Requires a Modern Organization
Read about: how our team of experts in sales, marketing, education, community, and recruiting can embed with your startup to help build your business and hire our replacements.
The Modern GTM
The Modern GTM Requires a Modern Org