Everyone starts at zero. No product. No users. No revenue. Just an idea and, if you’re lucky, a few Angel investors. Yet much of the content we see in clubhouse, on podcasts, in blog posts, or Zoom interviews deals with problems that come up after you have solved for adoption and have your first few hundred thousand in revenue.
Advice on how to monetize the 5,000 users you’ve amassed is very different from helping you with Day 1 problems like perfecting how you translate your technical innovation into a business value driver or defining an early sales process. We believe there’s a lack of content on these topics for multiple reasons, but primarily because it’s unrelentingly hard, messy, intricate work.
At Unusual, we work with our founders and their teams, building alongside them just like a full-time employee would, chasing the same goals as FTEs, and using these goals to measure our impact.
Each experience with founders provides a wealth of learning for us and, over time, we see patterns emerge that help us do a better job as partners in building companies. For this guide, we asked ourselves, “What are the steps you need to take at a seed-stage company to get from a signed term sheet (at month 0) to Product-Market-Fit and paying customers (roughly 18 months later)?”
This is our answer to that question. We'd love to have your feedback on this module when you're done!
As an early-stage enterprise startup, you are introducing a discontinuous (disruptive) innovation. You’re asking users to change their current mode of behavior to rely on your product instead of what they are using currently. Regardless of your product, there are three distinct market segments that you need to address in the right sequence to ensure you:
The most efficient way to achieve these objectives is to address each of three market segments in sequence, one at a time, with specific success metrics that you achieve before moving on to the next segment. Doing so provides you with the right insights at the right time in your product development to build adoption and get your sales flywheel going. The market segments you’ll need to address are these:
Geoffey A. Moore in his book, Crossing the Chasm, introduced these market segments in discussing the product adoption curve. We build on that work here.
Innovators pursue new technology aggressively. They are enthusiasts who are passionate about the newest product ideas and the problems they solve. Their feedback, as experts in your product space guides your GTM strategy, either providing evidence that your idea is worth pursuing and that it solves a real business pain or helping you pivot so that it does.
To get enough feedback to be confident of your product direction, you need to get in front of 50-100 Innovators and run an interview playbook to capture their feedback.
Design Partners are also technology enthusiasts. However, they are motivated by solving a specific business problem to gain a competitive advantage. They are willing to change how they operate, some to a significant degree, if your product can provide them a competitive advantage that the business can measure.
For this segment, your product must be a true beta or early GA version. Bugs are expected, and they will work through those with you, but they won’t tolerate failed installs or other major issues. They will work with you to develop a good product experience that you can carry into the Early Market.
It’s this willingness to build the product with you that gives them the name Design Partners. Their feedback from using your product live is worth its weight in gold, so you might decide to give them a significant discount (30%-60%) or not charge them at all while they serve as a design partner.
Where Design Partners are willing to gamble on your product for a massive leap forward, the Early Majority simply want to make incremental, predictable improvements.
Making the leap from Design Partners to the Early Majority is one of the biggest challenges for early stage startups and is where the “chasm” in Crossing the Chasm comes from. However, once you do win them over they are sticky, most entering into multi-year agreements with good average sale prices (ASP).
In order to engage the Early Majority, your product must be without significant or obvious bugs and must be generally available (GA). The experience must be rinse and repeat from the demo, to installation process, to first production-level task execution and beyond. For this segment you will need a sales leader and full-time sales reps to scale this effort.
Once you’ve achieved this success metric, you’re ready to build a repeatable, predictable revenue machine around your product to scale rapidly.
For your first 18 months you need to:
Following this systematic approach is the most efficient way to drive adoption and build a sales motion. Failing to do this almost always leads to getting mixed signals on your product direction from a variety of market segments and inevitably leads to burning as many as 12 months and a large amount of capital only to pivot later and follow this strategy.
The last point we need to drive home in this section is that you always need to optimize for adoption before optimizing for revenue. We’ve seen founders try to fix lack of adoption by throwing sales people at the problem. This. Never. Works.
For example, we’ve worked with founders who’ve built products that line up perfectly with the problems users are looking to solve, but when they were interviewing Innovators they never asked what the easiest way for them to install the product in their environment would be.
As a result, when the product was ready to test with Design Partners, the team had to spend an extra two months building out different integrations after finding out their assumptions about how users would want to install, and who would be involved (Enablers), were wrong. All of which could have been avoided if they dug into that during their Innovator interviews.
Though this module is presented through the lens of Sales, most of what’s here, especially with respect to understanding your USER and BUYER, represent the first steps you must take in order to enable each of the functions in your organization (Sales, Product, Marketing, Community, and Education) to play their role in supporting the USER / BUYER journey.
We’re going to cover how to engage and convert USERs and BUYERs in the first three market segments you’ll need to dominate. The personas in each of these segments follow the same general USER / BUYER journey when it comes to adopting a new technology. There are differences in the exact nature of each step, but the themes are the same. We’ll use this journey as a common denominator throughout.
As you work through the market segments we have outlined, USERs and BUYERs will experience your product and their journey first as slides and wireframes, then as a rough beta they help you build, and finally as a fully fledged product that is self-service.
There is an inverse relationship between your product maturity and how automated a USER’s experience of it is, but the key is that you are always building towards that ideal USER/BUYER journey; interviewing Innovators on what the ideal journey would be step-by-step; building it out for the first time with Design Partners, revising and refining; and then tracking users as they go through the journey in a self-serve fashion, again revising and refining as you learn. In the long run, this will allow your company to let your USERs inform the best ways to engage with them.
In the following sections, we’ll walk through all three segments of the adoption curve, from interviewing Innovators, to installing with Design Partners, and selling into the Early Majority. We’ll cover the tactics to deploy in order to achieve each success metric along the way, provide some considerations for hiring your team, and speak to how this all plays out in the context of the USER / BUYER journey.
Continue to: Identifying Your Innovator Market Segment
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The Modern GTM
Identifying Your Innovator Market Segment