Go-to-market strategy is the leading cause of startup death

You’ve built a great product that solves a huge problem. The verdict from early users is unanimous — they love it! You’re locked and loaded, ready to roll. You just need money to hire sales people and begin advertising so you can sell, sell, sell.

Well…not so fast. Now that you’ve gotten over the difficult hump of finding product-market fit, are you prepared for the insurmountable wall of go-to-market?

What is Go-to-Market?

Go-to-market means getting a product into customers’ hands. A lot of customers. $100M a year worth of customers. And only a very few startups ever achieve that.

Go-to-market is deceptively challenging. If we want to sell a new protein bar, all we need to do it get it on the shelves of Walmart and Kroger. If we want to sell a new QA test tool, we just need a few sales guys to call engineering managers. What’s so difficult about that? It may be a long process, but the strategy seems blindingly obvious.

Indeed, getting the first million in sales is not about go-to-market. We can put our protein bars on Amazon and build a social media following. We can promote ourselves at local events, maybe even get into a few local stores.

But that’s not scalable. A venture business needs to get to $100M within 5 years or so. And that’s a huge challenge that requires strategy and process.

There are plenty of strategies and the obvious ones rarely work. Walmart doesn’t put new protein bars from unknown companies on their shelves without good reason. And they don’t restock it if it isn’t selling, which won’t happen unless you’re generating customer pull-through.

It’s takes a combination of sales and marketing activities to find the go-to-market strategy that works for any particular product. Even 2 nearly identical products I made turned out to need completely different go-to-market strategies, and both nearly failed until I stumbled onto a strategy that worked.

Go-to-Market For Network Accelerator

My first product was a network accelerator. Our company invented a technology to make downloads faster.

After developing the software and thrilling initial users by making their applications 3–5x faster, we thought we had product-market fit.

Our plan was to license it to the application developers. That was a complete failure. So was the plan to offer it to operating system developers, and make it a networking standard. And so was the plan to sell it as a software package that big companies could install themselves on their client and server computers.

Users loved the software, but it was a nightmare for IT to install on every computer. There was no go-to-market strategy for our software. Our only choice was to make a hardware device they could plug into their networks. So we had to make a difficult pivot to becoming a hardware manufacturer.

As soon as we released the hardware, it sold out immediately. Customers were flying engineering teams on private jets to see a demonstration. Our biggest problem was scaling up production of the devices. Success at last! Now that we truly had product-market fit, the rest of the journey easy.

But not so fast. After a few months, sales plateaued, then fell. Those first customers had been desperate for a solution. They were looking for a solution. They had budget for a solution. And they were willing to try anything. They were a tiny minority. We needed to get to the rest.

For the other 99.9% of enterprises that could benefit from our product but didn’t know it, we needed a strategy to them to tell them we could make their networks faster with our magic box. That turned out to be a surprisingly difficult challenge.

Cold calls went unanswered. Email campaigns got no response. We came home from trade shows with a long list of hot prospects that we never heard from again. The press was uninterested in our difficult to understand technology.

In the IT industry, most products are sold to enterprises through specialized distributors and resellers. They had relationships with our target customers and were selling complimentary products. So we reached out to them to build a channel strategy.

It seemed to be working when many resellers agreed to carry our products. But sales didn’t increase. Customers didn’t know they needed the product, so they weren’t asking the resellers for it. The resellers were doing nothing to introduce our product to their clients, so they languished as just another SKU in their voluminous catalog of products.

The solution was customer education. A lot of it.

Rather than promoting our own product directly, we created a new product category and marketed the hell out of it.

While the trade press was uninterested in covering our announcements, they lapped up stories about how our early customers solved their problems with this new type of product.

We offered huge discounts to large companies willing to participate in case studies. We contributed dozens of articles and blog posts to any site willing to talk about network acceleration, never once mentioning our product by name. We got ourselves invited to speak at any IT trade show or conference that would have us. I even wrote a textbook on network acceleration that we handed out to IT managers.

Companies started calling resellers asking about this new type of product, and resellers begged us to sign them up as partners. We picked the innovative ones willing to do the most to promote us.

Eventually this took off and sales starting growing quickly. We invented a new product category that’s now worth a billion dollars. And we were acquired by a bigger public company that wanted to offer our product to their large base of customers.

Go-to-Market For Network Simulator

My next product was a network simulator that used much the same underlying technology. I thought I could simply replicated my previous success.

We built a similar hardware device and tried selling it the same way to the same customers with the same go-to-market strategy. I got my reseller friends to start selling the product while I worked on customer education.

This turned out to be a complete failure. Test tools aren’t sexy. They don’t make your network faster. Other than my mother and half our staff, nobody read my exciting articles on the benefits of testing.

The resellers were a bigger problem. They’d loved our accelerators because they could sell 100 at a time for each branch office, making a single order in the hundreds of thousands of dollars. Each customer only needed 1 simulator for the lab, an order size of only ten thousand dollars.

Selling a single device wasn’t worth the salespeople’s time, so they didn’t bother. We were back to being a SKU in their catalogs.

How do you promote a test device to a very large number of companies? The strategy took a while to figure out. We almost gave up.

Our test tool was useful for other companies to demonstrate their products to their customers. But our hardware was an industrial server, meant to be installed in a rack in the lab. When we saw a sales engineer lug one of our devices to a trade show for their demonstration, we had a better idea.

We built a portable version of the product on a Raspberry Pi. The functionality and performance were limited, but it was good enough for a demo. We added a big statistics page so they could show off the performance of their own product with our logo at the top. And we gave our portable devices away to partners at cost.

Soon, hundreds of sales people and resellers of other IT products were walking into their prospective customers with our device for their demos. Other companies’ sales people became our primary marketing channel.

The go-to-market strategy meant developing a new product for a different use case than originally envisioned, and giving away that product to drive sales of our profitable devices. The effective go-to-market strategy for a similar product didn’t work because the average order size was smaller.

The GTM Challenge

If my own travails in go-to-market seem unique to my particular products, that’s undoubtedly true, but every product in every market is unique. For go-to-market, Tolstoy had it backwards: All failed go-to-market strategies resemble one another, but each successful go-to-market is unique.

In consumer packaged goods, for example, the strategy seems easy — just sell in Kroger and Walmart. Okay, but you can’t just send a sample to Bentonville and ask Walmart to stock it.

The process usually starts with building a brand name and selling locally and on Amazon, marketing on social media and signing up influencers. Then signing up a distributor to approach the big box stores.

Even if Walmart gives it a try and stocks the product on a shelf beside a dozen better-known protein bars, there won’t be a repeat order until you drive sell-through yourself. How will you do that without spending tens of millions on Super Bowl ads?

There’s nothing more frustrating than a great product without a viable go-to-market plan. But that happens more frequently than not. Distribution costs might be too high to hit the required price point, or the sales cycle might too long to hold resellers’ attention. Influencers can make a product, but will they really come through? How will you sign up customers for that SaaS to manage nail salons without hiring sales people in every neighborhood in the country?

The go-to-market challenge is unique to startups. Big companies already have big sales teams and advertising budgets, millions of followers on social media, resellers ready to push their newest products and customers ready to try it.

Startups need to find a way to navigate through to customers to generate sales, and not just a small number of sales but tens of millions of dollars.

The GTM Solution

There’s no one size fits all solution for go-to-market. It’s a strategy that has to be carefully crafted based on the customers, industry, and product details. But there are a few points to keep in mind to build the most effective strategy possible.

  • Get to know your customers. Not just what they need, but how they discover and evaluate new products and their preferred purchasing process.
  • Iterate, A/B test, try as many things as possible as inexpensively as possible. Be open to out-of-the box ideas.
  • The MVP is not a beta version of the product. The MVP is whatever you need to begin experimenting to see what works. That’s often not a complete product.
  • The product needs to be designed for the go-to-market strategy, not the other way around. A great product that doesn’t have an effective way to reach customers is not a viable product.

The go-to-market strategy is more important than the product itself. Spend as much time and thought designing your go-to-market strategy as you do developing the product.

To Kill a Unicorn – a Silicon Valley Mystery

Interested in startups? You’ll love my mystery novel about SüprDüpr, a Silicon Valley startup that claims to have invented teleportation. Now the chief scientist is missing, and his hacker friend has to figure out if the company is a fraud or hiding fatal side effects.

Order your copy today! 
https://www.amazon.com/Kill-Unicorn-DC-Palter/dp/1950627616