The tech world, particularly Silicon Valley, in the past 2 decades, has accelerated its growth ’cause of one mantra: “Move fast and break things.” Some of the most valuable products we know today were built because of that. Facebook, whose founder coined the phrase. Google. Amazon. LinkedIn. Uber. The list goes on. In sum, be “agile”. Simultaneously, I see founders, on the regular, take this mental model too far. They move fast, but they rarely give enough time to test their hypotheses.
Equally so, some companies cannot afford to “break things”. Take Dropbox, for example. Ruchi Sanghvi, founder of the South Park Commons Fund, former VP of Operations at Dropbox, and Facebook’s earliest female engineer, told VentureBeat in 2015, “Quality is really, really important to Dropbox, and as a result we needed to move slower — not slowly, but slower than Facebook.” Ruth Reader, who wrote for VentureBeat at the time, further extrapolated, “What was right for Facebook — fast-paced iteration and fixing bugs in real time — didn’t work for DropBox, an application people entrusted with personal documents like wedding photos or the first draft of a novel. What was valuable to DropBox was the details.”
On the other extreme, there are founders who spend day after day, week after week, and sometimes year after year, pursuing the “perfect” product before launching. If they were right on the money before, by the time they launch 6 months later, they might be 6 months off the money. Take the situation we’re all in today for example – the pandemic. No one could have predicted it. In fact, I had many a few predictions before the pandemic, which all proved to be unfortunately wrong.
- The Marketplace of Startups, written on February 24, 2020 – I alluded to an opinion I held that consumer social was almost dead. The consumer app market had become so saturated that it was hard for new players to play in.
- Myths around Startups and Business Ideas, written on October 12, 2020 – Pre-COVID, I was more bullish on Slack than Zoom as a public stock investment. History proved otherwise.
… and more to come. Mistakes are inevitable. And “the rear view mirror is always clearer than the windshield”, as Warren Buffett would describe. Seth Godin said in his recent interview on The Tim Ferriss Show: “Reassurance is futile because you never have enough of it.”
At the end of the day, as a startup founder, your raison d’être is creating value in the world where there wasn’t before. As Bill Gates puts it: “A platform is when the economic value of everybody that uses it, exceeds the value of the company that creates it.” Analogized, your startup is that platform.
So, in this post, using the lessons from other subject-matter experts (SMEs), I’ll share how startup teams can balance speed with intentionality in their go-to-market (GTM) strategy.
Play for the endgame
There’s a famous military saying that goes, “Generals are always preparing to fight the last war.”
As Scott Belsky writes in his book The Messy Middle, when crafting for the “first mile” experience, you have to think about the endgame. Specifically, you have to answer 3 questions for your users/customers:
- Why are your customers here?
- What can they accomplish?
- What can they do next?
Effectively, all 3 questions attempt to answer: Why should customers bother sticking around? What is their reason to stay? Why is your product valuable to them?
The importance of the value metric
What (economic) value are you bringing to the world? Be as specific as you can.
- Why will people use/need your product? What problem are you solving for in this world?
- Who is it really for? How much have/will people sacrifice to obtain your product?
And subsequently, once you know the value proposition, what is the value metric you are optimizing for? When you’re going fast, you’re going to have bugs. In your product. In your business. Hell, probably in your team as well. But the one area you cannot have bugs in or around is your value metric (and your value proposition). In The Messy Middle, Scott also writes: “identify what you’re willing to be bad at.” Analogized, from one of his wife’s colleagues, “To be a great psychologist, you need to be great with patients and just fair with paperwork.” Just don’t compromise on the value you deliver.
For Dropbox, it’s security. If Dropbox moved fast and broke things, they would have ultimately done so at the cost of your information’s security.
For social media, like Facebook and LinkedIn, it’s your network – friends you can communicate with and add. In optimizing for that, Facebook and LinkedIn makes it easier for you to come back, rather than making it harder for you to leave. They send you push notifications on friend updates – birthdays, new posts, anniversaries and more – so you want to come back and see what your friend is up to.
For Uber, it’s rides booked. To optimize for rides, Uber realized, as many marketplaces are, supply-constrained. And one of the mechanisms to fuel driver growth, as Andrew Chen, Uber’s former Head of Growth writes on his blog, is surge pricing. “It’s easy to hate it, as a rider, and there are legitimate cases where it should be turned off. But think about it from the driver’s point of view- it gives them a huge incentive to get out onto the road, and to come to the exact area in the city where they are most needed.”
Patrick Campbell, CEO of ProfitWell, shares a few more when when guest-writing about pricing on Lenny Rachitsky’s blog.
You don’t have to be good at everything, but you have to be good at what you claim you’re good at.
The GTM customer parameters
When building a business, you can never escape the question of who. Your economic value is the value you bring to everyone else. But when starting off, you have to be hyper-specific on your audience, before you scale. You have to figure out how to go from zero to one, before you go from one to infinity. Andrew Chen echoes a similar notion in his recent LinkedIn post.
For the question of focus and who, I’ve found Mark Leslie‘s GTM customer parameters, which he shares on the First Round Review, to be rather useful.
| Price | “Is this a large or small economic decision for the buyer?” |
| Market Size | “Is it easier for them to find you or for you to find them?” |
| Complexity | “Can a customer self-serve to use or is education required?” |
| Fit | “After all is designed, done and shipped, is there still much more for the consumer to do?” |
| Customer | “Am I predominately selling directly to people or companies?” |
| Relationship | “Do I measure successful customer relationships by transactions or longevity?” |
| Touch | “How much agency do you have in developing your relationship with your customer? Can your efforts compound or are the mostly one-off?” |
This framework is also quite handy in determining if you’re going to be a marketing-driven or sales-driven company. As Mark puts it, “If you’re marketing-intensive, the product is bought. If it’s sales-intensive, the product is sold.” A loose rule of thumb is that typically B2C companies have a greater marketing budget than sales. And B2B companies have a greater sales budget than marketing. Of course, there are exceptions. Like if you’re building a bottom-up SaaS product, like Notion, Superhuman, or Figma, you’re still marketing-driven.
The thing about speed
When Jaleh Rezaei, CEO of Mutiny, shared her thoughts on the First Round Review, in her 6-step framework, there are 4 things that stood out to me:
- “Lean into motion goals to get into the ‘just ship it’ mindset.”
- “Obsess over weekly targets.”
- “Pick the right tools – not just the shiniest tools.”
- “Demand leading indicators.”
Lean into motion goals to get into the “just ship it” mindset.
Motion goals are goals that put you and your team on an aggressive schedule. An example she provided was to sell a newly-concepted program to a partner in 1 week. “Static friction is a lot higher than kinetic friction. Once it’s set in motion, everything is easier,” shared Jaleh.
Mike Maples Jr. of Floodgate may have unwittingly written a possibly great way to tackle motion goals April this year. Something he calls… backcasting. The opposite of forecasting. Instead of projecting today’s data into the future and extrapolating, aka forecasting, pick a point in the future as the starting point and work backwards. He writes, “Breakthrough builders are visitors from the future, telling us what’s coming.
“They seem crazy in the present but they are right about the future.
“Legendary builders, therefore, must stand in the future and pull the present from the current reality to the future of their design.”
With this mentality, motion goals become far less scary and feel much more doable.
Obsess over weekly targets.
In the theme of working backwards, set quarterly goals, then break them into weekly chunks. Quarterly goals have the tendency to bleed into the habit of procrastination. Learn and iterate weekly. Communicate often. Separate your learnings and customer data into weekly cohorts. You’re probably going to A/B test multiple acquisition channels and just as many retention mechanisms. Delineate your data accordingly, by cohort. How is the W1 cohort doing in comparison to the W2 (W3, W4, etc.) cohorts? How can you take the best performing metrics of each group and combine them into one business strategy?
Pick the right tools – not just the shiniest tools.
It’s easy to start off wanting a bunch of tools (software, hardware, etc.) that may help you build your business. A subscription to X SaaS tool. A lease at your favorite co-working space. And it doesn’t get any better once you get funding.
I’ve seen many a founder succumb to “I need A, B, C, D,… Z.”
And when I ask, “what will ‘C’ be used for?”
“Uhhh… for when we hire a designer.”
“When will that be?”
“Ah – when we raise our next round of funding.”
“When is that?”
“In 6-12 months.”
Three years ago, I met three co-founders. When I visited their office in SF’s Design District, it turned out to be their apartment. Oddly enough, I noticed a bunch of beautiful $1000+ Scandinavian furniture pieces. When I asked them how they got their furniture, they said, “It was all free.”
“How-“
“We got in tight with some office managers when we were apartment shopping. Turns out that tons of startups here in SF try to look like Airbnb as soon as they raise funding, so they buy a bunch of fancy furniture. But when they go out of business, the last thing they want to worry about is the furniture. So, office managers just have a bunch of high quality furniture and interior decor on their hands that they try to get rid of.”
Their office/apartment and furniture are just two examples of their resourcefulness. They were extremely lean and if they really needed some tool or expertise, they leveraged their hustling mentality and their network. And I say their network second because they didn’t have a network in the Bay when they first arrived, but they hustled their way into social circles.
Be scrappy. It’s okay to spend on software and other tools, but only if you really need them. Or if they’re free. But even if they are, prioritize what you need. As Jaleh says, “Any one tool is only as valuable as it is simple and enables quickness.”
Today, those 3 co-founders are YC alumni and have raised $1.9 million to date from some of the most recognizable names in the investing world.
Demand leading indicators.
This 4th one isn’t actually part of her 6-step framework, but I couldn’t help but want to include this in my takeaways. The thing is you’re probably not going to get results in the first week, maybe not the second week, third week or even 2 months later. So you’ve got to look for user behaviors that may act as proxies for future engagement and retention. And potentially, even better, virality. How often are they logging on? What action/notification prompted them to log on? How many actions do they take per session? Which actions do they take the most often? At the same time, this could inform you and your team of which features to prioritize over others.
In closing
A week ago, I reached out to John List, Kenneth C. Griffin Distinguished Service Professor in Economics and Lyft’s Chief Economist (and formerly held the same position at Uber), to ask him a question, whom inspired this post.
“When you conduct your economic experiments and user research for a consumer company, like Uber or Lyft, how long do you test for?”
John shared, “The timing issue revolves around what kinds of questions you want to answer and the tradeoff with the ‘interference’ that a longer time frame might introduce.” Similarly, when you’re bringing a product to market, keep in mind 3 things:
- Your strategy is a pursuit to test your hypothesis on your market.
- If you wait too long, you just might miss your lucky moment. Time, and subsequently, the markets wait for no one. The longer you wait, the more variables you may have to juggle.
- And as you’re moving fast, don’t forget your core hypothesis – your value metric.
If you have the time, John also passed me a study he did with Sally Sadoff and Mathis Wagner on Some Simple Rules of Thumb for Optimal Experimental Design, which I found to be highly instructive on approaching the experiments more analytically.
“The only thing harder than catching lightning in a bottle from my experience is holding onto it,” Garry Tan of Initialized Capital said in his recent interview with Neil Kothari of Drip Capital. In venture, we say timing is paramount. While timing into the market is “catching lightning”, iterating a product to stay in the market is “holding onto it”. Your GTM strategy is only the first step of building a business, but it is a crucial step to validate if the market has a need for what you’re building.
Build fast; test deliberately.
Top photo by Nicolas Hoizey on Unsplash
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