Monthly Archives

February 2017

Nailing go-to-market strategy

By | Startup general interest | 2 Comments

This chart, from First Round Capital’s recent post Leslie’s Compass: A Framework for Go-To-Market Strategy is super interesting. It’s first use is for founders to work out whether they should have a sales intensive or marketing intensive go-to-market strategy. That’s the point of the post and the summary is that if your business has the characteristics on the left hand side then your strategy should be marketing intensive and if you’re more like the right hand side you should be sales intensive. If you’re thinking this problem through at all I would highly recommend reading the whole post.

The second use, which they don’t cover, is assessing whether a business idea is likely to be successful. It’s an obvious thing to say, but unless a business can find a successful go-to-market strategy, sales will be limited and it won’t succeed. The power of this framework is that it can expose fundamental challenges to the viability of a plan even when it is only a concept, and then it can suggest ways to address those challenges.

Simple plans are easiest to execute and in this case the simple plans are ones that are either marketing intensive, or sales intensive. Plans that sit somewhere in the middle are ok, but products that have some marketing intensive characteristics and some sales intensive characteristics have an inherent contradiction that if left un-addressed will undermine success.

The most common and obvious contradiction that we see is complicated and high touch products that are inexpensive (or have low margins). Even if the product is a bullseye hit with what the customer needs, it won’t be possible to persuade them of that fact without an expensive sales effort, which won’t be covered by the value of the sale.

Other contradictions to watch out for include B2C : complex products and many customers : low fit, but the most important one is definitely cheap products that require a sales lead approach.

Business plans with contradictions like this aren’t necessarily fatally flawed, they are just more difficult to execute, and that brings us to the third and final use of this framework, which is to inform product strategy. If there is a contradiction then one solution is to resolve it through product innovation – if the contradiction is between low price and complexity/high touch then either find a way to either to take the complexity out or to charge more.

Usually those product innovations will be to enable a more marketing led approach, and to generalise, companies that move product categories from being more sales intensive to being more marketing intensive make promising bets. The shifts don’t have to be big either – convenience is a winning proposition. Examples are legion, but Slack is a great one. Last May they became the fastest company to reach a $2bn valuation in large part because they succeeded in making a product that works with a go-to-market strategy that is close to 100% marketing led. Looked at through this lens, their genius was in taking all the complexity out and enabling low touch adoption.

Amazon: A true success story

By | Amazon | No Comments

For about three weeks I’ve been meaning to write about the amazing success that is Amazon. Back then it was when I read they were planning to create 100k US jobs in the next 18 months, are worth more than the next eight biggest US retailers combined (see chart above), and that they now employ 45k robots, up 50% year-on-year. I finally put pen to paper today (so to speak) because I saw the additional news that they are building a $1.5bn hub for their own cargo airline (sic), have 0.7% of the UK grocery market a mere six months after launching here, and had a record holiday season in 2016 shipping over 1 billion items.

That’s quite a list, and unsurprisingly their share price has been tracking an exponential curve over the last few years.

When I think about what’s got them there, the list of characteristics are exactly the sort of things we love to see here in startups here at Forward Partners:

  • Execution oriented
  • Determined
  • Disciplined
  • Relentless
  • Logical
  • Keep it simple
  • Independent thinkers
  • Experimental
  • Not afraid to make mistakes
  • Values driven

That list makes them sound a bit like The Borg and whilst I love Amazon I will admit there’s some validity in that comparison, also noting that The Borg were hugely successful. That said, new startups trying to emulate Amazon would be well advised to make sure they also have a good dose of creativity and brand story.

Finally, there’s a great entrepreneur at the heart of every great business and Jeff Bezos is perhaps the greatest out there at the moment. I still love this video I posted back in 2010 where he shares some stories about Amazon’s first days and then tells us “everything he knows” in about five minutes. He has an incredible ability to distill complex concepts into simple insights.

There’s no denying that Amazon have had and still have their critics and naysayers, but from an entrepreneurial perspective, we could all aspire to be a little more Amazon.