The following is very much based on a true story – a sad but true story from early 2019. In a company’s first meeting, their CMO announced that they were building a big brand – just like Theranos. Just from hearing that, his direct reports knew immediately that the go-to-market and marketing foundations were probably a little shaky, and they weren’t wrong. Although Theranos might not be the best example to use, the product team had gotten the idea.
As it turned out, the Go-to-Market strategy was more like a very hot mess. What became clear was that this unicorn startup was busy spinning their wheels in the Early Success Trap. The Product team was blinded by all of the early success and activity. Sure, there was one large and appealing customer and a dominant share in a small sub-market. But the rest of the customer base was truly random—nothing repeatable at all. The marketing and sales teams were both flailing around chasing random businesses.
The company had a hammer, and the Early Success Trap (EST) convinced the Product leader that everything was a nail, utterly unaware that they were still determining product-market fit. At SBI, the Revenue Growth Methodology includes a 3-Step Product Strategy, starting with Product Planning. For a quick assessment of your own product, download SBI’s Product Planning Tool to develop your own one-page Business Canvas.
This tool will also help you evaluate the products you need to solve and figure out the best method to solve them.
Every early-stage company, or new division in a mature company, needs to find product-market fit, it’s what gets you onto a sustainable growth path. The Product leader and the executive team need to prioritize this above all else. The importance of product-market fit (or PMF) cannot be overstated and is discussed in length by Andreessen Horowitz at a16z.com. A genuine problem appears when you think you’ve found it, when in fact, you only found some early success and convinced yourself that you could scale from there. You’re not on a hockey stick, you’re actually in a hole, and you just don’t know it.
What Does the EST Look Like?
To paraphrase Tolstoy, all happy and successful companies look alike, but every company in the Early Success Trap is unhappy in its own way. Luckily, this case study company has provided a few signposts to help recognize trouble.
- Executive focus on brand, even though there’s not enough demand. Billboards for Zoom video-conferencing make sense when demand is growing. Talking about being a big brand (like Theranos) when you’ve missed revenue targets every quarter is delusional (if oddly appropriate). A billboard to promote your brand won’t change that.
- One dominant customer for whom you are not business-critical. Worse yet, by a contractual agreement, you cannot sell to their competitors, and there aren’t any obvious adjacent markets. How do you leverage that, and where do you go from there?
- Market dominance in a walled garden. You are a fit for the very largest companies but can’t scale down to their smaller competitors. Now you have a 75% market share with no place to go, and again, no adjacent markets. Feels a lot like #2 above.
- There isn’t a clear Ideal Customer Profile (ICP). Every internal marketing or sales meeting becomes a brainstorm that generates more ideas, but not more clarity on the ICP. If you can’t articulate the ideal customer, maybe there isn’t one?
- There is what appears to be mass delusion in managing up. Look for a sales manager always explaining revenue misses away and pinning things on the next hail Mary deal (or the next quarter!). It’s obvious that this needs a closer look and fewer enablers.
- Multiple executives asking what do all of those salespeople do? When you haven’t determined product-market fit, it takes a lot of salespeople to generate random business. (I can’t tell you how many times I was asked this in the case study organization.)
- A severe lack of clear, differentiated, and actionable marketing messaging and customer materials. If you have a hammer and the world is full of nails, why go through the hard work of building out a marketing foundation? It must be a floor wax and a dessert topping, it is perfect for every requirement! (See ICP in #4 above.)
- There is an awful lot of business development activity – meetings, LOIs, agreements, press releases – but no real outcomes and certainly no revenue. Always a red flag, IMHO.
Clearly, not every EST will have all of these, nor will they be this extreme or this obvious. At this startup, it was all of these and more. You just had to look from the outside in and connect all of the dots. If you can identify more than four of these eight symptoms, I suggest that you consider whether you are in the Early Success Trap. Working with your sales team very early in the product planning process is one way to gather market insights and help avoid the EST, as explored in this SBI post on engaging the sales team in product ideation.
How Do You Get past the EST?
Even with everything we know about sales and marketing at SBI, we haven’t found an easy cure for the EST. At the core, Product leaders are looking to solve product-market fit, and that can be a tough nut. We’ve tried AI/ML, ABM, programmatic, social selling, and even Brexit (just kidding). The only thing that seems to work is by applying the Revenue Growth Model, driving the required alignment between product, marketing, and sales.
- Take the Revenue Growth Diagnostic to capture business goals and evaluate the effectiveness of your go-to-market strategy.
- Perform primary customer and “voice of the market” research on the current solution fit.
- Develop new positioning and messaging and test with friendly customers and analysts.
- Assess sales to marketing alignment and adjust go-to-market strategy.
- Audit and develop new sales enablement materials on new market messaging.
- Develop or update the revenue framework.
- Develop and execute new marketing campaigns.
If you’re thinking, “But isn’t that how we’re supposed to Go-to-Market anyway?”, you’d be absolutely correct. In reality, only 40% of companies follow any sort of structured model for sales and marketing. More than half of the companies out there only do half-measures, and they only get partial results. Or maybe they fall into the EST and stumble around for a long time. If you are wondering about any of your own products right now, do a quick assessment with our Product Planning Tool to develop your own one-page Business Canvas.
Need I say it? Don’t be like the majority of companies out there.