This GTM handbook draws from our real-world experiences in founding companies, investing in and guiding early-stage startups. I, Sam Huleatt, along with Jordan Crawford, wanted to share some systems and frameworks we’ve observed as leading to successful go-to-market motions
Part 1: Understanding Your Customer
Customer Problems & ICP Hypotheses
Your job as a founder is to offer solutions to hard problems: you are ultimately searching for market pull or as Julian defines it “target customers reflexively want a product upon learning of it, and they're willing to do whatever is required to get it.” To get to market pull, it’s almost always best to start with a focus on the customer and their problem(s) so that you don’t end up in the dreaded state of being a ‘solution in search of a problem.’ While you may have developed an earned secret, be the customer yourself, or be tackling an obvious problem with a non-obvious solution, it’s still prudent to treat your insights as assumptions, until enough customer conversations convince you it’s fact.
One approach to crafting hypotheses around customer problems is to drill into what the world of SaaS calls the ICP’ or ideal customer profile. An ICP is a detailed description of a fictional company that represents your target market perfectly. The more specific, the better. The goal here is to qualify customers in advance and will help improve your close ratio.
→ This post by Lenny really drills into ICPs and how to identify them
- It’s often helpful to start with “mid-market” or mid-size companies (company size of 30-100). You want teams who have money to spend, but can also make decisions fast.
- Jordan has a friend who is the CMO of a top SaaS company. Different types of customers have different lenses. Consider three different types of CMO’s, each with a unique lens: brand marketing, demand generation, product marketing. Each type of CMO will likely gravitate toward different solutions and approaches.
- Here’s a sample ICP template
Find 50 Potential Customers To Talk To
Once you have identified your problem hypotheses and the ICPs of your expected early customers, you want to start talking with customers to learn and validate your hypotheses. Note that while tempting, the point of these conversation is first and foremost to focus on the problems, rather then jumping into your solutions.
Jordan and I recommend speaking to 50 customers: this likely means your target list needs to be 300+ companies, assuming 1 and 6 cold outreaches is willing to speak with you. Your cold outreach to to these customers is a learning exercise. You are likely thinking: “nobody is going to reply to me!” - and that’s exactly the point .If you can’t find 50 companies out of 300 or so willing to speak, there’s a good chance the problems you have identified are not ‘hair on fire’ enough to create true urgency, or the messaging/targeting is off.
How do you find and contact companies with ICPs that match those you are looking for? The easiest way is to outsource this list building to someone on Fiveer, Upwork, or to use Linkedin along with a platform like Hunter.io. Avoid cold outreach on Linkedin.
- Total silence - not working (some people kind of interested is bad)
- empathy gap - no one wakes up wnating to buy new saas
- If mid funnel drags - not working - people just being kind
Customer Outreach (Emailing)
The goal of talking to 50 customers is not to produce 50 paying customers; according to Jordan, the true goal is simply to elicit some response. If a customer truly has a hair on fire problem and can relate to you the pain points your speaking to, they will be interested in talking to you.
In your initial outreach, rather than asking to hop on a Zoom or call, you want to start by offering some sort of value exchange for the customer. The power of reciprocity is powerful. What do we mean by value exchange? Let’s say you’re validating a new SaaS tool leveraging AI to help build lead lists.
In your first email, you could simply offer your ICP 25 targeted leads for free
It’s so difficult to find new leads as commercial real estate broker!
I got so annoyed with the existing solutions, I started experimenting with AI to help me out. The results have been off the charts!
Is this a problem you can relate to? If so, I’d be happy to generate 25 leads for you - no strings attached. Simply send me these two data points:….
Your subject line should bait — but not switch. You want to create intrigue.
Subject lines that tend to work use pithy phrases like: “Is it broken?” or “This is the worst…”
Also, avoid triggering phrases like: “quick question,” or using the person’s name “Sam,…”
Jordan also recommends that in initial outreach, the email signature is the only place where you should refer to the solution you’re developing (in the form of a link to your company website). The signature should be your name, your Linkedin URL (so they know you’re legit) and the website link; otherwise you are not directly pitching your product.
Once a prospective customer engages you, then you can ask for a Zoom. Try and keep live customer conversations low stakes: for example, suggest a a 20 minute call, max. Also track your conversion rates from email outreach to calls; this a big data point (one you can even refer to in future customer pitches). In general, conversions will likely be a low, but if your problem resonates enough and your value exchange helped whets the appetite, you’ll be surprised how many customers will be willing to engage.
- Another way of thinking about value exchange is that your email should be independently useful
- If a prospect is curious, they will engage you. Let the prospective customer drive the interaction
- If necessary, pay ideal customers to interview them
Live Customer Conversations
Once you start to get customers willing to take a call, you’ve entered a new phase. Again, don’t think about jumping into demos just yet. Instead, think of yourself as conducting a listening tour. Do not prepare or use collateral like decks, or mock ups. Enter each conversations with a beginner’s mind: the point of the call is for the customer should educate you, not vice versa.
Start off by talking about your understanding of the the today way of doing things. Let the customer validate your assumptions, and then riff on all the ways you are right, or wrong.
A great technique to leverage for clarification is mirroring:
“If I’m understanding you correctly, you do first do this, then that…”
As you get deeper into your list, you will start to notice patters in the the customers’ pain points. It’s a great sign if you feel you could finish the customers sentences: this indicates clear patterns to the problems.
Also, take note of workflow insights. for example:
“….Yeah, we used to do this workflow using Apollo, but we still needed to manually research X, Y, and Z”.
This is where you should be taking notes and jumping in with questions: why do you do this manually? What is it exactly that Apollo doesn’t do well enough?
As you process the customer’s feedback you want to be considering questions like?
- Has the customer seen this pitch before? If so, how is my solution different?
- How is the customer solving the problem today?
- Is the customer currently spending time or money to solve this problem?
- If the problem was solved, how would the customer’s life be improved?
Part 2: Getting Customers Using Your MVP
In parallel with validating customer problems, you likely have also been developing to refining your product MVP. While I’m not a real product person, as an investor, the two key things I look for in MVPs are:
- Are ICP customers completing a core action with the product?
- Has the founder validated a GTM channel? Is there founder-GTM fit?
While not set in stone, other thing thing I have observed is that those founders who refuse to give their product away for free often arrive at the truth faster. Charging for your solution from day zero keeps both the founder and the customer honest. Even if you plan to go with a PLG motion, charging early on will help you prioritize customers and ensure you’re not spending time building a solution that does not create enough urgency to get customers to pay for it.
- PLG is a bad way to start
- B2B2C - sure
- adoption is not the primary problem - it’s will pay pay you to solve a problem
- Very few are actually PLG -
Jordan’s Note: If selling a software product B2B, I’ve observed many companies who plan to sell per seat, start by charging a customer $20k a year. In exchange for the $20k they can have as many seats as they want for say 1-2 years. This accomplishes two things: 1) it proves customers will pay for your product and 2) provides a high enough ACV to get investors excited.
It’s also helpful to “niche down” meaning you’ve built an MVP that specifically solves a problem for a single ICP - you don’t need to solve the problems of all potential customers from the get-go. Ugly MVPs are encouraged. I have seen MVPs for marketplaces built on Airtable and AI products built with Stacker and Open AI. Back to the example of a AI Prospecting Tool: your core action might simply be getting a customer to upload their address book
Jordan’s Note: Don’t be afraid to disqualify or waitlist customers who are likely to fail (i.e., not use your product). Chasing divergent customers is a high opportunity cost!
In terms of validating a GTM channel, the idea is to try and find one distribution channel you can repeatedly use to acquire customers at low cost. It’s doesn’t necessarily mean this first channel need to be crazy scalable, but you want to feel confident in your ability to repeatedly find new customer prospects. Reliably being able to acquire customers means your company will stay alive longer and have more datapoints allowing your to iterate faster.
MVPs & Traction
Paul Graham has three key pieces of advice for MVPs:
- Launch fast
- Iterate like crazy
- Provide amazing customer service (do things that don’t scale)
You should not overthink an MVP. In my opinion, once you’ve validated the problem, you want to get an MVP with a trackable core action into customers hands as fast as possible. I love the idea of focusing on a core action because it gives founder something to optimize around and a KPI to track. As an angel, it’s more important to me to see products where the core action is being used with high retention by a small group of customers, than it is to have say a ton of users but with very low retention. It’s probably better to do one thing only and do it really well than to be an inch deep and a mile wide. Adding new product features before dialing-in retention around your core action means the core action value prop is off.
Traction = Quantification
First, let’s define what most investors mean by traction at pre-seed and seed.
Traction means quantifiable data. Qualitative data (i.e. customer testimonials), while nice, is not traction. Traction means people using your solution to solve a core problem and ideally paying for that solution. In my mind, there are 3 types of traction: Revenue-based, Usage-based and Qualitative-based.
- High growth revenue: weekly and monthly (7-10%)
- Landing and expanding revenue (i.e., retention)
- Impressive daily usage
- Usage resulting in material benefits (driving revenue, greater productivity, etc)
- Usage leading to seat or account expansion
- Signed LOIs (ideally with a dollar figure attached)
- Customer testimonials
A note on automation and sales tech stacks. Notice that nowhere have we suggested you hire a BDR/SDR, sign up for Apollo, or Sales Navigator. Your first 5, 10, 25, 50 customers is not about automation. It’s about a deep curiosity for whether your value prop and core action resonate with your first customers.
Early Product Traction
Good products pique interest and can get people to sign-up and onboard. Great products become a habit - people continue to return to using the product on daily basis. Retention is likely the top metric future investors will be looking for, and thus it’s a KPI you need to maniacally focus on as a founder.
As my friend Martin Tobias states:
There are only two things founders must do at pre-seed:
- Demonstrate market pull with a first cohort of customers
- Raise the next round based on #1
In other posts I have discussed how demonstrating momentum to investors (and to customers) is paramount at pre-seed. Momentum combines both your narrative and traction. At pre-seed, while you may not have robust traction in terms of revenue, there are other traction “proxies” you can lean into. In general, anything you can quantify can serve as a traction data point. That’s why even if you don’t have a great MVP, your ability to tell an investors “we convert over 40% of cold outreach to customer discovery meetings” is a massive data point. Markets matter a ton to investors (they definitely do to me!) so if a founder is able to show quantitative validation of a massive customer pain point — along with a repeatable way to identify and convert them into leads — I’m willing to look past an ugly or bare-bones MVP. An amazing market will literally pull a great product out of a team.
Note: One of the strongest traction signals you can show an investor is to have customers who both pay for your product and are investing as angels. Even if the customer can only invest a small amount, angel investor customers are gold. It may even be worth opening an RUV specifically for customers if you have enough demand to justify it.
Important Traction Proxies/Metrics:
Part 3: Scaling Customers
Part three is a work in-progress. I think this handbook is long enough for now and developing a section on scaling customers (i.e., scaling beyond 50 paying customers for a enterprise product) could merit its own handbook.
As a general rule, Jordan believes a single channel can get you to $10m in ARR. Thus, until you’re a few million in revenue, you don’t really need to be thinking about scaling sales and customers beyond founders and 1-2 early sales hires, typically BDRs or SDRs.
However, you do want to start thinking about repeatability and the cost to acquire customers (i.e., CAC to LTV). Most products are not meant to scale to addressable market sizes that can support venture sized outcomes. Said another way, most products will not scale to revenue of $100+ million, but anything short of this will likely be a disappointment to a venture investor.
As you scale up customer acquisition efforts you should focus on:
- Customer acquisition costs (do you earn more money than spend acquiring customers?)
- Channels & Scale (where you can find said customers, and how many are there?)
- Systems & workflows (creating sales repeatability)
Appendix & Resources
The Last SDR: How to Use AI & Automate Your B2B Cold Outbound Motion in 2023
Presentation by Jordan Crawford | Founder | Blueprint Eric Nowoslawski | Founder| Growth Engine X Steve Eror | Sales Director | Signals https://getsignals.ai Jordan Crawford, Eric Nowoslawski, and Steve Eror presented at the Demand Gen Summit on how to use AI and automate your cold outbound motion. AI can give you ideas to score your service addressable market and help you search for good data providers. Buyers don't care if they can tell an email is written by AI as long as you are connecting the problem to the solution. In your prompt ask a question that is focused, contextualized, and add creative constraint. Email warming and set up is important to make sure your emails get past the spam filters. Do the opposite of what spammers are doing. Unverified DKIM signatures or missing DMARC can harm email deliverability. Use tools like mailtester.com or mailgenius.com for setup checks. Quote “If you take all the time to invest in this system and get it up and running and all these things and then go out to the market and get a seven percent open rate, nothing is going to matter if you can't get your emails past the spam filters, and now spam filters are so bad that google is landing in spam for themselves.” Resources https://getsignals.ai/virtual-events/demandgen-summit-spring-2023 Music Info: Stylish - @AShamaluevMusic Music Link: https://www.youtube.com/watch?v=gLwFFMfHB5I&t=0s
[BlueprintGTM.com] Research Criteria
Sheet1 Section,Field,Example,Questions to Ask Persona Information,Name,E-commerce Executive Emily Persona Information,Description,Brief overview of this persona. Persona Information,Job Role/Title,E-commerce Manager,What's your official job designation? Persona Information,Key Responsibilities,O...
GTM motions of 30 B2B SaaS companies
Market segments, target personas, and sales motions—then and now
Here is a piece Jordan wrote on how AI is impacting cold outreach: