Sam HuleattThis GTM handbook draws from my own experiences founding and investing in venture backed startups. I created the guide along with my friend, and sales/GTM genius Jordan Crawford. Jordan and I got to know each other at On Deck. We wanted to share some systems and strategies we’ve observed as leading to successful B2B go-to-market motions.
Part 1: Understanding Your Customer
Customer Problems & ICP Hypotheses
Your job as a founder is to identify problems with woefully inadequate solutions. You are ultimately searching for market pull, or as Julian Shapiro puts it, a solution so good “customers reflexively want [the solution] upon learning of it, and are willing to do whatever is required to get it.”
To find market pull, it’s typically best to start with a maniacal focus on the customer and their problem. This is as opposed to starting with the solution and working backwards. You want to avoid the dreaded state of being a solution in search of a problem. While you may have developed an earned secret from a prior jon, or be the customer yourself, 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
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 both learn and validate your hypotheses. Note that the point of these conversation is to focus on understanding each customer’s problems, not to propose 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. Cold outreach messaging itself 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 is not right. If you’ve identified a hair-on-fire problem, customers will feel real urgency to connect.
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. Jordan notes, it’s okay to compensate people at this point - your goal is simply to learn.
Initial Customer Outreach
According to Jordan, the goal of talking to 50 customers is not to produce 50 paying customers; the goal is simply to elicit a 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 GIVE your ICP 25 targeted leads for free
Example Copy:
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? I have a feeling it is, so I went ahead and attached 25 leads for you below - no strings attached.
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,…”
Another really powerful approach is “teaching”. If you can find data that teaches someone something new about their company, or their job, you build instant credibility. Check out this video from Sean Murray of Greenhouse talking about this very strategy (starts at 00:11:48):
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.
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?
- When did so-and-so happen? Tell me about the situation this occurred in?
- 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?
Notes on MVPs & Building Traction
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.
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
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
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.
Early Traction
Traction = Quantification
Since many founders reading this hope to raise capital, I think it’s important to consider ‘traction’ in the context of how pre-seed and seed investors might define it.
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.
- Revenue-Based
- High growth revenue: weekly and monthly (7-10%)
- Landing and expanding revenue (i.e., retention)
- Usage-Based
- Impressive daily usage
- Usage resulting in material benefits (driving revenue, greater productivity, etc)
- Usage leading to seat or account expansion
- Qualitative-Based
- Signed LOIs (ideally with a dollar figure attached)
- Customer testimonials
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
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.
Also remember to be wary of certain traps:
- Don’t become overly concentrated with one customer, even if it’s a dream logo
- Quality of customer matters: As an example, I’ve seen multiple developer tools get initial traction with small dev shops, only to learn VC’s don’t consider dev shops as scalable/meaningful customers
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.
Notes on Scaling
I think this handbook is long enough for now. Developing a section on scaling customers (i.e., scaling beyond 50 paying customers for a enterprise product) merits a post of its own.
However, I’ll mention that a single channel can get you to $10m in ARR. Thus, until you’re generating $2+ 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.
The more important proof point is repeatability within your channel and the cost to acquire customers (i.e., CAC to LTV).
As you scale up customer acquisition efforts 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
![[BlueprintGTM.com] Research Criteria](https://lh3.googleusercontent.com/docs/AOD9vFqvrv7fehdNvaOEj_Q7PxePp0EXtcqCLeIIijpjSqFFwPRn249xo0dZeeCMJIhG5tGzLU8_oCSaBe2WxkVEIYtyny24iNsSufj7UdHi7N1k=w1200-h630-p)
Here is a piece Jordan wrote on how AI is impacting cold outreach: