Why your go-to-market matters more than your product

Competition turns every product into a commodity. Including yours. 

100 million startups are launched every year. That’s 3 startups per second. How are you going to compete?

Products today are easy to build and deploy, which means anything that’s working will ultimately get copied. Too often startups focus on product alone and forget the importance of a well planned and executed go-to-market strategy.

In this essay, I’ll explain why startups can’t afford to ignore competition and present a systematic way to identify your competitive advantage & move faster than the competition.


B2B Software isn’t defensible

Low-end competitors cherry pick key features and launch lightweight versions of your product. In this case, you cannot compete on price or feature set alone. In 2018, you cannot win on product alone because the window for first-mover advantage has shrunk dramatically as it’s become easier and cheaper to start a company.

I experienced this first-hand at Zendesk where new competitors gained market share by targeting a particular customer segment or identifying an untapped opportunity in a larger suite of products.

Kustomer launched in 2015 as a Zendesk alternative for retail e-commerce companies with a simple view of both customer interactions and retail transactions.

Kustomer strategically won Glossier, previously a Zendesk customer, which served as a strong anchor to win customers like Rent the Runway, Zola and others. A strong anchor is a thought leader among peers and has the ability to influence the next generation of companies.

At the 2017 YC Female Founders Conference, Glossier CEO Emily Weiss thanked Kustomer for delivering a powerful solution to connect with customers. This served as a highly influential referral for hundreds of founders aspiring to build the next cult-like brand.

https://medium.com/@briannekimmel/glossier-ceo-emily-weiss-on-customer-experience-b429af1a93a5
Glossier CEO Emily Weiss at YC Female Founders Conference 2017          [I covered the story here]

Consumer startups aren’t defensible either. 

For mobile apps and consumer technology, you are always playing defense. Consumer platforms can easily copy, and ultimately kill, good consumer products.

“Facebook just released ______ the _______ killer”

Bonfire the Houseparty killer, Creator the Patreon killer, Jarvin the Alexa killer and most recently Portal the Alexa Echo Show killer. While most of these examples are lightweight experiments that will ultimately fail, they prove large consumer tech companies are willing to copy any product that’s working.

In the case of Instagram Stories, it’s clear that a massive distribution advantage can disrupt a market leader.  

 


You need a systematic way to compete

In today’s competitive environment, startups need a systematic way to identify unique advantages & move faster than the competition.

I’ve adapted the OODA Loop, a military framework that prioritizes agility over raw horsepower, to help startups w/ their GTM.

Here’s how to apply it:

The OODA loop is the cycle, observe, orient, decide, and act, developed by military strategist and United States Air Force Colonel John Boyd.

 


Observe

Use market intelligence & data to develop a deep expertise on the competitive landscape. During this phase, companies will use a number of tools to identify weaknesses in your competitor’s product and go-to-market and opportunities based on negative feedback from customers including feature requests and why customers churn.

For example: Technographic data from HG Data identifies which companies are using competitive products and other technologies used within the company to create a more accurate view of prospects.

 


Orient 

Identify your company’s unique advantage based on team strengths, market needs and competitive weakness.

While most companies consider team strengths and market needs, I find the majority of startups do not spend enough time anticipating competitive moves and identifying smarter ways to enter the market. Keep in mind, competing head-to-head will drive up paid marketing costs and create a possible feature war with the market leading solution.

In this phase, you have to ask the non-obvious questions. This could start as a whiteboard session and continues as a weekly meeting to discuss weekly competitive updates.

  • Do you have a unique advantage with a specific vertical or customer segment?
  • Can you move faster by building superior features for this particular vertical?
  • Does your team have a unique hiring advantage?
  • Do you have direct access to strategic partners or leading experts?

Gorgias is a customer service platform built specifically for e-commerce companies. As the first customer service app built for Shopify, the solution has a more robust set of features for e-commerce companies and a unique distribution advantage where the Shopify platform serves as both a technology partner and active source for new users.

        Gorgias beats Zendesk in customer satisfaction 

“If you are on Shopify, it is a must.” 


Decide

After you identify your team’s unique advantage, it’s time to decide how you plan to break into the market.

For many founders, this is where you start to see tension between co-founders, investors and your founding team. While identifying your unique advantages, you’ll uncover a number of possible entry strategies and no shortage of opinions from everyone involved.

In this period, this is when a startup welcomes as much feedback as possible. Tension should not be viewed as a negative, but rather valuable feedback which you can distill into insights to improve your overall value proposition.

During the decision phase, too many founders fixate on the total addressable market slide in your pitch deck. It’s important to separate your market entry strategy from your total addressable market. If you want to win, you need to outsmart your competition and move fast when you identify an opportunity.

To quote Vinod Khosla: “your market entry strategy is often different from your market disruption strategy.” Start where you find a gap in the market & push your way through.”

A recent example is Khosla-backed company Voyage, an autonomous vehicle company bringing self-driving cars to private communities.

By partnering with The Villages, a community of 125,000 residents, 750 miles of road and 3 distinct downtowns in Florida, Voyage was first to launch a fully-functional, door-to-door self-driving taxi service in America.

Voyage self-driving vehicle at the Villages, FL [https://voyage.auto/]
While large incumbents continue to face both technical and regulatory constraints, Voyage has a unique ability to move faster in private communities with access to private roads, high frequency routes and direct feedback from passengers who enjoy the service on a daily basis.

Voyage investor Alexis Ohanian says, “the big bet by Voyage was subtle, but brilliant.”

If 100 million startups launch every year, what does it take to be brilliant?

It takes a revolutionary go-to-market.

In a world of 100 million new startups each year, you will not compete on product alone. You need a systematic way to outsmart the competition, but remember this process is not easy. It takes time and commitment from co-founders, investors and your founding team.


Act

With startups, action and iteration go hand in hand.

To quote Ohanian, “a subtle, but brilliant” go-to-market does not stop once you’ve launched on Product Hunt or shipped a new feature.

In fact, once you understand how to Observe, Orient and Decide when making critical go-to-market decisions, your process for iteration will move a lot faster.

When you put the OODA Loop into practice, you can continue to move fast while testing new markets, segments and audiences in parallel.

For more thoughts on go-to-market strategy, subscribe to my newsletter.



 

Self-serve growth doesn’t last forever, it’s time to hire Sales.

As an angel investor and startup advisor, I meet a lot of founders who are addicted to product-led growth.

“Virality, we’ve nailed it.”

“Our product has strong network effects.”

“We don’t need paid marketing.”

“Sales reps? We don’t really need them.”

I don’t blame them. The fastest growing software companies have something in common… They started with no Sales team.

Bessemer Venture Partners State of the Cloud 2017

Product-led growth unlocks early revenue growth through a fairly frictionless experience for the end-user: no sales call, no contract and in many cases no credit card required.

Dropbox is a great example where even a Dropbox Business plan is entirely self-serve.

But guess what? There’s a problem…

Product-led growth has its limitations:

  1. Self-serve SMBs churn at a much higher rate than Mid-market and Enterprise customers. 
The Innovator’s Dilemma for SaaS Startups by Tomasz Tunguz

This is especially true if you’re selling to other startups or tech companies who typically try a number of free tools and ultimately choose based on price, feature set and relationships (ie: YC companies buy from YC companies. Startups want to use the latest products.)

2. Self-serve users have a low expansion rate. 

While free trials are effective for driving new user sign-ups, keep in mind these users are less loyal, less engaged, and less likely to change plans or add premium features.

On average, only 15-20% of free users will convert to paying customers.

Product-led growth is a great way to drive top of funnel growth and acquire a high volume of free trials.

However, it’s typically less effective in converting free users to paying customers. In many cases, tiered pricing pages introduce channel conflict where it’s impossible to ask one segment to pay more for a product when others get it for free.

When self-serve channels have been exhausted, your $/customer will flatten. 

You are not likely to get any additional revenue from these users from any product-led growth channel.

This is the moment when you need to add a formal Sales team.

In this moment, I highly encourage you to proceed with caution.

To ensure a successful pass from Product to Sales, you’ll need to implement a few new processes such as a lead qualification model and a more robust CRM like Pipedrive, ProsperWorks or another solution.

To ensure long-term alignment, start by identifying blind spots across your funnel and review leads on a weekly basis to ensure no lead gets left behind.

Industry Product 2018 Talk

Questions? Comments? Find me on Twitter @briannekimmel 

Additional resources

Join Modern Sales Pro‘s community of 6,000+ Sales leaders from venture-backed startups and leading tech companies.

Watch All Things Sales by Peter Levine, General Partner Andreessen Horowitz

A primer on influencer fatigue for brands and b2b2c.

Will we see the end of influencer marketing this year?

In this essay, I will present the latest industry research as featured in Forbes, ZD Net, and highlight macro trends for brands, consumers and the growing landscape of influencer marketing tools.

Influencer Marketing Tech Landscape

Over the past few months, I’ve conducted a series of qualitative interviews and read a number of quantitative studies to understand how the influencer marketing landscape is changing.

Influencer fatigue has become a common theme for brands, consumers and influencers. In many ways, the current model is broken, here’s why:

According to a recent study featured by Forbes, brands pay more than 10x what they would pay to reach the same number of people in a traditional or digital media buy.

According to a recent study by Sprout Social, 46% of marketers believe influencer marketing should be part of their marketing plan, however only 19% have budget for it.

In many cases, the pressure to launch an influencer campaign often means that campaigns have loose metrics. Influencer matching continues to be a huge challenge for marketers. No tool has been able to solve the matching problem.

Brands are spending up to $500 million a year on fraudulent followers.

Changes in follower count attributed to fake followers

From an influencer perspective, the pressure to grow your fan base leads has led to top celebrities and influencers paying for fake followers.

Patterns that indicate fake followers include batches of new followers created within a certain timeframe, many of these accounts will appear and disappear within a short period of time.

While nine of out ten influencers say they must already like a brand to accept its sponsorship, 71% of influencers’ income is almost exclusively from sponsored content, versus more traditional ad streams like display ads, affiliate links and e-commerce. If you want to make money, you have to partner with big brands.

Bad matching = more brand control = fake posts. 80% of influencers say they are deterred to work with brands that control their content too much. Influencers want to create their own brand, not mirror someone else’s brand.

Fake posts = low engagement from consumers. The average engagement rate for an influencer post is around 4%. This means 40 likes, comments or clicks for every 1,000 impressions.

In many cases, brands are reducing paid spend for influencer marketing and re-investing in owned channels such as customer support as a lever for user-generated content and reviews.

Consumers are almost twice as likely to consider a product recommended from a friend rather than an influencer. 61% say they’d be more likely to research a product or service recommended on social by a friend versus only 36% for influencers.

This essay is Part I in a series on influencer marketing and new channels for user acquisition. I would love to include additional research and data points from founders working in this space.

If you’re working on a project in the influencer marketing space, please DM me on Twitter: @briannekimmel 

Join me on YC Leap

This originally appeared as a tweetstorm on Twitter. Follow me for more updates like this: @briannekimmel

Since the launch of YC Leap, I’ve kindly asked women in tech who contact me via email/DM to move the conversation to Leap. This was a strategic decision to encourage women in my network to get more actively involved in the YC ecosystem. Here’s why:

YC has taught me everything I know about startups: how to build them, how to advise them and how to invest in them.

While we’ve all learned so much from Paul Graham over the years. Many people don’t realize we have Jessica Livingston to thank for the community.

YC alums are the most authentic and helpful people you’ll meet in tech. This is not coincidental, it’s because of @JessicaLivingston’s x-ray vision for character which Paul Graham describes here:

But historically the alumni network has been a walled garden. Bookface is private and alumni make time for other alumni.

Earlier this year, Cadran Cowansage built YC’s first open community for all women in tech. It’s a safe space for women to get advice from YC partners, alumnae, investors and peers.

Founders can ask anonymous questions including a recent example: “Co-founder expressed having feelings for me. Not sure how to proceed.”

Gender neutral advice such as “What is a reasonable founder salary after seed funding.” is more common.

As I dive deeper into SaaS and enterprise investing, I sadly have less time for advice emails and one-off coffees. So, please join YC Leap. You’ll meet awesome women like Holly Liu, Kat Manalac & so many more.



A completely customizable car with 580 parts

While Silicon Valley is obsessed with electric scooters and Model 3 deliveries, France is quietly building a completely new vehicle class. XYT is a modular, customizable electric car with only 580 parts.

Early XYT model

Electric vehicles today mimic traditional gas-powered vehicles: design, production and delivery processes are inefficient and outdated.

Tesla Inc. vehicles are loaded onto a truck for transport at the company’s manufacturing facility in Fremont, California, U.S., on Wednesday, June 20, 2018.

The XYT’s 580 parts can be transported and assembled locally. This creates new opportunities for upgrades and customizations, particularly for international markets.

I remember when I saw my first “ute” in Australia. Holden is famous for their utility vehicles specifically designed for Australian culture. “Chuck your 🏄‍♀️ in the back of the ute” is unique to AU. XYT has the potential to unlock customizations like this globally.

2008 Holden VE SS Ute

The XYT be easily customized into a number of new vehicle types including delivery & utility vehicles. This creates new ways for companies to reduce logistics costs and own the delivery process up to 200 kilometers.

Possible service and utility vehicles using XYT.

The most exciting thing about XYT is its open source platform. Renault released the first major open source platform at CES 2017. The XYT platform is fully customizable across car capabilities and connected services.

Images source: YXT Twitter account

I’d love to connect with founders who are working on hardware and software in urban mobility and transportation to learn more about the space.

Follow me: @briannekimmel 

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Advancing the Short-Term Accommodations Industry

Over the past few months, I’ve looked at nearly a dozen Airbnb-like startups. And like many investors, I’m typically pretty skeptical about consumer travel companies.

Travel is an infrequent activity and after spending a few years at Expedia, I can tell you that there’s a big gap between what we see on Instagram and how people actually travel.  

Consumers want unique experiences, but typically make booking decisions based on price, availability and convenience.

When it comes to short-term accommodations, Airbnb and Expedia are likely to own global network effects in this space for three reasons:  

  1. Homeowners and property managers are incentivized to cross-list on major platforms
  2. Consumer usage is episodic and driven by paid marketing spend
  3. Highest CAC/LTV wins based on conversion rate and market liquidity  

To break this network effect, I believe any new company will need to offer highly differentiated inventory or a stronger value proposition for property owners.  

In this post, I’ll cover demand-side differentiation and present a market map for evaluating inventory. In future posts, I’ll spend more time on supply-side services like Pillow and verticalized software like Hostfully.

When evaluating inventory, it’s important to look at both single properties, which emphasize loyalty programs and exclusive upgrades to encourage direct bookings and aggregators which provide a better search experience with a higher volume of available inventory.   

When it comes to demand-side differentiation, new players won’t be able to compete on total number of listings, however they can create competitive advantages through differentiated inventory and improved services. Hipcamp is a great example of differentiated inventory such as traditional campsites (high availability rate and high margin) and more premium inventory type such as yurts and cabins.

Demand-side differentiation can be created with one or more criteria:

  • Gaps in inventory type such as campsites and non-traditional accommodations such as Hipcamp and niche communities with social proof such as Overnight
  • Gaps in inventory location & availability such as unique advantages during peak travel seasons or high volume of available inventory in high demand location
  • Unmet audience segments such as kid-friendly travel, accessible-friendly travel (Accomable, acquired by Airbnb) or baby boomers. 

Let’s look at two examples of possible demand-side differentiators.    

Business travel is one segment with higher frequency and lower price sensitivity. Compare to other segments, business travelers are more likely to prioritize convenience over all other criteria.

They will pay a premium to be walking distance to a conference and close to the office. Due to the nature of the trip, a business traveler will look for amenities such as laundry service, free breakfast, daily newspaper and a mini bar for late night snacks.

Business travelers typically join a loyalty program and prefer a consistent experience in every city. This is an unmet need with the average Airbnb experience: finding keys can be a hassle, communicating with the host is time consuming and homes are unique by design.

Some companies that are tackling the business traveler segment:

  • Sonder: nightly bookings in Airbnb-like properties with hotel-like amenities.   
  • Zeus: monthly bookings in fully managed units
  • Outsite: group accommodations with a large common room to accommodate offsites

Extreme last minute is another interesting segment where travelers are willing to compromise on inventory quality and services to accommodate extreme last minute bookings.

Three types of extreme last minute inventory:

  1. Remnant inventory is last minute available inventory sold at a deeply discounted rate. For example: HotelTonight generates revenue by taking a cut of each transaction—about 20-30%.
  2. Opaque inventory offers deep discounts by specific suppliers (i.e. hotel, airline, etc.) however the specific name remains hidden until after the purchase has been completed. For example: Hotwire.com provides a neighborhood level map with proof points such as star rating and peer reviews to help ensure customer satisfaction.  

On-demand inventory is another segment where short-term accommodations can be booked instantly.  

Overnight is a good example where users can instantly book a friend’s home on the platform.

Recharge is another example where users can instantly book luxury hotels by the minute.

For hoteliers, this is a highly valuable model to increase occupancy rate above 100%. The only consideration is additional labor costs required for housekeeping outside of the traditional daily checkout time.

 

In closing, this analysis is intended to serve as a primer for evaluating short-term accommodations. This is not an exhaustive list of recent startups in this space, it’s simply a framework for evaluating differentiated inventory.

If you’re a founder working on a travel-related company, say hi! I’d love to learn more about what you’re building.

Follow me on Twitter: @briannekimmel



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Hi friends,

It’s been a busy month as I continue to explore the new building blocks for consumer technology, which I call “the unbundling of cool.”

I’ve asked dozens of founders working on social apps, gaming and other consumer tech: When do you build vs. use an API or Platform as a Service? What technology do we need to make online feel more IRL?

Based on these conversations, I have a few updates:

  • Why I invested in Voxeet, the best API for live video
  • How I killed the phrase “I’m not curing cancer”
  • New CEO office hours: Summer School 

Why I invested in Voxeet, the best API for live video.

In 2018, I believe many of our best moments will happen online.

With real-time video calling, we’re connecting with friends and family in a more meaningful way. We’re celebrating holidays, reconnecting with old friends and creating new memories from our phone.

And even though the experience is getting better, it still doesn’t compare to IRL. There’s distracting background noise, garbled noise and cross-talk.

What if we could add “same room” technology to make every video call feel real? With Voxeet, developers can bring IRL quality video to any website, app or hardware integration.

Voxeet’s TrueVoice™ 3D audio and video technology provides a true surround sound experience and removes distractions like background noise.

With Voxeet’s API library, widgets and UX toolkit developers can easily add real-time communication such as live broadcasting, video calling and messaging to websites, applications and hardware integrations on iOS, Android and all web browsers.

I’m excited to join a great group of investors:
Jason Lemkin (SaaStr), John Kim (CEO, Sendbird), Nicolas Dessaigne (CEO, Algolia), Bill McGlashan (Founder, TPG Growth)

P.S. If you’re an investor, please reply if you would like to receive my weekly update on companies. 

How I killed the phrase “I’m not curing cancer” 

When my dad was a kid, he was diagnosed with leukemia. He dropped out of school, my grandmother quit her job and they moved across the country so he could get treatment at St. Jude.

My dad can tell you a million stories about his experience, but most are related to the board games he played, snacks he ate and friends he made. When you’re sick, you need distractions to keep your spirits up. My dad frequently says he wished he had video games.

Fast forward to early 90s. Due to years of cancer treatment, my dad needs a heart transplant. We waited a long time for a heart and ultimately my dad gets on the list for an artificial heart at UPMC. As a kid, I spent an entire summer in Pittsburgh.

The entire experience was scary. I sat for hours in waiting rooms and my only distraction was video games. I made friends with kids who were in a similar position to my dad. We played Mario for hours and as a result, I believe in video games, silly apps, etc.

As a founder, you may never know the impact you have on the lives of individual users. There is so much more to life than curing cancer. Anything that makes someone smile & feel better about their current situation is worth building.

Follow me: @briannekimmel 

Sign up for CEO office hours: Summer School️

Want to practice your pitch, get product feedback & growth advice? Sign up for Summer School.

Keep building & stay cool! 😎
Brianne 



You’re not curing cancer (and that’s okay).

I recently had a very heartfelt conversation with a founder who is working on a new gaming company. As we were going through the pitch he said, “I’m not curing cancer.” This is a common lie that we tell ourselves. So I told him my story:

When my dad was a kid, he was diagnosed with leukemia. He dropped out of school, my grandmother quit her job and they moved across the country so he could get treatment at St. Jude.

My dad can tell you a million stories about his experience, but most are related to the board games he played, snacks he ate and friends he made. When you’re sick, you need distractions to keep your spirits up. My dad frequently says he wished he had video games.

Fast forward to early 90s. Due to years of cancer treatment, my dad needs a heart transplant. We waited a long time for a heart and ultimately my dad gets on the list for an artificial heart at UPMC. As a kid, I spent an entire summer in Pittsburgh.

The entire experience was scary. I sat for hours in waiting rooms and my only distraction was video games. I made friends with kids who were in a similar position to my dad. We played Mario for hours and as a result, I believe in video games, silly apps, etc.

As a founder, you may never know the impact you have on the lives of individual users. There is so much more to life than curing cancer. Anything that makes someone smile & feel better about their current situation is worth building.

This originally appeared on Twitter. Please follow @briannekimmel for more updates.



Why I invested in Voxeet, the best API for live video.

Why I invested in Voxeet, the best API for live video.

In 2018, I believe many of our best moments will happen online.

With real-time video calling, we’re connecting with friends and family in a more meaningful way. We’re celebrating holidays, reconnecting with old friends and creating new memories from our phone.

And even though the experience is getting better, it still doesn’t compare to IRL. There’s distracting background noise, garbled noise and crosstalk (🤐).

What if we could add “same room” technology to make every video call feel real?

With Voxeet, developers can bring IRL quality video to any website, app or hardware integration.

Voxeet’s TrueVoice™ 3D audio and video technology provides a true surround sound experience and removes distractions like background noise.

With Voxeet’s API library, widgets and UX toolkit developers can easily add real-time communication such as live broadcasting, video calling and messaging to websites, applications and hardware integrations on iOS, Android and all web browsers.

I’m excited to join a great group of investors: Jason Lemkin & SaaStr Fund, John Kim (CEO of Sendbird), Nicolas Dessaigne (CEO of Algolia), Bill McGlashan the founder of TPG Growth, the Webex co-founder, an early investor of Skype and the CEO and CTO of Nexmo.

In the coming months, we’ll be focused on building the developer platform and community. I’d love to connect with founders working on APIs, PaaS, Dev Tools and CTOs working on consumer mobile and video applications.

Connect with me on Twitter: @briannekimmel

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Here’s why perfectionism is killing our progress

Perfectionism is killing our progress. I’ve talked to 4 women this week who are “thinking about starting something,” but afraid to get an MVP live.

Here are some thoughts:   

If you have an early idea, but need help with an MVP: Y Combinator Leap, Dreamers//Doers and Women in Product are safe spaces to share ideas and get feedback from top product leaders and engineers.

Don’t overthink the MVP: Keep costs low. AWS, Hubspot, Zendesk all offer free tools and support for startups. For non-technical founders: Alyssa Ravasio built Hipcamp after learning how to code at a short dev bootcamp. Hackathons like Spectra and AthenaHacks are another way to get a low-cost MVP live.

Keep in mind: Other people are here to help. I’ve found this to be particularly true in SaaS.

In today’s environment, every SaaS company needs a partner integration strategy. Get your MVP live and get feedback from partnerships folks at other SaaS companies.

If you’re thinking about starting something (especially in SaaS), I want to hear from you.

Write me on Twitter: @briannekimmel