Lessons in Enterprise GTM: Product, Sales, Pricing & Customer Success
On January 16, Work-Bench hosted the first NY Enterprise Tech Meetup of 2019 to a sold-out crowd. The meetup featured David Ulevitch, who while a student in college founded EveryDNS, scaled it to over 100,000 users, and sold it to Dyn. In 2006, David launched OpenDNS, which was acquired by Cisco in 2015 for $635M.
In this fireside chat David shared true go-to-market wisdom based on his experience as an entrepreneur and now as a General Partner at Andreessen Horowitz. This is a brief recap of David’s Fireside chat with our Work-Bench co-founder and General Partner, Jonathan Lehr, and it touches on Product, Sales, Pricing, Customer Success and more.
Definitely check out the video (embedded below) if you’re interested in the full conversation.
Product
“You have to earn the right to be complicated”
- The consumerization of the enterprise is great and shortens time to value for people. A lot of things in the enterprise do need to be complicated though. The key is that products need to earn the right to be complicated.
- An example David walked through is comparing Zoom’s simplicity vs the clunkiness of a WebEx deployment. By the time Zoom reaches a point where people want conference room or calendar integrations (which are complicated), they’ve already demonstrated value to end users through their ability to simply press a button and launch a video conference between two people.
Minimum Viable Wedge: Playing off the above, Jon came up with the notion of a “minimum viable wedge” into customers to lock in value. David shared that this is doable even for complicated infrastructure and security products too, not just the Zoom example above.
- David’s perspective is that you need to find out individual, really painful use cases and make sure that the experience can be delivered very quickly. Then people can put in the effort to appreciate the full breadth of the offering.
- Take something complicated like a security and identity offering — you can take network security and put something on the network or VPN that provides network based security, and if people want more granular reporting, they may need to tie it into an identity service or a directory service. There’s ways to earn the right to do that. It’s rare to be unable to have a “crescendo of value” on the path of working with a customer. This is the value you’re delivering to the customers — not your set of features — so that you can hone in on the key value prop you want to wedge in on early and deliver over time, earning yourself a customer for life.
Hook into earlier buyers lower down in the organization: David explained that “we’re living in a world where people want shorter time to value…to get access to their budgets”
- Even CIOs that David spends time with these days are looking for an internal champion already bought in who has done some level of deployment of a product before signing a big deal. Target individual developers and users who have budget to create a bottoms up adoption ahead of the larger enterprise deal.
Product engagement and on-boarding impacts your ability to close contracts:
- This is doable in a world where products are often delivered via SaaS or cloud offerings, and the customer is using the product in some capacity before contract.
- The best way to guarantee a renewal in a subscription business is when the customer is fully engaged and using your product. A relevant insight from David is that startups need a metric for “how long it takes to onboard a customer”
- Getting them using the product at t-minus contract versus t-plus is the best guarantee to get money
Sales & Pricing
- Don’t underprice the value of your product: All companies that start with a bottoms up approach have trouble figuring out how to charge more. A lot of these products are replacing what IT provided historically, and people are generally underpricing the value of their products relative to the value being delivered.
- There’s always bigger fish: Hold a high bar for your value prop and recognize that when you’re talking about your product, you’re not talking about the features but instead you’re talking about the value delivered to customers. While you should celebrate a customer that pays you $10k for your product, there’s a customer that will pay you $100k. It’s hard to get the conviction that your product can close such accounts, but you need to have confidence that it can. Likewise, if there’s one paying you $100k, there’s one that will pay you $1M.
- Your teams will spend the same mental calories selling, on-boarding, and supporting customers paying you $5k/year as those paying you $500k/year. It’s very normal for startups to go upmarket. Even though you may build your business on SMBs, it’s very normal for startups to go upmarket. You need to start shifting your positioning, product marketing mentality, and the campaigns you run because it’s too difficult to handle these two very different buyer personas at the same time. However, it pays off when you see signs that you can close these bigger deals.
- Don’t get on a plane for less than a $50k deal: Make a smaller end of the market self service and small/medium-sized accounts using an inside sales model. Only go down on price if you’re trying to catch lighthouse customers in new target markets. Jon brought up that you can get creative with some of these deals and ask for logo usage and case studies, which more than make up for the discount when you’re early in a new vertical. Even if you can’t publicly reference a company, David shared that the credibility you get being able to talk about them in private pays off too.
Customer Success
Customer success is a direct conduit to customer feedback and gives you an opportunity to up-sell and cross-sell.
- A good rule of thumb David likes is…In an annual contract, your customer must be fully on-boarded in the first 3 months, you have the next 3 months to salvage the customer if it’s not working, and the next 6 months to focus on up-selling and cross-selling.
- It’s a rough situation to try and fix a customer who is 9 months into a 12 month term, who hasn’t deployed, or doesn’t have usage/engagement…this is money lost that’s very hard to recover
Know exactly how your customers are using your product: Instrument your entire product so that you know how it’s being used. Frequency of logins, what’s being clicked on, how far customers are in their deployment. With these metrics you can build baselines of what healthy customers look like. As a quick plug, our portfolio company Catalyst is an amazing platform for Customer Success leaders that helps teams reduce churn, drive product adoption, and grow their businesses by building customer relationships that scale.
Ask customers to pay upfront for a year. It’ll help with cash flow managing and most should be willing to do it. It also demonstrates a commitment by your customer to make this deployment a success.
Product Marketing
Product marketing leaders are the hardest roles to hire. They have to translate the vision of the company to what customers actually perceive as value. Product marketers create content which is ammunition, while the demand generation team is running the artillery. Sales engineers who are great writers can often make great product marketers because they are close to the customer and understand the realities that the sales teams live with.
Build Analyst relations: People generally discount analyst relations but it’s an incredibly valuable way to get your product out there by helping inform buyers Spending time with analysts is important and if you’re selling an enterprise product that does not fit into a Gartner Magic Quadrant, you should do a full reality check because it’s comprehensive. They create quadrants constantly, and there should be a quadrant your product fits into. Being a Gartner Cool Vendor, for example, really helps build your business.
PR is like air-cover to build awareness of your company: There’s a mechanism of account based marketing when you’re going after large deals that is very effective.
And finally…
People have bad days and bad weeks, as a CEO you might have a bad year: You need to figure out what you’re passionate about and love what you’re doing because the job of the CEO is hard. Always stay close to market and customer feedback.
