Unlearning GTM "best practices"
The GTM Newsletter
Buenos días
Writing this from a beautiful rooftop coffee shop in Mexico City.
A belly full of some of the best al pastor street tacos I’ve ever eaten and enough caffeine buzzing around my brain to fend off the typical post taco sluggish-ness.
🌮
One thing I love about travel is that time somehow seems to expand.
My theory (not based in any science whatsoever) is that when we travel, we’re constantly experiencing new things so our brain stays active/engaged the entire time and keeps us from going into our “natural default setting” or autopilot - making time slow down.
Anyway, back to business, we’re here to talk about everything go-to-market and how to scale your tech company or grow your personal impact across an organization.
Let’s get into it.
Unlearning past “best practices”
“The illiterate of the 21st century will not be those who cannot read and write, but those who cannot learn, unlearn, and relearn.” - Alvin Toffler
Sometimes the best way to improve is not by learning new things but by “unlearning” bad habits or old systems.
That’s what I wanted to focus this week’s newsletter on.
I asked 250+ GTM leaders what are the things that they have had to unlearn in order to become more effective operators and their responses did not disappoint.
“Something that I wish I knew way earlier in my career is that there's no such thing as a "Best Practice" really. I joke that they should be called "High Probability Practices" because that would be the right framing.
When I was a newer sales manager I blindly applied these Practices and didn't think enough about how they would resonate in my specific environment.
"High probability practices" are things that have worked well in many environments but are not perfect in every situation. Everything is contextual and influenced by your market/buyer/product/messaging/company/etc.”
Kyle Norton, SVP Sales at Owner
“We need to go up-market”
Across the tech sector, there is an unhealthy obsession with big logos.
And I mean it makes sense, right?
Bigger companies mean bigger contracts, more credibility, easier to fundraise, etc, etc, etc.
But David Self, Former Co-Founder and Executive Director, Revenue Innovation at Keet Health (acq. by WebPT) had to unlearn this the hard way.
He fell into this trap as a young founder and has since learned that it is an all too common experience.
It feels counterintuitive but David outlined the big risks he came across:
“ 1. Having one (or multiple) customer account for more than 20% of your revenue when you're young often results in becoming a dev shop for one-offs, which can cripple your journey to achieving PMF. But, they account for so much of your revenue, it's hard to say no so early.
Obviously, if those whales leave, your unit economics don't look so hot.
It can be a perceived risk to investors (as it should be).
You deceive yourselves into thinking you either have A.) PMF and/or B.) repeatable sales since you closed some big logos. Specifically for the latter, I made the mistake of thinking that since I could close whales by doing a ton of things that don't scale -- for instance, buying a 1990 Astro van, shagging it out, and handing out mezcal to the prospect at a conference -- that I was ready to hire a sales team. Turns out when we did, we had to figure out how to sell at scale, which meant selling without doing 80% of what we were doing. And as it turned out, we needed to pivot the product a bit.
For me, it was the obsession in getting them that was a big mistake, and overvaluing them vs. smaller, repeatable customers.”
That all being said, none of this is binary of course. There are tons of benefits of big logos, this doesn’t mean you need to push them away and one-off big efforts will always happen BUT you can’t get stuck in that world.
I think this quote sums it up nicely:
“Do things that don’t scale until they break” - Paul Graham.
Follow David Self for more here.
📈 How to take action:
Audit your current customers and to make sure 1 or 2 customers don’t account for more than 20% of your revenue.
Clearly define what Product Market Fit looks like for your business.
Don’t get fooled into thinking you have PMF if you’re having to do herculean, unscalable efforts to get large accounts across the line.
Give your small, early customers the love that they deserve.
If you do close a whale, ask yourself the question: could we have still sold that if we did 80% less activities/bespoke work/exec interference, etc?
“Do whatever it takes to get the deal across the line.”
We’ve all felt that quarterly crunch-time feeling.
You don’t want to let the team down, you see your wallet potentially taking a hit, you’re so close to your team’s goal.
If I can just find a way to get this done, I’ll be the hero!
You work late nights, you push your team, you get ultra “creative”.
James Kaikas, former Director of Solution Engineering at Salesforce, now founder at Pre-Sales Collective saw this epidemic of overselling throughout his career but after seeing how many downstream issues it caused, he set out to find a better way.
James shared with me a great article from Tomasz Tunguz, Venture Capitalist at Redpoint that encapsulates the transitions he and his teams made.
Here is the typical journey when you oversell by accident:
And here is the common journey when deliberately underselling:
Follow James Kaikis for more here and Tomasz Tunguz’ full article on deliberately underselling here.
📈 How to take action:
Don’t oversell: as tempting as it is, don’t teach your team to go for the entirety of the budget. It can lead to: a reduction of seats, customers losing confidence in AE, misalignment which leads to them pursuing a competitor or your champion being replaced.
Deliberately undersell: have your AEs undersize the contract by a third, smaller commission but faster close times. Then have your AE track usage, give helpful advice along the way, put the champion on a pedestal and look for upsell/referral opportunities.
“Undersizing contracts trades short-term bookings numbers for better unit economics, healthier customer relationships, and more expansion. AEs are more effective too.”
You need to craft the right AE comp plan to reward this structure.
“Focus on net new customers”
So what’s the first step in identifying a solution to a problem?
Admitting that you have one.
And in this case, our entire industry needs to acknowledge this one.
Anthony Bratti, Managing Partner at Bratti & Co, believes that to get there it starts with Inspecting what you expect and keeping a close eye on new trends/industry stats.
Here’s a few stats that caught his eye recently:
2 out of 3 companies don’t have a strategy to prevent losing their current customers (Gartner)
80% of future revenue comes from 20% of existing customers (Gartner)
the probability of landing a new customer is typically between 5-10% while the probability of selling more to existing customers is 60-70% (Marketing Metrics)
In a world consumed by acquiring net new logos these stats should give pause.
On a GTM org-wide level, how much time do you think the team spends on net new vs. customers?
Having been a part of some high performing teams myself, I would venture to guess that over 70% of time/resources are spent thinking about ways to bring in new customers and yet the majority of our revenue will come from existing customers.
Follow Anthony for more here and go check out his weekly newsletter, Prescriptive Profits where he goes much deeper on the above.
📈 How to take action:
Do you have a strategy to prevent customer churn?
Why are customers churning?
Proactive engagement with customers.
Quantify risk.
What does great service look like?
If you are going to go down, go down swinging
👀 More for your eyeballs:
An interesting article on why the business model of open source software works :
Just because I wrote the words “natural default setting” earlier and that made me think of David Foster Wallace’s famous commencement speech (which is always good for a healthy dose of perspective):
👂More for your eardrums:
Kyle Norton, SVP Sales at Owner and I went deep on his learning from his time leading sales at League, Shopify and now Owner (and what he’s “unlearned” and doing differently this time around) on the latest episode of The GTM Podcast.
🚀 Start-ups to watch:
Gitpod just announced their 25M Series A. They are transforming the world from static and brittle development environments to consistently reproducible, instant, ephemeral Cloud Development Environments (CDEs).
🔥Hottest GTM job of the week:
SMB Account Executive at Owner, more details here.
See more top GTM jobs here.
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You made it all the way to the end.
In a distracted world, that’s no easy feat.
BTW If you’ve been getting value from this newsletter, please share your thoughts on social or send it around to your colleagues.
We’ll be back next week to break down more go-to-market tips/tricks/hacks/playbooks from some of the best of the best.
Adios
Barker.
✌️