B2B Revenue Acceleration
B2B Revenue Acceleration

Episode · 2 years ago

64: A 4-Phase Plan to Market an Early-Stage Startup

ABOUT THIS EPISODE

We live in an increasingly impatient society, and it's affecting the way startups perceive how fast they should be scaling.

On this episode, we discuss a 4-phase approach that startups can use to gauge their growth. It comes from Martina Lauchengco, an operating partner at Costanoa Ventures.

What we talked about:

  • 4 stages of early-stage startups
  • Phase 1: Founder selling -- founder is everything
  • Phase 2: Product-market fit validation
  • Phase 3: Go-to-market fit validation
  • Phase 4: Scaling (Gas to the fire)
  • Scale when you have demand + a repeatable sales process
  • The real litmus test of whether you can scale 
  • The most successful company isn't always the most disruptive

Check out these resources we mentioned during the podcast:

  • Martina’s article on early-stage startups

This is an interview with Martina Lauchengco, an operating partner at Costanoa Ventures.

To hear this interview, and many more like it, you can subscribe to The B2B Revenue Acceleration Podcast on Apple Podcasts, on Spotify, or on our website.

You're listening to be to B revenue,acceleration podcast dedicated helping software executives stay on the cuttingedge of sales and marketing in their industry. Let's get into the show, welcome to be to be a ROFA newacceleration. My name is Onin with Y and a meal today with MarchinarLookchinko Operating Bartner at Custanowovin shots are you doing today,Mattina? I am pantastic its very much for coming today, so the topic is outto market an oonly stage starter, which is a which is a great topic for us todiscuss. That's probably representing your own cirty percent of our business,so I'm very excited to get to get your vuwse opinion stories onwhich you've been bitnissing your expriene, but but before we go into theconversation match O. could you please introduce yourself to audience and tellus more about hat your company Custoo Aventals, so I'm an operating partnerat Custino Adventures? We focus on early stage, soceed in series, ainvesting, largely in btob SAT, but in categories like data and Sidar securityand forstructure, and vertical stass applications like computer vision,cameras for aqual farming, so really interesting, ways of rethinking howbusiness gets done right as a white range of companies that you hotink.That's why that's very taste I a really wideit ma. It keeps me on my toes it'svery intellectually Challengyn, but it also gives me a really broadlentorwhich to understand at the early stage, with so much diversity in our portfolal.What really separates those that are accelerating and and getting to marketbetter and faster from those that, I would say, are more say, traditionaland and not quite accelerating it ass quickly, Perte title of your podcastabsotely Soso. Would you say that the most destructive or the mostdestructive company is the better ites get the market? Now I would say thatsingle most important thing right now is to have an intersection ofthoughtful ways of disrupting an industry, not necessarily the mostdisruptive technology. It's the most sthoughtful approach that can feeldiffrentiated and then to really go to market in a differenttiated way. Thatis different if you have a highly vertical market, so we have a companythat basically is around tracking like how thingschange in Earth Movement area. So if you're a mind, if you are building out an enormous sight and youhave to move trucks and fucks of dirt, so that is considred the constructionindustry as an example is one that has been unreutilizing technology becauseit kind of have their ways of doing things until they said like okay, forthis particular market, here's how to wrigte size the technology theyactually went from something that was extremely disrupted and used. Rown tsomething that was just basicaly GPS, that you could stap on a truck andthat's way easier for that industry to adopt and they've been very successfulbecause they've leaned into how that industry of work. So it's not aboutbeing the most desruptive. It's understanding that industry, what itsneeds are and then fining clever ways opply that technology as slipside ofthat is the Alkaby, which is a company of Reference earlier, where they arebeing very disruptive in the Norwegian on Pper or alcoforming industry.Instead of you putting in a net and sampling ten fish and deciding h w whatyour sea lifes count is based on that they're. Actually, they can account forall two hundred thouands an fish in a pen because they're using taramas to doall of that capture that duto capture and so they're able to get much betterdata about life and it and what's happening inside a particular Poen,because they're using technology, so there it's extremely disruptive, anvery new and very novel, but very appropriate for their particularindustry. And then I se the layer on...

...top of that. That's so crucial, then,is to be very, very thoughtful about how you're going to market- and I wouldsa this- is the step that most technology companies are' as good atand its absolutely equation to nail. Of course, TAT's kind of beading me to Mto my next question. So we recently came across one of your article, whereyou outlang the key tools and metrix that only stage started should add upfrom a marketing pespective. So could you shar with argiens the forphases ofthis frong preme work and where the Marketin fucis should be on ichoftemith that so the four stages I identified were tase, one which isfounder selling, which is basically you are trying to figure out like this, isbasically the founders, everything like your sales, you're marketing and thekey thing that you're trying to understand and identify. There is: Whatdoes this market need? WHEARE. The problems that I can solve and whate arethe right ways to go to this market and is really important that the foundingteam gets this signal directly, because that impacts the product that getssilked. You can do more I'd Tay, like wight weight, Cestiomor discove workthat really make sure that you build the right solution that can becompelling and then, when you ha have a sense of what you think it is that leadto the next pade phase, which is product Parket, Ip validation, and Idon't call it product market fit because you kind f have to validatewhether or not you've got it. And this is a step where you have some MBP orMBP ideas out in market and you're, getting some validation on whether ornot it is actually going to be adopted by the market, and this is likewise theplace where I would say people they look for for validation on their ideasand they're, not still in that sensing mode of Sen. People are saying thatit's good and that they like it but they're, not saying Oh, my God. I needto have it tomorrow and then thes age. That's what you want! You want to Osanlike. How can I canin by this like right now, if people are saying likeyeah, that wild be useful, which is what a lot of people say becausethey're all trying to be nice people said it would be really sful WatOtotomarket, like people feel like. Oh my God, my life woild be changed. Ifthis, if I had this, you really want that level of poll and the reason why Isait the par so high is because there are twenty other people with twentyother ideas that are coming at these same foks, saying like O, havesomething else is going to be useful for you and so that the fundamentalshift? That's happened in the tech industry that a lot of people kind ofhaven't quite adjusted to is how massively competitive it is foranyone's mindshare, and we all think like. Oh, what I'm doing is unique and,like O, be true, but so are ten other things. They are unique and it's kindof the intersection of who you're talking to what their needs are and howyou position it and frame it so that they feel like O. I have to hand the sothat these two that product market sat validation, then pay trees, thi go tomarket fot, avidation and, I would say increasingly in B Tobe. These arelittle hand and gloves are not necessarily sequential lose peoplethink like. Oh, I get product market fit and then I figure out go to marketfit, but in bee to be in particular, you kind of have to figure out go tomarket fit as you're figuring, outpodoc Marcu it, because sometimes it's whoyou're talking to that shapes whether or not the product will be adopted. Soan example here is a team that I just just met with last week and they hadthree different target audiences identified, and I said Okay Al thistree, so one was like a fointline developer. The second was engineeringleader and the third, with fomine in security, N Ysecat of those and Itasthree conversations, which was the person that said like. Oh, I wish I hadthat today and they're like well. It's the developer, thes Fon, my developer,because that Yryo Managor Racaesi decision they have some fledge thingsthat they need to consider. I, like everybody else, had other things thatthey were thinking, whereas developers like Oh yeah. I like this like wane,either right now, it's like that's your first Morket, so that is go to marketfit and an early stage need to be...

...startup. Sometimes that is as important,if not more important, because ens you make that decision. Sayn, that's themarket that can adopt this quickly. You might build the product differently andyou certainly will message it differently. So s something that weidentified in working together was all their messaging was orientee groundthat security buyer when they realized the one that would move the marketFasta with the frontline developer, that's natually going to change whatthey're going to say and how Theye Gin say it, and then that for phase was ascaling phase, which is when, after you figured out all those other things thatwork thas. When you can add gas to the fire yeah and that's, I would say thatpeople try to get to scaling too quickly. Generally speaking, they'relike Oh, we got a little something network, so let's Bild a pipeline andthe parsiof people. You really have to make sure that that is something that,when you do that Yor you're going othe ray absolutelyactually one of the one of the statements Nearsi coweur you mentionedis Istentyis to move right to Turnon, dimen gen and feel like they're doingmarketing. So basically, as you said, putting the foot on the gas okay, wefound something at work this this. Let's put off investment, an createlots of place and particularly wis. The pressure fromVC is the market as it is because you'v gotto GE. U, if not, you gwant to get catch by the competition in Ordan. Soit's really thisyu need to be quick, be successful and adapt quickly. But whaydo you think I's, not the right things to do to just you know, turn on thedimension. What I haven'te N Againi isostly an early stage, is people lookat early signal and they just do turn they try to quote unquote turn ondemand on just a little bit too early, so you can actually get to a million inrevenue, sometimes forreally quickly and then the next million and themillion after that is really really hard work because kind of like thoseearly doctors, those friends, those Friendlis, are like, Oh sure, andso.You think you have signal that the market is going to adopt us and youhave 't actually diagnosed either product market that or go to marketsaid very well, and the way I like to think about it is the before you kindof just add fuel to the fire. You need to make sure that you have diagnoseddemand, and that means who are we talking to? What are the things that weneed to say that actually compel them and feel a sense of urgency and whatare the things that hope keep our tale cycles tight and repetable, so youcan't actually get to scaling and that real demandgen that everybody, like Ohyeah e've, got a pipeline and just wit, turt on she can't got there nluchyou're, pretty sure that your procic is repeatable and the real test for thatis. Can you take an average Tis rap O, not someone that is likes petacular andable to do all Hoha Yeah? I Don' know what you're can give them an extremelywell defined process and and do your thing and Havit yield to cest and anddo that in less than six months. The average time that it takes on board BDBrap these days is, is usually less than six months s oern the four and half tosix months range, and so you not to make sure like the only way that thatworks is if process that you haven't placed for that, rep enables them to besuccessful and on goard in that time frame so that they can actuallycontribute ansoe reach their quota goal because then they're not motivatedeither like h. This is really hard and, and everybody starts ye fees. Devolvent,everyone o absolutely out. Yeah and Youso have the thing Os. I know better.I usedto look in my previous company, which is extremely onknowing. You knowwe I toll is. It can be good sometimes, but we do exactly the same. So webelieve that scalability is the fruit of developing a strong process flowwhere you've got conversion rate from one fast with Yous, offface, okay, youwill drop some and I think it's much exactly the same way it comes to whenhe's come to building up and what we like to. Do we like to get a newsenseRigh, no matter ow, Genio, Senor thear, to come into a process where we'vealready bote some sort of a foudation...

...of what that flok process should looklike and we've got already somed our fotthe conversion between each face?Basically, if we've got to the most raboard some, yet we can explain,process and saying well, this is the bol works, and if you, this is thereason where you are feeling- and this is what you should change at this stage-Youar the reason, but basically almost giving them like a anexplanation ofwhat they espect from them to do with the the ful step, bys step approach,which ultimately, some of them donk like because they fel ur theyr beingwatched but is itimatey very portant. If you just want to make sure thatyou've got SEV seam or you don't have just one potom succeeding an why butEink a team of fie six ten that oure successful. So we do exactly the samebeding of the the statoorses process and just add that you'd ask a questionabout or like the pressure that you feel from BCS. What happens is, as yousucceed, the reason why there's so much pressure from bces as they say likeokay, these guys have got it figure it out, and so the expectation as yourgrowing is I that youve figured it out and if you sort of accidentally andluckily sumbled upon the success that you have to date and it you can'tactually just ave fol to that fire. That's where you get this tension wherethere's intense pressure to Gow and these expectations and the inside thecompator I wel, where a mess. Why are they expecting tis Ti gril like that'sat reasonable and the backers are kind of like well youhaving a great clos Rase, and the didn't realize these that there wasthese supernatural acts that actually got them there, and so that yeah on a Goto market side for sales andmarking to really be like a lock stup and just like yeah we're ready and weactually know what it takes to grow and and meet those expectations. So speakme book ses, an pressure, but I don't think it's just this easy. It's alsobusiness onercofondes Ol, the people who start a business. Everybody ispatient. You know nowadays nobut nobody wants to want to wait. We wouldbuilding up recursion of impatience, but to that extense and aspually, whenyou are starting with with a Te wher you've got limited but get limitesresources. Do you give advice or would you have in youivise foraugence as towhat the key KPI hat? They should look at Shoul be ow. Do they evaluate thattheyare doing the right things Wut? How do you go about that? I don't thinkthere's any single KPI and you just have to look at your overall thisissholistically. I sa the healthiest ones that I've seen are ones that havebuseness schools that are well articulated. They have a vision, butthen they have business schools that are. We will articulated that theentire company can work towards so that okrs or any of the kymatets that gettracked or actually shared across function, because what I observe is iflike marking has terical felds has thericles, which they need to havetheir own functional goals, but they all have to aline and create alignment.So that the whole company is working towards those thisess cool, so that'swhen I've seen business ghools that the entire all the function, organizationsunderneath can align themselves toward and move towards locksteps. I sae thatis whet, I think, is more successful, but in terms of basic ae the eyesinthrou that world of as impatience, Wat or some important thing, a lot ofit is just consistency. Can Can you perform consistently? So it's not likehey. We have these Kpis we're meeting with te guys it sort of like ore. Areyou consistent ind how you perform one that I actually really like is is: AreYour problem, the new every quarter, if you can keep going back to like there'sone company that I've work with where every other board of Mevien were like?Is that a little ground Hoday? Because that means hat that improvement thatactually happening and what you want to have is every bord meain peopleare likewell. They killed that last problem now they've moved onto the next, becausethat means that it's learning it's growing and there will always beproblems and always be challenges. An issues and the- and it's just like howdo you overtome them and how do you...

...move through them? So that was a goodmetric about lik is the right amount of impatience for urgency? I don't thinkthere's something that helps you caligrate around, that other than Idon't think it's new. This, like notion have been patient that especcially.Just thinking about that this morning, when I started my Caeer at Microsoft,this is when it was a public company in the SISTUM. At early s and every singleday we felt the same credible sense of urgency, and it wasn't that there wasthis impatience. It was just like tethere's in technology. Always thereseems to be this incredible opportunity, that's tofunny that everybody wants torun towards, and that's just this industry and it has been the entire myentire career, and it has been like that. So I'm always shock when someonedoesn't have the like. You know pan or pant sense of eartis Youre like don'tyou feel this er, that's not there just because it seemsandemic to be. It has been my entire career, so I would say that doesn'tfeel new. It's, I think one of the really exciting poce of technology inwhy it keeps changing in why it's so exciting as an industry to be in no, no,I agree with you and, and somebody as Pectiv, I think, adapt to Ledisterristic, because when you walk fora start up and you there is particularlyif you've got if you bring a new from the to the market and it happens to adofend that we sit down with clients and theytell us about the valyproposition Weike, okay. Well, this is great. That's me me Ne me me B. that'syour the first in doing that your desfas to do tha, sort o thing Iquicker than this one right. It's all about you, fantastic primis! No oneknows you, so we try to explain to them as it's really about the people thatthere targetsing what's happening in their life with that sort of a painthat is big enough. Okay, is it US Ston in the shoe, and is thatstuden big enough, so they actually want to take ou Tas Wan do somethingabout it: Orcan they carry on walking with Tho Shu that they've got, in witthe wine Di Getinde and a the is really important, and I think it's abouttraying and being honest with with yourself and you, you Tra somethingthat is not working, but at least you try you're not sitting there waitingfor things to work and if she's not wolking, knock it on the AIG and, asyou said, if you find a formula that is working wl, just a big picture of it,stop there, everybody move, everyly, freeze, an less Tra to repeat it. Let'slook at it, whats was working. Why was it working? Can we repeat that andAbord and thats offendsime Thir missing from our clients, will try traiht forthe mad. When actually, you know trying different venues, I think lots of macrocampagn would be Wuld, be Ab ses, wor, but that's kind of fleading me to twinsof question around Ye. What do you think of the main DONB force that Erly,stig startups need to avoid from a marketing perspective Isay at youidentified one of them which is not being dynamic and how you djust? Whatyou're doing like you find something that works and kind of like okay? Well,we'll just kind of stick with this. I anways recommend that, like twenty fivepercent of your teams, energy always be spent on something new that you haven'ttried before so you're always trying to push an edge and discevesh somethingthat you might not know. That might be even better tha that you're alreadydoing so. It's more of that discovery, mindset kind of what tey're similartoproduct, where you have to be, throwing as many ideas away as you're, keepingif you're truly exploring the landscape of possibility, and typically what Ihappen is they're kind of like oh ll. These things worked well enough, and sowe're going to stick with them and double down with them, and sodefinitely ha o say at ther can feel safe, which is understandable, but youso I think that's one thing which is like failing to continue to kind ofpush an ent and find other things that are going to work for you and out tothe other, is is kind of more F that crosspunctional alignment like themarketing function like you're like okay, we got to do this and we have tocreate our pipeline, but your marketing,...

...punctions capacity to be effective, isvery, very dependent on sales and their ability to like process that pipelineand with Count Base Marketing and all these other things tha really,especially as it released to be to be so much woth. The focus of lot of thought of where things aregoing o happen to look better, making sure that you're totally locked up withsales and not just like Oh yeah, we're running these campaigns for sals itsfor like running them along Hidesales, and they don't feel like they can besuccessful, wit Thaut- is that it really feels like a true partnership Idsa. That's a watch point that I think people think that they're doing,because they're talking with sales and talking to sales and being actuallyaligned with saled and doing things together in market ar different absuly. My lest question to you is around theskill set and we always hear particuarly when we we even Thouh whenI meet we ce you, I think there is people who are the most season wouldtell you a I'm, the sort of gay that will take a company from zero to fiftymillion, and then I need to passenger someone else or I'm going to take a Coafrom fifty to hunder and Ifte Frecra. Do you think it's similar for marketingyouthink? There is a specific breed afete that am more better suted for forwalking with startups and then after Aur. Certain stages should probably goto the next one you not doing in a large organization. Do you think itthat a place to Marketin, as as a company Roul? I do think that generallyclue for most functions, where it's truly the extraordinary individual thatI can still fil from zero to wherever the company winds up being. That islike one in Idon now what the number is, but it's really rare and extraordinary, and because theskill set is really different so on the saleside Backin Glicer Shor, this a Dawe Crockatrapit, someone that can make stuff UF on the fly and a really just shuck andjive with what they're, interacting with it the market, because it's notwell to fined now that person oing to be terrible when you're scaling and youneeded to be more predictable. Similarly with marketing at the earlystages. This is someone that needs to be very hand on. That is detting thatdirect signal from sales from the customer and processing it and doingthings, hand on and trying things and and just being right in the thick of it,and that person sometimes doesn't necessarily scale well, because theyare tho hands on and Theyr and because they cet kind of pav fingers in a wholelot of pots. As the functions are growling and there's there start to bea little bit more separation n disciplined process, sometimes thatperson, because they are so shutin and griving, doesn't work as effecsively ina more skaled organization, where you need a little bit more process andthere's more organizationa management than there is actualy like just doingot your function. So I definitely think that it's true ind marketing for Teo insales and sometimes also with product. Like I sald generally, there is not. Idon't see enough real true customer discovery, work happening even in earlystate stars, which is surprising to say, but a lot of it is like. Oh, we got torush and get something out to market until there's a lot of validationversus discovery which are two different. So it is, it's ere differentskill. It there are those extraordinary Unicorns boot for, like ninety ninepercent of the world out. There is kind of like find the right person for rightnow and then is the right call like ninety nine point, nine percent of thetime yeah well, thank you. Ror Much Forin, TAK! MUC Nak. I reallyappreciate the the defence wo too the time to be with me today, and thatconversation is definitely very interesting. An lots of expin camesthrough the conversation, wis loves of hi stories and what he shos with us waswas pretty an if anyone wants to connect with you and lot more aboutyour company O or just continue conversation of like what would thebest way to get into Trisiou Martinau. I Tak please connect with me onLinkedin and let me know that you listen to the podcast, so I knowbecause I only like to connect with...

...people that like have a reason forKindofito, just Anacalit nteresting connect with me you're following me onlint, on at the great way to reaching Mi that's great well, it was fun to sixwere Yo on the show today. Thank you, a game for your time at. Thank you guy.So much operadics has redefined the meaning ofrevenue generation for technology companies worldwide, while thetraditional concepts of building and managing inside sales teams in househas existed for many years, companies are struggling with the lack of focus,agility and scale required in today's fast and complex world of enterprisetechnology sales. Seeo operatics can help your company accelerate pipelineat Operatics, dot net you've been listening to B, to b revenueacceleration to ensure that you never miss an episode subscribe to the showin your favorite podcast player. Thank you so much for listening until nexttime.

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