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 were listening to bb revenue acceleration, a podcast dedicated helping software executive stay on the cutting edge of sales and marketing in their industry. Let's get into the show. Welcome to be to be a revenue acceleration. My name is all on, in with you and I'm here today with Martina, looking co operating partner, a Gusta. No aven shows. Are You doing today, Martina? I am fantastic. Thank you very much for coming today. So the topic is how to market and only stage startup, which is a Whi. Is a great topic for us to discuss. That's probably representing your own thirty percent of our business. I'm very excited to get to get your views, opinion stories on what you've been missing, your experience. But before we go into that conversation, Martina, could you please introduce yourself to audience and tell us more about your company, Cousta? No event shows. So I'm an operating partner at Coustino Adventures. We focus on early stage, the seed in series a, investing largely in bed be Sass but in categories like data and cyber security and prastructure and vertical staff applications like computer vision, cameras for aqule farming. So really interesting ways of rethinking how business gets done right. That's wide range of companies that you are helping. That's why that's very interas is a really wide rate. Hit me a keeps me on my toes. It's very intellectually challenging, but it also gives me a really broad lens for which to understand at the early stage, with so much diversity in our portfolio, what really separates those that are accelerating and and getting to market better and faster from those that I would say are more, say, traditional and and not quite accelerating it as quickly, for it's the title of your podcast. The case is it. Would you say that the must descryptival or the most destructiva company is, the better it is to get to markets? Now, I would say that single most important thing right now is to have an intersection of thoughtful ways of disrupting an industry, not necessarily the most disruptive technology, it's the most thoughtful approach that can feel differentiated, and then to really go to market in a differentiated way. That is different if you have a highly vertical market. So we have a company that basically it is around tracking like how things change in Earth Movement areas. So if you're a mind, if you are building out an enormous site and it's to move trucks and trucks of dirt, so that is considered. The construction industry is an example. Is One that is been underutilizing technology because they kind of have their ways of doing things and so they said like, okay, for this particular market, here's how to write as a technology. They actually went from something that would extremely this shopt and use drones to something that was just basically gps that you can stop on a truck, and that's way easier for that industry to adopt and they've been very successful because they've leaned into how that industry work. So it's not about being the most disruptive, it's understanding that industry, what its needs are and then finding clever ways to apply that technology. As a flip side of that is the Alca Bite, which is a company I reference earlier, where they are being very disruptive in the Norwegian see farm are alqua farming industry. Instead of you putting in a net and sampling tense fish and deciding how what your see life count is based on that they're actually they can account for all two hundred thousand fish in a pen because they're using carameras to do all of that capture, that day to capture, and so they're able to get much better data about life and it and what's happening inside of particular patents because they're using technology is there. It's extremely disruptive and very new and very novel but very appropriate for their particular industry. And then, I shuld the layer on top of that that's so crucial then is to be very, very solfule...

...about how you're going to market, and I would say this is the step that most technology companies aren't as good at and it's absolutely crucial to nail, of course, what it's kind of leading me to my to my next question. So we recently can across one of your Offsi Colle while you outlying to keep tours and met rates, that Aldy stage thought of should I don't from a marketing bull spit you. So could you share with all agains the full phases of these front framewalk where the market team focus should be on each of them? That so the four stages I identified were phase one, which is founder selling, which is basically you are trying to figure out like a this is basically the founders everything, like your sales, you're marketing, and the key thing that you're trying to understand and identifying there is what does this market need? Where the PROMS that I can solve and what are the right ways to go to this market? And it's really important that the founding team gets the signal directly, because that impacts the product that gets still, you can do more, I'd say, like lightweight customer discovery work that really make sure that you build the right solution that can be compelling and then when you have to have a sense of what you think it is. That leads to the next stage phase, which is product market fit validation, and I don't call it product market fit because you kind of have to validate whether or not you've got it. And this is a step where you have some MVP or MVP ideas out in market and you're getting some validation on whether or not it is actually going to be adopted by the market. And this is likewise the place where I would say people they look for validation on their ideas and they're not still in that sensing mode of people are saying that it's good and that they like it, but they're not saying, Oh my God, I need to have it tomorrow. And and this stage, that's what you want. You want something like how can i? Can I buy this, like right now, if people are saying like yeah, that would be useful, which is what a lot of people say because they're all trying to be nice, people said it would be really useful. That's not prodot markets. That like people feel like, Oh my God, my life would be changed if this, if I had this. You really want that level of pull, and the reason why I set the bar so high is because there are twenty other people with twenty other ideas that are coming at these same folks say like, Oh, I have something else is going to be useful for you, and so that the fundamental shift that's happened in the tech industry that a lot of people kind of haven't quite adjusted to is how massively competitive it is for anyone's mind share. And we all think like, Oh, what I'm doing is unique and like. That be true, but so are ten other things. They are unique, and it's kind of the intersection of who you're talking to, what their needs are and how you position it and frame it so that they feel like, Oh, I have to have this, so that these two that product market fit validation and pastry is the go to market fit validation. And I would say increasingly in be to be, these are little hand and gloves. They're not necessarily sequential. Those people think like Oh, I get product market fit and then I figure out go to market fit. But in be to be in particular, kind of have to figure out go to market fit as you're figuring out product market fit, because sometimes it's who you're talking to that shapes whether or not the product will be adopted. It's an example here at the team that I just just met with last week and they had three different target audiences identified and I said, okay, of those street so one was like frontline developer, the second was engineering leader and the third with someone insecurity, and I said I came of those and those three conversations, which was the person that said like Oh, I wish I had this today? And they're like well, it's the developer, the fromine developer, because that did you manager Reci reason decision and they have some budget things that they need to consider, like everybody else, had other things that they were thinking, whereas the developers are like, Oh yeah, I like this, like lot of these right now, like that's the first mark it. So that is go to market fit and in early stage, be to be startups.

Sometimes that is as important, if not more important, because once you make that decision saying that's the market that can adopt this quickly, you might build a product differently and you certainly will message it differently. So something that we identified in working together was all their messaging was oriented around that security buyer. When they realize the one that would move the market fast as was the frontline developer, that's naturally going to change what they're going to say and how they're going to say it. And then that fourth phase was the scaling phase, which is when, after you figured out all those other things that work, that's when you can add gas to the fire. Yeah, and that's I would say that people try to get to scaling too quickly. Generally speaking, they're like, oh, we got a little something that works, so let's build a pipeline and the high sales people, you really have to make sure that that is something that when you do that, it's you're you're going another race. Absolutely actually one of the one of the statements in your secret what you mentioned is eastern teas to move right, to turn on them engine and feel like they're doing marketing. So basically, as you said, putting the food on the gas. Okay, we found something that walks this this let's put off the investment in great lots of please and and particularly with the pressure from VC's the market as it is, because you've good to get. If not, you're going to get catch better competition in order that. So it's pretty to be quick, be successful and that that's quickly. But why do you think he's done the right things to do, to just, you know, tell on the dam engine? What I have observed in again this is mostly in early stage, is people look at early signal and they just do turn. They try to, quote unquote, turn on demand and just a little bit too early, so you can actually get to a million in the avenue, sometimes really quickly, and then the next million and a million after that is a really, really hard work. It's kind of like those early doctors, those friends, those friendlies are like Oh sure, and so you think you have signal that the market is going to adopt this and you haven't actually diagnosed either product market. That or go to marketed very well. And the way I like to think about it is the before you kind of just add fuel to the fire, you need to make sure that you have diagnosed demand, and that means who are we talking to? What are the things that we need to say that actually compel them and feel a sense of urgency, and what are the things that help keep our sale cycles tight and repeatable? So you can't actually get to stealing and that real demandion that everybody like, Oh yeah, we've got a pipeline and this would start on. You can't get there and less you're pretty sure that your process is repeatable. And the real test for that is, can you take an average sales rep so not someone that is like spectacular and able to do all the yeah, I know what you mean, give them an extremely well defined process and and do your thing and have it yield success and and do that in less than six months. The average time that it takes on board a BBB wrap these days is is usually less than six months, if I learned the four and half to six months range. And so you have to make sure, like the only way that that works is if process that you have in place for that rep enables them to be successful and on board in that time Framis that that they can actually contribute and absolutely reach their quote a goal, because they they're not motivated either, like, oh, this is really hard, and everybody starts. You see US evolved in it. Everyone absolutely out. Yeah, and you saw this thing of I know better. I usually looking my previous company, which is extremely on knowing. You know, we still is. He can't be good sometimes, but we we do exactly the same. So we belive that scandy BDT is the fruit of developing a strong process flow where you've got convulsion rate from one face with yours off face. Okay, you will drop some and I think he's much exactly the same when it comes to when it's come to building up and what we'd like to do. We like to get a new cells right, no matter how junior or senior they are, to come into a process where we've already built some sort of formation of...

...what that flow process should look like and we've got already so made of wood, the conversion between each face sheets. Basically, if we've got to the most stramble some yet we can explain a process and saying, well, this is the will walks and if you see, this is the reason why you are failing and this is what you should change at this stage. The other reason, but basically almost giving them like a an explanation of what is expected from them to do with the the full step by step approach, which ultimately some of them don't like because they feel that they are being watched, but is ultimately very important if you just want to make sure that you've got settee more. You don't have just one person succeeding, why, but having a team of five, six, ten that all successful. So we do exactly the same building of the stable search process. And just to add that, you'd ask a question about your like the pressure that you feel from this. See happens is as you succeed. The reason why there's so much pressure from this is, as they say, like okay, these guys have got it, figured it out, and so the expectation as you're growing, is that you've figured it out and if you sort of accidentally and luckily stumble the pound the success that you have to day, then it you can't actually just add feel to that fire. That's where you get this tension where there's intense pressure to grow and these expectations and the inside the company to are we're a mess. Why? They expection is to grow, like that's a reasonable and the backers are kind of like, well, you having a great growers and they didn't realize these there would be supernatural acts that actually got them there, and so that, yeah, but on a go to market side, for sales and marking to really be like a lock step and just yeah, we're ready and we actually know what it takes to grow and and meet those expectations. So speaking, a Book v Season Pressure. But I don't think he's just to be seasy. It's also business. Oh now, co fundos or do people who thought to be this? Everybody be patient nowadays now, but nobody wants to want to wait. We breading up a kercial off in patients, but that's extense and post purely when you are starting with. Just Stop Up, when you've got Lem et heat bunget immediate resources. Do you give advice, or would you have a new advice to all audiences to what the key KPI that they should look at should be? I'll do the evaluate that they're doing the right things. But how do you go about that. I don't think there's any single KPI and you just have to look at your overall business holistically. I did. The healthy ones that I've seen are ones that have business schools that are well articulated. They have a vision, but then they have business schools that are well articulated that the entire company can work towards so that, okay, ours or any of the key metrics that get tracked are actually shared a cross functions, because what I've observed is, if you like, marking has theircles, fils has tercles, which they need to have their own functional goals, but they all have to align and create alignment so that the whole company is working towards those the schools. So that's when I've seen business schools that the entire all the functional organizations underneath can align themselves toward and moved towards black steps. I say that is when I've seen things most successful. But in terms of basic KPIS and through that world of inpatients we are some important things. A lot of it is just consistency. Can Can you perform consistently? So it's not like hey, we have these Kpis, were meeting the Apis is sort of like are are you consistent and how you perform? One that I actually really like is is are your problem the new every quarterer? If you to keep going back to like there's one company that I've worked with where every other board meeting were like, is it a little ground? How days? Because that means that that improvements not actually happening, and what you want to have is every board meeting people are like, well, they killed that last problem. Now they've moved on to the next, because that means that it's learning, it's growing and there will always be problemsn't always be challenges and issues, and the end it's just like how do you overcome...

...them and how do you move through them so that what a good metric about, like you, is the right amount of inpatients for urgency. I don't think there's something that helps you calibrate around that other than I don't think it's new. This like notion of impatience. That especially just thinking about that this morning. When I started my career at Microsoft, this is when it was a public company in the system at early S, and every single day we felt this incredible sense of urgency and it wasn't that there was this in patience. It was just like there's in technology always there seems to be this incredible opportunity that, through fronting, that everybody wants to run towards. And that's just this industry and it has been the entire my entire career, and it has been like that. I'm always shocked when someone doesn't have the like, you know, pea in a pant sense of earth is. You're like, don't you feel the sus of urgency? That's not they're just because it seems endemic to be. It has been my entire career. So I would say that doesn't feel new. It's, I think, one of the really exciting parts of technology and why it keeps changing and why it's so exciting as an industry to be in. Yeah, no, no, I agree with you and and from my perspective I think adapt to be it's terroristic because when you walk for a startup and you there is a part security if you've got if you bring a new from them to the market and he happens to us, the fund that we sit down with clients and they tell us about the very proposition and what I'm okay, well, this is great that's to me, me, me, me, me, beat. That's you're the first time doing that's you are the first to do this sort of thinking quicker than this one. Right, it's sort about you. Fantastic, probably is. No one knows you. So we try to explain to them as it's really about the people that they are target seeing what's happening in their life with that sort of a pain. That is big enough, okay. Is it the stone in their shoe? And is that student big enough so they actually want to take out the Sho and do something about it? I can they carry on walking with the should that they've got in, with the stood that they've got industrial I don't. It is really important and I think it's about trying and being honest with with yourself and if you try something that is not working, but at least you try. You're not sitting there waiting for things to open. If it's not working, knock it on the ED and and, as you said, if you find a formula that is working, just a picture of it. Stop there, everybody move, everybody freeze and let's try to repeat it. Let's look at it. What's was working? Why was it working? Can we repeat that? And a board, and that's often something that's missing from our clients will try trade, try the SMA D when actually, you know, trying different venues, having lots of macrocompaign would be would be a bit more successful. But that's kind of leading me to another question around you know, what do you think of the maindown falls that only stage startups need to avoid from a marketing perspective? I would say that you are unified. One of them, which is not being dynamic and how you just what you're doing, like you find something at work and I like, okay, we'll just kind of stick with this. I always recommend that like twenty five percent of your Ating Energy Al is it this sent on something new that you haven't tried before. So you're always trying to push an edge and distinguishmenting that you might not know that might be even better than it's you're already doing. So it's more of that discovery mindset kind of what they're similar to product, where you have to be throwing as many ideas away as you're keeping if you're truly exploring the landscape of possibility. And typically what I see happen is they're kind of like, oh well, these things worked well enough and so we're going to stick with them and double down with them. And so definitely, I say, at the can feel safe, which is understandable, but you so, I say, that's one thing, which is like failing to continue to kind of push an engine find other things that are going to work for you, and to the other is in kind of more that cross functional alignment. Like the marketing function, you're like, okay, we got to do this and we have to create our pipeline, but you're marketing functions capacity...

...to be effective is very, very dependent on sales and their ability to like process that pipeline and with count these marketing and all these other things were really especially as it relates to be to be so much of the focus of a lot of thought of where things are going to happens work better, making sure that you're totally lock step with sales and not just like Oh yeah, we're running these campaigns for sales. It's for like running them along side sales and they just feel like they can be successful about it, so that it really feels like a true partnership. And say that's a watch point that I think people think that they're doing because they're talking with sale and talking with sales and being actually aligned with sales and doing things together in market are different. Absolutely. And My last question to you is is around the skills set. And we always the particularly when we even when I meet we see you. I think there is people who are the most season would tell you, Ay, I'm the sort of gay that we'll take the company from zero to fifty million and then I need to puss onto someone else or I'm going to take a copy from fifty, twember and fifty, except for e Seha. Do you think it's seem, you know, for marketing? Do you think there is a specific breed? Tell that I'm all a better suited for walking with startups and then after our cultain stage, you should probably go to the next one. Not Do well in a large organization. Do you feel that a place to to marketing as a company group? I do think that's generally for most functions where it's truly the extraordinary individual that I can steal scale from the zero to wherever the company winds up being. That is like one in n out what the number is, but it's really just that's rare and extraordinary and because the skill set is really different. So on the sale side, watching refers to this day we crack at rabbit, someone that can make stuff up on the fly and and really just chuck and Gibe with what they're interacting with at the market because it's not well defined. Now that person is going to be terrible when you're scaling and you need it to be more predictable. Similarly, with marketing, at the early stages this is someone that needs to be very hands on, that is getting that direct signal from sales, from the customer and processing it and doing things Hereno and trying things and and just being right in the stick of it. And that person sometimes doesn't necessarily scale well because they are sir hands on and they're and because they can kind of pass fingers and a whole lot of pots. As the functions are growing and there's there starts to be a little bit more separation, discipline and process, sometimes that person, because they are so shutting and grooving, doesn't work as effectively in the more scaled organization where you need a little bit our process and there's more organization the management than there is actual like just doing it your function. So I definitely think that it's true and marketing for a CEO in sales and sometimes also with products, like I did. Generally there is not I don't see enough real true customer discovery work happening even in early stage starts, which is surprising to stay but a lot of it is like, Oh, we got to Russian get something out to market, and so there's a lot of validation versus discovery, which are two different so it is it's they're different skill sets. There are those extraordinary uniforms book for like ninety nine percent of the world out there. It's kind of like buying the right person form right now, and that is the right call, like ninety nine, play nine percent of the time right. Yeah, well, thank you. Rush for it safe must not already appreciate to defense. You to the thing to to be with me today and other conversation is definitely very interesting. In them, looks of experience comes through. The conversation was low of the few stories and what you shadow was. This was what it was. Pretty if anyone wants to connect with you and no more about your company, I'll just continue a conversation of flight. What would be the best way to get into Treez Your Martina? I did please connect with me on Linkedin and let me know that you listen to the podcast so I know, because I only like to connect with people that like have a reason for Tunis just are you just heard? If you...

...heard that the Mosten to it and you got it interesting, connect with me. You're following me on Linkedin. That's a great way to reach me. That's great. Well, it was fantastic to be on the show to day. Thank you again for your time, Matina. Thank you, guys so much. operatics has redefined the meaning of revenue generation for technology companies worldwide. While the traditional concepts of building and managing inside sales teams inhouse has existed for many years, companies are struggling with a lack of focus, agility and scale required in today's fast and complex world of enterprise technology sales. See O operatics can help your company accelerate pipeline at operatics dotnet. You've been listening to BEDB revenue acceleration. To ensure that you never miss an episode, subscribe to the show in your favorite podcast player. Thank you so much for listening. Until next time,.

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