GTM Observations in the 2023 Market
Ok, so the music has stopped. Now what?
This post outlines recurring discussion points across all the conversations we’ve had in Q4 and the first few weeks of 2023; it is not a post of prediction(s) but a post on how Founders are rethinking their GTM approach in 2023.
1. A March Up-Market:
TLDR: A move up-market to target larger enterprise customers to ‘justify’ previous valuations and receive a higher multiple.
To be a big company, you need to go where the most prominent market lives and prove they care: inside the enterprise. This shouldn’t surprise anyone. A move up-market will further help justify' the valuation you previously received (should you bring evidence of traction).
Mid-market and enterprise startups receive a different weight than those targeting higher-risk and small businesses. Why? Well, if it isn’t already obvious: larger, stickier, and more insulated.
2. PLG in Question
TLDR: The debate over when to test a direct, top-down motion to show proof of revenue instead of over-investing in sluggish bottoms-up growth.
Was PLG born out of startups selling to startups?
As it relates to Point #1, many early-stage PLG Founders are debating: when is the best time to test a direct, top-down motion to show significant proof of enterprise interest ( vs. one-offs) and revenue, knowing bottoms-up (free to paid — OR — single to multi-licenses) can take significant time and marketing capital.
Trying to crack bottoms-up and top-down simultaneously (albeit in the early days) is very challenging, knowing the different resources, ICPs, and team structures for each. In the last two years, direct sales (i.e., ‘SLG’; sales-led growth) was frowned upon as the far less sexy motion. However, outbound sales have returned in favor as engaging enterprise, being hyper-targeted, and controlling your own destiny is critical.
Ultimately, it’s always important to remember that the market will dictate and adopt the relevant GTM motion for them (not you, me, or any investor).
As someone far wiser than myself has said, “The most expensive GTM is the one that doesn’t work.” - @OnlyCFO
3. Experiments Are More Expensive:
TLDR: The increased cost of experimenting with new markets or verticals due to rising interest rates leading to a trend of "Founder-led experiments" to test a vision before delegating and hiring full-time staff.
There’s been a race to cut any and all distractions to focus on the core, fundamental business. With the rise in interest rates (the money kind, not the fun kind), experimenting with a new market or vertical has become more expensive regardless of their critical necessity.
The common theme is that Founders need to be the tip-of-spear in any/all experiments. Ultimately it’s their vision being tested. Knowing that experimenting is expensive, we’re seeing a trend of ‘Founder-led experiments’ testing a vision vs. searching for insight and using embedded consultants hint: JJELLYFISH ;) to stress-test and validate vision before hiring full-time bodies.
Do not delegate vision testing OR market interpretation to anyone outside the Founder, especially now.
4. Office of the CFO:
TLDR: A shift in target customers to finance teams, as they are now involved in all meaningful decisions and approvals and require better technology to improve efficiency and profitability.
We’ve seen many startups shift their ICP to targeting Finance teams. Why?
More obvious: The power dynamic has shifted from “spend and go faster” to cash flow, efficiency, and profitability. Finance is now involved in all meaningful decisions and approvals.
Less obvious: Finance teams are some of the most understaffed business units with legacy tooling. Not to mention they’re utterly reliant on data. SaaS can play a significant role in scaling their time.
5. Arming The Internal Sale
TLDR: Importance of adjusting messaging and value propositions to be easily communicated and internally sold in.
I don’t want to spend too much time on the obvious, but in times of change, what people find valuable changes. And how people assess and quantify value changes (revert to the importance of inspiring CFOs, as mentioned in #4).
You can’t hesitate to adjust your messaging or value proposition to reflect the new reality. It should be as easy as possible for your customer to draw (and communicate internally) the logical connection between your product and the result and confidently defend the decision to finance.
That logic falls in one of these buckets:
- Decrease costs and burn
- Increase revenue and margin
- Mission-critical business requirements (i.e., accounts receivables, cybersecurity, JJELLYFISH 😉)
Bonus Thought & Conclusion:
TLDR: bear markets are a good time to replace outdated or underperforming solutions as it allows for more time and opportunities to find cost savings.
I’ve noticed something interesting specifically in the past two months. Bear markets are an excellent time to rip and replace the outdated, underperforming, highly-integrated solution.
A slowdown in momentum allows for time, space, and opportunities to find cost savings. It’s a fact; no one wants to disrupt momentum during a bull run. Executives are seeking more and more ways to point to the value they are adding to the organization.
Budgets have NOT evaporated, but defending the WHY has become harder for you and your customer.
To increase your chances of winning, get as pointed and clear as possible; remember, product-market fit is a game of precision reached only after many experiments and iterations.
Love to hear from you and if you agree or disagree with the above: jen@jjellyfish.com
