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a16z Podcast | Finding Go-to-Market Fit in the Enterprise

with Peter Levine, Bob Tinker, and Hanne Tidnam (@omnivorousread) For consumer companies, often when the holy grail of product-market fit is achieved, the company takes off: magic happens, growth unlocks. Enterprise B2B companies face a different challenge. Sometimes, despite achieving product-market fit (and knowing when you've achieved it) and winning your first cohorts of renewing customers -- growth remains a challenge. Industry analyst maps are riddled with the logos of enterprise B2B companies who built outstanding products, won outstanding initial sets of customers... and then ultimately failed to scale. In this episode of the a16z Podcast, Bob Tinker, author of the book Survival to Thrival and founding CEO of MobileIron, and a16z general partner Peter Levine, talk with Hanne Tidnam all about how to find the right go-to-market fit for the enterprise startup. How do founders avoid that moment of reckoning after product-market fit, but before growth? When should an enterprise startup accelerate sales investments? -- the "Goldilocks problem" (not too early, not too late!) -- and pick the right sales team and go-to-market model for their product and their customers? And if you're stuck in that moment where growth stalls, what are the right tools to get out of it? What are the important metrics to know both where you are, and when you're out of the woods?

Hanne TidnamhostBob TinkerguestPeter Levineguest

Feb 26, 201937mWatch on YouTube ↗

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WHAT IT’S REALLY ABOUT

Why Enterprise Startups Stall After Product-Market Fit and How to Fix It

Bob Tinker argues that enterprise startups often win their first 15-20 customers yet never unlock growth, because Silicon Valley is strong at building products but weak at passing on knowledge about building go-to-market models.
Common stall points include over-reliance on founder selling, pursuing several go-to-market models at once, and failing to find the customer urgency that triggers a purchase, and Peter Levine adds that founders micromanaging a new sales leader makes the handoff worse.
Both speakers advise delaying a big sales build-out until demand is evident, starting with a few versatile 'Davy Crockett' reps rather than a VP of sales, and iterating on go-to-market the way one iterates on product.
Levine and Tinker offer simple tests for go-to-market fit, including reps generating roughly 3-4x their loaded cost, 3-5x pipeline coverage, short rep ramp times, and whether a new sales hire knows what to do.
Tinker says the right sales model depends on how customers decide to buy, while Levine notes that simpler, better-designed enterprise products make bottoms-up models more viable, and both discuss the leadership and culture shifts needed once growth unlocks.

IDEAS WORTH REMEMBERING

5 ideas

Product-market fit does not automatically unlock growth in enterprise

Tinker says consumer companies often take off at product-market fit, but enterprise startups can win 15-20 customers and then bump along without a repeatable way to find and win more.

Founder selling is a learning tool, not a scalable model

Both speakers encourage founders to sell early in order to learn, but growth stalls if a company never proves it can win customers without the founder, or if the founder micromanages a sales leader by saying 'just do what I do.'

Hold off on scaling sales until you see the 'whites of their eyes'

Levine waited to expand sales until customers were demanding the product, and Tinker advises hiring a couple of versatile reps first instead of a VP of sales, since the goal is still to find the path to repeatability.

Go-to-market fit means a new sales hire knows what to do

Tinker says the test is whether you have urgency, a sales model and a playbook that let new reps be productive, and Levine adds that you should be able to model hires on a spreadsheet and have results match.

Simple metrics tell you when to hire faster or slower

Levine looks for about 70% of reps generating over 3x their loaded cost, aiming around 4x, since 5-6x means hiring too slowly and 1x suggests overhiring, plus 3-5x pipeline coverage at the start of a quarter. Tinker adds rep ramp time and whether pipeline investment still yields linear returns.

WORDS WORTH SAVING

5 quotes

We are really, really, really good at helping entrepreneurs build products, but we are not that good at helping entrepreneurs build go-to-markets on the back of their products.

— Bob Tinker

In the beginning of building a startup, your mission is just don't die.

— Bob Tinker

Once a company makes this shift from how do we not die and how do we win, all hell breaks loose.

— Bob Tinker

If you hire a grade A VP of sales, they're gonna absolutely push you and the rest of the organization as they try and drive to scale, and it's gonna be uncomfortable. And if it's not, you may have not hired the right person.

— Bob Tinker

Keeping the metrics very simple is way more important than having too many metrics, and then you're trying to measure too many things.

— Peter Levine

Product-market fit versus go-to-market fitFounder-led selling and its limitsFinding customer urgencyEarly 'Davy Crockett' sales hiresSales and pipeline metricsChoosing a sales model on the spectrum from sales-led to product-ledLeadership, hiring and culture shifts at scale

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