Choosing Your Sales Strategy: Lighthouse vs. Landgrab

1. 0:00 – 0:58

   Intro

   1. JSJoe Schmidt0:00

      There's a moment right now to go sell big software again. We're now looking at a different way of doing business entirely.

   2. EBElena Burger0:04

      What are the lighthouse and landgrab sales playbook?

   3. JSJoe Schmidt0:07

      Here's the framework for evaluating which playbook should you be following. There's this very obvious one, go after the very obvious companies here in San Francisco that probably have some sort of proof or social value associated with them, or, like, go out and sell in Ohio. Find people who need your solution.

   4. AMAndy McCall0:21

      If you think about sort of the enterprise networking world in 2009, people thought we were crazy. Like, we had no chance of getting into the largest corporations in the world, the lighthouse, because Cisco and HP had them all tied up. But what we could do is we could say, "Listen, we can configure, we can deploy faster, we're simpler to use." And that was very much a landgrab strategy.

   5. JSJoe Schmidt0:40

      Too few people are willing to pick up the phone and willing to get on the plane and willing to get, you know, in front of those customers right now because they feel like it sounds way more sexy to sell to JPMorgan Chase than to Schmeshmesh Morphin Chase. [laughing]

   6. AMAndy McCall0:52

      I think the biggest mistake that I see founders make at an early stage, honestly, is just-

2. 0:58 – 6:57

   The Lighthouse vs Land Grab Framework

   1. EBElena Burger0:58

      Welcome back to the a16z podcast. Today, we're getting into the single most expensive question an AI founder makes: how you sell. Joe Schmidt just wrote a piece called Lighthouse or Landgrab, which gets into the two dominant playbooks he's observed among enterprise AI startups. Joe, tell us about the piece in your own words. What are the lighthouse and li- landgrab sales playbooks?

   2. JSJoe Schmidt1:21

      Yeah, and I... And this, this piece actually all stemmed back from an observation, uh, that I had actually driving up the 101 freeway. Uh, maybe this is, like, three, four, five months ago, I can't remember. And you just realize that you have the same kind of, like, two competing companies. Like, one's on one side of the freeway, and the other's on the other side of the freeway, and they're selling the exact same piece of software.

   3. EBElena Burger1:39

      [chuckles]

   4. JSJoe Schmidt1:39

      And for some reason, they all have decided that the only relevant companies for this piece of software are in San Francisco and driving on the 101 freeway. And then this has gotten even more ridiculous, since obviously every bus has been w-wrapped and every-

   5. EBElena Burger1:50

      Mm-hmm

   6. JSJoe Schmidt1:51

      ... you know, it's like planes are flying up above-

   7. EBElena Burger1:52

      Yeah, yeah, yeah

   8. JSJoe Schmidt1:53

      ... and they're now towing, you know, towing startups. And so I think it's, it's all very clever, but it's all targeting the same kind of sales motion. The reality is you don't always have to do that.

   9. EBElena Burger2:01

      Yeah.

   10. JSJoe Schmidt2:01

       Like, you don't always have to sell to the same companies in San Francisco. And so what I wanted to try to do is just tell, tell founders, like, "Hey, here's the framework for evaluating which playbook should you be following." There's this very obvious one, which is, like, go after the very obvious companies here in San Francisco, in New York City, in a major metro, that probably have some sort of proof or social value associated with them. Or, like, go out and sell in Ohio, go out and sell in Chicago, go out and sell in St. Louis. Find people who, who need your solution. Um, and so that was the whole point of the piece, is like, you don't always have to go sell to these notable logos, and, um, we'll see how that plays out, but that's why.

   11. EBElena Burger2:36

       And, and just to get a little bit deeper, like, when does it make sense for a, a founder to, you know, go and buy a giant billboard that you see when you're driving from SFO into the city? When does it make sense for you to kind of do a more targeted sales activity or, like, motion elsewhere?

   12. JSJoe Schmidt2:55

       Yeah, and I think the way that we tried to make this make sense, of course, we did very, uh, consulting style with a two-by-two matrix.

   13. EBElena Burger3:02

       Mm-hmm.

   14. JSJoe Schmidt3:02

       Um, I did never work at a consulting firm, but, um, I'll do my best. Uh, and so we really were thinking about, okay, what are the, the axes that we should be kind of mapping opportunities against? And so we decided upon, like, the Y-axis is really what we called, like, a b- the buyer's exposure. Um, and it's, it's intentionally called exposure because there's the exposure of, you know, making a mistake with the solution that you buy. There's also the solu- the exposure of the solution inside of your company. Like, does this, does this product that I'm selling to my customer end up, you know, being sh- is it shown to their end customers, right? Which is actually an important distinction. Um, and really just kind of the overall risk associated with buying this piece of software. So that was, like, kind of the Y-axis, and it goes from, like, high to low. Um, and then the, the X-axis is whether or not proof travels in any given market. And so, you know, if you think about, like, the top right would be proof travels in this market, um, and it's, it's high buyer exposure and high, you know, high buyer risk. Um, and the bottom left would... And, and that's a lighthouse market, right? Just to be clear. Um, and the bottom left would be, you know, low, low, uh, you know, low proof traveling, but also low buyer exposure, uh, and that would be a landgrab market. Um, and so I think those are actually quite different. And if you think about the, the, you know, the standard markets that fit into the lighthouse model, it's, you know, regulated industries. Oftentimes, there's a, a more constricted number of logos. Um, if you're wrong in the industry, like if the buyer buys the wrong piece of software and it ends up doing the wrong thing, uh, it can lead to of- you know, very bad things happening for your firm, uh, including, you know, potentially getting in trouble with the regulator, you know, even going, uh, and, and doing something illegal. That's very bad, uh, of course. Um, and then, uh, you know, on the, on the flip side, when you, uh, when you're looking at the more of a landgrab market, there's an established budget. People have been very, you know, used to and accustomed to paying for a type of service. And you can kinda come in there and show, like, the end buyer the math of, like, "Hey, my solution is better than whatever solution you're, you're using today," whether that's, you know, a, a software-driven solution or a human-driven solution. So, you know, the, the, the kind of distinction that we drew was between, like, proof on the bot- the top right of the bar- of the, of the quadrant, and math on the bottom left of the quad- of the quadrant. Um, and that's how we kind of thought about the framework.

   15. EBElena Burger5:06

       Yeah. And Andy, we'll get into your background, uh, in a little bit, but I think first maybe it's, it's good to kind of categorize some of these modern-day AI startups within these two frameworks. And I know you both work with a lot of these companies.

   16. JSJoe Schmidt5:20

       Yeah.

   17. EBElena Burger5:20

       So, so Joe, I'm not sure if you wanna call out specific examples or, Andy, if you wanna call out specific examples and really just kind of, like, talk through the, the sales strategies that you're seeing.

   18. JSJoe Schmidt5:29

       Yeah. I mean, well, you're like, you know, the, the, the landgrab, uh, you know-

   19. EBElena Burger5:33

       [chuckles]

   20. JSJoe Schmidt5:33

       ... mastermind. So maybe you wanna talk about some of the stuff that you've seen?

   21. AMAndy McCall5:36

       Yeah. Well, I mean, I, I think you, you framed it up really well in, in your, in your article. But, um, yeah, I think that concept of, like, the, the lighthouse being more in industries that require, you know, regulation, a lot of social proof, and so forth, and those tend to be companies that are going after, like, a category creation, right? It, it doesn't exist today, so therefore you gotta go out and you gotta kinda prove yourself with the big, the big names. And obviously, we have a bunch of portfolio companies out there.

   22. JSJoe Schmidt5:59

       Yeah.

   23. AMAndy McCall5:59

       There's a, there's a bunch of, of companies, I think you mentioned a couple in your article, that are doing that. And then on the other side, the, the, the sort of landgrab-

   24. EBElena Burger6:05

       Mm-hmm

   25. AMAndy McCall6:06

       ... uh, you know, less social proof. But those tend to be, especially in the AI world today, those are companies that are maybe replacing or improving workflows that already exist. And there's existing budget, and again, we have a whole bunch of portfolio companies-

   26. JSJoe Schmidt6:18

       Yeah

   27. AMAndy McCall6:19

       ... you, you named a couple in the article, um, that are doing that today. They're inserting themselves in, saying, "Hey, we built a better way to go after this through AI." Uh, and, and I think those are the great, uh, you know, companies going after the landgrab strategy.

   28. JSJoe Schmidt6:29

       Yeah. And, and it's interesting. I mean, um, for, for those that aren't, aren't familiar with, with Andy's background, you know, he's, uh, he's built some of the, the, the ... best sales organizations that I've ever heard of at Samsara and Meraki. Um, and I've always found, like, these, these stories, like, really fascinating and illuminating. Like the, the Samsara, you know, story around kind of the ELE- ELD mandate-

   29. AMAndy McCall6:49

       Yeah

   30. JSJoe Schmidt6:49

       ... is the way I understand it, um, kind of basically forcing the category to happen everywhere all at one point, and it's just who can go out there and do it fastest.

3. 6:57 – 13:26

   Samsara's ELD Mandate: The Perfect Land Grab Moment

   1. AMAndy McCall6:57

      Yeah.

   2. JSJoe Schmidt6:57

      Like, maybe just if you, if you could for, for the aud- audience's edification, like share a little bit about what that, like, big why now moment was.

   3. AMAndy McCall7:04

      Sure.

   4. JSJoe Schmidt7:04

      Because we're kind of having one right now.

   5. AMAndy McCall7:05

      Yeah. [laughs]

   6. JSJoe Schmidt7:06

      Um, and, and how you guys just kind of went and captured it.

   7. AMAndy McCall7:08

      Yeah. Yeah, I think if you, uh, if you're in the industry, uh, for long enough, and I've got the gray hair to, to prove that I have been-

   8. JSJoe Schmidt7:14

      Blonde. Blonde. [laughs]

   9. AMAndy McCall7:16

      Blonde. Blonde. Yeah, bordering on gray.

   10. JSJoe Schmidt7:18

       [laughs]

   11. AMAndy McCall7:18

       Sure. Um, you know, you, you tend to see these big, you know, transitions and, and I'm old enough to have seen, you know, the, the internet come about and, uh, you know, certainly mobile and cloud and obviously now AI. And each, each of those causes this, this transition, and it, and it causes new ways to think about-

   12. JSJoe Schmidt7:33

       Yeah

   13. AMAndy McCall7:33

       ... how you go to market. Um, not wholesale changes, but always tools to help improve upon them. Um, and, and I think, uh, you know, the other thing I would say, um, I, I, I can't name too many companies that have become hugely successful without some element of timing and luck.

   14. JSJoe Schmidt7:50

       Mm.

   15. SPSpeaker7:50

       Mm-hmm.

   16. AMAndy McCall7:50

       Right? And so you talk about Samsara and, um, you know, the, the company was, uh, founded back in 2015. I joined in 2017. Um, and you know, the idea back then was, you know, at the very beginning it was like internet connected sensors, like all the value chains are gonna become sensored up. How do we, you know, get sensors out there, ingest this data, give it back to business owners in, in digestible and usable ways? Um, and one of the first products that started gaining traction were these telematics units.

   17. JSJoe Schmidt8:16

       Mm.

   18. AMAndy McCall8:17

       And, uh, you know, taking a step back, if you think about, you know, the, the world of transportation, long haul trucking, right? Um, you know, prior to like 2016, uh, they had these manual logbooks. If you were driving a truck and you stopped to take a break, you would write down in your logbook, "I just drove for four hours, now I'm taking a 20-minute break." And then, then you drove for two more hours, and you stop for lunch. And if you got pulled over by highway patrol, they would ask to see your logbook, and they'd audit and make sure you weren't driving too long. It was a, it was a safety regulation. And in the US, round about 2016, they implemented this ELD mandate, right? It stands, it stood for electronic logging devices, and the idea there was, hey, we can use technology to actually track when the vehicle's moving and when it isn't, and are they taking enough breaks and so forth, right? Take the human, uh, and, and, and data element out of it. Um, the human element rather. And, and so, you know, over a two-year period, that was basically implemented between 2016 and 2019 with various phases of, of sort of compliance. But what it did is it, it provided this huge tailwind-

   19. JSJoe Schmidt9:17

       Mm

   20. AMAndy McCall9:17

       ... for anybody making these electronic logging devices, and we just happened to be one of the newer companies doing it.

   21. SPSpeaker9:23

       Mm.

   22. AMAndy McCall9:24

       And there were some very, very established players, right? AT&T had a solution. Verizon had a solution. There were a number of companies that were in sort of a, you know-

   23. JSJoe Schmidt9:29

       Yeah

   24. AMAndy McCall9:30

       ... hundreds of millions, half a billion in revenue already doing this. And, you know, rising tide floats all boats. It helped everybody. But if you were a new entrant into the market like we were at Samsara, it really helped because basically the entire industry all of a sudden had to find budget to go out and, and buy these things.

   25. JSJoe Schmidt9:49

       Mm-hmm.

   26. AMAndy McCall9:49

       And a certain percentage of them, you know, clearly would say, "Hey, let's check out what's new out there."

   27. JSJoe Schmidt9:53

       Yeah.

   28. AMAndy McCall9:53

       "Are there any new entrants into the field?" And so it really helped kind of, you know, give us a, a, a boost.

   29. JSJoe Schmidt9:58

       How did you navigate, like, the, the social proof side of that? 'Cause like, uh, you know, I think, uh, the casual observer might think about that and say, "Okay, wow, this is regulated. Like, we can't screw this up," so you probably have to go win, I don't know what the largest long haul trucking company is. I'm trying to think of the ones I see on the freeway. But in any event, you probably have to go win that one, but it doesn't sound like that's what you did. From what I understand, that's not what you had to do. So how'd you navigate that social proof element?

   30. AMAndy McCall10:20

       Yeah. Well, I, I think, um, you know, I, I, I would, uh, and maybe I'm doing a little bit of disservice to, to, to, uh, the amount of strategy that went into this, but there wasn't a lot of strategy that went into, like, do we chase lighthouse accounts-
4. 13:26 – 17:00

   Lighthouse in Practice: Harvey, Decagon & Further AI

   1. AMAndy McCall13:26

      to us."

   2. JSJoe Schmidt13:26

      Yeah, yeah.

   3. EBElena Burger13:26

      So maybe it's worth getting specific about some of these companies. I know in the piece you talk about Hevia and Harvey-

   4. JSJoe Schmidt13:33

      Yeah

   5. EBElena Burger13:33

      ... as, as classic lighthouse examples, and then Stood and Decagon-

   6. JSJoe Schmidt13:37

      Yeah, yeah

   7. EBElena Burger13:37

      ... as, as landgrab. So maybe do you guys wanna talk about some of those, those playbooks that you've seen-

   8. JSJoe Schmidt13:42

      Yeah

   9. EBElena Burger13:43

      ... or maybe, like, give other examples?

   10. JSJoe Schmidt13:44

       Sure. Yeah. Sure, I mean, I, I can go and you jump in. Um, you know, uh, so for example, I, I highlight Stood in the article as, like, the, the prototypical example of, uh, of a landgrab g- company that we're seeing in this new age. And so, uh, Stood, this amazing business founded by, you know, two incredible entrepreneurs, um, Tark and Ben, and, um, what they are going after is the accounts receivable market. And for listeners, uh, who maybe have never thought about, like, AR, accounts receivable, basically s- you know, this is when someone owes you money, you know, in an enterprise context, and you have to go collect the money from them. This is not glamorous. Um, but however, there has been, you know, a mechanism to do this historically, right? There are collections teams, and there's big pieces of software like, um, you know, I won't say their names 'cause the compliance will probably bleep them out anyway. So-

   11. EBElena Burger14:27

       [chuckles]

   12. JSJoe Schmidt14:27

       ... there are big companies that do lots of ARR that, uh, that sell on this market, but it's been very manual, right? These, these human teams have to interact with this piece of software, and they have to go out there, and they have to sell, um, or have to go, they have to go collect. And so what Stood said was, "Hey, AI's actually quite good at, you know, basically having conversations with, with people. It's very good at looking at information internally and basically doing this process end to end. And so we could reimagine this historic, you know, way of doing collections, and instead of having humans do it, we can have humans plus AI do this, um, and, and do it even more effectively." And that, what that-- they then saw that open up was, like, the rest of kind of like, you know, order to cash and basically the entire kind of, uh, accounts receivable suite. Um, and so what they basically went out and showed, uh, all of their early-stage buyers was, in doing this, we have the math to prove it. We will be more effective than your current solution and your current h- human teams at collecting. And this will do X, Y, Z for, you know, it'll improve working capital by a tremendous amount. Um, it'll save you money. It'll actually make you more money. Um, so they were able to go out to the mid-market and just basically show the math and be like, "Would you like to, you know, have this solution, yes or no?" Um, so that's a really good example of a l- of a, of a landgrab market. Um, and those entrepreneurs are just, like, unbelievable sellers. They hit the pavement better than anyone, um, uh, just as good as anyone, as anyone I've ever seen. Um, and, uh, and, and they're doing a great job. You know, another example on the, on the lighthouse side would be, you know, we, we highlight Harvey in, in our article. Um, and they just did a fantastic job of winning the right law firms for this very new, very, you know, theoretically high-risk initiative where you're augmenting your human workforce with, you know, AI, AI capabilities and really automating what, you know, um, uh, you know, uh, junior lawyers would be doing, um, on a day-to-day basis. And so when they won the first kind of, you know, few critical lighthouse accounts, um, inside of their market, like, that proof traveled, like, big time.

   13. EBElena Burger16:12

       Mm-hmm.

   14. JSJoe Schmidt16:12

       Um, and, uh, and then, you know, the buyers that had, like, this tremendous amount of exposure realized, "Hey, it's actually safe for me to buy this-"

   15. EBElena Burger16:18

       Yeah.

   16. JSJoe Schmidt16:19

       "... this solution."

   17. EBElena Burger16:19

       Yeah.

   18. JSJoe Schmidt16:19

       So those are the two kind of counter exam- or, you know, two examples in this market. I don't know if there's anything you, you'd highlight from other companies you're working with or-

   19. AMAndy McCall16:26

       I mean-

   20. JSJoe Schmidt16:26

       ... things you've seen.

   21. AMAndy McCall16:27

       Yeah, I mean, those are two great examples. Um, yeah, I'm doing a, a decent amount of work with a company we invested in called Pylon. Uh, they're basically the AI native, um, customer support, and they're a great, uh, example of, of, uh, of landgrab. They're doing a fantastic job right now of just going out and saying, "Hey, we've got a better way of doing this." Uh, and you know, they have, uh, you know, they, they've been climbing up the ACV ladder, but, you know, they started at pretty modest ACVs, uh, and have been working their way up just by going out and replacing.

   22. JSJoe Schmidt16:55

       Mm-hmm.

   23. AMAndy McCall16:55

       And they have a fantastic go-to-market team that's just out executing.

   24. JSJoe Schmidt16:58

       This, this ACV question is actually

5. 17:00 – 27:14

   ACV Discipline: Clear the Hurdle, Then Just Go

   1. JSJoe Schmidt17:00

      kind of an interesting one, and I, I'd be curious how you thought about it at, at Meraki or Samsara. Um, you know, there's, there's so much demand out there, and there's so many different ways of, like, kind of building your go-to-market engine. Like, how much did you actually even think about what you were landing at-

   2. AMAndy McCall17:13

      [chuckles]

   3. JSJoe Schmidt17:14

      ... with these, like, you know, it maybe go back to when you were at, like, I don't know-

   4. AMAndy McCall17:16

      Yeah

   5. JSJoe Schmidt17:16

      ... 10 or 50 of ARR-

   6. AMAndy McCall17:18

      Yeah

   7. JSJoe Schmidt17:18

      ... at one of these businesses. Were you optimizing for that, or was it just like, let's basically figure out how to get enough reps in and-

   8. AMAndy McCall17:24

      Yeah

   9. JSJoe Schmidt17:25

      ... just-

   10. AMAndy McCall17:25

       It's a good question. I, the, the answer is you think about it a lot, and then you try and not think about it at all. And what I mean by that is you wanna make sure that the ACV that you're going after, it, it has to, it has to top the hurdle, right? Uh, in, in other words, you look at your unit economics and is it healthy or not? You don't wanna be taking deals that are-

   11. JSJoe Schmidt17:43

       Yeah

   12. AMAndy McCall17:43

       ... you know, negative to your unit economics.

   13. JSJoe Schmidt17:45

       Yeah.

   14. AMAndy McCall17:45

       But if it passes the threshold, then the answer is you don't think about it. You just go.

   15. JSJoe Schmidt17:49

       Mm-hmm.

   16. AMAndy McCall17:49

       And you get as many of those as you can. So if you can build a go-to-market engine, just theoretically, that could live off of 15K ACV deals-

   17. JSJoe Schmidt17:56

       Yeah

   18. AMAndy McCall17:56

       ... fantastic.

   19. JSJoe Schmidt17:57

       Yeah.

   20. AMAndy McCall17:57

       Like, don't take 8K ACV deals.

   21. JSJoe Schmidt17:59

       Yeah.

   22. AMAndy McCall17:59

       But go get as many 15K ACV deals as you can.

   23. JSJoe Schmidt18:02

       Yeah.

   24. AMAndy McCall18:02

       And, and you wanna just build a repeatable engine and pour fuel on the fire and get as many of those as you can.

   25. JSJoe Schmidt18:06

       Yeah.

   26. AMAndy McCall18:06

       And then what happens over time is you start inching up, right?

   27. JSJoe Schmidt18:09

       Mm-hmm.

   28. AMAndy McCall18:09

       Bigger and bigger companies like what you're doing then, and, and you start stacking up, you know, the wins-

   29. JSJoe Schmidt18:14

       Yeah

   30. AMAndy McCall18:14

       ... and going up the ACV ladder.
6. 27:14 – 33:54

   Every Big Company Eventually Deploys Both Strategies

   1. JSJoe Schmidt27:14

      with us on that front.

   2. AMAndy McCall27:14

      I, I, I'll also say that, you know, every, every small company wants to become a big company. I don't know too many very large successful companies that at some point in time haven't deployed both strategies.

   3. JSJoe Schmidt27:24

      Yeah. No, I would say-

   4. AMAndy McCall27:24

      You might start off with land grab, but then you mature and you have a lighthouse strategy, or you start-

   5. JSJoe Schmidt27:29

      Yeah

   6. AMAndy McCall27:29

      ... with lighthouse and then you get big enough that you can go br- broad, you know, into land grab. So I, I think for founders, when I get this question early on, do what makes the most sense for your business right now.

   7. JSJoe Schmidt27:40

      Yep.

   8. AMAndy McCall27:40

      What does that mean? Go out and talk to customers.

   9. JSJoe Schmidt27:42

      [chuckles]

   10. AMAndy McCall27:42

       Find out where the early, earliest and easiest sales are, and pursue that strategy. It doesn't mean you're completely, you know, punting on the other one.

   11. JSJoe Schmidt27:50

       Yeah.

   12. AMAndy McCall27:50

       It just means come back to it.

   13. EBElena Burger27:51

       Mm-hmm.

   14. AMAndy McCall27:51

       And in, in both of the last companies that I worked for, both Meraki and Samsara, we started with land grab, but as soon as we matured and started getting up into enterprise, then what do you do? Well, you verticalize and all of a sudden, like great, who are the top five, you know, transportation companies? Who are the top five-

   15. JSJoe Schmidt28:07

       Yeah

   16. AMAndy McCall28:07

       ... warehousing companies? Who are the top five, you know, public sector? And then you wanna go take those down.

   17. JSJoe Schmidt28:12

       Yeah.

   18. AMAndy McCall28:12

       And so you can morph into a land grab strategy. You just wanna do what's most efficient and most effective for the stage of the company you're at.

   19. JSJoe Schmidt28:20

       Talk, can you talk a little bit about like one of those like key markets that you unlocked with like you went from land grab early to, you know, lighthouse in a given market. Like what did you-

   20. AMAndy McCall28:29

       Yeah

   21. JSJoe Schmidt28:29

       ... how did you set up that team? Um, or like was it just you or the founders that was going into this new market? And then like, you know, maybe a little bit about some of those deals that you closed. I'm just curious how this played out-

   22. AMAndy McCall28:39

       Yeah

   23. JSJoe Schmidt28:39

       ... with the sequencing.

   24. AMAndy McCall28:40

       Well, I, I think, uh, you know, at, at both Meraki and, um, Samsara, uh, you know, the, the sort of earliest example of, of, um, lighthouse was when we verticalized, and in both those instances, it was basically into like public sector. At Meraki, it was going after like school districts-

   25. JSJoe Schmidt28:57

       Oh, interesting

   26. AMAndy McCall28:58

       ... because that was sort of low-hanging fruit. And, you know, if you're, if you, if anybody, anybody's o- ever sold to school districts, like they all talk to each other, they all know each other.

   27. JSJoe Schmidt29:05

       Yeah.

   28. AMAndy McCall29:05

       You wanna find the biggest school districts in each state, and if you can take that down, every school district underneath them says-

   29. JSJoe Schmidt29:10

       Yeah, well said

   30. AMAndy McCall29:11

       ... "Oh, what did that one buy? Great."
7. 33:54 – 37:49

   Why Now Is the Moment to Sell Big Software Again

   1. JSJoe Schmidt33:54

      now. There's this crazy kinetic energy inside of companies where they're saying, "Hey," it could be even something as, you know, fundamental as CRM, right? It could be as fundamental as HR or ITSM. We're now looking at a different way of doing business entirely. This is not a skeuomorphic one-to-one replacement, green to blue. We're now thinking about, like, humans are gonna be doing something completely different.

   2. EBElena Burger34:13

      Mm-hmm.

   3. JSJoe Schmidt34:13

      Way more high value. We're gonna be doing way less of the, the same kind of, you know, mundane rote work. Um, and instead, agents are gonna be doing that, doing that. And so that's, I think, the opportunity right now, and it's why instead of talking about, like, of course, we gotta talk about PLG and, like, all these other sales models, there's a moment right now to go sell, you know, big software again, right? And to, and g- and to go sell platforms and, and it's because of this moment. Um, and so I think people need to be studying kind of the 15 years ago models of, like, how people build this and the up- and the ecosystems around it, um, to go and have success.

   4. AMAndy McCall34:45

      Yeah, I think that's right. I, I will say I think the consistent trend, uh, as long as I've been doing this, is that, you know, every year and with every technology transition, buyers become more and more educated.

   5. JSJoe Schmidt34:55

      Yes.

   6. AMAndy McCall34:55

      Right? So the buyer today just fundamentally has a better idea of what they want than they did five years ago, 10 years ago, 15 years ago.

   7. JSJoe Schmidt35:02

      Yeah.

   8. AMAndy McCall35:02

      And so, you know, that does lend itself more towards, you know, i- if you can hit that buyer when they're in their decision mode, you're gonna have a better chance. It doesn't have to necessarily be PLG.

   9. JSJoe Schmidt35:13

      Yeah.

   10. AMAndy McCall35:13

       But it can be more self-serve. It can be... It's, it should be an easier sell than, you know, 10, 15, 20 years ago, where you had to take them on this entire education journey, why you need this, how it works, here's how you're gonna... Right? Like, they're just so much more educated now on what they want to buy, that your job is just convince them that your company is the right solution for that.

   11. EBElena Burger35:31

       Mm-hmm.

   12. JSJoe Schmidt35:31

       Amen.

   13. EBElena Burger35:32

       Yeah. Yeah. I guess they're, the, the lighthouse kind of, like, definition just gets pushed ever outwards-

   14. JSJoe Schmidt35:38

       Yeah, yeah

   15. EBElena Burger35:38

       ... or you kind of like, yeah, just have to keep on conquering new territory. I'm curious, I, I assume a company just can't stay a lighthouse forever, and you, you even alluded to this, Andy. Like, what, what is kind of the average amount of time that a company kind of can just, you know, chew off those, those bigger logos and then, you know... Like, like, what is that transition moment like, I guess?

   16. AMAndy McCall36:03

       Yeah. I mean, theoretically you could, right?

   17. EBElena Burger36:06

       Mm-hmm.

   18. AMAndy McCall36:06

       If, if you were a company that was dedicated or committed to a, you know, multi-product strategy, you could just keep coming out with new products-

   19. JSJoe Schmidt36:13

       Mm-hmm

   20. AMAndy McCall36:13

       ... and you can keep going after-

   21. JSJoe Schmidt36:14

       Yeah

   22. AMAndy McCall36:14

       ... you know, more verticals, right?

   23. JSJoe Schmidt36:15

       Yeah.

   24. EBElena Burger36:15

       Yeah, yeah.

   25. AMAndy McCall36:15

       Like, you could theoretically do that, and I, I think there's probably some examples we could come up with of companies that did that. But, but yeah, in general, you know, if you start with a lighthouse strategy, you've built the social proof, you've gotten these big names, then what you wanna do is you wanna run the category underneath it.

   26. JSJoe Schmidt36:30

       Yeah.

   27. AMAndy McCall36:31

       Right? [chuckles] If I've gotten the top five financial companies in the world, I wanna run down, you know, the list after that, and so- That fundamentally becomes a little bit different of a sales motion, right?

   28. JSJoe Schmidt36:41

       Yeah.

   29. AMAndy McCall36:41

       You're spending less time with, you know, the huge organization, the big logo, you know, selling and-

   30. JSJoe Schmidt36:47

       Yeah
8. 37:49 – 43:40

   The Biggest Mistake Founders Make

   1. AMAndy McCall37:49

      I, I think, I think the biggest mistake that I see founders make at an early stage, honestly, is just spending too much time trying to figure it out.

   2. JSJoe Schmidt37:57

      Yeah.

   3. EBElena Burger37:57

      Mm-hmm.

   4. AMAndy McCall37:58

      Right? Like, too much time on the strategy.

   5. JSJoe Schmidt38:00

      Yeah, yeah.

   6. EBElena Burger38:00

      Yeah.

   7. AMAndy McCall38:00

      And strategy's important, but you should spend, like, 1% of your time on the strategy-

   8. JSJoe Schmidt38:04

      Yeah

   9. AMAndy McCall38:04

      ... pick it, and then spend 99% of your time trying to execute.

   10. JSJoe Schmidt38:06

       Yeah.

   11. EBElena Burger38:07

       Mm-hmm.

   12. AMAndy McCall38:07

       So, you know, rather than sit back and say, "Well, you know, should we do lighthouse or should we do landgrab?" Get out, talk to your customers, figure out which ones, you know, are, are willing to, you know, buy your product with the features and the services that it delivers today, and then chase that path.

   13. JSJoe Schmidt38:22

       Yeah.

   14. AMAndy McCall38:22

       Right? There's no bonus points for hard-earned revenue. You know, you don't-

   15. JSJoe Schmidt38:26

       [laughs]

   16. AMAndy McCall38:26

       ... get extra, you know, multipliers on your revenue if you get the big logo or something.

   17. EBElena Burger38:29

       [laughs]

   18. AMAndy McCall38:29

       Like, go after the customers you can.

   19. EBElena Burger38:31

       Yeah.

   20. AMAndy McCall38:32

       You know, and then, you know, constantly be improving your product, and then, you know, you can always reassess your strategy. You, you, after the first year, if you've hit-

   21. JSJoe Schmidt38:38

       Yeah

   22. AMAndy McCall38:38

       ... all your, your revenue milestones, you can look at it and say, "Well, could we be more effective doing this?" Maybe.

   23. JSJoe Schmidt38:43

       Yeah.

   24. AMAndy McCall38:43

       But just don't spend too much time in analysis paralysis mode.

   25. JSJoe Schmidt38:47

       Yeah. Totally agree with that. I totally agree with that.

   26. EBElena Burger38:49

       Joe, Joe, you had some, you had some fun questions for Andy.

   27. JSJoe Schmidt38:52

       Some lightning rounds.

   28. EBElena Burger38:53

       I, it was some lightning round questions.

   29. AMAndy McCall38:54

       Yeah, lightning round. Okay.

   30. EBElena Burger38:55

       Yeah.

Episode duration: 43:55