Answering startup questions at LinkedIn
Steps to finding efficient growth
This week I had the pleasure doing a live event for startup GTM leaders on a meaty topic: navigating the transition from a mindset of growth-at-all-costs to one of finding efficient growth. It was conversation with Tom Eschbacher, Director of Startups and VC at LinkedIn and Dayna Rothman, CMO of Censys - broadcast from LinkedIn’s beautiful studio in downtown San Francisco.
We shared our thoughts on the top problems startup leaders are tackling right now:
How are teams coping with the new economic climate?
What are the new trends are impacting startups?
How can startups respond to these new trends?
How should startup marketers balance brand vs performance?
How can startups protect revenue and grow?
How can startups use AI in their GTM?
How should founders balance short term vs long term planning?
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You can watch a recording of the event here on LinkedIn and read my detailed thoughts on each of the questions below.
How are teams coping with the new economic climate?
This is the 4th down cycle I’ve been through in my tech career:
The internet bubble collapse of 2000
The global financial crisis of 2008
The great lockdown of 2020
The recession that started in late 2022
Here’s what I’ve learned from them:
Going through a down cycle for the first time always seems worse than it is. When the internet bubble collapsed in 2000, I remember thinking they were just going to turn off the internet and pull out the plug. That obviously feels ludicrous in today’s terms but back then it felt very real!
Down cycles create opportunities for companies to innovate. Many of today’s most valuable companies like Airbnb, Square and Uber were created in the aftermath of the 2008 housing crash and LinkedIn itself was founded in the aftermath of the 2000 internet crash.
Down cycles have accelerated my own career. When I got laid off in 2002, I learned to code and ended up getting into adtech as a product manager, leading to a great run in that space for almost 10 years. In 2009 I learned affiliate marketing and made $500k as a side hustle generating leads from social media sites, which led to me getting my first CEO job. And after getting laid off in 2020, I got into what I do today - helping startups design and execute their GTM strategy.
What are the new trends impacting startups?
LinkedIn’s latest startup trends report, “Today in Startup Marketing”, outlines 3 key challenges gleaned from studying 1,200 B2B startups in their customer base:
Buyers’ shifting priorities — in the past, buyers had larger budgets and were willing to trying new tools and services that could potentially have a business impact. With budgets constrained, buyers are being forced to separate their must-have investments from their nice-to-have investments and to eliminate as many of their nice-to-haves as possible.
Slowing sales pipeline — in the past, buyers had the authority to spend up to a certain level with minimal oversight, leading to predictable sales cycles. Today’s buyers have to jump through more hoops internally to justify a purchase as a must-have, which slows down the sales cycle and in some cases deters them from shopping altogether.
Increasing competition — eliminating nice-to-haves means there are now fewer buyers for any given product or service, however there are still the same number of vendors in each category, so the competition has increased. Obviously this is not sustainable, which is why one of the top 3 things startups need to plan for in 2023 is being realistic about exit options.
How can startups respond to these new trends?
The starting point is always to update your ideal customer profile (ICP), to figure out who considers you a must-have and who considers you a nice-to-have. If your ICP isn’t clear (aka a sloppy ICP), its impossible to set your GTM strategy in a resource-constrained world, because you end up trying to do too many things at once and fail at most of them. I wrote about this in depth a few weeks ago in, How to build your Ideal Customer Profile in 2023.
Some basic steps to update your ICP are:
Ask your colleagues to describe your company’s ICP. Everyone will have an opinion but you’ll get a range of answers. You need to get everyone’s cards on the table / scratches their itch / insert your metaphor of choice, in order to havfe a shot at developing an actionable end product.
Use your data to validate the assumptions, in particular:
Existing Customer Expansion/Contraction: Look for the differences between customers who are expanding their business with you and customers who are reducing their business with you. The former group considers you a must-have, the latter a nice-to-have. Look for the common threads in each group.
New Customer Wins/Losses: Look for the differences between prospects who converted to customers and prospects who did not. Look for the common threads in each group and compare them to your customer data. You’ll start to see the sweet spot.
Identify the roles of the people who were involved in buying you and are involved in working with you day-to-day. An easy way to do this is to drop all the job titles of your customers them into a Google Sheet and use the ChatGPT plugin to classify them by seniority and business function (hooray for AI!).
Interview your top customers to understand why they keep buying you. A simple question to ask is “how has your day-to-day changed since switching to _____?”. You’ll start to hear similar descriptions of the problem(s) they had, the impact you are delivering, the urgency that was driving them to make a change, and how varies between end users, managers and executives.
Organize the information using SPICED framework (for background on the SPICED framework, check out Winning By Design’s blueprint).
Situation — the firmographics and technographics of your top customers.
Pain — the problems your top customers have hired you to solve.
Impact — the impact you are delivering to your top customers.
Critical Event — the moments in your customer’s business cycle that drove them to buy you.
Decision — the job titles of the people who were involved in buying you.
With your ICP organized into the SPICED framework, your GTM leaders (sales, marketing, customer success) can start answering the key questions that inform your GTM strategies for generating demand, closing new business and expanding existing business, as well as informing your overall product strategy.
How should startup marketers balance brand vs performance?
The common advice in a recession is to max out your performance marketing and cut back or eliminate brand marketing. This is why you see media costs drop in down cycles (and is the reason I was able to make $500k as an affiliate in 2009).
To max out your performance marketing, you need a precise ICP, otherwise you will have too many campaigns, generic messaging, too many funnels to track. and gaps in measurement. With a precise ICP you can focus on fewer channels with fewer campaigns, with fewer pieces of content that get higher click-through-rates and higher conversion rates because they are more relevant to your buyer and are easier to measure because they funnel into a single customer journey.
Look for ways to innovate in brand marketing. When the market pulls back on spending, media prices can drop significantly in channels like Out of Home (OOH) that are traditionally reliant on brand budgets. This creates an opportunity for innovative marketers to experiment with brand marketing and measure the ROI by looking at the lift on their performance marketing campaigns. (This is why you need to max out your performance marketing before adding brand marketing).
Yes you can measure the ROI of brand marketing at a startup. Brand marketing is about answering 3 questions, each of which can be measured without sophisticated models or expensive surveys.
Have the buyers in your target market heard of you? This can be measured by changes in the volume of Google searches on your brand name (easy to track if you are bidding on your brand name) and the volume of direct traffic to your website (easy to track in Google Analytics).
Do the buyers in your target market know what you do? This can be measured by increases in click through rates on non-branded search terms (buyers picking you over your competition on the search results page) and response rates to outbound emails (buyers responding to vendors they’ve heard of).
Do the buyers in your target market think you are good at what you do? This can be measured by increases in brand mentions in social channels. Yes there’s the sentiment aspect to consider but tbh if you are a startup people are only going to bother mentioning you if they like you, otherwise they’ll just ignore you.
I’ve covered this in more detail in How to do brand marketing at a startup.
How should startups protect revenue and grow?
Every renewal discussion has become a full resale. Increased scrutiny on must-haves vs nice-to-haves has made today’s renewal process look a lot more like your new customer sales process, where value needs to be re-established and demonstrated to all stakeholders. The day-to-day champion that customer success managers deal with can no longer push the renewal through on their own.
Customer success teams need to learn how to sell. With renewal discussions turning into full sales processes, customer success teams need to learn how to be proactive, to identify and probe for pain, identify buyer KPIs, demonstrate impact, identify multiple stakeholders, negotiate business terms — basically act more like proactive account managers. A precise ICP is vital to developing these skills quickly as it reduces the amount of information that needs to be learned.
Driving expansion is the secret to locking in retention. The more your customer buys from you, the more hooks you build into their workflow and the more you become a must-have. GTM teams need clear direction on which customers to target for expansion and why (another +1 for a precise ICP) and clear direction on roles and responsibilities so that sales and CS don’t step on each other toes.
Executive engagement can push deals over the line. Getting your exec team and advisors to reach out to their connections on the buying team during the renewal demonstrates your commitment to the partnership, differentiates you from your competitor who just sends a renewal notice and builds momentum to get the renewal done.
How are you using AI in your GTM?
Just like Hansel in Zoolander, AI is so hot right now with hundreds of startups in martech and salestech alone. It’s impossible to keep up but the use cases that have caught my attention are:
Using the ChatGTP plugin for Google Sheets to clean up CRM data. I’ve used it to automate mundane tasks like canonicalizing job titles for ICP analysis, canonicalizing lead sources for attribution analysis and enriching inbound leads to accelerate call prep. You have to sign up for the paid API to get past the rate limits but its still 100x cheaper than doing it manually. It’s a must have for rev ops.
Using the ChatGTP bot to draft SEO and social post outlines. The most time consuming part of writing posts is doing the research to come up with titles and outlines. With the right prompts, ChatGPT can massively speed this up, freeing you up to add your personal touch or brand voice to the content to make it stand out. It’s a boon for content marketers.
Real time cue cards for salespeople. One of the most important skills to master in sales is active listening — picking up on what your buyer says and asking a relevant follow up question. Many salespeople struggle with this because they are overly focused on getting through what they have to say. In ye olden days of working in an office, sales managers would listen into calls and hold up a white board with a prompt. In today’s remote selling world you need a technology version of that and Colibri and Attention are two interesting AI startups that are working on this and worth checking out.
How should founders balance short term vs long term planning?
In my career, I’ve been on the exec teams of startups that did $3M/yr, $30M/yr and $300M/yr. Seldom did we plan more than 6 months ahead and on the occasions that we did try to plan for a whole year, we usually got it wrong.
The further ahead you plan, the less data you have, the more you end up doing tops-down dreaming instead of bottoms-up building. Planning is a time-consuming activity, so you want to make the effort count.
For most startups, planning 3-6 months ahead is sufficient to run your business. You can set goals, measure progress, diagnose variance, identify corrective actions and assign owners to execute.
I published a step-by-step guide to planning in How to turn your great ideas into actual results.
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