With the current coronavirus pandemic, several sectors have been negatively impacted. For startups, what matters now is how do they go to the market after the lockdown, and how will it work.
In this episode of Matrix Moments, Avnish Bajaj, Founder and Managing Director, Matrix Partners India, talks about both product-market fit (PMF) and go-to-market, and what works best when.
Avnish says, “While PMF determines the success or failure of a startup, the GTM is your risk management strategy towards PMF. Businesses have started to get PMF. You are trying to attack a certain market. You believe there is a gap in that market and are building a product to address that gap. That is the PMF. But it’s far harder than it appears.”
He goes on to explains, “First you have to develop the product, and then you have to aim it at the right place in the market, which is the GTM. And then hopefully the fit happens. Essentially, in a sports analogy, PMF is your goal, and GTM is that entire play to get to that goal. Who is passing the ball where, and offence, defence, where you are, how are you passing the ball between various phases of the businesses.”
How does GTM help?
Avnish says, many entrepreneurs do not think through GTM enough. But if you think through your GTM correctly, it can accelerate the PMF or can also give you warning signals early on. Thus, GTM helps you with your goal of reaching the PMF.
GTM is the marketing approach and it is the internet world’s way of defining the 4Ps – price, placement, promotion, and product. How are you positioning your product in the market? The pricing decisions, and how are you promoting the product.
“Analyse your customers or consumers’ pain points and then think about how best to position. Therefore, that is the outside-in approach,” says Avnish.
Is it important for an entrepreneur to think of their GTM strategy differently for an enterprise and software company? Avnish explains, while strategically speaking no, tactically speaking it is yes.
Ultimately, the purpose of GTM for enterprise and consumer businesses are the same, but tactically it becomes apples and oranges. Typically, in enterprise, it’s more B2B, and more sales led. And in consumer, it is more marketing led.
Therefore, you will have inside sales or sales people-driven GTM, and you will have more of the consumer driven.
“The beauty of the last five to 10 years is these things are converging. So, there is something called the consumerisation of the enterprise. This is largely led because everything is becoming digital, says Avnish.
Getting the best of both worlds
Avnish explains that in today’s world, one can combine the best practices of the enterprise side into a consumer company, and the best practices of consumer into an enterprise company.
Citing an example of PayPal as a company with best GTM, Avnish says, PayPal in 1999 said you can pay each other, and the company would give you $5 to send money to another person, and they would get an email saying, ABC has sent you $5, click on this link to receive it. “Who wouldn’t do it? It was the ultimate viral product probably of the last two to three decades. Just caught fire,” says Avnish. He adds that it was a go-to-market strategy and not product market fit.
“The product market fit that PayPal had was to pay each other and pay on the internet, which was a massive value addition. So, you had this outstanding go-to-market strategy sitting on top of an outstanding product market fit, you have a winning strategy. They had these two viral things firing and it became a very valuable company very early,” adds Avnish.
All this comes from the traditional consumer product companies like Coco Cola and Pepsi that would give trail packages. This is the internet view of a trip package.
“Excellent GTM cannot solve for a bad PMF. An excellent GTM or a good GTM can explode an excellent PMF or a good PMF. So, they have a great product,” says Avnish.
Listen to the podcast here.
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