Member Ted Christianson Speaks: 3 Basics to Remember as You Grow a Startup

The Challenge:

The case at hand was brought by the CEO of a software startup who was seeking advice about how to most effectively spend a $100,000 budget on sales and marketing to go after enterprise customers. The company was on the outset of an ambitious growth phase, and the CEO wanted the best bang for his buck.

If you were in this situation, what would you do?

Make sure you clear up a few basics before proceeding with your growth plan. I’ve seen too many companies sputter along because they fail to validate their core value proposition before trying to scale.

Before deciding where to spend your sales and marketing budget, you first need to answer a fundamental question: what job does your product or service do for your customer? Not deeply understanding the jobs-to-be-done from your customer’s perspective (as proposed by Clayton Christensen) is a startup death knell.  Make sure you know what your customers think they are buying instead of just knowing what you’re selling. 

Second, try to identify the parts of your offering that your customers perceive as “must have,” “nice to have,” and most importantly “don’t need.” Knowing which parts of your business model that your customers think are valuable and necessary will help you differentiate where it matters. Differentiation for differentiation’s sake is a pitfall. Avoid it.

Third, it sounds like you are elephant hunting – wanting to land big deals in large enterprises right away.  While the allure of big numbers is enticing, you’re better off first focusing on smaller customers in an underserved market niche who can make buying decisions faster. Dominate this segment to prove your value and your business model to get your grounding. Then go after other adjacent segments while fine-tuning your business model to start scaling.  

Addressing these three basics will help you focus your sales and marketing efforts for growth.