Incredibly simple 1,2,3 go to market plan

I use “incredibly” deliberately. It is not credible that something as important as a go to market plan should be simple. This is so critical, so it has to be complex and difficult. Or does it?

Making something simple makes it easier to get everybody aligned. Simplicity is key to execution and go to market plans are 1% inspiration and 99% perspiration.

The insight, which I gained working on a project with @alexiskold many years ago is:

“everything is a network”.

Hopefully that insight is now “no duh obvious” (it was not in 2002 when Alex and I were working on the project that generated this insight). The best insights are simple. Everything is a network applies to things in nature, dependencies in a big software system and of course social networks.

If your go to market plan is not based on social networks, go back to the drawing board. You can only get the right unit economics if one user leads to another user in an organic way. Without this your Customer Acquisition Costs (CAC) will be too high. Seth Godin calls this Tribes. Or we can say “birds of a feather flock together”. This is as applicable to enterprise as it is to consumer. Your first reference customer in enterprise in a new market segment will typecast you. You will get more customers like that. Do you want that type of customer?

It is as simple as 1,2,3 because 3 is a magic number;

• Once means nothing

• Twice is a coincidence

• Three times is a trend

By far the hardest is the first one. If you want to drive a founder of an enterprise software company crazy, talk about the chicken and egg problem. Customers all say “call me again when you have your first customer”. Winning that first customer (and the second and third) is the subject of a different post.

Enterprise is all about push. Consumer is all about pull. To see this in an entertaining way, watch this Ted talk about the “first follower”.

As the leader, you have to accept one thing that goes totally against the grain for hard-charging entrepreneurs:

You are not in control of this outcome.

You cannot make that First Follower get up and dance. You cannot push. Only pull works. If you try to push, you will simply look ridiculous and desperate.

To put it another way “you can lead a horse to water but you cannot make her drink”.

Of course you can fake it. You can have somebody who looks like an independent follower who is really part of your team. Don’t get caught!

This does not mean, “launch it and they will come”. This is when you “do things that don’t scale”. This means doing things for early customers that you could not do profitably at scale. You “go the extra mile” and then some. You do whatever it takes to win over those early customers/followers, no matter how crazy the lengths you go to do that. This is a phase – “this too shall pass”.

The net profitability of these early customers does not matter. The gross unit profitability does matter. Selling a dollar for 99 cents is easy; your revenue traction will be amazing! However if you want to sell to millions and have good unit economics, spending expensive founder time on winning the first few thousand makes total sense.

Look at that first follower video again. You will see something happen after the third dancer joins. That is what could be called tipping point, or take off or traction or any number of words that basically says “its working”.

It is the power of three:

• Once means nothing

• Twice is a coincidence

• Three times is a trend

Of course that does not mean you only need three consumers and you are home free. This is where you need to figure out your “bundles” of customer. That is a deliberately simplistic word to cover many types. For example a bundle could be:

• A vertical domain for an enterprise tech solution.

• A tribe (types of users that think the same way and hang out together).

• A city (think Uber and AirBnB)

• A geographic region with linguistic and cultural differences – marketing speak for a country 🙂

In each bundle, you have the same 1,2,3 challenge. If your first enterprise customer is BMW, other car companies will be a relatively easy sell and once you have 3 car company references you are established (but a Bank or Retailer or Government customer still won’t see you as relevant).

If your first tribe is young single guys in Brooklyn who play Magic The Gathering, you will be credible when three who are influential start singing your praises (but a middle aged Mom/Dad in Brooklyn may still not view your product as relevant).

Or think Facebook growing through College networks. Once they were entrenched in three, all the others saw it as an inevitable trend (and only later did they break out of the college niche into the mainstream).

That is where the 3*3 rule comes into play. This is 3 customers in 3 bundles. That is only 9, which does not sound much. However when you have 3 in 3 you can scale using simple, repeatable processes (e.g. hiring sales guys in enterprise, spending ad $ in consumer).

If you have 3 car manufacturers, it is pretty simple to hire sales guys to go after the other car manufacturers.

If you have 3 young single hipsters in Brooklyn – your bundle is too big. You cannot win the Brooklyn market as one bundle. Maybe you need 3 in a block and then expand block by block. The block is your bundle.

Or maybe your tribe needs to be more tightly defined. Maybe it is young single Brooklyn guys who play Magic The Gathering.

In each case, the first follower is critical. The first customer/user defines you. They are leaders. Treat them like leaders. Choose them wisely for they will typecast you. If you aim to eventually grow beyond a niche, they must be aspirational. For example:

– SAP got BMW as its first customer (a clearly world class manufacturer that others want to emulate)

– Facebook started at Harvard and then Stanford, top tier colleges that are aspirational.

Car companies and colleges are all networks. Your job is to find the hubs in those networks and win them over. For example, if your first tribe is young single guys in Brooklyn who play Magic The Gathering, find somebody who is a community magnet, respected and liked by his peers. If he adopts your product, he is your first follower and others will follow you.

Then find linked networks and repeat. Get to 3*3 and then scale (at this point you have traction and VC will fund your expansion plans).

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