On Combining Bottom-up Adoption AND Enterprise Sales

0/ Mastering bottoms up adoption *and* enterprise sales is really hard. Yet many of the fastest growing enterprise companies do. This thread explores some of the considerations and why juggling both motions is a lot more complicated than most assume.

1/ The base case is that you’re very lucky and you either have a monetizeable, super-linear bottoms up motion (like consumer), or you find a high ACV sale directly to a customer without establishing a prior relationship through the product (traditional enterprise)

2/ However, the former (bottoms up only) is exceptionally rare with oft cited exceptions the prove the rule (DropBox, Atlassian). More often, growth is linear or tapers, and coupled with churn requires sales to cover increased costs of customer acquisition.

3/ The latter (sales only) is getting increasingly difficult as buyers are oversubscribed by vendors, and cloud, open source and great products / freemium are defining enterprise buying behavior.

4/ So most startups are forced to juggle both motions. They start with bottoms up and then overlay sales, effectively treating the bottoms up motion as lead gen for a direct motion. However, the relationship between these two curves is complicated and easy to get wrong.

5/ In a common failure mode, the startup builds out sales before figuring out how to scale growth. In this case, sales can outpace the organic growth engine resulting in two entirely different sales pitches, one when the customer knows you, and one when they don’t.

6/ To add to the confusion, organic adoption is, well, organic. Thus often covering varied use cases, technical integrations, team sizes, organizations, … effectively making it impossible for sales to achieve repeatability.

7/ This confusion isn’t limited to sales. Product and marketing are impacted too. Often organic growth favors horizontal platforms that are fit to a broad set of customer needs. While direct sales enablement is vastly aided by verticalization in product and messaging.

8/ In some areas (such as open source) it’s incredibly difficult to drive growth even through paid acquisition. So the company is forced to endure anemic growth, or to effectively pivot to traditional lead gen and direct sales.

9/ In the most pernicious case, sales kills the golden goose by eroding brand and can dramatically negatively impact the growth engine.

10/ Another common problem happens when the user in a bottoms up model is not the buyer. So an expensive bottoms up motion may only have marginal utility as a lead gen mechanism. Or worse, no utility at all.

11/ A corollary of this problem is that the bottoms up motion targets a difficult to monetize sector (e.g. SMB) forcing a mismatch between the product, the positioning and the ultimate target (e.g. enterprise).

12/ That said, if you can pull it off, this dual motion model has nice properties over either model in isolation.

13/ For example, if you move to sales, b2b bottoms up growth isn’t slave to consumer-like growth requirements. As long as the sales ACV can cover both the bottoms up user acquisition and sales cost, linear / paid growth is fine.

14/ Establishing a bottoms up relationship with the customer is the ultimate end run around the incumbents who generally can’t get out of their own way to create simple to use product, and instead get locked into incredibly expensive and long sales cycles.

15/ Also, often the bottoms up engine provides a predictable, transactional business that takes years to achieve if starting with direct.

16/ So I would recommend (a) assume you’ll need sales (b) target a user/vertical who can pay (c) figure out the bottoms up motion (d) ensure your ACV covers both bottoms up and direct costs (e) avoid developing two separate or conflicting motions.

17/ Thanks for reading 🙂

P.S./ This is yet another example of why product marketing is such a hyper-critical yet often under-appreciated role in modern tech companies. Treat your product marketers well, they have some of the most valuable knowledge in the industry.




The views expressed here are those of the individual AH Capital Management, L.L.C. (“a16z”) personnel quoted and are not the views of a16z or its affiliates. Certain information contained in here has been obtained from third-party sources, including from portfolio companies of funds managed by a16z. While taken from sources believed to be reliable, a16z has not independently verified such information and makes no representations about the enduring accuracy of the information or its appropriateness for a given situation.

This content is provided for informational purposes only, and should not be relied upon as legal, business, investment, or tax advice. You should consult your own advisers as to those matters. References to any securities or digital assets are for illustrative purposes only, and do not constitute an investment recommendation or offer to provide investment advisory services. Furthermore, this content is not directed at nor intended for use by any investors or prospective investors, and may not under any circumstances be relied upon when making a decision to invest in any fund managed by a16z. (An offering to invest in an a16z fund will be made only by the private placement memorandum, subscription agreement, and other relevant documentation of any such fund and should be read in their entirety.) Any investments or portfolio companies mentioned, referred to, or described are not representative of all investments in vehicles managed by a16z, and there can be no assurance that the investments will be profitable or that other investments made in the future will have similar characteristics or results. A list of investments made by funds managed by Andreessen Horowitz (excluding investments and certain publicly traded cryptocurrencies/ digital assets for which the issuer has not provided permission for a16z to disclose publicly) is available at https://a16z.com/investments/.

Charts and graphs provided within are for informational purposes solely and should not be relied upon when making any investment decision. Past performance is not indicative of future results. The content speaks only as of the date indicated. Any projections, estimates, forecasts, targets, prospects, and/or opinions expressed in these materials are subject to change without notice and may differ or be contrary to opinions expressed by others. Please see https://a16z.com/disclosures for additional important information.

The enterprise is changing

Sign up for our enterprise newsletter to get the a16z take on the trends reshaping B2B and enterprise tech.