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.

 

 

 

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