Marketing, Product-Market Fit, Sales Process, Startup Sales

The Easy Guide to Product-Market Fit (PMF)

90% of startups fail because they never reach Product-Market Fit (PMF). PMF is a function of a variety of daily, outward-facing activities that occur at an early stage: customer & product development. This represents the basic framework all startups need to find success and to really begin scaling.

I have met, mentored, and seen too many startups and entrepreneurs waste valuable time, effort, and money chasing a problem that doesn’t exist, with a solution that no one wants. Enthusiasm and passion alone don’t cut it. Often, startup failure directly correlated with the lack of these critical development efforts. But you don’t need to take my word for it.

Steve Blank, esteemed Silicon Valley pioneer and author, is a huge champion of the process. His books and research powered a lot of Eric Ries’ thinking in the Lean Startup approach today which is generally the gold standard by which modern tech companies are run. And be sure to check out Marc Andreesen’s famous post on the matter here too.


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Customer Development is a formalized process in which the Entrepreneur and his team must “get out of the building” and ultimately communicate with their prospective customer base to identify the key ingredients to a successful startup. It’s a combination of all the “outward-facing” activities (e.g. sales, business development, followed by marketing) that the founding team must engage ideally before they go all-in with the startup.

Steve breaks it down into four steps:

  1. Customer Discovery – Who’s the customer base? What’s the problem that I’m solving? Talk to 50 potential customers and get to know them. Do this before you invest too much, if any resources, in building the actual product. Revenue should always be aligned behind. There’s enough data to begin developing a Minimally Viable Product (MVP) and core features that begin to help the Client overcome the problem you’re solving for.
  2. Customer Validation – Is the market reacting positively and buying your solution? Is there some semblance of process and marketing messages that are resonating positively with the customer base?  This is the beginning of demand-generation and the production of a marketing message that will further drive demand. The Product is there and new features are being added to the product that will continue to meet the clients’ expectations. The first sales are complete and the organization begins to understand what actions are required to move a buyer down the sales funnel.
  3. Customer Creation – Can the organization drive repeatable, end-user demand that gets added to the sales funnel? This is where the marketing message matures as more knowledge is acquired about how the clients’ organizations are run. The sales team identifies what the Ideal Customer Profiles (ICP) is, the key decision makers are, buyers, budgets, and processes and how to incorporate those key factors the decision. There are more data points, more customers buying, and more customers lining up to buy. There should be some level of inbound activity and the startup needs to understand and provide material to the customer along their Customer’s Journey. This is where the funnel starts becoming optimized, and the sales and marketing organization is able to provide the customer with resources that answer their relevant questions.
  4. Company Building – How is the startup going to scale? What departments and leaders need to be hired now to continue growing the organization and repeating the customer development process in a way that will generate successful returns? Are we maintaining relevancy as the market is changing? Is our product still #1?This is once product-market fit is obtained and the organization has crafted a product that is directly solving the clients’ challenges. Recruitment, hiring, HR, diversity, and other internal initiatives become more important.

Each of the above steps needs to be studied, understood, and executed. In theory, if this is done correctly, the entrepreneur confirms and defines the purpose of their organization and can grow into a larger enterprise. It is an iterative process that continues to propel the organization forward.

To close, the common theme you will find here is sales. This team represents the outward facing component of the business gathering new information to bring back to marketing, product, and other organizational leaders. They are key and critical to the company’s success and just as important as the idea itself. An early stage sales hire that understands this is key to the success of that organization – often more so than the founders themselves who are not engaging in sales related activities.

A team can have the best product ever, but without the right customer-interfacing mechanisms for adoption and growth, there is nothing.

In my next post, we’ll take an even deeper dive into the importance of an excellent early stage hire, the rescaling your early stage, startup sales organization.

Sales Process

Fun with B2B Funnels

At a high level, startup strategy is generally the same when securing revenue. There are tons of variations of the startup sales funnel, but generally, they can be classified underneath four activities that help acquire modern customers and build the business:

  1. Awareness – Marketing team produces the message, crafts, and pushes the content. The sales team is developing business through their own channels.
  2. Interest – Prospective client consumes Marketing content, and/or responds to Sales call request. The bulk of the education tends to happen here.
  3. Decision – Prospective client is educated, challenged by the company (read: Challenger Sale), and addresses any questions and concerns. This is typically where the sales professional has an opportunity to not only sell her solution but reframe the decision maker’s thinking – while making her product and organization look great in comparison to the competition.
  4. Action – The Client consults with their team and makes a final decision by way of a verbal commitment or signature on the dotted line.

Value is heavier towards the bottom of the funnel. Both parties mutually increase their engagement, devote more of their time, and transfer valuable information to one another. This value can exhibit itself in a variety of ways: from the rep educating the business owner, sending out company swag, to mapping out deal plans via sales methodology (ex. MEDDICC) These can be observations that the selling organization has seen or trends.

Usually, new pieces of insight and information the business owner is unaware of. In return, the prospect confesses their problems, struggles, and helps the rep map out how the deal is going to get done. This is where the sales rep has earned the opportunity to showcase his or her knowledge and expertise – and win the trust of the prospect.

Now you have startups flipping the funnel and engaging in more modern processes such as Account Based Marketing/Sales which specifically targets your ideal buyers. The framework above is representative of more traditional b2b SaaS which is the world I live in.  The beauty of startups, and why I choose this career path, is that startups are typically freed of “traditional” business practices and methods.

The beauty of startups, and why I choose this career path, is that startups are usually released of “traditional” business practices and methods. Entrepreneurs can play around with the different types of sales processes and methodologies within the funnel that work best for their product, industry, customers, and organization.


Powering up with your Peers

Put down the ROI for a second. Yes, you’re right – we do need more revenue, growth, and we do need to maximize our revenue-building time. But we are social creatures and functions of our environment. The environment, tech ecosystem, surroundings, whatever you want to call it, helps shape who we are, what our companies do, how our strategies are formed, how to obtain growth, and also help us to think in new ways.

Real relationships come in all shapes, forms, and sizes. You have:

  • Family
  • College friends
  • Team Members
  • Industry peers
  • Field peers
  • Advisors, Mentors
  • Board Members
  • Prospects
  • Clients
  • Mentees

Each unique relationship that falls underneath these silos provide unique perspectives, advice, guidance, and outlooks. They also can help when you’re in need. Paying it forward is great, but relationships need to be actively managed. Relationships shouldn’t be strictly transactional, but I do feel that relationships are made up of a series of transactions, over time.

They build:

  1. Familiarity if you meet someone for the first time. Perhaps you’re sharing a few extra details on the presentation you made. They know you as that person who knows x or y.
  2. Credibility as you engage and share what’s happening at your organization or challenges in life. Usually, this is is a result of repeat interaction.
  3. Trust. This is the “closed deal,” the outcome you’re seeking. These relationships represent the ultimate outcome in which you can bet on someone and their word because you know them so well. You no longer question them and their expertise. Instead, you lean on them, or they lean on you for their professional or personal advice.

We’re never perfect as human beings, and we should always strive to be intellectually curious. Sales professionals especially should always be in a constant state of learning and networking. Regularly take time out of your week to meet with these people. It is a continuous cycle of actions representing giving and receiving.

Close the deals, but maintain the relationships so you may continue to grow as a person.