1,200 private companies are expected to run out of money next year. So, why should differentiation be the new survival instinct for B2B SaaS
In western Wyoming, autumn is when trout retreat from the wild waters of the Hoback, the Buffalo, Pacific Creek, Spread Creek, and other tributaries into the deeper, calmer main channels of the Snake River. There they will hold fast, close to the bottom, and barely eat in order to conserve energy until, hopefully, the Spring spawn. No amount of coaxing (or attractors or stimulants fly patterns…) will get them to budge.
This is also the tech industry, right now.
The season of easy money is over and founders and funders retreat from eventual growth at all costs to an efficient growth at an acceptable cost model.
Need proof, look no further than Salesforce and Hubspot’s homepages:
They are likely just a reflection of what people are searching for, but still...faster, better...how embarrassing (h/t to Dave Gerhardt for the find and grab)
It only goes to show that nobody is immune from the retreat or regression to the mean. Also, there’s a reason it’s called a regression and not a progression.
Trout have a deep-channel retreat strategy for survival, but that’s because they know exactly how long they need to chill until food sources start to flow again. Given that 1,200 private companies are expected to run out of money by the end of next year, a deep-channel retreat is not a strategy that will work for many early-stage tech start-ups.
Efficient growth is not enough, you need effective growth.
We are seeing start-ups double down on revenue by adding to the sales team and stack, but a sales person has 3-6 months of training and ramp and it will likely/hopefully be 12 months before they generate any ROI.
Companies are also doubling down on the hard sell of digital direct marketing tactics with new hires in the marketing director and manager positions. And while direct marketing can achieve small incremental gains through visibility, it can’t establish sustainable competitive differentiation. Spending can outpace a shit save time/save money story, but a differentiated story drives return.
It’s all gotten very downstream tactical again and leaders have stopped thinking upstream of sales and marketing, where strategy lives.
Not to regress to Sun Tzu quotes, but…”Strategy without tactics is the slowest route to victory. Tactics without strategy is the noise before defeat.”
What do we mean by strategy?
Strategy is...A clear, articulated, and differentiated vision for the future of the market, based on qualitative and quantitative information and analysis, that is own-able, scaleable, and actionable. It’s a thesis that can be tested, iterated, and adjusted until true.
You need Strategy for...Clarity. Alignment. Differentiation. Inspiration.
Category Strategy, what we do at DRMG, uses components of category design to achieve that clear, articulated, and differentiated vision. It’s then baked into go-to-market to make it actionable and measurable.
There is so much opportunity within the space to differentiate the culture and the product, but zero tolerance for any type of associated risk, real or perceived. Currently, early-stage start-ups are content to hold fast in the slow current at the bottom of the river and starve to death. The lucky few who are fat enough will make it to Spring. And then what?
Aim for Interesting; Don’t Be Boring
If you want a deeper dive on the imperative to be interesting, listen to the first episode of Let’s Make This More Interesting podcast, by Adam Morgan, the founder of eatbigfish agency, the author of the challenger brand category. Adam discusses a new analysis that reveals the real financial cost to a business of being dull with Marketing Effectiveness expert Peter Field. Exactly how much more expensive is it to run dull communications than engaging ones? And what can we learn from people who can’t afford to bore their audiences?
Buffett advised, "Buy commodities, sell brands." The new model is "Buy brands, sell commodities." Stanley is the case-study.Read More →
From pre-seed to pre-IPO, we've worked with leadership teams on up-market initiatives and down-market focus, teams in need of post-merger/acquisition alignment, teams that were growing fast and teams that were "restructuring," teams that were pivoting their focus, teams transitioning from a service model to a SaaS model, and teams on the hunt for their next round. In the last 26 months, DRMG clients have raised $96 million. We can likely help your team, as well.Read More →
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