Hooks and Upsell: Product and GTM Strategy for Bottoms-Up Adoption


Last month I gave a talk at Open Core Summit 2020 on the topic of bottoms-up adoption product and go-to-market strategy. The driving force for this presentation came from these insights:

1) In trying to get to product-market-fit, many enterprise startups focus on product but forget about market--often due to a lack of Go-To-Market (GTM) experience. Some knowledge on GTM adoption and sales models can help founders save precious time and money while building up the company, long before bringing on a VP Sales or Marketing.

2) Bottoms-up Adoption and Product-led GTM models have become very popular as driven by commercial open-source, freemium SaaS, or similar methodologies. But many startups often get the execution wrong; having spent time with several successful bottoms-up companies, I believe there is a method to the madness for doing it correctly.

Here is the video of the presentation (slides at the bottom), along with key takeaways:


1: GTM drives Product, not Vice-Versa

Having talked with a lot of startups, I often see this approach to company building:
1) Build a product
2) Figure out how to sell the product
3) Iterate/pivot/start over until product-market-fit is achieved, or startup dies

Smart enterprise startups and veteran founders have a different method:
1) Deeply understand target market, and choose a best fit GTM
2) Build a product that matches the chosen GTM
3) Market and sell the product using the chosen GTM

There's a good reason for this. How your product is built depends not just on the needs of the customer, but also the way the product is adopted and sold. Consider why Hashicorp CEO Dave McJannet stated the number one thing founders should do is "deeply consider go-to-market as part of the product building process."  If you build first and ask questions later, you might create a top-down enterprise platform loaded down with bells and whistles, only to find that what you really needed was a bottoms-up lightweight community tool that solved a single key pain point. 

2: GTM Adoption and Sales Models

In a nutshell, Go-To-Market is the process by which you get customers to understand the product (marketing), actually adopt and use it (distribution), and pay for it (sales...and product!). This is an area in which many technical founders have little experience, but is incredibly important to product-building (as we demonstrated above).

The three most common GTM adoption strategies are:
1) Bottoms-Up: Insertion and usage by "doers" in the org, upsell to managers and executives
2) Top-Down: Insertion and upsell at the executive level, adoption pushed downward in the org
3) Middle-Out: Insertion at the mid-management level, usage pushed downward, upsells pushed upward

Each of these has its place depending on value propositions, adoption cycles, and budget availability for a given pain point and sector. 

The three most commonly used sales models are:
1) Self-Serve: Customer adopts and buys with no sales team required
2) Inside Sales: Sell to customers via video/phone meetings using a stationary sales team
3) Field Sales: The classic in-person traveling sales team for big ticket deals

Each of these sales models fits different adoption strategies, lead generation mechanisms, sales cycles, and average deal sizes. Check out the video or slides for more details.

3: Bottoms-Up Hooks: Growing User Adoption

After spending time working with and studying companies that leverage bottoms-up adoption, I came up with a two-part framework called "Hooks and Upsell." 

Successful bottoms-up companies start with the Hook. This is about having a laser sharp focus on the components needed to first build up user adoption, with a couple of key areas:

Solve a clear, burning paint: Make your product critical path for users by either automating a key, frequent, painful workflow (e.g. PagerDuty, Docker), or creating a utility that is a quiet but fundamental piece of the architecture (Kafka, Stripe). Remember that simply solving an immediate user pain point outweighs creating a piece of complex technical wizardry.

Target a massive user base: It's easier to cultivate a community and increase your chance of referrals and upsell when the user base is already really big. Examples include developers, analysts, data engineers, etc. (Ex: Snyk targets developer users despite being a security product, although the buyers are security). Doers are better than managers due to inherent size and the likelihood to implement something they need in order to solve something else.

Use a lightweight, viral insertion: Make it as easy as humanly possible for a user to adopt your solution. Being free helps, as does easy installs, out-of-box functionality, good UX, and quick time to value. Find ways to create organic virality (e.g. collaborative experiences and "look what I've built!" moments). Target the right influencers and build up community champions who will advocate on your behalf.

Where startups get the hook wrong
- Focus on solving a hard technical problem rather than making life easier for the user
- Try to boil the ocean rather than solving a focused use case
- Too much friction in the insertion. Complex installs, UX sucks, or too much focus on customization.
- Target a user base that just isn't big enough to build a community
- Focus on monetizing too early rather than building sufficient user adoption

4: Bottoms-Up Upsell: Monetizing via the Buyer

Now that you've grown substantial adoption (and possibly a community) among users, it's time for the Upsell. This stage involves monetizing via the buyer, with the following key areas:

Understand what buyers want: Your buyer is not necessarily the same as your user, so understanding the buyer's value proposition is crucial for the sale. Most startups build their paid product MVP with "table-stakes" features like access control, single-sign-on, and support. The best product leaders learn what really drives buyer value. This is usually some product/industry specific combination of peace of mind (security, high availability), collaboration (team efficiency), insights (analytics and metrics), and performance (

Influence buyers to come to you: "If you build it they will come" is the biggest fallacy for product-market fit. Bottoms-up works best when you can create an efficient inbound engine, which usually requires some combination of targeted buyer marketing (content, ads, website, events) and product features (e.g. Slack's paid search history). When you do need to go outbound, identify potential buyers with significant internal freemium usage you can leverage.

Make the product easy to buy: The startup equivalent of "shut up and take my money." Do whatever you can to minimize friction in the sale: Make free to paid upgrades frictionless via SaaS or drop-in license keys; make the commercial product similar enough to the free one to minimize buyer re-education and facilitate inside sales or self-serve; and price elastically in a way that allows your product to grow with the value the customer derives from it.

Where startups get the upsell wrong
- Don't understand differences between user and buyer
- Attempt to monetize individual users rather than at team/org level
- Don't pay enough attention to marketing or product features that drive inbound/conversion
- Bait-and-switch with a commercial product that is vastly different from the free one
- Price in a way that does not align with how the buyer gains value from the product


This summarizes my views on the importance of GTM, various adoption and sales models, and a framework for growing and monetizing bottoms-up adoption (Hooks and Upsell). You can find the slides below.






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