Survival to Thrival - Summary & Perspective

I recently stumbled upon Survival to Thrival, written by Bob Tinker and Tae Hea Nahm. The book is a gold mine for anyone who is part of an early-stage startup and / or is struggling at any stage, from founding to finding Product Market Fit (PMF), to Go To Market fit, to achieving sustained and accelerated growth. I've summarized my takeaways in this post so you can efficiently soak up concise learnings distilled from pages and pages of wisdom. I've also supplemented the summary with real-world examples from my own experiences at startups and established scaled-up organizations, as well as with those from other successful organizations.

Target audience

If you are an entrepreneur, an employee, or an investor in the enterprise startup journey, this book is for you

Differentiation

Focussing on enterprise startup journeys, as opposed to consumer startup journeys or navigating established enterprises

Lightbulb moments

Product market fit - which is a well-known and embraced concept by Product leaders, is not sufficient for success. Go-to-market strategy and GTM fit are equally important.

Summary

The enterprise startup journey is categorized in 5 steps:

1. Founding

2. Product Market Fit

3. Go To Market Fit

4. Accelerate to category leader

5. Sustainable industry leader

1. Founding

a) To identify the right founding idea, start with the problem. As obvious as this sounds, Silicon Valley often gets it backwards and puts the technology first, case in point, the recent craze around Gen AI. Enterprise customers don't buy technology for technology's sake. They buy it to solve problems, improve their business, or defend themselves against disruption.

b) Test if the founding idea has Gravity to attract talent and capital. A great founding idea combined with passionate founders creates the gravity. External validation amplifies the gravitational force. The best validation is through early enterprise customer traction, either paid or unpaid. Additionally, gravity for team members is created by a combination of tackling a meaningful problem with a compelling solution and working with great people.

c) Find the right Co-founders who have a shared passion for the mission and founding idea, chemistry, a solid working relationship and a deep sense of trust with each other. Pitfalls to avoid include: too many co-founders, seeming "unfair" equity split, and Founder drama, aka inability to work well together

Storytime: Eric Yuan started Zoom with a strong awareness of the key problem - video conferencing sucked. It wasn't to sell the next video codec - it was to solve an everyday frustration of experiencing poor-quality video conferencing.

2. Product Market Fit

a) Identifying Enterprise Product Market Fit (PMF): While in the consumer world, PMF is defined by adoption or usage, Enterprise PMF is also about paying reference customers. Three specific signs of enterprise PMF: 1. Paying customers, 2. Real and increasing usage, 3. Recommendation/Virality leading to increasing inbound customer interest.

b) Finding PMF: The path to PMF involves listening, experimenting and iterating. To find PMF, Start with the hypothesis of a compelling solution, spend 70% of your efforts ruthlessly focussing on the initial hypothesis and 30% exploring adjacencies, iterate by experimenting with prototypes and listening to customers, and finally identify customer hot spots to arrive at your PMF

c) Test and iterate by seeking ruthless feedback from "teaching customers" - these are thoughtful potential customers with a vision and an immediate pain point that they need help addressing. Also, leverage digital marketing as a test bed by sending emails to different potential target customers with different descriptions of the pain point and solution and measure responses and actions such as opens, clicks, downloads, and registrations

d) Pivot if needed. Based on the cyclical approach of testing with customers as described above, pivot to an adjacent focus area as necessary

e) PMF challenges:

i. The new customer hotspot you identify might be different from your initial hypothesis - this can be hard for passionate founders. Recognize the founder bias and do the right thing.

ii. Early customers can get left behind if the focus changes. Acknowledge and explain the shift, and refund them. They might become lifelong customers of the new product in the future

iii. Technical debt from quick iterations. Tech debt is a side effect of moving fast and experimenting and is virtually unavoidable in early-stage startups. Keep a list of where the tech debt is, start fixing it by cleaning up a little on each release, and culturally make it cool to work on refactoring as it is to build new stuff to sell.

Story time: Zoom found its initial PMF for internal and external real-time corporate communications. While Zoom did solve use cases across healthcare, education, and financial services, it wasn't until the pandemic hit that Zoom doubled down on consumers and expanded on these additional sectors.

3. Go To Market Fit

a) Many enterprise startups achieve PMF, but don't achieve growth and acceleration due to missing GTM Fit, which accounts for a) How a startup finds and wins it customers, b) how repeatable it's wins are, and c) what those win costs are

b) 3 parts of GTM fit: Model, Playbook and Urgency

1. GTM Models abound: Direct, Channel, Web, Freemium, Trial & Upsell, Marketing led and Sales led. Early-stage startups have to decide on one model due to resource limits. GTM models have to do 4 things: a) Make customers aware of the product b) Get them to evaluate the product c) Develop the right pricing/packaging d) Close them to purchase/commit Models range from high touch to light touch, and the answer on which model to pick depends upon things like target customers, customer decision-making process, the type of product, the gross margin and onboarding time

2. GTM Playbook comes from early sales and marketing reps. Based on whether your GTM model is high-touch sales-led, light-touch marketing-led, or zero-touch self-serve, define the stages of your GTM playbook. An example of light touch marketing led model includes the following steps: Digital Marketing -> Webinar -> Nurture leads -> Free trial -> Drive usage -> Inside sales -> Purchase commit -> Onboard -> Live production -> Upsell / Renew The results of a good playback are: a) Marketing / Sales know what to do and say at each step b) The rest of the company knows how to support each step with tools, programs, and product

3. Urgency answers a simple question - why buy now, not six months from now? Focus on the right use cases to create urgent demand. Prioritize customer's opportunities that are tied to higher urgency problems, even if it comes at the cost of sacrificing lower urgency problems outside the playbook

So, how do you know if you've arrived at GTM Fit? The organization will realize momentum and growth, leads will grow organically, incremental investment in sales and marketing will make leads and sales pipeline grow, new reps will quickly learn what to do and win, and finally, the rest of the company will know what they need to do to support the GTM plan

Storytime: One of the key ways Zoom differentiated from competitors is by offering a Freemium GTM model from the get-go, with the free model being as feature-rich as the paid version, barring the 40-minute meeting limit. The competitors, including Teams, Google Meet, and WebEx, didn't have an "easy to get started with" Freemium model until after the pandemic hit.

4. Accelerate to category leadership

You are ready for this step when your startup has gone from trying not to die to figuring out how to win. Signs you are here include seeing your sales pipeline fill up with your target logos and noticing that every customer, regardless of vertical, has the same problem with an urgency - the problem you are solving. Here's what to do next...

a) Accelerate the business, become the category leader, and stay out in the front. If the category doesn't exist yet, you have the perfect opportunity to create it. Being a category leader will create a virtuous cycle of customers, investment, and talent that drives growth and reinforces leadership. Influence industry analysts through top customer feedback to win and retain the category leader spot.

b) Accelerating the business will mean significant shifts across the company, including i. Execution: Focussed wins -> aggressive land grabs, Careful execution -> calculated recklessness

ii. Mindset: Survival -> Thrival, Product-led culture -> GTM-led culture, Stingy hiring -> Fast hiring

iii. Market: Working in obscurity -> obsess about awareness, Market development -> Thought leadership

iv. Investors: Early-product investors -> Growth investors

c) Track growth and expenses via acceleration dashboards and early warning systems. Helpful metrics include current quarter sales, expense forecast, cash burn and cash balance, plus a forward-looking combination of sales forecast and pipeline that serves as an early warning system

d) To help keep a rapidly growing team pointed in the same direction, it is critical to set explicit company and team goals as well as tackle dependencies and issues. Lots of companies use Google's OKRs for communicating and tracking goals - supplement this with two additional concepts for completeness: 1. Dependencies & 2. Company-level issues. Raise these two to the same level of attention and stature as company goals and objectives to address the challenges head-on

Story time: Zoom demonstrated accelerations via executing on aggressive land grabs by hiring and supporting a stellar sales team, powered by a passionate product team. Additionally, over the pandemic, Zoom grew 4 fold in going from stingy hiring -> fast hiring, to support the increasing customer demands on the business

5. Achieving Sustainable Industry leadership

If your startup has made it this far, and not many do, congratulations!

You know it's time to go from accelerating execution to sustainable leadership when execution breaks and jeopardizes the overall business - for example, Facebook went from "Move fast and break things" to "Move fast with stable infrastructure" in 2014. Here's how to go towards sustainable industry leadership:

a) Transcend the initial category to become an industry leader by extending into adjacent categories through build or buy and adding more GTM models to reach into new markets. Expand from initial niche markets to a broader horizontal or multiple verticals.

b) Achieve escape velocity by painting the bigger vision internally and externally, defining company-wide goals and metrics that reinforce new adjacencies and expansions, and hiving off core teams to execute if building or acquiring a company if going down the buy route.

There you have it, Survival to Thrival, in a concise version punctuated with my personal stories for color. This is a trailer; if you like what you read, I highly recommend the full read.