What are the biggest GTM mistakes founders make? At this year’s SaaStr Europa, Jason Lemkin shared The Top 10 Mistakes Founders Make Again and Again. Some are decades-old problems, while others have emerged from this new world we’re in. Let’s jump right in.
Key takeaways:
- Hiring the Right VP of Sales: Ensure your VP of Sales is willing to sell and knows the product intimately. Avoid hiring those who are burnt out or unwilling to carry a bag. They must be able to demo the product effectively before starting.
- Marketing Missteps: Avoid hiring product marketers or brand experts when you need demand generation. Look for marketers who can generate leads and have a proven track record of hitting their marketing quotas.
- Founder Involvement in Sales: Founders should not completely step out of sales. Even with a great VP of Sales, founders should remain involved, especially in middle and closing stages of deals to leverage their product expertise and vision.
- AI Feature Parity: Ensure your product has AI feature parity with competitors. This is crucial for staying competitive, especially in enterprise sales. Evaluate if your CTO can handle the integration of AI into your product.
- Profitability vs. Growth: While profitability is important, growth is still the primary metric for venture capitalists and potential exits. Aim for T2D3 (triple, triple, double, double, double) growth to attract funding and achieve a successful exit.
- Customer Success and Sales: Be cautious about integrating customer success into sales. This can lead to weaponizing CS and negatively impact customer satisfaction. Ensure someone is dedicated to keeping customers happy without the pressure of sales targets.
- Cutting Marketing Budgets: Cutting marketing budgets to zero can severely impact future growth. Instead, work with your marketing team to optimize and reduce spend without eliminating it entirely. Focus on long-term pipeline building rather than instant ROI.
GTM Mistake #1: Hiring A VP of Sales That Can’t Sell or Demo the Product Themselves
Mistake number one has always been an issue, and it’s the number one reason startups struggle in today’s world. They hire a VP of Sales who doesn’t want to sell or learn the product. Jason has sat in on interviews with 50-100 VPs of Sales, and many of them don’t even know what the product was in their 4th or 5th interview.
If you go head-to-head with a competitor whose VP of Sales knows the product cold, you’ll lose every deal. In the old days of having offices, before anyone in sales from the bottom to the top started, they had to crush a demo for you.
You also don’t want to hire a VP of Sales who won’t carry a bag. In the old days, Jason wasn’t sure if a VP of Sales needed to carry a bag. If you joined a startup at $2M and wanted to get to $6M with reps doing $400k, that VP of Sales would need to hire ten reps.
There wouldn’t be enough time for them to carry a bag for six months and hire those ten people. Today, he’s 100% sure that your VP of Sales must be willing to carry a bag, and pitch your product.
GTM Mistake #2: A VP of Marketing Who Can’t Do Demand Generation
This is another founder GTM mistake that’s been around for a while. In the old days, the wrong VP of Marketing hire was someone who would get blue pens with your logo on them. That’s a field marketer, and you need someone who can do demand gen.
There are so many great SaaS veterans today from great companies, so it’s harder to determine which marketers know how to get you more leads. You don’t want to hire a product marketer, a corporate marketer, or a strategist. Why?
- The product marketer doesn’t make sense between $2M and $10M in revenue.
- The corporate marketer or brand expert doesn’t make sense until you have a brand and everyone’s heard of you. They don’t do demand gen.
- Avoid the strategist at all costs. They don’t understand marketing.
What you do want is someone who can share their commit. “I got 123% of lead commit,” or “I hit 118% of my MQLs.” The acronym doesn’t matter. The best demand-gen marketers are machines who generate pipeline and brag about what they did.
GTM Mistake #3: Stepping Out Of Sales
Founders often want to step out of sales after hiring a GTM team. They want to get back to product. Categories are more competitive today, not just because there are more vendors. Software is better, and AI makes it more so. 90% of the time, sales falls when a founder steps out of it.
Yes, if you have an elite-level VP of Sales who has done it before, still wants to carry a bag, has used your product regularly, and checks every box, you can step out of sales. But in reality:
- Can they demo better than you?
- Do they know the objections?
- Do they know the integrations?
- Do they understand how the API works?
- Do they know the competitive landscape better than you?
- Or why you lose?
99% of the time, they probably don’t. When you step out of sales, tough deals don’t close. When you hire a great VP of Sales, they don’t let you get out of sales. They just turn you into a middler.
Any great VP of Sales will be a better opener and closer than you, but people still love talking to the CEO. So, they bring you into a deal, increasing the odds of that deal closing.
GTM Mistake #4: Cutting Marketing Budgets to Almost Nothing
When growth comes up short, and you have a marketing budget of a few million, that’s the first place that gets cut. No one wants to do layoffs, cut sales, or fire good engineers, so the marketing budget is the simplest thing left to attack.
A lot of folks are cutting marketing spend to zero. When you cut sales, you’re cutting your present. When you cut marketing, you’re cutting your future.
A lot of public SaaS companies are too efficient. They only focus on limited digital stuff with instant ROI, but you can’t build pipeline that way. Almost everything in marketing will have a longer sales cycle than an inbound lead saying, “I want to buy today.”
If you have to cut, you have to cut. But if you can, find someone who knows how to build pipe, leads, and opportunities when times are tough, give them a budget, and trust them to force rank that spend. Don’t cut it to zero.
GTM Mistake #5: Not Properly Jumping on the AI Bandwagon
AI can be confusing in B2B because adding a lot of hallucinations into your app next week doesn’t make it better, or you don’t need to make text into cartoons. If you’re an asphalt company, you might not need AI to manage your projects. But there are two important things to understand here.
- AI is where all the budget is right now.
- This is where the competition is.
Whether you believe in AI or not, you must have AI feature parity, or you’ll lose the deal every time. So, sit down with your team and have an honest conversation about what AI parity looks like in your space and if you have it.
Also, determine whether you have the right CTO to handle these changes. To win, you have to hire hackers and tinkerers who love working on the bleeding edge of technology. If they aren’t sure how to integrate AI into your product, ask if you need a new CTO.
If you don’t jump on the bandwagon in a meaningful way, your competitiveness will continue to decay.
GTM Mistake #6: Putting Profitability Above Growth
We know this a little better than we did a couple of months ago, but social media and VCs are still sending the wrong message. In the broad world, many people believe profitability matters above all.
You can’t go public or be acquired on 10% growth. Hooray, you’re profitable, but that’s not the goal. For public companies, growth is still worth twice as much as profitability. For startups, it’s probably 4-10x.
And for startups, you still have to hit T2D2 or better to get funded: triple, triple, double, double. Some VCs may cut you some slack, but the goal of venture investing is to IPO within a decade.
To IPO, you have to be doing at least $200M and growing 40%. What does it take to hit $200M, growing 40% in 10 years? You probably have to triple at a million to three and go from three to nine, nine to 18, and 18 to 36. Most startups don’t do this.
Today, you won’t fail if you’re not T2D2, and for venture capital, you can’t burn $700M while doing it. You have to grow just as fast as in 2021 and burn less. Profitability isn’t the end state for investing or an exit.
GTM Mistake #7: Hiring the Broken, the Bitter, and the Fractional
There are too many folks today who are burnt out. You don’t want a VP of Sales who isn’t willing to travel, is too tired, wants to quit, or wants to be fractional with 11 clients. Sales is hard, and it can burn you out. Most people don’t magically rebound after two years unless you’re a founder or an Olympian.
The transition from 2021 to 2023 was brutal. The world of 2021 lasted almost two years, so long we all thought it was the new normal. VCs thought everyone would be a unicorn and people raised insane capital.
Sales is hard, and you have to hire folks who want to play the game for 48 minutes. You don’t want people with three jobs who want to run a business on the side or be fractional for seven different companies.
People are broken and angry because of the velocity of change, and you can’t hire these people.
GTM Mistake #8: Hiring for the Logo
Don’t hire for the logo. Founders have been making this mistake since SaaStr began. We all succumb to it. “I got someone from Notion or Insider or Mailchimp.” A first-time founder said they found the greatest person who said they were at HubSpot early. Early for them was $200M ARR.
The simplest cheat code here is to put your hand over the LinkedIn job titles and ask yourself, “Would I still hire this person if they didn’t work at x company?” The answer is no. Whatever you do, challenge people on your team to see if they’re hiring someone based on a logo. Don’t do it if there’s any hesitation.
GTM Mistake #9: Looking for Instant ROI
It doesn’t exist. People are cutting marketing expenses to nothing and cutting retreats. The bigger issue is that people spend all their time in free marketing to make up for it. “We’re not going to do booths, joint marketing, or spend, but we’ll do a podcast.” Then, they proceed to spend three months planning a podcast, building a studio, getting the same guests everyone else has, and potentially wasting a lot of time.
Building a podcast isn’t a bad idea. Do 100 of anything, and you build something. But think about the soft cost, time, and energy of your six-figure employees building one podcast.
Free marketing is great, but anything other than viral usually has a high soft cost. Free is not magical. Building pipeline takes time.
GTM Mistake #10: Eliminating True Customer Success
There is an operational tragedy in SaaS. As parts of the market came under stress and growth got harder, we did something wrong. Everyone raised prices without earning it. Slack did its first price increase in history. HubSpot did two after having almost the same pricing for a decade.
It’s one thing to launch a new addition with different functionality and integrations and raise the prices. But if you raise the price of a product three times with no change, people don’t like that.
People aren’t as receptive to a cross-sell when you rip them off in the core one. If your product is cheap relative to value and great, and someone from the company calls and says, “We have another product we’re launching.”Great! Only a handful of great, cheap, and trusted vendors exist.
You don’t want to push your existing customers to make up for the gap on new customers, so be attuned to this as a founder. The worst part of this was when we decided customer success should be part of sales.
By having customer success report to sales, you weaponize them. Instead of one person in the company focusing on customer happiness, they’re now focused on monetizing the base. So, whose job is it to make your top 20-30% of customers happy? Someone needs to be doing it.
Summary:
- Hire a VP of Sales that can sell or demo the product
- Hire a VP of Marketing who can do demand generation
- As a Founder or CEO, stay in sales
- Don’t cut your marketing budgets to almost nothing
- Jump on the AI bandwagon in a meaningful way
- Prioritize growth
- Be cautious when hiring the broken, the bitter, and the fractional
- Don’t hire for the logo
- ROI isn’t always instant, build pipeline
- Don’t eliminate true customer success