Product market fit is achieved by finding the successful intersection of product iteration, competition/market and go-to-market strategy. Finding product market fit (PMF), however, is hard when these three factors confound problem solving in the search for PMF. Fortunately, competition tends to be roughly constant over the period in which a startup is solving for PMF. To control between product iteration and GTM, go-to-market can be broken into five sub-steps in any of which product changes are small enough not to confound. This allows GTM tactics and strategy to be tested and proven or disproven. The five steps are first sale, founder sales, first sales person, sales leadership, scaling sales - each a distinct stage that can be tested and measured. There are metrics abound to measure sales performance, but many - including funnel conversion metrics, LTV and CAC - are fuzzy and imprecise in the early stages of a startup. What matters is whether a software business is adding adequate net new revenue per cash burned as measured by monthly increase in MRR per monthly net cash burned. Cash efficiency should go up at each successive go-to-market step.

1. Five steps of go-to-market
@guyhturner

2. 2
Confounding aspects of product market fit
Product
Iteration
Go-to-market
Strategy (GTM)
PMF
Focused here today
How do you diagnose/solve PMF with confounding?
• Expect competition to stay roughly constant or maybe irrelevant in
the early days
• Break up GTM development into baby steps to hold product
roughly constant at a given GTM step
Competition

3. This is what going-to-market (GTM) feels like
3
You
VS.
How do you add structure to developing GTM?

4. Five steps disaggregate the GTM gauntlet
4
First
sale
Founder
sales
Sales
people
Sales
leader
Scalable
sales
 MVP 
 Early PMF 
PMF 

5. Don’t blindly wield the sword, test and measure
5
Test Measure
• Adjust one variable at a
time(ish) – product, seller,
channel, etc…
• Set time and $ constraints
• Funnel conversion metrics
and CAC/LTV are useful to
watch, but fuzzy early on
• In the end, best metric is
sales per net burn!!!

6. Measuring sales cash efficiency
6
Δ net MRR
Net Burn
η =
Example
<2% bad, 5% okay, 7% great, >10% best in class
• Last month had $5K in MRR, this
month $8K
• Burned (net) $60K
• η = = = 5%
($8K - $5K)
$60K
Δ net MRR
Net Burn

7. -$5 M
$ M
$5 M
$10 M
$15 M
0% 2% 4% 6% 8% 10% 12% 14%
Cash Efficiency (η)
Net Value Created ($M)
Why this metric? Get richer faster
7
How much value does a startup at $100K MRR
create in a year depending on cash efficiency?
Note: Assumed valuation multiple on revenue goes from 2x at no growth to 7x at 15% efficiency based on market experience
3%
Increasing value creation
above ~3% cash efficiency
Value
destroying

8. First sale – find A customer for your MVP
8
Testing for
Watchouts before
moving to next step
• Will someone use product?
• Will someone pay for product?
• What is missing in product?
• Your mom doesn’t count as a
customer; friends maybe
• Anyone can find A customer

9. Founder sales – find more customers for MVP
9
• Will multiple people use the
same product?
• In what segments does the
product resonate?
• What is missing? Need to have
or nice to have?
• Selling to all of your friends
doesn’t count
• Significant customization for
different customers
• Abnormally low LTV/CAC ratio
(<<3) and/or low η
Testing for
Watchouts before
moving to next step

10. Sales people – get others to sell your product
10
• Value of product without
“founder passion”
• Level of sales experience
required (Jr/Sr, inside/outside)
• Early coding of repeatable sales
process
• Trying to skip this step!
• Got lucky or unlucky with one
sales person (test w/ 3-4)
• Abnormally low LTV/CAC ratio
(<<3) and/or low η
Testing for
Watchouts before
moving to next step

11. Sales leader – someone else to lead sales
11
• Broadness of PMF
• Level of leadership required to
achieve repeatability
• Productive marketing demand
gen channels/strategy to feed
larger sales team
• Sales productivity dropping 
you forgot to feed funnel!
• Abnormally low LTV/CAC ratio
(<<3) and/or low η
• Sales leader 30-60 day
forecasts consistently >30% off
(person or process issue?)
Testing for
Watchouts before
moving to next step

12. Scalable sales – get bigger faster
12
• Maintaining cash efficiency
with big spend
• Land and expand + ability to
grow average contract value
• Ability to hire and train large
sales team
• New sales/marketing channels
• Optimization of potential value
from customers (leaving $ on
table?)
• Need to verticalize sales teams
• Need to add enterprise sales
when historically inside sales
(moving up market)
Testing for
Watchouts before
moving to next step

13. 13
What to expect when you put it together
First
sale
Founder
sales
Sales
people
Sales
leader
Scalable
sales
Cash
efficiency
(η)
< 2% 2-5% 5% 7% >7%
Net burn*
per month
($K)
$50K $50K $75K $100K $200K
*Burn shown for non-coastal companies. Might be 2x on coasts.
Implied Δ
MRR per
month
$1K $2K $4K $7K $14K
Look for increasing efficiency before
increasing burn and moving to next step
 MVP   Early PMF  PMF 
GTM Stage

14. Thank You + Q&A
@guyhturner
@hydeparkvp
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