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What can we learn from hyper competitive markets in SaaS? That's exactly what we asked in this episode. We get into the pitfalls and strategies you can use to do better against the competition.
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- (00:00) - Introduction
- (03:44) - Hyper compeitive markets
- (06:12) - Pitfalls to watch out for
- (10:18) - Disruption happens
- (13:42) - What are folks gonna do?
- (15:04) - Horizontal vs vertical SaaS
- (19:05) - Outcompete on differentiation
- (25:33) - Outcompete on GTM
- (30:48) - Outcompete on cash
***
This episode is brought to you by Growblocks. Finding and fixing problems in your GTM shouldn't take weeks. It should happen instantly.
That's why Growblocks built the first RevOps platform that shows you your entire funnel, split by motions, segments and more - so you can find problems, the root-cause and identify solutions fast, all in the same platform.
***
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Creators & Guests
What is The Revenue Formula?
This podcast is about scaling tech startups.
Hosted by Toni Hohlbein & Mikkel Plaehn, together they look at the full funnel.
With a combined 20 years of experience in B2B SaaS and 3 exits, they discuss growing pains, challenges and opportunities they’ve faced. Whether you're working in RevOps, sales, operations, finance or marketing - if you care about revenue, you'll care about this podcast.
If there’s one thing they hate, it’s talk. We know, it’s a bit of an oxymoron. But execution and focus is the key - that’s why each episode is designed to give 1-2 very concrete takeaways.
[00:00:00] Toni: Hey everyone. This is Toni Hohlbein from Growblocks. You are listening to the Revenue Formula with Mikkel and Toni.
[00:00:06] In today's episode, we talk about hyper competitive markets and what you can learn even if you're not facing hyper competition just yet. Enjoy.
[00:00:19] So right after this podcast, we need to move the table around and have like, um,
[00:00:23] Mikkel: that's true. Because someone was late, we might only do one episode today, but let's see. Well, two, not three, is actually
[00:00:31] Toni: let's see. We'll, we'll get it done, we'll get it done.
[00:00:34] Mikkel: So, um, Saturday,
[00:00:39] Toni: Saturday was the day after your birthday,
[00:00:43] Mikkel: Correct. Correct. And, uh, of course, my boss had the valid excuse that he forgot to hit enter on a message.
[00:00:51] Toni: It was all there. I wrote it out really nicely. It was Happy B-day and it was sitting there and it's
[00:00:56] Mikkel: For you, I think this is good, because My expectation is just like, you know, you forget, you know, that's just who you are. And I know you, so it's totally fine.
[00:01:05] Um,
[00:01:05] Toni: you, know what, if I can remember the birthday of my kids, my wife, my mom, my dad. And then I selected my sister. I selected a few other people. I'm good. I'm
[00:01:16] Mikkel: Yeah. It's just like, I can't even remember half the people in my family's
[00:01:19] Toni: The funny, the funny thing is, right, with, you know, my profession, I can't even say to all of them, it's like, I'm just not a numbers guy, you
[00:01:26] Mikkel: just not a numbers guy. If only there was a process we could build. But you know what? We should sit once a year, like second January, when everything is like, everything is starting up. We should just schedule Slack messages to everyone on the team's like, happy birthday. That would actually be the way to go.
[00:01:44] Also schedule an email occasionally. So people don't know.
[00:01:47] Toni: a sequence.
[00:01:48] Mikkel: And we can just use AI to write out
[00:01:52] Toni: exactly. Maybe like, even like a video of
[00:01:54] Mikkel: Yeah, that's how that's the way to go. That's the way to
[00:01:57] Toni: Happy birthday, Mikkel.
[00:02:01] Mikkel: it's good. And actually for the first time, uh, actually it was the first time we decided to go out for dinner at a restaurant, me, my wife, and our three kids,
[00:02:09] Toni: Oh wow.
[00:02:09] Mikkel: and we had the expectation
[00:02:11] Toni: it's going to be complete mayhem.
[00:02:13] Mikkel: once we left, it was just going to be, you know, Totally torn down
[00:02:17] Toni: also the, the whole restaurant, once you get up to pay, everyone was like,
[00:02:21] Mikkel: finally, no. We had a couple sitting next to us and I felt sorry for them. It was like, you could see when, you know, we drop a glass on the floor and it breaks and soda everywhere. They're like, we just wanted to have a nice, calm dinner, and they placed us next to you. Can,
[00:02:35] Toni: we, can we please have the, the table next to the toilet instead, please?
[00:02:40] Mikkel: we sit in the
[00:02:41] Toni: In the toilet, maybe?
[00:02:42] Mikkel: Anyway, so it was a sushi restaurant. It's a super competitive kind of market in general. Everyone starts a
[00:02:49] Toni: Tell us, why did you go there then?
[00:02:50] Why, why,
[00:02:51] Mikkel: Because the only reason we went there was because we're going to do this episode. No, no, no. It was my attempt to make a Segway. I didn't have anything
[00:02:59] Toni: me, let me guess. They're just, uh, out competing on, um, cost. And there's a super cheap Yeah. Sushi place, which is always a good sign
[00:03:08] a
[00:03:08] Mikkel: Actually I also forgot to say, the reason we went there actually, they have a robot that they give the drinks and it drives down to the table hands it off.
[00:03:18] We obviously come with our double baby stroller and park it inside the restaurant
[00:03:22] Toni: Of course.
[00:03:23] Mikkel: and what happens the robot comes because it has like a track on the floor that we didn't think about and it just smashes into the stroller and gets stuck and just kind of like breaks down. So that was all good fun. But today, we're going to talk
[00:03:40] Toni: They really liked you in that restaurant.
[00:03:42] Mikkel: they really did. They really did.
[00:03:44] But we're going to talk a bit about hyper competitive markets. And I kind of forget why this idea came about. I think we spoke with someone
[00:03:52] Toni: with um, Frank Nardi.
[00:03:53] Mikkel: Frank Nardi, yeah, yeah, yeah. So he, he's obviously operating in a, is it a hyper competitive market? Okay, so he was the origin of the idea, I guess.
[00:04:01] And I just felt like we've not talked about the fact that some folks are going to be in a very, very competitive market. And actually, I think the main trigger for me was there were a few things you could learn, even though you aren't in a competitive market
[00:04:15] Toni: No, and it's also, it's so funny, right? Because we are, as Growblocks, not in a competitive market yet. We would
[00:04:22] Mikkel: so
[00:04:23] Toni: a lot more folks to start competing because then we could educate a lot of people more.
[00:04:28] We would obviously still take home the deal because we're just the better software there. Uh, but still it's like, you're like in this very early on market and you're like, oh, it would be so nice to have a more competitive market. And then, you know, I flipped my brain around when I was working in, uh, in very competitive markets.
[00:04:45] And, uh, you know, would be so nice to have like a, a softer market with less competition, you know, would be so much better for CAC Payback and so forth. And it's, you know, it's those two, the grass is always greener on the other
[00:04:56] Mikkel: greener. Yeah. I remember I was acquiring a competitor and, and I think actually it was Ulrik saying, you know what, it's also just going to be really nice to go in.
[00:05:04] And kind of pull the lever that just makes the engine go bzzzzzzzzzzzzzzzzz on that competitor.
[00:05:09] Toni: Yeah, I think, I think the quote is the saying used to me, Toni, it's, it's going to be really nice to take one of the chess pieces off
[00:05:16] the board
[00:05:16] Mikkel: Yeah. But it's so true, like, occasionally I find myself, like, I just wish there was a massive established market here.
[00:05:24] But then I also forget how that was like. Um, at the end of the day. You know what's also highly competitive? Podcasting. And what would be really helpful if you're listening right now, there's a little button somewhere that's going to say follow or subscribe. Hit that button for us. It would really mean a lot.
[00:05:42] It would help us grow this show. outcompete, I don't know, the SaaStr podcast
[00:05:44] Toni: No, I mean, our mission is to be the MBA for SaaS Go To Market.
[00:05:50] So there are lots of people that need that kind of education.
[00:05:53] Mikkel: So we've been here before. In not a hyper competitive market, but a competitive market.
[00:05:59] There were a lot of vendors in social media management, new ones appeared every day. Some VC backed, some not. It was like all over the place
[00:06:07] Toni: I mean, you did accounting later.
[00:06:08] I did like employee scheduling, crazy
[00:06:12] Mikkel: Yeah. Crazy competitive. So what we want to run through is some of the pitfalls that you need to watch out for.
[00:06:19] Toni: Yes. So the first one obviously is. Well, I don't want to call it price wars, but basically, you know, price pressure, lots of price pressure. Um, and that usually comes from commoditization, right?
[00:06:32] And, uh, when you're one of the first ones, for example, PlanData, the company I was working for, they were actually one of the first ones, um, bringing the restaurant employee staff scheduling into an app
[00:06:45] Mikkel: Yeah.
[00:06:46] Toni: And they're like, Oh, wow, this is so great. Let's totally do that. We have this old chalkboard or whiteboard or this pen and paper solution.
[00:06:54] We don't like this. Let's do this in the app. Fantastic. But over time, it became an extremely saturated, uh, market basically, which then led to them, uh, not being able to have those premium price points anymore. They're kind of more and more pressure basing on this. Um, But on the flip side, you also cannot afford to drop your pants completely because you have that customer base already.
[00:07:16] And they're kind of okay with the price point and so forth. So really fighting those, those entrants that, you know, jump into the market and something that's kind of fairly easy to copy with a much lower price point. That's like super difficult to navigate
[00:07:28] Mikkel: Yeah. I mean, roadmap. Once someone has established What the software should look like, how to sell it. There's a clear roadmap for intelligent people to go and copy it. And, and I mean, we saw the same, just, you mentioned accounting software, someone started out and their price point, guess what?
[00:07:44] 25%. And, you know, We obviously had the benefit of an installed base of users as had the other competitors in the market, but it still creates some kind of pressure when you're going to go and acquire new users. and that's, that's super dangerous. And I, and I also remember like the conversations we had at Falcon, even the, the sales dynamic are very different when you have competition, you know, some naughty things are going to happen.
[00:08:10] Are you going to, you know, buy out a competitor's contract or is there sales rep in the other end who, you know, skirts the truth
[00:08:16] Toni: I mean, the the the the biggest, worst thing that happened, I'm, I want to say under my watch, but I don't, maybe it wasn't truly yet. Um, we had one competitor that was struggling. Like, really struggling. and we, in the end Also that competitor, we basically send out annual reports of that competitor to people that were about to either go for them or us.
[00:08:44] And we're basically sending the annual report that had like a massive minus. And Hey, you know, there was a red, like, Hey, we need to fundraise or we're dead. it's like, do you want to send money in that
[00:08:53] Mikkel: direction?
[00:08:53] Yeah,
[00:08:54] Toni: you
[00:08:54] Mikkel: this direction? Yeah.
[00:08:55] Toni: So, I mean, there's like some really shady stuff that happens, um, which.
[00:09:00] You know, you can obviously say, you know, where do you skirt on in terms of legality? Um, but, but those are, those are usually things that are totally
[00:09:07] Mikkel: totally happen. And I guess ultimately the pitfall here is what you said, the, the keyword is commoditization, right?
[00:09:13] It's that you look at all the products out there, they're all the same. So how do they differ? Price, price. That's, that's a massive pitfall
[00:09:22] Toni: And the thing is, in terms of social media, this was just growing so much. You know, you didn't have the other issue, which many people then run into, which is, um, you know, the market is tapped out
[00:09:31] Mikkel: Yeah.
[00:09:33] Toni: And you can, you know, always have a conversation.
[00:09:35] Do you, are you running out of TAM or not? But ultimately that is another, uh, worry you will need to have at some point. It's like, okay, the, The growth curve is, you know, on the, on the wrong side of the S. Um, and why is that happening? Well, maybe you're tapping out of market and that might be an effect that comes from all the competitors combined and you, like everyone is kind of served.
[00:09:57] Everyone is, uh, you know, okay with, with a solution right now. Um, and then, you know, what do you do then? Right. Kind of this, this thing is tapping out and, and how, where do you want to get the growth? The, the only alternative then is like, okay. Yeah. I guess we can't grow anymore then slash cost and become a profitable company suddenly, right?
[00:10:14] And kind of, that's, that's usually kind of the ceiling that you run into.
[00:10:18] Mikkel: I think the last one, when you have a large market in the billions of dollars and you have commoditization happening, what always happens? Disruption.
[00:10:29] Toni: is going to come in.
[00:10:30] Mikkel: it almost always
[00:10:31] Toni: Yes. And, and I mean, this is how this whole thing works, right? And it's, um, there's this whole, should we disrupt ourselves and so forth, right? I think this is. I, so I don't want to overhype this, but I think this is the whole hype around AI right now, because, um, I've seen some investors that basically say like, okay.
[00:10:51] The only thing I'm looking for is give me a large market that has a proven problem. So like big players already there, where you can build an AI that solves this even better, even faster, even with less friction, you know, basically do it. And that, that is a true disruption, right? If you could, I don't know, if you could do employee payroll, with AI for all the different, you know, regions and stuff.
[00:11:17] and the only thing you have to do is send it one Excel spreadsheet. I don't know, whatever. , if that were to work out, fantastic, because the other problem is not like payroll isn't solved. You can, you can solve payroll. That's not the problem, but it's a pain to set it up. It's a pain to audit it and all of that jazz.
[00:11:34] If all of that would suddenly happen with just, you know, some, some chat GPT thing, I don't know if that's possible, um, that would be pretty disruptive to this market. Right. And it's a massive market when you think about it.
[00:11:44] Mikkel: Think about it.
[00:11:45] Yeah. And I think it's like, sometimes in SaaS, at least this is just my personal opinion. We feel like we're so special. That of course what happened to Nokia or mentioned any other company It's not gonna happen to us because we have this amazing tech and people are subscribed to our platform. It's like it happens It's gonna it's gonna happen
[00:12:04] Toni: What I gotta say is, as I'm now not a noob anymore.
[00:12:13] Mikkel: you get some spit in your face from that laugh?
[00:12:15] Toni: No. Um. You know, I've now been in this market for, you know, 12, maybe 15 years. And also before that, I had eyes, I could see things, I wasn't part of it sometimes. But in the very early beginning, when you're new to a system, it always feels like everything is static. You accept everything as a status quo, and then basically never will change.
[00:12:37] As you now have seen this for 10, 15 years. And, um, I mean, I didn't see the 2008 crash, uh, but I certainly saw the 20, 2022 2023 crash. Um, You see that all of that stuff is in flux all the time, right? And something like Nokia, which was like, ooh, or Kodak or, you know, all of those things that you learn in b school, basically.
[00:13:01] And it's like, oh, yeah, also the dinosaurs died, you know, that, that also happened. But you never, you know, really kind of see it with yourself, right? But it totally goes on all the time, and especially software categories, right? And the, the life cycle there is probably, I don't know, maybe 10 years. If we're looking at social media management now, completely established market.
[00:13:22] Um, and it's, it's still kind of growing, but it's completely established by two, three players, basically. And all of them are just infighting and screwing with each other, basically. Um, and some people, some of them will just not, they will just not make it. Um, and there's rollup happening. Basically in the end, you will probably have like two players really. anyway.
[00:13:42] Mikkel: So what are folks going to do if you're in a hyper competitive market or even if you aren't?
[00:13:48] What kind of learnings can we part with in today's
[00:13:51] Toni: Oh, we're also solving this for everyone
[00:13:52] Mikkel: we have to today. I gave you homework for the weekend.
[00:13:56] Toni: so I thought about this a little bit, right? Um, and there are a couple of ways to start, um, really thinking about this. And one of the interesting books, um, I read a while back was actually Blue Ocean Strategy was kind of written by some INSEAD professors.
[00:14:14] INSEAD is like, uh, it's the Harvard of Europe,
[00:14:16] Mikkel: It's
[00:14:17] Toni: or the Stanford of Europe. Let's just call it like that.
[00:14:19] Mikkel: Or the Wharton. for
[00:14:20] Toni: For all the, for all the, for all the Americans listening right now. Um, and, um, they're, they're actually talking, you know, they're taking some really old school, boring, topics like airlines and I don't know, some commodity event, you know, um, suppliers.
[00:14:35] and, uh, they have studied how. They suddenly went from being one of the pack, they just changed a tiny bit, a little bit, and suddenly they went completely somewhere else. Right. Um, and, um, you know, that sometimes can happen with, you know, your business model or blah, blah, blah, kind of, that's how this whole book goes.
[00:14:56] and you should totally read it, but it's, it's, you know, I think what we're doing today is kind of applying this a little bit more to B2B SaaS and kind of being a bit more specific. Right.
[00:15:04] So the first thing. that we have seen, uh, works extremely well is going from, or thinking about horizontal versus vertical SaaS.
[00:15:14] So what is vertical SaaS? Um, horizontal SaaS is probably what most of us are doing. Um, we're building a piece of software that is applicable across many different industries. And it's, uh, horizontal vertical is usually applied to industries actually. Or you do vertical SaaS, where you basically focus on one vertical only, one industry only.
[00:15:35] Uh, so you have companies like Toast. Uh, doing restaurants, and they're doing the booking, they're doing the payments, they're doing the, I don't know, the supply, the everything, you know, they're doing the whole stack and guess what, they didn't feel a blimp at all in the last two or three years. Because their customers didn't, they kind of kept growing like crazy.
[00:15:56] I think like two or three billion in revenue. It's insane. Um, then you have folks like Veeva. you ever heard of Viva? Um, are they public? They're public
[00:16:04] Mikkel: They're public, yeah, they're massive. They're also like two, I want to say two, three billion or
[00:16:08] Toni: So in, in revenue,
[00:16:09] Mikkel: Yeah, in revenue.
[00:16:10] Toni: not, not in like this other dreamy stuff that, uh,
[00:16:13] Mikkel: And they're generating, I think it was like a billion cash per year. Let's just let that simmer for a little bit.
[00:16:19] Toni: So what did Veeva do? Well, they started out as a CRM for pharmaceuticals. Um, they, they reached, I think, a hundred million with five customers. Think about that. and now they, they broaden out a bit and they do this for GPs and for like other kind of, uh, places. And they're busy with the CRM, the procurement, kind of the whole thing for, for pharmaceuticals and medical kind of stuff.
[00:16:42] Right. And there are a couple of other examples out there. Um, and these folks usually don't actually have that much of an issue. Right. So how could you use that? Well, you could consider, albeit all of those are like big strategic shifts, but you could consider, um, You know, from a horizontal perspective, just niching into one specific area into a vertical, right?
[00:17:05] I think that's a massive shift. I haven't seen that really work out in like once you established, but the little brother or sister of verticalization is basically starting to verticalize your teams. So we heard this with Pleo's CRO, for example, they were talking about, yes, we need to have like different streams for.
[00:17:26] SMB and mid market. Let's just call that the vertical, uh, so to speak. and they were basically kind of building a whole go to market for the mid market and a whole product team for the mid market and the same for the SMB. And then that sliced again into the different regions or countries because of the regulations that they need to kind of follow.
[00:17:44] You can do something similar for the different verticals that you're serving. Um, and you could also do a CAC Payback analysis and figure out which verticals are best for you. And maybe you cut some of the other ones away. You might still get inbounds from them and you work through those and that's fine, but all the focus is actually landing somewhere else, right?
[00:18:03] And I think Jesus, I'm not sure if he said this on air, I mean, we've been working with him for a while, basically saying, uh, at, um, Algolia, uh, they were basically looking at, uh, What are our topnotch best, best, best customers? And then let's get more of those. Yeah, right. More of those. Um, and it's kind of the same thing, right?
[00:18:23] Kind of basically, uh, verticalizing into a specific niche.
[00:18:26] Mikkel: Yeah. There's also another path, which is, you can develop more solutions and sell them to the same customer base, right? So let's take Veeva. They're doing CRM.
[00:18:36] They could also take on, I don't know, the support or the accounting side or whatever it is. So there are still, there's still going to be room to grow potentially, but at some point, yeah, you, you, you know, there will be limits to it.
[00:18:47] Toni: Yes.
[00:18:48] Mikkel: Okay. So that's horizontal versus, uh, vertical. Yeah.
[00:18:52] Toni: Then let's go into three different topics of just simply smashing your competition. So out competing them on three different areas and one is on differentiation, out competing on go to market, out competing on cash.
[00:19:05] Let's start with out competing on differentiation, right? And this is. Um, there's, there's a lot of stuff to be said about feature parity and getting kind of the, this level, right. I think there's also something else to be said about just how you're positioned in the first place. Um, but maybe you talk a little bit more about this
[00:19:25] Mikkel: I mean, one thing, um, when I think back at the, the Falcon days, right, again, a competitive market. There were a couple of vendors out there who did one thing.
[00:19:35] So in a social media management platform, you would have publishing to your profiles, you would have engagement, meaning handling all the replies, but you could also monitor for conversations. For example, on Twitter or X, what it's called today, you can do searches and see what people are talking about and hop into the conversation, and then you have the analytics piece, right?
[00:19:52] So some would do only analytics, some would do only monitoring. And I remember Ulrich being very intent on, well, the core is obviously publishing and engagement and then maybe some analytics, but we need more than that to have appeal in the market and to be a different player, uh, going after the mid market in this case, right?
[00:20:09] And I feel like that actually worked out really well for us. Like, granted, we didn't have the best monitoring solution, like we just didn't because there were specialized vendors. But for many, it was like that little tip on the scale that made people go, Okay. Yeah. This is like a complete solution.
[00:20:25] They're going to continue to develop it. It's actually okay for now. And I think that, you know, put us in position to say it's, it's a platform. It's not just one
[00:20:34] Toni: I think in that specific thing, it enabled us to, to say with the all in one solution, we could prove it versus, and that was then our go to a point vendor.
[00:20:43] And we basically kind of always admitted on those sales calls, a point vendor will always be better in these specific different areas. But listening to you Mikkel, it sounds like it's really important for you to also have insert whatever the point vendor doesn't have. And then it's like, yeah, it's kind of true.
[00:20:59] And then basically kind of going into this, right. And the, um, I mean, there's, there's also another thing here. This is almost like a sales technique or thinking is, um, I think in a crowded market, people will come to you, um, for the exact same reason that they go to a competitor, right. Um, in social media, it's the engagement and publishing and accounting.
[00:21:19] It's Can I do my accounting? Uh, in, you know, whatever it might be, it will be whatever it might be, right? and they, they are looking to solve this core problem. and let's just say all of the competitors can actually solve this core problem extremely well. So how is that person going to make a decision?
[00:21:36] Sure, one might be price, but the other one is actually, um, that you're positioning, um, I would say vanity use cases.
[00:21:47] Mikkel: Yeah. Yeah.
[00:21:47] Toni: around the core use case. And I say vanity because in the end of the day, they will lean heavily in the internal discussions. They will lean heavily on one of those use cases. And what we've seen again and again, and again, once they purchase it, they're basically using this vanity use case once or twice a year.
[00:22:04] Mikkel: Yeah.
[00:22:05] Toni: I'm not saying it's like a, a planning use case that only applies once a year. No, it's like, you know, a button you could reasonably click every single day, but they just never do because it's just so far out there. But the reason why they're coming back and purchasing is like, well, we need to solve this core problem.
[00:22:21] Why am I going with this vendor? Because of that shiny feature there in the corner.
[00:22:25] Mikkel: And I think this really drives home one of the things people always get wrong. They talk about differentiation and they look at marketing. And it's like, your problem, go fix. The reality here is it's this is a CEO problem to a large degree.
[00:22:40] And even I will say a go to market team problem to define, well, how are we going to differentiate? Because if you're going to just differentiate on marketing, at some point there is going to be a sales conversation. They're going to look at you and go, well, You know, yes, I could buy your thing and I really like you because, you know, you have a great brand, but this thing over here does the exact same thing at, you know, 10 percent less.
[00:23:00] So thank you very much, sir. I'm gonna go with the cheaper one, right? And I think that's just, you know, it's really difficult to make people pay a premium because of the brand. There has to be elements to back it up, whether it's the how you run your service or the motion you're doing or whatever it is.
[00:23:16] Toni: I think one one, interesting way to look at this, right? so let's just say you're doing, um, Inbound versus outbound motion. You have inbound, someone comes to you and is like, Oh, my arm hurts. And it's like, Oh, you know, I can, I can sell you a bandage. And it's like, Oh, great. Thanks. Solved. Um, but when you go outbound and maybe move away from the doctor
[00:23:34] Mikkel: thing. . Yeah, because I was gonna say, you cut them and then
[00:23:37] Toni: when you move outbound, um, uh, you know, people might not feel that they have this problem initially.
[00:23:43] Right. So you actually need to, Make them aware that they have this problem, and then once they kind of said, Ah, fuck, you know, I actually have this pain, there you go, Uh, I need to have a remedy, and then they buy your software. The, the way you need to think about this actually, If you want to successfully differentiate, You will have someone coming to you with an accounting pain, With, you know, something very specific, um, You then address this, but what you're also doing at the same time, You basically need to do a problem awareness, uh, play with them to make them aware of there's another problem over here that you didn't realize that also, by the way, is our differentiator, which you should really ask our competitors about because they don't actually can solve that.
[00:24:27] Um, so, you know, when you're really in this differentiated market, yes, people will come to you and, you know, buy the burger. But you really need to kind of make them aware that there's another issue next to it, which then basically is the differentiator you need to lean on, right?
[00:24:40] Mikkel: And I think maybe just to close this one, if you're not in a hybrid competitive market, chances are you're going to have competition.
[00:24:47] If not today, then eventually, right? So you still want to have different, you know, think about how to build differentiation versus just saying we're going to cut everything out. That's just vanity use cases. Maybe have a think about the
[00:24:59] long term.
[00:25:00] Toni: No, but to be honest, also in terms of, um, you know, non competitive markets, if you're solving a problem, chances are the problem is currently solved by Excel spreadsheets, email, Slack, meetings, Posted notes, whatever it might be.
[00:25:14] Someone is working through this problem already. So you do have a competitor there. Um, and it's in this case is you're not actually trying to differentiate between different, entities in a category. You're trying to differentiate between what you're building and the existing way of doing things. And need to find a compelling reason for that as well.
[00:25:32] Right.
[00:25:33] Mikkel: right? Okay. The other thing you mentioned was GTM. How can we compete on the GTM? Let's hop into that.
[00:25:39] Toni: So the thing is, right, um, you can also just build a more awesome machine to, to plow through this thing. Right. Um, and, um, if you do, you can distribute some of the costs where they maybe have higher leverage. Right. And so number one, this could be, you can spend more money on, uh, ads.
[00:26:06] Because you're just so more efficient everywhere else in the funnel. You can maybe spend more money on better talent. Um, or you can do a couple of other things, right? Kind of, that's the idea. If you have a much more lean machine, uh, that's basically executing as this, you have the luxury to spend more on some key points that your competitors potentially count.
[00:26:27] The other thing is, If you have a better go to market motion, it might also be that, um, you're picking up those leads faster. Uh, you're talking to them in a much smarter way. You're optimizing all the different routes that, you know, a lead could take. And you're basically incrementally improving the full funnel conversion rates from, uh, Something top end of the funnel to something in the bottom end of the funnel, right?
[00:26:51] And you get better and better and better and better. And by getting better, you're able to acquire more customers because you have now a larger CAC, um, uh, and, um, uh, and, you know, basically more resources working on this, which, And this is a BCG kind of principle. It's like you have the learning curve. Um, and, um, you know, usually in the eighties, this was, um, used to kind of say like, Oh, you're General Motors, you're Ford, you're like whatever, because you're producing so many more millions of cars than the competition, you will learn faster, you will slide down the learning curve faster and you will get more and more efficient.
[00:27:26] Um, you bring prices down, you undercut the competition prices, you win. Winner takes all. It's the same thing kind of applies here. If you have more throughput, you know, through your engine, you will learn faster on what works. You will be able to get more efficient. You will be able to spend more money and so forth, right?
[00:27:42] Um, so this is what I mean without competing and go to market. and for that, you really need to like, um, you need to be focused on this, right? This is not just a Quarterly kickoff war cry that you want to outcompete on, go to market and let's fucking go. Um, I think there's a couple of things, you know, for example, uh, anyway, I don't want to go into this right now.
[00:28:04] Some of this is obviously touching on Growblocks, but those are areas where you really kind of need to double down on, figure out what is, what is my actual strategy and how, how do I want to outcompete? What are my projects that I'm lining up? What are the biggest levers to pull? And then how do I actually execute against that in a very similar way as you would do this for a product.
[00:28:26] Like, you know, what are the features that we want to outcompete? When are we building them? How are we bringing them to market
[00:28:31] Mikkel: but I was going to actually say, like, I was reflecting over. My past experience is the instrumentation is actually critical for you to run that engine, right? Because so we operated with very little visibility and that makes it really hard to decide where you're going to allocate your resources.
[00:28:47] Where do you have potential leverage? So there were a lot of things to kind of Clean up and remedy and I think if you're operating in a hyper competitive market, actually making sure you can see how you're performing simple things like conversion rates, ACV, sales cycle lengths, what channels are working, what's not, is fundamentally critical to your business.
[00:29:08] Um, and that's also like, if, if you can get, you know, more stellar in your execution in a, you know, market that's not as competitive. You are still going to come out on top.
[00:29:20] Toni: Now I'm gonna, I mean, the simple question to ask is, I was like, Okay, if, if you want to do this, who is Who is the person in the organization that actually will do it? Because it's not going to be you, Mr.
[00:29:30] CRO. It's not going to be you, Mrs. CEO. It's probably going to be someone in Revenue Operations, by the
[00:29:36] Mikkel: Yeah.
[00:29:36] Toni: Probably, right? That actually kind of looks at this stuff and is like, you know, where can we find improvements? and, and executes on that stuff. Kind of, you need to think who is the person that runs with that specific project?
[00:29:48] Because it's not going to be the CRO.
[00:29:49] Mikkel: And you're also gonna have to be a bit honestly ruthless and unromantic about it, because you run into a risk when it's a more lets say comfortable market dynamic you’re operating in. You’re gonna have certain things running that’s run forever.
[00:30:01] that you just say well we actually don't really want to take the risk of switching it off because what if all of a sudden our growth dips so let's just keep burning cash over there but we don't know if it's really working out right so you're gonna have stuff like that roaming around the organization and you need and i think that's the learning from those hyper competitive companies they look at the numbers and decide swiftly to take action
[00:30:25] Toni: Yeah. And I think it's also, it's, it's a, it's a mindset shift actually that needs to happen. You know, are you, are you trying to make your go to market be a competitive advantage? And if this is not just a BS thing that someone throws into an executive meeting, but actually executes on this, then you kind of, the whole leadership team is not thinking in that direction and take action, right?
[00:30:48] But let's go to the last one here, which is, I don't know, maybe a bit more boring. Outcompete on cash. So this is something that has been extremely popular for the last four or five years. Um, now, well, it's still popular, but in the inverse, uh, almost, kind of. Who still has cash
[00:31:05] Mikkel: left
[00:31:05] Yeah,
[00:31:05] Toni: uh, might be outcompeting the ones that don't.
[00:31:08] But there's like two things here. One is. Basically, the size of your customer base is also a source of cash, right? Let's just, in the good old days, before this whole venture capital thing, who was funding your business? Yeah. It was your customers. Um, and that is still a massive funding source for you. so if you are the 10, 20, 30, 50 million player versus a couple of 5 million players, you have a big advantage simply because of that, right?
[00:31:35] So you can basically outcompete on cash and on size, um, and, uh, you know, make bigger bets, you know, move into a new market and so forth. Maybe buy some of the ones that are struggling, right? So, um, you know, number one, sheer size of your customer base is a competitive advantage. I would say it's a time limited moat as well, right?
[00:31:57] So kind of, you need to be aware of that. But then on the flip side, if you don't have this, you know, obviously you need to kind of, uh, outcompete on other areas than cash. And then the last thing on cash is your ability or your CEO, CFO's ability to fundraise.
[00:32:12] Mikkel: Yeah.
[00:32:12] Toni: Very, very simple, very straightforward. Um, basically you, you look at some of the winners that were created.
[00:32:20] Let's just say the super busy space of sales enablement. So Clari, Gong, SalesLoft, Outreach, This wouldn't have been such a tight race if they didn't all got to raise, I would say, 200 to 300 million dollars each,
[00:32:38] Mikkel: Yeah.
[00:32:39] Toni: right? It simply wouldn't have been. and, um, and, you know, it's only the four we're talking about in an extremely busy space of sales tech for that specific thing.
[00:32:49] Um, all the other ones were, um, out, outraced, like, clearly, and, you know, that probably was because, uh, they didn't, weren't so strong on GTM and differentiation and blah, all those other reasons, but ultimately also because of the, the, the ladies and gentlemen who then raised that cash, were just better in selling that fucking story than others, right?
[00:33:10] So let's not forget that, um, You know, the ability to kind of do that is also differentiator, right? Um, and, um, um, yeah. And, you know, doing that is extremely important for you to then take on the next, uh, next competitive advantage.
[00:33:25] Mikkel: yeah. So, I mean, I thought it was so interesting just to take some of those learnings from someone in a hyper competitive market and try and apply it to yourself and see, have you gotten a bit lazy on some fronts? Is there some source of inspiration? I certainly hope there was. Um, so, Toni, thanks so much
[00:33:41] Toni: Mikkel, thank you so much and thanks everyone for listening and if you haven't already hit subscribe. Have a good one. Bye. Bye