Decoding the Product-Market Fit with Greg Poirier

Yeah. I mean, you know, I’m a B2B SaaS guy—I’ve been around for a long time—so I’m a big believer in product-market fit. If you grew up in the ecosystem I did, that idea is just drilled into you day in and day out. It’s real, and some people don’t buy into it as aggressively as I do, but I’ve seen the blessing and the curse of it. I worked at Radian6, and we had product-market fit when I started there. I saw that ride, and at the time, in my mind, it was like, “Wow, B2B SaaS is easy.” We’d just do this marketing stuff—it’s complicated and takes a lot of brainpower—but it was incredible. People would just phone us up and buy. We were thinking, “This is a match, life is good.” Then I went on to two other B2B SaaS companies where we fundamentally did not have product-market fit, and we didn’t achieve it. That was a huge eye-opener—like, “Oh, this is actually really difficult. This is the real world.” It’s hard to describe unless you’ve been in a company that has product-market fit and one that doesn’t, but it’s huge. It’s the difference between the phone ringing with people who want to buy, and you calling a bunch of people who tell you to go away because you’re not delivering any value. There’s a whole gray area in between, if you haven’t quite nailed product-market fit, which is where most companies sit. But yeah, it’s definitely a very real thing.

Well, before I dive into this, I want to be clear that having product-market fit is amazing. I’m about to say some negative things about it, but by no means am I suggesting you shouldn’t strive for it—you absolutely want it. There are just some potential pitfalls that can come with it.

Shishir Mehrotra was on the Masters of Scale podcast with Reid Hoffman and described it better than I can. He compared having product-market fit to having a really heavy tailwind: it can push you past a bunch of obstacles that would usually slow or stop a company. A lot of our clients hit product-market fit insanely early, and they’re very fortunate. But what sometimes happens with those companies is they never learn how to properly execute on sales and marketing. In particular, they don’t really have to generate demand, so they’re never held accountable for it. They often go really “brand heavy,” and while there’s nothing wrong with branding, it shouldn’t be your entire marketing strategy.

On the sales side, if the phone is always ringing off the hook, the team becomes order-takers. Again, that’s a great problem to have, but they never learn how to fight for the dollar. In a more “normal” company that takes a while to achieve product-market fit, the marketing team never has enough money, so they have to fight for every dollar and show return on investment for each penny. That makes them really good at optimizing, generating pipeline, and powering a fast-growing sales machine. The same goes for the sales team, which learns how to track down and win deals rather than just answering the phone.

But if you’re in a perfect product-market fit scenario from day one, your SDRs and AEs might be used to easy deals. Then, when you decide to move up-market—to go enterprise—you realize enterprise deals can take 12 or 18 months, involve six to ten buyers, and require a huge sales and marketing engine behind you. Often, companies hire expensive enterprise reps from Salesforce or Oracle, then expect results in three months. It usually doesn’t work like that. Even if leadership says, “We understand it’ll take time,” three months in, those AEs might not have brought in a single sale, but they’re still drawing those big salaries and travel budgets. Meanwhile, the SMB team is closing deals fast, so the execs start losing patience. The best leaders stick it out, knowing it’ll take six or 12 months to see real traction. And when it finally kicks in, it’s magical—but getting there requires a lot of faith and discipline.

Yeah, so I guess to set the stage, for almost all of our clients we do an audit of their revenue operations system before engaging on a 12‑month retainer. We call that the “dating project”—because you probably want to do something with us before you commit for 12 months. It’s a paid engagement, and we come in, and over about six weeks we go through your entire revenue operations platform end to end. We review everything—from your demand generation and data warehouse, through your marketing automation platform, to Salesforce, basically your entire lead-to-cash system—and we audit it in a very deep way. That process usually takes about six weeks, and we deliver a document that is, depending on the engagement, around 60, 80, or even 90 to 100 pages long. It serves as a roadmap for what you, as a CRO or CMO, need to pursue over the next 12 to 18 months, based on the mandate you’ve given us. For many CMOs, an 18‑month mandate is essentially their lifecycle; the average tenure of a CMO is probably less than 18 months—maybe around 16 months. So we provide that roadmap, outlining what you need to do from a systems perspective to hit your numbers over the next 18 months.

The reason this audit is such an eye-opener for many organizations is that if you’re growing really quickly, your systems and processes often fail to keep pace with your growth. Most of the time when we’re brought in to do these audits, it’s for one of two reasons. The first is that there’s a new CRO or CMO, typically brought in with a mandate from the board or founders that the company needs to change its approach. This new leader usually comes in with more enterprise-level expectations. Sometimes, these situations coincide with a “stair-step moment” for the company, such as closing a Series C, preparing for an IPO, or having just IPOed, which forces a change in systems. For example, it might have made sense to route leads in Salesforce with four SDRs, but now you have 30 SDRs, and that task should be automated. Or, when the company was smaller, someone might have pulled all the data into spreadsheets, but now that’s a job for an entire BI team. Instead of receiving that data as a CRO once a month, you can now get it in real time. It all comes down to understanding the mandate given to the leadership team and then creating a roadmap to get there while future-proofing the systems.

In general, we’re not building these systems for what they are today; we’re building them for what they need to look like 12 months from now, at your current pace of growth. In some cases, we even design systems for 24 months out, because by then what you’re using now might be outdated given your rate of growth.

Well, for most of our clients, the right time is when there’s new leadership or a mandate for some kind of shift. Say you’re a new CMO, or the board wants a big change—like doubling or tripling growth—and maybe the current auditing isn’t pressing enough or big enough. That’s the impetus that triggers the need for an audit, because you want to see if your foundation is strong or if you need new systems or processes. Another impetus might be a big funding round, moving upmarket, or some kind of “stair-step” moment. If there’s no impetus—no new leadership or big push—it’s probably not a good investment. If you do it without that alignment or reason, you won’t act on the results, so it’s just not a good time.

Yeah, I mean, internal audits are possible. They just usually aren’t very effective because you’ve got people in the company who are supposed to spot what they’re doing wrong, but they generally don’t have the breadth of perspective and context about what’s possible. And so, hiring a third party is inherently a better option—if you choose the right one. They’ll have the knowledge and the outside perspective. They can come in and say, “This is what ‘good’ looks like.” That’s the fundamental experience or investment you should probably build into your Series B or Series C funding. Maybe it costs 1% or 2% of your round, but it pays you back over the next 12 months, preparing you for the next stage. Sometimes you do it once and then again 12 or 18 months later. We’ve had clients go that route. We’ll say, “Look, we do this all the time, so it’s not that we’re pushing you—this is just our process. We know what the best practices are, and we’ll tell you exactly what needs to be done for your stage.” Some people skip that blueprint and later realize they missed out on big gains.

Yeah. I was just gonna say there’s also the ability to architect and deploy solutions more efficiently. If you work at a company where that is the only Salesforce org, the only Marketing Cloud org, or the only Google Analytics org you work in, every time you need to build something you have to figure out how to do it from scratch. But if you’re working with a third party like CloudKettle—and we work with a lot of other clients in your industry—we’ve already figured out how to solve all those problems from an architectural and technology perspective. We might have to help you with the cultural and internal selling perspectives and other things, but when it comes to the mechanics, we already know what to do. We have it up and running at a bunch of other places, and we can slot that in for you in maybe 30 days, whereas if you were to build it, test it, and figure it out internally, it might take 120 days. And if you’re growing fast enough, that just doesn’t make sense.

I listen to a lot of podcasts, and I read a lot of books. For me, podcasts are what I listen to when I walk to work, which is usually about 40 to 45 minutes, and then walking home is another 40 to 45 minutes. Then, before I go to bed, I probably read for about 30 to 45 minutes. That’s kind of my wind-down routine. I’d say it’s pretty even between podcasts and books. I’m not really into super narrative, business-focused “best practices” books. I do read them, but I also enjoy books on business, technology in general, and a lot of random subjects. Sometimes I’ll listen to that sort of content, but not during my wind-down period. I do a lot of audiobooks at some point, and then I’ll switch to reading. I might listen to a book on building an effective sales funnel and then hammer through three or four audiobooks in a row, but I won’t do that at bedtime because it’s not relaxing. So yeah, that’s me. I guess when I’m reading, it’s usually some kind of fiction.

My absolute favorite book is The Amazing Adventures of Kavalier & Clay. Another one is kind of a new-age comedic thing—I’d call it an “Amazon comedic” book. I also read a lot of Spider-Man. For business, I’d say The Challenger Sale is probably the best one out there. People keep asking me about it, and I consider it the best. There are also some religious-type books, but that’s more for personal reading. So yeah, I’d read The Amazing Adventures of Kavalier & Clay, I’d read a lot of Spider-Man, and I’d read The Challenger Sale. I mention that last one because people keep asking for recommendations, and I think it’s the best.

I mean, I’ll start with the deceased—so certainly I would go with my grandmother on that one. She lived across the street from me, and she grew up way smarter than I did, having traveled more than I obviously did, and she just had a really great worldview. She turned out to be right on a lot of stuff that I didn’t get when I was 19 and 20. But now that I’m 42 and I’ve got kids—and, like, holy hell—you know, she just really nailed a lot of things. So that would be number one. On the living, certainly Bill Gates. I mean, he would be at the top of my list. And I don’t know if you’ve listened to the Bill Gates/Rashida Jones podcast, but it is fantastic. And, you know, being a tech, I’ve spent a lot of time in San Francisco. Certainly, Microsoft has been, you know, maligned. And, you know, in many ways, you’re either team Apple or team Microsoft. And certainly, I don’t know how many dollars’ worth of Apple stuff is in this house right now, but clearly our house turned out to be a team Apple house. But, you know, over time, after he left Microsoft, and considering what he’s done with his money and how he’s expending all his efforts with Melinda—and what they’re doing together—he’s turned out to be, I think, the more brilliant one. He and his wife are doing more to impact and change the world than I think any other business leader. They figured it out; they understood what was important, and they’re effecting a material change that I don’t think most people understand. I think you have to listen to his podcast. You’d have to understand what their charity is doing and how Melinda is running that charity, but, like, he’s having a bigger impact, I think, on what’s happening on Earth right now than any other business leader. And yes, it’s two people together—they’re doing it jointly. So, I guess you have to say two business leaders, but, I mean, nobody is doing it at that level.

Well, I would say Melinda is my third person, but as you know, she’s part of that group. I’ve been fortunate enough to get to have dinner with both of them, but if I could, I would say Mark Benioff. I enjoy him a lot, and I have a lot of respect for what he’s doing. But yeah, I guess if I had to just sit down and have a beer and a cheeseburger and just talk, that would be it.

The best way is to go to cloudkettle.com—you know, there’s a contact form. If you fill it out, someone will get back to you. That’s usually the easiest. You can also find me on Twitter as Greg Poirier or similar. And if people are doing B2B SaaS, there’s a lot of great content on our blog about how to scale from B to B SaaS, so make sure it’s CloudKettle: Greg Poirier.

Okay, thanks a lot.