Listen to the podcast to learn about
02:00 - Discovering the Power of Positioning
06:10 - Positioning your Product in a Market Category
07:39 - How to Position Yourself Against a Giant
12:35 - How a Startup Should Think About Choosing a Niche
18:50 - Differentiating a Startup in a Crowded Market
25:00 - “Category Creation is Something You Don’t Want to Do Unless You Have To”
32:50 - How to Use Trends to Position Yourself
37:00 - Developing Your Positioning Thesis as a Startup
Read the complete transcript below
AMIT SOMANI 00:55
Welcome to the Prime Venture Partners podcast, today I have with me a special guest April Dunford. April is a serial entrepreneur. She’s worked at many startups and a couple of large companies. In fact, she and I overlapped at one called IBM, which some of you may have heard about. And for the past many years, she’s now gone on the other side, to help startups with their B2B offerings, with positioning and so forth. So we’re gonna get into that, but welcome to the show April.
APRIL DUNFORD 02:00
Hey, thanks so much. It’s good to be here. And good to see you again, after all this time.
AMIT SOMANI 02:06
Likewise, I stumbled upon your book last year, Obviously Awesome. And I saw the name and I’m like, I think I know this person, as I read the book, and I have lots of questions and interesting anecdotes from the book. But good to see you.
APRIL DUNFORD 02:22
I’m telling you, I was having the same thing on my end when you sent me an email, I’m like, I know that guy from somewhere, and I was racking my brains going, I know this name. But anyway, it’s nice to reconnect.
AMIT SOMANI 02:35
Absolutely. So maybe April, you can talk to us a little bit about what you do with startups. And what is this whole thing about positioning, in particular with respect to b2b companies?
APRIL DUNFORD 02:46
Yeah, so I spent 25 years kind of as a Vice President of Marketing. And one of the first companies that I worked at, I got assigned to a product that was kind of a dog, it wasn’t selling very well. In fact, we were thinking about end of life-ing the product. And I got assigned the job to go and call all the customers to see how mad they would be if we end of lifed it. And what I discovered in those calls is that the vast majority of people weren’t even using it.
But there was this very, very small minority that was using the product in a way that we never expected. And so I brought this back to the executive team and said, good news, bad news, the bad, depending on your point of view, most people don’t use this thing. But there is a small sliver of them, and they love it for this other thing.
And maybe we should reposition it. So we did this repositioning exercise, and we kind of didn’t know what we were doing. We sort of muscled our way through it, but we thought it was desktop productivity software. And we ended up repositioning it as an embeddable database for mobile devices, pretty different.
But anyway, it was a lot of work, like a totally different pricing model, totally different routes to market. But we repositioned it, relaunched it. And the thing took off like crazy, we ended up getting acquired by a great big company in the valley, my boss quit, I ended up being the head of marketing for that company. And we were still growing like crazy. By the time I left, it was hundreds of millions of revenue. And we almost killed it, because it looked like it was no good. And so from that point forward, I was like, wow, this positioning thing is actually super important. You can have a product that’s actually a winner, but it looks like a loser because we’ve positioned it the wrong way.
And from that point forward, I was really fascinated with this idea of, are we positioning things properly, if we are going to do it, there must be a methodology for us to actually be able to do that in the best possible way. And so I spent the bulk of my career bouncing around between startups, and a lot of times, we were repositioning stuff.
And then about five years ago, when I decided to transition out of being in house to go to be a consultant, I thought positioning would be a good thing to focus on, one because it’s super important, two I’ve done a tonne of it. And three, I’ve got a bit of a process that I use to do it. And there doesn’t seem to be a lot of people out there that are actually doing it in a repeatable, methodical way. So I thought that one could be my contribution to folks.
AMIT SOMANI 05:24
Fantastic. So let’s dive right into it. And I think I read something in your book, which says, customers are looking not just for the product or the features, obviously, but also the context. And the market and the trends and all these other things, which are related to your product, but are not the product. And so maybe you can elaborate a little bit on how you go about this kind of 10 step process or whatever end step process to right at the top.
APRIL DUNFORD 05:55
So here’s how this works. Like if you’ve got a product. It doesn’t sit in isolation, it sits within a context of a whole bunch of different other products out there that look just like yours. And so if I’m a customer, I’m trying to figure out what I should pay attention to, and I’m trying to make a shortlist of products that I should buy. How do I actually do that? Well, it’s your job as the marketers in that company to figure out a way to stand out.
Now one of the main ways we do that is with market categories. If I tell you I got a thing, and it’s a CRM, and let’s say that’s all I tell you, it is a CRM, that’s it, think about it, it’s going to trigger a whole bunch of assumptions in your mind, like the first thing, you’re going to say, well, you must compete with Salesforce, they’re the gorilla in that market. Think about what features I would expect you to have, well, I’d expect you to be able to attract a deal across a pipeline and track account CRM stuff. I would expect that the person you sell that to is the head of sales or the vice president of sales.
Now, here’s how this works. If I do a good job, and I position my product in a market category, such that it triggers a set of assumptions about my product that are true, great, I just saved marketing and sales, a lot of hassle. I don’t have to tell you who my competitor is, assumed I don’t have to list every single feature, half of that stuff is table stakes. But if I do a bad job of it, then I trigger a set of assumptions about the product that are not true.
Now Marketing and Sales has got their work cut out for them trying to undo the damage that the positioning has already done. So I can give you an example of this. So early in my career, I worked at this company and we positioned ourselves as enterprise CRM since we’re talking about CRM. Enterprise CRM, that was our thing.
And now this was back 15 years ago or so. And so Salesforce was around, but they were really focused on the low end of the market. But an enterprise CRM, there was this big company in the valley called Siebel systems. And they were amazing publicly traded, 9000 employees, 2 billion revenue, fantastic company. And we without really thinking about it, were positioned directly against them. And we had none of that, we were a little company in Canada, I think I was employee 25, we had a million and a half revenue, we were nothing. And so we walk into customers and say we’re enterprise CRM and customers would say, Well, okay, how are you better than Siebel?
And the answer to that question was, we kind of aren’t, they were bigger than us and had more features than us, their product was more mature and 400 customers, we had four. And but we did have one thing, we had a feature that they didn’t have. And it enabled us to model relationships in a different way. In fact, even today, no CRM models relationships like this.
So but what we didn’t understand is, why it was valuable and who it was valuable for. So we’d walk in and say, Hey, we’re enterprise CRM, and they say, Oh, so how are you better than Siebel, we say, well, we got this thing, and we would demo it. And then customers say, well, that looks kind of cool, what’s it good for, and we’d say, anything you want. And then they get confused, and then we would lose the deal.
And so how we bust out of this eventually was a funny story. We ended up hiring a guy, we hired him in sales. And the reason we hired him was that he had a relationship with the head of investment banking at Goldman Sachs. And he promised he could get us a sales meeting with him. So we went and had this meeting at Goldman Sachs. And we showed him this feature, and the guy and Goldman got really, really excited.
And he said, Oh my God, do you mean two people belong to the same Board of Directors, you could model that or two people belong to the same country club, you could model that? we’re like, yes. And so he got super excited, and we closed the deal. What we learned in that meeting was the value of that feature, if you were an investment banker, was it actually allowed you to really accelerate your sales process.
And so at that point, it triggered a discussion inside the company about what we are like, are we actually enterprise CRM, or maybe what we are is just CRM for investment banks.
Now, that might not seem like a big change, but it’s a massive change inside the company, first, we had to get our heads around it, then we had to go convince the board and the board hated it. The board was like, Look, we didn’t write you a check to be some niche little lifestyle business, like how many investment banks are there, and how are you going to make any money, and we sold them on it with this idea that look, we’re going to position ourselves as CRM for investment banking because we think we can win there.
And once we win a significant number of deals, then we’re going to start selling to retail banks because now we have permission to go sell there and we got something so then we can be CRM for banking and then after we win that, we’re going to go sell the insurance companies, and then we’re going to be CRM for financial services.
And at that point, we’re going to be a giant company, then we’re going to take those Siebel guys out. And that’s how we’re going to do it. And that change in positioning when we shifted from enterprise CRM to CRM for investment banking, was totally transformational to the business.
So the first thing was, every time we walked in, instead of getting into this head to head battle with Siebel, we’d walk in and say, Hey, we’re CRM for investment banks, and the bankers would look at us and they go, but hang on, don’t you compete with Siebel? And we’d say, Siebel, we love those guys, what an amazing company, we love them, 2 billion revenue, they’re so amazing.
They’re probably the world’s number one CRM if you’re a call centre or a manufacturing plant, or I don’t know what, but not you, wolf of wall street, you need something special. And that’s why we’re CRM for investment banking, let me show you my amazing feature. And we would sort of cut them out of the deal and not have to compete with them head to head anymore. The result of that was we grew really fast. We went from 2 million to a little under 80 million in about 18 months. And then eventually, Siebel came and acquired us for $1.7 billion, which is the end of that story.
AMIT SOMANI 12:23
Fantastic story, lots of things to unpack there. Let me pick on a couple and I think you started answering some of those already. So if I heard you right, one is of course, the segmentation of the customer. So you went from a general CRM to an enterprise CRM to investment banking, relationship CRM, that’s one. The other was the set of features, and saying this unique set of features helps me distinguish my product. And at Prime Ventures, we often talk about how is your product or your GTM 10x different?
So that’s another one, I wonder if there are other elements to this, like pricing or other things. And the last thing was to sum it all, as a VC, I would have the same reaction if you came to me or one of our portfolio companies saying, isn’t this too niche? So how did you get the conviction and build the conviction in the broader kind of board to say that you will be able to expand the TAM, because you just stumbled upon this investment banking, CRM, you could have instead stumbled upon some other kind of relationship for retail banks, for that matter or whatever.
APRIL DUNFORD 13:30
So we looked at it a bunch of different ways. So the first one was, we were trying to find a segment of the market where we could win because our biggest problem was, we were having too many conversations and spending too much time on deals we were ultimately going to lose. And so we knew we had a differentiated feature, what we didn’t understand is what the value of it was.
And then we didn’t understand who cared a lot about our value. Once we figured that out, then we could say, well, let’s just target them. And then we got a higher chance of winning every single deal because we got something there, where we can beat the other guys. So that was the first thing. The second thing was because we were so small like we literally had four customers. So we were only doing a million in revenue.
And so we had this idea that we’re not gonna think about where the business is going to be five years from now or ten years from now we know we’re gonna get there eventually. But what we really need to do is make the number this year. And what’s the easiest way to make the number this year we’ll just go and when the deals that we can win right now. And so when we looked at it, we said, well, we could reposition for investment banking, we did actually raise the price quite a bit because it turned out, we had always been discounting because that was the only way we were ever going to beat Siebel.
So we’ve been heavily discounting. And when we did our first deal in banking, like we literally had the champion in the account, pulled us aside and said, Look, I can’t take this to my boss at this price, you’re gonna have to put the price up because you don’t look like you’re legitimate for bankers for this dinky little price, so he actually told us to put the price up, which we did. So we ended up putting the price way up.
So our average deal size went way up. And when we looked at it, we were like, could we make the number just sell into investment banks. And the way we modelled it out, we could make the number just selling investment, nothing but investment banks for a couple of years. And our thinking was, once we had a good volume of investment banks in there, then we were legitimate in banking, and that would enable us to go get to the other markets in a way that we couldn’t do if we just went straight to insurance, for example, there was no reason for you to buy us, if we went straight to insurance, we’d lose that deal.
But if we started in banking and then investment banking, then went to retail banking then go to insurance well by then we can walk in and tell a story like look we know an awful lot about financial services, we know a lot about the integration problems, we know a lot about the data that you’ve got, we know a lot about the processes that you do and by then we’d be able to legitimise it and so through a combination of one so the neat thing about niching down investment banking was two things, one we got to be really focused on deals that we could actually win so our hit rate was way higher.
So that made it a lot cheaper to get a deal into the pipeline and then once it was in the pipeline, our close rate was really high we raised the prices way up so our average deal size went way, way up and then we actually had bankers come to us because our website was all CRM for investment banks, were up there in the press same were the thing for investment banks and all that together contributed to this really explosive growth and it turned out investment banking was actually a big enough market to get us to a 100 million we didn’t quite get there before we got acquired but we could have got there without even actually leaving investment banking.
So I think a lot of times we’re worried about getting into a market that’s too niche but in fact, we if we can unlock a lot of growth in there and then prove that we dominate the niche we can justify higher prices we get a bigger deal size we get a higher hit rate all of the mechanics of how we bring a lead in and invest in a lead and get a deal closed all of that stuff gets better and then all of a sudden you’re making a lot of money and they’re doing a thing that looks pretty niche from the outside. Now it was never our intention to just stay there our intention was to expand it out but we spent a lot of time reading Geoffrey Moore if you remember.
AMIT SOMANI 17:50
Absolutely, in fact, I’ve shared it at infographic today with some startups and they’re like who’s Geoffrey Moore ?
APRIL DUNFORD 17:57
Exactly the kids today don’t know but at that point, we spent a lot of time thinking about bowling pin strategy so we literally drew this on the board for the investors we said look we’re not just going to be investment banking forever investment banking is our lead pin and we drew the pin on the board and then we say then once we knock that pin over we get permission to knock over the adjacent pins which are retail banking and insurance and then once we knock them over then we’re going to go get the whole thing. So don’t worry eventually we’re going to take Siebel out and we’re all going to be a billionaire. Well, I’ve long enough to do that but we did have a good healthy exit everybody was happy.
AMIT SOMANI 18:39
Great so following up if I had to summarise I would say and Eric Schmidt at Google used to say this a lot, that revenue and velocity hides all evil, so, therefore, the fact that you had this product market sales fit and the customer velocity in terms of closing of deals increased that kind of, covered a lot of the other things let me go on the other side of that coin April, which is that in very competitive markets and I see from your book as well as some of your other talks right like martech or sales enablement or whatever there could be hundreds or even thousands of companies so there isn’t the giant like a Siebel or Salesforce.
And how do you think about positioning in a deep red ocean with so many different players? Any kind of thoughts on that?
Because a lot of people I mean the good news about that thing is if there are 5000 companies there’s a real market because there are buyers are buying bad users if you are entrant number 5001 God help you, like how are you going to get the sales velocity?
APRIL DUNFORD 19:40
So the key thing here is, it kind of comes down to the same stuff interestingly it is like what do you have that’s differentiated, what’s the value of those differentiators and then who cares a lot about that value and can you just focus on those folks and get and start getting your accelerated revenue that way.
So you mentioned sales enablement so I’ll give you an example there, so it’s a company that I worked with here in Toronto and they’re in the sales enablement space and it’s terrible there’s like 1000 companies in there and half this stuff’s not even sales enablement they call it sales enablement so there’s like training software that they’re calling sales enablement but it wasn’t ever built for that or a CMS that they’re calling sales enablement but it was never built for that and so this company I worked with them and when I started working with them if you looked at their website it wasn’t clear how they were any different than any of the other sales, they were talking about better sales enablement and training your reps fast and having your reps love the experience and do the same stuff as everybody else is talking about and so what we did was, I spent some time digging into like so why do people pick you like you’re selling stuff right now, you’ve got a certain amount of traction right now, why do folks pick you?
Well, it turns out again their big differentiator was they are the only sales enablement software that’s built on top of Salesforce. And you say, okay, that’s the feature. So what’s the value of that feature when the value of that feature is, I can measure whether or not the sales enablement is working using sales data because I’ve only integrated into the Salesforce database.
So what that means is I do the sales enablement. And then I can see does that reduce time to first deal or time to meet quota or whatever, I can look at what my best sales reps are doing, versus my worst sales reps, and understand how my sales enablement can close the gap. So once we understood that, then it’s like, okay, that’s the value, then you say, well, who cares a lot about that?
Well, if I’m hiring a lot of sales reps, and growing fairly quickly, then every day, my reps not making quota cost me a lot of money. And some of those reps are going to be bad, and I’m going to have to fire them or they’re going to turn out. And so I want to know that as quickly as possible. So this idea of being able to measure the impact of sales enablement, with sales data is really important for those kinds of companies.
So if I’m level jump, what do I do? Well, first thing is I focus in on those kinds of companies. And then the second thing I do is focus on that differentiator. So what these guys do is they come in and they say, look, they’re generally selling to the head of sales. So they get into meeting with the head of sales. They’re like, Look, you get sales enablement is important, right? Because why is it important, because every day, your reps not making quota cost you a lot of money.
In fact, here’s the research on how much money it costs you and it’s like a lot of millions. It’s costing you money. So how are we solving that problem today? Well, if you look at all the solutions out in the market, some of them are just CMS, it’s just putting stuff on a shared drive and doing version control. Like, that’s okay, you make sure everybody’s using the right stuff. But I don’t know if anything’s working, or I have an LMS. And that’s a little bit better. I can tell who took the course.
And what days did they take it and all that, but it doesn’t tell you whether or not your sales enablement stuff is working. It doesn’t. So in a perfect world, we’d have a sales enablement product that would allow us to measure the impact of that sales enablement with data, right?
Now in that pitch, I didn’t even pitch you the product. I just pitched you my point of view on the world I just pitched you, like, do you agree that this is important? If you say, yes, as a customer, at this point, I got you. I’m the only game in town.
And so if I can get you aligned in that point of view, that, hey, what’s the point of doing this If we don’t have any sales data? Well, then you’re going to pick level jump because level jump is the only company that does that. So that’s the key, I got to figure out what my differentiator is, but it can’t stop there, I got to be able to figure out what’s the value of that it’s not just that they’re built on Salesforce, it’s what does build on Salesforce, get me as a company, it gets me this insight into whether or not my stuffs working. And then I get to who cares a lot about that. Because, again, I want to have fewer sales conversations, more closing.
And that’s what you got to get to, what’s different, what’s the value, who cares a lot, let’s focus on them. And then we’ll just go sell the heck out of that.
AMIT SOMANI 24:31
Makes a lot of sense. I think we always say, focus on selling the value or the benefit, not the feature, as soon as you start selling the features you’re a toast. And worse yet, in a deep red ocean category, you have no hope and heck, because everybody else has 1000 more features than you do as an early-stage startup.
APRIL DUNFORD 24:50
And customers don’t always know how to translate the features into value. It was like us, and at that CRM company, we were showing the features, and it looked really good in the demo, and everybody’s saying, Wow, that looks really good. But we couldn’t explain why you might use it.
So it was pointless, and the customer couldn’t figure it out either.
AMIT SOMANI 25:13
Right, So switching gears to a different and a third and the most interesting category for both me personally as a partner at Prime Ventures, but in general, if you’re creating a category creating company or category defining company where it is truly novel and new, there isn’t anything else out there, right? So you may be even competing with non-use or this is like new things who are completely on pen and paper and now they’re getting digitised for the first time etc. So, there is no existing framework there is no G2 crowd there is no capterra there is nothing. How do you go about establishing and positioning yourself there because the customer now you have to almost convince them that there is a real need. And how do you think about that?
APRIL DUNFORD 25:58
So a few thoughts on this. So the first one is, category creation is actually super rare like if you look at it, if I look at companies that have gone public on the NASDAQ in the last five years 93% of those are positioning themselves in an existing market category, 93%. So it is only a very very small sliver of tech companies that are actually doing category creation and doing it successfully in fact the history of silicon valley teaches us that the most likely outcome for category creators is that they exhaust their resources and the patience of their investors at the exact moment when the category starts to get created and they get murdered in the market by fast followers.
So this is why we don’t use ask jeeves we use google, this is why we don’t use my space we use Facebook, this is why nobody knows what a creative mp3 player is. So first of all category creation is something you don’t actually want to do unless you have to.
So that’s the first thing because it’s way easier to say hey we’re like this except we’re going to be for this piece that is underserved and most companies get their start that way, even big companies that we know like salesforce at the beginning was a niche play in an existing market CRM and they niche themselves out in the SMB part of CRM that wasn’t being served at all at that point, why because all the other CRMs on the market required you to have an IT department. Salesforce came in and said hey, you know what’s great about us? No software. You can get this thing going even if you don’t have IT.
Once they dominated that market then they moved up market and then they moved out and now they’re doing platform as a service and all these other things. But up until 300 million revenue they were not category creators, if you went to salesforce when they were a little company, a startup that’s not what they were doing.
AMIT SOMANI 28:04
I have a question. Would you call the fact that they were doing no software cloud delivery as category-creating or category defining or none of the above?
APRIL DUNFORD 28:14
Not at all because the reason how they sold so effectively was, they’re coming in and people are saying so what are you and they’re saying we’re CRM. Cloud was their differentiator and the value of that differentiator was I don’t have to have an IT department to deploy this thing, so instead of true category creation, it is more like I walk in and say, people say so what are you and you say I’m a flu flammer and you’re like what the heck’s a flu flammer and you’re like I’m glad you asked let me explain it to you.
So in my book the example that I use is Eloqua, so Mark Oregon tells this great story about how he was a consultant at Bain and he was researching marketing teams and how they work and he identified this emerging new kind of marketer that were called demand gen specialists and they were weirdos, they were in the corner using spreadsheets and looking at the data and doing stuff that the brand marketers weren’t doing and so he looked at that and said I could build software to automate that.
And so his original conception of Eloqua was, it was demand gen automation that’s what it was, it was software for this emerging type of marketer and he made a bet that that was going to be those types of marketers were going to multiply and eventually we’d have tonnes of those and they’re going to need software and this is the software for them so when he started I mean he’s pitching VCs on this demand gen automation the VCs are like, never heard of it, don’t know what it is.
His customers knew because they were demand gen on demand gen folks so he was selling okay but when he went to pitch it to people outside of that, nobody had any clue what he was talking about. And then what happened is it was a good bet because eventually that concept of demand gen expanded and expanded and in B2B it became this is what we’re doing in marketing now, there isn’t anything else.
So he changed the term to marketing automation and that was it, now he did have pressure once the market itself started to emerge there was marchetto was the fast follower hubspot was in there and it was good management that they managed to navigate their way out of that and actually get acquired by oracle or whoever bought them and have a good exit and whatever.
But usually, when we’re doing true category creation it’s actually we’re not actually creating the category, the category is itself emerging and we are the right software at the right time for this emerging use case this emerging set of users this emerging thing that wasn’t possible before or wasn’t needed before and now it is and we’re the platform that’s going to serve that. So that’s much more common.
So when you are in that situation, typically, you’re not at the beginning or the early stages, you’re not actually selling your product, you’re selling the problem. Because if people understood they had the problem, there would already be a category of solutions that existed to solve it. Because we wouldn’t say, Oh, I have this problem. Let me go ahead and solve it. So in the beginning, I’m actually evangelising, here’s why this is the thing. This is the opportunity cost of not solving this problem.
This is why it’s urgent that you do it right now, and oh, by the way, if you are going to solve this problem, my stuff is the best solution out there to solve it. And so you’re going to have to evangelise that heavily in the early days of the company, and that’s going to be expensive. Like what you need is patient investors, deep-pocketed investors that aren’t going to quit on you right at the moment when the thing starts to emerge. Because the danger of category creation is the moment the category itself starts to emerge, it gets flooded with copycat me too well funded with brand new money. Competitors pile in, and it’s a dog fight for market share at that point because now customers get that they need it.
Now there’s lots of search traffic on it, there’s lots of demand, there’s lots of pull from the market. And that’s exactly the point where a lot of these category creators fail, they get to that point. But at that point, they’re seven years in and the investors are mad, and nobody wants to keep funding this thing and these brand new competitors come in with 200 million in the bank, and they’re like, we can take this market from you. So if you can pull it off it’s great. But it’s actually really, really hard to do.
AMIT SOMANI 33:00
Yeah, I think my point is, I think it’s the terminology. So you’re absolutely spot on. I mean, you can create markets, that’s the terminology I’m used to, as opposed to market categories, I was thinking about when there is something else that changes also something in your book trends versus markets. So when there is a new trend, and you are the flagship bearer of defining that trend, and to use your parlance in an existing market category, I’m calling that category-defining because if the cloud happens, or if AI happens, or there’s something new that is relevant that is happening, and you are enabling that acceleration for that customer, or simplicity or a product or whatever, I think that is something to ride on. So maybe you can talk about trends.
APRIL DUNFORD 33:46
And trends are an interesting tool for us to use in positioning. So we’ve got our product, and we’ve got to figure out what’s the market that we can win. And then that’s table stakes. We need that. But then we’ve got this idea of trends and trends are important because customers, actually trends are important because the media thinks it’s important. And we can’t keep writing the same article about CRM every day, right?
So we want to write about the new stuff, what’s cool, and what’s new. So we have trends, like cloud computing was a trend now we’ve got artificial intelligence or machine learning or augmented reality. These are trends that can be applied to markets. So I’ve got my thing, so let’s say I’m selling CRM, I walk in, and the customer all of a sudden is like, I’m like, Hey, I’m here to pitch you this CRM, and they’re like, Yeah, but what about the AI man? I’ve been hearing about this AI, and I’m worried my competitors got that and I don’t know what that is.
So what you want to be able to do is kind of loop in if you can, if you can’t, it’s fine. Like, there are lots of people who’ve made lots of money, selling things that are perfectly untrendy, boring, like database software, for example, we sold a lot of untrendy stuff there for like billions of dollars. But if you can loop in this trend, it can help answer the question. Why do I got to do this deal right now? So it isn’t the answer to the question, why do I need this thing, but it can be an accelerant.
And it can help customers understand why you need to buy it now, not next year, now because your competitors are going to have this stuff because there’s this big jump in value you’re going to get. And so some companies I’ve seen do this very well like I did some work with a company in the UK called Red gate software, and they’re in a really sleepy category. They do database tools.
And what they noticed is that in their accounts, everybody was talking about DevOps, they were doing a DevOps transformation. And they were starting to get a little bit of pushback, like, how does this fit into my DevOps transformation because that’s our number one priority for this year. And if this isn’t a DevOps thing, I can put it off till next year, because this year I’m doing DevOps.
So they did this really great job of looking at their toolset and looking at DevOps and saying, you know what, if you’re doing a DevOps transformation, and you’re not worried about data, then you’re doing it wrong. So they invented this concept of database DevOps. And here’s how it works. And this is how data stuff fits into a DevOps transformation. And then they sold on that.
And so they managed to go from being like this sleepy little category to all of a sudden, they’re out there in the media, and everybody’s asking their opinions, they’re talking at conferences, and the thing they’re doing looks kind of cool and sexy, because DevOps is cool and sexy. So they’re talking about that, and their sales went way up, they sold more, it was a story that hung a bunch of their products together.
So they sold more products at once. And they started getting a lot more inbound interest again, because they can loop it into a thing that their customers thought was a real priority right now. So done well, you can’t use a trend on its own. But if you’ve got a well positioned product in a well defined category that you can win. And then if you manage the loop in this trend thing you can really use to put the foot on the gas on your revenue growth.
AMIT SOMANI 37:14
Fascinating. I have a question, which is looking at it from the outside-in exactly picking on this example that you mentioned, which is can you go figure out the customer’s top five problems, as opposed to taking your new Gizmo or whatever, Swiss Army knife and try to sell that even if it’s positioned right with the right value, and the right features and all that jazz. And just to see, as a calibration again, I’m sort of thinking of a more early stage startup, so you’re still doing a bit of customer discovery, any tools or frameworks that you have for that April, that might be useful?
APRIL DUNFORD 37:50
Yeah, well, here’s so I get a lot of companies who come to me, and they’re really early stage. And they’ll say, look, we gotta get this positioning really nailed. And in my opinion, if you’re just trying to build a product, like you’re in the concept phase, you’re in the early development phase, you’re doing customer discovery, and what you should be doing in customer discovery is essentially developing your positioning thesis.
So you should be able to write it down before you launch it and say, Look, here’s what we compete with, here’s how we’re different. This is the value we can uniquely deliver. These are the kinds of customers that really care about that value. Therefore, this is the market we can win.
But my experience also tells me that, we do this to the best of our ability, we have this positioning thesis, we launched the product. And we never get it exactly right. Usually kind of right, but kind of wrong. We get it out in the market. And then it turns out,there’s some other customer I didn’t even expect, loves our stuff and things that I thought were really differentiating, it turns out customers don’t care. And, the competitors, I thought I have my customers are actually comparing me to totally different things and I didn’t know.
So my recommendation to companies in the really early stages is you actually want to keep the positioning kind of loose, because you don’t know if you’re right, it’s good to write it down. It’s good to understand your thesis so that you can validate it. But you should keep in mind that you don’t actually want to close too many doors at the beginning, you just kind of want to put it so here’s my bad analogy, I’m going to give you my bad analogy. It’s like you designed a fishing net.
And your thesis is there’s a fishing net for tuna. It’s really good at catching tuna. It’s a tuna fishing net. But I don’t want to position it as that right away. Because I don’t really know if that’s true. I just want to validate it. So a better way to launch it instead of saying, Hey, this is a tuna fishing net. Maybe it works. Maybe it doesn’t. Instead you go out and you say you know what, it’s a net for big fish, all kinds of big fish.
And then yet the fishermen take it and throw it out in the ocean. And let’s see what we pull up. And then you might pull the thing up and say, you know what is grouper? It’s actually really good for grouper. Who knew then later, once you know that you can say okay, now I’m going to narrow my positioning down and say there’s a grouper fishing net, now I’m going to sell the heck out of the grouper of fishermen. And I’ll worry about tuna later. It’s a bad analogy. But the only one I’ve got
AMIT SOMANI 40:15
No, not at all very fascinating. So as we come to a close here, April, I just absolutely love this quote that again, I saw in your book, you cannot be everything to everyone. If you decide to go north, you cannot go south at the same time. So I absolutely love that. You have to be very sharp with your positioning just as with your product, just as with your GTM. Any closing thoughts from you April?
APRIL DUNFORD 40:48
No, not really. I think that the biggest thing with startups is startups tend to not worry about positioning until it’s obviously broken. And so I think It’s good for startups to kind of understand the mechanics of positioning and how it works.
So that they can be keeping an eye on it. Most of the time, we’re not positioning deliberately at the beginning, we kind of fall into a position. And then what happens is later on, it breaks and we’re like, oh, man, how do I fix that? I don’t even know how I built it in the first place.
So I think it’s good for startups to kind of understand it and be conscious of it and checking in on it a little bit so that they can start to see when it’s getting a little bit weak before it’s an absolute disaster.
AMIT SOMANI 41:32
Absolute pleasure, April. Thanks so much for being on the Prime Venture Partners podcast. Strongly recommend your book, Obviously Awesome. I think it’s on Amazon and wherever you get your book, so thanks again. It was great to see you.
APRIL DUNFORD 41:45
It’s good to see you too. Thanks for having me.
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