Don't Follow the Same Go-To-Market Strategy as Everyone Else!
And more advice from Sapna Shah, Angel Investor and Founder of Retail X Series. Retail X Series is an ecosystem for retail startups with educational events featuring founders, funders & experts for pre-seed stage founders (B2B, DTC, and marketplaces) who are revolutionizing the future of retail. Covering topics like customer acquisition, financial modeling, fundraising, and more.
1.Don't follow the same go-to-market strategy as everyone else!
The biggest mistake I see in consumer products and services and consumer tech, especially at pre-seed, is that the slide for go-to-market strategy is almost always the same. They often include an influencer strategy, paid acquisition via Google/Facebook, and organic outreach on college campuses, for example. And, that's it. You could swap out that slide from one company to another, and it would all look the same! Paid acquisition is so expensive, and it is often not effective. One of the companies that I invested in, Silk and Sonder, started with a physical journaling project. One of the things they found in the early days before raising any money is that people were using the journals not as they expected. There were all these interesting use cases like moms managing children with auto-immune issues. They figured it out because they had a closed Facebook group. People started talking about how journaling helped them, and it created this massive customer acquisition competitive advantage. Instead of targeting coastal Millennial women that every startup was targeting, they have this complete other strategy that people were using their product in a way that they didn't anticipate. I wrote the first check in the preseed round because I saw the value in having this particular cohort that could be easily targeted that other brands were not connecting to in those ways.
2.Get to the Decision Maker as fast as you can!
On the retail tech front, If you don't understand who you are selling to and how they will buy at a larger company, it is a huge uphill battle. That is the thing that I am always looking for when looking to invest in a company. Have you talked to potential customers? Who would be the buyer of this tech or product? Is it the tech team who will be buying, or is it a whole group of people? These legacy retailers like Nordstrom or Macy's have always been set up in a very different way as compared to companies today. E-commerce is in a different group than people who run stores. Those types of learnings take a while for early-stage startups to figure out, especially if they don't come from the industry. Many people think, "well, this is a great solution and companies need this." Or they have only talked to one company and then realize that each will be a little different. The ones who succeed find the fastest way to get to these decision-makers.
3.When building a marketplace site, you need to have a customer acquisition strategy for both sides!
Most startups are focused on the supply-side of the market at pre-seed product and service marketplaces because they don't have anything else. All of the deck is focused on the supply side. Just because you build it, they are not necessarily going to come. That is the mistake I see in early marketplace decks. They are so excited by the problem they will solve for all these vendors but are not focused on the consumer side. The companies are more concerned with building a brand. They will have difficulty succeeding if they don't have a customer acquisition strategy in place at the start.