Nail you strategy & cross the chasm: a GTM companion for AI products

I'm basing this article on a can't-miss episode of Lenny's Podcast with legendary GTM expert Geoffrey Moore . I focus on the most important takeaways on GTM in the first part of this article. Then, I share specific insights for AI businesses in the second part.

🎯 Part 1 - Nailing Your Go-to-Market

Find your laser-focused beachhead

The biggest mistake most startups make is going broad too fast. In a quest to drive revenue, many attempt to serve multiple customer segments right out the gate. This inevitable leads to diluted efforts and mediocre solutions that don’t fully address any one group’s needs.

Rather than chase scale early, Moore advocates targeting a narrow market segment where you can realistically reach 30-50% share within 2 years. This focused beachhead is your gateway to wider adoption – and the ecosystem support to facilitate it.

Document management platform Documentum began by serving pharmaceutical companies managing lengthy drug approval documents. This niche supported product refinement while building credibility and referencability.

Of course, no startup wants to be confined permanently to one customer type. The beauty of the beachhead is it lets you expand to natural adjacencies. Documentum moved successfully from pharma to chemicals to oil & gas – leveraging similar workflows and regulatory demands while boosting market leadership.

Discover Their Compelling Reasons to Buy

The biggest mistake technology vendors make is leading with their solution before identifying prospects’ problems. Especially in early sales conversations, resist the temptation to demo product capabilities or pitch visions of the technological future.

Your goal should be to probe deeply into the customer’s operating environment, challenges and unmet needs. Ask questions, listen intently and continue digging below surface issues to uncover root causes. You need to understand their situation better than they do themselves and better than any potential competitor.

What keeps your prospect up a night? Where are they experiencing the most acute pains and incurring the greatest costs from inadequacies today? These compelling reasons to buy are your keys to the kingdom. They will inform your product roadmap as well as your sales strategy.

Secure a Marquee Early Adopter

Before attempting to cross the chasm to mainstream adoption, startups need to establish credibility with a high-profile early customer win. This marquee company serves as a beacon for other prospects in that segment, specially if peers look up to the marquee customer as a leader in their space.

Think of a fledgling AWS public cloud business landing initial adoption by the CIA. That single prestigious deal instantly put AWS on the map as a platform that could handle sensitive workloads with the most stringent security requirements.

Now your dream client here fits the early adopter or visionary persona perfectly. They get excited about pursuing the latest innovations and accept the risks. But they also carry enough industry cache that mainstream prospects take note of their technology selections.

This marquee customer serves as your ticket to play as you expand to the wider market.

Tailor Your Approach to Their Adoption Stage

One message never fits all customers. Moore stresses that go-to-market strategies must map to the prospect’s lifecycle stage. Companies fall along a technology adoption spectrum spanning:

• Early Market Visionaries

• Pragmatic Pre-Chasm Majorities

• Mainstream Herd Mentality

• Conservative Laggards

Visionaries care only about the breakthrough capabilities or possibilities your technology enables. They have high risk tolerance and little concern with stability, support or solution integration.

However, most target customers for initial beachheads are pragmatists sitting just before the chasm. They need to see peer adoption and proven use cases relevant to their situation before buying. Here you must emphasize reliability, commitment and clinical domain experience.

Mainstream buyers entering once you cross the chasm respond best to simplicity, flexibility and popularity based on broad references. And laggards only migrate once solutions become standard and essential.

Message accordingly at each stage while qualifying leads on their specific adoption lifecycle profile.

Cross the Chasm Before Going Horizontal

Patience pays off when growing a startup. Avoid the temptation to expand across multiple segments or proliferate service variations before thoroughly dominating your initial beachhead.

Attempt horizontal growth too early and subpar execution will relegate you to mediocrity across markets. But own your niche completely before expanding and leverage that leadership to fuel further domination.

Documentum provides a playbook case study here. Only after taking the lion’s share of the pharmaceutical space with their document management solution did they broaden into chemicals, oil & gas and beyond. Their focused approach ensured each successive expansion reinforced their core strengths.

Set Your Sales Team Up for Authentic Dialogue

Given pragmatic prospects don’t care about you when you’re still crossing the chasm, sales reps must flip conventional pitches on their heads. Instead of defaulting to capabilities slides and demos, compel buyers to describe their situations in their own words.

This pulls prospects out of procurement mode defending budgets. It enables authentic dialogue around issues and frustrations. Now creative problem solving can drive the conversation addressing how you deliver quantifiable relief.

The most effective sellers go in diagnosing before prescribing. They follow doctors’ lead learning about potentially painful symptoms and intricate details before offering opinions. Customers want to know you grasp their challenges better than alternatives – before considering your treatment regimen.

Pick Your Target Persona Carefully

Not all prospect roles perceive value similarly. Early stage companies often target end users and frontline implementers who appreciate capabilities more than decision-makers balancing investments and risk.

But economic buyers worried about cost, scale and corporate standards don’t care what features engineers want. They respond to adoption trends visible among leadership peers plus the backing of their trusted partners.

For securing beachhead deals, prioritize economic buyers able to sponsor purchases and confirm compelling reasons propelling action now despite lingering vendor concerns. What combination of anxiety and aspirations is creating urgency amid obstacles?

You need them running toward you as much as they can instead of evaluating safe choices. This propulsion opens small windows for you to leverage your innovation advantage while demonstrating commitment.

Create a Repeatable Model Before Chasing Growth

The tendency for startups is chasing the next big sale to the next hot prospect. But Geoffrey Moore stresses that crossing the chasm requires shifting from selling custom projects to standardized solutions.

Yes, this transition means less ability to customize engagements and accommodate specific requests from early clients. But the tradeoff enables you to drive down customer acquisition costs, support expenses and pricing as you scale.

Repeatable solutions ensure reliable growth across a segment – enabling you to dominate a niche before expanding into adjacent markets. Custom one-off projects may dazzle but they don’t lend themselves to profitable growth models.

Map Out Your Bowling Alley Sequence

Moore likens profitable growth to methodically knocking down bowling pins. The bowling alley strategy means plotting your sequenced steps to expand across logical market adjacencies from your initial beachhead.

The key is identifying markets that align with the product capabilities and ecosystem partnerships forged in your first niche. Then growth comes from replicating what worked with minimal additional adaptation.

For example, after capturing pharmaceutical firms, Documentum expanded into petrochemicals and broader energy verticals. These markets shared similar regulatory demands, unstructured data types and process flows.

Make Bold Leadership Claims Early

Rather than shy away from aggressive positioning, unabashedly claim the market leadership mantle in your target segment right out the gate. When everyone assumes you’re a bit player as a startup, there’s little downside to such bold pronouncements – and much to gain.

Partners reluctant to work with fledgling niche vendors will reconsider when leadership ambitions come backed by strong early customer traction. Such positioning also rallies your internal teams to execute at the highest levels despite resource constraints.

Avoid early dilution across segments here by declaring a narrow scope for initial domination. But within that domain, don’t be afraid to declare ambitions akin to Category Kings.

Stay Focused to Avoid Mediocrity

As covered at multiple points, resisting the temptation to proliferate offers before perfecting your core solution is imperative. The more types of customers you serve and the more variations you offer early on, the more mediocre your solution becomes.

Be the best at delivering on a focused value proposition to a target audience before working at feature expansion. Otherwise, you end up caught in what Moore calls “the middle mush”. You fail to differentiate through segmented messaging and get overwhelmed trying to be all things to all customers.

Leading with strong solutions for a concentrated market lets you win with momentum and brand establishment. Then you expand off a position of strength.

Combine Domain Expertise with Innovative Technology

When introducing disruptive solutions, you need a healthy balance of domain expertise and cutting-edge technology. If you only focus on the breakthrough innovation, mainstream customers struggle to connect it back to practical use cases. But if you only specialize in static traditional applications, you get left behind by modernization.

Winning commercialization combines respect for customers’ operating environments with aptitude for where solutions need to progress. You meld understanding of their reality with vision for what’s newly possible. This fuels positioning as both a bold leader and a trusted partner.

In crossing the chasm, prospects are judging your grasp of their challenges as much as your product’s promises. Lean on domain experience to complement your technology innovations.

The Chasm is Very Real After the Early Adopters

For startups, the first few customers often come easily as early adopters find you. Visionary technology buyers live to try shiny new solutions, regardless of stability, scale or ecosystem support.

But the chasm hits hard when moving from niche experimentation to majority adoption. Mainstream pragmatists don’t mimic visionary behaviors. They wait to hear what trusted peers are adopting instead of venturing early bets.

This creates the classic chicken and egg dilemma. How do you get references without initial purchases? And how do you convert average prospects without proof points?

🤖 Part 2 - Lessons for Artificial Intelligence businesses

Match AI Strategies to Adoption Stages

AI might dazzle innovators while confusing conservatives. Companies fall along a spectrum of tech adoption lifecycles based on risk tolerance, buying requirements and decision motivators:

• Early Market Innovators – Care only about capabilities, not reliability

• Pragmatic Skeptics – Want proven solutions for pressing pains

• Mainstream Followers – Respond to simplicity, flexibility and popularity

• Laggards – Only adopt once essential as standards

The biggest mistake is mismatching sales messaging and product positioning to the prospect’s adoption lifecycle stage.

For example, Salesforce Einstein integrates AI broadly into the CRM platform for mainstream productivity enhancement (Mainstream followers) while AI legal assistants - think Harvey.ai - support attorneys on specific document tasks and not chase every legal use case in the wild (Early innovators).

Lead with the Problem, Not the AI

With AI, the temptation is highlighting automated pattern recognition, predictive analytics and infinite scale. But the winning approach is encouraging customers to share their operating constraints, bottlenecks and decision-making friction.

AI is the advanced mechanism for relief, not the selling point. As Moore notes, ask probing questions, listen intently and continue digging below surface issues to uncover root causes. Lead with their pains, not your technical innovation.

Combine AI Innovation with Domain Expertise

Winning AI commercialization melds understanding target environments with aptitude for improving them through automation. This fuels positioning as both a bold leader in machine learning while also demonstrating credible experience in applications.

For example, AI document assistants understand legal processes and information needs as much as technical search algorithms. Credibility derives from specialization as much as innovation.

Plot Expansion from Your AI Beachhead

Patience pays off when growing an AI startup. Avoid the temptation to expand across multiple segments before securing your initial beachhead. Target a niche where you can win decisively on a focused use case.

Once dominant, plot expansion across adjacent markets similarly struggling where your solution applies. Replicate what worked while minimizing additional adaptation needs.

Our legal AI example would expand across state courts and practice areas once proving itself with certain document types. Then continue spreading horizontally once market leadership firms.

AI Drives the Next Wave of X-as-a-Service

Moore notes that AI propels the next evolution beyond products – affordable and accessible services. Human expertise gets packaged into on-demand capabilities without bespoke consulting requests.

For example, lawyers publish specialized AI research reports without individual client contracts. Engineers receive design recommendations without retaining gurus. AI unlocks mass customization through instantly available expertise.

This X-as-a-service model powered by AI represents the next revolution in democratizing capabilities. Solutions embed human-quality logic and judgment but deliver it with software scale and consistency.

Develop AI That Understands Workflows and Data

The biggest AI development trap is building cool capabilities without market context. The most successful products emerge from observing user workflows to identify friction plus analyzing data limitations guiding technical priorities.

Don’t get distracted by AI hype without use case roots. Study how groups make decisions, where humans struggle with information overload and when subject matter expertise gaps appear. Build AI tailored for stepping into these leverage points rather than generalized intelligence.

Our document example arose from attorneys facing exploding information and form needs outstripping associate scaling. The market pull preceded technical build.

Apply AI Across the Application Stack

Creative developers have endless opportunities to embed intelligence across the application stack from back-end automation to front-end assistance:

• Data pipeline cleaning, categorization and connection

• API and microservices enrichment

• Process workflow improvement

• Decision support augmentation

• Interface personalization

Einstein again proves that infusing AI throughout CRM unlocks immense value via custom recommendations, predictive lead scoring and sentiment analysis. Let use cases guide AI infusion points.

Trustworthy AI Starts with Ethical Due Diligence

Before unleashing AI applications that impact businesses and lives, companies must confirm benefits outweigh risks across dimensions like privacy, security and fairness. Conduct ethical due diligence tailored to market needs, data types and use cases.

AI offers immense promise but also introduces potential for harm when biases emerge or models make impactful mistakes. Responsible development demands proactive mitigation planning, not just reactive apologies.