YC
Which Sales Strategy Is Best For Your Startup?
@ Y Combinator
12/09/22
Takeaways
PK
Pete Koomen
12/09/22
@ Y Combinator
I'm Pete Koomen, a visiting group partner at Y Combinator, and today I'm discussing two sales strategies for startups: Top Down and Bottom Up.
PK
Pete Koomen
12/09/22
@ Y Combinator
Top Down sales begin with a decision maker high in an organization, focusing on identifying leads and validating their problems before navigating bureaucratic processes to secure contracts.
PK
Pete Koomen
12/09/22
@ Y Combinator
Top Down sales work well for products that help executives achieve strategic goals, but they can be expensive to implement and require significant support.
PK
Pete Koomen
12/09/22
@ Y Combinator
The advantage of Top Down selling is that it follows a proven playbook, making it easier to find customers who will pay for solutions if you understand their problems.
PK
Pete Koomen
12/09/22
@ Y Combinator
Startups that sell using a Top Down approach often see better early retention metrics compared to those using Bottom Up sales.
PK
Pete Koomen
12/09/22
@ Y Combinator
A major downside of Top Down selling is the risk of creating one-off features for large customers, which can lead to consulting relationships instead of scalable products.
PK
Pete Koomen
12/09/22
@ Y Combinator
Scaling a Top Down sales motion typically requires building an expensive Enterprise sales team, which sets a high floor price for your product, often around $10K for mid-market and $100K for Enterprise.
PK
Pete Koomen
12/09/22
@ Y Combinator
To build a Top Down sales motion, define your target customer and identify the individuals within those companies who have the problems your product solves.
PK
Pete Koomen
12/09/22
@ Y Combinator
Finding leads that fit your profile can be done through LinkedIn, and getting their attention is crucial, often requiring warm introductions or personalized cold emails.
PK
Pete Koomen
12/09/22
@ Y Combinator
Bottom Up sales start with the user, focusing on building a self-serve product that can be adopted without direct interaction with the company. This approach works well for startups that solve pain points for individuals or small teams, as products need to be easy to adopt and can spread virally within an organization.
PK
Pete Koomen
12/09/22
@ Y Combinator
A perfect example of Bottoms Up sales is Slack, which small teams could adopt independently, allowing it to spread virally within organizations before the sales team reached out.
PK
Pete Koomen
12/09/22
@ Y Combinator
The advantages of the Bottoms Up model include efficiency, as it allows startups to generate leads without extensive sales efforts, but achieving viral product growth is challenging.
PK
Pete Koomen
12/09/22
@ Y Combinator
The dirty secret about Bottoms Up sales is that they still require salespeople, as seen with Slack, which employs many to build an efficient sales cycle once prospects are already using the product.
PK
Pete Koomen
12/09/22
@ Y Combinator
To build a successful Bottoms Up sales motion, startups must engage with customers early, eliminate friction in the product experience, and continuously test and refine their offerings.
PK
Pete Koomen
12/09/22
@ Y Combinator
Startups should use freemium pricing by offering free features for individual users while charging for team collaboration features, which can help in acquiring users effectively.
PK
Pete Koomen
12/09/22
@ Y Combinator
Startups typically use a top-down sales motion to sell expensive products to executives at large companies and a Bottoms Up motion to acquire individual users, which can lead to sales to those executives.
PK
Pete Koomen
12/09/22
@ Y Combinator
Choosing between top-down and Bottoms Up sales strategies depends on whose problem the startup is solving; if the pitch resonates with individual contributors, Bottoms Up is preferable, while top-down is better for executive-focused pitches.