What got you here isn’t getting you there.

When I think about companies that have survived the perilous journey upstream from SMB to Midmarket to Enterprise, while simultaneously evolving from a point solution to a best of breed platform that CFOs genuinely appreciate, Brex comes to mind.

I’ve been lucky to get to know one of the original gangsters behind the company’s strategic vision - Art Levy, Brex’s Chief Strategy Officer.

Like McNulty from the wire, there isn’t a case this guy won’t take on, even if it means pulling out some creative stops. Art has a great mind for monetizing innovation across multiple market segments and product lines, both organically and inorganically, which is why I was excited to jam out with him during this interview.

In season 1, Episode 6 of the Wire, Det. Lester Freamon explains:

Indeed. When it comes to corporate strategy, all the pieces do matter.

TL;DR:

Enjoy this convo with one of the biggest brains in the game.

This is a difficult question. I think some of the time good companies are “forced” to go upstream by their customers, rather than it being just a “preordained”  choice of the leadership team. 

Bill.com, Slack, Brex, Square, Shopify all started with “startup/SMB” customers and then realized that they could iterate on their product to service their growing base, add features, and “grow with their customers,” rather than ceding them to the upmarket competitors for bill pay, chat, merchant acquiring etc.

This cadence and situation is very different from a startup with a downstream product / customer base simply “deciding” one day to go upmarket. This is sometimes a trap, as the product, GTM, CX and everything in-between is very different upmarket.

While the TAM and ACVs can look alluring, it is a brand new “zero to one” motion in this type of situation. Even the marketing and positioning has to be different, which people traditionally sleep on.

Neither is easy. I think it is more natural to go upstream in markets where companies grow fast, because as noted above, you can scale with your customers, listen to what they need as they grow and ship some of those features. In that world, you are scaling over time and it’s a more natural curve to upmarket, rather than picking up and going from, say, 10 FTE’s to 10,000 FTE’s. 

If doing the latter, you need to re-imagine your salesforce, your product positioning, and your product itself. I think Square and Shopify have been relatively successful moving upmarket, but they still are not in the “Enterprise” conversation in the same way their competitors are (Adyen and Magenta, respectively). 

On the downstream side, Coupa has tried to push from Enterprise into the middle market, but the challenge is that price is prohibitive for some of these smaller companies, and the salesforce is prohibitive from Coupa’s side. What got you here isn’t getting you there.

What got you here isn’t getting you there.

Example: your field sales reps cannot be calling small SMBs and spending time on demo’s when the ACV’s are much lower. So now you have to build a whole inside Sales team and paid acquisition strategy - it’s a whole new territory. 

More natural is what Bill has done. I remember listening to a recent earnings call where Rene Lacerte (Bill’s CEO) mentioned how they are seeing larger and larger companies using Bill.com, even as they have not targeted them. This is an early indicator of PMF with a different customer cohort.

This is a very tough question and there are whole firms set up to help with this. I loved the book Monetizing Innovation which helped us think through Willingness to Pay to ensure we take a scientific approach to understand what customers want, what customers need, and what customers will pay for (sometimes all different).

Further, we had to ensure we had a full cross functional monetization team testing the elasticity curve for certain features. You need to put your features on trial and make people pay for the features they say they want. You need to talk to customers in each Segment to ensure you are solving their problem in the cost effective way for them. It sounds obvious, but many companies try to take shortcuts.

You need to put your features on trial and make people pay for the features they say they want.