a16z Podcast: Creating a Category, from Pricing to Positioning

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Feb 24, 2018

Guest

Michel Feaster

Guest

Martin Casado

Martin Casado, a general partner at Andreessen Horowitz and a key figure in software-defined networking, joins Michel Feaster, CEO of Usermind and an expert in technology business management. They dive into the critical role of category creation for startups, discussing how defining new market problems reshapes pricing and value. The duo explores the balancing act needed for navigating IT while empowering non-technical users. They emphasize the significance of strategic marketing, product-market fit, and the dual focus on current and future market needs for entrepreneurial success.

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ADVICE

Delay Pricing Until Technical Close

Sell first to visionary early customers and use pilots to de-risk deals before discussing price.
Avoid publishing list prices too early; wait until technical close to negotiate ACV.

ADVICE

Product Marketing Arms Your Sales Team

Turn your first customers' successes into repeatable sales tools like case studies and reference calls.
Use customer advisory councils to let prospects hear peers describe concrete use cases and ROI.

INSIGHT

Positioning Turns Differentiation Into Requirements

Product marketing synthesizes positioning and sales enablement to make your differentiation the buying requirement.
Framing the problem and your unique solution lets buyers conclude you're the only viable choice.

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with Martin Casado (@martin_casado), Michel Feaster (@michelfeaster) and Sonal Chokshi (@smc90)

The purpose of category creation, argue the guests in this episode of the podcast, isn't just about making a dent in the way companies work and changing what people do every day... it's about setting the price. And with that, comes creating the concept in people's heads, defining the value, and setting the rules of the game. But when you're going for a big change, you have to play by the current rules of the game, too.

And to make things even more complicated, theories about how "IT is dead" -- or the conviction that companies and departments beyond IT will become empowered through software -- are still very much in transition. Somehow we don't talk about that enough. That means startups need to do everything in two phases: for the now, and for the later and towards two constituencies: both direct lines of businesses and IT. So what does that mean for startups trying to navigate a complex enterprise, including internal debates around build vs. buy? How do you move beyond a few internal champions only? And just how long can a company cash out on founder charisma? In fact, all of these things can give entrepreneurs very confusing, mixed signals about whether or not they have product-market fit yet. So what patterns reveal that it's working?

In this episode of the a16z Podcast, general partner Martin Casado -- who helped create the category of "software-defined networking" in the enterprise through Nicira and then VMware (and has also written about the mixed messages involved in going to market when no market exists) -- and Michel Feaster, CEO and co-founder of Usermind, and who previously (as VP of products at Apptio) also defined the category and discipline of "technology business management" -- share their insights, in conversation with Sonal Chokshi. It's a long game, but if you can tease apart the signals, and nail some key moves early... you can win.

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