Lighthouse or Landgrab? How to Pick Your AI Sales Strategy

There's a moment right now to go sell big software again. We're now looking at a different way of doing business entirely.

What are the lighthouse and land grab sales playbooks?

Here's the framework for evaluating which playbook should you be following.

There's this very obvious one, go after the very obvious companies. You're in

San Francisco that probably have some sort of proof or social value associated with them. Or like go out and sell in

with them. Or like go out and sell in Ohio. Find people who need your

Ohio. Find people who need your solution.

If you think about sort of the enterprise networking world in 2009, people thought we were crazy. Like we

had no chance of getting into the largest corporations in the world lighthouse because Cisco and HP had them all tied up. But what we could do is we could say, "Listen, we can configure, we can deploy faster, we're simpler to

use." And that was very much a land grab

use." And that was very much a land grab strategy.

Too few people are willing to pick up the phone and willing to get on the plane and willing to get, you know, in front of those customers right now because they feel like it sounds way more sexy to sell the [music] JP Morgan Chase than the shmish shmish Morgan.

[laughter] I think the biggest mistake that I see [music] founders make at an early stage, honestly, is just Welcome back to the A16Z podcast. Today

we're getting into the single most expensive question an AI founder makes, how you sell. Joe Schmidt just wrote a piece called lighthouse or land grab, which gets into the two dominant

playbooks he's observed among enterprise AI startups. Joe, tell us about the

AI startups. Joe, tell us about the piece in your own words. What are the lighthouse and land grab sales playbooks?

Yeah, and I and this this piece actually all stemmed back from an observation uh that I had actually driving up the 101 freeway. Uh maybe this is like

101 freeway. Uh maybe this is like three, four, five months ago, I don't remember. And you just realize that you

remember. And you just realize that you have the same kind of like two competing companies. Like one's on one side of the

companies. Like one's on one side of the freeway and the other's on the other side of the freeway and they're selling the exact same piece of software. And

for some reason they all have decided that the only relevant companies for this piece of software are in San Francisco and driving on the 101 freeway. And then this has gotten even

freeway. And then this has gotten even more ridiculous. It's obviously every

more ridiculous. It's obviously every bus has been wrapped and every, you know, it's like planes are flying up above and they're now towing, you know, towing startups. And so I think it's

towing startups. And so I think it's it's all very clever, but it's all targeting the same kind of sales motion.

The reality is you don't always have to do that. Like,

you don't always have to sell to the same companies in San Francisco. And so,

what I wanted to try to do is to sell tell founders like, "Hey, here's the framework for evaluating which playbook should you be following? There's this

very obvious one, which is like go after the very obvious companies here in San Francisco, in New York City, in a major metro that probably have some sort of proof or social value associated with

them. Or like go out and sell in Ohio.

them. Or like go out and sell in Ohio.

Go out and sell in Chicago. Go out and sell in St. Louis. Find people who who who need your solution. Um and so, that was the whole point of the piece is like, you don't always have to go sell to these notable logos. And

um we'll see how that plays out, but that's why.

And and just to get a little bit deeper, like when does it make sense for a founder to, you know, go and buy a giant billboard that you see when you're

driving from SFO into the city? When

does it make sense for you to kind of do a more targeted sales activity or like motion elsewhere?

Yeah, and I think the way that we tried to make this make sense, of course, we did very uh consulting style with a 2 by 2 matrix. Um I did never work at a

matrix. Um I did never work at a consulting firm, but um I'll do my best.

Uh and so, we really were thinking about, "Okay, what are the the axes that we should be kind of mapping opportunities against?" And so, we

opportunities against?" And so, we decided upon like the Y axis is really what we called like a the buyer's exposure. Um and it's it's intentionally

exposure. Um and it's it's intentionally called exposure because there's the exposure of, you know, making a mistake with the solution that you buy. There's

also the the exposure of the solution inside of your company. Like, does this does this product that I'm selling to my customer end up you know, being is it shown to their end customers, right?

Which is actually an important distinction. Um and really just kind of

distinction. Um and really just kind of the overall risk associated with buying this piece of software. So, that was like kind of the Y axis, and it goes from like high to low. Um and then the the X axis is whether or not proof

travels in any given market. And so, you know, if you think about like the top right would be proof travels in this market. Um and it's it's high buyer

market. Um and it's it's high buyer exposure and high you know, high buyer risk. Um and the bottom left would and

risk. Um and the bottom left would and and that's a lighthouse market, right?

This is to be clear.

Um and the bottom left would be, you know, low low uh you know, low proof traveling, but also low buyer exposure.

Uh and that would be a land grab market.

Um and so I think those are actually quite different and if you think about the the, you know, the standard markets that fit into the lighthouse model, it's, you know, regulated industries.

Often times there's a a more constricted number of logos. Um if you're wrong in the industry, like if the buyer buys the wrong piece of software and it ends up doing the wrong thing, uh it can lead to a you know, very bad things happening

for your firm, uh including, you know, potentially getting in trouble with the regulator, you know, even going uh and and doing something illegal. That's very

bad, uh of course. Um and then uh you know, on the on the flip side, when you when you're looking at the more of a land grab market, there's an established budget. People have very, you know, used

budget. People have very, you know, used to and accustomed to paying for a type of service, and you can kind of come in there and show like the end buyer the math of like, "Hey, my solution is better than whatever solution you're

you're using today, whether that's, you know, a software driven solution or human driven solution." So, you know, the the the kind of distinction that we drew was between like proof on the the top right of the of the of the quadrant

and math on the bottom left of the of the quadrant. Um and that's how we kind

the quadrant. Um and that's how we kind of thought about the framework.

Yeah, and Andy, we'll get into your background uh in a little bit, but I think first maybe it's it's good to kind of categorize some of these modern day AI startups

within these two frameworks. And I know you both work with a lot of these companies.

Yeah. So, so Joe, I'm not sure if you want to call out specific examples or Andy, if you want to call out specific examples and really just kind of like talk through the the sales strategies that you're seeing.

Yeah, I mean, well, you're like, you know, the the the land grab uh you know, mastermind. So, maybe you want to talk

mastermind. So, maybe you want to talk about some of the stuff that you've seen.

Yeah, well, I mean, yeah, I think you you framed it up really well in in your in your article, but um yeah, I think that concept of like the the lighthouse being more in industries that require, you know, regulation, a lot of social

proof, and so forth. And those tend to be companies that are going after like a category creation, right? It doesn't

exist today, so therefore you got to go out and you got to kind of prove yourself with the big the big names. And

obviously we have a bunch of portfolio companies out there. There's a there's a bunch of the companies that I think you mentioned a couple in your article that are doing that. And then on the other side the the the sort of land grab, you know, less social proof, but those tend

to be especially in the AI world today, those are companies that are maybe replacing or improving workflows that already exist. And there's existing

already exist. And there's existing budget and again we have a whole bunch of portfolio companies you named a couple in the article that are doing that today. They're

inserting themselves in saying hey we built a better way to go after this through AI and and I think those are the great you know companies going after land grab strategy.

Yeah, and it's interesting. I mean for for those that aren't familiar with with Andy's background, you know, he's he's built some of the the best sales organizations that I've ever heard of at Samsara and Meraki.

And I've always found like these these stories like really fascinating and illuminating like the the Samsara, you know, story around kind of the ELD mandate as the way I understand it kind of basically forcing a category to

happen everywhere all at one point and it's just who can go out there and do it fastest. Like maybe just if you if you

fastest. Like maybe just if you if you could for for the audiences edification like share a little bit about what that like big why now moment was because we're kind of having one right now and and how you guys kind of went and captured it.

Yeah. Yeah, I think if you if you're in the industry for long enough and I've got the gray hair to to prove that I have been Blonde.

Blonde.

[laughter] Blonde. Blonde.

Blonde. Blonde.

Yeah, bordering on gray.

Sure.

Um you know, you you tend to see these big you know, transitions and and I'm old enough to have seen you know, the internet come about and you know, certainly mobile and cloud and obviously now AI and each each of those

causes this this transition and it and it causes new ways to think about how you go to market.

Not wholesale changes, but always tools to help improve upon them.

And and I think uh know, the other thing I would say um I I I can't name too many companies that have become hugely successful without some element of timing and luck,

right? And so you talk about Samsara and

right? And so you talk about Samsara and um you know, the the company was uh founded back in 2015. I joined in 2017.

Um and you know, the idea back then was you know, at the very beginning it was like internet connected sensors, like all the value chains are going to come sensored up. How do we you know, get

sensored up. How do we you know, get sensors out there and ingest this data, give it back to business owners in in digestible and usable ways. Um

and one of the first products that started gaining traction were these telematics units. And you know, taking a

telematics units. And you know, taking a step back if you think about you know, the the world of transportation, long-haul trucking, right? Um you know, prior to like 2016, uh they had these manual logbooks. If

you were driving a truck and you stopped to take a break, you would write down in your logbook, I had just drove for 4 hours, now I'm taking a 20-minute break, and then then you drove for 2 more hours and you stopped for lunch. And if you

got pulled over by highway patrol, they would ask to see your logbook and they'd audit and make sure you weren't driving too long. It was a it was a safety regulation.

And in the US, roundabout 2016, they implemented this ELD mandate, right? And

stands for electronic logging devices.

And the idea there was, hey, we can use technology to actually track when the vehicle's moving and when it isn't and are they taking enough breaks and so forth, right? Take the human

forth, right? Take the human uh and and and data element out of it, um the human element rather. And and so you know, over a 2-year period, that was basically implemented between 2016 and

2019 with various phases of of sort of compliance. But what it did is it it

compliance. But what it did is it it provided this huge tailwind for anybody making these electronic logging devices.

And we just happened to be one of the newer companies doing it. And there were some very very established players, right? AT&T had a solution, Verizon had

right? AT&T had a solution, Verizon had a solution. There were a number of

a solution. There were a number of companies that were in sort of a you know, hundreds of millions, half a billion in revenue already doing this.

And you know, rising tide floats all boats. It helped everybody. But if you

boats. It helped everybody. But if you were a new entrant into the market, like we were at Samsara, it really helped because basically the entire industry

all of a sudden had to find budget to go out and and buy these things. And a

certain percentage of them, you know, clearly would say, "Hey, let's check out what's new out there. Are there any new entrants into the field?" And so it really helped kind of, you know, give us a a boost.

How did you navigate like the the social proof side of that? Cuz like, you know, I think the casual observer might think about that and say, "Okay, wow, this is regulated. Like we can't screw this up."

regulated. Like we can't screw this up."

So you probably have to go win, I don't know what the largest long-haul trucking company is. I'm trying to think of the

company is. I'm trying to think of the ones I see on the freeway, but in any event, you probably have to go win that one. But it doesn't sound like that's

one. But it doesn't sound like that's what you did from what I understand.

It's not what you had to do. So how did you navigate that social proof element?

Yeah. Well, I think you know, I would maybe I'm doing a little bit of disservice to to the amount of strategy that went into this, but there wasn't a lot of strategy that went into like do we chase lighthouse accounts or do we go after

land grab?

Who's willing to pay us?

We kind of listened to our customers, right? And and it doesn't take too many

right? And and it doesn't take too many cold calls into the largest trucking and transportation firms when you're you know, 18-month-old company that they've never heard of to hear, "We're not

buying you." Click. To figure out, hey,

buying you." Click. To figure out, hey, you know, who can we sell to? And you

know, in in 2017, 2018, you know, we had minimal features. We were just looking

minimal features. We were just looking for do we have something that somebody wants to buy? And so for us at that point in time, the mid-market was the place to go. For a couple reasons.

Number one, it didn't require as much social proof, right? It was it was more about hey, are you satisfying my my need for for telematics? Do you do you fit the requirement? And then, you know, the

the requirement? And then, you know, the other reason was we could get really fast feedback product, right? Cuz the

sales cycles were short. We could get it implemented quickly. They would deploy

implemented quickly. They would deploy quickly, right? The bigger the account,

quickly, right? The bigger the account, the longer these deployments, the longer the feedback loops. And so it really helped us with the the sort of product innovation side as well just to get as many deals out there and get as many wins as we could.

Yeah, and I think this is actually really important though like as like you know early stage founders evaluate this moment in time like what do we don't exactly have like you know the mandate from the you know US government saying

you have to adopt AI but like you know CEOs everywhere are saying you do have to adopt AI company. There are AI boards at every enterprise right now saying like here's what we need to buy and we need to do it by X period of time and

and that surely will go away but there is this moment of like crazy you know kinetic energy inside of big companies and and so I think that like what he just said actually what Andy just said is is actually a good a good kind of

bellwether of whether or not you're in a land grab or versus a lighthouse market.

Are people willing to actually buy from you is part of the land grab you know math here is like are they willing to get on the phone with you? Are they

willing to buy your product? Are you

going through POCs and are you figuring out like how to get someone to use it?

You know and so if you can't get that done then it's all about going and like doing like very deep you know forward deployed lighthouse like a you know arrangements and figuring out how to then get to your

next customers but I just think too like too few people are willing to pick up the phone and willing to get on the plane and and willing to get you know in front of those customers right now because they feel like oh this is like this new category moment I have

to go I have to go to JP Morgan Chase to to sell my deal.

Yeah, and you said a really good thing there it's it's you know do they have existing budget? Do they have you know

existing budget? Do they have you know is it is it a replacement product? If it

is then you're probably going to lean more towards a land grab.

Yeah.

If this is a brand new product and and there's so many of those today right? We

talked to founders every day companies are being born with brand new products and they're going after brand new markets. If you have to do a lot of

markets. If you have to do a lot of education to your market if they don't have existing budget if you're going to have to take them this educational journey before they can go out and justify the purchase internally that's

probably more of a lighthouse strategy.

You're taking them on this educational journey and it's a lot more missionary work than it is hey take that money you're spending with vendor A and move it over to us.

Yeah, yeah.

So maybe it's worth getting specific about some of these companies. I know in the piece you talk about Heavy A and Harvie as as classic lighthouse examples. And then Stut and Deckagon as

examples. And then Stut and Deckagon as as land grabs. So, maybe do you guys want to talk about some of those those playbooks that you've seen or maybe like give other examples?

Yeah. Sure, I mean I I I can go I mean you jump in. Um you know so for example I highlight Stut in the article as like the the prototypical example of of a land grab company that we're seeing in

this new age. And so

Stut this amazing business founded by you know two incredible entrepreneurs Tarc and Ben. And what they are going after is the accounts receivable market.

And for listeners who maybe have never thought about like AR accounts receivable basically you know this is when someone owes you money you know in an enterprise context and you have to go collect the money from them. This is not

glamorous. Um but however there has been

glamorous. Um but however there has been you know a mechanism to do this historically. Right? There are

historically. Right? There are

collections teams and there's big pieces of software like you know I won't say their names because compliance will probably bleed them out anyway. So, there are big companies that

anyway. So, there are big companies that do lots of AR that that sell in this market. But it's been very manual.

market. But it's been very manual.

Right? These these human teams have to interact with this piece of software and they have to go out there and they have to sell or have to go they have to go collect.

And so what Stut said was hey AI is actually quite good at you know basically having conversations with with people. It's very good at looking at

people. It's very good at looking at information internally and basically doing this process end to end. And so we could reimagine this historic you know way of doing collections and instead of having humans do it we can have humans

plus AI do this and and do it even more effectively. And that what that they

effectively. And that what that they then saw that open up was like the rest of kind of like you know order to cash and basically the entire kind of accounts receivable suite.

And so what they basically went out and showed all of the early stage buyers was in doing this we have the math to prove it. We'll be more effective than your

it. We'll be more effective than your current solution and your current human teams at collecting. And this will do XYZ for you know improve working capital by a tremendous amount. It'll save you money. It'll actually make you more

money. It'll actually make you more money.

So, they were able to go out to the mid-market and just basically show the math and be like, "Would you like to, you know, have this solution, yes or no?" Um, so that's a really good example

no?" Um, so that's a really good example of a of a of a land grab market. Um, and

those entrepreneurs are just like unbelievable sellers. They hit the

unbelievable sellers. They hit the pavement better than anyone, um, just as good as anyone as anyone I've ever seen.

Um, and uh and and they're doing a great job. You know, another example on the on

job. You know, another example on the on the lighthouse side would be, you know, we had we had like Harvey in in our article, um, and they just did a fantastic job of winning the right law firms for this very new, very, you know,

theoretically high-risk initiative where you're augmenting your human workforce with, you know, AI capabilities and really automating what, you know, um, you know, junior lawyers would be doing,

um, on a day-to-day basis. And so when they won the first kind of, you know, few critical lighthouse accounts, um, inside of their market, like that proof traveled like big time. Um, and uh and

then, you know, the buyers that had like this tremendous amount of exposure realized, "Hey, it's actually safe for me to buy this this solution."

So those are the two kind of counter example or, you know, two examples in this market. I don't know if there's

this market. I don't know if there's anything you you'd highlight from other companies you're working with or yeah. Things you've seen.

yeah. Things you've seen.

Yeah, I mean, those are two great examples. Um, yeah, I'm doing uh a

examples. Um, yeah, I'm doing uh a decent amount of work with a company we invested in called Pylon. Uh, they're

basically the AI native um customer support and they're a great example of of uh of land grab. They're doing a fantastic job right now of just going out and saying, "Hey, we've got a better

way of doing this." Uh, and, you know, they have uh you know, they they've been climbing up the ACV ladder, but you know, they started at pretty modest ACVs uh and have been working their way up just by going out and replacing. And

they have a fantastic go-to-market team that's just out executing.

This this ACV question is actually kind of an interesting one and I'd be curious how you thought about it at at Meraki or Samsara. Um,

Samsara. Um, you know, there's there's so much demand out there and there's so many different ways of like kind of building your go-to-market engine. Like how much did

go-to-market engine. Like how much did you actually even think about what you were landing at with these like, you know, it maybe go back to when you were at like, I don't know, 10 or 50 of ARR at one of these businesses. Were you

optimizing for that or was it just like, let's basically figure out how to get enough reps in and Yeah, it's a good question. I the answer is you think about it a lot and then you try and not think about it at all. And

what I mean by that is you want to make sure that the ACV that you're going after it it has to it has to top the hurdle, right? In in other words, you look at

right? In in other words, you look at your unit economics and is it healthy or not? You don't want to be taking deals

not? You don't want to be taking deals that are, you know, negative to your unit economics.

Yeah.

But if it passes the threshold, then the answer is you don't think about it, you just go and you get as many of those as you can. So, if you can build a

you can. So, if you can build a go-to-market engine just theoretically that could live off of 15K ACV deals, Yeah.

fantastic. Like, don't take 8K ACV deals, but go get as many 15K AC deals as you can. And and you want to just build a repeatable engine and pour fuel on the fire and get as many of those as you can. And then what happens over time

you can. And then what happens over time is you start inching up, right? Bigger

and bigger companies like what you're doing then and and you start stacking up, you know, the wins and Yeah.

going up the ACV ladder.

And and can I one follow up on that because this is interesting and I'm so much enjoying getting you talking about this stuff, but like Meraki, you guys had and maybe tell the the audience what Meraki does, but you know,

basically access points, right, for for internet connectivity and you guys had this really clever program where you would kind of give it an access point away for free is the way I understood it almost, but and then of course like you do that,

that impacts gross margin, but also you then have a hardware element as a part of your gross margin calculus like we don't have as many companies out there that are doing, you know, maybe AI applications with with with a hardware element, but there is an inference

element which impacts gross margins and so I don't know, how did you think about like these kind of tradeoffs in the early days of Meraki and and of course you had the same thing at Sentara with with hardware, too.

Yeah, so so just just for for the audience's education, so Meraki was a basically a cloud networking company at this point 20 years ago. Still part

of still still is a very healthy business within Cisco. Was was by Cisco back in 2012, Um, the the company was actually founded back in 2006. Uh Uh,

the co-founders were working on a a research project as PhD students at MIT and started the business. And and what's interesting about that, the the research project was called Roofnet. The

technology they built was basically large-scale like mesh Wi-Fi and they'd install it on the roofs in like Cambridge and the idea was you could, you know, outfit these municipalities

and you know, parks and you know, public areas with Wi-Fi. Um, it was fantastic technology. Uh, within the first couple

technology. Uh, within the first couple years they figured out it wasn't a great business model. There wasn't a lot of

business model. There wasn't a lot of revenue in municipal Wi-Fi and so they made this pivot into enterprise.

Mhm.

Um, and the reason I say that is, uh, you know, if if you think about sort of the enterprise networking world in you know, 2009, 2010, like people thought we were crazy. Like, why would

you be trying to build an enterprise networking company in 2009? You don't

you know that market was won 10 years ago by Cisco and HP. Um, but the reality was and again back to sort of the the timing, that was right when cloud was coming about. And and the the big

coming about. And and the the big innovation around Meraki was the the product and engineering folks, fantastic team there, figured out how to configure and manage this networking equipment

through the cloud, which sounds like, yeah, total, of course. Back then it was it was a little bit innovative. Anyway,

um, our our problem and that was very much a land grab strategy, right? We had no chance of getting into the largest corporations in the world, the lighthouse, because Cisco and HP had them all tied up. But what we could do

is we could say, "Listen, we can configure, we can deploy faster, we're simpler to use." Well, who cares about that? The mid-market, right? Where they

that? The mid-market, right? Where they

don't have substantial IT teams that have been trained in command line code and and this kind of stuff. Um, and so, you know, our kind of firm belief at that point in time was, well, what's the

best way to get them to understand that our networking equipment is simpler to use than their Cisco that they're about to buy?

Mhm.

And the answer is get them to try it.

Yeah.

And so what we do is we'd run these webinars and we'd say, "Hey, you attend the webinar, we'll send you a free access point.

Mhm.

You plug it in, try it out." And the idea was if they if they try it, the lightbulb goes off and they say, "Wow, this is just so much easier than what I'm using.

Yeah.

Why don't I why don't I use that?" And

it was it was very very successful for a long period of time and even as the company matured, you know, we were very very liberal in our trial and eval because you just fundamentally want customers to experience the technology.

Yeah.

Um and realize that it's better than the alternative.

And do you think like there's there's an element of um like that people can kind of learn from that right now? It's it's

hard though because there is a an aspect of configurability with a lot of the new AI stuff, right? Like if you just give somebody this like, you know, Ferrari, they they might not know exactly how to even turn it on and um

and so I don't I I don't know how how you even think about like the delivery mechanism for some of these like trial periods, POCs with some of the AI companies you're working with right now.

Yeah. I I think it's become more challenging, right, in the world of AI because number one, things are moving so fast. Like things are changing daily.

fast. Like things are changing daily.

And if you think about like a a proof of of concept or a trial, you know, the whole idea, if you're on the sales side, is I want the customer to experience this, I want to prove that it works for them, but I want to do it in a in a

period of time that doesn't go on forever, right? And so what you what you

forever, right? And so what you what you have to stay away from, and I think one of the real dangers today is these things turn into like science projects, right? Like I'm going to deploy this,

right? Like I'm going to deploy this, well, can it do this? Can it do this?

Can you show me this? Can you show me this? And of course things are advancing

this? And of course things are advancing every day, so the answer is probably yes, I could, but then you run the risk of these trials or proof of concepts going on forever.

Yeah.

And so it just takes a lot of discipline, I think, in today's day and age to to really box that in and say, "Listen, here's what our solution does, and we're going to, you know, define it this way, and we're both going to agree

that if it, you know, has done this after 45 days, it's success and you're going to move forward with the purchase."

purchase." so there's there is a lot of that today.

And did you um like I guess would you recommend having like kind of auto converts on these as much as you can or Yeah, like I don't know how like other like kind of learnings and lessons from

this type of like 30-45 day And then we can talk about like the time you know the the right amount of time that you're giving people with the product.

I think I think the timing depends a little bit on the complexity of your product, right? If it's going to take,

product, right? If it's going to take, you know, 2 weeks to set up, then you can't make it a 2-week trial type thing.

But I think the two biggest things are make sure you have an end date, right?

Yeah.

It's a 30-day trial, it's a 45-day trial, it's a 60-day trial, period, end of story. And then the second one is you

of story. And then the second one is you have to define the success criteria up front. Here is what we are proving that

front. Here is what we are proving that we can do for you, right? And in some of these companies, you know, you can't do a proof of concept because, you know, maybe it is regulatory, maybe there's, you know, too

much risk in there, and they're not going to let you do it. But where you can, I think you want to make sure you have both an end date and you have the the success criteria clearly defined.

Yeah. I think this is so tricky right now where, you know, so many, you know, like you have to basically define the scope that you're going after, and the success criteria, but often times if you're like automating something that

has never been automated before, there's like significant amount of configuration, and that like costs money. And then your product could could

money. And then your product could could work, but it might be deployed improperly, and and and or the results take longer than 30 or 45 days. And so

how do you actually kind of There's like a There's like a difference of hey, the product is working, and you just and we and basically you need to work with the customer then optimize whatever they're doing with the product.

Right? Like imagine your I mean I don't I always go back to sales cuz it's easier to think about sales, but like imagine you're a you know, a sales tool. Like the product needs to work, and then you need to use it and target the right customers for

whatever you're you're selling.

And and they're kind of like two different parts of the equation. And so

if all of a sudden you're taking risk on for whether or not your product works and then whether or not it's being used correctly, very tricky. And so I think this is actually a really important topic for founders and for early-stage revenue leaders today to figure out how

you're educating your customer on like here is the thing we are signing up for.

We are not signing up for, you know, you know, maybe you are, maybe you aren't, but um you know, whether or not your employees are using our tool the right way.

Who who have you seen that does the best of evangelizing and and kind of like taking people through the onboarding process?

You know, I think uh who would I put in that bucket? Um

I mean, I think like Decagon has done an amazing job um at this. Like I think they go in, they basically evangelize that they're doing customer support better than anyone else. Um and then they're very good about saying here are

the benchmarks that we are signing up to hit and then they hit them um you know, in in their time period, right? And so I think this is you know, I think some people might trivialize, you know, this. It's very

hard to do customer support effectively.

Like this is a high-risk exposed market um you know, where where like you you you don't want to screw this up. And so

I think they've done a really good job of of evangelizing. Um I think the guys at Stude back to like the the example I just I just talked about. And then

another example would be excuse [clears throat] me a company that I'm on the board of called Further, Further AI, and they were they sell into the insurance space and they're kind of they're basically evangelizing the idea of bringing AI to

insurance. Um you know,

insurance. Um you know, people haven't been using AI in insurance. Like this is not, you know,

insurance. Like this is not, you know, generally a first adopter of of of of technology. But a lot of their customers

technology. But a lot of their customers are some of the biggest insurance companies in the world and it's because they're very comfortable with like, "Okay, hey, here's like an AI solution that's built in a govern it uh you know, a a a uh secure, you know,

governance-first, you know, form and fashion." Um and then they work with

fashion." Um and then they work with with forward-deploy teams, you know, their customers to get it up and running. So those are a couple examples.

running. So those are a couple examples.

I don't know if you have any And and that's that that last one's a good example of like a lighthouse strategy, right? Like they've they've

strategy, right? Like they've they've gone after the bigger insurance companies and you then you get that social proof and you know, on down the the long tail of insurance.

And I and I I think like sometimes people think that you have to be from a given market to do a lighthouse strategy and maybe there's someone sitting at home and they're like oh like if only like I worked at this company I could go

do this and it's like no the reality is like go build a relationship.

Yeah.

You know I see you laughing cuz I know you're like go build a relationship with your customer. Go find someone and show

your customer. Go find someone and show them like here's you know I have an earned secret. This earned secret is

earned secret. This earned secret is that AI can help your business or technology can help your business in this way and you know work with us on that front.

I I I I'll also say that you know every every small company wants to become a big company. I don't know too many very

big company. I don't know too many very large successful companies that at some point in time haven't deployed both strategies. You might start off with

strategies. You might start off with land grab but then you mature and you have a lighthouse strategy or you start with lighthouse and then you get big enough that you can go broad you know into land grab. So I think for founders

when I get this question early on do what makes the most sense for your business right now. What does that mean?

Go out and talk to customers. Find out

where the early earliest and easiest sales are and pursue that strategy. It

doesn't mean you're completely you know punting on the other one. It just means come back to it. And in in both of the last companies that I worked for both Meraki and Samsara we started with land grab but as soon as we matured and

started getting up in enterprise then what do you do? Well you verticalize and all of the sudden like great who are the top five you know transportation companies who are the top five warehousing companies who are the top

five you know public sector and then you want to go take those down and so you can morph into a land grab strategy. You

just want to do what's most efficient and most effective for the stage of the company you're at.

Talk Can you talk a little bit about like one of those like key markets that you unlocked with like you went from land grab early to you know lighthouse in a given market? Like what did you how

did you set up that team um or like was it just you were the founders that was going in this new market and then like you know maybe a little bit about some of those deals that you closed. I'm just

curious how this played out with the sequencing.

Well I I think I you know at both Meraki and um Samsara you know the the sort of earliest example of of uh lighthouse was when we

verticalized. And in both those

verticalized. And in both those instances, it was basically in like public sector. At Meraki, we were going

public sector. At Meraki, we were going after like school districts because that was sort of low-hanging fruit. And you

know, if you're if you if anybody anybody's ever sold to school districts, like they all talk to each other. They

all know each other. You want to find the biggest school districts in each state. And if you can take that down,

state. And if you can take that down, every school district underneath them what did that one buy? Great. All of a sudden the social proof is there. Now,

why why use a lighthouse strategy in say school districts or in Sam's case when we went into public sector when you start selling to cities and counties and states, you know, why shift? Because the

sales motion is fundamentally different.

Like the sales cycles are different, the way you sell, the decision-makers are different, the way they procure is different. And so, asking the same sales

different. And so, asking the same sales team to shift from, you know, selling to a mid-market customer and enterprise customer over to selling to a city or a county or a school district, it's just it's just different. And so, you know,

that's a a point where you might want to shift and say, "Okay, great. You know,

once we're verticalized, we want to shift to a a lighthouse strategy."

What what would you say there the differences are between great sellers in lighthouse models versus great sellers in land grab models? Are there any differences like from what you saw maybe when you're opening new markets? Is

there a profile that that was most effective?

It's always difficult to generalize. I I

think, you know, in a true lighthouse strategy, and and when I envision lighthouse, it's like, "Hey, we're going to go after whatever the financial sector. You know, here are the top 15

sector. You know, here are the top 15 accounts in finance. And you know, here are their logos. Like how many can we get into this quarter, next quarter, next quarter?" Right? Like that's a

next quarter?" Right? Like that's a lighthouse strategy.

You know, generally you want more seasoned, you know, enterprise sellers that, you know, know how to work within those accounts.

They understand the sales cycles. They

understand the the sort of procurement cycles. In in more of a land grab

cycles. In in more of a land grab strategy where you're just saying, "Hey, we have the best technology. We're

replacing this workflow. We're replacing

this product." You just want, you know, very aggressive, like hire for attitude and aptitude.

Right? You can go earlier in career. You

know, you just want those people to get out there and and hit as many of those customers as you can because, you know, at that point it's like you're hitting a big market and you just want to stack

wins as fast as you can.

Yeah, and I I, you know, my my unsolicited advice to any early-in-career seller or potential seller right now is there's never been a better time to work at some of these companies in our portfolio.

That's absolutely true. It's it's a super fun time to be in the market.

Yeah.

I I wanted to ask about maybe a third kind of of selling or or or product diffusion that we that we haven't talked about, which is like

the developer kind of bottoms-up, like more grassroots adoption. And is

that is that something that you guys are seeing? Like is is the idea of the

seeing? Like is is the idea of the seller sort of becoming, I wouldn't say obsolete, but like for a particular kind of product just just less relevant now?

Like a developer saying to, you know, their CTO or their, you know, CIO or whoever, like, "Hey, this is great. Like

let's just get this." And like there's less of a sales motion needed?

You know, I I guess definitely not. Like there's a bunch of PLG that's still happening today. I think people are buying things

today. I think people are buying things in a consumer fashion all the time and I think that there's new buyer behaviors being, you know, kind of discovered. And

of course, like, you know, we were big investors in Coda and everyone saw that played out and there's a bunch of other examples of this.

However, like if I take a giant step back and and talk about where we are in this like current cycle, like I wrote this long piece called "Trading Margin for Mode" about a year or year and a half ago or whatever it was,

talking about like the cycle.

And if you think about like why, you know, basically the last 12 years before 2024 or 10 or 15 years before 2024, you saw so much PLG is just kind of where we were in like the software, you know,

innovation cycle. You know, and a lot of

innovation cycle. You know, and a lot of the big cloud platform businesses, if you think about like CRM, HR, ITSM, security, like a lot of those big platform businesses were founded in the,

you know, call it 2000 to 2008 to 2010 period. Um, and those businesses went out and solved like the big platform opportunities. And so then the

platform opportunities. And so then the only way to really break in at the enterprise, right? And we're talking

enterprise, right? And we're talking more about like enterprise enterprise sales or mid-market enterprise sales, was to build like some sort of wedge product, wedge in with this product, and say, "Hey, I'm going to solve this part of your of your, you know, suite for

you, and then try to expand over time."

And so this like land and expand model became super, you know, obviously super in vogue, but it was really based on where we were in this like adoption cycle. And there were other people, of

cycle. And there were other people, of course, that said, "Hey, I want to go build a new CRM. I want to go build a new HRIS. I want to go build a new

new HRIS. I want to go build a new ITSM." But like the reality, you know,

ITSM." But like the reality, you know, was going from, you know, on prem to cloud was a big enough shift for people to like switch to something new. But

going from like cloud to cloud for CRM, like I don't care if the button is green or blue. I don't care if there's like

or blue. I don't care if there's like one little feature difference. I'm not

going to switch. And so you can you compare that cycle where we were looking at everything for the last 15 years, which was all PLG and all the time, this is incredible, to where we are right now, there's this crazy kinetic energy

inside of companies where they're saying, "Hey, it could be even something as, you know, fundamental as CRM, right?

It could be as fundamental as HR, ITSM.

We're now looking at a different way of doing business entirely. This is not a skeuomorphic one-to-one replacement, green to blue. We're now thinking about like humans are going to be doing something completely different, way more high value. We're going to be doing way

high value. We're going to be doing way less of the the same kind of, you know, mundane wrote work. Um, and instead agents are going to be doing that doing that. And so that's I think the

that. And so that's I think the opportunity right now, and it's why instead of talking about like of course we got to talk about PLG and like all these other sales models, there's a moment right now to go sell, you know,

big software again, right? And to

And to go sell platforms. And And it's because of this moment. Um and so I think people need to be studying kind of the 15 years ago models of like how people build this and the and the ecosystems around it um to go and have

success.

Yeah, I think that's right. I I will say I think the consistent trend as long as I've been doing this is that, you know, every year and with every technology transition, buyers become more and more educated, right? So the buyer today is

educated, right? So the buyer today is just fundamentally has a better idea of what they want than they did 5 years ago, 10 years ago, 15 years ago.

Yeah.

And so, you know, that does lend itself more towards, you know, if you can hit that buyer when they're in their decision mode, you're going to have a better chance. It doesn't have to

better chance. It doesn't have to necessarily be PLG, but it can be more self-serve. It can be it should be an

self-serve. It can be it should be an easier sell than, you know, 10, 15, 20 years ago where you had to take them on this entire education journey, why you need this, how it works, here's how you're going to write. Like they're just

so much more educated now on what they want to buy that your job is just convince them that your company is the right solution for that.

Amen.

Yeah.

Yeah. I guess there the lighthouse kind of like definition just gets pushed ever outwards or you kind of like, yeah, just have to keep on conquering new

territory. I'm curious I I assume a

territory. I'm curious I I assume a company just can't stay a lighthouse forever and you you even alluded to this, Andy. Like what what is kind of

this, Andy. Like what what is kind of the average amount of time that a company kind of can just, you know, chew off those those bigger logos and then,

you know, like like what is that transition moment like, I guess?

Yeah. I mean, theoretically, you could, right? If if you were a company that was

right? If if you were a company that was dedicated or committed to a, you know, multi-product strategy, you could just keep coming out with new products and keep going after, you know, more verticals, right? Like you could

verticals, right? Like you could theoretically do that and I think there's probably some examples we could come up with of companies that did that.

But But yeah, in general, you know, if you start with a lighthouse strategy, you've built the social proof, you've gotten these big names, then what you want to do is you want to run the category underneath it, right? If I've

gotten the top five financial companies in the world, I want to run down, you know, the list after that. And so, that fundamentally becomes a little bit different of a sales motion, right?

You're spending less time with, you know, the huge organization, the big logo, you know, selling and you're spending more time, you know, less time in the social proof and more time on, "Hey, here's a

reference if you need it. Otherwise,

this is why my product Best Buy it.

Yeah. And I mean, I I think And to to Danny's point, there are certain companies I think that actually do just stay lighthouse the entire time. And

like, that would be like I'm trying to think of a the best example might be like Applied Intuition in our portfolio.

Like, there's there is a very, you know, set number of people who are, you know, buying that kind of autonomous software.

Um and a certain number of, you know, car manufacturers and so on and so forth in the world. Um not to say that that's the only people they can sell to, but like of course, these are these are good trade markets. And so, you then have to

trade markets. And so, you then have to treat every one of these with immense care cuz they are huge um ACB opportunities. And And they've obviously

opportunities. And And they've obviously I think they're they're arguably the best in the world at doing that. Um so,

yeah. That's a good example of that.

Why why would a founder sort of mis- misjudge what game they're playing? Or

how how have you seen founders kind of misjudge whether they're doing lighthouse or land grab?

I mean, it sounds way more sexy to sell to JP Morgan Chase than to, you know, Schmitty Schmitty Mormon.

[laughter] I think I think the biggest mistake that I see founders make in an early stage, honestly, is just spending too much time trying to figure it out, right? It's

like too much time on the strategy. And

strategy's important, but you should spend like 1% of your time on the strategy. Pick it and then spend 99% of

strategy. Pick it and then spend 99% of your time trying to execute. So, you

know, rather than sit back and say, "Well, you know, should we do lighthouse or should we do land grab?" Get out, talk to your customers. Figure out which ones, you know, are are willing to, you know, buy your product, the features and

the services that it delivers today, and then chase that path, right? There's no

bonus points for hard-earned revenue.

You know, you don't get extra, you know, multipliers on your revenue if you get the big logo or something. Like go after the customers you can, you know, and then, you know, constantly be improving your product and then, you know, you can

always reassess your strategy. You You

after the first year, if you get all your your revenue milestones, you can look at it and say, "Well, could we be more effective doing this?" Maybe. But

just don't spend too much time in analysis paralysis mode.

Yeah, totally agree with that. I totally

agree with that.

Joe, Joe, you had some you had some fun questions for Andy. I It was a lightning round question.

Yeah, lightning round, okay.

Lightning round. I'll see what other ones I can come up off the top of my head but the first one is maybe like your favorite place you ever weirdest place you ever closed a deal.

Yeah, I mean, we've had some customers that, you know, have have taken taken us to some some funny places, right? I

mean, I've closed deals on fishing trips. I've closed deals, you know, out

trips. I've closed deals, you know, out at shooting ranges. I've closed deals at ballparks. So, yeah, I think those are

ballparks. So, yeah, I think those are all, you know, kind of unique, like anywhere that wasn't a meeting room.

Um airport Chili's?

[laughter] Uh probably. Probably over probably over

Uh probably. Probably over probably over the years.

Yeah, certainly at Samsara where we're selling to, you know, logistics and and transportation companies, you know, a lot of truck yards and and that kind of stuff. Um you know, sanitation sites.

stuff. Um you know, sanitation sites.

Yeah, yeah.

There's some There's some pretty When you're doing land grab motions, I think this is like the the permeating theme is just like people willing to go and and sell wherever. Maybe Andy, if you could go back and tell yourself one thing when you're building out these

these teams or like early in your career, what would you tell yourself?

Um early in my career. Well, I mean, this is the advice I give a lot of uh early in career folks.

Um and it was a mistake I made early on.

The only thing you should really be focused on when you're starting your sales career is find the best company you can possibly find to work for.

Uh I made this mistake early in my career. I was chasing, you know, where

career. I was chasing, you know, where can I make the most commission? Where

can I make the most money? What's the

hottest technology? What Where can I go get the biggest title? At the end of the day, none of that matters. What you want to find is you want to find the the the great company that's going to grow. And

if you do that, then it's like a career elevator, right? Like you will grow with

elevator, right? Like you will grow with the company.

Yeah. But you can't you can't let your ego get in the way and I want a director title or I want this big of a base salary or I think I can get this much of a commission rate. Just go find the best company you can work for.

Yeah. Totally agree. What's one role you think companies should hire for earlier than they normally do?

In sales work?

I mean, it really depends on the company and and how and you know, specifically like how comfortable the founders are.

Like if you're a founder that's very comfortable sales and you know, you can wait longer to hire sales here and that kind of stuff. Um so, it's a little bit of a generalized question, but I I would say sales operations is is probably one

that I see companies waiting a little too long on. And I am not a proponent. I

don't think you need to to, you know, stand up a gigantic revenue operations organization. It can be literally like

organization. It can be literally like one person, but you need somebody that every day is thinking through territory alignment, you know, name lists, doing you know, commission skirmishes, setting a sales constitution. Like all that kind of

constitution. Like all that kind of stuff becomes really really really important because when you get into like, you know, scale mode, you want all that stuff like largely figured out. You don't want it to become speed bumps otherwise. So, you

want somebody thinking about that and it's it's generally not going to be your sales leader cuz they're thinking about how do I hire the next person? How do I bring the next deal on?

So, I'd say, yeah, maybe sales operations, sales revenue operations.

Yeah.

Um maybe you know, one sentence or two sentences on, you know, how you think about how what percentage of sales teams at the early stage companies you're at should be hitting quota?

And like kind of like, [laughter] you know, sales thinking 100%.

Yeah, 100%. See, I was going to say Well, I think there's you have some interesting comments on like basically, you know, trying to keep them low, get everyone kind of rabid and and really I mean, listen, I think in the early

days, like sales teams run off of momentum, right? You you to hire winners

momentum, right? You you to hire winners and give them a chance to win. So, yes,

you want to, you know, be able to bring people in. You want to set reasonable

people in. You want to set reasonable goals.

Um it's got to be profitable for the company. Your unit economics have to

company. Your unit economics have to work. Like you can't, you know, you

work. Like you can't, you know, you can't change the math. But at the end of the day, like if you're an early stage company and you've got a great product, you want to hire the best possible sales talent to get that product solution out

to market. And the way you do that, the

to market. And the way you do that, the way you attract those people is give them a chance to hit quota.

Totally.

So, yeah, I think, you know, some of these companies today where, you know, 40, 50% hitting quota, I think they're probably doing themselves a disservice.

Either their quotas are too high or, you know, their hiring profile's off. But,

yeah, I think especially in the early stages when, you know, cost of sales isn't as important. When you're a public company and, you know, you've you've you've gone out and you've you've conquered your market, nobody looks back

and says, you know, gosh, you know, 6 years ago your cost of sales was really terrible.

Yeah.

[laughter] Totally.

Nobody cares about that. What they care about is, you know, did you get on a path where you where you could, you know, be successful.

Well, I I think something that's cool about this conversation is just how like timeless a lot of the wisdom is. It it

just seems it seems like, you know, these frameworks and and ways of thinking about the industry are are pretty consistent just throughout the different software cycles and, you know,

eras of that we're that we've seen. So,

anyway, Joe and Andy, thank you so much for joining us.

This was great and excited to have you guys back on.

Yeah.

Yeah.

God, the goat. Thanks for having us.

Thanks, Andy.

Thanks. It was fantastic.