Should your SaaS startup embrace a bottom-up GTM strategy?

Caryn MarooneyContributorShare on TwitterCaryn Marooney is general partner at Coatue Management and sits on the boards of Zendesk and Elastic. In prior roles she oversaw communications for Facebook, Instagram, WhatsApp and Oculus and co-founded The OutCast Agency, which served clients like Salesforce.com and Amazon.More posts by this contributor

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David CahnContributorDavid Cahn is an investor at Coatue, where he focuses on software investments. David is passionate about open-source and infrastructure software and previously worked in the Technology Investment Banking Group at Morgan Stanley.

Many of today's most successful software companies, from Atlassian and Datadog to Zoom, subscribe to the bottom-up SaaS go-to-market model. In this model, the user purchases software directly from a website, without ever speaking to a sales person. The product essentially sells itself.

The bottom-up model has a few key benefits: Companies spend dramatically less on sales than their peers, allowing them to invest more in product; they can sustain hypergrowth for longer because they are not as reliant on raw sales headcount to win business; and they tend to be more profitable in the long run, leading to premium valuations.

For all these reasons, more and more SaaS startups are choosing to adopt the bottom-up go-to-market model. But for every Atlassian or Zoom, there are many more companies that fail - often because they don't understand the hidden challenges and costs that come with the bottom-up model.

Before proceeding further, it's important to note that bottom-up is not the right starting strategy for every company. A few quick ways to see if bottom-up is the right place to start for you:

1. Product: People can easily try your product.
2. Decision-maker: Your decision-maker is a line-level employee (not C-Suite).
3. Users: Teams and individuals can get value from your product (doesn't have to be full enterprise roll-out).
4. Data: The data involved isn't something that compliance would need to review.

For companies that meet these criteria, there are three important questions that you must be able to answer:

1. Who needs to work together to make a bottom-up SaaS model work?
2. What is the value you deliver to your customer and how do you determine pricing that matches that value?
3. When do you hire a sales team? (Spoiler alert - it's sooner than you think!)

In this piece, we will tackle each of those questions in turn and share some of the best answers we've seen from companies that are making it work.

Who needs to work together to make a bottom-up SaaS model work?

Unlike most traditional companies who rely on a head of sales to keep tabs on customers and how much each one is paying, most successful bottom-up companies rely on a combination of product, sales, customer support, marketing and community teams to manage revenue.