Finding vs. Conjuring Demand
How to interpret [insert hip startup]'s [insert weird tactic]
PSA: There’s a companion podcast! I go into WAY more detail on the “Physics of Startups” podcast - available on Spotify, YouTube, & Apple Podcasts. Here’s this episode link:
Also - testing out sending this on Saturday mornings vs. Friday mornings (most people seem to read on weekends). Let me know if this is a bad idea.
Startups do weird things, like creating categories, creating job titles, making fancy websites, and doing odd marketing stunts. It is hard to know whether the weird things startups do cause them to be successful, prevent them from being successful, or set money on fire unproductively. This makes it extremely difficult for us to know exactly what to do or what to interpret from startup news. Which makes it hard to stay sane.
The theory:
When startups work, it’s because they find demand, and shape their products to fit demand. Demand exists organically in some shape or form - it’s out there - the startup harnesses it, sometimes in creative and weird ways.
When startups don’t work, it’s because they push their product, trying to convince the market they should have demand. In other words, demand isn’t out there - it is manufactured, the founder tries to “conjure” demand, often through creative and weird tactics.
A startup’s weird and creative tactics are either likely to work, or likely to fail, based on if they are designed as responses to demand that is out there. By just looking at the tactic, we can’t know much. But we can now ask the question: “What would have to be true on the demand side for this tactic to work?”
The example:
Clay is a go-to-market tool of sorts. It is a very flexible way to combine data from different sources to, for example, build a hyper-specialized lead list. Clay has raised a ton of money, gotten a lot of hype, and gotten some hate too.
One of Clay’s tactics has been “creating” a new job title: The GTM Engineer. I have seen people I respect arguing that this tactic is the dumbest thing ever, and I have also seen people I respect saying that this tactic is brilliant. The answer wasn’t clear to me.
What are GTM Engineers, you ask? They are supposed to “act like an internal product team that serves [a] GTM organization. They identify problems, write specs, ship prototypes, and scale what works, measuring success by metrics like meetings booked and hours saved.”1 To do these things, they might just use Clay’s software.
I imagine two ways the GTM Engineer might have emerged:
They found & fit demand: Someone at Clay noticed that there is a person on most every GTM team who does this kind of automation work, but they struggle because their existing tooling isn’t good enough… and maybe this person is moonlighting in this role because it’s not an “official” job, or that the traditional titles like “growth” or “RevOps” or whatever don’t accurately describe this person’s actual role.
They conjured demand: In a conference room at Clay HQ, someone said, “Here’s an idea: Let’s say that traditional GTM is dead, and that GTM Engineering is your only savior… powered by Clay. If we pour enough money behind creating FOMO and hype behind a rebrand of RevOps, people will believe it.”
Conjuring demand will almost certainly lead to Clay struggling, because even with an insanely good marketing team, they’re pushing the market (and it’s hard, if not impossible, to push a market). Finding & fitting demand shows a response to real, organic, free-range demand… and is more likely to work long-term, because the market was already pulling for this kind of supply.
How do I know that conjuring demand doesn’t work? My French friend Louis Grenier reminds me of a relevant analogy: Remember the hot Boston-based startup, Drift? They tried to push “Conversational Marketing” as a category onto the world, with insanely capable people and a heck of a lot of money. Sure, Drift grew and exited, but today, “Conversational Marketing” isn’t a thing, whereas “Inbound Marketing” from HubSpot is a thing. As a result, the latter is a success at a wildly different order of magnitude than the former. This has nothing to do with the skill level or work ethic of the Drift team. The Drift team was objectively exceptional, which emphasizes just how impossible it is for even the most talented people in startups to conjure demand!
Back to Clay and the GTM engineer: I can’t make a judgment about whether the GTM Engineer role is a good idea or not, but I can look at this tactic (and any other startup news story), and say, “Here’s what would have to be true for this to be a good idea. Do I think this is true?” Which, if nothing else, helps me sleep better.
Implications for you
When you are considering supply-side tactics (e.g., creating a category, creating a job title), make sure it fits what exists on the demand side.
When you see a successful startup doing something strange like the GTM Engineer, remember that you can’t see what’s on the demand side - so it’s next to impossible to tell whether the startup is building interesting supply that fits demand... or if they’ve just found an interesting, but ultimately futile, way to push their product.
When you understand demand, there’s a case for doing the weirdest possible things on the supply side that “fit” demand, because (1) they will work, and (2) they will be controversial and get people to talk, which will make them work even better.
PS: I run a “product-market fit + sales” course & do 1:1 work with B2B founders to figure out 0-1 sales. If you’d like to potentially work with me in Q4, reserve time on my Calendly for mid-late Sept HERE - more info about working with me is HERE.