Part I: The Founder’s Checklist for Bottoms Up Growth
Why Everyone Is Buzzing About Bottoms Up
With the Zoom and Slack IPOs and a flood of free new productivity tools, 2019 has been all about bottoms up growth. And for good reason! Bottoms up growth is based first and foremost on a high quality product that depends on delighted customers to drive word of mouth growth. This ultimately can result in some beautiful company metrics: short sales cycles, improved capital efficiency, and >100% net revenue expansion.
While it’s the go-to-market model of the moment, bottoms up software is nothing new. In fact, the first internet product ever — Netscape — was monetized this way in the 1995! However, certain recent conditions — the consumerization of the enterprise, the rise of remote work, and the decentralization of purchasing decisions down to each card-carrying employee — have contributed to the recent popularity of this business model.
Defining Bottoms Up:
So how does a bottoms up sales model work? Instead of waiting for a key decision maker to make a purchase decision and then roll out a new tool to employees as is done in traditional B2B sales, a bottoms up strategy starts with an individual at the “bottom” of an organization using a new piece of software. Over time, it’s adopted throughout a team or organization until a key decision maker rolls everything up into an enterprise contract. While we also see lots of self-service products in the SMB market, its this aspect combined with the account expansion opportunity that makes something truly bottoms up.
Here in Part I, I’ve outline the different types of products that succeed with this model, and have provided a quick checklist for founders who are thinking about taking this approach. In Part II: The Bottoms Up Growth Playbook, I’ve provided a more tactical framework for executing this model successfully.
The Different Ways To Do Bottoms Up:
I’ve broken down the most common types of bottoms up products by the following:
- Single player: These tools are useful at an individual level. While the product doesn’t inherently become more valuable with more team members on it, companies can see pricing, billing and admin advantages when upgrading to team or corporate plans.
- Multi-player: While these products inherently need 2 or more users to be useful (because I can’t do a Zoom videoconference with myself!), they have an internal network effect; the more people using it in your organization (and sometimes even outside of it), the more useful the product becomes. These type of products inherently have a foundation for viral growth.
- Both: These are bottoms up products that have use for individuals, but also increase in utility the more people that are on it in an organization. For example, while I love using Notion for my own personal notes and to-dos, when I’m able to share notes and collaborate with co-workers, it becomes much more useful and sticky.
- Company Wide vs Functional Group: While many successful bottoms up products that have cross-functional utility, like chat or note taking, other companies have found this model successful for just one specific function like engineering or marketing.
While prosumer categories like productivity, developer and creative tools have been the most popular categories for this model, companies like Pipedrive and Mixpanel take a bottoms up approach in areas that are still dominated by competitors using traditional B2B sales and marketing.
Is Bottoms Up Right For Your Product?
With all the hype outlined above, people sometimes talk like bottoms up will replace all traditional enterprise sales at some point, but that’s simply not true. Traditional B2B sales and marketing approaches are still necessary when there is high customization, intense implementation, and/or necessary team-wide cohesion.
For example, there are very few HR tools or core infrastructure products that have a bottoms up approach. Additionally, bottoms up can be a really hard model to execute in highly regulated industries where individual employees are unable to freely test new products.
The Bottoms Up Checklist for Founders:
At the end of the day, when taking your product to market, you have to make sure your approach matches your customer’s needs and maximizes the strengths of your product and team. Here’s a quick checklist when thinking about whether this model makes sense for you:
If you are a building a B2B software startup bottoms up, check out Part II: The Bottoms Up Growth Playbook for tips on taking your product to market. Or feel free to reach out — I love talking about all things growth!
email: email@example.com / twitter: @nickykamra
About Us: Streamlined Ventures is a seed stage fund focused on data and applied AI across every sector. Based in San Francisco, we’ve invested in over 125 companies including DoorDash, Rigetti, AppLovin, EasyPost and more.