Finding Product-Go-to-Market Fit (PGMF)
When launching a B2B enterprise software startup, it’s just as crucial to find product-go-to-market fit (PGMF) as it is to achieve product-market fit (PMF). Whereas PMF focuses on whether your product meets a market’s needs and demands, PGMF ensures you can scale and grow your business efficiently for the long term. Overlooking the go-to-market aspect early on can lead to major challenges later, sometimes requiring team rebuilds or even product pivots (something I had the unfortunate experience of having to do not once but multiple times as a startup CEO).
Why It Matters
Focusing on PGMF from the start helps you identify:
The best customer segment for your product (Enterprise, Mid Market, SMB, or Startup).
A viable sales model (field sales, inside sales, self-service, etc.).
A path to predictable and efficient revenue growth.
Many successful companies have built billion-dollar businesses targeting different segments. Salesforce, ServiceNow, and SAP went after enterprise, while Intuit, Shopify, and Mailchimp focused on SMBs. Others like Stripe, Slack, and Zendesk initially zeroed in on startups. Over time, some companies move upmarket or downmarket (though downmarket is less common).
The challenge for early-stage founders is deciding which segment to target first. Below is a quick-reference matrix to help you choose your ideal customer segment to find PGMF:
Enterprise
Many founders try to avoid enterprise sales due to its long, complex sales cycles, extensive security and procurement requirements, and frequent travel. However, certain products and markets require an enterprise approach—especially if:
The product is highly complex.
Multiple stakeholders must sign off.
There are extensive integration requirements.
High-touch implementation is necessary.
If you check these boxes, enterprise may be your best bet. Be prepared for 6–12+ month sales cycles and field reps earning $250K–$350K on-target earnings (OTE), with quotas in the $1.2M–$1.5M range. Contract values typically land in the six-figure range to justify these sales costs. The pitfalls to this approach are well known:
Slow sales velocity, which hurts ability to iterate on the product and achieve growth milestones
High initial cost of sales, which is challenging especially early on in the sales cycle
Often requires experience having sold into enterprise
Mid Market
Targeting mid-market customers, especially initially, can be a compelling alternative to going enterprise. Sales cycles are generally shorter, with fewer stakeholders and streamlined procurement processes. You can often succeed with inside sales reps who earn $150K–$250K OTE and carry quotas in the $600K–$1M range. These reps don’t necessarily need extensive rolodexes, typically have 3–5 years of sales experience, and can operate from a “hub” office. Sales cycles are typically 3-4 months and deal sizes here usually fall in the mid- to high five-figure range to justify the sales costs.
The mid market segment is probably the best choice for most startups, yet there are still pitfalls:
Low contract values that require too many transactions to hit quota
Multi stakeholder sales that extend sales cycles hurting deal velocity
Startup
Often referred to as the “YC playbook,” selling to other startups appeals to founders because it’s relatively frictionless. Sales cycles are short, usually involve a single decision-maker, and come with straightforward buying processes. Many young companies are also more willing to take a chance on new solutions, and often have “greenfield” opportunities (no incumbent product in place).
For this segment, founder led sales is the most common, followed by inside sales reps earning $100K–$200K OTE with quotas in the $400K–$600K range are common. Contract values can range from $10K+. This can be a seemingly attractive market to start with, but there are pitfalls:
Startups’ spending heavily depends on the funding environment (booming in 2021, tougher in 2023), and churn can be high.
As you grow and inevitably move upmarket, you may have to reestablish product-market fit for larger customers.
SMB
Selling to SMBs requires an ultra-low-touch or no-touch approach to remain profitable. Ideally, the end user is also the buyer, with enough budget authority to put the purchase on a credit card. Aim for as much self-service as possible—maybe just one or two calls, and a deal cycle of a few weeks at most. Success here hinges on a frictionless product experience and onboarding process.
Pitfalls include:
Sales that require multi-stakeholder approvals or extensive customization—both of which drive up cost and complexity.
High churn, as many SMBs go out of business each year.
Despite these challenges, well-designed SMB plays can scale enormously (think Intuit or Shopify).
Conclusion
It’s not enough to achieve product market fit - you must figure out your product-go to market fit (PGMF). Getting this right upfront - seed or series A stage - can save you from a pivot and/or team rebuild after you are millions in sales.