In a startup that sells software, what is the “business” side of the company?
When I worked in retail, developing software for internal use, there was a clear division between the engineering teams in IT and the Business, where people understood retail products and how to run a store.
But now that I’m in a developer tooling company, software is the business, right?
Nope. Selling software is the business. That creates the flow of money that keeps the company afloat. Or–in a VC-funded startup–it brings the growth that attracts the investment that keeps the company afloat. Growth isn’t measured in features; it’s measured in dollars.
We write the software in order to sell it. Also, if we sell it we can keep writing and running it. This forms a circle, a spiral toward both value and profit.
The side of the company that writes and runs the software is called (at Honeycomb) R&D, for research and development. The side that sells that software and brings in money is called GTM, an abbreviation for “Go To Market.” These two areas cover most of the company.
R&D makes the software real.
As a developer, I like to think that engineering teams create the value that the GTM side sells to customers.
Engineering, Product, and Design make the software product and keep it running.
But really, the software has no value until people are using it. GTM draws that connection.
GTM brings the software to customers.
What is GTM? It includes Marketing, Sales, and Customer Success (CS). All of these are necessary to create and nurture the connection between our product and the people who use it.
In Marketing, we want everyone who could benefit from our software to know we exist, have a good idea of what our product does, and see why they should go to great effort to use it. We accomplish this through our website, blogs and articles and videos, ads, sponsorships, appearing at conferences, and putting on events. Marketing also has the job of telling the story of our product in a way that the whole company can use. We attract people to our product, then give their email address to Sales.
In Sales (also called “Revenue”), we turn email addresses into closed deals. Sales Development Representatives (SDRs) contact people by email and on LinkedIn. They meet with potential customers, and then when someone wants to try our enterprise-level product, Sales makes it real. This includes technical help with the implementation, by Sales Architects. It’s also the harder organizational work: our Account Executives help the potential customer build a business case based on their company’s goals. Then they shepherd this work through procurements and approvals and implementation.
Then Customer Success takes responsibility for the customer relationship–both to us as a company, and to the product. It surprised me at first that CS (where the ‘S’ can also be Service or Support) was part of GTM. They’re revenue-generating, though: a large chunk of our growth is expansion, as our customers choose to use our product more and more. At Honeycomb, our Customer Architects, Technical Customer Success Managers, and Support Engineers all help with implementations and whenever a customer struggles. How well the product works for them, what other teams in their company get on board and start using it too, and whether that contract gets renewed are outcomes of Customer Success.
It is not enough to care how well the product works. How well the product works for customers is an outcome of GTM and R&D combined.
There is no product without both.
GTM brings people to our software, and also the money that lets us keep running and improving it.
There’s one other category: beside R&D and GTM is G&A, for “general and administrative.” Here we lump Finance, People Ops (a nicer name for Human Resources), and IT. Here, IT as “information technology” means getting people the computers and logins they need, not writing or running software. Security has some work here, but Honeycomb puts Security in R&D, as an essential component of our product’s value.
G&A is explicitly overhead. R&D is investment in what we can sell in the future; GTM brings in money now.
If you like writing valuable software, then appreciate the business side of the company. There is no value until the software is part of someone’s life, and it’s GTM that gets your work out into the world.
P.S. If you use the Viable Systems Model (VSM), then R&D is System 1; G&A is System 2; and GTM is System 4.