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TRACTION GAP ARCHITECTURE SERIES

REVENUE ARCHITECTURE

6.12.2018

WWW.TRACTIONGAP.COM | @TRACTIONGAPINST

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THE TRACTION GAP

THE TRACTION GAP is the time between Initial Product Release (IPR) and Minimum

Viable Traction (MVT)

Startups who fail to traverse the Traction

Gap in a timely manner expose themselves

to significant financing risk

MVC: Name & definition of the category being created or redefined

+ evidence the category is capable of supporting a startup

IPR: First publicly deployed product iteration

MVP: Product with minimal customer validation metrics

MVR: Solution-grade product, business model, and repeatable

sales/marketing

MVT: MVR + multiple quarters of growth

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KEY ARCHITECTURES

At each milestone in the

Traction Gap, startups must

mature internally along four

key architectures:

• Product Architecture

• Revenue Architecture

• Team Architecture

• Systems Architecture

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HOW WE WORK WITH ENTREPRENEURS

DEVELOP CUSTOM OPERATING, FINANCIAL & GO TO MARKET PLANS TO TRAVERSE THE TRACTION GAP

SERIES OF WORKSHOPS WITH STRATEGIC PARTNERS TO ADDRESS

PROBLEM AREAS

TRACTION GAP ACTION PLAN THAT IDENTIFIES DEFICIENCIES IN PRODUCT, REVENUE, TEAM & SYSTEMS

TRACTION GAP DIAGNOSTIC WORKSHOP WITH INVESTING GP &

GEOFF MOORE

FOUNDING TEAM TRACTION GAP SELF-ASSESSMENT

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MI S S I ON

T o t r a c k , c a p t u r e & p u b l i s h t h e s t o r i e s , t a ct i c s & m e t r i c s s t a r t u ps n e e d t o s u c c e s s f u l l y t r av e r se t h e T r a c t i o n G a p . WW W .T R A C T I O N G A P .C OM

P A R T NERS

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TRAVERSING THE TRACTION GAP – THE BOOK

• A “How To” guide for startups to

go from Ideation to Scale

• Contains & explains TG principles,

metrics, growth targets &

timeframes

• Features anecdotes, tips & tricks

you can apply

GET YOUR COPY 2019

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SCALING THE REVENUE ENGINE

TOM MOHR

CEO | CEO QUEST

WWW.TRACTIONGAP.COM | @TRACTIONGAPINST

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DEEP ALIGNMENT WITH TRACTION GAP

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THE JOURNEY OF COMPANY BUILDING

Minimum Viable

Category

Initial Product Release

Minimum Viable

Product

Minimum Viable

Repeatability

Minimum Viable Traction

Minimum Viable Scaling

Minimum Viable

Expansion

Minimum Viable

IPO Path

IPO Hot Public

Company

CEO’s

Im

pe

rativ

e

F I G H T T O S U R V I V E O P T I M I Z E T H E T E A M

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BELIEF STARTS WITH THE CUSTOMER

WHAT

• Mission

• Vision

• Values

WHO

• Customer • Investors

• Employees

A great Revenue Engine depends on a great customer experience

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STAGE & LTV SHAPE REVENUE ENGINE

Lifetime Value Company Stage

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STAGE MATTERS

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LVT MATTERS

LTV = $0.09 LTV > $1,000,000

LTV / CAC =3+

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TWO HEALTHCARE COMPANIES

Demand Gen

Based / Sales

Ready Product

(Digital only)

Account Based /

Orchestrated

Engagement

(Digital + Human)

Very Low LTV

Very High LTV

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REVENUE ENGINE IS A WHOLE SYSTEM

Foundational Layers

Key Functions Key Variables

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EVERYTHING SPRINGS FROM SEGMENTATION

Which groupings of customers most resonate to your value?

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SEGMENTATION DRIVES PRODUCT

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AND COMPETITIVE POSITIONING

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AND THOUGHT LEADERSHIP

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AND SALES STRUCTURE

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AND WORKFLOWS

W e b i n a r s

B l o g P o s t s

E v e n t s

W h i t e P a g e s

Marketing

Campaigns

Marketing Marketing campaigns help generate MQLS or warm-up SDR outbound.

N U R T U R E

M i c r o s e r v i c e s

W o r k s h o p

P r o o f D i s c o v e r y P r o p o s a l C l o s e SAL

MQL I n b o u n d P a t t e r n

O u t b o u n d P a t t e r n

Adoption

Sales Development The SDRs reach out to prospect & qualify for SALs. Once qualified, leads are handed off to sales.

Sales Sales leads buyer through buying process to close

If the buyer falls out of process at any time, return to marketing programs

No Response

Response

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AND PRICING

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FIRST STEP: MEASURE YOUR REVENUE ENGINE MATURITY

PROJECT A

PROJECT B

PROJECT C

1. Chaotic processes

2. Local optimization

3. Linkage optimization

4. Measure the steps

5. Teams use measures

to continuously

improve

Carnegie Mellon

Capability

Maturity Model

CARNEGIE MELLON

CAPABILITY

MATURITY MODEL

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EXECUTE DAY BY DAY WITH THE ENGINE YOU HAVE

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WHILE EXECUTING PROJECTS TO IMPROVE YOUR ENGINE

1. Chaotic processes

2. Local optimization

3. Linkage optimization

4. Measure the steps

5. Teams use measures

to continuously

improve

Carnegie Mellon

Capability

Maturity Model

CARNEGIE MELLON

CAPABILITY

MATURITY MODEL

metrics

BUILD experiments

MEASURE metrics

LEARN assumption

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SO THAT SOME DAY YOU HAVE THE ENGINE YOU WANT

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JUST NEVER FORGET…

It’s all about the customer

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DO IT WELL & YOU TOO CAN GO IPO

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TIEN TZUO

CEO & CO-FOUNDER | ZUORA

WWW.TRACTIONGAP.COM | @TRACTIONGAPINST

REVENUE ARCHITECTURE: THE ZUORA STORY