Keeping in your lane–and knowing when to swerve

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GTM software unicorns are struggling. Everyone is expanding into others’ turf, increasing costs while competition is hurting margins. You know the names:

Gong. Outreach. Apollo. SalesLoft.

It’s critical–as always–to have a real product philosophy underpinning product decisions. Sure, you could build a LinkedIn chrome plugin. But should you? Here’s one way of thinking about when to stay in your lane, and when to swerve.

Knowing your lane starts with your customer

First you have to know what your lane is, and clearly communicate that to your team and ecosystem. If you’re very close to your customer’s needs, it’s easier to decide what is and isn’t out of scope.

If your customer struggles with something that is core to the value you deliver, absolutely absorb it into your product. But if you are expanding just to get more TAM, just to grab more pie, think hard before you do.

Never let your competition dictate what you build. Instead focus on your customer. If competition is doing something your customer demands, and you are not doing it, then you need to step up. But if you’re just copying your competition, it can get ugly.

Apollo started as a database to find contact information to power outreach. Then it added the ability to build email sequences, because (obviously) that’s what everyone was doing with the data. Making it easier to send sequences made it easier to sell more credits for contacts.

Of course, in response all of its competitors–the email sequencing companies like Lemlist–added databases and the ability to search for contacts. I think this was probably inevitable–they are separate jobs to be done, but very closely related. But I’m sure as one company stepped onto the others’ turf, the other got up and did something about it. Now 2x more development is required to do basically the same thing. That can’t be good. Apollo’s email sequencing tools were never very good. Yes, they looked great, but their deliverability has always been very poor and usability leaves a lot to be desired.

42floors tried something similar–and had to fire half its team and roll it back. 42floors was a top YC company that was like Zillow for commercial real estate. It scraped all the commercial listings, eventually attracting a huge percentage of those listings and agents to its platform (as advertisers). If you Googled anything related to commercial real estate you didn’t find much–until 42floors, which owned the search results similarly to how Zillow owned residential listings.

The team thought that there was more money in being an agency, rather than just an advertising website (think Redfin instead of Zillow). They hired agents and got the regulatory licenses to act as an agent. Immediately every listing fled their platform. The other side of the marketplace wasn’t ok with competing with the platform. Jason Freedman had to let the entire brokerage team go and roll the whole program back.

As all of these applications expand into each others’ turf, I wonder how much the additional stakeholders are reacting. For example Lemlist I’m sure referred people to Apollo to find leads. But as soon as Apollo built email sequencing, I doubt lemlist continued to send people that way. Instead it built its own. Eventually this has to impact CAC and pipeline.

Why you have to expand

There are three reasons why you have to swerve beyond your lane. They are all defensive. Competitors are moving in, or could move in, from adjacent spaces. Your lane cannot support a viable business. Or your customers demand you do something different or that you don’t currently do. Here are examples of each.

Facebook got into messaging by buying WhatsApp because it realized that it had to. Its users were spending more and more of their time in messaging apps, especially that one. It did the same with most other communications-related innovations, including a Tik Tok ripoff within Instagram. I would argue this is only kind of leaving their lane–their lane is communications. So, maybe they didn’t leave. But they sure expanded their product footprint.

The classic reason involves leaving your lane because it cannot support a viable business–but an adjacent space could. There are countless stories here. One that I was very close to was TubeMogul. They started as a consolidated analytics platform for online video. Before YouTube dominated, there were a dozen online video outlets and creators–before anyone called them that–would post to every one. Aggregating stats was difficult, as was actually posting to all of those sites. TubeMogul was software that did that for people, and charged a little for it.

TubeMogul had built a large stable of customers, but realized all the money was in the ads. So Brett Wilson and team kept the tech to post and manage analytics, but built an ad network and started selling ads on all of those creators’ channels. When TubeMogul went public it was one of the largest online video ad networks.

When customers demand something, it’s an easy choice. Hubspot got into CRM because it was an obvious extension of inbound marketing. You’ve built a blog, landing pages, all these lead capture forms… and then what? You have to try to deal with them in Salesforce? Customers really wanted a sequencing tool, so they started there. If it hurt their relationship with Salesforce, so be it.

When not to shift lanes

You have to establish yourself first before you can start expanding out of your lane. All of the companies mentioned above were established, successful businesses before they expanded into something else. Early stage founders (myself included) like to shift to the next shiny object. But be careful not to build just for building’s sake. Sometimes you do need to fill in a core missing piece. But make sure you’re doing it because the customers asked for it. Not to fulfill the whims of non customers–investors, future acquirers, or even founders who think it’d be a cool thing to build.

Distraction vs. vision

Google launched with the idea of “organizing the world’s information”. This guiding purpose underpinned everything from building a search engine to building a web browser to building robots to illegally copy books at massive scale (and get away with it). Having that core purpose makes it easier to determine what is your lane and what isn’t.