Fix your GTM with Toll Booths (and Samurai Swords) | w/ Rob Snyder

And we are back, Rob. Yeah, here we, here we go back for into the pain cave that is listening to a podcast with you and me.

Yeah, yeah, yeah. Our, our listener is, is really going to love this one.

And by our listener, you mean my mom, who is sending me detailed notes on how we can improve after every, after every recording. Well, the good, good news, speaking of the listener, we're up to 150 listens on the last one, a 50% week over week growth rate, which by— yeah, by this time next year we'll have 143 billion listens to each episode, which I'm going to put into a VC pitch deck pretty soon and see if we can get this thing funded.

I mean, we're basically— we're basically going to own YouTube by then if this rate continues.

Yeah. Which undoubtedly, given the quality of our conversations, it will. All right. So this week, I don't know, maybe before we get into the topic, what's going on? What's, what's on your mind lately?

Gosh, what's on my mind lately? I— well, one is today's squat day, and so I'm barely standing, which is, which is great. And next week we're going to have a fun chat about heavy weightlifting and how it relates to startups. But this week, I don't know, man, I've been really focused on articulating this concept of the toll booth for like months. I've like mentioned it for months and everyone's like, oh, that's the coolest thing ever. Could you say more about that? It's like, not yet, because I don't quite understand it. And so, you know, maybe we're there now.

We'll see. Yeah, I'm definitely on camp interested in toll booth don't 100% understand it. So we're going to walk through this as if I were a, you know, a 12-year-old basically like brick by brick. But one other thing on weightlifting, that's like for our audience, our audience member, our strategy is to go after both the weightlifting crowd and the early-stage startup founder.

Then the Venn diagram there is probably just your mother still for some reason. Yeah.

I can never share this video with my family now. All right, let's jump in. So today we're talking about toll booths, which, you know, this is where we're really focused on like go-to-market. We're going to talk a lot about pipeline. Rob, can you help us unpack like Before getting into Tollbooth, when we're talking about like early stage founders, startups, tech, B2B, when we talk about go-to-market, like what are we, what are we actually saying? What do we mean?

Yeah, it's just like, how do we get people who could be customers to talk to us? And like, that's the, that's what pipeline is. It's just all about how do we get them to talk to us or to come to our website. But generally it's like, how do we get people into a sales conversation or into just a you know, like a Zoom call. And then there's questions of, okay, after that, how do we convert them into customers? And then how do we convert them into happy customers who don't churn? But for the purposes of this, we're just focused on the, like, how do we get people to talk to us, know about us? How do we get them into our pipeline?

So the, the go-to-market would be what are we doing in order to create that? The pipeline itself is then the clients or the potential customers who are considering buying it. Is that the right way to think about that relationship?

Yeah, sure. We don't, we don't have to be too like religious about definitions here. Like, so some people will define go-to-market as your strategy for getting people to talk to you, convert, like they'll talk about it as the whole thing. I don't even know. Some, I think some people include customer success and delivery in that. Some people don't. So. So just think about it right now as how do we get people to talk to us who might potentially buy our product?

Gotcha. All right, cool. Uh, well, let's get into, we're going to want to hit Tollbooth, but why don't we start with like conventional wisdom around like lead gen? You, in your, in your blog post, you, you talk about, you know, the customer acquisition cost about diversifying the approach. Talk about like how has it traditionally been taught and then we'll get into like why that is not a great strategy.

Yeah, I think, you know, like go-to-market and pipeline and like all this stuff is the most obnoxious section of the internet of people talking about this because there's just like a million different ways to think about it. Some people are shouting, AI agents are the future. Here are the 17 AI agents I've built to fully automate my whatever. Right. And then there are other people who are like, well, you need to have this complicated diagram of all these different components for a functional go-to-market system. And so there's just like a lot of noise out there. What I found when I've talked to people who are actually in the weeds, the dominant sense is that we kind of have to do a little bit of everything, by which I mean, we gotta do outbound, and we've gotta do blog posts and inbound, and we've gotta do ads because buyers are kind of everywhere and we just need to get in front of them as many places as possible. And then we'll just kind of like do the math afterwards and see, okay, what, what things do we think are contributing to this? Like, how do we, how do we think all of this kind of like works together? And because we're doing a little bit of everything, we hope something works. And we just look at the demo numbers per month and it's like, okay, demo numbers divided by cost. That's how we kind of figure out if we're efficient or not. And there's like a little bit more to it, but it's just generally like the bunch of tactics we're doing. Let's measure the overall effectiveness of it under the hypothesis that like something's gotta work.

Yeah, like with SEO is the thing that like comes to mind immediately around this. Like everybody, you know, as soon as you launch a website, you get 14 emails from Squarespace or whoever your provider is that's like, are you SEO optimized? And then you'll get a bunch of inbound stuff, which seems like the definition of, I don't know, maybe if I write about this, the person will find me who is imminently going to buy. They're going to see the genius of the product that I have and And rather than like a strategic, like an intentional focus on talking with people to understand exactly what it is that is going on in their startup's journey that, or their company's journey that makes them want to, you know, need to buy something.

Yeah. Yeah. And I think, I think there's like the kind of smart version of what I talked about is like, people are generally searching for things, right? They're searching for our competitors. They're searching for whatever. So let's, oh, let's, so let's have a dedicated SEO strategy focused on that, on that set of things. Okay, that's how we're doing SEO. But we're also going to do outbound because we know that not everybody searches. And so why don't we just get a bunch of people to cold call, you know, do a parallel dialer and call 1,000 people a day and see if we can't get a couple demos out of that too. And, and so it's, you know, it's just kind of, it's, a set of things that are, we're doing a lot of different things that all kind of seem to work.

Yeah. And why is that? Like that, I mean, it sounds logical. Like if you talk to anybody and go to market, they're going to ask you if you're going to do these 4 things because they worked for some company and maybe they're the right answer for you. Why is that the wrong approach?

It's not necessarily the wrong approach. It's just an expensive approach because what will tend to happen is you'll get, you're doing a lot of work. You're getting people to talk to you at a certain price and not all of those people are your best fit customers who need to buy right now. And so, right, you're just kind of, you're spreading your approaches out. And so, you know, each, it, The kind of current method is fine. It just tends to be quite expensive, takes a lot of people and effort, and it's not quite clear. It's like, it's a strategy of doing everything, which makes me personally uncomfortable. And I think once you, once you see what demand is in this kind of like case study model and the, the, the, this framework, there is another path. That you can take, one, one where you make more consolidated bets that other people kind of can't do.

Yeah. Let's, let's jump into that consolidated bets thread. And I assume there you're talking about like the toll booth.

Yeah.

Why don't, why don't you give the overview of like, what is a toll booth? Like, what do you mean when you say that word?

Yeah. Let's first, let's first just do a quick recap on like this, this idea of demand. So basically think of demand as somebody has a project on their to-do list that they are actively prioritizing where they wind up buying your product as a result of that. Okay? That's like what demand is. Now, these projects don't just randomly appear on people's to-do lists. They are forced onto there. Some set of things happens in their world that causes them to have this project on their to-do list. And those causes replicate across your customers. They are things that are knowable. Like you can know when somebody is about to need to buy your product. If you know when somebody is about to need your product and you know that that happens the same way for a lot of different people, you can just target that moment, that situation when they're about to prioritize it and design your go-to-market around that exclusively. And so I think like we can jump into an example here. I really like the samurai sword example, cause I think it's like hilarious. It's kind of like, you know, as we've like currently described it, it's just kind of like theoretical. The samurai sword makes it super practical.

And this might be the only time we ever get to talk about a samurai sword. So we should definitely take advantage. Yeah, jump into that one. But maybe, so to recap that, the toll booth is, yeah, I think about a physical space when I think about a toll booth. You write about like, it would be weird to put a toll booth in Siberia 'cause you're never gonna collect any tolls there. It's kind of a physical space. It can be a physical space, it can be a medium. It is more than that, though. It's something that happens that you are present at that moment. And so there's like a— it can— it's kind of a little bit amorphous, but it's more about like the demand instance.

Yeah, it's like in a situation when somebody has demand, you want to put a toll booth there. And it's not like they might just be at home, right? And so you're not going to literally put a toll booth in their house. That's not the concept. The concept is When they have demand, you want to figure out a way to make it weird if they don't talk to you.

Yep.

Cool.

Which is a combination of like awareness and messaging almost, or like arriving at that. Yeah.

It's just, it's doing something weird so that like, again, we're gonna get into a samurai sword right now, which is not quite messaging. It's like, It's like, so, so, okay, let's, let's tell, tell the story. I actually don't even know if this is real, but it's, it, it now I saw it somewhere. I can't remember where I saw it and I want to believe it's real. So we're just going to use it as an example. But there are other examples in the post as well. But okay. So there's a consultant who is specifically a crisis response consultant of some sort. And he, I think it's a he, uh, would look through the newspaper for Fortune 500 CEOs who were like under siege in some way, shape, or form. I feel like it might've been like activist investors or something like that. You know, it's something that is visible. And so he knows with, like, he's pretty certain when they have demand because he can see that. And so the traditional approach would be, oh look, maybe we send an infographic, maybe we send a white paper, maybe we like send some cold emails or, you know, send, send a, send some direct mail. Maybe we put some ads up. This guy's like, no, I'm going to send a personalized engraved samurai sword with a note that says something like, I will go into battle with you. Right? Okay. So like, I gotta assume if you get a personalized samurai sword with a note and a phone number, I'm calling that phone number like 99% of the time because nobody sends a real samurai sword. It's just a weird thing to do. So like, there's a couple of, there's like a couple of things to take away from that. It's a fun story, but it actually, encapsulates this toll booth idea. One is he knows exactly who has demand and when they have demand. And so the alternative approach would be just to blast out constant email sequences to all Fortune 500 CEOs when you would get, you know, I mean, 1% less response rate. Okay. But he's like, no, I know exactly when they have demand. I've figured out a way to know. That moment.

And maybe on that, another approach would be networking, giving talks at CEO conferences, doing whatever the thing is that happens up in Montana every year, like being at the place where CEOs are with the hope that when some percentage of these CEOs run into an activist investor, they'll pick up the phone and call you. And like, that's a ton of investment that he said unnecessary. Turns out Samurai Sword in the moment that they need something like to feel probably like there's somebody that's on their team that's not afraid of whatever the activist fund that's coming at them like that. It just cuts out all of that kind of ambiguous. Maybe somebody will eventually have demand investment that he would otherwise make.

Yeah, yeah, exactly. Look, full conviction that this person has demand now. That's step 1. Step 2 is what's the thing that we can do that would make it weird for them not to talk to us at that point in time? Okay. So like path 1 is instead of going and kind of like just very broad, we've gone super narrow on Who actually has demand? Who are we confident has demand? Step 2 is, okay, even if we have that list of people, we could just send them like a personalized note or an email or call their office. What's the— it's probably gonna be slightly better than just the kind of blasting stuff out everywhere, but that's not the game I wanna play. I wanna make it weird so that at that moment, like, I want to make it weird that they don't talk to us at that moment. Hence samurai sword.

Yeah. Let's talk about the weirdness. Is that just a get their attention thing? Like this, I, I like the samurai sword for a bunch of reasons. One, because it costs money. It costs time. Uh, it's not digital. Like it's not like you're sitting around waiting for a read receipt on a you know, on an email or something, which I don't know, people do read receipts anyways. You know, it's, it's like that, you know, the person could ignore it. And because it's mail, like, I don't know, as the sender, you just never know. Did it— did they receive it? Something like that. Like there's something that's so off the beaten path because it's not technological that I kind of like it. But when you talk about it being weird, why is weird important?

So I don't know that it needs to be a weird thing in itself, but it, the thing needs to be, the thing that you do needs to be so striking, so impactful that it would be weird if they didn't talk to you. And so the samurai sword just is an absurd thing to do. It's just insane, but like busy CEO embattled right now receiving a samurai sword that like does something. And so in that, so I wouldn't, if you're selling to e-commerce CEOs who are trying to scale their business, I would not send a samurai sword. Like this is going to be weird. It fits that demand situation perfectly. If you want to send me a samurai sword, I could put it back here. I don't want to put a samurai sword back here, but I probably need something back there. But the point is that it just has to be something that like makes it weird for them not to talk to you. We can talk through a couple of other examples, but I think we should talk about the economics of this too, because that's kind of interesting.

Specific to the samurai sword or economics in general of this approach?

This approach, but like we can talk through the lens of the samurai sword.

Cool.

So, so let's say you just take the traditional approach where you've got 500 CEOs and you kind of, maybe some percent of them at any one point in time have demand, but you're just kind of like blasting out stuff to all the CEOs. You're going to have very low conversion rates, which means your willingness to spend on any one tactic is relatively low. On the other hand, if you have very high conviction who has demand and it's just a small subset of those people, you're willing to spend a lot more if it can guarantee you meet with them. And so like the math I did in, in the blog post basically shows how you could kind of get from, you know, a $1 budget per contact to like a $650 budget per contact when you're kind of thinking in the Tollbooth way.

Yeah, that's interesting. Like it, it would never work to send, you know, 500 samurai swords cuz it's prohibitively expensive and that would be stupid. And the market would be flooded with samurai swords. Like a lot of violence could memorize the whole quote, it would crash. Yeah. So how does that, how does that tactically happen? You move from very low willingness, like what on earth? We can either go in that direction or we can start with what does it look like when you're not, when you're not able to read in the newspaper that your specific customer is embattled? Like how do you know that XYZ company needs new vendor management software? Like, how do you, what are the things that you're looking for with that?

Yeah, totally. So like, that's the, that's the whole kind of demand side approach. So I'll give another example of this. The short answer is you talk to your customers or your potential customers and the ones who buy fast, you try to figure out what was going on in their world that pushed this onto their to-do list and like, find where that replicates across your customers or potential customers. You have to figure out what the thing is, and then you can design around it. And so, an example being Bob Moesta, one of my heroes. He was talking about a construction company that was building, I think, condos for people who were retired to move into. So, they'd sell their big house and move into a smaller condo. What they realized was that after going to a funeral, people would start looking into— like, that was the thing that led to demand. And so they started advertising. Their approach on that was, okay, how do we find— like, we're not going to go and picket funerals or put ads at funerals or whatever. But we can put in— like, we can just advertise in the obituary section of the newspaper.

And so that in that case, the tollbooth is in an— in the physical space actually of like where the obituaries are published or maybe, you know, as that's gone digital, like advertising on those specific like obituary websites. But where maybe more generally it's where are people going to be after or at the event of a loved one's death or of an acquaintance's death and like, where is their attention going to be? And I should be like, right there.

Yeah. Yeah. And like the least creepy way possible.

Yeah. Thinking about some of the founders that you've worked with, are like pushing a little bit more on the B2B software side of things like What have been some examples of after talking with X number of customers, selling into a few of them, finding a common characteristic, and then going after that?

Yeah. So one like very simple one is a startup found that they were getting a lot of leads that closed very fast from consultants. And that basically these consultants would come in, they would deliver a report And then the company, it would be on the company to implement whatever the consultant said. Well, their software was a perfect fit to deliver on that thing. And companies were failing to deliver on it themselves. They were getting pissed at the consultants. Consultants weren't getting referrals. Like, and so these consultants would just pull them in and bring them in. So it's like, okay, cool. What if we just focused on distribution through consultants like these? And so it was their Tollbooth approach just became, we're just going to partner with a bunch of consultants.

Yeah. And let's, let's maybe let's use that to bridge into how does that drive down, or how does that make it so that you're willing to invest more in that consultant relationship? Or like, what does that look like from a cost of acquisition standpoint?

Yeah. So like, let's say you have a CAC budget of like $1,000 per company. That, that, um, that becomes a customer. Like, that's— most people have a higher CAC budget than that, but we'll just use it as a round number. So if you're doing a bunch of outreach to a bunch of people who probably don't have demand, you're doing a bunch of different things, your willingness to spend is like generally quite low on any specific tactic. But if you know that these consultants can bring you a client a month or a client every 2 months or whatever it is, then it's like, okay, if they're bringing me a client a month, I could just spend something like $1,000 minus maybe some, some other, whatever. But I could spend basically $1,000 a month on, on them. And I could do things with these consultants. I could, I don't know what it would be, but like how maybe I could fly out and spend a week with them so that they are like huge rabid fans of us. Maybe I could I could co-author a book with them. Maybe I could— there are like all these things I could do to put a toll booth with these consultants.

And it feels when I think about it, like part of it is the financial, you know, cost per, you know, customer that ends up converting. Another part of it is just time and attention, you know, that, that seems to be like baseline, your company is, is spending money developing a product or running, you know, you're paying team members, you're probably paying for things in your life. And so like when you find the toll booth, it's like, okay, thank goodness I don't have to like, it, it cleans up your funnel. Like it means that your time as the founder is spent on much higher probability of conversion conversations. And even if they're not converting, you're learning intentionally and in a direct line to improving that. And so, you know, if your calendar's blown up, maybe it's not actually the dollar per customer that you care most about. It's improving the quality of, uh, like the insights that you're getting in order to direct your, your startup.

Yeah. And I think too, like the toll booth is really only something you can do after you have product market fit or some semblance of it, because you have to know what demand is. And the core part of product market fit is figuring out what demand is. And so this tends to be something you do after you've kind of figured it out. And then, yeah, totally right. It consolidates your effort. Like Datadog, I talk about in the post, they just did conferences from 0 to 100 sales reps.

Can you tell us what is Datadog? Let's start there.

It's something sold to CTOs for observability monitoring. And so, if you are a CTO or engineering leader and you want to monitor your software, you plug in Datadog.

This episode is sponsored by Datadog.

I wish. Yeah.

Just kidding. Not sponsored. I don't know if that's, like, a legal thing, but don't sue us, Datadog.

They talked about this publicly, so they can't sue us. I'm sure they can, but they probably can.

Yeah. We'll have to get our, our attorney is also my mom though. So we'll have to loop her in.

Yeah, there we go. But, but like, okay. So what they found was that conferences just worked super well for them because when CTOs were considering, like when they had demand, they would go to a conference. And so conferences for them were kind of like fish in a barrel. They were, their product was like really well designed to do well at conferences. And so it just, it just worked for them. And so they were like, all right, we could do a bunch of different things, or we could spend every possible profitable dollar on conferences until we can spend literally no more dollars on conferences. And at that point, we'll start to figure out the next thing.

Yeah. And let's, let's talk. I think this one's really interesting because it's like, It actually, it's a physical space. It's a toll booth. It's also, you know, you write about how it's a single channel strategy and there's a difference between a toll booth and a single channel. Like, I don't personally, like right now I don't totally get the difference between those two things. So help me understand it.

Yeah. Yeah. So, um, the, like a toll booth strategy is attacking a demand situation to make it weird when somebody has demand for them not to hear about you. A single channel strategy is saying conferences work, let's just do more conferences. They might overlap, which I think they did in Datadog's case, but right, like think about, let's go back to our samurai sword, sending samurai swords. We'll just call that a version of outbound, but that person They're trying to own the situation of you are in a crisis. So the next thing they would do might not be more outbound. It might be to write the book or to write the, the, the, the thing these CEOs can't not read for just before the crisis, or when you, the thing for the best thing that's ever been written on dealing with activist investors.

Yeah, that's interesting. So it's like you can actually. Approach that demand instance from multiple angles. Like, one is like send a samurai sword. Two is, you know, you are at the Activist Investor Conference that the person only goes to when they know that that's a concern. You know, another one is you write the book on activist investors. And are each of those toll booths, or is it like there's one toll booth that you've got 3 people stationed at, or This might be a really technical—

I made this up. So let's be clear.

All right. If that doesn't inspire confidence in our 4 listeners, then I don't know what will.

There's actually some thinking behind it. My take is that the toll booth is attacking a situation. And so you can attack that situation from multiple angles. But what we are doing is we're saying at the moment when an activist investor is dealing with a Fortune 500 CEO, we're going to do everything in our power to make sure that it would be weird if they didn't talk to us at that exact moment. And so that's the kind of toll booth and that the specific ways that we make that happen. Or there can be one or multiple.

Yeah, I like, I like that. And so it's really, I mean, this is how you, it's how you start the post, but it's the first step is necessarily here's the demand event that happens like the second that the thought crosses a buyer's mind, like I need to accomplish X and it's making sure that you're doing everything you can to be at that specific moment. And then we're all time constrained, capacity constrained, attention constrained, experience constrained. And so it's, you know, maybe it starts with one strategy and it branches out to be more creative as you learn more about other ways that, you know, these CEOs, for example, are looking for resources.

Yep. I think that's right.

Let's, and so for Datadog, it's the combination. It's like what the conclusion you draw there is like, not everybody who goes to this particular conference or to these conferences is passing through that like moment. They don't all have demand. However, a bunch of them do. And one of the reasons why somebody might go to these conferences is they're looking for a solution to X. And so that makes it like the right place to put a toll booth for those specific people that, you know, are bringing that demand into that space.

Yeah. Yeah. I think about it this way. Not everybody who's going to the conference has demand, but if you have demand, you're probably going to the conference, which means it's a good place to put a toll booth.

Yeah. And that's why even with like the right messaging, you know, in a virtual space, LinkedIn outbound, they might have the right indicators. They're not actually looking for it though. And so like some percentage of your LinkedIn outbound is like, they're just not like that. They're not looking for the thing., but it's an, the important thing is that the ones that are looking for it are also receiving your, receiving your messaging and it's crafted in the right way to, to get their attention and to make it weird so that they don't respond to you. All right, cool. Um, other things that we want to, before we wrap and summarize that you wanted to hit, Rob, that we haven't gotten to?

I think what the other, this just like gets increasingly weirder, the like the The more you go down this path, because you can just, your go-to-market strategy will look, could look nothing like other people's. Um, right. You could just write a book that you send to a bunch of people. You could, you know, you do, and then your sales process becomes probably different. It is shaped around that moment, which means it converts better. And you don't have a bunch of the kind of like demos that are just tire kickers coming in. And so there's all these implications of designing around demand and like really nailing that demand situation that I think are cool. The one thing I'll say is that it just, it really does take guts to go all in on this. It feels safer to do a lot of things when in fact I don't actually think it is.

Let's, there's like a chicken and an egg thing here that I've been trying to figure out. It's like, the, you know, maybe you actually have to start by doing a broad range and then as like you narrow and then it's like, how do you know when it's like, okay, this is, this is where I need to be putting my toll booth versus I need to experiment for a little while because I don't, you know, right. I'm sitting here right now, Rob Snyder, and I don't know where my toll booth should be, but you're telling me I should put it somewhere. Like what if I'm, just totally wrong.

Yeah, totally. So what needs to happen is you need to know what the demand situation is and be like willing to bet on that. And so the way you figure out what your demand situation is, is you look across your customers and the people that you're talking to and see who actually pulls when. So what will happen sometimes is people will like, you'll have a first call with somebody and they'll ghost you for 6 months and then they'll come back and say, we need this tomorrow. It's like, okay, something happened there. And so yeah, you do generally need— you don't start out with a toll booth. You start out pretty broad talking to a bunch of people and then some of those people will pull and be like, oh, that's interesting. Some of them will turn into customers. Some of them will turn into satisfied customers. Right. And you, that's kind of like the earlier stage when you're getting to your first $100K, $200K, $500K ARR. By that time, you likely have a kind of breadth of different kinds of customers, but you're starting to see the patterns behind them and the patterns before that, like, lead them to having demand. And that's the point when you're like, okay, I've seen enough reps. I know that if this kind of person comes to me and says this kind of thing, they're going to buy right away. Like, I, the deal is mine to lose. They consider these different options. We are obviously superior. They've just gone through this thing. And so, okay, cool. It would be a waste of resources for us to not just invest in that thing.

Yeah. And it feels like that, you know, that might take some experimentation at that point. It's like when you really deeply understand demand, like what's the thing that happened that we're going to win at if they're talking to us? Then it's like, okay, there's a couple ways that we could be there and you might need to experiment. Like Datadog probably didn't know, they probably went to a conference for the first time and the rep walked away and was like, oh wow, I've got, you know, 8 customers, 6 of whom converted or something like that. Like it ended up being a big, like a big opportunity, but they might've been doing. Yes.

Yeah.

Like some SEO stuff and yeah.

They were, yeah, they were, they were doing a bunch of different things. And I think the story goes, They're doing a bunch of different things. The CMO, I don't remember who he was talking to, but CMO was basically like talking with someone and they're like, well, if we just did one thing, what would we go all in on? It's like conferences. Cool. Let's just do conferences. And that's what they did.

Love it. Love it. Well, why don't we, if you don't have anything else there, I think that's a good place to leave off until next week. We'll put the link to the blog in the show notes. If you've got comments, drop them in there. Again, like, can't promise that we'll read them or be aware that they exist, but if so, then we'll, you know, drop a question in that you want Rob to talk about. Maybe we can add a Mailbag component at some point. Cool. Anything else, Rob?

Nope. All good.

All right. Sweet. See you later.

Peace.