The a16z Show - Do You Really Know Your ICP? Why It Matters and How to Find Out

Starting point is 00:00:01 ICP is the central nervous system of the entire customer journey. Conversion rates, expansion rates, the length of your sales cycles. If you look at those, they're almost all telling you something about your ICP at all times. If you're like, we sell to everyone, we bill to everyone for everyone, maybe you're not selling anybody yet. It not only shows who you need to target and what you need to target the customer with, but also why the customer would need your approach. Your ideal customer profile, or ICP, is the low star of your company. It defines who you're building, marketing, and selling your products to.

Starting point is 00:00:41 And most growth stage founders think they know who their ICP is, because they found product market fit after all. I don't know that you necessarily have found product market fit. Sometimes you just get really lucky, and I call that the curse of early success. And here's the thing. Very few can define and refine their ICP well enough to keep the company focused on it as they grow. This lack of clarity can open a Pandora's box of problems across the

Starting point is 00:01:05 org. Pipeline not getting filled? Chances are it's an ICP problem. Product roadmap stalling out. ICP problem. Marketing spent through the roof? ICP problem. You could be missing a huge market opportunity if you misidentify your ICP. In this first episode of A16Z growth's

Starting point is 00:01:21 new company scaling series, the A16Z Guide to Growth, we take a step back and explain why understanding your ICP should be a company-wide effort and while getting this right is even more important in the AI era. As soon as you have a successful product, there will absolutely be competition in the market. A16Z growth partner, Emma Janowski, sits down with growth general partner and former CRO of Segment, Joe Morrissey, but also A16C partners Michael King, who was at Gartner before building full-stack marketing teams at companies like GitHub and VMware,

Starting point is 00:01:52 and Mark Reagan, who was most recently the VP of RevOps at Segment. Together, they dive into what truly makes a great ICP, including what it is, but also what it isn't. Is it meaningfully different than the way you might talk about segmentation or a psychographic or firmographic, or is it a constellation of all of those things put together? They also tackle how you know if you've outgrown your existing ICP and how and when to define, but also redefine it as you scale. They touch on how to make some hard decisions when you're implementing a new ICP, like saying no to customers, and how it shows up in the business,

Starting point is 00:02:26 when you get it right. The first voice is Emma's, then we have Michael, Mark, and then finally, Joe. Let's get started. As a reminder, the content here is for informational purposes only. Should not be taken as legal, business, tax, or investment advice, or be used to evaluate any investment or security, and is not directed at any investors or potential investors in any A16C fund. Please note that A16C and its affiliates may also maintain investments in the companies discussed in this podcast. For more details, including a link to the link to the website, to our investments, please see A16C.com slash disposures. Why are we talking about ICP?

Starting point is 00:03:09 If I am a gross stage founder, I found product market fit, I probably know my ICP, right? I'm growing, I'm scaling. Why do we need to care about this? I don't know that you necessarily have found product market fit. Sometimes you just get really lucky, and I call that the curse of early success. Sometimes you just have such a compelling product, or you sometimes just have such a compelling story around the product that people gravitate towards. to you. And you don't necessarily have to have an ICP. You're just selling to anybody who'll come

Starting point is 00:03:37 through the front door. And if that's successful, you're like, great, I've nailed my ICP. It's everybody. But when you start to refine your sales process, you start to bring in more people to sell the product, it starts being not led by a founder. The conversation is led by a salesperson or perhaps an SDR or perhaps someone else like that. All the sudden, that ICP becomes a lot more important. You've got to scale a marketing program. You've got to scale a sales team. You've got to scale a bunch of other things like that. All of a sudden, you really got to know who you're talking to. Why are they buying? What are they buying? How are they selling it internally? Before I came into this role when I was an operator in the companies I had been in before in revenue

Starting point is 00:04:15 operations, I don't think I had enough respect for just to what extent the ICP is the central nervous system of the entire customer journey. Almost every KPI that everybody is familiar with today, when you think of conversion rates, expansion rates, the length of your sales cycles, any of these things that normally you would signal to you, oh, we have a pipeline issue, or we need more STRs and things like this. The truth is, if you look at those,

Starting point is 00:04:40 they're almost all telling you something about your ICP at all times. So, for example, there are some companies I've been working with over the past couple of years where over time they start to see declining pipeline conversion rates. And you start to circle around that and look for things you can do better, tactically in that, well, we need a little bit better messaging here. We have this laggy process

Starting point is 00:05:01 where it's too much time where leads are in this or that queue. And those things could be true. But in almost every one of those cases, what you usually find is that you have your sales force often talking to the wrong people with the wrong message. And it goes all the way back to that continuous alignment and always being relevant and targeting the best possible customers and the best persona within those customers with the best messaging and relevancy around how your product is going to solve pain. And then when you get that right, all of those indicators will tell you whether you have it right or not. They're not going to lie to you. If they're hitting the targets you want, you're doing a pretty good job of operationalizing your ICP. But I think that focus on

Starting point is 00:05:43 the customer journey is the reason why it's so hard to diagnose an ICP problem because you're looking as, oh, I've got an onboarding problem. I've got a marketing problem. I've got a sales problem. I think to your point mark, you've got to look at the entire customer journey from first touch through when they're a million dollar customer. And if you start to see issues anywhere along the way, first make sure you've got your ICP correct and then start to look at, okay, maybe I do have a customer support issue. Because if your ICP is missing, you can throw a lot more dollars at marketing or change your marketing mix up or do whatever you want. And if you still got your ICP wrong, those are still going to be dollars you'll spend.

Starting point is 00:06:20 If you're like, we sell to everyone, we bill to everyone for everyone, maybe you're not selling anybody yet. And I think the biggest downstream negative consequence is actually one where it's missed opportunity. So the biggest risk often is opportunity cost. So when you're chasing the wrong profile, your ideal customers might be adopting a competitor's product or simply unaware of your solution. And so you could be missing a huge market opportunity if you misidentify your ICP.

Starting point is 00:06:49 Let's just even take a step back. What is an ICP? What counts as an ICP? What does a good ICP look like? What does a bad ICP look like? An ICP should tell you not only who you should target, but also why those customers should need you. So broadly defined, an ICP is a detailed description of the ideal set of customers for your product. And it typically should include

Starting point is 00:07:19 formographic details, behavioral traits of those companies, and it should be as narrowly defined as you can get it. A good example of that would be global B2C multinational corporations that are multi-brand,

Starting point is 00:07:37 multi-product, and want to use data to go direct to consumer. So you're not only getting a sense of the type of of company and the vertical and the industry that they're playing in, but why they need your product, what the unique value for your product is. It's actually got to include defensible differentiation. And so you think about what is defensible differentiation. It comes in three forms.

Starting point is 00:08:06 One, there's unique differentiation. There's the things that your product does and the pains that your product solves that your competitors can't. There's comparative differentiation. the things that your product does and your competitor's product does, but maybe you do them better. And then there's holistic differentiation. There's the things about you as a company or your solution that are very different. You might be the best funded or you may have the most experience in this particular domain. And I think that is so critical in determining what your ICP is because you've not just got to look and identify those customers that have the biggest pain points that you can solve.

Starting point is 00:08:47 also the ones where you have the most defensible differentiation versus your competitors. I agree with you 100%. I think the more narrow you can define it at first, the better off you are. The ICP should be, I'll call them searchable metrics. In other words, like if you define your ICP as companies that have these specific characteristics around how they think about customers and their buying patterns and things like that, how are you going to find them? But if you say it is a customer with international capabilities of a certain size and a certain dollar send it, then you can target them from a market.

Starting point is 00:09:23 Now, marketing data has gotten a lot better and customer data has gotten a lot better, but you still can't describe in flowery language what you think this company might be feeling and thinking because you're not going to be able to market to that. You're not going to be able to find them online or at conferences or any other places, right? You need those objective qualities. You need those objective measurable qualities. I think Gong was a great example of a very, very narrow customer focus. Like they focused on B2B software companies selling, you know, at a certain amount of dollars with a certain amount of employees selling over Zoom. And it narrowed it down to I think the number was 5,000 total companies in their ICP. And then they built from that base up.

Starting point is 00:10:03 I think a customer success platform I was talking about is been a really, really good job at narrowing down. This is Pylon. And what they've done is they've done a great job at narrowing down. We sell to B2B software companies that are supporting enterprise companies with highly complex support flows and customer success teams and multiple teams involved. So I think that narrow focus early on, particularly in competitive spaces, is really, really good. I mean, I'm hearing all of this and it sounds like, yeah, you want to get pretty granular. But I think there are a lot of different ways to slice the question of who is your customer. And so does the ICP, is it meaningfully different than the way you might talk?

Starting point is 00:10:42 about segmentation or a psychographic or firmographic, or is it a constellation of all of those things put together? The ICP gives you a place to focus, whereas the personas give you a who to focus on and who to build value statements for and who to market too directly and sell to directly. One is more about focusing, one's a little bit more about building an audience. You need them both, though. segmentation is really about identifying the groups of customers that would be interested in your product. So you could say this is SaaS companies or telco companies. ICP is much more narrow. And so you're explicitly defining the type of company, the size of the company, the pain points that that company has, why they need your product. And then personas are something different, right?

Starting point is 00:11:39 So personas are the individuals within those companies that own the pains that your product solves. That can, in many cases, influence the choice to buy your product. And very often are the folks who are actually going to make the decision to buy the product in the end. Yeah, I mean, that encapsulates a lot of how I think about it. I think your ICP has everything to do with the type of company that you're selling to. I think your persona does have to be very, very different because the persona is oftentimes encompassing a buying circle, not a single buyer. Sometimes you have a single buyer, and that's fine.

Starting point is 00:12:16 But oftentimes you have multiple buyers or multiple stakeholders in the buying process. You have a security team. You have an IT team. You have a champion. You have users. You have influencers within that. And I think you do need to separate those two out. Is there a gut test that we could give to founders?

Starting point is 00:12:34 Like a couple questions they should ask themselves, do you know, know who your ICP is? I have five questions I ask. Love it. Let's hear them. So the first one is, which of your current customers makes the most out of your products and service? Who uses it the most? Who are your best users, your biggest users?

Starting point is 00:12:50 What traits do those customers have in common? What reoccurring objections do you see when you lose an opportunity or when people churn? Which customers are the easiest to upsell and why? And what do the customers of your closest competitors have in common? If they can answer all of those questions, then they typically will know their ICP very, very well. Now, again, I have a list if they can answer all the questions, company size, industries, have problems, company specifics, unique buying behaviors, type of business, all those types of things.

Starting point is 00:13:22 They can answer all those, then they've got that. If they can't, they'll use those first five questions to find out what the ICP is. That's a great framework. And I think it also eludes to one of the challenges you have when you're working with startup companies or when you're in a startup, when a lot of what you're trying to do there is you're taking your best educated guesses at the answers to all those questions, right? And it is something at first where you just don't have a lot of feedback in the market. You still don't have a lot of customers yet.

Starting point is 00:13:52 You don't have a lot of signals from all the different segments, the geographies, the individual personas, especially the earlier stage that we run into because you want to go as broad as possible because you're trying to actually explore that product market. fit that you have and start to express your growth in a bunch of different directions through that. And you don't want to bargain against yourself by becoming too precise too early. However, I think if we're all being honest with themselves usually focuses the problem, right? It is usually the case that if you went and arbitrarily picked five different companies and looked at the way they are defining their ICP and going to market and operationalizing that ICP, they're nearly

Starting point is 00:14:36 always not as focused as they could be and thus not nearly as effective as they could be exploding that. And what happens over time is you have the ability to gather those and harness those and start to create a feedback loop that allows you to answer Michael's questions, both in terms of the things you know and the things you believe as hopefully a leader in your space, but also due to what's coming back from the interactions your Salesforce is having with prospects, what your customer success managers are having with your customers, which customers are expanding and why you have all of these signals out there that you can start to harness and bring into the answers to the questions in that framework.

Starting point is 00:15:20 Yeah, I think this is actually a pitch why you need a strong rev-ops practice in your organization early. And again, this is maybe a pitch for you, Mark. But I think you do need to have it, because otherwise you're taking the few customer conversations that you've had, and that's providing bias. You need a standardized methodology of looking at these, interrogating these, and applying the right amount of recency bias to the organizations that you are interacting with most regularly. I love, Mark, you were saying this is kind of like the central nervous system of your whole org. The word that occurred to me was root cause of a lot of issues, right? But if it's so important, who's responsible for defining it? I think it's really a company-wide responsibility, right?

Starting point is 00:15:59 I think in the early stages, for sure, it's got to come from. from the founders, right? And so there are kind of different stages of finding ICP. So I would say pre-product market fit, you've actually got to be pretty open-minded about what ICP will end up looking for because you haven't found it yet. But once you have hit product market fit, I think it's really incumbent on the founders to pay close attention to how they think this is going to evolve. And then throughout the company's journey, there are a couple of inflection points. certainly when you move from founder-led sales to a more repeatable motion, typically like around the series A, then you're bringing in a sales team and it's scaling, right?

Starting point is 00:16:39 And so you start to see cell leaders become very closely involved in defining and refining the ICP. As you're moving up market or down market, that has a massive impact on how your ICP changes. Ultimately, I think you very often see the responsibility for ICP, at least the growth stage, being shared at the executive team level. I'd agree with that. I think everybody has to own it, if you will, and everybody should have input to it. Your sales team, they're looking at six to 12 months. The marketing team, they're looking at 18 to 24 months, your product team, they're looking at.

Starting point is 00:17:18 So I think the different kind of viewpoints are important to bring to the table. But each of them are going to have input to that ICP. And your customer success team is going to have all historical. data, which customers have been successful, which have turned off, all those things like that. And so, again, that refinement process is going to occur if you continue to ask questions. Well, why are these customers successful? Well, how does the product service these to steal Joe's line? You keep asking why until you get to the root of the problem.

Starting point is 00:17:47 The other thing I would look at, and I think one of the rough sketches that I'll do, is when I'll put together an ICP, I'll take a look at the TAM of that ICP, and I'll understand what is my fair percentage? What is my unfair percentage? And if I'm capturing an unfair percentage of that tam, then I know that's probably a really good ICP for me. If I'm unable to capture even my fair share, then maybe there's not really good alignment between my use cases and that particular ICP. Wait, and how would you be able to tell what percentage you can capture? Is it because of the alignment of use cases with their pain points? Correct. Use cases with their pain points and what the total tam is, right? And if you're like, hey, if I'm alone in this market, then I should be able to win 80s. percent of my deals on it. If I'm one of four players, then maybe I should get 25 percent of that marketplace. I'm wondering about the sort of product intuition vision and mission here, which is kind of an X factor, right, where I can imagine founders getting a bunch of data saying, like,

Starting point is 00:18:44 this should be our ICP, and founders thinking, that's not really what I'm building, or like, that's not really what my mission is. And so I'm curious if any of you have seen companies that have maybe gotten some data back and thought, actually, that's not what I really want to build. and have gone on to do something else and been successful. I've seen the opposite thing. I worked with a founder who was from the security world

Starting point is 00:19:07 and they were building what they thought was a security product and they built it and they talked to a number of security buyers and none of the security buyers bit on it. But what they noticed is that every single time they had a conversation of security buyer,

Starting point is 00:19:19 they brought in a platform ops people. They brought in basically the platform operations people to either validate or have the conversation. And eventually, after a couple of these conversations, the founder and I were talking, and he said, you know, I don't think I'm building a security product. I think I'm building a DevOps product.

Starting point is 00:19:34 And we went through it and we said, well, who's going to benefit from it? Who's going to use it? So I've seen that opposite problem where the product intuition in their history took them one direction, but in reality, the customer feedback took them

Starting point is 00:19:45 to the right ICP eventually. What's the outcome from an ICP exercise? Does your ICP fit on one page of a Google doc? They go through, Michael, they ask some of your questions, they work backwards from existing customer data, What's the thing everybody creates? In my opinion, the ICP is a list of qualities and differentiators and formographic and typographic information

Starting point is 00:20:10 that then your marketing team, your sales team, your product team can all action on. It should be probably less than a page, in my opinion. I think that's right. It not only shows you who you need to target and what you need to target the customer with, but also why the customer would need your product specifically and who owns the pain within those organizations. As Michael said before, who are the champions, who are the influencers, who are the economic buyers.

Starting point is 00:20:41 And as the RevOps guy, I'm going to say that it is having the data and technology to support that, right? There are a lot of very good companies that will work with people like Michael or have people like Michael, and they put together this pristine, amazing, elegant ICP on slides, and it's great, right? And that's definitely part of it. But how are you pulling information back into the process that the people in your marketing organization and your product organization and your sales enablement organization, etc.?

Starting point is 00:21:17 How are you getting all that information and then making that part of the way you're defining your ICP? there are a lot of companies that aren't doing that very well, and they're still operating from theory. And what they'll find is they will eventually fall out of alignment with the market. And they will see all these leading indicators that start to tell them that's the issue. And it's because they're still operating from a position of a little too much hubris and a little too much of an echo chamber. I kind of want to throw out some examples. I'm thinking of ICPs in the context of a company like Open AI. Do they have an ICP?

Starting point is 00:21:54 It's chat GPT all the way down. It's chat GPT and you've got some APIs. It's the same product regardless if you're a consumer or you're working in the enterprise. And I'm wondering if with this sort of new generation of products coming out, is the idea of an ICP is still useful? Make no mistake, those companies are also doing what we're talking about here internally. Obviously, if you are in the AI space right now and you are selling generative AI platforms, and large language models and things like that. It's a good time, right?

Starting point is 00:22:25 But you still need some way to be able to distribute and go after your market in a way that is prioritized like that in order to practically have all these great things like great conversion rates and expansion rates. All these kind of lagging indicators that tell you you're selling it and expand the market well, but are also leading indicators that are truly indicative of how well you've set up your ICP and operationalized it.

Starting point is 00:22:54 Yeah, I think if you have a product that has no competitors and it is a brand new product and is an incredibly effective product, and I mean, that was the early open AI days, right? I think absolutely, I mean, do you have to do it? No, you're kind of like, look, the product trumps all. But the problem with that is that as soon as you have a successful product, there will absolutely be competition in the market. And so you will have to.

Starting point is 00:23:21 to eventually, even if you don't do at the very, very beginning, like, you will have to segment the market, you will have to find your use cases, you will have to find the ICPs for those use cases, all of those pieces like that. So you may see early success in a pure, like, we've got the very best product out there and everybody's just going to use this product, but that will not last. It never has, at least in the 28 years that I've been doing this. Like, as soon as you have a rocking product that's selling well, guess what? You have competition. Totally. The rubber, meets the road eventually, right? And you've got to figure out ways to sustainable growth. No, I think that sustainable growth is the piece right there. Like, you can get to one place,

Starting point is 00:23:59 but in order to grow from that one place, you've got to double down on these best practices. I think when you're in the growth stages, maybe you've got the elusive product market fit for one kind of customer, but you need to, for platform companies, serve multiple personas with an org, or maybe you want to go a little more vertical. And so how do you balance that question as you're scaling, needing to find more customers. Do you want to go more vertical? Do you want to go more horizontal? 11 Labs is a great example of this, where they are selling an excellent platform, which can appeal to a lot of different potential buyer groups. They've defined over a dozen different cuts of their ICP. But they are very clear on which ones they are most focused on

Starting point is 00:24:46 right now and what that really means, right? How they are thinking about product innovation. building content, target accounts that they are assigning out to their sellers, where they're putting salespeople geographically. Even if they have ICPs that they've defined, that they know really well and they're reporting on that data, they might have those comparatively speaking deprioritized in order to remain focused but still have an approach to those companies that are a little bit more out on the fringe of their capabilities.

Starting point is 00:25:19 And the other point about this is there are, also a very good example of a company that is clearly listening to customers on how mature their product is in certain areas, and they're not overselling past that. They're being really careful about making sure that the ICPs that they've targeted are where they know their product is going to be an absolute Grand Slam and versus the areas where they plan to go to and they have some capabilities, but they know that they still need to develop it out a little further there before they really go hard at that particular area. So they have a sort of stack ranked ICPs, it sounds like.

Starting point is 00:26:01 The group of companies that they know, this is a slam dunk, I can like really go along on solving this use case. But then it sounds like maybe it's opportunistic ICPs, places where they can expand and that they know, yeah, we can build into that. And I would even add really good focus. is more of an exercise in stratification. It's the way you're segmenting the market and the best possible companies is this small circle. That is where we're going to be hyper-focused because we know we get tremendous yield, expansion, just great things happen there in the center of that.

Starting point is 00:26:37 Then it's these concentric circles out of that where you have others that are still very good fits, but they are maybe not as quick to expand or it's a little bit more of a gruntric. to actually convert those into customers. They expand a little more slowly. And then you eventually fall out into lesser and lesser fit. And it's like proceed with caution on some of these over here, right? So it's a very prudent way to go about it, a very mature way to go about it, where you know you're going to go there.

Starting point is 00:27:05 But at the moment, you're being careful because you want to be responsible in the market and the way you're growing. You want to be able to make sure your product is doing the things you say it's going to do and that you're meeting commitments. Because if you do that really well, then those ICPs will be absolutely open and ready for you as your product evolves towards that. Michael, I feel like this is entirely in your wheelhouse. I feel like this is what you do day in and day out.

Starting point is 00:27:28 That's exactly it. I mean, I think no matter how general the tool is, you have to narrow your marketing and sales efforts. And I think focusing down on those use cases and those ICPs gives you an ability to spend marketing dollars in the right place, spend sales efforts in the right places, support the right customers. And sometimes at the same time,

Starting point is 00:27:48 like not support, not market to, not sell to other customers. It's really hard when someone waves a handful of cash and says, I want to buy your product, but you're not in my ICP. It's really hard to say no to that. But sometimes I think you need to say no to that because you can get pulled off track with customer requirements. You can get pulled off track with a customer sales effort that's going to lead you down what might be a cash rich place,

Starting point is 00:28:11 but not necessarily a strategy rich place. In other words, it won't necessarily net you the next customer, and the customer after that and the customer after that, which is way more important than the one customer you just landed. I think we've talked a lot about use cases and focusing on the pain point or problem that you solve. But what I want to figure out, and we started talking about this when Michael was like,

Starting point is 00:28:32 yeah, this is why you've got to have a great RevOps program, is let's say you get this ICP. How do you know whether it's working and how often do you need to continue refining it? ICP is definitely not a set and forget thing, right? It does evolve over time. It certainly evolves when you go from founder-led sales into repeatable, into scaling up. And very often that happens when you're moving market segment.

Starting point is 00:28:59 So many companies start out in SMB. They move to mid-market. They then move to enterprise. The ICP needs to change. They expand geographically. The ICP may be different in different markets. Pricing and packaging changes happen. Competitive pressures and external events in the market.

Starting point is 00:29:16 impact ICP. So it does evolve over time. For me, at least the critical thing is you've got to create a very tight feedback loop with the market. So there needs to be a tight feedback loop between sales and product. And I think it's also super critical that founders, CEOs, executives at every level, customer success, product management, engineering, that they're also out in front of customers, that they're listening to customers, their engagement.

Starting point is 00:29:46 with customers, they're understanding how they're using the product, where the gaps are, where they want to go next. Because that's super important as you sort of evolves the product roadmap over time. And then everything else follows from that. So therein lies the problem with ICPs in the real world. There is a constant evolution out there in terms of buyer interests and the nature of the problems that they have. Your competitors are constantly changing. Everybody you compete with is trying to do the same thing you're doing, which is get better and better at all of these things like their conversion rates, expansion rates, and all these other good signals to tell you're doing a good job. Joe and I went through this experience when we first

Starting point is 00:30:25 joined Segment, for instance, where you go and you have this big project of studying the market three, six months later, that has started to lose precision, right? It's not practical to run these projects constantly, though. And so the challenge has been, how do you do it where you have a practical feedback loop and practical revision of that, you're not continuously just thrashing your Salesforce with new pivots in the way that they're supposed to be selling and talking to the things. And, hey, you know what, these were the accounts we assigned to you in your territory. We're going to continuously change that every couple of weeks because of the ICP.

Starting point is 00:31:01 No one's going to like that, right? I do think there are indicators when you nail an ICP. I mean, I think you start to see the cost of your CPU. sales go down. I think you start to see your sales efficiency go up. You start to see higher renewals. You start to see those indications that you've got it right. I agree with Mark to 100% on this. You can't flip-flop it. What I tell folks all the time is with messaging and with targeting, like the minute you're getting sick of it, you got to double down on it, right? Oh, I was going to say, what's the threshold? Yeah. Yeah. So when you're getting sick of hearing

Starting point is 00:31:35 your same messaging or you're getting sick of being focused on the same customers, that means it's time to double down on it because it takes the customers a lot longer to input the messaging and takes the customers a lot longer to understand the use cases. It takes them a lot longer than it takes you because you're living in a day and day. Tell us to founders all the time. Like you think about your product 24 out of the 24 hours of the day. Your customer thinks about your product, maybe 10, 15 minutes a quarter. You just got to keep hammering it and hammering it. I think what actually is really interesting to me, though, is how is this going to change now in the era of AI. Fundamentally, the question of what is our ideal customer is a perpetual strategic one.

Starting point is 00:32:14 But AI, I think, actually offers huge promise to be able to continually evolve that and really micro-segment ICPs. So you think about ICP evolving from a static document into a living data-powered model that lives in your CRM, where you can do continuous refinement on it. It helps you discover better ICPs, but you still need to make decisions on where you steer the business, and then ultimately, founders and executive teams

Starting point is 00:32:46 are going to have to make decisions on where they invest and in how much they invest. The companies that I'm working with right now are plotting these AI-based roadmaps, instrumenting the central nervous system with all of this signal detection that gets pulled back in

Starting point is 00:33:02 to both product and marketing, which then gets, almost immediately disseminated into the materials that are being created, the sales enablement that's going on, the way that you can go and present the next accounts to call on as a rep, who to talk to, what to talk to them about. And the revolution that's coming with this is a matter of being able to do this very, very quickly and very, very precisely, continuously. And we're going to be wondering, well, why didn't everybody do this? And the truth is, it's available to all of them, but it's a mindset. It is definitely,

Starting point is 00:33:36 the culture of your organization that's going to determine if you're able to take advantage of it with those new capabilities there. If you take AI out of the picture again and go back to the companies that have been doing this, the best companies that have done this best for years, they are tremendously well aligned across marketing and product and sales and customer success. It's an amazing, just cohesive approach to how to think about the ICP, how to innovate your product in that direction, how to go and prospect and sell and expand your customer's usage. if you have that mindset and you're willing to put in the work, you could be really good at this.

Starting point is 00:34:11 The piece that people have been doing already is the actual collecting of this information, right? So whether it's like gong calls or the precision in which you can measure your marketing spend and your marketing effectiveness and everything else like that, or the customer success platforms that are recording all of the information, all of those information sources gives you the raw materials for an AI to come in or to an AI product,

Starting point is 00:34:35 to come in and really understand what is successful throughout the entire customer journey. I think we've done a great job as an industry collecting all this information. And unfortunately, it's lived in silos or individual people. But I think we now have the opportunity with AI. What does AI do really, really well? Large pattern recognition. So across the entire customer journey, understanding where your ICPs are landing and where they're not.

Starting point is 00:34:58 That's exciting to me. As a marketer, I get really fired up about that. I love that because the sheer amount of data collection fields, perhaps unique to the moment, but the decision to relentlessly collect, pursue, analyze, and operationalize the data has been around for ages. All right, that is all for today. If you did make it this far, first of all, thank you. We put a lot of thought into each of these episodes, whether it's guests, the calendar Tetris, the cycles with our amazing editor Tommy until the music is just right. So if you like what we've put together, consider dropping us a line at rate thispodcast.com

Starting point is 00:35:36 slash A16Z. And let us know what your favorite episode is. It'll make my day, and I'm sure Tommy's too. We'll catch you on the flip side.

The a16z Show - Do You Really Know Your ICP? Why It Matters and How to Find Out

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