As we kick off the new year, startup leaders face critical decisions about how to sustain and accelerate growth. When revenue slows or targets are missed, the first question founders often ask is, “What’s the root cause?” Is the product no longer resonating? Has the market shifted? Or is it a breakdown in my go-to-market motion?
To help tackle these questions, we recently hosted an AMA session with Madrona portfolio company CEOs. The discussion centered on diagnosing and addressing startup growth challenges, covering key strategies across product-market fit, go-to-market segmentation, vertical expansion, and competitive positioning. We’re sharing these insights to help founders navigate 2025 with clarity, focus, and a playbook for sustainable growth.
Diagnose Product-Market Fit Issues
Product-market fit is not static — it evolves as customer needs and market conditions change. Many founders mistakenly focus solely on the product, but broader factors like unclear customer needs, poor messaging, or a misaligned ICP often play a role.
To ensure product-market fit remains strong:
- Reassess urgency: Does your product still address an urgent pain point for customers? Engage directly with customers to validate this regularly.
- Target the right buyer: Selling too high in an organization can mean your solution is deprioritized. Selling too low often means no access to budget. Find the buyer with the right pain and authority.
- Refine your messaging: Highlight the pain your product solves with empathy and clarity, ensuring alignment with customer strategic goals.
- Facilitate cross-functional discussions: Encourage teams to focus on what they can improve while providing constructive input for other functions. Tension in these conversations is natural but should drive alignment, not finger-pointing.
Takeaway for 2025: Treat product-market fit as an evolving target. Regular assessments and customer feedback are your best tools to stay aligned.
Segment-Specific GTM Strategies
Not all customer segments are created equal, and misaligned GTM strategies can hinder growth. Each segment — SMB, mid-market, or enterprise — requires tailored approaches.
Strategies by segment:
- SMB: Emphasize product-led growth with minimal touchpoints to ensure scalability and cost efficiency. SMB customers may churn more often and generate lower contract values, making high-touch models unsustainable.
- Enterprise: Invest in high-touch sales cycles with experienced sellers who can navigate complex stakeholder dynamics. Enterprise accounts require dedicated resources and deep expertise to close.
- Alignment by segment: Ensure SDRs, sales, marketing, and customer success teams are aligned and specialized by segment. Avoid stretching the same team across vastly different motions.
Takeaway for 2025: Optimize GTM strategies by segment to maximize efficiency and customer satisfaction.
Enter New Verticals Strategically
Breaking into new verticals is a tempting growth strategy, but it’s often more complex than anticipated. Success requires rigorous planning and an adaptable approach.
Best practices for vertical entry:
- Validate TAM and timing: Ensure the total addressable market is sufficient and the market is ready for your solution. Being too early or late can lead to wasted resources.
- Leverage tiger teams: Test new verticals strategically by forming cross-functional teams from product, marketing, and sales to evaluate opportunities and gather feedback from experts and customers.
- Start with sales, not product: Test demand through vertical sales efforts before investing heavily in tailored product development. Selling to a new vertical doesn’t always require extensive product changes — sometimes, it’s about messaging and GTM alignment. And, the effort and expertise required to build a vertical product are often underestimated.
- Use tight feedback loops: Regularly assess progress and be prepared to pivot if early results don’t meet expectations.
Takeaway for 2025: Approach vertical expansion with discipline, starting investigating with tiger teams and then sales-led testing before committing to significant product investments.
Build an Effective Competitive Strategy
In competitive markets, having the right tools and training is essential to differentiate your offering and win deals. Your team needs more than just product knowledge — they need a clear understanding of how to position against competitors.
Tactical steps to sharpen competitive strategy:
- Host “compete boot camps”: Bring together product marketing, sales, and SDRs to refine messaging, objection handling, and positioning.
- Develop a living competitive playbook: Keep a regularly updated document detailing competitor strengths, weaknesses, and your differentiators.
- Adopt the competitor’s perspective: Sit in your competitors’ shoes to anticipate their moves and better understand how they might compete with you.
- Focus on strategic questions: Train your team to highlight your product’s advantages by planting questions for customers to ask competitors rather than badmouthing rivals.
Takeaway for 2025: Equip your team with the knowledge and tools to compete effectively in a dynamic market.
Ready to Tackle 2025?
Diagnosing startup growth challenges is rarely straightforward, but by focusing on these four areas — product-market fit, GTM segmentation, vertical strategies, and competitive positioning — you can set a strong foundation for success in 2025. Remember, sustainable growth comes from disciplined execution, customer empathy, and a willingness to adapt.
This guide came from our December portfolio company GTM sessions. Keep an eye out for takeaways from February sessions, where we’ll dive deeper into best practices for managing sales leaders. And don’t miss October’s lessons for aligning your GTM strategy for 2025 success.