Startup Go to Market Strategy: How to Build a Category-Creating Company From Zero (Real Case Study)

Most startup advice about go-to-market strategy is backwards.

They tell you to "find your ICP" and "build a sales funnel" before validating that anyone wants what you're building. According to CB Insights, 42% of startups fail because there is no market need for their product Revli—yet founders keep spending months on funnels instead of customer conversations.

Casey Ellis started Bugcrowd in 2012 with a controversial idea: turn hackers into a force for good by creating a marketplace between security researchers and companies. His first pitch meetings with top-tier VCs failed spectacularly. Today, Bugcrowd has raised over $180 million and fundamentally changed how companies think about cybersecurity.

The journey from rejected pitch decks to category leader reveals counterintuitive truths about startup go-to-market strategy that every early-stage founder needs to understand.

Key Takeaways

• Problem-solution fit without product market fit doesn't solve anything—you must connect your solution to where the problem exists through effective go-to-market
• The "Uber pitch" technique: Practice explaining your startup in 30 seconds to non-technical people until you consistently generate buying intent signals
• For B2B startups, the median time from idea to feeling product-market fit is roughly 2 years Substack, with category creation often taking even longer
• For marketplace startups, solve supply side first if you come from that community—leverage trust to build proof for demand side
• Relational outbound is the most underrated early growth strategy—tap your existing network completely before paid acquisition
• Simple is strong: Technical buyers appreciate clarity because they need to sell your solution internally
• Always hire salespeople in pairs (never one) with industry credibility over pure closing skills
• Best-in-class SaaS businesses reach $10M ARR in 2 years and 9 months, while median startups take over 5 years ChartMogul

The Critical Difference: Problem-Solution Fit vs Product Market Fit

"Problem-solution fit in the absence of product market fit doesn't solve the problem," Ellis explained. "That's a great problem-solution fit you've got there. If you don't plug it into where the problem actually exists, then it's like a tree falling in the forest with no one there."

Before Bugcrowd, Ellis ran a white-label penetration testing company making decent money. But he saw the math was wrong: companies paid one security professional by the hour while "there's this huge community of white hats that want to help but don't have the invitation."

The solution was obvious: create a marketplace. Fifty researchers testing your system for the same price as one should find more vulnerabilities. Perfect problem-solution fit.

But getting to product market fit required completely different work: overcoming the perception that hackers were criminals, solving operational challenges like paying international researchers, and creating an entirely new category that didn't exist.

While 42% of startups fail due to no market need, another 29% run out of cash and 23% fail due to not having the right team Revli. Most technical founders nail the solution but never figure out go-to-market strategy to connect that solution to the market.

Why Traditional Go-to-Market Strategies Fail for Category Creation

When Ellis first pitched Bugcrowd to Silicon Valley VCs in 2013, he failed spectacularly: "The first probably five or six pitches I did were with big tier firms. And I blew every single one of them."

He was positioning it like an incremental improvement: "We figured out this way to make a sausage machine and you're going to pay me money." That fell flat because VCs don't fund better sausage machines—they fund category creators.

After reflection, Ellis spent a month refactoring his pitch from "better, cheaper penetration testing" to "the future of work in cybersecurity." The new pitch: "This is never going to go away. If we get this out of the bag and actually execute on getting the market used to this concept, it will never go back in the bag."

That pitch raised $2 million.

For B2B SaaS, validating product-market fit typically takes two to three times longer than expected due to multiple decision-makers Lean B2B. Your first 2-3 years are pure evangelism—teaching the market your category exists.

The Uber Pitch: Perfecting Your Messaging in 30 Seconds

Ellis developed one of the most practical techniques for refining startup messaging: "The idea was to get through explaining what Bugcrowd is, what it does, why it matters in 30 seconds or less, no jargon."

This wasn't hypothetical. Ellis literally practiced with every Uber driver: "I'm sitting there with a driver, I don't know how technical or non-technical they are... Literally every time I got in the car, I'd do this and this is how I refined my pitch."

The goal was generating buying intent signals from strangers. "If I can get this out, have them show some sort of buying intent... the more I'm going to be able to create a message that my team is going to pick up and sell."

The principle: Simple is strong. "How do you boil something down without burning it?" Technical buyers appreciate clarity because they must sell internally to CFOs and executives. Once you nail a 30-second pitch that makes anyone lean in, you've found your core message.

Solving Supply First: Marketplace Go-to-Market Tactics

Ellis's critical early decision was which side of the marketplace to solve first. He focused on supply—and it made all the difference.

"I was cheating a little bit on the supply side because I was already a part of that community," Ellis explained. "So I already had some degree of trust."

Before writing code, Ellis answered: Is there a crowd available and will they show up?

His approach:

1. Social media marketing to collect signups from security researchers
2. Track whether people actually signed up
3. See if they would participate when given an opportunity

"We had probably 5,000 odd signups in the first month or two. So it's like, cool, supply side's there."

Then validation: "Ran a program on an application that I'd built, put like $500 down on it, and it got completely destroyed from a security testing standpoint. So it's like, okay, this model seems to work."

This entire process happened without real product—just MailChimp for community management and Wufoo for vulnerability intake.

Why solve supply first? You leverage insider advantage, supply becomes your proof point for demand, it's easier to test without perfect product, and community effects compound faster.

Relational Outbound: The Most Underrated Growth Strategy

"Early on, Australia was all basically relational outbound," Ellis explained. "That was literally me going to my buddies and then kind of one degree of separation from those guys."

Ellis would ask existing contacts about their security challenges: "What's working for you? What isn't working for you? Where would you like to see things work better?"

Then he'd use an "ascending close" technique:

• "Do you feel like fifty people testing your stuff would outperform one?" (Obviously yes)
• "Would that give you better understanding of your risk?" (Yes again)
• "Can we give this a try?" (Most said yes because he'd built trust)

When expanding to San Francisco, Ellis didn't change strategies—he hired for it: "I actually hired early on for network effect... People who had relationships, people who had trust, people who had an authoritative voice."

Top SaaS startups reach $1M ARR within 9 months, while median startups take approximately 2 years and 9 months ChartMogul. Relational outbound accelerates this timeline by leveraging existing trust.

Ellis's advice: "Don't think about marketing funnels or PLG or hiring salespeople until you as a founder have figured out how to tap out your existing network."

Hiring Salespeople: Always Two, Never One

"If you're going to do that, you never hire one, you always hire two," Ellis said. "Because that way they compete with each other and gee each other up, and it's a lot more fun."

Why hire two salespeople?

• Benchmark to know if poor performance is the person or the market
• Internal competition drives activity
• Peer support prevents loneliness
• Less pressure on any single hire

Ellis hired "people from a solutions sales or consulting background" in cybersecurity—prioritizing industry credibility over closing skills.

"Then they've got a trusted voice, right? If they know how to sell, then really the only thing you got to worry about is figuring out whether or not they know how to close."

For early-stage B2B SaaS, achieving double-digit month-over-month growth between $10,000 and $50,000 in MRR typically signals true product-market fit SaaStr. The right salespeople accelerate hitting these milestones.

Bugcrowd hired post-seed but pre-Series A at around 15 people. Those early salespeople did everything—prospecting, demoing, closing, account management—providing intelligence back to the founding team.

Brand Marketing for Early-Stage Startups

At a major security conference when Bugcrowd was only seven people, Ellis created a t-shirt that said "My other computer is your computer."

They printed 500 shirts and left them everywhere. "By the end of the week it looked like a hundred people worked for Bugcrowd, and everyone was talking about it."

This worked because:

1. They had a category creation problem requiring awareness over conversion
2. They targeted the intersection of two communities (security researchers and buyers)
3. The design itself was the message (playful but powerful)
4. Long-term brand value is real: "A lot of Bugcrowd customers reach out and say, 'Oh yeah, my Grace Hopper t-shirt from 2016 is wearing out. Can I get another one?' And they're like seven figure, eight figure deals now."

For marketplace startups or category creators, strategic brand marketing—even at seed stage—can accelerate everything when every investment does multiple jobs: generate awareness, start conversations, build community, signal positioning, and create memorable moments.

From $1M to $7M ARR: The Reality of Scaling

Year 1: $1M in bookings

Year 2: $3M

Year 3: ~$7M

"There was an initial hockey stick off that whole 'Yeah, this is way better return than what I'm doing right now,'" Ellis explained. "Then competition started to arrive. Then it was like, okay, what do our unit economics actually look like?"

Only 13% of SaaS startups are able to reach the $10M ARR mark even after 10 years in existence ChartMogul. The plateau between first traction and scale is where most startups die.

Ellis didn't panic during the slowdown. He used it to figure out repeatability: defining ICP more narrowly, understanding unit economics, building processes that worked without the founder, and eventually stratifying roles.

The lesson: The first hockey stick isn't product-market fit. Expect initial rapid growth from early adopters, then a plateau while you figure out repeatability. Don't scale prematurely.

When Founders Should Step Back

Six years into building Bugcrowd, Ellis stepped back from the CEO role. Five years later, he changed CEOs and eventually moved to an advisory role completely.

"In that seat, especially the founder CEO seat, you should be completely unafraid to ask yourself the question: Am I the right person to be doing this? Because the moment you start to get nervous about asking that question, you've got an actual problem."

The skills to start a company differ from the skills to scale it. What the company needs changes, and if you can't change with it, bring in someone who has what's needed.

When Ellis had emergency open heart surgery in July 2024, having CEO Dave Jerry already in place meant the business continued without missing a beat. "That was a huge blessing to be in that position."

"At the end of the day, when you started this thing, you had a picture of the future that you wanted to see fulfilled. And ultimately it becomes more about that than any particular title."

Essential Go-to-Market Principles

After thirteen years building Bugcrowd, Ellis distilled his go-to-market wisdom:

1. Know where you're attaching to existing budgets: "The first thing the CFO is going to do is open up a spreadsheet and see if there's an existing budget line item. If you can attach to that, that's your shortest path."

2. Tap out your network before building funnels: "Don't think about marketing funnels or PLG or hiring salespeople until you as a founder have figured out how to tap out your existing network."

3. Category creation requires different timelines: If your TTPMF (Time To Product-Market Fit) is more than 1-2 years, fatigue sets in, the window shifts, and investors get disengaged Medium. For category creation, expect 2-3 years of evangelism.

4. The first hockey stick isn't product-market fit: Expect initial rapid growth from early adopters, then a plateau. That plateau is when you figure out repeatability—don't scale prematurely.

Frequently Asked Questions

What is the difference between problem-solution fit and product-market fit?

Problem-solution fit means your solution technically solves a real problem. Product-market fit means you've connected that solution to the market in a way that creates sustainable, repeatable growth. As Ellis explains: "Problem-solution fit in the absence of product-market fit doesn't solve the problem... it's like a tree falling in the forest with no one there."

How long does it take to achieve product-market fit for a category-creating startup?

The median time from idea to feeling product-market fit is roughly 2 years for B2B startups. Founders should start worrying if they've been working for over 2 years without feeling PMF, and seriously worry after 3 years Substack. Category creation typically takes longer—Bugcrowd felt they hit true PMF around 2016, roughly four years after founding.

When should you hire your first salesperson?

Hire post-seed but pre-Series A, typically around 15 people. Always hire two salespeople at once (never just one) so they can compete and provide benchmark data. Look for people with consulting or solutions sales backgrounds in your industry who bring credibility and relationships—not just closing skills.

What is relational outbound and why does it work?

Relational outbound is leveraging your existing network and relationships for first customers rather than cold outreach. It works because trust is pre-established, learning loops are faster, conversations are more honest, and early customers become natural evangelists.

Should early-stage startups invest in brand marketing?

For most startups, no—focus on performance marketing with clear ROI. However, for marketplace startups or category creators, strategic brand marketing can accelerate growth. The key is making every brand investment do multiple jobs: generate awareness, start conversations, build community, signal positioning, and create memorable moments.

How do you know when to bring in a CEO as a founder?

Ask yourself regularly: "Am I the right person to be doing this?" If you're afraid to ask that question, you have a problem. As Peter Reinhardt notes, "80% of SaaS companies never make product market fit" Medium—sometimes bringing in different leadership is what it takes to get there. The mission matters more than your title.

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