GTM is an annoyingly complicated puzzle, but that’s also a big part of what makes it beautiful. No company goes from great idea to category domination without solving it. They have to take the seemingly endless pieces and fit them together, hitting dead-end after dead-end along the way. The ones who crack it are those who refuse to let the dead-ends slow them down.

There are a handful of people in our ecosystem who dedicate themselves to making this puzzle easier for the rest of us. They study it enthusiastically, seek out the people cracking it, and then share what they find.

Cassie Young is one of the best I know. She lived these problems as a CRO, and now as a General Partner at Primary Venture Partners, she spends her time studying the operators who have solved them, and backing the founders who are out to change the world.

Primary just raised $625M and released a GTM thesis that signals real conviction in a category that has been notoriously hard to win in. And so, this felt like the perfect moment to sit down with Cassie — to understand the new funds, get her unfiltered views on GTM-Tech, and learn a bit about how Primary operates.

Asad Zaman: I’ve been thinking about the evolution of venture a lot these days. At first there was really one kind of firm, but now there are many different flavors. For instance, there’s the Benchmark model, the a16z model, the Founders Fund. The differences seem to be about how they make decisions, the size of the funds, and the investment and belief in having a platform team. 

Which firm do you see as analogous with Primary and how you like to operate?

Cassie Young: The closest analogy would be Insight. Obviously, we do earlier stage than them, but they’re co-investors in many of our portfolio companies, and we’re very friendly with their team. 

Both of our firms invest deeply in portfolio support. There are many firms out there that are more hands-off and offer fast capital, but we believe VC should be a customer success job. And what’s the number one rule of customer success? Drive enough value that your customers get promoted!

Taking that analogy a step further: What does it take for early-stage founders to get from Seed to Series A? They need to ensure that they have the right people in the right roles; that they’ve secured early customers who are rabid for their product; and that they have a compelling narrative for their downstream capital raise. There’s nuance to each, but a company with those pillars in place is well on its way to success. 

We’ve structured our portfolio team (Impact) just as that: It’s people and networks, GTM, and strategic finance. We run it like a product organization, where if we see that the needs of the market or our founders are evolving, we evolve. 

Asad Zaman: Yeah, I just saw that you have a GTM Engineer on staff. I think you’re the only VC firm that has one.

Cassie Young: I think so, too, and it’s a great example of evolving our product roadmap. We’ve offered more traditional pipeline generation support for years. But with the rise of GTM engineering last year we realized that the old way of working simply wasn’t enough. So we now have a full-time GTM engineering team. It’s been hugely helpful to portfolio founders, and we learn a ton from it, too. 

Sometimes people hear about big operating teams, and they think it sounds like PE — and they start immediately worrying about the “invisible hand” of PE management. But this is not that. Instead, we’re backing visionary founders with the conviction that they’ll build category-defining unicorns. But those founders only have so many hours in a day. So, we slot in real expertise — the people on our Impact team had big jobs at scale-up companies — and help founders achieve escape velocity that much faster by doing real work. Every one of our portfolio companies is capable on their own, we just help them expand time and achieve key milestones faster. 

Asad Zaman: I’m curious if ownership on deals is impacted by this. How do you think about ownership? Specifically, are you looking to always lead or are you willing to start smaller and build positions over time? 

Cassie Young: It’s a great question. We have a chart that shows average ownership at the point of entry by fund. Today our model is to lead. If we rewind the clock to Fund I — which was a 2015 vintage — we were just getting started and trying to get into good deals. So the equation looked very different. But fast forward to more recent funds today and yes, we prefer to lead.

But as I said earlier, we’re always listening to market feedback and iterating on our own approach. One example on the ownership side was Pre-Seed deals. There were a few instances where we walked on compelling deals because we couldn’t get our desired ownership. More recently, we’ve been more flexible, and asking ourselves: “If Primary’s right to win is how we show up and support founders, and how relentless we are with our support, why wouldn’t we take a smaller toehold at Pre-Seed?” If we do all the things we promised to do, we should win the Seed if we want it. Mind you, this is an experiment, but a good example of challenging our own status quo.

Asad Zaman: Mike Maples Jr. says that if you look back into the history of venture, the best outcomes are usually the contrarian bets that you got right, which usually have low valuations. These days the best deals seem to come with big price tags. How price-sensitive are you right now? 

Cassie Young: We think about fund math in a very brass tacks way: We want every checkwriter to have a plan to 5X their book, and offer a high degree of autonomy to checkwriters in how they do that. So if there’s a more expensive deal on the table, we’re going to assume the partner sponsor has supreme conviction about how that will play into their overall portfolio. 

In the six years I’ve been with Primary, I don’t know that we’ve ever vetoed a deal when a partner said they were fully convicted. We’ve discussed deals at length, and partners frequently do additional work from there — sometimes passing and sometimes coming back with even more conviction. But if a partner is off the charts with conviction, we’ll support them. It’s akin to what I say about candidates: Look for presence of strength and supreme conviction vs. the absence of weakness. I think the same is true of deals.

That all said, we do stay away from these mega-Seed deals. 

Asad Zaman: No $400M at a $4B Seed?

Cassie Young: No! But we have had Seed deals where maybe the whole round is $15M — way bigger than it was before. If a partner comes to the table and says, “I want to do $10M or $12M of the $15M,” we trust that the partner is thinking, “I know my job is to try to 5X my book.” And so, much of our work is determining what the underwriting story is going to be at the next round, and what the ultimate outcome can be.

The point about milestones for the next round — and what will be required for a markup — is important for the Series A journey. Though it’s equally important for downstream rounds with our existing portfolio. If a company gets a crazy markup for the Series B — which, frankly, many people are getting right now — we need to be intellectually honest around what the path looks like from there. It may be a great vanity metric, but it doesn’t behoove anybody, if it’s not in the realm of growth possibilities for the business. So, with any fundraise, we’re always thinking about what will need to be true for the next round from there.

Asad Zaman: Does it ever happen that you put a different mark for an asset than another investor who got in on the same round?

Cassie Young: The short answer is “yes.” We typically rely on mark-to-market events [fundraises] for our own marks, and we really don’t markup our book unless we have such a data point — barring a very extenuating circumstance. We would sooner mark down an investment based on performance, though. You may have a company that raised in the 2021 boom times but there’s no way it’s worth $1.5B today; we’ll adjust accordingly. Our view is that we want to be very conservative and real with our LPs. We take a lot of pride in the transparency we’ve built with them, so we will always take a more cautious angle. 

Asad Zaman: One of the themes in our ecosystem today is concentration. Peter Walker wrote a great editorial on how that’s showing up in venture. How does Primary think about that right now? 

Cassie Young: In terms of how we allocate capital for follow-on, we are more concentrated. For example, our opportunity fund is called our “Select” Fund, and some time ago, we made a commitment to ourselves to be even more selective about “Select.”

In terms of what capital allocators are thinking about for fund construction — on the one hand, having true compounders and classic power law dynamics with two or three massive drivers is fantastic. But you could theoretically also have a fund that’s much more balanced across multiple winners but maybe no decacorns. Ideally, we want both! But when we’re investing out of the Select fund, we’re thinking about those true compounders.

Asad Zaman: You’re not just giving everyone who wants a follow-on a follow-on. You’re picking your battles.

Cassie Young: Correct. We obviously support our companies with reserves from the core fund at Series A, but when it comes to later rounds and the Select fund, we committed to our LPs to red-team our own portfolio. That means that we have a tiger team that focuses on that sort of diligence. This work is actually a huge benefit to our portfolio companies, because it helps them prepare for other investor conversations, and they already have massive trust in Primary by that point in the journey.

Asad Zaman: Who makes the final decision on the follow-on investment?

Cassie Young: Great question! At the end of the day, it’s the same approval process as our core fund, but the process to get there looks a little different. Our co-founders are also the firm’s co-CIOs, and we assign a CIO sponsor to every Select opportunity — specifically, the CIO who’s furthest from the deal and who spent the least amount of time with it. The CIO plus the deal team [partner sponsor] are supplemented by an internal team that focuses on market and customer research, and the financial story. Then, nine months later, we do a retrospective on what we did right and wrong, which has been really powerful and illustrative, as well.

Asad Zaman: Whenever I talk to GTM-Tech founders, they often say GTM is the hardest category to build for. We don’t have many great winners right now, so I tend to think they’ve been right so far. 

You’re bullish about GTM-Tech right now… Why? 

Cassie Young: First off, I’ll double down on veterans saying “stay away.” The joke at Primary for my first several years was that I had an insane GTM-Tech hangover, because this was the world I came from — I was the CRO of an enterprise martech company. We had a healthy, profitable business with good enterprise customers and sold it for only 3X. 

I do think the space is very crowded, and when I say I invest in GTM-Tech, I always say, “for better or for worse.” Kidding aside, I think it’s an exciting time in the category for companies that are making full-platform plays. If you execute against the right jobs to be done in GTM, you’ll unlock the labor budget, in addition to the software/tech budget wallet. It makes overall market sizes and potential outcomes that much more compelling. There are far bigger profit pools, and way more money, because people are second-guessing what actually requires humans, and how human-capital-intensive their businesses need to be. To be clear, though, I still think there are way too many point solutions out there. 

Asad Zaman: You wrote a really important editorial in Q4 on the churn crisis we might soon see in our ecosystem. GTM has been getting inefficient over time, and I think the increase in competition and the churn crisis together are a real problem. 

What are your thoughts about this? What do people have to get right to avoid this fate?

Cassie Young: I think that the two forces that you just described are somewhat inextricably linked. You know that I’ve been up on my soapbox about a gross retention apocalypse. Everyone’s trying everything, which will result in churn, which will harm enduring growth, which in turn will hurt metrics like graduation rates between rounds — never mind company failures… The list goes on and on. 

But I’ve also been preaching my more recent thesis, the centerpiece of which is that AI investments must hit the P&L in an immediately obvious way. The companies who are going to win are the ones with true dollar-and-cent impact. And the problem with the GTM category is that historically it’s been “nice-to-have” but not “need-to-have.” Everything in the sales enablement category, for instance, has fallen into that camp. They’ve gotten by on convoluted ROI estimates that involve opportunity cost and multiple lines of math to make a point, but that’s no longer sufficient. Screw opportunity cost! You need to cut labor spend.

Asad Zaman: How do you think this plays out?

Cassie Young: Very candidly, I worry for our ecosystem. I know that some companies won’t survive, because there’s so much experimental revenue in these ARR lines of what’s happening right now. But I think the way to mitigate risk is with relentless commitment to customers. What’s the easiest way to get there? Make your customers money. And if you’re making them money, you’re saving them money. 

Even this bit, historically, people say the way companies succeed is to “make customers money, save customers money, or prevent risk.” Now, I buy the notion of preventing risk in certain verticals, but that’s not something keeping me up at night in GTM-Tech. It really comes down to how you’re making money and how you’re saving money. 

It sounds so obvious, and everyone tries to back into some ROI story, but it’s so obvious when it’s not obvious! Recently, I was doing diligence on a deal, and I asked the customer how they were thinking about ROI. They said the vendor was working on it with them, and I said “I’m out.” 

Asad Zaman: I believe that when we look at a macro level, everything will get less efficient but, at the edges, the best companies will look far more efficient. We see some of this — say, with Kyle [Norton]’s team at Owner. What do you think? 

Cassie Young: I think that’s right. Some companies are just built from a different cloth. For instance, Jeanne DeWitt Grosser [COO, Vercel] has gone on record talking about how they’ve built their own lead agents. It’s kind of fascinating. It’s not to reduce headcount. Rather, they said that if one agent can do the job of 10 SDRs, with one human overseeing that, you can put the other nine SDRs into higher-value work. 

Now, I don’t think everyone in the world is like Vercel. I do think there’s a very, very long tail on adoption and the sophistication for how people are thinking about things.

Asad Zaman: So much of AI today is about startups having the right wedge that they can use to expand into their future vision for their category. One of the things founders really struggle with — and I hear that executives and individuals who are picking companies struggle with this, as well — is finding the right wedge.

If I’m a CRO looking at a bunch of Series A or B companies, how do I know which is the right one? 

Cassie Young: Great question. Two things are particularly top of mind for me: If I’m a buyer, I want to see very clear, non-fuzzy math on the P&L. It’s far easier to allocate additional budget to a solution down the road if there’s undeniable ROI on the first piece. That’s an important lesson for both buyers and founders. 

The second gets a little bit more interesting: You have to believe that the point solution that you’re going with is collecting really sufficient context that will be highly, highly beneficial when the second product ultimately gets launched. 

Let’s look at 1mind, for example: They started with inbound BDR, and guess what happened? It’s not supposed to do customer support (at least not yet), but the technical questions are built into the training data, and sales questions often look a lot like customer support questions. So, because it’s an agent, the system accidentally does customer support… and it’s pretty good! Their context graph from the wedge product has made it easy to expand into new use cases like ridealong sales engineer, and will make it easy to launch support when they’re ready! 

There are many other categories, unfortunately, where the context might be interesting for that specific use case. But you have to ask yourself, what’s it really going to do for the next category of problems?

Asad Zaman: It needs to create an elegant next step.

Cassie Young: I would also remind buyers that the vendor they’re evaluating should have a clear right to win. Specifically: Why are they the right people to go and do this? We ask that about founders as well. 

Asad Zaman: The other end of the spectrum is a compound startup. AI makes it a bit cheaper to build those, in theory. But they’re still complicated. I’ve heard that VCs only trust second-time founders with compound startups — what do you think? 

Cassie Young: I don’t think so. Listen, if there’s a great founder, I’m going to meet them regardless. But it’s funny: I personally tend to have a history of working with second-time founders. It’s not a Primary thing at all, though; my book tends to index on people who maybe have unfinished business, as I like to say.

I’m sure you’ve heard the adage: “First-time founders are all about product and second-time founders are all about distribution.” 

When you’re building a compound startup, you have to be so deliberate around your design and development with customers on the distribution side. You have to be following along intently, you have to be ready to move. And, you also need the ability to ship product at unprecedented speed — not just for the sake of shipping it. I’ve seen a bunch of startups build all this product, but it wasn’t actually the right product to go and build. 

And I think that first-time founders are actually amazing at shipping velocity. So, I wouldn’t bet against a first-time founder who’s coming into it.

Cassie Young is a General Partner at Primary, a $1.6B AUM early-stage venture capital firm that backs category-defining companies like Chief, Alma, K Health, Dandy, Etched, and Vestwell. She invests in founders disrupting the B2B P&L and also leads Primary’s firm operations. Before joining Primary in 2020, she spent 15 years in GTM operating roles, most recently as CRO at Sailthru through its PE exit, and at Marigold, where she oversaw a $200M+ martech roll-up.

Become a Topline insider by joining our Slack channel.

We want to hear your feedback! Let us know your thoughts.