5 Go-to-Market Lessons from Term Scout’s Category Creation Journey
Most startups rush to market with heavy investments in sales and marketing. Term Scout took the opposite approach, and their journey offers valuable lessons for technical founders building complex enterprise products. In a recent episode of Category Visionaries, CEO Otto Hanson shared insights that challenge conventional GTM wisdom.
- Build Trust Before Scale
The conventional playbook says to grab market share quickly. But Term Scout recognized that in high-stakes enterprise decisions, trust matters more than speed. “We know that if you’re going to rely on us to make a decision about whether or not to sign a contract, that’s a really high trust relationship, really high stakes relationship,” Otto explains.
This insight led to a deliberate strategy: “We spent a lot of time focusing on just product and technology… getting the subject matter experts to make sure that the data integrity is really high. So the customers that use our products, they trust them really fast.”
- Create Category Through Execution
Rather than spending heavily on marketing to define a new category, Term Scout let their product capabilities do the talking. “On the contract certification side, though, we’ve really created a category. And that category is all around using objective data to help people… Like real objective third party data to prove it. And in that particular space, there’s really no one else.”
- Choose Depth Over Breadth in AI
While many AI companies chase large language models and vast datasets, Term Scout took a contrarian approach. “We’re kind of more like a small language model. We want a much smaller data set, but much higher quality signal in that data set,” Otto shares. This focused strategy allowed them to build deeper expertise in their specific domain.
- Let Product Drive Distribution
Term Scout deliberately under-invested in marketing, trusting that product excellence would drive organic growth. “We made a conscious decision to invest really heavily in product and therefore less heavily in marketing,” Otto notes. “We just hired our first full time marketer this month.”
This strategy is paying off through strong word-of-mouth growth. “Most of our growth candidly comes from word of mouth… We have one happy customer that shares it. You have IBM who has a certification on their contract. Their customers see it.”
- Build for Both Sides of the Market
Instead of optimizing solely for either vendors or buyers, Term Scout recognized the need to serve both sides of contract negotiations. “We need a neutral, independent third party to help us get to contract faster. And what we’re trying to be is that neutral, independent third party for both parties, for both sides of the transaction.”
The company now processes about 6,000 contracts monthly – a number that Otto acknowledges is “nowhere close to a big dent, but it’s a number that we’re proud of for where we are as a company.”
Looking ahead, Term Scout’s vision extends beyond just enterprise contracts. “Contracts touch people and businesses equally. They don’t discriminate, right? Any person or business that participates in the economy is necessarily signing lots and lots of contracts,” Otto explains.
For founders building complex enterprise products, Term Scout’s journey offers an alternative to the “growth at all costs” mentality. Their story suggests that in markets where trust is paramount, focusing on product excellence and genuine expertise can create stronger foundations for scale than traditional marketing spend.
This approach requires patience and conviction. But as Term Scout demonstrates, when you’re creating a new category, trust is the ultimate growth lever. Building it systematically through product excellence might be slower initially, but it creates deeper moats than marketing alone ever could.